LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of March 26, 2001 (this "Agreement"), is
between HORIZON OFFSHORE CONTRACTORS, INC., a Delaware corporation
("Contractors"), HORIZON SUBSEA SERVICES, INC., a Delaware corporation
("Subsea") and HORIZON VESSELS, INC., a Delaware corporation ("Vessels", and
together with Contractors and Subsea, the "Borrowers"), jointly and
severally, each of the financial institutions which is or may from time to
time become a party hereto (collectively, "Lenders", and each a "Lender"),
and SOUTHWEST BANK OF TEXAS, N.A., a national banking association, as agent
(the "Agent").
R E C I T A L S :
Borrowers have requested that Lenders extend credit to Borrowers in the form
of a revolving line of credit in the amount of $25,000,000.00. Lenders are
willing to make such extension of credit to Borrowers 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 I.1. DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"ADVANCE" means a loan or loans pursuant to Article II.
"ADVANCE REQUEST FORM" means a certificate, in substantially the form of
Exhibit "G", properly completed and signed by Borrowers requesting an Advance.
"AFFILIATE" means, with respect to any Person, any other Person which,
directly or indirectly, controls or is controlled by or is under common
control with such Person, including, (a) any Person which beneficially owns
or holds ten percent (10%) or more of any class of voting stock of such
Person or ten percent (10%) or more of the equity interest in such Person,
(b) any Person of which such Person beneficially owns or holds ten percent
(10%) or more of any class of voting shares or in which such Person
beneficially owns or holds ten percent (10%) or more of the equity interests
in such Person, and (c) any officer or director of such Person.
"APPLICABLE MARGIN" means, for the Levels described below, the percentage
amounts set forth below.
--------------------------- ----------------- ----------------- ----------------- ---------------- -----------------
Level I Level II Level III Level IV Level V
--------------------------- ----------------- ----------------- ----------------- ---------------- -----------------
LIBOR Margin 2.00% 2.50% 3.00% 3.50% 5.00%
--------------------------- ----------------- ----------------- ----------------- ---------------- -----------------
Prime Rate Margin -0.50% 0.00% 0.50% 1.00% 2.00%
--------------------------- ----------------- ----------------- ----------------- ---------------- -----------------
LEVEL I applies when the Ratio of Funded Debt to Capitalization is less than
0.30 to 1.00.
LEVEL II applies when the Ratio of Funded Debt to Capitalization is equal to
or greater than 0.30 to 1.00 but less than 0.40 to 1.00.
LEVEL III applies when the Ratio of Funded Debt to Capitalization is equal to
or greater than 0.40 to 1.00 but less than 0.45 to 1.00.
LEVEL IV applies when the Ratio of Funded Debt to Capitalization is equal to
or greater than 0.45 to 1.00 but less than or equal to 0.50 to 1.00.
LEVEL V applies when the Ratio of Funded Debt to Capitalization is equal to
or greater than 0.50 to 1.00.
The applicable Level shall be adjusted, to the extent applicable, forty-five
(45) days after the end of each fiscal quarter (or, in the case of any change
reflected by the audited financial statements delivered pursuant to Section
7.1(a), ninety (90) days after the end of each fiscal year) based on the
Ratio of Funded Debt to Capitalization tested for the period ending on the
last day of such quarter or such fiscal year, as applicable; provided that if
Borrowers fail to deliver the financial statements required by Section 7.1(a)
or (b), as applicable, or the related No Default Certificate required by
Section 7.1(d) by the forty-fifth (45th) day (or, if applicable, the 90th
day) after the end of any quarter or any fiscal year, as applicable, Level V
shall apply until such financial statements are delivered.
"APPLICABLE RATE" means (a) during the period that an Advance is a Prime Rate
Advance, the sum of the Prime Rate plus the Prime Rate Margin from time to
time in effect, and (b) during the period that an Advance is a LIBOR Advance,
the sum of the LIBOR Rate plus the LIBOR Margin from time to time in effect.
"ARBITRATION AGREEMENT" means the Arbitration Agreement
executed by Borrowers and Guarantor in substantially the form of Exhibit "J",
as the same may be amended, supplemented, or modified.
"ASSIGNMENT AND ACCEPTANCE" means a document in substantially the form of
Exhibit "K".
"AUTHORIZED REPRESENTATIVE" means any officer or employee of Borrowers who
has been designated in writing by Borrowers to Agent to be an Authorized
Representative.
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"BORROWING BASE" means, at any particular time, an amount equal to eighty
percent (80%) of Eligible Accounts.
"BORROWING BASE CERTIFICATE" means a certificate in the form of Exhibit "H",
fully completed and executed by Borrowers.
"BUSINESS DAY" means (a) any day on which commercial banks are not authorized
or required to close in Houston, Texas, and (b) with respect to all
borrowings, payments, Conversions, Continuations, Interest Periods, and
notices in connection with LIBOR Advances, any day which is a Business Day
described in clause (a) above and which is also a day on which dealings in
Dollar deposits are carried out in the London interbank market.
"CAPITAL EXPENDITURES" means all expenditures for assets which, in accordance
with GAAP, are properly classified as equipment, real property, improvements,
fixed assets or a similar type of capitalized asset and which would be
required to be capitalized and shown on the consolidated balance sheet of
Guarantor and its Subsidiaries.
"CAPITAL LEASE OBLIGATIONS" means, for Guarantor or any of its Subsidiaries,
at any particular date, the obligations of Guarantor or such Subsidiary to
pay rent or other amounts under a lease of (or other agreement conveying the
right to use) real and/or personal property, which obligations are required
to be classified and accounted for as a capital lease on a balance sheet of
Guarantor or such Subsidiary under GAAP.
"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one (1) year from
the date of acquisition, (ii) time deposits (including Eurodollar time
deposits) and certificates of deposit of any bank meeting the qualifications
specified in clause (iv) below with maturities of not more than ninety (90)
days from the date of acquisition, (iii) fully secured repurchase obligations
with a term of not more than ninety (90) days for underlying securities of
the types described in clause (i) entered into with any bank meeting the
qualifications specified in clause (iv) below, (iv) commercial paper issued
by the parent corporation of any bank referred to in this clause (iv) or any
commercial bank of recognized standing having capital and surplus in excess
of $300,000,000.00 and commercial paper rated at least A-2 or the equivalent
thereof by S&P or at least P-2 or the equivalent thereof by Moody's, and in
each case maturing within ninety (90) days after the date of acquisition, and
(v) remarketed certificates of participation issued through any bank meeting
the qualifications specified in clause (iv) above rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by
Moody's and maturing with ninety (90) days after the date of acquisition.
"CASH TAXES" means for Guarantor and its Subsidiaries, on a consolidated
basis, for any period, the sum of all income taxes paid in cash during such
period, as determined in accordance with GAAP.
"CIT" means CIT Group/Equipment Financing, Inc., a New York corporation, and
its successors and assigns.
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"CIT LOAN AGREEMENT" means the Loan Agreement dated December 30, 1998 among
Contractors, Vessels and CIT, as Agent, and the lenders named therein, as the
same may be amended from time to time.
"CLAIMS" has the meaning set forth in Section 12.2.
"CLOSING DATE" means the date on which this Agreement has been executed and
delivered by the parties hereto and the conditions set forth in Section 5.1
have been satisfied.
"COLLATERAL" has the meaning specified in Section 4.1.
"COMBINED COMMITMENTS" means, as to all Lenders the obligations of Lenders to
make Advances and issue Letters of Credit in an aggregate principal amount at
any time outstanding up to but not exceeding $25,000,000.00.
"COMMITMENT" means, as to any Lender, its obligation to make Advances and
issue Letters of Credit hereunder in the amounts set forth opposite the name
of such Lender on the signature pages hereto under the heading "Commitments",
as such amount may be reduced pursuant to Section 2.8 or otherwise.
"COMMITMENT PERCENTAGE" means for each Lender the percentage derived by
dividing its Commitment by the Combined Commitments at the time in question.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the continuation
pursuant to Section 3.7 of an Advance as an Advance of the same Type from one
Interest Period to the next Interest Period.
"CONVERT", "CONVERSION", and "CONVERTED" shall refer to a conversion pursuant
to Section 3.7 of or 3.8 of one Type of Advance into another Type of Advance.
"CURRENT ASSETS" means all amounts which, in conformity with GAAP, would be
included as current assets on a consolidated balance sheet of Guarantor and
its Subsidiaries.
"CURRENT LIABILITIES" means all amounts which, in conformity with GAAP, would
be included as current liabilities on a consolidated balance sheet of
Guarantor and its Subsidiaries.
"CURRENT MATURITIES OF LONG TERM DEBT" means for Guarantor and its
Subsidiaries on a consolidated basis, the principal amount due and payable
during the next succeeding twelve month period on Total Funded Debt of
Guarantor and its Subsidiaries which has a final maturity more than twelve
months from the date of calculation.
"CURRENT RATIO" means, at any particular date, (a) Current Assets as of such
date divided by (b) Current Liabilities as of such date.
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"DEBT" means for any Person (a) all indebtedness, whether or not represented
by bonds, debentures, notes, securities, or other evidences of indebtedness,
for the repayment of money borrowed, including all indebtedness created under
this Agreement and under the Foreign Loan Agreement, (b) all indebtedness
representing deferred payment of the purchase price of property or assets,
(c) all Capital Lease Obligations, (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) any obligation to redeem or repurchase any of
such Person's capital stock or other ownership interests.
"DEFAULT RATE" means the lesser of (a) (i) for Advances which are Prime Rate
Advances, the sum of the Prime Rate in effect from day to day plus two
percent (2.0%), and (ii) for Advances which are LIBOR Advances, the sum of
the LIBOR Rate plus five percent (5.0%), or (b) the Maximum Rate.
"DEFAULTING LENDER" has the meaning specified in Section 3.1.
"DOLLAR," "DOLLARS" and "$" means currency of the United States of America
which is at the time of payment legal tender for the payment of public and
private debts in the United States of America.
"DRAWDOWN DATE" means the date upon which an Advance is made or a Letter of
Credit is issued.
"EBITDA" means for Guarantor and its Subsidiaries, on a consolidated basis,
for any period, the sum of (a) Net Income before gains and losses on sales of
assets (to the extent such gains and losses are included in earnings), plus
(b) Taxes, plus (c) depreciation and amortization, plus (d) Interest Expense.
"ELIGIBLE ACCOUNTS" means the aggregate of all accounts receivable of
Borrowers that 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, unless the account debtor for any such
account receivable is an Investment Grade Account Debtor, in which case such
accounts receivable shall have been outstanding less than one hundred twenty
(120) days past the original date of invoice; (c) have arisen in the ordinary
course of business from services performed by any Borrower to or for the
account debtor or the sale by any Borrower of goods in which such 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 any Borrower to make
such accounts receivable payable by the account debtor;(e) the goods 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 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 Agent created by the Loan
Documents and subordinate security interests in favor of the Foreign Agent
under the Foreign Loan Agreement; (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
Agent and are not subject to any other Lien, except subordinate Liens in
favor of the Foreign Agent under the Foreign Loan Documents; (i) are not
subject to setoff, counterclaim, defense, allowance, dispute or adjustment
other than normal discounts for prompt
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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 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
Foreign Person; (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 any Borrower; (o) do not arise in connection with any
amount which constitutes retention under any contract to which any Borrower
is a party; (p) have not been included in the Foreign Borrowing Base; and (q)
do not consist of accounts arising from the sale to, or services rendered
for, Guarantor or any Subsidiary of Guarantor or any Borrower. No account
receivable owed by an account debtor to any 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 Borrowers have remained unpaid for more than ninety (90) days
from the dates of their original invoices, unless the account debtor for any
such account receivable is an Investment Grade Account Debtor, in which case
no account receivable owed by any such Investment Grade Account Debtor to any
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
Investment Grade Account Debtor and its Affiliates to Borrowers have remained
unpaid for more than one hundred twenty (120) days from the dates of their
original invoices. 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. The amount of
any Eligible Accounts owed by any account debtor to Borrowers shall be
reduced by the aggregate amount of all sums held by Borrowers and Guarantor
as customer deposits from such account debtor.
"ELIGIBLE ASSIGNEE" means any commercial bank, savings and loan association,
savings bank, finance company, insurance company, pension fund, mutual fund,
or other financial institution (whether a corporation, partnership, or other
entity) acceptable to the Agent, and having combined capital and surplus of
at least $500,000,000.00.
"ENVIRONMENTAL LAWS" means any and all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of
natural resources, the management, release or threatened release of Hazardous
Substance or to health and safety matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations and published interpretations thereof.
"EVENT OF DEFAULT" has the meaning specified in Section 10.1.
"FIELD AUDITS" means audits, verifications and inspections of the accounts
receivable and inventory of
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Borrowers, conducted by an independent third Person selected by Agent.
