LOAN AGREEMENT
This Agreement is dated as of March 19, 1998 and is by and among Whitney
National Bank ("Lender"), a national banking association, and Xxxxxx Industries,
Inc. ("Borrower"), a Louisiana corporation and Orange Shipbuilding Company,
Inc., a Texas corporation, ("Orange" or a "Guarantor", as applicable), a Texas
corporation.
WITNESSETH:
WHEREAS, the Borrower has requested Lender to make an extension of credit
to the Borrower and Lender has agreed, upon the terms and conditions set forth
herein, to lend such amounts to the Borrower.
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Borrower and Lender hereby agree as follows:
SECTION I. DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
meanings specified below:
"Agreement" shall mean this Loan Agreement, as it may be amended from time
to time.
"Base Rate" shall mean the Prime Rate minus the applicable margin of
50 basis points during any Interest Period. Prime Rate shall mean that rate of
interest as recorded by Whitney National Bank from time to time as its prime
lending rate with the rate of interest to change when and as said prime lending
rate changes. The Prime Rate is not necessarily the lowest interest rate charged
by Whitney National Bank. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Prime Rate shall take
effect at the time of such change in the Prime Rate.
"Business Day" shall mean any day on which banks are required to be open to
carry on their normal business in the State of Louisiana.
"Capital Expenditures" shall mean as to any Person, without duplication and
for any period, the cost attributed, in accordance with GAAP consistent with
those applied in preparation of the financial statements referred to in Section
5.2 hereof, to acquisitions during such period by such Person of any asset,
tangible or intangible, or replacements or substitutes therefor or additions
thereto which such Person treated as a noncurrent asset on such Person's
financial statements, including, without limitation, the acquisition or
construction of assets having a useful life of more than one (1) year, excluding
the cost associated with the purchase of the stock of Orange.
"Closing Date" shall mean the date this Agreement is duly executed by
Lender and the Borrower and Orange.
"Company Agent" shall mean Xxxxxxx X. Xxxxxxx or Xxxxx X. Xxxxxxxxx.
"Xxxxxx Shipyard" shall mean the approximately 11 acres of immovable
property on the Atchafalya River, Morgan City , Louisiana, owned by Xxxxxx and
which is the Borrower's shipyard in Morgan City, Louisiana, as described on
Exhibit A.
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Consolidated Funded Debt" shall mean all indebtedness or other obligations
for borrowed money or for the deferred purchase price of property or services,
whether as maker or endorser, of Borrower and all of its Subsidiaries (including
without limitation, all notes, debentures, bonds or similar instruments and all
liabilities shown on a balance sheet or financial statement of Borrower and all
of its Subsidiaries)
"Consolidated Funded Debt Payments" shall mean, at a particular date all
principal and interest payments of Consolidated Funded Debt as required by the
terms of the documents evidencing such Debt and excluding any prepayments of
principal or interest thereunder.
"Current Assets" means, at a particular date, all amounts which would, in
conformity with generally accepted accounting principles in the United States of
America in effect from time to time and applied on a consistent basis, be
included under current assets on a balance sheet of the Borrower and all of its
Subsidiaries at such date.
"Current Liabilities" means, at a particular date, all amounts which
would, in conformity with generally accepted accounting principles in the United
States of America in effect from time to time and applied on a consistent basis,
be included under current liabilities on a balance sheet of the Borrower and all
of its Subsidiaries as at such date.
"Debt" of a Person shall mean at a particular date, the sum (without
duplication and in conformity with generally accepted accounting principles in
the United States of America in effect from time to time and applied on a
consistent basis) of (i) all indebtedness or other obligations for borrowed
money or for the deferred purchase price of property or services, whether as
maker or endorser, (including without limitation, all notes, debentures, bonds
or similar instruments and all liabilities shown on a balance sheet or financial
statement of Borrower and all of its Subsidiaries), (ii) capitalized lease
obligations of such Person or any subsidiary thereof, (iii) obligations with
respect to any installment sale or conditional sale agreement or title retention
agreement, (iv) indebtedness arising under acceptance facilities, (v)
reimbursement obligations arising in connection with surety, or performance or
other similar bonds and in connection with letters of credit issued in lieu of
such bonds, (vi) the outstanding amount of all other letters of credit and (vii)
any withdrawal liability or obligation of such Person or an ERISA affiliate to a
multiemployer plan.
"Debt to Worth Ratio" shall mean the ratio for a given period of Debt to
Tangible Net Worth.
"Default" shall mean the occurrence of any of the events specified in
Section VI.
"EBITDA" shall mean the net income after taxes of Borrower and all of its
Subsidiaries for each fiscal year of four consecutive quarters, plus all amounts
deducted in determining such net operating income after taxes on account of (a)
all interest paid or payable by Borrower and all of its Subsidiaries during such
2
period, (b) all taxes paid or accrued based on or measured by income and (c) all
depreciation and amortization expenses accrued during such period, all in
accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eligible Income" shall mean EBITDA minus (i) Capital Expenditures and (ii)
state and federal income taxes for the applicable accounting period.
"Fixed Charges Coverage Ratio" shall mean the ratio calculated on a rolling
four quarter basis over the life of the Loan of Eligible Income to Consolidated
Funded Debt Payments.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" means any sovereign state or nation or government,
or any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including without limitation, the United States
Department of Defense, the United States Navy, the United States Coast Guard and
United States Army Corp of Engineers.
"Government Contracts" shall have the meaning as provided in Section 4.20.
"Guarantors" shall mean Orange and J. Xxxxxx Xxxxxx (with each a
"Guarantor").
"Hazardous Materials" shall mean:
(a) any "hazardous waste" as defined by either the Resource Conservation
and Recovery Act of 1976 (42 U.S.C. (S)6901 et. seq.), as amended from
time to time, and regulations promulgated thereunder;
(b) any "hazardous substance" as defined by either the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. (S)9601 et. seq.) ("CERCLA"), as amended from time to time, and
regulations promulgated thereunder;
(c) asbestos;
(d) polychlorinated biphenyls;
(e) any "regulated substance" as defined under Underground Storage Tank
Regulations, 53 Fed. Reg. 37196 (Sept. 23, 1988), codified as 40 C.F.R.
(S) 280.12, or La. Adm. Code 33:XI.103;
(f) any naturally occurring radioactive materials, the possession, use,
transfer, processing, distribution, or disposal of which is subject to
regulation by the Louisiana Department of Environmental Quality
pursuant to the provisions of La. Adm. Code 33:XV, Chapter 14, as
amended from time to time;
3
(g) any non-hazardous oil field wastes ("Now") defined and regulated by the
Commissioner of Conservation under La. R.S. 30:1, et seq., or the
Louisiana Abandoned Oil field Waste Site Law, La. R.S. 30:71 et seq.,
as amended from time to time, and regulations promulgated thereunder;
(h) any substance the presence of which on the Property is prohibited by
any lawful rules and regulations of legally constituted authorities
from time to time in force and effect relating to the Property,
including but not limited to any solid waste and underground storage
tanks subject to the regulations of the Louisiana Department of
Environmental Quality ; and
(i) any other substance which by any such rule or regulation requires
special handling in its collection, storage, treatment, or disposal.
"Hazardous Materials Contamination" shall mean (i) the contamination
(whether presently existing or hereafter occurring) of the Property, including
the improvements, facilities, soil, ground, water, air or other elements on, or
of, the Property by Hazardous Materials, (ii) the contamination of the Property,
including the buildings, facilities, soil, ground, water, air or other elements
on, or of, any other property as a result of Hazardous Materials at any time
(whether before or after the date of this Loan Agreement) emanating from the
Property or (iii) the existence of an underground storage tank which is out-of-
service or must be removed in accordance with La. Adm. Code 33:XI, et seq.
"Indebtedness" of any Person shall mean and include all obligations of such
Person which in accordance with GAAP shall be classified upon a balance sheet of
such Person as liabilities of such Person and, in any event shall include
(without duplication):
(a) any obligation payable more than one year from the date of
creation thereof which, under generally accepted accounting principles, is shown
on the balance sheet as a liability (including capitalized lease obligations but
excluding reserves for deferred income taxes and other reserves to the extent
that such reserves do not constitute an obligation);
(b) any obligation payable on demand or within a period of one year
from the date of the creation thereof for borrowed money (and any notes payable
and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money);
(c) indebtedness which is secured by any Lien on property owned by
such Person, whether or not the indebtedness secured thereby shall have been
assumed by such Person;
(d) guarantees, endorsements (other than endorsements of negotiable
instruments for collection in the ordinary course of business) and other
contingent liabilities (whether direct or indirect) in connection with the
obligations, stock or dividends of any Person;
(e) obligations under any contract providing for the making of loans,
advances or capital contributions to any Person, or for the purchase of any
property from any Person, in each case in order to enable such Person primarily
to maintain working capital, net worth or any other balance sheet condition or
to pay debts, dividends or expenses;
4
(f) obligations under any contract for the Purchase of materials,
supplies or other property or services if such contract (or any related
document) requires that payment for such materials, supplies or other property
or services shall be made regardless of whether or not delivery of such
materials, supplies or other property or services is ever made or tendered;
(g) obligations under any contract to relet or lease (as lessee) any
real or personal property if such contract (or any related document) provides
that the obligation to make payments thereunder is absolute and unconditional
under conditions not customarily found in commercial leases then in general use
or requires that the lessee purchase or otherwise acquire securities or
obligations of the lessor (provided, that in any event, the foregoing is not
intended to include a normal operating lease or preclude a sublease or an
assignment of a lease in the normal course);
(h) obligations under any contract for the sale or use of materials,
supplies or other property or services if such contract (or any related
document) requires that payment for such materials, supplies or other property
or services, or the use thereof, shall be subordinated to any indebtedness (of
the purchaser or user of such materials, supplies or other property or the
Person entitled to the benefit of such services) owed or to be owed to any
Person;
(i) obligations under any other contract which, in economic effect, is
substantially equivalent to a guarantee; and
(j) liabilities in respect of unfunded vested benefits under plans
covered by Title IV of ERISA.
