EXHIBIT 10.1
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AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
by and among
XXXXXX XXXXXXX HALTER, INC.
and
EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO
as Borrowers,
THE LENDERS THAT ARE SIGNATORIES HERETO
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as the Arranger and Administrative Agent
Dated as of October 24, 2000
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TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION........................................................... 3
1.1 Definitions..................................................................... 3
1.2 Accounting Terms................................................................ 46
1.3 Code............................................................................ 46
1.4 Construction.................................................................... 46
1.5 Schedules and Exhibits.......................................................... 47
2. LOAN AND TERMS OF PAYMENT.............................................................. 47
2.1 Revolver Advances............................................................... 47
2.2 Term Loan....................................................................... 49
2.3 Borrowing Procedures and Settlements............................................ 50
2.4 Payments........................................................................ 57
2.5 Overadvances.................................................................... 61
2.6 Interest Rates and Letter of Credit Fee: Rates, Payments, and
Calculations.................................................................... 61
2.7 Cash Management................................................................. 63
2.8 Crediting Payments; Float Charge................................................ 65
2.9 Designated Account.............................................................. 65
2.10 Maintenance of Loan Account; Statements of Obligations.......................... 66
2.11 Fees............................................................................ 66
2.12 Letters of Credit............................................................... 66
2.13 LIBOR Option.................................................................... 70
2.14 Capital Requirements............................................................ 73
2.15 Joint and Several Liability of Borrowers........................................ 73
2.16 Prior Credit Agreement.......................................................... 77
3. CONDITIONS; TERM OF AGREEMENT.......................................................... 77
3.1 Conditions Precedent to the Initial Extension of Credit......................... 77
3.2 Conditions Subsequent to the Initial Extension of Credit........................ 82
3.3 Conditions Precedent to all Extensions of Credit................................ 84
3.4 Term............................................................................ 84
3.5 Effect of Termination........................................................... 84
3.6 Early Termination by Borrowers.................................................. 85
4. CREATION OF SECURITY INTEREST.......................................................... 85
4.1 Grant of Security Interest...................................................... 85
4.2 Negotiable Collateral........................................................... 86
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.......... 86
4.4 Delivery of Additional Documentation Required................................... 86
4.5 Power of Attorney............................................................... 86
4.6 Right to Inspect................................................................ 87
4.7 Control Agreements.............................................................. 87
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5. REPRESENTATIONS AND WARRANTIES....................................................... 87
5.1 No Encumbrances.............................................................. 88
5.2 Eligible Accounts............................................................ 88
5.3 Eligible Inventory........................................................... 88
5.4 Equipment.................................................................... 89
5.5 Location of Inventory and Equipment.......................................... 89
5.6 Inventory Records............................................................ 89
5.7 Location of Chief Executive Office; FEIN..................................... 89
5.8 Due Organization and Qualification; Subsidiaries............................. 89
5.9 Due Authorization; No Conflict............................................... 90
5.10 Litigation................................................................... 91
5.11 No Material Adverse Change................................................... 91
5.12 Fraudulent Transfer.......................................................... 92
5.13 Employee Benefits............................................................ 92
5.14 Environmental Condition...................................................... 92
5.15 Brokerage Fees............................................................... 92
5.16 Intellectual Property........................................................ 92
5.17 Leases....................................................................... 93
5.18 DDAs......................................................................... 93
5.19 Complete Disclosure.......................................................... 93
5.20 Indebtedness................................................................. 93
5.21 Eligible Equipment, Ship Collateral and Real Property Schedules.............. 93
5.22 Ownership of Ship Collateral Under Construction.............................. 93
5.23 Identifying Numbers.......................................................... 94
5.24 Marad Consent................................................................ 94
5.25 Intellectual Property........................................................ 94
6. AFFIRMATIVE COVENANTS................................................................ 94
6.1 Accounting System............................................................ 94
6.2 Collateral Reporting......................................................... 95
6.3 Financial Statements, Reports, Certificates.................................. 96
6.4 [Intentionally Omitted....................................................... 99
6.5 Return....................................................................... 99
6.6 Maintenance of Properties.................................................... 99
6.7 Taxes........................................................................ 99
6.8 Insurance.................................................................... 99
6.9 Location of Inventory and Equipment.......................................... 102
6.10 Compliance with Laws......................................................... 102
6.11 Leases....................................................................... 102
6.12 Brokerage Commissions........................................................ 103
6.13 Existence.................................................................... 103
6.14 Environmental................................................................ 103
6.15 Disclosure Updates........................................................... 103
6.16 Alterations, Modifications and Additions..................................... 103
6.17 Ownership of Ship Collateral................................................. 104
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6.18 Identifying Numbers............................................... 104
6.19 Insurance......................................................... 104
6.20 Excluded Assets................................................... 105
7. NEGATIVE COVENANTS........................................................ 106
7.1 Indebtedness...................................................... 106
7.2 Liens............................................................. 107
7.3 Restrictions on Fundamental Changes............................... 107
7.4 Disposal of Assets................................................ 108
7.5 Change Name....................................................... 108
7.6 Guarantee......................................................... 108
7.7 Nature of Business................................................ 108
7.8 Prepayments and Amendments........................................ 108
7.9 Change of Control................................................. 109
7.10 [Intentionally Omitted]........................................... 109
7.11 Distributions..................................................... 109
7.12 Accounting Methods................................................ 109
7.13 Investments....................................................... 109
7.14 Transactions with Affiliates...................................... 110
7.15 Suspension........................................................ 110
7.16 Compensation...................................................... 110
7.17 Use of Proceeds................................................... 110
7.18 Change in Location of Chief Executive Office; Inventory and
Equipment with Bailees............................................ 110
7.19 Securities Accounts............................................... 110
7.20 Financial Covenants............................................... 111
7.21 Vessels........................................................... 115
7.22 Guarantor Subsidiaries............................................ 115
7.23 Hedging Obligations............................................... 115
8. EVENTS OF DEFAULT......................................................... 115
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.................................... 118
9.1 Rights and Remedies............................................... 118
9.2 Remedies Cumulative............................................... 121
10. TAXES AND EXPENSES........................................................ 121
11. WAIVERS; INDEMNIFICATION.................................................. 122
11.1 Demand; Protest; etc.............................................. 122
11.2 The Lender Group's Liability for Collateral....................... 122
11.3 Indemnification................................................... 122
12. NOTICES................................................................... 123
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER................................ 124
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14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS....................................... 125
14.1 Assignments and Participations............................................ 125
14.2 Successors................................................................ 127
15. AMENDMENTS; WAIVERS.............................................................. 128
15.1 Amendments and Waivers.................................................... 128
15.2 Replacement of Holdout Lender............................................. 129
15.3 No Waivers; Cumulative Remedies........................................... 129
16. AGENT; THE LENDER GROUP.......................................................... 130
16.1 Appointment and Authorization of Agent.................................... 130
16.2 Delegation of Duties...................................................... 131
16.3 Liability of Agent........................................................ 131
16.4 Reliance by Agent......................................................... 131
16.5 Notice of Default or Event of Default..................................... 132
16.6 Credit Decision........................................................... 132
16.7 Costs and Expenses; Indemnification....................................... 133
16.8 Agent in Individual Capacity.............................................. 133
16.9 Successor Agent........................................................... 134
16.10 Lender in Individual Capacity............................................. 134
16.11 Withholding Taxes......................................................... 134
16.12 Collateral Matters........................................................ 136
16.13 Restrictions on Actions by Lenders; Sharing of Payments................... 137
16.14 Agency for Perfection..................................................... 138
16.15 Payments by Agent to the Lenders.......................................... 138
16.16 Concerning the Collateral and Related Loan Documents...................... 138
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information.................................... 139
16.18 Several Obligations; No Liability......................................... 140
17. GENERAL PROVISIONS............................................................... 140
17.1 Effectiveness............................................................. 140
17.2 Section Headings.......................................................... 140
17.3 Interpretation............................................................ 141
17.4 Severability of Provisions................................................ 141
17.5 Amendments in Writing..................................................... 141
17.6 Counterparts; Telefacsimile Execution..................................... 141
17.7 Revival and Reinstatement of Obligations.................................. 141
17.8 Integration............................................................... 141
17.9 Parent as Agent for Borrowers............................................. 141
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Assignment and Acceptance
Exhibit C-1 Form of Compliance Certificate
Exhibit L-1 Form of LIBOR Notice
Exhibit 5.24 Marad Consent
Schedule C-1 Assets Excluded from Collateral
Schedule C-2 Commitments
Schedule C-3 Construction Contracts
Schedule E-1 Eligible Equipment
Schedule E-2 Inventory Locations
Schedule P-1 Permitted Affiliate Transactions
Schedule P-2 Permitted Dispositions
Schedule P-3 Permitted Investments
Schedule P-4 Permitted Liens
Schedule R-1 Real Property
Schedule R-2 Real Property Collateral
Schedule R-3 Eligible Real Property Collateral
Schedule S-1 Ship Collateral
Schedule 2.7(a) Cash Management Banks
Schedule 2.7(b) Cash Management Accounts
Schedule 2.12(g) Letters of Credit Outstanding as of the Closing
Date
Schedule 3.2 Collateral Access Agreement
Real Property Locations
Schedule 5.5 Locations of Inventory and Equipment
Schedule 5.7 Chief Executive Office; FEIN
Schedule 5.8(b) Capitalization of Borrowers
Schedule 5.8(c) Capitalization of Borrowers' Subsidiaries
Schedule 5.8(d) Options, Warrants
Schedule 5.10 Litigation
Schedule 5.14 Environmental Matters
Schedule 5.16 Intellectual Property
Schedule 5.18 Demand Deposit Accounts
Schedule 5.20 Permitted Indebtedness
Schedule 5.25 Copyrights
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AMENDED AND RESTATED
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LOAN AND SECURITY AGREEMENT
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THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this
"Agreement"), is entered into as of October 24, 2000, between and among, on the
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one hand, the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively as the "Lenders"),
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FOOTHILL CAPITAL CORPORATION, a California corporation, as the arranger and
administrative agent for the Lenders ("Agent"), and, on the other hand, XXXXXX
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XXXXXXX HALTER, INC., a Mississippi corporation ("Parent"), and each of Parent's
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Subsidiaries identified on the signature pages hereof (such Subsidiaries,
together with Parent, are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the
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"Borrowers").
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RECITALS
A. Parent, certain lenders (the "Prior Lenders"), Xxxxx Fargo Texas,
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as administrative agent and co-arranger thereunder ("Prior Administrative
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Agent"), Banc One Capital Markets, Inc., as co-arranger and syndication agent
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thereunder ("Prior Syndication Agent"), and Royal Bank of Canada, a Canadian
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chartered bank, as documentation agent thereunder ("Prior Documentation Agent"),
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are parties to that certain Credit Agreement dated as of November 3, 1999, as
amended from time to time prior to the date hereof (such credit agreement, as
amended, the "Prior Credit Agreement").
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B. Parent has requested that (i) the Lenders assume the obligations
of the Prior Lenders under the Prior Credit Agreement, (ii) Agent assume the
agency responsibilities of the Prior Administrative Agent, Prior Syndication
Agent, and Prior Documentation Agent under the Prior Credit Agreement, and (iii)
Agent and the Lenders amend and restate the Prior Credit Agreement, agree that
certain guarantors under the Prior Credit Agreement are to be Borrowers
hereunder, and make credit available to the Borrowers on the terms and
conditions stated herein.
C. Agent and the Lenders, subject to the terms and conditions stated
herein, are willing to amend and restate the Prior Credit Agreement and to make
such credit facilities available; it being understood that no repayment of the
outstanding amounts payable under the Prior Credit Agreement as of the Closing
Date is being effected hereby but merely an amendment and restatement in
accordance with the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms
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shall have the following definitions:
"Ableco" means Ableco Finance LLC, a Delaware limited liability
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company.
"Account Debtor" means any Person who is or who may become
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obligated under, with respect to, or on account of, an Account, chattel paper
constituting Collateral, or a General Intangible that is not an Excluded Asset.
"Accounts" means all of Borrowers' now owned or hereafter
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acquired right, title, and interest with respect to "accounts" (as that term is
defined in the Code), and any and all supporting obligations in respect thereof.
"Acquired Indebtedness" means, with respect to any Permitted
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Acquisition, Indebtedness of a Person existing at the time such Person becomes a
Subsidiary of a Borrower or assumed by a Borrower in connection with the
acquisition of assets by such Borrower from such Person, and not incurred in
connection with, or in anticipation of, such Person becoming a Subsidiary of a
Borrower or such acquisition.
"Acquisition" means any purchase or other acquisition by a
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Borrower of the assets or Stock of any other Person, other than the purchase of
Inventory or Equipment in the ordinary course of business.
"Additional Documents" has the meaning set forth in Section 4.4.
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"Additional Mortgages" means, individually and collectively, one
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or more mortgages, deeds of trust, or deeds to secure debt, executed and
delivered by a Borrower in favor of Agent, in form and substance satisfactory to
Agent, that encumber that portion of the Real Property Collateral, and the
related improvements thereto, commonly known as (i) 13805 Industrial Seaway
Road, Gulfport, Mississippi, (ii) corner of Three Rivers Road and Industrial
Seaway Road, Gulfport, Mississippi, (iii) CSX Railroad Spur Lease, Pascagoula,
Mississippi, (iv) 0000 Xxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx, (v) 0000 Xxxxx Xxxxx
Xxxxxx, Xxxxxx Xxxx, Xxxxx, and (vi) 0000 Xxxxxx Xxxxxx Xxxx Xxxx., Xxxx Xxxxxx,
Xxxxx.
"Adjusted Tangible Net Worth" means, as of any date of
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determination, the sum of (a) Closing Date Adjusted Tangible Net Worth, plus (b)
100% of Parent's cumulative consolidated net earnings (taking into consideration
losses) since the Closing Date, and plus (c) 75% of the aggregate net cash
proceeds received by Parent from and after the Closing Date from the sale of any
of its Stock.
"Administrative Borrower" has the meaning set forth in Section
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17.9.
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"Advances" has the meaning set forth in Section 2.1.
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"Affiliate" means, as applied to any Person, any other Person
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who, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct the management and
policies of a Person, whether through the ownership of Stock, by contract, or
otherwise; provided, however, that, in any event: (a) any Person which owns
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directly or indirectly 10% or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a
Person or 10% or more of the partnership or other ownership interests of a
Person (other than as a limited partner of such Person) shall be deemed to
control such Person; (b) each director (or comparable manager) of a Person shall
be deemed to be an Affiliate of such Person; and (c) each partnership or joint
venture in which a Person is a partner or joint venturer shall be deemed to be
an Affiliate of such Person.
"Agent" means Foothill, solely in its capacity as agent for the
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Lenders hereunder, and any successor thereto.
"Agent's Account" means an account at a bank designated by Agent
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from time to time as the account into which Borrowers shall make all payments to
Agent for the benefit of the Lender Group and into which the Lender Group shall
make all payments to Agent under this Agreement and the other Loan Documents;
unless and until Agent notifies Administrative Borrower and the Lender Group to
the contrary, Agent's Account shall be that certain deposit account bearing
account number 323-266193 and maintained by Agent with The Chase Manhattan Bank,
4 New York Plaza, 15th Floor, New York, New York 10004, ABA #000000000.
"Agent Advances" has the meaning set forth in Section 2.3(e)(i).
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"Agent's Liens" means the Liens granted by Borrowers to Agent for
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the benefit of the Lender Group under this Agreement or the other Loan
Documents.
"Agent-Related Persons" means Agent together with its Affiliates,
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officers, directors, employees, and agents.
"Agreed Currency" means (i) Dollars, (ii) so long as such
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currencies remain Eligible Currencies, the lawful currency of each Specified
State and the Euro, and (iii) any other Eligible Currency which the Borrowers
requests the Agent to include as an Agreed Currency hereunder and which is
acceptable to the Agent.
"Agreement" has the meaning set forth in the preamble hereto.
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"Applicable Base Rate Margin" means the following margin based
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upon the applicable Ratio of Senior Debt to EBITDA, to be effective as of the
first day of the calendar month immediately following the date of determination,
and based on the most recent quarterly financial statements received by Agent
pursuant to Section 6.3(a) or (b), as the case may be, and the Compliance
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Certificate calculation of the Ratio of Senior Debt to EBITDA delivered pursuant
to Section 6.3(a)(iii):
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Ratio of Senior Debt to EBITDA Applicable Base Rate Margin
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1.9:1.00 2.25 percentage points
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1.7:1.00 2.00 percentage points
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1.5:1.00 1.75 percentage points
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1.3:1.00 1.50 percentage points
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1.1:1.00 1.25 percentage points
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; provided, however, the failure to deliver financial statements and the
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Compliance Certificate calculation of the Ratio of Senior Debt to EBITDA by the
date required hereunder (after giving effect to any applicable grace period)
shall automatically cause the Applicable Base Rate Margin to be the highest rate
set forth above, effective as of the first day of the calendar month immediately
following the date on which the delivery of the financial statements or the
Compliance Certificate calculation of the Ratio of Senior Debt to EBITDA was
otherwise required; and provided further, however, that for the period from the
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Closing Date through the last day of the calendar month during which the first
anniversary of the Closing Date occurs and thereafter until such time as the
Agent receives a Compliance Certificate calculation of the Ratio of Senior Debt
to EBITDA delivered pursuant to Section 6.3(a)(iii) establishing that a
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different Applicable Base Rate Margin applies, the Applicable Base Rate Margin
shall be 1.75 percentage points.
4
"Applicable LIBOR Rate Margin" means the following margin based upon
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the applicable Ratio of Senior Debt to EBITDA, and to be effective as of the
first day of the calendar month immediately following the date of determination,
and based on the most recent quarterly financial statements received by Agent
pursuant to Section 6.3(a) or (b), as the case may be, and the Compliance
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Certificate calculation of the Ratio of Senior Debt to EBITDA delivered pursuant
to Section 6.3(a)(iii):
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Ratio of Senior Debt to EBITDA Applicable LIBOR Rate Margin
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1.9:1.00 4.25 percentage points
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1.7:1.00 4.00 percentage points
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1.5:1.00 3.75 percentage points
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1.3:1.00 3.50 percentage points
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1.1:1.00 3.25 percentage points
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; provided, however, the failure to deliver financial statements and the
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Compliance Certificate calculation of the Ratio of Senior Debt to EBITDA by the
date required hereunder (after giving effect to any applicable grace period)
shall automatically cause the Applicable LIBOR Rate Margin to be the highest
rate set forth above, effective as of the first day of the calendar month
immediately following the date on which the delivery of the financial statements
or the Compliance Certificate calculation of the Ratio of Senior Debt to EBITDA
was otherwise required; and provided further, however, that for the period from
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the Closing Date through the last day of the calendar month during which the
first anniversary of the Closing Date occurs and thereafter until such time as
the Agent receives a Compliance Certificate calculation of the Ratio of Senior
Debt to EBITDA delivered pursuant to Section 6.3(a)(iii) establishing that a
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different Applicable LIBOR Rate Margin applies, the Applicable LIBOR Rate Margin
shall be 3.75 percentage points.
"Applicable Prepayment Premium" means, as of any date of
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determination, an amount equal to (a) during the period of time from and after
the date of the execution and delivery of this Agreement up to the date that is
the first anniversary of the Closing Date, $2,100,000, (b) during the period of
time from and including the date that is the first anniversary of the Closing
Date up to the date that is the second anniversary of the Closing Date,
$1,400,000, and (c) during the period of time from and including the date that
is the second anniversary of the Closing Date up to the Maturity Date, $700,000.
5
"Applicable Unused Line Fee" means, as determined by Agent on a
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quarterly basis, and to be effective as of the first day of the calendar month
immediately following the date of determination, and based on the most recent
quarterly financial statements received by Agent pursuant to Section 6.3(a) or
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(b), as the case may be, and the Compliance Certificate calculation of the Ratio
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of Senior Debt to EBITDA delivered pursuant to Section 6.3(a)(iii), the
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following percentage rate based upon the applicable Ratio of Senior Debt to
EBITDA:
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Ratio of Senior Debt to EBITDA Applicable Unused Line Fee
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1.9:1.00 0.50%
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1.7:1.00 0.50%
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1.5:1.00 0.50%
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1.3:1.00 0.375%
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1.1:1.00 0.25%
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; provided, however, the failure to deliver financial statements and the
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Compliance Certificate calculation of the Ratio of Senior Debt to EBITDA by the
date required hereunder (after giving effect to any applicable grace period)
shall automatically cause the Applicable Unused Line Fee to be the highest rate
set forth above, effective as of the first day of the calendar month immediately
following the date on which the delivery of the financial statements or the
Compliance Certificate calculation of the Ratio of Senior Debt to EBITDA was
otherwise required; and provided further, however, that for the period from the
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Closing Date through the last day of the calendar month during which the first
anniversary of the Closing Date occurs and thereafter until such time as the
Agent receives a Compliance Certificate calculation of the Ratio of Senior Debt
to EBITDA delivered pursuant to Section 6.3(a)(iii) establishing that a
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different Applicable Unused Line Fee applies, the Applicable Unused Line Fee
shall be 0.50%.
"Assignee" has the meaning set forth in Section 14.1.
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"Assignment and Acceptance" means an Assignment and Acceptance
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substantially in the form of Exhibit A-1.
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"Authorized Person" means any officer or other employee of
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Administrative Borrower.
"Availability" means, as of any date of determination, if such
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date is a Business Day, and determined at the close of business on the
immediately preceding
6
Business Day, if such date of determination is not a Business Day, the amount
that Borrowers are entitled to borrow as Advances under Section 2.1 (after
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giving effect to all then outstanding Obligations and all sublimits and reserves
applicable hereunder).
"Bankruptcy Code" means the United States Bankruptcy Code, as in
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effect from time to time.
"Base LIBOR Rate" means the rate per annum, determined by Agent
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in accordance with its customary procedures, and utilizing such electronic or
other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/16%), on the basis of the rates at which Dollar
deposits are offered to major banks in the London interbank market on or about
11:00 a.m. (California time) 2 Business Days prior to the commencement of the
applicable Interest Period, for a term and in amounts comparable to the Interest
Period and amount of the LIBOR Rate Loan requested by Administrative Borrower in
accordance with this Agreement, which determination shall be conclusive in the
absence of manifest error.
"Base Rate" means, the rate of interest announced within Xxxxx
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Fargo at its principal office in San Francisco as its "prime rate", with the
understanding that the "prime rate" is one of Xxxxx Fargo's base rates (not
necessarily the lowest of such rates) and serves as the basis upon which
effective rates of interest are calculated for those loans making reference
thereto and is evidenced by the recording thereof after its announcement in such
internal publication or publications as Xxxxx Fargo may designate.
"Base Rate Loan" means each portion of an Advance that bears
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interest at a rate determined by reference to the Base Rate.
"Benefit Plan" means a "defined benefit plan" (as defined in
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Section 3(35) of ERISA) for which any Borrower or any Subsidiary or ERISA
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Affiliate of any Borrower has been an "employer" (as defined in Section 3(5) of
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ERISA) within the past six years.
"Board of Directors" means the board of directors (or comparable
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managers) of Parent or any committee thereof duly authorized to act on behalf
thereof.
"Bonds" mean any surety agreements, undertakings or instruments
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of guarantee signed by a bonding company or other surety on behalf of any
Borrower.
"Bonded Contract" means any Contract, including Construction
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Contracts, referred to or described in any Bonds issued on behalf of any
Borrower.
"Bonded Contract Security Documents" means any Bonds, and all
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indemnity agreements, utilization agreements, security agreements, pledge
agreements, collateral account agreements, and all other instruments or
documents executed or delivered by any Borrower in connection with any Bond or
Bonded Contract.
7
"Books" means all of each Borrower's now owned or hereafter
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acquired books and records (including all of its Records indicating,
summarizing, or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial condition,
and all of its goods or General Intangibles related to such information).
"Borrower" and "Borrowers" have the respective meanings set forth
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in the preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting of Advances
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(or term loans, in the case of the Term Loan) made on the same day by the
Lenders (or Agent on behalf thereof), or by Swing Lender in the case of a Swing
Loan, or by Agent in the case of an Agent Advance, in each case, to
Administrative Borrower.
"Borrowing Base" has the meaning set forth in Section 2.1.
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"Borrowing Base Certificate" means a certificate in the form of
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Exhibit B-1.
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"Business Day" means any day that is not a Saturday, Sunday, or
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other day on which national banks are authorized or required to close, except
that, if a determination of a Business Day shall relate to a LIBOR Rate Loan,
the term "Business Day" also shall exclude any day on which banks are closed for
dealings in Dollar deposits in the London interbank market.
"Buyer" means any third party buyer subject to the terms and
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conditions of a Construction Contract.
"Canadian Security Agreement" means a Security Agreement executed
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and delivered by Xxxxxx Newfoundland and Xxxxxx Canada in favor of Parent, in
form and substance satisfactory to Agent.
"Canadian Security Documents" means, collectively, such
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instruments, agreements, and documents governed by the laws of Canada or any
political subdivision thereof, as Agent may require in order to secure the
obligations of Xxxxxx Newfoundland and Xxxxxx Canada to Parent under the
Intercompany Note, including the Canadian Security Agreement.
"Canadian Subsidiary" means, individually or collectively, as the
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context requires either of Xxxxxx Canada or Xxxxxx Newfoundland, or any of their
Subsidiaries, and "Canadian Subsidiaries" shall mean all such Persons.
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"Canadian Subsidiary Collateral Assignment" means a collateral
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assignment agreement executed and delivered by each applicable Borrower to Agent
collaterally assigning the rights of such Borrowers in the Canadian Security
Documents to the Agent for the benefit of the Lender Group, the form and
substance of which is satisfactory to the Agent.
8
"Capital Lease" means a lease that is required to be capitalized
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for financial reporting purposes in accordance with GAAP.
"Capitalized Lease Obligation" means any Indebtedness represented
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by obligations under a Capital Lease.
"Capital Expenditures" means, with respect to any Person for any
--------------------
period, the sum of (a) the aggregate of all expenditures by such Person and its
Subsidiaries during such period that in accordance with GAAP are or should be
included in "property, plant equipment" or similar fixed asset account on its
balance sheet, whether such expenditures are paid in cash or financed and
including all Capitalized Lease Obligations paid or payable during such period,
and (b) to the extent not covered by clause (a) above, the aggregate of all
expenditures by such Person and its Subsidiaries to acquire by purchase or
otherwise the business or fixed assets of, or the Stock of, any other Person.
"Cash Equivalents" means (a) marketable direct obligations issued
----------------
or unconditionally guaranteed by the United States or issued by any agency
thereof and backed by the full faith and credit of the United States, in each
case maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Xxxxx'x,
(c) commercial paper maturing no more than 1 year from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-2, or
better, from S&P or Xxxxx'x, (d) certificates of deposit or bankers' acceptances
maturing within 1 year from the date of acquisition thereof either (i) issued by
any bank organized under the laws of the United States or any state thereof
which bank has a rating of A or A2, or better, from S&P or Xxxxx'x, or (ii)
certificates of deposit less than or equal to $100,000 in the aggregate issued
by any other bank insured by the Federal Deposit Insurance Corporation, and (e)
repurchase obligations with a term of not more than 7 days for underlying
securities of the type described in clause (a) above entered into with any
financial institution meeting the qualifications specified in clause (d) above.
"Cash Management Bank" has the meaning set forth in Section
-------------------- -------
2.7(a).
------
"Cash Management Account" has the meaning set forth in Section
----------------------- -------
2.7(a).
------
"Cash Management Agreements" means those certain cash management
--------------------------
service agreements, in form and substance satisfactory to Agent, each of which
is among Administrative Borrower, Agent, and one of the Cash Management Banks.
"Change of Control" means (a) any "person" or "group" (within the
-----------------
meaning of Sections 13(d) and 14(d) of the Exchange Act), other than Permitted
Holders, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of 35%, or more, of the Stock of Parent
having the right to vote for the election of members of the Board of Directors,
or (b) a majority of the members of the Board of Directors do not
9
constitute Continuing Directors, or (c) any Borrower ceases to directly own and
control 100% of the outstanding capital Stock of each of its Subsidiaries extant
as of the Closing Date.
"Closing Date" means the date of the making of the initial
------------
Advance (or other extension of credit) hereunder.
"Closing Date Business Plan" means the set of Projections of
--------------------------
Borrowers for the fiscal year ending December 31, 2000 and the fiscal year
ending December 31, 2001 (on a year by year basis, and for the 1 year period
following the Closing Date, on a month by month basis), in form and substance
(including as to scope and underlying assumptions) satisfactory to Agent.
"Closing Date Adjusted Tangible Net Worth" means $92,000,000.
----------------------------------------
"Code" means the New York Uniform Commercial Code, as in effect
----
from time to time.
"Collateral" means all of each Borrower's now owned or hereafter
----------
acquired right, title, and interest in and to each of the following:
(a) Accounts, including all accounts and receivables related
to or arising out of the use, operation, engagement, employment or management of
any of the Ship Collateral, including all rights under charter agreements,
rights of use, lettings, bills of lading, employments, engagements for carriage
or transport of cargo or passengers, or other agreements, and all freights,
hire, charter, profits, compensation and other money, payment and consideration
due thereunder, whether earned or to be earned, of every nature and kind
whatsoever,
(b) Books,
(c) Components;
(d) Contracts,
(e) Equipment,
(f) General Intangibles,
(g) Inventory,
(h) Investment Property,
(i) Materials;
(j) Negotiable Collateral,
10
(k) Real Property Collateral,
(l) the Ship Collateral, the Materials, Work and Components
related to the Ship Collateral, and the Accounts, Equipment, Inventory and
General Intangibles and other Rights related to or arising out of the use of the
Ship Collateral;
(m) Work;
(n) all rights, liens and privileges of each such Borrower
in and to any Ship Collateral, Work, Materials or Components of third parties
for the payment of sums due and owing to each such Borrower pursuant to
Louisiana Revised Statutes 9:4501 et seq, Louisiana Commercial Code Articles
2772, 2777, 3216, 3217, 3237 et seq;
(o) money or other assets of each such Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(p) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing, and any and all Accounts, Books, Equipment, General
Intangibles, Inventory, Investment Property, Negotiable Collateral, Real
Property, money, deposit accounts, Ship Collateral, Work, Materials, Components,
or other tangible or intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any portion thereof
or interest therein, and the proceeds thereof;
provided, however, that for so long as (i) (A) the Marad Financing Documents,
-------- -------
(B) the GE Financing Documents, or (C) the existing collateral documents with
respect to TDI-North and TDI-South prohibit a Lien in favor of the Agent in the
assets of Borrowers described on Schedule C-1, or (ii) any Indebtedness of FGO
------------
to Marad under the Marad Financing Documents is outstanding, the applicable
portion of such assets (which includes the Marad Collateral) intended to be
secured under the documentation referenced in clauses (i)(A), (B) or (C) above
are specifically excluded from the definition of Collateral (the "Excluded
--------
Assets").
------
"Collateral Access Agreement" means a landlord waiver, bailee
---------------------------
letter, or acknowledgement agreement of any lessor, warehouseman, processor,
consignee, or other Person in possession of, having a Lien upon, or having
rights or interests in the Equipment or Inventory other than solely in Excluded
Assets, in each case, in form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments, and
-----------
other items of payment (including insurance proceeds, proceeds of cash sales,
rental proceeds, and tax refunds) of Borrowers.
"Commitment" means, with respect to each Lender, its Revolver
----------
Commitment, its Term Loan Commitment, or its Total Commitment, as the context
requires, and, with respect to all Lenders, their Revolver Commitments, their
Term Loan Commitments, or their
11
Total Commitments, as the context requires, in each case as such Dollar amounts
are set forth beside such Lender's name under the applicable heading on Schedule
--------
C-2 or on the signature page of the Assignment and Acceptance pursuant to which
---
such Lender became a Lender hereunder in accordance with the provisions of
Section 14.1.
------------
"Compliance Certificate" means a certificate substantially in the
----------------------
form of Exhibit C-1 delivered by the chief financial officer of Parent to Agent.
-----------
"Components" means, in accordance with Section 5522(h) of the
----------
Louisiana Ship Mortgage Law, all parts and components of a vessel, title to
which is vested in a Borrower under the Louisiana Ship Mortgage Law, and which
is fabricated by such Borrower for use in the construction of the vessel, which
will, when so used, form a part of the vessel, and, with respect to goods
located outside of the State of Louisiana, means all items of machinery, piping,
cables, supplies, sheetmetal, and other materials used, consumed, fabricated or
incorporated in connection with the construction of any vessel comprising Ship
Collateral, and shall include all parts and components fabricated in connection
with the completion of such vessel.
"Consolidated Net Interest Expense" means, with respect to any
---------------------------------
Person for any period, gross interest expense of such Person and its
Subsidiaries for such period determined in conformity with GAAP (including,
without limitation, interest expense paid to Affiliates of such Person other
than a Subsidiary of Parent), less the sum of interest income and non-cash
accretion expense and non-cash amortization of debt origination cost for such
period, each determined on a consolidated basis and in accordance with GAAP for
such Person and its Subsidiaries.
"Construction Contract" means any Contract entered into from time
---------------------
to time between such Borrower, as builder, and one or more third parties, as
Buyer, for the purpose of constructing a vessel, including but not limited to,
those Contracts in effect as of the Closing Date listed on Schedule C-3.
------------
"Construction Fund" means the Construction Fund under and as
-----------------
defined or used in the Marad Financing Documents (at the date of this Agreement,
at Bancorp South), and composing a portion of the Excluded Assets.
"Construction Moneys Fund" means the Construction Moneys Fund
------------------------
under and as defined or used in the Marad Financing Documents (at the date of
this Agreement, at Bancorp South).
"Continuing Director" means (a) any member of the Board of
-------------------
Directors who was a director (or comparable manager) of Parent on the Closing
Date, and (b) any individual who becomes a member of the Board of Directors
after the Closing Date if such individual was appointed or nominated for
election to the Board of Directors by a majority of the Continuing Directors,
but excluding any such individual originally proposed for election in opposition
to the Board of Directors in office at the Closing Date in an actual or
threatened election contest relating to the election of the directors (or
comparable managers) of Parent
12
(as such terms are used in Rule 14a-11 under the Exchange Act) and whose initial
assumption of office resulted from such contest or the settlement thereof.
"Contract" means, all of the Borrowers' construction contracts
--------
not composing Excluded Assets, sales orders, sales contracts, purchase orders,
purchase contracts, operating agreements, management agreements, service
agreements, development agreements, consulting agreements, leases and other
contract rights and, to the extent they can lawfully be conveyed or assigned,
express or implied warranties from the providers of goods or services pertaining
to the operation of the business.
"Contribution Agreement" means that certain Contribution
----------------------
Agreement, dated as of even date herewith, among the Borrowers, in form and
substance satisfactory to Agent.
"Control Agreement" means a control agreement, in form and
-----------------
substance satisfactory to Agent, executed and delivered by the applicable
Borrower, Agent, and the applicable securities intermediary with respect to a
Securities Account or a bank with respect to a DDA.
"copyright" shall have the meaning ascribed to such term in the
---------
United States Copyright Act of 1976, as amended, and includes unregistered
copyrights.
"Copyright Security Agreement" means a copyright security
----------------------------
agreement executed and delivered by each Borrower and Guarantor Subsidiary to
Agent, the form and substance of which is satisfactory to Agent.
"Daily Balance" means, with respect to each day during the term
-------------
of this Agreement, the amount of an Obligation owed at the end of such day.
"DDA" means any checking or other demand deposit account
---
maintained by any Borrower or Guarantor Subsidiary, with the exception of the
Title XI Reserve Fund, the Construction Fund, and the Construction Moneys Fund.
"Default" means an event, condition, or default that, with the
-------
giving of notice, the passage of time, or both, would be an Event of Default.
"Defaulting Lender" means any Lender that fails to make any
-----------------
Advance (or other extension of credit) that it is required to make hereunder on
the date that it is required to do so hereunder.
"Defaulting Lender Rate" means (a) the Base Rate for the first 3
----------------------
days from and after the date the relevant payment is due, and (b) thereafter, at
the interest rate then applicable to Advances that are Base Rate Loans
(inclusive of the Base Rate Margin applicable thereto).
"Designated Account" means account number 0000000000 of
------------------
Administrative Borrower maintained with the Designated Account Bank, or such
other deposit account of
13
Administrative Borrower (located within the United States) that has been
designated as such, in writing, by Administrative Borrower to Agent as provided
in Section 2.9.
-----------
"Designated Account Bank" means Xxxxx Fargo Texas, whose office
-----------------------
is located at 0000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000, and whose ABA number is
000000000, or such other Designated Account Bank (located within the United
States) that has been designated as such, in writing, by Administrative Borrower
to Agent as provided in Section 2.9.
-----------
"Dilution" means, as of any date of determination, a percentage,
--------
based upon the experience of the immediately prior 90 days, that is the result
of dividing the Dollar amount of (a) bad debt write-downs, discounts,
advertising allowances, credits, or other dilutive items with respect to the
Accounts during such period, by (b) Borrowers' Collections with respect to
Accounts during such period (excluding extraordinary items) plus the Dollar
amount of clause (a).
"Dilution Reserve" means, as of any date of determination, an
----------------
amount sufficient to reduce the advance rate against Eligible Accounts by one
percentage point for each percentage point by which Dilution is in excess of 5%.
"Disbursement Letter" means an instructional letter executed and
-------------------
delivered by Administrative Borrower to Agent regarding the extensions of credit
to be made on the Closing Date, the form and substance of which is satisfactory
to Agent.
"Dollars" or "$" means United States dollars.
------- -
"Due Diligence Letter" means the due diligence letter sent by
--------------------
Agent's counsel to Administrative Borrower, together with Administrative
Borrower's completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"EBITDA" means, with respect to any fiscal period, Parent's and
------
its Subsidiaries consolidated net earnings (or loss), excluding extraordinary
---------
gains and losses, and plus interest expense, income taxes, and depreciation and
----
amortization for such period, as determined in accordance with GAAP.
"Eligible Accounts" means those Accounts created by one of
-----------------
Borrowers in the ordinary course of its business, that arise out of its sale of
goods or rendition of services, that comply with each of the representations and
warranties respecting Eligible Accounts made by Borrowers under the Loan
Documents, and that are not excluded as ineligible by virtue of one or more of
the criteria set forth below; provided, however, that such criteria may be fixed
-------- -------
and revised from time to time by Agent in Agent's Permitted Discretion to
address the results of any audit performed by Agent from time to time after the
Closing Date. In determining the amount to be included, Eligible Accounts shall
be calculated net of customer deposits and unapplied cash remitted to Borrowers.
Eligible Accounts shall not include the following:
14
(a) Accounts that the Account Debtor has failed to pay
within 30 days of original invoice date,
(b) Accounts owed by an Account Debtor (or its Affiliates)
where 50% or more of all Accounts owed by that Account Debtor (or its
Affiliates) are deemed ineligible under clause (a) above,
(c) Accounts with respect to which the Account Debtor is an
employee, Affiliate, or agent of any Borrower,
(d) Accounts arising in a transaction wherein goods are
placed on consignment or are sold pursuant to a guaranteed sale, a sale or
return, a sale on approval, a xxxx and hold, or any other terms by reason of
which the payment by the Account Debtor may be conditional,
(e) Accounts that are not payable in an Agreed Currency;
(f) Accounts with respect to which the Account Debtor
either (i) does not maintain its chief executive office in the United States or
in a Specified State, or (ii) is not organized under the laws of the United
States or any state thereof or under the laws of a Specified State, or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof, unless
------
(w) the Account is supported by an irrevocable letter of credit satisfactory to
Agent (as to form, substance, and issuer or domestic confirming bank) that has
been delivered to Agent and is directly drawable by Agent, or (x) the Account is
covered by credit insurance or other form of credit enhancement in form,
substance, and amount, and by an insurer, Government Authority or credit
enhancer, satisfactory to Agent, or (y) the Account is deemed an Eligible
Account by the Agent in its sole discretion
(g) Accounts with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which the
applicable Borrower has complied, to the reasonable satisfaction of Agent, with
the Assignment of Claims Act, 31 USC (S). 3727), or (ii) any state of the United
States (exclusive, however, of (y) Accounts owed by any state that does not have
a statutory counterpart to the Assignment of Claims Act or (z) Accounts owed by
any state that does have a statutory counterpart to the Assignment of Claims Act
as to which the applicable Borrower has complied to Agent's satisfaction),
(h) Accounts with respect to which the Account Debtor is a
creditor of any Borrower that has made known its intention to assert a right of
setoff, or has asserted a right of setoff, or has disputed its liability, or has
made any claim with respect to its obligation to pay the Account,
(i) Accounts with respect to an Account Debtor whose total
obligations owing to Borrowers exceed 10% of all Eligible Accounts (which
concentration
15
percentage may be increased by the Agent as it shall determine to an amount no
greater than 20%, at the request of the Borrowers for specified Account
Debtors), to the extent of the obligations owing by such Account Debtor in
excess of such percentage,
(j) Accounts with respect to which the Account Debtor is
subject to an Insolvency Proceeding, is not Solvent, has gone out of business,
or as to which a Borrower has received notice of an imminent Insolvency
Proceeding or a material impairment of the financial condition of such Account
Debtor,
(k) Accounts with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, or West Virginia (or any other
state that requires a creditor to file a business activity report or similar
document in order to bring suit or otherwise enforce its remedies against such
Account Debtor in the courts or through any judicial process of such state),
unless the applicable Borrower has qualified to do business in New Jersey,
Minnesota, West Virginia, or such other states, or has filed a business
activities report with the applicable division of taxation, the department of
revenue, or with such other state offices, as appropriate, for the then-current
year, or is exempt from such filing requirement,
(l) Accounts, the collection of which, Agent, in its
Permitted Discretion, believes to be doubtful by reason of the Account Debtor's
financial condition,
(m) Accounts that are not subject to a valid and perfected
first priority Agent's Lien,
(n) (i) Accounts with respect to which the goods giving
rise to such Account have not been shipped, or billed to, or accepted by the
Account Debtor, or the services giving rise to such Account have not been
performed, or billed to, or accepted by the Account Debtor or with respect to
which the Account Debtor's obligations on the Account is conditional, whether
because further action is required to be performed by the applicable Borrower,
approval by a Person is required to be obtained, or otherwise, or (ii) the
Account otherwise does not represent a final sale; provided that, where payment
--------
by the Account Debtor under an Account is required upon the completion of
certain actions, the obtaining of certain approvals, or the achievement of
certain milestones, such Account shall be an Eligible Account, to the extent of
the amount of such required payment, if the Agent determines in its Permitted
Discretion that the applicable action has been taken, the applicable approval
has been obtained, or the applicable milestones have been achieved in accordance
with the Contract giving rise to such Account and such Account otherwise
qualifies as an Eligible Account,
(o) Accounts arising from the rendition of services or the
sale of goods associated in any way with any Bonded Contract,
(p) Accounts composing Excluded Assets, or
16
(q) Accounts which include a "retainage" or "hold-back"
from the amount due with respect to such Accounts, to the extent of the amount
of such "retainage" or "hold-back."