"FIXED CHARGE COVERAGE RATIO" means for Guarantor and its Subsidiaries, on a
consolidated basis, at any particular date, (a) EBITDA for the period ended
as of such date, less amounts used to repurchase stock of Guarantor, divided
by (b) the sum of (i) Current Maturities of Long Term Debt as of such date,
plus (ii) interest accrued and paid during the period ended as of such date,
plus (iii) Cash Taxes for the period ended as of such date.
"FOREIGN ACCOUNTS" means accounts receivable of any Borrower or Guarantor
which are owed by a Foreign Person.
"FOREIGN AGENT" means Southwest Bank of Texas, N.A., or any other Person
serving as Agent (as defined in the Foreign Loan Agreement) under the Foreign
Loan Agreement.
"FOREIGN BORROWING BASE" means the "Borrowing Base" as defined in the Foreign
Loan Agreement.
"FOREIGN LOAN AGREEMENT" means, upon the execution and delivery thereof, that
certain EXIM Guaranteed Loan Agreement among Borrowers, the Foreign Agent and
the lenders referred to therein, as the same may be amended, supplemented or
modified from time to time.
"FOREIGN LOAN DOCUMENTS" means the "Loan Documents" as defined in the Foreign
Loan Agreement.
"FOREIGN PERSON" means any Person organized under the laws of a jurisdiction
located outside of the Untied States of America.
"GAAP" means generally accepted accounting principles in the United States of
America, consistently applied.
"GOVERNMENTAL AUTHORITY" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTOR" means Horizon Offshore, Inc., a Delaware corporation, and its
successors and assigns.
"GUARANTY AGREEMENT" means the Guaranty Agreement executed by Guarantor in
favor of Agent in substantially the form of Exhibit "F", as the same may be
amended, supplemented or modified.
"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.
"HOLDING ACCOUNT" means an account in the name of the Borrowers and Guarantor
for the benefit of the Lenders held at the office of the Agent pursuant to
this Agreement and the Holding Account Agreement.
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"HOLDING ACCOUNT AGREEMENT" means the agreement entered into between
Borrowers, Guarantor and Agent with respect to the Holding Lockbox and the
Holding Account, which agreement may consist of Agent's Treasury Management
Services Agreement and the exhibits thereto, including the lockbox exhibit
thereto.
"HOLDING LOCKBOX" means Xxxx Xxxxxx Xxx 0000, Xxxx. 000, Xxxxxxx, Xxxxx
00000-0000.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement executed by CIT,
Agent, Borrowers and Guarantor in substantially the form of Exhibit "L", as
the same may be amended, supplemented or modified.
"INTEREST EXPENSE" means, for any period, the consolidated interest expense
of Guarantor and its Subsidiaries for such period, determined in accordance
with GAAP applied consistently.
"INTEREST PERIOD" means with respect to LIBOR Advances, each period
commencing on the date such Advances are made or Converted from Advances of
another Type or, in the case of each subsequent, successive Interest Period
applicable to a LIBOR Advance, each period commencing on the last day of the
immediately preceding Interest Period with respect to such LIBOR Advance, and
in each case ending on the thirtieth (30th), sixtieth (60th) or ninetieth
(90th) day thereafter, as Borrowers may select as provided in Section 2.5 or
3.7. Notwithstanding the foregoing (a) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day; provided, however, that if any Interest Period would
otherwise end on a date that is not a Business Day but is a day of the month
after which no further Business Day occurs, such Interest Period shall end on
the next preceding Business Day, (b) any Interest Period for any LIBOR
Advance which would otherwise extend beyond the Termination Date shall end on
the Termination Date, (c) no portion of any LIBOR Advance in an amount less
than $500,000.00 shall have an Interest Period which is different from the
Interest Period borne by a remaining portion of such Advance which is in an
amount which is at least equal to $500,000.00, provided that if a LIBOR
Advance is in an original aggregate amount which is less than $500,000.00,
such LIBOR Advance shall have only one Interest Period, (d) no Interest
Period shall have a duration of less than thirty (30) days, and, if the
Interest Period for any LIBOR Advance would otherwise be a shorter period,
such Advance shall be a Prime Rate Advance, and (e) if any Interest Period
begins on a date on which there is no numerically corresponding day in the
calendar month in which such Interest Period ends, such Interest Period shall
end on the last Business day of such month.
"INVESTMENT GRADE ACCOUNT DEBTOR" means, with respect to any account debtor
of any Borrower, that such account debtor has received a rating for its
short-term debt obligations of not less than BBB- from S&P or Baa3 from
Moody's (or the then equivalent).
"ISSUING BANK" means Southwest Bank of Texas, N.A. in its capacity of the
issuer of Letters of Credit.
"LETTER OF CREDIT" means any letter of credit issued by Issuing Bank for the
account of Borrowers pursuant to Article II.
"LETTER OF CREDIT APPLICATION" means Issuing Bank's standard form of letter
of credit application and
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agreement, as the same may be amended, modified, renewed, extended, or
supplemented.
"LETTER OF CREDIT LIABILITIES" means, at any time, the aggregate face amounts
of all outstanding Letters of Credit.
"LIBOR ADVANCES" means Advances the interest rates on which are determined on
the basis of the rates referred to in the definition of "LIBOR Rate".
"LIBOR MARGIN" has the meaning given to such term in the definition of the
term "Applicable Margin".
"LIBOR RATE" means, for any LIBOR Advance, for any Interest Period therefor,
the rate per annum offered for Dollar deposits in an amount comparable to the
principal amount of such LIBOR Advance for a period of time equal to such
Interest Period as of 11:00 A.M. City of London, England time two (2) London
Business Days prior to the first date of such Interest Period as shown on the
display designated as "British Bankers Association Interest Settlement Rates"
on the Bloomberg System ("Bloomberg"); provided, however, that if such rate
is not available on Bloomberg then such offered rate shall be otherwise
independently determined by Lender from an alternate, substantially similar
independent source available to Lender and recognized in the banking industry.
"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, deeds of trust, assignments, letters of credit, guaranties, 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.
"LONDON BUSINESS DAY" means any day other than a Saturday, Sunday or a day on
which banking institutions are generally authorized or obligated by laws or
executive order to close in the City of London, England.
"MAJORITY LENDERS" means Lenders holding 66-2/3% or more of the Combined
Commitments.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, operations, property or condition (financial or otherwise) of any
Borrower and its Subsidiaries, taken as a whole, or Guarantor and its
Subsidiaries, taken as a whole, (b) the ability of Borrowers to pay the
Obligations or the ability of any Borrower or Guarantor to perform its
respective obligations under this Agreement or any of the other Loan
Documents, or (c) the validity or enforceability of this Agreement or any of
the other Loan Documents, or the rights or remedies of Lender hereunder or
thereunder.
"MAXIMUM RATE" means the maximum rate of nonusurious interest permitted from
day to day by applicable law, including Chapter 303 of the Texas Finance Code
(the "Code") (and as the same may be incorporated
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by reference in other Texas statutes). To the extent that Chapter 303 of the
Code is relevant to Lender for the purposes of determining the Maximum Rate,
Lender elects to determine such applicable legal rate pursuant to the "weekly
ceiling," from time to time in effect, as referred to and defined in Chapter
303 of the Code; subject, however, to the limitations on such applicable
ceiling referred to and defined in the Code, and further subject to any right
Lender may have subsequently, under applicable law, to change the method of
determining the Maximum Rate.
"MOODY'S" Xxxxx'x Investors Service, Inc. and its successors and assigns.
"NET INCOME" means, for any period, with respect to Guarantor and its
Subsidiaries, the consolidated net income (or loss) of Guarantor and its
Subsidiaries for such period, determined in accordance with GAAP applied
consistently, (excluding any extraordinary items during such period.
"NO DEFAULT CERTIFICATE" means a certificate in the form of Exhibit "I"
hereto, fully completed and executed by Borrowers and Guarantor.
"NOTES" mean the promissory notes executed by Borrowers payable to the order
of each Lender, respectively, in substantially the form of Exhibit "A",
properly completed, as the same may be renewed, extended or modified and all
promissory notes executed in renewal, extension, modifications or
substitution thereof.
"OBLIGATIONS" means all obligations, indebtedness, and liabilities of
Borrowers to Agent, Issuing Bank, and Lenders, or any of them, arising
pursuant to this Agreement or any of the Loan Documents, now existing or
hereafter arising, including, without limitation, all of Borrowers'
contingent reimbursement obligations in respect of Letters of Credit, and all
interest accruing thereon and all attorneys' fees and other expenses incurred
in the enforcement or collection thereof.
"ORGANIZATIONAL DOCUMENTS" means, for any Person, (a) the articles of
incorporation and bylaws of such Person if such Person is a corporation, (b)
the articles or certificates of organization and regulations of such Person
if such Person is a limited liability company, (c) the limited partnership
agreement of such Person if such Person is a limited partnership, or (d) the
documents under which such Person was created and is governed if such person
is not a corporation, limited liability company or limited partnership.
"PERMITTED LIENS" shall have the meaning given to such term in Section 8.2.
"PERSON" means any individual, corporation, limited liability company,
business trust, association, company, partnership, joint venture,
governmental authority, or other entity.
"PRIME RATE" means that variable rate of interest per annum established by
Agent from time to time as its prime rate which shall vary from time to time.
Such rate is set by Agent as a general reference rate of interest, taking
into account such factors as Agent may deem appropriate, it being understood
that many of Agent's commercial or other loans are priced in relation to such
rate, that it is not necessarily the lowest or best rate charged to any
customer and that Lenders may make various commercial or other loans at rates
of interest having no relationship to such rate.
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"PRIME RATE ADVANCES" means Advances that bear interest at rates based upon
the Prime Rate.
"PRIME RATE MARGIN" has the meaning given to such term in the definition of
the term "Applicable Margin".
"PRO RATA", "PRO RATA SHARE OR PRO RATA PART" means for each Lender (i) for
all purposes when no Advance is outstanding, such Lender's Commitment
Percentage, and (ii) otherwise, the proportion which the portion of
outstanding Advances owed to such Lender bears to the aggregate outstanding
Advances owed to all Lenders at the time in question.
"RATIO OF FUNDED DEBT TO CAPITALIZATION" means, for Guarantor and its
Subsidiaries, on a consolidated basis, at any particular date, (a) Total
Funded Debt as of such date, divided by (b) Total Capitalization as of such
date.
"RATIO OF FUNDED DEBT TO EBITDA" means, for Guarantor and its Subsidiaries on
a consolidated basis, at any particular date, (a) Total Funded Debt as of
such date, divided by (b) EBITDA for the period ended as of such date.
"REGULATION D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented.
"REGULATORY CHANGE" means, with respect to any Lender, any change after the
date of this Agreement in United States federal, state, or foreign laws or
regulations (including Regulation D) or the adoption or making after such
date any interpretations, directives, or requests applying to a class of
banks (including any Lender) of or under any United States federal or state,
or any foreign, laws or regulations (whether or not having the force of law)
by any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"RESERVE REQUIREMENT" means the aggregate maximum reserve percentages
(including any marginal, special, supplemental or emergency reserves, and
expressed as a decimal) established by the Federal Reserve Board or any other
United States banking authority to which Lender is subject for "Eurocurrency
Liabilities" (as defined in Regulation D). Such reserve percentages shall
include, without limitation, those imposed under Regulation D.
"S&P" means Standard & Poor's Credit Market Services, a division of The
XxXxxx-Xxxx companies, Inc. and its successors and assigns.
"SECURITY AGREEMENT-CONTRACTORS" means the Security Agreement executed by
Contractors in favor of Agent in substantially the form of Exhibit "C"
hereto, as the same may be amended, supplemented or modified.
"SECURITY AGREEMENT-GUARANTOR" means the Security Agreement
executed by Guarantor in favor of Agent in substantially the form of Exhibit
"B", as the same may be amended, supplemented or modified.
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"SECURITY AGREEMENT-SUBSEA" means the Security Agreement executed by Subsea
in favor of Agent in substantially the form of Exhibit "D" hereto, as the
same may be amended, supplemented or modified.
"SECURITY AGREEMENT-VESSELS" means the Security Agreement executed by Vessels
in favor of Agent in substantially the form of Exhibit "E" hereto, as the
same may be amended, supplemented or modified.
"SECURITY AGREEMENTS" means the Security Agreement-Guarantor, the Security
Agreement-Contractors, the Security Agreement-Subsea and the Security
Agreement-Vessels.
"SHAREHOLDERS' EQUITY" shall have the meaning given to such term under GAAP.
"SUBSIDIARY" means each Borrower and any other Person of which or in which
Borrower and its other Subsidiaries own or control, directly or indirectly,
more than fifty percent (50%) of (a) the combined voting power of all classes
having general voting power under ordinary circumstances to elect a majority
of the directors or equivalent body of such Person, if it is a corporation,
(b) the capital interest or profits interest of such Person, if it is a
partnership, limited liability company, joint venture or similar entity, or
(c) the beneficial interest of such Person, if it is a trust, association or
other unincorporated association or organization.
