EXHIBIT 10.1
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CREDIT AGREEMENT
Among
THE LENDERS,
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
as Administrative Agent and Co-Arranger,
BANC ONE CAPITAL MARKETS, INC.,
as Co-Arranger and Syndication Agent,
and
XXXXXX XXXXXXX HALTER, INC.,
as Borrower
Dated as of November 3, 1999
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TABLE OF CONTENTS
Section 1. Definitions.............................................. 1
1.1 Certain Definitions...................................... 1
1.2 Accounting Terms......................................... 13
Section 2.............................................................. 13
2.1 Revolving Credit Facility................................ 13
2.2 Borrowing Base........................................... 14
2.3 LC Facility.............................................. 15
2.4 Counter Indemnity........................................ 15
2.5 Drawings Under Letters of Credit......................... 15
2.6 Variations............................................... 15
2.7 Security................................................. 16
2.8 Certificates............................................. 16
Section 3. The Notes................................................ 16
Section 4. Manner of Drawdown and Issuance of Letters of Credit..... 16
4.1 Manner of Drawdown or Issuance........................... 16
4.2 Disbursement of Funds.................................... 17
4.3 Failure to Borrow; Delay................................. 17
Section 5. Interest................................................. 17
5.1 Rate of Interest......................................... 17
5.2 Payment of Interest...................................... 18
5.3 Conversion of LIBOR Advance to Base Rate Advance......... 18
5.4 Overdue Payment of Principal and Interest................ 18
5.5 Compliance with Law...................................... 18
Section 6. Loan Payments............................................ 19
6.1 Payments on Non-Business Days............................ 19
6.2 Repayment of Revolving Credit Facility................... 19
6.3 Payment Procedure........................................ 20
6.4 Net Payments............................................. 20
6.5 Rights of Set-off........................................ 20
6.6 Changes in Circumstances................................. 21
6.7 Unavailability of Dollars................................ 22
6.8 Lockbox.................................................. 23
6.9 Tax Treaty............................................... 23
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Section 7. Security................................................. 24
7.1 Security Agreement, Mortgage and Pledge................. 24
7.2 Guaranty................................................. 24
7.3 Lockbox Agreement........................................ 24
7.4 Further Assurances....................................... 24
Section 8. Conditions Precedent..................................... 24
8.1 Documents Required as Conditions Precedent to the
Drawdown of the First Advance........................... 24
8.2 Additional Conditions Precedent to All Advances and
Letters of Credit....................................... 27
8.3 Waiver of Conditions Precedent........................... 28
Section 9. Fees and Expenses........................................ 28
9.1 Fees..................................................... 28
9.2 Expenses................................................. 28
9.3 General Indemnity........................................ 29
9.4 Survival................................................. 30
Section 10. Representations and Warranties of Borrower............... 30
10.1 Due Incorporation, Qualification, Etc.................... 30
10.2 Capacity................................................. 30
10.3 Authority and Enforceability............................. 30
10.4 Governmental Approvals................................... 31
10.5 Compliance with Other Instruments........................ 31
10.6 Financial Statements..................................... 31
10.7 Material Adverse Events.................................. 32
10.8 Litigation, Etc.......................................... 32
10.9 Principal Place of Business.............................. 32
10.10 Patent and Other Rights.................................. 32
10.11 Taxes.................................................... 32
10.12 Employee Retirement Income Security Act of 1974.......... 33
10.13 Investment Company Act of 1940........................... 33
10.14 Environmental Compliance................................. 33
10.15 Indebtedness............................................. 34
Section 11. Affirmative Covenants of the Borrower.................... 34
11.1 Financial Statements, Reports and Inspection............. 34
11.2 Insurance................................................ 36
11.3 Other Debt............................................... 36
11.4 Maintenance of Existence; Conduct of Business............ 36
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11.5 Financial Records........................................ 36
11.6 Environmental Compliance................................. 37
11.7 Environmental Notifications.............................. 37
11.8 Environmental Indemnification............................ 38
11.9 Year 2000 Compliance..................................... 38
Section 12. Negative Covenants of Borrower........................... 39
12.1 Liens.................................................... 39
12.2 Line of Business......................................... 41
12.3 Consolidation, Merger, Etc............................... 41
12.4 Modification of Agreements............................... 41
12.5 Indebtedness............................................. 41
12.6 Reportable Event......................................... 41
12.7 Change of Legal Structure................................ 41
12.8 Change of Place of Business.............................. 42
12.9 Subsidiaries............................................. 42
12.10 Sale of Fixed Assets or Accounts......................... 42
12.11 Leverage Ratio........................................... 42
12.12 Fixed Charge Coverage Ratio.............................. 42
12.13 Net Worth................................................ 42
12.14 Compliance with Federal Reserve Board Regulations........ 42
12.15 Loans and Investments.................................... 43
12.16 Contracts with Affiliates................................ 43
12.17 Dividends................................................ 44
12.18 Fiscal Years............................................. 44
Section 13. Events of Default........................................ 44
13.1 Events................................................... 44
Section 14. The Agent................................................ 46
14.1 Appointment and Duties of Agent.......................... 46
14.2 Discretion and Liability of Agent........................ 47
14.3 Event of Default......................................... 47
14.4 Consultation............................................. 47
14.5 Communications to and from Agent......................... 48
14.6 Limitations of Agency.................................... 48
14.7 No Representations or Warranty........................... 48
14.8 Lender Credit Decision................................... 48
14.9 Indemnity................................................ 49
14.10 Resignation.............................................. 49
14.11 Distribution............................................. 49
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14.12 Limitation of Suits...................................... 49
14.13 Right of Setoff.......................................... 49
Section 15. Miscellaneous............................................ 50
15.1 Entire Agreement......................................... 50
15.2 No Waiver................................................ 50
15.3 Survival................................................. 50
15.4 Notices.................................................. 50
15.5 Termination.............................................. 51
15.6 Severability of Provisions............................... 51
15.7 Successors and Assigns................................... 51
15.8 Assignment and Participation............................. 51
15.9 Counterparts............................................. 52
15.10 Jurisdiction............................................. 52
15.11 Choice of Law............................................ 53
15.12 Waiver of Jury Trial..................................... 53
15.13 Amendment and Waiver..................................... 53
15.14 No Oral Agreements....................................... 54
15.15 Headings, Etc............................................ 54
15.16 Taxes.................................................... 54
15.17 Controlling Agreement.................................... 54
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Exhibit A-1 - Form of Promissory Note
Exhibit A-2 - Form of Swing Note
Exhibit B - Request for Borrowing
Exhibit C - Request for Letter of Credit
Exhibit D - Borrowing Base Report
Exhibit E - Form of Letter of Credit
Exhibit F - Continuation/Conversion Notice
Exhibit G - Form of Assignment and Acceptance
Schedule 1 - Lenders
Schedule 2 - Vessels
Schedule 3 - Indebtedness Paid at Closing
Schedule 4 - Guarantors
Schedule 5 - Existing Letters of Credit
Schedule 6 - Real Property
Schedule 10.8 - Litigation
Schedule 12.1 - Existing Liens
Schedule 12.5 - Existing Indebtedness
Schedule 12.15 - Investments
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of November 3, 1999 (the "Credit
Agreement"), is among Xxxxxx Xxxxxxx Halter, Inc., a corporation organized and
existing under the laws of the State of Mississippi (the "Borrower"), the
financial institutions from time to time party hereto (the "Lenders"), Xxxxx
Fargo Bank (Texas), National Association, a national banking association, as
Administrative Agent and Co-Arranger (the "Agent"), and Bank One Capital
Markets, Inc., as Co-Arranger and Syndication Agent.
W I T N E S S E T H:
WHEREAS, the Lenders wish to make available to the Borrower a senior
secured revolving credit facility available to the Borrower in a principal
amount of up to Xxx Xxxxxxx Xxxxxx Xxxxxxx Xxxxxx Xxxxxx Dollars (USD
120,000,000) and to make a senior secured letter of credit facility available to
the Borrower in a principal amount of up to Forty-Four Million Two Hundred
Eighteen Thousand Two Hundred Fifty United States Dollars (USD 44,218,250) to
repay existing debt of the Borrower, to replace certain existing letters of
credit, to provide additional letter of credit capacity and to provide working
capital for the Borrower; and
NOW, THEREFORE, in consideration of the above recitals, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. Definitions.
1.1 Certain Definitions. As used herein, the following terms shall have
the following respective meanings:
"Acquisition" shall mean any transaction or series of transactions by which
the Borrower or any Guarantor acquires (x) any or all of the stock or other
securities of any class of any Person (other than Cash Equivalents) or (y) a
substantial portion of the assets, or a division or line of business of any
Person.
"Adjusted Commitment" means, as the context may require, either the
Revolving Loan Commitment or the LC Commitment as reduced from time to time in
accordance with Sections 2.1(b), 2.1(d) or 2.3(c), respectively, of this Credit
Agreement.
"Advance" means a Base Rate Advance or a LIBOR Advance (including a Swing
Line Advance).
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"Affiliate" of any Person means (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person and
(ii) any director or officer of such first Person or of any Person referred to
in clause (i) above. For the purposes of this definition "control" of any
Person includes (a) with respect to any corporation or other Person having
voting shares or the equivalent and elected directors, managers, or Persons
performing similar functions, the ownership or power to vote, directly or
indirectly shares or the equivalent representing 50% or more of the power to
vote in the election of directors, managers or Persons performing similar
functions, (b) ownership of 50% or more of the equity or beneficial interest in
any other entity and (c) the ability to direct the business and affairs of any
Person by acting as a general partner, manager or otherwise.
"Applicable Commitment Fee Percentage" shall mean, from the date of the
execution of this Agreement through the Maturity Date, the applicable percentage
per annum set forth below in the column entitled "Commitment Fee" for the
applicable period set forth below on the average daily amount by which the
Commitment exceeds an amount equal to the sum of outstanding Advances and the
face amount (including the Dollar Equivalent of the face amounts of outstanding
Offshore Currency Letters of Credit) of outstanding Tranche A and Tranche B
Letters of Credit.
Period Commitment Fee
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Level I: When the Borrower's Leverage Ratio is less
than 1.5 to 1.0 0.50%
Level II: When the Borrower's Leverage Ratio is
greater than or equal to 1.5 to 1.0 0.75%
Notwithstanding the foregoing table, the initial Applicable Commitment Fee
Percentage shall be 0.75%, from the date hereof until the earlier of (a)
December 31, 2000 and (b) the Voluntary Step Down Date. Any change in the
Applicable Commitment Fee Percentage shall be effective on the date the
applicable certificate described in Section 11.1(c) is due hereunder.
"Applicable Margin Amount" shall mean, at any time with respect to all
Advances, the basis points corresponding to the type of Advance and Borrower's
Leverage Ratio as set forth in the table below.
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Applicable Margin
(basis points)
-----------------------
Borrower's LIBOR Base Rate
Leverage Ratio Margin Margin
-------------- ------ ---------
Level I: less than 1.0 137.5 25.0
Level II: 3/1.00 to 1.50 175.0 50.0
Level III: 3/1.50 to 2.00 212.5 75.0
Level IV: 3/2.00 to 2.50 250.0 100.0
Level V: 3/2.50 275.0 125.0
Notwithstanding the foregoing table, the initial Applicable Margin Amount
for LIBOR Advances shall be 275 basis points and for Base Rate Advances shall be
125 basis points, from the date hereof until the earlier of (a) December 31,
2000 and (b) the Voluntary Step Down Date. Any change in the Applicable Margin
shall be effective on the date the applicable certificate described in Section
11.1(c) is due hereunder.
"Asset Sale" means the sale of any fixed assets, excluding sales in the
ordinary course of business in any calendar year, in a single transaction or a
series of related transactions, provided that such transaction or series of
transactions results in the receipt of Net Proceeds in excess of USD 2,500,000
per calendar year. Notwithstanding the foregoing, the following transactions
will be deemed not to be Asset Sales: (A) a sale of assets by the Borrower to a
Guarantor or by a Guarantor to the Borrower or to another Guarantor; (B) any
trade or exchange by the Borrower or any Guarantor of equipment or other assets
for equipment or other assets owned or held by another Person, provided that the
fair market value of the assets traded or exchanged by the Borrower or such
Guarantor (together with any cash or Cash Equivalents) is reasonably equivalent
to the fair market value of the assets (together with any cash or Cash
Equivalents) to be received by the Borrower or such Guarantor and (C) a sale of
assets which are promptly replaced thereafter by assets of a similar type and
value.
"Base Rate" means the sum of (a) on any day the higher of (i) the Prime
Rate in effect on that day, and (ii) the Federal Funds Rate in effect on that
day, plus (b) one-half of one percent (0.5%); provided that from the period
December 15, 1999 through January 31, 2000, the margin added to the Federal
Funds Rate for purposes of calculating the Base Rate shall be one and one-half
percent (1.5%).
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"Base Rate Advance" means an Advance as to which the Borrower has selected
the Base Rate to determine the interest rate or as to which the Base Rate has
been applied pursuant to Section 5.3(b) below.
"Borrowing Base" means at any time an aggregate amount equal to the sum
(without duplication) of (a) eighty percent (80%) of the face value of Eligible
Accounts, (b) fifty percent (50%) of Eligible Inventory and (c) thirty percent
(30%) of Net Investment in Work in Process; provided that no more than thirty
percent (30%) of the Borrowing Base shall consist of the aggregate of the
amounts set forth in subparagraphs (b) and (c) of this definition.
"Borrowing Base Report" means the Borrowing Base Report of the Borrower
substantially in the form of Exhibit D attached hereto.
"Breakage Cost" means any amount reasonably necessary to compensate the
Lender for actual costs or expenses incurred by the Lenders in connection with
the payment or acceleration of any LIBOR Advance (other than a Swing Line Loan)
, in whole or in part, whether voluntarily or involuntarily, on a date which is
not the last date of the then applicable Interest Period for the portion of any
LIBOR Advance (other than a Swing Line Loan) being paid, including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties.
"Business Day" means any day on which commercial banks are open for
business in San Francisco, California, Houston, Texas and London, England.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one (1) year from the
date of acquisition, (ii) time deposits (including Eurodollar time deposits) and
certificates of deposit of any bank meeting the qualifications specified in
clause (iv) below with maturities of not more than 90 days from the date of
acquisition, (iii) repurchase obligations with a term of not more than 90 days
for underlying securities of the types described in clause (i) entered into with
any bank meeting the qualifications specified in clause (iv) below, (iv)
commercial paper issued by the parent corporation of any bank referred to in
this clause (iv) or any commercial bank of recognized standing having capital
and surplus in excess of USD 300,000,000 and commercial paper rated at least A-2
or the equivalent thereof by Standard & Poor's Corporation or at least P-2 or
the equivalent thereof by Xxxxx'x Investor Services, Inc., and in each case
maturing within 90 days after the date of acquisition, (v) remarketed
certificates of participation issued through any bank meeting the qualifications
specified in clause (iv) above rated at least A-2 or the equivalent thereof by
Standard & Poor's Corporation or at least P-2 or the equivalent thereof by
Xxxxx'x Investor Services, Inc. and maturing within 90 days after the date of
acquisition; and (vi) investments by the Borrower in money market funds approved
by the Agent; provided that the investment guidelines
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for such funds have not changed in any material respect from those in effect on
the date of this Credit Agreement or the date of approval, as the case may be.
"Change of Control" means the occurrence of one or more of the following
events: (i) the Borrower shall cease to beneficially own, directly or
indirectly, 100% of the issued and outstanding shares of capital stock (measured
by ordinary voting power) of any Guarantor; (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of the Borrower to any Person or group of
related Persons for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended; (iii) the approval by the holders of the capital stock of the
Borrower of any plan or proposal for the liquidation or dissolution of the
Borrower; or (iv) the replacement of a majority of the Board of Directors of the
Borrower over a two year period from the directors who constituted the Board of
Directors of the Borrower at the beginning of such period, and such replacement
shall not have been approved by a vote of at least a majority of the Board of
Directors of the Borrower then still in office who either were members of such
Board of Directors at the beginning of such period of whose election as a member
of such Board of Directors was previously so approved.
"Closing Date" means the date on which the first Advance hereunder is made.
"Commitment" means a maximum of USD 164,218,250 as it may be reduced from
time to time pursuant to the provisions of this Credit Agreement.
"Commitment Percentage" means each Lender's portion of the Commitment as
shown opposite its name on Schedule 1 to this Credit Agreement.
"Confidential Information Memorandum" means the information and materials
provided in the Confidential Information Memorandum dated October 5, 1999 and
distributed to each Lender.
"Controlled Group" means a "controlled group of corporations" as defined in
Section 1563(a) of the Internal Revenue Code of 1986, as amended, determined
without regard to Section 1563(a)(4) and (e) (3) (C) of such Code, of which
Borrower or any Guarantor is a part.
