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EXHIBIT 10.4
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 15, 1997 (this "Agreement"), is
between LOUISIANA SHIP, INC., a Texas corporation ("Borrower"), and SOUTHWEST
BANK OF TEXAS, N.A., a national banking association ("Lender").
R E C I T A L S :
Borrower has requested that Lender extend credit to Borrower in the
form of (a) revolving credit advances which shall not exceed an aggregate
principal amount of $800,000.00 at any time outstanding, (b) an equipment
guidance line of credit which shall not exceed an aggregate principal amount of
$300,000.00, (c) a term loan in the amount of $650,000.00, and (d) a term loan
in the amount of $500,000.00. Lender is willing to make such extensions of
credit to Borrower upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
Definitions
Section 1.01. Definitions. As used in this Agreement, the following
terms have the following meanings:
"Advance-A" means an advance of funds by Lender to Borrower
pursuant to Article II.
"Advance-B" means an advance of funds by Lender to Borrower
pursuant to Article III.
"Advance Request Form-A" means a certificate, in substantially
the form of Exhibit "L" hereto, properly completed and signed by
Borrower requesting an Advance-A.
"Advance Request Form-B" means a certificate, in substantially
the form of Exhibit "M" hereto, properly completed and signed by
Borrower requesting an Advance-B.
"Advances" means the Advances-A and the Advances-B.
"Arbitration Agreement" means the Arbitration Agreement
executed by Borrower, Guarantor and NS&R in substantially the form of
Exhibit "K" hereto, as the same may be amended, supplemented, or
modified.
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"Borrowing Base-A" means, at any particular time, an amount
equal to the lesser of (a) 80% of Eligible Accounts or (b)
$800,000.00.
"Borrowing Base Certificate" means a certificate substantially
in the form of Exhibit "I" executed by an officer of Borrower
acceptable to Lender.
"Borrowing Limit-B" means for each Advance-B, an amount equal
to the lesser of (a) eighty percent (80%) of the purchase price of the
Purchased Equipment-B purchased with such Advance-B or (b)
$300,000.00.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Houston, Texas.
"Closing Date" means the date on which this Agreement has been
executed and delivered by the parties hereto, the conditions set forth
in Section 8.01 have been satisfied and Lender has funded the loans
evidenced by the Notes.
"Collateral" has the meaning specified in Section 7.01.
"Commitment-A" means the obligation of Lender to make
Advances-A hereunder in an aggregate principal amount at any time
outstanding up to but not exceeding $800,000.00, as such amount may be
reduced as provided in Section 2.08.
"Contingency Agreement" means that Contingency Agreement
executed by NS&R and Borrower in substantially the form of Exhibit "G"
hereto.
"Current Maturities of Long Term Debt" means for Borrower, the
principal amount due and payable during the next succeeding twelve
month period of Debt of Borrower for borrowed money, other than
Subordinated Debt, which Debt has a final maturity more than twelve
months from the date of calculation.
"Debt" means for Borrower (a) all indebtedness, whether or not
represented by bonds, debentures, notes, securities, or other
evidences of indebtedness, for the repayment of money borrowed, (b)
all indebtedness representing deferred payment of the purchase price
of property or assets, (c) all indebtedness under any lease which, in
conformity with GAAP, is required to be capitalized for balance sheet
purposes, (d) all indebtedness under guaranties, endorsements,
assumptions, or other contingent obligations, in respect of, or to
purchase or otherwise acquire, indebtedness of others, (e) all
indebtedness secured by a Lien existing on property owned, subject to
such Lien, whether or not the indebtedness secured thereby shall have
been assumed by the owner thereof, and (f)
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any obligation to redeem or repurchase any of such Person's capital
stock, warrants, or stock equivalents.
"Debt Service Coverage Ratio" means for Borrower the sum of
(a) net income, plus (b) depreciation, amortization and other non cash
charges, plus (c) interest expense, divided by the sum of (x)
principal payments made on Current Maturities of Long Term Debt, plus
(y) interest expense.
"Default Rate" means the lesser of (a) the sum of the Prime
Rate in effect from day to day plus four percent (4%) or (b) the
Maximum Rate.
"EAE" means EAE Industries, Inc., a Texas corporation, and its
successors and assigns.
"Eligible Accounts" means the aggregate of all accounts
receivable of Borrower that are acceptable to Lender in its sole
discretion and satisfy the following conditions: (a) are due and
payable within thirty (30) days; (b) have been outstanding less than
ninety (90) days past the original date of invoice; (c) have arisen in
the ordinary course of business from services performed by Borrower to
or for the account debtor or the sale by Borrower of goods in which
Borrower had sole ownership where such goods have been shipped or
delivered to the account debtor; (d) represent complete bona fide
transactions which require no further act under any circumstances on
the part of Borrower to make such accounts receivable payable by the
account debtor, provided that progress xxxxxxxx may constitute
Eligible Accounts if such progress xxxxxxxx are contemplated in the
underlying contract; (e) the goods and services the sale of which gave
rise to such accounts receivable were shipped or delivered to the
account debtor on an absolute sale basis and not on consignment, a
sale or return basis, a guaranteed sale basis, a xxxx and hold basis,
or on the basis of any similar understanding; (f) the goods and
services the sale of which gave rise to such accounts receivable were
not, at the time of sale thereof, subject to any Lien, except the
security interest in favor of Lender created by the Loan Documents;
(g) are not subject to any provisions prohibiting assignment or
requiring notice of or consent to such assignment; (h) are subject to
a perfected, first priority security interest in favor of Lender and
are not subject to any other Lien; (i) are not subject to setoff,
counterclaim, defense, allowance, dispute, or adjustment other than
normal discounts for prompt payment, and the goods of sale which gave
rise to such accounts receivable have not been returned, rejected,
repossessed, lost, or damaged; (j) the account debtor is not insolvent
or the subject of any bankruptcy or insolvency proceeding and has not
made an assignment for the benefit of creditors, suspended normal
business operations, dissolved, liquidated, terminated its
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existence, ceased to pay its debts as they become due, or suffered a
receiver or trustee to be appointed for any of its assets or affairs;
(k) are not evidenced by chattel paper or any instrument of any kind;
(l) are owed by a Person or Persons that are citizens of or organized
under the laws of the United States or any State and are not owed by
any Person located outside of the United States of America; (m) if any
accounts receivable are owed by the United States of America or any
department, agency, or instrumentality thereof, the Federal Assignment
of Claims Act shall have been complied with; and (n) are not owed by
an affiliate of Borrower. No account receivable owed by an account
debtor to Borrower shall be included as an Eligible Account if more
than twenty percent (20%) of the balances then outstanding on accounts
receivable owed by such account debtor and its affiliates to Borrower
have remained unpaid for more than eighty-nine (89) days from the
dates of their original invoices; provided that this sentence shall
not apply to accounts receivable from account debtors whose exemption
from the provisions of this sentence has been approved by Lender. The
amount of any Eligible Accounts owed by an account debtor to Borrower
shall be reduced by the amount of all "contra accounts" and other
obligations owed by Borrower to such account debtor. In the event
that at any time the accounts receivable from any account debtor and
its affiliates to Borrower exceed twenty percent (20%) of the accounts
receivable of Borrower, the accounts receivable from such account
debtor and its affiliates shall not constitute Eligible Accounts to
the extent to which such accounts receivable exceed twenty percent
(20%) of the accounts receivable of Borrower.