"TANGIBLE NET WORTH" means, at any particular date, all amounts which, in
conformity with GAAP, would be included as stockholders' equity on a
consolidated balance sheet of Guarantor and its Subsidiaries; provided,
however, there shall be excluded therefrom (a) any amount at which shares of
capital stock of Guarantor or any Subsidiary appear as an asset on
Guarantor's or such Subsidiary's balance sheet, (b) goodwill, including any
amounts, however designated, that represent the excess of the purchase price
paid for assets or stock over the value assigned thereto, (c) patents,
trademarks, trade names, and copyrights, (d) deferred expenses, (e) loans and
advances to any stockholder, director, officer, or employee of Guarantor or
any Subsidiary or any Affiliate, and (f) all other assets which are properly
classified as intangible assets.
"TAXES" means any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any Governmental Authority or taxing
authority thereof.
"TERMINATION DATE" means 11:00 a.m., Houston, Texas time on April 3, 2003, or
such earlier date on which the Commitment terminates as provided in this
Agreement.
"TOTAL CAPITALIZATION" means the sum of (a) Total Funded Debt, plus (b)
Shareholder's Equity.
"TOTAL FUNDED DEBT" means, for Guarantor and its Subsidiaries, on a
consolidated basis, the sum of (a) all indebtedness for borrowed money,
whether or not evidenced by notes, bonds, debentures, notes or similar
instruments, including the Note and all other indebtedness and liabilities of
Guarantor or any Subsidiary under the Foreign Loan Agreement, (b) all Capital
Lease Obligations, (c) all obligations to pay the deferred purchase price of
property or services (but excluding trade accounts payable or trade notes in
the ordinary course of business that are not past due by more than 90 days),
(d) all indebtedness secured by a Lien on the property of Guarantor or any of
its Subsidiaries, and (f) the Letter of Credit Liabilities.
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"TYPE" means the type of Advance (i.e. Prime Rate Advance or LIBOR Advance).
"UNMATURED EVENT OF DEFAULT" means the occurrence of an event or the
existence of a condition which, with the giving of notice or the passage of
time would constitute an Event of Default.
"WORKING CAPITAL" means, at any particular date, (a) Current Assets as of
such date, minus (b) Current Liabilities as of such date.
Section I.2. 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 AND LETTERS OF CREDIT
Section II.1. ADVANCES. Subject to the terms and conditions of this
Agreement, each Lender agrees severally to make one or more Advances to
Borrowers from time to time from the date hereof to and including the
Termination Date in an aggregate principal amount at any time outstanding up
to but not exceeding such Lender's Commitment; provided that the aggregate
amount of all Advances at any time outstanding shall not exceed the lesser of
(a) the Combined Commitments minus the outstanding Letter of Credit
Liabilities or (b) the Borrowing Base minus the outstanding Letter of Credit
Liabilities. Lenders shall have no obligation to make any Advance (other than
an Advance to reimburse Issuing Bank for any draw on a Letter of Credit
issued pursuant to the terms hereof) if an Event of Default or an Unmatured
Event of Default has occurred and is continuing unless waived by Majority
Lenders. The obligations of the Lenders under the Commitments are several and
not joint. The failure of any Lender to make an Advance required to be made
by it shall not relieve any other Lender of its obligation to make its
Advance, and no Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender. No Lender shall
ever be required to lend hereunder in excess of its legal lending limit.
Subject to the foregoing limitations, and the other terms and provisions of
this Agreement, Borrowers may borrow, repay, and reborrow hereunder.
Section II.2. THE NOTES. The obligation of Borrowers to repay the Advances
shall be evidenced by a Note executed by Borrowers, payable to the order of
each Lender, respectively, in the principal amount of such Lender's
Commitment. From time to time a new Note may be issued to another Lender
hereunder as such Person becomes a party to this Agreement. From time to time
the Agent may require a Note to be exchanged for a newly issued Note to
accurately reflect the amount of each Lender's Commitment
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hereunder. Upon the request of Agent, Borrowers shall execute and deliver to
Agent such new Notes as requested by Agent.
Section II.3. REPAYMENT OF ADVANCES. Borrowers shall repay the unpaid
principal amount of all Advances on the earlier of (a) the Termination Date
or (b) such other dates on which the Advances are or may be required to be
paid pursuant to this Agreement. Prior to March 30, 2002, Agent and Lenders
will review such matters as they may deem appropriate in their sole
discretion and may, in their sole and absolute discretion, determine whether
to extend the Termination Date for a period of three hundred sixty-five (365)
days.
Section II.4. INTEREST. The unpaid principal amount of the Advances 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 Applicable Rate, and
each change in the rate of interest charged on the Advances shall become
effective, without notice to Borrowers, on the effective date of each change
in the Applicable 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 to be limited to the Maximum Rate, then any subsequent reduction in
the Applicable Rate shall not reduce the rate of interest on the Advances
below the Maximum Rate until the aggregate amount of interest accrued on the
Advances equals the aggregate amount of interest which would have accrued on
the Advances if the interest rate specified in clause (b) preceding had at
all times been in effect. Accrued and unpaid interest on the Advances shall
be payable as follows:
(i) in the case of each Advance which is a Prime Rate Advance, on the first
day of each month commencing May 1, 2001;
(ii) in the case of each Advance which is a LIBOR Advance, on the last day of
each Interest Period therefor (but in the event that the Agent should consent
to a period of interest which is greater than ninety (90) days, interest
shall be payable not less than once during each ninety (90) day period);
(iii) upon the payment or prepayment (mandatory or optional) of any Advance
or the Conversion of any Advance (but only on the principal amount so paid,
prepaid, or Converted); and
(iv) for all Advances, on the Termination Date.
Notwithstanding the foregoing, if any Event of Default has occurred and is
continuing, the outstanding principal of the Advances and all past due
interest thereon shall bear interest at the Default Rate. Interest payable at
the Default Rate shall be payable from time to time on demand.
Section II.5. REQUESTS FOR ADVANCES. Borrowers shall give Agent notice of each
requested Advance by delivery to Agent of an Advance Request Form executed by an
Authorized Representative at least one (1) Business Day before the requested
date of each Advance which is to be a Prime Rate Advance and at least three (3)
Business Days before the requested date of each Advance which is to be a LIBOR
Advance, specifying (a) the requested date of such Advance (which shall be a
Business Day), (b) the amount of such Advance, (c) the Type of Advance, and (d)
in the case of an Advance which is to be a
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LIBOR Advance, the duration of the Interest Period for such Advance. Advance
Request Forms may be delivered by fax. Prior to making any Advance, Agent may
require that Borrowers deliver a Borrowing Base Certificate dated a recent
date acceptable to Agent evidencing that the amount of the outstanding
Advances plus the requested Advance plus the Letter of Credit Liabilities is
less than the lesser of (a) the Combined Commitments or (b) the Borrowing
Base. The Agent shall promptly notify each Lender of the contents of each
such notice. No later than 11:00 a.m. Houston, Texas time on the date
specified for each Advance hereunder, each Lender shall make available to
Agent at its office specified herein in immediately available funds, its Pro
Rata Share of each Advance. After Agent's receipt of such funds and subject
to the other terms and conditions of this Agreement, Agent shall make each
Advance available to the Borrowers by depositing the same, in immediately
available funds, in an account of the Borrowers maintained by the Borrowers
at Agent's office specified herein. Advance Request Forms submitted shall be
irrevocable and shall be effective for the requested Advances (a) in the case
of Prime Rate Advances on the following Business Day if received by Agent by
11:00 a.m. Houston, Texas time on a Business Day, and otherwise on the next
following Business Day, and (b) in the case of LIBOR Advances on the third
following Business Day if received by Agent by 11:00 a.m. Houston, Texas time
on a Business Day, and otherwise on the fourth following Business Day. The
proceeds of the Advances shall be deposited by Agent to the operating account
of Contractors at Agent.
Section II.6. USE OF PROCEEDS. The proceeds of Advances shall be used for
working capital and general corporate purposes.
Section II.7. MANDATORY PREPAYMENT. If at any time the outstanding principal
amount of the Advances plus the Letter of Credit Liabilities exceeds the
Borrowing Base, Borrowers shall immediately prepay the outstanding Advances
by the amount of the excess plus accrued and unpaid interest on the amount so
prepaid or, if no (or insufficient) Advances are outstanding, Borrowers shall
immediately pledge to Agent cash or cash equivalent investments in an amount
equal to the excess as security for the Letter of Credit Liabilities.
Section II.8. UNUSED COMMITMENT FEE; REDUCTION OR TERMINATION OF COMMITMENT.
Borrowers agree to pay to Agent for the Pro Rata benefit of the Lenders a
commitment fee on the average daily unused portion of the Combined
Commitments, from and including the Closing Date to and including the
Termination Date, at the rate of one-half of one percent (.50%) per annum
based on a 360 day year and the actual number of days elapsed, payable
quarterly, in arrears, and on the Termination Date. For the purpose of
calculating the commitment fee hereunder, the Combined Commitments shall be
deemed utilized by the amount of all outstanding Advances and Letter of
Credit Liabilities. Borrowers shall have the right at any time to terminate
in whole or from time to time to irrevocably reduce in part the Combined
Commitments upon at least three (3) Business Days prior notice to Agent
specifying the effective date thereof, whether a termination or reduction is
being made, and the amount of any partial reduction; provided, however, the
Combined Commitments shall never be reduced below an amount equal to the
outstanding Letter of Credit Liabilities. Simultaneously with giving such
notice, Borrowers shall prepay the amount by which the unpaid principal
amount of the Advances plus the outstanding Letter of Credit Liabilities
exceeds the Combined Commitments (after giving effect to such notice) plus
accrued and unpaid interest on the principal amount so prepaid. The Combined
Commitments may not be reinstated after they have been terminated or reduced.
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Section II.9. FACILITY FEE. Borrowers agree to pay to Agent for the Pro Rata
benefit of the Lenders a facility fee in the amount of $250,000.00 on the
Closing Date. Such facility fee shall be fully earned when paid.
Section II.10. LETTERS OF CREDIT. Subject to the terms and conditions of this
Agreement, Issuing Bank agrees to issue one or more Letters of Credit for the
account of Borrowers from time to time from the date hereof to and including
the Termination Date; provided, however, that the outstanding Letter of
Credit Liabilities shall not at any time exceed the least of (a)
$5,000.000.00, (b) the Combined Commitments minus the outstanding Advances,
or (c) the Borrowing Base minus the outstanding Advances. Each Letter of
Credit shall (a) have an expiration date which is at least ten (10) days
prior to the Termination Date, (b) be payable in United States dollars, (c)
support a transaction that is entered into in the ordinary course of any
Borrower's business, and (d) otherwise be satisfactory in form and substance
to Issuing Bank. No Letter of Credit shall require any payment by Issuing
Bank to the beneficiary thereunder pursuant to a drawing prior to the third
Business Day following presentment of a draft and any related documents to
Issuing Bank. Issuing Bank shall have no obligation to issue any Letter of
Credit if an Event of Default or an Unmatured Event of Default has occurred
and is continuing.
Section II.11. PROCEDURE FOR ISSUING LETTERS OF CREDIT. Each Letter of Credit
shall be issued upon receipt by Issuing Bank of written notice from an
Authorized Representative requesting the issuance of such Letter of Credit,
which notice shall be received by Issuing Bank at least five (5) Business
Days prior to the requested date of issuance of such Letter of Credit. Such
notice shall be accompanied by a Letter of Credit Application and such other
documents and instruments as Issuing Bank may require. Such notice and
application (both front and back sides) may be sent by fax, provided that
Borrowers hold Issuing Bank harmless with respect to actions taken by Issuing
Bank based upon notices and applications sent by fax. Each request for a
Letter of Credit shall constitute a representation by Borrowers to Issuing
Bank, Agent and the other Lenders as to each of the matters set forth in the
Borrowing Base Certificate, including representations that (a) the sum of (i)
the outstanding Advances plus (ii) the Letter of Credit Liabilities plus
(iii) the face amount of the requested Letter of Credit does not exceed the
lesser of the Borrowing Base or the Combined Commitments, and (b) no Event of
Default or Unmatured Event of Default exists. Prior to Issuing any Letter of
Credit, Issuing Bank may request a Borrowing Base Certificate from Borrowers
dated of a recent date acceptable to Lender evidencing that the statements
contained in the preceding sentence are correct.