"Dollar Equivalent" means on any date the equivalent amount in United
States Dollars of an amount expressed in an Offshore Currency as determined by
the Agent on such date on the basis of the Rate of Exchange on the last Business
Day of the most recent month.
"Dollars" and the sign "USD" mean lawful money of the United States of
America.
"Drawdown Date" means the date upon which an Advance is made or a Letter of
Credit is issued.
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"EBITDA" means, for any period, the consolidated earnings of the Borrower
during such period from continuing operations, before (i) gains or losses on
sales of assets (to the extent such gains or losses are included in earnings
from continuing operations), (ii) extraordinary items, as determined under GAAP,
(iii) federal, state, foreign and local income taxes, (iv) Interest Expense, and
(v) depreciation and amortization; provided, however, that following an
acquisition by the Borrower (including the acquisition of Halter Marine Group,
Inc.) or any of its subsidiaries, the calculation of EBITDA for the fiscal
quarter in which such acquisition occurred and each of the three fiscal quarters
immediately following such acquisition shall be made with reference to the
historical financial results of the Person, business, division or group of
assets acquired in such acquisition and the Borrower and its subsidiaries for
the applicable four quarter period (the "Test Period") after giving effect on a
pro forma basis to such acquisition and assuming that such acquisition had been
consummated at the beginning of the Test Period.
"Eligible Accounts" means, at any time, the aggregate amount of all
accounts receivable of the Borrower and its United States subsidiaries for the
sale of products or for services rendered for which invoices have been issued
and payment for which is due within ninety (90) days of the invoice date,
including without limitation, progress payments on current construction
projects. In determining accounts receivable constituting Eligible Accounts,
there shall be excluded (i) accounts receivable remaining unpaid for a period of
more than ninety (90) days from the date of invoice (or due date in the case of
instruments, lease agreements and chattel paper), (ii) accounts receivable
arising from sale to or services rendered for the Guarantors or any subsidiary
of the Guarantors or the Borrower, (iii) accounts receivable in which the Agent
does not have a first priority perfected security interest, (iv) accounts
receivable which are subject to a pending right of offset, claim or defense, (v)
that portion of accounts receivable due from suppliers of materials or inventory
to the Borrower equal to the amount that the Borrower is indebted to such
suppliers with respect to materials or supplies purchased by the Borrower from
such suppliers, (vi) accounts receivable from any Governmental Agency to the
extent the approval of such agency to the assignment thereof under the Security
Agreement has not been obtained, (vii) accounts receivable due from customers
known to be insolvent or in bankruptcy proceedings, (viii) accounts receivable
rejected in whole or in part by the Agent in its sole discretion as containing
unacceptable risk, (ix) that portion of any account which is more than twenty
percent (20%) of the Borrower's total accounts receivable; (x) the entire amount
owed by any party if more than fifty percent (50%) of all amounts owed by such
party to the Borrower are unpaid for more than ninety (90) days and (xi) any
retainage amounts for contracts which it is reasonably expected will not be
completed within one hundred eighty (180) days of their execution; provided,
however, that accounts receivable of any Canadian subsidiary of the Borrower may
be included in the Borrowing Base (subject to the other terms hereof) upon the
written request of the Borrower and consent of the Majority Lenders.
"Eligible Inventory" means the lesser of (a) the cost and (b) the fair
market value of all inventory, raw materials, parts and spare parts routinely
used by the Borrower and its United States subsidiaries in its business of the
construction and repair of vessels, rigs and similar equipment, which would be
accounted for as inventory under GAAP, and in which the Agent has a first
priority
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perfected security interest, but shall specially exclude any of the foregoing
that (i) is subject to a security interest or lien to any Person other than the
Agent other than liens described in clauses (a) and (b) of Section 12.1 or (ii)
is located in a jurisdiction other than a state of the United States; provided,
however, that inventory located in Canada may be included as Eligible Inventory
upon the written request of the Borrower and consent thereto by the Majority
Lenders.
"Equipment" shall have the meaning set forth in Section 1.01(e) of the
Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means each of the Events of Default described in Section
13 hereof.
"Existing Letters of Credit" means the Letters of Credit listed on Schedule
5 hereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent on
such day on overnight Federal funds transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means on a rolling four quarter basis, EBITDA
less capital expenditures used for the maintenance or repair of existing assets
and cash payments in respect of taxes, divided by the sum total of cash payments
in respect of Interest Expense, required principal payments on Indebtedness,
required payments under capital leases and cash dividends or distributions;
provided that for purposes of this calculation, the minimum level of "capital
expenditures used for the maintenance or repair of existing assets" shall be USD
12,000,000 irrespective of actual capital expenditures for such period.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States of America.
"General Syndication" means the assignment of some portion of the
Commitment by one or more of the original Lenders party hereto which will occur
subsequent to the first Drawdown Date, the amount and timing of which will be
determined by the Agent with the consent of the Majority Lenders. The Agent
will act as the sole book runner for any General Syndication and will determine
the final allocation of the Commitment among the Lenders.
"Governmental Agency" means any United States or foreign government or any
state, department or other political subdivision thereof or governmental body,
agency, authority,
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department or commission (including without limitation any court or tribunal)
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation, partnership or
other entity directly or indirectly owned by the foregoing.
"Guaranty" means the guaranty by the Guarantors of the Borrower's
obligations under this Credit Agreement and the Notes dated as of the date
hereof, as amended and ratified from time to time.
"Guarantors" means the subsidiaries of the Borrower listed on Schedule 4
attached hereto.
"Hazardous Substances" means petroleum and used oil, or any other pollutant
or contaminant, hazardous, dangerous or toxic waste, substance or material as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. (S) 9601, et seq. (hereinafter called
"CERCLA"); the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
(S) 9601, et seq. (hereinafter called "RCRA"); the Toxic Substances Control Act,
as amended, 15 U.S.C. (S) 2601, et seq. (hereinafter called "TSCA"); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. (S) 1801, et seq.
(hereinafter called "HMTA"); the Oil Pollution Act of 1990, 33 U.S.C. (S) 2701
et seq. (hereinafter called "OPA"); or any other statute, law, ordinance, code
or regulation of any Governmental Agency relating to or imposing liability or
standards of conduct concerning the use, production, generation, treatment,
storage, recycling, handling, transportation, release, threatened release or
disposal of any waste, substance or material, currently in effect or at any time
hereafter adopted.
"Indebtedness" of the Borrower or the Guarantors means (without
duplication); (a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments; (b) any direct or contingent obligations of such Person
arising under financial letters of credit, banker's acceptances, bank
guarantees, and all drawn but unreimbursed obligations arising under letters of
credit (other than financial letters of credit); (c) all obligations of such
person as lessee under capitalized leases which have been or should become in
accordance with GAAP, recorded as capitalized lease obligations; (d) all
leveraged leases and synthetic leases in which the Borrower or a Guarantor is
the lessee; (e) all obligations of such Person to pay the deferred purchase
price of property or services, and (f) obligations described in clauses (a)
through (d) above and secured by a lien on property owned by such Person
(including indebtedness arising under conditional sales or other title retention
agreements) whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; and (g) all guarantee obligations of such
Person in respect of any of the foregoing.
"Indemnity Payment" means a payment by the Borrower to the Agent equal to
the amount each Lender has paid to a beneficiary under a Letter of Credit or its
Dollar Equivalent as of the date of payment to such beneficiary as determined by
the Agent, in accordance with the terms and conditions of such Letter of Credit
and this Credit Agreement.
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"Interest Expense" means, with respect to any Person, for any period of
determination, its interest expense determined in accordance with GAAP.
"Interest Payment Date" means, with respect to any Base Rate Advance, the
last Business Day of each calendar quarter and, with respect to any LIBOR
Advance, the last day of the relevant Interest Period except if such Interest
Period is longer than three (3) months, every three (3) months and the last day
of such Interest Period.
"Interest Period" means with respect to any LIBOR Advance, each period
selected by the Borrower for which the rate of interest on such LIBOR Advance is
fixed being the period commencing on the date of the LIBOR Advance or the date
of the expiration of the preceding Interest Period for such LIBOR Advance and
ending on the corresponding day in the calendar month selected by the Borrower
which is one (1) month, two (2) months, three (3) months or six (6) months later
or, if such month has no numerical corresponding day, on the last Business Day
of such month. If the last day of any such Interest Period is not a Business
Day, then such Interest Period shall end on the next succeeding Business Day,
subject to Section 6.1 hereof. If any Interest Period determined hereunder
would extend beyond the Maturity Date, such Interest Period shall end on the
Maturity Date.
"Issuing Lender" means Xxxxx Fargo Bank, N.A., Bank One, N.A., any
affiliate thereof, or any Lender approved by the Agent and the Borrower.
"LC Commitment" means a maximum of USD 44,218,250 as it may be reduced from
time to time pursuant to the provisions of this Credit Agreement.
"LC Facility" means the senior secured letter of credit facility set forth
in Section 2.3.
"Letter of Credit" means a Tranche A Letter of Credit or a Tranche B Letter
of Credit.
"Leverage Ratio" means, for any period, the ratio of the Borrower's Senior
Debt to EBITDA for such period, calculated at the end of each fiscal quarter for
the immediately preceding twelve-month period.
"LIBOR Advance" means an Advance as to which the Borrower has selected the
LIBOR Rate.
"LIBOR Rate" means in respect of any Interest Period, the rate of interest
per annum at which deposits in U.S. Dollars are offered to major banks in the
London interbank market at approximately 11:00 a.m. (London time), as reported
by the Telerate System page 3750 or such other page as may replace such page
3750 on such system (rounded upwards, if necessary, to the nearest one-sixteenth
of one percent) for the purpose of reporting London Interbank Offered Rates of
major banks under the heading for British Bankers Association Interest
Settlement Rates in the column designated "USD" (U. S. Dollar), two (2) Business
Days before the first day of an Interest Period. In the event that LIBOR
interest rates are not reported on the Telerate System or such reported rates
are not applicable to the selected Interest Period, the Agent shall notify the
Borrower and upon such
9
notification, the LIBOR Rate shall mean in respect of any Interest Period the
rate of interest per annum (rounded upwards, if necessary, to the nearest one
sixteenth of one percent) at which the Lenders are able to acquire funds in
Dollars equal to the outstanding amount of the Advance for which the rate is to
be determined for the duration of the relevant Interest Period in the London
Interbank Eurocurrency Market at or about 11:00 a.m. London time on the second
Business Day prior to the commencement of the relevant Interest Period for value
on the first day of such Interest Period, or at such time in any alternative
market for such funds available to the Lenders, as notified by the Agent to the
Borrower, such notification, absent manifest error, to be conclusive.
"Loan" means the principal amounts advanced by the Lenders hereunder and
outstanding, the face amounts of all Letters of Credit outstanding hereunder,
(including the Dollar Equivalent of the face amounts of outstanding Offshore
Currency Letters of Credit), the principal amount of outstanding Swing Line
Advances, and the principal amount of any unpaid Indemnity Payments outstanding
hereunder.
"Loan Documents" means this Credit Agreement, the Security Agreements, the
Mortgages, the Ship Mortgages, the Pledges, the Guaranty, the Lockbox Agreement,
the Notes and the Swing Note.
"Lockbox Agreement" means the agreement between the Borrower and the Agent
establishing the lock box arrangement for the accounts receivable of the
Borrower, in form and substance satisfactory to the Agent.
"Majority Lenders" shall mean Lenders having Commitment Percentages
comprising fifty-one percent (51%) or more of the Commitment Percentages, or, if
the Commitments have been terminated or canceled in full, Lenders owed fifty-one
percent (51%) or more of the outstanding Advances.
"Material adverse effect" or "materially adversely affected" means, unless
specified otherwise, to affect in a material manner the ability of the Borrower
to perform its obligations under this Credit Agreement or any other Indebtedness
greater than USD 2,000,000 or the ability of the Guarantors to perform their
obligations under the Guaranty or any other Indebtedness greater than USD
2,000,000.
"Maturity Date" means November 3, 2002.
"Mortgages" means the Mortgages, Deeds of Trust, Security Agreements and
Assignments of Leases and Rents to be executed by the Borrower and certain of
the Guarantors in respect of certain real properties as listed in Schedule 6
hereto.
"Net Investment in Work in Process" means, for any construction or repair
contract to which the Borrower or any United States subsidiary of the Borrower
is party, the amount by which (a) the aggregate of (i) the cost of the hulls,
machinery, parts and materials, engines, equipment, decks,
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cranes, masts, and similar such items in respect of such contract ("Cost") plus
(ii) the excess of estimated earnings from such contract over the xxxxxxxx
therefor, exceeds (b) the excess of xxxxxxxx for such contract over the Costs
therefor; excluding, however, any work-in-process under contracts in which the
Borrower grants progressive title in the vessel to the contracting party.
"Net Proceeds" means the aggregate cash proceeds received by the Borrower
or any Guarantor in respect of any Asset Sale, net of (without duplication) (a)
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, sales commissions, recording
fees, title transfer fees, title insurance premiums, appraiser fees and costs
incurred in connection with preparing such asset for sale) and any relocation
expenses incurred as a result thereof, (b) taxes paid or estimated to be payable
as a result thereof, (c) amounts required to be applied to the repayment of
Indebtedness (other than under this Agreement) secured by a lien on the asset or
assets that were the subject of such Asset Sale and (d) any reserve established
in accordance with GAAP or any amount placed in escrow, in either case for
adjustment in respect of the sale price of such asset or assets, until such time
as such reserve is reversed or such escrow arrangement is terminated, in which
case Net Proceeds shall include only the amount of the reserve so reversed or
the amount returned to the Borrower or the Guarantor from such escrow
arrangement, as the case may be.
"Net Worth" means the stockholders equity of the Borrower and its
subsidiaries determined on a consolidated basis in accordance with GAAP.
"Notes" means the secured promissory notes of the Borrower in the aggregate
original principal amount of USD 164,218,250, substantially in the form of
Exhibit A-1 hereto, including without limitation the Swing Note, and all
renewals, extensions, rearrangements and replacements thereof.
"Obligations" means and includes all loans, advances, debts, liabilities,
obligations, letters of credit or any other financial accommodations, howsoever
arising, owing by the Borrower to the Agent and the Lenders pursuant to the
terms of this Credit Agreement, the Notes and the other Loan Documents of every
kind and description (whether or not for the payment of money); direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including, without limitation, all interest and other
expenses that the Borrower is obligated to pay thereunder.
"Ocean Rig Dispute" means the dispute between the Borrower and Ocean Rig
ASA, Inc. concerning the construction, delivery and price of the Bingo 9001 and
Bingo 9002 drilling rigs.
"Offshore Currency" means any lawful currency (other than United States
Dollars) that the relevant Issuing Lender with respect to any Offshore Currency
Letter of Credit, in its sole reasonable opinion, at any time determines to be
(a) freely traded in the offshore interbank foreign exchange markets, (b) freely
transferable and (c) freely convertible into United States Dollars.
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"Offshore Currency Letter of Credit" means any Letter of Credit denominated
in an Offshore Currency.
"Permitted Liens" has the meaning provided in Section 12.1 hereof.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, government, Governmental Agency or any
other entity other than the Borrower and its subsidiaries and whether acting in
an individual, fiduciary or other capacity.
"Plan" means any employee pension benefit plan subject to Title IV of ERISA
and maintained by the Borrower or any member of a Controlled Group, or any such
plan, to which the Borrower or any member of a Controlled Group is required to
contribute on behalf of any of its employees.
"Pledges" means the Stock Pledge Agreement and Pledge Agreement, each dated
as of the date hereof executed by the Borrower and certain of the Guarantors in
favor of the Agent in respect of the issued and outstanding voting shares,
membership interests or partnership interests, as the case may be, of each of
the Guarantors, as amended from time to time.
"Prime Rate" means the rate announced by the Agent at its San Francisco,
California office from time to time as its prime rate, it being understood that
the Prime Rate is one of the Agent's base 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 the Agent may
designate. Each change in the Prime Rate will be effective on the day the
change is announced by the Agent.
"Rate of Exchange" means the Agent's then current selling rate of exchange
in San Francisco, California for sales of the currency of payment of any draft
drawn under an Offshore Currency Letter of Credit, or of any fees or expenses or
other amounts payable under this Credit Agreement or any Letter of Credit, for
cable transfer to the country of which such currency is the legal tender.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA (29 U.S.C. (S)1343), except events for which the notice provision has been
waived by the Pension Benefit Guaranty Corporation.
"Request for Borrowing" means each request for borrowing given by the
Borrower pursuant to Section 4.1(c) hereof, substantially in the form attached
hereto as Exhibit B.
