Exhibit 10.1
INTERNATIONAL LETTER OF CREDIT
AGREEMENT
Dated as of September 29,
2006
among
GREAT LAKES DREDGE & DOCK CORPORATION,
GREAT LAKES DREDGE & DOCK
COMPANY, LLC,
and
WELLS FARGO HSBC TRADE BANK,
N.A.
TABLE OF CONTENTS
i
ii
iii
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Exhibit
A
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Definitions
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Exhibit B
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Form of Note
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Exhibit C
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Form of Weekly International Borrowing Base
Certificate, together with Annexes I and II
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Exhibit D
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Form of Compliance Certificate
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Exhibit E
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Form of Letter of Credit Request
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Exhibit F
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Form of Guaranty
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Exhibit G
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Form of Joinder to Guaranty
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Exhibit H
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Form of Standby Letter of Credit
Agreement
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Exhibit I
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Form of Reaffirmation, Ratification and
Assumption Agreement
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Exhibit J
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Form of Deposit Account Control
Agreement
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Schedule 1.1
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Existing Letters of Credit
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Schedule 6.1
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Subsidiaries
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Schedule 6.3
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Litigation
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Schedule 6.5
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Capital Stock of Borrower; Control
Affiliates
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Schedule 8.3
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Insurance
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Schedule 8.7
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Export Orders Excluded from the Cash Collateral
Account
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iv
INTERNATIONAL LETTER OF CREDIT
AGREEMENT
This International Letter of Credit
Agreement is entered into as of September 29, 2006 among GREAT
LAKES DREDGE & DOCK CORPORATION, a Delaware corporation,
the Guarantors from time to time party hereto and WELLS FARGO HSBC
TRADE BANK, N.A. (together with its successors and assigns, the
“ Bank ”).
The Borrower has requested that the
Bank provide an international letter of credit facility, and the
Bank is willing to do so on and subject to the terms and conditions
set forth herein.
In consideration of the mutual
covenants herein contained, the parties hereto covenant and agree
as follows:
ARTICLE I.
CERTAIN DEFINITIONS AND OTHER INTERPRETIVE
PROVISIONS.
1.1
Definitions
.
Capitalized terms used in this Agreement and not otherwise defined
herein shall have the
meanings given to them in Exhibit A to this
Agreement.
1.2
Other
Interpretive Provisions . With reference to
this Agreement and each other International Loan Document, unless
otherwise specified herein or in such other International Loan
Document:
(a)
The definitions
of terms herein shall apply equally to the singular and plural
forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “ include ,”
“ includes ” and “ including
” shall be deemed to be followed by the phrase “without
limitation.” The word “ will ” shall
be construed to have the same meaning and effect as the word
“ shall .” Unless the context requires
otherwise, (i) any definition of or reference to any
agreement, instrument or other document (including any Organization
Document) shall be construed as referring to such agreement,
instrument or other document as from time to time amended,
restated, supplemented or otherwise modified (subject to any
restrictions on such amendments, restatements, supplements or
modifications set forth herein or in any other International Loan
Document), (ii) any reference herein to any Person shall be
construed to include such Person’s successors and assigns,
(iii) the words “ herein ,” “
hereof ” and “ hereunder ” and
words of similar import when used in any International Loan
Document, shall be construed to refer to such International Loan
Document in its entirety and not to any particular provision
thereof, (iv) all references in an International Loan Document
to Articles, Sections, Exhibits and Schedules shall be construed to
refer to Articles and Sections of, and Exhibits and Schedules to,
the International Loan Document in which such references appear,
(v) any reference to any law shall include all statutory and
regulatory provisions consolidating, amending, replacing or
interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation
as amended, modified or supplemented from time to time, and
(vi) the words “ asset ” and “
property ” shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and
contract rights.
(b)
In the
computation of periods of time from a specified date to a later
specified date, the word “ from ” means “
from and including ;” the words “ to
” and “ until ” each mean “ to
but excluding ;” and the word “ through
” means “ to and including .”
(c)
Section headings
herein and in the other International Loan Documents are included
for convenience of reference only and shall not affect the
interpretation of this Agreement or any other International Loan
Document.
1.3
Accounting
Terms .
(a)
All accounting
terms not specifically defined herein shall be construed in
accordance with GAAP. The Borrower shall maintain a system of
accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in
conformity with GAAP (except as may be otherwise required pursuant
to Section 1.3(b) ), and each of the financial statements
described below shall be prepared from such system and
records.
(b)
Except as
otherwise provided herein, if any changes in accounting principles
from those used in the preparation of the most recent financial
statements referred to in Section 8.1 are hereafter required
or permitted by the rules, regulations, pronouncements and opinions
of the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants (or successors thereto or
agencies with similar functions) and are adopted by the Borrower
with the agreement of its independent certified public accountants
and such changes result in a change in the method of calculation of
any of the financial covenants, standards or terms found in
Section 9.5 or in the related definitions of terms used
therein, the parties hereto agree, subject to Section 11.15
, to enter into negotiations in order to amend such provisions so
as to reflect equitably such changes with the desired result that
the criteria for evaluating the Borrower’s financial
condition shall be the same after such changes as if such changes
had not been made, provided that, subject to Section
11.15 , no change in GAAP that would affect the method of
calculation of any of the financial covenants, standards or terms
shall be given effect in such calculations until such provisions
are amended, in a manner satisfactory to the Bank, so as to reflect
such change in accounting principles.
1.4
Times of
Day . Unless otherwise
specified, all references herein to times of day shall be
references to Central
time (daylight or
standard, as applicable).
ARTICLE II.
LETTERS OF CREDIT.
2.1
Commitment
.
(a)
Upon the terms
and conditions and relying upon the representations and warranties
herein set forth, the Bank agrees to issue standby Letters of
Credit for the account of the Borrower up to an aggregate face
amount not exceeding at any one time outstanding the lesser of
(i) $20,000,000.00 (such amount, as it may be reduced from
time to time pursuant to Section 3.6 , being the
Bank’s “ Commitment ”) or (ii) the
International Borrowing Base.
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(b)
The Borrower
shall execute and deliver to the Bank, to evidence its
reimbursement obligations in respect of Letters of Credit, a Note
which shall be (i) dated of even date herewith; (ii) in
the principal amount of the Commitment; and (iii) in
substantially the form attached hereto as Exhibit B ,
with the blanks appropriately completed.
2.2
International
Borrowing Base .
(a)
As soon as
available, and in any event by 11 a.m. (Central time) each
Wednesday (or, if Wednesday is not a Business Day, then on the
following Business Day), the Borrower shall furnish the Bank an
international borrowing base detailed scheduled report in the form
of Exhibit C , which is dated as of the last Business Day of
the previous calendar week (the “ Weekly International
Borrowing Base Certificate ”); provided ,
however , in order to receive Credit Accommodations
hereunder, the Borrower shall have delivered a Weekly International
Borrowing Base Certificate at least within the past seven (7)
calendar days. The Bank may, on demand, inspect the
documentation supporting any Weekly International Borrowing Base
Certificate. With respect to the Weekly International
Borrowing Base Certificate delivered for the fourth week of every
calendar month, such Weekly International Borrowing Base
Certificate shall include (i) a list of the Eligible
Export-Related Accounts Receivable and (ii) a list of Export
Orders that are included in the International Borrowing Base, as at
the end of the preceding month, such list to be in such form and
containing such information and detail as the Bank may reasonably
request, and as is satisfactory to the Bank, to comply with the
requirements of the Ex-Im Bank Guaranty, including, without
limiting the generality of the foregoing, as to Eligible
Export-Related Accounts Receivable, aging thereof in the customary
manner. The inclusion of any receivable in the Weekly
International Borrowing Base Certificate shall constitute a
representation and warranty by the Borrower that such receivable is
an Eligible Export-Related Accounts Receivable.