Section II.12. PARTICIPATION BY LENDERS. By the issuance of any Letter of
Credit and without any further action on the part of Issuing Bank or any
Lender in respect thereof, Issuing Bank hereby grants to each Lender, and
each Lender hereby agrees to acquire from Issuing Bank, a participation in
each such Letter of Credit and the related Letter of Credit Liabilities,
effective upon the issuance thereof without recourse or warranty, equal to
such Lender's Pro Rata Part of such Letter of Credit and Letter of Credit
Liabilities. Issuing Bank shall provide a copy of each Letter of Credit to
each other Lender promptly after issuance. This agreement to grant and
acquire participations is an agreement between Issuing Bank and Lenders, and
neither any Borrower nor any beneficiary of a Letter of Credit shall be
entitled to rely thereon. Each Borrower agrees that each Lender purchasing a
participation from the Issuing Bank pursuant to this Section 2.12 may
exercise all of its rights to payment against the Borrowers including the
right of setoff, with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the
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amount of such participations.
Section II.13. PAYMENTS CONSTITUTE ADVANCES. Each payment by Issuing Bank
pursuant to a drawing under a Letter of Credit shall constitute and be deemed
an Advance by Issuing Bank to Borrowers under the Notes and this Agreement as
of the day and time such payment is made by Issuing Bank and in the amount of
such payment. Each Lender shall make available to Issuing Bank in immediately
available funds its Pro Rata share of each such Advance in the manner
provided in Section 2.5 hereof upon notice given by the Issuing Bank in the
manner provided in Section 2.5 for notices given by Agent.
Section II.14. LETTER OF CREDIT FEES. Borrowers shall pay to Issuing Bank a
letter of credit fee payable on the date each Letter of Credit is issued in
an amount equal to the greater of (a) one percent (1.0%) per annum of the
stated amount of such Letter of Credit for the period during which such
Letter of Credit will remain outstanding, based on a 360 day year and the
actual number of days elapsed, or (b) $300.00. In addition, Borrowers shall
pay to Issuing Bank (a) at the time of issuance of any Letter of Credit, all
out-of-pocket costs incurred by Issuing Bank in connection with the issuance
of such Letter of Credit (b) upon the payment of any Letter of Credit, all
applicable payment fees, and (c) upon the amendment (including the extension)
of any Letter of Credit, all applicable amendment fees.
Section II.15. OBLIGATIONS ABSOLUTE. The obligations of Borrowers under this
Agreement and the other Loan Documents, including without limitation the
obligation of Borrowers to reimburse Issuing Bank and Lenders, as applicable,
for payment of drawings under any Letter of Credit, shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement and the other Loan Documents under all
circumstances, including (a) any lack of validity or enforceability of any
Letter of Credit or any other Loan Document, (b) the existence of any claim,
set-off, counterclaim, defense or other rights which any Borrower, Guarantor
or any other Person may have at any time against any beneficiary of any
Letter of Credit, Issuing Bank, Agent, any Lender, or any other Person,
whether in connection with this Agreement or any other Loan Document or any
unrelated transaction, (c) if any statement, draft or other document
presented under any Letter of Credit proves to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein is untrue or
inaccurate in any respect whatsoever, (d) payment by Issuing Bank under any
Letter of Credit against presentation of a draft or other document which does
not comply with the terms of such Letter of Credit in a manner which is not
material, (e) any amendment or waiver of, or any consent to departure from,
any Loan Document or (f) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing.
Section II.16. LIMITATION OF LIABILITY. Borrowers assume all risks of the
acts or omissions of any beneficiary of any Letter of Credit with respect to
its use of such Letter of Credit. None of Issuing Bank, Agent, any Lender or
any of their officers, employees or directors shall have any responsibility
or liability to any Borrower or any other Person for (a) the failure of any
draft to bear any reference or adequate reference to any Letter of Credit, or
the failure of any documents to accompany any draft at negotiation, or the
failure of any Person to surrender or to take up any Letter of Credit or to
send documents apart from drafts as required by the terms of any Letter of
Credit, or the failure of any Person to note the amount of any instrument on
any Letter of Credit, each of which requirements, if contained in any Letter
of Credit itself, it is agreed may be waived by Issuing Bank, (b) errors,
omissions, interruptions or delays in transmission or delivery of any
messages, (c) the validity, sufficiency or genuineness of any draft or other
17
document, or any endorsement thereon, even if any such draft, document or
endorsement should in fact prove to be in any and all respects invalid,
insufficient, fraudulent or forged or any statement therein is untrue or
inaccurate in any respect, (d) payment by Issuing Bank to the beneficiary of
any Letter of Credit against presentation of any draft or other document that
does not comply with the terms of the Letter of Credit in a respect which is
not material or (e) any other circumstance whatsoever in making or failing to
make any payment under a Letter of Credit. Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
Notwithstanding the foregoing, Issuing Bank shall be liable to Borrowers to
the extent of any direct, but not consequential, damages suffered by
Borrowers which Borrowers prove in a final nonappealable judgment were caused
by (i) Issuing Bank's willful misconduct or gross negligence in determining
whether documents presented under any Letter of Credit complied with the
terms thereof or (ii) Issuing Bank's willful failure to pay under any Letter
of Credit after presentation to it of documents strictly complying with the
terms and conditions of such Letter of Credit.
Section II.17. PROVISIONS REGARDING ELECTRONIC ISSUANCE OF LETTERS OF CREDIT.
Issuing Bank may adopt procedures pursuant to which Borrowers may request the
issuance of Letters of Credit by electronic means and Issuing Bank may issue
Letters of Credit based on such electronic requests. Such procedures may
include the entering by Borrowers into the Letter of Credit Applications
electronically. All the procedures, actions and documents referred to in the
two preceding sentences are referred to as "Electronic Applications". Each
Borrower holds Issuing Bank, Agent and each Lender harmless with respect to
actions taken by Issuing Bank based upon Electronic Applications. Each
Borrower further agrees to be bound by all the terms and provisions contained
in the Letter of Credit Applications, including, without limitation, the
terms and provisions of the Letter of Credit Applications contained on the
reverse side of the paper copies thereof, including the release and
indemnification provisions contained therein.
ARTICLE III.
PAYMENTS; ADDITIONAL MATTERS WITH RESPECT TO
LIBOR LOANS; YIELD PROTECTION PROVISIONS
Section III.1. METHOD OF PAYMENT. All payments of principal, interest, and
other amounts to be made by Borrowers under this Agreement, the Notes or any
other Loan Documents shall be made to Agent at its designated office
specified herein for the account of each Lender's office specified herein in
immediately available funds, without setoff, deduction, or counterclaim in
immediately available funds, not later than 11:00 a.m. Houston, Texas time on
the date that such payment shall become due (and each such payment made after
such time on such due date to be deemed to have been made on the next
succeeding Business Day). Each payment received by Agent under this Agreement
or any other Loan Document for the account of a Lender shall be paid promptly
to such Lender, in immediately available funds, at such Lender's office
designated herein; provided, however, in the event any Lender shall have
failed to make an Advance as contemplated by Section 2.5 hereof (a
"Defaulting Lender") and Agent or another Lender or Lenders shall have made
such Advance, payment received by Agent for the account of such Defaulting
Lender shall not be distributed to such Defaulting Lender or Lenders until
such Advance or Advances shall have been repaid in full to Agent or Lender or
Lenders who funded such Advance or Advances. Whenever
18
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 III.2. SHARING OF PAYMENTS, ETC./NON-RECEIPT OF FUNDS BY AGENT.
(a If any Lender shall obtain any payment (whether voluntary, involuntary, or
otherwise) on account of Advances (including, without limitation, any
set-off), which is in excess of its Pro Rata Share of payments on the
Advances obtained by all Lenders, such Lender shall either (i) remit such
excess to the other Lenders in amounts such that all Lenders receive their
Pro-Rata shares of such payments or (ii) purchase from the other Lenders such
participation as shall be necessary to cause such purchasing Lender to share
the excess payment Pro Rata with each of them; provided that, if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, the purchase shall be rescinded and the purchase price restored to
the extent of recovery. Borrowers agree that any Lender so purchasing a
participation from another Lender pursuant to this section may, to the
fullest extent permitted by law, exercise all of its rights of payment
(including the right of offset) with respect to such participation as fully
as if such Lender were the direct creditor of Borrowers in the amount of such
participation.
(b Unless Agent shall have been notified by a Lender or Borrowers (the
"Payor") prior to the date on which such Lender is to make payment to Agent
of the proceeds of an Advance to be made by it hereunder or Borrowers are to
make a payment to Agent for the account of one or more of the Lenders, as the
case may be (a "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to
Agent, Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor
has not in fact made the Required Payment to Agent, the recipient of such
payment shall, on demand, pay to Agent the amount made available to it
together with interest thereon in respect of the period commencing on the
date such amount was made available by Agent until the date Agent recovers
such amount at the rate applicable to such portion of the applicable Advance.
Section III.3. VOLUNTARY PREPAYMENT. Borrowers may prepay the Notes in whole
at any time or from time to time in part without premium or penalty other
than the amounts described in Section 3.9 (but with accrued interest to the
date of prepayment on the amount so prepaid).
Section III.4. COMPUTATION OF INTEREST. Interest on the indebtedness
evidenced by the Notes shall be computed on the basis of a year of (a) 360
days and the actual number of days elapsed (including the first day but
excluding the last day) for all LIBOR Advances 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, and (b) 365 days for
all Prime Rate Advances.
Section III.5. CAPITAL ADEQUACY. If after the date hereof, any Lender shall
have determined that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by such
19
Lender (or its parent) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on such Lender's (or its parent's) capital as a
consequence of its obligations hereunder or the transactions contemplated
hereby to a level below that which such Lender (or its parent) could have
achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies with respect to capital adequacy) by an
amount deemed by such Lender to be material, then from time to time, within
ten (10) Business Days after demand by such Lender, Borrowers shall pay to
such Lender such additional amount or amounts as will compensate such Lender
(or its parent) for such reduction. A certificate of such Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive, provided that the
determination thereof is made on a reasonable basis. In determining such
amount or amounts, such Lender may use any reasonable averaging and
attribution methods.
Section III.6. ADDITIONAL COSTS IN RESPECT OF LETTERS OF CREDIT. If as a
result of any Regulatory Change there shall be imposed, modified, or deemed
applicable any tax, reserve, special deposit, or similar requirement against
or with respect to or measured by reference to Letters of Credit issued or to
be issued hereunder or Issuing Bank's commitment to issue Letters of Credit
hereunder, and the result shall be to increase the cost to Issuing Bank of
issuing or maintaining any Letter of Credit or its commitment to issue
Letters of Credit hereunder or reduce any amount receivable by Issuing Bank
hereunder in respect of any Letter of Credit (which increase in cost, or
reduction in amount receivable, shall be the result of Issuing Bank's
reasonable allocation of the aggregate of such increases or reductions
resulting from such event), then, upon demand by Issuing Bank, Borrowers
agree to pay to Issuing Bank from time to time as specified by Issuing Bank,
such additional amounts as shall be sufficient to compensate Issuing Bank for
such increased costs or reductions in amount. A statement as to such
increased costs or reductions in amount incurred by Issuing Bank, submitted
by Issuing Bank to Borrowers, shall be conclusive as to the amount thereof,
provided that the determination thereof is made on a reasonable basis.
Section III.7. CONVERSIONS AND CONTINUATIONS. Borrowers shall have the right
from time to time to Convert any Advance from one Type of Advance into
another Type of Advance or to Continue any LIBOR Advance as a LIBOR Advance
by giving Lenders written notice at least one (1) Business Day before
Conversion into a Prime Rate Advance and at least three (3) Business Days
before Conversion into or Continuation of a LIBOR Advance, specifying (a) the
Conversion or Continuation date, (b) in the case of Conversions, the Type of
Advance to be Converted into, and (c) in the case of a Continuation of or
Conversion into a LIBOR Advance the duration of the Interest Period
applicable thereto; provided that (y) LIBOR Advances may only be Converted on
the last day of the Interest Period therefor, and (z) except for Conversions
to Prime Rate Advances, Lenders shall have no obligation to make any
Conversions while an Event of Default or an Unmatured Event of Default has
occurred and is continuing. All notices under this Section shall be
irrevocable and shall be given not later than 11:00 A.M. Houston, Texas time
on the day which is not less than the number of Business Days specified above
for such notice. If Borrowers shall fail to give Lenders the notice specified
above for Continuation or Conversion of any LIBOR Advance prior to the end of
the Interest Period with respect thereto, such LIBOR Advance shall
automatically be Converted into a Prime Rate Advance on the last day of such
Interest Period.
Section III.8. ILLEGALITY, IMPOSSIBILITY, REGULATORY CHANGE AND COMPENSATION.
