EXHIBIT 4.1
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMONG
FLEET CAPITAL CORPORATION,
SOUTHWEST BANK OF TEXAS, N.A.
AND
WHITNEY NATIONAL BANK,
AS LENDERS
FLEET CAPITAL CORPORATION,
AS AGENT FOR THE LENDERS
CAL DIVE INTERNATIONAL, INC.,
ENERGY RESOURCE TECHNOLOGY, INC.,
AQUATICA, INC.
AND
CANYON OFFSHORE, INC.
AS BORROWERS
DATED: FEBRUARY _____, 2002
TABLE OF CONTENTS
ARTICLE 1. GENERAL DEFINITIONS.............................................................................2
Section 1.1 Defined Terms..........................................................................2
Section 1.2 Accounting Terms......................................................................20
Section 1.3 Other Terms...........................................................................21
Section 1.4 Certain Matters of Construction.......................................................21
Section 1.5 The Term "Borrower" or Borrowers".....................................................21
ARTICLE 2. CREDIT FACILITY................................................................................21
Section 2.1 Revolving Loans.......................................................................21
Section 2.2 Vessel Sublimit.......................................................................22
Section 2.3 Overadvances..........................................................................22
Section 2.4 Manner of Borrowing...................................................................23
Section 2.5 Letters of Credit; LC Guaranties......................................................23
Section 2.6 All Loans to Constitute One Obligation................................................29
Section 2.7 Loan Account..........................................................................29
Section 2.8 Joint and Several Liability: Rights of Contribution...................................29
Section 2.9 Contribution of Lenders; Non-Ratable Loans............................................30
ARTICLE 3. INTEREST, FEES, TERM, REDUCTION AND REPAYMENT..................................................35
Section 3.1 Interest, Fees and Charges............................................................35
Section 3.2 Additional Provisions Regarding LIBOR Loans...........................................39
Section 3.3 Term of Agreement.....................................................................41
Section 3.4 Early Termination by Borrower.........................................................41
Section 3.5 Effect of Termination.................................................................41
Section 3.6 Payments..............................................................................42
Section 3.7 Application of Payments and Collections...............................................42
Section 3.8 Statements of Account.................................................................43
Section 3.9 Increased Costs.......................................................................44
Section 3.10 Basis for Determining Interest Rate Inadequate or Unfair..............................45
ARTICLE 4. COLLATERAL: GENERAL TERMS......................................................................45
Section 4.1 Security Interest in Collateral.......................................................45
Section 4.2 Other Collateral......................................................................47
Section 4.3 Lien on Vessels.......................................................................47
Section 4.4 Negative Pledge.......................................................................48
Section 4.5 Representations, Warranties and Covenants.............................................48
Section 4.6 Lien Perfection.......................................................................49
Section 4.7 Location of Collateral................................................................49
Section 4.8 Insurance of Collateral...............................................................49
Section 4.9 Protection of Collateral..............................................................50
ARTICLE 5. PROVISIONS RELATING TO ACCOUNTS................................................................50
Section 5.1 Representations, Warranties and Covenants.............................................50
Section 5.2 Assignments, Records and Schedules of Accounts........................................51
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Section 5.3 Administration of Accounts............................................................52
Section 5.4 Collection of Accounts................................................................52
ARTICLE 6. PROVISIONS RELATING TO EQUIPMENT, VESSELS AND OFFSHORE PLATFORMS...............................53
Section 6.1 Representations, Warranties and Covenants.............................................53
Section 6.2 Evidence of Ownership of Equipment and Vessels........................................53
Section 6.3 Records and Schedules of Equipment and the Vessels....................................53
Section 6.4 Dispositions..........................................................................53
ARTICLE 7. REPRESENTATIONS AND WARRANTIES.................................................................54
Section 7.1 General Representations and Warranties................................................54
Section 7.2 Solvent Financial Conditions..........................................................56
Section 7.3 Survival of Representations and Warranties............................................61
ARTICLE 8. COVENANTS AND CONTINUING AGREEMENTS............................................................61
Section 8.1 Affirmative Covenants.................................................................61
Section 8.2 Negative Covenants....................................................................69
Section 8.3 Specific Financial Covenants..........................................................74
ARTICLE 9. CONDITIONS PRECEDENT...........................................................................74
Section 9.1 Documentation.........................................................................74
Section 9.2 Other Conditions......................................................................76
ARTICLE 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT..............................................77
Section 10.1 Events of Default.....................................................................77
Section 10.2 Acceleration of the Obligations.......................................................80
Section 10.3 Remedies..............................................................................80
Section 10.4 Remedies Cumulative: No Waiver........................................................81
ARTICLE 11. THE AGENT......................................................................................82
Section 11.1 Authorization and Action..............................................................82
Section 11.2 Agent's Reliance, Etc.................................................................82
Section 11.3 Fleet and Affiliates..................................................................82
Section 11.4 Lender Credit Decision................................................................83
Section 11.5 Indemnification.......................................................................83
Section 11.6 Successor Agent.......................................................................83
Section 11.7 Communications to and from Agent......................................................83
Section 11.8 Limitations of Agency.................................................................84
Section 11.9 No Representations or Warranty........................................................84
Section 11.10 Distribution..........................................................................84
Section 11.11 Limitation of Suits...................................................................84
Section 11.12 Right of Setoff.......................................................................84
ARTICLE 12. MISCELLANEOUS..................................................................................85
Section 12.1 Power of Attorney.....................................................................85
Section 12.2 Indemnity.............................................................................86
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Section 12.3 Reimbursement of Expenses.............................................................87
Section 12.4 Indulgences Not Waivers...............................................................87
Section 12.5 Severability..........................................................................88
Section 12.6 Modification of Agreement; Sale of Interest...........................................88
Section 12.7 Cumulative Effect: Conflict of Terms..................................................92
Section 12.8 Execution in Counterparts.............................................................92
Section 12.9 Notice................................................................................92
Section 12.10 Agent or Lenders' Consent.............................................................93
Section 12.11 Time of Essence.......................................................................93
Section 12.12 Interpretation........................................................................93
Section 12.13 No Fiduciary Relationship or Joint Venture............................................93
Section 12.14 Publicity.............................................................................93
Section 12.15 Destruction of Borrower's Documents...................................................93
Section 12.16 Nonapplicability of Chapter 346.......................................................94
Section 12.17 No Preservation or Marshaling.........................................................94
Section 12.18 GOVERNING LAW; CONSENT TO FORUM.......................................................94
Section 12.19 WAIVERS BY BORROWER...................................................................95
Section 12.20 DTPA WAIVER...........................................................................95
Section 12.21 ORAL AGREEMENTS INEFFECTIVE...........................................................96
Section 12.22 RELEASE...............................................................................96
Section 12.23 Amendment and Restatement.............................................................96
Exhibit A -- Form of Note
Exhibit B -- Form of Borrowing Notice
Exhibit C -- Location of Collateral
Exhibit D -- Organization and Qualification
Exhibit E -- List Corporate Names
Exhibit F -- List of Patents, Trademarks, Copyrights and Licenses
Exhibit G -- Capital Structure
Exhibit H -- Shareholder Agreements
Exhibit I -- List of Restrictions
Exhibit J -- List of Litigation
Exhibit K -- ERISA
Exhibit L -- List of Tax Liability
Exhibit M -- List of Taxing Authorities
Exhibit N -- List of Labor Relations
Exhibit O -- List of Existing Environmental Violations
Exhibit P -- List of Surety Obligations
Exhibit Q -- List of Capitalized Leases
Exhibit R -- List of Operating Leases
Exhibit S -- Form of Compliance Certificate
Exhibit T -- Form of Tax Certificate
Exhibit U -- List of Other Guaranties
Exhibit V -- List of Liens
Exhibit W -- Material Changes since November 30, 2001.
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Exhibit X -- Form of Borrowing Base Certificate
Exhibit Y -- Form of Assignment and Acceptance
Schedules
Schedule 1 -- List of Lenders
Schedule 2 -- List of Vessels
Schedule 3 -- Reduction Amounts
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SECOND AMENDED AND RESTATED
LOAN
AND SECURITY AGREEMENT
THIS SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT is made
this _____ day of February, 2002, by and among FLEET CAPITAL CORPORATION, a
Rhode Island corporation (in its individual capacity, "Fleet"), successor in
interest by assignment to Shawmut Capital Corporation ("Shawmut"), with an
office at 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx 00000; SOUTHWEST BANK OF
TEXAS, N.A., a national banking association ("Southwest") with an office at 5
Post Oak Park, 0000 Xxxx Xxx Xxxxxxx, Xxxxxxx, Xxxxx 00000; WHITNEY NATIONAL
BANK, a national banking association ("Whitney") with an office at New Orleans,
Louisiana (Fleet, Whitney and Southwest being referred to herein collectively as
the "Lenders"), Fleet as Agent for the Lenders (the "Agent"); CAL DIVE
INTERNATIONAL, INC. ("Cal Dive"), a Minnesota corporation, ENERGY RESOURCE
TECHNOLOGY, INC. ("ERT"), a Delaware corporation, AQUATICA, INC. ("Aquatica"), a
Louisiana corporation and CANYON OFFSHORE, INC. ("Canyon"), a
Texas corporation
(Cal Dive, ERT, Aquatica and Canyon being referred to individually and
collectively as "Borrower"), each Borrower having its chief executive office at
000 X. Xxx Xxxxxxx Xxxxxxx X., Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000.
PRELIMINARY STATEMENTS
A. On August 3, 1993, Barclays Business Credit, Inc. ("Barclays") and Cal
Dive entered into that certain
Loan and Security Agreement, as amended
by (i) that certain First Amendment to
Loan and Security Agreement,
dated as of August 31, 1994, executed by Barclays and Cal Dive, and
(ii) that certain Letter Agreement, dated as of December 30, 1994 by
Barclays pursuant to which Barclays agreed to make loans and advances
to Cal Dive in accordance with the terms thereof.
B. On May 23, 1995, Shawmut and Cal Dive entered into that certain Amended
and Restated
Loan and Security Agreement, as so amended by First
Amendment dated September 19, 1995, Second Amendment dated March 8,
1996, Third Amendment dated October 2, 0000, Xxxxxx Xxxxxxxxx dated
January 7, 1997, Fifth Amendment dated April 30, 1997 and Sixth
Amendment dated May 12, 1999, as so amended the "Amended Loan
Agreement") pursuant to which Fleet agreed to make loans and advances
(collectively, the "Loans") to the Borrower in accordance with the
terms thereof.
C. The Amended Loan Agreement and any other documents evidencing,
governing, securing or otherwise pertaining to the Loans are
hereinafter referred to as the "Amended Loan Documents".
D. Cal Dive has requested Fleet to extend its relationship with Cal Dive
in connection with the Amended Loan Documents and to add Aquatica and
Canyon as Borrowers, and Fleet, as the legal and equitable owner and
holder of the Amended Loan Documents is willing to do so, subject to
certain terms and conditions expressed herein.
E. In connection with the extension of the relationship with Cal Dive,
Southwest and Whitney have agreed to become Lenders.
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F. In connection with the extension of the relationship between Cal Dive
and Lenders, Cal Dive and ERT , Aquatica, Canyon, Agent and Lenders
wish to completely amend, restate and modify (but not extinguish) the
Amended Loan Agreement and the other Amended Loan Documents, each
through the execution of this Agreement, which will supersede all prior
agreements among Fleet, Cal Dive and ERT, including without limitation
the Amended Loan Documents, and Cal Dive, ERT, Aquatica, Canyon, Agent
and Lenders have agreed that the agreements contained herein represent
an arms-length transaction among Agent, Lenders, Cal Dive, ERT,
Aquatica and Canyon.
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Agent, Lenders, Cal
Dive, ERT, Aquatica and Canyon covenant and agree as follows:
AGREEMENT
ARTICLE 1. GENERAL DEFINITIONS
Section 1.1 Defined Terms. When used herein, the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):
Accounts -- all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by Borrower or
in which Borrower now has or hereafter acquires any interest.
Account Debtor -- any Person who is or may become obligated under or on
account of an Account.
Affected Portion -- as defined in Section 3.2(c).
Affiliate -- a Person (other than ERT, Aquatica, Canyon, or a
Subsidiary): (a) which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, Borrower; (b)
which beneficially owns or holds ten percent (10%) or more of any class of the
Voting Stock of Borrower; (c) twenty percent (20%) or more of the Voting Stock
(or in the case of a Person which is not a corporation, twenty percent (20%) or
more of the equity interest) of which is beneficially owned or held by Borrower
or a Subsidiary of Borrower; (d) twenty percent (20%) or more of whose Voting
Stock (or in the case of a Person which is not a corporation, twenty percent
(20%) or more of the equity interest) is beneficially owned or held by a Person
referred to in clauses (a), (b) or (c) above; or (e) in the case of a natural
Person, is a director or officer of any of the foregoing. For purposes hereof,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of Voting Stock, by contract or otherwise.
Agent Advance -- as defined in Section 2.9.
Agreement -- this Second Amended and Restated
Loan and Security
Agreement, including all Exhibits hereto, as amended, modified, extended or
supplemented from time to time.
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Applicable Annual Rate -- as defined in Section 3.1(a).
Applicable Margin Amount -- at any time with respect to all Eurodollar
or Base Rate Loans, the basis points as set forth in the table below.
APPLICABLE MARGIN
Cash Flow Leverage Ratio Eurodollar Base Rate
<1.75 125 -25.0
> or = 1.75 < 2.00 150 0.0
> or = 2.00 < 2.25 175 25.0
> or = 2.25 < 2.50 200 50.0
> or = 2.50 < 2.75 225 75.0
> or = 2.75 250 100.0
Authority -- as defined in Section 8.1(u).
Average Monthly Loan Balance -- an amount equal to the quotient of (i)
the sum of the unpaid balance of all Loans at the end of each day for each
calendar day during the month in question, divided by (ii) the number of days in
such month.
Base Rate -- the rate of interest generally announced or quoted by
Fleet from time to time as its base rate for commercial loans, whether or not
such rate is the lowest rate charged by Fleet to its most preferred borrowers;
and, if such base rate for commercial loans is discontinued by Fleet as a
standard, a comparable reference rate designated by Fleet as a substitute
therefor shall be the Base Rate.
Bank -- means Fleet National Bank, a national banking association and
an Affiliate of Fleet.
Base Rate Loan -- a Loan which bears interest at a Base Rate.
Borrower -- as defined in the preamble of this Agreement.
Borrowing -- means any advance by the Lenders hereunder, whether in the
form of a Revolving Loan or a Credit Enhancement.
Borrowing Base -- as at any date of determination thereof, an amount
equal to the lesser of:
(a) the Revolving Credit Commitment then in effect; or
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(b) an amount equal to:
(i) eighty-five percent (85%) (or after an Event of
Default, such lesser percentage as Agent may in its
discretion determine from time to time after
providing Borrower with written notice of such
reduction, which discretion shall be exercised in
good faith) of the net amount of Eligible Accounts
outstanding at such date;
Plus
(ii) the lesser of (A) Four Million Dollars ($4,000,000)
or (B) eighty-five percent (85%) (or after an Event
of Default, such lesser percentage as Agent may in
its discretion determine from time to time after
providing Borrower with written notice of such
reduction, which discretion shall be exercised in
good faith) of the amount of Unbilled Accounts
outstanding at such date;
Plus
(iii) the Vessel Borrowing Base as of such date;
Minus
(iv) an amount equal to the sum of (A) the face amount of
all Credit Enhancements outstanding at such date, (B)
any amounts which Agent or Lenders may pay pursuant
to any of the Loan Documents for the account of
Borrower, and (C) all other reserves which Agent
deems necessary in the exercise of its reasonable
credit judgment to maintain with respect to the
Borrower, including reserves for any amounts which
Agent or any Lender may be obligated to pay in the
future for the account of Borrower.
For purposes hereof, the net amount of Eligible Accounts at any time shall be
the face amount of such Eligible Accounts less (1) any and all returns, rebates,
discounts, (which may, at Agent's option, be calculated on shortest terms),
credits, allowances or sales, excise or other taxes of any nature at any time
granted, issued, owing, or claimed by Account Debtors, outstanding or payable in
connection with such Accounts at such time and (2) any interest, late fees, and
services charges that may have accrued on such Accounts by reason of the Account
Debtors not having paid the Accounts as they became due.
Borrowing Notice -- as defined in Section 2.4(a).
Business Day -- any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the States of
Texas or Rhode Island or is a
day on which banking institutions located in such state are closed or, with
respect to LIBOR Periods, a day on which dealings in U.S. dollars are carried
out in the interbank Eurodollar market selected by Agent.
Capitalized Lease Obligation -- any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and
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the amount of such Indebtedness shall be the capitalized amount of such
obligations determined in accordance with GAAP.
Cash Collateral -- means collateral consisting of cash or Cash
Equivalents on which the Agent has a first priority Lien.
Cash Equivalents -- means
(a) Dollars;
(b) Securities issued or directly and fully guaranteed or
insured by the United States government or any agency
or instrumentality thereof or any state having
maturities of not more than one year after the date
of acquisition or up to $5,000,000 with maturities up
to five (5) years;
(c) Certificates of deposit and LIBOR time deposits with
maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not
exceeding one year and overnight bank deposits, in
each case with any lender or any domestic commercial
bank or US branch of a foreign commercial bank having
capital and surplus in excess of $250 million and a
Xxxxxxxx Bank Watch Rating of "B" or better and up to
$1,000,000 in a Eurodollar sweep account at Southwest
Bank of
Texas, N.A.;
(d) Repurchase obligations with a term of not more than
seven days for underlying securities of the types
described in clauses (b) and (c) above entered into
with any financial institution meeting the
qualifications specified in said clause (c);
(e) Commercial paper having the highest rating obtainable
from Xxxxx'x or S&P and in each case maturing within
270 days after the date of acquisition or a fund
which purchases such commercial paper; and
(f) Mutual funds that purchase the types of investments
referred to in (a) through (e) above.
Cash Flow Leverage Ratio -- on a Consolidated basis, the ratio of (a)
the total Funded Indebtedness (provided, however that for purposes of
calculation this ratio ERT's abandonment liabilities for its Properties shall
not be considered a part of Funded Indebtedness to (b) EBITDA for the prior
twelve months, calculated quarterly ending on the last day of each fiscal
quarter of the Borrower.
Closing Date -- the date on which all of the conditions precedent in
Section 9 are satisfied and the initial Loan is made hereunder.
Code -- the Uniform Commercial Code as in effect in the State of
Texas
on the date of this Agreement as the same may be amended or otherwise revised.
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Collateral -- all of the Property and interests in Property described
in Sections 4.1, 4.2 and 4.3 and all other Property and interests in Property
that now or hereafter secure the payment and performance of any of the
Obligations.
Computer Hardware and Software -- all of a Person's rights (including
rights as a licensee and lessee) with respect to (i) computer and other
electronic data processing hardware, including all integrated computer systems,
central processing units, memory units, display terminals, printers, computer
elements, card readers, tape drives, hard and soft disk drives, cables,
electrical supply hardware, generators, power equalizers, accessories,
peripheral devices and other related computer hardware; (ii) all Software and
all software programs designed for use on the computers and electronic data
processing hardware described in clause (i) above, including all operating
system software, utilities and application programs in any form (source code and
object code in magnetic tape, disk or hard copy format or any other listings
whatsoever); (iii) any firmware associated with any of the foregoing; and (iv)
any documentation for hardware, Software and firmware described in clauses (i),
(ii) and (iii) above, including flow charts, logic diagrams, manuals,
specifications, training materials, charts and pseudo codes.
Consolidated -- the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies, as applied to Cal Dive,
ERT, Aquatica, Canyon and their Subsidiaries.
Consolidated Financial Statements -- the Consolidated financial
statements of Cal Dive, ERT, Aquatica, Canyon and their Subsidiaries, if any,
delivered to Agent pursuant to Section 8.1(j).
Construction Contract Assignment -- the assignment by Cal Dive to the
Agent of the contract for the refurbishment of the SEA SORCERESS between Cal
Dive and Xxxxxx Shipyards or a successor shipyard in form and substance
satisfactory to the Agent.
Contract Right -- any right of a Person to payment under a contract for
the sale or lease of goods or the rendering of services, which right is at the
time not yet earned by performance.
Credit Enhancements -- LC Guaranties and Letters of Credit issued by
the Issuing Bank from time to time for Borrower's account in accordance with
Section 2.5.
Dated Assets -- as defined in Section 2.8.
Dated Liabilities -- as defined in Section 2.8.
Default -- an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of Default.
Default Rate -- as defined in Section 3.1(b).
Defaulting Lender -- as defined in Section 2.9.
Distressed Auction Value -- of any Vessel, shall have the meaning
customarily attributed to it in the equipment appraisal industry at the time of
the valuation, less the estimated
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marshaling, reconditioning and sale expenses designed to maximize the resale
value of such Vessel for a sale within six (6) months. The appraisal firm's
valuation shall be made with or without physical inspection at the Agent's
discretion.
Distribution -- in respect of any corporation means and includes: (a)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (b) the redemption or
acquisition of its Securities unless made contemporaneously from the net
proceeds of the sale of Securities; provided, however, that the acquisition of
Securities by Cal Dive or Canyon arising out of the completion of the
acquisition of Canyon by Cal Dive shall not be considered a Distribution.
Dominion Account -- a special account of Agent established by Borrower
pursuant to this Agreement at a bank selected by Borrower, but acceptable to
Agent, and over which Agent shall have sole and exclusive access and control for
withdrawal purposes.
EBIT -- means, for any period, on a Consolidated basis, the sum of the
amounts for such period, without duplication, of: (i) Net Income, plus (ii)
charges against income for foreign, federal, state, and local taxes, to the
extent deducted in computing Net Income, plus (iii) Interest Expense, plus (iv)
extraordinary or non-recurring non-cash losses to the extent deducted in
computing Net Income, minus (v) extraordinary or non-recurring non-cash gains to
the extent included in computing Net Income.
EBITDA -- means, for any period, on a Consolidated basis, the sum of
the amounts for such period, without duplication, of: (i) Net Income, plus (ii)
charges against income for foreign, federal, state, and local taxes, to the
extent deducted in computing Net Income, plus (iii) Interest Expense, plus (iv)
depreciation expense, to the extent deducted in computing Net Income, plus (v)
amortization expense, including without limitation amortization of goodwill,
other intangible assets and transaction expenses, to the extent deducted in
computing Net Income, plus (vi) extraordinary or non-recurring non-cash losses
to the extent deducted in computing Net Income, minus (vii) extraordinary or
non-recurring non-cash gains to the extent included in computing Net Income.
Eligible Account -- an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services which Agent
in its credit judgment, deems to be an Eligible Account. Without limiting the
generality of the foregoing, no Account shall be an Eligible Account if:
(a) it is an Unbilled Account; or
(b) the services giving rise to such Account require performance
bonds, except for those Accounts where the services giving
rise to such Account require Cash Deposits for Salvage
Operations or have been completed and there is no continuing
obligation of Borrower; or
(c) the services giving rise to such Account require retention
withheld to the extent of such retention; or
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(d) it is an Account arising out of a contract requiring
acknowledgment of assignment from the Account Debtor and Agent
has notified Borrower that obtaining such acknowledgment of
assignment is necessary, unless the Account Debtor has
acknowledged such assignment in a form and substance
satisfactory to Agent; or
(e) it arises out of a sale made by or services rendered by
Borrower to (i) another Borrower, (ii) a Subsidiary of
Borrower, (iii) an Affiliate of Borrower, (iv) a Person
controlled by an Affiliate of Borrower, or (v) an officer,
director, employee or agent of Borrower, a Subsidiary of
Borrower or an Affiliate of Borrower; or
(f) thirty-five percent (35%) or more of the Accounts from the
Account Debtor are not deemed Eligible Accounts hereunder; or
(g) any covenant, representation or warranty contained in this
Agreement with respect to such Account has been breached; or
(h) the Account Debtor is also Borrower's creditor or supplier, or
has disputed liability with respect to such Account, or has
made any claim with respect to any other Account due from such
Account Debtor to Borrower, or the Account otherwise is or may
become subject to any right of setoff by the Account Debtor,
to the extent of any offset, dispute or claim; or
(i) the Account Debtor has commenced a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter
amended, or made an assignment for the benefit of creditors,
or a decree or order for relief has been entered by a court
having jurisdiction in the premises in respect of the Account
Debtor in an involuntary case under the federal bankruptcy
laws, as now constituted or hereafter amended, or any other
petition or other application for relief under the federal
bankruptcy laws has been filed against the Account Debtor, or
if the Account Debtor has failed, suspended business, ceased
to be Solvent, or consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for
all or a significant portion of its assets or affairs; or
(j) it arises from the rendition of services or a sale to an
Account Debtor outside the United States, unless the sale or
services are to a Major Domestic Energy Company and the
invoice and payment are in U.S. Dollars, or the sale or
services are on letter of credit, guaranty or acceptance
terms, in each case acceptable to Lenders; or
(k) it arises from a sale to the Account Debtor on a
xxxx-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or
return basis; or
(l) the Account Debtor is the United States of America or any
department, agency or instrumentality thereof, unless Borrower
assigns its right to payment of such Account to Lenders, in
form and substance satisfactory to Agent, so as to comply
8
with the Assignment of Claims Act of 1940, as amended (31
U.S.C. Section 203 et seq.); or
(m) the Account is subject to a Lien other than a Permitted Lien;
or
(n) the goods giving rise to such Account have not been delivered
to and accepted by the Account Debtor or the services giving
rise to such Account have not been performed by Borrower and
accepted by the Account Debtor or the Account otherwise does
not represent a final sale, except for Accounts which arise
from (i) Long Day Rate Contracts or (ii) Turnkey Contracts
where the Account Debtor has approved the basic work completed
and an invoice for such work has been issued; or
(o) the Account arises from a progress billing or an invoice for
deposit, except for Accounts which arise from (i) Long Day
Rate Contracts or (ii) Turnkey Contracts where the Account
Debtor has approved the basic work completed and an invoice
for such work has been issued; or
(p) the Account arises from a sale which is an installment sale or
lease or is otherwise a sale on an extended payment basis; or
(q) the Account is evidenced by chattel paper or an instrument of
any kind, or has been reduced to judgment; or
(r) Borrower has made any agreement with the Account Debtor for
any deduction therefrom, except for discounts or allowances
made in the ordinary course of business and which discounts or
allowances are disclosed to Agent; or
(s) Borrower has made an agreement with the Account Debtor to
extend the time of payment thereof.
(t) the Account arises from a retail sale of goods to a Person who
is purchasing same primarily for personal, family or household
purposes; or
(u) the Account is due and unpaid from an Account Debtor for more
than ninety (90) days from the original invoice date;
(v) Agent in good faith believes that collection of such Account
is insecure or that payment thereof is doubtful or will be
delayed by reason of the Account Debtor's financial condition.
In determining whether an Account is an Eligible Account, Agent may
from time to time in its credit judgment, which will be exercised in good faith,
establish credit limits for certain Account Debtors after providing Borrower
with written notice thereof. Borrower may request from time to time that Agent
remove a credit limit for an Account Debtor and Agent may or may not do so in
its credit judgment, which will be exercised in good faith.
Environmental Complaint -- as defined in Section 8.1(u).
9
Environmental Laws -- all federal, state and local laws, rules,
regulations, ordinances, permits, orders and consent decrees relating to health,
safety and environmental matters, including, but not limited to, the Resource
Conservation and Recovery Act, the Oil Pollution Act of 1990; the Comprehensive
Environmental Response, Compensation and Liability Act of 1980; the Clean Air
Act; the Toxic Substances Control Act, as amended; the River and Harbor Act;
Water Pollution Control Act; the Marine Protection Research and Sanctuaries Act;
the Deep-Water Port Act; the Safe Drinking Water Act; the Superfund Amendments
and Reauthorization Act of 1986; the Federal Insecticide, Fungicide and
Rodenticide Act; the Mineral Lands and Leasing Act; the Surface Mining Control
and Reclamation Act; state and federal superlien and environmental cleanup laws;
and the Hazardous Materials Transportation Authorization Act.
Equipment -- all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles, and other tangible personal Property (other than
Inventory and Offshore Platforms) of every kind and description used in
Borrower's operations or owned by Borrower or in which Borrower has an interest,
whether now owned or hereafter acquired and wherever located, and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor.
ERISA -- the Employee Retirement Income Security Act of 1974 and all
rules and regulations promulgated thereunder.
ERISA Affiliate -- Borrower and each Person under common control with
Borrower or otherwise treated as a single employer with Borrower under ERISA or
IRC Section 414.
Excess -- as defined in Section 3.1(d).
Event of Default -- as defined in Section 10.1.
Fixed Charge Coverage Ratio -- means, with reference to the periods
referred to below, on a Consolidated basis, the ratio of Income from Operations
to Interest Expense and scheduled payments of principal, for the three-month
period ending March 31, 2002, the six-month period ending June 30, 2002, the
nine-month period ending September 30, 2002, and thereafter on a rolling
four-quarter basis, calculated as of the last day of each such quarter;
provided, however that for the three-month period ending March 31, 2002 up to
$3,000,000 of capitalized interest for the Title XI Debt shall not be included
in calculating Interest Expense.
Funded Indebtedness -- the sum of the Borrower's Consolidated (i) long
term debt evidenced by contracts or instruments plus (ii) capitalized lease
obligations and (iii) ERT's abandonment liabilities for its Properties.
Funding Date -- the date on which a Borrowing is made available to the
Borrower.
GAAP -- with respect to any date of determination, generally accepted
accounting principles as used by the Financial Accounting Standards Board and/or
the American Institute of Certified Public Accountants consistently applied and
maintained throughout the periods indicated.