"Interest Period" shall mean at the time the Borrower gives a Notice of
Conversion (as defined in Section 2.03) in respect of the making of, or
converting the interest rate on the Loan to accrue at Libor Rate or Base Rate on
the last Business Day prior to the expiration of the then applicable Interest
Period, the Borrower shall have the right to elect, by having the Borrower Agent
give Lender notice thereof the interest period (each an "Interest Period")
applicable to Libor Rate or Base Rate, which Interest Period shall, at the
option of the Borrower, be one month, two month, three month or six month period
for Libor Rate or a thirty day for Base Rate; provided that:
(i) the Loan shall at all times accrue interest at the rate chosen during
the applicable Interest Period;
(ii) the Interest Period for any Libor Rate or Base Rate shall commence on
the day on which the preceding Interest Period thereto expires;
(iii) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, however, that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period may be selected nor the rate of interest be changed
at any time when a Default is then in existence; and
5
(v) no Interest Period shall be selected which extends beyond the
respective Maturity Date for the Loan.
If upon the expiration of any Interest Period, the Borrower have failed to
elect, or are not permitted to elect, a new Interest Period, the Borrower shall
be deemed to have elected to have the Loan accrue interest equal to the Base
Rate effective as of the expiration date of such current Interest Period.
"Libor Rate" shall mean, for any Interest Period, an interest rate per
annum (rounded upward to the nearest hundredths of a percent), as determined by
Lender, which is the offered quotation to Lender of the London interbank offered
rates for Dollar deposits of amounts in immediately available funds in the
London market for one month, two months, three months or six months as recorded
by the Dow Xxxxx Telerate Service, as of the opening of business of Lender or as
soon thereafter as practicable, for a period to accrue equal to such Interest
Period, plus the applicable margin of 200 basis points (2.00% percent). As of
March 19 1998, the Libor Rate with a six month maturity was five and 68/10
(5.68%) percent plus the margin is a total rate of seven and 68/100 (7.68%)
percent per annum.
"Lien" shall mean any mortgage, pledge, hypothecation, security interest,
encumbrance, lien, judgment, garnishment, seizure, tax lien or levy (statutory
or otherwise) or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, or any
capitalized lease, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Loan" shall mean the Loan to Borrower described in Article II, with each
being a Loan, as applicable and shall include all principal, interest,
attorney's fees and costs owed thereon.
"Maturity Date" shall mean the maturity date for the Loan, which is April
30, 2004.
"Net Tangible Assets" of any Person shall mean, as of any date, the
aggregate book value of the assets which would be reflected on a balance sheet
of such Person prepared as of such date in accordance with GAAP, less the
aggregate book value of such Person's intangible assets (i.e., patents,
copyrights, trademarks, trade names, goodwill, franchises and other similar
intangibles) as of such date.
"Note" shall mean the note evidencing the Loan.
"Obligations" shall mean all obligations (monetary or otherwise, including,
but not limited to, all representations, warranties and covenants contained in
this Agreement) of the Borrower to Lender, whether direct or contingent, due or
to become due, now existing or hereafter arising, including future advances,
with interest, attorneys' fees, expenses of collection and costs arising under
or in connection with this Agreement, the Loan, the Note, the Collateral
Documents, promissory notes, checks, overdrafts, letter of credit agreements,
endorsements and continuing guaranties.
"Orange Shipyard" shall mean the approximately 12 acres of real property
on the Sabine River, Orange, Texas, owned by Orange Shipbuilding Company, Inc.
and which is Orange's shipyard, as described on Exhibit B.
"Permitted Liens" shall mean those presently outstanding Liens of the
Borrower and (i) pledges or deposits by the Borrower under workmen's
compensation laws, unemployment insurance laws or similar
6
legislation, or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Indebtedness of the Borrower) or leases (other
than capitalized leases) to which the Borrower is a party, or deposits to secure
statutory obligations of the Borrower or deposits of cash or U.S. Government
Bonds to secure surety or appeal bonds to which the Borrower is a party, or
deposits as security for contested taxes or import duties or for the payment of
rent; (ii) Liens imposed by law, such as carriers', warehousemen's,
materialmen's and mechanics' liens, incurred in the ordinary course of business
for sums not overdue or being contested in good faith by appropriate proceedings
and for which adequate reserves shall have been set aside on the Borrower's
books; (iii) judgment Liens in existence less than 30 days after the entry
thereof or with respect to which execution has been stayed or the payment of
which is covered in full (subject to a customary deductible) by insurance; (iv)
Liens for property taxes not yet delinquent and Liens for property taxes the
payment of which is being actively contested in good faith by appropriate
proceedings and for which adequate reserves shall have been set aside on the
Borrower's books; and (v) minor survey exceptions, minor encumbrances, easements
or reservations of, or rights of others for rights-of-way, highways and railroad
crossings, sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of real property
or Liens incidental to the conduct of the business of the Borrower or to the
ownership of its property which were not incurred in connection with
Indebtedness of the Borrower, which Liens do not in the aggregate materially
detract from the value of said properties or materially impair their use in the
operation of the business taken as a whole of the Borrower.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation (including the Borrower), a trust, an unincorporated
organization, government or any department or agency thereof, each Affiliate and
each Subsidiary.
"Plan" shall mean any employee benefit plan which is covered by ERISA and
in respect of which the Borrower is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Property" shall mean the Xxxxxx Shipyard and the Orange Shipyard and any
other immovable or real property owned by the Borrower or any of its
Subsidiaries.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association, partnership, joint venture or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned 50% or more by such Person.
"Tangible Net Worth" means, at a particular date, all amounts which would
be included under shareholders' equity on the balance sheet of Borrower and all
of its Subsidiaries in conformity with generally accepted accounting principles
in the United States of America in effect from time to time and applied on a
consistent basis excluding any amount attributable to goodwill or other
intangibles of Borrower and all of its Subsidiaries.
SECTION II
THE CREDIT
SECTION 2.01. COMMITMENT TO LEND. Subject to and upon the terms and
conditions contained in this Agreement, and relying on the representations and
warranties contained in this Agreement, Lender
7
agrees to make an extension of credit to the Borrower, said extension of credit
being more particularly described hereinafter.
SECTION 2.02. LOAN. On the Closing Date, Lender agrees to lend to the
Borrower the principal sum of Twenty-five Million and No/100 ($25,000,000.00)
Dollars (the "Loan") which shall be evidenced by a promissory note in a form
acceptable to Lender in the amount of $25,000,000.00, with interest to accrue at
the Libor Rate or Base Rate in accordance with Section 2.03. The Loan shall
initially be payable interest only payable on the last day of each month
commencing March 31, 1998 and thereafter on the last day of each month until May
31, 1998. Thereafter, the Loan shall be payable in 70 equal monthly principal
payments of $209,000.00, plus accrued interest with a final payment of all
unpaid principal and interest then due payable on April 30, 2004. The first
installment of principal and interest on the Loan shall be payable on June 30,
1998 with the succeeding installments payable on the last day of each month
until the Loan has been paid in full. Borrower shall be entitled to prepay the
Loan in whole or in part, without payment of premium or penalty. Interest on
the outstanding principal owed on the Loan shall be computed and assessed on the
basis of the actual number of days elapsed over a year composed of 360 days.
SECTION 2.03. CONVERSION. (a) At Closing, the Borrower has determined that
the Loan shall accrue interest at Libor Rate with an Interest Period to expire
on September 18, 1998. Upon the expiration of such Interest Period and any
Interest Period thereafter, the Borrower shall have the option to convert the
interest rate accruing on all (but not less than all) of the outstanding
principal balance of the Loan into a Libor Rate or Base Rate; provided that (i)
the Loan can not be converted when any Default has occurred and is continuing
and in such event the Loan shall continue to accrue interest at the rate in
effect as of the date of such Default, and (ii) no conversions are allowed until
the expiration of the Interest Period applicable to the existing rate of
interest has expired.
(b) Each conversion shall be enacted by the Company Agent by giving
Lender at its main office prior to 11:00 a. m. (New Orleans time) on or before
the last Business Day of the applicable Interest Rate Period written or
telephone notice of the conversion (each a "Notice of Conversion") specifying if
the Loan is to be converted into accruing interest at Libor Rate or Base Rate
and the Interest Period to be applicable thereto. In the absence of any
specific rate election by the Borrower or if Borrower fails to provide such
notice to the Lender in a timely manner, the Loan shall accrue interest at the
Base Rate. Borrower may prepay the Loan without payment of premium or penalty.
(c) The Borrower agrees that the internal records of Lender shall
constitute for all purposes prima facie evidence of (i) the amount of principal
and interest owing on the Loan from time to time, and (ii) the amount of each
principal and/or interest payment received by Lender on the Loan.