"Request for Letter of Credit" means a Request for Letter of Credit given
by the Borrower pursuant to Section 4.1(d) hereof, substantially in the form
attached hereto as Exhibit C.
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"Revolving Credit Facility" means the USD 120,000,000 senior secured
revolving loan provided for in Section 2 of this Credit Agreement.
"Revolving Loan Commitment" means a maximum of USD 120,000,000 as it may be
reduced from time to time pursuant to the provisions of this Credit Agreement.
"Security Agreements" means the security agreements on certain of the
Borrower's and Guarantors' assets and revenues from the Borrower and the
Guarantors to the Agent dated as of the date hereof, as each may be amended in
the future, and shall include, without limitation, all fixture filings executed
by the Borrower and the Guarantors in favor of the Agent or for the benefit of
the Agent.
"Senior Credit Facilities" means the Revolving Credit Facility and the LC
Facility.
"Senior Debt" means the consolidated Indebtedness of the Borrower and its
subsidiaries less Subordinated Debt.
"Ship Mortgages" means the U.S. First Preferred Fleet Mortgages dated the
date hereof in favor of the Agent in respect of the Vessels, as amended from
time to time.
"Subordinated Debt" means (i) the convertible subordinated notes in the
aggregate principal amount of USD 185,000,000 issued by Halter Marine Group,
Inc. (the Borrower's predecessor-in-interest) on September 15, 1997, bearing
interest at 4.5% per annum, due 2004 and (ii) other Indebtedness of the Borrower
or the Guarantors which by its terms is expressly subordinated to the
Obligations as to right and time of payment and as to any other rights and
remedies thereunder to the satisfaction of the Majority Lenders.
"Swing Line" means the line of credit provided by the Agent pursuant to
Section 2.1(c).
"Swing Line Advances" has the meaning set forth in Section 2.1(c).
"Swing Note" means the promissory note of the Borrower payable to the order
of the Agent in substantially the form of the attached Exhibit "A-2", evidencing
indebtedness of the Borrower to the Agent from Swing Line Advances owing to the
Agent.
"Taxes" means any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any Governmental Agency or taxing
authority thereof other than any taxes on the net income or receipts of any
Lender (or any alternative or minimum Taxes imposed in lieu of any such Taxes),
and any franchise Taxes (or any alternative or minimum Taxes imposed in lieu of
any such Taxes) imposed on any Lender.
"Tranche A Letter of Credit" means a letter of credit issued pursuant to
Section 2.1, or any Existing Letter of Credit that is a performance letter of
credit.
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"Tranche B Letter of Credit" means a standby letter of credit issued
pursuant to the LC Facility, or any Existing Letter of Credit that is a
financial letter of credit.
"Vessels" means the U.S. flag vessels listed on Schedule 2 hereto.
"Voluntary Step Down Date" means the date prior to December 31, 2000 that
the Borrower, in its sole discretion, elects to step down the Leverage Ratio
requirement in Section 12.11 hereof from 2.75 to 1.0 to 2.5 to 1.0, but not
before the Borrower delivers its audited financial statements for the period
ending December 31, 1999 to the Agent.
1.2 Accounting Terms. Except as expressly stated herein, all accounting
terms not specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in preparation of the consolidated financial
statements of the Borrower referred to in Section 11.1 hereof.
Section 2.
2.1 Revolving Credit Facility.
(a) Upon the terms and subject to the conditions herein set forth,
the Lenders severally agree to make the senior secured revolving credit
available to the Borrower by, from time to time prior to the Maturity Date,
making one or more Advances to the Borrower or by having the Issuing Lender
issue one or more Tranche A Letters of Credit (including, subject to Section 2.9
hereof, Offshore Currency Letters of Credit), for the account of the Borrower,
provided that the aggregate face amount of all Tranche A Letters of Credit
outstanding hereunder (including the Dollar Equivalent of the face amounts of
outstanding Offshore Currency Letters of Credit) shall not at any time exceed
USD 25,000,000, and provided further that the principal amounts of all
outstanding Advances and the face amount of Tranche A Letters of Credit
(including the Dollar Equivalent of the face amounts of outstanding Offshore
Currency Letters of Credit) shall not exceed, in the aggregate, the Revolving
Loan Commitment. No Tranche A Letter of Credit shall have a duration in excess
of one (1) year except with the consent of the Agent and no Tranche A Letter of
Credit shall have a duration beyond the Maturity Date. Within such limit, the
Borrower may borrow, repay pursuant to Section 6.2(a) and reborrow under this
Section 2.1. Each Advance by the Borrower from the Lenders under this Section
shall be in an aggregate principal amount of at least USD 500,000 and in
integral multiples of USD 100,000 in the case of each Base Rate Advance, and at
least USD 2,000,000 and in integral multiples of USD 100,000 in the case of each
LIBOR Advance.
(b) The Borrower may reduce the Revolving Loan Commitment, in integral
multiples of USD 1,000,000, upon five (5) days prior written notice to the
Agent. No subsequent increase of the Revolving Loan Commitment shall be
allowed.
(c) On the terms and conditions set forth in this Credit Agreement,
the Agent shall from time to time on any Business Day during the period from the
date of this Credit
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Agreement until the Maturity Date make advances ("Swing Line Advances") under
the Swing Note to the Borrower in an aggregate outstanding principal amount not
to exceed Twelve Million and No/100 Dollars ($12,000,000) with such payment
terms and principal maturities as the Agent and the Borrower may agree; provided
that (i) Swing Line Advances shall bear interest at the one-month LIBOR Rate as
in effect from time to time plus the then applicable LIBOR Margin as set forth
in the Applicable Margin Amount, (ii) no Swing Line Advances shall mature after
the Maturity Date, and (iii) no Swing Line Advances shall have a maturity longer
than ten (10) days, at which time Borrower shall repay the Swing Line Advances
with the proceeds of Advances under the Revolving Credit Facility. Upon the date
of such payment all accrued but unpaid interest on the Swing Note to such date
shall be due and payable by the Borrower to Agent. Upon the Agent's written
request or upon the acceleration of the Maturity Date pursuant to this Credit
Agreement, each Lender shall pay to Agent such Lender's pro rata share based on
their respective Commitment Percentage of all outstanding Swing Line Advances as
a Base Rate Advance under such Lender's Commitment, but in no event shall any
Lender be obligated to fund more than its Commitment Percentage.
(d) The Revolving Loan Commitment shall be reduced by fifty percent
(50%) of the Net Proceeds of any Asset Sales up to a maximum reduction of USD
25,000,000 in the Revolving Loan Commitment.
2.2 Borrowing Base.
(a) Notwithstanding any other provision of this Credit Agreement, the
aggregate principal amount of Advances and the face amount of Tranche A Letters
of Credit at any time outstanding (including the Dollar Equivalent of the face
amounts of outstanding Offshore Currency Letters of Credit) shall not be in
excess of the Borrowing Base.
(b) If at any time the test of Section 2.2(a) above is not met, the
Borrower shall at the Agent's direction either (i) within ten (10) Business Days
provide to the Agent sufficient additional collateral in form and substance
satisfactory to the Agent as shall be necessary to insure that the test of
Section 2.2(a) above is satisfied or (ii) within three (3) Business Days repay
the Loan in an amount as may be necessary to reduce the aggregate principal
amount outstanding under the Revolving Credit Facility to an amount which will
allow the test of Section 2.2(a) above to be met. The cure periods listed above
shall start running on the date notice of the Agent's decision is given to the
Borrower or, if the Agent does not send such notice, on the date that the chief
financial officer of the Borrower (or any other officer having principal
responsibility for the accounting or financial affairs of the Borrower) is aware
that the test of Section 2.2(a) above has not been met.
2.3 LC Facility.
(a) Upon the terms and subject to the conditions herein set forth,
the Lenders severally agree to make a letter of credit facility available to the
Borrower by, from time to time prior to the Maturity Date, having the Issuing
Lender issue one or more Tranche B Letters of Credit for the account of the
Borrower, provided that the aggregate face amount of all Tranche B Letters of
15
Credit outstanding hereunder shall not at any time exceed the lesser of (i) 80%
of the appraised orderly liquidation value of the Borrower's Equipment, and (ii)
the LC Commitment. No Tranche B Letter of Credit shall have an expiration date
that is later than the Maturity Date.
(b) If at any time the test of Section 2.3(a) above is not met as
shown by an appraisal, the Agent shall provide written notice thereof to the
Borrower (attaching thereto a copy of the appraisal) and the Borrower shall,
within ten (10) Business Days of receiving such notice, provide to the Agent
sufficient additional collateral in form and substance satisfactory to the Agent
as shall be necessary to insure that the test of Section 2.3(a) above is
satisfied. The cure period listed above shall start running on the date the
test of Section 2.3(a) above is not met.
(c) The Borrower may reduce the LC Commitment in integral multiples of
USD 1,000,000 upon five (5) days' prior written notice to the Agent; provided
that after giving effect to any such reduction the aggregate face amount of all
outstanding Tranche B Letters of Credit does not exceed the Adjusted Commitment.
No subsequent increase of the LC Commitment shall be allowed.
2.4 Counter Indemnity. The Borrower agrees to make each Indemnity Payment
to the Agent for distribution to the Issuing Lender immediately on demand of the
Issuing Lender.
2.5 Drawings Under Letters of Credit. No Lender issuing a Letter of
Credit shall concern itself with the regularity or propriety of any demand made
under any Letter of Credit, provided that such demand is made in the manner
called for in such Letter of Credit and (subject to such proviso) it shall not
be a defense to a claim of such Lender under this Section 2.5 that such Lender
could have resisted the payment in respect of which such claim is made.
2.6 Variations. The Borrower's obligations under Section 2.4 hereof shall
not be in any way discharged or impaired by any variation of the terms of any
Letter of Credit or this Credit Agreement or any document executed pursuant
hereto to which the Borrower has expressly consented in writing.
2.7 Security. The Borrower's obligations under Section 2.4 hereof shall
be in addition to and not in substitution for any security now or hereafter held
by the Agent in respect of its obligations under this Credit Agreement.
2.8 Certificates. A certificate together with evidence of payment
submitted by an issuing Lender to the Borrower as to the amount of any Indemnity
Payment owed to such Lender in respect of a Letter of Credit shall (save for
manifest error) be conclusive and binding on the Borrower for all purposes.
2.9 Offshore Currency Letters of Credit. The Borrower may request that
one or more Tranche A Letters of Credit be issued in an Offshore Currency
denomination. The aggregate Dollar Equivalent of all Offshore Currency Letters
of Credit, as of the issuance date of any such Offshore Currency Letter of
Credit, shall not exceed USD 2,000,000, as determined by the Agent. No
16
Tranche B Letter of Credit shall be an Offshore Currency Letter of Credit. No
Issuing Lender shall be obligated to issue an Offshore Currency Letter of Credit
if such Issuing Lender has determined, in its sole discretion, that it is unable
to fund obligations in the requested Offshore Currency. The Agent shall provide
to the Borrower, as of the last Business Day of each month, the Dollar
Equivalent of outstanding Offshore Currency Letters of Credit for purposes of
the Borrower's calculation of the Borrowing Base for such month.
Section 3. The Notes.
(a) The Borrower's obligations to pay the principal of, and interest
on, the Loan shall be evidenced by the Notes.
(b) At the time of the making of each Advance, and upon each payment
of the principal of the Loan, the Agent may, and is hereby authorized to, make a
notation on the Notes specifying the date and the amount of such Advance or such
payment. Failure to make any such notation shall not limit or otherwise affect
the Borrower's or any Guarantors' obligations in respect of this Credit
Agreement or the Notes.
Section 4. Manner of Drawdown and Issuance of Letters of Credit.
4.1 Manner of Drawdown or Issuance. The Borrower may draw an Advance or
have a Letter of Credit issued, increased or extended upon:
(a) The Agent's prior satisfaction that the relevant conditions set
out in Section 8 herein have been complied with;
(b) No event having occurred to the actual knowledge of the Borrower
which, with or without notice or lapse of time, would constitute an Event of
Default;
(c) The Agent having received from the Borrower, for an Advance, an
irrevocable Request for Borrowing (i) before 8:00 a.m. San Francisco time at
least three (3) and not more than ten (10) Business Days in the case of a LIBOR
Advance (which the Agent shall forward to the Lenders no later than 12:00 p.m.
San Francisco time two (2) Business Days prior to the requested Drawdown Date)
and (ii) before 12:00 p.m. San Francisco time at least one (1) and not more than
ten (10) Business Days in the case of a Base Rate Advance (which the Agent shall
forward to the lenders no later than 12:00 p.m. San Francisco time one (1)
Business Day prior to the requested Drawdown Date) prior to the Drawdown Date
selected by the Borrower; or the Agent, having received from the Borrower for a
Swing Line Advance an Irrevocable Request for Borrowing before 8:00 a.m. San
Francisco time on the date such Swing Line Advance is requested;
(d) The Agent having received from the Borrower, for the issuance of a
Letter of Credit, an irrevocable Request for Letter of Credit at least three (3)
Business Days prior to the Drawdown Date on which the Letter of Credit is to be
issued;
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(e) There shall be no more than five (5) outstanding LIBOR Advances
(excluding Swing Line Advances) at any time.
4.2 Disbursement of Funds. Disbursement of the proceeds of each Advance
shall be made by the Agent to the Borrower as directed by the Borrower in the
Request for Borrowing.
4.3 Failure to Borrow; Delay. If the borrowing described in any Request
for Borrowing or the issuance of a Letter of Credit described in any Request for
Letter of Credit fails to take place or is delayed because any of the conditions
specified in Section 8 below are not satisfied, the Borrower shall indemnify the
Lenders against any loss incurred as a result of the giving of such Request for
Borrowing or Request for Letter of Credit, including without limitation any loss
resulting from actions taken by the Lenders to fund the requested Advance, but
excluding any loss resulting from the gross negligence or willful misconduct of
the Lenders. A certificate of the Agent stating in reasonable detail the amount
of, and basis for, any such loss incurred by such Lender shall be conclusive
absent manifest error.
Section 5. Interest.
5.1 Rate of Interest.
(a) The Borrower agrees to pay interest in respect of all amounts
outstanding under any LIBOR Advance at a rate per annum equal to the LIBOR Rate
plus the Applicable Margin Amount.
(b) The Borrower agrees to pay interest in respect of all amounts
outstanding under any Base Rate Advance at a rate per annum equal to the Base
Rate plus the Applicable Margin Amount.
(c) Interest on unpaid principal amounts shall be computed on the
basis of a year of 360 days and the actual number of days elapsed.
(d) The Borrower agrees to pay interest in respect of all Indemnity
Payments at a rate per annum equal to the Base Rate plus 2% from the date the
obligation to make an Indemnity Payment arises to the date of payment. Interest
on unpaid Indemnity Payments shall be computed on the basis of a year of 360
days.
5.2 Payment of Interest. Except as provided in Section 5.1(d) above with
respect to interest on Indemnity Payments, interest shall be paid by the
Borrower on each Interest Payment Date.
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5.3 Conversion of LIBOR Advance to Base Rate Advance.
(a) At the end of any Interest Period for a LIBOR Advance, the
Borrower may, by irrevocable written notice to the Agent received before 8:00
a.m. San Francisco time at least three (3) Business Days prior to the end of
such Interest Period, elect to convert such Advance to a Base Rate Advance.
(b) The Borrower shall notify the Agent before 8:00 a.m. San Francisco
time three (3) Business Days prior to the end of each Interest Period for any
LIBOR Advance as to the length selected by the Borrower for the next Interest
Period. If no such notice is given, such LIBOR Advance shall automatically
convert to a Base Rate Advance.
(c) A notice under Section 5.3(a) or (b) above shall be substantially
in the form attached as Exhibit F.
5.4 Overdue Payment of Principal and Interest. Upon the occurrence and
continuation of an Event of Default, overdue principal of, and (to the extent
permitted by law) overdue interest in respect of, amounts due under this Credit
Agreement shall bear interest, payable on demand, at a rate per annum which
shall be 2% in excess of the interest rate otherwise applicable pursuant to
Section 5.1 above.
5.5 Compliance with Law. Notwithstanding any provision of this Credit
Agreement or the Notes to the contrary, in no event shall the aggregate amount
of consideration which constitutes interest under any applicable law which is
contracted for, charged or received hereunder or under this Credit Agreement or
the Notes ("Interest") exceed the maximum amount of nonusurious interest allowed
by law, and any excess shall be credited on this Credit Agreement or the Notes
(or if all obligations under this Credit Agreement and the Notes shall have been
paid in full, refunded to the Borrower). For purposes of the foregoing, the
maximum amount of interest allowed by law shall be calculated by determining the
amount of interest that could be contracted for, charged or received during the
term hereof at the maximum rate of nonusurious interest allowed from time to
time by applicable law as is now or, to the extent allowed by law, as may
hereafter be in effect (the "maximum nonusurious interest rate") and, if at any
time the rate of Interest to accrue would exceed the maximum nonusurious
interest rate, the rate of Interest to accrue under the Notes shall be limited
to the maximum nonusurious interest rate, but any subsequent reductions in the
LIBOR Rate or the Base Rate shall not reduce the rate of Interest to accrue
under this Credit Agreement or on the Notes below the maximum nonusurious
interest rate until the total amount of Interest accrued and paid under this
Credit Agreement or on the Notes equals the amount of Interest which could have
accrued if a rate per annum equal to the LIBOR Rate plus the Applicable Margin
Amount or the Base Rate plus the Applicable Margin Amount had at all times been
in effect.
