REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

 

Except as set forth in the corresponding sections or subsections of the Disclosure Schedules, each of the Stockholders (it being understood that, with respect to each Stockholder that is a Fonds commun de placement à risques ("FCPR"), references to such Stockholder in Section 4.2 and Section 4.3 shall be deemed to be references to such Stockholder and, it being further understood, that each FCPR is represented by its management company) hereby severally and not jointly represents and warrants to the Buyer as follows:

 

SECTION 4.1  ORGANIZATION

 

.  Such Stockholder is a corporation or an FCPR, as applicable, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, if applicable, and has full corporate power and authority, or legal capacity, as applicable, to own the Common Stock and the amount of the Convertible Bonds set forth opposite such Stockholder's name on Exhibit A.

 

SECTION 4.2  AUTHORITY

 

.  Such Stockholder has full corporate power and authority, or legal capacity, as applicable, to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance by such Stockholder of this Agreement and the consummation by such Stockholder of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action or otherwise duly and properly taken.  This Agreement has been duly and validly executed and delivered by such Stockholder.  This Agreement constitutes the legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws in effect which affect the enforcement of creditor’s rights generally and by equitable principles.

 

SECTION 4.3  NO CONFLICT; REQUIRED FILINGS AND CONSENTS

 

(A)  

 

The execution, delivery and performance by such Stockholder of this Agreement and the consummation of the transactions contemplated hereby do not and will not:

 

(I)  CONFLICT WITH OR VIOLATE THE ARTICLES OF INCORPORATION OR BYLAWS, OR EQUIVALENT GOVERNING INSTRUMENTS, IF APPLICABLE, OF SUCH STOCKHOLDER;

 

(II)  CONFLICT WITH OR VIOLATE ANY LAW APPLICABLE TO SUCH STOCKHOLDER; OR

 

(III)  RESULT IN ANY BREACH OF, CONSTITUTE A DEFAULT (OR AN EVENT THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD BECOME A DEFAULT) UNDER OR REQUIRE ANY CONSENT OF ANY PERSON PURSUANT TO, ANY NOTE, BOND, MORTGAGE, INDENTURE, AGREEMENT, LEASE, LICENSE, PERMIT, FRANCHISE, INSTRUMENT, OBLIGATION OR OTHER CONTRACT TO WHICH SUCH STOCKHOLDER IS A PARTY.

 

SECTION 4.4  OWNERSHIP OF COMMON STOCK AND CONVERTIBLE BONDS

 

.  Such Stockholder is the record and beneficial owner of the Common Stock and of the amount of the Convertible Bonds set forth opposite such Stockholder's name on Exhibit A, free and clear of any Encumbrance.  Such Stockholder has the right, authority and power to sell, assign and transfer such Common Stock and such Convertible Bonds to the Buyer.  Upon delivery to the Buyer of certificates for such Common Stock and instruments representing the transfer of such Convertible Bonds at the Closing and the Buyer's payment of the amount of the Purchase Price set forth opposite such Stockholder’s name on Exhibit A (as calculated in accordance with Section 2.1(a)), the Buyer shall acquire good, valid and marketable title to such Common Stock and such Convertible Bonds, free and clear of any Encumbrance.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer hereby represents and warrants to the Company and the Stockholders as follows:

 

SECTION 5.1  ORGANIZATION

 

.  The Buyer is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Washington and has full corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted.

 

SECTION 5.2  AUTHORITY

 

.  The Buyer has full corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby.  The execution, delivery and performance by the Buyer of this Agreement and the consummation by the Buyer of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action.  This Agreement has been duly and validly executed and delivered by the Buyer.  This Agreement constitutes the legal, valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms.

 

SECTION 5.3  NO CONFLICT; REQUIRED FILINGS AND CONSENTS

 

(A)  

 

The execution, delivery and performance by the Buyer of this Agreement and the consummation of the transactions contemplated hereby do not and will not:

 

(I)  CONFLICT WITH OR VIOLATE THE CERTIFICATE OF INCORPORATION OR BYLAWS OF THE BUYER;

 

(II)  CONFLICT WITH OR VIOLATE ANY LAW APPLICABLE TO THE BUYER; OR

 

(III)  RESULT IN ANY BREACH OF, CONSTITUTE A DEFAULT (OR AN EVENT THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD BECOME A DEFAULT) UNDER OR REQUIRE ANY CONSENT OF ANY PERSON PURSUANT TO, ANY NOTE, BOND, MORTGAGE, INDENTURE, AGREEMENT, LEASE, LICENSE, PERMIT, FRANCHISE, INSTRUMENT, OBLIGATION OR OTHER CONTRACT TO WHICH THE BUYER IS A PARTY;

 

except, in each case, for any such conflicts, violations, breaches, defaults or other occurrences that could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Buyer to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

 

(B)  

 

The Buyer is not required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Buyer of this Agreement or the consummation of the transactions contemplated hereby, except for any filings required to be made under the German Act, the Spanish Act, the Brazilian Act, the Portuguese Act and the Ukrainian Act.

 

SECTION 5.4  FINANCING

 

.  The Buyer shall have immediate access to funds at the Closing which constitute the funds necessary to pay the Purchase Price and consummate the transactions contemplated by this Agreement, including the (i) the repayment of the Group Indebtedness and (ii) the payment of fees and expenses that are for its account.

 

SECTION 5.5  BROKERS

 

.  Except for UBS Securities LLC, the fees of which will be paid by the Buyer, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Buyer.

 

SECTION 5.6  THE BUYER’S EXAMINATION

 

.  The Buyer and its Representatives have been given access to a “data room” between December 19, 2006 and February 22, 2007 (the “Data Room”), and have received or been given access to all of the information described or referred to in this Agreement.  The Buyer and its Representatives have been afforded the opportunity to meet with, ask questions of and receive answers from the management of the Company and its Subsidiaries in connection with the determination by the Buyer to enter into this Agreement and consummate the transactions contemplated hereby. The content of the Data Room has been moved to the offices of Gibson, Dunn & Crutcher LLP located at 480 Avenue Louise, 1050 Brussels, Belgium, just prior to the date hereof.  The Buyer and its Representatives will continue to have access to the Data Room until Closing.  The content of the Data Room together with any written answers given to the Buyer and/or its Representatives will be compiled on a CD-ROM under the supervision of the Buyer and the Stockholders, a copy of which will be delivered to the Buyer and the Stockholders on or prior to the Closing Date.

 

SECTION 5.7  INVESTIGATION; LIMITATION ON WARRANTIES.

 

(A)  

 

The Buyer acknowledges and agrees that neither the Company nor any of its Subsidiaries, nor any other Person acting on behalf of the Company or any of their respective Affiliates or representatives has made any representation or warranty, express or implied, as to the accuracy or completeness of any information regarding the Company or any of its Subsidiaries or their respective businesses or assets, except as expressly set forth in this Agreement or as and to the extent required by this Agreement to be set forth in the Disclosure Schedules.  The Buyer further agrees that no Stockholder or any other Person will have or be subject to any liability to the Buyer or any other Person, nor will the Buyer or any other Person be entitled to make an indemnification claim, resulting from the distribution or use by the Buyer, any Affiliate thereof or any of their Representatives of any such information and any legal opinions, memoranda, summaries or any other information, documents or materials made available to the Buyer or its Affiliates or Representatives in the Data Room, certain management presentations or any other form otherwise provided in expectation of the transactions contemplated by this Agreement.

 

(B)  

 

The Buyer acknowledges and agrees that except for the Core Representations, the Shares and the Convertible Bonds are being acquired AS IS WITHOUT ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR INTENDED USE OR OTHER EXPRESSED OR IMPLIED WARRANTY.  The Buyer acknowledges and agrees that it is consummating the transactions hereunder without any representation or warranty, express or implied, by any Person, except for the representations and warranties expressly set forth in this Agreement.

 

(C)  

 

The Buyer acknowledges that it is relying on its own investigation and analysis in entering into the transactions contemplated hereby.  The Buyer is knowledgeable about the industries in which the Company and its Subsidiaries operate and is capable of evaluating the merits and risks of the transactions contemplated by this Agreement and is able to bear the substantial economic risk of such investment for an indefinite period of time.  The Buyer has fully reviewed this Agreement, the Disclosure Schedules, the materials referenced therein and the materials in the Data Room relating to the transactions contemplated by this Agreement.  The Buyer does not have any knowledge that the representations and warranties of the Company in this Agreement and the Disclosure Schedules are not true and correct in all material respects and the Buyer does not have any knowledge of any material errors in, or material omissions from, the Disclosure Schedules and the Data Room.

 

(D)  

 

In connection with the Buyer’s investigation of the Company and its Subsidiaries, the Buyer has received from or on behalf of the Company certain projections, including projected statements of operating revenues and income from operations of the Company and its Subsidiaries, and certain business plan information of the Company and its Subsidiaries.  The Buyer acknowledges that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans, that the Buyer is familiar with such uncertainties, that the Buyer is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections and forecasts), and that the Buyer shall have no claim against any Person with respect thereto.  Accordingly, the Company and the Stockholders make no representations or warranties whatsoever with respect to such estimates, projections and other forecasts and plans (including the reasonableness of the assumptions underlying such estimates, projections and forecasts).

 

SECTION 5.8  SOLVENCY

 

.  Immediately after giving effect to the Closing and the transactions contemplated by this Agreement, the Buyer and each of its Subsidiaries shall be able to pay their respective debts as they become due and shall own property which has a fair saleable value greater than the amounts required to pay their respective debts (including a reasonable estimate of the amount of all contingent liabilities).  Immediately after giving effect to the transactions contemplated by this Agreement, the Buyer and each of its Subsidiaries shall have adequate capital to carry on their respective businesses.  No transfer of property is being made and no obligation is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company or its Subsidiaries.

 

SECTION 5.9  ACQUISITION FOR INVESTMENT

 

.  The Shares and Convertible Bonds acquired by the Buyer pursuant to this Agreement are being acquired for investment only and not with a view to any public distribution thereof, and the Buyer will not offer to sell or otherwise dispose of such Shares or Convertible Bonds in violation of any of the registration requirements of any securities Laws or other Laws.  The Buyer is an "accredited investor" within the meaning of Regulation D promulgated pursuant to the Securities Act of 1933, as amended.

 

SECTION 5.10  REPAYMENT OF THE CREDIT FACILITY AGREEMENTS

 

.  The Company shall have obtained and communicated to the Purchaser on or prior to the Closing a statement from the lenders under the Credit Facilities Agreement listing all Credit Facilities Liens, expressing that the Credit Facilities Liens shall be released at Closing, upon and subject to full repayment to such lenders of the Group Indebtedness, and whereby the lenders undertake to provide all reasonably required assistance for the purpose of making effective such releases.