"Eligible Currency" means any currency other than Dollars (i)
-----------------
that is readily available, (ii) that is freely traded, (iii) in which deposits
are customarily offered to banks in an internationally recognized interbank
market such as London, (iv) which is convertible into Dollars in the
international interbank market, and (v) as to which an equivalent amount valued
in Dollars at the applicable Exchange Rate may be readily calculated. If, after
the designation by the Agent of any currency as an Agreed Currency, (a) currency
control or other exchange regulations are imposed in the country in which such
currency is issued with the result that different types of such currency are
introduced, (b) such currency is, in the determination of the Agent, no longer
readily available or freely traded or (c) in the determination of the Agent, an
equivalent amount of such currency valued in Dollars at the applicable Exchange
Rate is not readily calculable, Agent shall promptly notify the Lenders and the
Borrowers, and such currency shall no longer be an Agreed Currency until such
time as the Agent agrees to reinstate such currency as an Agreed Currency.
"Eligible Equipment" means (a) the Equipment identified on
------------------
Schedule E-1 attached hereto and located at the locations set forth on Schedule
------------ --------
E-1, and (b) any additional Equipment identified by Borrowers to Agent for
---
inclusion on Schedule E-1, which Equipment (i) is held for use in the ordinary
------------
course of Borrowers' business, (ii) is located in Texas, Mississippi, or
Louisiana or the Canadian Province of Newfoundland, and in which Agent has a
perfected Lien of first priority, (iii) is acceptable in all respects to Agent
in its Permitted Discretion, (iv) is not a fixture with the exception of
Equipment affixed to Real Property Collateral, (v) is not intended to be affixed
to real property other than Real Property Collateral, or to become installed in
or affixed to other goods other than Personal Property Collateral, (vi) is not
subject to a Lien in favor of any Person other than Agent, (vii) is not subject
to a lease agreement with any Person, (viii) has had its Net Orderly Liquidation
Value established, (ix) is not acquired with respect to Title Transfer
Construction Contracts or Construction Contracts with Governmental Authorities
which provide for title in the Equipment to vest in the Governmental Authority
if such Equipment is acquired with payments received under such Construction
Contract, and (x) strictly complies with all of Borrowers' representations and
warranties to Agent; provided, however, that, with respect to additional items
-------- -------
of Equipment, standards of eligibility may be fixed and revised from time to
time by Agent in its Permitted Discretion. If and to the extent that an item of
additional Equipment is identified by Borrowers to Agent that meets each of the
foregoing criteria, Schedule E-1 automatically shall be deemed to be amended to
------------
include such item of Equipment. Eligible Equipment shall not include obsolete
items, damaged, defective, or destroyed items.
"Eligible Inventory" means Inventory of Borrowers consisting of
------------------
first quality raw materials or finished goods held for sale in the ordinary
course of Borrowers' business located at one of the business locations of
Borrowers set forth on Schedule E-2 (or in-transit between any such locations),
------------
that complies with each of the representations and warranties
17
respecting Eligible Inventory made by Borrowers in the Loan Documents, and that
is not excluded as ineligible by virtue of the one or more of the criteria set
forth below; provided, however, that such criteria may be fixed and revised from
-------- -------
time to time by Agent in Agent's Permitted Discretion to address the results of
any audit or appraisal performed by Agent from time to time after the Closing
Date. In determining the amount to be so included, Inventory shall be valued at
the lower of cost or market on a basis consistent with Borrowers' historical
accounting practices. An item of Inventory shall not be included in Eligible
Inventory if:
(a) a Borrower does not have good, valid, and marketable
title thereto, including Inventory acquired with respect to Title Transfer
Construction Contracts or Construction Contracts with Governmental Authorities
which provide for title in the Inventory to vest in the Governmental Authority
if such Inventory is acquired with payments received under such Construction
Contract,
(b) it is not located at one of the locations in the United
States of America or the Canadian Province of Newfoundland set forth on Schedule
--------
E-2 or in transit from one such location to another such location,
---
(c) it is located on real property owned or leased by a
Borrower or in a contract warehouse, in each case, unless it is subject to a
Collateral Access Agreement executed by the mortgagee, lessor, warehouseman, or
other third party, as the case may be, and unless it is segregated or otherwise
separately identifiable from goods of others, if any, stored on the premises,
including Inventory acquired with respect to Title Transfer Construction
Contracts or Construction Contracts with Governmental Authorities which provide
for title in the Inventory to vest in the Governmental Authority if such
Inventory is acquired with payments received under such Construction Contract,
(d) it is not subject to a valid and perfected first
priority security Agent's Lien,
(e) it consists of goods returned or rejected by a
Borrower's customers, or
(f) it consists of goods that are obsolete or slow moving,
restrictive or custom items, work-in-process, or goods that constitute spare
parts, packaging and shipping materials, supplies used or consumed in a
Borrower's business, xxxx and hold goods, defective goods, "seconds," or
Inventory acquired on consignment.
"Eligible Real Property Collateral" means (a) the Real Property
---------------------------------
Collateral identified on Schedule R-3 attached hereto, and (b) any additional
------------
Real Property Collateral (with the exception of Excluded Assets) identified by
Borrowers to Agent for inclusion on Schedule R-3, including the Excluded Real
------------
Property Collateral, which Real Property Collateral (i) is held for use in the
ordinary course of Borrowers' business, (ii) is located in the continental
United States of America, and in which Agent has a perfected Lien of first
priority, (iii) is acceptable in all respects to Agent in its Permitted
Discretion, (iv) with respect to which, subject to Section 3.2, Agent shall have
-----------
received (A) appraisals of the Net
18
Quick Sale Value of the Real Property Collateral satisfactory to Agent, and (B)
a Mortgagee Policy in amounts satisfactory to Agent assuring Agent that the
Mortgages on such Real Property Collateral are valid and enforceable first
priority mortgage Liens on such Real Property Collateral free and clear of all
defects and encumbrances except Permitted Liens, and the Mortgage Policies
otherwise shall be in form and substance satisfactory to Agent, including such
endorsements to such Mortgage Policies as Agent shall require; (v) with respect
to which Agent shall have received a phase-I or phase-II environmental report as
Agent shall require; the environmental consultants retained for such reports,
the scope of the reports, and the results thereof shall be acceptable to Agent;
(vi) with respect to which, subject to Section 3.2, Agent shall have received a
-----------
real estate survey and title corrective work as Agent shall require; the
surveyors retained for such surveys, the scope of the surveys and title
corrective work, and the results thereof shall be acceptable to Agent, (vii) is
not subject to a lease agreement with any Person as lessee, and (viii) strictly
complies with all of Borrowers' representations and warranties to Agent;
provided, however, that, with respect to additional parcels of Real Property
-------- -------
Collateral, standards of eligibility may be fixed and revised from time to time
by Agent in its Permitted Discretion. If and to the extent that an item of
additional Real Property Collateral is identified by Borrowers to Agent that
meets each of the foregoing criteria, Schedule R-3 automatically shall be deemed
------------
to be amended to include such parcel of Real Property Collateral.
"Eligible Transferee" means (a) a commercial bank organized under
-------------------
the laws of the United States, or any state thereof, and having total assets in
excess of $3,000,000,000, (b) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and
Development or a political subdivision of any such country and which has total
assets in excess of $3,000,000,000, provided that such bank is acting through a
branch or agency located in the United States, (c) a finance company, insurance
company, or other financial institution or fund that is engaged in making,
purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) total assets in excess of
$3,000,000,000, (d) any Affiliate (other than individuals) of a Lender that was
party hereto as of the Closing Date, or any fund, money market account,
investment account or other account managed by a Lender or an Affiliate of such
Lender, (e) so long as no Event of Default has occurred and is continuing, any
other Person approved by Agent and Administrative Borrower, and (f) during the
continuation of an Event of Default, any other Person approved by Agent.
"Environmental Actions" means any complaint, summons, citation,
---------------------
notice, directive, order, claim, litigation, investigation, judicial or
administrative proceeding, judgment, letter, or other communication from any
Governmental Authority, or any third party involving violations of Environmental
Laws or releases of Hazardous Materials from (a) any assets, properties, or
businesses of any Borrower or any predecessor in interest, (b) from adjoining
properties or businesses, or (c) from or onto any facilities which received
Hazardous Materials generated by any Borrower or any predecessor in interest.
"Environmental Law" means any applicable federal, state,
-----------------
provincial, foreign or local statute, law, rule, regulation, ordinance, code,
binding and enforceable guideline,
19
binding and enforceable written policy or rule of common law now or hereafter in
effect and in each case as amended, or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent
decree or judgment, to the extent binding on Borrowers, relating to the
environment, employee health and safety, or Hazardous Materials, including
CERCLA; RCRA; the Federal Water Pollution Control Act, 33 USC (S) 1251 et seq;
-- ---
the Toxic Substances Control Act, 15 USC, (S) 2601 et seq; the Clean Air Act, 42
-- ---
USC (S) 7401 et seq.; the Safe Drinking Water Act, 42 USC. (S) 3803 et seq.; the
-- --- -- ---
Oil Pollution Act of 1990, 33 USC. (S) 2701 et seq.; the Emergency Planning and
-- ---
the Community Right-to-Know Act of 1986, 42 USC. (S) 11001 et seq.; the
-- ---
Hazardous Material Transportation Act, 49 USC (S) 1801 et seq.; and the
-- ---
Occupational Safety and Health Act, 29 USC. (S)651 et seq. (to the extent it
-- ---
regulates occupational exposure to Hazardous Materials); any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"Environmental Liabilities and Costs" means all liabilities,
-----------------------------------
monetary obligations, Remedial Actions, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants,
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand by any
Governmental Authority or any third party, and which relate to any Environmental
Action.
"Environmental Lien" means any Lien in favor of any Governmental
------------------
Authority for Environmental Liabilities and Costs.
"Equipment" means all of Borrowers' now owned or hereafter
---------
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles (including
motor vehicles and Ship Collateral), tools, parts, goods (other than consumer
goods, farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing, and whether on board or not on board a
vessel.
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
---------------
employees are treated as employed by the same employer as the employees of a
Borrower under IRC Section 414(b), (b) any trade or business subject to ERISA
whose employees are treated as employed by the same employer as the employees of
a Borrower under IRC Section 414(c), (c) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any organization subject to ERISA that is a
member of an affiliated service group of which a Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of ERISA and Section
412 of the IRC, any Person subject to ERISA that is a party to an arrangement
with a Borrower and whose employees are aggregated with the employees of a
Borrower under IRC Section 414(o).
20
"Estoppel Letter" shall mean that certain estoppel letter, dated as
---------------
of the Closing Date, executed and delivered to Agent and the Lenders by the
Borrowers and Guarantor Subsidiaries, if applicable, in form and substance
satisfactory to Agent, in connection with the transactions contemplated by the
Purchase Agreement.
"Euro" means the euro referred to in Council Regulation (EC) No.
----
1103/97 dated June 17, 1997 passed by the Council of the European Union, or, if
different, the then lawful currency of the member states of the European Union
that participate in the third stage of Economic and Monetary Union.
"Event of Default" has the meaning set forth in Section 8.
----------------
"Excess Availability" means the amount, as of the date any
-------------------
determination thereof is to be made, equal to Availability minus the aggregate
amount, if any, of all trade payables of Borrowers aged in excess of the earlier
of (i) 60 days from due date and (ii) their historical levels with respect
thereto, and all book overdrafts in excess of their historical practices with
respect thereto, in each case as determined by Agent in its Permitted
Discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as in
------------
effect from time to time.
"Exchange Rate" means and refers to the nominal rate of exchange
-------------
(vis-a-vis Dollars) for a currency other than Dollars published in the Wall
Street Journal (Western Edition) on the date of determination (which shall be a
Business Day on which the Wall Street Journal (Western Edition) is published),
expressed as the number of units of such other currency per one Dollar.
"Excluded Assets" has the meaning set forth in the definition of
---------------
"Collateral."
"Excluded Real Property Collateral" means the following parcels of
---------------------------------
Real Property Collateral listed on Schedule R-2 that are excluded as of the
------------
Closing Date from the list of Eligible Real Property Collateral set forth on
Schedule R-3 until such time, as determined by the Agent in its Permitted
------------
Discretion, such parcels of Real Property Collateral satisfy the criteria for
inclusion as Eligible Real Property Collateral: Halter Xxxx Point located in
Escatawpa, Mississippi and designated Site #5 on Schedule R-1; HMG Engineering
------------
located in Gulfport, Mississippi and designated Site #6 on Schedule R-1; Halter
------------
Marine-Central located in Gulfport, Mississippi and designated Sites #8 on
Schedule R-1; FGO-West located in Pascagoula, Mississippi and designated Site
------------
#23 on Schedule R-1; Halter Marine located in Lockport, Louisiana and designated
------------
Site #4 on Schedule R-1; and Liberty Bayou located in Slidell, Louisiana and
------------
designated Site #20 on Schedule R-1.
------------
"Existing Mortgages" means, individually and collectively, each of
------------------
the mortgages, deeds of trust, or deeds to secure debt, executed and delivered
by a Borrower in favor of Prior Administrative Agent or Prior Documentation
Agent in connection with the
21
Prior Credit Agreement and that encumber certain parcels of real property, and
the related improvements thereto, composing the Real Property Collateral.
"Family Member" means, with respect to any individual, any other
-------------
individual having a relationship by blood (to the second degree of
consanguinity), marriage, or adoption to such individual.
"Family Trusts" means, with respect to any individual, trusts or
-------------
other estate planning vehicles established for the benefit of Family Members of
such individual and in respect of which such individual serves as trustee or in
a similar capacity.
"Fee Letter" means that certain fee letter, dated as of even date
----------
herewith, between Borrowers and Agent, in form and substance satisfactory to
Agent.
"Fee Split Letter" shall mean that certain letter agreement, dated as
----------------
of the Closing Date, between Agent and Ableco, in its individual capacity,
setting forth the allocation to Ableco of certain fees payable by Borrowers to
Agent pursuant to the Fee Letter and establishing certain relationship
agreements between the Lenders.
"FEIN" means Federal Employer Identification Number.
----
"FGO" means Xxxxxx Xxxxxxx Offshore, Inc., a Mississippi corporation
---
(f\k\a HAM Marine, Inc.).
"FGO Texas" means Xxxxxx Xxxxxxx Offshore Texas, L.P., a Texas
---------
limited partnership, and a Borrower.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i)
---------------------------
EBITDA for such period, to (ii) the sum of (A) all principal of Indebtedness of
Parent and its Subsidiaries scheduled to be paid or prepaid during such period
(not including prepayments of Advances unless such prepayments are accompanied
by a reduction of the Revolver Commitment and not including the final scheduled
payment of the Obligations at the Maturity Date), plus (B) Consolidated Net
Interest Expense of Parent and its Subsidiaries for such period, plus (C) all
amounts paid or payable by Parent and its Subsidiaries on Operating Lease
Obligations having a scheduled due date during such period. In determining the
Fixed Charge Coverage Ratio for a particular period (A) pro forma effect will be
given to: (1) the incurrence, repayment or retirement of any Indebtedness by
Parent or any of its Subsidiaries since the first day of such period as if such
Indebtedness was incurred, repaid or retired on the first day of such period and
(2) the acquisition (whether by purchase, merger or otherwise) or disposition
(whether by sale, merger or otherwise) of any property or assets acquired or
disposed of by Parent or any of its Subsidiaries since the first day of such
period, as if such acquisition or disposition occurred on the first day of such
period; (B) interest on Indebtedness bearing a floating interest rate will be
computed as if the rate on the date of computation had been the applicable rate
for the entire period; (C) if such Indebtedness bears, at the option of Parent
or any of its Subsidiaries, a fixed or floating rate of interest, interest
thereon will be computed by applying, at the option of Parent or any of its
22
Subsidiaries, either the fixed or floating rate; and (D) the amount of
Indebtedness under a revolving credit facility will be computed based upon the
average daily balance of such Indebtedness during such period.
"Foothill" means Foothill Capital Corporation, a California
--------
corporation.
"Foreign Exchange Reserve" means, as of any date of date of
------------------------
determination, a reserve for foreign currency exchange rate risk with respect to
Eligible Accounts payable in an Agreed Currency other than Dollars, and as to
which Borrowers have not covered such foreign currency exchange rate risk
through foreign currency hedging arrangements in a manner acceptable to Agent,
in such amount as shall be determined by Agent in its Permitted Discretion from
time to time on or after the Closing Date.
"Xxxxxx Canada" means Xxxxxx Xxxxxxx Canada, Inc., a Canadian federal
-------------
corporation.
"Xxxxxx France" means Xxxxxxx France SAS, a French corporation.
-------------
"Xxxxxx Newfoundland" means Xxxxxx Xxxxxxx Newfoundland Limited, a
-------------------
corporation organized under the laws of the Province of Newfoundland.
"Funding Date" means the date on which a Borrowing occurs.
------------
"Funding Losses" has the meaning set forth in Section 2.13(b)(ii).
-------------- -------------------
"GAAP" means generally accepted accounting principles as in effect
----
from time to time in the United States, consistently applied.
"GE" means GE Capital Public Finance, Inc., a Connecticut
--
corporation.
"GE Financing Documents" means that certain Loan Agreement, dated as
----------------------
of December 1, 1998, among GE, as lender, Mississippi Business Finance
Corporation, a public body corporate and political subdivision duly organized
and validly existing under the laws of the State of Mississippi, as issuer, and
Parent, as successor-in-interest to Xxxxxx Xxxxxxx International Inc., together
with all security agreements, mortgages, assignments, notes, guaranties,
documents, agreements, and instruments entered into by Parent or GE Guarantor in
favor of GE.
"GE Guarantor" means Xxxxxx Xxxxxxx Offshore, Inc., a Mississippi
------------
corporation, formerly known as HAM Marine, Inc., a Mississippi corporation,
successor-in- interest by merger with Xxxxxx Xxxxxxx Offshore, Inc., a Delaware
corporation.
"General Intangibles" means all of Borrowers' now owned or hereafter
-------------------
acquired right, title, and interest with respect to general intangibles
(including Hedging Obligations), payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes, or regulations, choses or
things in action, goodwill, patents, trade names, trademarks, servicemarks,
copyrights, blueprints, drawings, purchase orders,
23
customer lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on computer disks
or tapes, software, literature, reports, catalogs, money, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property other
than goods, Accounts, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
-------------------
certificate or articles of incorporation, by-laws, or other organizational
documents of such Person.
"Governmental Authority" means any federal, state, local, or other
----------------------
governmental or administrative body, instrumentality, department, or agency or
any court, tribunal, administrative hearing body, arbitration panel, commission,
or other similar dispute- resolving panel or body.
"Guarantor Security Agreement" means a security agreement executed
----------------------------
and delivered by each Guarantor Subsidiary to Agent, the form and substance of
which is satisfactory to Agent.
"Guarantor Subsidiary" means each of Xxxxxxxxx Bond Holding, Inc., a
--------------------
Delaware corporation, Xxxxxxxxx Xxxx, X.X., a Louisiana limited partnership,
Xxxxxxxxx Bond LLC, a Louisiana limited liability company, Gretna Machine and
Iron Works LLC, a Louisiana limited liability company, Halter Calcasieu LLC, a
Louisiana limited liability company, Halter Gulf Repair, Inc., a Delaware
corporation, Equitable Shipyards LLC, a Louisiana limited liability company,
Halter Marine Panama City, Inc., a Delaware corporation, Halter Yachts, Inc., a
Delaware corporation, and Marine Cleaning LLC, a Louisiana limited liability
company.
"Guaranty" means that certain general continuing guaranty executed
--------
and delivered by each Guarantor Subsidiary in favor of Agent, for the benefit of
the Lender Group, in form and substance satisfactory to Agent.
"Hazardous Materials" means (a) substances that are defined or listed
-------------------
in, or otherwise classified pursuant to, any applicable laws or regulations as
"hazardous substances," "hazardous materials," "hazardous wastes," "toxic
substances," or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or "EP
toxicity", (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedging Obligations" means, with respect to any Person, the
-------------------
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest
24
rate collar agreements, (b) other agreements or arrangements designed to protect
such Person against fluctuations in interest rates, and (c) any foreign currency
futures contract, option or similar agreement or arrangement designed to protect
such Person against fluctuations in foreign currency rates, in each case to the
extent such obligations are incurred in the ordinary course of business.
"Incipient Copyright" means any copyright that (a) has not yet become
-------------------
a completed product, version, upgrade, add-on, or modification that is ready to
be marketed by or on behalf of such Person, or (b) is not the subject of
licenses thereof or other dispositions by such Person giving rise to Accounts,
General Intangibles, or other rights to payment.
"Indebtedness" means (a) all obligations of a Borrower or any of its
------------
Subsidiaries for borrowed money, (b) all obligations of a Borrower or any of its
Subsidiaries evidenced by bonds, debentures, notes, or other similar instruments
and all reimbursement or other obligations of a Borrower or any of its
Subsidiaries in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations of a Borrower or any of
its Subsidiaries under Capital Leases, (d) all obligations or liabilities of
others secured by a Lien on any asset of a Borrower or any of its Subsidiaries,
irrespective of whether such obligation or liability is assumed, (e) all
obligations of a Borrower or any of its Subsidiaries for the deferred purchase
price of assets (other than trade debt incurred or insurance premiums financed
in the ordinary course of a Borrower's business or the business of any of its
Subsidiaries and repayable in accordance with customary trade practices), and
(f) any obligation of a Borrower or any of its Subsidiaries guaranteeing or
intended to guarantee (whether directly or indirectly guaranteed, endorsed,
co-made, discounted, or sold with recourse to a Borrower or any of its
Subsidiaries) any obligation of any other Person which would be Indebtedness
under clauses (a) through (e) above.
"Indemnified Liabilities" has the meaning set forth in Section 11.3.
----------------------- ------------
"Indemnified Person" has the meaning set forth in Section 11.3.
------------------ ------------
"Indenture" means that certain Indenture, dated as of September 15,
---------
1997, between Parent, as successor-in-interest by merger to Halter Marine Group,
Inc., and the Indenture Trustee, as amended by that certain First Supplemental
Indenture dated as of November 2, 1999.
"Indenture Trustee" means (a) U.S. Trust Company of Texas, N.A., in
------------------
its capacity as trustee under the Indenture, or (b) any successor trustee under
the Indenture from time to time.
"Indenture Documents" means, individually and collectively, the
-------------------
Indenture and all agreements, instruments, and documents executed in connection
therewith or pursuant thereto to which Parent or its Subsidiaries are party or
by which their assets are bound.
25
"Insolvency Proceeding" means any proceeding commenced by or against
---------------------
any Person under any provision of the Bankruptcy Code or under any other state
or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any Person, that portion
-----------------
of the book value of all of such Person's assets that would be treated as
intangibles under GAAP.
"Intellectual Property" means all patents, patent applications,
---------------------
trademarks, trademark applications, tradenames, tradedress, copyrights,
copyright registrations, technology, know-how and processes used in or necessary
for the conduct of the business of any Person as currently conducted that are
material to the condition (financial or otherwise), business, or operations of
such Person.
"Intercompany Note" means that certain promissory note jointly made
-----------------
by Xxxxxx Newfoundland and Xxxxxx Canada in favor of Parent in the original
principal amount of $15,000,000.
"Intercompany Subordination Agreement" means a subordination
------------------------------------
agreement executed and delivered by Borrowers and the Guarantor Subsidiaries to
Agent, the form and substance of which is satisfactory to Agent.
"Interest Period" means, with respect to each LIBOR Rate Loan, a
---------------
period commencing on the date of the making of such LIBOR Rate Loan and ending
1, 2, or 3 months thereafter; provided, however, that (a) if any Interest Period
-------- -------
would end on a day that is not a Business Day, such Interest Period shall be
extended (subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, or 3 months
after the date on which the Interest Period began, as applicable, and (e)
Borrowers (or Administrative Borrower on behalf thereof) may not elect an
Interest Period which will end after the Maturity Date.
"Inventory" means all Borrowers' now owned or hereafter acquired
---------
right, title, and interest with respect to inventory, including goods held for
sale or lease or to be furnished under a contract of service, goods that are
leased by a Borrower as lessor, goods that are furnished by a Borrower under a
contract of service, and raw materials, work in process, or materials used or
consumed in a Borrower's business, including Materials and
26
Components included or to be included in the Ship Collateral, or comprising a
portion of the Ship Collateral.
"Investment" means, with respect to any Person, any investment by
----------
such Person in any other Person (including Affiliates) in the form of loans,
guarantees, advances, or capital contributions (excluding (a) commission,
-------------
travel, and similar advances to officers and employees of such Person made in
the ordinary course of business, and (b) bona fide Accounts arising from the
sale of goods or rendition of services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness or Stock, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
The amount of any Investment shall be the original cost of such Investment plus
the cost of all additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment, less, in the case of any loan or advance, any repayment of the
principal thereof.
"Investment Property" means all of Borrowers' now owned or hereafter
-------------------
acquired right, title, and interest with respect to "investment property" as
that term is defined in the Code, and any and all supporting obligations in
respect thereof.
"IRC" means the Internal Revenue Code of 1986, as in effect from time
---
to time.
"Issuing Lender" means Foothill or any other Lender that, at the
--------------
request of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become an Issuing Lender for the purpose of issuing
L/Cs or L/C Undertakings pursuant to Section 2.12.
"L/C" has the meaning set forth in Section 2.12(a).
---
"L/C Cash Collateral" has the meaning set forth in Section
------------------- -------
2.4(a)(iii).
-----------
"L/C Disbursement" means a payment made by the Issuing Lender
----------------
pursuant to a Letter of Credit.
"L/C Undertaking" has the meaning set forth in Section 2.12(a).
--------------- ---------------
"Lender" and " Lenders" have the respective meanings set forth in the
------ -------
preamble to this Agreement, and shall include any other Person made a party to
this Agreement in accordance with the provisions of Section 14.1.
------------
"Lender Group" means, individually and collectively, each of the
------------
Lenders (including the Issuing Lender) and Agent.
"Lender Group Expenses" means all (a) costs or expenses (including
---------------------
taxes, and insurance premiums) required to be paid by a Borrower under any of
the Loan
27
Documents that are paid or incurred by any one or more members of the Lender
Group, (b) fees or charges paid or incurred by any one or more members of the
Lender Group in connection with the Lender Group's transactions with Borrowers,
including, fees or charges for photocopying, notarization, couriers and
messengers, telecommunication, public record searches (including tax lien,
litigation, judgment, and UCC searches and including searches with the patent
and trademark office, the copyright office, or the department of motor
vehicles), filing, recording, publication, appraisal (including periodic
Collateral appraisals or business valuations to the extent of the fees and
charges (and up to the amount of any limitation) contained in this Agreement,
real estate surveys, real estate title policies and endorsements, and
environmental audits, (c) costs and expenses incurred by any one or more members
of the Lender Group in the disbursement of funds to or for the account of
Borrowers (by wire transfer or otherwise), (d) charges paid or incurred by any
one or more members of the Lender Group resulting from the dishonor of checks,
(e) reasonable costs and expenses paid or incurred by the Lender Group to
correct any default or enforce any provision of the Loan Documents, or in
gaining possession of, maintaining, handling, preserving, storing, shipping,
selling, preparing for sale, or advertising to sell the Collateral, or any
portion thereof, irrespective of whether a sale is consummated, (f) audit fees
and expenses of any one or more members of the Lender Group related to audit
examinations of the Books to the extent of the fees and charges (and up to the
amount of any limitation) contained in this Agreement, (g) reasonable costs and
expenses of third party claims or any other suit paid or incurred by any one or
more members of the Lender Group in enforcing or defending the Loan Documents or
in connection with the transactions contemplated by the Loan Documents or any
one or more members of the Lender Group's relationship with any Borrower or any
guarantor of the Obligations, (h) Agent's and each Lender's reasonable fees and
expenses (including attorneys fees) incurred in advising, structuring, drafting,
reviewing, administering, or amending the Loan Documents, and (i) Agent's and
each Lender's reasonable fees and expenses (including attorneys fees) incurred
in terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or in exercising rights or remedies under the Loan
Documents), or defending the Loan Documents, irrespective of whether suit is
brought, or in taking any Remedial Action concerning the Collateral.
"Lender-Related Person" means, with respect to any Lender, such
---------------------
Lender, together with such Lender's Affiliates, and the officers, directors,
employees, and agents of such Lender.
"Letter of Credit" means an L/C or an L/C Undertaking, as the context
----------------
requires.
"Letter of Credit Usage" means, as of any date of determination, the
----------------------
aggregate undrawn amount of all outstanding Letters of Credit.
"LIBOR Deadline" has the meaning set forth in Section 2.13(b)(i).
-------------- ------------------
"LIBOR Notice" means a written notice in the form of Exhibit L-1.
------------ -----------
28
"LIBOR Rate" means, for each Interest Period for each LIBOR Rate
----------
Loan, the rate per annum determined by Agent (rounded upwards, if necessary, to
the next 1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period, by
(b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on and
as of the effective day of any change in the Reserve Percentage.
"LIBOR Rate Loan" means each portion of an Advance that bears
---------------
interest at a rate determined by reference to the LIBOR Rate.
"Lien" means any interest in an asset securing an obligation owed to,
----
or a claim by, any Person other than the owner of the asset, whether such
interest shall be based on the common law, statute, or contract, whether such
interest shall be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or the existence
of some future circumstance or circumstances, including the lien or security
interest arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, security agreement, conditional
sale or trust receipt, or from a lease, consignment, or bailment for security
purposes and also including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and other title
exceptions and encumbrances affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.10.
------------
"Loan Documents" means this Agreement, the Cash Management
--------------
Agreements, the Canadian Subsidiary Collateral Assignment, the Contribution
Agreement, the Control Agreements, the Disbursement Letter, the Due Diligence
Letter, the Estoppel Letter, the Fee Letter, the Guaranty, the Guarantor
Security Agreement, the Intercompany Subordination Agreement, the Letters of
Credit, the Louisiana Addendum to Guarantor Security Agreement, the Louisiana
Addendum to Loan Agreement, the Mortgages, the Officers' Certificate, the Patent
Security Agreement, the Prior Loan Documents, the Purchase Agreement, the
Resignation and Appointment Agreement, the Ship Mortgages, the Stock Pledge
Agreement, the Trademark Security Agreement, any note or notes executed by a
Borrower in connection with this Agreement and payable to a member of the Lender
Group, and any other agreement entered into, now or in the future, by any
Borrower, or any Guarantor Subsidiary, and the Lender Group in connection with
this Agreement.
"Louisiana Addendum to Guarantor Security Agreement" means that
--------------------------------------------------
certain Louisiana Addendum to Security Agreement, with respect to Louisiana law
remedies applicable to the Guarantor Security Agreement, executed by each
Guarantor Subsidiary and Agent, the form and substance of which is satisfactory
to Agent.
"Louisiana Addendum to Loan Agreement" means that certain Louisiana
------------------------------------
Addendum to Loan Agreement, with respect to Louisiana law remedies applicable to
this Agreement, executed by each Borrower and Agent, the form and substance of
which is satisfactory to Agent.
29
"Louisiana Ship Mortgage Law" means the Louisiana Ship Mortgage Law,
---------------------------
Louisiana Revised Statutes 9:5521 et seq.
"Marad" means the Maritime Administration of the United States
-----
Department of Transportation, and its successors and assigns under the Marad
Financing Documents.
"Marad Collateral" means the assets of FGO set forth on Schedule 1 to
----------------
Schedule C-1.
"Marad Financing Documents" means, individually and collectively, the
-------------------------
United States Government Guaranteed Shipyard Modernization Financing Bonds, HAM
Marine Series 2013 issued by FGO and all other agreements, documents and
instruments executed or delivered in connection therewith, as all of the
foregoing now exist or may hereafter be amended, modified, supplemented,
extended, renewed, restated or replaced.
"Material Adverse Change" means (a) a material adverse change in the
-----------------------
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of Borrowers taken as a whole, (b) a material
impairment of either the Parent's ability or the Borrowers' ability taken as a
whole, to perform its obligations under the Loan Documents to which it is a
party or of the Lender Group's ability to enforce the Obligations or realize
upon the Collateral, or (c) a material impairment of the enforceability or
priority of the Agent's Liens with respect to the Collateral as a result of an
action or failure to act on the part of a Borrower.
"Materials" means, in accordance with Section 5522(g) of the
---------
Louisiana Ship Mortgage Law, all materials, all items of Equipment title to
which is vested in a Borrower under the Louisiana Ship Mortgage Law, and which
are purchased or acquired for use in the construction of a vessel, which will,
when so used, form a part of such vessel and which have been delivered to a
Shipyard, and, with respect to goods located outside of the State of Louisiana,
means all items of machinery, piping, cables, supplies, sheetmetal, and other
materials used, consumed, fabricated or incorporated in connection with the
construction of any vessel comprising Ship Collateral, and shall include all
parts and components fabricated in connection with the completion of such
vessel.
"Maturity Date" has the meaning set forth in Section 3.4.
------------- -----------
"Maximum Revolver Amount" means $70,000,000.
-----------------------
"Maximum Term Loan Amount" means $40,000,000.
------------------------
"Mortgage Policy" and "Mortgage Policies" have the meanings set forth
--------------- -----------------
in Section 3.1(w).
--------------
"Mortgages" means, individually and collectively, each of the
---------
Existing Mortgages, the Additional Mortgages and the New Mortgages.
30
"Negotiable Collateral" means all of Borrowers' now owned and
---------------------
hereafter acquired right, title, and interest with respect to letters of credit,
letter of credit rights, instruments, promissory notes, drafts, documents, and
chattel paper (including electronic chattel paper and tangible chattel paper),
and any and all supporting obligations in respect thereof.
"Net Liquidation Percentage" means the percentage of the book value
--------------------------
of Borrowers' Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, such percentage to be as determined from time to
time by a qualified appraisal company selected by Agent.
"Net Orderly Liquidation Value" means, with respect to an item of
-----------------------------
Eligible Equipment, as of any date of determination, the orderly liquidation
value thereof as determined by Agent in its Permitted Discretion, which
determination may be made by Agent in reliance on periodic appraisals; provided,
--------
however, as of any date of determination, the aggregate New Orderly Liquidation
-------
Value of all items of Eligible Equipment shall not exceed $21,652,000, which
total amount may be increased, based upon the results of the appraisal required
by Section 3.2(j), as determined by Agent in its Permitted Discretion, minus the
--------------
then amount of the Net Orderly Liquidation Value Reserve.
"Net Orderly Liquidation Value Reserve" means a reserve initially set
-------------------------------------
as of the first day of the second calendar month immediately following the
Closing Date at $240,573, such amount thereafter to increase by $240,573 as of
the first day of each succeeding month, but not to exceed that aggregate amount
which reduces the borrowing availability attributable to Eligible Equipment to
zero, subject to adjustment from time to time as Agent shall determine in its
Permitted Discretion as a result of Agent's review of periodic appraisals.
"Net Proceeds" means, with respect to the sale or other disposition
------------
of any asset by any Borrower or any of its Subsidiaries (including in connection
with any sale-leaseback), the excess, if any, of (i) the aggregate amount
received (directly or indirectly) in cash (including any cash received by way of
deferred payment pursuant to a note receivable, installment receivable, purchase
price adjustment receivable, other non-cash consideration or otherwise, but only
as and when such cash is so received) in connection with such sale or other
disposition, over (ii) the sum of (A) the principal amount of any Indebtedness
which is secured by any such asset (other than Indebtedness assumed by the
purchaser of such asset) or which is required to be, and is, repaid in
connection with the sale or other disposition thereof (other than Indebtedness
hereunder), (B) the reasonable out-of-pocket expenses and fees incurred by the
such Borrower or its Subsidiaries in connection with such sale or other
disposition, but only to the extent that such out-of-pocket expenses and fees,
if paid to an Affiliate of such Borrower, are approved by the Agent in its sole
discretion exercised reasonably, and provided that all such expenses and fees
are set forth on a certificate provided to the Agent, and (C) federal and state
taxes incurred in connection with such sale or other disposition, whether
payable at such time or thereafter.
31
"Net Quick Sale Value" means, with respect to a parcel of Eligible
--------------------
Real Property Collateral, as of any date of determination, the net quick sale
value thereof as determined by Agent in its Permitted Discretion, which
determination may be made by Agent in reliance on periodic appraisals; provided,
--------
however, as of any date of determination, the aggregate Net Quick Sale Value of
-------
all parcels of Eligible Real Property Collateral shall not exceed $65,815,000,
which total amount may be increased as determined by Agent in its Permitted
Discretion, based upon the results of an appraisal of the FGO West Real
Property, located at 0000 Xxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000 ("FGO
---
West"), at such time as FGO West satisfies the requirements for inclusion as
----
Eligible Real Property Collateral, minus the then amount of the Net Quick Sale
Value Reserve.
"Net Quick Sale Value Reserve" means a reserve initially set as of
----------------------------
the first day of the second calendar month immediately following the Closing
Date at $319,934, such amount thereafter to increase by $319,934 as of the first
day of each succeeding month, but not to exceed that aggregate amount which
reduces the borrowing availability attributable to Eligible Real Property
Collateral to zero, subject to adjustment from time to time as Agent shall
determine in its Permitted Discretion as a result of Agent's review of periodic
appraisals.
"New Mortgages" means, individually and collectively, each of the
-------------
mortgages, deeds of trust, or deeds to secure debt, executed and delivered by a
Borrower in favor of Agent, amending or amending and restating an Existing
Mortgage.
"Obligations" means all loans (including the Term Loan), Advances,
-----------
debts, principal, interest (including any interest that, but for the provisions
of the Bankruptcy Code, would have accrued), contingent reimbursement
obligations with respect to outstanding Letters of Credit, premiums, liabilities
(including all amounts charged to Borrowers' Loan Account pursuant hereto),
obligations, fees (including the fees provided for in the Fee Letter), charges,
costs, Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by Borrowers
to the Lender Group pursuant to or evidenced by the Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all Lender Group Expenses that
Borrowers are required to pay or reimburse by the Loan Documents, by law, or
otherwise. Any reference in this Agreement or in the Loan Documents to the
Obligations shall include all amendments, changes, extensions, modifications,
renewals replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.
"Obsolete Copyright" means any copyright of a Person that, in such
------------------
Person's good faith determination (a) is no longer sold or marketed by such
Person, (b) is not generating any material amount of Accounts, General
Intangibles, or revenues of such Person, or (c) does not have a material fair
market value.
32
"Officers' Certificate" means the representations and warranties of
---------------------
officers form submitted by Agent to Administrative Borrower, together with
Borrowers' completed responses to the inquiries set forth therein, the form and
substance of such responses to be satisfactory to Agent.
"Operating Lease Obligations" means all obligations for the payment
---------------------------
of rent for any real or personal property under leases or agreements to lease,
other than Capitalized Lease Obligations.
"Originating Lender" has the meaning set forth in Section 14.1(e).
------------------ ---------------
"Overadvance" has the meaning set forth in Section 2.5.
----------- -----------
"Parent" has the meaning set forth in the preamble to this Agreement.
