Exhibit
10.1


 


SECOND AMENDMENT TO AMENDED AND RESTATED


FINANCING AND SECURITY AGREEMENT


 


This
SECOND AMENDMENT AMENDED AND RESTATED FINANCING AND SECURITY
AGREEMENT (this “Agreement”) is made as of July 1, 2009, by and among (a) OPTELECOM-NKF,
INC., a corporation organized under the laws of the State of Delaware (the “U.S.
Borrower”); (b) OPTELECOM-NKF HOLDING, B.V., a private company with
limited liability organized and existing under the laws of The Netherlands (the
“Dutch Borrower”)(the U.S. Borrower and the Dutch Borrower each being sometimes
called a “Borrower” and both of them being collectively called the “Borrowers”);
(c) OPTELECOM-NKF,  B.V., a private
company with limited liability organized and existing under the laws of The
Netherlands (“NKF”); (d) OPTELECOM-NKF S.L., a private company with
limited liability organized and existing under the laws of Spain (the “Spanish
Subsidiary”); (e) OPTELECOM UK LIMITED, a company organized and existing
under the laws of England and Wales; and (f) OPTELECOM-NKF LIMITED, a
company organized and existing under the laws of England and Wales (each a “U.K.
Subsidiary” and collectively, the “U.K. Subsidiaries”)(the U.S. Borrower, the
Dutch Borrower, the U.K. Subsidiaries, the Spanish Subsidiary and each
Additional Obligor (hereinafter defined) being each sometimes call an “Obligor”
and all of them collectively, the “Obligors”); and MANUFACTURERS AND TRADERS
TRUST COMPANY, a New York State banking corporation (the “Lender”).


 


Witnesseth:


 


On June 25, 2008, the Obligors and the Lender executed and
delivered a certain Financing and Security Agreement (the “Original Financing
Agreement”).  The Original Financing
Agreement was amended pursuant to
a First Amendment to  Amendment Amended and Restated Financing and
Security Agreement
(the “First
Amendment”) dated March 31, 2009, by and among the Obligors and the
Bank.  The Original Financing Agreement
as amended pursuant to the First Amendment is hereinafter called the “Financing
Agreement.”  The Obligors and the Lender have agreed to
amend certain provisions of the Financing Agreement 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 Lender and the
Obligors agree as follows:


 


1.          Recitals.  The
Lender and the Obligors 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 Financing Agreement shall have the same meanings ascribed to such terms by
the provisions of the Financing Agreement when used herein.


 

















 


2.          Amendments to Financing Agreement.


 


2.1.     The Financing
Agreement is hereby amended by deleting the term “Dollar LIBOR Rate” appearing
in Section 1.1 of the Financing Agreement in its entirety and by
substituting the following in lieu thereof:


 


““Dollar
LIBOR Rate” means (a) from June 28, 2008, to and including June 30,
2009, for any Dollar Interest Period with respect to any Dollar LIBOR Loan, the
interest rate per annum (rounded up, if necessary, to the nearest 1/16 of 1%)
equal to the per annum rate of interest at which deposits in Dollars are
obtained by dividing (i) the rate fixed by the British Bankers Association
for Dollar deposits in the London Interbank Eurodollar Market at approximately
11:00 a.m.  (London time) (or as
soon thereafter as practicable), two Business Days before the first day of the
applicable Dollar Interest Period, in an amount equal to the aggregate
principal amount outstanding on the first day of the Dollar Interest Period, as
determined by the Lender from any broker, quoting service or commonly available
source utilized by the Lender, by (ii) a percentage equal to 100% minus
the stated maximum rate of all reserves required to be maintained against “Eurocurrency
Liabilities” as specified in Regulation D (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
Dollar LIBOR Loans is determined or any category of extension of credit or
other assets which includes loans by a non-United States’ office of a bank to
United States residents) to any member bank of the Federal Reserve System; and (b) from
July 1, 2009, and thereafter, the greater of one percent (1%) or for any
Dollar Interest Period with respect to any Dollar LIBOR Loan, the interest rate
per annum (rounded up, if necessary, to the nearest 1/16 of 1%) equal to the
per annum rate of interest at which deposits in Dollars are obtained by
dividing (i) the rate fixed by the British Bankers Association for Dollar
deposits in the London Interbank Eurodollar Market at approximately 11:00 a.m.  (London time) (or as soon thereafter as
practicable), two Business Days before the first day of the applicable Dollar
Interest Period, in an amount equal to the aggregate principal amount
outstanding on the first day of the Dollar Interest Period, as determined by
the Lender from any broker, quoting service or commonly available source
utilized by the Lender, by (ii) a percentage equal to 100% minus the
stated maximum rate of all reserves required to be maintained against “Eurocurrency
Liabilities” as specified in Regulation D (or against any other category of
liabilities which includes deposits by reference to which the interest rate on
Dollar LIBOR Loans is determined or any category of extension of credit or
other assets which includes loans by a non-United States’ office of a bank to
United States residents) to any member bank of the Federal Reserve System.”