SECTION 2.04. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that
Lender shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any Interest Period or date of conversion that, by reason of
any changes arising after the date of this Agreement affecting the
London interbank market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Libor Rate; or
8
(ii) at any time, that Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Libor Rate because of any change since the date of this
Agreement in any applicable law or governmental rule, regulation,
order, guideline or request or in the interpretation or administration
thereof and including the introduction of any new law or governmental
rule, regulation, order, guideline or request, such as, for example,
but not limited to: (A) a change in the basis of taxation of payment
to Lender of the principal or interest on such Libor Rate (except for
changes in the rate of tax on, or determined by reference to, the net
income or profits of Lender) or (B) a change in official reserve
requirements; or
(iii) at any time, that the making or continuance of any Libor Rate
has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by Lender in good faith with
any governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of
this Agreement which materially and adversely affects the London
interbank market;
then, and in any such event, Lender shall promptly give notice (by telephone
confirmed in writing) to the Borrower. Thereafter (x) in the case of clause (i)
above, Libor Rate shall no longer be available until such time as Lender
notifies the Borrower that the circumstances giving rise to such notice no
longer exist, and any Notice of Conversion given by the Borrower with respect to
Libor Rate which have not yet been incurred (including by way of conversion)
shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above,
the Borrower agrees to pay to Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or otherwise as agreed to by Lender and the Borrower)
as shall be required to compensate Lender for such increased costs or reductions
in amounts received or receivable hereunder (a written notice as to the
additional amounts owed to Lender, showing the basis for the calculation
thereof, submitted to the Borrower by Lender in good faith shall, absent
manifest error, be final and conclusive and binding on all the parties hereto)
and (z) in the case of clause (iii) above, the Loan shall accrue interest at the
Base Rate. Lender agrees that if it gives notice to the Borrower of any of the
events described in clause (i) or (iii) above, it shall promptly notify the
Borrower and if such event ceases to exist. If any such event described in
clause (iii) above ceases to exist as to Lender, Lender's obligations to convert
the interest accruing on the Loan into Libor Rate on the terms and conditions
contained herein shall be reinstated.
(b) At any time that any Libor Rate Loan is affected by the circumstances
described in Section 2.04 (a)(ii) or (iii), the Loan shall accrue interest at
the Base Rate.
SECTION 2.05. USE OF PROCEEDS. The Borrower shall use the proceeds of the
Loan for the purpose of repaying the Lender loan facility having a present
principal balance of $25,000,000.00.
ARTICLE III
SECURITY FOR THE OBLIGATIONS
SECTION 3.01. COLLATERAL. The Loan and the Obligations shall be
secured by a first Lien in favor of Lender on the following collateral (the
"Collateral") to be documented upon terms and conditions satisfactory to Lender
(the "Collateral Documents"):
9
(a) Continuing Guaranties by Guarantors whereby Orange solidarily
agrees to repay all of the Obligations and J. Xxxxxx Xxxxxx agrees to solidarily
repay $2,000,000.00 of the Loan;
XXXXXX INDUSTRIES SHIPYARD
(b) A Collateral Note by Borrower in amount of $50,000,000.00 secured
by and paraphed for identification with a first, valid and enforceable
collateral mortgage mortgaging the Xxxxxx Shipyard and all improvements and
component parts located thereon, which mortgage shall include an assignment of
leases and rents;
(c) A Security Agreement executed by Borrower granting a security
interest in the Collateral Note;
(d) A Security Agreement and Financing Statements by Borrower granting
a first lien and security interest in all furniture, equipment, inventory,
fixtures, accounts, documents and general intangibles, including without
limitation, franchise agreements, operating agreements, contract rights,
licenses, permits and parish and city ordinances and approvals relating to or
usable in connection with the use, occupancy, operation, ownership or
maintenance of the Xxxxxx Shipyard;
ORANGE SHIPYARD
(e) A deed of trust by Orange mortgaging the Orange Shipyard and all
improvements and component parts located thereon, which deed of trust shall
include an assignment of leases and rents; and
(f) A Security Agreement and Financing Statements by Orange granting a
first lien and security interest in all furniture, equipment, inventory,
fixtures, accounts, documents and general intangibles, including without
limitation, franchise agreements, operating agreements, contract rights,
licenses, permits and parish and city ordinances and approvals relating to or
usable in connection with the use, occupancy, operation, ownership or
maintenance of the Orange Shipyard.
SECTION 3.02. GUARANTY. The Continuing Guaranty of J. Xxxxxx Xxxxxx
shall be released if the after the date of the Loan, the ratio of Borrower's
total Debt to Tangible Net Worth reduces to 2.5 or less as shown by the annual
audited financial records of Borrower and as reasonably determined by Lender.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement, the Borrower
represents and warrants to Lender as follows:
SECTION 4.01. CORPORATE EXISTENCE. (a) Borrower is a validly
organized corporation duly existing and in good standing under the laws of the
State of Louisiana and is duly qualified as a foreign corporation in all
jurisdictions wherein the property owned or the business transacted by it make
such qualifications necessary. Orange is a validly organized corporation duly
existing and in good standing under the laws of
10
the State of Texas and is duly qualified as a foreign corporation in all
jurisdictions wherein the property owned or the business transacted by it make
such qualifications necessary.
(b) Borrower has never done business under any name other than the
name of the Borrower set forth above. Borrower's tax identification number is
00-0000000 and its principal place of business is 0000 Xxxxx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxxxx 00000.
(c) Orange has never done business under any name other than the
name of the Orange set forth above and as Xxxxx Industries, Inc. Orange's tax
identification number is 00-0000000 and its principal place of business is 000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
SECTION 4.02. CORPORATE POWER AND AUTHORIZATION. The making and
performance by the Borrower of this Agreement, the borrowing by the Borrower and
the issuance of the Note and Collateral Documents by it hereunder, have been
duly authorized by all necessary corporate action and will not (i) violate any
provision of law or of the articles of incorporation or by-laws of the Borrower,
or (ii) result in a breach of, or constitute a default under, any agreement,
indenture or other instrument to which the Borrower is a party or by which it is
bound, the result of which would be to have material and adverse effect on the
business or property of the Borrower. The making and performance by Orange of
this Agreement, the issuance of the Continuing Guaranty and the Collateral
Documents by it hereunder have been duly authorized by all necessary corporate
action and will not (i) violate any provision of law or of the articles of
incorporation or by-laws of Orange, or (ii) result in a breach of, or constitute
a default under, any agreement, indenture or other instrument to which Orange is
a party or by which it is bound, the result of which would be to have material
and adverse effect on the business or property of Orange.
SECTION 4.03. NO CONSENT. No consent or approval of any governmental
agency or authority is required in connection with the execution, delivery and
performance by Borrower or Orange of this Agreement, the Note, the Collateral
Documents and all other documents required hereunder.
SECTION 4.04. ENFORCEABLE OBLIGATIONS. This Agreement, the
Collateral Documents and the Note to which the Borrower and/or Orange, as
applicable is a party, when duly executed and delivered for value will be legal,
valid and binding obligations of the Borrower and/or Orange, as applicable,
enforceable against the Borrower and/or Orange, as applicable in accordance with
their respective terms.
SECTION 4.05. NO MATERIAL LIABILITIES OR LITIGATION. Except for
liabilities incurred in the normal course of business, the Borrower does not
have any material (individually or in the aggregate) liabilities, direct or
contingent. In addition, there are no pending or threatened actions or
proceedings before any court or administrative agency which may materially and
adversely affect the Borrower's business, operations, assets conditions or
property, financial or otherwise.
SECTION 4.06. FINANCIAL CONDITION. The financial statements of
Borrower as heretofore furnished to Lender have been prepared in accordance with
the generally accepted accounting principles applied on a consistent basis and
fairly present the financial condition of Borrower as of those dates. To the
best of Borrower's knowledge and belief, Borrower does not have any contingent
obligation or liability for taxes not disclosed by or reserved against in said
financial statements, and there have been no material adverse changes in the
financial condition of Borrower from that set forth in said financial
statements. The financial statements of each Guarantor as heretofore furnished
to Lender fairly present the financial condition of such Guarantor as of the
date hereof. To the best of Guarantors' knowledge and belief, no Guarantor has
11
contingent obligation or liability for taxes not disclosed by or reserved
against in said financial statements, and there have been no material adverse
changes in the financial condition of such Guarantor from that set forth in said
financial statements. Since the close of the period covered by the latest
financial statement delivered to Lender with respect to the Borrower and
Guarantors, there has been no material adverse change in the assets, liabilities
or financial condition of the Borrower or any Guarantor. No event has occurred
(including, without limitation, any litigation or administrative proceedings)
and no condition exists or, to the knowledge of Borrower or any Guarantor, is
threatened, which (i) might render Borrower or any Guarantor unable to perform
its obligations under this Agreement, the Note or the Collateral Documents, or
(ii) would constitute a Default hereunder, or (iii) might adversely affect the
financial condition of the Borrower or any Guarantor or the validity or priority
of the lien of the Collateral Documents. All parties acknowledge that Lender is
relying upon said financial statements in entering into this Agreement and the
Loan.
SECTION 4.07. LIABILITIES AND LITIGATION. There is no litigation,
legal or administrative proceeding, investigation or other action of any nature
pending or, to the knowledge of Borrower and/or Guarantors, threatened against
or affecting Borrower or Guarantors which involves the possibility of any
judgment or liability not fully covered by insurance, and which may materially
and adversely affect the business or assets of the Borrower or Guarantors or
their respective ability to carry on business as now conducted.