------
"Participant" has the meaning set forth in Section 14.1(e).
----------- ---------------
"Patent Security Agreement" means a patent security agreement
-------------------------
executed and delivered by each Borrower and Guarantor Subsidiary to Agent, the
form and substance of which is satisfactory to Agent.
"Permitted Acquisition" means an Acquisition made by a Borrower so
---------------------
long as (a) no Default or Event of Default shall have occurred and be continuing
or would result from the consummation of the proposed Acquisition, (b) the
assets being acquired, or the Person whose Stock is being acquired, are useful
in or engaged in, as applicable, the business of Parent and its Subsidiaries as
such business exists on the Closing Date, (c) the aggregate consideration paid
or payable for Permitted Acquisitions (including Acquired Indebtedness, but
excluding consideration paid or payable in the common Stock of Parent or other
Stock of Parent that does not require any cash payment until after the second
anniversary of the Maturity Date) during any fiscal year, after giving effect to
the proposed Acquisition, shall not exceed $10,000,000, (d) the aggregate
consideration paid or payable for all Permitted Acquisitions (including Acquired
Indebtedness, but excluding consideration paid or payable in the common Stock of
Parent or other Stock of Parent that does not require any cash payment until
after the second anniversary of the Maturity Date), after giving effect to the
proposed Acquisition, shall not exceed $20,000,000, (e) after giving effect to
the payment of the aggregate consideration paid or payable with respect to any
specific Permitted Acquisition (including Acquired Indebtedness, but excluding
consideration paid or payable in the common Stock of Parent or other Stock of
Parent that does not require any cash payment until after the second anniversary
of the Maturity Date), the Borrowers will have Excess Availability and
unrestricted cash and Cash Equivalents on deposit in Securities Accounts or DDAs
subject to Control Agreements of not less than $25,000,000 (such aggregate
amount of Excess Availability and unrestricted cash and Cash Equivalents on
deposit in Securities Accounts or DDAs subject to Control Agreements to include
not less than $10,000,000 attributable to Excess Availability), (f) Parent has
provided Agent and the Lenders, no later than 15 days prior to the anticipated
effective date of any proposed Acquisition, with (i) copies of all
documentation, including stock or asset purchase
33
agreements and all documents or instruments related thereto, with respect to the
proposed Acquisition, together with a certificate of the Secretary of Parent
certifying each such document or instrument as being a true, correct, and
complete copy thereof, and (ii) written confirmation, supported by reasonably
detailed calculations, that on a pro forma basis, created by adding the
historical combined financial statements of Parent (including the combined
financial statements of any other Person or assets that were the subject of a
prior Permitted Acquisition during the relevant period) to the historical
consolidated financial statements of the Person to be acquired (or the
historical financial statements related to the assets to be acquired) pursuant
to the proposed Acquisition (adjusted to eliminate expense items that would not
have been incurred and include income items that would have been recognized, in
each case, if the combination had been accomplished at the beginning of the
relevant period; such eliminations and inclusions to be mutually agreed upon by
Parent and Agent), Borrowers would have been in compliance with each of the
financial covenants in Section 7.20 hereof for the 12 months ending as of the
fiscal quarter ended immediately prior to the proposed date of consummation of
such proposed Acquisition for which there are available financial statements,
(g) in the case of an asset Acquisition, the subject assets are being acquired
by one or more of the Borrowers, (h) in the case of a Stock Acquisition, the
subject Stock is being acquired in such Acquisition directly by a Borrower, (i)
in the case of an asset Acquisition, the relevant Borrower shall have executed
and delivered any and all security agreements, UCC-1 financing statements,
fixture filings, and other documentation reasonably requested by Agent in order
to include the newly acquired assets within the Collateral, and (j) in the case
of a Stock Acquisition, (i) the Borrowers shall have executed and delivered a
supplement to the Stock Pledge Agreement in order to include the Stock being
acquired thereunder and shall have delivered to Agent possession of the original
Stock certificates respecting all of the issued and outstanding shares of Stock
of such acquired Person, together with stock powers with respect thereto
endorsed in blank, and (ii) the Borrowers shall have caused such acquired Person
to execute and deliver a joinder to this Agreement in order to make such Person
a party hereto, together with any and all security agreements, UCC-1 financing
statements, fixture filings, and other documentation reasonably requested by
Agent in order to cause such cause acquired Person to be obligated with respect
to the Obligations and to include the assets of the acquired Person within the
Collateral. Without limiting whether or not an Acquisition shall constitute a
Permitted Acquisition, in the event that Borrowers request of Agent that the
Inventory, Equipment, or Accounts being acquired through a Permitted Acquisition
be included in the Borrowing Base as Eligible Accounts, Eligible Equipment, or
Eligible Inventory, as the case may be, Agent shall have completed its audit,
appraisal, and standard due diligence review with respect to the assets or
Person that is to be the subject of the proposed Permitted Acquisition and the
results thereof shall be satisfactory to Agent in the exercise of its Permitted
Discretion before such Inventory, Equipment, or Accounts shall be included in
the Borrowing Base.
"Permitted Affiliate Transactions" means (a) employment agreements,
--------------------------------
stock option or other incentive plans existing on the Closing Date and listed on
Schedule P-1, or thereafter entered into by the Parent, any other Borrower, or a
------------
Canadian Subsidiary in the ordinary course of business with the approval of a
majority of the disinterested members of the Parent's Board of Directors, or (b)
reasonable and customary fees and compensation paid to and
34
indemnity provided on behalf of, officers, directors, employees, or consultants
of the Parent, any other Borrower, or a Canadian Subsidiary as determined in
good faith by a majority of the disinterested directors of the Parent's Board of
Directors.
"Permitted Discretion" means a determination made in good faith and
--------------------
in the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Dispositions" means (a) provided no Default or Event of
----------------------
Default shall have occurred and be continuing or would result from the
consummation of the proposed disposition, sales or other dispositions by
Borrowers of Equipment that is substantially worn, damaged, obsolete, or no
longer useful to or needed for the business of Borrowers in the ordinary course
of the applicable Borrower's business, provided that the gross sales price of
--------
such Equipment is not less than fair market value and at least 75% of the total
consideration received by such Borrower in respect of such Equipment consists of
cash, (b) sales by Borrowers of Inventory to buyers in the ordinary course of
business, (c) the use or transfer of money or Cash Equivalents by Borrowers in a
manner that is not prohibited by the terms of this Agreement or the other Loan
Documents, (d) provided no Default or Event of Default shall have occurred and
is continuing, the sale or other disposition of those items of Collateral listed
on Schedule P-2, shall be at the minimum gross sales price and with the minimum
------------
net cash sale proceeds received at the closing of such sale or other disposition
of no less than the respective release price and net sale proceeds amount set
forth opposite each such parcel of Real Property Collateral on Schedule P-2, (e)
------------
the licensing by Borrowers, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of the
applicable Borrower's business, (f) transfers or other dispositions of assets by
a Solvent Borrower to another Solvent Borrower or by a Guarantor Subsidiary or a
Canadian Subsidiary to a Solvent Borrower, (g) provided no Default or Event of
Default shall have occurred and be continuing or would result from the
consummation of the proposed disposition, the sale or other disposition of the
Trinity Note, and (h) sales and other dispositions by FGO of Excluded Assets to
the extent permitted under the Marad Financing Documents and the GE Financing
Documents, as applicable.
"Permitted Holder" means X. X. Xxxxxxxx, and his Family Members, and
----------------
his Family Trusts.
"Permitted Investments" means (a) investments in Cash Equivalents,
---------------------
(b) investments in negotiable instruments for collection, (c) advances made in
connection with purchases of goods or services in the ordinary course of
business, (d) investments existing as of the Closing Date and set forth on
Schedule P-3, (e) investments by any Solvent Borrower in any other Solvent
------------
Borrower provided that if any such investment is in the form of Indebtedness,
such Indebtedness investment shall be subject to the terms and conditions of the
Intercompany Subordination Agreement, (f) Investments made after the Closing
Date in an aggregate amount not to exceed $1,000,000, (g) Investments (including
Acquisitions) by Xxxxxx France and its Subsidiaries, (h) Hedging Obligations,
(i) Investments in securities of trade creditors or customers received pursuant
to any plan of reorganization or similar
35
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers, (j) Investments as a result of consideration received in connection
with a Permitted Disposition, (k) advances made in connection with purchases of
goods or services in the ordinary course of business, (k) accounts owing to the
Parent or any Borrower or Canadian Subsidiary, if created in the ordinary course
of business and, if applicable, in compliance with Section 7.14, (l) loans or
------------
advances to employees made in the ordinary course of business not to exceed an
aggregate amount of $500,000 outstanding at any one time, (m) loans or advances
for which the obligation to repay is evidenced by the Intercompany Note, (n)
Investments made with the Title XI Reserve Fund, the Construction Fund and the
Construction Moneys Fund, as permitted under the Marad Financing Documents, and
(o) Permitted Acquisitions.
"Permitted Liens" means (a) Liens held by Agent for the benefit of
---------------
Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet
delinquent, or (ii) do not constitute an Event of Default hereunder and are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-4, (d) the
------------
interests of lessors under operating leases, (e) purchase money Liens or the
interests of lessors under Capital Leases to the extent that such Liens or
interests secure Permitted Purchase Money Indebtedness and so long as such Lien
attaches only to the asset purchased or acquired and the proceeds thereof, (f)
Liens arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of Borrowers' business and not in connection with the borrowing of money, and
which Liens either (i) are for sums not yet delinquent, or (ii) are the subject
of Permitted Protests, (g) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance, (h) Liens or
deposits to secure performance of bids, tenders, or leases incurred in the
ordinary course of Borrowers' business and not in connection with the borrowing
of money, (i) Liens granted as security for surety or appeal bonds in connection
with obtaining such bonds in the ordinary course of Borrowers' business, (j)
Liens resulting from any judgment or award that is not an Event of Default
hereunder, (k) Liens with respect to the Real Property Collateral that are
exceptions to the commitments for title insurance issued in connection with the
Mortgages, as accepted by Agent, (l) with respect to any Real Property,
easements or reservations, rights of way, mineral rights, servitudes, zoning
restrictions, and other restrictions or encumbrances that do not, in each case
or in the aggregate, materially interfere with or impair the use or operation
thereof by Borrowers, (m) unperfected Liens in Inventory, Equipment, Accounts,
Securities Accounts and DDAs, directly related to Construction Contracts subject
to Bonds issued by a bonding company or other surety rated A-VII or better by
A.M. Best Company, in favor of such bonding company or other surety pursuant to
a bonding company indemnity agreement(s) in such bonding company's or other
surety's customary form, which bonding company indemnity agreement(s) have been
submitted to Agent prior to the execution thereof by the applicable Borrower and
Agent has reviewed and approved the bonding company indemnity agreement(s),
which approval shall be given or denied in Agent's sole discretion, including
Agent's conditioning such approval on such bonding companies entering into such
intercreditor agreements with the Agent as the Agent may require in its sole
discretion, (n) perfected Liens in Inventory, Accounts, Securities Accounts and
DDAs, directly related to Construction Contracts subject to Bonds issued by a
bonding company or other surety rated A-VII or better by A.M. Best Company,
36
in favor of such bonding company or other surety pursuant to a bonding company
indemnity agreement(s) in such bonding company's or other surety's customary
form, as to which Liens the bonding company or other surety and Agent have
entered into an intercreditor agreement, the form and substance of which shall
be acceptable to Agent in its sole discretion, (o) subject to Agent's receipt of
no less that 15 days prior written notice from the applicable Borrower advising
Agent of such event, Liens granted by a Borrower, a Canadian Subsidiary, or a
Buyer, in each case in the ordinary course of business on Ship Collateral or
other Inventory under construction or Materials or Components used in the
construction of such Inventory in favor of a purchaser, owner or supplier of
such Ship Collateral or other Inventory, Components or Materials (or the lenders
to such purchasers, owners, or suppliers), (p) Liens, granted by a Person other
than a Borrower or any Subsidiary thereof and existing prior to the date of
Acquisition, on the assets purchased or otherwise acquired by a Borrower through
a Permitted Acquisition securing Acquired Indebtedness assumed by such Borrower
with respect to such Permitted Acquisition, (q) Liens granted by a Borrower in
favor of the United States of America in effect as of the Closing Date
encumbering assets composing a portion of the Excluded Assets as detailed on
Schedule C-1, (r) Liens granted by a Borrower in favor of GE in effect as of the
------------
Closing Date encumbering assets composing a portion of the Excluded Assets as
detailed on Schedule C-1, (s) Liens granted by a Canadian Subsidiary in favor of
------------
a Borrower to secure its obligations under the Intercompany Note evidencing
Indebtedness permitted by Section 7.1(h), (t) Liens securing Indebtedness
--------------
permitted under Section 7.1(h), and (u) Liens granted by Xxxxxx France or any of
--------------
its Subsidiaries.
"Permitted Protest" means the right of the applicable Borrower to
-----------------
protest any Lien (other than any such Lien that secures the Obligations), taxes
(other than payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve with respect
to such obligation is established on the Books in such amount as is required
under GAAP, (b) any such protest is instituted promptly and prosecuted
diligently by the applicable Borrower in good faith, and (c) Agent is satisfied
that, while any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent's Liens.
"Permitted Purchase Money Indebtedness" means, as of any date of
-------------------------------------
determination, Purchase Money Indebtedness incurred after the Closing Date in an
aggregate amount outstanding at any one time not in excess of $7,500,000.
"Person" means natural persons, corporations, limited liability
------
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.
"Personal Property Collateral" means all Collateral other than Real
------------------------------
Property.
"Physical Inventory" means a physical count of Borrowers' Inventory
------------------
(the methodology and implementation of such physical count to be satisfactory to
Agent in its
37
Permitted Discretion) and the reflection of the results of such physical count
in Borrowers' Books in accordance with GAAP.
"Prior Administrative Agent" has the meaning set forth in the
--------------------------
recitals to this Agreement.
"Prior Loan Documents" means all agreements, instruments, or
--------------------
documents assigned by Prior Administrative Agent, Prior Documentation Agent, or
Prior Syndication Agent to Agent pursuant to the Resignation and Appointment
Agreement.
"Prior Credit Agreement" has the meaning set forth in the recitals to
----------------------
this Agreement.
"Prior Documentation Agent" has the meaning set forth in the recitals
-------------------------
to this Agreement.
"Prior Lenders" has the meaning set forth in the recitals to this
-------------
Agreement.
"Prior Syndication Agent" has the meaning set forth in the recitals
-----------------------
to this Agreement.
"Projections" means Parent's forecasted (a) balance sheets, (b)
-----------
profit and loss statements, and (c) cash flow statements, all prepared on a
consistent basis with Parent's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means, as of any date of determination:
--------------
(a) with respect to a Lender's obligation to make Advances and
receive payments of principal, interest, fees, costs, and expenses with respect
thereto, (x) prior to the Revolver Commitment being reduced to zero, the
percentage obtained by dividing (i) such Lender's Revolver Commitment, by (ii)
the aggregate Revolver Commitments of all Lenders, and (y) from and after the
time that the Revolver Commitment has been terminated or reduced to zero, the
percentage obtained by dividing (I) the aggregate principal amount of such
Lender's Advances by (II) the aggregate principal amount of all Advances,
(b) with respect to a Lender's obligation to participate in
Letters of Credit, to reimburse the Issuing Lender, and to receive payments of
fees with respect thereto, (x) prior to the Revolver Commitment being reduced to
zero, the percentage obtained by dividing (i) such Lender's Revolver Commitment,
by (ii) the aggregate Revolver Commitments of all Lenders, and (y) from and
after the time that the Revolver Commitment has been terminated or reduced to
zero, the percentage obtained by dividing (I) the aggregate principal amount of
such Lender's Advances by (II) the aggregate principal amount of all Advances,
38
(c) with respect to a Lender's obligation to make the Term Loan
and receive payments of interest, fees, and principal with respect thereto, (i)
prior to the making of the Term Loan, the percentage obtained by dividing (x)
such Lender's Term Loan Commitment, by (y) the aggregate amount of all Lenders'
Term Loan Commitments, and (ii) from and after the making of the Term Loan, the
percentage obtained by dividing (x) the principal amount of such Lender's
portion of the Term Loan Amount by (y) the Term Loan Amount, and
(d) with respect to all other matters as to a particular Lender
(including the indemnification obligations arising under Section 16.7), the
------------
percentage obtained by dividing (i) such Lender's Revolver Commitment plus the
unpaid principal amount of such Lender's portion of the Term Loan Amount, by
(ii) the aggregate amount of Revolver Commitments of all Lenders plus the Term
Loan Amount; provided, however, that in the event the Revolver Commitments have
-------- -------
been terminated or reduced to zero, Pro Rata Share shall be the percentage
obtained by dividing (A) the principal amount of such Lender's Advances plus the
unpaid principal amount of such Lender's portion of the Term Loan Amount by (B)
the principal amount of all outstanding Advances plus the Term Loan Amount.
"Purchase Agreement" shall mean that certain Assignment and
------------------
Acceptance, dated as of the Closing Date, executed and delivered by the Prior
Lenders and the Lenders, in form and substance satisfactory to the Lenders,
relative to the assignment and delegation by the Prior Lenders and the
acceptance and assumption by the Lenders of the rights and duties of the Prior
Lenders under the Prior Credit Agreement.
"Purchase Money Indebtedness" means Indebtedness (other than the
---------------------------
Obligations, but including Capitalized Lease Obligations), incurred at the time
of, or within 20 days after, the acquisition of any fixed assets for the purpose
of financing all or any part of the acquisition cost thereof.
"Real Property" means any estates or interests in real property now
-------------
owned or leased or hereafter acquired or leased by any Borrower and the
improvements thereto, which estates or interests, as of the Closing Date, are as
listed on Schedule R-1.
------------
"Ratio of Senior Debt to EBITDA" means the ratio determined by
------------------------------
dividing (i) Senior Debt outstanding at the end of each such calendar quarter by
(ii) EBITDA for the 12 month period ending as of the end of each calendar
quarter (with the exception of the calendar quarter ended December 31, 2000, for
which the measuring period shall be 3 months, for the calendar quarter ended
March 31, 2001, for which the measuring period shall be 6 months, and for the
calendar quarter ended June 30, 2001, for which the measuring period shall be 9
months).
"Real Property Collateral" means (a) the parcel or parcels of Real
------------------------
Property identified on Schedule R-2 as Real Property Collateral, and (b) any
------------
additional parcels of Real Property hereafter acquired by a Borrower and
identified by Borrowers to Agent for
39
inclusion on Schedule R-2, and, upon such identification, Schedule R-2 shall be
------------ ------------
deemed to be amended to include such parcel of Real Property.
"Record" means information that is inscribed on a tangible medium or
------
which is stored in an electronic or other medium and is retrievable in
perceivable form.
"Remedial Action" means all actions taken to (a) clean up, remove,
---------------
remediate, contain, treat, monitor, assess, evaluate, or in any way address
Hazardous Materials in the indoor or outdoor environment, (b) prevent or
minimize a release or threatened release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment, (c) perform any pre-remedial studies,
investigations, or post-remedial operation and maintenance activities, or (d)
conduct any other actions authorized by 42 USC (S) 9601.
"Report" has the meaning set forth in Section 16.17.
------ -------------
"Required Availability" means Excess Availability and unrestricted
---------------------
cash and Cash Equivalents of Borrowers on deposit in Securities Accounts or DDAs
subject to Control Agreements in an amount of not less than $60,000,000 provided
--------
that such Required Availability shall include not less than $10,000,000
attributable to Excess Availability.
"Required Lenders" means, at any time, Lenders whose Pro Rata Shares
----------------
aggregate 51% as determined pursuant to clause (d) of the definition of "Pro
Rata Share."
"Required Term Loan Lenders" means, as of any date of determination,
--------------------------
so long as any Term Loan Amount is outstanding, Lenders holding 51% of the
outstanding Term Loan Amount, and, if no Term Loan Amount is outstanding, means
Required Lenders.
"Reserve Percentage" means, on any day, for any Lender, the maximum
------------------
percentage prescribed by the Board of Governors of the Federal Reserve System
(or any successor Governmental Authority) for determining the reserve
requirements (including any basic, supplemental, marginal, or emergency
reserves) that are in effect on such date with respect to eurocurrency funding
(currently referred to as "eurocurrency liabilities") of that Lender, but so
long as such Lender is not required or directed under applicable regulations to
maintain such reserves, the Reserve Percentage shall be zero.
"Reserves" means all Foreign Exchange Reserves, Dilution Reserves, the
--------
Net Orderly Liquidation Value Reserve, the Net Quick Sale Value Reserve, and any
other reserves that may be established under this Agreement.
"Resignation and Appointment Agreement" shall mean that certain
-------------------------------------
resignation and appointment agreement, dated as of the Closing Date, executed
and delivered by the Prior Administrative Agent, Prior Syndication Agent, and
Prior Documentation Agent to Agent, in form and substance satisfactory to Agent,
in connection with the transactions contemplated by the Purchase Agreements.
40
"Revolver Commitment" means, with respect to each Lender, its Revolver
-------------------
Commitment, and, with respect to all Lenders, their Revolver Commitments, in
each case as such Dollar amounts are set forth beside such Lender's name under
the applicable heading on Schedule C-2 or on the signature page of the
------------
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
"Revolver Usage" means, as of any date of determination, the sum of
--------------
(a) the then extant amount of outstanding Advances, plus (b) the then extant
amount of the Letter of Credit Usage.
"Rights" means and includes:
------
(a) any and all present and future options to sell, lease or
charter any of the Ship Collateral or any interest therein;
(b) any and all of a Borrower's Accounts and General Intangibles
in any way related to any of the Ship Collateral or the construction thereof;
(c) any and all of a Borrower's rights under any present and
future construction, architectural and engineering contracts or agreements with
regard to the construction of the Ship Collateral, including all rights under
the Construction Contracts, and any and all surety bonds, letters of credit and
guaranties in connection therewith of every nature and kind whatsoever,
including without limitation, the rights of such Borrower and its remedies to
enforce or receive payments or damages under such construction, engineering, or
architectural contracts and surety bonds, letters of credit or guaranties, as
provided therein, or as otherwise provided under applicable law; and
(d) any and all of a Borrower's present and future contract
rights, instruments and documents necessary for use or useful in connection with
the construction, ownership or operation of the Ship Collateral, and all liens,
security interests, guaranties, remedies, privileges and other rights pertaining
thereto, and all other rights and remedies of any kind forming the subject
matter thereof.
"Risk Participation Liability" means, as to each Letter of Credit, all
----------------------------
reimbursement obligations of Borrowers to the Issuing Lender with respect to an
L/C Undertaking, consisting of (a) the amount available to be drawn or which may
become available to be drawn, (b) all amounts that have been paid by the Issuing
Lender to the Underlying Issuer to the extent not reimbursed by Borrowers,
whether by the making of an Advance or otherwise, and (c) all accrued and unpaid
interest, fees, and expenses payable with respect thereto.
"SEC" means the United States Securities and Exchange Commission and
---
any successor thereto.
41
"Securities Account" means a "securities account" as that term is
------------------
defined in the Code, with the exception of the Title XI Reserve Fund, the
Construction Fund, the Construction Moneys Fund, and the Travelers' Fund.
"Senior Debt" means, as of any date of determination, the sum of (a)
-----------
Advances outstanding as of such date, (b) the Term Loan Amount, and (c) the
Letter of Credit Usage.
"Settlement" has the meaning set forth in Section 2.3(f)(i).
---------- -----------------
"Settlement Date" has the meaning set forth in Section 2.3(f)(i).
--------------- -----------------
"Ship Collateral" means, with the exception of the Excluded Assets,
---------------
(a) the U.S. flag vessels of a Borrower identified on Schedule S-1 attached
------------ --------
hereto, (b) any additional U.S. flag vessels hereafter acquired by a Borrower
and identified by Borrowers to Agent for inclusion on Schedule S-1, and, upon
------------
such identification, Schedule S-1 shall be deemed to be amended to include such
------------
U.S. flag vessel; and (c) the vessels assigned the hull numbers indicated on
Schedule S-1 (as the same may be supplemented from time to time), or otherwise
constituting a vessel under construction or to be constructed in future for a
Buyer by a Borrower under a Construction Contract, together with any and all
present and future materials, components, engines, boilers, machinery, masts,
boats, anchors, cables, chains, rigging, tackle, apparel, furniture, capstans,
outfit, tools, pumps, gear, furnishings, appliances, fittings, spare and
replacement parts and any and all manuals, materials, supplies, and components
in any way related to the construction of any such vessel and any and all other
appurtenances thereto, appertaining or belonging to any such vessel to be
constructed, whether now or hereafter acquired, and whether on board or not on
board, together with any and all present and future additions, improvements and
replacements therefor, made in or to said vessels, or any part or parts thereof.
Ship Collateral shall be included as Eligible Equipment and included on Schedule
--------
E-1 if such Ship Collateral otherwise satisfies the criteria for the inclusion
---
of Equipment as Eligible Equipment.
"Ship Mortgages" means the U.S. First Preferred Fleet Mortgages, dated
--------------
as of November 3, 1999, executed by certain of the Borrowers identified therein
in favor of Prior Administrative Agent that encumber the Ship Collateral.
"Shipyard" means any shipyard or construction area used by a Borrower
--------
in the construction of Ship Collateral.
"Solvent" means, with respect to any Person on a particular date, that
-------
such Person is not insolvent (as such term is defined in the Uniform Fraudulent
Transfer Act).
"Specified State" means, England, Scotland, Wales, Ireland, Australia,
---------------
France, Germany, Italy, New Zealand, Canada, Norway, Finland, Switzerland,
Sweden, Belgium, Japan, Singapore, the Netherlands, or any other state approved
by Agent.
42
"Stock" means all shares, options, warrants, interests,
-----
participations, or other equivalents (regardless of how designated) of or in a
Person, whether voting or nonvoting, including common stock, preferred stock, or
any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"Stock Pledge Agreement" means a stock pledge agreement, in form and
----------------------
substance satisfactory to Agent, executed and delivered by Parent and each
Borrower and Guarantor Subsidiary that owns Stock of a Subsidiary of Parent.
"Subsidiary" of a Person means a corporation, partnership, limited
----------
liability company, or other entity in which that Person directly or indirectly
owns or controls the shares of Stock having ordinary voting power to elect a
majority of the board of directors (or appoint other comparable managers) of
such corporation, partnership, limited liability company, or other entity.
"Swing Lender" means Foothill or any other Lender that, at the request
------------
of Administrative Borrower and with the consent of Agent agrees, in such
Lender's sole discretion, to become the Swing Lender hereunder.
"Swing Loan" has the meaning set forth in Section 2.3(d)(i).
---------- -----------------
"Taxes" has the meaning set forth in Section 16.11.
----- -------------
"TDI-North" means that certain parcel of Real Property, owned of
---------
record by FGO Texas, located in Port Xxxxxx, Texas, and designated Site #13 on
Schedule R-1.
------------
"TDI-South" means that certain parcel of Real Property, owned of
---------
record by FGO Texas, located in Port Xxxxxx, Texas, and designated Site #15 on
Schedule R-1.
------------
"Term Loan" has the meaning set forth in Section 2.2(a).
--------- --------------
"Term Loan Amount" means, as of any date of determination, the
----------------
outstanding principal amount of the Term Loan, plus the then extant Term Loan
PIK Amount.
"Term Loan Commitment" means, with respect to each Lender, its Term
--------------------
Loan Commitment, and, with respect to all Lenders, their Term Loan Commitments,
in each case as such Dollar amounts are set forth beside such Lender's name
under the applicable heading on Schedule C-2 or on the signature page of the
------------
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
------------
"Term Loan PIK Amount" means as of any date of determination, the
--------------------
amount of all interest accrued with respect to the Term Loan Amount that has
been paid-in-kind by being added to the balance thereof in accordance with
Section 2.6(a)(ii).
------------------
43
"Test Period" means, as of the end of any calendar quarter, the 12
-----------
month period then ended, with the exception of: (i) the calendar quarter ended
December 31, 2000, for which the Test Period shall be the 3 month period then
ended, (ii) the calendar quarter ended March 31, 2001, for which the Test Period
shall be the 6 month period then ended, and (iii) for the calendar quarter ended
June 30, 2001, for which the Test Period shall be the 9 month period then ended;
provided, however, that in the event that Borrowers' Excess Availability and
-------- -------
unrestricted cash and Cash Equivalents on deposit in Securities Accounts or DDAs
subject to Control Agreements as of the end of any calendar month shall be less
than (i) for the period from the Closing Date through December 31, 2000,
$50,000,000, and (ii) thereafter, $25,000,000, "Test Period" thereafter shall
mean, as of the end of any calendar month, the 12 month period then ended, with
the exception of any month ending during the period from the Closing Date
through September 30, 2001, for which the Test Period shall be the number of
months that have elapsed commencing with October, 2000 to the month then ended,
until such time, as of the end of any Test Period, that Borrowers' Excess
Availability and unrestricted cash and Cash Equivalents on deposit in Securities
Accounts or DDAs subject to a Control Agreement acceptable to Agent shall be
equal to or greater than (i) $50,000,000 for the period from the Closing Date
through December 31, 2000, and (ii) $25,000,000 thereafter, at which time Test
Period shall again mean the last ended calendar quarter of the Borrowers.
"Title XI Reserve Fund" means the Title XI Reserve Fund under and as
---------------------
defined or used in the Marad Financing Documents (at the date of this Agreement,
at Bancorp South), and composing a portion of the Excluded Assets.
"Title Transfer Construction Contract" means a Construction Contract
------------------------------------
which by its terms provides, pursuant to the Louisiana Ship Mortgage Law or
similar law, rule or regulation, that the purchaser under such Construction
Contract shall be the owner of the vessel during construction and that title to
the Ship Collateral under construction and the Materials, Works and Components
to be installed on such vessel will vest in the purchaser as and when performed.
"Total Commitment" means, with respect to each Lender, its Total
----------------
Commitment, and, with respect to all Lenders, their Total Commitments, in each
case as such Dollar amounts are set forth beside such Lender's name under the
applicable heading on Schedule C-2 attached hereto or on the signature page of
------------
the Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 14.1.
------------
"Trademark Security Agreement" means a trademark security agreement
----------------------------
executed and delivered by each Borrower and Guarantor Subsidiary to Agent, the
form and substance of which is satisfactory to Agent.
"Travelers" means Travelers Casualty and Surety Company of America, a
---------
Connecticut company.
44
"Travelers' Fund" means cash in the initial principal amount of
---------------
$15,000,000, delivered by Borrowers to Travelers as additional collateral
security to secure their obligations to Travelers under Bonds issued by
Travelers, and invested in a cash security account with Xxxxxxx Xxxxx Xxxxxx,
Inc.
"Triggering Event Notice" has the meaning set forth in Section 2.7(b).
----------------------- --------------
"Trinity Note" means that certain Promissory Note, dated April 7,
------------
2000, in the principal amount of $500,000, issued by New Yachts, Inc. in favor
of Halter Yachts, Inc., a Borrower, formerly known as Trinity Yachts, Inc..
"Underlying Issuer" means a third Person which is the beneficiary of
-----------------
an L/C Undertaking and which has issued a letter of credit at the request of the
Issuing Lender for the benefit of Borrowers.
"Underlying Letter of Credit" means a letter of credit that has been
---------------------------
issued by an Underlying Issuer.
"Voidable Transfer" has the meaning set forth in Section 17.7.
----------------- ------------
"Xxxxx Fargo" means Xxxxx Fargo Bank, National Association, a national
-----------
banking association.
"Xxxxx Fargo Texas" means Xxxxx Fargo Bank Texas, National
-----------------
Association, successor to Xxxxx Fargo Bank (Texas), National Association
"Work" means, in accordance with Section 5522(c) of the Louisiana Ship
----
Mortgage Law, in the case of a vessel having a keel, the keel, and in the case
of a vessel not having a keel, the bottom plates, and all materials, Equipment,
components, and fabrications, forming a part of such vessel when permanently
installed in place.
1.2 Accounting Terms. All accounting terms not specifically defined herein
----------------
shall be construed in accordance with GAAP. When used herein, the term
"financial statements" shall include the notes and schedules thereto. Whenever
the term "Borrowers" or the term "Parent" is used in respect of a financial
covenant or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code
----
shall be construed and defined as set forth in the Code unless otherwise defined
herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
------------
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
45
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. Section, subsection, clause,
schedule, and exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement or in the other Loan Documents to any
agreement, instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements, thereto and thereof, as applicable (subject to any
restrictions on such alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joinders, and supplements
set forth herein). Any reference herein to any Person shall be construed to
include such Person's successors and assigns. Any requirement of a writing
contained herein or in the other Loan Documents shall be satisfied by the
transmission of a Record and any Record transmitted shall constitute a
representation and warranty as to the accuracy and completeness of the
information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
----------------------
this Agreement shall be deemed incorporated herein by reference.
2. LOAN AND TERMS OF PAYMENT.
2.1 Revolver Advances.
-----------------
(a) Subject to the terms and conditions of this Agreement, and
during the term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances ("Advances")
to Borrowers in an amount at any one time outstanding not to exceed such
Lender's Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount less the Letter of Credit Usage, or (ii) the Borrowing Base less
the Letter of Credit Usage. For purposes of this Agreement, "Borrowing Base," as
--------------
of any date of determination, shall mean the result of:
(i) the lesser of
(A) the sum of:
(1) the lesser of:
(x) 35% of the amount of Eligible Accounts,
less the amount, if any, of the Dilution Reserve,
and
(y) an amount, as of any date of
determination, equal to (I) the result of the
total of Borrowers' Collections with respect to
Accounts for the immediately preceding 90 day
period divided by 90, times (II) 15, plus
(2) the least of
46
(x) the sum of (I) 50% of the value of each
item of raw materials composing Eligible Inventory
where the value of each such item of Eligible
Inventory then held by Borrowers for sale in the
ordinary course of business exceeds $25,000, and
(II) 20% of the value of each item of raw
materials composing Eligible Inventory where the
value of each such item of Eligible Inventory then
held by Borrowers for sale in the ordinary course
of business is less than or equals $25,000, and
(III) 50% of the value of each item of finished
goods composing Eligible Inventory, and
(y) 80% times the then extant Net
Liquidation Percentage times the book value of
Borrowers' Inventory, and
(z) $7,500,000, and
(B) $25,000,000, plus
(ii) 80% of the Net Orderly Liquidation Value of Eligible
Equipment less the then amount of the Net Orderly Liquidation Value
Reserve; plus
(iii) 70% of the Net Quick Sale Value of Eligible Real Property
Collateral less the then amount of the Net Quick Sale Value Reserve,
(iv) 100% of the L/C Cash Collateral, if any, minus
(v) the aggregate amount of Reserves, if any, established by
Agent under Section 2.1(b) and as associated with the satisfaction of
--------------
conditions subsequent as set forth in Section 3.2.
-----------
(b) Anything to the contrary in this Section 2.1 notwithstanding,
-----------
Agent shall have the right to establish reserves in such amounts, and with
respect to such matters, as Agent in its Permitted Discretion shall deem
necessary or appropriate, against the Borrowing Base, including, the Foreign
Exchange Reserve, the Net Orderly Liquidation Reserve, the Net Quick Sale Value
Reserve, and additional reserves with respect to (i) sums that Borrowers are
required to pay (such as taxes, assessments, insurance premiums, or, in the case
of leased assets, rents or other amounts payable under such leases) and has
failed to pay under any Section of this Agreement or any other Loan Document,
and (ii) amounts owing by Borrowers to any Person to the extent secured by a
Lien on, or trust over, any of the Collateral (other than any existing Permitted
Lien set forth on Schedule P-4 which is specifically identified thereon as
------------
entitled to have priority over the Agent's Liens), which Lien or trust, in the
Permitted Discretion of Agent likely would have a priority superior to the
Agent's Liens (such as Liens or trusts in favor of landlords, warehousemen,
carriers,
47
mechanics, materialmen, laborers, or suppliers, or Liens or trusts for ad
valorem, excise, sales, or other taxes where given priority under applicable
law) in and to such item of the Collateral. In addition to the foregoing, Agent
shall have the right (i) to have the Inventory reappraised by a qualified
appraisal company selected by Agent from time to time after the Closing Date for
the purpose of redetermining the Net Liquidation Percentage of the Eligible
Inventory portion of the Collateral, which appraisals, so long as no Default or
Event of Default shall have occurred and is continuing, shall be conducted at
Borrowers' expense no more frequently than 4 times during any 12 month period,
and, after the occurrence and during the continuance of a Default or an Event of
Default, at Borrowers' expense as frequently as Agent shall determine, (ii) to
have the Equipment reappraised by a qualified appraisal company selected by
Agent from time to time after the Closing Date for the purpose of redetermining
the Net Orderly Liquidation Value of the Eligible Equipment portion of the
Collateral, which appraisals, so long as no Default or Event of Default shall
have occurred and is continuing, shall be conducted at Borrowers' expense no
more frequently than 2 times during any 12 month period, and, after the
occurrence and during the continuance of a Default or an Event of Default, at
Borrowers' expense as frequently as Agent shall determine, and (iii) to have the
Real Property Collateral reappraised by a qualified appraisal company selected
by Agent from time to time after the Closing Date for the purpose of
redetermining the Net Quick Sale Value of the Real Property Collateral portion
of the Collateral, which appraisals, so long as no Default or Event of Default
shall have occurred and is continuing, shall be conducted at Borrowers' expense
no more frequently than once during any 12 month period, and, after the
occurrence and during the continuance of a Default or an Event of Default, at
Borrowers' expense as frequently as Agent shall determine. Based upon the
results of any such redetermination, and any other information received from the
collateral reporting required under Section 6.2, Agent may, in its Permitted
Discretion, redetermine the Borrowing Base.
(c) The Lenders with Revolver Commitments shall have no
obligation to make additional Advances hereunder to the extent such additional
Advances would cause the Revolver Usage to exceed the Maximum Revolver Amount.
(d) Amounts borrowed pursuant to this Section may be repaid
and, subject to the terms and conditions of this Agreement, reborrowed at any
time during the term of this Agreement.
2.2 Term Loan. Subject to the terms and conditions of this Agreement, on
---------
the Closing Date each Lender with a Term Loan Commitment agrees (severally, not
jointly or jointly and severally) to make term loans (collectively, the "Term
Loan") to Borrowers in an amount equal to such Lender's Pro Rata Share of the
Maximum Term Loan Amount. The Term Loan and all accrued and unpaid interest
under the Term Loan, shall be due and payable on the earlier to occur of (i) the
date of termination of this Agreement by its terms, (ii) the date of termination
of this Agreement by acceleration, or (iii) the Maturity Date. If (A) no Event
of Default shall then exist and be continuing or would result from any proposed
prepayment, and (B) after giving effect to any such proposed prepayment,
Borrowers have Excess Availability and unrestricted cash and Cash Equivalents on
deposit in Securities Accounts or DDAs subject to Control Agreements in an
amount (1) during the period from
48
the Closing Date through that date that is 180 days after the Closing Date, of
not less than $70,000,000, provided that if there are no outstanding Advances,
--------
such required amount of Excess Availability and unrestricted cash and Cash
Equivalents on deposit in Securities Accounts or DDAs subject to Control
Agreements shall be reduced to $40,000,000 (such aggregate amount of Excess
Availability and unrestricted cash and Cash Equivalents on deposit in Securities
Accounts or DDAs subject to Control Agreements to include not less than
$10,000,000 attributable to Excess Availability), and (2) thereafter,
$50,000,000, provided that if there are no outstanding Advances, such required
amount of Excess Availability and unrestricted cash and Cash Equivalents on
deposit in Securities Accounts or DDAs subject to Control Agreements shall be
reduced to $40,000,000 (such aggregate amount of Excess Availability and
unrestricted cash and Cash Equivalents on deposit in Securities Accounts or DDAs
subject to Control Agreements to include not less than $10,000,000 attributable
to Excess Availability), Borrowers may, from time to time, prepay the Term Loan
Amount upon 30 days prior written notice from the Administrative Borrower to the
Agent, in whole or in part without penalty or premium. All amounts outstanding
under the Term Loan shall constitute Obligations.
2.3 Borrowing Procedures and Settlements.
------------------------------------
(a) Procedure for Borrowing. Each Borrowing shall be made by an
irrevocable written request by an Authorized Person delivered to Agent (which
notice must be received by Agent no later than 10:00 a.m. (California time) on
the Business Day prior to the date that is the requested Funding Date in the
case of a request for an Advance or the Term Loan specifying (i) the amount of
such Borrowing, and (ii) the requested Funding Date, which shall be a Business
Day; provided, however, that in the case of a request for Swing Loan in an
-------- -------
amount of $12,000,000, or less, such notice will be timely received if it is
received by Agent no later than 10:00 a.m. (California time) on the Business Day
that is the requested Funding Date) specifying (i) the amount of such Borrowing,
and (ii) the requested Funding Date, which shall be a Business Day. At Agent's
election, in lieu of delivering the above-described written request, any
Authorized Person may give Agent telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice.