 


2.2.     The Financing
Agreement is hereby amended by deleting the term “Euro LIBOR” appearing in Section 1.1
of the Financing Agreement in its entirety and by substituting the following in
lieu thereof:


 


““Euro
LIBOR” means (a) from June 28, 2008, to and including June 30,
2009, for any Euro Interest Period with respect to any Euro LIBOR Loan, the
rate per annum (rounded upward, if necessary, to the nearest next 1/100 of 1%)
equal to the daily London Interbank Offered Rate for Euro deposits for a term
comparable to the applicable Euro 


 


2

















 


Interest
Period as determined by the Lender (taking into account any reserves applicable
to the Lender for Euro LIBOR Loans) at or about 11:00 A.M. (London time)
two Business Days prior to the first Business Day of the Euro Interest Period;
and (b) from July 1, 2009, and thereafter, the greater of one percent
(1%) or for any Euro Interest Period with respect to any Euro LIBOR Loan, the
rate per annum (rounded upward, if necessary, to the nearest next 1/100 of 1%)
equal to the daily London Interbank Offered Rate for Euro deposits for a term
comparable to the applicable Euro Interest Period as determined by the Lender
(taking into account any reserves applicable to the Lender for Euro LIBOR
Loans) at or about 11:00 A.M. (London time) two Business Days prior to the
first Business Day of the Euro Interest Period.”


 


2.3.     The Financing
Agreement is hereby amended by deleting the term “Dutch Revolving Credit
Expiration Date” appearing in Section 1.1 of the Financing Agreement in
its entirety and by substituting the following in lieu thereof:


 


““Dutch
Revolving Credit Expiration Date” means December 3l, 2009.”


 


2.4.     The Financing Agreement is hereby amended
by adding the following term (in alphabetical order) to Section 1.1 of the
Financing Agreement:


 


““Eligible
Foreign Receivables” means all Receivables that qualify as Eligible U.S.
Receivables, except the Account Debtor is incorporated or primarily conducting
business or otherwise located in any jurisdiction outside of the United States
or Canada, and such Receivables are insured under the applicable Obligor’s
receivables insurance policy acceptable to the Lender, the proceeds of which
have been assigned to the Lender pursuant to an assignment acknowledged by the
insurer.”


 


2.5.     The
Financing Agreement is hereby amended by deleting the definition of the terms “Eligible
U.S. Receivable” and “Eligible U.S. Receivables” appearing in Section 1.1
of the Financing Agreement in their entirety and by substituting the following
in lieu thereof:


 


““Eligible
U.S. Receivable” means each Eligible Receivable of the U.S. Borrower, and “Eligible
U.S. Receivables” means all Eligible Receivables of the U.S. Borrower.”


 


2.6.     The
Financing Agreement is hereby amended by deleting the term “U.S. Revolving
Credit Expiration Date” appearing in Section 1.1 of the Financing
Agreement in its entirety and by substituting the following in lieu thereof:


 


““U.S. Revolving
Credit Expiration Date” means December 31, 2009.”


