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EXHIBIT 10.38
AMENDED AND RESTATED CONTINUING REIMBURSEMENT AGREEMENT
THIS AMENDED AND RESTATED CONTINUING REIMBURSEMENT AGREEMENT (this
"AGREEMENT"), dated as of November 12, 1996, is by and between ▇. ▇. ▇▇▇▇▇▇▇▇ &
Associates Inc., a Louisiana corporation (the "CUSTOMER"), and ABN AMRO Bank,
N.V., a Netherlands chartered bank, acting through its Houston Agency (the
"BANK").
WITNESSETH
A. The Customer and the Bank have entered into that certain
Continuing Reimbursement Agreement dated as of November 1, 1994 (the "PRIOR
AGREEMENT").
B. This Agreement amends, restates and supersedes the Prior
Agreement in its entirety.
C. The Bank and Principal Mutual Life Insurance Company, TMG Life
Insurance Company, Berkshire Life Insurance Company and The Security Mutual
Life Insurance Company (collectively, together with any successors or assigns
thereto, the "NOTEHOLDERS"), and Texas Commerce Bank National Association and
Bank One Texas, N.A. (collectively, together with any successors or assigns
thereto, the "BANK GROUP") have entered into an Intercreditor Agreement of even
date herewith (the "INTERCREDITOR AGREEMENT").
WHEREAS, the Customer and the Bank hereby agree as follows:
1. SCOPE OF THIS AGREEMENT. The Customer has previously requested
that the Bank issue, and the Bank has so issued, four letters of credit for the
Customer's account and for the benefit of The General Manager, Finchaa Sugar
Factory of the Transitional Government of Ethiopia in connection with that
certain Contract No. FP-03 for the Design, Supply, Construction and
Commissioning of Finchaa Sugar Factory and Ethanol Plant (the "CONTRACT") dated
as of October 4, 1994, by and between the Customer and Finchaa Sugar Factory of
the Transitional Government of Ethiopia (now known as the Finchaa Sugar Factory
Project of the Federal Democratic Republic of Ethiopia) (the "FINCHAA SUGAR
FACTORY"), two performance security letters of credit in the original face
amounts of $7,001,681 USD and 7,540,406 Birr (collectively, as heretofore
amended, the "PERFORMANCE SECURITY LETTER OF CREDIT") and two advance payment
letters of credit in the original face amounts of $14,003,364 USD and
15,080,813 Birr (collectively, as heretofore amended, the "ADVANCE PAYMENT
LETTER OF CREDIT"). The Bank has also issued, at the request of the Finchaa
Sugar Factory, a letter of credit for the benefit of the Customer as a method
of disbursement of certain sums due to it from the Finchaa Sugar Factory under
the Contract in connection with Finchaa Sugar Factory and Ethanol Plant (the
"FINCHAA PROJECT"), the draws under which are reimbursed and guaranteed by the
African Development Bank ("ADB") (as heretofore amended, the "REVOLVING LETTER
OF CREDIT") (the Performance Security Letter of Credit, the Advance Payment
Letter of Credit and the Revolving Letter of Credit are sometimes hereinafter
referred to as a "LETTER OF CREDIT" or collectively as the "LETTERS
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OF CREDIT"). The issuance of, and the agreement to issue, the Letters of
Credit in response to such requests shall be deemed to incorporate by reference
and to have been made automatically subject to the terms and conditions of this
Agreement. Each of the terms, conditions, and obligations in the applications
with respect to the Performance Security Letter of Credit and the Advance
Payment Letter of Credit shall be incorporated herein with respect to such
Letter of Credit issued and shall constitute obligations of the Customer
hereunder. To the extent of any inconsistency between any of such applications
and this Agreement, the terms and provisions of this Agreement shall prevail.
The Customer hereby acknowledges and agrees that the Finchaa Sugar Factory has
requested that the expiry date of the Revolving Letter of Credit be extended to
April 23, 1998, and the Revolving Letter of Credit has been so extended, and it
hereby agrees to such amendment.
2. REIMBURSEMENT. The Customer agrees to reimburse the Bank,
immediately upon written demand, for any payment the Bank makes under the
Performance Security Letter of Credit or the Advance Payment Letter of Credit.
The Customer also agrees to reimburse the Bank, immediately upon written
demand, for any reasonable expense the Bank incurs in connection with making
payment under either such Letter of Credit. All payment obligations of the
Customer hereunder shall be in United States Dollars, converted, if necessary,
from Birr to United States Dollars on the date of payment of any draw under the
Performance Security Letter of Credit or the Advance Payment Letter of Credit,
as the case may be, at the exchange rate paid by the Bank to purchase the Birr
necessary to cover any such draw.
3. ISSUANCE FEES AND RESTRUCTURE FEE. The Customer agrees to pay to
the Bank with respect to each of the Advance Payment Letter of Credit and the
Performance Security Letter of Credit a nonrefundable fee, quarterly in advance
commencing as of October 1, 1996, and quarterly thereafter, equal to the higher
of 2.0% per annum or the rate per annum for the issuance of letters of credit
provided for in the First Amended and Restated Credit Agreement among Serv-
Tech, Inc. ("SERV-TECH"), the Guarantors named therein, Texas Commerce Bank
National Association ("TCB"), as Agent, and the Bank Group dated as of November
12, 1996 (the "BANK AGREEMENT") of the face amount of each such Letter of
Credit at the beginning of each calendar quarter calculated on the basis of a
365-day year and the actual days in such calendar quarter and based on the
scheduled expiration of such Letter of Credit. The Customer also agrees to pay
to the Bank with respect to the Revolving Letter of Credit a nonrefundable fee,
quarterly in advance commencing as of October 1, 1996, and quarterly
thereafter, equal to 1/2% per annum of the $12,500,000 face amount thereof or
such reduced face amount thereof pursuant to the terms of the Revolving Letter
of Credit, at the beginning of each calendar quarter calculated on the basis of
a 365-day year and the actual days in such calendar quarter and based on the
scheduled expiration of such Letter of Credit. The Customer agrees to pay to
the Bank a nonrefundable restructure fee of $113,965.27 as a condition
precedent to the effectiveness of this Agreement.