 

Subject to the delivery of the above statement, and to the Company's commitment to provide all reasonably required assistance in connection therewith, the Buyer shall be solely responsible of obtaining of the release of the Credit Facilities Liens.

 

At Closing, the Buyer shall, in addition to the payment of the Purchase Price, pay in cash into the Company’s bank account an amount sufficient for the Company and its Subsidiaries to repay the Group Indebtedness with value date (date de valeur) at the Closing Date, in accordance with the terms and conditions of the Credit Facility Agreements.

 

ARTICLE VI

 

COVENANTS

 

SECTION 6.1  CONDUCT OF BUSINESS PRIOR TO THE CLOSING

 

.  Except as set forth on Exhibit F, between the date of this Agreement and the Closing Date, unless the Buyer shall otherwise consent in writing (such consent not to be unreasonably withheld or delayed), the Company shall conduct the Business only in the ordinary course of business consistent with past practice, and shall take reasonable steps to preserve substantially intact the organization of the Business.  By way of amplification and not limitation, between the date of this Agreement and the Closing Date, the Company and its Subsidiaries shall not do or propose to do, directly or indirectly, any of the following without the prior written consent of the Buyer:

 

(A)  

 

amend or otherwise change its articles of organization or bylaws, or equivalent organizational documents;

 

(B)  

 

except as set forth on Exhibit G, issue, sell, pledge, dispose of or otherwise subject to any Encumbrance any shares of capital stock of the Company or any of its Subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any such shares, or any other ownership interest in the Company or any of its Subsidiaries, or any material assets of the Company or any of its Subsidiaries (other than sales or transfers of inventory in the ordinary course of business consistent with past practice);

 

(C)  

 

except as set forth on Exhibit H, declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, or make any other payment on or with respect to any of its capital stock;

 

(D)  EXCEPT AS SET FORTH ON EXHIBIT H,

 

reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock or make any other change with respect to its capital structure;

 

(E)  

 

except as set forth on Exhibit I, acquire any corporation, partnership, limited liability company, other business organization or division thereof or any material amount of assets, or enter into any joint venture, strategic alliance, exclusive dealing, noncompetition or similar contract or arrangement;

 

(F)  

 

except as set forth on Exhibit J, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries, or otherwise alter the Company's or any of its Subsidiaries' corporate structure;

 

(G)  

 

incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans or advances, or draw any additional amount under existing lines of credit, subject to the prior approval of the Buyer, which shall not be unreasonably withheld; provided that in no event shall the Company or any of its Subsidiaries incur, assume or guarantee any long-term indebtedness for borrowed money;

 

(H)  

 

materially amend, waive, modify or consent to the termination of any Material Contract, or materially amend, waive, modify or consent to the termination of the Company's or any of its Subsidiaries' rights thereunder, or enter into any Contract other than in the ordinary course of business consistent with past practice;

 

(I)  

 

authorize, or make any commitment with respect to, any single capital expenditure that is in excess of €500,000 or capital expenditures that are, in the aggregate, in excess of €500,000 for the Company and its Subsidiaries taken as a whole;

 

(J)  

 

enter into any lease of real or personal property or any renewals thereof involving rental obligations exceeding €500,000 per year in any single case;

 

(K)  

 

increase the compensation payable or to become payable, or the benefits provided to, its directors, officers or employees, except for normal merit and cost-of-living increases consistent with past practice in salaries or wages of employees of the Company or any of its Subsidiaries who are not directors or officers of the Company or any of its Subsidiaries and who receive less than €100,000 in total annual cash compensation from the Company or any of its Subsidiaries, or grant any severance or termination payment to, or pay, loan or advance any amount to, any director, officer or employee of the Company or any of its Subsidiaries, or establish, adopt, enter into or amend any Employee Benefit Plan;

 

(L)  

 

enter into any Contract with any Related Party of the Company or any of its Subsidiaries;

 

(M)  

 

make any material change in any method of accounting or accounting practice or policy, except as required by GAAP;

 

(N)  

 

make any tax election, settle or compromise any income Tax liability or file any Return other than on a basis consistent with past practice;

 

(O)  

 

pay, discharge or satisfy any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, of liabilities reflected or reserved against on the Balance Sheet or subsequently incurred in the ordinary course of business consistent with past practice;

 

(P)  

 

permit the cancellation of any existing policy of insurance;

 

(Q)  

 

cancel, compromise, waive or release any right of claim other than in the ordinary course of business consistent with past practice;

 

(R)  

 

permit the lapse of any material right relating to Intellectual Property or any other intangible asset;

 

(S)  

 

accelerate the collection of or discount any accounts receivable, delay the payment of any accounts payable or defer expenses, reduce inventories or otherwise increase cash on hand, except in the ordinary course of business consistent with past practice;

 

(T)  

 

commence or settle any Action in excess of €500,000; or

 

(U)  

 

announce an intention, enter into any formal agreement, or otherwise make a commitment to do any of the foregoing.

 

SECTION 6.2  COVENANTS REGARDING INFORMATION

 

.  From the date hereof until the Closing Date, the Company shall, and shall cause its Subsidiaries to, afford the Buyer and its officers, directors, principals, employees, advisors, auditors, agents and other representatives (collectively, "Representatives") reasonable access (including for inspection and copying) at all reasonable times to the Representatives, properties, offices, plants and other facilities, books and records of the Company and each of its Subsidiaries, and shall furnish the Buyer with such financial, operating and other data and information as the Buyer may reasonably request, in each case to the extent that such access and disclosure would not obligate the Company or the Subsidiaries to take any actions that would unreasonably disrupt the normal course of their businesses or violate the terms of any Contract to which the Company or the Subsidiaries is bound or any applicable law or regulation. All requests for access shall be directed to the Stockholder Representative or such other Person as the Company may designate in writing from time to time (the "Designated Contacts"). Notwithstanding anything in this Section 6.2 to the contrary,  the Company shall not be required to provide access or to disclose any information to the Buyer if such access or disclosure (i) would cause significant competitive harm to the Company or its Subsidiaries if the transactions contemplated by this Agreement are not consummated or (ii) would be in violation of applicable Laws or regulations of any Governmental Authority (including anti-competition Laws) or the provisions of any agreement to which the Company or any of its Subsidiaries is a party.  Other than the Designated Contacts, the Buyer is not authorized to and shall not (and shall cause its Representatives and Affiliates not to) contact any officer, director, employee, franchisee, customer, supplier, distributor, lender or other material business relation of the Company or any of its Subsidiaries in connection with the transactions contemplated hereby prior to the Closing without the prior written consent of the Company.  

 

SECTION 6.3  EXCLUSIVITY

 

.  Each of the Stockholders and the Company agree that between the date of this Agreement and the earlier of the Closing and the termination of this Agreement, it shall not, and shall take all action necessary to ensure that none of the Subsidiaries of the Company or any of their respective Affiliates or Representatives shall:

 

(A)  

 

solicit, initiate, consider, encourage or accept any other proposals or offers from any Person (i) relating to any direct or indirect acquisition or purchase of all or any portion of the Business, the Shares or the Convertible Bonds, whether effected by sale of assets, sale of stock, merger or otherwise, other than inventory to be sold in the ordinary course of business consistent with past practice or (ii) to enter into a recapitalization, reorganization or any other extraordinary business transaction involving or otherwise relating to the Company or any of its Subsidiaries; or

 

(B)  

 

participate in any discussions, conversations, negotiations or other communications regarding, or furnish to any other Person any information with respect to, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any other Person to seek to do any of the foregoing.  Each of the Stockholders and the Company immediately shall cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons conducted heretofore with respect to any of the foregoing.

 

SECTION 6.4  NOTIFICATION OF CERTAIN MATTERS; SUPPLEMENTS TO DISCLOSURE SCHEDULES

 

(A)  

 

The Company shall give prompt written notice to the Buyer of  (i) the occurrence of a Material Adverse Event, (ii) any failure of the Company or any of its Affiliates or Representatives to comply with or satisfy any covenant or agreement to be complied with or satisfied by it hereunder or any event or condition that would otherwise result in the nonfulfillment of any of the conditions to the Buyer's obligations hereunder, (iii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the consummation of the transactions contemplated by this Agreement or (iv) any Action pending or, to the Knowledge of the Company, threatened against a party or the parties relating to the transactions contemplated by this Agreement.

 

(B)  

 

Each of the Company and the Stockholders shall supplement the information set forth on the Disclosure Schedules with respect to any matter now existing or hereafter arising that, if existing or occurring at or prior to the date of this Agreement, would have been required to be set forth or described in the Disclosure Schedules or that is necessary to correct any information in the Disclosure Schedules or in any representation or warranty of such party which has been rendered inaccurate thereby promptly following discovery thereof.  No such supplement shall be deemed to cure any breach of any representation or warranty made in this Agreement.

 

SECTION 6.5  RELEASE OF INDEMNITY OBLIGATIONS.

 

  At the Closing, except for the obligations of the Company set forth in Section 6.14, each of the Stockholders hereby releases and discharges the Company and its Subsidiaries from any and all obligations to pay or indemnify such party, guarantee or secure its obligations or otherwise hold it harmless pursuant to any agreement, Contract or other arrangement entered into by such party with the Company or such Subsidiaries prior to the Closing.

 

SECTION 6.6  STOCKHOLDER ARRANGEMENTS

 

.  At the Closing, all accounts or contracts between the Company and its Subsidiaries, on the one hand, and any Stockholder or any of its Affiliates (other than the Company and its Subsidiaries), on the other hand, are hereby cancelled without any consideration or further liability to any party and without the need for any further documentation.  Notwithstanding the foregoing, the parties hereby agree that (i) the Company shall continue to assume the "Assumed Liabilities" described on page 3 of Schedule 3.6(a) of the Disclosure Schedules and (ii) they shall negotiate the terms and conditions pursuant to which the services agreement entered into between AMS Industries and the Company on November 1, 2005 (as referred to in Schedule 3.18 of the Disclosure Schedules) may be continued after the Closing.

 

SECTION 6.7  DIRECTOR RESIGNATIONS

 

.  At the Closing, the Stockholders will deliver the resignation of the directors of the Company, effective as of the Closing, as specified by the Buyer to the Company in writing at least five days prior to the Closing Date.