 


2.7.     The Financing
Agreement is hereby amended by deleting the first paragraph of Section 2.3.3
from the Financing Agreement in its entirety and by substituting the following
in lieu thereof:


 


“As
used in this Agreement, the term “Dutch Borrowing Base” means at any time, an
amount equal to any Unused Availability, less (a) the Interest
Rate/Currency Protection 


 


3

















 


Reserve
for the Dutch Borrower, less (b) the amount of any U.S. Borrowing Base
Deficiency which has not been paid, less (c) the amount of any reserve
which the Lender in its reasonable and good faith discretion deems appropriate
to cover any potential Dutch Borrowing Base Deficiency which the Lender
determines, in its reasonable and good faith discretion based upon information
previously provided by the Borrowers or obtained from the Lender’s auditors,
may have occurred since the most recent Dutch Borrowing Base Report was
provided by the Dutch Borrower.”


 


2.8.     The Financing
Agreement is hereby amended by deleting the first sentence of Section 2.1.3
in its entirety and by substituting the following in lieu thereof:


 


“2.1.3  U.S. Borrowing Base


 


As
used in this Agreement, the term “U.S. Borrowing Base” means at any time, an
amount equal to the greater of


 


(a)                                                        the aggregate
of (i) the sum of eighty-five percent (85%) of Eligible U.S. Receivables, plus
(ii) seventy percent (70%) Eligible Foreign Receivables, plus (iii) thirty
percent (30%) of the amount of Eligible Inventory, less the outstanding
principal amount of the Dutch Term Loan, or


 


(b)                                                        the lesser of (i) One
Million Dollars ($1,000,000.00), or (ii)  the aggregate of (i) the sum
of eighty-five percent (85%) of Eligible U.S. Receivables, plus (ii) seventy
percent (70%) Eligible Foreign Receivables, plus (iii) thirty
percent (30%) of the amount of Eligible Inventory.


 


less
(1) the Interest Rate/Currency Protection Reserve for the U.S. Borrower,
less, (2) the amount of any Dutch Borrowing Base Deficiency which has not
been paid, less (3) the amount of any reserve which the Lender in its
reasonable and good faith discretion deems appropriate to cover any potential
U.S. Borrowing Base Deficiency which the Lender determines, in its reasonable
and good faith discretion based upon information previously provided by the
Borrowers or obtained from the Lender’s auditors, may have occurred since the
most recent U.S. Borrowing Base Report was provided by the U.S. Borrower.”


 


2.9.     The Financing
Agreement is hereby amended by deleting section (n) from the definition of
“Eligible Receivables” appearing in Section 1.1. of the Financing
Agreement in its entirety and by substituting the following in lieu thereof:


 


“(n) the
Account Debtor is not incorporated or primarily conducting business or
otherwise located in any jurisdiction outside of the United States of America
or Canada;”


 


2.10.  The Financing
Agreement is hereby amended by deleting subsection 2.6.1 (b) in its
entirety and by substituting the following in lieu thereof:


 


4

















 


“(b)         The Applicable Margin for each of the
Credit Facilities shall be as follows:


 


(i)        From June 25, 2008 to and including June 30, 2009
the Applicable Margin for the U.S. Revolving Loan shall be:


 


	
   

  	
   

  	
  Applicable Margin

  	
   

  	
  Applicable Margin

  	
   

  
	
  Senior Debt Leverage Ratio

  	
   

  	
  For LIBOR Loans

  	
   

  	
  For Base Rate Loans

  	
   

  
	
  <l:1

  	
   

  	
  1.75

  	
  %

  	
  0

  	
  %

  
	
  <1.5:1 and >1:1

  	
   

  	
  2.0

  	
  %

  	
  0

  	
  %

  
	
  <2:1 and >1.5:1

  	
   

  	
  2.25

  	
  %

  	
  0.25

  	
  %

  
	
  > 2:1

  	
   

  	
  2.75

  	
  %

  	
  0.5

  	
  %.