4. POST-ISSUANCE COSTS. The Customer agrees to pay to the Bank,
immediately upon written demand, any and all reasonable costs arising after
issuance of any Letter of Credit that the Bank may reasonably pay or incur
under or in connection with a Letter of Credit or this
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Agreement, including, without limitation, reasonable legal fees arising from
the enforcement of this Agreement. If the Bank determines that the effect of
any change from the date hereof in any applicable law, governmental regulation,
guideline or order or in the interpretation thereof by any governmental
authority charged with the administration thereof (including the imposition of
or change in any reserve, capital, special deposit, insurance, or similar
requirement) is to increase the cost of issuing or maintaining any Letter of
Credit, to reduce the Bank's return on its capital as a result of so issuing or
maintaining any Letter of Credit, or to reduce the amount of any payment to be
made to the Bank in respect of any obligation hereunder, then the Customer will
pay to the Bank, on demand, such additional amounts as the Bank may determine
to be required to compensate the Bank on an after-tax basis for such additional
cost or reduction of amounts receivable hereunder. Any additional payments
under this clause will be computed in accordance with generally accepted
accounting principles ("GAAP") from the effective date at which such additional
costs or reduction in amounts receivable have to be borne by the Bank.
5. INTEREST. (a) The Customer agrees to pay to the Bank, without
demand unless otherwise specified below, interest on all amounts due from it
but unpaid hereunder as set forth below:
(i) All amounts drawn under the Revolving Letter of Credit
from the date of such draw until the date such amount is reimbursed by
the ADB shall bear interest, payable upon written demand on the last
business day of each calendar month after any such draw, at a daily
fluctuating interest rate per annum equal to the higher of (a) the
fluctuating overnight money market rate of interest announced by the
Bank from time to time at its Chicago, Illinois office in effect on such
day, or (b) the sum of (x) the rate per annum (rounded upwards, if
necessary, to the nearest 1/100th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the next business
day on which the Bank is open, provided, that (A) if such day is not
such a business day, the rate on such transactions on the immediately
preceding business day as so published on the next business day shall
apply, and (B) if no such rate is published on such next business day,
the rate for such day shall be the average rate quoted to the Bank by
three (3) members of the Federal Reserve System on such day for such
transactions as determined by the Bank, plus (y) 0.50% per annum (the
"FEDERAL FUNDS RATE");
(ii) All amounts drawn under the Performance Security Letter of
Credit from the date of such draw until the date such amount is
reimbursed by the Customer shall bear interest at a daily fluctuating
interest rate per annum equal to the higher of the fluctuating
commercial loan rate of interest announced by the Bank from time to time
at its Chicago, Illinois office as its base rate for U.S. Dollar loans
in the United States of America in effect on such day (which rate is not
necessarily its lowest rate charged by the Bank on loans to any of its
customers) or the Federal Funds Rate (the "BASE RATE") plus 3% per
annum; and
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(iii) All amounts drawn under the Advance Payment Letter of
Credit shall bear interest from the date of such draw until the date
such amount is reimbursed by the Customer at a daily fluctuating
interest rate per annum equal to the Base Rate plus 3% per annum.
6. USURY SAVINGS CLAUSE. If at any time the interest rate
applicable to any amount outstanding hereunder exceeds the maximum rate or the
amount of interest which the Bank is allowed by law to contract for, charge,
take, reserve or receive (the "HIGHEST LAWFUL RATE"), the rate of interest on
such outstanding amount shall be limited to the Highest Lawful Rate, but any
subsequent reductions in the interest rate shall not reduce the rate of
interest thereon below the Highest Lawful Rate until the total amount of
interest accrued thereon equals the amount of interest which would have accrued
thereon if the interest rate had at all times been in effect. In the event
that at maturity (stated or by acceleration), or at final payment of all
obligations hereunder, the total amount of interest paid or accrued thereon is
less than the amount of interest which would have accrued thereon if the
interest rate applicable thereto had at all times been in effect, then, at such
time and to the extent permitted by law, the Customer shall pay an amount equal
to the difference between (a) the lesser of the amount of interest which would
have accrued thereon if the interest rate applicable thereto had at all times
been in effect and the amount of interest which would have accrued thereon if
the Highest Lawful Rate had at all times been in effect, and (b) the amount of
interest actually paid or accrued on all obligations hereunder. To the extent
that Article 5069-1.04 of the Texas Revised Civil Statutes is relevant to the
Bank for the purpose of determining the Highest Lawful Rate, the Bank hereby
elects to determine the applicable rate ceiling under such Article by the
indicated (Weekly) rate ceiling from time to time in effect, subject to its
right subsequently to change such method in accordance with applicable law. To
the extent the interest received hereunder exceeds the Highest Lawful Rate, the
Bank shall refund to the Customer the amount of the excess or shall credit the
amount of the excess against amounts owing hereunder and the Bank shall not be
subject to any of the penalties provided by law for contracting for, taking,
reserving, charging or receiving interest in excess of the Highest Lawful Rate.