 

SECTION 6.8  CONFIDENTIALITY

 

(A)  

 

Until the Closing Date, each of the parties shall, and shall cause its Affiliates, Representatives, the lenders and prospective lenders to, keep confidential, disclose only to its Affiliates, its  Representatives, the lenders or prospective lenders, and use only in connection with the transactions contemplated by this Agreement all information and data obtained by them from the other parties or their respective Affiliates or Representatives relating to such other parties or the transactions contemplated hereby (other than information or data that is or becomes available to the public other than as a result of a breach of this Section 6.8), unless disclosure of such information or data is required by applicable Law and/or Governmental Authorities.  In the event that the transactions contemplated hereby are not consummated, each party shall, and shall use its commercially reasonable efforts to cause its Affiliates, Representatives, the lenders and prospective lenders to, promptly return to the other parties or destroy all documents (including all copies thereof) containing any such information or data.

 

(B)  

 

From the Closing and for a period of one year following the Closing Date, no Stockholder shall, and each Stockholder shall cause its Affiliates and Representatives not to, use for its or their own benefit or divulge or convey to any third party, any Confidential Information; provided, however, that such Stockholder or such Affiliate or Representative may furnish such portion (and only such portion) of the Confidential Information as such Stockholder or such Affiliate or Representative reasonably determines it is legally obligated to disclose if:  (i) it receives a request to disclose all or any part of the Confidential Information under the terms of a subpoena, civil investigative demand or order issued by a Governmental Authority; (ii) to the extent not inconsistent with such request, it notifies the Buyer of the existence, terms and circumstances surrounding such request and consults with the Buyer on the advisability of taking steps available under applicable Law to resist or narrow such request; (iii) it exercises its commercially reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to the disclosed Confidential Information; and (iv) disclosure of such Confidential Information is required to prevent such Stockholder or such Affiliate or Representative from being held in contempt or becoming subject to any other penalty under applicable Law.  For purposes of this Agreement, "Confidential Information" consists of all information and data relating to the Business, the Shares, the Convertible Bonds, the Company or its Subsidiaries or the transactions contemplated hereby (other than data or information that is or becomes available to the public other than as a result of a breach of this Section 6.8).

 

SECTION 6.9  CONSENTS AND FILINGS

 

(A)  

 

Each of the Company and the Buyer shall use all commercially reasonable efforts to take, or cause to be taken, all appropriate action to do, or cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to consummate and make effective the transactions contemplated by this Agreement as promptly as practicable, including using commercially reasonable efforts to (i) obtain from Governmental Authorities and other Persons all consents, approvals, authorizations, qualifications and orders as are necessary for the consummation of the transactions contemplated by this Agreement, (ii) promptly make all necessary filings (which shall remain the sole responsibility of the Buyer), and thereafter make any other required submissions, with respect to this Agreement required under the German Act, the Spanish Act, the Brazilian Act, the Portuguese Act and the Ukrainian Act and any other applicable antitrust or competition law of any Governmental Authority and (iii) have vacated, lifted, reversed or overturned any order, decree, ruling, judgment, injunction or other action (whether temporary, preliminary or permanent) that is then in effect and that enjoins, restrains, conditions, makes illegal or otherwise restricts or prohibits the consummation of the transactions contemplated by this Agreement.  In furtherance and not in limitation of the foregoing, each of the Company and the Stockholders shall permit the Buyer reasonably to participate in the defense and settlement of any claim, suit or cause of action relating to this Agreement or the transactions contemplated hereby, and none of the Company or the Stockholders shall settle or compromise any such claim, suit or cause of action without the Buyer's written consent.  With respect to antitrust clearance, the Buyer shall use commercially reasonable efforts to make, within five Business Days of the date hereof, all necessary filings required under the German Act, the Spanish Act, the Portuguese Act and the Ukrainian Act and any other applicable antitrust or competition law of any Governmental Authority (“Governmental Approvals”).  The Company shall promptly furnish to the Buyer all necessary information as the Buyer may reasonably request in connection with the preparation of any filing or submission pursuant to any Governmental Approval and the Buyer shall promptly furnish to the Stockholder Representative copies of all written communications (and memoranda setting forth the substance of any oral communication) in connection with any Governmental Approval in connection with this Agreement.  The Buyer will consult with the Stockholder Representative prior to any meetings, by telephone or in person, with the staff of any applicable Governmental Authority.  The Buyer shall promptly respond to any request for additional information pursuant to any Governmental Approval.  Upon the terms and subject to the provisions hereof, the Buyer and the Company shall each use their reasonable best efforts to resolve objections, if any, as may be asserted by any Governmental Authority with respect to the transactions contemplated by this Agreement under any antitrust or trade or regulatory laws or regulations of any Governmental Authority and to cause the waiting periods or other requirements under the applicable anti-competition Laws to terminate or expire at the earliest possible date.  For purposes hereof, “reasonable best efforts” of the Buyer shall include the Buyer’s agreement to hold separate and divest such businesses, products and assets of the Buyer and its Affiliates as may be necessary to obtain the agreement of any Governmental Authority not to seek an injunction against or otherwise oppose the transactions contemplated hereby, on such terms as may be required by such Governmental Authority.  The Buyer shall not (and, after Closing, the Buyer shall not permit the Company and any of its Subsidiaries to) consummate another transaction or enter into an agreement with respect to another transaction or take any other action if the intent or reasonably anticipated consequence of such transaction or action is, or would be, to cause any Governmental Authority not to grant approval of any required regulatory approval or materially delay either such approval.

 

(B)  

 

The Company shall use reasonable efforts to obtain such third party consents and estoppel certificates as the Buyer may deem necessary or desirable in connection with the transactions contemplated by this Agreement.  The Buyer shall cooperate with and assist the Company in obtaining such consents and estoppel certificates; provided, however, that the Buyer shall have no obligation to give any guarantee or other consideration of any nature in connection with any such  consent or estoppel certificate or consent to any change in the terms of any agreement or arrangement that the Buyer may deem adverse to the interests of the Buyer, the Business, the Shares or the Convertible Bonds.  The Buyer has been aware through its investigations and acknowledges that certain consents to the transactions contemplated by this Agreement may be required from parties to contracts, leases, licenses or other agreements to which the Company and/or its Subsidiaries is a party (including the Material Contracts) and such consents may not be obtained.  The Buyer agrees that the Stockholders shall not have any liability whatsoever to the Buyer (and the Buyer shall not be entitled to assert any claims against the Stockholders) arising out of or relating to the failure to obtain any consents that may have been or may be required in connection with the transactions contemplated by this Agreement because of the default, acceleration or termination of or loss of right under any such contract, lease, license or other agreement as a result thereof.  The Buyer further agrees that no representation, warranty or covenant of the Company contained herein shall be breached or deemed breached and no condition of the Buyer shall be deemed not to be satisfied as a result of the failure to obtain any consent or as a result of any such default, acceleration or termination or loss of right or any lawsuit, action, claim, proceeding or investigation commenced or threatened by or on behalf of any Person arising out of or relating to the failure to obtain any consent or any default, acceleration or termination or loss of right.

 

(C)  

 

The Company shall deliver, as promptly as practicable, to the greatest extent possible by March 26, 2007, but in no event later than April 5, 2007, the audited 2006 Financial Statements (which shall be prepared consistent with past practice and shall be without footnotes), which shall conform in all respects with the Unaudited Financial Statements, except for such failures to conform as would not, in the aggregate, have a Material Adverse Effect.

 

(D)  

 

The Stockholders shall cause Ernst & Young LLP to provide to the Buyer, at the Company's expense and as promptly as practicable after the Closing, but in no event later than June 4, 2007, (i) financial statements of the Company and its Subsidiaries in compliance with Regulation S-X under the Securities Act of 1933, as amended, as and when needed to satisfy the Buyer's United States reporting obligations in connection with the transactions contemplated hereby, including audited consolidated financial statements for 2004, 2005 and 2006, interim unaudited consolidated financial statements for March 31, 2006 and 2007, and pro forma financial statements, as may be required in accordance with Regulation S-X, and (ii) written consents, awareness letters and other documents, as requested by the Buyer, with respect to the inclusion of such financial statements in the Buyer's filings with the United States Securities and Exchange Commission.  The Company shall provide Ernst & Young LLP with reasonable and customary representation letters in connection therewith.

 

SECTION 6.10  PUBLIC ANNOUNCEMENTS

 

.  Each of the Stockholders, the Company and the Buyer shall consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statement with respect to the transactions contemplated hereby, and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law.

 

SECTION 6.11  REPAYMENT OF GROUP INDEBTEDNESS

 

.  Provided that the Buyer has made funds referred to in Section 5.10 available the Company shall repay the Group Indebtedness at the Closing.  The Stockholders shall use commercially reasonable efforts to assist the Company and the Buyer with preparations for prepayments and termination of the Group Indebtedness.

 

SECTION 6.12  EMPLOYMENT MATTERS

 

(A)  

 

All Business Employees who remain employees of the Business after the Closing Date are referred to as "Continuing Employees".

 

(B)  

 

For a period of at least one year following the Closing Date and subject to their continued employment, the Buyer shall (or shall cause an Affiliate of the Buyer to) provide wages and employee benefits to each Continuing Employee who is not an employee of any Subsidiary of the Company organized in the United States that, in the aggregate, are substantially comparable to those provided to such Continuing Employee immediately prior to the Closing (provided, however, that each Continuing Employee's terms and conditions of employment shall instead be in compliance with applicable law to the extent such law requires different treatment of such Continuing Employee).

 

(C)  

 

For a period of at least one year following the Closing Date, the Buyer shall (or shall cause an Affiliate to) provide wages and employee benefits to each Continuing Employee of any Subsidiary of the Company organized in the United States that, in the aggregate, are (i) comparable to those provided to similarly-situated employees of the Buyer in the United States or (ii) substantially comparable to those provided to such Continuing Employee immediately prior to the Closing.

 

(D)  

 

The Buyer shall take all actions required so that eligible Continuing Employees shall receive credit for purposes of participation and vesting under any employee benefit plans, programs or arrangements sponsored by the Buyer or an Affiliate of the Buyer to the extent credited under an analogous plan, program or arrangement of the Company or a Subsidiary of the Company as of the Closing Date.  To the extent that the Buyer or an Affiliate of the Buyer modifies any coverage or benefit plans under which the Continuing Employees participate, the Buyer shall (or shall cause such Affiliate to) waive any applicable waiting periods, pre-existing conditions or actively-at-work requirements and shall give such Continuing Employees credit under the new coverage or benefit plans for deductibles, co-payments and out-of-pocket payments that have been paid during the plan year in which the Closing occurs.