(b) Agent's Election. Promptly after receipt of a request for a
Borrowing pursuant to Section 2.3(a), Agent shall elect, in its discretion, (i)
--------------
to have the terms of Section 2.3(c) apply to such requested Borrowing, or (ii)
--------------
if the Borrowing is for an Advance, to request Swing Lender to make a Swing Loan
pursuant to the terms of Section 2.3(d) in the amount of the requested
--------------
Borrowing; provided, however, that if Swing Lender declines in its sole
-------- -------
discretion to make a Swing Loan pursuant to Section 2.3(d), Agent shall elect to
--------------
have the terms of Section 2.3(c) apply to such requested Borrowing.
--------------
(c) Making of Advances.
(i) In the event that Agent shall elect to have the terms of this
Section 2.3(c) apply to a requested Borrowing as described in Section
-------------- -------
2.3(b),
------
49
then promptly after receipt of a request for a Borrowing pursuant to
Section 2.3(a), Agent shall notify the Lenders, not later than 1:00
--------------
p.m. (California time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telecopy, telephone, or other
similar form of transmission, of the requested Borrowing. Each Lender
shall make the amount of such Lender's Pro Rata Share of the
requested Borrowing available to Agent in immediately available
funds, to Agent's Account, not later than 10:00 a.m. (California
time) on the Funding Date applicable thereto. After Agent's receipt
of the proceeds of such Advances or the Term Loan, as applicable,
upon satisfaction of the applicable conditions precedent set forth in
Section 3 hereof, Agent shall make the proceeds thereof available to
---------
Administrative Borrower on the applicable Funding Date by
transferring immediately available funds equal to such proceeds
received by Agent to Administrative Borrower's Designated Account;
provided, however, that, subject to the provisions of Section 2.3(i),
-------- ------- --------------
Agent shall not request any Lender to make, and no Lender shall have
the obligation to make, any Advance (or its portion of the Term Loan)
if Agent shall have actual knowledge that (1) one or more of the
applicable conditions precedent set forth in Section 3 will not be
---------
satisfied on the requested Funding Date for the applicable Borrowing
unless such condition has been waived, or (2) the requested Borrowing
would exceed the Availability on such Funding Date.
(ii) Unless Agent receives notice from a Lender on or prior to
the Closing Date or, with respect to any Borrowing after the Closing
Date, at least 1 Business Day prior to the date of such Borrowing,
that such Lender will not make available as and when required
hereunder to Agent for the account of Borrowers the amount of that
Lender's Pro Rata Share of the Borrowing, Agent may assume that each
Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but
shall not be so required), in reliance upon such assumption, make
available to Borrowers on such date a corresponding amount. If and to
the extent any Lender shall not have made its full amount available
to Agent in immediately available funds and Agent in such
circumstances has made available to Borrowers such amount, that
Lender shall on the Business Day following such Funding Date make
such amount available to Agent, together with interest at the
Defaulting Lender Rate for each day during such period. A notice
submitted by Agent to any Lender with respect to amounts owing under
this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute
such Lender's portion of the requested Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is not
made available to Agent on the Business Day following the Funding
Date, Agent will notify Administrative Borrower of such failure to
fund and, upon demand by Agent, Borrowers shall pay such amount to
Agent for Agent's account, together with interest thereon for each
day elapsed since the date of such Borrowing, at a rate per annum
equal to the
50
interest rate applicable at the time to the Advances composing such
Borrowing. The failure of any Lender to make its portion of any
Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make available its portion of the requested
Advance on such Funding Date, but no Lender shall be responsible for
the failure of any other Lender to make available its portion of the
requested Advance to be made by such other Lender on any Funding
Date.
(iii) Agent shall not be obligated to transfer to a Defaulting
Lender any payments made by Borrowers to Agent for the Defaulting
Lender's benefit, and, in the absence of such transfer to the
Defaulting Lender, Agent shall transfer any such payments to each
other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such
Defaulting Lender's portion of the Advance was funded by the other
members of the Lender Group) or, if so directed by Administrative
Borrower and if no Default or Event of Default had occurred and is
continuing (and to the extent such Defaulting Lender's Advance was
not funded by the Lender Group), retain same to be re-advanced to
Borrowers as if such Defaulting Lender had made Advances to
Borrowers. Subject to the foregoing, Agent may hold and, in its
Permitted Discretion, re-lend to Borrowers for the account of such
Defaulting Lender the amount of all such payments received and
retained by it for the account of such Defaulting Lender. Solely for
the purposes of voting or consenting to matters with respect to the
Loan Documents, such Defaulting Lender shall be deemed not to be a
"Lender" and such Lender's Commitment shall be deemed to be zero.
This Section shall remain effective with respect to such Lender until
(x) the Obligations under this Agreement shall have been declared or
shall have become immediately due and payable, (y) the non-Defaulting
Lenders, Agent, and Administrative Borrower shall have waived such
Defaulting Lender's default in writing, or (z) the Defaulting Lender
makes its Pro Rata Share of the applicable Advance and pays to Agent
all amounts owing by Defaulting Lender in respect thereof. The
operation of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, to relieve or excuse
the performance by such Defaulting Lender or any other Lender of its
duties and obligations hereunder, or to relieve or excuse the
performance by Borrowers of their duties and obligations hereunder to
Agent or to the Lenders other than such Defaulting Lender. Any such
failure to fund by any Defaulting Lender shall constitute a material
breach by such Defaulting Lender of this Agreement and shall entitle
Administrative Borrower at its option, upon written notice to Agent,
to arrange for a substitute Lender to assume the Commitment of such
Defaulting Lender, such substitute Lender to be acceptable to Agent.
In connection with the arrangement of such a substitute Lender, the
Defaulting Lender shall have no right to refuse to be replaced
hereunder, and agrees to execute and deliver a completed form of
Assignment and Acceptance Agreement in favor of the substitute Lender
(and agrees that it
51
shall be deemed to have executed and delivered such document if it
fails to do so) subject only to being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata
Share of the Risk Participation Liability) without any premium or
penalty of any kind whatsoever; provided further, however, that any
-------- ------- -------
such assumption of the Commitment of such Defaulting Lender shall not
be deemed to constitute a waiver of any of the Lender Groups' or
Borrowers' rights or remedies against any such Defaulting Lender
arising out of or in relation to such failure to fund.
(d) Making of Swing Loans.
(i) In the event Agent shall elect, with the consent of Swing
Lender, as a Lender, to have the terms of this Section 2.3(d) apply
--------------
to a requested Borrowing as described in Section 2.3(b), Swing Lender
--------------
as a Lender shall make such Advance in the amount of such Borrowing
(any such Advance made solely by Swing Lender as a Lender pursuant to
this Section 2.3(d) being referred to as a "Swing Loan" and such
-------------- ----------
Advances being referred to collectively as "Swing Loans") available
-----------
to Borrowers on the Funding Date applicable thereto by transferring
immediately available funds to Administrative Borrower's Designated
Account. Each Swing Loan is an Advance hereunder and shall be subject
to all the terms and conditions applicable to other Advances, except
that no such Swing Loan shall be eligible for the LIBOR Option and
all payments on any Swing Loan shall be payable to Swing Lender as a
Lender solely for its own account (and for the account of the holder
of any participation interest with respect to such Swing Loan).
Subject to the provisions of Section 2.3(i), Agent shall not request
--------------
Swing Lender as a Lender to make, and Swing Lender as a Lender shall
not make, any Swing Loan if Agent has actual knowledge that (i) one
or more of the applicable conditions precedent set forth in Section 3
---------
will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or (ii)
the requested Borrowing would exceed the Availability on such Funding
Date. Swing Lender as a Lender shall not otherwise be required to
determine whether the applicable conditions precedent set forth in
Section 3 have been satisfied on the Funding Date applicable thereto
---------
prior to making, in its sole discretion, any Swing Loan.
(ii) The Swing Loans shall be secured by the Agent's Liens, shall
constitute Advances and Obligations hereunder, and shall bear
interest at the rate applicable from time to time to Advances that
are Base Rate Loans.
(e) Agent Advances.
(i) Agent hereby is authorized by Borrowers and the Lenders,
from time to time in Agent's sole discretion, (1) after the
occurrence and during the continuance of a Default or an Event of
Default, or (2) at any time that any of
52
the other applicable conditions precedent set forth in Section 3 have
---------
not been satisfied, to make Advances to Borrowers on behalf of the
Lenders that Agent, in its Permitted Discretion deems necessary or
desirable (A) to preserve or protect the Collateral, or any portion
thereof, (B) to enhance the likelihood of repayment of the
Obligations, or (C) to pay any other amount chargeable to Borrowers
pursuant to the terms of this Agreement, including Lender Group
Expenses and the costs, fees, and expenses described in Section 10
----------
(any of the Advances described in this Section 2.3(e) shall be
--------------
referred to as "Agent Advances"); provided, that notwithstanding
-------------- --------
anything to the contrary contained in this Section 2.3(e), the
--------------
aggregate principal amount of Advances outstanding at any one time,
when taken together with the aggregate principal amount of
Overadvances made in accordance with Section 2.3(i) outstanding at
--------------
any time, shall not exceed an amount equal to the lesser of (x) 10%
of the Borrowing Base then in effect and (y) $7,000,000. Each Agent
Advance is an Advance hereunder and shall be subject to all the terms
and conditions applicable to other Advances, except that no such
Agent Advance shall be eligible for the LIBOR Option and all payments
thereon shall be payable to Agent solely for its own account (and for
the account of the holder of any participation interest with respect
to such Agent Advance).
(ii) The Agent Advances shall be repayable by Borrowers on demand
demand and secured by the Agent's Liens granted to Agent under the
Loan Documents, shall constitute Advances and Obligations hereunder,
and shall bear interest at the rate applicable from time to time to
Advances that are Base Rate Loans.
(f) Settlement. It is agreed that each Lender's funded portion
of the Advances is intended by the Lenders to equal, at all times, such Lender's
Pro Rata Share of the outstanding Advances. Such agreement notwithstanding,
Agent, Swing Lender, and the other Lenders agree (which agreement shall not be
for the benefit of or enforceable by Borrowers) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Advances, the Swing Loans, and the Agent Advances shall take
place on a periodic basis in accordance with the following provisions:
(i) Agent shall request settlement ("Settlement") with the
----------
Lenders on a weekly basis, or on a more frequent basis if so
determined by Agent, (1) on behalf of Swing Lender, with respect to
each outstanding Swing Loan, (2) for itself, with respect to each
Agent Advance, and (3) with respect to Collections received, as to
each by notifying the Lenders by telecopy, telephone, or other
similar form of transmission, of such requested Settlement, no later
than 2:00 p.m. (California time) on the Business Day immediately
prior to the date of such requested Settlement (the date of such
requested Settlement being the "Settlement Date"). Such notice of a
---------------
Settlement Date shall include a summary statement of the amount of
outstanding Advances, Swing Loans, and Agent Advances for the period
since the prior Settlement
53
Date. Subject to the terms and conditions contained herein (including
Section 2.3(c)(iii)): (y) if a Lender's balance of the Advances,
-------------------
Swing Loans, and Agent Advances exceeds such Lender's Pro Rata Share
of the Advances, Swing Loans, and Agent Advances as of a Settlement
Date, then Agent shall, by no later than 12:00 p.m. (California time)
on the Settlement Date, transfer in immediately available funds to
the account of such Lender as such Lender may designate, an amount
such that each such Lender shall, upon receipt of such amount, have
as of the Settlement Date, its Pro Rata Share of the Advances, Swing
Loans, and Agent Advances, and (z) if a Lender's balance of the
Advances, Swing Loans, and Agent Advances is less than such Lender's
Pro Rata Share of the Advances, Swing Loans, and Agent Advances as of
a Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately
available funds to the Agent's Account, an amount such that each such
Lender shall, upon transfer of such amount, have as of the Settlement
Date, its Pro Rata Share of the Advances, Swing Loans, and Agent
Advances. Such amounts made available to Agent under clause (z) of
the immediately preceding sentence shall be applied against the
amounts of the applicable Swing Loan or Agent Advance and, together
with the portion of such Swing Loan or Agent Advance representing
Swing Lender's Pro Rata Share thereof, shall constitute Advances of
such Lenders. If any such amount is not made available to Agent by
any Lender on the Settlement Date applicable thereto to the extent
required by the terms hereof, Agent shall be entitled to recover for
its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.
(ii) In determining whether a Lender's balance of the Advances,
Swing Loans, and Agent Advances is less than, equal to, or greater
than such Lender's Pro Rata Share of the Advances, Swing Loans, and
Agent Advances as of a Settlement Date, Agent shall, as part of the
relevant Settlement, apply to such balance the portion of payments
actually received in good funds by Agent with respect to principal,
interest and fees payable by Borrowers and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such net
amount shall be distributed by Agent to that Lender as part of such
next Settlement.
(iii) Between Settlement Dates, Agent, to the extent no Agent
Advances or Swing Loans are outstanding, may pay over to Swing Lender
any payments received by Agent, that in accordance with the terms of
this Agreement would be applied to the reduction of the Advances, for
application to Swing Lender's Pro Rata Share of the Advances. If, as
of any Settlement Date, Collections received since the then
immediately preceding Settlement Date have been applied to Swing
Lender's Pro Rata Share of the Advances other than to Swing Loans, as
provided for in the previous sentence, Swing
54
Lender shall pay to Agent for the accounts of the Lenders, and Agent
shall pay to the Lenders, to be applied to the outstanding Advances
of such Lenders, an amount such that each Lender shall, upon receipt
of such amount, have, as of such Settlement Date, its Pro Rata Share
of the Advances. During the period between Settlement Dates, Swing
Lender with respect to Swing Loans, Agent with respect to Agent
Advances, and each Lender (subject to the effect of letter agreements
between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement
on the daily amount of funds employed by Swing Lender, Agent, or the
Lenders, as applicable.
(g) Notation. Agent shall record on its books the principal
amount of the Advances owing to each Lender, including the Swing Loans owing to
Swing Lender, and Agent Advances owing to Agent, and the interests therein of
each Lender, from time to time. In addition, each Lender is authorized, at such
Lender's option, to note the date and amount of each payment or prepayment of
principal of such Lender's Advances in its books and records, including computer
records, such books and records constituting conclusive evidence, absent
manifest error, of the accuracy of the information contained therein.
(h) Lenders' Failure to Perform. All Advances (other than Swing
Loans and Agent Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligations hereunder, and (ii) no failure by
any Lender to perform its obligations hereunder shall excuse any other Lender
from its obligations hereunder.
(i) Optional Overadvances. (i) Any contrary provision of this
Agreement (including Section 2.3(i)(ii)) notwithstanding, the Lenders hereby
------------------
authorize Agent or Swing Lender, as applicable, and Agent or Swing Lender, as
applicable, may, but is not obligated to, knowingly and intentionally, continue
to make Advances (including Swing Loans) to Borrowers notwithstanding that an
Overadvance exists or thereby would be created, so long as (A) after giving
effect to such Advances (including a Swing Loan), the Revolver Usage does not
exceed the Borrowing Base by more than an amount equal to the lesser of (1) 10%
of the Borrowing Base then in effect and (2) $7,000,000, (B) after giving effect
to such Advances (including a Swing Loan) the outstanding Revolver Usage (except
for and excluding amounts charged to the Loan Account for interest, fees, or
Lender Group Expenses) does not exceed the Maximum Revolver Amount, (C) the
aggregate principal amount of Overadvances made pursuant to this Section 2.3(i)
--------------
when taken together with the aggregate principal amount of Agent Advances made
pursuant to Section 2.3(e) does not exceed at any time an amount equal to the
--------------
lesser of (1) 10% of the Borrowing Base then in effect and (2) $7,000,000, and
(D) at the time of the making of any such Advance (including a Swing Loan),
Agent does not believe, in good faith, that the Overadvance created by such
55
Advance will be outstanding for more than 120 days. The foregoing provisions are
for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not
intended to benefit Borrowers in any way. The Advances and Swing Loans, as
applicable, that are made pursuant to this Section 2.3(i) shall be subject to
--------------
the same terms and conditions as any other Advance or Swing Loan, as applicable,
except that they shall not be eligible for the LIBOR Option and the rate of
interest applicable thereto shall be the rate applicable to Advances that are
Base Rate Loans under Section 2.6(c) hereof without regard to the presence or
--------------
absence of a Default or Event of Default.
(i) In the event Agent obtains actual knowledge
that the Revolver Usage exceeds the amounts permitted by the
preceding paragraph, regardless of the amount of, or reason
for, such excess, Agent shall notify Lenders as soon as
practicable (and prior to making any (or any additional)
intentional Overadvances (except for and excluding amounts
charged to the Loan Account for interest, fees, or Lender
Group Expenses) unless Agent determines that prior notice
would result in imminent harm to the Collateral or its value),
and the Lenders with Revolver Commitments thereupon shall,
together with Agent, jointly determine the terms of
arrangements that shall be implemented with Borrowers and
intended to reduce, within a reasonable time, the outstanding
principal amount of the Advances to Borrowers to an amount
permitted by the preceding paragraph. In the event Agent or
any Lender disagrees over the terms of reduction or repayment
of any Overadvance, the terms of reduction or repayment
thereof shall be implemented according to the determination of
the Required Lenders.
(ii) Each Lender with a Revolver Commitment shall
be obligated to settle with Agent as provided in Section
-------
2.3(f) for the amount of such Lender's Pro Rata Share of any
------
unintentional Overadvances by Agent reported to such Lender,
any intentional Overadvances made as permitted under this
Section 2.3(i), and any Overadvances resulting from the
--------------
charging to the Loan Account of interest, fees, or Lender
Group Expenses.
2.4 Payments.
---------
(a) Payments by Borrowers.
(i) Except as otherwise expressly provided
herein, all payments by Borrowers shall be made to Agent's
Account for the account of the Lender Group and shall be made
in immediately available funds, no later than 11:00 a.m.
(California time) on the date specified herein. Any payment
received by Agent later than 11:00 a.m. (California time),
shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.
(ii) Unless Agent receives notice from
Administrative Borrower prior to the date on which any payment
is due to the Lenders that
56
Borrowers will not make such payment in full as and when required, Agent may
assume that Borrowers have made (or will make) such payment in full to Agent on
such date in immediately available funds and Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent Borrowers do not make such payment in full to Agent on the date when due,
each Lender severally shall repay to Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.
(iii) If, during any 12 consecutive month period, any Borrower or any
Guarantor Subsidiary receives any Net Proceeds from the sale, assignment,
transfer or other disposition of any assets described in clauses (a), (d) or (h)
of the definition of Permitted Dispositions and the aggregate Net Proceeds
received by all such entities on account of such sales, assignments, transfers
and other dispositions during such 12 consecutive month period (it being
understood that pursuant to clause (ii)(A) of the definition of "Net Proceeds,"
the proceeds from such sales, assignments, transfers or other dispositions shall
be reduced by the amount required to be paid to Marad or GE pursuant to the
Marad Financing Documents or the GE Financing Documents, as the case may be),
exceeds $2,000,000 (the "Excess Net Proceeds"), Borrowers immediately shall (A)
-------------------
prepay the outstanding Term Loan Amount in an amount equal to the Excess Net
Proceeds (subject to compliance with the requirements of Section 2.2 with the
-----------
exception of the notice provisions thereof), or (B) permanently reduce the
Maximum Revolver Amount and the Revolver Commitments by an amount equal to the
Excess Net Proceeds, by immediately giving Agent and each Lender written notice
of their election to so permanently reduce the Maximum Revolver Amount and the
Revolver Commitments (whereupon (w) the Maximum Revolver Amount and the Revolver
---------
Commitments shall immediately and automatically so reduce, (x) the Revolver
Commitments of each Lender shall reduce ratably, (y) the Letter of Credit
facility sublimit referred to in Section 2.12(a)(ii) hereof shall reduce
-------------------
ratably, and (z) the Borrowers shall apply the Excess Net Proceeds, first, to
prepay the Advances and, second, to provide cash collateral to be held by Agent
in an interest bearing account selected by Agent in its sole discretion for the
benefit of those Lenders with a Revolver Commitment in an amount equal to 105%
of the then extant Letter of Credit Usage (the aggregate amount of such cash
collateral held by Agent as of any date of the determination thereof is referred
to herein as the "L/C Cash Collateral"), in each case regardless of any failure
------------------- ------------
to comply with the notice or other requirements of Section 3.6 hereof), or (C)
-----------
prepay the Term Loan Amount and reduce the Maximum Revolver Amount and the
Revolver Commitments pursuant to any combination of prepayments and reductions
pursuant clauses (A) and (B) as
57
Parent shall elect, so long as the total amount of such prepayment and reduction
is equal to such Excess Net Proceeds.
(b) Apportionment and Application.
(i) Except as otherwise provided with respect to Defaulting Lenders
and except as otherwise provided in the Loan Documents (including letter
agreements between Agent and individual Lenders), aggregate principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and payments of fees and expenses (other than fees or
expenses that are for Agent's separate account, after giving effect to any
letter agreements between Agent and individual Lenders) shall be apportioned
ratably among the Lenders. All payments shall be remitted to Agent and all such
payments not relating to principal or interest of specific Obligations (other
than payments constituting the payment of specific fees), and all proceeds of
Accounts or other Collateral received by Agent, shall be applied as follows:
A. first, to pay any Lender Group Expenses then due to Agent
-----
under the Loan Documents, until paid in full,
B. second, to pay any Lender Group Expenses then due to the
------
Lenders under the Loan Documents, on a ratable basis, until paid in
full,
C. third, to pay any fees then due to Agent (for its separate
-----
accounts, after giving effect to any letter agreements between Agent
and the individual Lenders) under the Loan Documents until paid in
full,
D. fourth, to pay any fees then due to any or all of the Lenders
------
(after giving effect to any letter agreements between Agent and
individual Lenders) under the Loan Documents, on a ratable basis, until
paid in full,
E. fifth, to pay interest due in respect of all Agent Advances,
-----
until paid in full,
F. sixth, ratably to pay interest due in respect of the Advances
-----
(other than Agent Advances) and the Swing Loans until paid in full,
G. seventh, so long as no Event of Default has occurred and is
-------
continuing or, if an Event of Default has occurred and is continuing
and Agent agrees in its sole discretion, to pay interest due in respect
of the Term Loan until paid in full (if an Event of Default has
occurred or is
58
continuing, the priority of the payment of interest on the Term Loan
Amount, including the Term Loan PIK Amount, is deferred to item
"twelfth" below),
H. eight, to pay the principal of all Agent Advances until paid
-----
in full,
I. ninth, to pay the principal of all Swing Loans until paid in
-----
full,
J. tenth, to pay the principal of all Advances until paid in
-----
full,
K. eleventh, if an Event of Default has occurred and is
--------
continuing, to Agent, to be held by Agent, for the ratable benefit of
Issuing Lender and those Lenders having a Revolver Commitment, as cash
collateral in an amount up to 105% of the then extant Letter of Credit
Usage until paid in full,
L. twelfth, if an Event of Default has occurred and is
-------
continuing, to pay interest due in respect of the Term Loan, including
the Term Loan PIK Amount, until paid in full,
M. thirteenth, if an Event of Default has occurred and is
----------
continuing, to pay the outstanding principal balance of the Term Loan
until the Term Loan is paid in full,
N. fourteenth, to pay any other Obligations until paid in full,
----------
and
O. fifteenth, to Borrowers (to be wired to the Designated
---------
Account) or such other Person entitled thereto under applicable law.
(ii) Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such
funds as it may be entitled to receive, subject to a Settlement delay as
provided in Section 2.3(h).
--------------
(iii) In each instance, so long as no Default or Event of Default has
occurred and is continuing, Section 2.4(b) shall not be deemed to apply to
--------------
any payment by Borrowers specified by Borrowers to be for the payment of
specific Obligations then due and payable (or prepayable) under any
provision of this Agreement, including, without limitation, the prepayment
of all or any part of the Term Loan Amount pursuant to Section 2.4(a)(iii).
-------------------
(iv) For purposes of the foregoing, "paid in full" means payment of
all amounts owing under the Loan Documents according to the terms thereof,
59
including loan fees, service fees, professional fees, interest
(and specifically including interest accrued after the
commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or
not the same would be or is allowed or disallowed in whole or
in part in any Insolvency Proceeding.
(v) Notwithstanding anything to the contrary, the
Applicable Prepayment Premium shall not be paid to any Lender
until all other Obligations have been paid in full.
(vi) In the event of a direct conflict between the
priority provisions of this Section 2.4 and other provisions
-----------
contained in any other Loan Document, it is the intention of
the parties hereto that such priority provisions in such
documents shall be read together and construed, to the fullest
extent possible, to be in concert with each other. In the
event of any actual, irreconcilable conflict that cannot be
resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.
-----------
2.5 Overadvances. If, at any time or for any reason, the amount of
------------
Obligations owed by Borrowers to the Lender Group pursuant to Sections 2.1 and
----------------
2.12 is greater than the Dollar limitations set forth in Sections 2.1 or 2.12,
---- --------------------
(an "Overadvance"), Borrowers immediately shall pay to Agent, in cash, the
-----------
amount of such excess, which amount shall be used by Agent to reduce the
Obligations in accordance with the priorities set forth in Section 2.4(b). In
--------------
addition, Borrowers hereby promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full to the Lender Group as
and when due and payable under the terms of this Agreement and the other Loan
Documents.
2.6 Interest Rates and Letter of Credit Fee Rates, Payments, and
------------------------------------------------------------
Calculations.
------------
(a) Interest Rates. Except as provided in clause (c) below,
(i) all Obligations (except for undrawn Letters of
Credit and the Term Loan Amount) that have been charged
to the Loan Account pursuant to the terms hereof shall
bear interest on the Daily Balance thereof at a per annum
rate equal to the greater of (A) (1) if the relevant
Obligation is an Advance that is a LIBOR Rate Loan, at a
per annum rate equal to the LIBOR Rate plus the
Applicable LIBOR Rate Margin, or (2) otherwise, at a per
annum rate equal to the Base Rate plus the Applicable
Base Rate Margin, and (B) 7.5%; and
(ii) the Term Loan Amount (inclusive of any Term Loan PIK
Amount) shall bear interest on the amount thereof
outstanding from time to time at a per annum rate equal
to the greater of (A) the Base Rate plus 5.50 percentage
points and (B) 13.0% (to the extent that interest accrued
hereunder at the rate set forth herein
60
would be less than the foregoing minimum
daily rate, the interest rate chargeable
hereunder for such day automatically shall
be deemed increased to the minimum rate);
provided, however, that, so long as no Event
-------- -------
of Default has occurred and is continuing,
that portion of such interest equal to 1.50
percentage points per annum ( the "Term Loan
---------
PIK Amount") shall, in the absence of an
----------
election by Borrowers to pay such interest
in cash, be paid-in-kind by being added to
the principal balance of the Term Loan
Amount (inclusive of any Term Loan PIK
Amount theretofore so added); provided,
--------
further, however, that Borrower may, on or
------- -------
prior to the date that is 5 Business Days
prior to the due date thereof, elect to pay
all accrued and unpaid interest under this
Section 2.6(a)(ii) in cash.
------------------
(b) Letter of Credit Fee. Borrowers, jointly and
severally, shall pay Agent (for the ratable benefit of the Lenders with a
Revolver Commitment, subject to any letter agreement between Agent and
individual Lenders), a Letter of Credit fee (in addition to the charges,
commissions, fees, and costs set forth in Section 2.12(e)) which shall accrue at
----------------
a rate equal to (i) the Applicable LIBOR Rate Margin minus 0.50 percentage
points, times (b) the Daily Balance of the undrawn amount of all outstanding
Letters of Credit.
(c) Default Rate. Upon the occurrence and during the
continuation of an Event of Default (and at the election of Agent or the
Required Lenders),
(i) all Obligations (except for undrawn Letters
of Credit) that have been charged to the Loan
Account pursuant to the terms hereof shall bear
interest on the Daily Balance thereof at a per annum
rate equal to 2 percentage points above the per annum
rate otherwise applicable hereunder, and
(ii) the Letter of Credit fee provided for above
shall be increased to 2 percentage points above the
per annum rate otherwise applicable hereunder.
(d) Payment. Interest, Letter of Credit fees, and all
other fees payable hereunder shall be due and payable, in arrears, on the first
day of each month at any time that Obligations or Commitments are outstanding.
Borrowers hereby authorize Agent, from time to time, without prior notice to
Borrowers, to, and Agent agrees that it will, charge such interest and fees, all
Lender Group Expenses (as and when incurred), the charges, commissions, fees,
and costs provided for in Section 2.12(e) (as and when accrued or incurred), the
---------------
fees and costs provided for in Section 2.11 (as and when accrued or incurred),
------------
and all other payments as and when due and payable under any Loan Document
(including the installments due and payable with respect to the Term Loan) to
Borrowers' Loan Account, which amounts thereafter constitute Advances hereunder
and shall accrue interest at the rate then applicable to Advances hereunder. Any
interest not paid when due shall be
61
compounded by being charged to Borrowers' Loan Account and shall thereafter
constitute Advances hereunder and shall accrue interest at the rate then
applicable to Advances that are Base Rate Loans hereunder.
(e) Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year for the actual number
of days elapsed. In the event the Base Rate is changed from time to time
hereafter, the rates of interest hereunder based upon the Base Rate
automatically and immediately shall be increased or decreased by an amount equal
to such change in the Base Rate.
(f) Intent to Limit Charges to Maximum Lawful Rate. In no event
shall the interest rate or rates payable under this Agreement, plus any other
amounts paid in connection herewith, exceed the highest rate permissible under
any law that a court of competent jurisdiction shall, in a final determination,
deem applicable. Borrowers and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that, anything contained
-------- -------
herein to the contrary notwithstanding, if said rate or rates of interest or
manner of payment exceeds the maximum allowable under applicable law, then, ipso
facto, as of the date of this Agreement, Borrowers are and shall be liable only
for the payment of such maximum as allowed by law, and payment received from
Borrowers in excess of such legal maximum, whenever received, shall be applied
to reduce the principal balance of the Obligations to the extent of such excess.
2.7 Cash Management.
---------------
(a) Borrowers shall (i) establish and maintain cash management
services of a type and on terms satisfactory to Agent at one or more of the
banks set forth on Schedule 2.7(a) (each a "Cash Management Bank"), and shall
--------------- --------------------
request in writing and otherwise take such reasonable steps to ensure that all
of its Account Debtors forward payment of the amounts owed by them directly to
such Cash Management Bank, and (ii) deposit or cause to be deposited promptly,
and in any event no later than the first Business Day after the date of receipt
thereof, all Collections other than Collections composing Excluded Assets
(including those sent directly by Account Debtors to a Cash Management Bank)
into a bank account in Agent's name (a "Cash Management Account") at one of the
-----------------------
Cash Management Banks and as listed on Schedule 2.7(b).
---------------
(b) Each Cash Management Bank shall establish and maintain Cash
Management Agreements with Agent and Borrowers, in form and substance acceptable
to Agent. Each such Cash Management Agreement shall provide, among other things,
that (i) all items of payment deposited in such Cash Management Account and
proceeds thereof are held by such Cash Management Bank as agent or bailee-in-
possession for Agent, (ii) the Cash Management Bank has no rights of setoff or
recoupment or any other claim against the applicable Cash Management Account,
other than for payment of its service fees and other charges directly related to
the administration of such Cash Management Account and for returned checks or
other items of payment, (iii) for remitting of all proceeds received therein
62
to the Agent's Account at any time that Agent has provided a notice (a
"Triggering Event Notice") to the applicable Cash Management Bank, and (iv)
-----------------------
after receipt of a Triggering Event Notice, at Agent's election, the Cash
Management Bank will segregate that portion of the Collections representing
amounts attributable to any taxes or fees due to a Governmental Authority as
well as that portion of the Collections representing amounts owing to or
composing the senior collateral of any third party, including to the United
States of America or GE as proceeds of or composing the Excluded Assets, to a
surety with respect to payments received under a bonded construction contract
and as to which the surety may have a claim of entitlement senior to Agent's
Liens, and such other Collections as Agent may, in its sole discretion,
designate, in each case to be held in a separate account (it being the intent of
Agent to segregate all such Collections so as to avoid the deposit of such funds
into the Agent's Account). The Agent (A) prior to the repayment in full in cash
of the Term Loan, shall at the request of the Required Lenders or the Required
Term Loan Lenders, and (B) thereafter, may provide a Triggering Event Notice to
the applicable Cash Management Bank if either (1) an Event of Default has
occurred and is continuing hereunder, or (2) Borrower's Excess Availability plus
unrestricted cash and Cash Equivalents on deposit in Securities Accounts or DDAs
subject to Control Agreements is less than $50,000,000 (such aggregate amount of
Excess Availability and unrestricted cash and Cash Equivalents on deposit in
Securities Accounts or DDAs subject to Control Agreements to include not less
than $10,000,000 attributable to Excess Availability), or (3) Revolver Usage is
greater than $35,000,000. No Cash Management Agreement or other arrangement
contemplated thereby shall be modified by any Borrower without the prior written
consent of Agent. Upon the terms and subject to the conditions set forth in the
Cash Management Agreements, from and after the receipt by a Cash Management Bank
of a Triggering Event Notice, all amounts received in the applicable Cash
Management Account, except such funds as are segregated pursuant to clause (iv)
above, shall be wired each Business Day into the Agent's Account. Agent may,
without any liability to any Borrower or any Guarantor Subsidiary, direct a Cash
Management Bank to forward Collections consisting of Excluded Assets or the
proceeds thereof as Marad or GE may direct.
(c) So long as no Default or Event of Default has occurred and
is continuing, Administrative Borrower may amend Schedule 2.7(a) or (b) to add
---------------
or replace a Cash Management Account Bank or Cash Management Account; provided,
--------
however, that (i) such prospective Cash Management Bank shall be satisfactory to
-------
Agent and Agent shall have consented in writing in advance to the opening of
such Cash Management Account with the prospective Cash Management Bank, and (ii)
prior to the time of the opening of such Cash Management Account, Borrowers and
such prospective Cash Management Bank shall have executed and delivered to Agent
a Cash Management Agreement. Borrowers shall close any of their Cash Management
Accounts (and establish replacement cash management accounts in accordance with
the foregoing sentence) promptly and in any event within 30 days of notice from
Agent that the creditworthiness of any Cash Management Bank is no longer
acceptable in Agent's reasonable judgment, or as promptly as practicable and in
any event within 60 days of notice from Agent that the operating performance,
funds transfer, or availability procedures or performance of the Cash Management
Bank with respect to Cash
63
Management Accounts or Agent's liability under any Cash Management Agreement
with such Cash Management Bank is no longer acceptable in Agent's reasonable
judgment.
(d) The Cash Management Accounts shall be cash collateral
accounts, with all cash, checks and similar items of payment in such accounts
securing payment of the Obligations, and in which Borrowers are hereby deemed to
have granted a Lien to Agent.
2.8 Crediting Payments; Float Charge. The receipt of any payment item by
--------------------------------
Agent (whether from transfers to Agent by the Cash Management Banks pursuant to
the Cash Management Agreements or otherwise) shall not be considered a payment
on account unless such payment item is a wire transfer of immediately available
federal funds made to the Agent's Account or unless and until such payment item
is honored when presented for payment. Should any payment item not be honored
when presented for payment, then Borrowers shall be deemed not to have made such
payment and interest shall be calculated accordingly. Anything to the contrary
contained herein notwithstanding, any payment item shall be deemed received by
Agent only if it is received into the Agent's Account on a Business Day on or
before 11:00 a.m. (California time). If any payment item is received into the
Agent's Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day. From and after
the Closing Date, Agent shall be entitled to charge Borrowers for 1 Business Day
of `clearance' or `float' at the rate applicable to Base Rate Loans under
Section 2.6 on all Collections that are received by Borrowers (regardless of
-----------
whether forwarded by the Cash Management Banks to Agent). This across-the-board
1 Business Day clearance or float charge on all Collections is acknowledged by
the parties to constitute an integral aspect of the pricing of the financing of
Borrowers and shall apply irrespective of whether or not there are any
outstanding monetary Obligations; the effect of such clearance or float charge
being the equivalent of charging 1 Business Day of interest on such Collections.
2.9 Designated Account. Agent is authorized to make the Advances and the
------------------
Term Loan, and Issuing Lender is authorized to issue the Letters of Credit,
under this Agreement based upon telephonic or other instructions received from
anyone purporting to be an Authorized Person, or without instructions if
pursuant to Section 2.6(d). Administrative Borrower agrees to establish and
--------------
maintain the Designated Account with the Designated Account Bank for the purpose
of receiving the proceeds of the Advances requested by Borrowers and made by
Agent or the Lenders hereunder. So long as no Default or Event of Default has
occurred and is continuing, Administrative Borrower may add or replace, the
Designated Account Bank or the Designated Account on 30 days prior written
notice to Agent; provided, however, that (i) such prospective Designated Account
-------- -------
Bank shall be satisfactory to Agent and Agent shall have consented in writing in
advance to the opening of such Designated Account with the prospective
Designated Account Bank, and (ii) prior to the time of the opening of such
Designated Account, Borrowers and such prospective Designated Account Bank shall
have executed and delivered to Agent a Control Agreement. Unless otherwise
agreed by Agent and Administrative Borrower, any Advance, Agent
64
Advance, or Swing Loan requested by Borrowers and made by Agent or the Lenders
hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of Obligations. Agent shall
------------------------------------------------------
maintain an account on its books in the name of Borrowers (the "Loan Account")
------------
on which Borrowers will be charged with the Term Loan, all Advances (including
Agent Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers' account, the Letters of Credit issued by Issuing
Lender for Borrowers' account, and with all other payment Obligations hereunder
or under the other Loan Documents, including, accrued interest, fees and
expenses, and Lender Group Expenses. In accordance with Section 2.8, the Loan
-----------
Account will be credited with all payments received by Agent from Borrowers or
for Borrowers' account, including all amounts received in the Agent's Account
from any Cash Management Bank. Agent shall render statements regarding the Loan
Account to Administrative Borrower, including principal, interest, fees, and
including an itemization of all charges and expenses constituting Lender Group
Expenses owing, and such statements shall be conclusively presumed to be correct
and accurate and constitute an account stated between Borrowers and the Lender
Group unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.11 Fees. Borrowers shall pay to Agent the following fees and charges,
----
which fees and charges shall be non-refundable when paid (irrespective of
whether this Agreement is terminated thereafter) and shall be apportioned among
the Lenders in accordance with the terms of letter agreements between Agent and
individual Lenders:
(a) Fee Letter Fees. As and when due and payable under the terms
of the Fee Letter, Borrowers shall pay to Agent the fees set forth in the Fee
Letter,
(b) Audit, Appraisal, and Valuation Charges. For the separate
account of Agent, audit, appraisal, and valuation fees and charges as follows,
(i) a fee of $750 pay day, per auditor, plus out-of-pocket expenses for each
financial audit of a Borrower performed by personnel employed by Agent, (ii) if
implemented, a one time charge of $3,000 plus out-of-pocket expenses for
expenses for the establishment of electronic collateral reporting systems, (iii)
subject to the limitations set forth in Section 2.1, a fee of $1,500 per day per
-----------
appraiser, plus out-of-pocket expenses, for each appraisal of the Collateral
performed by personnel employed by Agent, and (iv) the actual charges paid or
incurred by Agent if it elects to employ the services of one or more third
Persons to perform financial audits of Borrowers, to appraise the Collateral, or
any portion thereof, or to assess a Borrower's business valuation.
2.12 Letters of Credit.
-----------------
(a) Subject to the terms and conditions of this Agreement, the
Issuing Lender agrees to issue letters of credit for the account of Borrowers
(each, an "L/C") or to purchase participations or execute indemnities or
---
reimbursement obligations (each such undertaking, an "L/C Undertaking") with
---------------
respect to letters of credit issued by an Underlying
65
Issuer (as of the Closing Date, the prospective Underlying Issuer is to be
Xxxxx Fargo) for the account of Borrowers. To request the issuance of an L/C or
an L/C Undertaking (or the amendment, renewal, or extension of an outstanding
L/C or L/C Undertaking), Administrative Borrower shall hand deliver or telecopy
(or transmit by electronic communication, if arrangements for doing so have been
approved by the Issuing Lender) to the Issuing Lender and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Undertaking, or identifying the
L/C or L/C Undertaking to be amended, renewed, or extended, the date of
issuance, amendment, renewal, or extension, the date on which such L/C or L/C
Undertaking is to expire, the amount of such L/C or L/C Undertaking, the name
and address of the beneficiary thereof (or of the Underlying Letter of Credit,
as applicable), and such other information as shall be necessary to prepare,
amend, renew, or extend such L/C or L/C Undertaking. If requested by the Issuing
Lender, Borrowers also shall be an applicant under the application with respect
to any Underlying Letter of Credit that is to be the subject of an L/C
Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the requested
Letter of Credit:
(i) the Letter of Credit Usage would exceed the Borrowing
Base less the amount of outstanding Advances, or
(ii) the Letter of Credit Usage would exceed $ 65,000,000,
or
(iii) the Letter of Credit Usage would exceed the Maximum
Revolver Amount less the then extant amount of outstanding
Advances.
Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall have an expiry date no later
than 30 days prior to the Maturity Date and all such Letters of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
(i) the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall
bear interest at the rate then applicable to Advances that are Base Rate Loans
under Section 2.6. To the extent an L/C Disbursement is
-----------
66
deemed to be an Advance hereunder, Borrowers' obligation to reimburse such L/C
Disbursement shall be discharged and replaced by the resulting Advance. Promptly
following receipt by Agent of any payment from Borrowers pursuant to this
paragraph, Agent shall distribute such payment to the Issuing Lender or, to the
extent that Lenders have made payments pursuant to Section 2.12(c) to reimburse
---------------
the Issuing Lender, then to such Lenders and the Issuing Lender as their
interest may appear.
(b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.12(a), each Lender with a Revolver Commitment agrees to
---------------
fund its Pro Rata Share of any Advance deemed made pursuant to the foregoing
subsection on the same terms and conditions as if Borrowers had requested such
Advance and Agent shall promptly pay to Issuing Lender the amounts so received
by it from the Lenders. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuing Lender or the Lenders with Revolver
Commitment, the Issuing Lender shall be deemed to have granted to each Lender
with a Revolver Commitment, and each Lender with a Revolver Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender's Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Revolver Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender's Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in clause (a) of
this Section, or of any reimbursement payment required to be refunded to
Borrowers for any reason. Each Lender with a Revolver Commitment acknowledges
and agrees that its obligation to deliver to Agent, for the account of the
Issuing Lender, an amount equal to its respective Pro Rata Share pursuant to
this Section 2.12(b) shall be absolute and unconditional and such remittance
---------------
shall be made notwithstanding the occurrence or continuation of an Event of
Default or Default or the failure to satisfy any condition set forth in Section
-------
3 hereof. If any such Lender fails to make available to Agent the amount of such
-
Lender's Pro Rata Share of any payments made by the Issuing Lender in respect of
such Letter of Credit as provided in this Section, Agent (for the account of the
Issuing Lender) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Defaulting Lender Rate until paid
in full.
(c) Each Borrower hereby agrees to indemnify, save, defend, and
hold the Lender Group harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by the Lender Group arising out of or in
connection with any Letter of Credit; provided, however, that no Borrower shall
-------- -------
be obligated hereunder to indemnify for any loss, cost, expense, or liability
that is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer's regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender's interpretations of any L/C issued by
Issuing Lender to or for such Borrower's account, even though this
interpretation may be
67
different from such Borrower's own, and each Borrower understands and agrees
that the Lender Group shall not be liable for any error, negligence, or mistake,
whether of omission or commission, in following Borrowers' instructions or those
contained in the Letter of Credit or any modifications, amendments, or
supplements thereto. Each Borrower understands that the L/C Undertakings may
require Issuing Lender to indemnify the Underlying Issuer for certain costs or
liabilities arising out of claims by Borrowers against such Underlying Issuer.
Each Borrower hereby agrees to indemnify, save, defend, and hold the Lender
Group harmless with respect to any loss, cost, expense (including reasonable
attorneys fees), or liability incurred by the Lender Group under any L/C
Undertaking as a result of the Lender Group's indemnification of any Underlying
Issuer; provided, however, that no Borrower shall be obligated hereunder to
-------- -------
indemnify for any loss, cost, expense, or liability that is caused by the gross
negligence or willful misconduct of the Issuing Lender or any other member of
the Lender Group.
(d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the Issuing Lender all instruments, documents, and other
writings and property received by such Underlying Issuer pursuant to such
Underlying Letter of Credit and to accept and rely upon the Issuing Lender's
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(e) Any and all charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and immediately shall be
reimbursable by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is .50% per annum
times the face amount of each Underlying Letter of Credit, that such issuance
charge may be changed from time to time, and that the Underlying Issuer also
imposes a schedule of charges for amendments, extensions, drawings, and
renewals.
(f) If by reason of (i) any change in any applicable law,
treaty, rule, or regulation or any change in the interpretation or application
thereof by any Governmental Authority, or (ii) compliance by the Underlying
Issuer or the Lender Group with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(i) any reserve, deposit, or similar requirement is or shall be
imposed or modified in respect of any Letter of Credit issued
hereunder, or
(ii) there shall be imposed on the Underlying Issuer or the
Lender Group any other condition regarding any Underlying Letter of
Credit or any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent
68
may, at any time within a reasonable period after the additional cost is
incurred or the amount received is reduced, notify Administrative Borrower, and
Borrowers shall pay on demand such amounts as Agent may specify to be necessary
to compensate the Lender Group for such additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the rate then applicable to Base Rate Loans hereunder. The
determination by Agent of any amount due pursuant to this Section, as set forth
in a certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and conclusive
and binding on all of the parties hereto.
(g) All Letters of Credit issued to support the payment by
Parent of its reimbursement obligations under the Underlying Letters of Credit
issued under the Prior Credit Agreement outstanding as of the Closing Date, that
are listed on Schedule 2.12(g), shall each be deemed to be a Letter of Credit
----------------
provided under this Section 2.12, regardless of whether the terms of any such
------------
Underlying Letter of Credit outstanding as of the Closing Date comply with the
requirements imposed on Letters of Credit under this Agreement or under the
Prior Credit Agreement, and to the extent that the terms of this Agreement are
inconsistent with the terms of the Underlying Letters of Credit issued under the
Prior Credit Agreement outstanding as of the Closing Date, the terms of the
Underlying Letters of Credit issued under the Prior Credit Agreement outstanding
as of the Closing Date shall govern such Letters of Credit.
2.13 LIBOR Option.
------------
(a) Interest and Interest Payment Dates. In lieu of having
interest charged at the rate based upon the Base Rate, Borrowers shall have the
option (the "LIBOR Option") to have interest on all or a portion of the Advances
------------
be charged at a rate of interest based upon the LIBOR Rate. Interest on LIBOR
Rate Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Agent on behalf thereof elect to
accelerate the maturity of the Obligations, (iii) termination of this Agreement
pursuant to the terms hereof, or (iv) the first day of each month that such
LIBOR Rate Loan is outstanding. On the last day of each applicable Interest
Period, unless Administrative Borrower properly has exercised the LIBOR Option
with respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to Base Rate
Loans of the same type hereunder. At any time that an Event of Default has
occurred and is continuing, Borrowers no longer shall have the option to request
that Advances bear interest at the LIBOR Rate and Agent shall have the right to
convert the interest rate on all outstanding LIBOR Rate Loans to the rate then
applicable to Base Rate Loans hereunder.
(b) LIBOR Election.
(i) Administrative Borrower may, at any time and from time to
time, so long as no Event of Default has occurred and is continuing,
elect to exercise the LIBOR Option by notifying Agent prior to 11:00
a.m. (California
69
time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the " LIBOR Deadline"). Notice of
--------------
Administrative Borrower's election of the LIBOR Option for a permitted
portion of the Advances and an Interest Period pursuant to this
Section shall be made by delivery to Agent of a LIBOR Notice received
by Agent before the LIBOR Deadline, or by telephonic notice received
by Agent before the LIBOR Deadline (to be confirmed by delivery to
Agent of a LIBOR Notice received by Agent prior to 5:00 p.m.
(California time) on the same day). Promptly upon its receipt of each
such LIBOR Notice, Agent shall provide a copy thereof to each of the
Lenders having a Revolver Commitment.
(ii) Each LIBOR Notice shall be irrevocable and binding on
Borrowers. In connection with each LIBOR Rate Loan, each Borrower
shall indemnify, defend, and hold Agent and the Lenders harmless
against any loss, cost, or expense incurred by Agent or any Lender as
a result of (a) the payment of any principal of any LIBOR Rate Loan
other than on the last day of an Interest Period applicable thereto
(including as a result of an Event of Default), (b) the conversion of
any LIBOR Rate Loan other than on the last day of the Interest Period
applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice
delivered pursuant hereto (such losses, costs, and expenses,
collectively, "Funding Losses"). Funding Losses shall, with respect to
--------------
Agent or any Lender, be deemed to equal the amount determined by Agent
or such Lender to be the excess, if any, of (i) the amount of interest
that would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would have
been applicable thereto, for the period from the date of such event to
the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that
would have been the Interest Period therefor), minus (ii) the amount
of interest that would accrue on such principal amount for such period
at the interest rate which Agent or such Lender would be offered were
it to be offered, at the commencement of such period, Dollar deposits
of a comparable amount and period in the London interbank market. A
certificate of Agent or a Lender delivered to Administrative Borrower
setting forth any amount or amounts that Agent or such Lender is
entitled to receive pursuant to this Section shall be conclusive
absent manifest error.
(iii) Borrowers shall have not more than 5 LIBOR Rate Loans in
effect at any given time. Borrowers only may exercise the LIBOR Option
for LIBOR Rate Loans of at least $1,000,000 and integral multiples of
$500,000 in excess thereof.
(c) Prepayments. Borrowers may prepay LIBOR Rate Loans at any
time; provided, however, that in the event that LIBOR Rate Loans are prepaid on
-------- -------
any date that is not the last day of the Interest Period applicable thereto,
including as a result of any
70
automatic prepayment through the required application by Agent of proceeds of
Collections in accordance with Section 2.4(b) or for any other reason, including
--------------
early termination of the term of this Agreement or acceleration of the
Obligations pursuant to the terms hereof, each Borrower shall indemnify, defend,
and hold Agent and the Lenders and their Participants harmless against any and
all Funding Losses in accordance with clause (b) above.
(d) Special Provisions Applicable to LIBOR Rate.
(i) The LIBOR Rate may be adjusted by Agent with respect
to any Lender on a prospective basis to take into account any
additional or increased costs to such Lender of maintaining or
obtaining any eurodollar deposits or increased costs due to
changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including
changes in tax laws (except changes of general applicability in
corporate income tax laws) and changes in the reserve
requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve
Percentage, which additional or increased costs would increase
the cost of funding loans bearing interest at the LIBOR Rate. In
any such event, the affected Lender shall give Administrative
Borrower and Agent notice of such a determination and adjustment
and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected Lender,
Administrative Borrower may, by notice to such affected Lender
(y) require such Lender to furnish to Administrative Borrower a
statement setting forth the basis for adjusting such LIBOR Rate
and the method for determining the amount of such adjustment, or
(z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under clause
(b)(ii) above).
(ii) In the event that any change in market conditions or
any law, regulation, treaty, or directive, or any change therein
or in the interpretation of application thereof, shall at any
time after the date hereof, in the reasonable opinion of any
Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Advances or to continue such funding or
maintaining, or to determine or charge interest rates at the
LIBOR Rate, such Lender shall give notice of such changed
circumstances to Agent and Administrative Borrower and Agent
promptly shall transmit the notice to each other Lender and (y)
in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender's notice shall be
deemed to be the last day of the Interest Period of such LIBOR
Rate Loans, and interest upon the LIBOR Rate Loans of such Lender
thereafter shall accrue interest at the rate then applicable to
Base Rate Loans, and (z) Borrowers shall not be entitled to elect
the LIBOR Option until such Lender determines that it would no
longer be unlawful or impractical to do so.
71
(e) No Requirement of Matched Funding. Anything to the contrary
contained herein notwithstanding, neither Agent, nor any Lender, nor any of
their Participants, is required actually to acquire eurodollar deposits to fund
or otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.
2.14 Capital Requirements. If, after the date hereof, any Lender determines
--------------------
that (i) the adoption of or change in any law, rule, regulation or guideline
regarding capital requirements for banks or bank holding companies, or any
change in the interpretation or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), the effect of reducing the return on such Lender's or such
holding company's capital as a consequence of such Lender's Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender's or such holding company's then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity's capital) by any amount deemed by such Lender to be material, then such
Lender may notify Administrative Borrower and Agent thereof. Following receipt
of such notice, Borrowers agree to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 90 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender's calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error). In determining such amount, such
Lender may use any reasonable averaging and attribution methods.
2.15 Joint and Several Liability of Borrowers.
----------------------------------------
(a) Each of Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Agent and the Lenders under this Agreement,
for the mutual benefit, directly and indirectly, of each of Borrowers and in
consideration of the undertakings of the other Borrowers to accept joint,
several and in solido liability for the Obligations.
(b) Each of Borrowers, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including, without limitation, any
Obligations arising under this Section 2.15), it being the intention of the
------------
parties hereto that all the Obligations shall be the joint and several
obligations of each Person composing Borrowers without preferences or
distinction among them.
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(c) If and to the extent that any of Borrowers shall fail to make any
payment with respect to any of the Obligations as and when due or to perform any
of the Obligations in accordance with the terms thereof, then in each such event
the other Persons composing Borrowers will make such payment with respect to, or
perform, such Obligation.
(d) The Obligations of each Person composing Borrowers under the
provisions of this Section 2.15 constitute the absolute and unconditional, full
------------
recourse Obligations of each Person composing Borrowers enforceable against each
such Borrower to the full extent of its properties and assets, irrespective of
the validity, regularity or enforceability of this Agreement or any other
circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each
Person composing Borrowers hereby waives notice of acceptance of its joint and
several liability, notice of any Advances or Letters of Credit issued under or
pursuant to this Agreement, notice of the occurrence of any Default, Event of
Default, or of any demand for any payment under this Agreement, notice of any
action at any time taken or omitted by Agent or Lenders under or in respect of
any of the Obligations, any requirement of diligence or to mitigate damages and,
generally, to the extent permitted by applicable law, all demands, notices and
other formalities of every kind in connection with this Agreement (except as
otherwise provided in this Agreement). Each Person composing Borrowers hereby
assents to, and waives notice of, any extension or postponement of the time for
the payment of any of the Obligations, the acceptance of any payment of any of
the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by Agent or Lenders at any time or times
in respect of any default by any Person composing Borrowers in the performance
or satisfaction of any term, covenant, condition or provision of this Agreement,
any and all other indulgences whatsoever by Agent or Lenders in respect of any
of the Obligations, and the taking, addition, substitution or release, in whole
or in part, at any time or times, of any security for any of the Obligations or
the addition, substitution or release, in whole or in part, of any Person
composing Borrowers. Without limiting the generality of the foregoing, each
Borrower assents to any other action or delay in acting or failure to act on the
part of any Agent or Lender with respect to the failure by any Person composing
Borrowers to comply with any of its respective Obligations, including, without
limitation, any failure strictly or diligently to assert any right or to pursue
any remedy or to comply fully with applicable laws or regulations thereunder,
which might, but for the provisions of this Section 2.15 afford grounds for
------------
terminating, discharging or relieving any Person composing Borrowers, in whole
or in part, from any of its Obligations under this Section 2.15, it being the
------------
intention of each Person composing Borrowers that, so long as any of the
Obligations hereunder remain unsatisfied, the Obligations of such Person
composing Borrowers under this Section 2.15 shall not be discharged except by
------------
performance and then only to the extent of such performance. The Obligations of
each Person composing Borrowers under this Section 2.15 shall not be diminished
------------
or rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Person
composing Borrowers or any Agent or Lender. The joint and several liability of
the Persons composing Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
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whatsoever in the name, constitution or place of formation of any of the Persons
composing Borrowers or any Agent or Lender.
(f) Each Person composing Borrowers represents and warrants to Agent
and Lenders that such Borrower is currently informed of the financial condition
of Borrowers and of all other circumstances which a diligent inquiry would
reveal and which bear upon the risk of nonpayment of the Obligations. Each
Person composing Borrowers further represents and warrants to Agent and Lenders
that such Borrower has read and understands the terms and conditions of the Loan
Documents. Each Person composing Borrowers hereby covenants that such Borrower
will continue to keep informed of Borrowers' financial condition, the financial
condition of other guarantors, if any, and of all other circumstances which bear
upon the risk of nonpayment or nonperformance of the Obligations.
(g) Each of the Persons composing Borrowers waives all rights and
defenses arising out of an election of remedies by the Agent or any Lender, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed the Agent's or such
Lender's rights of subrogation and reimbursement against such Borrower by the
operation of Section 580(d) of the California Code of Civil Procedure or
otherwise:
(h) Each of the Persons composing Borrowers waives all rights and
defenses that such Borrower may have because the Obligations are secured by Real
Property Collateral. This means, among other things:
(i) Agent and Lenders may collect from such Borrower without
first foreclosing on any Real Property Collateral or Personal Property
Collateral pledged by Borrowers.
(ii) If Agent or any Lender forecloses on any Real Property
Collateral pledged by Borrowers:
A. The amount of the Obligations may be reduced only by the
price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.
B. Agent and Lenders may collect from such Borrower even if
Agent or Lenders, by foreclosing on the Real Property Collateral,
has destroyed any right such Borrower may have to collect from
the other Borrowers.
This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property
Collateral. These rights and defenses include, but are not limited to, any
rights or defenses based upon Section 580a, 580b, 580d or 726 of the California
Code of Civil Procedure.
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(i) The provisions of this Section 2.15 are made for the benefit of
------------
the Agent, the Lenders and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Persons
composing Borrowers as often as occasion therefor may arise and without
requirement on the part of any such Agent, Lender, successor or assign first to
marshal any of its or their claims or to exercise any of its or their rights
against any of the other Persons composing Borrowers or to exhaust any remedies
available to it or them against any of the other Persons composing Borrowers or
to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
Section 2.15 shall remain in effect until all of the Obligations shall have been
------------
paid in full or otherwise fully satisfied. If at any time, any payment, or any
part thereof, made in respect of any of the Obligations, is rescinded or must
otherwise be restored or returned by any Agent or Lender upon the insolvency,
bankruptcy or reorganization of any of the Persons composing Borrowers, or
otherwise, the provisions of this Section 2.15 will forthwith be reinstated in
------------
effect, as though such payment had not been made.
(j) Each of the Persons composing Borrowers hereby agrees that
it will not enforce any of its rights of contribution or subrogation against the
other Persons composing Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Lenders with respect to any of the Obligations or any
collateral security therefor until such time as all of the Obligations have been
paid in full in cash. Any claim which any Borrower may have against any other
Borrower with respect to any payments to any Agent or Lender hereunder or under
any other Loan Documents are hereby expressly made subordinate and junior in
right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior payment in full in cash of the
Obligations and, in the event of any insolvency, bankruptcy, receivership,
liquidation, reorganization or other similar proceeding under the laws of any
jurisdiction relating to any Borrower, its debts or its assets, whether
voluntary or involuntary, all such Obligations shall be paid in full in cash
before any payment or distribution of any character, whether in cash, securities
or other property, shall be made to any other Borrower therefor.
(k) Each of the Persons composing Borrowers hereby agrees that, after
the occurrence and during the continuance of any Default or Event of Default,
the payment of any amounts due with respect to the indebtedness owing by any
Borrower to any other Borrower is hereby subordinated to the prior payment in
full in cash of the Obligations. Each Borrower hereby agrees that after the
occurrence and during the continuance of any Default or Event of Default, such
Borrower will not demand, xxx for or otherwise attempt to collect any
indebtedness of any other Borrower owing to such Borrower until the Obligations
shall have been paid in full in cash. If, notwithstanding the foregoing
sentence, such Borrower shall collect, enforce or receive any amounts in respect
of such indebtedness, such amounts shall be collected, enforced and received by
such Borrower as trustee for the Agent, and the Agent shall deliver any such
amounts to the Administrative Agent for application to the Obligations in
accordance with Section 2.4(b).
--------------
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2.16 Prior Credit Agreement. Anything herein to the contrary
----------------------
notwithstanding, it is the express intent of the parties hereto to preserve the
outstanding nature of all loans and other financial accommodations made or
issued under the Prior Credit Agreement and outstanding prior to the Closing
Date. To that end, all such outstanding loans or other financial accommodations
shall be converted on the Closing Date to the loans or other financial
accommodations made or issued hereunder, and shall not be deemed to have been
repaid or cancelled and reloaned or reissued, but rather, at all times,
continuously to have remained outstanding, and all repayment obligations of
Borrowers under or related to the Prior Credit Agreement, whether evidenced by
notes or otherwise, shall be deemed restated by the promise of the Borrowers to
pay the Obligations under Section 2.5. To the extent that the shares of the
-----------
Lenders claims of such Prior Lenders that are being replaced, or whose shares
are being reduced, shall be considered to have been assigned, without
representation, warranty, or recourse by such Prior Lenders to the Lenders
hereunder in such a manner as to achieve ratable outstandings hereunder, as
reflected on Schedule C-2 attached hereto, immediately following the Closing
------------
Date, and Agent and the Lenders shall cooperate to effect such adjustments and
transfers at the Closing Date among the Lenders as may be necessary or
appropriate to achieve ratable outstandings immediately following the Closing
Date as are reflected on Schedule C-2.
------------
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Extension of Credit. The obligation
-------------------------------------------------------
of the Lender Group (or any member thereof) to make the initial Advance and the
Term Loan (or otherwise to extend any credit provided for hereunder), is subject
to the fulfillment, to the satisfaction of Agent, of each of the conditions
precedent set forth below:
(a) the Closing Date shall occur on or before October 31, 2000;
(b) Agent shall have received all financing statements required
by Agent, duly executed by the applicable Borrowers;
(c) Agent shall have received each of the following documents,
in form and substance satisfactory to Agent, duly executed, and each such
document shall be in full force and effect:
(i) the Louisiana Addendum to Loan Agreement,
(ii) the Disbursement Letter,
(iii) Control Agreements governing all of Borrowers' Securities
Accounts and governing the DDA accounts located at (A) Xxxxx Fargo
Texas, account number 0000000000, and located at 0000 Xxxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxx 00000, and (B) BancorpSouth Bank, account
number 00000000, and located at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxx
00000,
(iv) the Due Diligence Letter,
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(v) the Cash Management Agreements,
(vi) the Fee Letter,
(vii) the Fee Split Letter,
(viii) the Guaranty,
(ix) the Guarantor Security Agreement,
(x) the Louisiana Addendum to Guarantor Security Agreement,
(xi) the Additional Mortgages,
(xii) the New Mortgages,
(xiii) such assignments and amendments to the Existing Mortgages
as Agent shall require,
(xiv) the Officers' Certificate,
(xv) the Patent Security Agreement,
(xvi) the Copyright Security Agreement,
(xvi) the Stock Pledge Agreement, together with all
certificates representing the shares of Stock pledged thereunder, as
well as Stock powers with respect thereto endorsed in blank,
(xvii) the Trademark Security Agreement,
(xviii) the Intercompany Subordination Agreement,
(xix) the Contribution Agreement,
(xx) the Intercompany Note, together with endorsements in
blank with respect thereto,
(xxi) the Trinity Note, together with endorsements in blank
with respect thereto,
(xxii) such assignments and amendments to the Ship Mortgages as
Agent shall require,
(xxiii) such assignments and amendments to the Prior Loan
Documents as Agent shall require,
(xxiv) the Estoppel Letter,
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(xxv) the Purchase Agreement, and
(xxvi) the Resignation and Appointment Agreement;
(d) Agent shall have received a certificate from the Secretary of
each Borrower (i) attesting to the resolutions of such Borrower's Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same, and (ii) certifying the
names and true signatures of the officers of such Borrower authorized to sign
each Loan Document to which such Borrower is a party;
(e) Agent shall have received copies of each Borrower's Governing
Documents, as amended, modified, or supplemented to the Closing Date, certified
by the Secretary of such Borrower;
(f) Agent shall have received a certificate of status with
respect to each Borrower, dated within 10 days of the Closing Date, such
certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Borrower, which certificate shall indicate that such
Borrower is in good standing in such jurisdiction;
(g) Agent shall have received certificates of status with respect
to each Borrower, each dated within 30 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions (other
than the jurisdiction of organization of such Borrower) in which its failure to
be duly qualified or licensed would constitute a Material Adverse Change, which
certificates shall indicate that such Borrower is in good standing in such
jurisdictions;
(h) Agent shall have received a certificate from the Secretary of
each Guarantor Subsidiary (i) attesting to the resolutions of such Guarantor
Subsidiary's Board of Directors authorizing its execution, delivery, and
performance of the Loan Documents to which such Guarantor Subsidiary is a party
and authorizing specific officers of such Guarantor Subsidiary to execute the
same, and (ii) certifying the names and true signatures of the officers of such
Guarantor Subsidiary authorized to sign each Loan Document to which such
Guarantor Subsidiary is a party;
(i) Agent shall have received copies of each Guarantor
Subsidiary's Governing Documents, as amended, modified, or supplemented to the
Closing Date, certified by the Secretary of such Guarantor Subsidiary;
(j) Agent shall have received a certificate of status with
respect to each Guarantor Subsidiary, dated within 10 days of the Closing Date,
such certificate to be issued by the appropriate officer of the jurisdiction of
organization of such Guarantor Subsidiary, which certificate shall indicate that
such Guarantor Subsidiary is in good standing in such jurisdiction;
78
(k) Agent shall have received certificates of status with respect
to each Guarantor Subsidiary, each dated within 30 days of the Closing Date,
such certificates to be issued by the appropriate officer of the jurisdictions
(other than the jurisdiction of organization of such Guarantor Subsidiary) in
which its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that such Guarantor Subsidiary
is in good standing in such jurisdictions;
(l) Agent shall have received a certificate of insurance,
together with the endorsements thereto, as are required by Section 6.8, the form
-----------
and substance of which shall be satisfactory to Agent;
(m) Agent shall have received opinions of Borrowers', Canadian
Subsidiaries' and Guarantor Subsidiaries' counsel and Texas counsel to Agent in
form and substance satisfactory to the Lenders;
(n) Agent shall have received satisfactory evidence (including a
certificate of the chief financial officer of Parent) that all tax returns
required to be filed by Borrowers and Guarantor Subsidiaries have been timely
filed and all taxes upon Borrowers, Guarantor Subsidiaries or their respective
properties, assets, income, and franchises (including Real Property taxes and
payroll taxes) have been paid prior to delinquency, except such taxes that are
the subject of a Permitted Protest;
(o) Borrowers shall have the Required Availability after giving
effect to the initial extensions of credit hereunder;
(p) Lenders shall have completed their business, legal, and
collateral due diligence, including (i) a collateral audit and review of
Borrowers' books and records and verification of Borrowers' representations and
warranties to the Lender Group, the results of which shall be satisfactory to
Lenders, and (ii) an inspection of each of the locations where Inventory or
Equipment is located, such inspection to include the verification of
Availability attributable to raw material Inventory and Equipment, the results
of which shall be satisfactory to Agent;
(q) Lenders shall have received completed reference checks with
respect to Borrowers' senior management, the results of which are satisfactory
to Lenders in their sole discretion;
(r) Agent shall have received (i) an appraisal of the Net Orderly
Liquidation Value applicable to Borrowers' Eligible Equipment, and (ii) a
determination of the Net Liquidation Percentage for calculating the book value
of Borrowers' Inventory that is estimated to be recoverable in an orderly
liquidation of such Inventory, the results of which shall be satisfactory to
Agent;
(s) Agent shall have received the enterprise valuation report
from PriceWaterhouseCoopers LLP, the results of which shall be satisfactory to
Agent;
79
(t) Lenders shall have received Borrowers' Closing Date Business
Plan;
(u) Borrowers shall pay all Lender Group Expenses incurred in
connection with the transactions evidenced by this Agreement;
(v) Lenders shall have received (i) appraisals of the Net Quick
Sale Value of the Real Property Collateral satisfactory to Lenders, and (ii)
mortgagee title insurance policies (or marked commitments to issue the same) for
the Real Property Collateral issued by a title insurance company satisfactory to
Lenders (each a "Mortgage Policy" and, collectively, the "Mortgage Policies") in
--------------- -----------------
amounts satisfactory to Lenders assuring Agent for the benefit of the Lenders
that the Mortgages on such Real Property Collateral are valid and enforceable
first priority mortgage Liens on such Real Property Collateral free and clear of
all defects and encumbrances except Permitted Liens, and the Mortgage Policies
otherwise shall be in form and substance satisfactory to Agent, including such
endorsements to such Mortgage Policies as Agent shall require;
(w) Agent shall have received a phase-I environmental report with
respect to such parcels of Real Property composing the Real Property Collateral
as Agent shall require; the environmental consultants retained for such reports,
the scope of the reports, and the results thereof shall be acceptable to Agent;
(x) Agent shall have received copies of the Indenture Documents,
the Marad Financing Documents, the GE Financing Documents and all Bonded
Contract Security Documents as to Bonds in effect as of the Closing Date,
together with a certificate of the Secretary of Parent certifying each such
document as being a true, correct, and complete copy thereof;
(y) Borrowers shall have received all licenses, approvals or
evidence of other actions required by any Governmental Authority in connection
with the execution and delivery by Borrowers of this Agreement or any other Loan
Document or with the consummation of the transactions contemplated hereby and
thereby;
(z) To the extent not designated a condition subsequent under
Section 3.2, Agent shall have received such waivers of subrogation rights,
-----------
collateral or payment sharing agreements, intercreditor agreements, or such
other agreements as Agent shall require, from each bonding company or other
surety that has issued for the benefit of a Borrower performance bonds, surety
bonds, or other similar bonds and which are outstanding as of the Closing Date,
the terms and conditions of which shall be acceptable to the Agent in its sole
discretion;
(aa) Agent shall, to its satisfaction, confirm that Borrowers'
accounts payable are within terms;
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(bb) Agent shall have received, to its satisfaction, evidence
that Marad has consented to the transactions contemplated by this Agreement and
the other Loan Documents; and
(cc) all other documents and legal matters in connection with
the transactions contemplated by this Agreement shall have been delivered,
executed, or recorded and shall be in form and substance satisfactory to Agent.
3.2 Conditions Subsequent to the Initial Extension of Credit. The
--------------------------------------------------------
obligation of the Lender Group (or any member thereof) to continue to make
Advances (or otherwise extend credit hereunder) is subject to the fulfillment,
on or before the date applicable thereto, of each of the conditions subsequent
set forth below (the failure by Borrowers to so perform or cause to be performed
constituting an Event of Default):
(a) within 10 days of the Closing Date, Agent shall have received
searches reflecting the filing of all such financing statements, including
appropriate PPSA filings for the Canadian Province of Newfoundland,
(b) within 10 days of the Closing Date, deliver to Agent
satisfactory evidence that all existing copyrights of Borrowers (other than
Exempt Copyrights) have been registered with the United States Copyright Office
and that all such copyrights and any proceeds thereof are specifically
encumbered by the Copyright Security Agreement,
(c) within 15 days of the Closing Date, Agent shall have received
the Canadian Subsidiary Collateral Assignment together with the Canadian
Security Documents accompanied by a certificate of the Secretary of Parent
certifying to the accuracy and completeness of the Canadian Security Documents;
(d) within 15 days of the Closing Date, Agent shall have received
satisfactory evidence that the title curative work required of Borrowers by
Agent with respect to those certain parcels of Eligible Real Property Collateral
known as FGO-Corporate/Training, located in Pascagoula, Mississippi, and
identified as Site #24 on Schedule R-1, and TDI-Corporate, located in Port
------------
Xxxxxx, Texas, and identified as Site #22 on Schedule R-1, has been completed to
------------
the satisfaction of Agent, and, if such curative work is not completed within
the 15 day period, Agent shall remove either or both of such parcels as to which
the curative work is not so completed from designation as Eligible Real Property
Collateral and recalculate the Borrowing Base accordingly;
(e) within 30 days of the Closing Date, Agent shall have received
satisfactory evidence that the title curative work required of Borrowers by
Agent with respect to that certain parcel of Eligible Real Property Collateral
known as TDI-Dock Yard, located in Port Xxxxxx, Texas, and identified as Site
#21 on Schedule R-1, has been completed to the satisfaction of Agent, and, if
------------
such curative work is not so completed within the 30 day period, Agent shall
remove such parcel from designation as Eligible Real Property Collateral and
recalculate the Borrowing Base accordingly;
81
(f) within 30 days of the Closing Date, deliver to Agent
certified copies of the policies of insurance, together with the endorsements
thereto, as are required by Section 6.8, the form and substance of which shall
-----------
be satisfactory to Agent and its counsel;
(g) within 30 days of the Closing Date, Agent shall have received
a phase-I environmental report with respect to the TDI-Sabine Shipyard; the
environmental consultants retained for such report, the scope of the report, and
the results thereof shall be acceptable to Agent;
(h) within 90 days of the Closing Date, Agent shall have received
phase-II environmental reports with respect to such parcels of Real Property
composing the Real Property Collateral as Agent shall require; the environmental
consultants retained for such reports, the scope of the reports, and the results
thereof shall be acceptable to Agent, and until such time as this condition
shall have been completed to the satisfaction of the Agent, Agent may in its
discretion maintain a reserve against Availability under the Borrowing Base of
$5,750,000;
(i) within 90 days of the Closing Date, Agent shall have received
a real estate survey and title corrective work with respect to such parcels of
Real Property composing the Real Property Collateral as Agent shall require; the
surveyors retained for such surveys, the scope of the surveys and title
corrective work, and the results thereof shall be acceptable to Agent, and until
such time as this condition shall have been completed to the satisfaction of the
Agent, Agent may in its discretion maintain a reserve against Availability under
the Borrowing Base of $5,000,000;
(j) within 60 days of the Closing Date, Agent shall have received
certificates of title with respect to all certificated Collateral duly executed
in a manner sufficient, as determined by Agent, that, upon filing with the
appropriate Governmental Authority, Agent's Lien in such Collateral shall be
perfected;
(k) within 60 days of the Closing Date, Agent shall have received
such waivers of subrogation rights, collateral or payment sharing agreements,
intercreditor agreements, or such other agreements as Agent shall require, from
each bonding company or other surety that has issued for the benefit of a
Borrower performance bonds, surety bonds, or other similar bonds and which are
outstanding as of the Closing Date, the terms and conditions of which shall be
acceptable to the Agent in its sole discretion, that were not required as a
condition precedent to the initial extension of credit hereunder pursuant to
Section 3.1(aa);
---------------
(l) within 60 days of the Closing Date, Agent shall have received
a full-scope/all-item appraisal of Borrowers' Equipment to be conducted by
Xxxxxx Xxxx & Co., and the results thereof shall be acceptable to Agent, and
until such time as this condition shall have been completed to the satisfaction
of the Agent, Agent may in its discretion maintain a reserve against
Availability under the Borrowing Base of $1,000,000; and
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(m) within 90 days of the Closing Date, Agent shall have received
Collateral Access Agreements with respect to the Real Property locations set
forth on Schedule 3.2; provided, that no Collateral Access Agreement will be
------------ --------
requested of Marad.
3.3 Conditions Precedent to all Extensions of Credit. The obligation of the
------------------------------------------------
Lender Group (or any member thereof) to make any Advances (or to extend any
other credit hereunder) shall be subject to the following conditions precedent:
(a) the representations and warranties contained in this
Agreement and the other Loan Documents shall be true and correct in all material
respects on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate solely to an earlier date);
(b) no Default or Event of Default shall have occurred and be
continuing on the date of such extension of credit, nor shall either result from
the making thereof;
(c) no injunction, writ, restraining order, or other order of any
nature prohibiting, directly or indirectly, the extending of such credit shall
have been issued and remain in force by any Governmental Authority against any
Borrower, Agent, any Lender, or any of their Affiliates; and
(d) no Material Adverse Change shall have occurred.
3.4 Term. This Agreement shall become effective upon the execution and
----
delivery hereof by Borrowers, Agent, and the Lenders and shall continue in full
force and effect for a term ending on October 24, 2003 (the "Maturity Date").
-------------
The foregoing notwithstanding, the Lender Group, upon the election of the
Required Lenders, shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and during the
continuation of an Event of Default.
3.5 Effect of Termination. On the date of termination of this Agreement,
---------------------
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to any outstanding Letters of Credit) immediately shall become due
and payable without notice or demand. No termination of this Agreement, however,
shall relieve or discharge Borrowers of their duties, Obligations, or covenants
hereunder and the Agent's Liens in the Collateral shall remain in effect until
all Obligations have been fully and finally discharged and the Lender Group's
obligations to provide additional credit hereunder have been terminated. When
this Agreement has been terminated and all of the Obligations have been fully
and finally discharged and the Lender Group's obligations to provide additional
credit under the Loan Documents have been terminated irrevocably, Agent will, at
Borrowers' sole expense, execute and deliver any UCC termination statements,
lien releases, mortgage releases, re-assignments of trademarks, discharges of
security interests, and other similar discharge or release documents (and, if
applicable, in recordable form) as are reasonably necessary to release, as of
record, the Agent's Liens and all notices of security interests and liens
previously filed by Agent with respect to the Obligations.
83
3.6 Early Termination by Borrowers. Borrowers have the option, at any time
------------------------------
upon 90 days prior written notice by Administrative Borrower to Agent, to
terminate this Agreement by paying to Agent, for the benefit of the Lender
Group, in cash, the Obligations (including either (i) providing cash collateral
to be held by Agent for the benefit of those Lenders with a Revolver Commitment
in an amount equal to 105% of the then extant Letter of Credit Usage, or (ii)
causing the original Letters of Credit to be returned to the Issuing Lender), in
full, together with the Applicable Prepayment Premium (to be allocated based
upon letter agreements between Agent and individual Lenders). If Administrative
Borrower has sent a notice of termination pursuant to the provisions of this
Section, then the Commitments shall terminate and Borrowers shall be obligated
to repay the Obligations (including either (i) providing cash collateral to be
held by Agent for the benefit of those Lenders with a Revolver Commitment in an
amount equal to 105% of the then extant Letter of Credit Usage, or (ii) causing
the original Letters of Credit to be returned to the Issuing Lender), in full,
together with the Applicable Prepayment Premium, on the date set forth as the
date of termination of this Agreement in such notice. In the event of the
termination of this Agreement and repayment of the Obligations at any time prior
to the Maturity Date, for any other reason, including (a) termination upon the
election of the Required Lenders to terminate after the occurrence of an Event
of Default, (b) foreclosure and sale of Collateral, (c) the permanent reduction
in the Maximum Revolver Amount pursuant to Section 2.4(a)(iii), (d) sale of the
-------------------
Collateral in any Insolvency Proceeding, or (e) restructure, reorganization or
compromise of the Obligations by the confirmation of a plan of reorganization,
or any other plan of compromise, restructure, or arrangement in any Insolvency
Proceeding, then, in view of the impracticability and extreme difficulty of
ascertaining the actual amount of damages to the Lender Group or profits lost by
the Lender Group as a result of such early termination, and by mutual agreement
of the parties as to a reasonable estimation and calculation of the lost profits
or damages of the Lender Group, Borrowers shall pay the Applicable Prepayment
Premium to Agent (to be allocated based upon letter agreements between Agent and
individual Lenders), measured as of the date of such termination.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby grants to Agent, for
--------------------------
the benefit of the Lender Group, a continuing security interest in all of its
right, title, and interest in all currently existing and hereafter acquired or
arising Personal Property Collateral in order to secure prompt repayment of any
and all of the Obligations, now owned or in the future arising and including
future advances or other value whether or not the advances or value are given
pursuant to commitment, in accordance with the terms and conditions of the Loan
Documents and in order to secure prompt performance by Borrowers of each of
their covenants and duties under the Loan Documents. The Agent's Liens in and to
the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or Borrowers. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for Permitted Dispositions, Borrowers have no authority,
express or implied, to dispose of any item or portion of the Collateral.
84
4.2 Negotiable Collateral. In the event that any Collateral, including
---------------------
proceeds, is evidenced by or consists of Negotiable Collateral, and if and to
the extent that perfection or priority of Agent's security interest is dependent
on or enhanced by possession, the applicable Borrower, immediately upon the
request of Agent, shall endorse and deliver physical possession of such
Negotiable Collateral composing Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral.
----------------------------------------------------------------------
At any time after the occurrence and during the continuation of an Event of
Default Agent or Agent's designee may (a) notify Account Debtors of Borrowers
that the Accounts, chattel paper composing Collateral, or General Intangibles
composing Collateral have been assigned to Agent or that Agent has a security
interest therein, or (b) collect the Accounts, chattel paper composing
Collateral, or General Intangibles composing Collateral directly and charge the
collection costs and expenses to the Loan Account. Each Borrower agrees that it
will hold in trust for the Lender Group, as the Lender Group's trustee, any
Collections that it receives other than Collections in respect of Excluded
Assets and immediately will deliver said Collections to Agent or a Cash
Management Bank in their original form as received by the applicable Borrower.