7. PAYMENTS. All payments by the Customer to the Bank hereunder
shall be made in immediately available U.S. Dollars at the Bank's office as set
forth on the signature page hereto or at such other place within the
continental United States of America as the Bank may designate in writing,
without any withholding, deduction, or set off. The Bank may open and debit
(under written advice to the Customer) a new account in the name of the
Customer to effect such payments in respect of the Customer's obligations
hereunder.
8. WAIVER OF EXISTING KNOWN DEFAULTS. The Customer has disclosed in
writing to the Bank all defaults and Events of Default that may exist under the
Prior Agreement and the Guaranty dated as of November 1, 1994, executed in
connection therewith (the "PRIOR GUARANTY") immediately prior to closing under
this Agreement. The Bank, in consideration of the agreements of the Customer
hereunder, hereby waives each such default or Event of Default.
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The Bank hereby represents and warrants to the Customer that, as of closing
hereunder, it knows of no other default or Event of Default under the Prior
Agreement or the Prior Guaranty, and no default or Event of Default resulting
from the execution and delivery of this Agreement or any of the other
documentation executed and delivered at closing or transactions effected. It
is agreed and understood that such waivers of defaults or Events of Default by
the Bank shall not constitute a waiver of any other default or Event of Default
under the Prior Agreement or the Prior Guaranty or any similar or future
default or Event of Default hereunder or under the Amended and Restated
Guaranty of even date herewith.
9. RELEASE AND INDEMNITY. (a) The Customer for itself and its
directors, officers, employees, shareholders, agents, successors, assigns,
other representatives, affiliates and attorneys do hereby release and forever
discharge the Bank and its directors, officers, employees, shareholders,
agents, successors, assigns, other representatives, affiliates and attorneys
(each a "RELEASED PARTY") from any and all losses, claims, demands, damages,
causes of actions, actions, cross-actions, judgments, liabilities, penalties,
costs and expenses (including attorneys' fees and other legal expenses) of any
kind or nature whatsoever ("CLAIMS"), which any of such persons has owned or
held, or may now or in the future own or hold, whether known or unknown,
contingent or liquidated, for or because of any action, inaction, omission,
statement or publication on or before the date hereof by any Released Party
arising directly or indirectly out of any of the Letters of Credit or the Prior
Agreement, or any other documents or instruments executed in connection
therewith or any other transactions relating directly or indirectly thereto,
including, without limitation, any claims of usury which may or could be
asserted by any such persons.
(b) The Customer agrees to indemnify and hold harmless each of
the Released Parties, on demand and to the fullest extent permitted by law,
against all Claims which any of the Released Parties may pay or incur arising
directly or indirectly out of any of the Letters of Credit, the Prior
Agreement, this Agreement, any other documents or instruments executed in
connection therewith or any other transactions relating directly or indirectly
thereto, including, without limitation, actions commenced by Finchaa Sugar
Factory for wrongful dishonor or non-payment and actions commenced by ▇▇▇▇▇▇▇▇
to enjoin honor or payment to attach the proceeds of honor or payment or for
wrongful dishonor or non-payment, regardless of whether any of such Claims are
founded in whole or in part upon the alleged negligence of any of the Released
Parties other than those which arise from the gross negligence or willful
misconduct of the party claiming indemnification. WITHOUT LIMITING ANY
PROVISION OF THIS AGREEMENT, IT IS EXPRESSLY INTENDED BY THE PARTIES THAT EACH
OF SUCH RELEASED PARTIES TO BE INDEMNIFIED HEREUNDER SHALL BE INDEMNIFIED AND
HELD HARMLESS AGAINST ANY AND ALL CLAIMS ARISING OUT OF OR RESULTING FROM THE
ORDINARY SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH RELEASED PARTY OR IMPOSED UPON
SUCH RELEASED PARTY UNDER ANY THEORY OF STRICT LIABILITY. The Customer, upon
written demand by the Bank, shall reimburse the Bank for any legal or other
expenses incurred in connection with investigating or defending against any of
the foregoing except if the same is directly due to the gross negligence or
willful misconduct of the Released Party.
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10. REPRESENTATIONS AND WARRANTIES OF THE CUSTOMER. The Customer
represents and warrants to the Bank as follows:
(a) CORPORATE EXISTENCE. The Customer is a corporation duly
formed and validly existing and in good standing under the laws of the
State of Louisiana. The Customer has all requisite corporate power and
authority to conduct its business, to own its properties, and to execute
and deliver and perform all of its obligations under this Agreement and
the Contract. To the best of the Customer's knowledge, the Customer has
all licenses, certificates, permits, franchises and other governmental
authorizations necessary to own and operate its business and properties
and is duly qualified or licensed and is authorized to do business and
is in good standing as a foreign corporation in each state as necessary
to own and operate its business and properties.
(b) DUE AUTHORIZATION. The execution, delivery and
performance by the Customer of this Agreement and the Contract are
within the Customer's corporate powers, have been duly authorized by all
necessary corporate action, and do not, and will not, contravene (i) any
provision of its articles of incorporation or bylaws, (ii) any
applicable law or (iii) any contractual restriction binding on or
affecting the Customer, and except as provided herein, do not result in
or require the creation of any lien, security interest or other charge
or encumbrance upon or with respect to any of its properties.
(c) APPROVALS. No authorization or approval or other action
by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Customer of this Agreement except as have been duly
obtained or made and as are in full force and effect. No authorization
or approval or other action by, and no notice to or filing with, any
federal or state governmental authority or regulatory body with the
United States is required for the due execution, delivery and
performance by the Customer of the Contract, except as have been duly
obtained or made and as are in full force and effect.
(d) BINDING NATURE OF OBLIGATIONS. This Agreement is the
legal, valid and binding obligation of the Customer enforceable against
the Customer in accordance with its terms.
