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LAZARE KAPLAN INTERNATIONAL
INC.
SECOND AMENDMENT TO REVOLVING CREDIT
AGREEMENT
This Second Amendment (herein, the
“Amendment”) to Revolving Credit Agreement is entered
into as of August __, 2007, between Lazare Kaplan International
Inc., a Delaware corporation (the “Borrower”) and HSBC
Bank USA, National Association, as lender (the
“Bank”).
PRELIMINARY
STATEMENTS
A.
The
Borrower and Bank entered into a certain Revolving Credit
Agreement, dated as of September 28, 2004, as amended by the First
Amendment to Revolving Credit Agreement between Borrower and Bank
dated as of December 1, 2005 (the Revolving Credit Agreement, as
the same has been amended prior to the date hereof, being referred
to herein as the “Credit Agreement”). All capitalized
terms used herein without definition shall have the same meanings
herein as such terms have in the Credit Agreement.
B.
To
induce Bank to continue to extend the credit facility to Borrower
and to provide for certain requests of Borrower with respect to
additional permitted Indebtedness, Bank and Borrower have agreed to
amend the Credit Agreement as set forth below.
Now, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
SECTION 1.
AMENDMENTS.
Subject to the satisfaction of the conditions
precedent set forth in Section 2 below, the Credit Agreement shall
be and hereby is amended as follows:
1.1
The
following definitions shall be inserted in appropriate alphabetical
order in Section 1 of the Credit Agreement:
“ABN Amro Bank
Line”: The secured line of credit given by ABN Amro to
Gulfdiam in the aggregate amount of up to U.S.$50,000,000, to be
used by Gulfdiam for the purpose of financing of purchases and
sales of rough diamonds (and possibly working capital needs) in
Angola.
“ABN Amro”: ABN Amro
Bank N.V.
“Gulfdiam”: Gulfdiam
DMCC, a joint venture partially owned by a wholly-owned subsidiary
of Borrower.
“Gulfdiam Guaranty”:
That certain unsecured limited guaranty executed by Borrower in
favor of ABN Amro, pursuant to which Borrower shall guaranty 50% of
the net outstanding obligations from time to time of Gulfdiam under
the ABN Amro Bank Line, not to exceed U.S.$25,000,000 in the
aggregate (or its equivalent in foreign currencies, at
conversion rates established by
ABN Amro), plus any interest accrued thereon, charges relating
thereto including, without limitation, monetary corrections, if
any, and all costs and expenses of enforcement of the Gulfdiam
Guaranty.
“Nedbank Guaranty”:
That certain guaranty of up to $6,000,000 in Indebtedness (which
shall include all Indebtedness of Subsidiaries of Borrower)
executed by Borrower in favor of Nedbank, Limited, South Africa,
which shall include guaranties by the Borrower and Subsidiaries of
the Borrower in connection with such Indebtedness.
1.2 The
definition of “Commitment” appearing in Section 1 of
the Credit Agreement shall be amended in its entirety to read as
follows: “Commitment: The obligation of Bank to make Loans to
the Borrower up to an aggregate outstanding principal amount not to
exceed $20,000,000, as such amount may be reduced from time to time
or terminated according to the terms of this Agreement, including,
without limitation, Section 2.3(b) hereof.”
1.3
The definition of “Termination Date” appearing in
Section 1 of the Credit Agreement shall be amended in its entirety
to read as follows: “Termination Date: June 30,
2008.”
1.4
The
following sentence is hereby added to the end of the definition of
“Contingent Obligations” as follows:
“Notwithstanding the forgoing, the Nedbank Guaranty and the
Gulfdiam Guaranty shall not be deemed to be Contingent Obligations
for the purposes of this Agreement.”
1.5
Section
2.3 of the Credit Agreement shall be amended in its entirety to
read as follows:
“Section 2.3. Repayments
and Prepayments. (a) Optional Prepayment or Repayment. The Borrower
hereby agrees to pay to Bank, no later than the Maturity Date, the
entire unpaid principal of and interest on the Loans. The Borrower
may elect to prepay the outstanding principal of all or any part of
any Loan, without premium or penalty, provided that (a) any full or
partial prepayment of the outstanding amount of any LIBOR Rate
Loans pursuant to this Section 2.3(a) may be made only on the last
day of the Interest Period relating thereto, and (b) any such
prepayments of LIBOR Rate Loans shall be in a minimum amount of
$300,000 or a whole multiple of $100,000 in addition thereto. The
Borrower shall give Bank Notice of the date and amount of any
proposed prepayment pursuant to this Section 2.3(a) (y) no less
than three (3) LIBOR Business Days prior to any such proposed
prepayment of any LIBOR Rate Loans, and (z) no later than 10:00
a.m., New York time, on the date of any such prepayment of any Base
Rate Loan. The Borrower shall be entitled to reborrow before the
Termination Date such amounts, upon the terms and subject to the
conditions of this Agreement. Each repayment or prepayment of
principal of any Loan shall be accompanied by payment of the unpaid
interest accrued to such date on the principal being repaid or
prepaid and shall be applied, in the absence of instruction by the
Borrower, first to the principal of Base Rate Loans and then to the
principal of LIBOR Rate Loans. If at any time the aggregate amount
of
2
Loans outstanding shall exceed
the Commitment, the Borrower shall immediately pay the amount of
such excess to Bank for application to the Loans. The Borrower may
elect to reduce or terminate the Commitment by a minimum principal
amount of $100,000 or an integral multiple thereof of the amount
reduced or, as the case may be, terminated, upon Notice to Bank
given by 10:00 a.m., New York time, at least two (2) Business Days
prior to the date of such reduction or termination. The Borrower
shall not be entitled to reinstate the respective Commitment
following such reduction or termination.
(b) Mandatory Repayment. The
Borrower hereby agrees to pay
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