(b)
Two Business Days
after the receipt of any such Weekly International Borrowing Base
Certificate (unless the Bank prior to such date has notified the
Borrower in writing of its determination of a different
International Borrowing Base) the International Borrowing Base
amount stated in any such Weekly International Borrowing Base
Certificate shall automatically be deemed the International
Borrowing Base amount until the earlier of (i) the date of the
next determination or (ii) the date the Bank notifies the
Borrower in writing of its determination of a different
International Borrowing Base and the basis for such
determination. The date of any such notification (if any) by
the Bank is herein called a “ Determination Date
” and any increase or reduction in the International
Borrowing Base by the Bank shall be effective as of such
date. Each determination of the International Borrowing Base
shall be made by the Bank in its reasonable business judgment,
based on the most recent Weekly International Borrowing Base
Certificate furnished by the Borrower and other information
available to the Bank.
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2.3
Letters of
Credit .
(a)
Subject to and
upon the terms and conditions herein set forth, including, without
limitation, the applicable terms and conditions set forth in
Article VII hereof, the Bank agrees that it will,
following its receipt of a Letter of Credit Request, issue or cause
to be issued for the account of the Borrower one or more
irrevocable standby letters of credit which can be drawn down by a Buyer
only if the Borrower, any Guarantor or an Eligible Joint Venture
fails to perform any of its obligations under an Export
Order (each a “ Letter of
Credit ” and collectively, the “ Letters of
Credit ”); provided that the Bank shall be under no
obligation to issue or cause to be issued any Letter of Credit if
at the time of such issuance:
(i)
any order,
judgment or decree of any Governmental Authority or arbitrator
shall purport by its terms to enjoin or restrain the Bank or Wells
Fargo from issuing such Letter of Credit or any requirement of law
applicable to the Bank or Wells Fargo or any request or directive
(whether or not having the force of law) from any Governmental
Authority with jurisdiction over the Bank or Wells Fargo shall
prohibit, or request that the Bank or Wells Fargo refrain from, the
issuance of letters of credit generally; or
(ii)
subject to any
Cover requirements set forth in Section 10.3 of this
Agreement, (x) 25% of the Stated Amount of such Letter of Credit
plus (y) 25% of the aggregate Stated Amount of all outstanding
Letters of Credit plus (z) 100% of the aggregate Unpaid Drawings
then outstanding (after giving effect to all Unpaid Drawings
reimbursed prior to or concurrently with the issuance of such
Letter of Credit) exceeds the International Borrowing Base then in
effect; or
(iii)
if the Stated
Amount of such Letter of Credit plus all Letter of Credit
Outstandings (after giving effect to all Unpaid Drawings reimbursed
prior to or concurrently with the issuance of such Letter of
Credit) exceeds the Commitment; or
(iv)
unless the Bank
and Ex-Im Bank shall give their prior written consent in their sole
discretion, the expiry date of such Letter of Credit is later than
12 months from the date of issuance of such Letter of Credit;
provided however , the Bank may issue or cause to be
issued the Diyaar Project Letter of Credit so long as the Diyaar
Project Letter of Credit shall have an expiry date of not later
than the lesser of (a) 27 months from the date of issuance of such
Diyaar Project Letter of Credit and (b) the number of months from
Closing Date to the Final Disbursement Date.
(b)
Notwithstanding
the foregoing, (i) the Bank may not issue or cause to be
issued during the final sixty (60) days of the term of this
Agreement any Letters of Credit which expire after the Maturity
Date unless the Bank either has decided to renew this Agreement or
has obtained the prior written approval of Ex-Im Bank and
(ii) any Letter of Credit that shall have an expiration date
after the Maturity Date shall be subject to Cover, such Cover to be
delivered to the Bank thirty (30) days prior to the Maturity
Date.
4
(c)
The Borrower
acknowledges that the Bank will be liable to Wells Fargo for
reimbursement of any and all draws under Letters of Credit issued
by Wells Fargo and for all other amounts required to be paid under
the applicable Application and the Standby Letter of Credit
Agreement. Accordingly, the Borrower agrees to pay to the
Bank any and all amounts required to be paid under the applicable
Application and the Standby Letter of Credit Agreement, when and as
required to be paid thereby.
(d)
From and after
the Initial Date, all Existing Letters of Credit shall be deemed to
have been issued pursuant hereto, and shall be subject to and
governed by the terms and conditions hereof.
2.4
Letter of
Credit Requests .
(a)
Whenever the
Borrower desires that a Letter of Credit be issued for its account
or that an existing expiry date shall be extended, the Borrower
shall deliver to the Bank its prior written request therefore not
later than 12:00 noon (Central time) on at least the second
Business Day prior to the requested issuance or extension date, as
the case may be. Each such request shall be in the form of
Exhibit E attached hereto executed by the Borrower or
such other form (including electronic requests) satisfactory to the
Bank and Wells Fargo in their sole discretion (together with the
Application, a “ Letter of Credit Request ”)
and, in the case of the issuance of any Letter of Credit, shall be
accompanied by an Application therefor, completed to the
satisfaction of the Bank and Wells Fargo, and such other
certificates, documents and other papers and information as the
Bank and Wells Fargo may reasonably request. Each Letter of
Credit shall be denominated in Dollars or in an Approved Currency,
shall expire no later than the date specified in
Section 2.3 , shall not be in an amount greater than is
permitted under Section 2.3(a) and shall be in such
form as may be approved from time to time by the Bank, Wells Fargo
and the Borrower.
(b)
The making of
each Letter of Credit Request shall be deemed to be a
representation and warranty by the Borrower that such Letter of
Credit may be issued in accordance with, and will not violate the
requirements of Section 2.3(a) and
Article VII of this Agreement. Upon its issuance
of any Letter of Credit or the extension of the existing expiry
date of any Letter of Credit, as the case may be, the Bank shall
promptly notify the Borrower of such issuance or extension, which
notice shall be accompanied by a copy of the Letter of Credit
actually issued or a copy of any amendment extending the existing
expiry date of any Letter of Credit, as the case may
be.
2.5
Agreement to
Repay Letter of Credit Drawings .
(a)
Upon the receipt
by the Bank of notice of any Drawing from a beneficiary under a
Letter of Credit, the Bank promptly will provide the Borrower with
telecopy notice thereof. The Borrower hereby agrees to
reimburse the Bank by making payment to the Bank in immediately
available funds at the Payment Office, for any payment made by the
Bank under any Letter of Credit issued by it or Wells Fargo (each
such amount so paid until reimbursed, an “ Unpaid
Drawing ”) on the date of such payment, provided
that if the Borrower shall have received notice of any Drawing
later than 11:00 a.m. (Central
5
time) on any
Business Day, then the Borrower shall make such payment not later
than 11:00 a.m. (Central time) on the immediately following
Business Day, together with interest on the amount so paid by the
Bank at the rate specified herein, to the extent not reimbursed
prior to 2:00 p.m. (Central time) on the date of such payment, from
and including the date paid but excluding the date reimbursement is
made as provided above, such interest to be payable ON
DEMAND.