(e) PENDING LITIGATION. Except as listed in the attached
Schedule 1, there is no pending or threatened action, investigation or
proceeding before any court, governmental agency or arbitrator against
or affecting the Customer which could reasonably be expected to have a
material adverse effect on the financial condition, operations,
properties or prospects of the Customer or the ability of the Customer
to perform its obligations hereunder or under the Contract or which
purports to affect the legality, validity or enforceability of this
Agreement or the Contract.
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(f) FINANCIAL STATEMENTS. The financial statements for the
calendar quarter dated June 30, 1996, present fairly in all material
respects the financial position of the Customer as of such date and the
results of its operations and cash flows for such period. Since such
date there has been no change in its business, operations, properties,
condition (financial or otherwise) or prospects except changes which
could not reasonably be expected to have a material adverse effect on
any thereof or on the ability of the Customer to perform its obligations
hereunder or under the Contract.
(g) INDEBTEDNESS. The financial statements described in
Section 8(f) reflect all indebtedness for borrowed money, bonds, notes
and similar instruments and all outstanding bonds, notes and similar
instruments and letters of credit issued for the Customer's account, all
obligations of the Customer pursuant to a guaranty, all leases which
would be capitalized lease obligations under GAAP, all obligations of
other persons secured by any properties of the Customer and all
obligations under any interest rate protection agreements and agreements
to protect against fluctuations in commodity prices or currency exchange
rates of the Customer as of the date hereof (collectively,
"INDEBTEDNESS").
(h) TITLE TO PROPERTIES. The Customer has good and
indefeasible title to all of its properties reflected on the financial
statements referred to in Section 8(f), except for such failures as are
immaterial to such financial statement, and all such property is free
from liens, charges and encumbrances not permitted hereunder.
(i) COMPLIANCE WITH LAW. The Customer is not in violation of
any law, ordinance, governmental rule or regulation to which it is
subject which could reasonably be expected to have a material adverse
effect on the Customer. The Customer is in compliance with the Employee
Retirement Income Security Act of 1974, as amended from time to time
("ERISA") and in compliance in all material respects with all federal,
state, county, regional or local law, statutes or regulations enacted in
connection with or relating to the protection of the environment,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time,
the Resource Conservation and Recovery Act of 1976, as amended from time
to time, and the Superfund Amendments and Reauthorization Act of 1986,
as amended from time to time, and any orders, decrees or judgments
issued by any court of competent jurisdiction in connection with any of
the foregoing ("ENVIRONMENTAL PROTECTION LAWS"). The Customer is not
subject to any liability under any Environmental Protection Laws and the
Customer has not received any notice or communication from any
governmental authority asserting any such liability, notice of any lien
on any property owned or previously owned of the Customer or any notice
designating any property of the Customer as a hazardous substance
disposal or removal site, a "Super Fund" clean-up site or as candidate
for removal or closure.
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(j) TAXES. The Customer has filed all United States and
foreign federal income tax returns and all other material tax returns or
appropriate extensions for filing, which are required to be filed by it
and has paid all taxes due pursuant to such returns or pursuant to any
assessments received by the Customer. The charges, accruals and
reserves on the books of the Customer in respect of taxes or other
governmental charges are adequate under GAAP as in effect on the date
thereof.
(k) SUBSIDIARIES. The Customer has no corporate subsidiaries
and it is not the partner of any general partnership, joint venture or
limited partnership or the member of any limited liability company. The
Customer is a wholly owned subsidiary of Serv-Tech, subject only to that
certain Grant of Option dated as of October 17, 1994, granted to ▇. ▇.
▇▇▇▇▇▇▇▇ and that certain Grant of Repurchase Option dated as of October
14, 1994 granted to ▇. ▇. ▇▇▇▇▇▇▇▇ and others. Ninety-six shares of
Class C Voting Common Stock were issued to ▇. ▇. ▇▇▇▇▇▇▇▇ on May 16,
1995 pursuant to the Grant of Option dated as of October 17, 1994.
These 96 shares issued to ▇. ▇. ▇▇▇▇▇▇▇▇ represent 20% of the aggregate
voting power of the Customer's outstanding shares and 100% of the issued
and outstanding Class C Voting Common Stock.
(l) FULL DISCLOSURE. No information furnished by the Customer
in writing in connection with the establishment of any Letter of Credit
or with this Agreement contains or will contain any untrue statement of
a material fact or omits or will omit to state a material fact necessary
to make the statements contained therein or herein not misleading except
to the extent a written waiver with respect thereto has been given by
the Bank.
(m) PUBLIC UTILITY HOLDING COMPANY. The Customer is not a
"holding company," a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Company Act
of 1935, as amended.
(n) INVESTMENT COMPANY. The Customer is not an "investment
company" or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended.
11. AFFIRMATIVE COVENANTS. So long as a drawing is available under
any Letter of Credit, or the Bank shall have any commitment hereunder, or the
Customer shall have any obligation to pay any amount to the Bank hereunder, the
Customer will, unless the Bank shall otherwise consent in writing:
(a) PRESERVATION OF EXISTENCE. Preserve and maintain its
corporate existence and all rights, privileges, licenses and franchises
necessary and desirable in the normal conduct of its business and in the
performance of its obligations under the Contract and not dissolve or
otherwise discontinue its existence or operations.
(b) COMPLIANCE WITH LAWS. Comply in all material respects
with the requirements of all applicable laws, ordinances, governmental
rules or regulations and orders of any governmental or regulatory
authority or arbitration, including ERISA and all Environmental
Protection Laws, and obtain all necessary licenses, permits,
certificates,
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franchises or other governmental authorizations necessary to the
ownership of its properties, the operation of its business or its
performance under the Contract.