SECTION 4.08. TAXES AND GOVERNMENTAL CHARGES. The Borrower and
Orange have filed all tax returns and reports required to be filed by all
applicable jurisdictions and have paid all taxes, assessments, fees and other
governmental charges levied upon it or upon any property owned by them or upon
their income, which are due and payable, including interest and penalties, or
has provided adequate reserves for the payment thereof.
SECTION 4.09. TITLE TO PROPERTY. Borrower and Orange, as applicable,
have good, valid and merchantable title to the Property, free of all Liens
except (i) those created by the Collateral Documents, or (ii) those disclosed to
Lender in writing prior to date hereof, including those reflected on the title
commitment covering portions of the Property. Furthermore, neither Borrower nor
Orange has heretofore conveyed or agreed to convey or encumber any Collateral in
any way, except in favor of the Lender or as disclosed to Lender in writing
prior to date hereof.
SECTION 4.10. DEFAULT. Neither Borrower nor any Guarantor is in
default (in any respect which materially and adversely affects its business,
property, operations or condition, financial or otherwise) under any indenture,
mortgage, deed of trust, agreement or other instrument to which Borrower and/or
any Guarantor is a party or by which either is bound or subject to any charter
or other corporate restriction which materially and adversely affects its
business, properties or assets, operation or condition, whether financial or
otherwise, except as disclosed to the Lender in writing. No Default hereunder
has occurred and is continuing.
SECTION 4.11. NO CONSENT. The Borrower's and Orange's execution,
delivery and performance of this Agreement, the Note and the Collateral
Documents, as applicable, do not require the consent or approval of any other
Person, including without limitation any regulatory authority or governmental
body of the United States or any state thereof or any political subdivision of
the United States or any state thereof.
SECTION 4.12. COMPLIANCE WITH THE LAW. The Borrower and/or Orange
(i) is not in violation of any law, judgment, decree, order, ordinance or
governmental rule or regulation to which the Borrower or any of its property are
subject; and (ii) has not failed to obtain any license, permit, franchise or
other governmental
12
authorization necessary to the ownership of any of its property or the conduct
of its business; in each case, which violation or failure could reasonably be
anticipated to materially and adversely affect the business, prospects, profits,
property or condition (financial or otherwise) of the Borrower.
SECTION 4.13. OTHER INFORMATION. All information, reports, papers
and data given to Lender by the Borrower and each Guarantor pursuant to this
Agreement and in connection with the Borrower's application for the Loan are
accurate and correct in all material respects. All financial projections given
to Lender were prepared in good faith based on facts and circumstances existing
at the time of preparation and were believed by the Borrower to be accurate in
all material respects. No information, exhibit or report furnished by the
Borrower to Lender in connection with the negotiation of this Agreement contains
any material misstatement of fact or fails to state a material fact or any fact
necessary to make the statement contained therein not materially misleading.
SECTION 4.14. ENVIRONMENTAL MATTERS. (a) To the best of the
Borrower's knowledge, all operating facilities and property owned, leased, used,
or operated by the Borrower and/or Orange have been, and will continue to be,
owned, leased, used, or operated by the Borrower and/or Orange in substantial
compliance with applicable environmental laws, regulations, and guidelines.
There has been no claim, complaint, or notice received by the Borrower with
respect to a violation of environmental laws which remains unsettled or
unresolved as of the date hereof, including but not limited to, any unsettled or
unresolved liabilities relating to, arising out of or resulting from (i) any
emission, discharge or release of any pollutant, contaminant, Hazardous
Material, toxic material or other similar waste or (ii) any processing,
distribution, use, treatment, transport, removal, storage and/or disposal of
materials or wastes into or upon the ambient air, surface water, ground water or
land owned by the Borrower or any alleged violation of any federal, state, or
local statute, regulation, or ordinance relating to the environment. There has
been no complaint or notice received by the Borrower or Orange regarding
potential liability under the Comprehensive Environmental Response Compensation
and Liability Act, as amended, the Resource Conservation and Recovery Act, as
amended, or any comparable state or local law which is unsettled or remains
unresolved as of the date hereof. To the Borrower's knowledge, there has been no
release of a Hazardous Material at any facility or property owned, leased, used,
or operated by the Borrower or Orange which caused or could have cause a
material adverse change in the Borrower's financial condition, business or
ability to pay or perform its Obligations. For purposes of the last sentence of
this Section III (k), "release" shall have the meaning assigned to it under the
Comprehensive Environmental Response Compensation and Liability Act.
(b) Borrower has obtained all permits, licenses or similar
authorizations to construct, occupy, operate or use any buildings, improvements,
fixtures and equipment forming a part of the Property by reason of any Hazardous
Materials. The use which the Borrower makes and intends to make of the Property
will not result in any Hazardous Materials Contamination.
SECTION 4.15. GOVERNMENTAL REQUIREMENTS. The Property is in
compliance with all current Governmental Requirements affecting the Property,
including, without limitation, all current zoning and land use regulations,
building codes and all restrictions and requirements imposed by applicable
governmental authorities with respect to the construction of any improvements on
the Property and the contemplated use of the Property.
SECTION 4.16. CONTINUING ACCURACY. All of the representations and
warranties contained in this article or elsewhere in this Agreement shall be
true through and until the Obligations are fully satisfied, and
13
Borrower shall promptly notify Lender of any event which would render any of
said representations and warranties untrue or misleading.
SECTION 4.17. AMERICANS WITH DISABILITIES ACT. The Property shall be
readily accessible to individuals with disabilities, and complies with all
terms and conditions of the Americans With Disabilities Act, 42 U.S.C. (S)1210,
et seq. and all regulations and orders promulgated thereunder.
SECTION 4.18. CLEAN AIR ACT. The Property now complies with and upon
completion of the Improvements shall continue to comply with all terms and
conditions of 42 U.S.C. (S) 7401, et seq. and all regulations and orders
promulgated thereunder.
SECTION 4.19. LICENSES, PERMITS. The Borrower and Orange have all
permits, certificates, licenses (including patent and copyright licenses)
approvals and other authorizations required in connection with the operation of
their business.
SECTION 4.20. GOVERNMENT CONTRACTS. Neither Borrower nor Orange has
ever been debarred or suspended from contracting (as a first tier or any other
level of subcontractor) for or bidding on any Governmental Contract (as such
term is defined below). Neither Borrower nor Orange is currently debarred or
suspended from (or has received notice that it is under investigation with
respect to a possible debarment or suspension from) bidding on or entering into
any contract with or for any Governmental Authority ( a "Government Contract").
Neither Borrower nor Orange has been given notice (i) that any Government
Contract may be or will be terminated for the convenience of a Governmental
Authority or a default by Borrower or Orange, as the case may be, (ii) that a
major program or contract of Borrower or Orange will be eliminated or
substantially reduced or suspended, (iii) requiring or resulting in, loss of use
or substantial impairment or interference of use by Borrower or Orange, as the
case may be, of any facilities owned by a Governmental Authority, or (iv) that
any relevant budget authority or contract authority has been exceeded with
respect to any material Government Contract. Neither the Borrower or Orange
anticipates incurring cost overruns on any Government Contracts which would have
a material adverse effect on the financial condition of Borrower or Orange.
SECTION 4.21. FEDERAL REGULATIONS. No part of the proceeds of the
Loan will be used as "purpose credit" within the meaning of such term under
Regulations U or G of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect, if such use would violate the
provisions of Regulations U or G.
SECTION 4.22. SUBSIDIARIES. At the Effective Date, the Borrower has
no Subsidiaries except Orange, and the Borrower owns all of the capital stock of
Orange.
SECTION 4.23. GOVERNMENT CONTRACTS. Borrower and Orange have the
right under their Government Contracts to grant a security interest to the
proceeds therefrom under the Collateral Documents and the Collateral Documents
create a non-perfected security interest in the Government Contracts. To the
best of Borrower's and Orange's respective knowledge, there are no offsets, and
there are not currently threatened or pending any claims or offsets against
Borrower or Orange by any Governmental Authority.
SECTION 4.24. ASSETS MORTGAGED TO LENDER. All drydocks, barges and
other vessels and equipment of Borrower and Orange are not documented vessels
with the United States Coast Guard and are free and clear of any Liens, except
the Collateral Documents or Permitted Liens. In the event any asset of Borrower
14
or Orange becomes a documented vessel with the United States Coast Guard,
Borrower agrees to notify Lender and to execute a preferred maritime ship
mortgage encumbering such asset in favor of Lender upon terms and conditions
reasonably acceptable to Lender. All immovable and real property of Borrower and
Orange are mortgaged to Lender under the Collateral Documents, except the
shipyard owned by Borrower in Amelia, Louisiana. All equipment of Borrower and
Orange are subject to a perfected security interest in favor of Lender in
accordance with the terms of the Collateral Documents.
SECTION V
AFFIRMATIVE COVENANTS
The Borrower agrees that, so long the Loan remains unpaid, or any
other amount or any Obligations are owing to Lender hereunder, the Borrower
shall comply with the covenants in this Section.
SECTION 5.01. FINANCIAL COVENANTS.
(a) DEBT TO TANGIBLE NET WORTH. The Borrower on a consolidated basis
with all of its Subsidiaries when combined with each Subsidiary shall maintain a
Debt to Net Worth Ratio of no greater than 6.5 until December 30, 1998.
Thereafter the Borrower when combined with each Subsidiary shall maintain a Debt
to Net Worth ratio of no greater than the following ratios at the end of the
referenced fiscal year:
Date Debt to Net Worth Ratio
---- -----------------------
December 31, 1998 3.5
December 31, 1999 2.5
December 31, 2000, until 1.5
the Loan is paid in full.
