Exhibit 10.2


 


FIRST AMENDMENT TO
SUBORDINATED PROMISSORY NOTE


 


This FIRST AMENDMENT TO SUBORDINATED PROMISSORY NOTE (this “Amendment”)
is made as of June 25, 2008, by and between OPTELECOM-NKF, INC., a
Delaware corporation (“Optelecom”) and DRAKA HOLDING, N.V., a limited liability
company organized under the laws of The Netherlands, or its permitted assigns
(the “Holder”).


 


On March 8, 2005, Optelecom, under
the name Optelecom, Inc., made a Subordinated Promissory Note payable to
the Holder in the principal amount of Nine Million Euro (€9,000,000) (such
Subordinated Promissory Note being hereinafter called the “Note”).  Optelecom and the Holder have agreed to amend
a certain provisions of the Note subject to and in accordance with this
Amendment.


 


NOW THEREFORE, in consideration of the
premises and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by the parties hereto, the Holder and
Optelecom agree as follows:


 


1.          Recitals.  The
Holder and Optelecom acknowledge that the above recitals to this Amendment are
true and correct, and agree that the same are incorporated by reference into
the body of this Amendment.  Unless
otherwise specifically defined herein, all terms defined by the provisions of
the Note shall have the same meanings ascribed to such terms by the provisions
of the Note when used herein.


 


2.                              Amendment to the Note.


 


2.1. 
The Note is hereby amended as of the date of this Amendment by deleting Section 6
(a) subsections (i), (ii) and (iii) of the Note in their
entirety and by substituting the following in lieu thereof:


 


 “(i)         Reserved.


 


(ii)       a term loan made by the Bank to
Optelecom-NKF Holding B.V. (“ONH”) in the amount of Four Million One Hundred
Ninety Five Thousand Sixty Five Dollars and Sixty Cents ($4,195,065.60) and any
refinancing or other modification of such term loan (provided that, except as
permitted under Section 6(a)(v), any such refinancing or other
modification of such term loan shall not increase the aggregate outstanding
principal amount thereof), and any debentures, notes or other evidence of
indebtedness issued in exchange for such term loan, in all cases whether direct
or indirect, absolute or contingent, liquidated or unliquidated, due or to
become due, joint or several, and including without limitation all interest,
late fees, and collection costs associated with such term loan (the “Acquisition
Debt”);


 


(iii)      a revolving credit facility or facilities
provided by the Bank to Optelecom and ONH in an amount not to exceed FIVE
MILLION Dollars ($5,000,000) (or the Euro currency equivalent of FIVE MILLION
Dollars ($5,000,000)) and any 


 

















 


debentures,
notes or other evidence of indebtedness issued in exchange for such revolving
credit facility or facilities, in all cases whether direct or indirect,
absolute or contingent, liquidated or unliquidated, due or to become due, joint
or several, and including without limitation all interest, late fees, and
collection costs associated with such revolving credit facility or facilities
(the “Optelecom Revolver”);”


 


2.2. 
The Note is hereby amended as of the date of this Amendment by deleting
the first sentence in Section 6 (f) in its entirety and by
substituting the following in lieu thereof:


 


Upon
the occurrence of an Event of Default or a Change in Control hereunder, the
Holder may exercise all the rights and remedies available to it under Section 5(a) and
5(b) (as applicable), and may exercise all other rights and remedies
available to it under applicable law or under this Note; for collection or
enforcement of this Note, the Agreement or the Pledge Agreement (as defined in Section 7
hereof); provided that, except as set forth in the immediately succeeding
sentence, the Holder shall not commence or continue any action, suit or
proceeding against Optelecom or its assets, or exercise any other remedies
available to it at law or under this Note, the Agreement or the Pledge
Agreement, for collection or enforcement of this Note for a period of One
Hundred Eighty (180) days after (i) the date of an Event of Default under Section 4(a),
4(b), or 4(c) hereof; (ii) the date all or any portion of the Senior
Indebtedness of Optelecom or ONH is accelerated; or (iii) the Maturity
Date if on the Maturity Date there exists any Senior Indebtedness Default or
any condition which, with notice or lapse of time, or both, would constitute a
Senior Indebtedness Default.


 


2.3. 
The Note is hereby amended as of the date of this Amendment by deleting Section 7
in its entirety and by substituting the following in lieu thereof:


 


“7.           Security.  This Note is secured by that certain Deed of
Pledge of Shares in Optelecom-NKF Holding B.V. dated June 25, 2008 (the
Pledge Agreement”), by and among Optelecom, the Holder and ONH under which
thirty-five percent (35%) of the issued share capital of ONH are being pledged
to the Holder to secure Optelecom’s obligations hereunder, as more particularly
described therein.  The Holder hereby
acknowledges and consents that any security interest granted to it under the
Pledge Agreement is subject and subordinated to the rights granted to the Bank
under this Note, and that in case of an Event of Default, the following
limitations shall apply to the Holder’s rights under the Pledge Agreement
(collectively the “Senior Debt Rights”):


 


(a)           The Holder shall not exercise any
remedies available to it under the Pledge Agreement, (i) at any time prior
to the payment and satisfaction in full of the Acquisition Debt, and (ii) for
a period of One Hundred Eighty (180) days after any of the events set forth in
clauses (i), (ii) or (iii) of Section 6(f) hereof.