In the event that (a) it
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becomes unlawful for any Lender to honor its obligation to make LIBOR
Advances hereunder or to maintain LIBOR Advances hereunder, (b) any Lender
determines that (i) quotations of interest rates for the relevant deposits
referred to in the definition of "LIBOR Rate" are not being provided in the
relative amounts or for the relative maturities for determining the interest
rates borne by the LIBOR Advances as provided in this Agreement or (ii) such
quotations do not accurately reflect any Lender's costs in connection
therewith, or (c) a Regulatory Change (including the imposition of a Reserve
Requirement) occurs which changes any Lender's basis of taxation with respect
to LIBOR Advances or imposes reserve, capital or other requirements with
respect thereto, then (x) such Lender shall notify Borrowers of any such
event, (y) Borrowers shall promptly pay to such Lender such amounts as such
Lender may determine (which determination shall be conclusive provided such
determination is made on a reasonable basis) to be necessary to compensate
such Lender for any increased costs incurred by such Lender or decreases in
amounts receivable by such Lender which such Lender determines are
attributable to any event described in clauses (a), (b) or (c) above, and (z)
the obligation of each Lender to make or Continue LIBOR Advances or to
Convert Prime Rate Advances to LIBOR Advances shall terminate, and (i) all
future Advances shall be Prime Rate Advances and (ii) all outstanding
Advances which are LIBOR Advances shall be Converted to Prime Rate Advances
on the last day of the current Interest Period therefor.
Section III.9. COMPENSATION FOR PREPAYMENT OR FAILURE TO BORROW. Borrowers
shall pay to Lenders, promptly upon the request of such Lender, such amount
or amounts as shall be sufficient to compensate such Lender for any actual
and reasonable loss, cost or expense (including any reasonable losses and
expenses arising from the liquidation or reemployment of deposits acquired to
fund or maintain any principal amount prepaid) incurred by such Lender as a
result of (a) any payment, prepayment or Conversion of any LIBOR Advance on a
day other than the last day of an Interest Period therefor or (b) the failure
by Borrowers to borrow, Convert or prepay a LIBOR Advance on any date
required hereby. Such reimbursement shall be calculated as though such Lender
funded the principal amount paid, prepaid, Converted or not borrowed through
the purchase of Dollar deposits in the London, England interbank market
having a maturity corresponding to last day of the Interest Period for the
amount paid, prepaid, Converted or to be borrowed and bearing an interest
rate equal to the LIBOR Rate for such principal amount for such Interest
Period, whether in fact that is the case or not. Such Lender's determination
of the amount of such reimbursement shall be conclusive in the absence of
manifest error, provided that the determination thereof is made on a
reasonable basis.
Section III.10. JOINT AND SEVERAL OBLIGATIONS. The obligations of
Contractors, Subsea and Vessels as Borrowers under this Agreement are joint
and several in all respects.
Section III.11. SUBROGATION AND CONTRIBUTION. (a) If any Borrower makes a
payment in respect of the Obligations, it shall be subrogated to the rights
of Lenders (or any other payee) against the other Borrowers, as appropriate,
with respect to such payment and shall have the rights of contribution set
forth below against the other Borrowers; provided that such Borrower shall
not enforce its rights to any payment by way of subrogation or by exercising
its rights of contribution until all the Obligations shall have been paid in
full. If any Borrower makes a payment in respect of the Obligations so that
the amount of its then current Net Payments is less than the amount of its
then current Contribution Obligation, any Borrower making such
proportionately smaller payment shall, when permitted by the preceding
sentence, pay to the other Borrowers an amount such that the Net Payments
made by the Borrowers in respect of the
21
Obligations shall be shared among the Borrowers pro rata in proportion to
their respective Contribution Percentage. If any Borrower receives any
payment by way of subrogation or contribution so that the amount of its then
current Net Payments is greater than the amount of its then current
Contribution Obligation, the Borrower receiving such proportionately greater
payment shall, when permitted by the second preceding sentence, pay to the
other Borrowers an amount such that the Net Payments received by the
Borrowers shall be shared among the Borrowers pro rata in proportion to their
respective Contribution Percentage. If any Borrower makes a payment in
respect of the Obligations so that the amount of its then current Net
Payments is greater than the amount of its then current Contribution
Obligation, any Borrower making such proportionately larger payment shall,
when permitted by the third preceding sentence, receive from the other
Borrowers an amount such that the Net Payments made by the Borrowers in
respect of the Obligations shall be shared amount the Borrowers pro rata in
proportion to their respective Contribution Percentage, unless otherwise
agreed to by the Borrowers.
(b As used in this Section, the term "Contribution Obligation" shall mean an
amount equal, at any time and from time to time and for each respective
Borrower, to the product of (i) such Borrower's Contribution Percentage,
times (ii) the sum of all payments made previous to or at the time of
calculation by all Borrowers in respect of the Obligations (less the amount
of any such payments previously returned to any Borrower by operation of law
or otherwise, but not including payments received by any Borrower by way of
its rights of subrogation and contribution hereunder). Notwithstanding
anything to the contrary contained in this Section or in this Agreement, no
liability or obligation of any Borrower that shall accrue pursuant to this
Agreement shall be paid nor shall it be deemed owed pursuant to this
Agreement until all of the Obligations shall be paid in full.
(c As used in this Section, the term "Net Payments" shall mean an amount
equal, at any time and from time to time and for each respective Borrower, to
the difference of (i) the sum of all payments made previous to or at the time
of calculation by such Borrower in respect of the Obligations and in respect
of its obligations contained in this Agreement, less (ii) the sum of all such
payments previously returned to such Borrower by operation of law or
otherwise and including payments received by such Borrower by way of its
rights of subrogation and contribution hereunder.
(d As used in this Section, the term "Contribution Percentage" shall mean,
for any applicable date as of which such percentage is being determined an
amount equal to the quotient of (i) the Net Worth of such Borrower as of such
date, divided by (ii) the sum of the Net Worth of all the Borrowers as of
such date.
(e As used in this Section, the term "Net Worth" shall mean for any Borrower,
calculated on and as of any applicable date on which such amount is being
determined, the difference between (i) the sum of all such Borrower's
property (other than its equity interest in another Borrower, at a fair
valuation as of such date, minus (ii) the sum of all such Borrower's debts,
at a fair valuation as of such date excluding the Obligations.
ARTICLE IV.
COLLATERAL
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Section IV.1. COLLATERAL. To secure full and complete payment and performance
of the Obligations, Borrowers 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 4.1 (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"):
(a Each Borrower shall grant to Agent a first priority security interest in
all of its Accounts (as defined in the Security Agreements), its Charters (as
defined in the Security Agreements), the Holding Account, and all products
and proceeds thereof, pursuant to the Security Agreement executed by such
Borrower; provided, however, that upon execution of the Foreign Loan
Agreement, the Agent's security interests in Foreign Accounts shall become
second priority security interests and shall be subordinate to the Foreign
Agent's security interests in Foreign Accounts.
(b Guarantor shall grant to Agent a first priority security interest in all
of its Accounts (as defined in the Security Agreements), its Charters (as
defined in the Security Agreements), the Holding Account, and all products
and proceeds thereof, pursuant to the Security Agreement-Guarantor; provided,
however, that upon execution of the Foreign Loan Agreement, the Agent's
security interests in Foreign Accounts shall become second priority security
interests and shall be subordinate to the Foreign Agent's security interests
in Foreign Accounts.
(c Borrowers and Guarantor shall execute and cause to be executed such
further documents and instruments, including without limitation, Uniform
Commercial Code financing statements, as Agent, in its sole discretion, deems
necessary or desirable to evidence and perfect its liens and security
interests in the Collateral.
Section IV.2. SETOFF. Upon the occurrence of an Event of Default, Agent,
Issuing Bank and each Lender shall have the right to set off and apply
against the Obligations in such a manner as such Person may determine, at any
time and without notice to any 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 such Person to any Borrower whether or not the
Obligations are then due. As further security for the Obligations, each
Borrower hereby grants to Agent, Issuing Bank and each Lender a security
interest in all money, instruments, and other property of such Borrower now
or hereafter held by such Person. In addition to such Person's right of
setoff and as further security for the Obligations, each Borrower hereby
grants to Agent, Issuing Bank and each Lender a security interest in all
deposits (general or special, time or demand, provisional or final) and other
accounts of such Borrower now or hereafter on deposit with or held by such
Person and all other sums at any time credited by or owing from such Person
to such Borrower. The rights and remedies of Agent, Issuing Bank and each
Lender hereunder are in addition to other rights and remedies (including,
without limitation, to the rights of setoff) which such Person may have.
Section IV.3. GUARANTY AGREEMENT. Guarantor shall unconditionally and
irrevocably guarantee payment and performance of the Obligations by execution
and delivery of the Guaranty Agreement.
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ARTICLE V.
CONDITIONS PRECEDENT
Section V.1. INITIAL EXTENSION OF CREDIT. The obligation of Lenders to make
the initial Advance or Issuing Bank to issue any initial Letter of Credit is
subject to the condition precedent that prior thereto Agent shall have
received all of the documents set forth below in form and substance
satisfactory to Agent.
(a CERTIFICATE - EACH BORROWER. A certificate of the Secretary or another
officer of each Borrower acceptable to Agent certifying (i) resolutions of
the board of directors of each Borrower which authorize the execution,
delivery and performance by such Borrower of this Agreement and the other
Loan Documents to which such Borrower is or is to be a party, and (ii) the
names of the officers of each Borrower authorized to sign this Agreement and
each of the other Loan Documents to which such Borrower is or is to be a
party together with specimen signatures of such officers.
(b ORGANIZATIONAL DOCUMENTS - EACH BORROWER. The articles or certificate of
incorporation and the bylaws of each Borrower certified by the Secretary or
another officer of such Borrower acceptable to Agent.
(c GOVERNMENTAL CERTIFICATES - EACH BORROWER. Certificates issued by the
appropriate government officials of (i) the state of incorporation of each
Borrower as to the existence and good standing of such Borrower, (ii) the
state of Texas as to the existence and good standing of such Borrower as a
foreign corporation in the state of Texas, and (iii) the state of Louisiana
as to the existence and good standing of Contractors as a foreign corporation
in the state of Louisiana.
(d CERTIFICATE - GUARANTOR. A certificate of the Secretary or another officer
of Guarantor acceptable to Agent certifying (i) resolutions of the board of
directors of Guarantor which authorize the execution, delivery and
performance by Guarantor of the Guaranty Agreement and the other Loan
Documents to which Guarantor is or is to be a party, and (ii) the names of
the officers of Guarantor authorized to sign the Guaranty Agreement and each
of the other Loan Documents to which Guarantor is or is to be party together
with specimen signatures of such officers.
(e ORGANIZATIONAL DOCUMENTS - GUARANTOR. The articles or certificate of
incorporation and the bylaws of Guarantor certified by the Secretary or
another officer of Guarantor acceptable to Agent.
(f GOVERNMENTAL CERTIFICATES - GUARANTOR. Certificates issued by the
appropriate government officials of (i) the state of incorporation of
Guarantor as to the existence and good standing of Guarantor and (ii) the
state of Texas as to the existence and good standing of Guarantor as a
foreign corporation in the state of Texas.
(g NOTES. The Notes executed by Borrowers payable to the order of the
respective Lenders.
(h SECURITY AGREEMENTS. The Security Agreements executed by Borrowers and
Guarantor, respectively.
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(i FINANCING STATEMENTS. Uniform Commercial Code financing statements
executed by Borrowers and Guarantor, respectively.
(j GUARANTY AGREEMENT. The Guaranty Agreement executed by Guarantor.
(k INTERCREDITOR AGREEMENT. The Intercreditor Agreement executed by Agent,
Borrowers, Guarantor and CIT.
(l ARBITRATION AGREEMENT. The Arbitration Agreement executed by Borrowers and
Guarantor.
(m FEES. The facility fee referred to in Section 2.9 and any fee agreed to be
paid to the Agent by the Borrowers.
(n FIELD AUDIT. A Field Audit dated as of a recent date acceptable to Agent.
(o UCC SEARCH. A Uniform Commercial Code search showing all financing
statements and other documents or instruments on file against Borrowers and
Guarantor in Xxxxxx County, Texas and the offices of the Secretary of State
of the states of Texas, Louisiana and Delaware.
(p CANCELLATION LETTER. A letter from Borrowers directing Xxxxx Fargo Bank to
terminate and cancel Borrowers' credit facility with Xxxxx Fargo Bank.
(q UCC ASSIGNMENTS. UCC-3 financing statement assignments executed by Xxxxx
Fargo Bank.
(r OPINION OF COUNSEL. An opinion of Jones, Walker, Waechter, Poitevent,
Carrere and Xxxxxxx, legal counsel to Borrowers and Guarantor.
(s ATTORNEYS' FEES AND EXPENSES. Evidence that the costs and expenses
(including reasonable attorneys' fees) referred to in Section 12.1, to the
extent incurred, have been paid in full by Borrowers.
(t ADDITIONAL DOCUMENTATION. Such additional approvals, opinions or documents
as Agent may reasonably request.