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Section 6. Loan Payments
6.1 Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day; provided, however, that if such next succeeding Business Day is in
a new month, then the payment required under this Credit Agreement or the Notes
shall be made on the first Business Day preceding the original date on which
payment was due. If a payment of principal has been extended pursuant to this
Section 6.1, interest shall be payable on such principal at the applicable rate
during such extension.
6.2 Repayment of Revolving Credit Facility.
(a) The Borrower may repay any amounts outstanding under the Revolving
Credit Facility prior to the Maturity Date, on the following terms and
conditions:
(i) amounts outstanding as LIBOR Advances may be repaid upon
irrevocable written notice to the Agent three (3) days prior to the end of an
Interest Period without prepayment fee or penalty, but any repayment made before
the end of an Interest Period must be accompanied by Breakage Costs, provided
that each such repayment shall be in a minimum amount of USD 2,000,000, and
integral multiples of USD 100,000 plus all accrued and unpaid interest thereon;
(ii) any amounts outstanding as Base Rate Advances may be repaid
upon irrevocable written notice to the Agent no later than 10:00 a.m. San
Francisco time on the day before repayment and without prepayment fee or
penalty; and
(iii) any Swing Line Advances may be repaid upon irrevocable
written notice to the Agent no later than 8:00 a.m. San Francisco time on the
date of repayment and without prepayment fee or penalty.
(b) The Borrower shall repay all amounts outstanding under the
Revolving Credit Facility to the Lenders in one payment on the Maturity Date.
6.3 Payment Procedure. (a) All payments and prepayments made by the
Borrower under the Notes, the Swing Note or this Credit Agreement shall be made
by wire transfer in immediately available funds before 10:00 a.m., San Francisco
time on the date such payment is required to be made to the Lenders pursuant to
the Agent's written instructions. Any payment received and accepted by the
Lenders after such time shall be considered for all purposes (including the
calculation of interest, to the extent permitted by law) as having been made on
the next following Business Day. All payments and prepayments received shall be
applied first to accrued interest, then to outstanding fees and then to the
reduction of principal.
20
(b) If any payment required to be made by the Borrower under the
Notes, the Swing Note or this Credit Agreement is not received by the Agent by
10:00 a.m. San Francisco time on the date such payment is required to be made,
the Borrower hereby authorizes the Agent to make such payment or as much of such
payment as is possible, from accounts of the Borrower at the Agent or from funds
held by the Agent pursuant to the Lockbox Agreement.
6.4 Net Payments.
(a) All sums payable by the Borrower under this Credit Agreement or
the Notes, whether of principal, interest, fees or otherwise, shall be paid in
full without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments (after deduction or withholding for or on account
of any Taxes, other than any Tax, on or measured by the income of the Lenders)
shall not be less than the amounts otherwise specified to be paid under this
Credit Agreement or the Notes.
(b) A certificate as to any additional amounts payable to the Lenders
under this Section 6.4 submitted to the Borrower by the Agent shall show in
reasonable detail the amount payable and the calculations used to determine in
good faith such amount and shall be conclusive absent manifest error.
(c) With respect to each deduction or withholding for or on account of
any Taxes, the Borrower shall promptly furnish to the Agent such certificates,
receipts and other documents as may be required (in the reasonable judgment of
the Agent) to establish any income tax credit to which a Lender may be entitled.
In the event that such a deduction or withholding for Taxes becomes so
applicable, the Lenders and the Borrower will use their best efforts to minimize
the effect of such Taxes.
6.5 Rights of Set-off. The Agent and the Lenders shall, with respect to
the Loan and all other amounts payable hereunder, have all rights of set-off,
banker's lien and counterclaim as they are entitled to exercise under the law of
the jurisdiction in which such rights are exercised.
6.6 Changes in Circumstances.
(a) If, by reason of any change subsequent to the date of this Credit
Agreement in applicable law or regulation or regulatory requirement or directive
whether or not having the force of law or in the interpretation or application
thereof by the governmental or quasi-governmental or judicial authority or
central bank charged with the administration or interpretation of such law or
regulation (a "Change in Circumstance"), a Lender shall determine in good faith
that it has become unlawful or impossible for it to perform its obligations
hereunder, the Agent shall immediately notify the Borrower and, after such
notice, the liability of such Lender to advance or maintain the Advances or
issue Letters of Credit shall immediately cease or, (i) if any Advance has been
made, the Borrower shall prepay to such Lender its pro rata portion of the
Advance, or (ii) if any Letter of Credit has been issued by such Lender (the
"Affected Letter of Credit"), the Borrower and the Agent shall use
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their reasonable good faith efforts to secure a replacement letter of credit at
the sole expense of the Borrower; provided that if the Borrower is unable to
secure such replacement letter of credit, the Borrower shall deposit with the
Agent at an account designated by the Agent an amount equal to the face amount
of the Affected Letter of Credit. In any such event, but without prejudice to
the aforesaid obligation of the Borrower to prepay, the Borrower, such Lender
and the Agent shall negotiate in good faith for a period not to exceed ninety
(90) days commencing from the date notice is given by the Agent as provided
above, with a view to agreeing to terms for making or continuing to make
available the Commitment from another jurisdiction or funding of the affected
portion of the Advance and issuing or reissuing the Affected Letters of Credit
from alternative sources.
(b) If the effect of any Change in Circumstance having effect after
the date hereof, is to:
(i) change the basis of taxation to a Lender of payment of
principal or interest or any other payment due pursuant to the terms of this
Credit Agreement or the Notes (other than an increase in the rate of taxation on
a Lender's overall net income); or
(ii) impose or modify or deem applicable any reserve requirements
or require the making of any special deposits against or in respect of any
assets or liabilities of, deposits with or for the account of or loans by a
Lender; or
(iii) impose on any Lender any other condition affecting the
Commitment or the Loan or any part thereof, the result of which is either to
increase the cost to such Lender of making available or maintaining the
Commitment or the Loan or any part thereof or to reduce the amount of any
payment received by the Lender hereunder; then and in any such case if such
increase or reduction in the opinion of the Lender materially affects the
interests of the Lender;
(A) the Lender shall notify the Borrower of any of the above
circumstances and the Lender shall use all reasonable efforts (without any
financial commitment on its part) to avoid the effects of any such change and in
particular, shall consider (without any commitment on its part) fulfilling its
obligations under this Credit Agreement through another office or transferring
its interest in this Credit Agreement and the Notes or the Swing Note at par to
one or more of its Affiliates not affected by the Change in Circumstances if
such transfer can be accomplished without material added cost to such Lender and
in a manner compatible with its operational procedures; or
(B) If the efforts referred to in (A) above fail to have the
effect of eliminating the increased cost incurred by the Lender or the reduction
in the amount of any payment received, the Borrower shall within three (3)
Business Days following demand (whether made before or after any repayment of
the amounts outstanding under this Credit Agreement and the Notes) pay to the
Lender such amount as the Agent shall certify to be necessary to compensate the
Lender for such additional cost or reduction; provided, however, that despite
such payments, the Lender and
22
the Borrower shall continue to use their best efforts to reduce the effect of
such Change in Circumstance; and
(C) At any time thereafter, so long as the Change in
Circumstance giving rise to the obligation to make the compensating payment
continues, the Borrower may, upon giving the Lender not less than ten (10)
Business Days' written notice which shall be irrevocable, prepay to the Lender
the affected portion of the Loan (except for outstanding Letters of Credit) and
shall deposit with the Lender at an account designated by the Lender an amount
equal to the face amount of all then outstanding Letters of Credit (including
the Dollar Equivalent of the face amounts of outstanding Offshore Currency
Letters of Credit).
(c) If any amounts outstanding under this Credit Agreement are to be
prepaid by the Borrower prior to the last day of the relevant Interest Period
pursuant to any of the provisions of this Section 6.6, the Borrower shall
simultaneously with such prepayment pay to the Agent for distribution to any
affected Lender all Breakage Costs and all accrued interest and fees on the
amounts to be prepaid.
(d) The certificate of determination of the Agent, as to any matters
referred to in this Section 6.6 shall show in reasonable detail the amount
payable and the calculations used in good faith to determine such amount and
shall, save for any manifest error, be conclusive and binding on the Borrower.
6.7 Unavailability of Dollars.
(a) In the event that a Lender is not able to obtain Dollars in the
London Interbank Market, in the manner in effect on the date of this Credit
Agreement, the Dollars required by such Lender to fund the Loan shall be made
available from such other financial sources as may be available to such Lender.
In such an event the rate of interest applicable to the Loan for the relevant
Interest Period will be the aggregate of the most recent Applicable Margin
Amount for LIBOR Advances and the cost (expressed as a per annum percentage) to
the Lender from such financial sources and for periods as may be elected by the
Lender. Each change in such cost in respect of funding the Loan will cause an
immediate corresponding change in the rate of interest payable by the Borrower.
This arrangement shall be temporary and should Dollars subsequently become
available to the Lender in the London Interbank Market, in the manner in effect
on the date of this Credit Agreement, then from the conclusion of the then
current Interest Period for funding from alternative sources, the Loan will bear
interest at the rate detailed in Section 5.1(a) above.
(b) In the event that a Lender is unable (for any reason whatsoever)
to acquire the required Dollars from any source, the parties hereto shall meet
to discuss an alternative arrangement. In the absence of mutual agreement and
at the end of ten (10) Business Days after the meeting referred to above the
obligation of the Lender hereunder to make available the Loan shall be
extinguished forthwith and the affected portion of the Loan shall be repaid
forthwith by the Borrower to such Lender along with all fees and Breakage Costs
for the Loan.
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6.8 Lockbox.
(a) On or before the first Drawdown Date, the Borrower shall cause to
be established in the name of the Borrower for the benefit of the Lenders an
account and lockbox (the "Lockbox") with the Agent pursuant to the Lockbox
Agreement. The Borrower shall instruct all of its customers and account
debtors to make all payments to the Lockbox of all accounts receivable of the
Borrower, including but not limited to Accounts as defined in the Security
Agreement. Any payments received directly by the Borrower from their customers
or account debtors will be deposited immediately in the Lockbox. Until an Event
of Default shall have occurred, the Borrower shall have the right to transfer
from the Lockbox any amounts in the Lockbox. After an Event of Default shall
have occurred all amounts in the Lockbox may be applied by the Agent for the
benefit of the Lenders in payment of any amounts due and outstanding under this
Credit Agreement or the Notes.
(b) On each Interest Payment Date, the Maturity Date, and each day on
which any commitment fee or letter of credit fee is payable and only in the
event that the Borrower has failed to make a payment in accordance with the
terms of this Credit Agreement and the Notes, all amounts in the Lockbox
(including interest accrued), shall be used first to pay interest due on such
Interest Payment Date, second to pay any commitment fee or letter of credit fee
due on such date and third to repay the principal amount outstanding on the
Notes which is due and payable to the Lenders on such date. After such payments
have been made, all other funds in the Lockbox shall be released to the
Borrower.
(c) The Lockbox shall terminate and any funds remaining in it shall be
paid the Borrower upon the fulfillment of all of the Borrower's Obligations.
6.9 Tax Treaty. Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Credit Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to the
Borrower and the Agent a properly completed and executed IRS Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the IRS or
the United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
the Borrower and the Agent prior to becoming a Lender hereunder. No foreign
Person may become a Lender hereunder if such Person is unable to deliver a
Certificate of Exemption.
Section 7. Security.
7.1 Security Agreement, Mortgage and Pledge. The Obligations (including
without limitation the Swing Note) and all other amounts due under this Credit
Agreement shall be secured in accordance with the provisions of the Security
Agreement, the Mortgage and the Pledge.
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7.2 Guaranty. The Obligations (including without limitation the Swing
Note) and all other amounts due under this Credit Agreement shall be guaranteed
in accordance with the provisions of the Guaranty.
7.3 Lockbox Agreement. The Obligations (including without limitation the
Swing Note) and all other amounts due under this Credit Agreement shall be
secured in accordance with the terms of the Lockbox Agreement.
7.4 Further Assurances. The Borrower agrees to execute and deliver to the
Agent such financing statements or other instruments or documents as the Agent
may reasonably request in order to perfect the security created by the Security
Agreement, the Mortgage, the Pledge and the Lockbox Agreement or otherwise
required by this Credit Agreement.
Section 8. Conditions Precedent.
8.1 Documents Required as Conditions Precedent to the Drawdown of the
First Advance. The obligation of the Lenders to make the first Advance (or
issue the first Letter of Credit, whichever is earlier) is subject to the
condition precedent that the Agent shall have received at or prior to the first
Drawdown Date all of the following, each dated on or before the first Drawdown
Date and each in form and substance satisfactory to the Lenders.
(a) The executed Notes, Swing Note and the other Loan Documents.
(b) Certified copies of the resolutions of the Boards of Directors of
the Borrower and the Guarantors authorizing the execution and delivery by the
Borrower and the Guarantors of the Loan Documents to which they are parties and
all documents evidencing other necessary corporate action with respect to the
Loan Documents.
(c) Certificates of the Secretaries or the Assistant Secretaries of
the Borrower and the Guarantors certifying the names and true signatures of the
officers of the Guarantors and the Borrower authorized to sign the Loan
Documents on behalf of the Borrower and the Guarantors and the other documents
or certificates to be executed by the Borrower and the Guarantors pursuant to
this Credit Agreement.
(d) Copies certified as of a recent date by the Secretaries or the
Assistant Secretaries of the Borrower and the Guarantors of their By-Laws or
similar such document.
(e) Copies of the Guarantors' Certificates of Incorporation (or
equivalent documents) certified by the Secretaries or the Assistant Secretaries
of the Guarantors, respectively, as of the date of the first Drawdown Date
except that in the case of Xxxxxx Xxxxxxx Offshore, Inc. and Halter Marine, Inc.
the Certificates of Incorporation shall be certified by the relevant officials
25
of their jurisdictions of incorporation within thirty (30) days from the date of
the first Drawdown Date.
(f) A copy of the Borrower's Certificate of Merger certified by the
Secretary of State of Mississippi and, within thirty (30) days of the first
Drawdown Date a copy of the Certificate of Incorporation or Articles of
Incorporation of the Borrower certified by the Secretary of State of
Mississippi.
(g) Certificates dated within thirty (30) days of the first Drawdown
Date of the relevant officials of their jurisdiction of organization as to the
existence and good standing of the Borrower and the Guarantors.
(h) An opinion of Jones, Walker, Waechter, Poitevent, Carrere &
Xxxxxxx, counsel to the Borrower and the Guarantors, and of each of special
Nevada and Mississippi counsel to the Borrower and the Guarantors, acceptable to
the Agent.
(i) An opinion of Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P., special
counsel to the Lenders, acceptable to the Agent.
(j) The Borrower shall have executed and delivered to the Agent copies
of all documents and filings and shall have taken all actions necessary to
perfect the security interests created by the Ship Mortgages, the Lockbox
Agreement, the Security Agreements and the Pledges as first priority perfected
security interests.
(k) All orders, consents, approvals, licenses, authorizations and
validations of, and filings, recordings and registrations with and exemptions by
any Governmental Agency or any Person (other than any routine filings which may
be required after the date hereof with appropriate governmental authorities in
connection with the operation of the Borrower's assets) required to (i)
authorize the execution, delivery and performance by the Borrower and the
Guarantors of the Loan Documents to which they are parties or (ii) prevent the
execution, delivery and performance by the Borrower and the Guarantors of the
Loan Documents to which they are parties from resulting in a breach of any of
the terms or conditions of, or resulting in the imposition of any lien, charge
or encumbrance upon any properties of the Borrower or the Guarantors pursuant
to, or constituting a default (with due notice or lapse of time or both), or
resulting in an occurrence of any event for which any holder or holders of
Indebtedness may declare the same due and payable under, any indenture,
agreement, order, judgment or instrument under which the Borrower or any
Guarantor is a party (other than the Lockbox Agreement, the Security Agreement
or the Pledge) or to the Borrower's knowledge after due inquiry by which the
Borrower or the Guarantors or their property may be bound or affected, or under
the Certificates of Incorporation or By-Laws of the Borrower or the Guarantors
or similar such documents, shall have been obtained or made to the extent
required to avoid a material adverse effect.