 

(E)  

 

Nothing in this Section 6.12 shall impact the Buyer's or any of its Affiliates' rights to terminate the employment of any Continuing Employee or (subject to Section 6.12(b) and Section 6.12(c)) change the terms and conditions of such Continuing Employee's employment at any time.

 

(F)  

 

The Buyer shall be responsible for any and all notices, liabilities, costs, payments and expenses arising from any action by the Buyer or, after the Closing, the Company (including breach of contract, defamation or retaliatory discharge) regarding any Business Employee, including any such liability (i) under any applicable law that relates to employees, employee benefit matters or labor matters, (ii) for dismissal, wrongful termination or constructive dismissal or termination, or severance pay or other termination pay, or (iii) under or with respect to any benefit plan, program, contract, policy, commitment, or arrangement of the Company and its Subsidiaries, including with respect to severance or retention plans, or to the extent such severance or retention plans provide payments or benefits with respect to any Business Employee.

 

(G)  

 

In any termination or layoff of any Business Employee by the Buyer or the Company after the Closing, the Buyer and the Company will comply fully, if applicable, with the Worker Adjustment and Retraining Notification Act of 1988 ("WARN") and all other applicable Laws, including those prohibiting discrimination and requiring notice to employees.  The Buyer shall not, and shall cause the Company and its Subsidiaries not to, at any time prior to 60 days after the Closing Date, effectuate a “plant closing” or “mass layoff” as those terms are defined in WARN affecting in whole or in part any facility, site of employment, operating unit or employee of the Company or any Subsidiary without complying fully with the requirements of WARN.  The Buyer will bear the cost of compliance with (or failure to comply with) any such Laws.

 

(H)  

 

For periods on and after the Closing Date, the Company and its Subsidiaries shall continue to have all obligations and liabilities under and with respect to the Employee Benefit Plans and to or with respect to all persons entitled to benefits under the provisions of each such Employee Benefit Plan, including, without limitation, the obligation to provide or make available welfare benefits to retired or disabled employees of the Company and its Subsidiaries.  Nothing in this Section will preclude the Buyer from making any modification to, or terminating, such Employee Benefit Plans.

 

(I)  

 

No Continuing Employee or any dependent or beneficiary thereof is an intended third-party beneficiary of this Section 6.12, and no such individual shall have any right to enforce the provisions of this Section 6.12.

 

SECTION 6.13  TAX COVENANTS

 

(A)  

 

Each of the Stockholders shall be responsible for the payment of its Taxes resulting from the transactions contemplated hereby and the Buyer shall have no liability therefor.

 

(B)  

 

The Buyer shall prepare, or cause to be prepared, and file, or cause to be filed, all Returns of the Company and its Subsidiaries for Pre-Closing Tax periods that are due (including extensions) after the Closing Date and for any Taxable Period that begins prior to and ends after the Closing Date.

 

(C)  

 

All transfer, documentary, sales, use, stamp, registration and other such taxes and fees (including any interest and penalties) incurred in connection with the transactions contemplated by this Agreement ("Transfer Taxes") shall be paid by the Buyer  and the Buyer will prepare and file all necessary Returns and other documentation with respect to such Transfer Taxes and, if required by Law, the Stockholders will join in the execution of any such Returns.

 

SECTION 6.14  INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

(A)  

 

For six years from and after the Closing Date, to the fullest extent permitted by applicable Law, the Buyer and the Company agree to indemnify and hold harmless all past and present officers and directors of the Company and of its Subsidiaries to the same extent such persons are currently indemnified by the Company pursuant to the Company’s organizational documents and Director Indemnification Agreements for acts or omissions occurring at or prior to the Closing Date, and the Buyer shall not, and shall not permit the Company or any of its Subsidiaries to, amend, repeal or modify any provision in the Company’s or any of its Subsidiaries’ organizational documents relating to the exculpation or indemnification of former officers and directors as in effect immediately prior to the Closing; provided, however, that the foregoing will not apply to indemnification claims pursuant to Article VIII hereunder; provided, further, that neither the Company nor the Buyer shall be liable with respect to any settlements effected without its written consent (which consent shall not be unreasonably withheld).

 

(B)  

 

The Buyer shall cause the Company and its Subsidiaries to maintain in effect for six years from the Closing Date directors’ and officers’ liability insurance covering those persons who are currently covered by the Company’s existing directors’ and officers’ liability insurance policy on terms not less favorable than such existing insurance coverage; provided, that in the event that any claim is brought under such director’s and officer’s liability insurance policy, such policy shall be maintained until final disposition of such claim; provided,further, that the Company shall not be required to pay an annual premium in excess of 250 percent of the last annual premium paid prior to the date thereof, but in such case shall purchase as much coverage as possible for such amount.

 

(C)  

 

In addition to the other rights provided for in this Section 6.14 and not in limitation thereof (but without in any way limiting or modifying the obligations of any insurance carrier contemplated by Section 6.14), from and after the Closing Date, the Buyer shall, and shall cause the Company and its Subsidiaries (each, a "D&O Indemnifying Party") to, to the fullest extent permitted by applicable law, (i) indemnify and hold harmless (and release from any liability to the Buyer or the Company or any of its Subsidiaries), the individuals who, on or prior the Closing Date, were officers, directors, or employees or agents of the Company or any of its Subsidiaries or served on behalf of the Company as an officer, director or employee or agent of any of the Company’s current or former Subsidiaries or Affiliates (collectively, "Covered Affiliates") or any of their predecessors in all of their capacities (including as member or stockholder, controlling or otherwise) and the heirs, executors, trustees, fiduciaries and administrators of such officer, directors or employees or agents (each a "D&O Indemnitee" and, collectively, the "D&O Indemnitees") against all D&O Expenses, losses, claims, damages, judgments or amounts paid in settlement ("D&O Costs") in respect of any threatened, pending or completed Action based on or arising out of or relating to the fact that such Person is or was a director, officer or employee (controlling or otherwise) of the Company or any of its Subsidiaries or Covered Affiliates or any of their predecessors arising out of acts or omissions occurring on or prior to the Closing Date (including without limitation, in respect of acts or omissions in connection with this Agreement and the transactions contemplated thereby) (a "D&O Indemnifiable Claim"), except for acts or omissions which involve conduct known to such Person at the time to constitute a material violation of applicable law and (ii) advance to such D&O Indemnitees all D&O Expenses incurred in connection with any D&O Indemnifiable Claim (including in circumstances where the D&O Indemnifying Party has assumed the defense of such claim) promptly after receipt of reasonably detailed statements therefor; provided, however, that the Person to whom D&O Expenses are to be advanced provides an undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification.  Each D&O Indemnifiable Claim shall continue until such D&O Indemnifiable Claim is disposed of or all judgments, orders, decrees or other rulings in connection with such D&O Indemnifiable Claim are fully satisfied.  For the purposes of this Section 6.14(c), "D&O Expenses" shall include reasonable attorneys’ fees and all other reasonable costs, charges and expenses paid or incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, to be a witness in or participate in any D& O Indemnifiable Claim, but shall exclude losses, judgments and amounts paid in settlement (which items are included in the definition of D&O Costs).

 

(D)  

 

Notwithstanding anything contained in this Agreement to the contrary, this Section 6.14 shall survive the consummation of the Closing indefinitely.  In the event that the Buyer or the Company or any of its Subsidiaries or any of their respective successors or assigns (i) consolidates with or merges in to any other Person, or (ii) transfers all or substantially all of its properties or assets to any Person, then, and in each case, the successors and assigns of the Buyer or its Subsidiary, as the case may be, shall expressly assume and be bound by the obligations set forth in this Section 6.14.

 

(E)  

 

The obligations of the Buyer, the Company and its Subsidiaries under this Section 6.14 shall not be terminated or modified in such a manner as to adversely affect any D&O Indemnitee to whom this Section 6.14 applies without the consent of such affected D&O Indemnitee.

 

SECTION 6.15  PRESERVATION OF RECORDS; POST-CLOSING ACCESS AND COOPERATION

 

The Buyer and the Company shall preserve and retain, in accordance with the Buyer's record retention program as in effect from time to time, all corporate, accounting, legal, auditing, human resources and other books and records of the Company and each of its Subsidiaries relating to the conduct of the Business prior to the Closing Date.  If, after the Closing, the Stockholders need information contained in the books and records of the Company, then the Buyer shall cause the Company to provide the Stockholders with such information.

 

SECTION 6.16  INDONESIAN SUBSIDIARY

 

.  Messrs. Bize and Matton shall provide reasonable assistance to the Company to resolve the dispute between the Company and its partner in Indonesia.

 

ARTICLE VII

 

CONDITIONS TO CLOSING

 

SECTION 7.1  GENERAL CONDITIONS

 

.  The respective obligations of the Buyer, the Company and the Stockholders to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may, to the extent permitted by applicable Law, be waived in writing by the Buyer, the Company or the Stockholder Representative (on behalf of the Stockholders) in its sole discretion (provided that such waiver shall only be effective as to the obligations of such party (or, in the case of the Stockholders, such waiver by the Stockholder Representative on behalf of the Stockholders shall only be effective as to the obligations of the Stockholders)):

 

(A)  

 

No Injunction or Prohibition.  No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) that is then in effect and that enjoins, restrains, conditions, makes illegal or otherwise prohibits the consummation of the transactions contemplated by this Agreement.

 

(B)  

 

Antitrust/Competition and Regulatory Clearance.  Any waiting period (and any extension thereof) under the German Act, the Spanish Act, the Portuguese Act and the Ukrainian Act or any applicable Laws and/or regulations of any Governmental Authority shall have expired or shall have been terminated, it being understood that the Buyer shall be solely responsible for obtaining the Brazilian antitrust clearance or the consequences of the failure to obtain of such clearance.

 

SECTION 7.2  CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE STOCKHOLDERS

 

.  The obligations of the Company and the Stockholders to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by the Company or the Stockholder Representative (on behalf of the Stockholders), in its sole discretion:

 

(A)  

 

Representations, Warranties and Covenants of the Buyer.  The representations and warranties of the Buyer contained in this Agreement or any schedule, certificate or other document delivered pursuant hereto or in connection with the transactions contemplated hereby shall be true and correct both when made and as of the Closing Date, or in the case of representations and warranties that are made as of a specified date, such representations and warranties shall be true and correct as of such specified date, except where the failure to be so true and correct (without giving effect to any limitation or qualification as to "materiality" (including the word "material") or "Knowledge" set forth therein) would not, individually or in the aggregate, reasonably be expected to be materially adverse to the ability of the Buyer to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.  The Buyer shall have performed all obligations and agreements and complied with all covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing.