Section V.2. POST CLOSING OBLIGATIONS AND DELIVERIES. Not later than April
30, 2001, Borrowers shall (a) establish the Holding Account at Agent, (b)
notify their customers to make payment of amounts due to Borrowers and
Guarantor directly to the Holding Account, and (c) deliver to Agent the
Holding Account Agreement executed by Borrowers and Guarantor.
Section V.3. ALL EXTENSIONS OF CREDIT. The obligation of Lenders to make any
Advance and Issuing Bank to issue any Letter of Credit (including the initial
Advance and the initial Letter of Credit) is subject (a) to receipt by Agent
or Issuing Bank, as applicable, of the items required by Section 2.5 or 2.11,
as applicable, and such additional approvals or documents as Agent may
reasonably request and (b) all of the representations and warranties
contained in Article VI hereof and the other Loan Documents being true
25
and correct on and as of the date of such Advance or Letter of Credit
issuance, as applicable, with the same force and effect as if such
representations and warranties had been made on and as of such date.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
To induce Agent, Issuing Bank and Lenders to enter into this Agreement, each
Borrower represents and warrants to each such Person that:
Section VI.1. EXISTENCE. Each Borrower, Guarantor and each Subsidiary (a) are
duly organized, validly existing, and in good standing under the laws of
their respective jurisdictions of organization, (b) have all requisite power
and authority to own their assets and carry on their business as now being or
as proposed to be conducted and (c) are qualified to do business in all
jurisdictions necessary and where failure to so qualify would have a Material
Adverse Effect. Each Borrower has the 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. Guarantor has the power and authority
to execute, deliver and perform its obligation under the Guaranty Agreement
and the other Loan Documents to which it is a party.
Section VI.2. FINANCIAL STATEMENTS. Borrowers have delivered to Agent
unaudited consolidated financial statements of Guarantor and its Subsidiaries
as at and for the fiscal year ended December 31, 1999, and unaudited
consolidated financial statements of Guarantor and its Subsidiaries for the
eleven (11) month period ended November 30, 2000. Such financial statements
are true and correct, have been prepared in accordance with GAAP, and fairly
and accurately present, on a consolidated basis, the financial condition of
Guarantor and its Subsidiaries as of the respective dates indicated therein
and the results of operations for the respective periods indicated therein.
There has been no Material Adverse Effect since the effective date of the
most recent financial statements referred to in this Section.
Section VI.3. REQUISITE ACTION; NO BREACH. The execution, delivery, and
performance by each Borrower of this Agreement and the other Loan Documents
to which such Borrower is or may become a party have been duly authorized by
all requisite action on the part of such Borrower and do not and will not
violate or conflict with the Organizational Documents of such 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 such Borrower or any Subsidiary
pursuant to the provisions of any indenture, mortgage, deed of trust,
security agreement, franchise, permit, license, or other instrument or
agreement by which such Borrower or any Subsidiary or any of their respective
properties is bound.
Section VI.4. OPERATION OF BUSINESS. Each Borrower, Guarantor and each
Subsidiary possess all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted.
26
Section VI.5. LITIGATION AND JUDGMENTS. Except as disclosed on Schedule 6.5
hereto, there is no action, suit, investigation, or proceeding before or by
any court, governmental authority, or arbitrator pending, or to the knowledge
of any Borrower, threatened against or affecting any Borrower, Guarantor or
any Subsidiary, that would, if adversely determined, have a Material Adverse
Effect. There are no outstanding judgments against any Borrower, Guarantor or
any Subsidiary.
Section VI.6. RIGHTS IN PROPERTIES; LIENS. Each Borrower, Guarantor and each
Subsidiary have good and indefeasible title to or valid leasehold interests
in their respective properties and assets, real and personal, including the
properties, assets and leasehold interests reflected in the financial
statements described in Section 6.2, and none of the properties, assets or
leasehold interests of any Borrower, Guarantor or any Subsidiary is subject
to any Lien, except as permitted by this Agreement.
Section VI.7. ENFORCEABILITY. This Agreement constitutes, and the other Loan
Documents to which each Borrower is party, when delivered, shall constitute
the legal, valid, and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their 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 VI.8. 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
any Borrower of this Agreement and the other Loan Documents to which any
Borrower is or may become a party or Guarantor of the Guaranty Agreement and
the other Loan Documents to which Guarantor is a party, or the validity or
enforceability thereof.
Section VI.9. DEBT. Neither any Borrower, Guarantor nor any Subsidiary has
any Debt except Debt permitted pursuant to Section 8.1.
Section VI.10. USE OF PROCEEDS; MARGIN SECURITIES. Neither any Borrower,
Guarantor nor any Subsidiary is 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 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 VI.11. ERISA. Each Borrower, Guarantor and each Subsidiary have
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 VI.12. TAXES. Each Borrower, Guarantor and each Subsidiary have filed
all tax returns (federal, state, and local) required to be filed, including
all income, franchise, employment, property, and sales taxes, and have paid
all of their liabilities for Taxes or timely filed requests for extensions of
the date for
27
payment of such taxes, and no Borrower or Guarantor knows of any pending
investigation of any Borrower, Guarantor or any Subsidiary by any taxing
authority or of any pending but unassessed tax liability of any Borrower,
Guarantor or any Subsidiary.
Section VI.13. DISCLOSURE. There is no fact known to any Borrower or
Guarantor which has a Material Adverse Effect, or which might in the future
have a Material Adverse Effect that has not been disclosed in writing to
Agent.
Section VI.14. SUBSIDIARIES. Guarantor has no Subsidiaries other than
Borrowers and the other Subsidiaries listed on Schedule 6.14. Guarantor owns
one hundred percent (100%) of the issued and outstanding stock of each
Borrower.
Section VI.15. COMPLIANCE WITH LAWS. Neither any Borrower, Guarantor nor any
Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any court, governmental authority, or
arbitrator.
Section VI.16. COMPLIANCE WITH AGREEMENTS. Neither any Borrower, Guarantor
nor any Subsidiary is in violation in any material respect of any material
document, agreement, contract or instrument to which it is a party or by
which it or its properties are bound.
Section VI.17. ENVIRONMENTAL MATTERS. Each Borrower, Guarantor and each
Subsidiary, and their respective properties are in substantial compliance
with all applicable Environmental Laws and neither any Borrower, Guarantor
nor any Subsidiary is subject to any liability or obligation for remedial
action thereunder. There is no pending or threatened investigation or inquiry
by any governmental authority of any Borrower, Guarantor or any Subsidiary,
or any of their respective properties pertaining to any Hazardous Substance.
Except in the ordinary course of business and in substantial compliance with
all Environmental Laws, there are no Hazardous Substances located on or under
any of the properties of any Borrower, Guarantor or any Subsidiary. Except in
the ordinary course of business and in compliance with all Environmental
Laws, neither any Borrower, Guarantor nor any Subsidiary has caused or
permitted any Hazardous Substance to be disposed of on or under or released
from any of its properties. Each Borrower, Guarantor and each Subsidiary have
obtained all permits, licenses, and authorizations which are required under
and by all Environmental Laws.
Section VI.18. SOLVENCY. Each Borrower and its Subsidiaries and Guarantor and
its Subsidiaries, on a consolidated basis, are not insolvent, each Borrower's
and its Subsidiaries' assets and Guarantor's and its Subsidiaries' assets, on
a consolidated basis, exceed their liabilities, and no Borrower will be
rendered insolvent by the execution and performance of this Agreement and the
Loan Documents and Guarantor will not be rendered insolvent by the execution
of the Guaranty Agreement.
Section VI.19. INVESTMENT COMPANY ACT. Neither any Borrower, Guarantor nor
any Subsidiary is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section VI.20. PUBLIC UTILITY HOLDING COMPANY ACT. Neither any Borrower,
Guarantor nor any Subsidiary is a "holding company" or a "subsidiary company"
of a "holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of
1935, as
28
amended.
Section VI.21. VESSELS. Neither any Borrower, Guarantor nor any Subsidiary
owns any vessels other than the vessels referred to in the definition of
"Vessel" contained in the Security Agreements.
ARTICLE VII.
AFFIRMATIVE COVENANTS
Borrowers covenant and agree that, as long as the Obligations or any part
thereof are outstanding or any Lender has any Commitment hereunder or Issuing
Bank has any obligation to issue any Letter of Credit hereunder or any Letter
of Credit Liabilities exist, Borrowers will perform and observe the covenants
set forth below, unless Agent shall otherwise consent in writing.
Section VII.1. REPORTING REQUIREMENTS. Borrowers will deliver to Agent,
Lenders and Issuing Bank:
(a) ANNUAL FINANCIAL STATEMENTS - GUARANTOR. As soon as available, and in any
event within ninety (90) days after the end of each fiscal year of Guarantor,
beginning with the fiscal year ending December 31, 2000, a copy of the annual
audited financial statements of Guarantor and its Subsidiaries for such
fiscal year (on SEC Form 10-K, if applicable to Guarantor) containing, on a
consolidated basis and a consolidating basis, 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 audited
and certified without qualification by independent certified public
accountants of recognized standing acceptable to Agent.
(b) QUARTERLY FINANCIAL STATEMENTS - GUARANTOR. As soon as available, and in
any event within forty-five (45) days after the end of each quarter of each
fiscal year of Guarantor, a copy of the financial statements of Guarantor and
its Subsidiaries as of the end of such fiscal quarter and for the portion of
the fiscal year then ended (on SEC Form 10-Q, if applicable to Guarantor),
containing, on a consolidated basis and a consolidating basis, balance
sheets, statements of income, statements of stockholders' equity and 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 Guarantor acceptable to Agent to have been
prepared in accordance with GAAP and to fairly and accurately present the
financial condition and results of operations of Guarantor and its
Subsidiaries, on a consolidated basis and a consolidating basis, at the date
and for the periods indicated therein.
(c) MONTHLY FINANCIAL STATEMENTS - GUARANTOR. As soon as available, and in
any event within thirty (30) days after the end of each month of each fiscal
year of Guarantor, a copy of the financial statements of Guarantor and its
Subsidiaries as of the end of such month and for the portion of the fiscal
year then ended, containing, on a consolidated basis, 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
Guarantor acceptable to Agent to
29
have been prepared in accordance with GAAP and to fairly and accurately
present the financial condition and results of operations of Guarantor and
the Subsidiaries, on a consolidated basis, at the date and for the periods
indicated therein.
(d) NO DEFAULT CERTIFICATE. (i) As soon as available, and in any event within
forty-five (45) days after the end of each quarter of each fiscal year of
Guarantor, a No Default Certificate as of the last day of such quarter, and
(ii) together with the financial statements delivered pursuant to Section
7.1(a), a No Default Certificate as of the last day of the fiscal year
covered by such financial statements, in each case executed by an officer of
each Borrower and Guarantor acceptable to Agent and containing detailed
calculations of the covenants contained in Article IX.
(e) BORROWING BASE CERTIFICATE. As soon as available, and in any event within
thirty (30) days after the end of each month of each fiscal year of
Borrowers, a Borrowing Base Certificate as of the last day of such month
certified by an officer of each Borrower acceptable to Agent.
(f) MONTHLY ACCOUNTS RECEIVABLE REPORTS. As soon as available, and in any
event within thirty (30) days after the end of each month of each fiscal year
of Borrowers, aged accounts receivable reports for each Borrower as of the
last day of such month certified by an officer of each Borrower acceptable to
Agent.
(g) MONTHLY BARGE STATUS REPORTS. As soon as available, and in any event
within thirty (30) days after the end of each month of each fiscal year of
Borrowers, a barge status report for Borrowers as of the last day of such
month in form and substance acceptable to Agent and certified by an officer
of each Borrower acceptable to Agent.
(h) PROJECTIONS. Not later than December 1 of each year, a projected balance
sheet, income statement and statement of cash flows for Guarantor and its
Subsidiaries for the next fiscal year, certified by an officer of Guarantor
acceptable to Agent.
(i) NOTICE OF LITIGATION. Promptly after the commencement thereof, notice of
all actions, suits and proceedings before any court or governmental
department, commission, board, agency or instrumentality, domestic or
foreign, affecting any Borrower, Guarantor or any Subsidiary which, if
determined adversely to such Person, could have a Material Adverse Effect.
(j) JUDGMENTS. Within five (5) days of the rendering thereof, notice of any
judgment against any Borrower, Guarantor or any Subsidiary in an amount which
is more than $25,000.00.
(k) NOTICE OF DEFAULT. As soon as possible and in any event within five (5)
days after the occurrence of each Event of Default and Unmatured Event of
Default, a written notice setting forth the details of such Event of Default
or Unmatured Event of Default and the action which Borrowers have taken and
propose to take with respect thereto.
(l) NOTICE OF MATERIAL ADVERSE EFFECT. As soon as possible, an in any event
within five (5) days after any Borrower becomes aware thereof, notice of the
occurrence of any event or the existence of any
30
condition which might reasonably be expected to have a Material Adverse
Effect.