4.4 Delivery of Additional Documentation Required. At any time upon the
---------------------------------------------
request of Agent, Borrowers shall execute and deliver to Agent, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance satisfactory to Agent, to perfect and continue perfected or better
perfect the Agent's Liens in the Collateral (whether now owned or hereafter
arising or acquired), to create and perfect Liens in favor of Agent in any Real
Property acquired after the Closing Date, and in order to fully consummate all
of the transactions contemplated hereby and under the other Loan Documents. To
the maximum extent permitted by applicable law, each Borrower authorizes Agent
to execute any such Additional Documents in the applicable Borrower's name and
authorize Agent to file such executed Additional Documents in any appropriate
filing office. In addition, on such periodic basis as Agent shall require,
Borrowers shall (a) provide Agent with a report of all new patentable,
copyrightable, or trademarkable materials acquired or generated by Borrowers
during the prior period, (b) cause all patents, copyrights, and trademarks
acquired or generated by Borrowers that are not already the subject of a
registration with the appropriate filing office (or an application therefor
diligently prosecuted) to be registered with such appropriate filing office in a
manner sufficient to impart constructive notice of Borrowers' ownership thereof,
and (c) cause to be prepared, executed, and delivered to Agent supplemental
schedules to the applicable Loan Documents to identify such patents, copyrights,
and trademarks as being subject to the security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes, constitutes,
-----------------
and appoints Agent (and any of Agent's officers, employees, or agents designated
by Agent) as such Borrower's true and lawful attorney, with power to (a) if such
Borrower refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the
-----------
85
name of such Borrower on any of the documents described in Section 4.4, (b) at
-----------
any time that an Event of Default has occurred and is continuing, sign such
Borrower's name on any invoice or xxxx of lading relating to the Collateral,
drafts against Account Debtors, or notices to Account Debtors, (c) send requests
for verification of Accounts, (d) endorse such Borrower's name on any Collection
item that may come into the Lender Group's possession other than Collection
composing Excluded Assets, (e) at any time that an Event of Default has occurred
and is continuing, make, settle, and adjust all claims under such Borrower's
policies of insurance as to Collateral and make all determinations and decisions
with respect to such policies of insurance, and (f) at any time that an Event of
Default has occurred and is continuing, settle and adjust disputes and claims
respecting the Accounts, chattel paper composing Collateral, or General
Intangibles composing Collateral directly with Account Debtors, for amounts and
upon terms that Agent determines to be reasonable, and Agent may cause to be
executed and delivered any documents and releases that Agent determines to be
necessary. The appointment of Agent as each Borrower's attorney, and each and
every one of its rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully and finally repaid and
performed and the Lender Group's obligations to extend credit hereunder are
terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their
----------------
respective officers, employees, or agents) shall have the right, from time to
time hereafter to inspect the Books and to check, test, and appraise the
Collateral in order to verify Borrowers' financial condition or the amount,
quality, value, condition of, or any other matter relating to, the Collateral.
4.7 Control Agreements. Each Borrower agrees that it will not transfer
------------------
assets out of any Securities Accounts other than as permitted under Section 7.19
------------
and, if to another securities intermediary, unless each of the applicable
Borrower, Agent, and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any Control
Agreement in respect of any Securities Accounts or other Investment Property
(other than that constituting Excluded Assets) shall be modified by Borrowers
without the prior written consent of Agent. Upon the occurrence and during the
continuance of a Default or Event of Default, Agent may notify any securities
intermediary to liquidate the applicable Securities Account or any related
Investment Property (other than that constituting Excluded Assets) maintained or
held thereby and remit the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, each Borrower makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof (with the exception of Section 5.24), and shall
------------
be true, correct, and complete, in all material respects (including Section
-------
5.24), as of the Closing Date, and at and as of the date of the making of each
----
Advance (or other extension of credit) made thereafter, as though made on and as
of the date of such Advance (or other extension of credit) (except to the extent
that such
86
representations and warranties relate solely to an earlier date) and such
representations and warranties shall survive the execution and delivery of this
Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to its
---------------
Collateral and the Real Property Collateral, free and clear of Liens except for
Permitted Liens.
5.2 Eligible Accounts. The Eligible Accounts are bona fide existing payment
-----------------
obligations of Account Debtors created by the sale, delivery and unconditional
acceptance of Inventory or the rendition and unconditional acceptance of
services to such Account Debtors in the ordinary course of Borrowers' business,
and such Accounts, to the extent not excluded from the definition of "Eligible
Accounts" pursuant to paragraph (n) thereof, are unconditionally owed to a
Borrower without defenses, disputes, offsets, counterclaims, or rights of return
or cancellation. Further, each Eligible Account is not:
(a) owed by an employee, Affiliate, or agent of a Borrower,
(b) on account of a transaction wherein goods were placed on
consignment or were sold pursuant to a guaranteed sale, a sale or return, a sale
on approval, a xxxx and hold, or on any other terms by reason of which the
payment by the Account Debtor may be conditional,
(c) payable in a currency other than an Agreed Currency;
(d) owed by an Account Debtor that has a right of setoff, has
made known its intention to assert a right of setoff, or has asserted a right of
setoff, or has disputed its liability, or has made any claim with respect to its
obligation to pay the Account,
(e) owed by an Account Debtor that is subject to any Insolvency
Proceeding or is not Solvent or as to which a Borrower has received notice of an
imminent Insolvency Proceeding or a material impairment of the financial
condition of such Account Debtor, and
(f) on account of a construction or other contract or agreement
the completion or performance of which is the subject of a bonding or other
surety arrangement,
(g) composing a portion of the Excluded Assets,
(h) composed of a "retainage" or "hold-back" from the amount due,
to the extent of the amount of such "retainage," or "hold-back," or
(i) an Account that has not been billed to the customer.
5.3 Eligible Inventory. All Eligible Inventory is of good and merchantable
------------------
quality, free from defects. As to each item of Eligible Inventory, such
Inventory is
87
(a) owned by a Borrower free and clear of all Liens other than
Liens in favor of Agent,
(b) either located at one of the locations set forth on Schedule
--------
E-1 or in transit from one such location to another such location,
---
(c) not located on real property leased by a Borrower or in a
contract warehouse, in each case, unless subject to a Collateral Access
Agreement executed by the lessor, the warehouseman, or other third party, as the
case may be, and unless segregated or otherwise separately identifiable from
goods of others, if any, stored on the premises,
(d) not goods that have been returned or rejected by Borrowers'
customers, and
(e) not goods that are obsolete or slow moving, restrictive or
custom items, work-in-process, or that constitute spare parts, packaging and
shipping materials, supplies used or consumed in Borrowers' business, xxxx and
hold goods, defective goods, "seconds," or Inventory acquired on consignment.
5.4 Equipment. All of the Equipment is used or held for use in Borrowers'
---------
business and is fit for such purposes.
5.5 Location of Inventory and Equipment. The Inventory and Equipment are
-----------------------------------
not stored with a bailee, warehouseman, or similar party and are located only at
the locations identified on Schedule 5.5.
------------
5.6 Inventory Records. Each Borrower keeps correct and accurate records
-----------------
itemizing and describing the type, quality, and quantity of its Inventory and
the book value thereof.
5.7 Location of Chief Executive Office; FEIN. The chief executive
----------------------------------
office of each Borrower is located at the address indicated in Schedule 5.7 and
------------
each Borrower's FEIN is identified in Schedule 5.7.
------------
5.8 Due Organization and Qualification; Subsidiaries.
------------------------------------------------
(a) Each Borrower is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization and qualified to
do business in any state where the failure to be so qualified reasonably could
be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8(b), is a complete and accurate
---------------
description of the authorized capital Stock of each Borrower, by class, and, as
of the Closing Date, a description of the number of shares of each such class
that are issued and outstanding. Other than as described on Schedule 5.8(b),
---------------
there are no subscriptions, options, warrants, or calls relating to any shares
of each Borrower's capital Stock, including any right of conversion or exchange
under any outstanding security or other instrument. No Borrower is subject to
any
88
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8(c), is a complete and accurate list
---------------
of each Borrower's direct and indirect Subsidiaries, showing: (i) the
jurisdiction of their organization; (ii) the number of shares of each class of
common and preferred Stock authorized for each of such Subsidiaries; and (iii)
the number and the percentage of the outstanding shares of each such class owned
directly or indirectly by the applicable Borrower. All of the outstanding
capital Stock of each such Subsidiary has been validly issued and is fully paid
and non-assessable.
(d) Except as set forth on Schedule 5.8(d), there are no
---------------
subscriptions, options, warrants, or calls relating to any shares of any
Borrower's Subsidiaries' capital Stock, including any right of conversion or
exchange under any outstanding security or other instrument. No Borrower or any
of its respective Subsidiaries is subject to any obligation (contingent or
otherwise) to repurchase or otherwise acquire or retire any shares of any
Borrower's Subsidiaries' capital Stock or any security convertible into or
exchangeable for any such capital Stock.
(e) Each Guarantor Subsidiary holds only minimal assets the value
of which, in the aggregate for all Guarantor Subsidiaries, does not exceed
$1,000,000, and does not conduct business operations.
5.9 Due Authorization; No Conflict.
------------------------------
(a) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the Loan Documents to which it is a party
have been duly authorized by all necessary action on the part of such Borrower.
(b) As to each Borrower, the execution, delivery, and performance
by such Borrower of this Agreement and the Loan Documents to which it is a party
do not and will not (i) violate any provision of federal, state, or local law or
regulation applicable to any Borrower, the Governing Documents of any Borrower,
or any order, judgment, or decree of any court or other Governmental Authority
binding on any Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default under any
material contractual obligation of any Borrower, (iii) result in or require the
creation or imposition of any Lien of any nature whatsoever upon any properties
or assets of Borrower, other than Permitted Liens, or (iv) require any approval
of any Borrower's interestholders or any approval or consent of any Person under
any material contractual obligation of any Borrower.
(c) Other than the consents listed on Schedule 3.2 and the filing
of financing statements, fixture filings, and Mortgages, the execution,
delivery, and performance by each Borrower of this Agreement and the Loan
Documents to which such Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority or other Person.
89
(d) As to each Borrower, this Agreement and the other Loan
Documents to which such Borrower is a party, and all other documents
contemplated hereby and thereby, when executed and delivered by such Borrower
will be the legally valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
enforcement may be limited by equitable principles or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens are validly created, perfected, and first
priority Liens, subject only to Permitted Liens
(f) The execution, delivery, and performance by each Guarantor
Subsidiary of the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Guarantor Subsidiary.
(g) The execution, delivery, and performance by each Guarantor
Subsidiary of the Loan Documents to which it is a party do not and will not (i)
violate any provision of federal, state, or local law or regulation applicable
to such Guarantor Subsidiary, the Governing Documents of such Guarantor
Subsidiary, or any order, judgment, or decree of any court or other Governmental
Authority binding on such Guarantor Subsidiary, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any material contractual obligation of such Guarantor Subsidiary, (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of such Guarantor Subsidiary, other
than Permitted Liens, or (iv) require any approval of such Guarantor
Subsidiary's interestholders or any approval or consent of any Person under any
material contractual obligation of such Guarantor Subsidiary.
(h) The execution, delivery, and performance by such Guarantor
Subsidiary of the Loan Documents to which such Guarantor Subsidiary is a party
do not and will not require any registration with, consent, or approval of, or
notice to, or other action with or by, any Governmental Authority or other
Person.
(i) The Loan Documents to which each Guarantor Subsidiary is a
party, and all other documents contemplated hereby and thereby, when executed
and delivered by such Guarantor Subsidiary will be legally valid and binding
obligations of such Guarantor Subsidiary, enforceable against such Guarantor
Subsidiary in accordance with their respective terms, except as enforcement may
be limited by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights generally.
5.10 Litigation. Other than those matters disclosed on Schedule 5.10, there
---------- -------------
are no actions, suits, or proceedings pending or, to the best knowledge of
Borrowers, threatened against Borrowers, or any of their Subsidiaries, as
applicable, except for (a) matters that are fully covered by insurance (subject
to customary deductibles), and (b) matters arising after the Closing Date that
reasonably could be expected to result in a Material Adverse Change.
90
5.11 No Material Adverse Change. All financial statements relating to
--------------------------
Borrowers or any Guarantor Subsidiary that have been delivered by Borrowers or
any Guarantor Subsidiary to the Lender Group have been prepared in accordance
with GAAP (except, in the case of unaudited financial statements, for the lack
of footnotes and being subject to year-end audit adjustments) and present fairly
in all material respects, Borrowers' (or Guarantor Subsidiary's, as applicable)
financial condition as of the date thereof and results of operations for the
period then ended. There has not been a Material Adverse Change with respect to
Borrowers (or any Guarantor Subsidiary, as applicable) since the date of the
latest financial statements submitted to the Lender Group on or before the
Closing Date.
5.12 Fraudulent Transfer.
-------------------
(a) each Borrower is Solvent.
(b) No transfer of property is being made by any Borrower and no
obligation is being incurred by any Borrower in connection with the transactions
contemplated by this Agreement or the other Loan Documents with the intent to
hinder, delay, or defraud either present or future creditors of Borrowers.
5.13 Employee Benefits. None of Borrowers, any of their Subsidiaries, or
-----------------
any of their ERISA Affiliates maintains or contributes to any Benefit Plan.
5.14 Environmental Condition. Except as set forth on Schedule 5.14, (a) to
----------------------- -------------
Borrowers' knowledge, none of Borrowers' properties or assets has ever been used
by Borrowers or by previous owners or operators in the disposal of, or to
produce, store, handle, treat, release, or transport, any Hazardous Materials,
where such production, storage, handling, treatment, release or transport was in
violation, in any material respect, of applicable Environmental Law, (b) to
Borrowers' knowledge, none of Borrowers' properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, (c) none of Borrowers have
received notice that a Lien arising under any Environmental Law has attached to
any revenues or to any Real Property owned or operated by Borrowers, and (d)
none of Borrowers have received a summons, citation, notice, or directive from
the Environmental Protection Agency or any other federal or state governmental
agency concerning any action or omission by any Borrower resulting in the
releasing or disposing of Hazardous Materials into the environment the result of
which could be expected to be a Material Adverse Change.
5.15 Brokerage Fees. Borrowers have not utilized the services of any
--------------
broker or finder in connection with Borrowers' obtaining financing from the
Lender Group under this Agreement and no brokerage commission or finders fee is
payable by Borrowers in connection herewith.
5.16 Intellectual Property. Each Borrower owns, or holds licenses
---------------------
in, all trademarks, trade names, copyrights, patents, patent rights, and
licenses that are necessary to the conduct, in all material respects, of its
business as currently conducted. Attached hereto as Schedule 5.16 is a true,
-------------
correct, and complete listing of all material patents, patent
91
applications, trademarks, trademark applications, copyrights, and copyright
registrations as to which each Borrower is the owner or is an exclusive
licensee.
5.17 Leases. Borrowers enjoy peaceful and undisturbed possession
------
under all leases material to the business of Borrowers and to which Borrowers
are a party or under which Borrowers are operating. All of such leases are valid
and subsisting and no material default by Borrowers exists under any of them.
5.18 DDAs. Set forth on Schedule 5.18 are all of the DDAs of each
---- -------------
Borrower, including, with respect to each depository (i) the name and address of
that depository, and (ii) the account numbers of the accounts maintained with
such depository.
5.19 Complete Disclosure. All factual information (taken as a whole)
-------------------
furnished by or on behalf of Borrowers in writing to Agent or any Lender
(including all information contained in the Schedules hereto or in the other
Loan Documents) for purposes of or in connection with this Agreement, the other
Loan Documents or any transaction contemplated herein or therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of Borrowers in writing to the Agent or any Lender will be, true and
accurate in all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any fact necessary to
make such information (taken as a whole) not misleading in any material respect
at such time in light of the circumstances under which such information was
provided. On the Closing Date, the Closing Date Business Plan represent, and as
of the date on which any other Projections are delivered to Agent, such
additional Projections represent Borrowers' good faith best estimate of its
future performance for the periods covered thereby.
5.20 Indebtedness. Set forth on Schedule 5.20 is a true and complete
------------ -------------
list of all Indebtedness of each Borrower outstanding immediately prior to the
Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.
5.21 Eligible Equipment, Ship Collateral and Real Property
-----------------------------------------------------
Schedules. Schedule C-3 lists all Construction Contracts. Schedule E-1 lists all
------------ ------------
of each Borrower's Equipment meeting the criteria for inclusion as Eligible
Equipment, including description and location thereof. Schedule R-1 lists all
------------
ls of Real Property held of record or beneficially by each Borrower as
either owner or lessee as of the Closing Date. Schedule R-2 lists all parcels of
------------
Real Property composing Real Property Collateral as of the Closing Date.
Schedule R-3 lists all parcels of Real Property composing Eligible Real Property
------------
Collateral as of the Closing Date. Schedule S-1 lists all vessels under
------------
construction by any Borrower. Schedule S-3 lists all U.S. Flag vessels held of
------------
record or beneficially by a Borrower as either owner or lessee.
5.22 Ownership of Ship Collateral Under Construction. Except for
-----------------------------------------------
those Title Transfer Construction Contracts listed as such on Schedule C-3,
------------
copies of which will be promptly provided to Agent upon request, all other
Construction Contracts listed on Schedule C-3 provide that each Borrower a party
------------
thereto shall remain the owner of the
92
applicable vessel during construction, and that the title and all other rights
to the Ship Collateral under construction and all work thereon shall not
automatically vest with Buyer as and when performed but shall remain with each
such Borrower, with title and all other rights to all of the Materials, Works
and Components to be installed on such vessels remaining with each such Borrower
until the Certificate of Ownership is issued in the name of the Buyer.
5.23 Identifying Numbers. In the case of each item of Ship Collateral under
-------------------
construction in the State of Louisiana, each Borrower is currently in compliance
with all the requirements imposed upon the builder under the Louisiana Ship
Mortgage Law and more specifically, with all the requirements imposed under
Louisiana Revised Statutes ss. 9:5523.
5.24 Marad Consent. Marad has, pursuant to the Marad Financing
-------------
Documents, approved FGO entering into this Agreement and certain of the other
Loan Documents as described in the Marad Consent, a copy of which is attached
hereto as Exhibit 5.24. The Borrowers, but not Marad, further represent and
------------
warrant that no additional Marad consent is required under the Marad Financing
Documents, and no further Marad consent is required with respect to any Borrower
or any of their Subsidiaries for their entering into and performing their
Obligations under this Agreement and the other Loan Documents.
5.25 Intellectual Property. Each Borrower owns, or holds licenses
---------------------
in, all Intellectual Property that is necessary to the conduct of its business
as currently conducted. Attached hereto as Schedule 5.25 is a true, correct, and
-------------
complete listing of all Intellectual Property as to which each Borrower is the
owner or is an exclusive licensee.
6 . AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the Obligation
and termination of this Agreement, Borrowers shall and shall cause each of their
respective Subsidiaries, with the exception of Xxxxxx France and its
Subsidiaries, to do all of the following:
6.1 Accounting System. Maintain a system of accounting that enables
-----------------
Borrowers to produce financial statements in accordance with GAAP and maintain
records pertaining to the Collateral that contain information as from time to
time reasonably may be requested by Agent. Borrowers also shall keep an
inventory reporting system that shows all additions, sales, claims, returns, and
allowances with respect to the Inventory.
93
6.2 Collateral Reporting. Provide Agent (with copies for each Lender)
--------------------
with the following documents at the following times in form satisfactory to
Agent:
--------------------------------------------------------------------------------
Weekly (a) a sales journal, collection journal, and credit register
since the last such schedule as of such date, and
(b) notice of all returns, disputes, or claims.
--------------------------------------------------------------------------------
Monthly (not (c) Inventory reports specifying each Borrower's cost, the
later than the book value, if different than cost, and the wholesale market
10th day of each value of its Inventory, by category, with additional detail
month) showing additions to and deletions from the Inventory,
(d) For each month during which additions to and deletions
from the Equipment have occurred, Equipment reports
specifying each Borrower's cost, the book value, if
different than cost, and the Net Orderly Liquidation Value
of its Equipment, by location, with additional detail
showing additions to and deletions from the Equipment,
(e) a detailed calculation of the Borrowing Base (including
detail regarding those Accounts that are not Eligible
Accounts),
(f) a detailed aging, by total, of the Accounts, together
with a reconciliation to the detailed calculation of the
Borrowing Base previously provided to Agent,
(g) a summary aging, by vendor, of Borrowers' accounts
payable and any book overdraft, and
(h) a calculation of Dilution for the prior month.
--------------------------------------------------------------------------------
Quarterly (i) a detailed list of each Borrower's customers in such
detail as Agent shall require,
(j) a report regarding each Borrower's accrued, but unpaid,
ad valorem taxes,
--------------------------------------------------------------------------------
Upon request by (k) copies of invoices in connection with the Accounts,
Agent credit memos, remittance advices, deposit slips, shipping
and delivery documents in connection with the Accounts and,
for Inventory and Equipment acquired by Borrowers, purchase
orders and invoices,
(l) subject to the limitations set forth in Section 2.1,
-----------
updated appraisals of Inventory, Equipment and Real
Property, and, based upon the results of
--------------------------------------------------------------------------------
94
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such appraisals, the Borrowing Base shall be adjusted as
Agent shall determine in its Permitted Discretion,
(m) such other reports as to the Collateral, or the
financial condition of any Borrower or Subsidiary of the
Parent as Agent may request in the exercise of its Permitted
Discretion,
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Upon (n) within 30 days of the completion thereof, the results of
Completion Borrowers' annual Physical Inventory (financial or SKU
based) conducted in a manner satisfactory to Agent and
following such methodology as may be required by Agent, each
of which Physical Inventories shall be observed by
Borrowers' independent certified public accountants, and
--------------------------------------------------------------------------------
Upon and after (o) such reports as Agent shall request to enable the Cash
the giving of a Management Bank to segregate that portion of the Collections
Triggering Event representing amounts attributable to any taxes or fees due
Notice to a Governmental Authority as well as that portion of the
Collections representing amounts owing to or composing the
senior collateral of any third party, including to the
United States of America or GE (as proceeds of or composing
the Excluded Assets), to a surety with respect to payments
received under a bonded construction contract and as to
which the surety may have a claim of entitlement senior to
Agent's Liens, and such other Collections as Agent may, in
its sole discretion, designate.
--------------------------------------------------------------------------------
In addition, each Borrower agrees to cooperate fully with
Agent to facilitate and implement a system of electronic collateral reporting in
order to provide electronic reporting of each of the items set forth above.
6.3 Financial Statements, Reports, Certificates. Deliver to Agent, with
-------------------------------------------
copies to each Lender:
(a) as soon as available, but in any event within 30 days (45
days in the case of a month that is the end of one of the first 3 fiscal
quarters in a fiscal year, and 90 days in the case of the last month of the
fiscal year) after the end of each month during each of Parent's fiscal years,
(i) a company prepared consolidated balance sheet, income
statement, and statement of cash flow covering Parent's and its
Subsidiaries' operations during such period,
(ii) a certificate signed by the chief financial officer of
Parent to the effect that:
A. the financial statements delivered hereunder have been
prepared in accordance with GAAP (except for the lack of
footnotes
95
and being subject to year-end audit adjustments) and fairly
present in all material respects the financial condition of
Parent and its Subsidiaries,
B. the representations and warranties of Borrowers contained
in this Agreement and the other Loan Documents are true and
correct in all material respects on and as of the date of such
certificate, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to
an earlier date), and
C. there does not exist any condition or event that
constitutes a Default or Event of Default (or, to the extent of
any non-compliance, describing such non-compliance as to which he
or she may have knowledge and what action Borrowers have taken,
are taking, or propose to take with respect thereto), and
(iii) for each month that is the date on which a financial
covenant in Section 7.20 is to be tested or Applicable Base Rate
------------
Margin, Applicable LIBOR Rate Margin, or Applicable Unused Line Fee is
to be reset, a Compliance Certificate demonstrating, in reasonable
detail, compliance at the end of such period with the applicable
financial covenants contained in Section 7.20 including the
------------
calculation of the Ratio of Senior Debt to EBITDA.
(b) as soon as available, but in any event within 90 days after
the end of each of Parent's fiscal years,
(i) financial statements of Parent and its Subsidiaries for each
such fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in
accordance with GAAP (such audited financial statements to include a
balance sheet, income statement, and statement of cash flow and, if
prepared, such accountants' letter to management), and
(ii) a certificate of such accountants addressed to Agent and the
Lenders stating that such accountants do not have knowledge of the
existence of any Default or Event of Default under Section 7.20.
------------
(c) as soon as available, but in any event within 30 days prior
to the start of each of Parent's fiscal years,
(i) copies of Borrowers' Projections, in form and substance
(including as to scope and underlying assumptions) satisfactory to
Agent, in its sole discretion, for the forthcoming 3 years, year by
year, and for the forthcoming fiscal year, month by month, certified
by the chief financial officer of Parent as being such officer's good
faith best estimate of the
96
financial performance of Parent and its Subsidiaries during the period
covered thereby,
(d) if and when filed by any Borrower,
(i) 10-Q quarterly reports, Form 10-K annual reports, and Form 8-
K current reports,
(ii) any other filings made by any Borrower with the SEC,
(iii) copies of Borrowers' federal income tax returns, and any
amendments thereto, filed with the Internal Revenue Service, and
(iv) any other information that is provided by Parent to its
shareholders generally,
(e) if and when filed by any Borrower and as requested by Agent,
satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which (i) any Borrower conducts business or is required to pay
any such excise tax, (ii) where any Borrower's failure to pay any such
applicable excise tax would result in a Lien on the properties or assets of any
Borrower, or (iii) where any Borrower's failure to pay any such applicable
excise tax reasonably could be expected to result in a Material Adverse Change,
(f) promptly after the commencement thereof, but in any event
within 5 days after the service of process with respect thereto on any Borrower,
notice of all actions, suits or proceedings brought by or against any Borrower
before any Governmental Authority which, if determined adversely to such
Borrower, reasonably could be expected to cause a Material Adverse Change,
(g) as soon as a Borrower has knowledge of any event or condition
that constitutes a Default or an Event of Default, notice thereof and a
statement of the curative action that Borrowers propose to take with respect
thereto, and
(h) upon the request of Agent, any other report reasonably
requested relating to the financial condition of Borrowers.
In addition to the financial statements referred to above, Borrowers
agree to deliver financial statements prepared on both a consolidated and
consolidating basis and that no Borrower, or any Subsidiary of a Borrower, will
have a fiscal year different from that of Parent. Borrowers agree that their
independent certified public accountants are authorized to communicate with
Agent and to release to Agent whatever financial information concerning
Borrowers that Agent reasonably may request. Each Borrower waives the right to
assert a confidential relationship, if any, it may have with any accounting firm
or service bureau in connection with any information requested by Agent pursuant
to or in accordance with this Agreement, and agree that Agent may contact
directly any such accounting firm or service bureau in order to obtain such
information.
97
6.4 [Intentionally Omitted.]
---------------------
6.5 Return. Cause returns and allowances as between Borrowers and their
------
Account Debtors, to be on the same basis and in accordance with the usual
customary practices of the applicable Borrower, as they exist at the time of the
execution and delivery of this Agreement. If, at a time when no Event of Default
has occurred and is continuing, any Account Debtor returns any Inventory to any
Borrower, the applicable Borrower promptly shall determine the reason for such
return and, if the applicable Borrower accepts such return, issue a credit
memorandum (with a copy to be sent to Agent) in the appropriate amount to such
Account Debtor. If, at a time when an Event of Default has occurred and is
continuing, any Account Debtor returns any Inventory to any Borrower, the
applicable Borrower promptly shall determine the reason for such return and, if
Agent consents (which consent shall not be unreasonably withheld), issue a
credit memorandum (with a copy to be sent to Agent) in the appropriate amount to
such Account Debtor.
6.6 Maintenance of Properties. Maintain and preserve all of its properties
-------------------------
which are necessary or useful in the proper conduct to its business in good
working order and condition, ordinary wear and tear excepted, and comply at all
times with the provisions of all leases to which it is a party as lessee, so as
to prevent any loss or forfeiture thereof or thereunder.
6.7 Taxes. Cause all assessments and taxes, whether real, personal, or
-----
otherwise, due or payable by, or imposed, levied, or assessed against Borrowers
or any of their assets to be paid in full, before delinquency or before the
expiration of any extension period, except to the extent that the validity of
such assessment or tax shall be the subject of a Permitted Protest. Borrowers
will make timely payment or deposit of all tax payments and withholding taxes
required of it by applicable laws, including those laws concerning F.I.C.A.,
F.U.T.A., state disability, and local, state, and federal income taxes, and
will, upon request, furnish Agent with proof satisfactory to Agent indicating
that the applicable Borrower has made such payments or deposits. Borrowers shall
deliver satisfactory evidence of payment of applicable excise taxes in each
jurisdictions in which any Borrower is required to pay any such excise tax.
6.8 Insurance.
---------
(a) At Borrowers' expense, maintain insurance respecting its
property and assets wherever located, covering loss or damage by fire, theft,
explosion, and all other hazards and risks as ordinarily are insured against by
other Persons engaged in the same or similar businesses. Borrowers also shall
maintain business interruption, public liability, and product liability
insurance, as well as insurance against larceny, embezzlement, and criminal
misappropriation. All such policies of insurance shall be in such amounts and
with such insurance companies as are reasonably satisfactory to Agent, but only
if such requirements are not in conflict with, or do not require lesser coverage
than, the coverage required by Marad with respect to the Marad Collateral.
Borrowers shall deliver copies of all such policies to Agent, which policies,
with the exception of insurance coverage of the Excluded
98
Assets, shall contain a satisfactory lender's loss payable endorsement naming
Agent as sole loss payee or additional insured, as appropriate. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than 30 days prior written notice to Agent in the event of cancellation
of the policy for any reason whatsoever.
(b) Administrative Borrower shall give Agent prompt notice of any
loss covered by such insurance. Agent shall, with the exception of losses
payable with respect to the Excluded Assets, have the exclusive right to adjust
any losses payable under any such insurance policies in excess of $500,000,
without any liability to Borrowers whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance policy mentioned
above (other than liability insurance policies and monies received as payment
for any loss with respect to the Excluded Assets) or as payment of any award or
compensation for condemnation or taking by eminent domain (with the exception of
any such payment received with respect to the Excluded Assets), shall be paid
over to Agent to be applied at the option of the Required Lenders either to the
prepayment of the Obligations or shall be disbursed to Administrative Borrower
under staged payment terms reasonably satisfactory to the Required Lenders for
application to the cost of repairs, replacements, or restorations. Any such
repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction.
(c) Borrowers shall not take out separate insurance concurrent in
form or contributing in the event of loss with that required to be maintained
under this Section 6.8, unless (other than as to insurance coverage on the
-----------
Excluded Assets) Agent is included thereon as named insured with the loss
payable to Agent under a lender's loss payable endorsement or its equivalent.
Administrative Borrower immediately shall notify Agent whenever such separate
insurance is taken out, specifying the insurer thereunder and full particulars
as to the policies evidencing the same, and copies of such policies promptly
shall be provided to Agent.
(d) In furtherance of the foregoing and with respect to Ship
Collateral:
(i) For so long as this Agreement remains in effect, Borrowers
shall, at their sole cost or the cost of the Buyer, keep the Ship
Collateral and related Materials, Work, Components, Equipment and
Inventory constantly insured as specified below, as well as keep the
Ship Collateral and related Materials, Work, Components, Equipment and
Inventory insured against such additional risks as may be commercially
reasonable or reasonably specified by Agent from time to time,
including (i) builders' risk insurance or such other insurance
protecting the Ship Collateral and all Materials, Work and Components
installed or to be installed thereon, from loss or risks by fire, by
such hazards included within the term "extended coverage," and by such
other hazards as may be required by Agent, (ii) marine and hull
machinery insurance under the latest forms (determined at the time of
issuance of the policies in question) of policies approved by Agent
insuring the Ship Collateral against
99
the usual risks covered by such forms, and (iii) such additional
policies of insurance as Agent may from time to time require,
including all coverages required hereunder.
(ii) All property damage insurance shall be in an amount not less
than 110% of the construction price or the replacement cost of the
Ship Collateral covered by such insurance, whichever is greater, or
such other amount or amounts, and subject to such deductibles and
self-insurance agreements, as Agent may require or approve in writing.
Each Borrower shall further provide and maintain or cause to be
provided or maintained, at no expense to the Lender Group,
comprehensive marine and other liability insurance, naming both such
Borrower and Agent for the benefit of the Lender Group as parties
insured, protecting against claims for bodily injury, death or
property damage arising out of the use, ownership, possession,
operation or condition of the Ship Collateral, and further containing
a broad form contractual liability endorsement covering such
Borrower's obligations to indemnify the Lender Group as provided
hereunder. Each Borrower shall provide and maintain at its sole cost
and expense workmen's compensation and such other Commercial General
Liability and Protection and Indemnity insurance as Agent may require,
protecting against claims for bodily injury, death or property damage
arising out of such Borrower's business operations and the
construction of the vessel(s) constituting the Ship Collateral.
(iii) Each Borrower may purchase such insurance through one or
more insurance brokers of its choice, with such insurance being placed
and kept with such American, British or other insurance companies,
underwriters' associations, clubs or underwriting funds as may be
acceptable to Agent and that may be authorized to conduct business in
the State of Louisiana. All such insurance policies, including
renewals and replacements, must also be in form and substance
acceptable to Agent and must additionally contain a standard non-
contributory lender's loss payable endorsement in favor of Agent
providing in part that: (A) all proceeds and returned premiums under
such policies of insurance will be paid directly to Agent; (B) no act
or omission on the part of such Borrower or its officers, agents,
employees or representatives, or the master or crew of any vessel
constituting the Ship Collateral, or any charter or sub-charter
thereof, or breach of any warranties contained in such policies, shall
affect the obligations of the insurer to pay the full amount of any
loss of the Lender Group; (C) such policies may not be cancelled or
altered without 30 days' prior written notice to Agent of such
intended cancellation or alteration; and (D) there shall be no
recourse against Agent or any other member of the Lender Group for the
payment of premiums or commissions.
(iv) Each Borrower will further furnish to Agent, and Agent may
rely upon, a certificate or opinion of a firm of marine insurance
brokers or other insurance brokers acting for such Borrower with
respect to the Ship
100
Collateral of such Borrower, with respect to the insurance
required under this Agreement, stating in effect, that, as of the
date of this Agreement, all such insurance complies in all
respects with the applicable requirements of this Agreement.
(v) Nothing under this section shall be deemed to excuse
any Borrower from its obligations to promptly repair, replace or
restore any lost, damaged or destroyed portion or part of the
affected Ship Collateral, or the Materials, Works, Components or
Inventory or Equipment, whether or not the same may be covered by
insurance, and whether or not such proceeds of insurance are
available, and whether such proceeds are sufficient in amount to
complete such repair, replacement or restoration to the
satisfaction of Agent. Furthermore, unless otherwise confirmed by
Agent in writing, the application or release of any insurance
proceeds by Agent shall not be deemed to cure or waive any Event
of Default under this Agreement.
(vi) Once a vessel constituting Ship Collateral is subject
to a Preferred Ship Mortgage in favor of Agent, the insurance
provisions of such mortgage with respect to insurance shall
govern with respect to such vessel.
6.9 Location of Inventory and Equipment. Keep the Inventory and Equipment
-----------------------------------
only at the locations identified on Schedule 5.5 (except to the extent in
------------
transit from a location identified on Schedule 5.5 to another location
------------
identified on Schedule 5.5); provided, however, that Administrative Borrower may
------------- -------- -------
amend Schedule 5.5 so long as such amendment occurs by written notice to Agent
------------
not less than 30 days prior to the date on which the Inventory or Equipment is
moved to such new location, so long as such new location is within the
continental United States or the Canadian Province of Newfoundland, and so long
as, at the time of such written notification, the applicable Borrower provides
any financing statements or fixture filings necessary to perfect and continue
perfected the Agent's Liens on such assets that constitute Collateral and also
provides to Agent, if requested, a Collateral Access Agreement if the assets
constitute Collateral.
6.10 Compliance with Laws. Comply with the requirements of all applicable
--------------------
laws, rules, regulations, and orders of any Governmental Authority, including
the Fair Labor Standards Act and the Americans With Disabilities Act, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, would not result in and reasonably could not be expected to
result in a Material Adverse Change.
6.11 Leases. Pay when due all rents and other amounts payable under any
------
leases to which any Borrower is a party or by which any Borrower's properties
and assets are bound, unless such payments are the subject of a Permitted
Protest.
101
6.12 Brokerage Commissions. Pay any and all brokerage commission or
---------------------
finders fees incurred in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement. Borrowers agree and
acknowledge that payment of all such brokerage commissions or finders fees shall
be the sole responsibility of Borrowers, and each Borrower agrees to indemnify,
defend, and hold Agent and the Lender Group harmless from and against any claim
of any broker or finder arising out of Borrowers' obtaining financing from the
Lender Group under this Agreement.
6.13 Existence. Except as permitted under Section 7.3, at all times
--------- -----------
preserve and keep in full force and effect each Borrower's valid existence and
good standing and any rights and franchises material to Borrowers' businesses.
6.14 Environmental. To the extent any of the following could reasonably be
-------------
expected to result in a Material Adverse Change: (a) keep any property either
owned or operated by any Borrower free of any Environmental Liens or post bonds
or other financial assurances sufficient to satisfy the obligations or liability
evidenced by such Environmental Liens, (b) comply, in all material respects,
with Environmental Laws and provide to Agent documentation of such compliance
which Agent reasonably requests, and (c) promptly notify Agent of any release of
a Hazardous Material of any reportable quantity from or onto property owned or
operated by any Borrower and take any Remedial Actions required to xxxxx said
release or otherwise to come into compliance with applicable Environmental Law;
and, notwithstanding whether the matter involved could result in a Material
Adverse Change, promptly provide Agent with written notice within 10 days of the
receipt of any of the following: (i) notice that an Environmental Lien has been
filed against any of the real or personal property of any Borrower, (ii)
commencement of any Environmental Action or notice that an Environmental Action
will be filed against any Borrower, and (iii) notice of a violation, citation,
or other administrative order which reasonably could be expected to result in a
Material Adverse Change.
6.15 Disclosure Updates. Promptly and in no event later than 5 Business
------------------
Days after obtaining knowledge thereof, (a) notify Agent if any written
information, exhibit, or report furnished to the Lender Group contained any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made, and (b) correct any defect or error that may be
discovered therein or in any Loan Document or in the execution, acknowledgement,
filing, or recordation thereof.
6.16 Alterations, Modifications and Additions. At their sole expense, make
----------------------------------------
such alterations and modifications in and additions to the Equipment as may be
required from time to time by any relevant Governmental Authority or as may be
deemed necessary from time to time by the Borrowers, whether upon the
recommendation of any manufacturer or otherwise, for the purpose of the safe
operation of the Equipment (any such alteration, modification or addition as may
be so required or so deemed necessary being herein called a "Required
--------
Modification"). In addition, the Borrowers, at their sole expense, may from time
------------
to time make such other alterations and modifications in and additions to the
Equipment as the
102
Borrowers may deem desirable in the proper conduct of their business (any such
alteration, modification or addition as may be so deemed desirable being herein
called an "Optional Modification"); provided, however, that (i) any Required
--------------------- -------- -------
Modification shall be expeditiously completed in a good and workmanlike manner,
in compliance with all legal requirements applicable thereto, and (ii) no
Optional Modification shall diminish the value or utility of any item of
Equipment or impair the operating condition thereof below the value, utility and
operating condition thereof immediately prior to such Optional Modification,
assuming that such item of Equipment was then of the value or utility and in the
operating condition required to be maintained by the terms of this Agreement.
All parts incorporated or installed in or attached to any item of Equipment
composing Collateral as a result of any alteration, modification or addition
which are not readily removable without damage to such item of Equipment shall,
without necessity of further act, become part of such item of Equipment for all
purposes hereof and subject to the security interest granted herein; however,
this sentence shall not be construed to impair or affect Marad's rights, duties
and privileges with respect to FGO or Parent under the Marad Financing
Documents, and the Borrowers covenant and agree not to incorporate or install in
or attach any item of Marad Collateral to any item of Equipment composing
Collateral.
6.17 Ownership of Ship Collateral. In the event any Borrower enters into a
----------------------------
Title Transfer Construction Contract, such Borrower shall notify Agent
immediately of such fact and shall promptly provide Agent, upon Agent's request,
with a signed copy of such contract.
6.18 Identifying Numbers. The following shall apply to all items of Ship
-------------------
Collateral currently under construction as to which title during construction
remains with the applicable Borrower. In the case of each item of Ship
Collateral to be constructed in the State of Louisiana, comply with all the
requirements imposed upon the builder under the Louisiana Ship Mortgage Law, and
more specifically, with all the requirements imposed under Louisiana Revised
Statutes 9:5523. Each Borrower shall affix a plaque showing the name of such
Borrower, the hull number of the item of Ship Collateral being constructed by
such Borrower, and in the case of Louisiana constructed vessels, the parish in
which such vessel is to be constructed, to the keel of the vessel if the vessel
has a keel, or to the bottom plates if such vessel does not have a keel, when
laid, so as to be clearly visible at all times during the performance of the
work and until the decking is laid. At such times as the decking is laid, each
Borrower shall move the aforementioned plaque and permanently affix the plaque
to the weather decking of the vessel so as to be clearly visible at all times
during the continuance of the work and after completion of construction. Each
Borrower shall xxxx or stamp on Materials, Works and Components to be installed
on the designated vessel with the hull number of the vessel upon delivery of
such materials and/or components to the Shipyard. Alternatively, each Borrower
shall maintain records which shall identify with certainty all such Materials,
Works and Components with such vessel's hull number.
6.19 Insurance. All items of Ship Collateral subsequently acquired shall
---------
be insured according to the terms and conditions of Section 6.8 herein.