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(l) Payment by the Borrower of the fees referred to Section 9.1 below
required to be paid on or before the first Drawdown Date.
(m) Except for indebtedness referred to in Section 10.16 below, all of
the Senior Debt of the Borrower shall be fully repaid and all liens securing
such indebtedness shall have been released or adequate provision shall have been
made for securing such releases.
(n) There shall have been no material adverse change in the financial
condition of the Borrower or the Guarantors since the pro forma financial
statements delivered to the Agent for the period ending June 30, 1999.
(o) A landlord consent with respect to each property at which any
Inventory, work-in-progress or Equipment is located; provided, however, that the
Borrower shall use its best efforts within 60 days but shall have no more than
120 days after the first Drawdown Date to provide such consents and if a consent
for any property is not provided within such period, any Inventory, work-in-
progress or Equipment located on such property shall be excluded from the
Borrowing Base.
(p) The Agent shall have completed and shall be reasonably satisfied
with its due diligence review of the assets, business and financial condition of
the Borrower and its subsidiaries, including, without limitation the Borrower's
3-year annual financial projections.
(q) The Agent shall have received collateral audits in form and
substance reasonably satisfactory to the Lenders.
(r) The Agent shall have received an appraisal or appraisals of the
Equipment in form and substance reasonably satisfactory to the Lenders.
(s) The Agent shall have received certificates of insurance reasonably
acceptable to the Agent, evidencing the insurances required under the Security
Agreement and the Ship Mortgages and within thirty (30) days of the first
Drawdown Date the Borrower shall provide to the Agent an opinion of an
independent insurance broker reasonably acceptable to the Agent to the effect
that the insurances evidenced by such certificates comply with the requirements
of the Security Agreement and the Ship Mortgages.
(t) The Agent shall have received a fax copy of the Promissory Note of
Xxxxxx Xxxxxxx France SAS (with original to be delivered to the Agent within
three (3) Business Days of the Closing Date) and the original Promissory Note of
Xxxxxx Xxxxxxx Canada, Inc., each in the amount of USD 10,000,000, each payable
to the Borrower, and each endorsed to the Agent.
(u) If the first Drawdown Date is not the date hereof, certificates
dated the first Drawdown Date of an officer of the Borrower and the Guarantors,
respectively, certifying that:
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(i) The representations and warranties contained in Section 10
below and in Section 7 of the Guaranty are correct on and as of the first
Drawdown Date as through made on and as of such date except those expressly made
as of another date; and
(ii) No event has occurred and is continuing, or would result
from the first Advance or first issuance of a Letter of Credit which constitutes
an Event of Default or with the passing of time or the giving of notice would
constitute an Event of Default.
8.2 Additional Conditions Precedent to All Advances and Letters of Credit.
The obligation of the Lenders to make each Advance and to issue, increase or
extend each Letter of Credit shall be subject to the further condition precedent
that the Agent shall have received at or prior to the date of such Advance or
the date of issuance, increase or extension of such Letter of Credit, each dated
on or before the date of the Advance or Letter of Credit and each in form and
substance satisfactory to the Lenders:
(a) a certificate (dated the date of such Advance or Letter of Credit)
of an officer of the Borrower and the Guarantors, respectively, certifying that:
(i) The representations and warranties contained in Section 10
below and in Section 7 of the Guaranty are correct on and as of the date such
Advance is made or Letter of Credit is issued, increased or extended as though
made on and as of such date except those expressly made as of another date; and
(ii) No event has occurred and is continuing, or would result
from such Advance, or from the issuance, increase or extension of such Letter of
Credit, which constitutes an Event of Default or with the passing of time or the
giving of notice would constitute an Event of Default.
(b) payment by the Borrower of the fees required to be paid on
or before such date by Section 9.1 below; and
(c) any required Borrowing Base Report.
8.3 Waiver of Conditions Precedent. All of the conditions precedent
contained in this Section 8 are for the sole benefit of the Lenders and the
Lenders may waive any or all of them in their absolute discretion.
Section 9. Fees and Expenses.
9.1 Fees.
(a) The Borrower shall pay to the Agent for distribution to the
Lenders (i) a commitment fee equal to the daily undrawn portion of the Revolving
Credit Facility (including
28
without limitation, Swing Line Advances) less the face amount of outstanding
Tranche A Letters of Credit (including the Dollar Equivalent of the face amounts
of outstanding Offshore Currency Letters of Credit) times the Applicable
Commitment Fee Percentage and (ii) a commitment fee equal to the unused portion
of the LC Facility up to and including the Maturity Date times the Applicable
Commitment Fee Percentage. Such commitment fee shall begin to accrue on the date
of this Credit Agreement and shall be payable quarterly in arrears, the first
such payment to be made on December 31, 1999 and quarterly thereafter. The
amount of the commitment fee shall be computed on the basis of a year of 360
days and the actual number of days elapsed.
(b) The Borrower shall pay to the Agent for distribution to the
Issuing Lender an annual letter of credit fee equal to the face amount of each
Letter of Credit (including the Dollar Equivalent of the face amounts of
outstanding Offshore Currency Letters of Credit) outstanding times the
Applicable Margin Amount then in effect for LIBOR Advances, payable quarterly in
arrears; provided that the Agent shall deduct from such fee, for payment to the
Issuing Lender, an amount equal to one-tenth of one percent (0.10%) of the face
amount of each such Letter of Credit (including the Dollar Equivalent of the
face amounts of outstanding Offshore Currency Letters of Credit); and provided
further, that if any Existing Letter of Credit is not replaced with a new Letter
of Credit within ninety (90) days following the date hereof, the Borrower shall
pay to the Issuing Lender for such Existing Letters of Credit an additional
letter of credit fee equal to one-tenth of one percent (0.10%) of the face
amount of each such Letter of Credit, payable quarterly in arrears.
(c) The Borrower shall pay to the Agent for distribution to the
Lenders on the Closing Date an underwriting fee in an amount equal to two
percent (2%) of the commitment of each Lender set forth in the original
commitment letter of such Lender to the Borrower if such commitment is equal to
or greater than USD 58,000,000; provided that if such commitment is less than
USD 58,000,000, such underwriting fee shall be proportionately reduced by
multiplying it by a fraction, the numerator of which is the amount of such
commitment and the denominator of which is USD 58,000,000.
9.2 Expenses. The Borrower agrees, whether or not any Advance is made or
Letter of Credit is issued, to promptly pay or reimburse the Agent upon demand
for all reasonable fees and disbursements of the Agent, including, but not
limited to, travel and other out-of-pocket expenses of the Agent and the
reasonable fees and expenses of external counsel and technical consultants to
the Agent, incurred in connection with (a) the preparation, execution and
delivery of the Loan Documents, the making of Advances and issuance of Letters
of Credit under this Credit Agreement and all other documents referred to herein
and any amendments, renegotiation, refinancing or waivers to or termination of
any thereof, (b) the recording, filing and perfection of all security interests
created by the Loan Documents and (c) the protection of the rights of the Agent
and the Lenders under this Credit Agreement and all other documents referred to
herein and the enforcement of payment of the Obligations, whether by judicial
proceedings or otherwise, and shall promptly pay and reimburse the Lenders for
any such fees and disbursements incurred in connection with the protection of
the rights of the Lenders hereunder and enforcement of payment of the
Obligations, whether by judicial proceedings or otherwise.
29
9.3 General Indemnity. The Borrower hereby agrees to:
(a) pay and hold the Agent and the Lenders harmless from and against
any and all present and future stamp and other similar Taxes with respect to the
Notes, the Swing Note and the other Loan Documents and save the Agent and each
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such Taxes, and will indemnify the
Agent and each Lender for the full amount of Taxes paid by the Lender in respect
of payments made or to be made hereunder and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted;
(b) except as otherwise provided in Section 9.2 hereof (and without
duplication thereof), indemnify the Agent and each Lender, and its officers,
directors, employees, representatives, agents, attorneys and Affiliates (an
"Indemnitee") from and hold each of them harmless against and promptly upon
demand pay or reimburse each of them for, any and all actions, suits,
proceedings (including any investigations, litigation or inquiries), claims,
demands and causes of action, and, in connection therewith, all reasonable
costs, losses, liabilities, damages or expenses of any kind or nature whatsoever
(collectively the "Indemnity Matters") which may be incurred by or asserted
against or involve any of them (whether or not any of them is designated a party
thereto) as a result of, arising out of or in any way related to (i) any actual
or proposed use by the Borrower of the proceeds of the Loan, (ii) the operations
of the business of the Borrower, (iii) the failure of the Borrower to comply
with any requirement of any Government Agency, or (iv) any other aspect of this
Credit Agreement, the Notes, the Swing Note and the other Loan Documents,
including, without limitation, the reasonable fees and disbursements of counsel
and all other expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any
investigations, litigation or inquiries) or claim and including all Indemnity
Matters arising by reason of the negligence of any Indemnitee;
(c) In the case of any indemnification hereunder, the Agent, any
Lender or other Person indemnified hereunder shall give notice to the Borrower
within a reasonable period of time of any such claim or demand being made
against it and the Borrower shall have the non-exclusive right to provide the
defense against any such claim or demand provided that if the Borrower provides
a defense, the Borrower shall bear the cost of the Indemnitee's defense unless
there is a conflict of interest between the Borrower and such Indemnitee.
(d) No Indemnitee may settle any claim to be indemnified pursuant to
this Section 9.3 without the consent of the indemnitor, such consent not to be
unreasonably withheld; provided, that the indemnitor may not reasonably withhold
consent to any settlement that an Indemnitee proposes, if the indemnitor does
not have the financial ability to pay all of its obligations outstanding and
asserted against the Indemnitee at that time, including the maximum potential
claims against the Indemnitee to be indemnified pursuant to this Section 9.3.
30
(e) Notwithstanding anything to the contrary in this Credit Agreement,
the Borrower shall have no indemnity obligation with respect to any Indemnitee
Matter caused by or resulting from the gross negligence or willful misconduct of
the Agent, any Lender or any other Indemnitee.
(f) The indemnity and hold harmless contained in this Section 9.3
shall not extend to the Agent, any Lender or any other Indemnitee in its or his
capacity as an equity investor in the Borrower or as an owner of any property or
interest as to which the Borrower is also an owner but only to the Agent's or
any Lender's capacity as a lender or a holder of security interests.
9.4 Survival. The obligations of the Borrower under this Section 9 shall
survive payment of all other amounts due under this Credit Agreement.
Section 10. Representations and Warranties of Borrower.
The Borrower represents and warrants to the Lenders as follows:
10.1 Due Incorporation, Qualification, Etc. It is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing as a foreign corporation to
do business in the jurisdictions in which the failure to be so qualified would
have a material adverse effect on its business or financial condition, and it
has full corporate power and authority to own its properties and assets and to
conduct its business as presently conducted.
10.2 Capacity. It has full corporate power and authority to execute and
deliver, and to perform and observe the provisions of the Loan Documents to
which it is a party and to carry out the transactions contemplated hereby and
thereby.
10.3 Authority and Enforceability. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is a party have
been or will be duly authorized by all necessary corporate action. This Credit
Agreement (including the Texas choice of law) constitutes, and the other Loan
Documents to which it is a party constitute, or will constitute, legal, valid
and binding obligations of the Borrower enforceable against it in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditor' rights and remedies generally. The Security Agreement, the Mortgage,
the Pledge and the Lockbox Agreement shall on the first Drawdown Date create and
constitute valid and perfected security interests in and to the properties
covered thereby, subject to the exceptions contained therein, enforceable
against all third parties, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and shall secure the Obligations.
10.4 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with
(other than any routine filings which may be
31
required after the date hereof with appropriate governmental authorities
required in connection with the perfection of the security interests created by
any of the Loan Documents), or exemption by, any Governmental Agency, is
required to authorize the execution, delivery and performance by the Borrower of
the Loan Documents to which it is a party.
10.5 Compliance with Other Instruments. The execution and delivery of
this Credit Agreement and compliance with its terms, the issuance of the Notes
and the Swing Note, and the execution and delivery of the Security Agreement,
the Mortgage, the Pledge and the Lockbox Agreement and the compliance with their
terms as contemplated herein, do not result in a breach of any of the terms or
conditions of, or result in the imposition of any lien, charge or encumbrance
(except those contemplated by this Credit Agreement) upon any properties of the
Borrower pursuant to, or constitute a default (with due notice or lapse of time
or both), or result in an occurrence of any event for which any holder or
holders of Indebtedness may declare the same due and payable under any
indenture, agreement, order, judgment or instrument under which the Borrower is
a party or to the Borrower's knowledge, after due inquiry, by which the Borrower
or its property may be bound or affected, or under the Certificate of
Incorporation or By-Laws of the Borrower, and, to the Borrower's knowledge,
after due inquiry, do not violate any provision of applicable law, in each case,
to the extent that any such breach, imposition, event or violation could
reasonably be expected to have a material adverse effect.
10.6 Financial Statements.
(a) The pro forma consolidated balance sheets of the Borrower as of
June 30, 1999 and the related consolidated statements of income for the year to
date period ended on that date, copies of which have been furnished to the
Agent, have been prepared in accordance with GAAP, have been prepared by the
Borrower giving pro forma effect to the merger creating the Borrower and have
been based on the unaudited consolidated balance sheets and related consolidated
statements of income of the Borrower and its subsidiaries dated June 30, 1999.
(b) Since June 30, 1999 and except for performance guarantees and the
obligation to make indemnity payments under performance bonds issued in their
ordinary course of business, the Borrower and the Guarantors have incurred no
contingent liabilities which, if determined adversely to them (either singly or
in the aggregate), would reasonably be expected to have a material adverse
effect.
10.7 Material Adverse Events. Since June 30, 1999 neither the business,
the prospects, the properties nor the condition (financial or otherwise) of the
Borrower and its subsidiaries, taken as a whole, have been materially adversely
affected except as disclosed in the Confidential Information Memorandum.
10.8 Litigation, Etc. Since June 30, 1999, and except as disclosed on
Schedule 10.8 and in the Confidential Information Memorandum, there are no
actions, suits or proceedings pending, or to the knowledge of the Borrower
threatened, against or affecting the Borrower or the Guarantors,
32
at law or in equity which, if adversely determined, could reasonably be expected
to have a material adverse effect on their condition (financial or otherwise of
the Borrower on a consolidated basis. To the Borrower's knowledge, neither the
Borrower nor any Guarantor is in violation with respect to any applicable laws
or regulations which non-compliance would have a material adverse effect on
their condition (financial or otherwise) nor is the Borrower or any Guarantor in
violation or default with respect to any order, writ, injunction, demand or
decree of any court or any Person or in violation or default (nor is there any
waiver in effect which, if not in effect, would result in a violation or
default) in any material respect under any indenture, agreement or other
instrument under which the Borrower or any Guarantor is a party or may be bound,
default under which could reasonably be expected to have a material adverse
effect on their condition (financial or otherwise).
10.9 Principal Place of Business. The chief executive office and
principal place of business of the Borrower and the Guarantors is located at
00000 Xxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000.
10.10 Patent and Other Rights. The Borrower and the Guarantors have the
right to use all patents, licenses, trademarks, trade names, trade secrets,
copyrights and all rights with respect thereto, which are required to conduct
their businesses as now conducted without known conflict with the rights of
others which would materially and adversely affect such businesses.
10.11 Taxes. The Borrower and the Guarantors have filed or caused to be
filed all tax returns which are required to be filed by them, pursuant to the
laws, regulations or orders of each Person with taxing power over the Borrower
and the Guarantors or their assets. The Borrower and the Guarantors have paid,
or made provision for the payment of, all Taxes which have or may have become
due pursuant to said returns, or otherwise, or pursuant to any assessment
received by the Borrower and the Guarantors, except such Taxes, if any, as are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided. The charges, accruals and reserves in
respect of Taxes on the books of the Borrower and the Guarantors are adequate
(determined in accordance with GAAP). There are no proposed material tax
assessments against the Borrower or the Guarantors and no extension of time for
the assessment of federal, state or local Taxes of the Borrower or the
Guarantors is in effect or has been requested.
10.12 Employee Retirement Income Security Act of 1974. No Reportable
Event has occurred and is continuing with respect to any Plan.
10.13 Investment Company Act of 1940. The Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940.
10.14 Environmental Compliance.
(a) The Borrower and the Guarantors have duly complied in all material
respects with, and their properties and operations are in compliance in all
material respects with, the
33
provisions of all applicable environmental, health and safety laws, codes and
ordinances and all rules and regulations promulgated thereunder of all
Governmental Agencies.