10
General Intangibles -- all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, deposit accounts, inventions, designs, patents, patent applications,
trademarks, trade names, trade secrets, goodwill, copyrights, registrations,
licenses, franchises, rights to royalties, blueprints, drawings, confidential
information, catalogs, sales literature, video tapes, consulting agreements,
employment agreements, customer lists, tax refund claims, computer programs,
insurance policies, deposits with insurers, all claims under guaranties,
security interests or other security held by or granted to a Borrower to secure
payment of any of the Accounts by an Account Debtor, all rights to
indemnification and all other intangible property of every kind and nature
(other than Accounts and Cash Deposits for Salvage Operations).
Hazardous Discharge -- as defined in Section 8.1(u).
Hazardous Substance -- without limitation, any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances or related materials
as defined in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and Recovery Act, the Oil
Pollution Act, 1990, the Toxic Substances Control Act, the Hazardous Materials
Transportation Act, each as amended, applicable state or local law, or any other
applicable federal and state Environmental Laws now in force or hereafter
enacted.
Hydrocarbons -- all oil, gas, hydrocarbons (including, distillate,
condensate, residue gas and liquified petroleum gas) and all other substances
that may be found in, associated with, or produced from a well, together with
all components thereof, and substances that may be executed therefrom.
Income From Operations -- with respect to any fiscal period, means the
Consolidated EBITDA of the Borrower, less (a) Unfunded Capital Expenditures and
(b) accrued Taxes for such period (excluding deferred taxes, which shall be
deducted from Income From Operations for the quarter in which they are due and
payable).
Indebtedness -- as applied to a Person means, without duplication (a)
all items which in accordance with GAAP would be included in determining total
liabilities as shown on the liability side of a balance sheet of such Person as
at the date as of which Indebtedness is to be determined, including, without
limitation, Capitalized Lease Obligations, (b) all obligations of other Persons
which such Person has guaranteed, (c) in the case of Borrower (without
duplication), the Obligations, (d) obligations of Borrower under the Synthetic
Lease financing of the Gunnison production platform and (e) obligations of
Borrower under other Synthetic Leases which have a term of five (5) years or
more.
Indemnified Persons -- as defined in Section 12.2.
Intellectual Property -- all past, present and future: trade secrets,
know-how and other proprietary information; trademarks, internet domain names,
service marks, trade dress, trade names, business names, designs, logos, slogans
(and all translations, adaptations, derivations and
11
combinations of the foregoing) indicia and other source and/or business
identifiers, and the goodwill of the business relating thereto and all
registrations or applications for registrations which have heretofore been or
may hereafter be issued thereon throughout the world; copyrights (including
copyrights for computer programs) and copyright registrations or applications
for registrations which have heretofore been or may hereafter be issued
throughout the world and all tangible property embodying the copyrights,
unpatented inventions (whether or not patentable); patent applications and
patents; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code, data, databases
and other physical manifestations, embodiments or incorporations of any of the
foregoing; the right to xxx for all past, present and future infringements of
any of the foregoing; all other intellectual property; and all common law and
other rights throughout the world in and to all of the foregoing; provided,
however, that the patents, trade secrets, trademarks, copyrights and related
appurtenances, additions, improvements, replacements, physical manifestations,
embodiments or incorporations concerning the vessel now known as the Q 4000
assigned to the Secretary of Transportation as security for the Title XI Debt
under the License Rights Agreement dated August 16, 2000 shall not be considered
part of Borrower's Intellectual Property.
Interest Coverage Ratio -- means, on a Consolidated basis, the ratio of
(a) EBIT to (b) Interest Expense ending on the last day of the most recent
fiscal quarter of the Borrower, calculated for the three-month period ending
March 31, 2002, the six-month period ending June 30, 2002, the nine-month period
ending September 30, 2002, and thereafter on a rolling four-quarter basis.
Interest Expense -- for any fiscal period, the amount equal to (a)
interest charges paid or accrued during such fiscal period (including imputed
interest on Capitalized Lease Obligations, but excluding amortization of debt
discount and expense) on the Indebtedness, (b) the net amount payable under any
interest rate swap, collar or hedging agreement, (c) the interest component of
Synthetic Leases, (d) commitment, facility, usage and similar fees payable in
connection with any Indebtedness, and (e) letter of credit fees for Letters of
Credit or any other financial letter of credit, all determined in accordance
with GAAP, but excluding interest income received during such fiscal period.
Inventory -- all of Borrower's inventory, whether now owned or
hereafter acquired and wherever located, including, but not limited to, all
goods intended for sale or lease by Borrower, or for display or demonstration;
all work in process; all raw materials and other materials and supplies of every
nature and description used or which might be used in connection with the
manufacture, printing, packing, shipping, advertising, selling, leasing or
furnishing of such goods or otherwise used or consumed in Borrower's business;
and all documents evidencing and General Intangibles relating to any of the
foregoing.
IRC -- the United States Internal Revenue Code of 1986, as amended, and
all rules and regulations promulgated thereunder.
Issuing Bank -- means the Bank in its capacity as the issuer of Letters
of Credit.
12
Lawful Substances -- as defined in Section 7.2 (q)(iii).
LC Application -- means an application by Borrower, any Subsidiary of
Borrower and Fleet to the Bank, on a form approved by Fleet, for the issuance of
a Letter of Credit that is submitted to Fleet at least two Business Days prior
to the requested issuance date of such Letter of Credit.
LC Conditions -- means each of the following conditions, the
satisfaction of each of which is required before Fleet shall be obligated to
procure the issuance of a Letter of Credit: (i) each of the conditions set forth
in Section 9 has been and continues to be satisfied, including the absence of
any Default or Event of Default; (ii) after giving effect to the issuance of the
requested Letter of Credit and all other unissued Letters of Credit for which LC
Applications have been approved by Fleet, the LC Outstandings would not exceed
in the aggregate $6,000,000, (iii) the expiry date of such Letter of Credit does
not extend beyond the earlier to occur of 365 days after the date of issuance or
the 30th day prior to the last Business Day before the last day of the Term; and
(iv) the currency in which payment is to be made under the Letter of Credit in
Dollars.
LC Documents -- means any and all agreements, instruments and documents
(other than an LC Application or an LC Guaranty) required by the Bank to be
executed by Borrower, any Subsidiary of Borrower or any other Person and
delivered to the Bank in connection with the issuance of a Letter of Credit.
LC Facility - means a subfacility of the Revolving Credit Facility
consisting of LC Outstandings in an aggregate not to exceed $6,000,000.
LC Guaranty -- means a guaranty or other support agreement from Fleet
in favor of the Bank pursuant to which Fleet shall guarantee or otherwise assure
the payment or performance by the parties (other than Fleet) to an LC
Application of such parties' obligations with respect to the Letter of Credit
issued thereon, including the obligation of such parties to reimburse the
Issuing Bank for any payment made by the Issuing Bank under such Letter of
Credit.
LC Outstandings -- means, on any date of determination thereof, an
amount in Dollars equal to the sum of (i) all amounts then due on such date and
payable by Borrower or any of its Subsidiaries on such date by reason of any
payment made on or before such date by Fleet under any LC Guaranty plus (ii) the
aggregate Letter of Credit Amount of all Letters of Credit then outstanding or
to be issued by the Bank under an LC Application therefore submitted to the
Bank.
LC Reserve -- means at any date, (i) 100% of the Letter of Credit
Amount of all Letters of Credit outstanding on such date minus (ii) the amount
of any Cash Collateral for Letters of Credit.
Legal Requirement -- any requirement imposed upon any Lender by any law
of the United States of America or the United Kingdom or by any regulation,
order, interpretation, ruling of official directive (whether or not having the
force of law) of the Board, the Bank of England or any other board, central bank
or governmental or administrative agency, institution or authority
13
of the United States of America, the United Kingdom or any political subdivision
of either thereof.
Letter of Credit Amount -- means, with respect to any Letter of Credit,
the aggregate maximum amount at any time available for drawing under such Letter
of Credit, assuming all conditions to drawing are satisfied.
Letter of Credit -- a standby letter of credit at any time issued by an
Issuing Bank or another Person for the account of Borrower.
LIBOR Loan -- a Loan which bears interest at a rate that is determined
by reference to the LIBOR Rate.
LIBOR Period -- any period, selected as provided in Section 2.4, of 1
month, 2 month, or 3 months, commencing on any Business Day; provided, however,
that no LIBOR Period shall extend beyond the last day of the Term, unless
Borrower and Agent and Lenders have agreed to an extension of the Term beyond
the expiration of the LIBOR Period in question. If any LIBOR Period so elected
shall end on a date that is not a Business Day, such LIBOR Period shall instead
end on the next preceding or succeeding Business Day as determined by Agent in
accordance with the then current banking practice in London. Each determination
by Agent of a LIBOR Period shall, in the absence of manifest error, be
conclusive, and at Borrower's request, Agent shall demonstrate the basis for
such determination. In no event shall Borrower be permitted to have outstanding
at any one time LIBOR Loans with more than five (5) different LIBOR Periods.
LIBOR Rate -- as applicable to any LIBOR Loan, the rate per annum
(rounded upward, if necessary, to the nearest 1/32 of one percent) as determined
on the basis of the offered rates for deposits in U.S. dollars, for a period of
time comparable to such LIBOR Loan which appears on the Telerate page 3750 as of
11:00 a.m. (London time) on the day that is two (2) London Banking Days
preceding the first day of such LIBOR Loan; provided, however, if the rate
described above does not appear on the Telerate System on any applicable
interest determination date, the LIBOR Rate shall be the rate (rounded upwards
as described above, if necessary) for deposits in U.S. dollars for a period
substantially equal to the interest period on the Reuters Page "LIBO" (or such
other page as may replace the LIBO Page on that service for the purpose of
displaying such rates), as of 11:00 a.m. (London Time), on the day that is two
(2) London Banking Days prior to the beginning of such interest period. If both
the Telerate and Reuters systems are unavailable, then the rate for that date
will be determined on the basis of the offered rates for deposits in U.S.
dollars for a period of time comparable to such LIBOR Loan which are offered by
four (4) major banks in the London interbank market at approximately 11:00 a.m.
(London time), on the day that is two (2) London
14
Banking Days preceding the first day of such LIBOR Loan as selected by Agent.
The principal London office of each of the major London Banks so selected will
be requested to provide a quotation of its U.S. dollar deposit offered rate. If
at least two (2) such quotations are provided, the rate for that date will be
the arithmetic mean of the quotations. If fewer than two quotations are provided
as requested, the rate for that date will be determined on the basis of the
rates quoted for loans in U.S. dollars to leading European banks for a period of
time comparable to such LIBOR Loan offered by major banks in New York City at
approximately 11:00 a.m. (New York City time), on the day that is two (2) London
Banking Days preceding the first day of such LIBOR Loan. In the event that Agent
is unable to obtain any such quotation as provided above, it will be determined
that LIBOR Rate pursuant to a LIBOR Loan cannot be determined. In the event that
the Board of Governors of the Federal Reserve System shall impose a Reserve
Percentage with respect to LIBOR deposits of a Lender then for any period during
which such Reserve Percentage shall apply, LIBOR Rate shall be equal to the
amount determined above divided by an amount equal to 1 minus the Reserve
Percentage.
LIBOR Reserve Requirement -- at any date of determination, that
percentage (expressed as a decimal fraction) which is in effect on such day, as
provided by the Board of Governors of the Federal Reserve System (or any
successor governmental body) applied for determining the maximum reserve
requirements (including without limitation, basic, supplemental, marginal and
emergency reserves) under Regulation D with respect to "Eurocurrency
liabilities" as currently defined in Regulation D, or under any similar or
successor regulation with respect to Eurocurrency liabilities or Eurocurrency
funding. Each determination by Agent of the LIBOR Reserve Requirement shall be
provided to Borrower and, in the absence of manifest error, be conclusive and
binding. Any LIBOR Reserve Requirement shall be determined in accordance with
Agent's customary practice and applied on a consistent basis.
Lien -- any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such interest
is based on the common law, statute or contract, and including, but not limited
to, the security interest, security title or lien arising from a security
agreement, mortgage, deed of trust, preferred ship mortgage, deed to secure
debt, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
affecting Property. For the purpose of this Agreement, Borrower shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person.
Loan Account -- the loan account established on the books of Lenders
pursuant to Section 2.7.
Loan Documents -- this Agreement, the Notes, the Other Agreements and
the Security Documents.
Loans -- all loans and advances made by Lenders pursuant to this
Agreement, including, without limitation, all Revolving Loans and each payment
made pursuant to a Credit Enhancement.
Long Day Rate Contracts -- contracts for services performed on a time
and materials basis for which: (a) services continue for more than one billing
cycle of Borrower, (b) the Account Debtor is willing to accept for payment an
invoice appropriate for that billing cycle, and (c) payment of such invoice is
due and owing, not being contingent on further provision of such services.
15
Losses -- as defined in Section 12.2.
Major Domestic Energy Company -- a multinational energy company (or
subsidiary thereof) with substantial corporate representation in the United
States that Agent, in its sole discretion, deems to be an acceptable credit
risk.
Majority Lenders -- those Lenders holding at least 51% of the Loans but
at all times when there are three (3) or more Lenders, at least two (2) Lenders.
Maximum Legal Rate -- as defined in Section 3.1(c).
MMS -- the Department of Interior Mineral Management Services and any
successor thereto.
Money Borrowed -- as applied to Indebtedness, means (a) Indebtedness
for borrowed money; (b) Indebtedness, whether or not in any such case the same
was for borrowed money, (i) which is represented by notes payable or drafts
accepted that evidence extensions of credit, (ii) which constitutes obligations
evidenced by bonds, debentures, notes or similar instruments, or (iii) upon
which interest charges are customarily paid (other than accounts payable) or
that was issued or assumed as full or partial payment for Property; (c)
Indebtedness that constitutes a Capitalized Lease Obligation; and (d)
Indebtedness under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (a) through (c).
Multiemployer Plan -- a multiemployer plan as defined in Section 3(37)
of ERISA to which any ERISA Affiliate contributes, has contributed to in the
last six years or is required to contribute to.
Net Income -- means, with reference to any period, the net income (or
loss) of the Borrower and its Subsidiaries calculated on a Consolidated basis
for such period.
New Ship Mortgages -- as defined in Section 4.2.
Non-Ratable Loan -- as defined in Section 2.9.
Notes -- the promissory notes of the Borrower in favor of the Lenders,
substantially in the form of Exhibit A attached hereto and made a part hereof.
Obligations -- all Loans and all other advances, debts, liabilities,
obligations, covenants and duties from Borrower to any Lender, Fleet, Issuing
Bank, the Agent or any Affiliate of the Agent, together with all interest, fees
(including without limitation attorneys' fees), expenses and other charges
thereon, owing, arising, due or payable from Borrower to the Agent, Fleet and/or
the Lenders of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under this Agreement
or any of the other Loan Documents or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired.
16
Offshore Platforms -- any structure located in the Gulf of Mexico,
together with all equipment, facilities or structures affixed thereto utilized
in connection with, or related to, drilling or work with respect to xxxxx, or
the production, processing, treating, gathering, storing, measuring or
transportation of Hydrocarbons.
OSHA -- the Occupational Safety and Health Act and all rules and
regulations from time to time promulgated thereunder.
Other Agreements -- any and all agreements, instruments and documents
(other than this Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower and delivered to Agent or Lenders in respect to
the transactions contemplated by this Agreement.
PBGC -- the Pension Benefit Guaranty Corporation.
Pension Plan -- an employee pension benefit plan as defined in Section
3(2) of ERISA, which is maintained or contributed to by an ERISA Affiliate or
for which contributions are required from an ERISA Affiliate, and which is
subject to Title IV of ERISA.
Permitted Liens -- any Lien of a kind specified in clauses (i) through
(x) of Section 8.2(h).
Permitted Purchase Money Indebtedness -- Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase Money
Lien and which, when aggregated with the Consolidated principal amount of all
other such Purchase Money Indebtedness and Capitalized Lease Obligations of
Borrower at the time outstanding, does not exceed (a) One Million Dollars
($1,000,000) for the purchase of fixed assets other than vessels and (b) Five
Million Dollars ($5,000,000) for the purchase of vessels. For the purposes of
this definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.
Person -- an individual, partnership, corporation, joint stock company,
land trust, business trust or unincorporated organization, or a government or
agency or political subdivision thereof.
Plan -- an employee benefit plan as defined in Section 3(3) of ERISA
that is maintained or contributed to or for which contributions are required by
an ERISA Affiliate.
Prohibited Transaction -- a transaction described in Section 406 of
ERISA or Section 4975 of the IRC which would subject any Plan or ERISA Affiliate
to any taxes, fines, penalties or other liabilities, directly or through any
indemnification agreements.
Projections -- Borrower's Consolidated and consolidating forecasted (a)
balance sheets, (b) profit and loss statements, and (c) cash flow statements,
all prepared on a consistent basis with Borrower's historical Consolidated
Financial Statements, together with appropriate supporting details and a
statement of underlying assumptions.
Property -- any interest of Borrower in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
17
Pro Rata Share -- for any Lender, the amount of any Revolving Loan or
reimbursement for a Credit Enhancement equal to the principal amount thereof
multiplied by such Lender's percentage of the Revolving Credit Commitment.
Purchase Money Indebtedness -- means and includes (a) Indebtedness
(other than the Obligations) for the payment of all or any part of the purchase
price of any assets, (b) any Indebtedness (other than the Obligations) incurred
at the time of or within ten days prior to or after the acquisition of any
assets for the purpose of financing all or any part of the purchase price
thereof, and (c) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien -- a Lien upon assets which secure Purchase Money
Indebtedness, but only if such Lien shall at all times be confined solely to the
assets the purchase price of which was financed through the incurrence of the
Purchase Money Indebtedness secured by such Lien.
Qualified Pooling of Interests -- a financial accounting method for the
combination of one or more business entities with Borrower which qualifies for
the pooling-of-interests method of accounting for business combinations under
GAAP and is so accounted for by Borrower.
Real Property -- as defined in Section 8.1(u).
Reduction Amount -- the amount by which the Vessel Borrowing Base
reduces each month commencing on April 1, 2002, as more specifically set forth
on Schedule 4 hereto.
Release -- as defined in Section 7.1(aa).
Renewal Term -- as defined in Section 3.3.
Rentals -- as at any date of determination thereof, the amount of all
payments which the lessee is required to make by the terms of any lease, but
excluding those payments for which lessee is directly or indirectly compensated
as a result of services provided.
Reportable Event -- any of the events set forth in Section 4043(c) of
ERISA and the regulations thereunder, excluding any event not subject to the
provision for 30 days notice to the PBGC under such regulations.
Restricted Investment -- any investment in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, advance or capital contribution, or
otherwise, or in any Property except the following: (a) investments in one or
more Subsidiaries of Borrower to the extent existing on the Closing Date; (b)
Property to be used in the ordinary course of business; (c) current assets
arising from the sale of goods and services in the ordinary course of business
of Borrower and its Subsidiaries; (d) Cash Equivalents and (e) investments
pursuant to agreements by and between Borrower and any Lender satisfactory to
Agent.
Revolving Credit Commitment -- as at any date of determination thereof,
an amount equal to (a) Sixty Million Dollars ($60,000,000) minus (b) the face
amount of all Credit Enhancements
18
outstanding at such date. Each Lender's portion of the Revolving Credit
Commitment is as set forth on Schedule 1 hereto.
Revolving Loan -- a Loan made by Lenders as provided in Section 2.1.
Schedule of Accounts -- as defined in Section 5.2.
Security -- shall have the same meaning as in Section 2(l) of the
Securities Act of 1933, as amended.
Security Documents -- the Ship Mortgages, each New Ship Mortgage, the
Construction Contract Assigment and all other instruments and agreements now or
at any time hereafter securing the whole or any part of the Obligations.
Settlement -- as defined in Section 2.9.
Settlement Date -- as defined in Section 2.9.
Ship Mortgages -- the U.S. First Preferred Fleet Mortgage executed by
Cal Dive on August 3, 1993, on the Vessels listed on Schedule 2A, the Bahamian
Deed of Covenants dated January 29, 2002 and related Statutory Mortgages on the
Vessels listed on Schedule 2B, the U.S. First Preferred Ship Mortgage dated
February ___, 2002 on the MR. XXX and any New Ship Mortgages, as such mortgages
may be amended, modified or supplemented from time to time.
Solvent - as to any Person, such Person (a) owns Property whose fair
salable value is greater than the amount required to pay all of such Person's
Indebtedness (including contingent debts), (b) is able to pay all of its
Indebtedness as such Indebtedness matures and (c) has capital sufficient to
carry on its business and transactions and all business and transactions in
which it is about to engage.
Statutory Liens -- as defined in Section 8.2(h).
Subsidiary -- any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than fifty percent (50%) of
the Voting Stock at the time of determination; provided, however, with respect
to Cal Dive, the term "Subsidiary" as used in this Agreement shall not include
ERT, Aquatica or Canyon.
Synthetic Lease -- a lease arrangement treated as an operating lease
for financial accounting purposes and a financing lease for tax purposes.
Term -- as defined in Section 3.3.
Termination Amount -- at any date of determination thereof, an amount
equal to the sum of (a) the Revolving Credit Commitment, (b) the face amount of
all Credit Enhancements outstanding at such date.
19
Title XI Debt -- short and long term debt guaranteed by the U.S.
government under Title XX xx xxx Xxxxxxxx Xxxxxx Xxx, 0000 used to finance the
Borrower's construction and acquisition of the vessel now known as the Q 4000.
Total Commitment -- means Sixty Million and No/100 Dollars
($60,000,000).
Turnkey Contracts -- contracts entered into in the ordinary course of
business to perform a specific scope of work for a set price, subject at times
to additional charges resulting from changes to the agreed upon scope of work.
Unbilled Account -- an Account arising in the ordinary course of
Borrower's business for the rendition of services that represent completed
services of Borrower not yet invoiced to the Account Debtor (except for Long Day
Rate Contracts), but which shall be invoiced within 90 days from the date such
services were completed, and which Account is otherwise an Eligible Account.
Unfunded Capital Expenditures -- for any period, on a Consolidated
basis, the amount of capital expenditures during such period less the funded
amount of Funded Indebtedness in such period, the proceeds of which are used to
finance such capital expenditures; provided that, for purposes of this
definition, the capital expenditures through January 2002 related to the
acquisition of Canyon shall be excluded; and provided further that for fiscal
2002 there shall also be excluded an amount of capital expenditures up to
$40,000,000 to the extent that such amount is actually expended by Borrower and
is not provided by Funded Indebtedness.
Vessel Borrowing Base -- the lesser of (a) the then 46.7% of the
current Distressed Auction Value of the Vessels and (b) the Vessel Sublimit.
Vessel Sublimit -- USD 35,000,000, as reduced from time to time by
Reduction Amounts and prepayments pursuant to Section 2.2.
Vessels -- the vessels listed on Schedule 2 attached hereto.
Voting Stock -- Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
Section 1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with that
applied in preparation of the Consolidated Financial Statements, and all
financial data pursuant to this Agreement shall be prepared in accordance with
such principles. In the event that changes in GAAP shall be mandated by the
Financial Accounting Standards Board and/or the American Institute of Certified
Public Accountants or any similar accounting body of comparable standing, and
shall be recommended by Borrower's certified public accountants, to the extent
that such changes would modify such accounting terms or the interpretation or
computation thereof as contemplated by this Agreement at the time of execution
hereof, then in such event such changes shall be followed in defining such
accounting terms only after Lender and Borrower amend this Agreement to reflect
the original intent of such terms in light of such changes, and such terms shall
continue to be applied and interpreted without such change until such agreement.
20
Section 1.3 Other Terms. All other terms contained in this Agreement
shall have, when the context so indicates, the meanings provided for by the Code
to the extent the same are used or defined therein.
Section 1.4 Certain Matters of Construction. The terms "herein",
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular section, paragraph or
subdivision. Any pronoun used shall be deemed to cover all genders. The section
titles, table of contents and list of exhibits appear as a matter of convenience
only and shall not affect the interpretation of this Agreement. All references
to statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any instruments or
agreements, including, without limitation, references to any of the Loan
Documents, shall include any and all modifications or amendments thereto and any
and all extensions or renewals thereof.
Section 1.5 The Term "Borrower" or Borrowers". All references to
"Borrower" or "Borrowers" herein shall refer to and include each Borrower
separately and all representations contained herein shall be deemed to be
separately made by each of them, and each of the covenants, agreements and
obligations set forth herein shall be deemed to be the joint and several
covenants, agreements and obligations of them. Any notice, request, consent,
report or other information or agreement delivered to Lender by any Borrower
shall be deemed to be ratified by, consented to and also delivered by the other
Borrower. Each Borrower recognizes and agrees that each covenant and agreement
of "Borrower" or "Borrowers" under this Agreement and the Other Agreements shall
create a joint and several obligation of the Borrowers, which may be enforced
against Borrowers, jointly, or against each Borrower separately. Without
limiting the terms of this Agreement and the Other Agreements, security
interests granted under this Agreement and Other Agreements in properties,
interests, assets and collateral shall extend to the properties, interests,
assets and collateral of each Borrower. Similarly, the term "Obligations" shall
include, without limitation, all obligations, liabilities and indebtedness of
such corporations, or any one of them, to Lender, whether such obligations,
liabilities and indebtedness shall be joint, several, joint and several or
individual.
ARTICLE 2. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, each Lender agrees severally and not jointly to make its percentage
share of a total credit facility of up to Sixty Million Dollars ($60,000,000.00)
available upon Borrower's request therefor, as follows:
Section 2.1 Revolving Loans.
(a) Subject to all of the terms and conditions of this Agreement,
Lenders agree, for so long as no Event of Default exists, to
make Revolving Loans to Borrower from time to time, as
requested by Borrower in accordance with the terms of Section
2.4, up to a maximum principal amount at any time outstanding
equal to the Borrowing Base at such time. No Lender shall be
required to make any Revolving Loan in excess of its
commitment as set forth in Schedule 1 hereto. It is expressly
understood and agreed that Lenders shall use the Borrowing
Base as a
21
maximum ceiling on Revolving Loans outstanding to Borrower at
any time, subject to the provisions of Section 2.3. If the
unpaid balance of the Revolving Loans should exceed the
Borrowing Base or any other limitation set forth in this
Agreement, such Revolving Loans shall nevertheless constitute
Obligations that are secured by the Collateral and entitled to
all the benefits thereof; provided, however, if such an
overadvance occurs, Borrower shall immediately repay, without
premium or penalty, Revolving Loans in an amount equal to such
excess, along with accrued unpaid interest on the amount so
repaid to the date of such repayment. In no event shall
Borrower be authorized to request a Revolving Loan at any time
that there exists an Event of Default.
(b) Notwithstanding the foregoing provisions of Section 2.1(a),
Lenders shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lenders shall
deem necessary or appropriate, against the amount of Revolving
Loans which Borrower may otherwise request under Section
2.1(a), including, without limitation, with respect to (i)
price adjustments, damages, unearned discounts, returned
products or other matters for which credit memoranda are
issued in the ordinary course of Borrower's business; (ii)
other sums chargeable against Borrower's Loan Account as
Revolving Loans under any section of this Agreement; (iii)
sales tax liabilities; (iv) price adjustments, damages,
returned products or other matters related to contractual
obligations of Borrower; (v) offset exposure relating to
contractual obligations of Borrower; and (vi) such other
matters, events, conditions or contingencies as to which
Lenders, in their credit judgment, determine reserves should
be established from time to time hereunder.
(c) The Revolving Loans shall be used solely for (i) the payment
of costs, expenses and fees relating to the Loans to be made
under this Agreement, (ii) the purchase of the capital stock
of Borrower, and (iii) Borrower's general operating capital
needs, to the extent not inconsistent with the provisions of
this Agreement.
Section 2.2 Vessel Sublimit. If Borrower sells any Vessel or if any
Vessel is a total or constructive total loss, the Vessel Sublimit shall be
reduced by an amount equal to the appraised value of such Vessel according to
the most recent appraisal thereof.
Section 2.3 Overadvances. Insofar as Borrower may request and Fleet may
be willing in its sole and absolute discretion to make Revolving Loans to
Borrower at a time when the unpaid balance of Revolving Loans exceeds, or would
exceed with the making of any such Revolving Loan, the Borrowing Base (any such
Loan or Loans being herein referred to individually as an "Overadvance" and
collectively as "Overadvances"), Fleet may make such Overadvances in amount not
to exceed USD 1,000,000 at any time outstanding, and the Agent shall enter such
Overadvances as debits in the Loan Account. All Overadvances shall be repaid on
demand, shall be secured by the Collateral and shall bear interest as provided
in this Agreement for Revolving Loans generally, and shall be subject to the
terms of Section 2.9(d) hereof with respect to Agent Advances. The foregoing
notwithstanding, in no event, unless otherwise consented to by the Agent, shall
any Overadvances be outstanding for more than thirty (30) consecutive days.
22
Section 2.4 Manner of Borrowing. Borrowings under the Revolving Credit
Commitment shall be as follows:
(a) A request for a LIBOR Loan shall be made, or shall be deemed
to be made, if Borrower gives Agent notice of its intention to
borrow in the form of Exhibit B (a "Borrowing Notice"), in
which notice Borrower shall specify (i) the aggregate amount
of such LIBOR Loan, (ii) the requested date of such LIBOR
Loan, (iii) the Applicable Annual Rate selected in accordance
with Section 3.1, and (iv) the LIBOR Period applicable
thereto. If Borrower selects a LIBOR Loan, Borrower shall give
Agent the Borrowing Notice at least two (2) Business Days
prior to the requested date of the LIBOR Loan.
(b) A request for a Base Rate Loan shall be made, or shall be
deemed to be made, if (i) Borrower sends by facsimile
transmission to (000) 000-0000, or such other number as Agent
may designate, a request for a Base Rate Loan prior to 12:00
p.m. Central Standard Time on the Business Day on which
Borrower is requesting such Base Rate Loan (if a request is
received after such time on a Business Day, Agent, in its sole
discretion, may request the Lenders to make the requested Base
Rate Loan on the day of such notice or on the next following
Business Day); (ii) Borrower fails to pay any interest
accruing under this Agreement or the Notes on the date such
interest becomes due and payable, or (iii) Borrower fails to
pay any other Obligations under this Agreement on the date
such Obligations become due and payable. The amount of Base
Rate Loans advanced according to clause (i) shall be for the
amount requested. The amount of Base Rate Loans advanced
according to clauses (ii) and (iii) shall be deemed to be an
amount equal to the amount of interest that was not actually
paid by Borrower or the amount of funds actually disbursed,
respectively.