"Environmental Laws" means any and all federal, state and
local laws, regulations, and requirements pertaining to health,
safety, or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Section 9601 et seq.,the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq.,
the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., and all
similar laws, regulations, and requirements of any governmental
authority or agency having jurisdiction over Borrower or any of its
properties or assets, as such laws, regulations, and requirements may
be amended or supplemented from time to time.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
"Event of Default" has the meaning specified in Section 12.01.
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"First Wave" means First Wave Marine, Inc, a Texas
corporation, and its successors and assigns.
"GAAP" means generally accepted accounting principles, applied
on a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants or in statements of the Financial Accounting Standards
Board or their respective successors and which are applicable in the
circumstances as of the date in question. Accounting principles are
applied on a "consistent basis" when the accounting principles
observed in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Guarantor" means Xxxxxx X. Xxxxx, and his heirs, executors,
successors and assigns.
"Guaranty" means the Guaranty Agreement executed by Guarantor
in favor of Lender in substantially the form of Exhibit "F" hereto, as
the same may be amended, supplemented or modified from time to time.
"Hazardous Substance" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement and all promissory
notes, security agreements, assignments, guaranties, contingency
agreements, subordination agreements, and other instruments,
documents, and agreements executed and delivered pursuant to or in
connection with this Agreement, as such instruments, documents, and
agreements may be amended, modified, renewed, extended, or
supplemented from time to time.
"Loan-C" means the term loan made by Lender to Borrower
pursuant to Article IV.
"Loan-D" means the term loan made by Lender to Borrower
pursuant to Article V.
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"Maximum Amount-Advances-B" means the amount of $300,000.00.
"Maximum Rate" means the maximum rate of nonusurious interest
permitted from day to day by applicable law, including as to Article
52069-1.04, Vernon's Texas Civil Statutes (and as the same may be
incorporated by reference in other Texas statutes), but otherwise
without limitation, that rate based upon the "indicated rate ceiling"
and calculated after taking into account any and all relevant fees,
payments, and other charges in respect of the Loan Documents which are
deemed to be interest under applicable law.
"No Default Certificate" means a certificate substantially in
the form of Exhibit "J" executed by an officer of Borrower acceptable
to Lender.
"Note-A" means the promissory note executed by Borrower
payable to the order of Lender, in substantially the form of Exhibit
"A" hereto, and all extensions, renewals, and modifications thereof
and all substitutions therefor.
"Note-B" means the promissory note executed by Borrower
payable to the order of Lender, in substantially the form of Exhibit
"B" hereto, and all extensions, renewals, and modifications thereof
and all substitutions therefor.
"Note-C" means the promissory note executed by Borrower
payable to the order of Lender, in substantially the form of Exhibit
"C" hereto, and all extensions, renewals, and modifications thereof
and all substitutions therefor.
"Note-D" means the promissory note executed by Borrower
payable to the order of Lender, in substantially the form of Exhibit
"D" hereto, and all extensions, renewals, and modifications thereof
and all substitutions therefor.
"Notes" means Note-A, Note-B, Note-C and Note-D.
"NS&R" means Newpark Shipbuilding and Repair, Inc., a Texas
corporation, and its successors and assigns.
"Obligated Party" means Guarantor, NS&R and any other Person
who is or becomes party to any agreement pursuant to which such Person
guarantees or secures payment and performance of the Obligations or
any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of Borrower to Lender, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligations,
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indebtedness, and liabilities of Borrower under this Agreement and the
other Loan Documents including, without limitation, all attorneys'
fees and other expenses incurred in the enforcement or collection
thereof.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, governmental
authority, or other entity.
"Prime Rate" means that variable rate of interest per annum
established by Lender from time to time as its prime rate which shall
vary from time to time. Such rate is set by Lender as a general
reference rate of interest, taking into account such factors as Lender
may deem appropriate, it being understood that many of Lender's
commercial or other loans are priced to relation to such rate, that it
is not necessarily the lowest or best rate charged to any customer and
that Lender may make various commercial or other loans at rates of
interest having no relationship to such rate.
"Purchased Equipment-B" means the machinery and equipment
purchased by Borrower with the proceeds of the Advances-B.
"Section 12.01 Event of Default" means the failure of Borrower
to comply with the provisions of Section 12.01 as evidenced by the
most recent financial statements of Borrower delivered under Section
10.01(a) or (b).
"Security Agreement" means the Security Agreement executed by
Borrower in favor of Lender in substantially the form of Exhibit "E"
hereto, as the same may be amended, supplemented, or modified.
"Subordinated Debt" means (a) the Subordinated Debt-NS&R, (b)
the Subordinated Debt-EAE, (c) the Subordinated Debt-First Wave, and
(d) Debt of Borrower the payment of which has otherwise been
subordinated to the payment of the Obligations by an agreement
satisfactory to Lender.
"Subordinated Debt-EAE" means Debt of Borrower which is
subject to the Subordination Agreement-EAE.
"Subordinated Debt-First Wave" means Debt of Borrower which is
subject to the Subordination Agreement- First Wave.
"Subordinated Debt-NS&R" means Debt of Borrower which is
subject to the Subordination Agreement-NS&R.
"Subordination Agreement-EAE" means the Subordination
Agreement executed by Borrower and EAE in favor of Lender in
substantially the form of Exhibit "N" hereto, as the same may be
amended, supplemented, or modified.
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"Subordination Agreement-First Wave" means the Subordination
Agreement executed by Borrower and First Wave in favor of Lender in
substantially the form of Exhibit "O" hereto, as the same may be
amended, supplemented, or modified.
"Subordination Agreement-NS&R" means the Subordination
Agreement executed by Borrower and NS&R in favor of Lender in
substantially the form of Exhibit "H" hereto, as the same may be
amended, supplemented, or modified.
"Termination Date-A" means 11:00 a.m., Houston, Texas time on
August 1, 1998, or such earlier date on which the Commitment-A
terminates as provided in this Agreement.
"Termination Date-B" means 11:00 a.m., Houston, Texas time on
August 1, 1998, or such earlier date on which the Commitment-A
terminates as provided in this Agreement.
"Test Date" shall mean that date which is sixty (60) days
following the Closing Date.
Section 1.02. Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof", "herein", and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. Unless
otherwise specified, all Article and Section references pertain to this
Agreement. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. Terms used herein that are defined in the
Uniform Commercial Code as adopted by the State of Texas, unless otherwise
defined herein, shall have the meanings specified in the Uniform Commercial
Code as adopted by the State of Texas.
ARTICLE II.
Advances-A
Section 2.01. Advances-A. Subject to the terms and conditions of
this Agreement, Lender agrees to make one or more Advances-A to Borrower from
time to time from the date hereof to and including the Termination Date-A in an
aggregate principal amount at any time outstanding up to but not exceeding the
Commitment-A; provided that the aggregate amount of all Advances-A at any time
outstanding (a) shall not exceed $300,000.00 at any time prior to the Test
Date, and (b) commencing on the Test Date and at all times thereafter shall not
exceed the lesser of (i) the Commitment-A or (ii) the Borrowing Base-A.
Subject to the foregoing limitations, and the other terms and provisions of
this Agreement, Borrower may borrow, repay, and reborrow hereunder.
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Section 2.02. Note-A. The obligation of Borrower to repay the
Advances-A shall be evidenced by Note-A executed by Borrower, payable to the
order of Lender, in the principal amount of the Commitment-A.
Section 2.03. Repayment of Advances-A. Borrower shall repay the
unpaid principal amount of all Advances-A on the earlier of (a) the Termination
Date-A or (b) such other dates on which the Advances-A are or may be required
to be paid pursuant to this Agreement.