(b)
The
Borrower’s obligations under this Section 2.5 to
reimburse the Bank with respect to Unpaid Drawings (including, in
each case, interest thereon) shall be absolute and unconditional
under any and all circumstances (except as provided below with
respect to the gross negligence, bad faith or willful misconduct of
the Bank or Wells Fargo) and irrespective of any setoff,
counterclaim or defense to payment which the Borrower may have or
have had against the Bank or Wells Fargo, including any defense
based upon the failure of any drawing under a Letter of Credit
(each a “ Drawing ”) to conform to the terms of
the Letter of Credit (other than a defense based upon the gross
negligence, bad faith or willful misconduct of the Bank or Wells
Fargo in determining whether such Drawing conforms to the terms of
the Letter of Credit) or any non-application or misapplication by
the beneficiary of the proceeds of such Drawing, including any of
the following circumstances:
(i)
any lack of
validity or enforceability of this Agreement or any of the other
International Loan Documents;
(ii)
the existence of
any claim, setoff, defense or other right which the Borrower may
have at any time against a beneficiary named in a Letter of Credit,
any transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), the Bank, Wells Fargo, or any other
Person, whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the
Borrower or any other Person and the beneficiary named in any such
Letter of Credit);
(iii)
any draft,
certificate or any other document presented under the Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in
any respect;
(iv)
the surrender or
impairment of any security for the performance or observance of any
of the terms of any of the International Loan
Documents;
(v)
the occurrence of
any Default or Event of Default; or
(vi)
any other
circumstance which might otherwise constitute a defense available
to, or a discharge of, the Borrower;
provided
that none of the
foregoing is attributable to the gross negligence, bad faith or
willful misconduct of the Bank or Wells Fargo.
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(c)
The Borrower also
agrees with the Bank that, in the absence of gross negligence, bad
faith or willful misconduct of the Bank or Wells Fargo, the Bank
shall not be responsible for, and the Borrower’s
reimbursement obligations under Section 2.5(a) shall
not be affected by, among other things, the validity or genuineness
of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged,
or any dispute between the Borrower or any other Person and the
beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred, or any claims whatsoever
of the Borrower or any other Person against any beneficiary of such
Letter of Credit or any such transferee.
(d)
Neither the Bank
nor Wells Fargo shall be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any
Letter of Credit, except for errors or omissions caused by the
Bank’s or Wells Fargo’s gross negligence, bad faith or
willful misconduct. The Borrower agrees that any action taken
or omitted by the Bank or Wells Fargo under or in connection with
any Letter of Credit or the related drafts or documents, if done in
the absence of gross negligence, bad faith or willful misconduct
and in accordance with the standards of care specified in the
Uniform Customs and Practice for Documentary Credits (1994
Revision), International Chamber of Commerce, Publication
No. 500 (and any subsequent revisions thereof approved by a
Congress of the International Chamber of Commerce and adhered to by
the Bank) and, to the extent not inconsistent therewith, the
Uniform Commercial Code of the State of New York, shall not result
in any liability of the Bank or Wells Fargo to the Borrower or any
other Person. IT IS THE INTENT OF THE PARTIES HERETO THAT
NEITHER THE BANK NOR WELLS FARGO SHALL HAVE ANY LIABILITY UNDER
THIS SECTION 2.5 FOR THE ORDINARY SOLE OR CONTRIBUTORY
NEGLIGENCE OF THE BANK OR WELLS FARGO.
2.6
Conflict
Between Applications and Agreement . To the extent that
any provision of any Application related to any Letter of
Credit or any provision of the Standby Letter of Credit
Agreement is inconsistent with the
provisions of this Agreement, the provisions of this Agreement
shall control.
2.7
Increased
Costs; Increased Capital .
(a)
If the Bank
determines that compliance with any law or regulation or any
guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law) issued after the
Closing Date affects or would affect the amount of capital required
or expected to be maintained by the Bank or any corporation
controlling the Bank and that the amount of such capital is
increased by or based upon the existence of the Bank’s
Commitment hereunder and other commitments of this type, then,
within fifteen (15) Business Days after written demand by the Bank,
the Borrower shall pay to the Bank, from time to time as specified
by the Bank, additional amounts sufficient to compensate the Bank
or such corporation for such increase. A certificate as to
such amounts, showing a calculation of such amounts in reasonable
detail, submitted to the Borrower by the Bank shall be presumptive
evidence of such amounts.
7
(b)
Anything in this
Section notwithstanding: (i) the Borrower shall not be
required to pay to the Bank reimbursement or indemnification with
regard to any costs or expenses described in this Section, unless
the Bank notifies the Borrower in writing of such costs or expenses
within ninety (90) days after the date the Bank obtained knowledge
of the circumstances that would cause the Borrower to pay such
additional amounts; and (ii) the Bank shall not be permitted
to pass through to the Borrower charges and costs under this
Section on a discriminatory basis (i.e., which are not also passed
through by the Bank to other customers of the Bank similarly
situated where such customer is subject to documents providing for
such pass through).
2.8
Default
Rate . Notwithstanding
anything set forth herein to the contrary if any Unpaid Drawing is
not paid when due, all
outstanding Obligations shall bear interest at a fluctuating rate
per annum equal to the Default Rate, which interest shall be due
and payable ON DEMAND.
2.9
Facility
Subject to Ex-Im Bank Rules . The Borrower
acknowledges that the Bank is willing to make its Commitment
available to the Borrower because Ex-Im Bank is willing to guaranty
payment of a significant portion of the Obligations pursuant to the
Ex-Im Bank Guaranty. Accordingly, in the event of any
inconsistency among the International Loan Documents and the Ex-Im
Bank Guaranty, the Borrower Agreement, the Fast Track Agreement,
the Fast Track Borrower Supplement and the rules and regulations of
Ex-Im Bank governing the Working Capital Guaranty Program, the
provision that is the more stringent on the Borrower shall control
and compliance with any such applicable rule or regulation shall
constitute an additional covenant of the Borrower incorporated
herein by reference; provided , however , that the
following provisions shall be deemed to be waived by the terms of
this Agreement: (1) Fast Track Lender Agreement Section 2(e)(ii)(a)
with respect to the requirement that the Borrower provide the Bank
with a Lien on the domestic revolving loan collateral under the
Domestic Credit Agreement; (2) Section 1.01 of the Borrower
Agreement and the Ex-Im Bank Guaranty with respect to the
definition of Eligible Export-Related Accounts Receivable regarding
(i) Accounts Receivable owned by the Eligible Joint Ventures being
included in the definition of Eligible Export-Related Accounts
Receivable and (ii) affiliate receivables being included in the
definition of Eligible Export-Related Accounts Receivable; (3)
Section 4.12(b) of the Ex-Im Bank Guaranty with respect to the
length of the term of certain letters of credit longer than 12
months; (4) Section 4.02 of the Ex-Im Bank Guaranty, as amended by
the Fast Track Lender Agreement, with respect to the requirement
that the Bank perfect its security interest in Export-Related
Inventory; (5) Section 4.02(a) of the Ex-Im Bank Guaranty, as
amended by the Fast Track Lender Agreement, with respect to the
collateral securing the Domestic Credit Agreement that will not
secure the Obligations; (6) Section 7 of the Fast Track Agreement,
Section 2.07(c) of the Borrower Agreement, as amended by the Fast
Track Borrower Supplement and Section 2.08(a) of the Borrower
Agreement, as amended by the Fast Track Borrower Supplement with
respect to the payment of all funds received in payment of the
Excluded Export-Related Accounts Receivable into a lockbox and/or
the Cash Collateral Account; (7) Section 2.19 of the Borrower
Agreement with respect to naming the Bank as loss payee or
mortgagee on its property insurance; and (8) Section 2.22 of the
Borrower Agreement with respect to the consummation of the Aldabra
Transactions. The Borrower and the Bank hereby acknowledge
that Holdings and the Persons that own 20% or more of the ownership
of Holdings are controlled by venture capital
8
firms, private
equity firms or other investment groups and are therefore not
required to guaranty this Agreement.