(c) Borrower hereby irrevocably authorizes Lenders to disburse the
proceeds of each Loan requested, or deemed to be requested,
pursuant to this Section 2.4 as follows: (i) the proceeds of
each Loan requested under Sections 2.4(a) or 2.4(b)(i) shall
be disbursed by Lenders in lawful money of the United States
of America in immediately available funds, in the case of the
initial borrowing, in accordance with the terms of the written
disbursement letter from Borrower, and in the case of each
subsequent borrowing, by wire transfer to such bank account as
may be agreed upon by Borrower and Agent from time to time;
and (ii) the proceeds of each Revolving Loan requested under
Section 2.4(b)(ii) or (iii) shall be disbursed by Lenders by
way of direct payment of the relevant Obligation.
Section 2.5 Letters of Credit; LC Guaranties.
23
(a) Agreement to Issue. Upon the terms and subject to the
conditions of, and in reliance upon the representations and
warranties made under this Agreement from time to time during
the period commencing on the Closing Date and ending on the
last day of the Term, Fleet agrees to issue or cause the
issuance by the Issuing Bank, for the account of Borrower, one
or more Letters of Credit in accordance with this Section 2.5.
(b) Amounts. Fleet shall not have any obligation to procure any
Letter of Credit at any time:
(i) if, after giving effect to the issuance of the
requested Letter of Credit, (A) the aggregate LC
Outstandings would exceed the LC Facility then in
effect or (B) the aggregate principal amount of the
Revolving Credit Loans outstanding would exceed the
Borrowing Base (after reduction for the LC Reserve in
respect of such Letter of Credit) or (C) if no
Revolving Credit Loans are outstanding, the aggregate
LC Outstandings would exceed the Borrowing Base; or
(ii) which has a term longer than 365 days or an
expiration date after the 30th day prior to the last
Business Day of the Term.
(c) Conditions. The obligation of Fleet to procure a Letter of
Credit is subject to the satisfaction of (a) the LC Conditions
and (b) the following additional conditions precedent in a
manner satisfactory to Agent, Fleet and the Issuing Bank:
(i) Borrower shall (i) have delivered to Fleet, the
Issuing Bank and Agent at such times and in such
manner as Fleet or Agent may prescribe an LC
Application in form and substance satisfactory to
Fleet, the Issuing Bank and Agent for the issuance of
such Letter of Credit and such other LC Documents as
may be required pursuant to the terms thereof, and
(ii) the form and terms of the proposed Letter of
Credit shall be satisfactory to Fleet, the Issuing
Bank and Agent; and
(ii) as of the date of issuance, no order of any court,
arbitrator or governmental authority having
jurisdiction or authority over Fleet or the Issuing
Bank shall purport by its terms to enjoin or restrain
Fleet from issuing any guaranty, including any LC
Guaranty, or banks generally from issuing letters of
credit of the type and in the amount of the proposed
Letter of Credit, and no law, rule or regulation
applicable to banks generally and no request or
directive (whether or not having the force of law)
from any governmental authority with jurisdiction
over banks generally shall prohibit, or request that
the Issuing Bank refrain from, the issuance of
letters of credit generally or the issuance of such
Letter of Credit.
(d) Issuance of Letters of Credit.
24
(i) Request for Issuance. Borrower shall deliver a
completed and signed LC Application (unless Fleet is
to join in such LC Application, in which case it
shall be signed by Borrower and completed but for any
information to be supplied by Fleet), to Fleet,
Issuing Bank and Agent no later than three (3)
Business Days prior to the proposed date of issuance
of the requested Letter of Credit. Such notice shall
be irrevocable and shall specify the original face
amount of the Letter of Credit requested, the
effective date (which date shall be a Business Day)
of issuance of such requested Letter of Credit,
whether such Letter of Credit may be drawn in a
single or in multiple draws, the date on which such
requested Letter of Credit is to expire (which date
shall be a Business Day prior to the last day of the
Term), the purpose for which such Letter of Credit is
to be issued and the beneficiary of the requested
Letter of Credit.
(ii) Responsibilities of the Agent; Issuance. Agent shall
determine, as of the Business Day immediately
preceding the requested effective date of issuance of
the Letter of Credit set forth in the related LC
Application, the amount of the unused LC Facility and
the Borrowing Base. If (A) the form of the Letter of
Credit delivered by Borrower to Agent is acceptable
to Fleet, the Issuing Bank and Agent in their sole
discretion, (ii) the undrawn available amount of the
requested Letter of Credit is less than or equal to
the lesser of (A) the unused LC Facility, and (B) the
unused Borrowing Base and (iii) Agent has received a
certificate from Borrower stating that the applicable
conditions set forth in Section 9 have been
satisfied, then Fleet will cause the Letter of Credit
to be issued.
(iii) Notice of Issuance. Fleet shall give Agent written or
facsimile notice, or telephonic notice confirmed
promptly thereafter in writing, of the issuance of
each Letter of Credit and related LC Guaranty, and
Agent shall give each Lender periodic notice of the
issuance of each Letter of Credit and related LC
Guaranty and Agent shall provide the Lenders at least
monthly with a report of all Letters of Credit and LC
Guaranties outstanding.
(iv) No Extension or Amendment. No Letter of Credit nor LC
Guaranty shall be extended or amended unless the
requirements of this Section 2.5(d) are met as though
a new Letter of Credit were being requested and
issued.
(e) Duties of Issuing Bank. The rights and obligations of Borrower
and the Issuing Bank in respect of any Letter of Credit shall
be governed by the LC Application and other LC Documents
pursuant to which such Letter of Credit was issued. No action
taken or omitted to be taken by the Issuing Bank under or in
connection with any Letter of Credit shall result in any
liability of Fleet or the Agent to the Loan Parties or any
Lender or relieve the Borrower or any Lender of its
obligations hereunder to Fleet, including in respect of the
related LC Guaranty. In determining whether to reimburse an
amount drawn under any Letter of Credit, Fleet shall have no
obligation to any Borrower or any Lender other than to confirm
that such drawing has been honored by the Issuing Bank.
25
(f) Payment of Reimbursement Obligations.
(i) Payment. Notwithstanding any provisions to the
contrary in any LC Application or other LC Document,
Borrower agrees to reimburse the Issuing Bank for any
drawings (whether partial or full) under each Letter
of Credit issued by the Issuing Bank and agrees to
pay to the Issuing Bank the amount of all other LC
Outstandings and other amounts payable to the Issuing
Bank under or in connection with such Letter of
Credit immediately when due and (but without
duplication) to pay or to reimburse Fleet on demand
for any amounts payable or paid by Fleet under any LC
Guaranty, irrespective of any claim, set-off, defense
or other right which any Loan Party may have at any
time against the Issuing Bank, Fleet or any other
Person.
(ii) Recovery or Avoidance of Payments. In the event any
payment by or on behalf of any Loan Party with
respect to any Letter of Credit or related LC
Guaranty received by the Issuing Bank, Fleet, or
Agent and distributed by Agent to the Lenders on
account of their respective participations therein,
is thereafter set aside, avoided or recovered from
the Issuing Bank, Fleet or Agent in connection with
any receivership, liquidation or bankruptcy
proceeding or otherwise, the Lenders shall, upon
demand by the Agent, pay to Agent, for the account of
the Issuing Bank, Fleet or the Agent their respective
Revolving Credit Percentage of such amount set aside,
avoided or recovered together with interest at the
rate required to be paid by Agent on the amount
required to be repaid by it.
(g) Participations.
(i) Purchase of Participations. Immediately upon issuance
by Fleet of an LC Guaranty, each Lender shall be
deemed to have irrevocably and unconditionally
purchased and received without recourse or warranty,
an undivided interest and participation in such LC
Guaranty, equal to such Lender's Revolving Credit
Percentage of the face amount thereof, and any
security therefor or guaranty pertaining thereto,
including any rights of Fleet on payment thereunder
to be subrogated to the rights of the Issuing Bank
under the related Letter of Credit.
(ii) Sharing of Letter of Credit Payments. In the event
that Fleet makes a payment under any LC Guaranty and
Fleet shall not have been repaid such amount pursuant
to Section 2.5(f), then on a weekly basis, or more
frequently if requested by Fleet, each Lender shall
make payment to Fleet, in immediately available
funds, of an amount equal to such Lender's pro rata
share of the amount of any payment made by Fleet in
respect of any LC Guaranty. The obligation of each
Lender to reimburse Fleet under this Section 2.5(g)
shall be unconditional, continuing, irrevocable and
absolute. In the event that any Lender fails to make
payment to Fleet of any amount due under this Section
2.5(g), the Agent shall be entitled to
26
receive, retain and deliver to Fleet for application
against such obligation the principal and interest
otherwise payable to such Lender hereunder until
Fleet receives such payment from such Lender or such
obligation is otherwise fully satisfied.
(iii) Sharing of Reimbursement Obligation Payments.
Whenever Fleet receives a payment from or on behalf
of Borrower on account of a reimbursement obligation
under an LC Guaranty, Fleet shall promptly pay to
Agent, for the benefit of each Lender that has
previously paid its pro rata share of such amount to
or for the benefit of Fleet, such Lender's pro rata
share of the amount of such payment from the Borrower
in Dollars. Each such payment shall be made by Fleet
on the Business Day on which Fleet receives
immediately available funds, if received prior to
11:00 a.m. (Dallas,
Texas time) on such Business Day,
and otherwise on the next succeeding Business Day.
(iv) Documentation. Upon the request of any Lender, Agent
shall furnish to such Lender copies of any Letter of
Credit, LC Application or LC Guaranty for any Letter
of Credit and such other documentation as may
reasonably be requested by such Lender.
(v) Obligations Irrevocable. The obligations of each
Lender to make payments to Agent with respect to any
LC Guaranty and their participations therein and the
obligations of Borrower to make payments to Fleet or
to Agent, for the account of Lenders, shall be
irrevocable, shall not be subject to any
qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of
this Agreement (assuming, in the case of the
obligations of the Lenders to make such payments,
that the LC Guaranty has been issued in accordance
with Section 2.5(d).
(h) Indemnification, Exoneration.
(i) Indemnification. In addition to amounts payable as
elsewhere provided in this Section 2.5, Borrower
agrees to protect, indemnify, pay and save the
Lenders, Fleet, the Issuing Bank and Agent harmless
from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which
any Lender, Fleet, the Issuing Bank or the Agent may
incur or be subject to as a consequence, directly or
indirectly, of
(A) the issuance of any Letter of Credit or LC
Guaranty, other than as a result of its
gross negligence or willful misconduct, as
determined by a court of competent
jurisdiction, or
(B) the failure of the Issuing Bank to honor a
drawing under any Letter of Credit as a
result of any act or omission, whether
rightful or
27
wrongful, of any present or future de jure
or de facto governmental authority (all such
acts or omissions being hereinafter referred
to collectively as "Government Acts").
(ii) Assumption of Risk. As among Borrower, Fleet, the
Lenders and Agent, Borrower assumes all risks of the
acts and omissions of, or misuse of any of the
Letters of Credit by, the respective beneficiaries of
such Letters of Credit and confirm, for the benefit
of Fleet, the Lenders and Agent that as between
Borrower and the Issuing Bank, such matters will be
subject to the terms of the LC Application and other
LC Documents.
(iii) Exoneration. In furtherance and extension, and not in
limitation, of the specific provisions set forth
above, any action taken or omitted by the Agent,
Fleet, the Issuing Bank or any Lender under or in
connection with any of the Letters of Credit, any LC
Guaranty or any related agreements, certificates, or
other documents, if taken or omitted in good faith,
shall not result in any liability of any of Fleet,
Lender or the Agent to Borrower or relieve Borrower
of any of its obligations hereunder to any such
Person.
(i) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.5(b), any LC
Guaranty is outstanding on the last day of the Term, then on
or prior to the last day of the Term, or in any case upon the
occurrence of any Default or Event of Default, Borrower shall,
promptly on demand by Agent, deposit with Agent, for the
ratable benefit of the Lenders, with respect to each LC
Guaranty then outstanding, as Agent shall specify, either (a)
a standby letter of credit (a "Supporting Letter of Credit")
in form and substance satisfactory to Agent, issued by an
issuer satisfactory to Agent in its reasonable judgment under
which Supporting Letter of Credit Agent is entitled to draw
amounts necessary to reimburse Fleet for payments made by
Fleet under such LC Guaranty or under any reimbursement or
guaranty agreement with respect thereto or any Letter of
Credit issued for the account of Borrower, or (b) Cash
Collateral, in either case with respect to the foregoing
clauses (a) or (b), in an amount equal to 105% of the greatest
amount for which the Letter of Credit relating to such LC
Guaranty may be drawn plus all related costs then accrued or
which may be incurred or which may in the future accrue. Such
Supporting Letter of Credit or Cash Collateral shall be held
by Agent, as security for, and to provide for the payment of,
Borrower's obligations in respect of such outstanding LC
Guaranty or under any reimbursement or guaranty agreement with
respect thereto or any Letter of Credit issued for the account
of Borrower in an amount necessary to reimburse Fleet for
payments made by Fleet. In addition, Agent may at any time
after the last day of the Term apply any or all of such Cash
Collateral to the payment of any or all of the Obligations
then due and payable. At Borrower's request, but subject to
Agent's reasonable approval, Agent shall invest any Cash
Collateral consisting of cash or any proceeds of Cash
Collateral consisting of cash, in Cash Equivalents, and any
commissions, expenses and penalties incurred by Agent in
connection with any investment and redemption of such Cash
Collateral shall be Obligations hereunder secured by the
Collateral, shall bear interest at the rates provided herein
28
for the Revolving Credit Base Loan and shall be charged to the
Loan Account of the Borrower, or, at Agent's option, shall be
paid out of the proceeds of any earnings received by Agent
from the investment of such Cash Collateral as provided herein
or out of such cash itself. Agent makes no representation or
warranty as to, and shall not be responsible for, the rate of
return, if any, earned on any Cash Collateral. Any earnings on
Cash Collateral shall be held as additional Cash Collateral on
the terms set forth in this Section 2.5(i).
Section 2.6 All Loans to Constitute One Obligation. All Loans shall
constitute one general joint and several obligation of Borrowers, shall be
evidenced by the Notes, and shall be secured by Agent's security interest in and
Lien upon all of the Collateral, and by all other security interests and Liens
heretofore, now or at any time or times hereafter granted by Borrower to Agent.
Section 2.7 Loan Account. Lenders shall enter all Loans as debits to
the Loan Account and shall also record in the Loan Account all payments made by
Borrowers on each Loan and all proceeds of Collateral which are finally paid to
Lenders, and may record therein, in accordance with customary accounting
practices, all charges and expenses properly chargeable to Borrower hereunder.
Section 2.8 Joint and Several Liability: Rights of Contribution.
(a) Each Borrower states and acknowledges that: (i) pursuant to
this Agreement, Borrowers desire to utilize their borrowing
potential on a consolidated basis to the same extent possible
if they were merged into a single corporate entity; (ii) it
has determined that it will benefit specifically and
materially from the advances of credit contemplated by this
Agreement; (iii) it is both a condition precedent to the
obligations of Lenders hereunder and a desire of the Borrowers
that each Borrower execute and deliver to Agent and Lenders
this Agreement; and (iv) Borrowers have requested and
bargained for the structure and terms of and security for the
advances contemplated by this Agreement.
(b) Each Borrower hereby irrevocably and unconditionally: (i)
agrees that it is jointly and severally liable to Lenders for
the full and prompt payment of the Obligations and the
performance by each Borrower of its obligations hereunder in
accordance with the terms hereof; (ii) agrees to fully and
promptly perform all of its obligations hereunder with respect
to each advance of credit hereunder as if such advance had
been made directly to it; and (iii) agrees as a primary
obligation to indemnify Lenders on demand for and against any
loss incurred by Lenders as a result of any of the obligations
of any Borrower being or becoming void, voidable,
unenforceable or ineffective for any reason whatsoever,
whether or not known to Agent, Lenders or any Person, the
amount of such loss being the amount which Lenders would
otherwise have been entitled to recover from Borrower.
It is the intent of each Borrower that the indebtedness, obligations and
liability hereunder of no one of them be subject to challenge on any basis.
Accordingly, as of the date hereof, the liability
29
of each Borrower under this Section 2.8, together with all of its other
liabilities to all Persons as of the date hereof and as of any other date on
which a transfer is deemed to occur by virtue of this Agreement, calculated in
amount sufficient to pay its probable net liabilities on its existing
Indebtedness as the same become absolute and matured ("Dated Liabilities") is,
and is to be, less than the amount of the aggregate of a fair valuation of its
property as of such corresponding date ("Dated Assets"). To this end, each
Borrower under this Section 2.8, (i) grants to and recognizes in each other
Borrower, ratably, rights of subrogation and contribution in the amount, if any,
by which the Dated Assets of such Borrower, but for the aggregate of subrogation
and contribution in its favor recognized herein, would exceed the Dated
Liabilities of such Borrower or, as the case may be, (ii) acknowledges receipt
of and recognizes its right to subrogation and contribution ratably from the
other Borrower in the amount, if any, by which the Dated Liabilities of such
Borrower, but for the aggregate of subrogation and contribution in its favor
recognized herein, would exceed the Dated Assets of such Borrower under this
Section 2.8. In recognizing the value of the Dated Assets and the Dated
Liabilities, it is understood that Borrowers will recognize, to at least the
same extent of their aggregate recognition of liabilities hereunder, their
rights to subrogation and contribution hereunder. It is a material objective of
this Section 2.8 that each Borrower recognizes rights to subrogation and
contribution rather than be deemed to be insolvent (or in contemplation thereof)
by reason of an arbitrary interpretation of its joint and several obligations
hereunder.
Section 2.9 Contribution of Lenders; Non-Ratable Loans
(a) Agent's Election. Promptly after receipt of a Borrowing Notice
pursuant to Section 2.4, the Agent shall elect, in its
discretion, (i) to have the terms of Section 2.9(b) apply to
such requested Borrowing, or (ii) to request Fleet to make a
Non-Ratable Loan pursuant to the terms of Section 2.9(c) in
the amount of the requested Borrowing; provided, however that
if Fleet declines in its sole discretion to make a Non-Ratable
Loan pursuant to Section 2.9(c) the Agent shall elect to have
the terms of Section 2.9(b) apply to such requested Borrowing.
(b) Making of Revolving Loans.
(i) In the event that the Agent shall elect to have the
terms of this Section 2.9(b) apply to a requested
Borrowing as described in Section 2.4, then promptly
after receipt of a Borrowing Notice, the Agent shall
notify the Lenders by telecopy, telephone, or other
similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such
Lender's Pro Rata Share of the requested Borrowing
available to the Agent in immediately available
funds, to such account of the Agent as the Agent may
designate, not later than 2:00 p.m., (Dallas,
Texas
time) on the Funding Date applicable thereto. After
the Agent's receipt of the proceeds of such Revolving
Loans, upon satisfaction of the applicable conditions
precedent set forth in Article 9, the Agent shall
make the proceeds of such Revolving Loans available
to the Borrower on the applicable Funding Date by
transferring same day funds equal to the proceeds of
such Revolving Loans received by the Agent to the
account designated pursuant
30
to Section 2.4 or disbursing such funds in such other
manner as the Borrower may direct to the Agent.
(ii) Unless the Agent receives notice from a Lender at
least one Business Day prior to the date of a
requested Borrowing, that such Lender will not make
available its Pro Rata Share of such Borrowing, the
Agent may assume that each Lender has made such
amount available to the Agent in immediately
available funds on the Funding Date and the Agent may
(but shall not be required) to make available to the
Borrower on such date a corresponding amount. If and
to the extent a Lender has not made such amounts
available to the Agent, and the Agent has made the
Borrowing available to the Borrower, such Lender
shall on the Business Day following such Funding Date
make such amount available to the Agent, together
with interest at the Base Rate for each day during
such period. A notice by the Agent submitted to any
Lender with respect to such amounts owing under this
subsection shall be conclusive, absent manifest
error. If such amount is not made available to the
Agent on the Business Day following the Funding Date,
the Agent will notify the Borrower of such failure
and, upon demand by the Agent, the Borrower will pay
such amount to the Agent for Agent's account,
together with interest for each day elapsed since the
Funding Date at the interest rate then applicable to
Revolving Loans. The failure of a Lender to make its
Pro Rata Share of a Borrowing available on a Funding
Date (a "Defaulting Lender") shall not relieve any
other Lender of its obligation to make its Pro Rata
Share of such Borrowing on the Funding Date, but
neither the Agent nor any Lender shall be responsible
for the failure of any other Lender to make its Pro
Rata Share of such Borrowing available on such
Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by any Borrower
to the Agent for the Defaulting Lender's benefit; nor
shall a Defaulting Lender be entitled to the sharing
of any payments hereunder. Amounts payable to a
Defaulting Lender shall instead be paid to or
retained by the Agent. The Agent may hold and, in its
discretion, re-lend to the Borrower the amount of all
such payments received or retained by it for the
account of the Defaulting Lender. Any amounts so
re-lent to the Borrower shall bear interest at the
rate applicable to Base Rate Loans and for all other
purposes of this Agreement shall be treated as
Revolving Loans; provided, however, that for purposes
of voting or consenting to matters with respect to
the Loan Documents and determining a Lender's Pro
Rata Share, such Defaulting Lender shall be deemed
not to be a "Lender". Until a Defaulting Lender cures
its failure to fund its Pro Rata Share of any
Borrowing (A) such Defaulting Lender shall not be
entitled to any portion of the unused commitment fee
set forth in Section 3.1(f) and (B) such fee shall
accrue in favor of the Lenders which have funded
their respective Pro Rata Shares of such requested
Borrowing land shall be allocated among such
performing Lenders ratably based upon their relative
Commitments. This Section shall remain
31
effective with respect to such Lender until such time
as the Defaulting Lender shall no longer be in
default of any of its obligations under this
Agreement. The terms of this Section shall not be
construed to increase or otherwise affect the
Commitment of any Lender, or relieve or excuse the
performance by Borrower of its duties and obligations
hereunder.
(c) Making of Non-Ratable Loans.
(i) In the event the Agent shall elect, with the consent
of Fleet, to have the terms of this Section 2.9(c)
apply to a requested Borrowing, Fleet shall make a
Revolving Loan in the amount of such Borrowing (any
such Revolving Loan made solely by Fleet pursuant to
this Section 2.9(c) being referred to as a
"Non-Ratable Loan" and such Revolving Loans being
referred to collectively as "Non-Ratable Loan")
available to the Borrower on the Funding Date
applicable thereto by transferring same day funds to
the account of such Borrower, designated pursuant to
Section 2.4. Each Non-Ratable Loan is a Revolving
Loan hereunder and shall be subject to all the terms
and conditions applicable to other Revolving Loans
except that all payments thereon shall be payable to
Fleet solely for its own account (and for the account
of the holder of any participation interest with
respect to such Revolving Loan). The Agent shall not
request Fleet to make any Non-Ratable Loan if (A) the
Agent shall have received written notice from any
Lender that one or more of the applicable conditions
precedent set forth in Article 9 will not be
satisfied on the requested Funding Date for the
applicable Borrowing, or (B) the requested Borrowing
would exceed the Revolving Credit Commitment on such
Funding Date. Fleet shall not otherwise be required
to determine whether the applicable conditions
precedent set forth in Article 9 have been satisfied
or the requested Borrowing would exceed the Revolving
Credit Commitment on the Funding Date applicable
thereto prior to making, in its sole discretion, any
Non-Ratable Loan.
(ii) The Non-Ratable Loans shall be secured by the
Collateral, shall constitute Revolving Loans and
Obligations hereunder, and shall bear interest at the
rate applicable to the Revolving Loans from time to
time.
(d) Agent Advances.
(i) Subject to the limitations set forth in the provisos
contained in this Section 2.9(d), the Agent is hereby
authorized by the Borrowers and the Lenders, from
time to time in the Agent's sole discretion, (A)
after the occurrence of a Default or an Event of
Default, or (B) at any time that any of the other
applicable conditions precedent set forth in Article
9 have not been satisfied, to make Base Rate Loans to
the Borrower on behalf of the Lenders which the
Agent, in its reasonable business judgment, deems
necessary or desirable (1) to preserve or protect the
Collateral or any portion thereof, (2) to enhance the
likelihood of, or maximize the amount
32
of, repayment of the Loans and other Obligations, or
(3) to pay any other amount chargeable to the
Borrower pursuant to the terms of this Agreement,
including costs, fees, and expenses as described in
Section 12.4 (any of the advances described in this
Section 2.9(d) being hereinafter referred to as
"Agent Advances"); provided that the Majority Lenders
may at any time revoke the Agent's authorization
contained in this Section 2.9(d) to make Agent
Advances, any such revocation to be in writing and to
become effective prospectively upon the Agent's
receipt thereof;
(ii) The Agent Advances shall be repayable on demand and
secured by the Collateral, shall constitute Revolving
Loans and Obligations hereunder, and shall bear
interest at the rate applicable to Base Rate Loans
from time to time. The Agent shall notify the
Borrower and each Lender in writing of each such
Agent Advance; provided that the failure of the Agent
to provide any such notice to the Borrower or any
Lender shall not affect the Borrower's liability for
or obligation to repay such Agent Advances or result
in any liability or constitute the breach of any duty
or obligation of the Agent hereunder.
(e) Settlement. Except as may be specifically provided otherwise
by this Section 2.9, it is agreed that each Lender's funded
portion of the Revolving Loans is intended by the Lenders to
be equal at all times to such Lender's Pro Rata Share of the
outstanding Revolving Loans. Notwithstanding such agreement,
the Agent, Fleet, and the other Lenders agree (which agreement
shall not be for the benefit of or enforceable by the
Borrowers) that in order to facilitate the administration of
this Agreement and the other Loan Documents, settlement among
them as to the Revolving Loans, the Non-Ratable, Loans, and
the Agent Advances shall take place on a periodic basis in
accordance with the following provisions:
(i) The Agent shall request settlement (a "Settlement")
with the Lenders on at least a weekly basis, or on a
more frequent basis if so determined by the Agent,
(A) on behalf of Fleet, with respect to each
outstanding Non-Ratable Loan, (B) for itself, with
respect to each Agent Advance, and (C) with respect
to collections received, in each case, by notifying
the Lenders of such requested Settlement by telecopy,
telephone, or other similar form of transmission, of
such requested Settlement, no later than 11:00 a.m.
(Dallas,
Texas time) on the date of such requested
Settlement (the "Settlement Date"), each Lender
(other than Fleet, in the case of Non-Ratable Loans,
and the Agent, in the case of Agent Advances) shall
make the amount of such Lender's Pro Rata Share of
the outstanding principal amount of the Non-Ratable
Loans and Agent Advances with respect to which
Settlement is requested available to the Agent, to
such account of the Agent as the Agent may designate,
not later than 2:00 p.m. (Dallas,
Texas time), on the
Settlement Date applicable thereto, which may occur
before or after the occurrence or during the
continuation of a Default or an Event of Default and
whether or not the applicable conditions precedent
33
set forth in Article 9 have then been satisfied. Such
amounts made available to the Agent shall be applied
against the amounts of the applicable Non-Ratable
Loan or Agent Advance and, together with the portion
of such Non-Ratable Loan or Agent Advance
representing Fleet's Pro Rata Share thereof, shall
constitute Revolving Loans of the Lenders,
respectively. If any such amount is not made
available to the Agent by any Lender on the
Settlement Date applicable thereto, the Agent shall
be entitled to recover such amount on demand from
such Lender together with interest thereon at the
Base Rate for the first three (3) days from and after
the Settlement Date and thereafter at the Interest
Rate then applicable to the Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent
(whether before or after the occurrence of a Default
or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a
Non-Ratable Loan or Agent Advance), each other Lender
(A) shall irrevocably and unconditionally purchase
and receive from Fleet or the Agent, as applicable,
without recourse or warranty, an undivided interest
and participation in such Non-Ratable Loan or Agent
Advance equal to such Lender's Pro Rata Share of such
Non-Ratable Loan or Agent Advance and (B) if
Settlement has not previously occurred with respect
to such Non-Ratable Loans or Agent Advances, upon
demand by Fleet or the Agent, as applicable, shall
pay to Fleet or the Agent, as applicable, as the
purchase price of such participation an amount equal
to one-hundred percent (100%) of such Lender's Pro
Rata Share of such Non-Ratable Loans or Agent
Advances. If such amount is not in fact made
available to the Agent by any Lender, the Agent shall
be entitled to recover such amount on demand from
such Lender together with interest thereon at the
interest rate then applicable to Base Rate Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in
any Non-Ratable Loan or Agent Advance pursuant to
clause (ii) preceding, the Agent shall promptly
distribute to such Lender at such address as such
Lender may request in writing, such Lender's Pro Rata
Share of all payments of principal and interest and
all proceeds of Collateral received by the Agent in
respect of such Non-Ratable Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no
Agent Advances or Non-Ratable Loans are outstanding,
may pay over to Fleet any payments received by the
Agent, which in accordance with the terms of this
Agreement would be applied to the reduction of the
Revolving Loans, for application to Fleet's Revolving
Loans. If, as of any Settlement Date, collections
received since the then immediately preceding
Settlement Date have been applied to Fleet's
Revolving Loans (other than to Non-Ratable Loans or
Agent Advances in which such Lender has not yet
funded its
34
purchase of a participation pursuant to Section
2.9(d)(ii)), as provided for in the previous
sentence, Fleet shall pay to the Agent for the
accounts of the Lenders, to be applied to the
outstanding Revolving Loans of such Lenders, an
amount such that each Lender shall, upon receipt of
such amount, have, as of such Settlement Date, its
Pro Rata Share of the Revolving Loans. During the
period between Settlement Dates, Fleet with respect
to Non-Ratable Loans, the Agent with respect to Agent
Advances, and each Lender with respect to the
Revolving Loans other than Non-Ratable Loans and
Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement
on the actual average daily amount of funds employed
by Fleet, the Agent and the other Lenders.