(c) PAYMENT OF TAXES. Pay and discharge, before the same
shall become delinquent, (i) all taxes, assessments and governmental
charges or levies imposed upon it or upon its properties, and (ii) all
lawful claims which, if unpaid, might by law become a lien upon its
properties; provided, however, that the Customer shall not be required
to pay or discharge any such tax, assessment, charge or claim that is
being contested in good faith and by proper proceedings, so long as the
charges, accruals and reserves on the books of the Customer with respect
thereto are adequate under GAAP and so long as no tax sale may occur
during such proceedings.
(d) EXAMINATION RIGHTS. At any reasonable time and from time
to time, permit the Bank or any agents or representatives thereof,
during normal business hours to examine and make copies of and abstracts
from the records and books of and accounts of, and visit the properties
of, the Customer and to discuss the affairs, finances and accounts of
the Customer and the Contract with any of its officers and independent
public accountants.
(e) KEEPING OF BOOKS. Keep proper books and records and
accounts, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Customer and
the Customer's performance under the Contract in accordance with GAAP
consistently applied.
(f) MAINTENANCE OF PROPERTIES. Maintain and preserve all of
its properties which are used or useful in the conduct of its business
in good working order and condition, ordinary wear and tear excepted.
(g) MAINTENANCE OF INSURANCE. Maintain insurance with
responsible and reputable insurance companies in such amounts and
covering such risks as is customarily carried by companies of
established reputations engaged in the same or similar businesses and
similarly situated, and upon request of the Bank (i) deliver to the Bank
certificates of insurance or copies of policies of insurance required to
be carried by or on behalf of the Customer pursuant hereto and (ii)
cause each such policy of insurance to contain a notice of cancellation
provision satisfactory to the Bank and in accordance with insurance
industry practice. Maintain all insurance as required under the
Contract.
(h) REPORTING REQUIREMENTS. Furnish (or cause to be
furnished) to the Bank the following:
(i) as soon as possible and in any event within three
(3) days after the occurrence of each Event of Default or each
event which, with the giving of notice or time elapse, or both,
would constitute an Event of Default ("DEFAULT")
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continuing on the date of such statement, a statement of the
Chief Executive Officer or the Chief Financial Officer of the
Customer setting forth details of such Default or Event of
Default or event and the action which the Customer proposes to
take with respect thereto;
(ii) (x) within ten (10) days after the end of each
month, (A) copies of all change orders, variations or amendments
requested and/or approved by any party to the Contract with
respect to the Finchaa Project, (B) a monthly site report, (C) a
listing of draws on the Revolving Letter of Credit by invoice
number, (D) a variation summary with supporting details on all
variations since the previous summary and (E) copies of all
material correspondence between ▇▇▇▇ & ▇▇▇▇ Technical Services or
any other Finchaa Project engineer, the Finchaa Project owner or
the ADB with the Customer or Serv-Tech; and (y) within thirty
(30) days after the end of each month, (A) the monthly Finchaa
Project status report, (B) a report (aged) of all accounts of the
Customer, segregating accounts of the Customer with respect to
the Finchaa Project, (C) a statement of income and a balance
sheet for the Customer, (D) a schedule of cash flows and monthly
project budget for the Finchaa Project, including the Customer's
then projected net income (loss) with respect thereto, (E) a
"Billing Through" report (Certificate of Payment from ▇▇▇▇ & ▇▇▇▇
Technical Services), (F) a time and materials schedule, (G) a
monthly progress report, (H) a construction progress report and
forecast, and (I) a master invoice log;
(iii) duplicate financial and/or business reports
furnished to the Noteholders, TCB or the Bank Group
contemporaneously with transmitting thereto; and
(iv) such other information respecting the business,
properties, operations, condition or (financial or otherwise) or
prospects of the Customer, the Contract or the Finchaa Project as
the Bank may from time to time reasonably request.
(i) FINCHAA PROJECT ACCOUNT. The Customer shall maintain with
ABN AMRO Bank N.V., or such other financial institution as agreed to in
writing by the Bank, the Noteholders and the Bank Group, a segregated
account into which all proceeds of any draw upon the Revolving Letter of
Credit, together with all proceeds of, or sums paid to Customer pursuant
to, the Contract or the Finchaa Project (including any insurance
proceeds with respect thereto) shall be immediately deposited by the
Customer. The Customer shall not commingle the funds in connection with
the Contract or the Finchaa Project with funds from any other source.
The Customer shall use the funds in such account only for performing its
obligations under the Contract and for reimbursements to Serv-Tech and
its affiliates of costs incurred on the Customer's behalf directly in
connection with the Contract, and shall not use such funds for any other
purpose,
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including, without limitation, for any general corporate purposes or for
any other projects of the Customer. Such account shall be so maintained
until the Contract has been completed, the Finchaa Project has been
accepted by the owner pursuant to the terms of the Contract and the Bank
has no further liability whatsoever under any of the Letters of Credit,
subject to the terms of the Intercreditor Agreement.
(j) CUSTOMER ACCOUNT. The Customer, upon written request from
the Bank, shall maintain a segregated account or accounts into which all
of the Customer's funds from sources other than those described in
Section 11(i) shall be deposited and shall not commingle such funds with
funds of Serv-Tech, any affiliate or any other person. Any such account
shall be subject to the terms of the Intercreditor Agreement.
(k) TRAVEL EXPENSES. The Customer shall be responsible for
any reasonable travel expenses incurred by any consultants and
professionals, the Bank, and any of its consultants and professionals
pursuant to site inspections or evaluations of the Finchaa Project.