(b) Neither the Borrower nor any Guarantor has received any notice
from any Governmental Agency, or has any knowledge, of any fact(s) which
constitute a material violation of any applicable environmental, health or
safety laws, codes or ordinances, and any rules or regulations promulgated
thereunder of all Governmental Agencies, which relate to the use or ownership of
the properties owned or operated by the Borrower or the Guarantors.
(c) The Borrower and the Guarantors have been issued all required
permits, licenses, certificates and approvals of all Governmental Agencies
relating to (i) air emissions, (ii) discharges to surface water of ground water,
(iii) noise emissions, (iv) solid or liquid waste disposal, (v) the use,
generation, storage, transportation, treatment, recycling or disposal of
Hazardous Substances or (vi) other environmental, health or safety matters
necessary for the ownership or operation in all material respects of the
properties owned or operated by the Borrower or the Guarantors and such permits,
licenses, certificates and approvals are in full force and effect on the date of
this Credit Agreement.
(d) To the best of the Borrower's knowledge, except in accordance with
a valid governmental permit, license, certificate or approval, there has been no
spill or unauthorized discharge or release of any Hazardous Substance to the
environment at, from or as a result of any operations or any of the properties
owned or operated by the Borrower or the Guarantors required to be reported to
any Governmental Agency that could reasonably be expected to have a material
adverse effect.
(e) There has been no complaint, compliance order, compliance
schedule, notice letter, notice of citation or other similar notice from any
applicable environmental agency which concerns the operations of the properties
owned or operated by the Borrower or the Guarantors required to be reported to
any Governmental Agency that could reasonably be expected to have a material
adverse effect.
10.15 Indebtedness. The Borrower has no indebtedness for borrowed money
other than the Indebtedness hereunder, the Indebtedness listed on Schedule 3
attached hereto to be paid at closing and the Indebtedness listed on Schedule
12.5.
Section 11. Affirmative Covenants of the Borrower.
Until the payment in full of all amounts due under this Credit Agreement,
the Notes and the Swing Note by the Borrower and the termination of the
Commitments, unless compliance shall have been waived by the Lenders, the
Borrower agrees that:
34
11.1 Financial Statements, Reports and Inspection.
(a) The Borrower will furnish to the Agent, with sufficient copies for
each Lender (which the Agent shall distribute promptly to such Lenders):
(i) as soon as possible and in any event within two (2) Business
Days after an officer of the Borrower has knowledge of the occurrence of any
Event of Default or any event which with the giving of notice or lapse of time,
or both, would constitute an Event of Default which is continuing on the date of
such statement, the statement of the chief financial officer or treasurer of the
Borrower setting forth the details of such Event of Default and the action which
the Borrower proposes to take with respect thereto;
(ii) as soon as available and in any event within forty-five
(45) days after the close of each quarter of the Borrower's fiscal years, a copy
of (A) quarterly consolidated financial statements for the Borrower prepared in
accordance with GAAP and certified by the chief financial officer or chief
accounting officer or treasurer of the Borrower together with consolidating
statements of the Borrower, or (B) the Borrower's 10-Q filing with the
Securities and Exchange Commission ("SEC") for such quarter;
(iii) as soon as available and in any event within ninety (90)
days after the close of the Borrower's fiscal years, a copy of (A) the
consolidated and consolidating annual audited financial statements for such year
for the Borrower certified by Ernst & Young LLP or other independent public
accountants of recognized standing acceptable to the Lenders, or (B) the
Borrower's 10-K filing with the SEC for such year;
(iv) as soon as available and in any event within thirty (30)
days after the end of each month, a job status report in respect of contracts
having a total contract value of USD 30,000,000 or greater, in form and
substance satisfactory to the Agent;
(v) as soon as possible and in any event by December 1 of each
year an annual business plan for the Borrower for the coming year, including
projections of consolidated expenses and revenues; and
(vi) (A) as soon as possible, and in any event, within thirty
(30) days after the Borrower or any Guarantor knows that any Reportable Event
with respect to any Plan has occurred, a statement of an officer of the Borrower
or such Guarantor setting forth details as to such Reportable Event and the
action which the Borrower or any Guarantor propose to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the Pension
Benefit Guaranty Corporation if a copy of such notice is available to the
Borrower or any Guarantor and (B) promptly after receipt thereof a copy of any
notice relating to a Reportable Event having a material adverse effect, that the
Borrower, or any Guarantor or any member of the Controlled Group may receive
from the Pension Benefit Guaranty Corporation or the Internal Revenue Service
with respect
35
to any Plan; provided, however, this Section 11.1(a)(vi)(B) shall not apply to
notice of general application promulgated by the Department of Labor.
(b) The Borrower or the Guarantors will, upon request, furnish to the
Agent such information as the Agent may reasonably request with respect to the
business, affairs or condition (financial or otherwise) of the Borrower or the
Guarantors and will permit the Lenders or their representatives at any
reasonable time or times during normal business hours upon three (3) Business
Days' prior notice, to inspect the properties of the Borrower or the Guarantors,
to inspect, audit and examine the books or records of the Borrower or the
Guarantors and to take extracts therefrom and will reimburse the Agent for all
reasonable expenses incurred in connection therewith. The Agent may order an
appraisal of the Borrower's Equipment and an audit of the Borrower's other
assets once per each 12-month period following the Closing Date, the cost of
which shall be borne by the Borrower. The Agent may, prior to the Maturity Date
and at the direction of any Lender order a one-time appraisal of the Borrower's
and Guarantors' real property, the costs of which shall be borne by the
Borrower. The Agent may, with the consent of the Majority Lenders, order
additional such appraisals and audits, the cost of which shall be borne by the
Lenders (unless an Event of Default shall have occurred in which case the cost
shall be borne by the Borrower). Each such appraisal shall be conducted by an
appraiser reasonably acceptable to the Agent. The Borrower shall provide to the
Agent Phase I Environmental Site Assessments for each of the properties subject
to the Mortgages within sixty (60) days after the date hereof and any further
environmental reports or studies in respect of such properties as the Agent may
deem reasonably necessary in its sole discretion. Each such report or study
shall be performed by an assessor reasonably acceptable to the Agent and the
costs of such reports or studies shall be borne by the Borrower.
(c) Within forty-five (45) days of the close of the first three
quarters of the Borrower's fiscal year and on the dates that the annual reports
required pursuant to Section 11.1(a)(iii) above are provided to the Agent, the
Borrower shall furnish to the Agent a certificate signed by the chief financial
officer, chief accounting officer or treasurer of the Borrower certifying (A)
that the representations and warranties contained in Section 10 of this Credit
Agreement and Section 7 of the Guaranty are correct on and as of the date of
such certificate as though made on and as of such date except those expressly
made as of another date, (B) that the Borrower is in compliance with all of the
covenants contained in Sections 12.11, 12.12 and 12.13 of this Credit Agreement,
such certificates showing the relevant computations for such compliance, and (C)
for the first such certificate hereunder, the amounts and nature of merger-
related costs and expenses.
(d) As soon as possible and in any event within ninety (90) days of
the end of each of the Borrower's fiscal years, a certificate from the
Borrower's auditors referred to in Section 11.1(a)(iii) above, certifying that
(A) such auditor is not aware of any Events of Default and (B) the Borrower is
in compliance with the covenants contained in Sections 12.11, 12.12 and 12.13 of
this Credit Agreement, such certificates showing the relevant computations for
such compliance.
36
(e) The Borrower shall provide to the Agent a Borrowing Base Report on
the thirtieth (30th) day of each month, or the next succeeding Business Day, if
such day is not a Business Day, providing a calculation of the Borrowing Base
for the immediately preceding month, plus a detailed listing and aging report of
accounts receivable, and upon the request of the Agent, a detailed listing and
aging report of accounts payable.
(f) As soon as possible, a copy of any filing made by the Borrower
with the SEC (except as provided in subsection (a) above).
11.2 Insurance. The Borrower shall insure, or cause to be insured, the
properties of the Borrower and the Guarantors as required by the Security
Agreement and the Mortgage. The Borrower will provide certificates evidencing
such insurances to the Agent on each anniversary of the date hereof and will
promptly notify the Agent of any material changes in such insurances or any
change in the underwriters or clubs providing such insurances.
11.3 Other Debt. The Borrower will, and will cause each Guarantor to,
promptly pay and discharge any and all liens, charges, and all Taxes imposed
upon them or upon their income or profits, or upon any of their properties prior
to the date on which penalties accrue thereon, and lawful claims which, if
unpaid, might become a lien or charge upon their properties, except such as may
in good faith be contested or disputed, provided appropriate reserves are
maintained in accordance with GAAP and to pay all Indebtedness as required by
the agreements governing such Indebtedness.
11.4 Maintenance of Existence; Conduct of Business. The Borrower and the
Guarantors will preserve and maintain their corporate existence, their business
as presently conducted, and all of their rights, privileges and franchises
necessary or desirable in the normal conduct of said business, and will conduct
their businesses in an orderly, efficient and regular manner.
11.5 Financial Records. The Borrower and the Guarantors will keep books
of record and account in which proper entries will be made of their transactions
in accordance with GAAP.
11.6 Environmental Compliance.
(a) The Borrower will comply in all material respects with and will
use its best efforts to cause the Guarantors, and each of their agents,
contractors and sub-contractors (while such Persons are acting within the scope
of their contractual relationship with the Borrower or the Guarantors) to so
comply with (i) all applicable environmental, health and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder of all
Governmental Agencies and (ii) the terms and conditions of all applicable
permits, licenses, certificates and approvals of all Governmental Agencies now
or hereafter granted or obtained with respect to the properties owned or
operated by the Borrower or the Guarantors unless such compliance would violate
the laws or regulations of the jurisdictions in which the properties or
operations of the Borrower or the Guarantors are located.
37
(b) The Borrower will use its best efforts and safety practices, and
will cause the Guarantors to use their best efforts and safety practices, to
prevent the unauthorized release, discharge, disposal, escape or spill of
Hazardous Substances on or about the properties owned or operated by the
Borrower or the Guarantors.
11.7 Environmental Notifications. The Borrower shall notify the Agent, in
writing, within ten (10) Business Days of any of the following events occurring
after the date of this Credit Agreement to the extent such event could
reasonably be expected to have a material adverse effect:
(a) Any written notification made by the Borrower or any Guarantor to
any U.S. or foreign federal, state or local environmental agency required under
any federal, state or local environmental statute, regulation or ordinance
relating to a spill or unauthorized discharge or release of any Hazardous
Substance to the environment at, from, or as a result of any operations on, the
properties and operations owned or operated by the Borrower or any Guarantor;
(b) Knowledge by an officer of the Borrower or any Guarantor of
receipt of service by the Borrower or any Guarantor of any complaint, compliance
order, compliance schedule, notice letter, notice of violation, citation or
other similar notice or any judicial demand by any U.S. or foreign court,
federal, state or local environmental agency, alleging (i) any spill,
unauthorized discharge or release of any Hazardous Substance to the environment
from, or as a result of the operations on, the properties owned or operated by
the Borrower or any Guarantor or (ii) violations of applicable laws, regulations
or permits regarding the generation, storage, handling, treatment,
transportation, recycling, release or disposal of Hazardous Substances on or as
a result of operations on the properties and operations owned or operated by the
Borrower or any Guarantor.
(c) It is understood by the parties hereto that the above mentioned
notices are solely for the Lenders' information, may not otherwise be required
by any U.S. or foreign federal, state or local environmental laws, regulations
or ordinances, and are to be considered confidential information by the Agent
and the Lenders.
(d) The term "environmental agency" as used herein shall include, but
not be limited to, the United States Environmental Protection Agency, the United
States Coast Guard, the United States Minerals Management Service, the United
States Department of Transportation (in its administration of the Hazardous
Materials Transportation Act, 49 U.S.C. ' 1801, et seq.) and other analogous or
similar Governmental Agencies regulating or administering statutes, regulations
or ordinances relating to or imposing liability or standards of conduct
concerning the generation, storage, use, production, transportation, handling,
treatment, recycling, release or disposal of any Hazardous Substance.
11.8 Environmental Indemnification.
(a) The Borrower hereby agrees to indemnify and hold the Indemnitees
harmless from and against any and all claims, losses, liability, damages and
injuries of any kind whatsoever asserted against any Indemnitee with respect to
or as a direct result of the presence, escape, seepage,
38
spillage, release, leaking, discharge or migration from the properties owned or
operated by the Borrower or any Guarantor of any Hazardous Substance, including
without limitation, any claims asserted or arising under any applicable
environmental, health and safety laws, codes and ordinances, and all rules and
regulations promulgated thereunder of all Governmental Agencies, regardless of
whether or not caused by or within the control of the Borrower or any Guarantor.
(b) It is the parties' understanding that neither the Agent, the
Lenders nor any other Indemnitee does now, has never and does not intend in the
future to exercise any operational control or maintenance over of the properties
and operations owned or operated by the Borrower or any Guarantor, nor has any
of them in the past, presently, or intends in the future to, maintain an
ownership interest in the properties owned or operated by the Borrower or any
Guarantor except as may arise upon enforcement of the Agent's or the Lenders'
rights under the Security Agreement.
(c) The indemnity and hold harmless contained in this Section 11.8
shall not extend to the Agent, any Lender or any other Indemnitee in its or his
capacity as an equity investor in the Borrower or any Guarantor or as an owner
of any property or interest as to which the Borrower or any Guarantor is also an
owner but only to the Agent's and the Lenders' capacity as a lender or a holder
of security interests.
11.9 Year 2000 Compliance. On or prior to November 30, 1999 (the
"Compliance Date"), the Borrower and the Guarantors shall take all actions
necessary to insure that the automated systems used by the Borrower and the
Guarantors that are material to their operations (collectively, "Mission-
Critical Systems"), including without limitation, software, hardware and other
data processing devices, shall not fail, malfunction or produce incorrect
results with respect to data, calculations and other processing involving dates
before, as of or after December 31, 1999, regardless of the form of the date
data is received or processed (collectively "Year 2000 Compliant" or "Year 2000
Compliance"). Without limiting the generality of the foregoing, on or prior to
the Compliance Date, the Borrower shall, and shall cause the Guarantors to, test
and certify that their Mission-Critical Systems are Year 2000 Compliant in
accordance with commercially reasonable practices and industry standards. The
Borrower agrees that upon the reasonable request of the Lenders, the Borrower
shall, and shall cause the Guarantors to, make their employees, consultants,
premises, records and documentation available to the Agent with respect to their
Year 2000 Compliance efforts.
11.10 Security Interests. The Borrower shall, and shall cause each
Guarantor to, ensure that, within thirty (30) days following the Closing Date,
all additional documents and instruments required by the Agent are executed and
delivered, and all filings and further actions reasonably required by the Agent,
are taken to effect the granting and perfection of the security interests
contemplated under the Loan Documents, except as otherwise provided herein. The
Borrower shall and shall cause each Guarantor to ensure that, at such time as
the Borrower or a Guarantor becomes the registered owner of the U.S. flag
vessels CHIEF, Official No. 535748 and XXXXXXXXX XXXXX, Official No. 510390,
such vessels shall be mortgaged to the Agent pursuant to the Ship Mortgages.
The Borrower shall, and shall cause each Guarantor to ensure that the Mortgages
are executed and
39
filed in the appropriate jurisdictions and to the satisfaction of the Agent
within ninety (90) days following the date hereof. The Agent shall reasonably
cooperate with the Borrower and the Guarantors in effecting such execution,
delivery and filing.
