FINANCING AGREEMENT
This Financing Agreement (“Agreement”) is made and entered into this 26th day of March, 2024, by and among Shimmick Corporation f/k/a SCCI National Holdings, Inc., Shimmick Construction Company, Inc., The Leasing Corporation, Rust Constructors, Inc., and Rust Constructors Puerto Rico, Inc., and any and all affiliates, subsidiaries, successors and assigns thereof (individually and collectively, “Indemnitors”); and Berkshire Hathaway Specialty Insurance Company, National Liability & Fire Insurance Company, National Indemnity Company and any and all affiliates, subsidiaries, successors and assigns thereof (collectively, “Surety”).
RECITALS
WHEREAS, Indemnitors have and continue to request and apply to Surety for payment and performance bonds in connection with various construction contracts;
WHEREAS, in order to induce Surety to issue such bonds, each of the Indemnitors has heretofore made and entered into a General Agreement of Indemnity and a related rider in favor of Surety (the “GAI”) (a copy of the GAI, which is fully incorporated herein, is attached hereto as Exhibit 1);
WHEREAS, Surety, in reliance upon the terms and obligations set forth in the GAI, has, at the request of Indemnitors, issued payment and performance bonds (“Bonds”) in connection with certain construction contracts that have been awarded to various contractors (“Contractors”) by various owner/obligees (“Obligees”) for the construction of various projects as set forth in Exhibit 2 attached hereto (collectively, the “Bonded Contracts”) (The term “Bonds” shall include, without limitation, all performance, payment, retainage or other bonds previously or hereafter issued by Surety on, or in connection with, the Bonded Contracts);
WHEREAS, Indemnitors hereby acknowledge and reaffirm all of their joint and several obligations and liabilities, as Indemnitors under the GAI, to Surety in connection with each of the Bonded Contracts, which GAI shall remain in full force and effect;
WHEREAS, the Bonded Contracts are in various stages of completion, and Indemnitors have requested financial assistance from the Surety to ensure that Indemnitors have sufficient liquidity to complete the Bonded Contracts and discharge their obligations under the Bonds;
WHEREAS, Indemnitors have offered and/or recommitted certain assets as security for the requested financial assistance and as an inducement for Surety to provide such assistance and forbear enforcing rights under the GAI in accordance with this Agreement;
WHEREAS, in accordance with and subject to the terms and conditions set forth herein, Surety, as a performing surety, intends to provide financial assistance to Indemnitors by making limited funds available to facilitate completion of the work and discharge of Bond obligations arising under one or more of the Bonded Contracts; and
WHEREAS, in order to address, in part, their obligations and duties to Surety under the GAI and the Bonds, Indemnitors are willing to execute this Agreement.
Covenants
Now, therefore, for and in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, it is hereby mutually understood and agreed by and among Indemnitors and Surety as follows:
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Without limiting the foregoing, such Loss shall include, but not necessarily be limited to all damages, losses, reasonable costs, reasonable attorneys’, accountants’, engineers’, and consulting fees, and all other reasonable expenses incurred in connection therewith, which Surety may sustain, incur, or to which it may be exposed by reason of executing or procuring the execution of said Bonds, or any other bond(s) issued by Surety which may already or hereafter be executed on behalf of Contractors, or renewal or continuation thereof; or which may be sustained or incurred by reason of (1) making any investigation on account thereof, (2) prosecuting or defending any case involving any salvage or other recovery in connection therewith; (3) enforcing by litigation or otherwise any of the provisions of this Agreement or the GAI; (4) evaluating and considering Indemnitors’ requests for financial assistance to Surety; or (5) in the formation or administration of this Agreement.
Surety Loss shall also include, but not be limited to (1) any and all funds provided by Surety under this Agreement and any and all other amounts paid by Surety to Indemnitors to fund completion of the Bonded Contracts, including any payments to subcontractors or suppliers and all related costs, fees, expenses and interest; (2) any and all amounts paid for claims made under any Bonds; (3) money judgments and amounts paid in settlement or compromise, of any third party claims, including the full amount of attorney and other professional fees incurred or paid by Surety, court costs and fees; (4) any loss which Surety may sustain or incur as a result of any actions taken by
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Surety upon information provided by any of the Indemnitors; (5) any loss resulting from the activity of Contractors individually or as part of a joint venture, partnership, or other entity which has been or may be formed; (6) any amounts that have been paid to Surety to be applied to a Surety loss that a court of competent jurisdiction determines constitutes a “preference” within the meaning of Section 547 of the Bankruptcy Code, and that, by reason thereof, Surety is required to disgorge or refund; (7) any amounts paid by Surety to prosecute any affirmative claim or defend against any claim, (8) any unpaid premiums and fees for the issuance and continuance of Bonds; and (9) interest, at the rate specified below, on all losses paid by Surety, due from the date of Surety’s payment of such sums, including but not limited to any amounts loaned or advanced by Surety or otherwise deposited by Surety into any account provided for hereunder, whether or not interest has been awarded by any court or other tribunal.
All loss described above shall constitute Surety Loss for purposes of this Agreement and under the GAI.