 

















 


(b)           The Holder hereby acknowledges and
agrees that in order to secure Optelecom’s obligations to the Bank under the
Acquisition Debt and the Optelecom Revolver, Optelecom has pledged, among other
things, sixty five percent (65%) of the issued share capital of ONH (the “ONH
Capital Stock”) to the Bank to secure Optelecom’s obligations to the Bank (such
pledge being hereinafter called the “Bank Stock Pledge”).  If at any time the Bank exercises its rights
under the Bank Stock Pledge and desires in connection with the exercise of such
rights to sell, exchange, convey, or otherwise transfer, in a commercially
reasonable manner, in one or a series of related transactions to one or more
independent third parties (each, a “Purchaser”), all of the ONH Capital Stock
(a “ONH Stock Sale”), then the Bank may require the Holder to participate in
such ONH Stock Sale by delivering written notice of the ONH Stock Sale to the
Holder, and the Holder agrees that upon receipt of such written notice it shall
(A) consent to such ONH Stock Sale and take such actions as are reasonably
necessary to evidence its consent to such ONH Stock Sale and to evidence that
each Purchaser is acquiring the ONH Capital Stock free and clear of any liens
created under the Pledge Agreement; (B) to the extent it has possession of
the ONH Capital Stock, deliver the ONH Capital Sale to the Bank; (C) to
the extent the ONH Capital Stock is registered in the name of the Holder,
deliver to the Bank stock powers or other authorization that will induce the
transfer agent or other registrar of the ONH Capital Stock to change the
registration to that of the Bank, or the Purchaser of the ONH Capital Stock as
the Bank deems to be reasonably necessary to affect the sale of the ONH Stock; (D) to
the extent deemed reasonably necessary by the Bank to affect the sale of the
ONH Capital Stock, join the sale to effect the transfer by entering into any
purchase and sale agreement or other agreement under the terms of which such
sale is consummated, and (E) do all things that the bank deems to be
reasonably necessary to affect the sale of the ONH Capital Stock.  The Holder further agrees that upon
consummation of any ONH Stock Sale, its only right with respect to the ONH
Capital Stock shall solely be to receive that portion, if any, of the aggregate
proceeds received from the Purchaser(s) in the ONH Stock Sale (the “Sale
Proceeds”) equal to the lesser of (x) thirty five percent (35%) of the
Sale Proceeds, or (y) the amount of Sale Proceeds remaining after the
Acquisition Debt has been paid and satisfied in full, and any and all other
rights of the Holder under the Pledge Agreement or otherwise with respect to
the ONH Capital Stock shall terminate and have no further force and effect.


 


(c)   By the Holder’s acceptance
of this Note, the Holder agrees that (i) the provisions of this Section 7,
and other provisions of this Note and the Pledge Agreement that relate to the
Senior Debt Rights and the Holder’s subordination of all amounts payable
hereunder to the payment of the Acquisition Debt and the Optelecom Revolver,
are for the benefit of the Bank and holders from time to time of the
Acquisition Debt and the Optelecom Revolver, and, so long as any of the
Acquisition Debt or the Optelecom Revolver remain unpaid, may not be rescinded
or canceled in whole or in part without the prior written consent thereto of
the Bank; (ii) the Bank may rely on this Section 7 and the other
provisions of 


 

















 


this Note that relate to the Senior Debt Rights and the Holder’s
subordination of all amounts payable hereunder to the payment of the
Acquisition Debt and the Optelecom Revolver; and (iii) the Bank shall be a
third party beneficiary hereof and as such shall be entitled to enforce this Section 7.”


 


2.4. The Note is hereby amended as of the date of this Agreement by
adding the following as Section 8.4 thereof:


 


“8.4 Certain Covenants and Acknowledgements.  Except as might be required in accordance
with the Senior Indebtedness Documents, Optelecom agrees that it will not (i) sell,
convey, assign, or otherwise transfer its interests in ONH to any third party, (ii) consent
to the sale, conveyance, assignment, or other transfer by ONH to a third party
of any of ONH’s interest in Optelecom-NKF, B.V., (iii) take any action
which would result in a reduction of the value, or might jeopardize the
existence or enforceability, of the ONH Capital Stock, (iv) issue any new
shares in ONH or permit ONH to issue any new shares in Optelecom-NKF, B.V., (v) purchase
or retire or reduce the nominal value of the shares of ONH or permit ONH to
purchase or retire or reduce the nominal value of the shares of Optelecom-NKF,
B.V., or (vi) grant any rights in relation to the shares of ONH or permit
ONH to grant any rights in relation to the shares of Optelecom-NKF, B.V., in
each case without the prior written consent of the Holder.  Holder acknowledges and agrees that Bank
shall be entitled to exercise any rights or remedies available to it following
the occurrence of a Senior Indebtedness Default, including, without limitation,
the right under the Bank Stock Pledge to conduct an ONH Stock Sale to a
Purchaser, and that upon any such ONH Stock Sale, the provisions of this Section 8.4
shall automatically be of no further force and effect.”


 


3.     Amendment Only.  This Amendment is only an agreement amending
a certain provisions of the Note.  All of
the provisions of the Note are incorporated herein by reference and shall continue
in full force and effect as amended by this Amendment.  Optelecom hereby ratifies and confirms all of
its obligations, liabilities and indebtedness under the provisions of the Note
as amended by this Amendment.


 


4.     Applicable Law, Etc.  This Amendment shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles or rules regarding conflicts of laws, other than such
principles directing application of the laws of the State of Delaware.  This Amendment and shall be binding upon and
inure to the benefit of the Holder and Optelecom and their respective
successors and assigns.


 

















 


FIRST AMENDMENT TO
SUBORDINATED PROMISSORY NOTE


 


IN WITNESS WHEREOF,
Optelecom and the Holder have executed this Amendment under their respective
seals, the day and year
first written above.


 


	
  WITNESS/ATTEST:

  	
   

  	
   

  	
  OPTELECOM-NKF, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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  WITNESS
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  DRAKA HOLDING, N.V.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
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