(f) Notation. The Agent shall record on its books the principal
amount of the Revolving Loans owing to each Lender, including
the Non-Ratable Loans owing to Fleet, and the Agent Advances
owing to the Agent, from time to time. In addition, each
Lender is authorized, at such Lender's option, to note the
date and amount of each repayment or prepayment of principal
of such Lender's Revolving Loans in its books and records,
including computer records, such books and records
constituting presumptive evidence, absent manifest error, of
the accuracy of the information contained therein.
(g) Lenders' Failure to Perform. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender shall be
responsible for any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, nor shall
any commitment of any Lender be increased or decreased as a
result of any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, (ii) no
failure by any Lender to perform its obligation to make any
Revolving Loans hereunder shall excuse any other Lender from
its obligation to make any Revolving Loans hereunder, and
(iii) the obligations of each Lender hereunder shall be
several, not joint and several.
ARTICLE 3. INTEREST, FEES, TERM, REDUCTION AND REPAYMENT
Section 3.1 Interest, Fees and Charges.
(a) Interest. Outstanding principal on the Loans shall bear
interest at the option of Borrower (subject to the terms and
conditions herein) at either the Base Rate or LIBOR Rate,
calculated daily, at the following rates per annum
(individually called, as applicable, an "Applicable Annual
Rate"):
(i) Existing LIBOR Loans. Each LIBOR Loan outstanding on
the date of this Agreement shall bear interest at a
rate per annum equal to the existing Applicable
Annual Rate.
35
(ii) New LIBOR Loans. Each LIBOR Loan drawn after the
Closing Date shall bear interest at a rate per annum
equal to the LIBOR Rate plus the Applicable Margin
Amount.
(iii) Base Rate Loans. The Base Rate Loans shall bear
interest at a fluctuating rate per annum equal to the
Base Rate plus the Applicable Margin Amount.
The interest rate applicable to Base Rate Loans shall be increased or
decreased, as the case may be, by an amount equal to any increase or decrease in
the Base Rate, with such adjustments to be effective as of the opening of
business on the day that any such change in the Base Rate becomes effective. The
Base Rate in effect on the date hereof shall be the Base Rate effective as of
the opening of business on the date hereof, but if this Agreement is executed on
a day that is not a Business Day, the Base Rate in effect on the date hereof
shall be the Base Rate effective as of the opening of business on the last
Business Day immediately preceding the date hereof. Interest on the Loans shall
be calculated daily, based on the actual days elapsed over a three hundred-sixty
(360) day year. Further, for the purpose of computing interest, all items of
payment received by Lenders shall be applied by Lenders (subject to final
payment of all drafts and other items received in form other than immediately
available funds) against the Obligations on the day of receipt. The
determination of when a payment is received by Lenders will be made in
accordance with Section 3.6.
(b) Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the
principal amount of the Loans and other Obligations shall bear
interest, calculated daily (computed on the actual days
elapsed over a three hundred-sixty (360) day year), at two
percent (2.00%) above the Base Rate or other applicable rate
of interest (a "Default Rate").
(c) Maximum Rate of Interest. Notwithstanding anything to the
contrary in this Agreement or otherwise, (i) if at any time
the amount of interest computed on the basis of an Applicable
Annual Rate or a Default Rate would exceed the amount of such
interest computed upon the basis of the maximum rate of
interest permitted by applicable state or federal law in
effect from time to time hereafter (the "Maximum Legal Rate"),
the interest payable under this Agreement shall be computed
upon the basis of the Maximum Legal Rate, but any subsequent
reduction in such Applicable Annual Rate or Default Rate, as
applicable, shall not reduce such interest thereafter payable
hereunder below the amount computed on the basis of the
Maximum Legal Rate until the aggregate amount of such interest
accrued and payable under this Agreement equals the total
amount of interest which would have accrued if such interest
had been at all times computed solely on the basis of an
Applicable Annual Rate or Default Rate, as applicable; and
(ii) unless preempted by federal law, an Applicable Annual
Rate or Default Rate, as applicable, from time to time in
effect hereunder may not exceed the applicable indicated rate
ceiling as defined in the Texas Finance Code, (and as the same
may be incorporated by reference in other Texas statutes), but
otherwise without limitation, that rate based upon the "weekly
rate ceiling" and calculated after taking into account any and
all relevant fees, payments, and other charges in
36
respect of the Loan which are deemed to be interest under
applicable law. If the applicable state or federal law is
amended in the future to allow a greater rate of interest to
be charged under this Agreement than is presently allowed by
applicable state or federal law, then the limitation of
interest hereunder shall be increased to the maximum rate of
interest allowed by applicable state or federal law as
amended, which increase shall be effective hereunder on the
effective date of such amendment, and all interest charges
owing to Lender by reason thereof shall be payable upon
demand. (d) Excess Interest. No agreements, conditions,
provisions or stipulations contained in this Agreement or
any other instrument, document or agreement between Borrower,
Agent and Lenders or default of Borrower, or the exercise by
Agent or Lenders of the right to accelerate the payment of the
maturity of principal and interest, or to exercise any option
whatsoever contained in this Agreement or any other Loan
Document, or the arising of any contingency whatsoever, shall
entitle Lenders to contract for, charge, or receive, in any
event, interest exceeding the Maximum Legal Rate. In no event
shall Borrower be obligated to pay interest exceeding such
Maximum Legal Rate and all agreements, conditions or
stipulations, if any, which may in any event or contingency
whatsoever operate to bind, obligate or compel Borrower to pay
a rate of interest exceeding the Maximum Legal Rate, shall be
without binding force or effect, at law or in equity, to the
extent only of the excess of interest over such Maximum Legal
Rate. In the event any interest is contracted for, charged or
received in excess of the Maximum Legal Rate ("Excess"),
Borrower acknowledges and stipulates that any such contract,
charge, or receipt shall be the result of an accident and bona
fide error, and that any Excess received by Lenders shall be
applied, first, to reduce the principal then unpaid hereunder;
second, to reduce the other Obligations; and third, returned
to Borrower, it being the intention of the parties hereto not
to enter at any time into a usurious or otherwise illegal
relationship. Borrower recognizes that, with fluctuations in
the Base Rate or the LIBOR Rate and the Maximum Legal Rate,
such a result could inadvertently occur. By the execution of
this Agreement, Borrower covenants that (i) the credit or
return of any Excess shall constitute the acceptance by
Borrower of such Excess, and (ii) Borrower shall not seek or
pursue any other remedy, legal or equitable, against Lenders,
based in whole or in part upon contracting for, charging or
receiving of any interest in excess of the maximum authorized
by applicable law. For the purpose of determining whether or
not any Excess has been contracted for, charged or received by
Lenders, all interest at any time contracted for, charged or
received by Lenders in connection with this Agreement shall be
amortized, prorated, allocated and spread in equal parts
during the entire term of this Agreement.
(e) Incorporation by this Reference. The provisions of Section
3.1(d) shall be deemed to be incorporated into every document
or communication relating to the Obligations which sets forth
or prescribes any account, right or claim or alleged account,
right or claim of Lenders with respect to Borrower (or any
other obligor in respect of Obligations), whether or not any
provision of this Section 3.1 is referred to therein. All such
documents and communications and all figures set
37
forth therein shall, for the sole purpose of computing the
extent of the Obligations and obligations of the Borrowers (or
other obligor) asserted by Agent or Lenders thereunder, be
automatically re-computed by any Borrower or obligor, and by
any court considering the same, to give effect to the
adjustments or credits required by Section 3.1(d).
(f) Unused Commitment Fee. Borrower agrees to pay to Agent for
distribution to Lenders a monthly unused commitment fee equal
to 0.375% per annum multiplied by the amount by which the
Total Commitment exceeds the Average Monthly Loan Balance;
provided, however, that if the Total Commitment exceeds the
Average Monthly Loan Balance by $50,000,000 or more at any
time during the first two (2) years following the Closing Date
the fee shall be increased to 0.50% per annum for such period.
Such unused commitment fee shall be payable (i) on the Closing
Date, and (ii) monthly in arrears on the first day of each
calendar month after the Closing Date.
(g) Closing Fees. Borrower shall pay to Agent on the Closing Date
for distribution to the Lenders a closing fee of $225,000 and
an underwriting fee to the Agent as provided in the letter
agreement between Borrower and Agent dated February ___, 2002.
(h) Agency Fee. Borrower shall pay to Agent on the Closing Date
and on each anniversary of the Closing Date during the term of
this Agreement an agency fee of Twenty Thousand Dollars
($20,000).
(i) Capital Adequacy Charge. In the event that a Lender shall have
determined in good faith that the adoption of any law, rule or
regulation regarding capital adequacy, or any change therein
or in the interpretation or application thereof or compliance
by such Lender with any request or directive regarding capital
adequacy (whether or not having the force of law) from any
central bank or governmental authority, does or shall have the
effect of reducing the rate of return on such Lender's capital
as a consequence of its obligations hereunder to a level below
that which such Lender could have achieved but for such
adoption, change or compliance (taking into consideration such
Lender's policies with respect to capital adequacy) by an
amount deemed- by such Lender, in its sole discretion, to be
material, then from time to time, after submission by such
Lender to Borrower of a certificate certifying the amount by
which such rate of return is actually reduced with respect to
this transaction, together with the calculation and a written
demand therefor, Borrower shall promptly pay to such Lender
such additional amount or amounts as will compensate such
Lender for such reduction; provided, that, such Lender's other
debtors are required to reimburse such Lender for the same
type of reduction. The certificate of such Lender claiming
entitlement to payment as set forth above shall be conclusive
in the absence of manifest error. Such certificate shall set
forth the nature of the occurrence giving rise to such
payment, the additional amount or amounts to be paid to such
Lender, and the method by which such amounts were determined.
In determining such amount, a Lender may use any reasonable
averaging and attribution method, so
38
long as it accurately reflects the reduction. A Lender
claiming amounts under this Section 3.1(i) agrees to provide
Borrower such additional information with respect thereto upon
request.
(j) Letter of Credit: LC Guaranty Fees. As additional
consideration for the Issuing Bank's issuing its Letters of
Credit for Borrower's account or for issuing its LC Guaranties
at Borrower's request pursuant to Section 2.4, Borrower agrees
to pay to the Issuing Bank, in addition to the Issuing Bank's
costs and expenses incurred in issuing such Letters of Credit
and LC Guaranties, fees equal to the Applicable Margin for
LIBOR Loans (equal to the face amount of each Letter of Credit
and LC Guaranty) times the face amount of each Letter of
Credit and LC Guaranty, which fee shall be deemed fully earned
upon issuance of each such Letter of Credit or LC Guaranty,
and shall be due and payable in equal monthly installments
beginning on the first Business Day of the month following the
date of issuance of such Letter of Credit or LC Guaranty and
continuing on the first Business Day of each month thereafter
during the term thereof. No fee payable by Borrower to the
Issuing Bank under this Section 3.1(j) shall be subject to
rebate or proration upon the termination of this Agreement for
any reason.
Section 3.2 Additional Provisions Regarding LIBOR Loans.
(a) Borrower may select a LIBOR Rate with respect to all or any
portion of the Loans as provided in this Section 3.2;
provided, however, that (i) each LIBOR Loan shall be in a
principal amount of not less than One Million Dollars
($1,000,000) (and, if greater than One Million Dollars
($1,000,000), in integral multiples of One Hundred Thousand
Dollars ($100,000)), (ii) no more than five (5) LIBOR Periods
may be in existence at any one time, and (iii) Borrower may
not select a LIBOR Rate for a Loan if there exists a Default
or Event of Default. Borrower shall select LIBOR Periods with
respect to LIBOR Loans so that no LIBOR Period expires after
the end of the Original Term, or if extended pursuant to
Section 3.3, any Renewal Term. With respect to a LIBOR Loan,
the Borrowing Notice shall be delivered to Agent not later
than two (2) Business Days before the proposed borrowing date
referenced therein. An outstanding Base Rate Loan may be
converted to a LIBOR Loan at any time subject to the
provisions of this Section 3.2.
(b) Each LIBOR Loan shall bear interest from and including the
first day of the LIBOR Period applicable thereto (but not
including the last day of such LIBOR Period) at the interest
rate determined as applicable to such LIBOR Loan, but interest
on such LIBOR Loan shall be payable as provided in Section
3.6. If at the end of an LIBOR Period for an outstanding LIBOR
Loan, Borrower has failed to deliver to Lender a new Borrowing
Notice with respect to such LIBOR Loan or to pay such LIBOR
Loan, then such LIBOR Loan shall be converted to a Base Rate
Loan on and after the last day of such LIBOR Period and shall
remain a Base Rate Loan until paid or until the effective date
of a new Borrowing Notice with respect thereto.
39
(c) If a Lender determines that maintenance of any of its portion
of LIBOR Loans would violate any applicable law, rule,
regulation or directive, whether or not having the force of
law, such Lender shall suspend the availability of its portion
of LIBOR Loans (the "Affected Portion") and require the
Affected Portion of any LIBOR Loans outstanding to be repaid;
or if such Lender determines that (i) deposits of a type or
maturity appropriate to match fund the Affected Portion of
LIBOR Loans are not available, or (ii) the LIBOR Rate does not
accurately reflect the cost of making the Affected Portion of
a LIBOR Loan, then such Lender shall promptly provide notice
to Borrower of its decision to suspend Borrower's ability to
make the Affected Portion of LIBOR Loans and/or require
Borrower to repay the Affected Portion of LIBOR Loans and
shall suspend the availability of the Affected Portion of
LIBOR Loans after the date of any such determination.
(d) If any payment of a LIBOR Loan occurs on a date which is not
the last day of the applicable LIBOR Period, whether because
of acceleration, prepayment or otherwise, or a LIBOR Loan is
not made on the date specified by Borrower because Borrower
has not satisfied the conditions precedent to such LIBOR Loan
contained in this Agreement or a Default or Event of Default
has occurred and is continuing, Borrower will indemnify
Lenders for any loss or cost incurred by it resulting
therefrom, including without limitation any loss or cost in
liquidating or employing deposits required to fund or maintain
the LIBOR Loan.
(e) Agent shall deliver a written statement as to the amount due,
if any, under Sections 3.2(c) or (d). Such written statement
shall set forth in reasonable detail the calculations upon
which Agent determined such amount and shall be final,
conclusive and binding on Borrower in the absence of manifest
error. Determination of amounts payable under such Sections in
connection with a LIBOR Loan shall be calculated as though the
affected Lender funded its portion of LIBOR Loan through the
purchase of a deposit of the type and maturity corresponding
to the deposit used as a reference in determining the LIBOR
Rate applicable to such Loan whether in fact that is the case
or not. Unless otherwise provided herein, the amount specified
in the written statement shall be payable on demand after
receipt by Borrower of the written statement.
(f) Borrower may prepay a LIBOR Loan only upon at least three (3)
Business Days prior written notice to Agent (which notice
shall be irrevocable). Borrower shall pay to Agent, upon
request of Agent, such amount or amounts as shall be
sufficient (in the reasonable opinion of Agent) to compensate
Lenders for any loss, cost, or expense incurred as a result
of: (i) any payment of a LIBOR Loan on a date other than the
last day of the LIBOR Period for such LIBOR Loan; (ii) any
failure by Borrower to borrow a LIBOR Loan on the date
specified by Borrower's written notice; or (iii) any failure
by Borrower to pay a LIBOR Loan on the date for payment
specified in Borrower's written notice. Without limiting the
foregoing, Borrower shall pay to Agent for the benefit of
Lenders a "yield maintenance fee" in an amount computed as
follows: the current rate for United States Treasury
securities (bills on a discounted basis shall be converted to
a bond equivalent) with a maturity date closest to the LIBOR
Period chosen pursuant to
40
the LIBOR Loan as to which the prepayment is made, shall be
subtracted from the LIBOR Rate in effect at the time of
prepayment. If the result is zero or a negative number, there
shall be no yield maintenance fee. If the result is a positive
number, then the resulting percentage shall be multiplied by
the amount of the principal balance being prepaid. The
resulting amount shall be divided by 360 and multiplied by the
number of days remaining in the LIBOR Period chosen pursuant
to the LIBOR Loan as to which the prepayment is made. Said
amount shall be reduced to present value calculated by using
the above referenced United States Treasury securities rate
and the number of days remaining in the term chosen pursuant
to the LIBOR Loan as to which prepayment is made. The
resulting amount shall be the yield maintenance fee due to
Agent for the benefit of Lenders upon the prepayment of a
LIBOR Loan. If by reason of an Event of Default, Agent or the
Majority Lenders elect to declare the Obligations to be
immediately due and payable, then any yield maintenance fee
with respect to a LIBOR Loan shall become due and payable in
the same manner as though the Borrower had exercised such
right of prepayment.
Section 3.3 Term of Agreement. Subject to the terms hereof and to
Lenders' right to cease making Loans to Borrower at any time upon or after the
occurrence of an Event of Default, this Agreement shall be in effect for (a) a
period of three (3) years from the date hereof, through and including February
___, 2005 (the "Term"). Upon written request by Borrower, Lenders may, in their
sole and absolute discretion, renew this Agreement for any number of successive
one year periods thereafter (each such successive one year period, a "Renewal
Term"), but Lenders shall have no obligation to do so. Notwithstanding anything
contained herein to the contrary, Lenders may terminate this Agreement without
notice upon or after the occurrence of an Event of Default.
Section 3.4 Early Termination by Borrower. Borrower may terminate the
Revolving Credit Commitment hereunder at any time during the term of this
Agreement by repaying all outstanding Loans and the interest thereon, plus a
premium as follows: (i) if such prepayment occurs on or before the first
anniversary of the Closing Date, a premium of 2% of the then existing Revolving
Credit Commitment; (ii) if such prepayment occurs after the first anniversary of
the Closing Date and on or before the second anniversary of the Closing Date a
premium of 1.5% of the then existing Revolving Credit Commitment; and (iii) if
such prepayment occurs after the second anniversary of the Closing Date and on
or before the third anniversary of the Closing Date a premium of .5% of the then
existing Revolving Credit Commitment.
Section 3.5 Effect of Termination. All of the Obligations shall be
forthwith due and payable upon any termination of this Agreement in accordance
with Section 3.4. Except as otherwise expressly provided for in this Agreement
or the other Loan Documents, no termination or cancellation (regardless of cause
or procedure) of this Agreement or any of the other Loan Documents shall in any
way affect or impair the rights, powers or privileges of Lenders or the
obligations, duties or liabilities of Borrower or Lenders in any way relating to
(a) any transaction or event occurring prior to such termination or cancellation
or (b) any of the undertakings, agreements, covenants, warranties or
representations of Borrower contained in this Agreement or any of the other Loan
Documents. All such undertakings, agreements, covenants, warranties and
representations of Borrower shall survive such termination or cancellation and
Agent shall retain
41
its Liens in the Collateral and all of its rights and remedies under this
Agreement and the other Loan Documents notwithstanding such termination or
cancellation until all of the Obligations known existing, threatened or claimed
which can be given a monetary value have been paid in full, in immediately
available funds.
Section 3.6 Payments.
Principal and interest on the Loans shall be payable as follows:
(a) principal payable on account of Loans shall be payable by
Borrower to Lenders immediately upon the earliest of (i) the
receipt by Agent, a Lender or Borrower of any proceeds of any
of the Collateral, to the extent of said proceeds, (ii) the
occurrence of an Event of Default in consequence of which
Agent elects to accelerate the maturity and payment of such
Loans, or (iii) termination of this Agreement.
(b) interest accrued on the Loans shall be due on the earliest of
(i) the first day of each month (for the immediately preceding
month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in
consequence of which Agent elects to accelerate the maturity
and payment of the Obligations, or (iii) termination of this
Agreement.
(c) reasonable and itemized costs, fees and expenses payable
pursuant to this Agreement shall be promptly payable by
Borrower to Agent or to any other Person designated by Agent
in writing.
(d) the balance of the Obligations requiring the payment of money,
if any, shall be payable by Borrower to Agent as and when
provided in this Agreement, the Other Agreements or the
Security Documents, or, if not otherwise provided, then on
demand.
Borrower hereby irrevocably authorizes Agent, in Agent's good faith
discretion, to advance to Borrower and to charge to the Loan Account as a
Revolving Loan, sums sufficient to pay all amounts due and payable under
Sections 3.6(b), (c) and (d) above whether or not any such advance would cause
the outstanding Revolving Loans to exceed the Borrowing Base.
Section 3.7 Application of Payments and Collections. (a) Except as
otherwise provided in this Section 3.7, Borrower irrevocably waives the right to
direct the application of any and all payments and collections at any time or
times hereafter received by Agent or Lenders from or on behalf of Borrower, and
Borrower does hereby irrevocably agree that Agent shall have the continuing
exclusive right to apply and reapply any and all such payments and collections
received at any time or times hereafter by Agent or its agent against the
Obligations, in such manner as Agent may deem advisable, notwithstanding any
entry by Agent upon any of its books and records. If as the result of
collections of Accounts as authorized by Section 5.2 a credit balance exists in
the Loan Account with respect to the Revolving Credit Commitment, such credit
balance shall not accrue interest in favor of Borrower, but shall be returned to
Borrower within one (1) Business Day for so long as no Default or Event of
Default exists.
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Agent may offset any credit balance against the Obligations upon or after the
occurrence of an Event of Default. Payments and collections received by Agent
from the Dominion Account or otherwise in Houston, Texas (a) before 2:00 p.m.
Central Standard Time on a Business Day shall be deemed received on such
Business Day, and (b) after 2:00 p.m. Central Standard Time on a Business Day
shall be deemed received on the next succeeding Business Day, in each case for
purposes of determining the amount of Revolving Loans available for borrowing
hereunder and for purposes of computing interest on the Loans (subject in each
case to final payment of all items and collections received in form other than
immediately available funds). For so long as no Event of Default has occurred,
all payments and collections deposited into the Dominion Account shall be
transferred to a bank account specified by Borrower, and upon the occurrence of
an Event of Default, Agent may, in its sole discretion, direct all such payments
and collections to be transferred to a bank account specified by Agent.
(a) All monies to be applied to the Obligations, other than as
expressly provided for elsewhere in this Agreement, whether
such monies represent voluntary payments by the Borrower or
are received pursuant to demand for payment or realized from
any disposition of Collateral, shall be allocated among the
Agent and such of the Lenders and other holders of the
Obligations as are entitled thereto (and, with respect to
monies allocated to the Lenders, on a ratable basis unless
otherwise provided in this Section 3.7): (i) to pay principal
and accrued interest on any Overadvance; (ii) second, to the
Agent to pay the amount of expenses that have not been
reimbursed to the Agent by the Borrower or the Lenders,
together with interest accrued thereon; (iii) third, to the
Agent to pay any indemnified amount that has not been paid to
the Agent by the Borrower or the Lenders, together with
interest accrued thereon; (iv) fourth, to the Agent to pay any
fees due and payable to the Agent under this Agreement; (v)
fifth, to the Lenders for any indemnified amount that they
have paid to the Agent and for any expenses that they have
reimbursed to the Agent; (vi) sixth, to the Lenders to pay any
fees due and payable to the Lenders under this Agreement;
(vii) seventh, in payment of the unpaid principal and accrued
interest in respect of the Loans and (viii) eighth, any other
Obligations then outstanding and held by any Lender to be
shared among the Lenders on a ratable basis, or on such other
basis as may be agreed upon in writing by all of the Lenders
(which agreement or agreements may be entered into without
notice to or the consent or approval of the Borrower). The
allocations set forth in this Section 3.7 are solely to
determine the rights and priorities of the Agent and the
Lenders as among themselves and may be changed by the Agent
and the Lenders without notice to or the consent or approval
of the Borrower or any other Person.
Section 3.8 Statements of Account. Agent will account to Borrower
monthly with a statement of Loans, charges and payments made pursuant to this
Agreement, and such account rendered by Agent, absent manifest error, shall be
deemed final, binding and conclusive upon Borrower unless Agent is notified by
Borrower in writing to the contrary within seventy-five (75) days after the date
each account is mailed to Borrower. Such notice shall only be deemed an
objection to those items specifically objected to therein.
43
Section 3.9 Increased Costs. If any law or any governmental or
quasi-governmental rule, regulation, policy, guideline or directive (whether or
not having the force of law) adopted after the date of this Agreement and having
general applicability to all banks within the jurisdiction in which any Lender
operates (excluding, for the avoidance of doubt, the effect of and phasing in of
capital requirements or other regulations or guidelines passed prior to the date
of this Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application thereof,
or the compliance of any Lender therewith, shall:
(a) (i) subject any Lender to any tax with respect to this
Agreement (other than (A) any tax based on or measured by net
income or otherwise in the nature of a net income tax,
including, without limitation, any franchise tax or any
similar tax based on capital, net worth or comparable basis
for measurement and (B) any tax collected by a withholding on
payments and which neither is computed by reference to the net
income of the payee nor is in the nature of an advance
collection of a tax based on or measured by the net income of
the payee) or (ii) change the basis of taxation of payments to
any Lender of principal, fees, interest or any other amount
payable hereunder or under any Loan Documents (other than in
respect of (A) any tax based on or measured by net income or
otherwise in the nature of a net income tax, including,
without limitation, any franchise tax or any similar tax based
on capital, net worth or comparable basis for measurement and
(B) any tax collected by a withholding on payments and which
neither is computed by reference to the net income of the
payee nor is in the nature of an advance collection of a tax
based on or measured by the net income of the payee);
(b) impose, modify or hold applicable any reserve (except any
reserve taken into account in the determination of the
applicable LIBOR Rate), special deposit, assessment or similar
requirement against assets held by, or deposits in or for the
account of, advances or loans by, or other credit extended by,
any office of any Lender, including (without limitation)
pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
(c) impose on any Lender or the London interbank market any other
condition with respect to any Loan Document;
and the result of any of the foregoing is to increase the cost to any Lender of
making, renewing or maintaining Loans hereunder by an amount that any Lender
deems to be material or to reduce the amount of any payment (whether of
principal, interest or otherwise) in respect of any of the Loans by an amount
that any Lender deems to be material, then, in any such case, Borrower shall pay
such Lender, upon demand and certification not later than sixty (60) days
following its receipt of notice of the imposition of such increased costs, such
additional amount as will compensate such Lender for such additional cost or
such reduction, as the case may be, to the extent such Lender has not otherwise
been compensated, with respect to a particular Loan, for such increased cost as
a result of an increase in the Base Rate or the LIBOR Rate. An officer of such
Lender shall determine the amount of such additional cost or reduced amount
using reasonable averaging and attribution methods and shall certify the amount
of such additional cost or reduced amount to Borrower, which certification shall
include a written explanation of such
44
additional cost or reduction to Borrower and a statement that such costs affect
other borrowers with similar LIBOR loans. Such certification shall be conclusive
absent manifest error. If such Lender claims any additional cost or reduced
amount pursuant to this Section 3.8, then such Lender shall use reasonable
efforts (consistent with legal and regulatory restrictions) to designate a
different lending office or to file any certificate or document reasonably
requested by Borrower if the making of such designation or filing would avoid
the need for, or reduce the amount of, any such additional cost or reduced
amount and would not, in the sole discretion of such Lender, be otherwise
disadvantageous to such Lender.
Section 3.10 Basis for Determining Interest Rate Inadequate or Unfair.
In the event that Agent shall have determined that:
(a) reasonable means do not exist for ascertaining the LIBOR Rate
for any LIBOR Period; or
(b) Dollar deposits in the relevant amount and for the relevant
maturity are not available in the London interbank market with
respect to a proposed LIBOR Loan, or a proposed conversion of
a Base Rate Loan into a LIBOR Loan; then
Agent shall give Borrower prompt written, telephonic or electronic notice of the
determination of such effect. If such notice is given, (i) any such requested
LIBOR Loan shall be made as a Base Rate Loan, unless Borrower shall notify Agent
no later than 10:00 A.M. (Dallas, Texas Time) two (2) Business Days prior to the
date of such proposed borrowing that the request for such borrowing shall be
canceled or made as an unaffected type of LIBOR Loan, and (ii) any Base Rate
Loan which was to have been converted to an affected type of LIBOR Loan shall be
continued as or converted into a Base Rate Loan, or, if Borrower shall notify
Agent, no later than 10:00 A.M. (Dallas, Texas Time) two (2) Business Days prior
to the proposed conversion, shall be maintained as an unaffected type of LIBOR
Loan.
ARTICLE 4. COLLATERAL: GENERAL TERMS
Section 4.1 Security Interest in Collateral. To secure the prompt
payment and performance to Lenders of the Obligations, Borrower hereby grants to
Agent on behalf of the Lenders a continuing security interest in and Lien upon
all the following Property and interests in Property of Borrower, whether now
owned or existing or hereafter created, acquired or arising and wheresoever
located:
(a) Accounts;
(b) Certificated Securities;
(c) Chattel Paper (including Electronic Chattel Paper);
(d) Computer Hardware and Software and all rights with respect
thereto, including, any and all licenses, options, warranties,
service contracts, program services, test rights, maintenance
rights, support rights, improvement rights, renewal rights and
indemnifications, and any substitutions, replacements,
additions or model conversions of any of the foregoing;
45
(e) Contract Rights;
(f) Deposit Accounts;
(g) Documents;
(h) Equipment;
(i) Financial Assets;
(j) Fixtures;
(k) General Intangibles, including Payment Intangibles and
Software;
(l) Goods (including all of its Equipment, Fixtures and
Inventory), and all accessions, additions, attachments,
improvements, substitutions and replacements thereto and
therefor;
(m) Instruments;
(n) Intellectual Property;
(o) Inventory;
(p) Investment Property;
(q) money (of every jurisdiction whatsoever);
(r) Letter-of-Credit Rights;
(s) Payment Intangibles;
(t) Security Entitlements;
(u) Software;
(v) Supporting Obligations;
(w) Uncertificated Securities; and
(x) to the extent not included in the foregoing, all other
personal property of any kind or description;
together with all books, records, writings, data bases, information and other
property relating to, used or useful in connection with, or evidencing,
embodying, incorporating or referring to any of the foregoing, and all Proceeds,
products, offspring, rents, issues, profits and returns of and from any of the
foregoing; provided that to the extent that the provisions of any lease or
license of Computer Hardware and Software or Intellectual Property expressly
prohibit (which prohibition is enforceable under applicable law) any assignment
thereof, and the grant of a security interest
46
therein, Agent will not enforce its security interest in Borrower's rights under
such lease or license (other than in respect of the Proceeds thereof) for so
long as such prohibition continues, it being understood that upon request of
Agent, Borrower will in good faith use reasonable efforts to obtain consent for
the creation of a security interest in favor of Agent (and to Agent's
enforcement of such security interest) in such Agent's rights under such lease
or license.