2.10
Currency
Equivalents . For all purposes of
this Agreement, (i) the equivalent in Dollars of any Approved
Currency shall be
determined by using the quoted spot rate at which Wells Fargo
offers to exchange Dollars for such Approved Currency two Business
Days prior to the date on which such equivalent is to be determined
and (ii) the equivalent in any Approved Currency of Dollars shall
be determined by using the quoted spot rate at which Wells Fargo
offers to exchange such Approved Currency for Dollars two Business
Days prior to the date on which such equivalent is to be
determined. The equivalent in Dollars of each Letter of
Credit made in an Approved Currency shall be recalculated hereunder
on each date that it shall be necessary or desirable by any party
to determine the amount of the Commitment, the Unpaid Drawings, the
Letter of Credit Obligations, the Letter of Credit Outstandings,
the Obligations or the face amount of any Letter of Credit on such
date.
ARTICLE III.
CASH COLLATERAL, PREPAYMENTS AND OTHER PAYMENTS.
3.1
Deposit of
Cash Collateral and Required Prepayments .
(a)
The Borrower
agrees that if at any time the Borrower or the Bank determines that
(x) 25% of the aggregate Stated Amount of all outstanding Letters
of Credit plus (z) 100% of the aggregate Unpaid Drawings then
outstanding exceeds the International Borrowing Base, the Borrower
will, within five Business Days after request from the Bank
or actual knowledge thereof, (i) deliver to the Bank cash
collateral in an amount equal to such excess, which shall be held
by the Bank to the extent and until such excess is eliminated or
(ii) furnish additional security to the Bank, in form and amount
satisfactory to the Bank and Ex-Im Bank.
(b)
The Borrower
agrees that if at any time the aggregate principal amount of the
Letter of Credit Outstandings exceeds the amount of the Commitment,
the Borrower shall immediately deliver to the Bank cash collateral
in an amount equal to such excess, which, subject to Section
3.1(c) below, shall be held by the Bank to the extent and until
such excess is eliminated.
(c)
Cash collateral
provided to the Bank pursuant to Section 3.1(a) and
(b) above shall be first applied by the Bank to the Unpaid
Drawings, if any, and the remainder to be held by the Bank in a
collateral account.
3.2
[RESERVED]
.
3.3
Place of
Payment or Prepayment . All payments and
prepayments of the Obligations made in accordance with the provisions of
this Agreement or of the Note, including, without limitation, fees,
reimbursements or interest, shall, subject to Section 2.5(a)
, be made to the Bank at the Payment Office no later than
2:00 p.m. (Central time) on the date when due, in immediately
available funds.
9
3.4
Prepayment
Premium or Penalty . Each prepayment
pursuant to Section 3.1 shall be without premium or
penalty.
3.5
Taxes . Unless required by
law, all payments (whether of principal, interest, reimbursements
or otherwise) under this Agreement
or on the Note shall be made by the Borrower without set-off or
counterclaim and shall be made free and clear of and without
deduction for any present or future tax, levy, impost or any other
charge, if any, of any nature whatsoever now or hereafter imposed
by any taxing authority, but excluding taxes imposed on or measured
by the Bank’s net income (including branch profits taxes) and
franchise taxes imposed on the Bank (each non-excluded tax, levy,
impost or charge, a “ Tax ”). If the
making of such payments is prohibited by law unless such Tax is
deducted or withheld therefrom, the Borrower shall pay to the Bank,
on the date of each such payment, such additional amounts as may be
necessary in order that the net amounts received by the Bank after
such deduction or withholding shall equal the amounts which would
have been received if such deduction or withholding were not
required, provided that the Borrower shall be required to
pay such additional amounts only if (A) such withholding Tax is
imposed as a result of a change in law after the Closing Date (or,
in the case of a transferee of the Bank, if such withholding Tax is
imposed as a result of a change in law after the date the
transferee became a party hereto) and (B) such withholding Tax is
not imposed as a result of the failure of the Bank (or any
transferee of the Bank) to provide such properly completed and duly
executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate
of withholding, but only to the extent the Bank (or such
transferee) is legally permitted to provide such
documentation.
3.6
Reduction or
Termination of the Commitment . The Borrower may at
any time or from time to time reduce or terminate the
Commitment by giving written notice thereof no later than
2:00 p.m. (Central time) not less than two (2) Business
Days’ prior to such reduction or termination. Any
reduction in the Commitment shall be effective on the date
specified in the Borrower’s notice with respect to such
reduction. The Commitment shall automatically terminate on
the earlier of (i) the Maturity Date or (ii) in the event of
acceleration of the Maturity Date of the Note. Each reduction
of the Commitment hereunder shall be irrevocable.
ARTICLE IV.
FEES.
4.1
Facility
Fee . The Borrower shall
pay to the Bank on the Closing Date, and on each Loan Facility
Anniversary Date, a
non-refundable facility fee in an amount equal to the product of
(x) the Commitment and (y) the Annual Facility Fee
Percentage; provided that on the second Loan Facility
Anniversary Date, the facility fee shall be pro rated for a period
of time equal to the greater of (i) the remaining term of the
Agreement and (ii) six months. The facility fee payable on
the Closing Date shall be in the amount of $200,000.
4.2
Letter of
Credit Fees . The Borrower agrees
to pay the Bank a fee in respect of each Letter of Credit issued
for the account of the
Borrower (the “ Letter of Credit Fee ”), in an
amount equal to the greater of (i) $750 or (ii) an amount
computed at the applicable rate for standby letters of credit in
the Domestic Credit Agreement set forth in Section 3.3(a)
thereof minus 0.25%. Letter of Credit Fees shall be
due and payable quarterly in arrears on or before the fifth (5th)
Business Day following the end of each Fiscal Quarter. Fees
due under this
10
Section 4.2
shall be computed
on the basis of a year of 360 days. In addition, the Borrower
shall pay to the Bank or Wells Fargo, as applicable, solely for its
own account as issuer of Letters of Credit, any applicable
amendment, transfer, negotiation and other fees as determined in
accordance with the Bank’s or Wells Fargo’s then
current fee policy.
4.3
Fees Not
Interest; Nonpayment . The fees described in
this Agreement represent compensation for services rendered and to be
rendered separate and apart from the lending of money or the
provision of credit and do not constitute compensation for the use,
detention or forbearance of money, and the obligation of the
Borrower to pay each fee described herein shall be in addition to,
and not in lieu of, the obligation of the Borrower to pay interest,
other fees described in this Agreement, and expenses otherwise
described in this Agreement. Fees shall be payable when due
in Dollars and in immediately available funds. All fees shall
be non-refundable, and shall, to the fullest extent permitted by
law, bear interest, if not paid within five (5) Business Days of
when due, at a rate per annum equal to the Default
Rate.