Section 2.04. Interest. The unpaid principal amount of the
Advances-A shall bear interest prior to maturity at a varying rate per annum
equal from day to day to the lesser of (a) the Maximum Rate or (b) the sum of
the Prime Rate in effect from day to day plus one percent (1.0%), and each
change in the rate of interest charged on the Advances-A shall become
effective, without notice to Borrower, on the effective date of each change in
the Prime Rate or the Maximum Rate, as the case may be; provided, however, if
at any time the rate of interest specified in clause (b) preceding shall exceed
the Maximum Rate, thereby causing the interest on the Advances-A to be limited
to the Maximum Rate, then any subsequent reduction in the Prime Rate shall not
reduce the rate of interest on the Advances-A below the Maximum Rate until the
aggregate amount of interest actually accrued on the Advances-A equals the
amount of interest which would have accrued on the Advances-A if the interest
rate specified in clause (b) preceding had at all times been in effect.
Accrued and unpaid interest on the Advances-A shall be payable on the first day
of each month commencing on September 1, 1997 and on the earlier of the
Termination Date-A or any other date on which the principal amount of the
Advances-A is paid (whether as a result of optional or mandatory prepayment or
acceleration). All past due principal and interest shall bear interest at the
Default Rate.
Section 2.05. Requests for Advances-A. Borrower shall give Lender
notice of each requested Advance-A at least one (1) Business Day prior to the
requested date of such Advance-A by delivery to Lender of an Advance Request
Form-A properly completed and containing the information required therein.
Lender at its option may accept telephonic requests for Advances-A. Each such
telephonic request for an Advance-A shall constitute a representation by
Borrower to Lender as to each of the matters set forth in the Borrowing Base
Certificate, including representations that the (a) sum of (i) the amount of
the outstanding Advances-A, plus (ii) the amount of the requested Advance-A
does not exceed (A) $300,000.00 if such request is prior to the Test Date and
(B) the lesser of the Commitment or the Borrowing Base if such request is on or
after the Test Date, and (b) no Event of Default exists. At any time,
including prior to making any Advance-A, Lender may request a Borrowing Base
Certificate from Borrower dated of a recent date acceptable to Lender.
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Section 2.06. Use of Proceeds. The proceeds of Advances-A shall be
used for general working capital purposes.
Section 2.07. Mandatory Prepayment. If at any time prior to the
Test Date the outstanding principal amount of the Advances-A exceeds
$300,000.00, or if at any time after the Test Date the outstanding principal
amount of the Advances-A exceeds the lesser of the Borrowing Base-A or the
Commitment-A, Borrower shall promptly prepay the outstanding Advances-A by the
amount of the excess plus accrued and unpaid interest on the amount so prepaid.
Section 2.08. Commitment Fee; Reduction or Termination of
Commitment-A. Borrower agrees to pay to Lender a commitment fee on the average
daily unused portion of the Commitment-A, from and including the Closing Date
to and including the Termination Date-A, at the rate of one half of one percent
(1/2%) per annum based on a 360 day year and the actual number of days elapsed,
payable on the first day of each month, commencing on September 1, 1997, and on
the Termination Date-A. Borrower shall have the right at any time to terminate
in whole or from time to time to irrevocably reduce in part the Commitment-A
upon at least three (3) Business Days prior notice to Lender specifying the
effective date thereof, whether a termination or reduction is being made, and
the amount of any partial reduction. Simultaneously with giving such notice,
Borrower shall prepay the amount by which the unpaid principal amount of the
Advances-A exceeds the Commitment-A (after giving effect to such notice) plus
accrued and unpaid interest on the principal amount so prepaid. The
Commitment-A may not be reinstated after it has been terminated or reduced.
ARTICLE III.
Advances-B
Section 3.01. Advances-B. At the sole discretion of Lender and
subject to the terms and conditions of this Agreement, Lender may make one or
more Advances-B to Borrower from time to time from the date hereof to and
including the Termination Date-B in an aggregate principal amount at any time
outstanding up to but not exceeding the Maximum Amount-Advances-B; provided
that the amount of each Advance-B shall not exceed the Borrowing Limit-B for
such Advance-B.
Section 3.02. Note-B. The obligation of Borrower to repay the
Advances-B shall be evidenced by Note-B executed by Borrower, payable to the
order of Lender, in the principal amount of the Maximum Amount-Advances-B.
Section 3.03. Repayment of Advances-B. Principal of and interest
on the Advances-B shall be due and payable as provided in
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Note-B. All past due principal and interest shall bear interest at the Default
Rate.
Section 3.04. Interest. The unpaid principal amount of the
Advances-B shall bear interest prior to maturity at a varying rate per annum
equal from day to day to the lesser of (a) the Maximum Rate or (b) the sum of
the Prime Rate in effect from day to day plus one percent (1.0%), and each
change in the rate of interest charged on the Advances-B shall become
effective, without notice to Borrower, on the effective date of each change in
the Prime Rate or the Maximum Rate, as the case may be; provided, however, if
at any time the rate of interest specified in clause (b) preceding shall exceed
the Maximum Rate, thereby causing the interest on the Advances-B to be limited
to the Maximum Rate, then any subsequent reduction in the Prime Rate shall not
reduce the rate of interest on the Advances-B below the Maximum Rate until the
aggregate amount of interest actually accrued on the Advances-B equals the
amount of interest which would have accrued on the Advances-B if the interest
rate specified in clause (b) preceding had at all times been in effect. All
past due principal and interest shall bear interest at the Default Rate.
Section 3.05. Requests for Advances-B. Borrower shall give Lender
notice of each requested Advance-B at least two (2) Business Days prior to the
requested date of such Advance-B by delivery to Lender of an Advance Request
Form-B properly completed and containing the information required therein.
Lender at its option may accept telephonic requests for Advances-B, provided
that such acceptance shall not constitute a waiver of Lender's right to require
delivery of an Advance Request Form-B in connection with subsequent Advances-B.
Any telephonic request for an Advance-B by Borrower shall be promptly confirmed
by submission of a properly completed Advance Request Form-B to Lender.
Section 3.06. Use of Proceeds. The proceeds of Advances-B shall be
used to purchase equipment.
ARTICLE IV.
Loan-C
Section 4.01. Agreement for Loan-C. Subject to the terms and
conditions of this Agreement, Lender agrees to make Loan-C to Borrower in the
amount of $650,000.00.
Section 4.02. Note-C. The obligation of Borrower to repay Loan-C
shall be evidenced by Note-C executed by Borrower, payable to the order of
Lender, in the principal amount of $650,000.00.
Section 4.03. Interest. Loan-C shall bear interest prior to maturity
at a varying rate per annum equal from day to day to the
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lesser of (a) the Maximum Rate or (b) the Prime Rate in effect from day to day
plus one percent (1.0%), and each change in the rate of interest charged on
Loan-C shall become effective, without notice to Borrower, on the effective
date of each change in the Prime Rate or the Maximum Rate, as the case may be;
provided, however, if at any time the rate of interest specified in clause (b)
preceding shall exceed the Maximum Rate, thereby causing the interest on Loan-C
to be limited to the Maximum Rate, then any subsequent reduction in the Prime
Rate shall not reduce the rate of interest on Loan-C below the Maximum Rate
until the aggregate amount of interest actually accrued on Loan-C equals the
amount of interest which would have accrued on Loan-C if the interest rate
specified in clause (b) preceding had at all times been in effect.
Section 4.04. Payment of Principal and Interest. Principal of and
interest on Loan-C shall be due and payable as provided in Note-C. All past
due principal and interest shall bear interest at the Default Rate.