Section 4.2 Other Collateral.
(a) Commercial Tort Claims. Borrower shall promptly notify Agent
in writing upon incurring or otherwise obtaining a Commercial
Tort Claim after the Closing Date against any third party and,
upon request of Agent, promptly enter into an amendment to
this Agreement and do such other acts or things deemed
appropriate by Agent to give Agent a security interest in any
such Commercial Tort Claim.
(b) Other Collateral. Borrower shall promptly notify Agent in
writing upon acquiring or otherwise obtaining any Collateral
after the date hereof consisting of Deposit Accounts,
Investment Property, Letter-of-Credit Rights or Electronic
Chattel Paper and, upon the request of Agent, promptly execute
such other documents, and do such other acts or things deemed
appropriate by Agent to deliver to Agent control with respect
to such Collateral; promptly notify Agent in writing upon
acquiring or otherwise obtaining any Collateral after the date
hereof consisting of Documents or Instruments and, upon the
request of Agent, will promptly execute such other documents,
and do such other acts or things deemed appropriate by Agent
to deliver to Agent possession of such Documents which are
negotiable and Instruments, and, with respect to nonnegotiable
Documents, to have such nonnegotiable Documents issued in the
name of Agent; and with respect to Collateral in the
possession of a third party, other than Certificated
Securities and Goods covered by a Document and obtain an
acknowledgement from the third party that it is holding the
Collateral for the benefit of Agent.
The security interests in the Collateral granted to Agent by Borrower
are given in renewal, extension and modification of the security interests
previously granted to Fleet by Cal Dive and ERT in the Amended Loan Documents;
such prior security interests are not extinguished hereby; and the making,
perfection and priority of such prior security interests shall continue in full
force and effect.
Section 4.3 Lien on Vessels. (a) The due and punctual payment and
performance of the Obligations shall be secured by the Lien created by the Ship
Mortgages upon the Vessels. Except as otherwise permitted herein, if Borrower
shall acquire at any time or times hereafter any interest in other vessels,
Borrower hereby agrees to promptly execute and deliver to Agent, as additional
security and Collateral for the Obligations, Ship Mortgages or other collateral
documents satisfactory in form and substance to Agent and its counsel (herein
collectively referred to as "New Ship Mortgages") covering such new vessels. The
Ship Mortgages and each New Ship Mortgage shall be duly recorded in each office
where such recording is required to constitute a valid and perfected Lien on the
vessels covered by such Mortgage. Borrower shall
47
deliver to Agent such other documents as Agent and its counsel may reasonably
request relating to the Property subject to the Ship Mortgage and any New Ship
Mortgages.
(b) Upon demand by Agent, Borrower shall execute and deliver to
Agent the Construction Contract Assignment and shall do all
such other things deemed appropriate by Agent to perfect such
assignment as a first preferred security interest on the
collateral described in it.
Section 4.4 Negative Pledge. Borrower agrees that for so long as any
Obligations remain outstanding, it will not, without the prior written consent
of Agent create or permit any Lien (other than Permitted Liens) or its interests
in the Offshore Platforms and its other oil and gas Properties.
Section 4.5 Representations, Warranties and Covenants. To induce
Lenders to enter into this Agreement, Borrower represents, warrants, and
covenants to Agent and Lender:
(a) The Collateral is now and, so long as any of the Obligations
are outstanding, will continue to be owned solely by Borrower,
and no other Person has or will have any right, title,
interest, claim, or Lien therein, thereon or thereto other
than a Permitted Lien.
(b) Except for Permitted Liens or as specifically consented to in
writing by Agent the Liens granted to Agent shall be first and
prior on the Collateral and as to the Accounts and proceeds,
including insurance proceeds, resulting from the sale,
disposition, or loss thereof. No further action need be taken
to perfect the Liens granted to Lender, other than the filing
of continuation statements under the Code or other applicable
law, continued possession by Agent of that portion of the
Collateral constituting instruments or documents, the
recording of the Ship Mortgage and each New Ship Mortgage as
required by applicable law.
(c) All goods evidenced by the Collateral constituting chattel
paper, documents or instruments, the possession of which has
been given to Agent, are owned by Borrower and the same are
free and clear of any prior Lien, except for Statutory Liens
contested by Borrower as required by Section 8.2(h). Borrower
further warrants and guarantees the value, quantities,
adequate condition, grades and qualities of the goods and
services described therein. Borrower shall pay and discharge
when due all taxes, levies, and other charges upon said
Collateral and upon the goods evidenced by any documents
constituting Collateral, except and to the extent only that
such taxes, levies and other charges are being actively
contested in good faith and by appropriate lawful proceedings,
and Borrower has established adequate reserves therefor, which
are properly reflected on the Consolidated Financial
Statements, and the nonpayment of such taxes, levies and
charges does not result in a lien upon any Collateral other
than a Permitted Lien. Borrower shall defend Agent against and
save it harmless from all claims of any Person with respect to
the Collateral. This indemnity shall include reasonable
attorneys' fees and legal expenses.
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Section 4.6 Lien Perfection. Borrower agrees to execute the UCC-1
financing statements provided for by the Code or otherwise together with any and
all other instruments, assignments or documents and shall take such other action
as may be required to perfect or to continue the perfection of Agent's security
interest in the Collateral. Unless prohibited by applicable law, Borrower hereby
authorizes Agent to execute and file any such financing statement on Borrower's
behalf, including without limitation financing statements that indicate the
Collateral (i) as all assets of Cal Dive, ERT, Aquatica or Canyon or words of
similar effect, or (ii) as being equal or lesser in scope or with greater or
lesser detail, than as set forth in Section 4.1 on Borrower's behalf. Borrower
also hereby ratifies its authorization for the Agent to have filed in any
jurisdiction any like financial statements or amendments thereto if filed prior
to the date hereof. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement and
may be filed in any appropriate office in lieu thereof.
Section 4.7 Location of Collateral. All Collateral, other than
Inventory in transit, motor vehicles, Vessels and diving equipment, will at all
times be kept by Borrower at one or more of the business locations set forth in
Exhibit C attached hereto and shall not, without the prior written approval of
Agent, be moved therefrom except, prior to an Event of Default, for (a) sales of
Inventory and the providing of services in the ordinary course of business; (b)
the storage of Inventory at locations within the continental United States other
than those shown on Exhibit C attached hereto if (i) Borrower gives Agent
written notice of the new storage location at least sixty (60) days prior to
storing Inventory at such location, (ii) except for Statutory Liens contested by
Borrower as required by Section 8.2(h), Agent's security interest in such
Inventory is and continues to be a duly perfected, first priority Lien thereon,
(iii) neither Borrower's nor Agent's right of entry upon the premises where such
Inventory is stored, or its right to remove the Inventory therefrom, is in any
way restricted, (iv) the owner of such premises agrees with Agent not to assert
any landlord's, bailee's or other Lien in respect of the Inventory for unpaid
rent or storage charges, and (v) all negotiable documents and receipts in
respect of any Collateral maintained at such premises are promptly delivered to
Agent; (c) temporary transfers (for period not to exceed three months in any
event) of Equipment from a location set forth on Exhibit C attached hereto to
another location if done for the limited purpose of repairing, refurbishing or
overhauling such Equipment in the ordinary course of Borrower's business; and
(d) removals in connection with dispositions of Equipment that are authorized by
Section 6.4.
Section 4.8 Insurance of Collateral. Borrower agrees to maintain and
pay for insurance upon all Collateral (other than Offshore Platforms) wherever
located, in storage or in transit, including goods evidenced by documents,
covering casualty, hazard, public liability and such other risks and in such
amounts and with insurance companies acceptable to Agent. Borrower shall deliver
to Agent certificates regarding such insurance and the originals of such
policies when available, with satisfactory endorsements naming Agent as loss
payee or co-insured and as mortgagee pursuant to a standard mortgagee clause
without liability for premiums, club calls or assessments. Each policy of
insurance or endorsement shall contain a clause requiring the insurer to give
not less than thirty (30) days prior written notice to Agent in the event of
cancellation of the policy for any reason whatsoever and a clause that the
interest of Agent shall not be impaired or invalidated by any act or neglect of
Borrower or owner of the Property nor by the occupation of the premises for
purposes more hazardous than are permitted by said policy. If Borrower fails to
provide and pay for such insurance, Agent may, at
49
Borrower's expense, procure the same, but shall not be required to do so.
Borrower agrees to deliver to Agent, promptly as rendered, true copies of all
reports made in any reporting forms to insurance companies. Borrower will
maintain, with financially sound and reputable insurers, insurance with respect
to its Properties and business against such casualties and contingencies of such
type (including public liability, product liability, larceny, embezzlement, or
other criminal misappropriation insurance) and in such amounts as is customary
in the business or as otherwise required by Agent.
Section 4.9 Protection of Collateral. All insurance expenses and all
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral, any and all excise, property, sales, and use taxes
imposed by any state, federal, or local authority on any of the Collateral or in
respect of the sale thereof shall be bome and paid by Borrower. If Borrower
fails to promptly pay any portion thereof when due or is not actively contesting
such taxes in good faith and by appropriate proceedings and has not established
adequate reserves, which are properly reflected on the Consolidated Financial
Statements, Agent may, at its option, but shall not be required to, pay the same
and charge the Loan Account therefor. Borrower agrees to reimburse Agent
promptly therefor with interest accruing thereon daily at the Applicable Annual
Rate for Base Rate Loans. All sums so paid or incurred by Agent for any of the
foregoing and all costs and expenses (including reasonable attorneys' fees,
legal expenses, and court costs) which Agent may incur in enforcing or
protecting its Lien on or rights and interest in the Collateral or any of its
rights or remedies under any Loan Document or in respect of any of the
transactions to be had hereunto, together with interest at the Default Rate
applicable to Base Rate Loans, shall be considered Obligations hereunder secured
by all Collateral. Agent shall not be liable or responsible in any way for the
safekeeping of any of the Collateral or for any loss or damage thereto (except
for reasonable care in the custody thereof while any Collateral is in Agent's
actual possession) or for any diminution in the value thereof, or for any act or
default of any warehouseman, carrier, forwarding agency, or other person
whomsoever, but the same shall be at Borrower's sole risk.
ARTICLE 5. PROVISIONS RELATING TO ACCOUNTS
Section 5.1 Representations, Warranties and Covenants. With respect to
all Accounts, Borrower represents and warrants to Agent and Lenders that Agent
may rely, in determining which Accounts are Eligible Accounts, on all statements
and representations made by Borrower with respect to any Account or Accounts,
and, unless otherwise indicated in writing to Agent, that with respect to each
Account:
(a) it is genuine and in all respects what it purports to be, and
it is not evidenced by a judgment;
(b) it arises out of a completed, bona fide sale and delivery of
goods or rendition of services by Borrower in the ordinary
course of its business and in accordance with the terms and
conditions of all purchase orders, contracts or other
documents relating thereto and forming a part of the contract
between Borrower and the Account Debtor;
50
(c) it has been generated in compliance with Borrower's normal
credit policies as historically in effect (or as modified from
time to time on prior written notice to Agent) or on such
other reasonable terms disclosed in writing to Agent in
advance of the creation of such Account, and such terms are
expressly set forth on the face of the invoice covering such
sale or rendition of services;
(d) it is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services,
a copy of which has been furnished or is available to Agent;
(e) Borrower has made no agreement with any Account Debtor
thereunder for any deduction therefrom, except discounts or
allowances which are granted by Borrower in the ordinary
course of its business and which are disclosed to Agent;
(f) to the best of Borrower's knowledge, there are no facts,
events or occurrences which have not been disclosed to Agent
which in any way impair the validity or enforceability thereof
or tend to reduce the amount payable thereunder from the face
amount of the invoice and statements delivered to Agent with
respect thereto;
(g) to the best of Borrower's knowledge, the Account Debtor
thereunder (i) is Solvent and (ii) had the capacity to
contract at the time any contract or other document giving
rise to the Account was executed; and
(h) Borrower has no knowledge of any fact or circumstance which
would impair the validity or collectability of the Account,
and to the best of Borrower's knowledge there are no
proceedings or actions which are threatened or pending against
any Account Debtor thereunder which might result in any
material adverse change in such Account Debtor's financial
condition or the collectability of such Account.
Section 5.2 Assignments, Records and Schedules of Accounts. If so
requested by Agent, Borrower shall execute and deliver to Agent formal written
assignments of all of its Accounts on a weekly or more frequent basis, which
shall include all Accounts that have been created since the date of the last
assignment, together with copies of invoices or invoice registers related
thereto. Borrower shall keep accurate and complete records of its Accounts and
all payments and collections thereon and shall submit to Agent on a weekly
basis, unless requested on a more frequent basis by Agent, a sales and
collections report for the preceding week, in form satisfactory to Agent. On or
before the last day of each week from and after the date hereof, Borrower shall
deliver to Agent, in form satisfactory to Agent, a detailed listing of all
Unbilled Accounts existing as of the last day of the preceding week, a detailed
aged trial balance of all Accounts existing as of the last day of the preceding
week, specifying the names, face value, dates of invoices and due dates for each
Account Debtor obligated on an Account so listed and a listing of all disputed
amounts due and owing (a "Schedule of Accounts"), and upon Agent's request
therefor, the reason for any disputed amounts, all claims related thereto and
the amount in controversy, and addresses, copies of proof of delivery and the
original copy of all documents, including, without limitation, repayment
histories and present status reports relating to the Accounts so scheduled, and
such other matters and information relating to the status of then existing
Accounts as Agent shall reasonably request.
51
Section 5.3 Administration of Accounts.
(a) Borrower shall report discounts, allowances or credits granted
by Borrower that are not shown on the face of the invoice for
the Account involved to Agent at the time of its submission to
Agent of the next Schedule of Accounts as provided in Section
5.2 or more frequently upon the request of Agent. Upon and
after the occurrence of an Event of Default, Agent shall have
the right to settle or adjust all disputes and claims directly
with the Account Debtor and to compromise the amount or extend
the time for payment of the Accounts upon such terms and
conditions as Agent may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including reasonable
attorney's fees, to Borrower.
(b) If an Account includes a charge for any tax payable to any
governmental taxing authority, Agent is authorized, in its
sole discretion, to pay the amount thereof to the proper
taxing authority for the account of Borrower and to charge the
Loan Account therefor. Borrower shall notify Agent if any
Account includes any tax due to any govenunental taxing
authority and, in the absence of such notice, Agent shall have
the right to retain the full proceeds of the Account and shall
not be liable for any taxes to any governmental taxing
authority that may be due by Borrower by reason of the sale
and delivery creating the Account.
(c) Whether or not an Event of Default has occurred, any of
Agent's officers, employees or agents shall have the right, at
any time or times hereafter, in the name of Agent, any
designee of Agent or Borrower, to verify the validity, amount
or any other matter relating to any Accounts by mail,
telephone, telegraph or otherwise. Borrower shall cooperate
fully with Agent in an effort to facilitate and promptly
conclude any such verification process.
Section 5.4 Collection of Accounts.
(a) To expedite collection, Borrower shall endeavor in the first
instance to make collection of its Accounts for Agent. All
remittances received by Borrower on account of Accounts shall
be held as Agent's property by Borrower as trustee of an
express trust for Agent's benefit and Borrower shall
immediately deposit same in the Dominion Account. Agent shall
have the right at any time after the occurrence of an Event of
Default to notify Account Debtors that Accounts have been
assigned to Agent and to collect Accounts directly in its own
name and to charge the collection costs and expenses,
including reasonable attorneys' fees, to Borrower. Agent has
no duty to protect, insure, collect or realize upon the
Accounts or preserve rights in them.
(b) Borrower shall deposit all proceeds of the Collateral, other
than receipts for the sale of Property held by third parties
as reserves for like/kind exchanges, or cause the same to be
deposited in kind in a Dominion Account pursuant to a lockbox
arrangement with such banks as may be selected by Borrower and
be acceptable to Agent. Borrower shall issue to any such bank,
an irrevocable letter of instruction directing such banks to
deposit all payments or other remittances
52
received in the lockbox to the Dominion Account for
application on account of the Obligations. All funds deposited
in the Dominion Account shall immediately become the property
of Agent and Borrower shall obtain the agreement by such banks
to waive any offset rights against the funds so deposited.
Agent assumes no responsibility for such lockbox arrangement,
including, without limitation, any claim of accord and
satisfaction or release with respect to deposits accepted by
any bank thereunder.
ARTICLE 6. PROVISIONS RELATING TO EQUIPMENT, VESSELS AND OFFSHORE PLATFORMS
Section 6.1 Representations, Warranties and Covenants. With respect to
the Equipment, Vessels and the Offshore Platforms, Borrower represents, warrants
and covenants to and with Agent that:
(a) substantially all of the Equipment and the Vessels are in
adequate operating condition and repair, and all necessary
replacements of and repairs thereto shall be made so that the
value and operating efficiency of the Equipment and the
Vessels shall be maintained and preserved, reasonable wear and
tear excepted; and
(b) except for Equipment affixed to Offshore Platforms in the
ordinary course of ERT's business, Borrower will not permit
any of the Equipment to become affixed to any Real Property
leased to Borrower so that an interest arises therein under
the real estate laws of the applicable jurisdiction unless the
landlord of such Real Property has executed a landlord waiver
or leasehold mortgage in favor of Agent, and Borrower will not
permit any of the Equipment to become an accession to any
personal Property other than Equipment subject to first
priority Liens in favor of Agent or subject to Permitted
Liens.
Section 6.2 Evidence of Ownership of Equipment and Vessels. Immediately
on request therefor by Agent, Borrower shall deliver to Agent any and all
evidence of ownership, if any, of any of the Equipment and the Vessels.
Section 6.3 Records and Schedules of Equipment and the Vessels.
Borrower shall maintain accurate records itemizing and describing the kind,
type, quality, quantity, location and value of its Equipment and Vessels and all
dispositions made in accordance with Section 6.4, and shall furnish Agent with a
current schedule, in form and substance satisfactory to Agent, containing the
foregoing information on at least an annual basis and more often if requested by
Agent.
Section 6.4 Dispositions. Borrower will not sell, lease or otherwise
dispose of or transfer any of the Equipment, any Vessel, any Offshore Platform,
or any oil or gas Properties, or any part thereof without the prior written
consent of Agent; provided, however, that the foregoing restriction shall not
apply to dispositions required by the United States government, or, for so long
as no Event of Default exists, to the following:
53
(a) dispositions of Offshore Platforms and related Equipment and
oil and gas Properties by ERT and vessels owned by Borrower
and not mortgaged to Agent in the ordinary course of business;
provided, that, all proceeds thereof, other than receipts for
the sale of Property held by third parties as reserves for
like/kind exchanges, are delivered to Agent for application to
the Obligations in accordance with the terms of this
Agreement; or
(b) replacement of Equipment and Vessels that are substantially
worn, damaged or obsolete with Equipment or Vessels of
substantially like kind and function and with a value not less
than the Equipment or Vessels being replaced; which
replacement Equipment and Vessels shall be acceptable to
Agent; provided, that, (i) the replacement Equipment or
Vessels shall be acquired prior to concurrently with or within
six (6) months of any disposition of the Equipment or Vessel
that is to be replaced, (ii) the replacement Equipment or
Vessels shall be free and clear of Liens other than Permitted
Liens, (iii) Borrower shall give Agent at least five (5) days
prior written notice of such disposition, and (iv) Borrower
shall deliver to Agent all proceeds realized from any such
disposition for application to the Obligations.
(c) None of the provisos or other exceptions to the restriction
against dispositions of Equipment, Vessels or Offshore
Platforms set forth in this Section 6.4 shall be construed to
allow any disposition, whether by Borrower of a Vessel on
which Agent has been granted a Lien, without the prior written
consent of Agent.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES
Section 7.1 General Representations and Warranties. To induce Lenders
to enter into this Agreement and to make advances hereunder, Borrower warrants,
represents and covenants to Agent and Lenders as follows:
(a) Organization and Qualification. Borrower is a corporation duly
organized, validly existing and in good standing under the
laws of the state of its incorporation. Borrower has duly
qualified and is authorized to do business and is in good
standing as a foreign corporation in each state or
jurisdiction listed on Exhibit D attached hereto and made a
part hereof and in all other states and jurisdictions where
the character of its Properties or the nature of its
activities make such qualification necessary.
(b) Corporate Names. Since July 27, 1990, Cal Dive, since
September 30, 1992, ERT since September 24, 1997, Aquatica and
since September 12, 1996, Canyon, have not been known as or
used any corporate, fictitious or trade names except as
disclosed on Exhibit E attached hereto and made a part hereof.
Except as set forth on Exhibit E attached hereto, Borrower has
not, during the preceding three years, been the surviving
corporation of a merger or consolidation or acquired all or
substantially all of the assets of any Person. Each Borrower's
exact legal name, state of incorporation, type of organization
and organizational identification number is set forth on
Exhibit E.
54
(c) Corporate Power and Authority. Borrower has the right and
power and is duly authorized and empowered to enter into,
execute, deliver and perform this Agreement and each of the
other Loan Documents to which it is a party. The execution,
delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all
necessary corporate action and do not and will not (i) require
any consent or approval of the shareholders of Borrower; (ii)
contravene Borrower's charter, articles of incorporation or
by-laws; (iii) violate, or cause Borrower to be in default
under, any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award in
effect having applicability to Borrower; (iv) result in a
breach of or constitute a default under any indenture or loan
or credit agreement or any other agreement, lease or
instrument to which Borrower is a party or by which it or its
Properties may be bound or affected; or (v) result in, or
require, the creation or imposition of any Lien (other than
Permitted Liens) upon or with respect to any of the Properties
now owned or hereafter acquired by Borrower.
(d) Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement
will be, a legal, valid and binding obligation of Borrower
enforceable against it in accordance with their respective
terms, except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency and other similar
laws affecting creditors' rights generally or by principles of
equity pertaining to the availability of equitable remedies.
(e) Use of Proceeds. Borrower's uses of the proceeds of any Loans
pursuant to this Agreement are, and will continue to be, legal
and proper corporate uses, duly authorized by its Board of
Directors, and such uses will not violate any applicable laws,
including, without limitation, the Foreign Assets Control
Regulations, the Foreign Funds Control Regulations and the
Transaction Control Regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended), where
the failure to do so would have a material adverse effect on
its business, condition (financial or otherwise), operations,
prospects, or Properties.
(f) Margin Stock. Borrower is not engaged principally, or as one
of its important activities, in the business of purchasing or
carrying "margin stock" (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System), and no
part of the proceeds of any Loans to Borrower will be used to
purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying any margin
stock or be used for any purpose which violates or is
inconsistent with the provisions of Regulation T, U or X of
said Board of Governors.
(g) Governmental Consents. Except where failure to do so would
have a material adverse effect on its business, condition
(financial or otherwise), operations, prospects, or
Properties, Borrower has, and is in good standing with respect
to, all governmental consents, approvals, authorizations,
permits, certificates, inspections, and franchises necessary
to continue to conduct its business as
55
heretofore or proposed to be conducted by it and to own or
lease and operate its Properties as now owned or leased by it.
(h) Patents, Trademarks, Copyrights and Licenses. Borrower owns or
possesses all the patents, trademarks, service marks, trade
names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known
conflict with the rights of others. All such patents,
trademarks, service marks, trade names, copyrights, licenses
and other similar rights are listed on Exhibit F attached
hereto and made a part hereof.
(i) Capital Structure. Exhibit G attached hereto and made a part
hereof states (i) the correct name of each of the Subsidiaries
of Borrower, the jurisdiction of incorporation and the
percentage of its Voting Stock owned by Borrower, (ii) the
name of each of Borrower's corporate or joint venture
Affiliates and the nature of the affiliation, (iii) the
number, nature and holder of all outstanding Securities of
each Subsidiary of Cal Dive, and (iv) the number of
authorized, issued and treasury shares of Borrower and each
Subsidiary of Borrower. Borrower has good title to all of the
shares of stock it purports to own of each Subsidiary, free
and clear in each case of any Lien other than Permitted Liens.
All such shares have been duly issued and are fully paid and
nonassessable. Except as provided in Exhibits G and H attached
hereto, there are not outstanding any options to purchase, or
any rights or warrants to subscribe for, or any commitments or
agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to,
shares of the capital stock of Borrower.
Except as provided in Exhibits G and H attached hereto, there are not
outstanding any agreements or instruments binding upon any of Borrower's
shareholders relating to the ownership of its shares of capital stock.
Section 7.2 Solvent Financial Conditions. Borrower is now and, after
giving effect to initial Loans to be made hereunder, at all times will be,
Solvent.
(a) Restrictions. Borrower is not a party or subject to any
contract, agreement, or charter or other ------------
corporate restriction, which materially and adversely affects
its business or the use or ownership of any of its Properties
other than as set forth on Exhibit I attached hereto. Borrower
is not a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other
than as set forth on Exhibit I attached hereto, none of which
prohibit the execution of or compliance with this Agreement by
Borrower. Neither Borrower nor any of its Subsidiaries has
agreed or consented to cause or permit in the future (upon the
happening of a contingency or otherwise) any of its Property,
whether now owned or hereafter acquired, to be subject to a
Lien that is not a Permitted Lien.
(b) Litigation. Except as set forth on Exhibit J attached hereto
and made a part hereof, there are no actions, suits,
proceedings or investigations pending, or to the knowledge of
Borrower, threatened, against or affecting Borrower or any of
its Subsidiaries, or the business, operations, Properties,
prospects, profits or
56
condition of Borrower or any of its Subsidiaries, in any court
or before any governmental authority or arbitration board or
tribunal, and no action, suit, proceeding or investigation
shown on Exhibit J attached hereto, except as indicated on
such Exhibit J, involves the possibility of materially and
adversely affecting the Properties, business, prospects,
profits or condition (financial or otherwise) of Borrower or
the ability of Borrower to perform this Agreement. Neither
Borrower nor any of its Subsidiaries is in default with
respect to any order, writ, injunction, judgment, decree or
rule of any court, governmental authority or arbitration board
or tribunal.
(c) Title to Properties. Subject to the statutory right of the MMS
to approve the acquisition of an Offshore Platform and related
oil and gas Properties, each Borrower and each of its
Subsidiaries has good, indefeasible and marketable title to
and fee simple ownership of, or valid and subsisting leasehold
interests in, all of its oil and gas Properties and Real
Property, and good title to all of its other Property, in each
case, free and clear of all Liens except Permitted Liens.
Exhibits C and R attached hereto identifies all of the
Offshore Platforms, other oil and gas Properties and Real
Property leased or owned by Borrower and its Subsidiaries and,
if leased, identifies the lessor thereof.
(d) Financial Statements: Fiscal Year. The Consolidated balance
sheet of Borrower and such other Persons described therein
(including the accounts of all Subsidiaries for the respective
periods during which a Subsidiary relationship existed) as of
November 30, 2001 and the related statements of income,
changes in stockholder's equity, and changes in cash flow for
the periods ended on such dates, have been prepared in
accordance with GAAP (except for changes in application in
which Borrower's independent certified public accountants
concur), and present fairly the financial positions of
Borrower and its Subsidiaries at such dates and the results of
Borrower's operations for such periods. Except as disclosed in
Schedule W hereto, since November 30, 2001 there has been no
material change in the condition, financial or otherwise, of
Borrower, its Subsidiaries and such other Persons as shown on
the Consolidated balance sheet as of such date and no change
in the aggregate value of Equipment and other Property owned
by Borrower or its Subsidiaries or such other Persons, except
as otherwise disclosed in the footnotes to such financial
statements and changes in the ordinary course of business,
which individually or in the aggregate has not been materially
adverse. The fiscal year of Borrower and each of its
Subsidiaries ends on December 31 of each year.
(e) Full Disclosure. The financial statements referred to in
Section 7.1(n), do not, nor does this Agreement or any other
written statement of Borrower to Lender (including, without
limitation, Borrower's filings, if any, with the Securities
and Exchange Commission), contain any untrue statement of a
material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There
is no fact which Borrower has failed to disclose to Agent or
Lenders in writing which materially affects adversely or, so
far as Borrower can now foresee, will materially affect
adversely the Properties, business, prospects,
57
profits, or condition (financial or otherwise) of Borrower or
any of its Subsidiaries or the ability of Borrower or its
Subsidiaries to perform this Agreement.