12. NEGATIVE COVENANTS. So long as a drawing is available under any
Credit, or the Bank shall have any commitment hereunder, or the Customer shall
have any obligation to pay any amount to the Bank hereunder, the Customer will
not, without the prior written consent of the Bank:
(a) AMENDMENT OF CORPORATE DOCUMENTS. Enter into or consent
to any amendment or modification of its articles of incorporation or
bylaws in any way which would adversely affect the Bank.
(b) LIENS, ETC. Create, assume or suffer to exist any lien,
security interest or other charge or encumbrance upon ("LIEN") or with
respect to any of its properties, whether now owned or hereafter
acquired, or assign any right to receive income, except
(i) Liens existing on the Execution Date and listed on
Schedule _______;
(ii) Liens securing Indebtedness permitted under Section
______ above;
(iii) Permitted Liens;
(iv) any renewal, extension or replacement of any Lien
referred to in subparagraphs (i) and (ii) above; provided, that
no Lien arising or existing as a result of such extension,
renewal or replacement shall be extended to cover any property
not theretofore subject to the Lien being extended, renewed or
replaced
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and provided further that the principal amount of the
Indebtedness secured thereby shall not exceed the principal
amount of the Indebtedness so secured at the time of such
extension, renewal or replacement; and
(v) Liens granted to TCB as Collateral Agent for the
Bank, the Bank Group and the Noteholders on even date herewith,
and any renewals, extensions and modifications thereof or
additions thereto.
(c) INDEBTEDNESS. Create, assume or suffer to exist any
Indebtedness except:
(i) under this Agreement;
(ii) purchase money Indebtedness in connection with the
purchase of assets so long as such Indebtedness does not exceed
eighty percent (80%) of the purchase price of such assets and
does not exceed $100,000 in the aggregate;
(iii) other unsecured Indebtedness not to exceed
$100,000;
(iv) unsecured Indebtedness in connection with trade
letters of credit issued as of the date hereof on behalf of the
Customer in the ordinary course of business, provided that no
such letters of credit are increased in amount; and
(v) unsecured Indebtedness owed to Serv-Tech which is
subordinated to the obligations of the Customer to the Bank
pursuant to the terms of the Guaranty (as hereinafter defined) in
an amount not to exceed $2,000,000 in connection with the Finchaa
Project and in an amount not to exceed $1,000,000 in connection
with the operation of the Customer's business other than the
Finchaa Project; and
(vi) the Guaranty to the Noteholders of even date
herewith.
(d) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise
dispose of any of its assets, except in the ordinary course of business.
(e) MERGER, CONSOLIDATION, ETC.
(i) MERGER AND CONSOLIDATION. The Customer will not
merge with or into or consolidate with any other person or permit
any other person to merge or consolidate with or into it.
(ii) ACQUISITION OF STOCK, ETC. The Customer will not
acquire any stock of any corporation or materially all the assets
of any entity.
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(f) CHANGE IN BUSINESS OR THE CONTRACT. Enter into any
business which is different from or is not connected with the business
in which the Customer is engaged on the date hereof or amend the
Contract without the consent of the Bank, where such amendment would
extend the term of the Contract, change the price of the Contract,
reduce the amounts owing to the Customer under the Contract, or
otherwise adversely affect the Customer's ability to perform the
Contract or the Customer's anticipated profit from the Contract as of
the date hereof.
(g) DIVIDENDS. The Customer shall not redeem, purchase or
otherwise acquire any shares of its capital stock, make any loans or
advances to stockholders or any other persons or entities, declare or
pay any dividends on its capital stock, make any distribution or payment
to stockholders, or set aside any funds for such purpose other than the
repayment of any Indebtedness permitted in Section 11(c)(v) so long as
no Significant Event (as defined in the Intercreditor Agreement) shall
have occurred and be continuing.
(h) TRANSACTIONS WITH AFFILIATES. The Customer will not enter
into any transaction, including, without limitation, the purchase, sale
or exchange of property or the rendering of any service, with any
affiliate, except in the ordinary course of and pursuant to the
reasonable requirements of the Customer's business and upon fair and
reasonable terms no less favorable to the Customer than would obtain in
a comparable arm's-length transaction with a person not an affiliate.
(i) REPAYMENT OF INTERCOMPANY DEBT. The Customer shall not
repay any Indebtedness to Serv-Tech permitted hereunder if a Significant
Event (as defined in the Intercreditor Agreement) shall have occurred
and be continuing.
13. CONDITIONS. The effectiveness of this Agreement is conditioned
upon receipt by the Bank of the following in form and substance acceptable to
the Bank: (a) a duplicate of this Agreement duly signed on behalf of the
Customer and its remaining in full force and effect with respect to the
obligations of the Customer; (b) a certified copy of the resolutions of the
Board of Directors of the Customer authorizing the execution and delivery of
this Agreement; (c) a Certificate of Incumbency specifying the names and titles
of the authorized individuals under such board resolution; (d) authenticated
signatures of the persons specified in such board resolution; (e) an amended
and restated guaranty of Serv-Tech and its subsidiaries listed therein and any
other domestic subsidiaries from time to time required to execute a Guaranty
pursuant to the terms thereof (the "SUBSIDIARIES") (the "GUARANTY") with
respect to the obligations of the Customer hereunder duly executed and
accompanied by (i) certified copies of a resolution of each of the Boards of
Directors of Serv-Tech and the Subsidiaries authorizing the execution and
delivery of the Guaranty together with a certificate of incumbency specifying
the names and titles of the applicable authorized individuals under such board
resolutions and the authenticated
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signatures of such persons; (f) a written opinion by the Customer's, Serv-
Tech's and the Subsidiaries' legal counsel in a form satisfactory to the Bank;
(g) payment of all costs (including reasonable attorneys' fees) of the Bank in
connection with documenting the restructure described in this Agreement; (h)
the Intercreditor Agreement in form and substance satisfactory to the Bank
executed by the Bank, the Bank Group and the Noteholders under that certain
Note Purchase Agreement dated as of June 1, 1993, as amended prior to and on
the date hereof (the "NOTE PURCHASE AGREEMENT"); (i) a written opinion provided
by Jones, Walker, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. on or before
November 18, 1996; and (j) documentation in form and substance satisfactory to
the Bank that Serv-Tech has restructured all indebtedness owed to the Bank
Group and the Noteholders, that Serv-Tech and it subsidiaries have granted
liens on all their material assets to the Bank Group, the Noteholders and the
Bank and that Serv-Tech and its subsidiaries are in compliance with all such
restructured loan documentation. Serv-Tech, the Subsidiaries and any other
subsidiaries as are hereafter required to execute a Guaranty pursuant to the
terms hereof, are collectively referred to as the "GUARANTORS."