 

SECTION 7.3  CONDITIONS TO OBLIGATIONS OF THE BUYER

 

.  The obligations of the Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions, any of which may be waived in writing by the Buyer in its sole discretion:

 

(A)  

 

Representations, Warranties and Covenants of the Company.

 

(I)  THERE SHALL NOT HAVE OCCURRED, WITHOUT GIVING EFFECT TO ANY LIMITATION OR QUALIFICATION (INCLUDING THE WORD "MATERIAL", "MATERIAL ADVERSE EFFECT", "MATERIAL ADVERSE EVENT" OR "KNOWLEDGE") SET FORTH IN ANY REPRESENTATION OR WARRANTY OF THE COMPANY CONTAINED IN THIS AGREEMENT:

 

(A)           any breach of any representation or warranty of the Company (other than any Core Representation of the Company) contained in Article III as of the date of this Agreement;

 

(B)           any breach of any Core Representation of the Company as of the date of this Agreement or as of the Closing Date; or

 

(C)           any Material Adverse Event;

 

that, individually or in the aggregate, has a Material Adverse Effect, and

 

(II)  THE COMPANY SHALL HAVE PERFORMED ALL OBLIGATIONS AND AGREEMENTS AND COMPLIED WITH ALL COVENANTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED OR COMPLIED WITH BY IT PRIOR TO OR AT THE CLOSING, EXCEPT FOR ANY SUCH FAILURES TO PERFORM OR COMPLY AS WOULD NOT REASONABLY BE EXPECTED TO BE ADVERSE TO THE COMPANY, THE BUYER, OR THE COMPANY OR THE BUYER’S ABILITY TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY AS CONTEMPLATED BY THIS AGREEMENT.

 

(B)  

 

Representations, Warranties and Covenants of the Stockholders.  The representations and warranties of each Stockholder contained in Article IV of this Agreement shall be true and correct as of the date of this Agreement, and the Core Representations of each Stockholder contained in this Agreement shall be true and correct as of the Closing Date, except in either case where the failure to be so true and correct (without giving effect to any limitation or qualification as to "materiality" (including the word "material") or "Knowledge" set forth therein) would not, individually or in the aggregate, reasonably be expected to be materially adverse to the ability of such Stockholder to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.  Each Stockholder shall have performed all obligations and agreements and complied with all covenants and conditions required by this Agreement to be performed or complied with by it prior to or at the Closing, except where the failure to do so does not adversely impact the Company, the Buyer or the Buyer's ability to consummate the transactions contemplated hereby in accordance with this Agreement.

 

ARTICLE VIII

 

INDEMNIFICATION

 

SECTION 8.1  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

 

.  The representations and warranties of the Company, the Stockholders and the Buyer contained in this Agreement and any schedule, certificate or other document delivered pursuant hereto or thereto or in connection with the transactions contemplated hereby or thereby shall terminate as of the Closing; provided, however, that the representations and warranties set forth in Section 3.1, Section 4.1 and Section 5.1 relating to organization and existence, Section 3.2, Section 4.2 and Section 5.2 relating to authority, Section 4.4 relating to Common Stock and Convertible Bonds, and Section 3.4 relating to capitalization (Sections 3.1, Section 3.2, Section 3.4, Section 4.1, Section 4.2, Section 4.4, Section 5.1, and Section 5.2 are collectively referred to herein as the "Core Representations") shall survive until the date that is 18 months after the Closing Date.  For the avoidance of doubt, the Buyer shall not have any right to be indemnified hereunder after the Closing Date for the breach of any representation or warranty set forth in this Agreement other than for breaches of the Core Representations.  All covenants of the Company, the Stockholders and the Buyer contained in this Agreement shall survive until the date that is 12 months after the Closing Date.

 

 

SECTION 8.2  INDEMNIFICATION BY THE STOCKHOLDERS

 

.  Each Stockholder shall save, defend, indemnify and hold harmless the Buyer and its Affiliates and the respective Representatives, successors and assigns of each of the foregoing from and against any and all Losses incurred, sustained or suffered by any of the foregoing as a result of, arising out of or relating to (i) any breach of any Core Representation or covenant made by the Company or any Stockholder in this Agreement or (ii) any unpaid Transaction Expenses.  For purposes of this Section 8.2, each Stockholder’s indemnification obligations shall be several (in accordance with its percentage ownership of the Shares and Convertible Bonds as set forth opposite such Stockholder’s name on Exhibit A) and not joint.

 

SECTION 8.3  INDEMNIFICATION BY THE BUYER

 

 

SECTION 11.5.  Modification in Writing

 

.  No amendment, modification, supplement, termination or waiver of or to any provision hereof, nor consent to any departure by any Pledgor therefrom, shall be effective unless the same shall be made in accordance with the terms of the Credit Agreement and unless in writing and signed by the Collateral Agent.  Any amendment, modification or supplement of or to any provision hereof, any waiver of any provision hereof and any consent to any departure by any Pledgor from the terms of any provision hereof in each case shall be effective only in the specific instance and for the specific purpose for which made or given.  Except where notice is specifically required by this Agreement or any other document evidencing the Secured Obligations, no notice to or demand on any Pledgor in any case shall entitle any Pledgor to any other or further notice or demand in similar or other circumstances.

 

SECTION 11.6.  Notices

 

.  Unless otherwise provided herein or in the Credit Agreement, any notice or other communication herein required or permitted to be given shall be given in the manner and become effective as set forth in the Credit Agreement, as to any Pledgor, addressed to it at the address of the Borrower set forth in the Credit Agreement and as to the Collateral Agent, addressed to it at the address set forth in the Credit Agreement, or in each case at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 11.6.

 

SECTION 11.7.  Governing Law, Consent to Jurisdiction and Service of Process; Waiver of Jury Trial

 

.  Sections 10.09 and 10.10 of the Credit Agreement are incorporated herein, mutatis mutandis, as if a part hereof.

 

SECTION 11.8.  Severability of Provisions

 

.  Any provision hereof which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions hereof or affecting the validity, legality or enforceability of such provision in any other jurisdiction.

 

SECTION 11.9.  Execution in Counterparts

 

.  This Agreement and any amendments, waivers, consents or supplements hereto 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 to be an original, but all such counterparts together shall constitute one and the same agreement.

 

SECTION 11.10.   Business Days

 

.  In the event any time period or any date provided in this Agreement ends or falls on a day other than a Business Day, then such time period shall be deemed to end and such date shall be deemed to fall on the next succeeding Business Day, and performance herein may be made on such Business Day, with the same force and effect as if made on such other day.

 

SECTION 11.11.   No Credit for Payment of Taxes or Imposition

 

.  Such Pledgor shall not be entitled to any credit against the principal, premium, if any, or interest payable under the Credit Agreement, and such Pledgor shall not be entitled to any credit against any other sums which may become payable under the terms thereof or hereof, by reason of the payment of any Tax on the Pledged Collateral or any part thereof.

 

SECTION 11.12.   No Claims Against Collateral Agent

 

.  Nothing contained in this Agreement shall constitute any consent or request by the Collateral Agent, express or implied, for the performance of any labor or services or the furnishing of any materials or other property in respect of the Pledged Collateral or any part thereof, nor as giving any Pledgor any right, power or authority to contract for or permit the performance of any labor or services or the furnishing of any materials or other property in such fashion as would permit the making of any claim against the Collateral Agent in respect thereof or any claim that any Lien based on the performance of such labor or services or the furnishing of any such materials or other property is prior to the Lien hereof.

 

SECTION 11.13.   No Release

 

.  Nothing set forth in this Agreement or any other Loan Document, nor the exercise by the Collateral Agent of any of the rights or remedies hereunder, shall relieve any Pledgor from the performance of any term, covenant, condition or agreement on such Pledgor’s part to be performed or observed under or in respect of any of the Pledged Collateral or from any liability to any person under or in respect of any of the Pledged Collateral or shall impose any obligation on the Collateral Agent or any other Secured Party to perform or observe any such term, covenant, condition or agreement on such Pledgor’s part to be so performed or observed or shall impose any liability on the Collateral Agent or any other Secured Party for any act or omission on the part of such Pledgor relating thereto or for any breach of any representation or warranty on the part of such Pledgor contained in this Agreement, the Credit Agreement or the other Loan Documents, or under or in respect of the Pledged Collateral or made in connection herewith or therewith.  Anything herein to the contrary notwithstanding, neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any contracts, agreements and other documents included in the Pledged Collateral by reason of this Agreement, nor shall the Collateral Agent or any other Secured Party be obligated to perform any of the obligations or duties of any Pledgor thereunder or to take any action to collect or enforce any such contract, agreement or other document included in the Pledged Collateral hereunder.  The obligations of each Pledgor contained in this Section 11.13 shall survive the termination hereof and the discharge of such Pledgor’s other obligations under this Agreement, the Credit Agreement and the other Loan Documents.

 

SECTION 11.14.   Obligations Absolute

 

.  All obligations of each Pledgor hereunder shall be absolute and unconditional irrespective of:

 

(i)  any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation or the like of any other Pledgor;

 

(ii)  any lack of validity or enforceability of the Credit Agreement, any Hedging Agreement or any other Loan Document, or any other agreement or instrument relating thereto;

 

(iii)  any change in the time, manner or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from the Credit Agreement, any Hedging Agreement or any other Loan Document or any other agreement or instrument relating thereto;

 

(iv)  any pledge, exchange, release or non-perfection of any other collateral, or any release or amendment or waiver of or consent to any departure from any guarantee, for all or any of the Secured Obligations;

 

(v)  any exercise, non-exercise or waiver of any right, remedy, power or privilege under or in respect hereof, the Credit Agreement, any Hedging Agreement or any other Loan Document except as specifically set forth in a waiver granted pursuant to the provisions of Section 11.5 hereof; or

 

(vi)  any other circumstances which might otherwise constitute a defense available to, or a discharge of, any Pledgor.

 

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]

 

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IN WITNESS WHEREOF, each Pledgor and the Collateral Agent have caused this Agreement to be duly executed and delivered by their duly authorized officers as of the date first above written.