(b) CONSOLIDATED FUNDED DEBT TO EBITDA RATIO. Borrower on a
consolidated basis with all of its Subsidiaries shall maintain at all times
during the existence of the Loan a maximum ratio of Consolidated Funded Debt to
EBITDA (on a rolling four quarter basis) that shall not exceed 3.0 during the
fiscal year ending December 31, 1998 and 2.5 during each fiscal year thereafter.
(c) FIXED CHARGE COVERAGE RATIO. Borrower on a consolidated basis
with all of its Subsidiaries shall maintain at all times during the existence of
the Loan a Fixed Charge Coverage Ratio of at least 1.5.
(d) CURRENT RATIO. Borrower on a consolidated basis with all of its
Subsidiaries shall maintain at all times during the existence of the Loan a
ratio of Current Assets (minus any Prepayments) to Current Liabilities of 1.5 to
1.0 or greater.
SECTION 5.02. FINANCIAL STATEMENTS. (a) Borrower shall, from time
to time, promptly furnish to Lender as soon as available, but in any event
within ninety (90) days after the close of Borrower's fiscal year a copy of the
audited financial statements of Borrower and all of its Subsidiaries of a
consolidated basis, as of the close of such fiscal year prepared in reasonable
detail and in accordance with generally accepted accounting principles in the
United States in effect from time to time and applied consistently throughout
the period reflected therein, with such financial statements to include a
balance sheet of the Borrower and Orange as of the end of such year and the
related statement of operations, of stockholder's equity and of cash flow
prepared in reasonable detail and in conformity with generally accepted
accounting principles in the
15
United States in effect from time to time and applied on a basis consistent with
that of the preceding fiscal year, and prepared by independent certified public
accountants selected by Borrower and satisfactory to Lender.
(b) Borrower shall, from time to time, promptly furnish Lender as soon
as available, but in any event within forty-five (45) days after the end of each
quarter of each fiscal year of Borrower, the unaudited balance sheet of Borrower
and all of its Subsidiaries as of the end of each such quarter and the related
unaudited statements of operations, of shareholder's equity and of cash flow for
such quarter and the portion of the fiscal year throughout such date, all
prepared in reasonable detail and in conformity with good accounting practices
in the United States in effect from time to time and applied consistently
throughout the period reflected therein and certified by the chief financial
officer of Borrower.
(c) Immediately upon becoming aware of the occurrence of any event
which constitutes a Default or which could constitute a Default with the passage
of time or the giving of notice, or both, Borrower shall give written notice to
Lender describing such occurrence together with a detailed statement by the
Company Agent of the steps being taken by Borrower to cure the effect of such
event.
(d) Borrower shall furnish to Lender concurrently with the delivery of
the financial statements referred to in subsections (a) and (b) above, a
certificate of the chief financial officer of Borrower (i) stating that such
officer has no knowledge of any Default, or any other event with which the
passage of time would become a Default under this Agreement or the Collateral
Documents, except as specified in such certificate and (ii) showing in detail
the calculations supporting such statements in respect to Section 5.01. The
Borrower shall furnish to Lender with reasonable promptness, such additional
financial and other information as Lender may from time to time reasonably
request.
SECTION 5.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. The
Borrower and Orange shall continue to engage principally in the business of the
same general type now conducted by it and preserve, renew and keep in full force
and effect its corporate existence and take all reasonable action to maintain
all rights, privileges and franchises necessary in the normal conduct of its
business and comply with all laws.
SECTION 5.04. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
The Borrower and its Subsidiaries shall keep proper books and records in
conformity in all material respects of GAAP and permit representatives of Lender
to visit and inspect any of its properties and examine the books and records of
the Borrower at any reasonable time during normal business hours and as often as
may reasonably be necessary, and to discuss the business, operations, properties
and financial and other condition of the Borrower and its Subsidiaries with
officers of the Borrower and its Subsidiaries and with its independent certified
public accountants.
SECTION 5.05. NOTICE OF CERTAIN EVENTS. (a) The Borrower shall
promptly notify Lender if the Borrower learns of the occurrence of any event
which constitutes a Default, together with a detailed statement by the Company
Agent of the steps being taken to cure the effect of such Default.
(b) The Borrower shall promptly notify Lender of any change in
location of the Borrower's and/or Orange' principal places of business or the
office where Borrower and/or Orange keeps its records concerning accounts and
contract rights.
16
(c) The Borrower shall promptly notify Lender of the arising of any
litigation or dispute threatened against or affecting the Borrower and/or any of
its Subsidiaries or the Property which, if adversely determined, would have a
material adverse effect upon the financial condition or business of the Borrower
and/or Orange. In the event of such litigation, the Borrower will cause such
proceedings to be vigorously contested in good faith and, in the event of any
adverse ruling or decision, the Borrower shall prosecute all allowable appeals.
Lender may (but shall not be obligated to), without prior notice to Borrower,
commence, appear in or defend any action or proceeding purporting to affect the
Loan, or the respective rights and obligations of Lender or Borrower pursuant to
this Agreement. Lender may (but shall not be obligated to) pay all necessary
expenses, including reasonable attorneys' fees and expenses incurred in
connection with such proceedings or actions, which Borrower agrees to repay to
Lender upon demand.
SECTION 5.06. ENVIRONMENTAL INDEMNITY. (a) Borrower and Orange
agree to (i) give notice to Lender immediately upon its acquiring knowledge of
the violation of any Governmental Requirement regarding the presence of any
Hazardous Materials on the Property and/or of any Hazardous Materials
Contamination with a full description thereof; and (ii) promptly comply with any
Governmental Requirement requiring removal, treatment or disposal of such
Hazardous Materials or Hazardous Materials Contamination and provide Lender with
satisfactory evidence of such compliance. Upon the discovery of any Hazardous
Materials Contamination, or upon the occurrence of a Default and the expiration
of the cure period provided in Section 7.02, Lender shall have the right to
cause an environmental audit or review of the Property to be performed by a firm
acceptable to Lender at the sole cost and expense of Borrower.
(b) Borrower and Orange shall solidarily defend, indemnify and hold
Lender, its directors, officers, agents and employees harmless from any and all
liabilities (including strict liability), actions, demands, penalties, losses,
costs or expenses (including, without limitation, reasonable attorneys' fees and
remedial costs), suits, costs of any settlement or judgment and claims of any
and every kind whatsoever which may now or in the future be paid, incurred, or
suffered by, or asserted against Lender by any person or entity or governmental
agency for, with respect to, or as a direct or indirect result of, the presence
on or under, or the escape, seepage, leakage, spillage, discharge, emission,
discharging or release from or onto the Property of any Hazardous Materials or
any Hazardous Materials Contamination, or arise out of, or result from, the
environmental condition of the Property or the applicability of any Governmental
Requirement relating to Hazardous Materials (including, without limitation,
CERCLA or any so called federal, state or local "super fund" or "super lien"
laws, statute, ordinance, code, rule, regulation, order or decree) regardless of
whether or not caused by or within the control of Borrower and/or Orange. These
representations, covenants and warranties contained in this Section 5.07 shall
survive the termination of this Agreement.
SECTION 5.07. INDEMNIFICATION. (a) Borrower and Orange shall
solidarily defend, indemnify Lender and hold Lender harmless from claims of
brokers with whom the Borrower and/or Orange has dealt in the execution hereof
or the consummation of the transactions contemplated hereby.
(b) The Borrower and Orange shall solidarily defend, indemnify Lender
and hold Lender harmless from any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs and expenses of whatever kind
or nature which may be imposed on, incurred by or asserted at any time against
Lender in any way relating to, or arising in connection with, the use or
occupancy of any of the Property.
(c) Borrower and Orange solidarily agree to defend, indemnify, hold
harmless and fully protect Lender from any allegation or charge whatsoever of
negligence, misfeasance or nonfeasance of
17
Lender in whole or in part, pertaining to any defect in the Property, and
particularly, any failure of Lender or any agent, officer, employee or
representative of Lender, to note any defect in materials or workmanship or of
physical conditions or failure to comply with any ordinances, statutes or other
governmental requirements, or to call to the attention of any person whatsoever,
or take any action, or to demand that any action be taken, with regard to any
such defect or failure or lack of compliance.
SECTION 5.08. MAINTENANCE OF THE PROPERTY. The Borrower shall cause
the Property to be maintained in good condition and repair and will not commit
or suffer to be committed any waste of the Property. The Property shall not be
removed, demolished or materially altered (except for normal replacement),
without the prior written consent of Lender. The Borrower shall promptly comply
with all laws, orders, and ordinances affecting the Property or the use thereof,
and shall promptly repair, replace or rebuild any part of the Property which may
be damaged or destroyed by any casualty (including any casualty for which
insurance was not obtained or obtainable) and shall complete and pay for, within
a reasonable time, any structure at any time in the process of construction or
repair on the Property. Except with regard to normal and customary utility
servitudes, the Borrower will not, without obtaining the prior written consent
of Lender, initiate, join in, or consent to any private restrictive covenant,
zoning ordinance, or other public or private restrictions, limiting or defining
the uses which may be made of the Property or any part thereof.
SECTION 5.09. AMERICANS WITH DISABILITIES ACT. (a) Borrower and
Orange shall (i) maintain the Property to be readily accessible to individuals
with disabilities, (ii) provide goods, services, accommodations, access and
facilities without discrimination on the basis of disability, and (iii) comply
with all terms and conditions of the Americans With Disabilities Act, 42 U.S.C.
(S)1210, et seq. and all regulations and orders promulgated thereunder.