14. EVENTS OF DEFAULT. The occurrence of any of the following events
shall be an "EVENT OF DEFAULT" hereunder:
(a) NON-PAYMENT OF MONETARY OBLIGATIONS HEREUNDER. The
Customer shall fail to pay any amount payable hereunder when due;
(b) BREACH OF WARRANTIES. Any representation or warranty of
the Customer made in writing herein or in connection with this Agreement
or any of the Letters of Credits shall prove to have been incorrect in
any material respect when made;
(c) OTHER DEFAULTS. The Customer shall fail to perform or
observe any other term, covenant or agreement contained in this
Agreement on its part to be performed or observed;
(d) NON-PAYMENT OF OTHER MONETARY OBLIGATIONS. The Customer
shall fail to pay any indebtedness (excluding indebtedness under this
Agreement) in excess of $50,000 individually or in the aggregate, or any
interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) and such failure
shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such indebtedness; or any other
default under any agreement or instrument relating to any such
indebtedness, or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate, or
to permit the acceleration of, the maturity of such indebtedness; or any
such indebtedness shall be declared to be due and payable, or required
to be prepaid (other than by a regularly scheduled required prepayment),
prior to the stated maturity thereof;
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(e) BANKRUPTCY, INSOLVENCY, ETC. The Customer or any of the
Guarantors shall fail to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding shall
be instituted by or against the Customer or any of the Guarantors
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, or other similar official for it or any
substantial part of its property and, if instituted against the Customer
or any of the Guarantors, shall remain undismissed for a period of sixty
(60) days, or an order for relief as defined in the United States
Bankruptcy Reform Act of 1978, as amended, shall be rendered prior to
the expiration of that sixty (60) day period; or any judgment, writ,
warrant of attachment or execution or similar process shall be issued or
levied against any substantial part of the property of the Customer or
any of the Guarantors, and shall not be released, vacated or fully
bonded within sixty (60) days after its issue or levy, or the Customer
or any of the Guarantors shall take any action to authorize any of the
actions set forth above in this subsection (e);
(f) INVALIDITY, ETC. Any provision of this Agreement or the
Guaranty shall at any time for any reason cease to be valid and binding
on the Customer or any of the Guarantors, as the case may be, or shall
be declared by any court, arbitrator or governmental authority or agency
to be null and void, or the validity or enforceability thereof shall be
contested by the Customer or any of the Guarantors, as the case may be,
or a proceeding shall be commenced by any governmental agency or
authority having jurisdiction over the Customer or any of the
Guarantors, as the case may be, seeking to establish the invalidity or
unenforceability thereof, or the Customer or any of the Guarantors, as
the case may be, shall deny in writing that it has any or further
liability or obligation under this Agreement or the Guaranty, as the
case may be;
(g) JUDGMENTS. The Customer shall fail to pay, bond or
otherwise discharge, or stay on appeal or otherwise appropriately
contest in good faith in a manner that stays execution, any money
judgment or order in excess of $50,000 against it or its assets at least
five (5) days prior to the date on which any steps may be taken to
execute on such judgment;
(h) GUARANTY DEFAULT. Any "Event of Default" under and as
defined in the Guaranty shall have occurred and be continuing;
(i) CONTRACT DEFAULT. A Default (as defined in the Contract)
shall occur under the Contract pursuant to Section 27 thereof or
otherwise, the Contract shall terminate or be declared terminated, be
declared null and void or be contested by the Finchaa Sugar Factory, any
other governmental authority, or the ADB;
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(j) NOTE PURCHASE AGREEMENT AND BANK AGREEMENT. A default or
an event of default shall occur under the Note Purchase Agreement or the
Bank Agreement, in all respects without giving effect to any amendment
or waiver thereof after the date hereof; provided that (i) it shall also
be an Event of Default hereunder if a default or an event of default
shall occur in any of such agreements as same may be amended after the
date hereof, (ii) if either the Note Purchase Agreement or the Bank
Agreement, shall cease to be in full force and effect, it shall also be
an Event of Default hereunder if any default or event of default would
have occurred if such agreement, in all respects without giving effect
to any amendment or waiver thereof after the date hereof, was then in
full force and effect; and (iii) if the Note Purchase Agreement is
replaced, it shall also be an Event of Default hereunder in any default
or event of default occurs under any such replacement agreement;
(k) TERMINATION OF BANK AGREEMENT. The Bank Agreement shall
cease to be in full force and effect;
(l) OWNERSHIP OF CUSTOMER. Serv-Tech shall fail to own,
directly or indirectly, 100% of the capital stock of the Customer or to
control the Board of Directors thereof while the Letters of Credit are
outstanding; or
(m) WHITNEY NATIONAL BANK LETTERS OF CREDIT. A default or an
event of default shall occur under any documents or instruments
evidencing (i) any credit facility with Whitney National Bank pursuant
to which letters of credit are issued for the account of the Customer or
(ii) any guaranty of Serv-Tech or any other affiliate of Serv-Tech
thereof.
