EXHIBIT 10.7
SIXTH AMENDMENT TO
AMENDED AND RESTATED LOAN AGREEMENT
This SIXTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT dated as of
January 30, 2003 (this "Amendment"), by and among (a) METALLURG, INC., a
Delaware corporation having its principal place of business at ▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("MI"), SHIELDALLOY METALLURGICAL CORPORATION,
a Delaware corporation having its principal place of business at ▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("SMC") and METALLURG INTERNATIONAL
RESOURCES, LLC, a Delaware limited liability company having its principal place
of business at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("MIR" and together
with MI and SMC, the "Borrowers"), (b) METALLURG SERVICES, INC., a New York
corporation having its principal place of business at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("MSI"), MIR (China), Inc., a Delaware corporation having
its principal place of business at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("MIR China"), METALLURG HOLDINGS CORPORATION, a New York corporation having its
principal place of business at ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
("MHC"), and Metallurg (Canada) Ltee./Metallurg (Canada) Ltd., a corporation
organized under the laws of Quebec ("MCL", and collectively with MHC, MSI and
MIR China, the "Guarantors"), (c) FLEET NATIONAL BANK (formerly known as
BankBoston, N.A.), a national banking association, as agent (in such capacity
the "Agent") for itself and the other financial institutions from time to time
parties to the Loan Agreement referred to below (collectively, the "Banks"); and
(d) the BANKS, amends certain provisions of the Amended and Restated Loan
Agreement dated as of October 29, 1999, by and among the Borrowers, the
Guarantors, the Agent and the Banks (as amended by that certain First Amendment
thereto, dated as of October 11, 2000, that certain Second Amendment thereto,
dated as of November 3, 2000, that certain Third Amendment thereto, dated as of
July 2, 2001, that certain Fourth Amendment thereto, dated as of December 13,
2001, and that certain Fifth Amendment thereto, dated as of December 20, 2002,
the "Loan Agreement").
WHEREAS, as contemplated by the Fifth Amendment to the Loan Agreement, the
parties have agreed to amend the Loan Documents to add MCL as a Guarantor under
the Loan Documents; and, in addition, the parties desire to amend certain other
terms of the Loan Agreement as hereinafter more fully set forth, all upon the
terms and subject to the conditions contained herein;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Loan Agreement and herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
'SS'1. Defined Terms. Capitalized terms used herein without definition
that are defined in the Loan Agreement shall have the same meanings herein as in
the Loan Agreement.
'SS'2. Amendment to Loan Agreement. Subject to the terms and conditions
set forth herein and the effectiveness of this Amendment, the Loan Agreement is
hereby amended as follows:
'SS'2.1 Amendments to 'SS'1 of the Loan Agreement.
(a) Section 1.1 of the Loan Agreement is hereby amended by restating
the definition of Borrowing Base in its entirety as follows:
"Borrowing Base: At the relevant time of reference thereto, an
amount determined by the Agent by reference to the most recent Borrowing
Base Report and the most recent appraisal
of the Eligible Fixed Assets delivered to the Banks and the Agent pursuant
to 'SS'9.1(a)(v), which is equal to
(a) the sum of
(i) 85% of Eligible Accounts at such time; plus
(ii) 55% of the net book value (valued on an average cost
basis at the lower of cost or market (except as provided below
in this definition) by the Borrowers in a manner consistent
with their past practices) of Eligible Consignment Accounts at
such time; plus
(iii) 55% of the net book value (valued on an average cost
basis at the lower of cost or market (except as provided below
in this definition) by the Borrowers in a manner consistent
with their past practices) of Eligible Inventory at such time;
plus
(iv) 75% of the Determined Value of Eligible Fixed Assets at
such time; plus
(b) (i) from January 30, 2003 though May 12, 2003, after taking into
account any requested Loan or Letter of Credit, the proceeds of
which are to be used to fund the Canadian Intercompany Facility, an
amount equal to the lesser of (A) the Canadian Borrowing Base at
such time, and (B) the aggregate amount of the Canadian Intercompany
Outstandings at such time; and
(ii) from and after May 12, 2003, an amount equal to the
lesser of (A) the Canadian Borrowing Base at such time, and (B) the
greater of (1) $2,500,000, and (2) the aggregate amount of the
Canadian Intercompany Outstandings at such time, after taking into
account any requested Loan or Letter of Credit, the proceeds of
which are to be used to fund the Canadian Intercompany Facility;
plus
(c) 55% of the maximum aggregate amount that the beneficiaries may
draw under outstanding documentary Letters of Credit issued in
connection with the purchase of inventory by the Borrowers solely to
the extent that such inventory being purchased, immediately upon any
drawing of any such documentary Letter of Credit, would constitute
Eligible Inventory; minus
(d) the amount of any Warehousemen Lien Reserve with respect to
inventory of the Borrowers at such time.