-----------
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6.20 Excluded Assets. Provide the Agent with 30 days prior written notice
---------------
of (a) the date on which the Indebtedness secured by the Marad Collateral is to
be repaid in full, or (b) the date on which the Indebtedness secured by Liens in
favor of GE or the mortgagees under the existing collateral documents with
respect to TDI-North and TDI-South, as the case may be, encumbering any of the
assets composing the Excluded Assets is to be finally repaid in full or any such
Liens under this clause (b) terminated or released, and promptly take such
actions as the Agent may require to amend or amend and restate existing filed
UCC financing statements or recorded Mortgages or file new UCC financing
statements or record new mortgages to perfect in favor of the Agent for the
benefit of the Lender Group a first priority Lien in that portion of the
Excluded Assets being released from the Liens of either the United States of
America (provided in such case the Indebtedness to Marad under the Marad
Financing Documents has been repaid in full), GE, or any mortgagee under the
existing collateral documents with respect to TDI-North and TDI-South, as the
case may be, and take such other actions as Agent may require with respect
thereto.
6.21 Bonds. Provide the Agent, promptly upon the execution thereof, true,
-----
correct and complete copies of any Bonded Contract and the Bonded Contract
Security Documents with respect thereto accompanied by a memorandum from the
chief financial officer of Parent detailing the collateral security granted to
the bonding company or other surety with respect to any Bonds.
6.22 Copyright Registrations. No less frequently than once every 60 days,
-----------------------
unless Agent shall otherwise agree in writing, each Borrower shall (a) cause all
copyrights generated by such Borrower (other than Exempt Copyrights) that are
not already the subject of a registration with the United States Copyright
Office (or an application therefor diligently prosecuted) to be registered with
the United States Copyright Office in a manner sufficient to impart constructive
notice of such Borrower's ownership thereof, and (b) cause to be prepared,
executed, and delivered to Lender, with sufficient time to permit to record no
later than the last Business Day within 10 days following the date that such
copyrights have been registered or an application for registration has been
filed, a Copyright Security Agreement or supplemental schedules to the Copyright
Security Agreement reflecting the security interest of Agent in such new
copyrights (other than Exempt Copyrights, which, although subject to the
security interest of Agent for the benefit of the Lender Group, shall not be
required to be registered until 30 days after such time, if any, as they cease
to be Incipient Copyrights), which supplemental schedules shall be in form and
content suitable for registration with the United States copyright Office so as
to give constructive notice, when so registered, of the transfer by such
Borrower to Agent of a security interest in such copyrights. Borrowers also
shall maintain copies of all source and object code for all software utilized in
their business operations at safe and secure offsite locations reasonably
acceptable to Agent and shall, at the request of Agent, advise the operators of
such locations of Agent's security interest in such software, shall keep Agent
fully informed of each such location, and shall maintain the currency of all
such software stored offsite.
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6.23 Real Estate Curative Work. Take commercially reasonable efforts to
-------------------------
complete as expeditiously as possible the title curative work with respect to
certain parcels of Real Property Collateral as required by Sections 3.2(d),(e),
-------------------
and (i).
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7 . NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrowers will not and will not permit any of their respective
Subsidiaries, with the exception of Xxxxxx France and its Subsidiaries, to do
any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise
------------
become or remain, directly or indirectly, liable with respect to any
Indebtedness, except:
(a) Indebtedness evidenced by this Agreement and the other
Loan Documents, together with Indebtedness owed to Underlying Issuers with
respect to Underlying Letters of Credit;
(b) Indebtedness set forth on Schedule 5.20;
-------------
(c) Indebtedness outstanding under the Securities (as such
term is defined in the Indenture) in an aggregate principal amount not to exceed
$185,000,000 at any one time outstanding;
(d) Permitted Purchase Money Indebtedness;
(e) Indebtedness owing by (i) Parent to any other Borrower,
(ii) any wholly-owned Borrower to Parent, and (iii) any wholly-owned Borrower to
any other wholly-owned Borrower, so long as, in each such case, any such
Indebtedness is the subject of the Intercompany Subordination Agreement;
(f) Indebtedness evidenced by, and reimbursement
obligations with respect to, performance bonds, surety bonds, and other similar
bonds issued by or for the benefit of a Borrower in the ordinary course of
business, the terms and conditions of which, including waiver of subrogation
rights of the surety and collateral and payment sharing arrangements or other
intercreditor arrangements between the surety and Agent, are acceptable to the
Agent in its sole discretion;
(g) Hedging Obligations permitted by this Agreement;
(h) Purchase Money Indebtedness of Xxxxxx Canada or any of
its Subsidiaries in an amount not to exceed $10,000,000 outstanding at any one
time; provided that such Purchase Money Indebtedness only shall be used by
--------
Xxxxxx Canada or any of its Subsidiaries for the construction of a barge to be
used to facilitate joint construction projects of Xxxxxx Canada and the
Borrowers;
(i) Indebtedness of Xxxxxx France or any of its
Subsidiaries;
105
(j) Acquired Indebtedness in an amount not to exceed
$5,000,000 outstanding at any one time;
(k) subordinated Indebtedness the terms and conditions of
which, including provisions subordinating such Indebtedness to the Obligations,
are satisfactory to the Required Lenders and the Required Term Loan Lenders;
(l) Indebtedness evidenced by the Intercompany Note;
(m) refinancings, renewals, or extensions of Indebtedness
permitted under this Section 7.1 (and continuance or renewal of any Permitted
-----------
Liens associated therewith) so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not, in the judgment of the Required
Lenders and the Required Term Loan Lenders, materially impair the prospects of
repayment of the Obligations by Borrowers or materially impair Borrowers'
creditworthiness, (ii) such refinancings, renewals, or extensions do not result
in an increase in the principal amount of, or interest rate with respect to, the
Indebtedness so refinanced, renewed, or extended; provided, that the refinancing
--------
of the Securities (as defined in the Indenture) may occur in a transaction
providing for an interest rate acceptable to the Required Lenders and the
Required Term Loan Lenders, (iii) such refinancings, renewals, or extensions do
not result in a shortening of the average weighted maturity of the Indebtedness
so refinanced, renewed, or extended, nor are they on terms or conditions, that,
taken as a whole, are materially more burdensome or restrictive to the
applicable Borrower, and (iv) if the Indebtedness that is refinanced, renewed,
or extended was subordinated in right of payment to the Obligations, then the
terms and conditions of the refinancing, renewal, or extension Indebtedness must
include subordination terms and conditions that are at least as favorable to the
Lender Group as those that were applicable to the refinanced, renewed, or
extended Indebtedness; or the refinancing, renewal or extension is effected
through the issuance of the common Stock of Parent or other Stock of Parent that
does not require any cash payment until after the second anniversary of the
Maturity Date so long as the Lenders receive at least 30 days prior written
notice of such issuance; and
(n) Indebtedness composing Permitted Investments.
7.2 Liens. Create, incur, assume, or permit to exist, directly or
-----
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced, renewed, or
extended under Section 7.1(m) and so long as the replacement Liens only encumber
--------------
those assets that secured the refinanced, renewed, or extended Indebtedness).
7.3 Restrictions on Fundamental Changes.
-----------------------------------
(a) Except for Permitted Acquisitions, enter into any
merger, consolidation, reorganization, or recapitalization, or reclassify its
Stock.
106
(b) Liquidate, wind up, or dissolve itself (or suffer any
liquidation or dissolution).
(c) Convey, sell, lease, license, assign, transfer, or
otherwise dispose of, in one transaction or a series of transactions, all or any
substantial part of its assets.
Clauses (a) and (b) shall not apply to the merger of a Solvent Guarantor
Subsidiary with and into a Borrower so long as such Borrower is the surviving
entity, or the dissolution or liquidation of a Guarantor Subsidiary without the
incurrence of additional Indebtedness or liability by a Borrower.
7.4 Disposal of Assets. Other than Permitted Dispositions (and subject to
------------------
Section 2.4(a)(iii), if applicable), convey, sell, lease, license, assign,
-------------------
transfer, or otherwise dispose of any of the assets of any Borrower.
7.5 Change Name. Change any Borrower's name, FEIN, corporate structure or
-----------
identity, or add any new fictitious name; provided, however, that a Borrower may
-------- -------
change its name upon at least 30 days prior written notice by Administrative
Borrower to Agent of such change and so long as, at the time of such written
notification, such Borrower provides any financing statements or fixture filings
necessary to perfect and continue perfected Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with
---------
respect to the obligations of any third Person, except by endorsement of
instruments or items of payment for deposit to the account of Borrowers or which
are transmitted or turned over to Agent, and except for (i) guarantees permitted
under Section 7.1, or (ii) additional guarantees in an aggregate amount,
-----------
including the present value, discounted, as of the date of any determination
thereof, at the interest rate then applicable to Base Rate Loans, of future
contingent liabilities, not to exceed $5,000,000.
7.7 Nature of Business. Make any change in the principal nature of
------------------
Borrowers' business.
7.8 Prepayments and Amendments.
--------------------------
(a) Except in connection with a refinancing permitted by
Section 7.1(m), and except for regularly scheduled sinking fund payments or
--------------
(subject to the proviso set forth in Section 7.17 hereof) mandatory redemptions
------------
in connection with determinations from time to time of the depreciated actual
cost of Marad collateral composing a portion of the Excluded Assets, mandatory
payment with respect to Title XI Reserve Fund Net Cash Flow (as defined in the
Marad Financing Documents) or mandatory redemptions in connection with an
actual, constructive, agreed or compromise total loss of Marad collateral
composing a portion of the Excluded Assets, in each case as required by the
Marad Financing Documents and whether paid by FGO or Parent, and except for
Indebtedness repaid in the common Stock of Parent or other Stock of Parent that
does not require any cash payment until after the second anniversary of the
Maturity Date, prepay, redeem, defease,
107
purchase, or otherwise acquire any Indebtedness of any Borrower, other than (i)
the Obligations in accordance with this Agreement, or (ii) provided that (A) no
--------
Event of Default shall exist or is continuing either before or immediately after
giving effect to any such repurchase, (B) after giving effect to any such
repurchase Borrowers shall have Excess Availability and unrestricted Cash and
Cash Equivalents on deposit in Securities Accounts or DDAs subject to Control
Agreements of not less than $70,000,000 (such aggregate amount of Excess
Availability and unrestricted cash and Cash Equivalents on deposit in Securities
Accounts or DDAs subject to Control Agreements to include not less than
$10,000,000 attributable to Excess Availability), and (C) the Term Loan
(together with all interest thereon) has been paid in full in cash, the
repurchase of Securities (as such term is defined in the Indenture) in an amount
not to exceed $25,000,000 during any fiscal year or $75,000,000 in the
aggregate, and
(b) Except in connection with a refinancing permitted by
Section 7.1(m), directly or indirectly, amend, modify, alter, increase, or
--------------
change any of the terms or conditions of any agreement, instrument, document,
indenture, or other writing evidencing or concerning Indebtedness permitted
under Sections 7.1, including the Marad Financing Documents, the GE Financing
------------
Documents, or the Canadian Security Documents if the result of any such
amendment, modification, alteration, increase or change grants a Lien on any
additional collateral, could be expected to be a Material Adverse Change, or if
the effect of any such amendment, modification, alteration, increase or change,
together with all other amendments, modifications, alterations, increases or
changes made, is to increase materially the obligations of the obligor
thereunder or to confer additional rights on the holders of such Indebtedness
(or a trustee or representative on their behalf) which would be adverse to a
Borrower or to a member of the Lender Group.
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
-----------------
any Change of Control.
7.10 [Intentionally Omitted.]
---------------------
7.11 Distributions. Other than distributions or declaration and payment of
-------------
dividends by a Borrower to another Borrower, make any distribution or declare or
pay any dividends (in cash or other property, other than common Stock) on, or
purchase, acquire, redeem, or retire any of any Borrower's Stock, of any class,
whether now or hereafter outstanding.
7.12 Accounting Methods. Modify or change its method of accounting (other
------------------
than as may be required to conform to GAAP) or enter into, modify, or terminate
any agreement currently existing, or at any time hereafter entered into with any
third party accounting firm or service bureau for the preparation or storage of
Borrowers' accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or Borrowers'
financial condition.
7.13 Investments. Except for Permitted Investments, directly or
-----------
indirectly, make or acquire any Investment, or incur any liabilities (including
contingent obligations) for or in
108
connection with any Investment; provided, however, that Borrowers shall not have
-------- -------
Permitted Investments (other than in the Cash Management Accounts) in excess of
$750,000 outstanding at any one time unless the applicable Borrower and the
applicable securities intermediary or bank have entered into Control Agreements
or similar arrangements governing such Permitted Investments, as Agent shall
determine in its Permitted Discretion, to perfect (and further establish) the
Agent's Liens in such Permitted Investments; provided, further, that the
-------- -------
foregoing limitation shall not apply to Permitted Investments made in the
Construction Fund, the Construction Moneys Fund, the Title XI Reserve Fund, and
the Travelers' Fund.
7.14 Transactions with Affiliates. Except for Permitted Affiliate
----------------------------
Transactions, directly or indirectly enter into or permit to exist any
transaction with any other Borrower or any Affiliate of any Borrower except for
transactions that are in the ordinary course of Borrowers' business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to Borrowers than would be obtained in an arm's length transaction
with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
----------
business.
7.16 Compensation. Increase the annual fee or per-meeting fees paid to the
------------
members of its Board of Directors during any year by more than 15% over the
prior year; pay or accrue total cash compensation, during any year, to its
officers and senior management employees in an aggregate amount in excess of
115% of that paid or accrued in the prior year.
7.17 Use of Proceeds. Use the proceeds of Advances and the Term Loan for
---------------
any purpose other than (a) on the Closing Date, to pay transactional fees,
costs, and expenses incurred in connection with this Agreement, the other Loan
Documents, and the transactions contemplated hereby and thereby, and (b)
thereafter, consistent with the terms and conditions hereof, for its lawful and
permitted purposes, provided that no proceeds of Advances or the Term Loan shall
--------
be used to fund any mandatory redemptions required by the Marad Financing
Documents in connection with an actual, constructive, agreed or compromise total
loss of the collateral of Marad composing a portion of the Excluded Assets.
7.18 Change in Location of Chief Executive Office; Inventory and Equipment
---------------------------------------------------------------------
with Bailees. Relocate its chief executive office to a new location without
------------
Administrative Borrower providing 30 days prior written notification thereof to
Agent and so long as, at the time of such written notification, the applicable
Borrower provides any financing statements or fixture filings necessary to
perfect and continue perfected the Agent's Liens and also provides to Agent a
Collateral Access Agreement with respect to such new location. The Inventory and
Equipment composing Collateral shall not at any time now or hereafter be stored
with a bailee, warehouseman, or similar party without Agent's prior written
consent.
7.19 Securities Accounts. Establish or maintain any Securities Account
-------------------
unless Agent shall have received a Control Agreement in respect of such
Securities Account. Borrowers agree to not transfer assets out of any Securities
Account; provided, however,
-------- -------
109
that, so long as no Event of Default has occurred and is continuing or would
result therefrom, Borrowers may use such assets (and the proceeds thereof) to
the extent not prohibited by this Agreement.
7.20 Financial Covenants.
-------------------
(a) Fail to maintain:
110
(i) Minimum EBITDA. EBITDA, measured as of the last day of each
Test Period, of not less than the required amount set forth in the
following table for each Test Period ending on the date set forth
opposite thereto:
=======================================================================
Minimum EBITDA Applicable Test Period Ending
Amount
=======================================================================
$ 0.00 October 31, 2000
-----------------------------------------------------------------------
$ 0.00 November 30, 2000
-----------------------------------------------------------------------
$ 1,727,000 December 31, 2000
-----------------------------------------------------------------------
$ 6,582,000 January 31, 2001
-----------------------------------------------------------------------
$ 12,321,000 February 28, 2001
-----------------------------------------------------------------------
$ 17,541,000 March 31, 2001
-----------------------------------------------------------------------
$ 24,421,000 April 30, 2001
-----------------------------------------------------------------------
$ 32,288,000 May 31, 2001
-----------------------------------------------------------------------
$ 37,799,000 June 30, 2001
-----------------------------------------------------------------------
$ 43,374,000 July 31, 2001
-----------------------------------------------------------------------
$ 49,581,000 August 31, 2001
-----------------------------------------------------------------------
$ 55,858,000 September 30, 2001
-----------------------------------------------------------------------
$ 62,424,000 October 31, 2001
-----------------------------------------------------------------------
$ 67,315,000 November 31, 2001
-----------------------------------------------------------------------
$ 71,540,000 December 31, 2001 and thereafter
=======================================================================
111
(ii) Adjusted Tangible Net Worth. Adjusted Tangible Net Worth,
measured as of the last day of each Test Period, of not less than the
required amount set forth in the following table for each Test Period
ending on the date set forth opposite thereto:
====================================================================
Minimum Adjusted Applicable Test Period Ending
Tangible Net Worth
Amount
====================================================================
$ 66,556,000 October 31, 2000
--------------------------------------------------------------------
$ 64,134,000 November 30, 2000
--------------------------------------------------------------------
$ 66,309,000 December 31, 2000
--------------------------------------------------------------------
$ 67,489,000 January 31, 2001
--------------------------------------------------------------------
$ 69,389,000 February 28, 2001
--------------------------------------------------------------------
$ 70,853,000 March 31, 2001
--------------------------------------------------------------------
$ 73,674,000 April 30, 2001
--------------------------------------------------------------------
$ 77,298,000 May 31, 2001
--------------------------------------------------------------------
$ 78,974,000 June 30, 2001
--------------------------------------------------------------------
$ 80,694,000 July 31, 2001
--------------------------------------------------------------------
$ 82,927,000 August 31, 2001
--------------------------------------------------------------------
$ 85,208,000 September 30, 2001
--------------------------------------------------------------------
$ 88,092,000 October 31, 2001
--------------------------------------------------------------------
$ 89,611,000 November 31, 2001
--------------------------------------------------------------------
$ 90,823,000 December 31, 2001 and thereafter
====================================================================
112
(iii) Fixed Charge Coverage Ratio. A Fixed Charge Coverage
Ratio, measured as of the last day of each calendar quarter, of not
less than the required amount set forth in the following table, for
the 12 month period ended as of the date set forth opposite thereto,
with the exception of the calendar quarter ended December 31, 2000,
for which the measuring period shall be 3 months, for the calendar
quarter ended March 31, 2001, for which the measuring period shall be
6 months, and for the calendar quarter ended June 30, 2001, for which
the measuring period shall be 9 months:
==========================================================================
Minimum Fixed Charge Calendar Quarter Ended
Coverage Ratio
==========================================================================
0.14:1.00 December 31, 2000
--------------------------------------------------------------------------
0.69:1.00 March 31, 2001
--------------------------------------------------------------------------
0.99:1.00 June 30, 2001
--------------------------------------------------------------------------
1.10:1.00 September 30, 2001
--------------------------------------------------------------------------
1.42:1.00 December 31, 2001 and each
calendar quarter thereafter
==========================================================================
(iv) Minimum Ratio of Senior Debt to EBITDA. A Ratio of
Senior Debt to EBITDA of not less than the required amount set forth
in the following table:
============================================================================
Minimum Ratio of Senior Debt Calendar Quarter Ended
to EBITDA
============================================================================
37.6:1.00 December 31, 2000
----------------------------------------------------------------------------
4.8:1.00 March 31, 2001
----------------------------------------------------------------------------
2.4:1.00 June 30, 2001
----------------------------------------------------------------------------
2.0:1.00 September 30, 2001
----------------------------------------------------------------------------
2.0:1.00 12/31/2001 and each
calendar quarter thereafter
============================================================================
(b) Make:
113
(i) Capital Expenditures. Capital Expenditures excluding
Capital Expenditures composing Permitted Acquisitions, in any fiscal
year in excess of the amount set forth in the following table for the
applicable period:
========================================================================
Fiscal Year 2000 Fiscal Year 2001 Fiscal Year 2002
========================================================================
$ 7,500,000 $ 24,000,000 $ 30,000,000
========================================================================
7.21 Vessels. Register or document, or permit the registration or
-------
documentation, of any Ship Collateral with any Governmental Authority without
providing Agent 30 days prior written notice of the proposed registration or
documentation, which notice shall include the proposed date of registration or
documentation and the name of the Governmental Authority and office thereof at
which the proposed registration or documentation is to be made, together with
such documents and agreements as Agent shall require to create and perfect a
first priority Lien on the Ship Collateral proposed to be registered or
documented.
7.22 Guarantor Subsidiaries. Permit any Guarantor Subsidiary to conduct
----------------------
business operations or to hold assets having an aggregate value for all
Guarantor Subsidiaries in excess of $100,0000 (with the exception of the Trinity
Note).
7.23 Hedging Obligations. Become or remain liable with respect to any
-------------------
Hedging Obligations unless such Hedging Obligations meet the following
conditions:
(i) if such Hedging Obligation relates to interest rates, such
Hedging Agreement xxxxxx actual outstanding Indebtedness (or an amount
approximating such actual outstanding Indebtedness) of a Borrower or one of its
Subsidiaries, and (ii) if such Hedging Obligation relates to foreign currency,
and, in each case, such Hedging Obligation is not speculative in nature; and
(ii) the pricing and spread under such Hedging Obligation is on
market terms.
7.24 Additional Bonds with Travelers. Request, authorize or permit
-------------------------------
Travelers to issue any Bond or otherwise guaranty or become liable in any way
for any obligation or Indebtedness of any Borrower or any Subsidiary of any
Borrower, with respect to a Bonded Contract (with the exception of the Pasha
Contract and the Global Contract as defined in the Travelers' Bonded Contract
Security Documents) or otherwise, without the prior written consent of the
Agent, which consent shall not be unreasonably withheld.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an event of
default (each, an "Event of Default") under this Agreement:
----------------
114
8.1 If any Borrower or Guarantor Subsidiary fails to pay when due and
payable or when declared due and payable, all or any portion of the Obligations
(whether of principal, interest (including any interest which, but for the
provisions of the Bankruptcy Code, would have accrued on such amounts), fees and
charges due the Lender Group, reimbursement of Lender Group Expenses, or other
amounts constituting Obligations);
8.2 (a) If any Borrower fails to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Section 6.2 or 6.3
----------- ---
hereof and such failure or neglect continues for a period of 5 days after the
date on which such failure or neglect first occurs, (b) if any Borrower or any
Guarantor Subsidiary fails to perform, keep, or observe any term, provision,
condition, covenant, or agreement contained in Section 6.1, 6.5, 6.7, or 6.11
--------------------- ----
hereof and such failure or neglect continues for a period of 15 days after the
date on which such failure or neglect first occurs, or (c) if any Borrower or
any Guarantor Subsidiary fails to perform, keep, or observe any other term,
provision, condition, covenant, or agreement contained in this Agreement (other
than any such term, provision, condition, covenant, or agreement that is
expressly dealt with elsewhere in this Section 8) or in any of the other Loan
---------
Documents; provided, however, that if the Term Loan and all interest thereon
-------- -------
have been paid in full Borrowers' failure to perform, keep, or observe any of
the financial covenants contained in Section 7.20(a) shall not constitute an
---------------
Event of Default hereunder if Borrowers demonstrate to the satisfaction of the
Agent (determined in its Permitted Discretion) at such time as Borrowers deliver
to Agent the financial statements showing Borrowers noncompliance with any such
financial covenant, that as of the date on which such covenant was measured
Borrowers had Excess Availability and unrestricted cash and Cash Equivalents on
deposit in Securities Accounts or DDAs subject to Control Agreements equal to
the greater of (i) $10,000,000 in excess of Borrowers' consolidated loss
reserves, and (ii) $50,000,000 (such aggregate amount of Excess Availability and
unrestricted cash and Cash Equivalents on deposit in Securities Accounts or DDAs
subject to Control Agreements to include not less than $ 10,000,000 attributable
to Excess Availability).
8.3 If any material portion of any Borrower's or any of its
Subsidiaries' assets is attached, seized, subjected to a writ or distress
warrant, levied upon, or comes into the possession of any third Person;
8.4 If an Insolvency Proceeding is commenced by any Borrower or any of
its Subsidiaries;
8.5 If an Insolvency Proceeding is commenced against any Borrower, or
any of its Subsidiaries, and any of the following events occur: (a) the
applicable Borrower or the Subsidiary consents to the institution of the
Insolvency Proceeding against it, (b) the petition commencing the Insolvency
Proceeding is not timely controverted, (c) the petition commencing the
Insolvency Proceeding is not dismissed within 45 calendar days of the date of
the filing thereof; provided, however, that, during the pendency of such period,
Agent (including any successor agent) and each other member of the Lender Group
shall be relieved of their obligation to extend credit hereunder, (d) an interim
trustee is appointed to take possession of all or any substantial portion of the
properties or assets of, or to operate all
115
or any substantial portion of the business of, any Borrower or any of its
Subsidiaries, or (e) an order for relief shall have been entered therein;
8.6 If any Borrower or any of its Subsidiaries is enjoined,
restrained, or in any way prevented by court order from continuing to conduct
all or any material part of its business affairs;
8.7 If a notice of Lien, levy, or assessment is filed of record with
respect to any Borrower's or any of its Subsidiaries' assets by the United
States, or any department, agency, or instrumentality thereof, or by any state,
county, municipal, or governmental agency, or if any taxes or debts owing at any
time hereafter to any one or more of such entities becomes a Lien, whether
xxxxxx or otherwise, upon any Borrower's or any of its Subsidiaries' assets and
the same is not paid on the payment date thereof;
8.8 If a judgment or other claim becomes a Lien or encumbrance upon
any material portion of any Borrower's or any of its Subsidiaries' properties or
assets;
8.9 If there is a default in any material agreement (including the
Indenture, the Marad Financing Documents, the GE Financing Documents, or any
performance bond, surety bond or other similar bond with respect to any
Construction Contract) to which any Borrower or any of its Subsidiaries is a
party and such default (a) occurs at the final maturity of the obligations
thereunder, or (b) results in a right by the other party thereto, irrespective
of whether exercised, to accelerate the maturity of the applicable Borrower's or
its Subsidiaries' obligations thereunder, to terminate such agreement, or to
refuse to renew such agreement pursuant to an automatic renewal right therein;
8.10 If any Borrower or any of its Subsidiaries makes any payment on
account of Indebtedness that has been contractually subordinated in right of
payment to the payment of the Obligations, except to the extent such payment is
permitted by the terms of the subordination provisions applicable to such
Indebtedness;
8.11 If any material misstatement or misrepresentation exists now or
hereafter in any warranty, representation, statement, or Record made to the
Lender Group by any Borrower, its Subsidiaries, or any officer, employee, agent,
or director of any Borrower or any of its Subsidiaries;
8.12 If the obligation of any Guarantor Subsidiary under the Guaranty
is limited or terminated by operation of law or by such Guarantor Subsidiary
thereunder;
8.13 If a "Change of Control" (as defined in the Indenture) occurs;
8.14 If this Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on or security interest in the Collateral covered hereby or
thereby; or
116
8.15 Any provision of any Loan Document shall at any time for any
reason be declared to be null and void, or the validity or enforceability
thereof shall be contested by any Borrower or Guarantor Subsidiary, or a
proceeding shall be commenced by any Borrower, or by any Governmental Authority
having jurisdiction over any Borrower, seeking to establish the invalidity or
unenforceability thereof, or any Borrower shall deny that any Borrower has any
liability or obligation purported to be created under any Loan Document.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the
-------------------
continuation, of an Event of Default, Agent may, and shall at the authorization
and instruction of the Required Lenders (at their election but without notice of
their election and without demand), do any one or more of the following on
behalf of the Lender Group, all of which are authorized by Borrowers:
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable;
(b) Cease advancing money or extending credit to or for
the benefit of Borrowers under this Agreement, under any of the Loan Documents,
or under any other agreement between Borrowers and the Lender Group;
(c) Terminate this Agreement and any of the other Loan
Documents as to any future liability or obligation of the Lender Group, but
without affecting any of the Agent's Liens in the Collateral and without
affecting the Obligations;
(d) Settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which Agent considers advisable, and
in such cases, Agent will credit the Loan Account with only the net amounts
received by Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection therewith;
(e) Cause Borrowers to hold all returned Inventory in
trust for the Lender Group, segregate all returned Inventory from all other
assets of Borrowers or in Borrowers' possession and conspicuously label said
returned Inventory as the property of the Lender Group;
(f) Without notice to or demand upon any Borrower or
Guarantor Subsidiary, make such payments and do such acts as Agent considers
necessary or reasonable to protect its security interests in the Collateral.
Each Borrower agrees to assemble the Personal Property Collateral if Agent so
requires, and to make the Personal Property Collateral available to Agent at a
place that Agent may designate which is reasonably convenient to both parties.
Each Borrower authorizes Agent to enter the premises where the Personal Property
Collateral is located, to take and maintain possession of the Personal Property
Collateral, or any part of it, and to pay, purchase, contest, or compromise any
Lien that in Agent's determination appears to conflict with the Agent's Liens
and to pay
117
all expenses incurred in connection therewith and to charge Borrowers' Loan
Account therefor. With respect to any of Borrowers' owned or leased premises,
each Borrower hereby grants Agent a license to enter into possession of such
premises and use such premises, without charge, in order to exercise any of the
Lender Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to any Borrower (such notice being
expressly waived), and without constituting a retention of any collateral in
satisfaction of an obligation (within the meaning of the Code), set off and
apply to the Obligations any and all (i) balances and deposits of any Borrower
held by the Lender Group (including any amounts received in the Cash Management
Accounts), or (ii) Indebtedness at any time owing to or for the credit or the
account of any Borrower held by the Lender Group;
(h) Hold, as cash collateral, any and all balances and
deposits of any Borrower held by the Lender Group, and any amounts received in
the Cash Management Accounts, to secure the full and final repayment of all of
the Obligations;
(i) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Personal Property Collateral. Agent is hereby granted a license
or other right to use, without charge for the benefit of the Lender Group, such
Borrower's labels, patents, copyrights, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and such
Borrower's rights under all licenses and all franchise agreements shall inure to
the Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a
public or private sale, or both, by way of one or more contracts or
transactions, for cash or on terms, in such manner and at such places (including
Borrowers' premises) as Agent determines is commercially reasonable. It is not
necessary that the Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the
Personal Property Collateral as follows:
(i) Agent shall give Administrative Borrower (for the
benefit of the applicable Borrower) a notice in writing of the
time and place of public sale, or, if the sale is a private sale
or some other disposition other than a public sale is to be made
of the Personal Property Collateral, the time on or after which
the private sale or other disposition is to be made; and
(ii) The notice shall be personally delivered or mailed,
postage prepaid, to Administrative Borrower as provided in
Section 12, at least 10 days before the earliest time of
----------
disposition set forth in the notice; no notice needs to be given
prior to the disposition of any portion of the Personal Property
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Collateral that is perishable or threatens to decline speedily in
value or that is of a type customarily sold on a recognized
market;
(l) Agent, on behalf of the Lender Group, may credit bid
and purchase at any public sale;
(m) Agent may seek the appointment of a receiver or keeper
to take possession of all or any portion of the Collateral or to operate same
and, to the maximum extent permitted by law, may seek the appointment of such a
receiver without the requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents; and
(o) Any deficiency that exists after disposition of the
Personal Property Collateral as provided above will be paid immediately by
Borrowers. Any excess will be returned, without interest and subject to the
rights of third Persons, by Agent to Administrative Borrower (for the benefit of
the applicable Borrower).
(p) For purposes of executory process under applicable
Louisiana law, each Borrower hereby acknowledges the Obligations, CONFESSES
JUDGMENT thereon and consent that judgment be rendered and signed, whether
during the court's term or during vacation in favor of the Agent, for the full
amount of the Obligations in principal, interest, and attorney's fees, together
with all charges and expenses whatsoever pursuant to this Agreement or any other
Loan Document. Upon the occurrence of an Event of Default, and in addition to
all of their rights, powers and remedies under this instrument and applicable
law, Agent and the Lenders may, at their option, cause all or any part of the
Collateral to be seized and sold under executory process or under writ of fieri
facias issued in execution of an ordinary judgment obtained upon the
Obligations, without appraisement to the highest bidder, for cash or under such
terms as Agent deems acceptable. Each Borrower hereby waives all and every
appraisement of the Collateral and waives and renounces the benefit of
appraisement and the benefit of all laws relative to the appraisement of the
Collateral seized and sold under executory or other legal process. Each
Borrowers agrees to waive, and do hereby specifically waive:
(i) the benefits of appraisement provided for in Articles
2332, 2336, 2723 and 2724, Louisiana Code of Civil Procedure, and
all other laws conferring such benefits;
(ii) the demand and 3 days delay accorded by Articles 2639
and 2721, Louisiana Code of Civil Procedure;
(iii) the notice of seizure required by Articles 2293 and
2721, Louisiana Code of Civil Procedure;
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(iv) the 3 days delay provided by Articles 2331 and 2722,
Louisiana Code of Civil Procedure; and the benefit of the other
provisions of Articles 2331, 2722 and 2723, Louisiana Code of
Civil Procedure.
In the event Agent elects, at its option, to enter suit via
ordinaria on the Obligations, in addition to the foregoing confession of
judgment, Borrowers hereby waive citation, other legal process and legal delays
and hereby consents that judgment for the unpaid principal due on the
obligations, together with interest, attorneys' fees, costs and other charges
that may be due on the Obligations, be rendered and signed immediately.
Pursuant to the authority contained in Louisiana Revised Statutes
9:5136 through 9:5140.2, Borrowers and the Lender Group do hereby expressly
designate Agent or its designee to be keeper or receiver ("Keeper") for the
------
benefit of the Lender Group or any assignee of any member of the Lender Group,
such designation to take effect immediately upon any seizure of any of the
Collateral under writ of executory process or under writ of sequestration or
fieri facias as an incident to an action brought by Agent. It is hereby agreed
that the Keeper shall be entitled to receive as compensation, in excess of its
reasonable costs and expenses incurred in the administration or preservation of
the Collateral, a reasonable amount, which compensation to the Keeper shall also
be secured by this Agreement. The designation of Keeper made herein shall not be
deemed to require Agent or any Lender to provoke the appointment of such a
keeper.
9.2 Remedies Cumulative. The rights and remedies of the Lender Group
-------------------
under this Agreement, the other Loan Documents, and all other agreements shall
be cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves in
Borrowers' Loan Account as Agent deems necessary to protect the Lender Group
from the exposure created by such failure, or (c) in the case of the failure to
comply with Section 6.8 hereof, obtain and maintain insurance policies of the
-----------
type described in Section 6.8 and take any action with respect to such policies
-----------
as Agent deems prudent. Any such amounts paid by Agent shall constitute Lender
Group Expenses and any such payments shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver by the Lender
Group of any Event of Default under this Agreement. Agent need not inquire as
to,
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or contest the validity of, any such expense, tax, or Lien and the receipt of
the usual official notice for the payment thereof shall be conclusive evidence
that the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
--------------------
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of documents, instruments, chattel paper, and guarantees at any time held by the
Lender Group on which any such Borrower may in any way be liable.
11.2 The Lender Group's Liability for Collateral. Each Borrower hereby
-------------------------------------------
agrees that: (a) so long as the Lender Group complies with its obligations, if
any, under the Code, Agent shall not in any way or manner be liable or
responsible for: (i) the safekeeping of the Collateral, (ii) any loss or damage
thereto occurring or arising in any manner or fashion from any cause, (iii) any
diminution in the value thereof, or (iv) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other Person, and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold
--------------
the Agent-Related Persons, the Lender-Related Persons with respect to each
Lender, each Participant, and each of their respective officers, directors,
employees, agents, and attorneys- in-fact (each, an "Indemnified Person")
------------------
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, and damages, and
all reasonable attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are incurred and
irrespective of whether suit is brought), at any time asserted against, imposed
upon, or incurred by any of them (a) in connection with or as a result of or
related to the execution, delivery, enforcement, performance, or administration
of this Agreement, any of the other Loan Documents, or the transactions
contemplated hereby or thereby, and (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto (all the foregoing, collectively,
the "Indemnified Liabilities"). The foregoing to the contrary notwithstanding,
-----------------------
Borrowers shall have no obligation to any Indemnified Person under this Section
-------
11.3 with respect to any Indemnified Liability that a court of competent
----
jurisdiction finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision shall survive the
termination of this Agreement and the repayment of the Obligations. If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrowers were required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrowers
with respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON
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WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:
If to Administrative
Borrower: XXXXXX XXXXXXX HALTER, INC.
00000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxxx
Fax No. 000.000.0000
with copies to: JONES, WALKER, XXXXXXXX, POITUENT,
CARRERE & XXXXXXX, L.L.P.
000 Xx. Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Fax No. 000.000.0000
If to Agent: FOOTHILL CAPITAL CORPORATION
0000 Xxxxxxxx Xxxxxx
Xxxxx 0000X
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
Fax No. 000.000.0000
with copies to: XXXXXXX, PHLEGER & XXXXXXXX LLP
000 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx Hilson, Esq.
Fax No. 000.000.0000
Agent and Borrowers may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other party. All notices or demands sent in accordance with this Section 12,
----------
other than notices by Agent in
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connection with enforcement rights against the Collateral under the provisions
of the Code, shall be deemed received on the earlier of the date of actual
receipt or 3 Business Days after the deposit thereof in the mail. Each Borrower
acknowledges and agrees that notices sent by the Lender Group in connection with
the exercise of enforcement rights against Collateral under the provisions of
the Code shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted by telefacsimile or any other
method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT
OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE BORROUGH OF
MANHATTAN, STATE OF NEW YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
-------- -------
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH
ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWERS AND
THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT
EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO
----- --- ----------
VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
-------
13(b).
-----
BORROWERS AND THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWERS AND THE LENDER GROUP REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
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EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
14. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
14.1 Assignments and Participations.
------------------------------
(a) Any Lender may, with the written consent of Agent (provided
that no written consent of Agent shall be required in connection with any
assignment and delegation by a Lender to an Eligible Transferee and no notice to
Agent shall be required in connection with any assignment and delegation by a
Lender to a fund or account managed by a Lender or an Affiliate of a Lender),
assign and delegate to one or more assignees (each an "Assignee") all, or any
--------
part of all, of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount of $5,000,000 (except such minimum amount shall not apply to any
Affiliate of a Lender or to a fund or account managed by a Lender provided that
if the minimum amount is not met Borrowers and Agent may continue to deal solely
and directly with such Lender in connection with the interest so assigned to an
Assignee); provided, however, that Borrowers and Agent may continue to deal
-------- -------
solely and directly with such Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the
Assignee, have been given to Administrative Borrower and Agent by such Lender
and the Assignee, (ii) such Lender and its Assignee have delivered to
Administrative Borrower and Agent a fully executed Assignment and Acceptance
substantially in the form of Exhibit A-1, and (iii) the assignor Lender or
-----------
Assignee has paid to Agent for Agent's separate account a processing fee in the
amount of $5,000. Anything contained herein to the contrary notwithstanding, the
consent of Agent or Administrative Borrower shall not be required (and payment
of any fees shall not be required) if such assignment is in connection with any
merger, consolidation, sale, transfer, or other disposition of all or any
substantial portion of the business or loan portfolio of such Lender or the
assignee is an Affiliate (other than individuals) of, or a fund, money market
account, investment account or other account managed by a Lender or an Affiliate
of a Lender.
(b) From and after the date that Agent notifies the assignor
Lender (with a copy to Administrative Borrower, if applicable) that it has
received a fully executed Assignment and Acceptance and payment (if applicable)
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 11.3 hereof)
------------
and be released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto
124
and thereto), and such assignment shall affect a novation between Borrowers and
the Assignee.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (1) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (2) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrowers or the performance or observance by Borrowers of any of their
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (4) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (5) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement as are delegated to
Agent, by the terms hereof, together with such powers as are reasonably
incidental thereto, and (6) such Assignee agrees that it will perform all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
(d) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance and receipt and acknowledgment by
Agent of such fully executed Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of
Agent, sell to one or more commercial banks, financial institutions, or other
Persons not Affiliates of such Lender (a "Participant") participating interests
-----------
in the Obligations owing to such Lender, the Commitment of such Lender, and the
other rights and interests of that Lender (the "Originating Lender") hereunder
------------------
and under the other Loan Documents (provided that no written consent of Agent
shall be required in connection with any sale of any such participating
interests by a Lender to an Eligible Transferee); provided, however, that (i)
-------- -------
the Originating Lender shall remain a "Lender" for all purposes of this
Agreement and the other Loan Documents and the Participant receiving the
participating interest in the Obligations, the Commitments, and the other rights
and interests of the Originating Lender hereunder shall not constitute a
"Lender" hereunder or under the other Loan Documents and the Originating
Lender's obligations under this Agreement shall remain unchanged, (ii) the
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Originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrowers, Agent, and the Lenders shall continue to deal
solely and directly with the Originating Lender in connection with the
Originating Lender's rights and obligations under this Agreement and the other
Loan Documents, (iv) no Originating Lender shall transfer or grant any
participating interest under which the Participant has the right to approve any
amendment to, or any consent or waiver with respect to, this Agreement or any
other Loan Document, except to the extent such amendment to, or consent or
waiver with respect to this Agreement or of any other Loan Document would (A)
extend the final maturity date of the Obligations hereunder in which such
Participant is participating, (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating, (C) release
all or a material portion of the Collateral or guaranties (except to the extent
expressly provided herein or in any of the Loan Documents) supporting the
Obligations hereunder in which such Participant is participating, (D) postpone
the payment of, or reduce the amount of, the interest or fees payable to such
Participant, (E) change the amount or due dates of scheduled principal
repayments or prepayments or premiums in respect of the Obligations hereunder in
which such Participant is participating, or (F) subordinates the Liens of Agent
for the benefit of the Lender Group to the Liens of any other creditor of any
Borrower; and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrowers, the Collections, the Collateral, or otherwise in respect of the
Obligations. No Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves. The provisions of this
Section 14.(e) are solely for the benefit of Lender Group, and none of Borrowers
--------------
shall have any rights as a third party beneficiary of any such provisions.