ARTICLE V.
PERMITTED PURPOSES OF LETTERS OF CREDIT
The Borrower agrees that the Letters
of Credit shall be issued solely to support one or more of the
Borrower’s, any Guarantor’s or any Eligible Joint
Venture’s obligations under an Export Order. No
Letter of Credit may be a Warranty Letter of Credit;
provided , however , a performance Letter of Credit
that converts to a Warranty Letter of Credit at the end of the
performance period may be issued so long as the Bank’s
liability thereunder and therefor is eliminated (in a manner
satisfactory to the Bank in its sole discretion) not later than the
date when the warranty period commences.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES.
The Borrower and, as applicable,
each Guarantor each represents and warrants that:
6.1
Organization
and Qualification . It and each of its
Subsidiaries (a) is duly organized, validly existing, and in
good
standing under the laws of the jurisdiction of its organization
(except to the extent that such failure to be in good standing
under such laws could not reasonably be expected to have a Material
Adverse Effect); (b) has the power to own its Properties and
to carry on its business as now conducted; and (c) is duly
qualified to do business and is in good standing in all
jurisdictions in which the failure to so qualify or be in good
standing could reasonably be expected to have a Material Adverse
Effect. As of the Closing Date, the Borrower has no
Subsidiaries other than those listed on Schedule 6.1
.
6.2
Financial
Statements; Positive Tangible Net Worth . The Borrower has
furnished the Bank with the following financial
statements: (a) its year-end Annual Audited Financial
Statements for the fiscal year ended December 31, 2005; and
(b) its unaudited consolidated balance sheet, statement of
earnings and statement of cash flow as at and for the three month
period ended June 30, 2006. These statements have been
prepared in conformity with GAAP, except, in the case of unaudited
financial statements, for the absence of footnote disclosure and
for year-end audit adjustments. Such statements fairly
present, in all material respects, the
11
consolidated
financial condition of the Borrower and its Subsidiaries and the
consolidated results of its operations as at the dates and for the
periods indicated. Since December 31, 2005, there has been no
change in any circumstances, facts or conditions nor shall an event
have taken place which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
During the period from June 30, 2006 to the Closing Date, the
Borrower has had a positive tangible net worth, as determined in
accordance with GAAP. For the purpose of this determination,
net worth (as determined in accordance with GAAP) must be
(i) increased by any Debt of the Borrower and its Subsidiaries
subordinated to the indebtedness evidenced by this Agreement and
(ii) decreased by all intangible assets (including, without
limitation, all patents, licenses, goodwill, subscription lists,
capitalized software, organization expenses, covenants not to
compete, and investments in and monies due from Affiliates,
officers and directors of the Borrower and its
Subsidiaries).
6.3
Litigation;
Contingent Liabilities . Other than as set
forth on Schedule 6.3 , there is no material action or
proceeding
pending or, to the knowledge of the Loan Parties, overtly
threatened against or involving the Borrower or any Subsidiary
before any court, administrative agency or arbitrator the results
of which could reasonably be expected to have a Material Adverse
Effect. Other than any liability incident to the actions or
proceedings disclosed on Schedule 6.3 , or provided for or
disclosed in the financial statements referred to in Section
6.2 , as of the Closing Date, none of the Borrower or any of
the Borrower’s Subsidiaries has any contingent liabilities
which could reasonably be expected to have a Material Adverse
Effect.
6.4
Default
. Neither
the Borrower nor any Subsidiary is (i) in default under any
agreement or instrument to which
any of such Persons is a party or by which any of their respective
properties or assets is bound or affected, which default could
reasonably be expected to have a Material Adverse Effect, (ii) in
default under or in violation of the provisions of any
Governmental Requirement (except where such default or violation
could not reasonably be expected to have a Material Adverse Effect)
or (iii) in default in any material respect with any material
provisions of any Export Order (which is included in the
International Borrowing Base), which has not been waived by the
applicable party thereto. No Event of Default or Default has
occurred and is continuing.
6.5
Title to
Assets; Ownership .
(a)
The Borrower and
each Subsidiary has good and marketable title to, or a valid
leasehold interest in, its material Properties, subject to no Liens
except as permitted by Section 9.1 hereof.
(b)
As of the Closing
Date, except as permitted in Section 9.1 hereof, the Persons
identified on Schedule 6.5 directly own, free and clear of
all Liens or restrictions on transferability or voting, one hundred
percent (100%) of the outstanding shares of Capital Stock of the
Borrower and all such shares are validly issued, fully paid and non
assessable. As of the Closing Date, there are no outstanding
warrants, options, contracts or commitments of any kind entitling
any Person to purchase or otherwise acquire (i) any shares of
the Capital Stock of the Borrower or (ii) any securities
convertible into or exchangeable for any shares of such Capital
Stock. As of the Closing Date, no securities are outstanding
which are convertible into or exchangeable for any shares of
Capital
12
Stock of the
Borrower. As of the Closing Date, the Persons identified on
Schedule 6.5 as Controlling Affiliates are the only
Controlling Affiliates of the Borrower (other than Controlling
Affiliates that are not required to execute a Guaranty pursuant to
Section 6(c) of the Fast Track Lender
Agreement).
6.6
Authorization,
Validity, Etc . It has the power and
authority to make, execute, deliver and carry out the International Loan
Documents to which it is a party and the transactions contemplated
therein and to perform its obligations thereunder and all such
action has been duly authorized by all necessary proceedings on its
part. The International Loan Documents to which any Loan
Party is a party have been duly and validly executed and delivered
by such Loan Party and constitute valid and legally binding
obligations of such Loan Party enforceable against such Loan Party
in accordance with their respective terms, except as limited by
Debtor Laws. The Liens created by the International Security
Documents will constitute valid and perfected Liens on the
Collateral described therein superior in right to all other Liens,
except for Permitted Liens.
6.7
Intentionally
Omitted .
6.8
Taxes . The Borrower and each
Subsidiary has timely filed, or
has caused to be timely filed, all tax returns and reports required by applicable law, has
timely paid, or has caused to be timely paid, all applicable taxes,
assessments, deposits and contributions owing by Borrower and each
such Subsidiary and will timely pay, or cause to be timely paid,
all such items in the future as they became due and payable.
The Borrower or any Subsidiary may, however, defer payment of any
contested taxes; provided , that Borrower or such Subsidiary
(a) in good faith contests Borrower’s obligation to pay
such taxes by appropriate proceedings promptly and diligently
instituted and conducted; (b) notifies the Bank in writing of
the commencement of, and any material development in, the
proceedings; (c) posts bonds or takes any other steps required
to keep the contested taxes from becoming a Lien upon any of the
Collateral; and (d) maintains adequate reserves therefore in
conformity with GAAP. The Borrower is not aware of
any proposed tax assessment by any taxing authority or of any
claims by any Governmental Authority for any unpaid taxes which
could reasonably expected to have a Material Adverse Effect, in
each case except liabilities contested in good faith or for which
adequate reserves have been provided.