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Promptly upon executing this Agreement, Indemnitors will develop a comprehensive list of the following Collateral items: (i) any and all assets valued at $50,000 or greater, of any nature or kind, in which they or any of them have any interest, with sufficient detail to enable Surety to exercise its assignment rights and/or to confirm, perfect or otherwise establish the liens, security interests and any other rights provided for in the GAI or herein in or against such Collateral, (ii) a detailed list of any corporate entities, no matter how constituted, in which any of them owns an equity, investor or other beneficial interest, describing the nature and extent of each such interest;
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and (iii) a detailed list of any assets valued at $50,000 or greater, of any nature or kind, of any subsidiary corporate entity, no matter how constituted, in which any Indemnitors owns or holds an equity, investor or beneficial interest, describing the nature and extent of such interest. Indemnitors will update this list quarterly or as the Surety may otherwise request.
Indemnitors agree to execute any and all instruments or documents reasonably required or deemed necessary by Surety, which may include but shall not be limited to financing statements under the Uniform Commercial Code (UCC Form 1), state-specific consents, agreements and acknowledgements to impress liens against personal and real property, and liens, to confirm, perfect or otherwise establish the liens, security interests and rights granted as Collateral to Surety under this Agreement or as to any other collateral granted to Surety by Indemnitors under any separate assignment or agreement, including the GAI. The Surety shall have all of the rights and remedies of a lienor and of a secured party under the Uniform Commercial Code in effect in the state in which any Collateral is located.
With respect to all Bonded Contracts involving joint ventures, the Indemnitors pledge and agree to provide to Surety: (i) in a form acceptable to Surety, a monthly report detailing the project’s scheduled progress, billings to date, contract receipts and status of subcontractor/supplier payments and anticipated costs to complete; and (ii) a copy of any joint venture or similar agreement that governs the relationship between the joint venture partners. Further, as additional Collateral hereunder, the Indemnitors assign to Surety, to the extent assignable, all of their interests arising out of any and all such joint venture or similar agreements, which assignment rights Surety may elect to exercise in its sole discretion.
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Any and all Surety advances beyond this amount shall only be made at the sole discretion of Surety, and nothing in this Agreement creates or imposes upon the Surety any obligation or duty to make any such advances whatsoever. All funds advanced by the Surety shall be used for the purposes expressly set forth in this Agreement. Any obligation of Surety to loan or advance monies shall cease upon an Instance of Default or the Payment Event as defined herein or upon any other termination or expiry of this Agreement.
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All monies that Surety may advance or loan to Indemnitors or Contractors shall constitute and be considered trust funds for the purposes set forth in this Agreement.
On a weekly basis, Indemnitors shall provide to Surety a cash flow report for each Bonded Project and for any other project for which funding may be provided by Surety. The report shall include information explaining how the funds received on each project are to be used. Specifically, the report shall confirm that the funds are only being used to pay subcontractors, material men, suppliers, and/or laborers performing work on the Project from which the funds are generated.
Surety agrees to provide to Indemnitors a statement of Losses upon reasonable request within forty-five (45) days or promptly in advance of a potential Payment Event, which statement will be current through the date of the request. Notwithstanding anything contained herein to the contrary, as of the date of the occurrence of any Instance of Default, and without demand or notice therefore, all Amounts Owed Surety, including all accrued interest, shall be immediately due and payable. Nothing contained herein shall limit the rights of Surety to recover from Indemnitors or Contractors any amounts due Surety under this Agreement, the Bonds, under the GAI, by statute, at law or in equity.
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Upon the occurrence of any of the foregoing Instances of Default, then Surety, notwithstanding any other provision hereof, shall have the right, at its sole option, to immediately notify Indemnitors and Contractors that Surety declares Contractors and Indemnitors in default hereunder; Surety shall thereupon have the right to exercise any and all rights it has agreed herein to forbear, in addition to all other rights otherwise available under this Agreement, the Bonds, the
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GAI and any other agreement or instrument, or by statute, at law or in equity, to satisfy any indebtedness due to the Surety and Surety shall be relieved of and released from any and all obligations otherwise imposed upon Surety by this Agreement. As of the date of such declaration of default by Surety, any Surety obligation to make loans or advances or to make funds available shall cease. Any failure of Surety to exercise any right granted hereunder or under any provision of this Agreement, the GAI, or any agreement with respect to any Collateral, shall not be deemed a waiver of any such right.
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As to Surety:
Jeffrey Jubera
VP – Global Surety Claims
Berkshire Hathaway Specialty Insurance
1314 Douglas Street, Suite 1300
Omaha, NE 68102 - 1944
With a copy to:
Vivian Katsantonis, Esq.
Watt, Tieder, Hoffar & Fitzgerald, L.L.P.
8405 Greensboro Drive, Suite 100
McLean, Virginia 22182
As to Indemnitors:
c/o Shimmick Corporation
530 Technology Drive, Suite 300
Irvine, California 92618
Attention: Steven E. Richards
With a copy to:
Alan Noskow, Esq.
King & Spalding LLP
1700 Pennsylvania Avenue, NW, Suite 900
Washington, D.C. 20006
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[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above, and each of the undersigned personally represent and warrant that they have the full right, power and authority to execute this Agreement on behalf of the respective parties.
Indemnitors:
Shimmick Corporation (f/k/a SCCI National Holdings, Inc.)
Attest: ______________________ By:
Its:
Shimmick Construction Company, Inc.
Attest: ______________________ By:
Its:
The Leasing Corporation
Attest: ______________________ By:
Its:
Rust Constructors, Inc.
Attest: ______________________ By:
Its:
Rust Constructors Puerto Rico, Inc.
Attest: ______________________ By:
Its:
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Surety:
Berkshire Hathaway Specialty Insurance
Attest: ______________________ By: Its:
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