Section 4.05. Purpose. The purpose of Loan-C shall be used to
purchase equipment and for the acquisition of the assets of Platzer
Shipbuilding, Inc.
ARTICLE V.
Loan-D
Section 5.01. Agreement for Loan-D. Subject to the terms and
conditions of this Agreement, Lender agrees to make Loan-D to Borrower in the
amount of $500,000.00.
Section 5.02. Note-D. The obligation of Borrower to repay Loan-D
shall be evidenced by Note-D executed by Borrower, payable to the order of
Lender, in the principal amount of $500,000.00.
Section 5.03. Interest. Loan-D shall bear interest prior to maturity
at a varying rate per annum equal from day to day to the lesser of (a) the
Maximum Rate or (b) the Prime Rate in effect from day to day plus one percent
(1.0%), and each change in the rate of interest charged on Loan-D shall become
effective, without notice to Borrower, on the effective date of each change in
the Prime Rate or the Maximum Rate, as the case may be; provided, however, if
at any time the rate of interest specified in clause (b) preceding shall exceed
the Maximum Rate, thereby causing the interest on Loan-D to be limited to the
Maximum Rate, then any subsequent reduction in the Prime Rate shall not reduce
the rate of interest on Loan-D below the Maximum Rate until the aggregate
amount of interest actually accrued on Loan-D equals the amount of interest
which would have accrued on Loan-D if the interest rate specified in clause (b)
preceding had at all times been in effect.
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Section 5.04. Payment of Principal and Interest. Principal of and
interest on Loan-D shall be due and payable as provided in Note-D. All past
due principal and interest shall bear interest at the Default Rate.
Section 5.05. Purpose. The purpose of Loan-D shall be used to
purchase a flare, the cost of which is $651,457, including $158,783 of
installation costs, and for the acquisition of the assets of Platzer
Shipbuilding, Inc.
ARTICLE VI.
Payments
Section 6.01. Method of Payment. All payments of principal,
interest, and other amounts to be made by Borrower under this Agreement, the
Notes or any other Loan Documents shall be made to Lender at its office at 0000
Xxxx Xxx Xxxxxxx, Xxxxxxx, Xxxxx 00000, without setoff, deduction, or
counterclaim in immediately available funds. Whenever any payment under this
Agreement, the Note or any other Loan Document shall be stated to be due on a
day that is not a Business Day, such payment may be made on the next Business
Day, and interest shall continue to accrue during such extension.
Section 6.02. Voluntary Prepayment. Borrower may prepay the Notes
in whole at any time or from time to time in part without premium or penalty
but with accrued interest to the date of prepayment on the amount so prepaid.
Section 6.03. Computation of Interest. Interest on the
indebtedness evidenced by the Notes shall be computed on the basis of a year of
360 days and the actual number of day elapsed (including the first day but
excluding the last day) unless such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
ARTICLE VII.
Collateral
Section 7.01. Collateral. To secure full and complete payment and
performance of the Obligations, Borrower shall execute and deliver or cause to
be executed and delivered the documents described below covering the property
and collateral described therein and in this Section 7.01 (which, together with
any other property and collateral which may now or hereafter secure the
Obligations or any part thereof, is sometimes herein called the "Collateral"):
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(a) Borrower shall grant to Lender a first priority
security interest in all of its accounts, accounts receivable,
inventory, equipment, machinery, fixtures, chattel paper, documents,
instruments, and general intangibles, whether now owned or hereafter
acquired, and all products and proceeds thereof, pursuant to the
Security Agreement.
(b) Borrower shall execute and cause to be executed such
further documents and instruments, including without limitation,
Uniform Commercial Code financing statements, as Lender, in its sole
discretion, deems necessary or desirable to evidence and perfect its
liens and security interests in the Collateral.
Section 7.02. Setoff. Upon the occurrence of an Event of Default,
Lender shall have the right to set off and apply against the Obligations in
such a manner as Lender may determine, at any time and without notice to
Borrower, any and all deposits (general or special, time or demand, provisional
or final) or other sums at any time credited by or owing from Lender to
Borrower whether or not the Obligations are then due. In addition to Lender's
right of setoff and as further security for the Obligations, Borrower hereby
grants to lender a security interest in all deposits (general or special, time
or demand, provisional or final) and other accounts of Borrower now or
hereafter on deposit with or held by lender and all other sums at any time
credited by or owing from Lender to Borrower. The rights and remedies of
Lender hereunder are in addition to other rights and remedies (including,
without limitation, to the rights of setoff) which Lender may have.
Section 7.03. Guaranty; Repurchase Agreement. Guarantor shall
unconditionally and irrevocably guarantee payment and performance of the
Obligations by execution and delivery of the Guaranty. NS&R shall
unconditionally and irrevocably agree to purchase the Notes upon the terms and
conditions set forth in the Note Purchase Agreement.
ARTICLE VIII.
Conditions Precedent
Section 8.01. Initial Extension of Credit. The obligation of
Lender to make the initial Advance or fund either Loan-C or Loan-D is subject
to the condition precedent that prior thereto Lender shall have received all of
the documents set forth below in form and substance satisfactory to Lender.
(a) Resolutions - Borrower. Resolutions of the Board
of Directors of Borrower certified by its Secretary or an Assistant
Secretary which authorize the execution, delivery
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and performance by Borrower of this Agreement and the other Loan
Documents to which Borrower is or is to be a party.
(b) Incumbency Certificate - Borrower. A certificate of
incumbency certified by the Secretary or an Assistant Secretary of
Borrower certifying the names of the officers of Borrower authorized
to sign this Agreement and each of the other Loan Documents to which
Borrower is or is to be party together with specimen signatures of
such officers.
(c) Articles of Incorporation - Borrower. The articles
of incorporation of Borrower certified by the Secretary or an
Assistant Secretary of Borrower.
(d) Bylaws - Borrower. The bylaws of Borrower certified
by the Secretary or an Assistant Secretary of Borrower.
(e) Governmental Certificates - Borrower. Certificates
of the appropriate government officials of the state of Texas as to
the existence and good standing of Borrower.
(f) Notes. Note-A, Note-B, Note-C and Note-D executed by
Borrower.
(g) Security Agreement. The Security Agreement executed
by Borrower.
(h) Financing Statements. Uniform Commercial Code
financing statements executed by Borrower.
(i) Guaranty. The Guaranty executed by Guarantor.
(j) Contingency Agreement. The Contingency Agreement
executed by NS&R and Borrower.
(k) Subordination Agreement-NS&R. The Subordination
Agreement-NS&R executed by the parties thereto.
(l) Subordination Agreement-EAE. The Subordination
Agreement-EAE executed by the parties thereto.
(m) Subordination Agreement-First Wave. The
Subordination Agreement-First Wave executed by the parties thereto.
(n) UCC Search. A Uniform Commercial Code search showing
all financing statements and other documents or instruments on file
against Borrower in the office of the Secretary of State of Texas.
(o) Attorneys' Fees and Expenses. Evidence that the
costs and expenses (including reasonable attorneys' fees)
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referred to in Section 13.01, to the extent incurred, have been paid
in full by Borrower.
(p) Additional Documentation. Such additional approvals,
opinions or documents as Lender may reasonably request.
Section 8.02. All Extensions of Credit. (a) The obligation of Lender
to make any Advance-A (including the initial Advance-A) is subject to the
additional conditions precedent that Lender shall have received (i) a request
for such Advance-A as provided in Section 2.05 and (ii) such additional
approvals, opinions or documents as Lender may reasonably request, including a
Borrowing Base Certificate dated as of a recent date acceptable to Lender.