(b) Borrower and Orange shall defend, indemnify and hold Lender
harmless from any and all liabilities (including strict liability), actions,
demands, penalties, losses, costs or expenses (including, without limitation,
reasonable attorneys' fees and remedial costs), suits, costs of any settlement
or judgment and claims of any and every kind whatsoever which may now or in the
future be paid, incurred, or suffered by, or asserted against Lender by any
person or entity or governmental agency for, with respect to, or as a direct or
indirect result of, any violations of the Americans With Disabilities Act or any
regulations or orders promulgated thereunder resulting from the operation,
maintenance or renovation of the Property.
SECTION 5.10. CLEAN AIR ACT. (a) Borrower and Orange shall maintain
the Property in full compliance with all terms and conditions of the Clean Air
Act 42 U.S.C. (S)7401, et seq. and all regulations and orders promulgated
thereunder.
(b) Borrower and Orange shall defend, indemnify and hold Lender
harmless from any and all liabilities (including strict liability), actions,
demands, penalties, losses, costs or expenses (including, without limitation,
reasonable attorneys' fees and remedial costs), suits, costs of any settlement
or judgment and claims of any and every kind whatsoever which may now or in the
future be paid, incurred, or suffered by, or asserted against Lender by any
person or entity or governmental agency for, with respect to, or as a direct or
indirect result of, any violations of the Clean Air Act or any regulations or
orders promulgated thereunder resulting from the operation, maintenance or
renovation of the Property.
SECTION 5.11. ERISA. The Borrower shall fulfill its obligations
under the minimum funding standards of ERISA and the Internal Revenue Code of
1986, as amended, with respect to each Plan, and
18
neither the Borrower nor any Affiliate or Subsidiary shall take any action that
would result in the termination of a Plan by the Pension Benefit Guaranty
Corporation.
SECTION 5.12. TAXES AND OTHER LIENS. The Borrower and Orange will
pay and discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or upon the Property as
well as all claims of any kind (including claims for labor, materials, supplies
and rent) which, if unpaid, might become a Lien upon any or all of the Property;
provided, however, the Borrower and/or Orange shall not be required to pay any
such tax, assessment, charge, levy or claim if the amount, applicability or
validity thereof shall currently be contested in good faith by appropriate
proceedings diligently conducted and if Borrower and/or Orange have set up
reserves therefor adequate under generally accepted accounting principles or if
the claim is covered by insurance or the payment or performance bonds. The
Borrower shall furnish Lender with proof of payment of all taxes, assessments,
charges, levies or claims not later than the date on which penalties might
attach thereto, or in the event that the Borrower and/or Orange contests any
such taxes, assessments, charges, levies or claims in accordance with this
section, Borrower and/or Orange shall furnish Lender with a description of the
contested matter and all actions taken by Borrower and/or Orange in connection
with such contest.
SECTION 5.13. MAINTENANCE OF BORROWER'S AND ITS SUBSIDIARIES'
EXISTENCE. The Borrower and its Subsidiaries will (i) maintain their respective
corporate existence and rights; (ii) observe and comply (to the extent necessary
so that any failure will not materially and adversely affect the business of the
Borrower and/or its Subsidiaries) with all applicable Governmental Requirements
applicable to Borrower and/or its Subsidiaries or the Property (including
without limitation applicable statutes, regulations, orders and restrictions
relating to environmental standards or controls or to energy regulations); and
(iii) maintain the Property in generally good and workable condition at all
times and make all repairs, replacements, additions, betterments and
improvements to the Property to the extent necessary so that any failure will
not materially and adversely affect the business of the Borrower and/or its
Subsidiaries.
SECTION 5.14. FURTHER ASSURANCES. The Borrower will promptly (and in
no event later than 30 days after written notice from Lender is received) cure
any defects in the creation, execution and delivery of this Agreement, the Note
or the Collateral Documents. The Borrower and/or Orange at Borrower's expense
will promptly execute and deliver to Lender upon request all such other and
further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of the Borrower and/or Orange in
this Agreement, the Note or in the Collateral Documents or to further evidence
and more fully describe the Collateral, or to correct any omissions in the
Collateral Documents, or more fully state the security obligations set out
herein or in any of the Collateral Documents, or to perfect, protect or preserve
any Liens created pursuant to any of the Collateral Documents, or to make any
recordings, to file any notices, or obtain any consents as may be necessary or
appropriate in connection with the transactions contemplated by this Agreement.
SECTION 5.15. REIMBURSEMENT OF EXPENSES. The Borrower will pay all
reasonable legal fees incurred by Lender in connection with the preparation of
this Agreement, the Note and the Collateral Documents. The Borrower will, upon
request, promptly reimburse Lender for all amounts expended, advanced or
incurred by Lender to satisfy any obligation of the Borrower under this
Agreement, or to protect the Property or business of the Borrower or to collect
the Obligations, or to enforce the rights of Lender under this Agreement, which
amounts will include all court costs, attorneys fees, fees of auditors and
accountants and investigation expenses reasonably incurred by Lender in
connection with any such matters,
19
together with interest at the interest rate set forth in the Note on each such
amount from the date that the same is expended, advanced or incurred by Lender
until the date of reimbursement to Lender.
SECTION 5.16. INSURANCE. (a) The Borrower shall procure and
maintain for the benefit of Lender original paid-up insurance policies from
companies satisfactory to Lender, in amounts, in form and substance, and with
expiration dates acceptable to Lender and containing a noncontributory standard
mortgagee clause or its equivalent in a form satisfactory to Lender, or the
statutory mortgagee clause, if any, required in the state where the Property is
located, or a mortgagee's loss payable endorsement, in favor of Lender,
providing the following types of insurance on the Property:
(i) Multi-Peril Hazard Insurance. For the Property, multi-peril
hazard insurance. In each case, the policies will afford insurance against loss
or damage by fire, lightning, explosion, earthquake, collapse, theft, sprinkler
leakage, vandalism and malicious mischief and such other perils as are included
in so-called "all-risks" or "extended coverage" and against such other insurable
perils as, under good insurance practices, from time to time are insured against
for properties of similar character and location; such insurance to be not less
than 100% of the full replacement cost of the improvements located on the
Property, without deduction for depreciation; said policies to contain
replacement costs and stipulated value endorsements.
(ii) Comprehensive General Liability Insurance. Comprehensive public
liability insurance with respect to the Property and the operations related
thereto, whether conducted on or off the Property, against liability for
personal injury (including bodily injury and death) and property damage, of not
less than a total of $5,000,000.00 combined single limit bodily injury and
property damage; such comprehensive public liability insurance to be on a per
occurrence basis and to specifically include but not limited to water damage
liability, products liability, motor vehicle liability for all owned and
nonowned vehicles, including rented and leased vehicles, and contractual
indemnification.
(iii) Workers' Compensation and General Liability. Workers'
compensation and general liability insurance against loss, damage or injury to
employees, agents or representatives of the Borrower and/or its Subsidiaries or
of any contractor and subcontractor, or insurance against loss, damage or injury
caused by any employees, agents or representatives of the Borrower and/or its
Subsidiaries or of any contractor or subcontractor.
(iv) Flood Insurance. Flood Insurance Policy in the amount of the
Loan or the maximum amount obtainable, whichever is less, if the property is
located in a Flood Hazard Area as defined by the Federal Emergency Management
Agency.
(v) Other Insurance. Such other insurance on the Property or any
replacements or substitutions therefor and in such amounts as may from time to
time be reasonably required by Lender against other insurable casualties which
at the time are commonly insured against in the case of premises similarly
situated, due regard being given to the height and type of the improvements on
the Property, its construction, location, use and occupancy, or any replacements
or substitutions therefor.
(b) All of the foregoing policies shall contain an agreement by the
insurer not to cancel or amend the policies without giving Lender at least
thirty (30) days' prior written notice of its intention to do so and shall
provide that the policies shall be payable not withstanding the acts of Borrower
or its Subsidiaries, as applicable.
20
(c) At Closing, Borrower shall deliver original binders evidencing the
insurance and within 15 days of closing the original or certified policies to
Lender, and Borrower shall deliver original or certified renewal policies with
satisfactory evidence of payment not less than fifteen (15) days in advance of
the expiration date of the existing policy or policies. In the event Borrower
and/or its Subsidiaries should, for any reason whatsoever, fail to keep the
Property or any part thereof so insured, or to keep said policies so payable, or
fail to deliver to Lender the original or certified policies of insurance and
the renewals thereof upon demand, then Lender after giving written notice to
Borrower of that deficiency and if after 15 days after delivery of such notice,
there is still no insurance coverage, then Lender, if it so elects, may itself
have such insurance effected in such amounts and in such companies as it may
deem proper and may pay the premiums therefor. The Borrower shall reimburse
Lender upon demand for the amount of premium paid, together with interest
thereon at 15% percent per annum from date until paid.
(d) Borrower and Orange agree to notify Lender immediately in writing
of any material fire or other casualty to or accident involving any of the
Property, whether or not such fire, casualty or accident is covered by
insurance. Borrower and Orange further agree to notify promptly Borrower's
and/or Orange insurance company and to submit an appropriate claim and proof of
claim to the respective insurance company if any of the Property is damaged or
destroyed by fire or other casualty.
(e) Lender is hereby authorized and empowered, at its option, to
collect and receive the proceeds from any policy or policies of insurance, and
each insurance company is hereby authorized and directed to make payment of all
such losses directly to Lender instead of to the Borrower and/or Orange and
Lender jointly. Lender shall apply the net proceeds thereof, in accordance with
Subsections (f), (g) and/or (h) hereof.