Section 12. Negative Covenants of Borrower. Until the payment in full of all
amounts due under this Credit Agreement, the Notes and the Swing Note by the
Borrower and the termination of the Commitments, the Borrower agrees that it
will not, and will not allow any direct or indirect subsidiary to, without the
prior written consent of the Lenders:
12.1 Liens. Create, incur, assume or suffer to exist any lien (including
any encumbrance or security interest) of any kind upon any of their assets,
revenues or right to receive revenue whether now owned or hereafter acquired
(including, without limitation, any real property and any property located in a
jurisdiction other than the United States), nor enter into any agreement to
restrict its ability to pledge or encumber any of its assets, except for the
liens and other encumbrances set forth below and any agreement to restrict its
ability to further pledge or encumber the assets subject to the liens and
encumbrances set forth below (the "Permitted Liens"):
(a) liens for Taxes or assessments or governmental charges or levies
not at the time delinquent or thereafter payable without penalty or being
contested in good faith, provided provision is made to the extent required by
GAAP for the eventual payment thereof in the event it is found that such are
payable by the Borrower;
(b) liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue or
being contested in good faith, provided provision is made to the extent required
by GAAP for the eventual payment thereof in the event it is found that such sums
are payable by the Borrower or the Guarantors;
(c) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders and
statutory obligations entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds in the ordinary course of business
or easements, rights of way and similar encumbrances incurred in the ordinary
course of business and not interfering with the ordinary conduct of the business
of the Borrower or the Guarantors;
(d) judgment liens in existence less than thirty (30) days after the
entry thereof or with respect to which execution has been stayed or the payment
of which is covered in full by insurance;
(e) liens required by the terms of this Credit Agreement and liens
permitted by the Mortgage and the Security Agreement; and
(f) (i) deposits to secure the performance of bids, tenders or trade
contracts, or to secure statutory obligations, surety or appeal bonds or other
liens of like general nature incurred
40
in the ordinary course of business and (ii) liens arising in the ordinary course
of business or incidental to the ownership of properties and assets and not
incurred in connection with the borrowing of money (including liens in
connection with worker's compensation, unemployment insurance and other like
laws, carrier's, mechanic's, materialmen's, repairmen's, vendor's,
warehousemen's and attorneys' liens and statutory landlords' liens);
(g) survey exceptions, issues with regard to the merchantability of
title, easements or reservations, mineral rights, or rights of others for
rights-of-way, servitudes, utilities and other similar purposes, or zoning or
other restrictions as to the use of real properties, which could not reasonably
be expected to have a material adverse effect;
(h) liens permitted by the Majority Lenders in writing;
(i) liens reflected on Schedule 12.1 attached hereto and certain
capitalized leases of Xxxxxx Xxxxxxx Newfoundland Limited in an amount not to
exceed USD 4,000,000, in each case in existence as of the date of this Credit
Agreement, and any extensions, renewals and refinancings thereof provided that
any such refinancing shall not increase the principal indebtedness secured
thereby without the prior written consent of the Majority Lenders.
(j) non-perfected liens in favor of Firemen's Fund Insurance Company
or other bonding company(ies) rated A-VII or better by A.M. Best Company
pursuant to a bonding company indemnity agreement(s) in customary form.
(k) liens granted in the ordinary course of business on vessels, rigs
or equipment under construction or materials used in the construction of such
property in favor of the purchaser, owner or supplier of such vessels, rigs,
equipment or materials (or the lenders to such purchasers, owners or suppliers);
(l) liens in existence on the date of acquisition encumbering the
assets or stock of any subsidiary acquired after the date of this Credit
Agreement;
(m) liens securing Indebtedness permitted by Section 12.5(h) below.
12.2 Line of Business. Enter into any new line of business unrelated to
their present activities after the date of this Credit Agreement.
12.3 Consolidation, Merger, Etc. Consolidate with or merge with, or sell
(whether in one transaction or in a series of transactions) all or substantially
all of their assets to any Person.
12.4 Modification of Agreements. Amend, modify or otherwise change any of
the Loan Documents.
12.5 Indebtedness. Incur or assume any Indebtedness, except:
41
(a) the Advances and the Letters of Credit;
(b) accounts payable and accrued liabilities incurred in the ordinary
course of business;
(c) Indebtedness secured by Permitted Liens and any refinancing or
replacement of such Indebtedness.
(d) endorsements for collection, deposits or negotiation and
warranties of products or services, in each case incurred in the ordinary course
of business;
(e) Indebtedness in respect of performance, surety or appeal bonds
obtained in the ordinary course of Borrower's or any of its subsidiary's
business;
(f) Indebtedness existing on the Closing Date and listed and described
on Schedule 12.5 hereto and Indebtedness issued to refinance or replace such
Indebtedness;
(g) Indebtedness in connection with an acquisition permitted by
Section 12.15 below.
(h) other Indebtedness not otherwise permitted by this Section 12.5 in
the principal amount outstanding of up to USD 15,000,000 in any year, and up to
an aggregate of USD 25,000,000 from the date hereof through the Maturity Date.
12.6 Reportable Event. Cause or allow to occur a Reportable Event.
12.7 Change of Legal Structure. Cause or allow to occur any material
change in their present Certificate of Incorporation or By-Laws adversely
affecting the Lenders or change their jurisdiction of incorporation.
12.8 Change of Place of Business. Make any change in the address of their
principal place of business or their chief executive office except upon thirty
(30) days' prior written notice to the Agent.
12.9 Subsidiaries. Create or acquire any subsidiaries, unless (a) the
Borrower notifies the Agent of the creation or the acquisition of such
subsidiary and such subsidiary, at the Agent's request, guarantees the
Borrower's obligations hereunder in form and substance satisfactory to the
Lenders, or, (b) in the case of any direct foreign subsidiary, such subsidiary
executes a promissory note in favor of the Borrower which shall be assigned to
the Agent, or (c) in the case of an indirect foreign subsidiary, such subsidiary
executes a promissory note in favor of a direct foreign subsidiary, each
substantially in the form of the notes described in Section 8.1(t) hereof .
Neither the Borrower nor any of its direct or indirect subsidiaries shall
transfer or sell any shares of capital stock of any subsidiary, whether domestic
or foreign, without the prior written consent of the Majority Lenders.
42
12.10 Sale of Fixed Assets or Accounts. Sell, transfer or assign any
fixed assets or any account receivable; provided, however, that the Borrower may
sell, transfer or assign any assets in the ordinary course of business in an
amount of up to USD 15,000,000 in any year and up to an aggregate of USD
40,000,000 from the date of this Credit Agreement through the Maturity Date.
12.11 Leverage Ratio. Permit the Leverage Ratio to be greater than (a)
2.75 to 1.0 from the date hereof through September 30, 2000 and (b) 2.25 to 1.0
at any time thereafter.
12.12 Fixed Charge Coverage Ratio. Permit its Fixed Charge Coverage Ratio
to be less than 1.5 to 1.0 on a rolling four quarter basis.
12.13 Net Worth. Permit its Net Worth to be less than the aggregate of
(a) ninety percent (90%) of Borrower's Net Worth as of the Closing Date less
merger-related expenses not to exceed USD 10,000,000 which may be realized up to
twelve months after the Closing Date, (b) seventy-five percent (75%) of
positive net income for each fiscal quarter, on a cumulative basis commencing
with the quarter beginning October 1, 1999, and (c) seventy-five percent (75%)
of the net proceeds of future offerings by the Borrower of common stock or other
equity of the Borrower.
12.14 Compliance with Federal Reserve Board Regulations. No part of the
proceeds of any Advance, and no Letter of Credit, will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or for the purpose of purchasing or carrying or trading in any
securities under such circumstances as to involve the Borrower or the Guarantors
in a violation of Regulation X of said Board or the Lenders in a violation of
Regulation U of said Board. In particular, without limitation of the foregoing,
neither the Borrower nor any Guarantor will use any part of the proceeds of any
Advance to be made hereunder to acquire for itself or for any other person any
publicly-held securities of any kind. The assets of the Borrower and the
Guarantors do not and will not include any margin securities, and the Borrower
and the Guarantors have no present intention of acquiring any margin securities.
As used in this Section 12.14, the terms "margin security" and "purpose of
purchasing or carrying" shall have the meanings assigned to them in the
aforesaid Regulation U, and the term "publicly-held", in respect of securities,
shall have the meaning assigned to it in Section 220.7(a) of Regulation T of
said Board. If requested by any Lender, the Borrower will furnish to such Lender
a statement or statements in conformity with the requirements of Federal Reserve
Form U-1 referred to in said Regulation U.
12.15 Loans and Investments. Advance funds to, or make investments in,
(whether by way of loan, guarantee or other credit support, stock purchase or
capital contribution) any Person other than in Cash Equivalents, except for:
(a) In addition to the investments permitted in clauses (b) and (d) of
this Section 12.15 and the fixed asset acquisitions permitted by clause (e) of
this Section 12.15, (i) during the period from the date hereof through the
earlier of (1) December 31, 2000 or (2) the Voluntary Step
43
Down Date, Acquisitions for which the total purchase price does not exceed
$25,000,000 in capital stock of the Borrower; (ii) thereafter until March 31,
2001 Acquisitions for which the total purchase price does not exceed USD
50,000,000 of which no more than USD 25,000,000 may be in the form of cash or
debt (whether assumed or newly incurred) in the aggregate in any calendar year;
and (iii) thereafter Acquisitions for which the total purchase price does not
exceed USD 100,000,000 of which no more than USD 25,000,000 may be in the form
of cash or debt (whether assumed or newly incurred) in the aggregate in any
calendar year; provided, that each such Acquisition shall only be of an entity
in the same or similar line of business as the Borrower and which is domiciled
in the U.S.; and provided further, that no Event of Default shall exist before
or after giving effect to any such acquisition on a trailing twelve months pro
forma basis;
(b) investments in joint ventures or similar arrangements existing as
of the effective date hereof as listed and described in Schedule 12.15 attached
hereto and any future retained earnings in respect thereof;
(c) guarantees, loans or advances to officers or employees of the
Borrower or a subsidiary of the Borrower in the aggregate principal amount of up
to USD 500,000 at any one time outstanding;
(d) present and future investments in joint ventures or similar
arrangements including guarantees of joint venture obligations up to USD
5,000,000 in respect of any one such investment and not to exceed USD 25,000,000
in respect of all such investments; and
(e) capitalized fixed asset additions, not to exceed USD 25,000,000
per calendar year; provided that, notwithstanding anything herein to the
contrary, neither the Borrower nor any of its U.S. subsidiaries shall make
advances or loans to any one non-U.S. subsidiary in excess of USD 10,000,000,
and to all non-U.S. subsidiaries which exceed, in the aggregate, USD 20,000,000.
12.16 Contracts with Affiliates. Enter into any transaction with any
director, officer, employee, shareholder or Affiliate of the Borrower or the
Guarantors except on terms no less favorable to the Borrower than the Borrower
could obtain in an arms length transaction with Persons not affiliated with the
Borrower or the Guarantors.
12.17 Dividends. Without the consent of the Majority Lenders, make any
dividend payments (other than dividends payable in stock) or other distributions
to its stockholders or redeem or otherwise acquire any of its stock; provided
that, following the date which is the earlier of (a) December 31, 2000 and (b)
the Voluntary Step Down Date, the Borrower may redeem or retire subordinated
indebtedness, in an amount not to exceed, in the aggregate, USD 30,000,000.
12.18 Fiscal Years. Change or allow to change, the fiscal year of the
Borrower or any Guarantor from one ending on December 31.
44
Section 13. Events of Default.
13.1 Events. An "Event of Default" shall exist if any of the following
events shall occur and be continuing:
(a) The Borrower shall default in the payment or prepayment when due
of any principal or interest on the Loan or any fees or other amount payable by
them hereunder or under any other Loan Document and such default shall continue
for three (3) Business Days after such amount is due; or
(b) The Borrower or the Guarantors shall default in the payment when
due of any principal of or interest on any of their other Indebtedness in an
aggregate amount in excess of USD 2,000,000; or any event specified in any
notes, agreement, indenture or other document evidencing or relating to any such
Indebtedness shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, such Indebtedness to become due prior to its stated maturity;
or
(c) Any representation, warranty or certification made or deemed made
herein or in any other Loan Document by the Borrower or the Guarantors or any
certificate furnished to the Agent or the Lenders pursuant to the provisions
hereof or any other Loan Document, shall prove to have been false or misleading
as of the time made or furnished in any material respect; or
(d) The Borrower or the Guarantors shall fail to perform or observe
any provision of the Loan Documents to which they are parties and such failure
shall continue unremedied for a period of ten (10) Business Days after (i) the
failure arises and (ii) the Borrower or the Guarantors have knowledge of such
failure, or ten (10) Business Days after the Agent gives the Borrower notice of
such failure; or
(e) The Borrower or any Guarantor shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due; or
(f) The Borrower or any direct or indirect subsidiary shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the U.S. Bankruptcy Code (as
now or hereafter in effect), (iv) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the U.S. Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Borrower or any direct or indirect subsidiary in any court of
competent jurisdiction, seeking
45
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Borrower or any direct or
indirect subsidiary or of all or any substantial part of the assets of any of
them, or (iii) similar relief in respect of the Borrower or any direct or
indirect subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) days; or an order for relief
against the Borrower or any direct or indirect subsidiary shall be entered in an
involuntary case under the U.S. Bankruptcy Code; or
(h) A judgment for the payment of money in excess of USD 2,000,000
shall be rendered by a court against any of the Borrower or any Guarantor and
the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within thirty
(30) days from the date of entry thereof and the Borrower or any Guarantor,
respectively, shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
(i) The Guaranty or any other Loan Document shall cease to be in full
force and effect;
(j) a Change of Control shall have occurred; or
(k) any security interest provided in the Loan Documents or the
perfection thereof shall fail or otherwise have lapsed, written notice thereof
has been provided by the Agent to the Borrower, and the Borrower fails to
cooperate with the Agent or take all reasonable steps needed to effect the
granting of such security interest and the perfection thereof within ten (10)
days of such written notice.
THEN, or at any time thereafter, while any such event remains unremedied or
uncured:
The Agent may (and at the written request of the Majority Lenders shall)
upon written notice to the Borrower, terminate the Commitment to make Advances
or to issue Letters of Credit and/or declare the entire outstanding unpaid
principal amount of the Notes and the Swing Note, all Breakage Costs and all
interest accrued and unpaid thereon and all other amounts payable hereunder and
thereunder to be forthwith due and payable, whereupon the same shall become
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower and
also demand that the Borrower cooperate with it in order to permit any
outstanding Letters of Credit to be terminated, or if such termination cannot be
accomplished, the Borrower shall deposit with each issuing Lender an amount
equal to the aggregate amounts of any outstanding Letters of Credit (including
the Dollar Equivalent of the face amounts of outstanding Offshore Currency
Letters of Credit) which deposit shall be held by such Lender as security until
all of the Letters of Credit are terminated or expire; provided that the
Commitments
46
shall automatically terminate upon the occurrence of any Event of Default under
Section 13(f) or (g) above. The Agent and the Lenders may immediately and
without expiration of any additional period of grace, enforce payment of all
obligations of the Borrower under this Credit Agreement, under the Notes and
under the Swing Note. In addition, the Agent and the Lenders may exercise any or
all of such remedies as may be available to it under applicable law or granted
pursuant to the Loan Documents.
Any declaration made pursuant to this Section 13.1 is subject to the
condition that, if at any time after the aggregate outstanding principal of the
Notes and the Swing Note shall have become due and payable, and before any
foreclosure action has been taken by the Agent or any Lender under any of the
Loan Documents to realize upon the security provided by such documents, and
provided that all Breakage Costs and all arrears of interest upon the Notes and
the Swing Note and all other obligations owed to the Lenders (except that
aggregate principal of the Notes which by such declaration shall have become
payable) shall have been duly paid, and every other default and Event of Default
shall have been made good waived or cured, then the Lenders may, by written
notice to the Borrower, rescind and annul such declaration and its consequences;
but no such rescission or annulment shall extend to or affect any subsequent
default or Event of Default or impair any right consequent thereon.
Section 14. The Agent
14.1 Appointment and Duties of Agent. The parties hereto agree that
Xxxxx Fargo Bank (Texas), National Association shall act, subject to the terms
and conditions of this Section 14, as the Agent for the Lenders in connection
with the Loan, and to the extent set forth herein each Lender hereby irrevocably
appoints, authorizes, empowers and directs the Agent to take such action on its
behalf and to exercise such powers as are specifically delegated to the Agent
herein or are reasonably incidental thereto in connection with the
administration of and the enforcement of any rights or remedies with respect to
this Credit Agreement, the Notes and the other Loan Documents. It is expressly
understood and agreed that the obligations of the Agent under the Loan Documents
are only those expressly set forth in this Credit Agreement. The Agent shall
use reasonable diligence to examine the face of each document received by it
hereunder to determine whether such documents, on its face, appears to be what
it purports to be. However, the Agent shall not be under any duty to examine
into and pass upon the validity or genuineness of any documents received by it
hereunder and the Agent shall be entitled to assume that any of the same which
appears regular on its face is genuine and valid and what it purports to be.
Banc One Capital Markets, Inc., in its capacity as Syndication Agent and Co-
Arranger, shall have no rights or obligations hereunder or under any of the Loan
Documents.
14.2 Discretion and Liability of Agent. Subject to Sections 14.3 and 14.5
below, the Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
under any of the Loan Documents or otherwise, or with respect to taking or
refraining from taking any action or actions which it may be able to take under
any of the Loan Documents. Neither the Agent nor any of its directors,
officers, employees, agents or
47
representatives shall be liable for any action taken or omitted by it hereunder
or in connection herewith, except for its own gross negligence or wilful
misconduct. The Agent shall incur no liability under, or in respect of this
Credit Agreement or the other Loan Documents by acting upon a notice,
certificate, warranty or other paper or instrument reasonably believed by it to
be genuine or authentic or to be signed by the proper party or parties, or with
respect to anything which it may do or refrain from doing in the reasonable
exercise of its judgment, or which may seem to it to be necessary or desirable
in the premises.