  



 


(ii)           From and including July 1,
2009, and thereafter the Applicable Margin for the U.S. Revolving Loan shall be
3.0%.


 


(iii)          From June 25,
2008 to and including June 30, 2009 the Applicable Margin for the Dutch
Revolving Loan  shall be


 


	
   

  	
   

  	
  Applicable Margin

  	
   

  
	
  Senior Debt Leverage Ratio

  	
   

  	
  For LIBOR Loans

  	
   

  
	
  <1:1

  	
   

  	
  1.75

  	
  %

  
	
  <1.5:1 and >1:1

  	
   

  	
  2.0

  	
  %

  
	
  <2:1 and >1.5:1

  	
   

  	
  2.25

  	
  %

  
	
  > 2:1

  	
   

  	
  2.75

  	
  %.

  



 


(iv)          From
and including July 1, 2009, and thereafter the Applicable Margin for the
Dutch Revolving Loan shall be 3.0%.


 


(v)           From June 25,
2008 to and including June 30, 2009 the Applicable Margin for the Dutch
Term Loan shall be:


 


	
   

  	
   

  	
  Applicable Margin

  	
   

  
	
  Senior Debt Leverage Ratio

  	
   

  	
  For LIBOR Loans

  	
   

  
	
  <1:1

  	
   

  	
  2.25

  	
  %

  
	
  <1.5:1 and >1:1

  	
   

  	
  2.5

  	
  %

  
	
  <2:1 and >1.5:1

  	
   

  	
  2.75

  	
  %

  
	
  > 2:1

  	
   

  	
  3.25

  	
  %.

  



 


(vi)          From and including July 1,
2009, and thereafter the Applicable Margin for the Dutch Term Loan shall be
3.0%.


 


2.11.  The Financing
Agreement is hereby amended by deleting Section 6.1.14 in its entirety and
by substituting the following in lieu thereof:


 


“6.1.14  Financial
Covenants.


 


(a)   Fixed
Charge Coverage Ratio.  From June 25,
2008, to and including March 31, 2009, the U.S. Borrower will maintain, on
a consolidated basis and tested as of the 


 


5

















 


last day of each of the U.S. Borrower’s fiscal quarters for the four (4) quarter
period ending on that date, a Fixed Charge Coverage Ratio of not less than 1.15
to 1.0.


 


(b)   Fixed
Charge Coverage Ratio.  From March 31,
2010 and thereafter, the U.S. Borrower will maintain, on a consolidated basis
and tested as of the last day of each of the U.S. Borrower’s fiscal quarters
for the four (4) quarter period ending on that date, a Fixed Charge
Coverage Ratio of not less than 1.15 to 1.0.


 


(c)   Senior
Debt Leverage Ratio.  The U.S.
Borrower will maintain, on a consolidated basis and tested as of the last day
of each of the U.S. Borrower’s fiscal quarters for the four (4) quarter
period ending in that date, a Senior Debt Leverage Ratio of not greater than
2.5 to 1.0.


 


(d)     Minimum
Funds Flow. The U.S. Borrower will maintain: (i) for the fiscal
quarter ending June 30, 2009, the sum of its EBITDA plus Non Cash Stock
Option/Restricted Stock Expense of not less than $100,000, (ii) for the
fiscal quarter ending September 30, 2009, the sum of its EBITDA plus Non
Cash Stock Option/Restricted Stock Expense of not less than $1,200,000, and (iii) for
the fiscal quarter ending December 31, 2009, the sum of its EBITDA plus
Non Cash Stock Option/Restricted Stock Expense of not less than $1,700,000.”