(f) ERISA. Except as disclosed in Exhibit K attached hereto, there
are no Pension Plans or Multiemployer Plans and no fact exists
that could result in any material liability (other than as
disclosed on Borrower's financial statements) to Borrower
relating to any former Plan. No Reportable Event has occurred
with respect to any Pension Plan that is not a Multiemployer
Plan. No Prohibited Transaction has occurred. The PBGC has not
instituted proceedings to terminate any Pension Plan. No ERISA
Affiliate nor any duly appointed administrator of a Pension
Plan has (i) incurred any liability to the PBGC with respect
to a Pension Plan other than for premiums not yet due and
payable, or (ii) instituted or intends to institute
proceedings under Section 4041(c) of ERISA to terminate any
Pension Plan, or (iii) instituted proceedings to withdraw from
any Pension Plan that is a Multiemployer Plan. No "accumulated
funding deficiency" within the meaning of Section 302(a)(2) of
ERISA exists with respect to any Pension Plan. No liability
has been incurred by any ERISA Affiliate which remains
unsatisfied for any taxes or penalties, with respect to any
Plan that is not a Multiemployer Plan or, to the best of
Borrower's knowledge and belief, with respect to any
Multiemployer Plan. No litigation is pending or, to the
Borrower's knowledge, threatened concerning or involving any
Plan. No amendment to any Pension Plan has been adopted such
that security is required to be given pursuant to IRC Section
401(a)(29) and no lien exists under IRC Section 412(n) with
respect to any Plan. Except as shown on Exhibit K attached
hereto with respect to the date and using the assumptions
described thereon, and to the best of Borrower's knowledge and
belief, no unfunded or unreserved liability exists for
benefits under any Plan that would have a material adverse
effect on the business or finances of Borrower. No ERISA
Affiliate contributes to, has contributed to, or is or has
been obligated to contribute to, any Multiemployer Plan. No
ERISA Affiliate maintains, or has promised to maintain, any
Plan which provides medical benefits to an employee or the
employee's dependents after the employee terminates employment
other than as required by law.
(g) Taxes. The federal tax identification numbers for Cal Dive,
ERT, Aquatica and Canyon are 00-0000000, 00-0000000,
00-0000000 and 00-0000000, respectively. Borrower and its
Subsidiaries each has filed all federal, state and local tax
returns and other reports it is required by law to file and
has paid, or made provision for the payment of, all taxes,
assessments, fees and other governmental charges that are due
and payable. The provision for taxes on the books of Borrower
and its Subsidiaries are adequate for all years not closed by
applicable statutes, and for its current fiscal year. There
are no material unresolved questions or claims concerning any
tax liability of Borrower except as described in Exhibit L
attached hereto. None of the transactions contemplated hereby
or under any agreements referred to hereunder will result in
any material tax liability for Borrower or result in any other
material adverse tax consequence for Borrower. Exhibit M
attached hereto contains an accurate list of all taxing
authorities to which Borrower and its Subsidiaries and their
respective Properties are subject. No Properties of
58
Borrower or its Subsidiaries are or could become subject to
any Lien in favor of any such taxing authorities for
nonpayment of taxes, except as specified on Exhibit M attached
hereto.
(h) Labor Relations. Except as described on Exhibit N attached
hereto, neither Borrower nor any of its Subsidiaries is a
party to any collective bargaining agreement, and there are no
material grievances, disputes or controversies with any union
or any other organization of Borrower's employees, or threats
of strikes, work stoppages or any asserted pending demands for
collective bargaining by any union or organization.
(i) Compliance With Laws. Except as disclosed on Exhibit O
attached hereto as to existing violations of Environmental
Laws (the "Existing Environmental Violations"), Borrower has
duly complied in all material respects with, and its Property,
business operations and leaseholds are in compliance in all
material respects with, the provisions of all federal, state
and local laws, rules, regulations orders, citations and final
and enforceable notices applicable to Borrower, its Properties
or the conduct of its business, including, without limitation,
OSHA, Environmental Laws, the Securities Act of 1933, the
Securities Exchange Act of 1934, the Fair Labor Standards Act,
laws relating to income, unemployment, payroll or social
security taxes and Plans under ERISA, the Flood Disaster
Protection Act of 1973, the Consumer Credit Protection Act,
the Federal Trade Commission Act, statutes creating and
governing the Bureau of Alcohol, Tobacco and Firearms, and any
and all state statutes or pronouncements addressing, or
related to, subjects the same as or comparable to those
covered by such enumerated federal statutes, and there have
been no citations, notices or orders of noncompliance issued
to Borrower or any of its Subsidiaries under any such law,
rule or regulation.
(j) Surety Obligations. Except as described in Exhibit P attached
hereto, Borrower is not obligated as surety or indemnitor
under any surety or similar bond or other contract issued or
entered into any agreement to assure payment, performance or
completion of performance of any undertaking or obligation of
any Person.
(k) No Defaults. No event has occurred and no condition exists
which would, upon the execution and delivery of this Agreement
or Borrower's performance hereunder, constitute a Default or
an Event of Default. Neither Borrower nor any of its
Subsidiaries is in default, and no event has occurred and no
condition exists which constitutes, or which with the passage
of time or the giving of notice or both would constitute, a
default in the payment of any Indebtedness to any Person for
Money Borrowed.
(l) Brokers. There are no claims for brokerage commissions,
finder's fees or investment banking fees in connection with
the transactions contemplated by this Agreement.
59
(m) Business Locations. Agent for Process. During the preceding
three year period, Borrower has had no office, place of
business or agent for service of process located in any state
or county other than as shown on Exhibit C attached hereto.
(n) Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any
modification or change in, the business relationship between
Borrower and any customer or any group of customers whose
purchases individually or in the aggregate are material to the
business of Borrower, or with any material supplier, and there
exists no present condition or state of facts or circumstances
which would materially affect adversely Borrower or prevent
Borrower from conducting such business after the consummation
of the transaction contemplated by this Agreement in
substantially the same manner in which it has heretofore been
conducted.
(o) Leases. Exhibit Q attached hereto is a complete listing of all
capitalized leases of Borrower and Exhibit R attached hereto
is a complete listing of all operating leases of Borrower.
(p) Investment Company Act. Borrower is not an "investment
company" or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as
amended.
(q) OSHA and Environmental Compliance.
(i) Except for the Existing Environmental Violations,
Borrower is in compliance with, and its facilities,
business, operations, assets, Property, leaseholds,
Offshore Platforms, Vessels and Equipment are in
compliance in all material respects with, the
provisions of OSHA, the Resource Conservation and
Recovery Act, Oil Pollution Act, 1990, all
Environmental Laws and all permits issued to Borrower
under any Environmental Laws; there have been no and
are not now any outstanding citations, notices or
orders of non-compliance issued to Borrower, nor is
Borrower aware of any potential or threatening
citations, notices or orders of noncompliance that
may be issued to Borrower or relating to its
business, assets, Property, leaseholds, Offshore
Platforms, Vessels or Equipment under such laws,
rules or regulations.
(ii) Borrower has been issued all required federal, state
and local licenses, certificates or permits relating
to all applicable Environmental Laws.
(iii) Except for the Existing Environmental Violations, (1)
there are no visible signs of material releases,
spills, discharges, leaks or disposal (collectively
referred to as "Releases") of Hazardous Substances
at, upon, under or within any Real Property or
Vessels in violation of any Environmental Law, nor is
Borrower aware of the existence of any nonvisible
Releases; (2) there are no underground storage tanks
or polychlorinated biphenyls on the Real Property;
(3) the Real Property has never been used as a
60
treatment, storage or disposal facility of Hazardous
Substance (except for the storage of fuels,
Hydrocarbons, lubricants, solvents, paints and
coatings, compressed gases, explosives,
anti-oxidants, rust inhibitors, surfactants, C02
scavengers, soap and chemical dispersants, batteries
and similar or substitute items, substances or
chemicals used or useful in the ordinary course of
business by Borrower (collectively the "Lawful
Substances")); and (4) no Hazardous Substances are
present on the Real Property or Vessels in violation
of any Environmental Laws.
(r) Reaffirmation. Each request for a Loan made by Borrower
pursuant to this Agreement or any of the other Loan Documents
shall constitute (i) an automatic representation and warranty
by Borrower to Agent and Lenders that there does not then
exist any Default or Event of Default unless otherwise
disclosed to Lender in writing and (ii) a reaffirmation as of
the date of said request that all of the representations and
warranties of Borrower contained in this Agreement and the
other Loan Documents are true in all material respects except
for any changes in the nature of Borrower's business or
operations that would render the information contained in any
exhibit attached hereto either inaccurate or incomplete, so
long as Agent has consented to such changes in writing or such
changes are expressly permitted by this Agreement.
Section 7.3 Survival of Representations and Warranties. Borrower
covenants, warrants and represents to Agent and Lenders that all representations
and warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall be true at the time of Borrower's execution of this Agreement
and the other Loan Documents, and shall survive the execution, delivery and
acceptance thereof by Agent and Lenders and the parties thereto and the closing
of the transactions described therein or related thereto until four (4) years
and one (1) day after all of the Obligations have been paid in full.
ARTICLE 8. COVENANTS AND CONTINUING AGREEMENTS
Section 8.1 Affirmative Covenants. During the term of this Agreement,
and thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Agent in writing, it shall:
(a) Taxes and Liens. Pay and discharge, and cause each Subsidiary
to pay and discharge, all taxes, assessments and governmental
charges upon it, its income and Properties as and when such
taxes, assessments and charges are due and payable (and, if
requested by Agent, provide Agent with proof that Borrower or
such Subsidiary has done so), except and to the extent only
that such taxes, assessments and charges are being actively
contested in good faith and by appropriate proceedings,
Borrower maintains adequate reserves on its books therefor and
the nonpayment of such taxes, assessments and charges does not
result in a Lien upon any Properties or Borrower other than a
Permitted Lien. Borrower shall also pay and discharge any
lawful claims which, if unpaid, might become a Lien against
any of Borrower's Properties, except for Permitted Liens.
Borrower shall also make timely payment or deposit of all FICA
payments and
61
withholding taxes required of it by the applicable laws, and
will, upon request, furnish Agent with proof satisfactory of
it that Borrower has made such payments or deposits.
(b) Tax Returns. File, and cause each Subsidiary to file, all
federal, state and local tax returns and other reports
Borrower or such Subsidiary is required by law to file and
maintain adequate reserves for the payment of all taxes,
assessments, governmental charges, and levies imposed upon it,
its income, or its profits, or upon any Property belonging to
it.
(c) Payment of Bank Charges. Pay to Agent or Lenders, on demand,
any and all reasonable and customary fees, costs or expenses
which Agent or Lenders pay to a bank or other similar
institution arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of
Borrower, by Agent or Lenders proceeds of loans made by
Lenders to Borrower pursuant to this Agreement and (ii) the
depositing for collection, by Agent or Lenders of any check or
item of payment received or delivered to Agent or Lenders on
account of the Obligations.
(d) Business and Existence. Preserve and maintain, and cause each
Subsidiary to preserve and maintain, its separate corporate
existence and all rights, privileges, and franchises in
connection therewith, and maintain, and cause each Subsidiary
to maintain, its qualification and good standing in all states
in which such qualification is necessary except in connection
with business combinations that result in a Subsidiary or a
Borrower being acquired by or merging with another Borrower.
(e) Maintain Properties. Maintain, and cause each Subsidiary to
maintain, its Properties in adequate operating condition and
make, and cause each Subsidiary to make, all necessary
renewals, repairs, replacements, additions and improvements
thereto.
(f) Compliance with Laws and Remediation of Existing Environmental
Violations. (i) Except for the Existing Environmental
Violations and the storage of the Lawful Substances, comply,
and cause each Subsidiary to comply, with all laws,
ordinances, governmental rules and regulations to which it is
subject, including, without limitation, all Environmental
Laws, and obtain and keep in force any and all licenses,
permits, franchises, or other governmental authorizations
necessary to the ownership or lease of its Properties or to
the conduct and operation of its business, except for
violations or failures to obtain that will not materially and
adversely affect the business, prospects, profits, Properties,
or condition (financial or otherwise) of Borrower.
(g) ERISA Compliance. (i) Make and cause each ERISA Affiliate to
make prompt payment of all contributions it is obligated to
make under all Plans or are required to meet the minimum
funding standard set forth in ERISA, (ii) within thirty (30)
days after the filing thereof, furnish to Agent a copy of the
most recently filed
62
annual report/return (Form 5500 Series), as well as all
schedules and attachments required to be filed with the
Department of Labor and/or the Internal Revenue Service
pursuant to ERISA, and the regulations promulgated thereunder,
in connection with each of its Plans that is not a
Multiemployer Plan, (iii) notify Agent prior to any request by
any ERISA Affiliate for a waiver of the funding requirements
of IRC Section 412 or the commencement of any distress
termination pursuant to ERISA Section 4041(c) with respect to
any Pension Plan, (iv) notify Agent immediately of any
Reportable Event, Prohibited Transaction, and of any fact
arising in connection with any of its Plans that is not a
Multiemployer Plan, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to
administer such Plan, together with a statement, if requested
by Agent, as to the reason therefor and the action, if any,
proposed to be taken with respect thereto, (v) notify Agent
immediately of any event which is likely to give rise to an
assertion of withdrawal liability in connection with a
Multiemployer Plan, and (vi) furnish to Agent, promptly upon
Agent's request therefor, such additional information
concerning any Plan as may be reasonably requested.
(h) Business Records. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its
business activities in which proper entries are made in
accordance with GAAP reflecting all its financial
transactions.
(i) Visits and Inspections. Upon two (2) Business Days notice to
Borrower, permit representatives of Agent, from time to time,
as often as may be reasonably requested, but only during
normal business hours, to visit and inspect the Properties of
Borrower, inspect and make extracts from its books and
records, and discuss with its officers, its employees and its
independent accountants, Borrower's business, assets,
liabilities, financial condition, business prospects and
results of operations; provided, however, if a Default or
Event of Default exists, Agent shall not be required to give
notice to Borrower prior to inspection or visitation by Agent
of Borrower's Properties.
(j) Financial Statements. Cause to be prepared and furnished to
Agent the following (all to be kept and prepared in accordance
with GAAP applied on a consistent basis, unless Borrower's
certified public accountants concur in any change therein and
such change is disclosed to Agent and is consistent with
GAAP):
(i) as soon as possible, but not later than ninety (90)
days after the close of each fiscal year of Borrower,
unqualified audited financial statements of Borrower
and its Subsidiaries as of the end of such year, on a
Consolidated basis, certified by a firm of
independent certified public accountants of
recognized national standing or otherwise acceptable
to Agent (except for a qualification for a change in
accounting principles with which the independent
public accountant concurs);
(ii) as soon as possible, but not later than thirty (30)
days after the end of each month (except that
statements for the month of January shall be
delivered
63
within sixty (60) days after the end thereof)
hereafter, unaudited interim financial statements of
Borrower and its Subsidiaries as of the end of such
month and of the portion of Borrower's fiscal year
then elapsed, on a consolidating basis certified by
the principal financial officer of Borrower as
prepared in accordance with GAAP and fairly
presenting the consolidated financial position and
results of operations of Borrower and its
Subsidiaries for such month and period subject only
to changes from audit and year-end adjustments and
except that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the
case may be, copies of any proxy statements,
financial statements or reports which Borrower has
made available to its shareholders and copies of any
regular, periodic and special reports or registration
statements which Borrower files with the Securities
and Exchange Commission or any governmental authority
which may be substituted therefor, or any national
securities exchange; and
(iv) such other data and information (financial and
otherwise) as Lender, from time to time, may
reasonably request, bearing upon or related to the
Collateral, Borrower's financial condition or results
of operations, including, without limitation, federal
income tax returns of Borrower, accounts payable
ledgers, vendor listings and bank statements.
Upon receipt, Borrower shall forward to Agent a copy of the
accountants' letter to Borrower's management that is prepared in connection with
the financial statements described in clause (i) above and also shall cause to
be prepared and shall furnish to Agent a certificate of the aforesaid certified
public accountants certifying to Agent that, based upon their examination of the
financial statements of Borrower and its Subsidiaries performed in connection
with their examination of said financial statements, they are not aware of any
Default or Event of Default, or, if they are aware of such Default or Event of
Default, specifying the nature thereof. Concurrently with the delivery of the
financial statements described in clause (i) above and the financial statements
for the months ending on March 30, June 30, September 30 and December 31 of each
calendar year delivered pursuant to clause (ii) above, Borrower shall cause to
be prepared and furnished to Agent a Compliance Certificate in the form of
Exhibit S attached hereto.
(k) Notices to Lender. Notify Agent in writing: (i) promptly after
Borrower's learning thereof, of the commencement of any
litigation affecting Borrower or any of its Properties,
whether or not the claim is considered by Borrower to be
covered by insurance, and of the institution of any
administrative proceeding, and of the receipt of any order or
citation from any f'ederal, state or local agency which may
materially and adversely affect Borrower's operations,
financial condition, Properties or business or Agent's Lien
upon any of the Collateral; (ii) at least ten (10) Business
Days prior thereto, of Borrower's opening of any new office or
place of business or Borrower's closing of any existing office
or place of business; except if any such closing arises out of
a consolidation of offices or
64
places of business at Cal Dive's current address; in which
case substantially contemporaneous notice shall be sufficient;
(iii) promptly after Borrower's learning thereof, of any labor
dispute to which Borrower may become a party, any strikes or
walkouts relating to any of its plants or other facilities,
and the expiration of any labor contract to which it is a
party or by which it is bound; (iv) promptly after Borrower's
learning thereof, of any material default by Borrower under
any note, indenture, loan agreement, mortgage, lease, deed,
guaranty or other similar agreement relating to any
Indebtedness of Borrower exceeding Five Hundred Thousand
Dollars ($500,000); (v) promptly after the occurrence thereof,
of any Default or Event of Default; (vi) promptly after the
occurrence thereof, of any default by any obligor under any
note or other evidence of Indebtedness payable to Borrower;
and (vii) promptly after the rendition thereof, of any
judgment rendered against Borrower or any of its Subsidiaries.
(l) Landlord and Storage Agreements. Provide Agent with copies of
all agreements between Borrower and any landlord or
warehouseman which owns any premises at which any Collateral
may, from time to time, be kept.
(m) Subordinations. Except for Permitted Purchase Money
Indebtedness, provide Agent with a debt subordination
agreement, in form and substance satisfactory to Agent,
executed by Borrower and any Person who is an officer,
director or Affiliate of Borrower to whom Borrower is or
hereafter becomes indebted for Money Borrowed, subordinating
in right of payment and claim all of such Indebtedness and any
future advances thereon to the full and final payment and
performance of the Obligations.
(n) Further Assurances. At Agent's request, promptly execute or
cause to be executed and deliver to Agent any and all
documents, instruments and agreements deemed necessary by
Agent to give effect to or carry out the terms or intent of
this Agreement or any of the other Loan Documents. Without
limiting the generality of the foregoing, if any of the
Accounts, the face value of which exceeds One Thousand Dollars
($1,000), arises out of a contract with the United States of
America, or any department, agency, subdivision or
instrumentality thereof, Borrower shall promptly notify Agent
thereof in writing and shall execute any instruments and take
any other action required or requested by Agent to comply with
the provisions of the Federal Assignment of Claims Act. For
each deposit account or brokerage account that Borrower at any
time opens or maintains, Borrower shall at Agent's request and
option, pursuant to an agreement in form and substance
satisfactory to Agent, cause the depository bank or securities
intermediary, as applicable, to agree to comply at any time
with instructions from Agent to such depository bank or
securities intermediary, as applicable, directing the
disposition of funds from time to time credited to such
deposit or brokerage account without the further consent of
Borrower.
(o) Tax Certificate. Within ninety (90) days after the end of each
fiscal year of Borrower, or more frequently if requested by
Agent, cause the chief financial
65
officer of Borrower to prepare and deliver to Agent a tax
certificate in the form of Exhibit T attached hereto, with
appropriate insertions.
(p) Vessel Appraisals. Agent shall have the option to prepare an
appraisal of the Vessels no less than annually from the
Closing Date at Borrower's expense.
(q) Vessel Certifications. As soon as available, and in any event
no later than thirty (30) days after receipt by Borrower,
deliver to Lender copies of Coast Guard Certificates of
Inspection and ABS Load Line Certifications (or similar
certificates issued for foreign registered marine vessels) for
each Vessel.
(r) Vessel Maintenance. Keep adequate records with respect to
maintenance of Vessels which detail drydocking, machinery
overhauls and maintenance history for each Vessel.
(s) Projections. As soon as available, and in any event no later
than thirty (30) days after the end of each fiscal year of
Borrower, deliver to Agent Projections of Borrower for the
forthcoming fiscal year, on a month by month basis.
(t) Systems. Maintain any system reasonably requested by Agent for
creating backup data on computer hardware, software or
firmware, such as Accounts and customer lists, and deliver and
pledge to Agent such tapes or discs with respect thereto as
may be required by Lender.
(u) Environmental Matters.
(i) Ensure that the Real Property and the Vessels remain
in compliance with all Environmental Laws where the
failure to do so would have a material adverse effect
on its business, condition (financial or otherwise),
operations, prospects or Properties, and it will not
place or permit to be placed any Hazardous Substance
on any Real Property or Vessel except as not
prohibited by applicable law or appropriate
governmental authorities. Notwithstanding the
foregoing, Agent and Borrower recognize the Existing
Environmental Violations and the storing and carrying
of the Lawful Substances and Borrower hereby agrees
to ensure that all Existing Environmental Violations
are remediated in a manner consistent with any lawful
requirements and schedules established by appropriate
governmental authorities.
(ii) Establish and maintain a system to assure and monitor
continued material compliance with all applicable
Environmental Laws appropriate to the nature of
Borrower's business and review the adequacy and
effectiveness of such system on an annual basis.
(iii) (1) employ in connection with its use of the Real
Property and the Vessels appropriate technology
necessary to maintain material compliance with any
applicable Environmental Laws, and (2) dispose of any
and all Hazardous Substance generated at the Real
Property or on board the
66
Vessels only at facilities and with carriers that
maintain any required permits under the Resource
Conservation and Recovery Act and any other
applicable Environmental Laws. Borrower shall obtain
certificates of disposal, such as hazardous waste
manifest receipts, from all treatment, transport,
storage or disposal facilities or operators in
connection with the transport or disposal of any
Hazardous Substance generated at the Real Property or
on board the Vessels to the extent such certificates
are required by applicable Environmental Laws.
(iv) In the event the Borrower obtains, gives or receives
notice of any Release or threat of Release of a
reportable quantity of any Hazardous Substances at
the Real Property or on board the Vessels (any such
event being hereinafter referred to as a "Hazardous
Discharge") or receives any notice of violation,
request for information or notification that it is
potentially responsible for investigation or cleanup
of environmental conditions, demand letter or
complaint, order, citation, or other written notice
alleging liability on the part of Borrower or any
Subsidiary with regard to any Hazardous Discharge or
violation of Environmental Laws (any of the foregoing
is referred to herein as an "Environmental
Complaint") from any Person or entity, including any
state or local agency responsible in whole or in part
for environmental matters in the state in which the
Real Property is located , the United States Coast
Guard, the United States Environmental Protection
Agency or any similar agency of a foreign government
where a Vessel is operating (any such person or
entity hereinafter the "Authority"), then the
Borrower shall, within ten (10) Business Days, give
written notice of same to the Agent and furnish the
Agent a copy of the Environmental Complaint. Such
notice is not intended to create nor shall it create
any obligation upon Agent with respect thereto.
(v) Promptly forward to Agent copies of any request for
information, notification of potential liability,
demand letter relating to potential responsibility
with respect to the investigation or cleanup of
Hazardous Substances at any other site owned,
operated or used by Borrower to dispose of Hazardous
Substances and shall continue to forward copies of
correspondence between Borrower and the Authority
regarding such claims to the Agent until the claim is
settled. The Borrower shall promptly forward to the
Agent copies of all documents and reports concerning
a Hazardous Discharge that the Borrower is required
to file under any Environmental Laws. Such
information is to be provided solely to allow the
Agent to protect Agent's security interest in the
Collateral and is not intended to create nor shall it
create any obligation upon Agent with respect
thereto.
(vi) Respond promptly to any Hazardous Discharge or
Environmental Complaint and take all necessary action
in order to safeguard the health of any Person and to
avoid subjecting the Collateral or Real Property to
any
67
Lien. Borrower shall be deemed to be taking all
necessary action only if, and for so long as, the
execution or enforcement of an Environmental
Complaint is, and continues to be, effectively stayed
and the Borrower maintains adequate reserves
therefore, which are properly reflected on Borrower's
Consolidated Financial Statements, the validity and
amount of the claims secured thereby are being
actively contested in good faith and by appropriate
lawful proceedings, and any Liens associated with the
Environmental Complaint do not, in the aggregate,
materially detract from the value of the Property of
Borrower or materially impair the use thereof in the
operation of Borrower's business. If Borrower shall
fail to so respond to any Hazardous Discharge or
Environmental Complaint or Borrower shall fail to
comply with any of the requirements of any
Environmental Laws where the failure to do so would
have a material adverse effect on its business,
condition (financial or otherwise), operations,
prospects or Properties, Agent may, but without the
obligation to do so, for the sole purpose of
protecting Agent's interest in Collateral after
giving Borrower prior written notice: (a) give such
notices or (b) enter onto the Real Property or
Vessels (or authorize third parties to enter onto the
Real Property or Vessels) and take such actions as
Agent(or such third parties as directed by the Agent)
deem reasonably necessary or advisable, to clean up,
remove, or mitigate any such Hazardous Discharge or
Environmental Complaint. All reasonable costs and
expenses incurred by Agent (or such third parties) in
the exercise of any such rights, including any sums
paid in connection with any judicial or
administrative investigation or proceedings, fines
and penalties, together with interest thereon from
the date expended at the Applicable Annual Rate for
Base Rate Loans shall be paid upon demand by the
Borrower, and until paid shall be added to and become
a part of the Obligations secured by the Liens
created by the terms of this Agreement or any other
agreement between Agent or Lenders and Borrower.
(vii) Promptly upon the written request of the Agent, in
connection with any Hazardous Discharge or
Environmental Complaint as described in clause (vi)
immediately preceding, provide to Agent, at the
Borrower's expense, with an environmental site
assessment or environmental audit report prepared by
an environmental engineering firm acceptable to Agent
to assess with a reasonable degree of certainty the
existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and
removal of any Hazardous Substances required as a
result of the Hazardous Discharge or Environmental
Complaint. Any investigation of or response to such
Hazardous Discharge proposed and acceptable to an
appropriate Authority that is charged to oversee the
clean-up of such Hazardous Discharge shall be
acceptable to the Agent.
(viii) Defend and indemnify Agent and Lenders and hold Agent
and Lenders, and their respective employees, agents,
directors and officers harmless from and against all
loss, liability, damage and expense, claims, costs,
68
fines and penalties, including attorney's fees,
suffered or incurred by Agent or Lenders under or on
account of any Environmental Laws, including, without
limitation, the assertion of any Lien thereunder,
with respect to any Hazardous Discharge, the presence
of any Hazardous Substances affecting its business
and operations, the Real Property or the Vessels,
whether or not the same originates or emerges from
the Real Property or any contiguous real estate or
the Vessels, including any loss of value of the Real
Property as a result of the foregoing. Borrower's
obligations under this Section 8.1(u) shall arise
upon the discovery of the presence of any Hazardous
Substances at the Real Property or on board the
Vessels that would have a material adverse effect on
Borrower's business, condition (financial or
otherwise), operations, prospects or Properties, or
Borrower's use of Hazardous Substances in its
business and operations in a manner that would have a
material adverse effect on its business, condition
(financial or otherwise), operations, prospects or
Properties, whether or not any federal, state, or
local environmental agency has taken or threatened
any action in connection with the presence of any
Hazardous Substances. Borrower's obligation and the
indemnification hereunder shall survive the
termination of this Agreement.
(ix) For purposes of Section 7.1(aa), 8.1(u) and 8.2(aa),
all references to "Real Property" shall be deemed to
be all of Borrower's right, title and interest in and
to all leased and owned premises, including, without
limitation, the Offshore Platforms.
(v) Reporting of Locations of Vessels. Concurrently with the
delivery of the monthly unaudited interim financial statements
of Borrower and its Subsidiaries, as required by Section
8.1(j)(ii), deliver to Agent a report identifying by name and
location, the Vessels that, as of the end of the month covered
by the monthly unaudited financial statements then delivered
to Agent, are operating in waters outside of the territorial
jurisdiction of the United States.
Section 8.2 Negative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lenders, Borrower
covenants that, unless consented to by Lender in writing, it will not and will
not allow its Subsidiaries to:
(a) Mergers, Consolidations; Acquisitions. Merge or consolidate,
or permit any Subsidiary to merge or consolidate, with any
Person, except a consolidation or merger between both
Borrowers, or a Borrower and one or more wholly owned
Subsidiaries; nor acquire all or any substantial part of the
Properties of any Person; nor change its or any of its
Subsidiaries' state of incorporation or type of organization,
nor change its or any of its Subsidiaries' legal names except
in connection with a consolidation or merger permitted by this
Section 8.2(a).
(b) Loans. Make, or permit any Subsidiary to make, any loans or
other advances of money (other than for salary, travel
advances, advances against commissions and other similar
advances in the ordinary course of business) to any Person,
69
including, without limitation, any of Borrower's Subsidiaries,
Affiliates, officers or employees.
(c) Total Indebtedness. Create, incur, assume, or suffer to exist
any Indebtedness, except: (i) Obligations owing to Lenders;
(ii) unsecured accounts payable to trade creditors which are
not aged more than ninety (90) days from billing date and
current operating expenses (other than for Money Borrowed)
which are not more than sixty (60) days past due, in each case
incurred in the ordinary course of business and paid within
such time period, unless the same are actively being contested
in good faith and by appropriate and lawful proceedings and
Borrower shall have set aside such reserves, if any, with
respect thereto as are required by GAAP and deemed adequate by
Borrower and its independent public accountants; (iii)
Obligations to pay Rentals permitted by Section 8.2(u); (iv)
Permitted Purchase Money Indebtedness; (v) contingent
liabilities arising out of endorsements of checks and other
negotiable instruments for deposit or collection in the
ordinary course of business; (vi) liabilities arising under
the Synthetic Lease financing of the Gunnison production
platform; (vii) liabilities arising under the Title XI Debt;
(viii) plug and abandonment obligations not to exceed
$50,000,000 at any time; and (ix) Indebtedness not included in
clauses (i) through (v) above which does not exceed at any
time, in the aggregate, the sum of Five Hundred Thousand
Dollars ($500,000).