Notwithstanding that the Eligible Consignment Accounts and Eligible
Inventory of the Borrowers shall be reported at the lower of cost or
market as provided above, the Agent and the Banks hereby acknowledge that
the Borrowers review their inventory for market adjustment on a quarterly
basis only. The Borrowers hereby agree to adjust their inventory to the
lower of cost or market on a more current basis in the event of any
material decrease in the market price for any such inventory which would
cause the amount of Eligible Consignment Accounts and/or Eligible
Inventory to be materially misstated if not so currently adjusted, and at
any time during which the amount of unused availability that the Borrowers
may use to request Loans or Letters of Credit hereunder shall be less than
$5,000,000 in the aggregate, the Agent may, in its
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discretion, require the Borrowers to adjust their inventory to the lower
of cost or market on a monthly basis.
The Borrowing Base shall be determined monthly (or at such other
interval as may be specified pursuant to 'SS'9.1(a)(v)) by the Agent by
reference to the Borrowing Base Report and the appraisals of Eligible
Fixed Assets delivered to the Banks and the Agent pursuant to
'SS'9.1(a)(vi). The components of the Borrowing Base and the Canadian
Borrowing Base, the advance rates provided for therein, and the
definitions contained in this Agreement governing eligibility criteria for
such components of the Borrowing Base and the Canadian Borrowing Base may
hereafter be adjusted or revised by the Agent in its reasonable judgment
on the basis of any then recently completed commercial finance examination
or appraisal or other information then recently delivered by the Borrowers
to the Agent and the Banks."
(b) Section 1.1 of the Loan Agreement is hereby amended by restating
the definition of Canadian Borrowing Base in its entirety as follows:
"Canadian Borrowing Base: At the relevant time of reference thereto,
an amount determined by the Agent by reference to the most recent
Borrowing Base Report delivered to the Banks and the Agent pursuant
to 'SS'9.1(a)(v), which is equal to the lesser of
(a) $3,500,000, and
(b) the sum of
(i) 85% of Eligible Canadian Accounts at such time; plus
(ii) 55% of the net book value (valued on an average cost
basis at the lower of cost or market (except as provided below
in this definition) by MCL in a manner consistent with its
past practice) of Eligible Canadian Inventory at such time;
plus
(iii) 55% of the maximum aggregate amount that the
beneficiaries may draw under outstanding documentary Letters
of Credit issued for the account of MCL in connection with the
purchase of inventory by MCL solely to the extent that such
inventory being purchased, immediately upon any drawing of any
such documentary Letter of Credit, would constitute Eligible
Canadian Inventory; minus
(iv) the amount of any Warehousemen Lien Reserve with respect
to inventory of MCL at such time.
For purposes of determining the Canadian Borrowing Base, in order to
convert the value of Eligible Canadian Accounts and Eligible Canadian
Inventory from a given amount of Canadian currency into Dollars, such
conversion shall be made at the Agent's spot rate of exchange for buying
Dollars with such amount of Canadian currency prevailing at the Agent's
close of business as of the first Business Day of the month during which
the date of determination occurs or as of such other date as the Agent may
from time to time reasonably require. Notwithstanding that the Eligible
Canadian Inventory of MCL shall be reported at the lower of cost or market
as provided above, the Agent and the Banks hereby acknowledge that MCL
reviews its inventory for market adjustment on a quarterly basis only. The
Borrowers hereby
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agree to cause MCL to adjust its inventory to the lower of cost or market
on a more current basis in the event of any material decrease in the
market price for any such inventory which would cause the amount of
Eligible Canadian Inventory to be materially misstated if not so currently
adjusted, and at any time during which the amount of unused availability
that the Borrowers may use to request Loans or Letters of Credit hereunder
shall be less than $5,000,000 in the aggregate, the Agent may, in its
discretion, require the Borrowers to cause MCL to adjust its inventory to
the lower of cost or market on a monthly basis."