6.9
Conflicting or
Adverse Agreements or Restrictions . Neither the
execution, delivery and performance by each Loan Party of the
International Loan Documents to which it is a party, any Export
Order to which it is a party and which is included in the
International Borrowing Base, nor the consummation of the
transactions contemplated thereby nor fulfillment of and compliance
with the respective terms, conditions and provisions thereof, will
conflict with or result in a breach of any of the terms, conditions
or provisions of, or constitute a default under, or result in any
violation of, or result in the creation or imposition of any Lien
on any of the Property of the Borrower or any Subsidiary (other
than Liens created under the International Loan Documents and, in
connection with the execution, delivery and performance of any
Export Order, Permitted Liens) pursuant to, (a) the
Organization Documents of such Person; (b) any Governmental
Requirement; or (c) the terms, conditions or provisions of any
material contract to which such Person is a party or by which it is
bound or to which it is subject.
6.10
Information
. Neither
this Agreement nor any other document, certificate or written
statement furnished to the
Bank by or on behalf of the Borrower or any Subsidiary
in
13
connection with
this Agreement (including, without limitation, any Export Order
included in the International Borrowing Base or any Weekly
International Borrowing Base Certificate) contains any statement of
material fact which is untrue or incorrect in any material respect
or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading in any
material respect in light of the circumstances under which such
information was provided as of the time when delivered. As of
the Closing Date, there is no fact currently known to any Loan
Party which now or in the future could reasonably be expected to
have a Material Adverse Effect and which has not been set forth or
referred to in this Agreement, the other International Loan
Documents, or such documents, certificates or statements heretofore
furnished to the Bank.
6.11
No
Consent . Except to the extent
obtained, no authorization or approval or other action by, and no
notice to or filing with, any
Person or any Governmental Authority is required for the due
execution, delivery, and performance (a) by any Loan Party of
any International Loan Document to which it is a party or the
borrowings hereunder, in each case as contemplated herein, or the
effectuation of the transactions contemplated under any
International Loan Document to which it is a party, except (i)
filings and recordings to perfect the Liens created under the
International Loan Documents and (ii) those which, if not obtained,
could not reasonably be expected to have a Material Adverse Effect,
or (b) of any Export Order by the parties thereto or the
effectuation of the transactions contemplated thereunder, except
those which, if not obtained, could not reasonably be expected to
have a Material Adverse Effect.
6.12
Environmental
Matters . The Borrower and each
Subsidiary (a) owns, possesses or otherwise holds, and is
in compliance with
the terms and conditions of, all Governmental Approvals under
Environmental Laws necessary for the ownership or lease and
operation of its Property and the carrying on of its business as
now conducted or proposed to be conducted, except where the failure
could not reasonably be expected to have a Material Adverse Effect,
and (b) is in compliance with all Governmental Requirements
relating to the environment except where the failure could not
reasonably be expected to have a Material Adverse Effect.
There are no civil, criminal or administrative actions,
investigations or proceedings or claims pending or, to the best
knowledge of the Borrower, threatened against the Borrower or any
Subsidiary, for noncompliance with Environmental Laws or arising
out of the presence or release of hazardous materials at, on or
under any Property now owned, leased or operated by the Borrower or
any Subsidiary which could reasonably be expected to have a
Material Adverse Effect.
6.13
Debt . As of the Closing
Date, the financial statements referred to in Section 6.2 contain a
complete and accurate disclosure in
all material respects of all Debt of the Borrower and its
Subsidiaries outstanding as of the respective dates of such
financial statements, except for Guaranties permitted by Section
6.2(f) (or any comparable section) of the Domestic Credit
Agreement. As of the Closing Date, none of the Borrower or
any of its Subsidiaries has incurred any other Debt since the
respective dates of such financial statements, except as would have
been permitted under Section 9.6 of this Agreement had this
Agreement been in effect at the time of the incurrence of any such
additional Debt.
6.14
Compliance
with Laws. The Borrower and each
Subsidiary has complied in all material respects with all provisions of all applicable
laws and regulations, including those relating to Borrower’s
ownership of real or personal property, the conduct and licensing
of
14
Borrower’s
business, the payment and withholding of taxes, ERISA and other
employee matters, safety and environmental matters.
6.15
Suspension and
Debarment, Etc . Neither the Borrower
nor any of its Principals (as defined below) are (A) debarred,
suspended, proposed for debarment with a final determination still
pending, declared ineligible or voluntarily excluded (as such terms
are defined under any of the Debarment Regulations referred to
below) from participating in procurement or nonprocurement
transactions with any U.S. federal government department or agency
pursuant to any of the Debarment Regulations (as defined below) or
(B) indicted, convicted or had a civil judgment rendered
against the Borrower or any of its Principals for any of the
offenses listed in any of the Debarment Regulations. For the
purposes hereof, (1) ” Principals ” shall
mean any officer, director, owner, partner, key employee, or other
person with primary management or supervisory responsibilities with
respect to the Borrower; or any other Person (whether or not an
employee) who has critical influence on or substantive control over
the transaction covered by this Agreement and (2) the “
Debarment Regulations ” shall mean (x) the
Government wide Debarment and Suspension (Nonprocurement)
regulations (Common Rule), 53 Fed. Reg. 19204
(May 26, 1988), (y) Subpart 9.4 (Debarment,
Suspension and Ineligibility) of the Federal Acquisition
Regulations, 48 C.F.R. 9.400-9.409 and (z) the
revised Government wide Debarment and Suspension (Nonprocurement)
regulations (Common Rule), 60 Fed. Reg. 33037
(June 26, 1995).
ARTICLE VII.
CONDITIONS.
The obligation of the Bank to issue
each Letter of Credit is subject to the following
conditions:
7.1
Representations True and No
Defaults .
(a)
The
representations and warranties of the Borrower and the Guarantors
contained in the International Loan Documents shall be true and
correct in all material respects on and as of the date of the
issuance of any Letter of Credit, as though made on and as of such
date except for any representation or warranty which is specified
as being made as of an earlier date, in which case such
representation or warranty shall only speak as to such earlier
date; and
(b)
no Event of
Default or Default shall have occurred and be
continuing.
7.2
Terms of
Sale . Letters of Credit
shall be issued only against Export Orders, copies of which have
been delivered to the Bank,
if the Bank or Ex-Im Bank requires, and which are maintained on
file with the Borrower. Each Letter of Credit hereunder is
subject to the condition precedent that the Bank shall have
reviewed and approved in its sole discretion the terms and
conditions, including without limitation that there exists
satisfactory evidence that the Items will in fact be exported, of
the applicable Export Order.
7.3
Governmental
Approvals . The Borrower and each
Guarantor and the Bank shall have obtained all Governmental Approvals
required for the making and carrying out of this Agreement, the
issuance of Letters of Credit pursuant hereto and the issuance of
the Note and the
15
execution,
delivery and performance of the applicable Export Order that is
included in the International Borrowing Base. Without
limitation of the foregoing, no Letter of Credit shall be issued
hereunder (a) in violation of the Ex-Im Bank Guaranty or
contrary to the instructions of Ex-Im Bank or (b) following
the occurrence of an Event of Default that is continuing or of any
event which but for the giving of notice or the lapse of time or
both would constitute an Event of Default pursuant to
Section 4.10 of the Ex-Im Bank Guaranty.
7.4
Letter of
Credit Documents . On the date of the
issuance of any Letter of Credit, the Bank shall have received from the
Borrower a Letter of Credit Request in respect of Letters of Credit
to be issued on such issuance date together with such other
documents and certificates relating to the transactions herein
contemplated as the Bank may reasonably request.