(d) Affiliate Transactions. Enter into, or be a party to, or
permit any Subsidiary to enter into or be a party to, any
transaction with any Affiliate, except (i) transactions in the
ordinary course of and pursuant to the reasonable requirements
of Borrower's or such Subsidiary's business and upon fair and
reasonable terms which are fully disclosed to Agent and are no
less favorable to Borrower than would obtain in a comparable
arm's length transaction with a Person not an Affiliate or
stockholder of Borrower or such Subsidiary, or (ii)
transactions contemplated by the Shareholders Agreement, in
effect on the Closing Date.
(e) Partnerships or Joint Ventures. Become or agree to become a
general or limited partner in any general or limited
partnership or a joint venturer in any joint venture other
than arising from acquisitions by ERT of oil and gas
properties with aggregate plug and abandonment obligations of
$25,000,000 or less per year.
(f) Adverse Transactions. Except for Turnkey Contracts, enter into
any transaction, or permit any Subsidiary to enter into any
transaction, which materially and adversely affects or may
materially and adversely affect the Collateral or Borrower's
ability to repay the Obligations or permit or agree to any
material extension, compromise or settlement or make any
change or modification of any kind or nature with respect to
any Account, including any of the terms relating thereto,
other than discounts and allowances in the ordinary course of
business, all of which shall be reflected in the Schedules of
Accounts submitted to Lender pursuant to Section 5.2.
70
(g) Guaranties. Except as described on Exhibit U attached hereto
guarantee, assume, endorse or otherwise, in any way, become
directly or contingently liable with respect to the
Indebtedness of any Person (other than a guaranty by Cal Dive
on behalf of ERT, Aquatica or Canyon), except by endorsement
of instruments or items of payment for deposit or collection.
(h) Limitation on Liens. Create or suffer to exist any Lien upon
any of its Property, income or profits, whether now owned or
hereafter acquired, except: (i) Liens at any time granted in
favor of Agent or Lenders; (ii) Liens for taxes (excluding any
Lien imposed pursuant to any of the provisions of ERISA) not
yet due or being contested as permitted by Section 8.1(a), but
only if in Agent's sole discretion and judgment such Lien does
not affect adversely Agent's rights or the priority of Agent's
Lien in the Collateral; (iii) Liens securing the claims or
demands of materialmen, mechanics, carriers, warehousemen,
landlords, operators and other like Persons or common law
maritime liens or liens under the Federal Maritime Lien Act or
similar state statutes (collectively, the "Statutory Liens")
for labor, materials, supplies, injuries or rentals incurred
in the ordinary course of Borrower's business, but only if the
payment thereof is not at the time required and only if such
Liens are junior to the Liens in favor of Agent, or if, and
for so long as, the execution or other enforcement of such
Liens is, and continues to be, effectively stayed, the
validity and amount of the claims secured thereby are being
actively contested in good faith and by appropriate lawful
proceedings, and such Liens do not, in the aggregate,
materially detract from the value of the Property of Borrower
or materially impair the use thereof in the operation of
Borrower's business; (iv) Liens resulting from deposits made
in the ordinary course of business in connection with
workmen's compensation, unemployment insurance, social
security and other like laws; (v) attachment, judgment and
other similar non-tax Liens arising in connection with court
proceedings, but only if and for so long as the execution or
other enforcement of such Liens is and continues to be
effectively stayed and bonded on appeal in a manner
satisfactory to Agent for the full amount thereof, the
validity and amount of the claims secured thereby are being
actively contested in good faith and by appropriate lawful
proceedings and such Liens do not, in the aggregate,
materially detract from the value of the Property of Borrower
or materially impair the use thereof in the operation of
Borrower's business; (vi) Purchase Money Liens securing
Permitted Purchase Money Indebtedness which is not incurred in
violation of Section 8.2(c); (vii) contractual rights,
reservations, exceptions, easements, rights of way, and other
similar encumbrances affecting Real Property other than as
described in Exhibit V attached hereto; provided, that, in
Agent's judgment, which will be exercised in good faith, they
do not in the aggregate materially detract from the value of
said Properties or materially interfere with their use in the
ordinary conduct of Borrower's business and, if said Real
Property constitutes Collateral, Agent has consented thereto;
(viii) Liens securing Indebtedness of a Subsidiary to Borrower
or another Subsidiary; (ix) such other Liens as described on
Exhibit V attached hereto; and (x) such other Liens as Agent
may hereafter approve in writing.
71
(i) Distributions. Without the prior written consent of Agent,
declare or make, or permit any Subsidiary to declare or make,
any Distributions except for the repurchase or its Securities
from employees.
(j) Subsidiaries. Hereafter create any Subsidiary or divest itself
of any material assets by transferring them to a new
Subsidiary to whose existence Agent has not consented.
(k) Business Locations. Transfer its principal place of business
or chief executive office, or maintain warehouses or records
with respect to Accounts, Equipment or Inventory, to or at any
locations other than those at which the same are presently
kept or maintained, as set forth on Exhibit C attached hereto,
except upon at least sixty (60) days prior written notice to
Lender and after the delivery to Lender of financing
statements, if required by Lender, in form satisfactory to
Lender to perfect or continue the perfection of Lender's Lien
and security interest hereunder.
(l) Change of Business. Enter into any new business or make any
material change in any of Borrower's business objectives,
purposes and operations.
(m) Disposition of Assets. Sell, lease or otherwise dispose of any
of its Properties, including any disposition of Property as
part of a sale and leaseback transaction, to or in favor of
any Person, except (i) sales of Inventory in the ordinary
course of Borrower's business for so long as no Event of
Default exists hereunder, (ii) a transfer of Property to
Borrower by a Subsidiary, or (iii) dispositions expressly
authorized by Section 6.4.
(n) Name of Borrower. Use any corporate name (other than its own)
or any fictitious name, tradestyle or "d/b/a" except for the
names disclosed on Exhibit E attached hereto.
(o) Xxxx-and-Hold Sales, Etc. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on
approval or consignment basis, or any sale on a repurchase or
return basis.
(p) Use of Lenders' Names. Without the prior written consent of
Agent, use the names or trademarks of Agent or Lenders or the
name or trademark of any affiliates of Agent or Lenders in
connection with any of Borrower's business or activities,
except in connection with internal business matters, as
required in dealings with governmental agencies and financial
institutions and to trade creditors of Borrower solely for
credit reference purposes.
(q) Margin Securities. Own, purchase or acquire (or enter into any
contract to purchase or acquire) any "margin security" as
defined by any regulation of the Federal Reserve Board as now
in effect or as the same may hereafter be in effect unless,
prior to any such purchase or acquisition or entering into any
such contract, Agent shall have received an opinion of counsel
satisfactory to Agent to the effect that such purchase or
acquisition will not cause this Agreement to
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violate Regulations T, U or X or any other regulation of the
Federal Reserve Board then in effect.
(r) Restricted Investment. Make or have, or permit any Subsidiary
to make or have, any Restricted Investment.
(s) Fiscal Year. Change, or permit any Subsidiary to change, its
fiscal year from a calendar year.
(t) Stock of Subsidiary, Etc. Sell or otherwise dispose of any
Security of any Subsidiary, except in connection with a
transaction permitted under Section 8.2(a), or permit any
Subsidiary to issue any additional shares of its capital stock
except director's qualifying shares or as required by a stock
option program in existence on or before the Closing Date or
as required for Cal Dive to complete its acquisition of
Canyon.
(u) Leases. Become a lessee under any operating lease (other than
a lease under which Borrower is lessor) of Property if the
aggregate Rentals payable during any current or future period
of twelve consecutive months under the lease in question and
all other leases under which Borrower is then lessee would
exceed $750,000, unless the terms and conditions thereof are
approved by Borrower's Board of Directors and acceptable to
Agent.
(v) Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than a
Subsidiary.
(w) Prepayments. Make, or permit any Subsidiary to make, any
prepayment of any part or all of any Money Borrowed, except
that (i) Borrower and its Subsidiaries may prepay outstanding
Money Borrowed in connection with a Purchase Money Lien from
the proceeds of the sale of property subject to such Lien, and
(ii) Borrower may prepay Lenders as provided in this Agreement
or any of the Other Agreements.
(x) Compliance with Environmental Laws. Except as specifically
permitted by applicable Environmental Law or permits or
consents granted pursuant to such laws (i) use any of the Real
Property or any Vessel or any portion thereof for the
handling, processing, storage or disposal of Hazardous
Substances (other than the Lawful Substances), (ii) cause or
permit to be located on any of the Real Property any
underground tank or other underground storage receptacle for
Hazardous Substances, (iii) generate any Hazardous Substances
on any of the Real Property or any Vessel, (iv) conduct any
activity at any Real Property or on board any Vessel or any
other location or use any Real Property in any manner so as to
cause a Release or threatened Release of Hazardous Substances
on, upon or into the Real Property, or (v) otherwise conduct
any activity at any Real Property or on board any Vessel or
any other location or use any Real Property or any other
location in any manner that would violate any Environmental
Law or bring such Real Property in violation of any
Environmental Law.
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(y) Amend any Pension Plan. Amend any Pension Plan so as to
require security to be provided pursuant to IRC Section
401(a)(29).
(z) Capital Expenditures. Incur capital expenditures in excess of
(i) $200,000,000 for the fiscal year 2002 (excepting capital
expenditures made in January 2002 for Canyon), (ii)
$95,000,000 for the fiscal year 2003 and (iii) $70,000,000 for
the fiscal year 2004.
(aa) Gunnison Financing. Enter into or consent to any amendment or
modification to the Synthetic Lease financing of the Gunnison
production platform the effect of which would be to:
(i) extend the term or amount of such financing; or
(ii) change the pricing for such financing more than 300
basis points from that in effect on the Closing Date;
or
(iii) increase the amount or type of collateral for the
financing.
Section 8.3 Specific Financial Covenants. During the term of this
Agreement, and thereafter for so long as there are any Obligations to Lender,
Borrower covenants that, unless otherwise consented to by Lender in writing, it
shall:
(a) Cash Flow Leverage Test. The Borrower will not permit its Cash
Flow Leverage Ratio to be greater than (i) 3.00 to 1.00 until
September 30, 2003 and (ii) 2.75 to 1.00 thereafter.
(b) Interest Coverage Test. The Borrower will not permit its
Interest Coverage Ratio to be less than 2.50 to 1.00.
(c) Fixed Charge Coverage Test. The Borrower will not permit its
Fixed Charge Coverage Ratio to be less than 1.75 to 1.00.
ARTICLE 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the
other Loan Documents, and without affecting in any manner the rights of Agent or
Lenders under the other Sections of this Agreement, it is understood and agreed
that Lenders will not make any Loan under Section 2 unless and until each of the
following conditions has been and continues to be satisfied, all in form and
substance satisfactory to Lenders and their legal counsel:
Section 9.1 Documentation. Agent shall have received the following
documents, each to be in form and substance satisfactory to Agent and its
counsel:
(a) certificates evidencing Borrower's casualty insurance
policies, together with endorsements naming Lender as loss
payee and as mortgagee pursuant to a
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standard mortgagee clause, and certificates evidencing
Borrower's liability insurance policies, together with
endorsements naming Agent as a co-insured;
(b) copies of all filing receipts or acknowledgments issued by any
governmental authority to evidence any filing or recordation
necessary to perfect the Liens of Agent in the Collateral and
evidence to Agent that such Liens constitute valid and
perfected security interests and Liens, having the Lien
priority specified in Section 4.3(b);
(c) on or prior to the Closing Date, landlord or warehouseman
agreements with respect to all premises leased by Borrower,
other than the premises located at 1028 Xxxxxxx, Morgan City,
Louisiana and prior to sixty (60) days after the Closing Date,
a landlord agreement for the premises located at 1028 Xxxxxxx,
Morgan City, Louisiana;
(d) a copy of the Articles of Incorporation of Borrower, and all
amendments thereto, certified within fifteen (15) days before
the Closing Date by the Secretary of State or other
appropriate official of its jurisdiction of incorporation;
(e) a copy of the bylaws of Borrower, and all amendments thereto,
certified as of the Closing Date by the Secretary of Borrower;
(f) good standing certificates for Borrower, issued within fifteen
(15) days before the Closing Date by the Secretary of State or
other appropriate official of Borrower's jurisdiction of
incorporation and each jurisdiction where the conduct of
Borrower's business activities or the ownership of its
Properties necessitates qualification;
(g) a Closing Certificate signed by two (2) duly authorized senior
officers of Borrower dated as of the Closing Date, stating
that (i) the representations and warranties set forth in
Section 7 are true and correct on and as of such date, (ii)
Borrower is on such date in compliance with all the terms and
provisions set forth in this Agreement, and (iii) on such date
no Default or Event of Default has occurred or is continuing;
(h) the Security Documents duly executed, accepted and
acknowledged by or on behalf of each of the signatories
thereto;
(i) the Other Agreements duly executed and delivered by Borrower;
(j) the favorable, written opinion of Xxxxxx Xxxxxx, General
Counsel of the Borrower, regarding Borrower, the Loan
Documents and the transactions contemplated by the Loan
Documents, in form and substance satisfactory to Agent and its
legal counsel;
(k) duly executed agreements establishing the Dominion Account
with a financial institution acceptable to Agent for the
collection or servicing of the Accounts, or, at Agent's
discretion, within thirty (30) days of the Closing Date;
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(l) a copy certified by the Borrower as true, correct and complete
of the Participation Agreement dated November 8, 2001, as
amended, concerning the Synthetic Lease financing of the
Gunnison Platform;
(m) the consent of Bank One, NA as Agent in connection with the
Synthetic Lease financing of the Gunnison Platform to this
Agreement.
(n) a Borrowing Base Certificate in the form of Exhibit W attached
hereto, reflecting that Borrower has Eligible Accounts and
Vessels in which Agent has a perfected first priority Lien, in
amounts sufficient in value and amount to support the initial
Revolving Loan in the amount requested by Borrower;
(o) a certificate regarding Equipment and Vessels signed by a duly
authorized senior officer of Borrower dated the date hereof,
reflecting the type, value and location of Borrower's
Equipment and Vessels; and
(p) such other documents, instruments and agreements as Agent
shall reasonably request in connection with the foregoing
matters, including, without limitation, any items identified
in the closing checklist delivered by Agent to Borrower
immediately prior to the Closing Date.
Section 9.2 Other Conditions. The following conditions have been and
shall continue to be satisfied:
(a) no Default or Event of Default shall exist;
(b) each of the conditions precedent set forth in the other Loan
Documents shall have been satisfied;
(c) since November 30, 2001, except as disclosed in Exhibit W, and
except for changes which are reflected on the financial
statements and notes through November 30, 2001 prepared by
management and submitted to Agent, there shall not have
occurred any material adverse change in the business,
financial condition or results of operations of Borrower or
its Subsidiaries, or the existence or value of any Collateral,
or any event, condition or state of facts which would
reasonably be expected materially and adversely to affect the
business, financial condition or results of operations of
Borrower or its Subsidiaries;
(d) no action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to
enjoin, restrain or prohibit, or to obtain damages in respect
of, or which is related to or arises out of this Agreement or
the consummation of the transactions contemplated hereby or
which, in Agent's discretion, would make it inadvisable to
consummate the transactions contemplated by this Agreement or
any of the other Loan Documents;
(e) Borrower shall have paid all expenses of Agent and Lenders
pursuant to any invoices presented to Borrower relating to the
negotiation, preparation and
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execution of the Loan Documents, including, without
limitation, reasonable attorneys' fees;
(f) all representations and warranties made by Borrower to Agent
and Lenders in the Loan Documents shall be true and correct;
(g) Borrower shall have paid to Agent and Lenders all fees
required by Section 3 to be paid on the Closing Date;
(h) Lenders' servicing requirements for the Loans shall have been
approved by Lenders' credit officers; and
(i) all covenants in this Agreement shall have been approved by
Lenders' credit officers.
ARTICLE 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
Section 10.1 Events of Default. The occurrence of any one or more of
the following events shall constitute an "Event of Default":
(a) Payment of Notes. Borrower shall fail to pay any installment
of principal, interest or premium, if any, owing on the Notes
on the due date of such installment.
(b) Payment of Other Obligations. Borrower shall fail to pay any
of the Obligations that are not evidenced by the Notes on the
due date thereof (whether due at stated maturity, on demand,
upon acceleration or otherwise) and such failure to pay is not
remedied within ten (10) days.
(c) Misrepresentations. Any warranty, representation, or other
statement made or furnished to Agent or Lender by or on behalf
of Borrower or in any instrument, certificate or financial
statement fumished in compliance with or in reference to this
Agreement or any of the other Loan Documents proves to have
been false or misleading in any material respect when made or
furnished.
(d) Breach of Covenants. Borrower shall fail or neglect to
perform, keep or observe (i) any covenant contained in
Sections 4.2, 4.3, 4.5, 4.6, 5.4(b), 6.4, 8.1(a), 8.1(f),
8.1(i), 8.1(j), 8.1(o), 8.1(w), or 8.2 of this Agreement or
(ii) any other covenant in this Agreement (other than a
covenant of default of which the performance or observance is
dealt with specifically elsewhere in this Section 10.1) and
the breach of such other covenant is not cured to Agent's
satisfaction within thirty (30) days after the sooner to occur
of Borrower's receipt of notice of such breach from Agent or
the date on which such failure or neglect becomes known to any
officer of Borrower.
(e) Default Under Other Agreements. Any event of default shall
occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement
contained in, any of the Other Agreements and such default
shall continue beyond any applicable period of grace.
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(f) Default Under Security Documents. Any event of default shall
occur under, or Borrower shall default in the performance or
observance of any term, covenant, condition or agreement
contained in, any of the Security Documents and such default
shall continue beyond any applicable period of grace.
(g) Other Defaults. There shall occur an event of default on the
part of Borrower (including specifically, but without
limitation, due to nonpayment) under any agreement, document
or instrument to which Borrower is a party or by which
Borrower or any of its Property is bound, creating or relating
to any Indebtedness greater than Five Hundred Thousand Dollars
($500,000) (other than the Obligations) if the payment or
maturity of such Indebtedness is or could be accelerated in
consequence of such event of default or demand for payment of
such Indebtedness is made.
(h) Uninsured Losses: Unauthorized Dispositions. Any material
loss, theft, damage or destruction not fully covered by
insurance (as required by this Agreement and subject to
deductibles), or sale, lease or encumbrance of any of the
Collateral or the making of any levy, seizure, or attachment
thereof or thereon except in all cases as may be specifically
permitted by other provisions of this Agreement.
(i) Insolvency, etc. Borrower shall cease to be Solvent or shall
suffer the appointment of a receiver, trustee, custodian or
similar fiduciary, or shall make an assignment for the benefit
of creditors, or any petition for an order for relief shall be
filed by or against Borrower under the Bankruptcy Code (if
against Borrower, the continuation of such proceeding for more
than thirty (30) days), or Borrower shall make any offer of
settlement, extension or composition to their respective
unsecured creditors generally.
(j) Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower
for a period which significantly affects Borrower's capacity
to continue its business, on a profitable basis; or Borrower
shall suffer the loss or revocation of any license or permit
now held or hereafter acquired by Borrower which is necessary
to the continued or lawful operation of its business; or
Borrower shall be enjoined, restrained or in any way prevented
by court, governmental or administrative order from conducting
all or any material part of its business affairs; or any
material lease or agreement pursuant to which Borrower leases,
uses or occupies any Property shall be cancelled or terminated
prior to the expiration of its stated term; or all or any
material part of the Collateral shall be taken through
condemnation or the value of such Property shall be impaired
through condemnation.
(k) Change of Control. Cal Dive shall cease to own and control,
beneficially and of record all of the issued and outstanding
capital stock of ERT or Aquatica or eighty-five percent (85%)
of the issued and outstanding capital stock of Canyon, or a
controlling interest in Cal Dive is acquired by any Person who
is on the Closing Date not a shareholder of Cal Dive.
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(l) ERISA.
(i) Both events described in clauses (a) and (b)
following shall occur: (a) either (w) proceedings
have been instituted to terminate, or a notice of
termination has been filed with respect to, any
Pension Plan (other than a Multiemployer Plan) by any
ERISA Affiliate, the PBGC or any representative of
either, or any such Pension Plan shall be terminated
under Section 4041 or Section 4042 of ERISA, (x) a
Reportable Event has occurred with respect to any
Pension Plan (other than a Multiemployer Plan) and
continues for a period of sixty (60) days, (y) a
Prohibited Transaction has occurred, or (z) any other
event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or
appointment of a trustee to administer, a Pension
Plan has occurred, and (b) the sum of any liability
to PBGC under Section 4062 of ERISA, plus the
currently payable obligations of any ERISA Affiliate
to fund liabilities under all Pension Plans (when
aggregated with the liabilities related to the events
described in clause (a) above), shall have a material
adverse effect on Borrower's business or finances;
(ii) Any of the events described in clauses (a), (b), or
(c) following shall occur with respect to any
Multiemployer Plan: (a) any ERISA Affiliate incurs a
withdrawal liability under Section 4201 of ERISA, or
(b) any Multiemployer Plan is "in reorganization" as
that term is defined in Section 4241 of ERISA, or (c)
any such Multiemployer Plan is terminated under
Section 4041A of ERISA; and the aggregate liability
likely to be incurred by any ERISA Affiliate as a
result of all or any of the events occurring that are
specified in clauses (a), (b) and (c) above when
aggregated with any liabilities arising pursuant to
any event described in the preceding clause (i),
shall have a material adverse effect on Borrower's
business or finances.
(iii) Borrower adopts or amends any Plan so as to create or
result in a liability or funding obligation that has
a material adverse effect on Borrower's business or
finances, or when aggregated with all other
liabilities described in this Section 10.1(n) has a
material adverse effect on Borrower's business or
finances.
(m) Litigation. Borrower, or any Affiliate, shall challenge or
contest in any action, suit or proceeding the validity or
enforceability of this Agreement or any of the other Loan
Documents, the legality or enforceability of any of the
Obligations or the perfection or priority of any Lien granted
to Agent.
(n) Criminal Forfeiture. Borrower shall be criminally indicted or
convicted under any law that could lead to a forfeiture of any
material Property of Borrower.
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(o) Judgments. Any money judgment, writ of attachment or similar
process is entered or filed against Borrower or any of its
Property and results in the creation or imposition of any Lien
that is not a Permitted Lien.
Section 10.2 Acceleration of the Obligations. Without in any way
limiting the right of Agent to demand payment of any portion of the Obligations
payable on demand in accordance with Section 3.6 hereof, upon or at any time
after the occurrence of an Event of Default as above provided, all or any
portion of the Obligations due or to become due from Borrower to Lenders
(whether under this Agreement, or any of the other Loan Documents or otherwise)
shall, at Agent's option (or, in the case of an Event of Default under Section
10.1(j) hereof, immediately upon the occurrence thereof), become at once due and
payable without presentment, demand, protest, notice of dishonor, notice of
default, notice of intent to accelerate, notice of acceleration, or any other
notice whatsoever, and Borrower shall forthwith pay to Lenders, in addition to
any and all sums and charges due, the entire principal of and interest accrued
on the Obligations.
Section 10.3 Remedies. Upon and after the occurrence of an Event of
Default, Agent shall have and may exercise from time to time the following
rights and remedies:
(a) All of the rights and remedies of a secured party under the
Code, or under other applicable law, and all other legal and
equitable rights to which Agent may be entitled, all of which
rights and remedies shall be cumulative, and none of which
shall be exclusive, and shall be in addition to any other
rights or remedies contained in this Agreement or any of the
other Loan Documents.
(b) The right to take immediate possession of the Collateral, and
(i) to require Borrower to assemble the Collateral, at
Borrower's expense, and make it available to Agent at a place
designated by Agent which is reasonably convenient to both
parties, and (ii) to enter any of the premises of Borrower or
wherever any of the Collateral shall be located, and to keep
and store the same on said premises until sold (and if said
premises be the Property of Borrower, Borrower agrees not to
charge Agent for storage thereof).
(c) The right to sell or otherwise dispose of all or any Inventory
or Equipment in its then condition, or after any further
manufacturing or processing thereof, at public or private sale
or sales, with such notice as may be required by law, in lots
or in bulk, for cash or on credit, all as Agent, in its
discretion, may deem advisable. Borrower agrees that ten days
written notice to Borrower of any public or private sale or
other disposition of such Collateral shall be reasonable
notice thereof, and such sale shall be at such locations as
Agent may designate in said notice. Agent shall have the right
to conduct such sales on Borrower's premises, without charge
therefor, and such sales may be adjourned from time to time in
accordance with applicable law. Agent shall have the right to
sell, lease or otherwise dispose of such Collateral, or any
part thereof, for cash, credit or any combination thereof, and
Agent and Lenders may purchase all or any part of such
Collateral at public or, if permitted by law, private sale
and, in lieu of actual payment of such purchase price, may set
off the amount of such price against the Obligations.
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(d) Agent is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights
of use of any name, trade secrets, trade names, trademarks and
advertising matter, or any Property of a similar nature, as it
pertains to the Collateral, in advertising for sale and
selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Agent's
benefit.
(e) The proceeds realized from the sale of any Collateral may be
applied, after allowing two Business Days for collection,
first to the costs, expenses and reasonable attorneys' fees
incurred by Agent in collecting the Obligations, in enforcing
the rights of Agent and Lenders under the Loan Documents and
in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivery any of the
Collateral; secondly, to interest due upon any of the
Obligations; and thirdly, to the principal of the Obligations.
(f) With respect to the face amount of all LC Guaranties and
Letters of Credit issued by Agent may, at its option, require
Borrower to deposit with Lender funds equal to such face
amount, and if Borrower fails to promptly make such deposit,
Lenders may advance such amount as a Revolving Loan (whether
or not such advance would cause the outstanding balance of
Revolving Loans to exceed the Borrowing Base). Any such
deposit or advance shall be held by Agent as a reserve to fund
future payments on such LC Guaranties and future drawings
against such Letters of Credit. At such time as all LC
Guaranties have been paid or terminated and all Letters of
Credit issued by Issuing Bank have been drawn upon or expired,
any amounts remaining in such reserve shall be applied against
any outstanding Obligations, or to the extent all Obligations
have been indefeasibly paid in full, returned to Borrower.
Section 10.4 Remedies Cumulative: No Waiver. All covenants, conditions,
provisions, warranties, guaranties, indemnities, and other undertakings of
Borrower contained in this Agreement and the other Loan Documents, or in any
document referred to herein or contained in any agreement supplementary hereto
or in any schedule or contained in any other agreement between Agent or Lenders,
or and Borrower, heretofore, concurrently, or hereafter entered into, shall be
deemed cumulative to and not in derogation or substitution of any of the terms,
covenants, conditions, or agreements of Borrower herein contained or of any of
the other rights or remedies of Agent or Lenders as provided by any applicable
law or in equity. The failure or delay of Agent or Lenders to exercise or
enforce any rights, Liens, powers, or remedies hereunder or under any of the
aforesaid agreements or other documents or security or Collateral or other
rights or remedies shall not operate as a waiver of such Liens, rights, powers
and remedies, but all such Liens, rights, powers, and remedies shall continue in
full force and effect until all Loans and all other Obligations owing or to
become owing from Borrower to Agent or Lenders shall have been fully satisfied,
and all Liens, rights, powers, and remedies herein provided for are cumulative
and none are exclusive.
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ARTICLE 11. THE AGENT
Section 11.1 Authorization and Action. Each Lender hereby appoints and
authorizes Agent to take such action on its behalf and to exercise such powers
under this Agreement, and the other Loan Documents as are delegated to Agent by
the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement and the other Loan Documents (including, without limitations
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Lenders, and such instructions
shall be binding upon all Lenders; provided, however, that Agent shall not be
required to take any action which exposes Agent to personal liability or which
is contrary to this Agreement or the other Loan Documents or applicable law. To
the extent the Lenders do not receive such materials directly from Borrower,
Agent agrees to give each Lender promptly a copy of each notice, financial
statement or report given to it by Borrower pursuant to the terms of this
Agreement and the other Loan Documents.
Section 11.2 Agent's Reliance, Etc. Neither Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement or
the other Loan Documents, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing,
Agent: (a) may treat the payee of any Note as the holder thereof until Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Agent; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (c) makes no
warranty or representations to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not have
any duty beyond Agent's customary practices to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Loan Party or to
inspect the property (including the books and records) of any Loan Party; (e)
shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed in good faith by it to be genuine and signed or sent by
the proper party or parties.
Section 11.3 Fleet and Affiliates. With respect to its commitment
hereunder to make Revolving Credit Loans, Fleet shall have the same rights and
powers under this Agreement and the other Loan Documents as any other Lender and
may exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include Fleet in its
individual capacity. Fleet and its Affiliates may lend money to, and generally
engage in any kind of business with, Borrower or any of its Subsidiaries and any
Person who may do business with or own Securities of Borrower or any such
Subsidiary, all as if Fleet were not Agent and without any duty to account
therefor to Lenders.
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Section 11.4 Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon Agent or any other Lender and based
on the financial statements referred to in Section 8.3 and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement.
Section 11.5 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Notes then held by each of them, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against Agent in
any way relating to or arising out of this Agreement or any other Loan Document
or any action taken or omitted by Agent under this Agreement, provided that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse Agent promptly upon
demand for its ratable shares of any out-of-pocket expenses (including counsel
fees) incurred by Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by Borrower.
Section 11.6 Successor Agent. Agent may resign at any time by giving
written notice thereof to Lenders and Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor Agent which shall
be reasonably acceptable to Borrower. If no successor Agent shall have been so
appointed by the Majority Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank or financial institution organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least Five Hundred Million Dollars ($500,000,000).