 


2.12.  The Financing
Agreement is hereby amended by deleting the date “September 8, 2009, set
forth in Section 6.1.28 in its entirety and by substituting the following
in lieu thereof:


 


“December 31, 2009”


 


2.13.  The Financing
Agreement is hereby amended by deleting the Attention, Facsimile: and E-mail
notice information for Obligors set forth in Section 8.1 of the Financing
Agreement in its entirety and by substituting the following in lieu thereof:


 


“Attention: 
Steven Tamburo


Facsimile: 
(240) 912-3382


E-mail: 
stamburo@optelecom-nkf.com”


 


3.          Confirmation of Security Interest.  The Obligors hereby confirm that pursuant to the
provisions of the Financing Agreement and the other Financing Documents, the
Obligors have granted to the Lender a security interest and continuing lien, in
and to the Collateral.


 


4.          Representations and Warranties.      The
Obligors represent and warrant to the Lender that each and all of the
representations and warranties of the Obligors in the Financing Agreement and
the other Financing Documents are true and correct on the date hereof as if the
same were made on the date hereof.  The
Obligors further represent and warrant to the Lender that as of the date
hereof, the Collateral is free and clear of all assignments, security
interests, liens and other encumbrances of any kind and nature whatsoever
except for those permitted under the provisions of the Financing Documents.


 


6

















 


5.         Amendment Only.  This Amendment is only an agreement
amending certain provisions of the Financing Agreement.  All of the provisions of the Financing
Agreement are incorporated herein by reference and shall continue in full force
and effect as amended by this Amendment. 
The Obligors hereby ratify and confirm all of its obligations,
liabilities and indebtedness under the provisions of the Financing Agreement as
amended by this Amendment.  The Lender
and the Obligors agree it is their intention that nothing herein shall be
construed to extinguish, release or discharge or constitute, create or effect a
novation of, or an agreement to extinguish, any of the obligations,
indebtedness and liabilities of the Obligors or any other party under the
provisions of the Financing Agreement or under any of the other Financing
Documents, or any assignment or pledge to the Lender of, or any security
interest or lien granted to the Lender in or on, any collateral and security
for such obligations, indebtedness and liabilities.


 


6.          Applicable Law, Etc. 
This
Amendment shall be governed by the laws of the State of Maryland and shall be
binding upon and inure to the benefit of the Lender and the Obligors and their
respective successors and assigns.  This Amendment may be executed in any
number of duplicate originals or counterparts, each of such duplicate originals
or counterparts shall be deemed to be an original and all taken together shall
constitute but one and the same instrument.


 


(Signatures Appear on
Following Page)


 


7

















 


Signature
Page for First Amendment to Amended and Restated


Financing and Security
Agreement


 


WITNESS
WHEREOF, each of the parties hereto have executed and delivered this Agreement
under their respective seals as of the day and year first written above.


 


	
  WITNESS OR ATTEST:

  	
   

  	
  OPTELECOM-NKF,
  INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
                                         ,

  
	
  (Name)

  	
   

  	
   

  	
  (Name)

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS OR ATTEST:

  	
   

  	
  OPTELECOM-NKF
  HOLDING, B.V.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
                                         ,

  
	
  (Name)

  	
   

  	
   

  	
  (Name)

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS OR ATTEST:

  	
   

  	
  OPTELECOM-NKF,
  B.V.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
                                         ,

  
	
  (Name)

  	
   

  	
   

  	
  (Name)

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS OR ATTEST:

  	
   

  	
  OPTELECOM-NKF
  S.L.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
                                         ,

  
	
  (Name)

  	
   

  	
   

  	
  (Name)

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS OR ATTEST:

  	
   

  	
  OPTELECOM
  UK LIMITED

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
                                         ,

  
	
  (Name)

  	
   

  	
   

  	
  (Name)

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS OR ATTEST:

  	
   

  	
  OPTELECOM-NKF
  LIMITED

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
                                         ,

  
	
  (Name)

  	
   

  	
   

  	
  (Name)

  	
  (Title)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  WITNESS OR ATTEST:

  	
   

  	
  MANUFACTURERS AND TRADERS TRUST COMPANY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  (Seal)

  
	
   

  	
   

  	
   

  	
  J.
  Eric Goodwin, Vice President

  	
   

  
	
  (Name)

  	
   

  	
   

  	
   

  
							



 


8