 

ITRON, INC., as a Pledgor

 

By:

/s/ Steven M. Helmbrecht

Name: Steven M. Helmbrecht

Title: Senior Vice President and Chief Financial Officer

 

ITRON INTERNATIONAL, INC., as a Pledgor

 

By:

/s/ Steven M. Helmbrecht

Name: Steven M. Helmbrecht

Title: President and Treasurer

 

ITRON ENGINEERING SERVICES, INC., as a Pledgor

 

By:

/s/ Steven M. Helmbrecht

Name: Steven M. Helmbrecht

Title: Vice President

 

ITRON BRAZIL I, LLC, as a Pledgor

 

By:

/s/ Joseph P. Ball

Name: Joseph P. Ball

Title: Manager

 

ITRON BRAZIL II, LLC, as a Pledgor

 

By:

/s/ Joseph P. Ball

Name: Joseph P. Ball

Title: Manager

 

---

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Agent

 

By:

/s/ Tom Beil

Name: Tom Beil

Title: Vice President

 

 

 

---

EXHIBIT 1

 

 

ISSUER’S ACKNOWLEDGMENT

 

The undersigned hereby (i) acknowledges as of this          day of                  , 20    , receipt of the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of April 18, 2007, made by ITRON, INC., a Washington corporation (the “Borrower”), the Subsidiary Guarantors party thereto and WELLS FARGO BANK, NATIONAL ASSOCIATION, as collateral agent (in such capacity and together with any successors in such capacity, the “Collateral Agent”), (ii) agrees promptly to note on its books the security interests granted to the Collateral Agent and confirmed under the Security Agreement, (iii) agrees that it will comply with instructions of the Collateral Agent with respect to the applicable Securities Collateral without further consent by the applicable Pledgor, (iv) agrees to notify the Collateral Agent upon obtaining knowledge of any interest in favor of any person in the applicable Securities Collateral that is adverse to the interest of the Collateral Agent therein and (v) waives any right or requirement at any time hereafter to receive a copy of the Security Agreement in connection with the registration of any Securities Collateral thereunder in the name of the Collateral Agent or its nominee or the exercise of voting rights by the Collateral Agent or its nominee.

 

[                                                          ]

 

By:

Name:

Title:

 

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EXHIBIT 2

 

SECURITIES PLEDGE AMENDMENT

 

This Securities Pledge Amendment, dated as of [                    ], is delivered by [                 ] (the “Pledgor”), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, as collateral agent (in such capacity and together with any successors in such capacity, the “Collateral Agent”), pursuant to Section 5.1 of the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of April 18, 2007, made by ITRON, INC., a Washington corporation (the “Borrower”), the Subsidiary Guarantors party thereto and WELLS FARGO BANK, NATIONAL ASSOCIATION, as collateral agent.

As collateral security for the payment and performance in full of all the Secured Obligations, the Pledgor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties, a lien on and security interest in all of the right, title and interest of the Pledgor in, to and under the Pledged Securities and Intercompany Notes listed on this Securities Pledge Amendment and all Proceeds of any and all of the foregoing (other than Excluded Property).

The Pledgor hereby agrees that this Securities Pledge Amendment may be attached to the Security Agreement and that the Pledged Securities and/or Intercompany Notes listed on this Securities Pledge Amendment shall be deemed to be and shall become part of the Pledged Collateral and shall secure all Secured Obligations.

 

PLEDGED SECURITIES

 

ISSUER	CLASS OF STOCK OR INTERESTS	PAR VALUE	CERTIFICATE NO(S).	NUMBER OF SHARES OR INTERESTS	PERCENTAGE OF ALL ISSUED CAPITAL OR OTHER EQUITY INTERESTS OF ISSUER

---

 

INTERCOMPANY NOTES

 

ISSUER	PRINCIPAL AMOUNT	DATE OF ISSUANCE	INTEREST RATE	MATURITY DATE

[                                                                        ],

as Pledgor

 

 

By:

Name:

Title:

 

AGREED TO AND ACCEPTED:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 as Collateral Agent

 

By:

Name:

Title:

 

 

 

---

EXHIBIT 3

 

JOINDER AGREEMENT

 

[Name of New Pledgor]

[Address of New Pledgor]

 

[Date]

 

Ladies and Gentlemen:

 

Reference is made to the Security Agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement;” capitalized terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement), dated as of April 18, 2007, made by ITRON, INC., a Washington corporation (the “Borrower”), the Subsidiary Guarantors party thereto and WELLS FARGO BANK, NATIONAL ASSOCIATION, as collateral agent (in such capacity and together with any successors in such capacity, the “Collateral Agent”).

 

This Joinder Agreement supplements the Security Agreement and is delivered by the undersigned, [                         ] (the “New Pledgor”), pursuant to Section 3.5 of the Security Agreement.  The New Pledgor hereby agrees to be bound as a Subsidiary Guarantor and as a Pledgor party to the Security Agreement by all of the terms, covenants and conditions set forth in the Security Agreement to the same extent that it would have been bound if it had been a signatory to the Security Agreement on the date of the Security Agreement.  The New Pledgor also hereby agrees to be bound as a party by all of the terms, covenants and conditions applicable to it set forth in Articles V, VI and VII of the Credit Agreement to the same extent that it would have been bound if it had been a signatory to the Credit Agreement on the execution date of the Credit Agreement.  Without limiting the generality of the foregoing, the New Pledgor hereby grants and pledges to the Collateral Agent, as collateral security for the full, prompt and complete payment and performance when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations, a Lien on and security interest in, all of its right, title and interest in, to and under the Pledged Collateral and expressly assumes all obligations and liabilities of a Subsidiary Guarantor and Pledgor thereunder.  The New Pledgor hereby makes each of the representations and warranties and agrees to each of the covenants applicable to the Pledgors contained in the Security Agreement and the Credit Agreement.

 

Annexed hereto are supplements to each of the schedules to the Security Agreement and the Credit Agreement, as applicable, with respect to the New Pledgor.  Such supplements shall be deemed to be part of the Security Agreement or the Credit Agreement, as applicable.

 

This Joinder Agreement and any amendments, waivers, consents or supplements hereto 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 to be an original, but all such counterparts together shall constitute one and the same agreement.

 

THIS JOINDER AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.

---

IN WITNESS WHEREOF, the New Pledgor has caused this Joinder Agreement to be executed and delivered by its duly authorized officer as of the date first above written.

 

[NEW PLEDGOR]

 

By:

Name:

Title:

 

AGREED TO AND ACCEPTED:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

 as Collateral Agent

 

 

By:

Name:

Title:

 

 

 [Schedules to be attached]

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EXHIBIT 4

CONTROL AGREEMENT CONCERNING SECURITIES ACCOUNTS

 

This Control Agreement Concerning Securities Accounts (this “Control Agreement”), dated as of [                    ], by and among [                         ] (the “Pledgor”), Wells Fargo Bank, National Association, as Collateral Agent (the “Collateral Agent”) and [              ] (the “Securities Intermediary”), is delivered pursuant to Section 3.4(c) of that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), dated as of April 18, 2007, made by [Itron, Inc., a Washington corporation,] [the Pledgor] and each of the Subsidiary Guarantors listed on the signature pages thereto in favor of Wells Fargo Bank, National Association, as collateral agent, as pledgee, assignee and secured party (the “Collateral Agent”).  This Control Agreement is for the purpose of perfecting the security interests of the Secured Parties granted by the Pledgor in the Designated Accounts described below.  All references herein to the “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Security Agreement.

 

Section 1.                      Confirmation of Establishment and Maintenance of DesignatedAccounts.  The Securities Intermediary hereby confirms and agrees that (i) the Securities Intermediary has established for the Pledgor and maintains the account(s) listed in Schedule I annexed hereto (such account(s), together with each such other securities account maintained by the Pledgor with the Securities Intermediary collectively, the “Designated Accounts” and each a “Designated Account”), (ii) each Designated Account will be maintained in the manner set forth herein until termination of this Control Agreement, (iii) this Control Agreement is the valid and legally binding obligation of the Securities Intermediary, (iv) the Securities Intermediary is a “securities intermediary” as defined in Section 8-102(a)(14) of the UCC, (v) each of the Designated Accounts is a “securities account” as such term is defined in Section 8-501(a) of the UCC and (vi) all securities or other property underlying any financial assets which are credited to any Designated Account shall be registered in the name of the Securities Intermediary, endorsed to the Securities Intermediary or in blank or credited to another securities account maintained in the name of the Securities Intermediary and in no case will any financial asset credited to any Designated Account be registered in the name of the Pledgor, payable to the order of the Pledgor or specially endorsed to the Pledgor, except to the extent the foregoing have been specially endorsed to the Securities Intermediary or in blank.

 

Section 2.                      “Financial Assets” Election.  All parties hereto agree that each item of Investment Property and all other property held in or credited to any Designated Account (the “Account Property”) shall be treated as a “financial asset” within the meaning of Section 8-102(a)(9) of the UCC.

 

Section 3.                      Entitlement Order.  If at any time the Securities Intermediary shall receive an “entitlement order” (within the meaning of Section 8-102(a)(8) of the UCC) issued by the Collateral Agent and relating to any financial asset maintained in one or more of the Designated Accounts, the Securities Intermediary shall comply with such entitlement order without further consent by the Pledgor or any other person.  The Securities Intermediary shall also comply with instructions directing the Securities Intermediary with respect to the sale, exchange or transfer of any Account Property held in each Designated Account originated by a Pledgor, or any representative of, or investment manager appointed by, a Pledgor until such time as the Collateral Agent delivers a Notice of Sole Control pursuant to Section 9(i) to the Securities Intermediary.  The Securities Intermediary shall comply with, and is fully entitled to rely upon, any entitlement order from the Collateral Agent, even if such entitlement order is contrary to any entitlement order that the Pledgor may give or may have given to the Securities Intermediary.

 

Section 4.                      Subordination of Lien; Waiver of Set-Off.  The Securities Intermediary hereby agrees that any security interest in, lien on, encumbrance, claim or (except as provided in the next sentence) right of setoff against, any Designated Account or any Account Property it now has or subsequently obtains shall be subordinate to the security interest of the Collateral Agent in the Designated Accounts and the Account Property therein or credited thereto.  The Securities Intermediary agrees not to exercise any present or future right of recoupment or set-off against any of the Designated Accounts or to assert against any of the Designated Accounts any present or future security interest, banker’s lien or any other lien or claim (including claim for penalties) that the Securities Intermediary may at any time have against or in any of the Designated Accounts or any Account Property therein or credited thereto; provided, however, that the Securities Intermediary may set off all amounts due to the Securities Intermediary in respect of its customary fees and expenses for the routine maintenance and operation of the Designated Accounts, including overdraft fees and amounts advanced to settle authorized transactions.

 

Section 5.                      Choice of Law.  Both this Control Agreement and the Designated Accounts shall be governed by the laws of the State of New York.  Regardless of any provision in any other agreement, for purposes of the UCC, New York shall be deemed to be the Securities Intermediary’s jurisdiction and the Designated Accounts (as well as the security entitlements related thereto) shall be governed by the laws of the State of New York.