(f) In connection with any such assignment or participation or
proposed assignment or participation, a Lender may disclose all documents and
information which it now or hereafter may have relating to Borrowers or
Borrowers' business.
(g) Any other provision in this Agreement notwithstanding, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR (S).203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
14.2 Successors. This Agreement shall bind and inure to the benefit of the
----------
respective successors and assigns of each of the parties; provided, however,
-------- -------
that Borrowers
126
may not assign this Agreement or any rights or duties hereunder without the
Lenders' prior written consent and any prohibited assignment shall be absolutely
void ab initio. No consent to assignment by the Lenders shall release any
Borrower from its Obligations. A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder and thereunder pursuant to
Section 14.1 hereof and, except as expressly required pursuant to Section 14.1
------------ ------------
hereof, no consent or approval by any Borrower is required in connection with
any such assignment.
15. AMENDMENTS; WAIVERS.
15.1 Amendments and Waivers. No amendment or waiver of any provision of
----------------------
this Agreement or any other Loan Document, and no consent with respect to any
departure by Borrowers therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by Agent at the written request
of the Required Lenders) and Administrative Borrower (on behalf of all
Borrowers) and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
--------
however, that no such waiver, amendment, or consent shall, unless in writing and
-------
signed by all of the Lenders affected thereby and Administrative Borrower (on
behalf of all Borrowers) and acknowledged by Agent, do any of the following:
(a) increase or extend any Commitment of any Lender,
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees, or other
amounts due hereunder or under any other Loan Document,
(c) reduce the principal of, or the rate of interest on, any
loan or other extension of credit hereunder, or reduce any fees or other amounts
payable hereunder or under any other Loan Document,
(d) change the percentage of the Commitments that is required to
take any action hereunder,
(e) amend, modify or waive this Section or any provision of the
Agreement providing for consent or other action by all Lenders,
(f) release Collateral other than as permitted by Section 16.12,
-------------
(g) change the definition of "Required Lenders" or "Pro Rata
Share",
(h) contractually subordinate any of the Agent's Liens,
(i) release any Borrower or Guarantor Subsidiary from any
obligation for the payment of money, or
(j) increase the advance rate with respect to Advances (except
for the restoration of an advance rate after the prior reduction thereof),
127
(k) change the definitions of Borrowing Base, Eligible Accounts,
Eligible Inventory, Eligible Equipment, Maximum Revolver Amount, Maximum Term
Loan Amount, or change, or modify Section 2.1(b) or Section 2.4(b); or
-------------- --------------
(l) amend, modify or waive any of the provisions of Section 16,
Section 2.1(a) or Section 2.3(i).
-------------- --------------
and, provided further, however, that no amendment, waiver or consent shall,
-------- ------- -------
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, affect
the rights or duties of Agent, Issuing Lender, or Swing Lender, as applicable,
under this Agreement or any other Loan Document. The foregoing notwithstanding,
any amendment, modification, waiver, consent, termination, or release of, or
with respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.
15.2 Replacement of Holdout Lender If any action to be taken by the
-----------------------------
Lender Group or Agent hereunder requires the unanimous consent, authorization,
or agreement of all Lenders, and a Lender ("Holdout Lender") fails to give its
--------------
consent, authorization, or agreement, then Agent, upon at least 5 Business Days
prior irrevocable notice to the Holdout Lender, may permanently replace the
Holdout Lender with one or more substitute Lenders (each, a "Replacement
-----------
Lender"), and the Holdout Lender shall have no right to refuse to be replaced
------
hereunder. Such notice to replace the Holdout Lender shall specify an effective
date for such replacement, which date shall not be later than 15 Business Days
after the date such notice is given.
Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance Agreement, subject only to the Holdout Lender being repaid its share
of the outstanding Obligations (including an assumption of its Pro Rata Share of
the Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance Agreement prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance Agreement. The replacement of any Holdout Lender
shall be made in accordance with the terms of Section 14.1. Until such time as
------------
the Replacement Lenders shall have acquired all of the Obligations, the
Commitments, and the other rights and obligations of the Holdout Lender
hereunder and under the other Loan Documents, the Holdout Lender shall remain
obligated to make the Holdout Lender's Pro Rata Share of Advances and to
purchase a participation in each Letter of Credit, in an amount equal to its Pro
Rata Share of the Risk Participation Liability of such Letter of Credit.
15.3 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
-------------------------------
exercise any right, remedy, or option under this Agreement or, any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No
128
waiver by Agent or any Lender will be effective unless it is in writing, and
then only to the extent specifically stated. No waiver by Agent or any Lender on
any occasion shall affect or diminish Agent's and each Lender's rights
thereafter to require strict performance by Borrowers of any provision of this
Agreement. Agent's and each Lender's rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
that Agent or any Lender may have.
16. AGENT; THE LENDER GROUP.
16.1 Appointment and Authorization of Agent. Each Lender hereby designates
--------------------------------------
and appoints Foothill as its representative under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes Agent to take such
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 16. The
----------
provisions of this Section 16 are solely for the benefit of Agent, and the
----------
Lenders, and Borrowers shall have no rights as a third party beneficiary of any
of the provisions contained herein. Any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document notwithstanding, Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only, that Foothill
is merely the representative of the Lenders, and only has the contractual duties
set forth herein. Except as expressly otherwise provided in this Agreement,
Agent shall have and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or refraining from
taking any actions that Agent expressly is entitled to take or assert under or
pursuant to this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent shall have the
right to exercise the following powers as long as this Agreement remains in
effect: (a) maintain, in accordance with its customary business practices,
ledgers and records reflecting the status of the Obligations, the Collateral,
the Collections, and related matters, (b) execute or file any and all financing
or similar statements or notices, amendments, renewals, supplements, documents,
instruments, proofs of claim, notices and other written agreements with respect
to the Loan Documents, (c) make Advances, for itself or on behalf of Lenders as
provided in the Loan Documents, (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents, (e) open and maintain such
bank accounts and cash management accounts as Agent deems necessary and
appropriate in accordance with the Loan Documents for the foregoing purposes
with respect to the Collateral and the Collections, (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group with respect
to Borrowers, the Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents, and (g) incur and pay
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such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
16.2 Delegation of Duties. Agent may execute any of its duties under this
--------------------
Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
16.3 Liability of Agent. None of the Agent-Related Persons shall (i) be
------------------
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by any Borrower or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of any Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the Books or properties of Borrowers or the books or
records or properties of any of Borrowers' Subsidiaries or Affiliates.
16.4 Reliance by Agent. Agent shall be entitled to rely, and shall be
-----------------
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrowers
or counsel to any Lender), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Loan Document unless Agent shall first receive
such advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by Lenders against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action. Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
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16.5 Notice of Default or Event of Default. Agent shall not be deemed to
-------------------------------------
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders, except
with respect to actual knowledge by an officer of Agent who is handling this
relationship with the Borrowers of the existence of an Overadvance and except
with respect to Defaults and Events of Default of which an officer of Agent who
is handling the relationship with the Borrowers has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 16.4, Agent shall take such action with respect to such Default or Event
------------
of Default as may be requested by the Required Lenders in accordance with
Section 9; provided, however, that unless and until Agent has received any such
--------- -------- -------
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.
16.6 Credit Decision. Each Lender acknowledges that none of the Agent-
---------------
Related Persons has made any representation or warranty to it, and that no act
by Agent hereinafter taken, including any review of the affairs of Borrowers and
their Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to the Lenders by Agent, Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrowers and any other
Person party to a Loan Document that may come into the possession of any of the
Agent-Related Persons.
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16.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender
-----------------------------------
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, reasonable attorneys fees
and expenses, costs of collection by outside collection agencies and auctioneer
fees and costs of security guards or insurance premiums paid to maintain the
Collateral, whether or not Borrowers are obligated to reimburse Agent or Lenders
for such expenses pursuant to the Loan Agreement or otherwise. Agent is
authorized and directed to deduct and retain sufficient amounts from Collections
received by Agent to reimburse Agent for such out-of-pocket costs and expenses
prior to the distribution of any amounts to Lenders. In the event Agent is not
reimbursed for such costs and expenses from Collections received by Agent, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
Agent for the amount of such Lender's Pro Rata Share thereof. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of Borrowers and without limiting the obligation of Borrowers to do so),
according to their Pro Rata Shares, from and against any and all Indemnified
Liabilities; provided, however, that no Lender shall be liable for the payment
-------- -------
to any Agent-Related Person of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct nor
shall any Lender be liable for the obligations of any Defaulting Lender in
failing to make an Advance or other extension of credit hereunder. Without
limitation of the foregoing, each Lender shall reimburse Agent upon demand for
such Lender's ratable share of any costs or out-of-pocket expenses (including
attorneys fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
16.8 Agent in Individual Capacity. Foothill and its Affiliates may make
----------------------------
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in, and generally engage in any kind of banking,
lending, trust, financial advisory, underwriting, or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person party to
any Loan Documents as though Foothill were not Agent hereunder, and, in each
case, without notice to or consent of the other members of the Lender Group. The
other members of the Lender Group acknowledge that, pursuant to such activities,
Foothill or its Affiliates may receive information regarding Borrowers or their
Affiliates and any other Person (other than the Lender Group) party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrowers
or such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent will
use its reasonable best efforts to obtain), Agent shall not be under any
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obligation to provide such information to them. The terms "Lender" and "Lenders"
include Foothill in its individual capacity.
16.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
---------------
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 16 shall
----------
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
16.10 Lender in Individual Capacity. Any Lender and its respective
-----------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
Borrowers and their Subsidiaries and Affiliates and any other Person (other than
the Lender Group) party to any Loan Documents as though such Lender were not a
Lender hereunder without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Lender and its respective Affiliates may receive information
regarding Borrowers or their Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrowers or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender not shall be under any obligation to provide such
information to them. With respect to the Swing Loans and Agent Advances, Swing
Lender shall have the same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not the sub agent of the
Agent.
16.11 Withholding Taxes.
-----------------
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the IRC and such Lender claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the IRC, such
Lender agrees with and in favor of Agent and Borrowers, to deliver to Agent and
Administrative Borrower:
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(i) if such Lender claims an exemption from withholding tax
pursuant to its portfolio interest exception, (a) a statement of the
Lender, signed under penalty of perjury, that it is not a (I) a "bank"
as described in Section 881(c)(3)(A) of the IRC, (II) a 10%
shareholder (within the meaning of Section 881(c)(3)(B) of the IRC),
or (III) a controlled foreign corporation described in Section
881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and at
any other time reasonably requested by Agent or Administrative
Borrower;
(ii) if such Lender claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, properly completed
IRS Form W-8BEN before the first payment of any interest under this
Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the first payment of any interest is due under this Agreement
and at any other time reasonably requested by Agent or Administrative
Borrower;
(iv) such other form or forms as may be required under the IRC
or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form W-8BEN
and such Lender sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of Borrowers to such Lender, such
Lender agrees to notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrowers to such Lender. To the extent
of such percentage amount, Agent will treat such Lender's IRS Form W-8BEN as no
longer valid.
(c) If any Lender is entitled to a reduction in the applicable
withholding tax, Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding tax after taking into account
such reduction. If the forms or other documentation required by subsection (a)
of this Section are not delivered to Agent, then Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that Agent did not properly
withhold tax from amounts
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paid to or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Borrowers hereunder or under any note
or other Loan Document will be made without setoff, counterclaim, or other
defense, except as required by applicable law other than for Taxes (as defined
below). All such payments will be made free and clear of, and without deduction
or withholding for, any present or future taxes, levies, imposts, duties, fees,
assessments or other charges of whatever nature now or hereafter imposed by any
jurisdiction (other than the United States) or by any political subdivision or
taxing authority thereof or therein (other than of the United States) with
respect to such payments (but excluding, any tax imposed by any jurisdiction or
by any political subdivision or taxing authority thereof or therein (i) measured
by or based on the net income or net profits of a Lender, or (ii) to the extent
that such tax results from a change in the circumstances of the Lender,
including a change in the residence, place of organization, or principal place
of business of the Lender, or a change in the branch or lending office of the
Lender participating in the transactions set forth herein) and all interest,
penalties or similar liabilities with respect thereto (all such non-excluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed,
-----
each Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any note, including any amount paid pursuant to this Section
-------
16.11(e) after withholding or deduction for or on account of any Taxes, will not
--------
be less than the amount provided for herein; provided, however, that Borrowers
-------- -------
shall not be required to increase any such amounts payable to Agent or any
Lender (i) that is not organized under the laws of the United States, if such
Person fails to comply with the other requirements of this Section 16.11, or
-------------
(ii) if the increase in such amount payable results from Agent's or such
Lender's own willful misconduct or gross negligence. Borrowers will furnish to
Agent as promptly as possible after the date the payment of any Taxes is due
pursuant to applicable law certified copies of tax receipts evidencing such
payment by Borrowers .
16.12 Collateral Matters.
------------------
(a) The Lenders hereby irrevocably authorize Agent, at its
option and in its sole discretion, to release or subordinate any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrowers of all Obligations, (ii) constituting property
being sold or disposed of if a release is required or desirable in connection
therewith and if Administrative Borrower certifies to Agent that the sale or
disposition is permitted under Section 7.4 of this Agreement or the other Loan
-----------
135
Documents (and Agent may rely conclusively on any such certificate, without
further inquiry), (iii) constituting property in which no Borrower owned any
interest at the time the security interest was granted or at any time
thereafter, (iv) constituting Inventory and the sale thereof by a Borrower to a
purchaser in the ordinary course of business, including the release of Liens on
a vessel under construction and Collateral included therein in favor of a
purchaser under a Title Transfer Construction Contract, (v) to clarify the
senior Lien position of a secured creditor providing purchase money financing
constituting Permitted Purchase Money Indebtedness, or (vi) constituting
property leased to a Borrower under a lease that has expired or is terminated in
a transaction permitted under this Agreement. Except as provided above, Agent
will not execute and deliver a release of any Lien on any Collateral without the
prior written authorization of (y) if the release is of all or any substantial
portion of the Collateral, all of the Lenders, or (z) otherwise, the Required
Lenders. Upon request by Agent or Administrative Borrower at any time, the
Lenders will confirm in writing Agent's authority to release any such Liens on
particular types or items of Collateral pursuant to this Section 16.12;
-------------
provided, however, that (1) Agent shall not be required to execute any document
-------- -------
necessary to evidence such release on terms that, in Agent's opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Lien without recourse, representation, or
warranty, and (2) such release shall not in any manner discharge, affect, or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of Borrowers in respect of) all interests retained by
Borrowers in the Collateral, including, the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.
(b) Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by Borrowers or is
cared for, protected, or insured or has been encumbered, or that the Agent's
Liens have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, absent
Agent's gross negligence or willful misconduct, in its sole discretion given
Agent's own interest in the Collateral in its capacity as one of the Lenders and
that Agent shall have no other duty or liability whatsoever to any Lender as to
any of the foregoing, except as otherwise provided herein.
16.13 Restrictions on Actions by Lenders; Sharing of Payments.
-------------------------------------------------------
(a) Each of the Lenders agrees that it shall not, without the
express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrowers or any deposit accounts of
Borrowers now or hereafter maintained with such Lender. Lenders however shall
not have any set off rights as to the Title XI Reserve Fund, the Construction
Fund and the Construction Moneys Fund. Each of the Lenders further
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agrees that it shall not, unless specifically requested to do so by Agent, take
or cause to be taken any action, including, the commencement of any legal or
equitable proceedings, to foreclose any Lien on, or otherwise enforce any
security interest in, any of the Collateral the purpose of which is, or could
be, to give such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) If, at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff, or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations arising under, or relating to, this
Agreement or the other Loan Documents, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender's Pro Rata Share portion of
all such distributions by Agent, such Lender promptly shall (1) turn the same
over to Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in immediately available funds, as applicable,
for the account of all of the Lenders and for application to the Obligations in
accordance with the applicable provisions of this Agreement, or (2) purchase,
without recourse or warranty, an undivided interest and participation in the
Obligations owed to the other Lenders so that such excess payment received shall
be applied ratably as among the Lenders in accordance with their Pro Rata
Shares; provided, however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as applicable, and the
applicable portion of the purchase price paid therefor shall be returned to such
purchasing party, but without interest except to the extent that such purchasing
party is required to pay interest in connection with the recovery of the excess
payment.
16.14 Agency for Perfection. Agent hereby appoints each other Lender as
---------------------
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent's Liens in Collateral which, in accordance with Article 9
of the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor shall deliver such Collateral to Agent or
in accordance with Agent's instructions.
16.15 Payments by Agent to the Lenders. All payments to be made by Agent
--------------------------------
to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to Agent. Concurrently with
each such payment, Agent shall identify whether such payment (or any portion
thereof) represents principal, premium, or interest of the Obligations.
16.16 Concerning the Collateral and Related Loan Documents. Each member of
----------------------------------------------------
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Agent in accordance with the terms of this Agreement or the other Loan Documents
relating to the Collateral and the
137
exercise by Agent of its powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be binding upon all
of the Lenders.
16.17 Field Audits and Examination Reports; Confidentiality; Disclaimers
------------------------------------------------------------------
by Lenders; Other Reports and Information. By becoming a party to this
-----------------------------------------
Agreement, each Lender:
(a) is deemed to have requested that Agent furnish such Lender,
promptly after it becomes available, a copy of each field audit or examination
report (each a "Report" and collectively, "Reports") prepared by or at the
------ -------
request of Agent, and Agent shall so furnish each Lender with such Reports,
(b) expressly agrees and acknowledges that Agent does not (i)
make any representation or warranty as to the accuracy of any Report, and (ii)
shall not be liable for any information contained in any Report,
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Borrowers
and will rely significantly upon the Books, as well as on representations of
Borrowers' personnel,
(d) agrees to keep all Reports and other material, non-public
information regarding Borrowers and their Subsidiaries and their operations,
assets, and existing and contemplated business plans in a confidential manner;
it being understood and agreed by Borrowers that in any event such Lender may
make disclosures (a) to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender's rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any subpoena or other
legal process, or by any law, statute, regulation, or court order; provided,
--------
however, that, unless prohibited by applicable law, statute, regulation, or
-------
court order, such Lender shall notify Administrative Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof, and
(e) without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any such
other Lender preparing a Report harmless from any action the indemnifying Lender
may take or conclusion the indemnifying Lender may reach or draw from any Report
in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender's participation in, or the indemnifying Lender's purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and hold
Agent, and any such other Lender preparing a Report harmless
138
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
shall provide a copy of same to such Lender, (y) to the extent that Agent is
entitled, under any provision of the Loan Documents, to request additional
reports or information from Borrowers, any Lender may, from time to time,
reasonably request Agent to exercise such right as specified in such Lender's
notice to Agent, whereupon Agent promptly shall request of Administrative
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Administrative Borrower, Agent promptly
shall provide a copy of same to such Lender, and (z) any time that Agent renders
to Administrative Borrower a statement regarding the Loan Account, Agent shall
send a copy of such statement to each Lender.
16.18 Several Obligations; No Liability. Notwithstanding that certain
---------------------------------
of the Loan Documents now or hereafter may have been or will be executed only by
or in favor of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of the Lenders (if any) to make any
credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any Lender any interest
in, or subject any Lender to any liability for, or in respect of, the business,
assets, profits, losses, or liabilities of any other Lender. Each Lender shall
be solely responsible for notifying its Participants of any matters relating to
the Loan Documents to the extent any such notice may be required, and no Lender
shall have any obligation, duty, or liability to any Participant of any other
Lender. Except as provided in Section 16.7, no member of the Lender Group shall
------------
have any liability for the acts or any other member of the Lender Group. No
Lender shall be responsible to any Borrower or any other Person for any failure
by any other Lender to fulfill its obligations to make credit available
hereunder, nor to advance for it or on its behalf in connection with its
Commitment, nor to take any other action on its behalf hereunder or in
connection with the financing contemplated herein.
1 7. GENERAL PROVISIONS.
1 7.1 Effectiveness. This Agreement shall be binding and deemed
-------------
effective when executed by Borrowers, Agent, and each Lender whose signature is
provided for on the signature pages hereof.
139
17.2 Section Headings. Headings and numbers have been set forth herein
----------------
for convenience only. Unless the contrary is compelled by the context,
everything contained in each Section applies equally to this entire Agreement.
17.3 Interpretation. Neither this Agreement nor any uncertainty or
--------------
ambiguity herein shall be construed or resolved against the Lender Group or
Borrowers, whether under any rule of construction or otherwise. On the contrary,
this Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.
17.4 Severability of Provisions. Each provision of this Agreement
--------------------------
shall be severable from every other provision of this Agreement for the purpose
of determining the legal enforceability of any specific provision.
17.5 Amendments in Writing. This Agreement only can be amended by a
---------------------
writing in accordance with Section 15.1.
------------
17.6 Counterparts; Telefacsimile Execution. This Agreement may be
-------------------------------------
executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, shall be deemed to be
an original, and all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
17.7 Revival and Reinstatement of Obligations. If the incurrence or
----------------------------------------
payment of the Obligations by any Borrower or any Guarantor Subsidiary or the
transfer to the Lender Group of any property should for any reason subsequently
be declared to be void or voidable under any state or federal law relating to
creditors' rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (collectively, a "Voidable Transfer"), and if
-----------------
the Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
Group is required or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto, the liability
of Borrowers or any Guarantor Subsidiary automatically shall be revived,
reinstated, and restored and shall exist as though such Voidable Transfer had
never been made.
17.8 Integration. This Agreement, together with the other Loan
-----------
Documents, reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
140
17.9 Parent as Agent for Borrowers. Each Borrower hereby irrevocably
-----------------------------
appoints Parent as the borrowing agent and attorney-in-fact for all Borrowers
(the "Administrative Borrower") which appointment shall remain in full force and
-----------------------
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to obtain Advances and Letters of Credit and to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that Lender Group shall not incur
liability to any Borrower as a result hereof. Each Borrower expects to derive
benefit, directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each Borrower
is dependent on the continued successful performance of the integrated group. To
induce the Lender Group to do so, and in consideration thereof, each Borrower
hereby jointly and severally agrees to indemnify each member of the Lender Group
and hold each member of the Lender Group harmless against any and all liability,
expense, loss or claim of damage or injury, made against the Lender Group by any
Borrower or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of Borrowers as herein
provided, (b) the Lender Group's relying on any instructions of the
Administrative Borrower, or (c) any other action taken by the Lender Group
hereunder or under the other Loan Documents, except that Borrowers will have no
liability to the relevant Agent-Related Person or Lender-Related Person under
this Section 17.9 with respect to any liability that has been finally determined
------------
by a court of competent jurisdiction to have resulted solely from the gross
negligence or willful misconduct of such Agent-Related Person or Lender-Related
Person, as the case may be.
[Signature page to follow.]
141
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
XXXXXX XXXXXXX HALTER, INC.,
a Mississippi corporation XXXXXX XXXXXXX OFFSHORE
TEXAS, LIMITED PARTNERSHIP, a
Louisiana limited partnership
By:___________________________________ By: Maritime Holdings, Inc., a
Name: Xxxxx X. Xxxxxxxx Delaware corporation, its
Title: Senior Vice President-Treasurer General Partner
AMCANE COMPANY, a Minnesota XXXXX XXXXXX, INC., a Louisiana
corporation corporation
XXXXXX XXXXXXX HALTER
ENGINEERED PRODUCTS GROUP,
INC., a Delaware corporation
TDI-HALTER, L.L.C., a Louisiana GULF COAST FABRICATION, INC., a
limited liability company Mississippi corporation
HALTER MARINE GULFPORT, INC., a
By:___________________________________ Nevada corporation
Name: Xxxxx X. Xxxxxxxx
Title: Authorized Representative for HALTER MARINE, INC., a Louisiana
the three above referenced corporation
Borrowers
HALTER MARINE, INC., a Nevada
AMCLYDE ENGINEERED PRODUCTS corporation
COMPANY, INC., a Delaware
corporation HALTER MARINE PASCAGOULA,
INC., a Delaware corporation
BRISSONNEAU & XXXX MARINE
USA, INC., a Delaware corporation HALTER MARINE SERVICES INC., a
Mississippi corporation MARITIME HOLDINGS, INC., a
Delaware corporation
XXXXXX XXXXXXX DELAWARE,
INC., a Delaware corporation OFFSHORE MARINE INDEMNITY
COMPANY, a Vermont corporation
XXXXXX XXXXXXX OFFSHORE, INC.,
a Mississippi corporation
142
TDI-ORANGE, L.L.C., a Louisiana
limited liability company
TDI-ORANGE LIMITED
PARTNERSHIP, a Louisiana limited
partnership
By: Maritime Holdings, Inc., a
Delaware corporation, its
General Partner
UTILITY STEEL FABRICATION, INC.,
a Louisiana corporation
WORLD RIG LEASING COMPANY, a
Delaware corporation
By:______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President for
each of the nineteen above
referenced Borrowers
FOOTHILL CAPITAL CORPORATION,
a California corporation, as
Agent and as a
Lender
By:______________________________
Name: Xxxxx X. Xxxx
Title: Vice President
ALBECO FINANCE, L.L.C., a
Delaware limited liability
company as a Lender
By:______________________________
Name: Xxxxx X. Genda
Title: Senior Vice President
143
EXHIBIT A-1
-----------
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Assignment Agreement") is
entered into as of ____________________ between ________________ ("Assignor")
and ______________________ ("Assignee"). Reference is made to the Agreement
described in Item 2 of Annex I annexed hereto (the "Loan Agreement").
------ -------
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed to them in the Loan Agreement.
In accordance with the terms and conditions of Section 14 of the Loan
Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor's rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and Assignor's
portion of the Total Commitments, the Revolver Commitments, and the Term Loan
Commitments, all as specified in Item 4.b and Item 4.c of Annex I. After giving
-------- -------- -------
effect to such sale and assignments, the Assignee's portion of the Total
Commitments, Revolver Commitments, and the Term Loan Commitments will be as set
forth in Item 4.b of Annex I. After giving effect to such sale and assignment
--------
the Assignor's amount and portion of the Total Commitments, Revolver
Commitments, and the Term Loan Commitments will be as set forth in Item 4.d and
--------
Item 4.e of Annex I.
--------
The Assignor (a) represents and warrants that it is the legal and
beneficial owner of the interest being assigned by it hereunder and that such
interest is free and clear of any adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any other instrument or document furnished
pursuant thereto; and (c) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower or any of
its Subsidiaries or the performance or observance by any Borrower or any of its
Subsidiaries of any of their respective obligations under the Loan Documents or
any other instrument or document furnished pursuant thereto.
The Assignee (a) confirms that it has received copies of the Loan
Agreement and the other Loan Documents, together with copies of the financial
statements referred to therein and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment Agreement; (b) agrees that it will, independently and
without reliance, as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents;
(c) confirms that it is eligible as an assignee under the terms of the Loan
Agreement; (d)
-1-
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Loan Documents as are delegated to Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (e) agrees that it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender [and (f) attaches the forms prescribed by the
Internal Revenue Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States withholding
taxes with respect to all payments to be made to the Assignee under the Loan
Agreement or such other documents as are necessary to indicate that all such
payments are subject to such rates at a rate reduced by an applicable tax
treaty.]
Following the execution of this Assignment Agreement by the Assignor
and Assignee, it will be delivered by the Assignor to the Agent for recording by
the Agent. The effective date of this Assignment (the "Settlement Date") shall
be the later of (a) the date of the execution hereof by the Assignor and the
Assignee, the payment by Assignor or Assignee to Agent for Agent's sole and
separate account a processing fee in the amount of $5,000, and the receipt of
any required consent of the Agent, and (b) the date specified in item 5 of Annex
------ -----
I.
-
Upon recording by the Agent, as of the Settlement Date (a) the
Assignee shall be a party to the Loan Agreement and, to the extent of the
interest assigned pursuant to this Assignment Agreement, have the rights and
obligations of a Lender thereunder and under the other Loan Documents, and (b)
the Assignor shall, to the extent of the interest assigned pursuant to this
Assignment Agreement, relinquish its rights and be released from its obligations
under the Loan Agreement and the other Loan Documents.
Upon recording by the Agent, from and after the Settlement Date, the
Agent shall make all payments under the Loan Agreement and the other Loan
Documents in respect of the interest assigned hereby (including, without
limitation, all payments or principal, interest and commitment fees (if
applicable) with respect thereto) to the Assignee. Upon the Settlement Date, the
Assignee shall pay to the Assignor the Assigned Share (as set forth in Item 4.b
--------
of Annex I) of the principal amount of any outstanding loans under the Loan
Agreement and the other Loan Documents. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Loan Agreement and the other Loan
Documents for periods prior to the Settlement Date directly between themselves
on the Settlement Date.
THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Remainder of page left intentionally blank.]
-2-
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement and Annex I hereto to be executed by their respective officers
-------
thereunto duly authorized, as of the first date above written.
[NAME OF ASSIGNOR]
as Assignor
By___________________________________
Title:_______________________________
[NAME OF ASSIGNEE]
as Assignee
By:__________________________________
Title:_______________________________
ACCEPTED THIS ____ DAY OF
_____________
FOOTHILL CAPITAL CORPORATION,
AS AGENT
By:___________________________
Title:________________________
-3-
ANNEX FOR ASSIGNMENT AND ACCEPTANCE
ANNEX I
1. Borrowers: Xxxxxx Xxxxxxx Halter, Inc., a Mississippi corporation, and
each of its Subsidiaries party to the below referenced Loan Agreement.
2. Name and Date of Loan Agreement: Amended and Restated Loan and Security
Agreement, dated as of October 24, 2000, among the Borrowers, the
lenders signatory thereto as the Lenders, and Foothill Capital
Corporation, a California corporation, as the arranger and
administrative agent for the Lenders.
3. Date of Assignment Agreement: _________
4. Amounts:
a. Assignor's Total Commitment $_________
i. Assignor's Revolver Commitment $_________
ii. Assignor's Term Loan Commitment $_________
b. Assigned Share of Total Commitment _________%
i. Assigned Share of Revolver Commitment _________%
ii. Assigned Share of Term Loan Commitment _________%
c. Assigned Amount of Total Commitment $_________
i. Assigned Amount of Revolver Credit
Commitment $_________
ii. Assigned Amount of Term Loan
Commitment $_________
d. Resulting Amount of Assignor's Total Commitment
after giving effect to the sale and Assignment
to Assignee $_________
i. Resulting Amount of Assignor's
Revolver Commitment $_________
-4-
ii. Resulting Amount of Assignor's Term
Loan Commitment $_________
e. Assignor's Resulting Share of Total Commitment
after giving effect to the Assignment to Assignee _________%
i. Assignor's Resulting Share of Revolving
Credit Commitment _________%
ii. Assignor's Resulting Share of the Term
Loan Commitment _________%
5. Settlement Date: _________
6. Notice and Payment Instructions, etc.
Assignee: Assignor:
7. Agreed and Accepted:
[ASSIGNOR] [ASSIGNEE]
By:___________________ By:______________________
Title:________________ Title:___________________
Accepted:
FOOTHILL CAPITAL CORPORATION, as Agent
By:______________________________
Title:___________________________
-5-
EXHIBIT C-1
(Form of Compliance Certificate)
[on Borrowers' letterhead]
To: Foothill Capital Corporation, as Agent
under the below-referenced Loan Agreement
0000 Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attn: Business Finance Division Manager
Re: Compliance Certificate dated __________________
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Loan
and Security Agreement, dated as of October 24, 2000 (the "Loan Agreement")
among Xxxxxx Xxxxxxx Halter, Inc., a Mississippi corporation ("Parent"), certain
of Parent's subsidiaries identified on the signature pages thereof (such
subsidiaries, together with Parent, collectively, jointly and severally, the
"Borrowers"), the lenders signatory thereto (the "Lenders"), and Foothill
Capital Corporation, a California corporation, as the arranger and
administrative agent for the Lenders ("Agent"). Capitalized terms used in this
Compliance Certificate have the meanings set forth in the Loan Agreement unless
specifically defined herein.
Pursuant to Section 6.3 of the Loan Agreement, the undersigned
-----------
officer of Parent hereby certifies that:
1. The financial information of Parent and its Subsidiaries
furnished in Schedule 1 attached hereto, has been prepared in accordance with
----------
GAAP (except for year- end adjustments and the lack of footnotes, in the case of
financial statements delivered under Section 6.3(a) of the Loan Agreement) and
--------------
fairly presents the financial condition of Parent and its Subsidiaries.
2. Such officer has reviewed the terms of the Loan Agreement
and has made, or caused to be made under his/her supervision, a review in
reasonable detail of the transactions and condition of the Borrowers during the
accounting period covered by the financial statements delivered pursuant to
Section 6.3 of the Loan Agreement.
-----------
3. Such review has not disclosed the existence on and as of
the date hereof, and the undersigned does not have knowledge of the existence as
of the date hereof, of any event or condition that constitutes a Default or
Event of Default, except for such conditions or events listed on Schedule 2
----------
attached hereto, specifying the nature and period of existence thereof and what
action Borrowers have taken, are taking, or propose to take with respect
thereto.
-1-
4. Borrowers are in timely compliance with all
representations, warranties, and covenants set forth in the Loan Agreement and
the other Loan Documents, except as set forth on Schedule 2 attached hereto.
----------
Without limiting the generality of the foregoing, Borrowers are in compliance
with the covenants contained in Section 7.20 of the Loan Agreement as
------------
demonstrated on Schedule 3 hereof.
----------
IN WITNESS WHEREOF, this Compliance Certificate is executed by
the undersigned this _____ day of _______________, ________.
Xxxxxx Xxxxxxx Halter, Inc.,
a Mississippi corporation
as Administrative Borrower
By: ________________________
Name:
Title:
-2-
SCHEDULE 3
----------
1. Minimum EBITDA.
--------------
(a) Parent's and its Subsidiaries' EBITDA for the _________
ending _________, ________ is $______________, which amount [is/is not] greater
than or equal to the amount set forth in Section 7.20(a)(i) of the Loan
Agreement for the corresponding period.
2. Minimum Adjusted Tangible Net Worth.
-----------------------------------
(a) The Adjusted Tangible Net Worth of Parent and its
Subsidiaries, as of the last day of the [fiscal quarter] [month] ending
___________, _____, is calculated as follows:
(i) Closing Date Adjusted Tangible
Net Worth: $92,000,000
(ii) 100% of Parent's cumulative
consolidated net earnings since the
Closing Date: $____________
(iii) 75% of the aggregate net cash
received by Parent from and after
the Closing Date from the sale of
any of its Stock: $____________
Item (i) plus Item (ii) plus
Item (iii) (= Adjusted Tangible Net Worth): $____________
(b) The Adjusted Tangible Net Worth set forth above [is/is
not] greater than or equal to the amount set forth in Section 7.20(a)(ii) of the
-------------------
Loan Agreement for the corresponding period.
3. Fixed Charge Coverage Ratio.
---------------------------
(a) The Fixed Charge Coverage Ratio of Parent and its
Subsidiaries, for the fiscal quarter ending __________, ____, is calculated as
follows
(i) EBITDA of Parent and its Subsidiaries
for the [3/6/9/12] month period then: $____________
-3-
(ii) Principal Indebtedness of Parent and
its Subsidiaries scheduled to be paid
or prepaid during such period: $___________
(iii) Gross interest expense of Parent and
its Subsidiaries for such period: $___________
(iv) Interest income of Parent and its
Subsidiaries for such period: $___________
(v) Non-cash accretion expense of Parent
and its Subsidiaries for such period: $___________
(vi) Non-cash amortization of debt
origination cost of Parent and its
Subsidiaries for such period: $___________
(vii) Operating Lease Obligations of Parent
and its Subsidiaries having a scheduled
due date during such period: $___________
Item (i) divided by the sum of
----------
Item (ii) plus Item (vii) plus the result of Item (iii)
---- ----
minus the sum of Item (iv) plus Item (v) plus Item (vi)
-----
(= Fixed Charge Coverage Ratio) ___ : ___
(b) The Fixed Charge Coverage Ratio set forth above [is/is
not] greater than or equal to the amount set forth in Section 7.20(a)(iii) of
--------------------
the Loan Agreement for the corresponding period.
4. Ratio of Senior Debt to EBITDA.
------------------------------
(a) The Senior Debt Coverage Ratio of Parent and its
Subsidiaries, as of the last day of the quarter ending ___________, _____, is
calculated as follows:
(i) Senior Debt outstanding as of the end of
such period: $__________
(ii) EBITDA of Parent and its Subsidiaries
for the [3/6/9/12] month period then
ended: $__________
Item (i) divided by Item (ii)
----------
(=Ratio of Senior Debt to EBITDA) ____ :
____
-4-
(b) The Ratio of Senior Debt to EBITDA set forth above [is/is
not] greater than or equal to the amount set forth in Section 7.20(a)(iv) of the
-------------------
Loan Agreement for the corresponding period.
5. Maximum Capital Expenditures.
----------------------------
(a) The aggregate amount of Capital Expenditures made or
committed to be made to date in the current fiscal year is $________________.
(b) The aggregate amount set forth above [is/is not] less than
or equal to the amount set forth in Section 7.20(b)(i) of the Loan Agreement for
------------------
the corresponding period.
-0-
XXXXXXX X-0
-----------
FORM OF LIBOR NOTICE
Foothill Capital Corporation, as Agent
under the below referenced Loan Agreement
0000 Xxxxxxxx Xxxxx
Xxxxx 0000 Xxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention:_______________________
Ladies and Gentlemen:
Reference hereby is made to that certain Amended and Restated Loan and
Security Agreement, dated as of October 24, 2000 (the "Loan Agreement"), among
--------------
Xxxxxx Xxxxxxx Halter, Inc., a Mississippi corporation (" Administrative
--------------
Borrower"), certain of Administrative Borrower's Subsidiaries signatory thereto
--------
(such Subsidiaries, together with Administrative Borrower, each a "Borrower" and
--------
collectively, jointly and severally, the "Borrowers"), the lenders signatory
---------
thereto (the "Lenders"), and Foothill Capital Corporation, a California
-------
corporation, as the arranger and administrative agent for the Lenders ("Agent").
-----
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Loan Agreement.
This LIBOR Notice represents the Borrowers' request to elect the LIBOR
Option with respect to outstanding Advances in the amount of $_____________ (the
"LIBOR Rate Component")[, and is a written confirmation of the telephonic notice
--------------------
of such election given to Agent].
Such LIBOR Rate Component will have an Interest Period of [1, 2, or 3]
month(s) commencing on ______________________.
This LIBOR Notice further confirms the Borrowers' acceptance, for
purposes of determining the rate of interest based on the LIBOR Rate under the
Loan Agreement, of the LIBOR Rate as determined pursuant to the Loan Agreement.
Administrative Borrower, on behalf of itself and the other Borrowers,
represents and warrants that (i) as of the date hereof, each representation or
warranty contained in or pursuant to any Loan Document, any agreement,
instrument, certificate, document or other writing furnished at any time under
or in connection with any Loan Document, and as of the effective date of any
advance, continuation or conversion requested above is true and correct in all
material respects (except to the extent any representation or warranty expressly
related to an earlier date), (ii) each of the covenants and agreements contained
in any Loan Document have been performed (to the extent required to be performed
on or before the date hereof or each such effective date), and (iii) no Default
or Event of Default has occurred and is continuing on the date hereof, nor will
any thereof occur after giving effect to the request above.
Dated:____________________________________
XXXXXX XXXXXXX HALTER, INC., a
Mississippi corporation, as Administrative
Borrower
By________________________________________
Name:_____________________________________
Title:____________________________________
Acknowledged by:
FOOTHILL CAPITAL CORPORATION,
as Agent
By:___________________________
Name:_________________________
Title:________________________
Schedule C-2
------------
Commitments
============================================================================================
Lender Revolver Commitment Term Loan Total Commitment
Commitment
============================================================================================
Foothill Capital $50,000,000 $ 50,000,000
Corporation
============================================================================================
Ableco Finance LLC $20,000,000 $40,000,000 $ 60,000,000
============================================================================================
============================================================================================
============================================================================================
============================================================================================
All Lenders $70,000,000 $40,000,000 $110,000,000
============================================================================================