(c) Section 1.1 of the Loan Agreement is hereby amended by restating
the definition of Daily Cash Balance in its entirety as follows:
"Daily Cash Balance: With respect to the Borrowers and the
Guarantors on any Business Day of determination, the aggregate amount of
all cash and Cash Equivalents of the Borrowers and the Guarantors
maintained with the Agent, determined at the close of business on such
day."
(d) Section 1.1 of the Loan Agreement is hereby amended by restating
the definition of Guarantors in its entirety as follows:
"Guarantors: Collectively MCL, MHC, MSI and MIR China, and such
other Persons as may from time to time become Guarantors hereunder."
(e) Section 1.1 of the Loan Agreement is hereby amended by restating
the definition of MI Indenture in its entirety as follows:
"MI Indenture: The Indenture dated as of November 25, 1997 among MI
as principal obligor, each of the Guarantors (other than MCL) as
guarantors, and The Bank of New York (as successor to IBJ ▇▇▇▇▇▇▇▇ Bank &
Trust Company), in its capacity as trustee under the MI Indenture, or any
successor thereto."
(f) Section 1.1 of the Loan Agreement is hereby amended by restating
the definition of Security Agreement in its entirety as follows:
"Security Agreement: The Amended and Restated Security Agreement,
dated or to be dated on or prior to the Restatement Date, among the
Borrowers, the Guarantors (other than MCL) and the Agent, as amended,
restated, supplemented or otherwise modified and in effect from time to
time, substantially in the form of Exhibit E hereto."
(g) Section 1.1 of the Loan Agreement is hereby amended by restating
the definition of Security Documents in its entirety as follows:
"Security Documents: The Security Agreement, the Stock Pledge
Agreements, the Foreign Pledge Agreements, the Canadian Assignment
Documents, the Agency Agreements, the Lock Box Agreement, the Membership
Interest Pledge Agreement, the MCL Movable Hypothec, the MCL
Subordination, the Ontario Security Agreement and all other security
agreements, mortgages, deeds of trust, assignments, or other instruments
or documents, in form and substance satisfactory to the Agent and the
Banks, which shall grant to the Agent, for the benefit of the Banks and
the Agent, Liens upon all of the Collateral."
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(h) Section 1.1 of the Loan Agreement is hereby further amended by
adding the following new definitions in alphabetical order:
"MCL Movable Hypothec: Collectively, the Demand Note, issued by MCL
in favor of the Agent, the Pledge of Note granted by MCL in favor of the
Agent and the Movable Hypothec, between MCL and the Agent, each dated as
of January 30, 2003, as amended, restated, supplemented or otherwise
modified and in effect from time to time."
"MCL Subordination: The Subordination Agreement, dated or to be
dated on or prior to January 30, 2003, between MI and the Agent, as
amended, restated, supplemented or otherwise modified and in effect from
time to time."
"Ontario Security Agreement: The Ontario Security Agreement by and
between MCL and the Agent, dated as of January 30, 2003, as amended,
restated, supplemented or otherwise modified and in effect from time to
time."
'SS'2.2 Amendments to 'SS'6 of the Loan Agreement.
(a) Section 6.3 of the Loan Agreement is hereby amended by adding
the following new clause at the end thereof: ", and, in the case of MCL,
including without limitation, causing each bank with which MCL has an existing
depository lock box to enter into an agency agreement with the Agent, in form
and substance reasonably satisfactory to the Agent, under which such depository
lock box is subject to the control of the Agent, upon the request of the Agent."
(b) Section 6.4 of the Loan Agreement is hereby amended by adding
the following new Section 6.4(i) at the end thereof:
"(i) Notwithstanding any other term or provision of this
Article 6, MCL's liabilities as a Guarantor hereunder shall be limited to
an amount equal to $2,500,000, together with interest thereon from the
date of any demand by the Agent hereunder until the date on which payment
is made, plus any amounts payable pursuant to the following sentence. MCL
further agrees, as the principal obligor and not as a guarantor only, to
pay to the Agent, on demand, all costs and expenses (including court costs
and legal expenses) incurred or expended by the Agent in connection with
the Obligations, this Guaranty and the enforcement thereof, together with
interest on amounts recoverable under this Section 6.4(i) from the time
when such amounts become due until payment, whether before or after
judgment, at the rate of interest for overdue principal set forth in the
Loan Agreement, provided that if such interest exceeds the maximum amount
permitted to be paid under applicable law, then such interest shall be
reduced to such maximum permitted amount."