(f) If there is a fire or casualty loss which damages a portion (but
not all) of the improvements on any of the Property and as long as no Default
has occurred and is continuing, then the Proceeds of the insurance shall be
deposited into a cash collateral account and such proceeds will be applied to
the payment of the cost of restoration of the improvements upon such terms and
conditions as Lender may deem necessary or appropriate in its reasonable
discretion; provided, however, that (i) such insurance proceeds must be adequate
to cover the cost of restoration of the improvements, or if the proceeds are
insufficient, then the Borrower shall give Lender such adequate protection and
assurance as Lender may, in its reasonable discretion require, that additional
funds will be provided by the Borrower in order to complete the restoration of
the Improvements (ii) the Borrower shall have provided Lender with such adequate
protection and assurance as Lender may, in its reasonable discretion require,
that the Borrower has sufficient funds on hand to pay interest and principal on
the Loan during the restoration period, and (iii) the first priority of the
Collateral Documents in the Property is not impaired. In connection with any
restoration of any of the improvements, the Borrower and/or Orange shall provide
Lender with a detailed cost breakdown showing by line item all costs projected
for such restoration and a revised and updated cost breakdown shall be furnished
by the Borrower and/or Orange to Lender on a monthly basis.
(g) If there is a fire or casualty loss which constitutes a total
loss or a constructive total loss of any of the Property, or if not all of the
conditions set forth in subclause (i) through (iv) of Subsection (f) above are
satisfied, then the insurance proceeds shall be applied to the payment of the
Obligations. If such insurance proceeds are not sufficient to pay the
Obligations in full, Lender shall have a right to accelerate the maturity of the
Obligations and proceed against the Borrower or the remainder of the Property;
and if the proceeds exceed the amount necessary to pay the Obligations in full,
then such excess shall be paid to Borrower.
21
(h) Upon demand of Lender and after the occurrence of a Default, the
Borrower shall pay to Lender, together with, at the same time as and in addition
to the payments of principal and/or interest due on the Note, a pro rata portion
of the property taxes, assessments, governmental charges, levies and insurance
premiums relating to the Property next to become due, as estimated by Lender, so
that Lender will have sufficient funds on hand to pay such taxes, assessments,
governmental charges, levies and premiums not less than thirty (30) days prior
to the due date thereof. All such amounts shall be held by Lender (not in
trust) without interest as further security for the Obligations. Lender may
apply all or a portion of the amounts so paid at such time and in such order as
Lender, in its uncontrolled discretion shall determine, to the payment of the
taxes, assessments, governmental charges, levies and insurance premiums, as the
case may be.
SECTION 5.17. INITIAL PUBLIC OFFERING. In the event Borrower offers
its stock to be sold in a public offering within the meaning of the Securities
Act of 1933, the net proceeds from such sale shall be used to prepay in whole or
part the principal balance then owed on the Loan, unless otherwise agreed to in
writing by the Lender.
SECTION 5.18. SURVEY AND POST CLOSING ITEMS. Borrower agrees to
furnish a perimeter survey of the Xxxxxx Shipyard, showing any encroachments and
access to the property and to cure all title defects of the Property, as shown
on Lender's title commitments covering the Property, to the satisfaction of
Lender's counsel on or prior to April 19, 1998. Borrower agrees that all
mortgages and deeds of trust on the Property, other than the Collateral
Documents, will be canceled on or before March 25, 1998.
SECTION VI
NEGATIVE COVENANTS
The Borrower agrees that, so long as the Loan remain unpaid, or any
other amount or any Obligations are owing to Lender hereunder, the Borrower
shall comply with the applicable covenants contained in this Section.
SECTION 6.01. LIMITATIONS ON LIENS. The Borrower and/or Orange shall
not create, encumber or suffer any Lien, other than the Collateral Documents and
Permitted Liens, to exist on the Property or any other Collateral without the
prior written consent of Lender.
SECTION 6.02. ENVIRONMENTAL LIABILITIES. Borrower and/or Orange
shall not violate any Governmental Requirement regarding Hazardous Materials and
shall not create or allow any Hazardous Materials Contamination; and, without
limiting the foregoing, or otherwise dispose of (or permit any Person to dispose
of) any Hazardous Material (except in accordance with applicable law) into or
onto or from, the Property, nor allow any Lien imposed pursuant to any
Governmental Requirement relating to Hazardous Materials or the disposal thereof
to be imposed or to remain on the Property.
SECTION 6.03. ERISA COMPLIANCE. The Borrower and/or any of its
Subsidiaries will not at any time permit any Plan maintained by it to engage in
any "prohibited transaction" as such term is defined in Section 4975 of the
Code; incur any "accumulated funding deficiency" as such term is defined in
Section 302 of ERISA; or terminate any such Plan in a manner which could result
in the imposition of a Lien on the property of the Borrower and/or Orange
pursuant to Section 4068 of ERISA.
22
SECTION 6.04. CONSOLIDATION/MERGER. Neither the Borrower nor a
Subsidiary shall merge or consolidate with any other Person without the written
consent of Lender, except that the Borrower or a Subsidiary may merge or
consolidate with another corporation, provided that:
(a) the "surviving corporation" is organized under the laws of the
United States or a jurisdiction thereof, and
(b) the "surviving corporation" shall be engaged in substantially the
same line of business conducted by the Borrower or the Subsidiary on the
Closing Date, and
(c) the "surviving corporation" expressly assumes the Obligations and
executes such collateral documents and other agreements all upon terms and
conditions as reasonably requested by Lender.
SECTION 6.05. RESTRICTED PAYMENTS. Neither the Borrower nor a Subsidiary
shall declare or pay any dividend on, or declare or make any other distribution
on account of, any shares of any class of its stock now or hereafter
outstanding, or set apart any sum for such purpose without the Lender's prior
written consent.
SECTION 6.06. TRANSACTION WITH AFFILIATES. Neither the Borrower nor any
Subsidiary shall enter into any transaction (including the purchase, sale or
exchange of property or the rendering of any service) with any Affiliate except
upon fair and reasonable terms which are at least as favorable to the Borrower
or any Subsidiary as would be obtained in a comparable arm's length transaction
with a non-Affiliate.
SECTION VII
EVENTS OF DEFAULT
SECTION 7.01. DEFAULTS. The occurrence of any one or more of the following
events shall constitute a default (a "Default") under this Agreement:
(a) the failure of Borrower to pay promptly when due any interest or
principal on any of the Obligations, including but not limited to the Loan;
(b) the failure of Borrower, Orange and/or any Guarantor to observe
or perform promptly when due any covenant, agreement, or obligation due to the
Lender;
(c) the failure to pay on demand any amounts advanced by Lender for
the payment of taxes and assessments or the cost of obtaining the release of any
Collateral from any seizure, Lien, or attachment;
(d) the inaccuracy at any time of any warranty, representation, or
statement made to Lender by Borrower, Orange and/or any Guarantor, whether such
warranty, representation, or statement is made (i) in this Agreement, the Note,
or the Collateral Documents, or (ii) in any other agreement, document, or
writing;
(e) any default on or in connection with any Obligation;
23
(f) any material discrepancy between any financial statement
submitted to Lender by Borrower and/or any Guarantor and its actual financial
condition;
(g) any garnishment, seizure, or attachment of, or any tax lien or
tax levy against, any assets of Borrower, Orange and/or any Guarantor,
including, without limitation, those assets that are Collateral, unless the same
is being contested in good faith and is secured by adequate reserves in an
amount sufficient to satisfy same;
(h) one or more judgments, decrees, arbitration award, rulings or
decisions shall be entered against Borrower, Orange and/or any Guarantor
involving in the aggregate a liability (not paid or fully covered by insurance
including self-insurance or the payment or performance bonds) of $100,000 or
more and all such judgments, decrees, awards and rulings shall not have been
vacated, paid, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof;
(i) Borrower shall default in any payment of principal of or interest
on any Debt other than the Loan in the aggregate principal amount of more than
$100,000, in each instance, beyond the period of grace, if any, provided in the
instrument or agreement under which such Debt or observance or performance of
any other agreement or condition relating to any such Debt or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such Debt or
beneficiary or beneficiaries of such (or a trustee, agent or other Person acting
on behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Debt to become due prior to its
stated maturity;
(j) a receiver, conservator, liquidator or trustee of the Borrower,
Orange and/or any Guarantor, or of any of their property (including the
Property) is appointed by order or decree of any court or agency or supervisory
authority having jurisdiction; or an order for relief is entered against the
Borrower, Orange and/or any Guarantor under the Federal Bankruptcy Code; or the
Borrower, Orange and/or any Guarantor is adjudicated bankrupt or insolvent; or
any material portion of any property of any of the Borrower, Orange and/or any
Guarantor (including the Property) is sequestered by court order and such order
remains in effect for more than thirty (30) days after such party obtains
knowledge thereof; or a petition is filed against the Borrower, Orange and/or
any Guarantor under any state, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of any
jurisdiction, whether now or hereafter in effect, and such petition is not
dismissed within sixty (60) days;
(k) the Borrower, Orange and/or any Guarantor files a case under the
Federal Bankruptcy Code or seeks relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
consents to the filing of any case or petition against it under any such law;
(l) the Borrower, Orange and/or any Guarantor makes an assignment for
the benefit of its creditors, or admits in writing its inability to pay its
debts generally as they become due, or consents to the appointment of a
receiver, trustee or liquidator of the Borrower, Orange and/or any Guarantor or
of all or any part of its property;
(m) the entry of a final court order that enjoins or restrains
Borrower's and/or Orange conduct of its business activities;
24
(n) the existence or future enactment of any law, by any federal,
state, parish, county, municipal, or other taxing authority, requiring or
permitting Borrower to deduct any amount from any payments to be made on the
Loan or any other Obligation;
(o) the failure of Borrower and/or Orange to pay any federal, state,
or local tax, fee, or duty, unless the same is being contested in good faith and
is secured by an adequate reserve in an amount sufficient to satisfy same and
enforcement proceedings have not begun;
(p) any material adverse change in Borrower's financial condition,
business, or ability to pay or perform its obligations to Lender; or
(q) the Collateral, or any material portion thereof, is condemned or
expropriated under power of eminent domain by any legally constituted
governmental authority.