15. RIGHT OF SET-OFF. Upon the occurrence and during the continuance
of any Default or any Event of Default, the Bank is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by the Bank
to or for the credit or the account of the Customer against any and all of the
obligations of the Customer now or hereafter existing under this Agreement,
irrespective of whether or not the Bank shall have made any demand hereunder
and although such obligations may be contingent or unmatured; provided,
however, the amount so set off shall be held as collateral pursuant to the
terms and conditions of the Intercreditor Agreement.
16. LIMITED LIABILITY. So long as the Bank has exercised reasonable
care and has acted in good faith, the Bank shall not be responsible to the
Customer for, and the Bank's right to reimbursement, indemnification, and other
payments hereunder shall not be impaired by (i) any act or omission for which
banks are relieved of responsibility under the Uniform Customs and Practice for
Documentary Credits, 1993 revision, ICC Publication No. 500 (1993), (ii) any
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recommendation or failure to recommend the inclusion or exclusion of any
particular term or wording in a Letter of Credit, (iii) honor or dishonor or
refusal of any demand under a Letter of Credit following the Customer's refusal
to confirm that such demand is entitled to be honored or that the Bank is
entitled to be reimbursed, (iv) any lack of validity or enforceability of this
Agreement or document or instrument executed in connection therewith, (v) any
amendment or waiver of or any consent to depart from all or any of the
provisions of this Agreement or any document or instrument executed in
connection therewith; (vi) the existence of any claim, set-off, defense or
other right the Customer may have at any time against a beneficiary of a Letter
of Credit (or any person for whom a beneficiary may be acting), the Bank or any
other person, whether in connection with this Agreement, another document or
instrument executed in connection therewith or any unrelated transaction; (vii)
any statement or any other document presented under a 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; (viii) payment by
the Bank under a Letter of Credit against presentation to the Bank of a draft
or certificate that does not comply with the terms of the Letter of Credit,
provided that the Bank's determination that documents presented under the
Letter of Credit comply with the terms thereof did not constitute gross
negligence or willful misconduct of the Bank; or (ix) any other act or omission
to act or delay of any kind by the Bank or any other person or any other event
or circumstance whatsoever that might, but for the provisions of this Section,
constitute a legal or equitable discharge of the Customer's obligations
hereunder. The Bank shall not be liable for any special, indirect, or
consequential damages unless there is a judicial finding by a court of
competent jurisdiction that such damages resulted solely from the Bank's bad
faith or willful misconduct.
17. MISCELLANEOUS.
(a) NO WAIVER; AMENDMENT. No amendment or waiver of any
provision hereof shall be enforceable against the Bank unless in writing
and signed by the Bank, and then only in the specific instance and for
the specific purposes for which given. Nothing herein shall affect the
Bank's duties or a beneficiary's rights under a Letter of Credit unless
such Letter of Credit is so amended.
(b) APPLICABLE LAW AND VENUE. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. The
Customer (i) agrees that any suit, action or other legal proceeding
arising out of or relating to this Agreement may be brought in a court
of competent jurisdiction in the State of Texas or in the Courts of the
United States of America located in such State, and that any suit,
action or other legal proceeding arising out of or relating to any
Letter of Credit issued hereunder may be brought, at the option of the
Bank, either in such a court or any other appropriate court of competent
jurisdiction, (ii) consents to the jurisdiction of any such court in any
such suit, action or proceeding, and (iii) waives any objection or
immunity which it may have to the laying of
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venue of any suit, action or proceeding in any of such courts and any
claim that any such suit, action or proceeding has been brought in an
inconvenient forum.
(c) COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same document.
(d) SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.
(e) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or in any
certificate delivered pursuant hereto shall survive the execution and
delivery of this Agreement, and no investigation by the Bank shall
affect the representations and warranties or the right of the Bank to
rely upon them.
(f) HEADINGS. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
(g) NOTICES. All notices hereunder shall be in writing, shall
be hand delivered, deposited into the United States mail (registered or
certified mail), postage prepaid, sent by overnight courier or sent by
confirmed facsimile transmission and shall be addressed to the parties
hereto at the respective addresses set forth opposite their signatures
below or such other address as such party shall designate in writing and
furnish to the other party. Any notice shall be deemed to be received
when actually received unless so addressed and deposited in the United
States mail as so designated in which event it shall be deemed received
on the third succeeding business day after the date of such deposit.
(h) WAIVER OF JURY TRIAL. THE CUSTOMER HEREBY EXPRESSLY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY LETTER OF CREDIT OR
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
(i) NOTICE OF ENTIRE AGREEMENT. This Agreement constitutes
the entire understanding between the Customer and the Bank and
supersedes all earlier or contemporaneous agreements, whether written or
oral, concerning the subject matter thereof. THIS WRITTEN AGREEMENT
REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED
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BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers as of the
date first above written.
▇. ▇. ▇▇▇▇▇▇▇▇ & ASSOCIATES, INC.
Address:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Title: Director, Vice President & CFO
------------------------------------
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ABN AMRO BANK N.V., HOUSTON AGENCY
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ BY: ABN AMRO NORTH AMERICA, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President & Director
By: /s/ H. ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: H. ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Title: Vice President & Director
------------------------------------
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SCHEDULE I - PENDING LITIGATION
NONE