'SS'2.3 Amendments to 'SS'9 of the Loan Agreement.
(a) Section 9.2(d)(iv) of the Loan Agreement is hereby amended by
adding the words "or MCL" after the phrase "maintained by the Borrowers"
appearing therein.
(b) Section 9.2 of the Loan Agreement is hereby amended by
deleting 'SS'9.2(d)(vi)(A) thereof in its entirety and substituting the
following new 'SS'9.2(d)(vi)(A):
"(A) $3,500,000 in the aggregate in the case of
investments in MCL (including all of the Canadian Intercompany
Outstandings),"
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(c) Section 9.2 of the Loan Agreement is hereby amended by
deleting 'SS'9.2(d)(vii) thereof in its entirety and substituting the following
new 'SS'9.2(d)(vii):
"(vii) in the Operating Accounts, the Lock Box Accounts,
and operating bank accounts of the Guarantors maintained with the Agent;"
'SS'2.4 Amendment to 'SS'13 of the Loan Agreement.
(a) Section 13.1 of the Loan Agreement is hereby amended by adding
the following new 'SS'13.1(d) following existing subsection (c) thereof:
"(d) For greater certainty, and without limiting the
powers of the Agent as agent under any of the other Security Documents, in
connection with the guaranty by MCL and the MCL Moveable Hypothec, the
Banks hereby acknowledge that the Agent shall, for purposes of holding any
security granted by MCL to secure payment of the bonds, note or other
titles of indebtedness issued by MCL, be the holder of an irrevocable
power of attorney (fonde de pouvoir) (within the meaning of the Civil Code
of Quebec) for itself and all present and future Banks and in particular
for all present and future holders of such debentures, bonds, notes or
other titles of indebtedness. The Banks hereby irrevocably constitute, to
the extent necessary, the Agent as the holder of an irrevocable power of
attorney (fonde de pouvoir) (within the meaning of Article 2692 of the
Civil Code of Quebec) in order to hold a moveable hypothec and any other
Security Documents to secure such debentures, bonds, notes or other title
of indebtedness issued by MCL and to hold such debentures, bonds, notes or
other title of indebtedness for the Banks. Each permitted assignee of the
Banks shall be deemed to have confirmed and ratified the constitution of
the Agent as the holder of such irrevocable power of attorney (fonde de
pouvoir) by execution of the relevant assignment of its interest.
Notwithstanding the provisions of Section 32 of the Special Corporate
Powers Act (Quebec), the Agent may acquire and be the holder of such
debentures, bonds, notes or other titles of indebtedness issued by MCL."
'SS'2.5 Global Amendment to References to MCL and the Guarantors in the
Loan Agreement. For clarification, the Loan Agreement is hereby deemed to be
further amended to delete each reference to "the Guarantors and MCL" and to "the
Guarantors or MCL" and the like, and to replace each such reference with a
reference to "the Guarantors".
'SS'3. Ratifications, Etc.
(a) Except as expressly amended hereby, the Loan Agreement and all
documents, instruments and agreements related thereto, including, but not
limited to the Loan Documents, are hereby ratified and confirmed in all respects
and shall continue in full force and effect.
(b) Each of the Borrowers hereby affirms its absolute and
unconditional promise to perform and pay, to the Banks and the Agent, all
Obligations under the Loan Agreement (as amended hereby) and the other Loan
Documents at the times and in the amounts provided for therein.
(c) Each of the Guarantors, including without limitation MCL, hereby
acknowledges that it has read and is aware of the provisions of this Amendment.
Each of the Guarantors, including without limitation MCL, hereby affirms and
reaffirms its absolute and unconditional guaranty of the Borrowers' payment and
performance of the Obligations under the Loan Agreement (as amended hereby) and
the other Loan Documents.