7.5
Required
Initial Documents and Certificates . On or before the
issuance of the first Letter of Credit hereunder (the
“ Initial Date ”), the Bank shall have received
from the Borrower or, as applicable, each Guarantor the following,
in each case in form, scope and substance satisfactory to the
Bank:
(i)
the SBA/Ex-Im
Bank Joint Application, duly executed by the parties thereto,
together with the $100 application fee related thereto;
(ii)
the Borrower
Agreement duly executed by the parties thereto;
(iii)
the Fast Track
Borrower Supplement duly executed by the parties
thereto;
(iv)
this Agreement
duly executed by the parties hereto, together with all schedules
and exhibits thereto;
(v)
the Note duly
executed by the Borrower;
(vi)
the International
Security Agreement duly executed by the parties
thereto;
(vii)
the International
Pledge Agreement duly executed by the parties thereto;
(viii)
the Standby
Letter of Credit Agreement duly executed by the parties
thereto;
(ix)
an
officer’s certificate of the Borrower signed in the name of
the Borrower by its President, Chief Financial Officer, Vice
President or Secretary, and dated as of the Closing Date to which
are attached true and correct copies of the Organization Documents
of the Borrower and corporate resolutions duly adopted by the Board
of Directors of the Borrower authorizing the transactions
contemplated by the International Loan Documents;
16
(x)
such certificates
as may be appropriate to demonstrate the continued existence and
good standing of the Borrower in its jurisdiction of
organization;
(xi)
an
officer’s certificate of each Guarantor signed in the name of
such Guarantor by its President, Chief Financial Officer, Vice
President or Secretary, and dated as of the Closing Date to which
are attached true and correct copies of the Organization Documents
of such Guarantor and resolutions duly adopted by the Board of
Directors or Managers of such Guarantor authorizing the
transactions contemplated by the International Loan
Documents;
(xii)
such certificates
as may be appropriate to demonstrate the continued existence and
good standing of each Guarantor in its jurisdiction of
organization;
(xiii)
a Weekly
International Borrowing Base Certificate dated within five (5)
calendar days preceding the Initial Date;
(xiv)
copies of UCC
Financing Statements and all other requisite filing documents
necessary to perfect the Liens granted pursuant to the
International Security Documents and, if applicable, duly executed
releases or assignments of Liens and UCC-3 financing statements in
recordable form, each in form and substance satisfactory to the
Bank, and filed with the appropriate filing offices, covering all
of the Collateral subject thereto, as may be necessary to reflect
that the Liens granted to the Bank are of the priority required by
Section 9.1 hereof;
(xv)
the facility fee
required under Section 4.1 ;
(xvi)
the
Borrower’s monthly Export-Related Accounts Receivable aging
schedule showing all of the Borrower’s Export-Related
Accounts Receivable as of the last day of the calendar month
immediately preceding the Closing Date;
(xvii)
the
Borrower’s financial statements described in Section
6.2 ;
(xviii)
an Exceptions
Approval Letter properly signed by Ex-Im Bank;
(xix)
the Guaranty,
duly executed and delivered by each Guarantor;
(xx)
a control
agreement in the form of Exhibit J hereto for the Cash
Collateral Account at Wells Fargo, duly executed by Bank, Wells
Fargo and the Borrower;
(xxi)
a copy of the
Standing Instruction Agreement executed by Ahli United
Bank;
17
(xxii)
a customary
opinion dated as of the Closing Date of legal counsel to the
Borrower and Guarantor as to such matters as the Bank may
reasonably request;
(xxiii)
any amendments
and/or consents required to the Domestic Loan Documents and the
Travelers Agreement (as defined in the Domestic Credit Agreement)
to allow the Liens granted pursuant to the International Security
Documents;
(xxiv)
a confirmation of
the pledge of each Guarantor’s equity interests in the Durrat
Joint Venture, executed by each other member of the Durrat Joint
Venture; and
(xxv)
any further
documentation or evidence that the Bank or Ex-Im Bank may
require.
In addition, as of the Initial Date,
all legal matters incident to the transactions herein contemplated
shall be reasonably satisfactory to the Bank.
7.6
Ex-Im Bank
Acknowledgment, Etc . On or before the
Initial Date, Ex-Im Bank shall have received from the Bank copies of all
documents required pursuant to the Ex-Im Bank Guaranty and the Fast
Track Agreement. The Bank shall have received from Ex-Im Bank
a Loan Authorization Agreement executed by Ex-Im Bank, together
with all other items referred to in Paragraph 3 of the Fast Track
Agreement.
7.7
Post-Closing
Lien Search . After the Closing
Date, the Bank shall have received the results of all post-
closing lien
searches confirming that the Bank has obtained a perfected security
interest in the Collateral of the priority required by
Section 9.1 .
ARTICLE VIII.
AFFIRMATIVE COVENANTS.
The Borrower covenants and agrees
that, so long as the Borrower requests issuance of Letters of
Credit hereunder and until payment in full of all Obligations, the
expiry of all Letters of Credit and the termination of this
Agreement, the Borrower shall, and shall (except in the case of the
covenants set forth in Sections 8.1 and 8.5 ) cause
each Subsidiary to:
8.1
Financial
Statements and Information . Deliver to the Bank:
(a)
within 90 days
after the end of each Fiscal Year of the Borrower, the Annual
Audited Financial Statements of the Borrower and its Subsidiaries
for such Fiscal Year;
(b)
within 75 days
after the first calendar day of each Fiscal Year, a budget for such
Fiscal Year, which budget shall be prepared on a Fiscal Quarter
basis and shall contain a projected, consolidated balance sheet,
consolidated statement of earnings (broken out in reasonable detail
by business segment) and a consolidated statement of cash flow of
the Borrower and its Subsidiaries for such Fiscal Year. It is
understood that
18
(i) any
projections or budget furnished to the Bank are subject to
significant uncertainties and contingencies, which are beyond the
control of the Borrower and its Subsidiaries, (ii) no assurance is
given by the Borrower and its Subsidiaries that such projections
will be realized, and (iii) the actual results may differ from such
projections and such differences may be material;
(c)
within 45 days
after the first three Fiscal Quarters of each Fiscal Year, the
Quarterly Unaudited Financial Statements of the Borrower and its
Subsidiaries;
(d)
a Weekly
International Borrowing Base Certificate as required by Section
2.2(a) ;
(e)
the notices and
information required to be delivered by Section 6.1(f) (or any
comparable section) of the Domestic Credit Agreement;
(f)
with reasonable
promptness after the sending or filing thereof, copies of all
reports and registrations statements which the Borrower or any
Subsidiary files with the Securities and Exchange Commission or any
national securities exchange;
(g)
in connection
with the Durrat Project and the Diyaar Project, within 45 days
after the end of each calendar month, (i) copies of all standing
instructions delivered to Ahli United Bank (to the extent not
previously delivered), (ii) monthly statements of the Ahli United
Bank Deposit Account, and (iii) copies of any and all invoices
issued by (x) the Durrat Joint Venture to Durrat, (y) the Diyaar
Joint Venture to Diyaar and (z) Great Lakes LLC to (I) the Durrat
Joint Venture and (II) the Diyaar Joint Venture; and
(h)
such additional
financial or other information as the Bank may reasonably
request.
Together with each delivery of the
Annual Audited Financial Statements and the Quarterly Unaudited
Financial Statements, the Borrower will deliver to the Bank a
Compliance Certificate substantially in the form of
Exhibit D hereto, showing (in reasonable detail and
appropriate calculations and computations in form reasonably
satisfactory to the Bank) compliance with the financial covenants
set forth in Section 9.5 , stating that there exists no
Event of Default or Default, or, if any such Event of Default or
Default exists, stating the nature thereof, the period of existence
thereof and what action the Borrower has taken or proposes to take
with respect thereto. The Bank is authorized to deliver a
copy of any information and financial statement delivered to it
pursuant to this Agreement to Ex-Im Bank and any Governmental
Authority having jurisdiction over the Bank.