 

Section 6.                      Conflict with Other Agreements; Amendments.  As of the date hereof, there are no other agreements entered into between the Securities Intermediary and the Pledgor with respect to any Designated Account or any security entitlements or other financial assets credited thereto (other than standard and customary documentation with respect to the establishment and maintenance of such Designated Accounts).  The Securities Intermediary and the Pledgor will not enter into any other agreement with respect to any Designated Account unless the Collateral Agent shall have received prior written notice thereof.  The Securities Intermediary and the Pledgor have not and will not enter into any other agreement with respect to (i) creation or perfection of any security interest in or (ii) control of security entitlements maintained in any of the Designated Accounts or purporting to limit or condition the obligation of the Securities Intermediary to comply with entitlement orders with respect to any Account Property held in or credited to any Designated Account as set forth in Section 3 hereof without the prior written consent of the Collateral Agent acting in its sole discretion.  In the event of any conflict with respect to control over any Designated Account between this Control Agreement (or any portion hereof) and any other agreement now existing or hereafter entered into, the terms of this Control Agreement shall prevail.  No amendment or modification of this Control Agreement or waiver of any rights hereunder shall be binding on any party hereto unless it is in writing and is signed by all the parties hereto.

 

Section 7.                      Certain Agreements.

 

                         (i)As of the date hereof, the Securities Intermediary has furnished to the Collateral Agent the most recent account statement issued by the Securities Intermediary with respect to each of the Designated Accounts and the financial assets and cash balances held therein, identifying the financial assets held therein in a manner acceptable to the Collateral Agent.  Each such statement accurately reflects the assets held in such Designated Account as of the date thereof.

 

                         (ii)The Securities Intermediary will, upon its receipt of each supplement to the Security Agreement signed by the Pledgor and identifying one or more financial assets as “Pledged Collateral”, enter into its records, including computer records, with respect to each Designated Account a notation with respect to any such financial asset so that such records and reports generated with respect thereto identify such financial asset as “Pledged.”

 

Section 8.                      Notice of Adverse Claims.  Except for the claims and interest of the Collateral Agent and of the Pledgor in the Account Property held in or credited to the Designated Accounts, the Securities Intermediary on the date hereof does not know of any claim to, security interest in, lien on, or encumbrance against, any Designated Account or Account Property held in or credited thereto and does not know of any claim that any person or entity other than the Collateral Agent has been given “control” (within the meaning of Section 8-106 of the UCC) of any Designated Account or any such Account Property.  If the Securities Intermediary becomes aware that any person or entity is asserting any lien, encumbrance, security interest or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process or any claim of control) against any of the Account Property held in or credited to any Designated Account, the Securities Intermediary shall promptly notify the Collateral Agent and the Pledgor thereof.

 

Section 9.                      Maintenance of Designated Accounts.  In addition to the obligations of the Securities Intermediary in Section 3 hereof, the Securities Intermediary agrees to maintain the Designated Accounts as follows:

 

               (i)Notice of Sole Control.  If at any time the Collateral Agent delivers to the Securities Intermediary a notice instructing the Securities Intermediary to terminate Pledgor’s access to any Designated Account (the “Notice of Sole Control”), the Securities Intermediary agrees that, after receipt of such notice, it will take all instructions with respect to such Designated Account solely from the Collateral Agent, terminate all instructions and orders originated by the Pledgor with respect to the Designated Accounts or any Account Property therein, and cease taking instructions from Pledgor, including, without limitation, instructions for investment, distribution or transfer of any financial asset maintained in any Designated Account.  Permitting settlement of trades pending at the time of receipt of such notice shall not constitute a violation of the immediately preceding sentence.

 

               (ii)Voting Rights.  Until such time as the Securities Intermediary receives a Notice of Sole Control, the Pledgor, or an investment manager on behalf of the Pledgor, shall direct the Securities Intermediary with respect to the voting of any financial assets credited to any Designated Account.

 

               (iii)Statements and Confirmations.  The Securities Intermediary will send copies of all statements and other correspondence (excluding routine confirmations) concerning any Designated Account or any financial assets credited thereto simultaneously to each of the Pledgor and the Collateral Agent at the address set forth in Section 11 hereof.  The Securities Intermediary will provide to the Collateral Agent, upon the Collateral Agent’s request therefor from time to time and, in any event, as of the last business day of each calendar month, a statement of the market value of each financial asset maintained in each Designated Account.  The Securities Intermediary shall not change the name or account number of any Designated Account without the prior written consent of the Collateral Agent.

 

               (iv)Perfection in Certificated Securities.  The Securities Intermediary acknowledges that, in the event that it should come into possession of any certificate representing any security or other Account Property held in or credited to any of the Designated Accounts, the Securities Intermediary shall retain possession of the same on behalf and for the benefit of the Collateral Agent and such act shall cause the Securities Intermediary to be deemed holding such certificate for the Collateral Agent, if necessary to perfect the Collateral Agent’s security interest in such securities or assets.  The Securities Intermediary hereby acknowledges its receipt of a copy of the Security Agreement, which shall also serve as notice to the Securities Intermediary of a security interest in collateral held on behalf and for the benefit of the Collateral Agent.

 

Section 10.                                Successors; Assignment.  The terms of this Control Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors and permitted assignees.

 

Section 11.                                Notices.  Any notice, request or other communication required or permitted to be given under this Control Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received or two (2) days after being sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below.

 

Pledgor:

[                                        ]

[Address]

Attention:

Telecopy:

Telephone:

with copy to:

 

[                                        ]

[Address]

Attention:

Telecopy:

Telephone:

Securities

 

Intermediary:

[                                        ]

[Address]

Attention:

Telecopy:

Telephone:

Collateral

 

Agent:

Wells Fargo Bank

Inland Northwest RCBO

601 West First Avenue, Suite 900

Spokane, WA 99201

Attention: Tom Beil

Telecopier No.:  (509) 455-5760

Email: beilt@wellsfargo.com

 

Any party may change its address for notices in the manner set forth above.

 

Section 12.                                Termination.

 

(i)           Except as otherwise provided in this Section 12, the obligations of the Securities Intermediary hereunder and this Control Agreement shall continue in effect until the security interests of the Collateral Agent in the Designated Accounts and any and all Account Property held therein or credited thereto have been terminated pursuant to the terms of the Security Agreement and the Collateral Agent has notified the Securities Intermediary of such termination in writing.

 

(ii)           The Securities Intermediary, acting alone, may terminate this Control Agreement at any time and for any reason by written notice delivered to the Collateral Agent and the Pledgor not less than thirty (30) days prior to the effective termination date.

(iii)           Prior to any termination of this Control Agreement pursuant to this Section 12, the Securities Intermediary hereby agrees that it shall promptly take, at Pledgor’s sole cost and expense, all reasonable actions necessary to facilitate the transfer of any Account Property in or credited to the Designated Accounts as follows: (i) in the case of a termination of this Control Agreement under Section 12(i), if requested by Pledgor, to the institution designated in writing by Pledgor; and (ii) in all other cases, to the institution designated in writing by the Collateral Agent.

Section 13.                                Fees and Expenses.  The Securities Intermediary agrees to look solely to the Pledgor for payment of any and all fees, costs, charges and expenses incurred or otherwise relating to the Designated Accounts and services provided by the Securities Intermediary hereunder (collectively, the “Account Expenses”), and the Pledgor agrees to pay such Account Expenses to the Securities Intermediary on demand therefor.  The Pledgor acknowledges and agrees that it shall be, and at all times remains, solely liable to the Securities Intermediary for all Account Expenses.

 

Section 14.                                Severability.  If any term or provision set forth in this Control Agreement shall be invalid or unenforceable, the remainder of this Control Agreement, other than those provisions held invalid or unenforceable, shall be construed in all respects as if such invalid or unenforceable term or provision were omitted.

 

                      Section 15.                                Counterparts.  This Control Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Control Agreement by signing and delivering one or more counterparts.

[signature page follows]

[                                                                    ],

as Pledgor

 

By:

Name:

Title:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Agent

 

By:

Name:

Title:

 

 [                                                                    ],

as Securities Intermediary

 

By:

Name:

Title:

 

---

SCHEDULE I

 

Designated Account(s)

 

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EXHIBIT 5

 

CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS

 

This CONTROL AGREEMENT CONCERNING DEPOSIT ACCOUNTS (this “Control Agreement”), dated as of [                    ], by and among [                         ] (the “Pledgor”), WELLS FARGO BANK, NATIONAL ASSOCIATION, as Collateral Agent (the “Collateral Agent”) and [                         ] (the “Bank”), is delivered pursuant to Section 3.4(b) of that certain security agreement (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), dated as of April 18, 2007, made by [Itron, Inc., a Washington corporation,] [the Pledgor] and each of the Subsidiary Guarantors listed on the signature pages thereto in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, as collateral agent, as pledgee, assignee and secured party (the “Collateral Agent”).  This Control Agreement is for the purpose of perfecting the security interests of the Secured Parties granted by the Pledgor in the Designated Accounts described below.  All references herein to the “UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.  Capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Security Agreement.

 

Section 1.                      Confirmation of Establishment and Maintenance of DesignatedAccounts.  The Bank hereby confirms and agrees that (i) the Bank has established for the Pledgor and maintains the deposit account(s) listed in Schedule 1 annexed hereto (such account(s), together with each such other deposit account maintained by the Pledgor with the Bank collectively, the “Designated Accounts” and each a “Designated Account”), (ii) each Designated Account will be maintained in the manner set forth herein until termination of this Control Agreement, (iii) the Bank is a “bank”, as such term is defined in the UCC, (iv) this Control Agreement is the valid and legally binding obligation of the Bank and (v) each Designated Account is a “deposit account” as such term is defined in Article 9 of the UCC.

 

Section 2.                      Control.  The Bank shall comply with instructions originated by the Collateral Agent without further consent of the Pledgor or any person acting or purporting to act for the Pledgor being required, including, without limitation, directing disposition of the funds in each Designated Account.  The Bank shall also comply with instructions directing the disposition of funds in each Designated Account originated by the Pledgor or its authorized representatives until such time as the Collateral Agent delivers a Notice of Sole Control pursuant to Section 8(i) hereof to the Bank.  The Bank shall comply with, and is fully entitled to rely upon, any instruction from the Collateral Agent, even if such instruction is contrary to any instruction that the Pledgor may give or may have given to the Bank.