(m) PROXY STATEMENTS, ETC. As soon as available, one copy of each financial
statement, report, notice or proxy statement sent by Guarantor or any
Subsidiary to its stockholders generally and one copy of each regular,
periodic or special report, registration statement, or prospectus filed by
Guarantor or any Subsidiary within any securities exchange or the Securities
and Exchange Commission or any successor agency.
(n) GENERAL INFORMATION. Promptly, such other information concerning any
Borrower, Guarantor or any Subsidiary as any Lender may from time to time
reasonably request.
Section VII.2. MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. Each Borrower
will preserve and maintain, and will cause Guarantor and each Subsidiary to
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 VII.3. MAINTENANCE OF PROPERTIES. Each Borrower will maintain, and
will cause Guarantor and each Subsidiary to maintain, its assets and
properties in good condition and repair.
Section VII.4. TAXES AND CLAIMS. Each Borrower will pay or discharge, and
will cause Guarantor and each Subsidiary to 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 neither any Borrower, Guarantor, nor any Subsidiary shall be required to
pay or discharge any tax, levy, assessment, or governmental charge with
respect to which no Lien has been filed of record, which is being contested
in good faith by appropriate proceedings diligently pursued, and for which
adequate reserves have been established.
Section VII.5. INSURANCE. Each Borrower will maintain, and will cause
Guarantor and each Subsidiary to maintain, with financially sound and
reputable insurance companies workmen's compensation insurance, liability
insurance, and insurance on its property, assets and business, all at least
in such amounts and against such risks as are usually insured against by
Persons engaged in similar businesses.
Section VII.6. INSPECTION; FIELD AUDITS. At any reasonable time and from time
to time, each Borrower will permit, and will cause Guarantor and each
Subsidiary to permit, representatives of Agent:
(a) to examine and make copies of the books and records of, and visit and
inspect the properties or assets of any Borrower, Guarantor and any
Subsidiary and to discuss the business, operations, and financial condition
of any such Persons with their respective officers and employees and with
their independent certified public accountants; and
(b) to conduct Field Audits; provided, however, that Agent intends to conduct
at least four Field Audit during each fiscal year of Borrowers and the cost
of four Field Audits during each fiscal year of Borrowers shall be paid by
Borrowers.
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Section VII.7. KEEPING BOOKS AND RECORDS. Each Borrower will maintain, and
will cause Guarantor and each Subsidiary to 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 VII.8. COMPLIANCE WITH LAWS. Each Borrower will comply, and will
cause Guarantor and each Subsidiary to comply, in all material respects with
all applicable laws, rules, regulations, and orders of any court,
governmental authority, or arbitrator.
Section VII.9. COMPLIANCE WITH AGREEMENTS. Each Borrower will comply, and
will cause Guarantor and each Subsidiary to comply, in all material respects
with all material agreements, contracts, and instruments binding on it or
affecting its properties or business.
Section VII.10. FURTHER ASSURANCES. Each Borrower will execute and deliver,
and will cause Guarantor and each Subsidiary to execute and deliver, such
further instruments as may be requested by Agent to carry out the provisions
and purposes of this Agreement and the other Loan Documents and to preserve
and perfect the Liens of Agent in the Collateral.
Section VII.11. ERISA. Each Borrower will comply, and will cause Guarantor
and each Subsidiary to 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.
Section VII.12. CONTINUITY OF OPERATIONS. Each Borrower and Guarantor will
continue to conduct, and will cause each of its Subsidiaries to continue to
conduct, its primary businesses as conducted as of the Closing Date and to
continue its operations in such businesses.
Section VII.13. HOLDING ACCOUNT; HOLDING LOCKBOX. (a) Each Borrower will
cause, and will cause Guarantor to cause, all of the proceeds from the
accounts receivable of such Borrower and Guarantor to be remitted to the
Holding Account or the Holding Lockbox. Each Borrower will, and will cause
Guarantor to, direct its customers and account debtors to remit payments of
all accounts receivable due to Borrowers and Guarantor, including the
Accounts (as defined in the Security Agreements) and the charters (as defined
in the Security Agreements), by check to the Holding Lockbox or by wire to
the Holding Account. Each Borrower further agrees immediately to, and to
cause Guarantor immediately to, deposit any payments received directly by
such Borrower or Guarantor from its customers or account debtors into the
Holding Account. If no Event of Default exists, all collected funds (as
determined by Agent in accordance with its customary practices with respect
to similar accounts) with respect to acceptable checks received in the
Holding Lockbox and all funds deposited directly into, or transferred into,
the Holding Account shall remain the Holding Account and may be withdrawn by
Borrowers or Guarantor. If an Event of Default has occurred, all funds with
respect to checks received in the Holding Lockbox and all funds deposited
directly into, or transferred into the Holding Account may, in the discretion
of Agent, be paid or delivered to Agent and deposited by Agent in a
segregated noninterest bearing collateral account (the "Collateral Account").
Neither any Borrower nor Guarantor shall have the right to effect withdrawals
from the Collateral Account, and the Collateral Account shall be maintained
in the name of and subject to the sole and exclusive
32
dominion and control of Agent. Agent may at any time, and from time to time,
apply funds on deposit in the Collateral Account to the Obligations in such
order as Agent may determine. If an Event of Default has occurred, Agent may
cease honoring drafts, demands, withdrawal, remittance or other requests or
instructions by any Borrower or Guarantor, whether made before or after the
occurrence of such Event of Default.
(b) Each Borrower hereby pledges and assigns to Agent, and grants to Agent a
security interest in, the Collateral Account and in all cash, instruments,
securities and funds on deposit therein, all interest and cash or other
property received in connection therewith or in exchange therefor, and all
proceeds of all of the above, now or hereafter existing, as additional
collateral security for the Obligations. In addition to Agent's common law
rights of setoff, each Borrower hereby grants to Agent, upon the occurrence
of an Event of Default, the right to offset all or a portion of the funds in
the Collateral Account.
(c) On each date on which interest or principal is due and payable under this
Agreement or the Notes, and each day on which any fee or other amount is
payable under this Agreement, in the event that Borrowers have failed to make
any such payment in accordance with the terms of this Agreement and the
Notes, all amounts in the Holding Account (including accrued interest), shall
be applied by Agent to pay such interest, principal and/or other amount due
under this Agreement.
(d) Notwithstanding any provision of this Section 7.13, at such time as the
Foreign Loan Agreement and the other Foreign Loan Documents are executed and
delivered by Borrowers and Guarantor, Borrowers and Guarantor shall no longer
be required to comply with the provisions of this 7.13 with respect to the
Foreign Accounts, the Foreign Accounts shall not be required to be paid to
the Holding Lockbox or the Holding Account and the proceeds of the Foreign
Accounts shall not be required to applied as provided in this Section 7.13.
Section VII.14. ENVIRONMENTAL COMPLIANCE.
(a) Borrowers will comply with, and will use their best efforts to cause
their agents, contractors and sub-contractors (while such Persons are acting
within the scope of their contractual relationship with any Borrower) to
comply with, (i) all applicable Environmental Laws and (ii) the terms and
conditions of all applicable permits, licenses, certificates and approvals of
all Governmental Authorities now or hereafter granted or obtained with
respect to the properties owned or operated by any Borrower unless such
compliance would violate the laws or regulations of the jurisdictions in
which the properties or operations of any Borrower are located.
(b) Borrowers will use their best efforts and safety practices to prevent the
unauthorized release, discharge, disposal, escape or spill of Hazardous
Substances on or about the properties owned or operated by Borrowers.
Section VII.15. ENVIRONMENTAL NOTIFICATIONS. Borrowers shall notify the
Agent, in writing, within five (5) Business days of any of the following
events occurring after the date of this Agreement:
(a) Any written notification made by any Borrower to any U.S. or foreign
federal, state or local
33
environmental agency required under any Environmental Law relating to a spill
or unauthorized discharge or release of any Hazardous Substance to the
environment at, from, or as a result of any operations on, the properties and
operations owned or operated by any Borrower.
(b) Knowledge by an officer of any Borrower of receipt of service by any
Borrower of any complaint, compliance order, compliance schedule, notice
letter, notice of violation, citation or other similar notice or any judicial
demand by any U.S. or foreign court, federal, state or local environmental
agency, alleging (i) any spill, unauthorized discharge or release of any
Hazardous Substance to the environment from, or as a result of the operations
on, the properties owned or operated by any Borrower, or (ii) violations of
applicable laws, regulations permits regarding the generation, storage,
handling, treatment, transportation, recycling, release or disposal of
Hazardous Substances on or as a result of operations on the properties and
operations owned or operated by any Borrower.
(c) It is understood by the parties hereto that the above mentioned notices
are solely for the Agent's and Lenders' information, may not otherwise be
required by any U.S. or foreign federal, state or local Environmental Laws,
and are to be considered confidential information by the Agent and the
Lenders.
(d) The term "environmental agency" as used herein shall include, but not be
limited to, the United States Environmental Protection Agency, the United
States Coast Guard, the United States Minerals Management Service, the United
States Department of Transportation (in its administration of the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq.) and other
analogous or similar Governmental Agencies regulating or administering
statutes, regulations or ordinances relating to or imposing liability or
standards of conduct concerning the generation, storage, use, production,
transportation, handling, treatment, recycling, release or disposal of any
Hazardous Substance.
Section VII.16. ENVIRONMENTAL INDEMNIFICATION.
(a) Borrowers hereby agree to indemnify and hold Agent, Lenders and their
officers, employees, directors and Affiliates (the "Indemnitees") harmless
from and against any and all claims, losses, liability, damages and injuries
of any kind whatsoever asserted against any Indemnitee with respect to or as
a direct result of the presence, escape, seepage, spillage, release, leaking,
discharge or migration from the properties owned or operated by any Borrower
of any Hazardous Substance, including without limitation, any claims asserted
or arising under any applicable Environmental Law, regardless of whether or
not caused by or within the control of any Borrower.
(b) It is the parties' understanding that neither Agent, any Lenders nor any
other Indemnitees does now, has never and does not intend in the future to
exercise any operational control or maintenance over of the properties and
operations owned or operated by any Borrower, nor has any of them in the past
maintained, presently maintains, or intends in the future to maintain, an
ownership interest in the properties owned or operated by any Borrower except
as may arise upon enforcement of the Agent's or the Lenders' rights under the
Security Agreement or the other Loan Documents.
ARTICLE VIII.
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NEGATIVE COVENANTS
Each Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder or
Issuing Bank has any obligation to issue any Letter of Credit hereunder or
any Letter of Credit Liabilities exist, Borrowers will perform and observe
the covenants set forth below, unless Agent shall otherwise consent in
writing.
Section VIII.1. DEBT. No Borrower will incur, create, assume or permit to
exist, nor will any Borrower permit Guarantor or any Subsidiary to incur,
create, assume, or permit to exist, any Debt, except
(a) indebtedness of Borrowers to Lenders under this Agreement and the Loan
Documents;
(b) Indebtedness of Borrowers under the Foreign Loan Agreement in an
aggregate principal amount which does not exceed $15,000,000.00 outstanding
at any time;
(c) accounts payable and accrued liabilities incurred in the ordinary course
of business;
(d) letter of credit, performance and bid bonds obtained by Borrowers in the
ordinary course of their business, other than the Letters of Credit, up to an
aggregate amount of $15,000,000.00 at any time;
(e) supersedeas bonds obtained by Borrowers in the ordinary course of their
business;
(f) secured indebtedness in an aggregate principal amount which does not
exceed $15,000,000.00 outstanding at any time; and
(g) Indebtedness of Borrowers under the CIT Loan Agreement and other
indebtedness of Borrowers secured only by vessels.
Section VIII.2. LIMITATION ON LIENS. No Borrower will incur, create, assume
or permit to exist, nor will any Borrower permit Guarantor or any Subsidiary
to incur, create, assume or permit to exist, any Lien upon any of its
property, assets or revenues, whether now owned or hereafter acquired, except
for the liens and other encumbrances set forth below (the "Permitted Liens"):
(a) Liens for Taxes not at the time delinquent or thereafter payable without
penalty or being contested in good faith, provided provision is made to the
extent required by GAAP for the eventual payment thereof in the event it is
found that such are payable by any Borrower or Guarantor;
(b) Liens of carriers, warehousemen, mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue or being
contested in good faith, provided provision is made to the extent required by
GAAP for the eventual payment thereof in the event it is found that such sums
are payable by any Borrower or Guarantor;
35
(c) maritime Liens:
(i) arising in the ordinary course of business by operation of law that are
being contested in good faith by appropriate proceedings and for which
reserves have been made to the reasonable satisfaction of Lenders or
(ii) arising in connection with salvage and general average; or
(iii) arising in connection with crew wages claimed but not paid;
(d) Liens incurred in the ordinary course of business in connection with
workmen's compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders and statutory
obligations entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds in the ordinary course of business or
easements, rights of way and similar encumbrances incurred in the ordinary
course of business and not interfering with the ordinary conduct of the
business of any Borrower or Guarantor;
(e) judgment Liens in existence less than thirty (30) days after the entry
thereof or with respect to which execution has been stayed or the payment of
which is covered in full by insurance;
(f) Liens required by the terms of this Loan Agreement;
(g) Liens in favor of the Foreign Agent pursuant to the Foreign Loan
Agreement, provided that only the Liens covering the Foreign Accounts of
Borrowers shall be prior to the Liens of Agent under this Agreement and the
Loan Documents;
(h) Liens in connection with Debt referred to in Section 8.1(f); and
(i) Liens created in accordance with the CIT Loan Agreement securing the
indebtedness of Borrowers under the CIT Loan Agreement and Liens on vessels
securing other Debt permitted pursuant Section 8.1(g).