SECTION 7.02. NOTICE OF DEFAULT AND REMEDIES. Upon the happening of any
event of Default and such Default continues for a period of ten (10) days for a
payment default under the Loan or the Obligations or thirty (30) days for any
other type of default, after Lender has mailed or sent written notice of such
Default to the Borrower (but with no notice required in the event of a Default
under paragraphs (j), (k), or (l) of Section 7.01), Lender may declare the
entire principal amount of all Obligations then outstanding, including the Loan
and interest accrued thereon, to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice of
default of any kind, all of which are hereby expressly waived by the Borrower
and Lender is then authorized to exercise any and all of its rights and remedies
under the Collateral Documents and/or the Obligations.
SECTION 7.03. RIGHT OF SET-OFF AND COMPENSATION. Upon the occurrence and
continuance of a Default and expiration of the notice provided in Section 7.02,
Lender is hereby authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by the Borrower) to set-off,
compensate and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held, and other indebtedness at any time owing
by the Lender to or for the credit or the account of the Borrower against any
and all of the Obligations of the Borrower, irrespective of whether or not the
Lender shall have made any demand under this Agreement or the Note and although
such Obligations may be unmatured. The Lender agrees promptly to notify the
Borrower after any such set-off, compensation and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to
other rights of set-off and compensation which the Lender may have under the
Collateral Documents or otherwise. Lender shall have the right to impute all
payments on the Obligations in any order as Lender may desire.
SECTION VIII
MISCELLANEOUS
SECTION 8.01. NOTICES. All notices and other communications given
hereunder or in connection herewith shall be in writing, shall be sent by
registered or certified mail, return receipt requested, postage prepaid, or by
hand delivery with acknowledged receipt of delivery, shall be deemed given on
the date of acceptance or refusal of acceptance shown on such receipt; and shall
be addressed to the party to receive such notice at the following applicable
addresses:
25
If to the Borrower: Xxxxxx Industries, Inc.
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
If to Lender: Whitney National Bank
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Santa Xxxx, III
Assistant Vice President
Any party may, by notice given as aforesaid, change its address for all
subsequent notices.
SECTION 8.02. AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement or of the Note shall be effective unless the same shall be in
writing and signed by Lender and the Borrower. No waiver of Borrower's
Obligations shall be effective unless in writing and signed by Lender, and then
such waiver shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 8.03. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 8.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement, the Collateral Documents and the
Note.
SECTION 8.05. HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation hereof in any respect.
SECTION 8.06. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of Lender, the Borrower and their respective
successors and assigns.
SECTION 8.07. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable under applicable law shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
SECTION 8.08. GOVERNING LAW. This Agreement, the Note and the rights and
obligations of the parties under this Agreement and the Note shall be governed
by, and construed and interpreted in accordance with, the law of the State of
Louisiana.
SECTION 8.09. TIME OF THE ESSENCE. Time shall be deemed of the essence
with respect to the performance of all of the terms, provisions and conditions
on the part of the Borrower and the Lender to be performed hereunder.
26
SECTION 8.10. SUCCESSORS AND ASSIGNS; PARTICIPANTS. (a) All covenants
and agreements contained by or on behalf of the Borrower in this Agreement, the
Note and the Collateral Documents shall bind its successors and assigns and
shall inure to the benefit of the Lender and its successors and assigns.
(b) This Agreement is for the benefit of the Lender and for such other
Person or Persons as may from time to time become or be the holders of any of
the Obligations, and this Agreement shall be transferable and negotiable, with
the same force and effect and to the same extent as the Obligations may be
transferable, it being understood that, upon the transfer or assignment by the
Lender of any of the Obligations, the legal holder of such Obligations shall
have all of the rights granted to the Lender under this Agreement.
(c) Borrower hereby recognizes and agrees that the Lender may, from time
to time, one or more times, transfer all or any portion of the Obligations to
one or more third parties. Such transfers may include, but are not limited to,
sales of participation interests in such Obligations in favor of one or more
third-party lenders. Borrower specifically (i) consents to all such transfers
and assignments, waives any subsequent notice of and right to consent to any
such transfers and assignments as may be provided under applicable Louisiana
law; (ii) agrees that the purchaser of a participation interest in the
Obligations will be considered as the absolute owner of a percentage interest of
such Obligations and that such a purchaser will have all of the rights granted
to the purchaser under any participation agreement governing the sale of such a
participation interest; (iii) waives any right of off-set that Borrower may have
against the Lender, and/or any purchaser of such a participation interest in the
Obligations and unconditionally agrees that either the Lender or such a
purchaser may enforce Borrower's Obligations under this Agreement, irrespective
of the failure or insolvency of the Lender or any such purchaser; (iv) agrees
that any purchaser of a participation interest in the Obligations may exercise
any and all rights of counterclaim, set-off, banker's lien and other liens with
respect to any and all monies owing to the Borrower in accordance with the terms
of the Obligations, including but not limited to this Agreement; and (v) agrees
that, upon any transfer of all or any portion of the Obligations, the Lender may
transfer and deliver any and all collateral securing repayment of such
Obligations to the transferee of such Obligations and such collateral shall
secure any and all of the Obligations in favor of such a transferee, and after
any such transfer has taken place, the Lender shall be fully discharged from any
and all future liability and responsibility to Borrower with respect to such
collateral, and the transferee thereafter shall be vested with all the powers,
rights and duties with respect to such collateral.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
SECTION 8.12. PAYMENT OF EXPENSES AND INDEMNITY.
(a) The Borrower agrees (i) to promptly pay or reimburse Lender for all of
Lender's reasonable out-of-pocket costs, expenses and attorneys' fees incurred
in connection with the preparation, execution and delivery of this Agreement,
the Note, the Collateral Documents and any other documents prepared in
connection herewith, and (ii) to promptly pay or reimburse Lender for all of
Lender's reasonable out-of-pocket costs and expenses incurred in connection with
the preparation, execution and delivery of any amendment, supplement or
modification to this Agreement, the Note, the Collateral Documents and any other
documents prepared in connection herewith, together with the reasonable fees and
disbursements of
27
counsel to Lender and the reasonable costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
Note, the Collateral Documents and any such other documents.
(b) In consideration of the execution and delivery of this Agreement by
Lender, the Borrower hereby indemnifies, exonerates and holds Lender and its
respective officers, directors, employees, and agents, (herein collectively
called the "Bank Parties" and individually called a "Bank Party") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses actually incurred in connection
therewith (irrespective of whether such Bank Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnification Liabilities"), incurred by
the Bank Parties or any of them as a result of, or arising out of, or relating
to:
(i) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of the Loan; or
(ii) any investigation, litigation, or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or all or substantially all
of the assets of any Person, regardless of whether any Bank Party is a
party thereto; or
(iii) the presence on or under, or the escape, seepage leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary of any
Hazardous Material (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under the Comprehensive Environmental Response. Compensation
and Liability Act, any so-called "Superfund" or "Superlien" law, or
any other federal, state, local or other statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards on conduct concerning, any Hazardous
Material), regardless of whether caused by, or within the control of,
the Borrower or any Subsidiary;
except for any such Indemnification Liabilities arising for the account of a
particular Bank Party which a court of competent jurisdiction shall have
determined in a final proceeding to have arisen by reason of the relevant Bank
Party's gross negligence, bad faith, willful misconduct or breach of contractual
obligation arising under this Agreement and owed to the Borrower (which shall be
the sole responsibility of such Bank Party). The agreements in this Section
shall survive payment of the Loan and the Obligations and all other amounts
payable hereunder.
SECTION 8.13. ENTIRE AGREEMENT. This Agreement, the Note, the Collateral
Documents and the other documents executed in connection herewith constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof. To the extent the terms of the Collateral Documents conflict with the
terms of this Agreement, the terms of this Agreement shall control.
[Intentionally Deleted]
28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
XXXXXX INDUSTRIES, INC.
BY: /s/ XXXXXXX X. XXXXXXX
------------------------------
XXXXXXX X. XXXXXXX
ITS: PRESIDENT
ORANGE SHIPBUILDING COMPANY, INC.
BY: /s/ XXXXXXX X. XXXXXXX
--------------------------------
XXXXXXX X. XXXXXXX
ITS: PRESIDENT
WHITNEY NATIONAL BANK
BY: /s/ XXXXX X. SANTA XXXX, III
---------------------------------
XXXXX X. SANTA XXXX, III
ITS: ASSISTANT VICE PRESIDENT
(WNBFILE #13839/m)Car. #11683
APPROVED AS TO FORM BY
CARVER, DARDEN, KORETZKY,
TESSIER, FINN, BLOSSMAN & AREAUX, L.L.C.
29