(b) The obligation of Lender to make any Advance-B (including the
initial Advance-B) is subject to the additional condition precedent that Lender
shall have received an Advance Request Form-B as provided in Section 3.05
executed by an officer of Borrower acceptable to Lender, all of the statements
in which shall be true and correct on and as of such date.
(c) The obligation of Lender to make any Advance is subject to the
additional condition precedent that Lender shall have received such additional
approvals, opinions or documents as Lender may reasonably request.
ARTICLE IX.
Representations and Warranties
To induce Lender to enter into this Agreement, commencing on the
Closing Date and at all times thereafter while the Obligations are outstanding,
Borrower represents and warrants to Lender that:
Section 9.01. Corporate Existence. Borrower (a) is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, (b) has all requisite corporate power and
authority to own its assets and carry on its business as now being or as
proposed to be conducted and (c) is qualified to do business in all
jurisdictions necessary and where failure to so qualify would have a material
adverse effect on its business, condition (financial or otherwise), operations,
prospects, or properties. Borrower has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and the other
Loan Documents to which it is or may become a party.
Section 9.02. Financial Statements. Borrower has delivered to Lender
proforma financial statements of Borrower (the "Proformas") and financial
statements of NS&R for the fiscal year ended December 31, 1996 and for the
three month period ended March
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31, 1997 (the "NS&R Statements"). To the best of Borrower's knowledge, the
Proformas reflect the estimated financial position of Borrower as of the dates
set forth therein. To the best of Borrower's knowledge the NS&R Statements are
true and correct, have been prepared in accordance with GAAP, and, to the best
of Borrower's knowledge, the NS&R Statements fairly and accurately present the
financial condition of NS&R as of the respective dates indicated therein and
the results of operations for the respective periods indicated therein. To the
best of Borrower's knowledge, neither Borrower nor NS&R has any material
contingent liabilities, liabilities for taxes, material forward or long-term
commitments, or unrealized or anticipated losses from any unfavorable
commitments not reflected in the Proformas or the NS&R Statements. There has
been no material adverse change in the business, condition (financial or
otherwise), operations, prospects, or properties of Borrower or, to the best of
Borrower's knowledge, NS&R since the effective date of the Proformas or the
NS&R Statements.
Section 9.03. Corporate Action; No Breach. The execution, delivery,
and performance by Borrower of this Agreement and the other Loan Documents to
which Borrower is or may become a party have been duly authorized by all
requisite action on the part of Borrower and do not and will not violate or
conflict with the articles of incorporation or bylaws of Borrower or any law,
rule or regulation or any order, writ, injunction, or decree of any court,
governmental authority, or arbitrator, and do not and will not conflict with,
result in a breach of, or constitute a default under, or result in the
imposition of any Lien (except as provided in this Agreement) upon any of the
revenues or assets of Borrower pursuant to the provisions of any indenture,
mortgage, deed of trust, security agreement, franchise, permit, license, or
other instrument or agreement by which Borrower or any of its properties is
bound.
Section 9.04. Operation of Business. Borrower possesses all
licenses, permits, franchises, patents, copyrights, trademarks, and tradenames,
or rights thereto, to conduct its business substantially as now conducted and
as presently proposed to be conducted.
Section 9.05. Litigation and Judgments. There is no action, suit,
investigation, or proceeding before or by any court, governmental authority, or
arbitrator pending, or to the knowledge of Borrower, threatened against or
affecting Borrower that would, if adversely determined, have a material adverse
effect on the business, condition (financial or otherwise), operations,
prospects or properties of Borrower or the ability of Borrower to pay and
perform the Obligations. There are no outstanding judgments against Borrower.
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Section 9.06. Rights in Properties; Liens. Borrower has good and
indefeasible title to or valid leasehold interests in its properties and
assets, real and personal, including the properties, assets and leasehold
interests reflected in the financial statements described in Section 9.02, and
none of the properties, assets or leasehold interests of Borrower is subject to
any Lien, except as permitted by this Agreement.
Section 9.07. Enforceability. This Agreement constitutes, and the
other Loan Documents to which Borrower is party, when delivered, shall
constitute the legal, valid, and binding obligations of Borrower, enforceable
against Borrower in accordance with its respective terms, except as
enforceability thereof may be limited by bankruptcy, insolvency, or other laws
of general application relating to the enforcement of creditor's rights.
Section 9.08. Approvals. No authorization, approval, or consent of,
and no filing or registration with, any court, governmental authority, or third
party is or will be necessary for the execution, delivery, or performance by
Borrower of this Agreement and the other Loan Documents to which Borrower is or
may become a party or the validity or enforceability thereof.
Section 9.09. Debt. Borrower has no Debt except Debt which is
permitted by this Agreement and is disclosed in the financial statements
referred to in Section 9.02.
Section 9.10. Use of Proceeds; Margin Securities. Borrower is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any extension of credit
under this Agreement will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock.
Section 9.11. ERISA. Borrower has complied with all applicable
minimum funding requirements and all other applicable and material requirements
of ERISA, and there are no existing conditions that would give rise to
liability thereunder. No Reportable Event (as defined in Section 4043 of
ERISA) has occurred in connection with any employee benefit plan that might
constitute grounds for the termination thereof by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States District
Court of a trustee to administer such plan.
Section 9.12. Taxes. Borrower has filed all tax returns (federal,
state, and local) required to be filed, including all income, franchise,
employment, property, and sales taxes, and has paid all of its liabilities for
taxes, assessments, governmental charges, and other levies that are due and
payable, and Borrower
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knows of no pending investigation of Borrower by any taxing authority or of any
pending but unassessed tax liability of Borrower.
Section 9.13. Disclosure. There is no fact known to Borrower which
has a material adverse effect, or which might in the future have a material
adverse effect, on the business, condition (financial or otherwise),
operations, prospects, or properties of Borrower that has not been disclosed in
writing to Lender.
Section 9.14. Subsidiaries. Borrower has no Subsidiaries.
Section 9.15. Compliance with Laws. Borrower is not in violation in
any material respect of any law, rule, regulation, order, or decree of any
court, governmental authority, or arbitrator.
Section 9.16. Inventory. All inventory of Borrower has been and will
hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as
amended (29 U.S.C. Sections 201-219), and the regulations promulgated
thereunder.
Section 9.17. Investment Company Act. Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Section 9.18. Environmental Matters. Borrower and its properties are
in compliance with all applicable Environmental laws and Borrower is not
subject to any liability or obligation for remedial action thereunder. There
is no pending or threatened investigation or inquiry by any governmental
authority of Borrower or any of its properties pertaining to any Hazardous
Substance. There are no Hazardous Substances located on or under any of the
properties of Borrower. Borrower has not caused or permitted any Hazardous
Substance to be disposed of on or under or released from any of its properties.
Borrower has obtained all permits, licenses, and authorizations which are
required under and by all Environmental Laws.
Section 9.19. Solvency. Borrower is not insolvent, and Borrower will
not be rendered insolvent by the execution or performance of the Loan Documents
to which Borrower is a party.
ARTICLE X.
Positive Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment
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hereunder, Borrower will perform and observe the covenants set forth below,
unless Lender shall otherwise consent in writing.
Section 10.01. Reporting Requirements. Borrower will deliver to
Lender:
(a) Annual Financial Statements - Borrower. As soon as
available, and in any event within one hundred twenty (120) days after
the end of each fiscal year of Borrower, beginning with the fiscal
year ending December 31, 1997, a copy of the annual compiled financial
statements of Borrower for such fiscal year containing balance sheets,
statements of income, statements of stockholders equity and statements
of cash flows as at the end of such fiscal year and for the 12-month
period then ended, in each case setting forth in comparative form the
figures for the preceding fiscal year, all in reasonable detail,
prepared in accordance with GAAP and compiled by independent certified
public accountants of recognized standing acceptable to Lender.