 

Section 3.                      Subordination of Lien; Waiver of Set-Off.  The Bank hereby agrees that any security interest in, lien on, encumbrance, claim or (except as provided in the next sentence) right of setoff against, any Designated Account or any funds therein it now has or subsequently obtains shall be subordinate to the security interest of the Collateral Agent in the Designated Accounts and the funds therein or credited thereto.  The Bank agrees not to exercise any present or future right of recoupment or set-off against any of the Designated Accounts or to assert against any of the Designated Accounts any present or future security interest, banker’s lien or any other lien or claim (including claim for penalties) that the Bank may at any time have against or in any of the Designated Accounts or any funds therein; provided, however, that the Bank may set off (i) all amounts due to the Bank in respect of its customary fees and expenses for the routine maintenance and operation of the Designated Accounts, including overdraft fees, and (ii) the face amount of any checks or other items which have been credited to any Designated Account but are subsequently returned unpaid because of uncollected or insufficient funds).

 

Section 4.                      Choice of Law.  Both this Control Agreement and the Designated Accounts shall be governed by the laws of the State of New York.  Regardless of any provision in any other agreement, for purposes of the UCC, New York shall be deemed to be the Bank’s jurisdiction and the Designated Account(s) shall be governed by the law of the State of New York.

 

Section 5.                      Conflict with Other Agreements; Amendments.  As of the date hereof, there are no other agreements entered into between the Bank and the Pledgor with respect to any Designated Account or any funds credited thereto (other than standard and customary documentation with respect to the establishment and maintenance of such Designated Accounts).  The Bank and the Pledgor will not enter into any other agreement with respect to any Designated Account unless the Collateral Agent shall have received prior written notice thereof.  The Bank and the Pledgor have not and will not enter into any other agreement with respect to control of the Designated Accounts or purporting to limit or condition the obligation of the Bank to comply with any orders or instructions with respect to any Designated Account as set forth in Section 2 hereof without the prior written consent of the Collateral Agent acting in its sole discretion.  In the event of any conflict with respect to control over any Designated Account between this Control Agreement (or any portion hereof) and any other agreement now existing or hereafter entered into, the terms of this Control Agreement shall prevail.  No amendment or modification of this Control Agreement or waiver of any right hereunder shall be binding on any party hereto unless it is in writing and is signed by all the parties hereto.

 

Section 6.                      Certain Agreements.  As of the date hereof, the Bank has furnished to the Collateral Agent the most recent account statement issued by the Bank with respect to each of the Designated Accounts and the cash balances held therein.  Each such statement accurately reflects the assets held in such Designated Account as of the date thereof.

 

Section 7.                      Notice of Adverse Claims.  Except for the claims and interest of the Secured Parties and of the Pledgor in the Designated Accounts, the Bank on the date hereof does not know of any claim to, security interest in, lien on, or encumbrance against, any Designated Account or in any funds credited thereto and does not know of any claim that any person or entity other than the Collateral Agent has been given control (within the meaning of Section 9-104 of the UCC) of any Designated Account or any such funds.  If the Bank becomes aware that any person or entity is asserting any lien, encumbrance, security interest or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process or any claim of control) against any funds in any Designated Account, the Bank shall promptly notify the Collateral Agent and the Pledgor thereof.

 

Section 8.                      Maintenance of Designated Accounts.  In addition to the obligations of the Bank in Section 2 hereof, the Bank agrees to maintain the Designated Accounts as follows:

 

               (i)Notice of Sole Control.  If at any time the Collateral Agent delivers to the Bank a notice instructing the Bank to terminate Pledgor’s access to any Designated Account (the “Notice of Sole Control”), the Bank agrees that, after receipt of such notice, it will take all instruction with respect to such Designated Account solely from the Collateral Agent, terminate all instructions and orders originated by the Pledgor with respect to the Designated Accounts or any funds therein, and cease taking instructions from the Pledgor, including, without limitation, instructions for distribution or transfer of any funds in any Designated Account.

 

               (ii)Statements and Confirmations.  The Bank will send copies of all statements and other correspondence (excluding routine confirmations) concerning any Designated Account simultaneously to the Pledgor and the Collateral Agent at the address set forth in Section 10 hereof.  The Bank will promptly provide to the Collateral Agent, upon request therefor from time to time and, in any event, as of the last business day of each calendar month, a statement of the cash balance in each Designated Account.  The Bank shall not change the name or account number of any Designated Account without the prior written consent of the Collateral Agent.

 

Section 9.                      Successors; Assignment.  The terms of this Control Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective corporate successors and permitted assignees.

 

Section 10.                                Notices.  Any notice, request or other communication required or permitted to be given under this Control Agreement shall be in writing and deemed to have been properly given when delivered in person, or when sent by telecopy or other electronic means and electronic confirmation of error free receipt is received or two (2) days after being sent by certified or registered United States mail, return receipt requested, postage prepaid, addressed to the party at the address set forth below.

 

Pledgor:

[                                        ]

[Address]

Attention:

Telecopy:

Telephone:

with copy to:

 

[                                        ]

[Address]

Attention:

Telecopy:

Telephone:

 

Bank:

[                                             ]

[                                             ]

[                                             ]

Attention:

Telecopy:

Telephone:

 

Collateral

 

Agent:

Wells Fargo Bank

Inland Northwest RCBO

601 West First Avenue, Suite 900

Spokane, WA 99201

Attention: Tom Beil

Telecopier No.:  (509) 455-5760

Email: beilt@wellsfargo.com

 

Any party may change its address for notices in the manner set forth above.

 

Section 11.                                Termination.  

 

(i)           Except as otherwise provided in this Section 11, the obligations of the Bank hereunder and this Control Agreement shall continue in effect until the security interests of the Collateral Agent in the Designated Accounts and any and all funds therein have been terminated pursuant to the terms of the Security Agreement and the Collateral Agent has notified the Bank of such termination in writing.

 

(ii)           The Bank, acting alone, may terminate this Control Agreement at any time and for any reason by written notice delivered to the Collateral Agent and the Pledgor not less than thirty (30) days prior to the effective termination date.

(iii)           Prior to any termination of this Control Agreement pursuant to this Section 11, the Bank hereby agrees that it shall promptly take, at Pledgor’s sole cost and expense, all reasonable actions necessary to facilitate the transfer of any funds in the Designated Accounts as follows: (a) in the case of a termination of this Control Agreement under Section 11(i), if requested by Pledgor, to the institution designated in writing by Pledgor; and (b) in all other cases, to the institution designated in writing by the Collateral Agent.

Section 12.                                Fees and Expenses.  The Bank agrees to look solely to the Pledgor for payment of any and all fees, costs, charges and expenses incurred or otherwise relating to the Designated Accounts and services provided by the Bank hereunder (collectively, the “Account Expenses”), and the Pledgor agrees to pay such Account Expenses to the Bank on demand therefor.  The Pledgor acknowledges and agrees that it shall be, and at all times remains, solely liable to the Bank for all Account Expenses.

 

Section 13.                                Severability.  If any term or provision set forth in this Control Agreement shall be invalid or unenforceable, the remainder of this Control Agreement, other than those provisions held invalid or unenforceable, shall be construed in all respects as if such invalid or unenforceable term or provision were omitted.

 

Section 14.                                Counterparts.  This Control Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Control Agreement by signing and delivering one or more counterparts.

 

[signature page follows]

 

---

[                                                            ]

 

By:

Name:

Title:

 

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Collateral Agent

 

By:

Name:

Title:

 

 [                                                            ],

as Bank

 

 

By:

Name:

Title:

 

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SCHEDULE 1

 

 

Designated Account(s)

 

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EXHIBIT 6

 

COPYRIGHT SECURITY AGREEMENT

 

COPYRIGHT SECURITY AGREEMENT, dated as of April 18, 2007 (this “Copyright Security Agreement”), by [__________] and [___________] (individually, a “Pledgor”, and, collectively, the “Pledgors”), in favor of WELLS FARGO BANK, NATIONAL ASSOCIATION, in its capacity as collateral agent pursuant to the Credit Agreement (in such capacity, the “Collateral Agent”).

 

W I T N E S S E T H:

 

WHEREAS, the Pledgors are party to a Security Agreement of even date herewith (the “Security Agreement”) in favor of the Collateral Agent pursuant to which the Pledgors are required to execute and deliver this Copyright Security Agreement;

 

NOW, THEREFORE, in consideration of the premises and to induce the Collateral Agent, for the benefit of the Secured Parties, to enter into the Credit Agreement, the Pledgors hereby agree with the Collateral Agent as follows:

 

SECTION 1.                                Defined Terms.  Unless otherwise defined herein, terms defined in the Security Agreement and used herein have the meaning given to them in the Security Agreement.

 

SECTION 2.                                Grant of Security Interest in Copyright Collateral.  As collateral security for the payment and performance in full of all the Secured Obligations, each Pledgor hereby pledges and grants to the Collateral Agent for the benefit of the Secured Parties, a lien on and security interest in all of the right, title and interest of such Pledgor in, to and under the following property, wherever located, and whether now existing or hereafter arising or acquired from time to time:

 

(a)  all Copyrights of such Pledgor, including, without limitation, the Copyrights of such Pledgor listed on Schedule I attached hereto; and

 

(b)  all Proceeds of any and all of the foregoing.

 

Notwithstanding anything to the contrary contained in clauses (a) and (b) above, the security interest created by this Copyright Security Agreement shall not extend to any Excluded Property.

 

SECTION 3.                                Security Agreement.  The security interest granted pursuant to this Copyright Security Agreement is granted in conjunction with the security interest granted to the Collateral Agent pursuant to the Security Agreement and Pledgors hereby acknowledge and affirm that the rights and remedies of the Collateral Agent with respect to the security interest in the Copyrights made and granted hereby are more fully set forth in the Security Agreement.  In the event that any provision of this Copyright Security Agreement is deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall control unless the Collateral Agent shall otherwise determine.

 

SECTION 4.                                Recordation.  Each Pledgor hereby authorizes and requests that the United States Copyright Office record this Copyright Security Agreement.

 

SECTION 5.                                Termination.  Upon the payment in full of the Secured Obligations and termination of the Security Agreement, the Collateral Agent shall execute, acknowledge, and deliver to the Pledgors an instrument in writing in recordable form releasing the collateral pledge, grant, assignment, lien and security interest in the Copyrights under this Copyright Security Agreement.

 

SECTION 6.                                Counterparts.  This Copyright Security Agreement may be executed in any number of counterparts, all of which shall constitute one and the same instrument, and any party hereto may execute this Copyright Security Agreement by signing and delivering one or more counterparts.

 

[signature page follows]

 

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IN WITNESS WHEREOF, each Pledgor has caused this Copyright Security Agreement to be executed and delivered by its duly authorized offer as of the date first set forth above.

 

Very truly yours,