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement
and the other Loan Documents. After any retiring Agent's resignation hereunder
as Agent, the provisions of this Section 11 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
Section 11.7 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
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permitted or required hereunder, action shall be taken by the Agent for and on
behalf of or for the benefit of all the Lenders as provided in Section
11.1above. The Borrowers 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. Upon receipt by the Agent from the
Borrower or any Lender of any communication it will, in turn, promptly forward
such communication to the Lenders; provided, however, that the Agent shall not
be liable for any costs, expenses or losses arising from any failure to so
forward any such communication.
Section 11.8 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.
Section 11.9 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 or any other Person in connection therewith.
(b) The Agent takes no responsibility for the accuracy or
completeness of any information concerning the Borrower
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.
Section 11.10 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 the terms of the Loan Documents. Each Lender shall be responsible
for designating by written notice to the Agent the account to which such
distribution shall be deposited.
Section 11.11 Limitation of Suits.
All rights of action and claims under this Agreement and the other Loan
Documents of the Lenders 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 Borrowers under this
Agreement and the other Loan Documents. However, notwithstanding anything
contained in this Section 11.11, the Lenders shall always retain their ability
to retain independent counsel and to protect their rights under this Agreement
and the other Loan Documents.
Section 11.12 Right of Setoff.
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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 Agreement irrespective of whether
or not such Lender will have made any demand under this Agreement, the Note or
any other Loan Document. The Borrower also hereby grants to each of the Lenders
a security interest in and hereby transfers, assigns, sets over and conveys to
each of the Lenders, as security for payment of the Loan, all such deposits,
funds or property of the Borrower or indebtedness of any Lender to the Borrower.
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 11.12 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.
ARTICLE 12. MISCELLANEOUS
Section 12.1 Power of Attorney. Borrower hereby irrevocably designates,
makes, constitutes and appoints Agent (and all Persons designated by Agent) as
Borrower's true and lawful attorney (and agent-in-fact) and Agent, or Agent's
agent, may, in either Borrower's or Agent's name, but at the cost and expense of
Borrower:
(a) At such time or times hereafter as Agent or said agent may
determine and after notice to Borrower, endorse Borrower's
name on any checks, notes, acceptances, drafts, money orders
or any other evidence of payment or proceeds of the Collateral
which come into the possession of Agent or under Agent's
control; and
(b) At such time or times upon or after the occurrence of an Event
of Default as Agent or its agent may determine: (i) demand
payment of the Accounts from the Account Debtors, enforce
payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of Borrower's rights and remedies with
respect to the collection of the Accounts; (ii) settle,
adjust, compromise, discharge or release any of the Accounts
or other Collateral or any legal proceedings brought to
collect any of the Accounts or other Collateral; (iii) sell or
assign any of the Accounts and other Collateral upon such
terms, for such amounts and at such time or times as Agent
deems advisable; (iv) take control, in any manner, of any item
of payment or proceeds relating to any Collateral; (v)
prepare, file and sign Borrower's name to a proof of claim in
bankruptcy or similar document against any Account Debtor or
to any notice of lien, assignment or satisfaction of lien or
similar document in connection with any of the Collateral;
(vi) receive,
85
open and dispose of all mail addressed to Borrower and to
notify postal authorities to change the address for delivery
thereof to such address as Agent may designate; (vii) endorse
the name of Borrower upon any of the items of payment or
proceeds relating to any Collateral and deposit the same to
the account of Agent on account of the Obligations; (viii)
endorse the name of Borrower upon any chattel paper, document,
instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Accounts, Inventory, and
any other Collateral; (ix) use Borrower's stationery and sign
the name of Borrower to verifications of the Accounts and
notices thereof to Account Debtors; (x) use the information
recorded on or contained in any data processing equipment and
computer hardware and software relating to the Accounts,
Inventory, Vessels, Equipment and any other Collateral and to
which Borrower has access; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things
necessary, in Agent's determination, to fulfill Borrower's
obligations under this Agreement.
Section 12.2 Indemnity. Borrower hereby indemnifies, holds harmless,
and shall defend Agent and Lenders and their directors, officers, agents,
counsel and employees ("Indemnified Persons") from and against any and all
losses, liabilities, damages, costs, expenses, suits, actions and proceedings
("Losses") ever suffered or incurred by any Indemnified Person arising out of or
relating to this Agreement or any other transaction contemplated hereby,
including, without limitation, any Losses caused by the negligence of such
Indemnified Person, but not including any Losses caused by the gross negligence
or willful misconduct of such Indemnified Person, and Borrower shall reimburse
Agent and Lenders and each other Indemnified Person for any expenses (including
in connection with the investigation of, preparation for or defense of any
actual or threatened claim, action or proceeding arising therefrom, including
any such costs of responding to discovery requests or subpoenas, regardless of
whether Agent and Lenders or such other Indemnified Person is a party thereto).
Without limiting the generality of the foregoing, this indemnity shall extend to
any claims asserted against Agent and Lenders or any other Indemnified Person by
any Person under any Environmental Laws or similar laws by reason of Borrower's
or any other Person's failure to comply with laws applicable to solid or
hazardous waste materials or other toxic substances. Borrower may select counsel
with respect to any Losses; provided, however, each Indemnified Person shall
have the right to monitor the progress of any claims, suits and administrative
proceedings defended by Borrower hereunder with counsel of such Indemnified
Person's choice, or conduct its defense through counsel of such Indemnified
Person's choice, in the event that (i) such Indemnified Person determines in
good faith that the conduct of its defense by Borrower could be materially
prejudicial to such Indemnified Person's interests or that other reasonable
grounds exist which demonstrate a lack of effectiveness or high level of quality
in the conduct of such defense by Borrower, and (ii) prior to retaining such
counsel for such purpose, such Indemnified Person shall consult with Borrower
and shall attempt in good faith to agree upon counsel to conduct the defense on
behalf of Borrower and such Indemnified Person, and in each case the fees and
disbursements of such counsel shall be paid by Borrower; provided, however, that
if such mutual agreement is not reached within a reasonable time on selecting
counsel, then such Indemnified Person may retain its own counsel at Borrower's
expense. Notwithstanding any contrary provision of this Agreement, the
obligation of Borrower under this Section 12.2 shall survive the payment in full
of the Obligations and the termination of this Agreement.
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Section 12.3 Reimbursement of Expenses. Without limiting Borrower's
obligations for payment of expenses as provided elsewhere in this Agreement or
in any other Loan Document, if, at any time or times prior or subsequent to the
date hereof, regardless of whether or not an Event of Default then exists or any
of the transactions contemplated hereunder are concluded, Agent or Lenders incur
any out-of-pocket expenses (including, without limitation, the fees and expenses
of Agent or Lenders' attorneys if Agent or Lenders retain legal counsel) in
connection with: (a) the negotiation and preparation of the Loan Documents, any
amendment or modification of any Loan Documents; or (b) the administration of
the Loan Documents and the transactions contemplated thereby; (c) any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Agent, Lenders, Borrower or any other Person) in any way relating to the
Collateral, any Loan Documents, Agent's, Lenders' and Borrower's relationship,
or Borrower's affairs; (d) any attempt to enforce any rights of Agent or Lenders
against Borrower or any other Person which may be obligated to Agent or Lenders
by virtue of any Loan Documents, including, without limitation, the Account
Debtors; (e) the exercise or enforcement of any rights, remedies or privileges
of Lender under the Loan Documents or applicable law; (f) the analysis of
information received in connection with any Loan Documents; (g) the audit or
appraisal of any Collateral or Borrower's books and records; (h) the granting of
any consents or waivers requested in connection with the Loan Documents; (i) the
collection of any Obligations; or (j) any attempt to inspect, verify, protect,
preserve, restore, collect, sell, liquidate or otherwise dispose of or realize
upon the Collateral; then, in any such event, all expenses, costs, charges and
other fees incurred by Agent, Lender or their attorneys or relating to any of
the events or actions described in this Section 12.4 shall be payable, on
demand, by Borrower to Agent, and shall be additional Obligations hereunder
secured by the Collateral. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: recording costs; appraisal
costs; accountants' fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
attorney and paralegal fees, costs and expenses; long distance telephone
charges; air express charges; telegram and facsimile charges; wire transfer
fees; secretarial overtime charges; and expenses for travel, lodging and food.
Additionally, if any taxes (excluding taxes imposed upon or measured by the net
income of Agent or Lenders) shall be payable on account of the execution or
delivery of any of the Loan Documents, or the creation of any of the Obligations
hereunder, by reason of any existing or hereafter enacted federal or state
statute, Borrower will pay all such taxes, including, but not limited to, any
interest and penalties thereon, and will indemnify and hold Lender harmless from
and against liability in connection therewith. Notwithstanding anything else
contained in this Agreement, Borrower shall have no obligation to reimburse or
indemnify any Lender for its costs, expenses or losses if they arise out of an
action by Borrower to enforce such Lender's several obligations under this
Agreement and Borrower is successful in such an action.
Section 12.4 Indulgences Not Waivers. Agent's failure, at any time or
times hereafter, to require strict performance by Borrower of any provision of
this Agreement shall not waive, affect or diminish any right of Agent thereafter
to demand strict compliance and performance therewith. Any suspension or waiver
by Agent of an Event of Default by Borrower under this Agreement or any of the
other Loan Documents shall not suspend, waive or affect any other Event of
Default by Borrower under this Agreement or any of the other Loan Documents,
whether the same is prior or subsequent thereto and whether of the same or of a
different type. None of the undertakings, agreements, warranties, covenants and
representations of Borrower contained in this Agreement or any of the other Loan
Documents and no Event of Default by
87
Borrower under this Agreement or any of the other Loan Documents shall be deemed
to have been suspended or waived by Agent, unless such suspension or waiver is
by an instrument in writing specifying such suspension or waiver and is signed
by a duly authorized representative of Agent and sent to Borrower.
Section 12.5 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
Section 12.6 Modification of Agreement; Sale of Interest.
(a) The Loan Documents constitute the complete agreement between
the parties with respect to the subject matter hereof and may
not be modified, altered or amended except by an agreement in
writing signed by Borrower, Majority Lenders and, if required
by the terms hereof, Agent. No Borrower may sell, assign or
transfer any of the Loan Documents, or any of the Obligations,
or any portion thereof, including without limitation, any
Borrower's rights, title, interests, remedies, powers and
duties hereunder or thereunder. Each Borrower hereby consents
to Agent's and any Lender's sale of participation, assignment,
transfer or other disposition in accordance with the terms of
this Section 12.6, at any time or times, of any of the Loan
Documents or of any portion thereof or interest therein,
including, without limitation, Agent's and any Lender's
rights, title, interests, remedies, powers or duties
thereunder, whether evidenced in writing or not; Each Borrower
agrees that it will use its best efforts to assist and
cooperate with Agent and any Lender in any manner reasonably
requested by Agent or such Lender to effect the sale of
participation in or assignment of any of the Loan Documents or
of any portion thereof or interest therein, including, without
limitation, assistance in the preparation of appropriate
disclosure documents or placement memoranda and executing
appropriate amendments to the signature pages hereto to
reflect the addition of any Lenders and such Lender's
respective commitments. The foregoing notwithstanding, except
with respect to sales, assignments or transfers to Affiliates
under common control pursuant to which the selling, assigning
or transferring Lender retains its voting rights, no Lender
shall sell participate or assign, transfer or otherwise
dispose of any of the Loan Documents or any portion thereof or
interest therein, without the prior written consent of Agent,
which shall not be unreasonably withheld.
(b) In respect to any assignment by a Lender of its rights and
obligations under this Agreement (including, without
limitation, all or a portion of its Revolving Credit
Commitments, the Revolving Loans owed to it and the Note held
by it (i) each such assignment shall be of a uniform, and not
a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Lender's
rights and obligations under this Agreement, (A) the aggregate
amount of the Revolving Credit Commitments of the assigning
Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance
88
with respect to such assignment) shall in no event be less
than $2,000,000, and in integral multiples of $1,000,000
thereafter, or such lesser amount as to which Borrower and the
Agent may consent to and (B) after giving effect to each such
assignment in the amount of the Revolving Credit Commitments
of the Assigning Lender shall in no event be less than
$2,000,000, (iii) the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance, an
Assignment and Acceptance in the form of Exhibit Y hereto (an
"Assignment and Acceptance"), together with any Note subject
to such assignment and a processing and recordation fee of
$3,500, and (iv) any Lender may without the consent of
Borrower or the Agent, and without paying any fee, assign to
any Affiliate of such Lender that is a bank or financial
institution all of its rights and obligations under this
Agreement. The foregoing notwithstanding, no Person may become
a Lender or a Participating Lender hereunder, unless such
Person is a financial institution having stockholders' equity
(or the equivalent) of at least One Hundred Million Dollars
($100,000,000). Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such
Assignment and Acceptance (x) the assignee thereunder shall be
a party hereto and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Lender
hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the remaining portion of an
assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto). If,
pursuant to this Section 12.6, any interest in this Agreement
or any Revolving Credit Loan or any Note is transferred to any
transferee which is organized under the laws of any
jurisdiction other than the United States or any state
thereof, the transferor Lender shall cause such transferee
(other than any Participating Lender), and may cause any
Participating Lender concurrently with the effectiveness of
such transfer, (a) to represent to the transferor Lender (for
the benefit of the transferor Lender, Agent and Borrower) that
under applicable law and treaties no Taxes will be required to
be withheld by Agent, Borrower or the transferor Lender with
respect to any payments to be made to such transferee in
respect of the Revolving Credit Loans, or the Notes, (b) to
furnish to the transferor Lender, Agent or Borrower either
U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein such transfer claims
entitlement to complete exemption form U.S. federal
withholding tax on all interest payments hereunder), and (c)
to agree (for the benefit of the transferor Lender, Agent and
Borrower) to provide the transferor Lender, Agent and Borrower
a new Form 4224 or Form 1001 upon the obsolescence of any
previously delivered form and comparable statements in
accordance with applicable U.S. laws and regulations and
amendments duly executed and completed by such transferee, and
to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.
89
(c) In addition to, and not in limitation of the foregoing,
Borrower acknowledges that if Fleet intends to sell, assign or
participate any of its Revolving Credit Commitments, Borrower
agrees to use its best efforts to assist Fleet in any respect
to any such sale, assignment or participation.
(i) In the event any Lender assigns or otherwise
transfers all or any part of its Note any such Lender
shall so notify Borrower and Borrower shall, upon the
request of such Lender, issue new Notes in exchange
for the old Notes.
(ii) Any Lender may at any time sell to one or more
commercial banks, financial institutions, or other
Persons not Affiliates of Borrower (a "Participating
Lender") participating interests in any Loans, the
Revolving Credit Commitments of that Lender and the
other interests of that Lender (the "Originating
Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the
Originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the Originating Lender
shall remain solely responsible for the performance
of such obligations, (iii) Borrower and the Agent
shall continue to deal solely and directly with the
Originating Lender in connection with the Originating
Lender's rights and obligations under this Agreement
and the other Loan Documents, and (iv) no Lender
shall grant any participation under which the
Participating Lender shall have rights to approve any
amendment to or waiver of this Agreement or the Loan
Documents, except to the extent such amendment or
waiver would: (A) extend the final maturity date for
payment of the Loans in which such Participating
Lender is participating; (B) reduce the interest rate
or the amount of principal or fees applicable to the
Loans in which such Participating Lender is
participating; or (C) release all or substantially
all of the Collateral, except as expressly provided
herein. In those cases in which an Originating Lender
grants rights to a Participating Lender to approve
any amendment to or waiver of this Agreement or the
other Loan Documents respecting the matters described
in clauses (A) through (C) of the preceding sentence,
the relevant participation agreements shall provide
for a voting mechanism whereby a majority of the
amount of such Lender's portion of the Loans
(irrespective of whether held by such Lender or
participated) shall control the vote for all of such
Lender's portion of the Loans. In the case of any
participation, the Participating Lender shall not
have any rights under this Agreement or any of the
other Loan Documents entered into in connection
herewith (the Participating Lender's right against
such Lender in respect of such participation to be
those set forth in the participation or other
agreement executed by such Lender and the
Participating Lender relating thereto). In no event
shall any Participating Lender grant a participation
in its participation interest in the Loans without
the prior written consent of Agent, which approval
shall not be unreasonably withheld. All amounts
payable by Borrower hereunder shall be determined as
if the Originating Lender had not sold any such
participation, except that, if amounts outstanding
under this Agreement are due and unpaid, or shall
have been
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declared or shall have become due and payable upon
the occurrence of an Event of Default, each
Participating Lender shall be deemed to have the
right of set-off in respect of its participating
interest in amounts owing under this Agreement to the
same extent as if the amount of its participating
interest were owing directly to it as a Lender under
this Agreement.
(iii) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a
security interest in, or pledge, all or any portion
of its rights under and interest in this Agreement in
favor of any Federal Reserve Bank in accordance with
Regulation A of the Board or U.S. Treasury Regulation
31 C.F.R. Section 203.14, and such Federal Reserve
Bank may enforce such pledge or security interest in
any manner permitted under applicable law.
(iv) No amendment or waiver of any provision of this
Agreement or the Notes or any other Loan Document,
nor consent to any departure by Borrower therefrom,
shall in any event be effective unless the same shall
be in writing and signed by the Majority Lenders, and
then such waiver or consent shall be effective only
in the specific instance and for the specific purpose
for which given; provided, however: (a) that no
amendment, waiver or consent -------- shall, unless
in writing and signed by each Lender affected thereby
do any of the following: (i) increase the aggregate
Revolving Credit Commitments, or subject any Lender
to any additional obligations, (ii) reduce the
principal of, or decrease the rate of interest on,
the Notes or other amount payable hereunder other
than those payable only to Fleet in its capacity as
Agent which may be reduced by Fleet unilaterally,
(iii) postpone any date fixed for any payment of
principal of, or interest on, the Notes or other
amounts payable hereunder, other than those payable
only to Fleet in its capacity as Agent which may be
postponed by Fleet unilaterally, (iv) reduce 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 hereunder,
(v) release or discharge any Person liable for the
performance of any obligations of Borrower hereunder
or under any of the Loan Documents, (vi) increase the
advance rates contained in the definition of the
Borrowing Base, (vii) to the extent Agent's or
Lenders' consent is required by the terms hereof,
release all or substantially all of the Collateral or
(viii) amend this Section 12.6; (b) that no
amendment, waiver or consent shall be effective
unless in writing and signed by either Required
Lenders or all Lenders, as required by the terms
hereof and, if such amendment, waiver or consent
affects Agent or its rights hereunder, Agent.
(v) The foregoing notwithstanding, Agent on behalf of
itself and all Lenders may waive Events of Default
arising from the breach of any of the financial
covenants contained in Section 8.3 if the deviation
from each such financial covenant does not exceed ten
percent (10%).
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Section 12.7 Cumulative Effect: Conflict of Terms. The provisions of
the Other Agreements and the Security Documents are hereby made cumulative with
the provisions of this Agreement. Except as otherwise provided in Section 3.6
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
Section 12.8 Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which counterparts taken together shall constitute but
one and the same instrument.
Section 12.9 Notice. Except as otherwise provided herein, all notices,
requests and demands to or upon a party hereto shall be in writing and shall be
sent by certified or registered mail return receipt requested, by Federal
Express or similar courier company or by telefax during normal business hours
and, unless otherwise expressly provided herein, shall be deemed to have been
validly served, given or delivered when delivered against receipt or one
Business Day after deposit in the U.S. mail postage prepaid, or, in the case of
telegraphic notice, when delivered to the telegraph company, addressed as
follows:
(a) If to Agent: Fleet Capital Corporation
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Loan Administration Manager
Fax No: (000) 000-0000
(b) If to Lenders: Fleet Capital Corporation
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Loan Administration Manager
Fax No: (000) 000-0000
Southwest Bank of Texas, N.A.
0 Xxxx Xxx Xxxx
0000 Xxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax No: (000) 000-0000
Whitney National Bank
X.X. Xxx 00000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax No: (000) 000-0000
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(c) If to Borrower: Cal Dive International, Inc.
000 X. Xxx Xxxxxxx Xxxxxxx X., Xxxxx 000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxx Xxxxxxx
Fax No: (000) 000-0000
or to such other address as each party may designate for itself by like notice
given in accordance with this Section 12.10; provided, however, that any notice,
request or demand to or upon Agent or Lenders pursuant to Sections 2.4 or 3.4
shall not be effective until received by Agent or Lenders. Any written notice
that is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.
Section 12.10 Agent or Lenders' Consent. Whenever Agent's or Lenders'
consent is required to be obtained under this Agreement, any of the Other
Agreements or any of the Security Documents as a condition to any action,
inaction, condition or event, Agent or Lenders shall be authorized to give or
withhold such consent in their good faith discretion (unless otherwise
specifically provided herein) and to condition their consent upon the giving of
additional collateral security for the Obligations, the payment of money or any
other matter.
Section 12.11 Time of Essence. Time is of the essence of this
Agreement, the Other Agreements and the Security Documents.
Section 12.12 Interpretation. No provision of this Agreement or any of
the other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured,
drafted or dictated such provision.
Section 12.13 No Fiduciary Relationship or Joint Venture. No provision
herein or in any of the other Loan Documents and no course of dealing between
the parties hereto shall be deemed to create any fiduciary relationship among
Agent or Lenders and Borrower or to create any partnership or joint venture
among Lenders and Borrower.
Section 12.14 Publicity. Each Borrower and Lender hereby consents to
Agent's use of the name or tradestyle of such Person in any announcements or
advertisements relating to the completion of the transactions contemplated
hereby and the role played by Agent in providing financing to Borrower hereunder
in such media and in such manner as Agent, with the prior written consent of
Borrower, which shall not be unreasonably withheld or delayed, deems
appropriate.
Section 12.15 Destruction of Borrower's Documents. Any documents,
schedules, invoices or other papers delivered to Agent may be destroyed or
otherwise disposed of by Agent one (1) month after they are delivered to or
received by Agent, unless Borrower requests, in writing, the return of the said
documents, schedules, invoices or other papers and makes arrangements, at
Borrower's expense, for their return; provided, that in no event shall Agent be
liable to Borrower for any failure to retain Borrower's records for any period
of time or to return such records to Borrower.
93
Section 12.16 Nonapplicability of Chapter 346. Borrower, Agent and
Lenders hereby agree that Chapter 346 of the Texas Finance Code (regulating
certain revolving loans and revolving tri-party accounts) shall not apply to
this Agreement or any of the other Loan Documents.
Section 12.17 No Preservation or Marshaling. Borrower agrees that Agent
and Lenders have no obligation to preserve rights to the Collateral against
prior parties or to marshal any Collateral for the benefit of any Person.
Section 12.18 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN
NEGOTIATED, EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN
DALLAS, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT IF ANY OF
THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE LAWS
OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF AGENT'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF AGENT'S
OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE LAWS OF SUCH
JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF TEXAS. AS PART
OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF ANY PRESENT OR
FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER, AGENT OR BORROWER
HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS COUNTY, TEXAS, OR,
AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE U.S. DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND
AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF
OR RELATED TO THIS AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND
BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING FOR SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE
SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN
THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE
EARLIER OF BORROWER'S ACTUAL RECEIPT THEREOF OR THREE DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO AFFECT THE RIGHT OF AGENT TO SERVE LEGAL PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY AGENT OF ANY JUDGMENT OR
ORDER OBTAINED IN SUCH FORUM OR THE TAKING OF
94
ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORM OR
JURISDICTION.
Section 12.19 WAIVERS BY BORROWER. BORROWER WAIVES (a) THE RIGHT TO
TRIAL BY JURY (WHICH AGENT AND LENDER HEREBY ALSO WAIVE) IN ANY ACTION, SUIT,
PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE
LOAN DOCUMENTS, THE OBLIGATIONS OR THE COLLATERAL; (b) PRESENTMENT, DEMAND AND
PROTEST AND NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO
ACCELERATE, ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION
OR RENEWAL OF ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS,
INSTRUMENTS, CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY AGENT OR LENDERS
ON WHICH BORROWER MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS
WHATEVER AGENT OR LENDERS MAY DO IN THIS REGARD; (c) NOTICE PRIOR TO TAKING
POSSESSION OR CONTROL OF THE COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE
REQUIRED BY ANY COURT PRIOR TO ALLOWING AGENT TO EXERCISE ANY OF AGENT'S
REMEDIES; (d) THE BENEFIT OF ALL VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND
(e) NOTICE OF ACCEPTANCE HEREOF. BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO AGENT'S AND LENDERS' ENTERING INTO THIS
AGREEMENT AND THAT AGENT AND LENDER ARE RELYING UPON THE FOREGOING WAIVERS IN
THEIR FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT. BORROWER HEREBY AGREES THAT IT SHALL HAVE NO
RIGHT TO REQUIRE AGENT TO TERMINATE AGENT'S SECURITY INTEREST IN THE COLLATERAL
OR IN ANY OF THE PROPERTY OF BORROWER UNTIL THE OCCURRENCE OF EACH OF THE
FOLLOWING: (i) PAYMENT IN FULL IN IMMEDIATELY AVAILABLE FUNDS OF ALL OBLIGATIONS
KNOWN EXISTING, THREATENED OR CLAIMED WHICH CAN BE GIVEN A MONETARY VALUE; (ii)
TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH SECTION 3.4; AND (iii)
EXECUTION BY BORROWER AND BY ANY PERSON WHOSE LOANS TO BORROWER ARE USED IN
WHOLE OR IN PART TO SATISFY THE OBLIGATIONS OF AN AGREEMENT INDEMNIFYING AGENT
AND LENDERS FROM ANY LOSS OR DAMAGE AGENT OR LENDERS MAY INCUR AS THE RESULT OF
DISHONORED CHECKS OR OTHER ITEMS OF PAYMENT RECEIVED BY AGENT AND LENDERS FROM
BORROWER OR ANY ACCOUNT DEBTOR AND APPLIED TO THE OBLIGATIONS, AND BORROWER
HEREBY WAIVES ANY RIGHT TO REQUIRE A TERMINATION OF AGENT'S SECURITY INTEREST
PRIOR TO THE OCCURRENCE OF EACH OF THE ABOVE-DESCRIBED EVENTS.
Section 12.20 DTPA WAIVER. BORROWER HEREBY WAIVES ALL PROVISIONS OF THE
DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT (TEX. BUS. & COM. CODE XXX.
Section 17.01 ET SEQ. (XXXXXX SUPP. 1987)), OTHER THAN SECTION 17.555
95
THEREOF PERTAINING TO CONTRIBUTION AND INDEMNITY, AND EXPRESSLY WARRANTS
AND REPRESENTS THAT BORROWER (a) HAS ASSETS OF $5,000,000 OR MORE, (b) HAS
KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE BORROWER
TO EVALUATE THE MERITS AND RISKS OF THIS TRANSACTION, (c) IS NOT IN A
SIGNIFICANTLY DISPARATE BARGAINING POSITION RELATIVE TO AGENT AND LENDERS, AND
(d) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.
Section 12.21 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
Section 12.22 RELEASE. BORROWER ACKNOWLEDGES AND AGREES THAT (a) IT HAS
NO CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE AMENDED LOAN
DOCUMENTS AND THE PERFORMANCE OF ITS OBLIGATIONS THEREUNDER, OR (b) IF IT HAS
ANY SUCH CLAIMS, COUNTERCLAIMS, OFFSETS, CREDITS OR DEFENSES TO THE AMENDED LOAN
DOCUMENTS AND/OR ANY TRANSACTION RELATED TO THE AMENDED LOAN DOCUMENTS, SAME ARE
HEREBY WAIVED, RELINQUISHED AND RELEASED IN CONSIDERATION OF AGENT'S AND
LENDERS' EXECUTION AND DELIVERY OF THIS AGREEMENT.
Section 12.23 Amendment and Restatement. This Agreement and the Notes
are given in amendment, restatement, renewal and extension (and not in
extinguishment or satisfaction) of the Amended Loan Documents. With respect to
matters relating to the period prior to the date hereof, all the provisions of
the Amended Loan Documents are hereby ratified and confirmed and shall remain in
full force and effect.
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IN WITNESS WHEREOF, this Agreement has been duly executed in _________,
Texas, on the day and year specified at the beginning hereof.
BORROWER:
CAL DIVE INTERNATIONAL, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
ENERGY RESOURCE TECHNOLOGY, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
AQUATICA, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
CANYON OFFSHORE, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
LENDERS:
SOUTHWEST BANK OF TEXAS, N.A.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
FLEET CAPITAL CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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WHITNEY NATIONAL BANK
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
AGENT:
FLEET CAPITAL CORPORATION
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
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SCHEDULE 1
LIST OF LENDERS
PERCENTAGE OF
AMOUNT OF REVOLVING REVOLVING CREDIT
NAME AND ADDRESS OF LENDER CREDIT COMMITMENT COMMITMENT
----------------------------- ------------------- ----------------
Fleet Capital Corporation
0000 Xxxxxx Xxxx, Xxxxx 000 $35,000,000 58.3%
Xxxxxx, Xxxxx 00000
Southwest Bank of Texas, N.A.
0 Xxxx Xxx Xxxx $ 5,000,000 8.3%
0000 Xxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Whitney National Bank
X.X. Xxx 00000 $20,000,000 33.3%
Xxx Xxxxxxx, Xxxxxxxxx 00000
SCHEDULE 2
LIST OF VESSELS
VESSEL FLAG OFFICIAL NUMBER
------ ---- ---------------
1. CAL DIVER I U.S. 555055
2. CAL DIVER II U.S. 582698
3. CAL DIVER III U.S. 590456
4. CAL DIVER V U.S. 536440
5. CAL DIVE BARGE I U.S. 610175
6. MR. XXX X.X. 000000
7. WITCH QUEEN Bahamas 726136
8. ECLIPSE Bahamas 8000430
9. MYSTIC VIKING Bahamas 800547
10. MERLIN Bahamas 730930
11. SEA SORCERESS Bahamas 9000009
12. UNCLE XXXX Bahamas 728134
SCHEDULE 3
REDUCTION AMOUNT