(b) Monthly Financial Statements - Borrower. As soon as
available, and in any event within forty-five (45) days after the end
of each month of each fiscal year of Borrower, a copy of the unaudited
financial report of Borrower as of the end of such month and for the
portion of the fiscal year then ended, containing balance sheets,
statements of income and statements of cash flows, in each case
setting forth in comparative form the figures for the corresponding
period of the preceding fiscal year, all in reasonable detail and
certified by an officer of Borrower acceptable to Lender to have been
prepared in accordance with GAAP and to fairly and accurately present
the financial condition and results of operations of Borrower at the
date and for the period indicated therein.
(c) No Default Certificate. As soon as available, but in
any event within forty-five (45) days after the end of each month of
each year of Borrower, a No Default Certificate, as of the last day of
such month certified by an officer of Borrower acceptable to Lender.
(d) Borrowing Base Certificate. At any time, promptly
upon request therefor by Lender, and as soon as available but in any
event within forty-five (45) days after the end of each month of each
fiscal year of Borrower, a Borrowing Base Certificate, as of the most
recent date available or the last day of such month, as applicable,
certified by an officer of Borrower acceptable to Lender.
(e) Accounts Receivable Reports. As soon as available,
and in any event within forty-five (45) days after the end of each
month of each fiscal year of Borrower, aged accounts receivable
reports for Borrower as of the last day of such
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month certified by an officer of Borrower acceptable to Lender.
(f) Annual Financial Statement-Guarantor. As soon as
available, and in any event on or before each March 1, a copy of the
financial statement of the Guarantor as of the preceding December 31,
consisting of a balance sheet, a statement of income and expenses, a
list of liabilities, including contingent liabilities (and stating the
holder of such liabilities, the repayment terms thereof and any
collateral therefor), and a statement of cash flows.
(g) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, and proceedings
before any court or governmental department, agency or
instrumentality, affecting Borrower, Guarantor or NS&R which, if
determined adversely such Person, could have a material adverse effect
on the business, condition (financial or otherwise), operations,
prospects, or properties of such Person.
(h) Notice of Default. As soon as possible and in any
event within five (5) days after the occurrence of each Event of
Default and each event which, with the giving of notice or lapse of
time or both, would constitute an Event of Default, a written notice
setting forth the details of such Event of Default or event and the
action which Borrower has taken and proposes to take with respect
thereto.
(i) General Information. Promptly, such other
information concerning Borrower, Guarantor or NS&R as Lender may from
time to time reasonably request.
Section 10.02. Maintenance of Existence; Conduct of Business.
Borrower will preserve and maintain its corporate existence and all of its
leases, privileges, licenses, permits, franchises, qualifications and rights
that are necessary or desirable in the ordinary conduct of its business.
Section 10.03. Maintenance of Properties. Borrower will maintain its
assets and properties in good condition and repair.
Section 10.04. Taxes and Claims. Borrower will pay or discharge at
or before maturity or before becoming delinquent (a) all taxes, levies,
assessments, and governmental charges imposed on it or its income or profits or
any of its property, and (b) all lawful claims for labor, material, and
supplies, which, if unpaid, might become a Lien upon any of its property;
provided, however, that Borrower shall not be required to pay or discharge any
tax, levy, assessment, or governmental charge which is being contested in good
faith by appropriate proceedings diligently pursued, and for which adequate
reserves have been established.
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Section 10.05. Insurance. Borrower will maintain with financially
sound and reputable insurance companies workmen's compensation insurance,
liability insurance, and insurance on its property, assets and business at
least in such amounts and against such risks as are usually insured against by
Persons engaged in similar businesses. Each insurance policy covering
Collateral shall name Lender as lender loss payee and provide that such policy
will not be cancelled without thirty (30) days prior written notice to Lender.
Section 10.06. Inspection; Audits. At any reasonable time and from
time to time, Borrower will permit, and, upon the occurrence and during the
continuance of an Event of Default, will cause Guarantor and NS&R to permit,
representatives of Lender (including agents of Lender and third parties engaged
by Lender):
(a) To examine and make copies of the books and records
of, and visit and inspect the properties or assets of Borrower,
Guarantor and NS&R and to discuss the business, operations, and
financial condition of any such Persons with their respective officers
and employees with their independent certified public accountants; and
(b) At the expense of Borrower, to conduct audits,
verifications and inspections of the accounts receivable and inventory
of Borrower.
Section 10.07. Keeping Books and Records. Borrower will maintain
proper books of record and account in which full, true, and correct entries in
conformity with GAAP shall be made of all dealings and transactions in relation
to its business and activities.
Section 10.08. Compliance with Laws. Borrower will comply in all
material respects with all applicable laws, rules, regulations, and orders of
any court, governmental authority, or arbitrator.
Section 10.09. Compliance with Agreements. Borrower will comply in
all material respects with all agreements, contracts, and instruments binding
on it or affecting its properties or business.
Section 10.10. Further Assurances. Borrower will execute and
deliver, and will cause NS&R to execute and deliver, such further instruments
as may be requested by Lender to carry out the provisions and purposes of this
Agreement and the other Loan Documents and to preserve and perfect the Liens of
Lender in the Collateral.
Section 10.11. ERISA. Borrower will comply with all minimum funding
requirements, and all other material requirements, of ERISA, if applicable, so
as not to give rise to any liability thereunder.
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Section 10.12. Continuity of Operations. Borrower will (a) continue
to conduct its primary businesses as conducted as of the date of this Agreement
and will continue its operations in such businesses, and (b) not make any
material change in the nature of their businesses as carried on as of the
Closing Date.
ARTICLE XI
Negative Covenants
Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any Commitment hereunder, Borrower
will perform and observe the covenants set forth below, unless Lender shall
otherwise consent in writing.
Section 11.01. Debt. Borrower will not incur, create, assume or
permit to exist, any Debt, except (a) Debt to Lender, (b) Subordinated Debt,
(c) Debt which does not exceed an aggregate principal amount of $100,000
outstanding at any time, (d) accounts payable in the ordinary course of
business, and (e) Debt arising from the endorsement of instruments for
collection in the ordinary course of business.
Section 11.02. Limitation on Liens. Borrower will not incur, create,
assume, or permit to exist, any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, except (a) Liens in favor of
Lender, (b) Liens securing the Subordinated Debt, (c) purchase money liens
securing the Debt permitted by Section 11.01(c), (d) Encumbrances consisting of
minor easements, zoning restrictions, or other restrictions on the use of real
property that do not (individually or in the aggregate) materially affect the
value of the assets encumbered thereby or materially impair the ability of
Borrower to use such assets in its business, and none of which is violated in
any material aspect by existing or proposed structures or land use, (e) Liens
for taxes, assessments, or other governmental charges which are not delinquent
or which are being contested in good faith and for which adequate reserves have
been established, and (f) Liens of mechanics, materialmen, warehousemen,
carriers or other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business.
Section 11.03. Mergers, Acquisitions, Dissolutions and Disposition of
Assets. Borrower will not (a) become a party to a merger, consolidation,
partnership or joint venture or purchase or otherwise acquire all or a
substantial part of the assets of any Person or any shares or other evidence of
beneficial ownership of any Person, (b) dissolve or liquidate, or (c) sell,
lease, assign, transfer or otherwise dispose of a material portion of its
assets, except dispositions of inventory in the ordinary course of business.