8.2
Books and
Records . Maintain, and cause
its Subsidiaries to maintain, proper books of record and account
in accordance with GAAP
(including records relating to Collateral) which accurately reflect
all of its business affairs and transactions in relation to its
business and activities in all material respects.
8.3
Insurance
. Maintain,
and cause its Subsidiaries to maintain, insurance with financially
sound, responsible and
reputable companies in such types (including, without limitation,
fire and casualty) and amounts and against such casualties, risks
and contingencies as
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is customarily
carried by owners of similar businesses and Properties, and furnish
to the Bank, together with each delivery of Annual Audited
Financial Statements under Section 8.1(a) ,
certificates of insurance evidencing the insurance carried.
Without limiting the generality of the foregoing, the Borrower will
comply with the insurance requirements set forth in each
International Security Document to which the Borrower is a
party. For purposes hereof, the Borrower’s types and
amounts of insurance set forth in Schedule 8.3 shall be
acceptable to the Bank.
8.4
Inspection of
Property and Records; Audits of Collateral; Etc
.
(a)
Permit, and cause
its Subsidiaries to permit, any Person designated by the Bank in
writing to visit and inspect any of the Properties, books and
financial records of the Borrower and its Subsidiaries and discuss
its affairs and finances with its officers, all at such times
during normal business hours as the Bank may reasonably request at
a mutually agreeable time, and cause its officers and employees to
give full cooperation and assistance in connection therewith.
Without limiting the generality of the foregoing, the Borrower will
permit, and cause its Subsidiaries to permit, any officer or
employee of, or agent designated by, the Bank to have access to,
examine and inspect the Collateral and to audit and make copies
from the Borrower’s and any Subsidiaries’ records,
files and books of account in order to verify such
Collateral.
(b)
The Borrower
will, from time to time, on a quarterly basis (other than the
fourth Fiscal Quarter), permit the Bank, an independent certified
public accountant or another appropriate entity acceptable to the
Bank to audit the Borrower’s books, records and procedures
with respect to Inventory, Accounts Receivable and other
Collateral. This inspection shall include a physical
inspection of the Collateral in accordance with normal commercial
lending practices, except that a book audit shall be made of the
Borrower’ Accounts Receivable and any intangible
Collateral. Promptly after the conclusion of each such audit,
the Borrower shall pay to the Bank its reasonable and customary
out-of-pocket expenses associated with such audit.
8.5
Notice of
Certain Matters . Promptly, but in any
event within five (5) Business Days, notify the Bank in writing of the occurrence
of any of the following:
(a)
the Borrower or
any Guarantor (i) applies for, consents to or suffers the
appointment of, or the taking of possession by, a receiver,
custodian, trustee, liquidator or similar fiduciary of itself or of
all or a substantial part of its property or calls a meeting of its
creditors, (ii) admits in writing its inability, or is generally
unable, to pay its debts as they become due or ceases operations of
its present business, (iii) makes a general assignment for the
benefit of creditors, (iv) commences a voluntary case under any
state or federal bankruptcy laws (as now or hereafter in effect),
(v) is adjudicated as bankrupt or insolvent, (vi) files a petition
seeking to take advantage of any other law providing for the relief
of debtors, (vii) acquiesces to, or fails to have dismissed within
thirty (30) days, any petition filed against it in any involuntary
case under such bankruptcy laws, or (vii) takes any action for the
purpose of effecting any of the foregoing;
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(b)
any Lien in any
of the Collateral, granted or intended by the International Loan
Documents to be granted to Bank, ceases to be a valid, enforceable,
perfected, first priority Lien (or a lesser priority if expressly
permitted pursuant to Section 6 of the Loan Authorization
Agreement) subject only to Permitted Liens;
(c)
the issuance of
any levy, assessment, attachment, seizure or Lien, other than a
Permitted Lien, against any of the Collateral which is not stayed
or lifted within thirty (30) calendar days;
(d)
any proceeding is
commenced by or against the Borrower or any Guarantor for the
liquidation of its assets or dissolution;
(e)
any litigation is
filed against the Borrower or any Guarantor which has had or could
reasonably be expected to have an Ex-Im Material Adverse Effect and
such litigation is not withdrawn or dismissed within thirty (30)
calendar days of the filing thereof;
(f)
any Default or
Event of Default under the International Loan
Documents;
(g)
any failure to
comply with any terms of the Loan Authorization
Agreement;
(h)
any material
provision of this Agreement or any other International Loan
Document for any reason ceases to be valid, binding and enforceable
in accordance with its terms;
(i)
any event which
has had or could reasonably be expected to have an Ex-Im Material
Adverse Effect;
(j)
the aggregate
outstanding amount of Disbursements exceeds the applicable
Export-Related Borrowing Base;
(k)
the existence of
any condition requiring a mandatory prepayment or deposit of cash
collateral pursuant to Section 3.1 hereof;
(l)
any failure to
pay when due any amount payable to the Bank by the Borrower or any
Subsidiary under any non-Ex-Im Bank guaranteed loan(s) extended by
the Bank to the Borrower or any Subsidiary;
(m)
any actual
breach, or threatened breach made in writing, in any material
respect of any material provision of any Export Order included in
the International Borrowing Base, by any party to any such
contract; or
(n)
the Borrower has
included in the International Borrowing Base any Accounts
Receivable that no longer qualifies as Eligible Export-Related
Accounts Receivable.
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8.6
Security and
Further Assurances . Each Loan Party
shall, from time to time as the Bank may reasonably request, at the
Borrower’s own expense, promptly execute and deliver all such
further instruments (including, without limiting the generality of
the foregoing, additional security agreements, and financing
statements) and do such other acts as the Bank may reasonably
request for the purpose of protecting or perfecting any Lien
created or granted or intended to be created or granted in the
International Security Documents or in order to ensure that any
such Lien is of the priority purported to be granted thereby and as
required by Section 9.1 hereof, or in order to police
or protect any Collateral or otherwise to carry out more
effectually the purposes and intent of the International Loan
Documents.
8.7
Establishment
of Cash Collateral Account . Establish and
maintain a deposit account with Wells Fargo, in which payments
related to Export-Related Accounts Receivable will be deposited
directly by wire transfer (the “ Cash Collateral
Account ”); provided , however , that
payments from Durrat and Diyaar will be deposited in an account at
Ahli United Bank (the “ Ahli United Bank Deposit
Account ”) with the portion of such payments belonging to
the Borrower or Guarantor to be deposited in the Cash Collateral
Account reasonably promptly, and in any event within
two (2) Business
Days (as defined in the Standing Instruction Agreement), from the
date of the deposit in the Ahli United Bank Deposit Account and,
provided , further that (i) payments related to the
Export Orders identified on Schedule 8.7 and (ii) payments
related to Export Orders that have a contractual value of less than
$1,000,000 and which are not included in the International
Borrowing Base (collectively, the “ Excluded
Export-Related Accounts Receivable ”) shall not be
required to be deposited into the Cash Collateral Account.
The Cash Collateral Account, including the withdrawal and release
of funds therefrom, shall be governed by the control agreement in
the form of
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