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'SS'4. Representations, Warranties and Covenants; No Default;
Authorization. Each of the Borrowers and Guarantors hereby represents, warrants
and covenants to the Agent and the Banks as follows:
(a) Each of the representations and warranties of such Borrower or
Guarantor contained in the Loan Agreement was true as of the date as of which it
was made and is true as and at the date of this Amendment, and no Default or
Event of Default has occurred and is continuing as of the date of this
Amendment;
(b) This Amendment has been duly authorized, executed and delivered
by each of the Borrowers and Guarantors and is in full force and effect;
(c) Upon the execution and delivery of this Amendment by the
respective parties hereto, this Amendment shall constitute the legal, valid and
binding obligation of the Borrowers and the Guarantors, enforceable in
accordance with its terms, except that the enforceability thereof may be subject
to any applicable bankruptcy, reorganization, insolvency or other laws affecting
creditors' rights generally; and
(d) On or before February 28, 2003, the Borrowers shall deliver to
the Agent evidence satisfactory in form and substance to the Agent of the
assignment of MCL's insurance policies and the proceeds thereof to the Agent,
including certificates evidencing the Agent's interests as loss payee, mortgagee
insured and additional insured in such policies, as applicable.
'SS'5. Conditions to Effectiveness. The effectiveness of this Amendment,
including the amendments contained herein, shall be subject to the satisfaction
of the following conditions precedent on or before January 30, 2003:
(a) This Amendment and the MCL Movable Hypothec, the Demand Note,
Pledge of Note, Ontario Security Agreement, and the MCL Subordination shall have
been duly executed and delivered by the Borrowers, the Guarantors and the Banks
and shall be in full force and effect; the MCL Movable Hypothec and the Ontario
Security Agreement and any financing statements in connection therewith shall
have been duly recorded;
(b) The Agent shall have received such evidence of corporate
authority and officers' certificates stating that there have been no changes (or
certifying to such changes) in the bylaws or charter documents of each of the
Borrowers and the Guarantors, and shall have received a certificate of
incumbency with respect to each such Person. The Borrowers and the Guarantors
shall have obtained all consents and approvals of the boards of directors,
shareholders, governmental entities and other applicable third parties necessary
in connection with the transactions contemplated herein and shall have delivered
copies of the same to the Agent.
(c) The Agent shall have received an opinion of Canadian legal
counsel, in form and substance acceptable to the Agent which shall include,
without limitation, (i) an opinion that the transactions contemplated by this
Amendment (including without limitation, MCL's entry into the Guaranty, MCL
Movable Hypothec, the Demand Note, Pledge of Note and the Ontario Security
Agreement) were duly authorized, executed and delivered under Quebec law, (ii)
an opinion that the Massachusetts choice of law clause would be enforceable in
Canada with respect to MCL's obligations under the Guaranty, and (iii) an
enforceability and perfection opinion with respect to the MCL Movable Hypothec
and the Ontario Security Agreement; and
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(d) The Borrowers shall have paid to the Agent all fees and expenses
that are due and payable as of the date hereof.
'SS'6. Ratification, etc. Except as expressly amended hereby, the Loan
Agreement and all documents, instruments and agreements related thereto are
hereby ratified and confirmed in all respects. All references in the Loan
Agreement or any related agreement or instrument to the Loan Agreement shall
hereafter refer to the Loan Agreement as amended hereby.
'SS'7. No Implied Waiver. Except as expressly provided herein, nothing
contained herein shall constitute a waiver of, impair or otherwise affect any
Obligations, any other obligations of any of the Borrowers or Guarantors or any
right of the Agent or any Bank consequent thereon.
'SS'8. Counterparts. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.
'SS'9. Governing Law. THIS AMENDMENT SHALL FOR ALL PURPOSES BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as a
sealed instrument as of the date first above written.
METALLURG, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Sr. Vice President & CFO
SHIELDALLOY METALLURGICAL
CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Finance & CFO
METALLURG INTERNATIONAL
RESOURCES, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Finance & CFO
METALLURG SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Finance & CFO
MIR (CHINA), INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Finance & CFO
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METALLURG HOLDINGS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President, Finance & CFO
METALLURG (CANADA) LTEE./METALLURG
(CANADA) LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Treasurer and Director
FLEET NATIONAL BANK
(formerly known as BANKBOSTON, N.A.),
individually and as Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
BANK OF SCOTLAND
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: First Vice President
NATIONAL BANK OF CANADA
By: PNC BANK, N.A., Attorney-in-Fact
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Bank Officer
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