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Section 11.04. Restricted Payments. Borrower will not declare or pay
any dividends or make any other payment or distribution (in cash, property, or
obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, or set apart any money for a
sinking or other analogous fund for any dividend or other distribution on its
capital stock or for any redemption, purchase, retirement, or other acquisition
of any of its capital stock, or grant or issue any capital stock or any
warrant, right, or option pertaining to its capital stock, or issue any
security convertible into capital stock; provided that Borrower may issue
additional shares of stock and offer such stock to key management of Borrower
in amounts such that the total amount of stock so owned by key management of
Borrower does not exceed twenty percent (20%) of the total voting stock of
Borrower.
Section 11.05. Loans and Investments. Borrower will not make any
advance, loan, extension of credit, or capital contribution to or investment
in, or purchase any stock, bonds, notes, debentures, or other securities of any
Person, except (a) readily marketable direct obligations of the United States
of America, (b) fully insured certificates of deposit with maturities of one
year or less from the date of acquisition of any commercial bank operating in
the United States having capital and surplus in excess of $50,000,000.00, and
(c) commercial paper of a domestic issuer if at the time of purchase such paper
is rated in one of the two highest rating categories of Standard and Poor's
Corporation or Xxxxx Investors Service.
Section 11.06. Compliance with Environmental Laws. Except in the
ordinary course of business and in accordance with law, Borrower will not (a)
use (or permit any tenant to use) any of their respective properties or assets
for the handling, processing, storage, transportation, or disposal of any
Hazardous Substance, (b) generate any Hazardous Substance, (c) conduct any
activity which is likely to cause a release or threatened release of any
Hazardous Substance, or (d) otherwise conduct any activity or use any of their
respective properties or assets in any manner that is likely to violate any
Environmental Law.
Section 11.07. Accounting. Borrower will not make any change in
accounting treatment or reporting practices, except as required by GAAP.
Section 11.08. Subordination. If no Event of Default has occurred,
Borrower may pay principal of and interest on the Subordinated Debt. If a
Section 12.01 Event of Default has occurred and no other Event of Default has
occurred and is continuing, Borrower shall not pay payments of principal of the
Subordinated Debt, however, (a) Borrower may pay payments of interest on the
Subordinated Debt and (b) Borrower may pay payables of Borrower to NS&R, EAE or
First Wave incurred in the ordinary
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course of business. If any Event of Default other than a Section 12.01 Event
of Default has occurred and is continuing, Borrower shall not pay payments of
interest or principal on the Subordinated Debt or payables of Borrower to NS&R,
EAE or First Wave incurred in the ordinary course of business.
ARTICLE XII
Financial Covenants
Borrowers covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or Lender has any commitment hereunder, Borrower
will observe and perform the following financial covenants set forth below,
unless Lender shall otherwise consent in writing.
Section 12.01. Debt Service Coverage Ratio. Borrower will at all
times maintain a Debt Service Coverage Ratio of not less than 1.50 to 1.00.
The Debt Service Coverage Ratio shall be calculated as of the last day of each
month on a cumulative basis for the twelve months ended as of such date;
provided that for the first eleven months following the Closing Date, the Debt
Service Coverage Ratio shall be based only upon the months following the
Closing Date, calculated on an annualized basis.
ARTICLE XIII
Default
Section 13.01. Events of Default. Each of the following shall be
deemed an "Event of Default":
(a) Borrower shall fail to pay when due the Obligations or
any part thereof.
(b) Any representation or warranty made or deemed made by
Borrower or any Obligated Party (or any of their respective officers)
in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in
this Agreement or any other Loan Document.
(d) Borrower or any Obligated Party shall commence a
voluntary proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any
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bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian, or other similar official of it or a substantial part of
its property or shall consent to any such relief or to the appointment
of or taking possession by any such official in an involuntary case or
other proceeding commenced against it or shall make a general
assignment for the benefit of creditors or shall generally fail to pay
its debts as they become due or shall take any corporate action to
authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against
Borrower or any Obligated Party seeking liquidation, reorganization,
or other relief with respect to it or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official for it or a substantial part of its property, and
such involuntary proceeding shall remain undismissed and unstayed for
a period of thirty (30) days.
(f) Borrower or any Obligated Party shall fail to discharge
within a period of thirty (30) days after the commencement thereof any
attachment, sequestration, or similar proceeding or proceedings
involving an aggregate amount in excess of $25,000.00 against any of
its assets or properties.
(g) Borrower or any Obligated Party shall fail to satisfy and
discharge promptly any final judgement or judgements against it for
the payment of money in an aggregate amount in excess of $25,000.00.
(h) Borrower or any Obligated Party shall fail to pay when
due any principal of or interest on any Debt (other than the
Obligations), or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof, or any event shall have occurred
that permits (or, with the giving of notice or lapse of time or both,
would permit) any holder or holders of such Debt or any Person acting
on behalf of such holder or holders to accelerate the maturity thereof
or require any such prepayment.
(i) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
Borrower or any Obligated Party, or Borrower or any Obligated Party
shall deny that it has any further liability or obligation under any
of the Loan Documents, or any lien or security interest created by the
Loan Documents shall for any reason cease to be a valid, first
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priority perfected security interest in and lien upon any of the
Collateral purported to be covered thereby.
(j) Guarantor shall have died or have been declared
incompetent by a court of law.
Section 13.02. Remedies Upon Default. If any Event of Default shall
occur, Lender may do any one or more of the following: (a) declare the
outstanding principal of and accrued and unpaid interest on the Notes and the
Obligations or any part thereof to be immediately due and payable, and the same
shall thereupon become immediately due and payable, without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other formalities of any
kind, all of which are hereby expressly waived by Borrower, (b) terminate the
Commitment-A without notice to Borrower, (c) foreclose or otherwise enforce any
Lien granted to the Lender to secure payment and performance of the
Obligations, and (d) exercise any and all rights and remedies afforded by the
laws of the State of Texas or any other jurisdiction by any of the Loan
Documents, by equity or otherwise; provided, however, that upon the occurrence
of an Event of Default under Section 13.01(d) or Section 13.01(e), the
Commitment-A shall automatically terminate, and the outstanding principal of
and accrued and unpaid interest on the Notes and the other Obligations shall
become immediately due and payable without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to demand, protest, or other formalities of any kind, all of which are
hereby expressly waived by Borrower.
Section 13.03. Performance by Lender. If Borrower shall fail to
perform any covenant, duty, or agreement contained in any of the Loan
Documents, Lender may perform or attempt to perform such covenant, duty, or
agreement on behalf of Borrower. In such event, Borrower shall, at the request
of Lender, promptly pay any amount expended by Lender in such performance or
attempted performance to Lender, together with interest thereon at the Default
Rate from the date of such expenditure until paid. Notwithstanding the
foregoing, it is expressly agreed that Lender shall not have any liability or
responsibility for the performance of any obligation of Borrower under this
Agreement or any other Loan Document.
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ARTICLE XIV.
Miscellaneous
Section 14.01. Expenses of Lender. Borrower hereby agrees to pay
Lender on demand (a) all reasonable costs and expenses incurred by Lender in
connection with the preparation, negotiation, and execution of this Agreement
and the other Loan Documents and any and all amendments, modifications,
renewals, extensions, and supplements thereof and thereto, including, without
limitation, the fees and expenses of Lender's legal counsel, (b) all reasonable
costs and expenses incurred by Lender in connection with the enforcement of
this Agreement or any other Loan Document, including, without limitation, the
fees and expenses of Lender's legal counsel, and (c) all other reasonable costs
and expenses incurred by Lender in connection with this Agreement or any other
Loan Document, including, without limitation, all costs, expenses, taxes,
assessments, filing fees, and other charges levied by an governmental authority
or otherwise payable in respect of this Agreement or any other Loan Document or
in obtaining any insurance policy, audit or appraisal in respect of the
Collateral.