14.3 Event of Default.
(a) The Agent shall be entitled to assume that no Event of Default or
event which would constitute an Event of Default after notice or lapse of time,
or both, has occurred and is continuing, unless the Agent has actual knowledge
of such facts or has received notice from a Lender in writing that such Lender
considers that an Event of Default or event which would constitute an Event of
Default after notice or lapse of time, or both, has occurred and is continuing
and which specifies the nature thereof.
(b) In the event that the Agent shall acquire actual knowledge of any
Event of Default or event which would constitute an Event of Default after
notice or lapse of time, or both, the Agent shall promptly notify (either
orally, confirmed in writing, or in writing) the Lenders of such Event of
Default or event and may take such action and assert such rights as are
contemplated under this Credit Agreement and in an emergency, or if requested in
writing by the Majority Lenders shall, take such action and assert such rights
as are contemplated under this Agreement; provided that the unanimous consent of
the Lenders shall be required for the Agent to commence foreclosure proceedings
in respect of any real property subject to the Mortgages. The Agent shall be
indemnified pro rata by the Lenders against any liability or expenses,
including, but not limited to, travel expenses and internal and external counsel
fees and expenses, incurred in connection with taking such action. The Agent
may refrain from acting in accordance with any instructions from the Lenders
until it shall have been indemnified to its satisfaction against any and all
costs and expenses which it will or may expend or incur in complying with such
instructions.
14.4 Consultation. When acting in connection with this Credit Agreement,
or the other Loan Documents, the Agent may engage and pay for the advice and
services of any lawyers, accountants, surveyors, appraisers or other experts
whose advice or services may to it appear necessary, expedient or desirable and
the Agent shall be entitled to fully rely upon any opinion or such advice so
obtained.
14.5 Communications to and from Agent. When any notice, approval,
consent, waiver or other communication or action is required or may be delivered
by the Lenders hereunder or the other Loan Documents, action by the Agent shall
be effective for all purposes hereunder; provided, that upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Lenders, unless action by the Agent alone, or only upon
instruction of all of the Lenders, is expressly permitted or required hereunder,
action shall be taken by the Agent for and on
48
behalf of or for the benefit of all the Lenders as provided in Section 14.3
above. The Borrower and the Guarantors may rely on any communication from the
Agent hereunder or the other Loan Documents, and need not inquire into the
propriety of or authorization for such communication.
14.6 Limitations of Agency. Notwithstanding anything in the Loan
Documents, expressed or implied, it is agreed by the parties hereto, that the
Agent will act under the Loan Documents as Agent solely for the Lenders and only
to the extent specifically set forth herein, and will, under no circumstances,
be considered to be an agent or fiduciary of any nature whatsoever in respect to
any other person. The Agent may generally engage in any business with the
Borrower and the Guarantors or any of their affiliates as if it was not the
Agent.
14.7 No Representations or Warranty.
(a) No Lender (including the Agent) makes to any other Lender any
representation or any warranty, expressed or implied, or assumes any
responsibility with respect to the Loan or the execution, construction or
enforceability of the Loan Documents or any instrument or agreement executed by
the Borrower, the Guarantors or any other Person in connection therewith.
(b) The Agent takes no responsibility for the accuracy or completeness
of any information concerning the Borrower and the Guarantors distributed by the
Agent in connection with the Loan nor for the truth of any representation or
warranty given or made herein, nor for the validity, effectiveness, adequacy or
enforceability of this Agreement or any of the other Loan Documents.
14.8 Lender Credit Decision. Each Lender acknowledges that it has,
independent of and without reliance upon any other Lender (including the Agent)
or any information provided by any other Lender (including the Agent) and based
on the financial statements of the Borrower and the Guarantors and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Credit Agreement. Each Lender also
acknowledges that it will, independent of and without reliance upon any other
Lender (including the Agent) and based on such documents and information as it
shall deem appropriate at that time, continue to make its own credit decisions
in taking or not taking action under this Agreement and any other documents
relating thereto.
14.9 Indemnity. Notwithstanding any of the provisions hereof, to the
extent the Agent has not been so indemnified by the Borrower, the Lenders shall
severally indemnify the Agent against any and all losses, costs, liabilities,
damages or expenses, including but not limited to, reasonable travel expenses
and internal and external counsel's reasonable fees and expenses, arising from,
or in connection with, its performance as Agent hereunder and not caused by its
gross negligence or willful misconduct.
14.10 Resignation. The Agent may resign as such at any time upon at least
thirty (30) days' prior notice to the Borrower and the Lenders, provided that
such resignation shall not take effect
49
until a successor agent has been appointed. In the event of a resignation by the
Agent, the Lenders shall promptly appoint a successor agent from among the
Lenders.
14.11 Distribution. The Agent shall be responsible for promptly
distributing each Lender's share of all net amounts received by the Agent under
any of the Loan Documents pursuant to each Lender's percentage of commitment.
Each Lender shall be responsible for designating by written notice to the Agent
the account to which such distribution shall be deposited.
14.12 Limitation of Suits. All rights of action and claims of the Lenders
under this Credit Agreement, the Mortgage, the Pledge and the Security Agreement
shall be prosecuted and enforced only by the Agent. The Lenders agree that they
shall not independently institute any proceedings, judicial or otherwise, to
enforce their rights against the Borrower under this Agreement, the Mortgage,
the Pledge or the Security Agreement. However, notwithstanding anything
contained in this Section 14.12, the Lenders shall always retain their ability
to retain independent counsel and to protect their rights under this Credit
Agreement and the other Loan Documents.
14.13 Right of Setoff. Upon the occurrence and during the continuation of
any Event of Default, the Lenders each are hereby authorized at any time and
from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to setoff and apply any and all deposits
(general or special, time or demand, provisional or final, whether or not such
setoff results in any loss of interest or other penalty, and including without
limitation all certificates of deposit) at any time held by the Lenders and all
of the indebtedness arising in connection with this Credit Agreement
irrespective of whether or not such Lender will have made any demand under this
Credit Agreement, the Notes or any other Loan Document; provided that such
Lender shall share such deposits ratably among the other Lenders. Should the
right of any Lender to realize funds in any manner set forth hereinabove be
challenged and any application of such funds be reversed, whether by court order
or otherwise, the Lenders shall make restitution or refund to the Borrower pro
rata in accordance with their respective portions of the Loan. Each Lender
agrees to promptly notify the Borrower and the Agent after any such setoff and
application, provided that the failure to give such notice will not affect the
validity of such setoff and application. The rights of the Agent and the
Lenders under this Section 14.13 are in addition to other rights and remedies
(including without limitation other rights of setoff) which the Agent or the
Lenders may have. Nothing contained herein shall affect the right of any Lender
to exercise, and retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower to such Lender.
Section 15. Miscellaneous.
15.1 Entire Agreement. This Credit Agreement with its Schedules and
Exhibits embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings relating to the
subject matter hereof.
15.2 No Waiver. No failure to exercise, and no delay in exercising any
right, power or remedy hereunder or under any document delivered pursuant hereto
shall impair any right, power
50
or remedy which the Lender may have, nor shall any such delay be construed to be
a waiver of any of such rights, powers or remedies, or an acquiescence in any
breach or default under this Credit Agreement or any document delivered pursuant
hereto, nor shall any waiver of any breach or default of the Borrower hereunder
be deemed a waiver of any default or breach subsequently occurring. The rights
and remedies herein specified are cumulative and not exclusive of any rights or
remedies which the Agent or the Lenders would otherwise have.
15.3 Survival. All representations, warranties and agreements herein
contained on the part of the Borrower shall survive the making of the Advances
or the issuance of the Letters of Credit hereunder and all such representations,
warranties, and agreements shall be effective as long as any amount arising
pursuant to the terms of this Credit Agreement, the Notes or the Swing Note
remains unpaid.
15.4 Notices.
(a) All notices, requests, consents, demands, and other communications
provided for or permitted hereunder shall be effective three (3) days after
being duly deposited in the mails, certified, return receipt requested, or upon
receipt if delivered to Federal Express or similar courier company or
transmitted by telefax, addressed to the respective party at the address set
forth below.
Borrower and Guarantors: Xxxxxx Xxxxxxx Halter, Inc.
00000 Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Chief Financial Officer
Telefax No.: (000) 000-0000
Agent: Xxxxx Fargo Bank (Texas), National Association, as
Agent
c/o Wells Fargo Bank
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx, Vice President and Manager
Telefax No.: (000) 000-0000
or to such other addresses as the parties hereto may notify.
15.5 Termination. This Credit Agreement shall terminate when all
obligations of the Borrower incurred under the Loan Documents shall have been
discharged in full and all of the Commitments have been terminated.
15.6 Severability of Provisions. In case any one or more of the
provisions contained in this Credit Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
51
15.7 Successors and Assigns. This Credit Agreement shall be binding upon
and inure to the benefit of the Borrower, the Agent and the Lenders and their
respective successors and permitted assigns; provided, however, that the
Borrower may not transfer their rights to borrow under this Credit Agreement
without the prior written consent of the Lenders.
15.8 Assignment and Participation.
(a) Subject to compliance with the provisions of this Section 15.8,
the Lenders shall have the right to assign all or part of the obligations of the
Borrower outstanding under this Credit Agreement or the Notes evidencing such
obligations to Affiliates of the Lenders or to any foreign, federal or state
banking institution, savings and loan association, finance company, investment
bank or investment partnership. The Agent shall inform the Borrower in advance
as to any proposed assignment by a Lender and the identity of the prospective
assignee. Each such assignment shall be evidenced by execution and delivery of
an Assignment and Acceptance substantially in the form of Exhibit G hereto,
executed by the assigning Lender and the assignee, a copy which shall be
delivered to the Agent.
(b) Except in connection with the General Syndication: (i) any
assigning Lender shall pay an assignment fee to the Agent of USD 3,500 per
assignment, (ii) any assignment shall be in increments of USD 1,000,000 and
shall be no less than USD 5,000,000 and (iii) no assignment shall be effective
without the prior written consent of the Agent, which shall not be unreasonably
withheld, conditioned or delayed.
(c) The Lenders may sell participations (without the consent of the
Borrower) to one or more parties, in or to all or a portion of their rights and
obligations under this Credit Agreement, the Notes and the other Loan Documents;
provided, that any participation by a Lender of all or any part of its
Commitment shall be in an amount at least equal to USD 5,000,000 (other than the
right of each Lender, on a one time basis, to sell a participation of less than
USD 5,000,000) and with the understanding that all amounts payable by the
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the collateral
subject to the Loan Documents (other than in accordance with the terms of this
Agreement or the other Loan Documents). Neither the Borrower nor any Guarantor
shall have any obligation or duty to any participant. Neither Administrative
Agent nor any Lender (other than the Lender selling a participation) shall have
any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred.
52
(d) Notwithstanding anything herein contained to the contrary, no
assignment or participation may be made prior to the earlier of (i) General
Syndication and (ii) the 30th day following the resolution of the Ocean Rig
Dispute, without the consent of the Majority Lenders.
(e) The Borrower hereby agrees to assist with any assignment made
pursuant to this Section 15.8 by executing and delivering any documents or
instruments reasonably requested by the Lenders in connection with any such
assignment, including but not limited to, amendments to this Credit Agreement,
consents to assignments or new promissory Notes.
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements or increased costs under
Section 6.6(b), an inability to fund LIBOR Advances under Section 6.6(a) or
Section 6.7, or withholding taxes in accordance with Section 6.9.
15.9 Counterparts. This Credit Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Credit Agreement by signing any such
counterpart.
15.10 Jurisdiction. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO THIS
CREDIT AGREEMENT AND THE NOTES MAY BE INSTITUTED IN THE COURTS OF THE STATE OF
TEXAS OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS.
BY EXECUTION AND DELIVERY OF THIS CREDIT AGREEMENT THE LENDERS, THE AGENT AND
THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE JURISDICTION OF EACH
SUCH COURT, AND IRREVOCABLY AND UNCONDITIONALLY WAIVE (i) ANY OBJECTION THE
BORROWER, THE AGENT OR THE LENDERS MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN ANY OF SUCH COURTS, AND (ii) ANY CLAIMS THAT ANY ACTION OR PROCEEDING
BROUGHT IN ANY OF SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM;
PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION 15.10 SHALL LIMIT OR RESTRICT
THE RIGHT OF THE AGENT OR THE LENDERS TO BRING SUIT AGAINST THE BORROWER OR THE
GUARANTORS ANYWHERE IN THE WORLD TO ENFORCE THE SECURITY PROVIDED IN THE
SECURITY AGREEMENT.
15.11 Choice of Law. THIS CREDIT AGREEMENT AND THE NOTES ISSUED HEREUNDER
AND ALL ISSUES ARISING IN CONNECTION WITH THIS CREDIT AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, EXCEPT THAT WITH
RESPECT TO THE PROVISIONS OF THIS CREDIT AGREEMENT AND THE NOTES WHICH PROVIDE
FOR OR RELATE TO THE PAYMENT OF INTEREST, PROVISIONS OF APPLICABLE FEDERAL LAW
WHICH PERMIT
53
THE LENDERS TO CHARGE THE HIGHER OF THE RATE PERMITTED BY SUCH APPLICABLE LAW OR
BY THE LAWS OF THE STATE IN WHICH EACH LENDER IS LOCATED SHALL BE DEEMED
GOVERNING AND CONTROLLING.
15.12 Waiver of Jury Trial. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY
ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT, RELATED TO, OR CONNECTED
WITH THIS CREDIT AGREEMENT, ANY OF THE LOAN DOCUMENTS OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
15.13 Amendment and Waiver. No amendment or waiver of any provision of
this Credit Agreement, the Notes, or any other Loan Document, nor any consent to
any departure by the Borrower or the Guarantors therefrom, shall in any event be
effective unless the same shall be agreed or consented to by the Majority
Lenders, the Agent and the Borrower, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver, or consent shall, unless in writing
and signed by all of the Lenders and the Borrower, do any of the following: (a)
increase Commitments of the Lenders or subject the Lenders to any additional
obligations; (b) reduce the principal of, or interest on, the Notes or any fees
or other amounts payable hereunder; (c) postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder (d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes or the number of Lenders which shall be
required for the Lenders or any of them to take any action under this Credit
Agreement; (e) change any provision contained in this Section 15.13; (f) release
any of the collateral for the Obligations, including, without limitation, the
Guaranty; or (g) change the percentages set forth in the definition of
"Borrowing Base"; provided, however, that the Agent may release any collateral
in order to give effect to, or otherwise in connection with, any asset sale,
lease or other disposition, or secured financing or other financing transaction
permitted hereby, in which case the Lenders authorize the Agent to execute and
deliver any and all related release documents without the further consent of any
Lender. Each Lender and holder of any Note shall be bound by any modification
or amendment authorized by this Section 15.13 regardless of whether its Notes
shall be marked to make reference thereto, and any consent by any Lender or
holder of a Note pursuant to this Section shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall be so marked.
15.14 No Oral Agreements. THIS WRITTEN CREDIT AGREEMENT WITH ITS
SCHEDULES AND EXHIBITS REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES
CONCERNING THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
15.15 Headings, Etc. The table of contents of this Credit Agreement and
the headings of various sections and subsections herein are for convenience of
reference only and shall not modify,
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define, expand or limit any of the terms or provisions hereof. References to
sections or subsections without reference to the document in which they are
contained are references to this Credit Agreement.
15.16 Taxes. Any Taxes payable or ruled payable by any Government Agency
in respect of this Credit Agreement, the Notes, the Swing Note or any other Loan
Document, other than any Tax on or measured by the income of the Lenders, shall
be paid by the Borrower, together with any interest and penalties.
15.17 Controlling Agreement. In the event of a conflict between the
provisions of this Credit Agreement and those of any other Loan Document, the
provisions of this Credit Agreement shall control.
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IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be executed as of the day and year first above written.
XXXXXX XXXXXXX HALTER, INC.
By: /s/ XXXXX X. XXXXXXXX
Name: Xxxxx X. Xxxxxxxx
Title: Senior Vice President and Treasurer
LENDERS:
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By: /s/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ X.X. XXXXX
Name: X.X. Xxxxx
Title: Senior Manager
HIBERNIA NATIONAL BANK
By: /s/ XXXXX XXXX
Name: Xxxxx Xxxx
Title: Senior Vice President
BANK ONE, N.A.
By: /s/ XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Officer
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ADMINISTRATIVE AGENT AND CO-ARRANGER:
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By: /s/ XXXXXX X. XXXXXXX
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
SYNDICATION AGENT AND CO-ARRANGER:
BANC ONE CAPITAL MARKETS, INC.
By: /s/ XXXXXXX X. XXXXXXX
Name: Xxxxxxx X. Xxxxxxx
Title: Authorized Officer
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