Section 14.02. Indemnification. Borrower hereby indemnifies Lender
and each affiliate thereof and their respective officers, directors, employees,
attorneys, and agents from, and holds each of them harmless against, any and
all losses, liabilities, claims, damages, penalties, judgments, disbursements,
costs, and expenses (including attorneys' fees) (collectively, "Claims") to
which any of them may become subject which directly or indirectly arise from or
relate to (a) the negotiation, execution, delivery, performance,
administration, or enforcement of any of the Loan Documents, (b) any of the
transactions contemplated by the Loan Documents, (c) any breach by Borrower of
any representation, warranty, covenant, or other agreement contained in any of
the Loan Documents, or (d) the presence, release, threatened release, disposal,
removal, or cleanup of any Hazardous Substance located on, about, within, or
affecting any of the properties or assets of Borrower; provided, however, that
such indemnification obligation shall not arise to the extent that any Claim
arises from the negligence or willful misconduct of Lender.
Section 14.03. Limitation of Liability. Neither Lender nor any
affiliate, officer, director, employee, attorney, or agent of Lender shall have
any liability with respect to, and Borrower hereby waives, releases, and agrees
not to xxx any of them upon, any claim for any special, indirect, incidental,
or consequential damages suffered or incurred by Borrower in connection with,
arising out of, or in any way related to, this Agreement or any of the other
Loan Documents, or any of the transactions contemplated by this Agreement or
any of the other Loan Documents. Borrower hereby waives, releases, and agrees
not to xxx Lender or any of Lender's affiliates, officers, directors,
employees, attorneys, or
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agents for punitive damages in respect of any claim in connection with, arising
out of, or in any way related to, this Agreement or any of the other Loan
Documents, or any of the transactions contemplated by this Agreement or any of
the other Loan Documents.
Section 14.04. No Waiver; Cumulative Remedies. No failure on the
part of Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement and the other Loan Documents
are cumulative and not exclusive of any rights and remedies provided by law.
Section 14.05. Successors and Assigns. This Agreement is binding
upon and shall inure to the benefit of Lender and Borrower and their respective
successors and assigns, except that Borrower may not assign or transfer any of
its rights or obligations under this Agreement without prior written consent of
Lender.
Section 14.06. Survival. All representations and warranties made
in this Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them. Without prejudice to the
survival of any other obligation of Borrower hereunder, the obligations of
Borrower under Sections 14.01 and 14.02 shall survive repayment of the Notes
and termination of the Commitment-A.
Section 14.07. Amendment. The provisions of this Agreement and the
other Loan Documents to which Borrower is a party may be amended or waived only
by an instrument in writing signed by the parties hereto.
Section 14.08. Maximum Interest Rate. No provision of this Agreement
or of any other Loan Documents shall require the payment or the collection of
interest in excess of the maximum permitted by applicable law. If any excess
of interest in such respect is hereby provided for, or shall be adjudicated to
be so provided, in any other Loan Documents or otherwise in connection wit this
loan transaction, the provisions of this Section shall govern and prevail and
neither Borrower nor the sureties, guarantors, successors, or assigns of
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event Lender ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
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amount permitted by applicable law shall be applied as payment and reduction
of the principal of the indebtedness evidenced by the Note; and, if the
principal of the Notes has been paid in full, any remaining excess shall
forthwith be paid to Borrower. In determining whether or not the interest paid
or payable exceeds the Maximum Rate, Borrower and Lender shall, to the extent
permitted by applicable law, (a) characterize any non-principal payment as an
expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the indebtedness evidenced by the Notes so that
interest for the entire term does not exceed the Maximum Rate.
Section 14.09. Notices. All notices and other communications
provided for in this Agreement and the other Loan Documents shall be in writing
and may be telecopied, mailed by certified mail return receipt requested, or
delivered to the intended recipient at the addresses specified below or at such
other address as shall be designated by any party listed below in a notice to
the other parties listed below given in accordance with this Section.
If to Borrower: Louisiana Ship, Inc.
00000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
If to Guarantor: Xxxxxx X. Xxxxx
0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, Xxxxxxxxx 00000
Telephone No.: 000-000-0000
Fax: 000-000-0000
If to NS&R: Newpark Shipbuilding and Repair, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Chairman and Chief Executive Officer
Telephone No.: 000-000-0000
Fax: 000-000-0000
If to Lender: Southwest Bank of Texas, N.A.
0000 Xxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Telephone No.: 000-000-0000, ext. 1766
Fax: 000-000-0000
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or
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addressed as aforesaid; provided, however, that notices to Lender pursuant to
Articles II and III shall not be effective until received by Lender.
Section 14.10. Applicable Law; Venue; Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas and the applicable laws of the United States of America. This
Agreement has been entered into in Xxxxxx County, Texas and it shall be
performable for all purposes in Xxxxxx County, Texas. Except as provided in
the Arbitration Agreement, any action or proceeding against Borrower under or
in connection with any of the Loan Documents may be brought in any state or
federal court in Xxxxxx County, Texas, and Borrower hereby irrevocably submits
to the nonexclusive jurisdiction of such courts and waives any objection it may
now or hereafter have as to the venue of any such action or proceeding brought
in any such court or that any such court is an inconvenient forum. Borrower
agrees that service of process upon it may be made by certified or registered
mail, return receipt requested, at its office specified in this Agreement.
Except as provided in the Arbitration Agreement, nothing herein or in any of
the other Loan Documents shall affect the right of Lender to serve process in
any other manner permitted by law or shall limit the right of Lender to bring
any action or proceeding against Borrower or with respect to any of its
property in courts in other jurisdictions. Except as provided in the
Arbitration Agreement, any action or proceeding by Borrower against Lender
shall be brought only in a court located in Xxxxxx County, Texas.
Section 14.11. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 14.12. Severability. Any provision of this Agreement held by
a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 14.13. Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 14.14. Non-Application of Chapter 15 of Texas Credit Code.
The provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to this Agreement or any of the other Loan Documents or to the
transactions contemplated hereby.
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Section 14.15. Participations. Lender shall have the right at any
time and from time to time to grant participations in the Note and any other
Loan Documents. Each actual or proposed participant shall be entitled to
receive all information received by Lender regarding the creditworthiness of
Borrower, including, without limitation, information required to be disclosed
to a participant pursuant to Banking Circular 181 (Rev., August 2, 1984),
issued by the Comptroller of the Currency (whether the actual or proposed
participant is subject to the circular or not).
Section 14.16. ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND
THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
LOUISIANA SHIP, INC.
By: /s/ XXXXXX X. XXXXX
------------------------------
Xxxxxx X. Xxxxx
President
LENDER:
SOUTHWEST BANK OF TEXAS, N.A.
By: /s/ XXXXXX XXXXXXXX
------------------------------
Xxxxxx Xxxxxxxx
Vice President
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LIST OF EXHIBITS
Exhibits Document
-------- --------
A Note-A
B Note-B
C Note-C
D Note-D
E Security Agreement
F Guaranty
G Contingency Agreement
H Subordination Agreement-NS&R
I Borrowing Base Certificate
J No Default Certificate
K Arbitration Agreement
L Advance Request Form-A
M Advance Request Form-B
N Subordination Agreement - EAE
O Subordination Agreement - First Wave
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