Section VIII.3. MERGERS, ACQUISITIONS, DISSOLUTIONS AND DISPOSITION OF
ASSETS. No Borrower will, nor will any Borrower permit Guarantor or any
Subsidiary to, (a) become a party to a merger or consolidation (a "Merger")
or acquire all or a substantial part of the assets of any Person or the
shares or other evidence of beneficial ownership of any Person (an
"Acquisition"), unless (i) such Borrower, Guarantor or such Subsidiary is the
surviving Person to such Merger or Acquisition, (ii) the aggregate
consideration paid by such Borrower, Guarantor or such Subsidiary in
connection with such merger (whether in the form of cash, stock, the
assumption of Debt or other consideration) does not exceed twenty percent
(20%) of Shareholder's Equity as shown on the most recent financial
statements of Guarantor delivered to Agent pursuant to Section 7.1(a) or (b),
(iii) no Event of Default or Unmatured Event of Default exists immediately
prior to such Merger or Acquisition, and (iv) no Event of Default or
Unmatured Event of Default would arise as a result of such Merger or
Acquisition, (b) sell, lease, assign, transfer or otherwise dispose of
substantially all of its assets (whether in one transaction or in a series of
transactions), or (c) dissolve or
36
liquidate.
Section VIII.4. CHANGE OF LEGAL STRUCTURE. No Borrower will, nor will any
Borrower permit Guarantor or any Subsidiary to, (a) cause or allow to occur
any material change in its Certificate of Incorporation, Articles of
Incorporation or By-Laws, which change might adversely affect Agent or any
Lender, or (b) change its jurisdiction of incorporation.
Section VIII.5. CHANGE OF PLACE OF BUSINESS. No Borrower will, nor will any
Borrower permit Guarantor or any Subsidiary to, make any change in the
address of its principal place of business or its chief executive office
except upon thirty (30) days' prior written notice to Agent.
Section VIII.6. SUBSIDIARIES. No Borrower will, nor will any Borrower permit
Guarantor or any Subsidiary to, create or acquire any Subsidiary, unless (a)
prior to the creation of such Subsidiary, such Borrower, Guarantor or such
Subsidiary has notified Agent of the creation or the acquisition of such
Subsidiary, and (b) if so requested by Lenders, such Subsidiary has executed
a guaranty of the Obligations in form and substance satisfactory to Agent.
Section VIII.7. RESTRICTED PAYMENTS. No Borrower will permit Guarantor to,
and Guarantor 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.
Section VIII.8. LOANS AND INVESTMENTS. No Borrower will, nor will any
Borrower permit Guarantor or any Subsidiary to, (a) advance or loan funds to
any Person, or (b) make any investments in any Person (whether by way of
loan, stock purchase or capital contribution), except for (i) investments in
Cash Equivalents and (ii) the payment of costs, expense, capital
contributions and other payments to be made as set forth in the Limited
Liability Company Agreement of Deep Sea Pipeline Contractors, L.L.C. between
Guarantor and Cal Dive.
Section VIII.9. LINE OF BUSINESS. No Borrower will, nor will any Borrower
permit Guarantor or any Subsidiary to, enter into any new line of business
unrelated to its present activities as of the date of this Agreement.
Section VIII.10. CONTRACTS WITH AFFILIATES. No Borrower will, nor will any
Borrower permit Guarantor or any Subsidiary to, enter into any transaction
with any director, officer, employee, shareholder or Affiliate of any
Borrower or Guarantor except on terms no less favorable to such Borrower,
Guarantor or such Subsidiary than such Borrower, Guarantor or such Subsidiary
could obtain in an arms length transaction with Persons not affiliated with
such Borrower, Guarantor or such Subsidiary.
Section VIII.11. LEASE PAYMENTS. No Borrower will, nor will any Borrower
permit Guarantor or any Subsidiary to, incur or pay an aggregate amount which
exceeds $2,000,000.00 in any year for operating leases or rental of
equipment, vessels or real property having a term in excess of twelve (12)
months, except for (a) Capitalized Lease Obligations, and (b) other than
rental for Borrowers' and Guarantor's
37
principal place of business referred to on the signature pages to this
Agreement.
Section VIII.12. FISCAL YEARS. No Borrower will, nor will any Borrower permit
Guarantor or any Subsidiary to, change or allow to change, the fiscal year of
such Borrower or Guarantor from one ending on December 31.
Section VIII.13. COMPLIANCE WITH ENVIRONMENTAL LAWS. No Borrower will, nor
will any Borrower permit Guarantor or any Subsidiary to, 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,
except in the ordinary course of business and in compliance with all
Environmental Laws, generate any Hazardous Substance, conduct any activity
which is likely to cause a release or threatened release of any Hazardous
Substance, or 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 VIII.14. ACCOUNTING. No Borrower will make, nor will any Borrower
permit Guarantor or any Subsidiary to make, any change in accounting
treatment or reporting practices, except as permitted by GAAP.
ARTICLE IX.
FINANCIAL COVENANTS
Borrowers covenant and agree that, as long as the Obligations or any part
thereof are outstanding or any Lender has any Commitment hereunder or Issuing
Bank has any obligation to issue any Letter of Credit hereunder or any Letter
of Credit Liabilities exist, Borrowers will observe and perform, and will
cause Guarantor to observe and perform, the financial covenants set forth
below, unless Agent shall otherwise consent in writing.
Section IX.1. CURRENT RATIO. Guarantor and its Subsidiaries will at all times
maintain a Current Ratio of not less than 1.10 to 1.00. The Current Ratio
shall be calculated and tested quarterly as of the last day of each fiscal
quarter of Guarantor.
Section IX.2. RATIO OF FUNDED DEBT TO CAPITALIZATION. Guarantor and its
Subsidiaries will at all times maintain a Ratio of Funded Debt to
Capitalization of not greater than 0.50 to 1.00. The Ratio of Funded Debt to
Capitalization shall be calculated and tested quarterly as of the last day of
each fiscal quarter of Guarantor.
Section IX.3. WORKING CAPITAL. Guarantor and its Subsidiaries will at all
times maintain Working Capital of not less than $3,000,000.00. Working
Capital shall be calculated and tested quarterly as of the last day of each
fiscal quarter of Guarantor.
Section IX.4. TANGIBLE NET WORTH. Guarantor and its Subsidiaries will at all
times maintain Tangible Net Worth in an amount not less than the sum of (a)
$100,000,000.00, plus (b) seventy-five percent (75%) of
38
Net Income for each fiscal quarter of Guarantor and its Subsidiaries which
has been completed as of the date of calculation, commencing with the fiscal
quarter ending December 31, 2000, provided, however, that in the event that
Net Income of Guarantor and its Subsidiaries is not greater than zero for any
fiscal quarter, an amount equal to zero shall be added to the calculation of
Tangible Net Worth for such fiscal quarter, plus (c) seventy-five percent
(75%) of the net proceeds of any equity issued by Guarantor or any of its
Subsidiaries (on a consolidated basis) after the Closing Date. Tangible Net
Worth shall be calculated and tested quarterly as of the last day of each
fiscal quarter of Guarantor.
Section IX.5. FIXED CHARGE COVERAGE RATIO. Guarantor and its Subsidiaries
will at all times maintain a Fixed Charge Coverage Ratio of not less than
1.50 to 1.00. The Fixed Charge Coverage Ratio will be calculated and tested
quarterly as of the last day of each fiscal quarter of Guarantor, and for
purposes of calculating the Fixed Charge Coverage Ratio, EBITDA shall be
calculated for the period of four fiscal quarters ended as of the date of
calculation.
Section IX.6. RATIO OF FUNDED DEBT TO EBITDA. Guarantor and its Subsidiaries
will at all times maintain a Ratio of Funded Debt to EBITDA of not greater
than 3.50 to 1.00. The Ratio of Funded Debt to EBITDA will be calculated and
tested quarterly as of the last day of each fiscal quarter of Guarantor, and
for purposes of calculating the Ratio of Funded Debt to EBITDA, EBITDA shall
be calculated for the period of four fiscal quarters ended as of the date of
calculation.
ARTICLE X.
DEFAULT
Section X.1. EVENTS OF DEFAULT. An "Event of Default" shall exist if any of
the events set forth below shall occur and be continuing.
(a) Any Borrower shall default in the payment or prepayment when due of any
principal or interest on the Obligations or any portion thereof or any fees
or other amount payable by any of them under this Agreement or under any
other Loan Document, and such default shall continue for three (3) Business
Days after such amount is due.
(b) Any representation, warranty or certification made or deemed made herein
or in any other Loan Document by any Borrower or Guarantor or any certificate
furnished to Agent or any Lender pursuant to the provisions hereof or any
other Loan Document, shall prove to have been false or misleading as of the
time made or furnished in any material respect.
(c) Any Borrower or Guarantor shall fail to perform or observe any provision
of any Loan Document to which it is a party and such failure shall continue
unremedied for a period of (i) ten (10) Business Days after either (A) the
failure arises and (B) any Borrower or Guarantor has knowledge of such
failure, or (ii) ten (10) Business Days after Agent gives Borrowers notice of
such failure.
(d) Any Borrower or Guarantor shall (i) apply for or consent to the
appointment of, or the taking of
39
possession by, a receiver, custodian, trustee or liquidator of itself or of
all or a substantial part of its property, (ii) make a general assignment for
the benefit of its creditors, (iii) commence a voluntary case under the U.S.
Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking
to take advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding -up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or acquiesce in
writing to, any petition filed against it in an involuntary case under the
U.S. Bankruptcy Code, or (vi) take any corporate action for the purpose of
effecting any of the foregoing.
(e) A proceeding or case shall be commenced, without the application or
consent of any Borrower or Guarantor in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, dissolution or winding-up of any
Borrower or Guarantor, or the composition or readjustment of the debt of any
Borrower or Guarantor, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of any Borrower or Guarantor or of all or
any substantial part of the assets of any of them, or (iii) similar relief in
respect of any Borrower or Guarantor under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of sixty (60) days;
or an order for relief against any Borrower or Guarantor shall be entered in
an involuntary case under the U.S. Bankruptcy Code.
(f) Any Borrower or Guarantor shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due.
(g) Any Borrower or Guarantor shall default in the payment when due of any
principal of or interest on any of its other Debt which Debt had an original
aggregate principal amount in excess of $100,000.00; or any event specified
in any note, agreement, indenture or other document evidencing or relating to
any such Debt shall occur if the effect of such event is to cause, or (with
the giving of any notice or the lapse of time or both) to permit the holder
or holders of such Debt (or a trustee or agent on behalf of such holder or
holders) to cause, such Debt to become due prior to its stated maturity.
(h) A judgment for the payment of money in excess of $150,000.00 shall be
rendered by a court against any Borrower or Guarantor and the same shall not
be discharged (or provision shall not be made for such discharge), or a stay
of execution thereof shall not be procured, within thirty (30) days from the
date of entry thereof and such Borrower or Guarantor, shall not, within said
period of thirty (30) days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal.
(i) 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 any Borrower,
Guarantor or any Subsidiary or any of their respective shareholders, or any
Borrower or Guarantor 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,
perfected security interest in and Lien upon any of the Collateral purported
to be covered thereby or shall cease to have the priority required by this
Agreement.
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(j) Guarantor shall cease to own one hundred percent of the capital stock of
each Borrower.
(k) An Event of Default (as defined in the CIT Loan Agreement) shall occur
and be continuing under the CIT Loan Agreement.
(l) An Event of Default (as defined in the Foreign Loan Agreement) shall
occur and be continuing under the Foreign Loan Agreement.
Section X.2. REMEDIES UPON DEFAULT. If any Event of Default shall occur,
Agent 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 Borrowers, (b) terminate
the Commitments without notice to any Borrower, (c) foreclose or otherwise
enforce any Lien granted to Agent 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 10.1(d) or Section 10.1(e),
the Commitments 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 Borrowers.
Section X.3. CHANGE OF CONTROL. If at any time while any amount is
outstanding under this Agreement or any Lender has a Commitment hereunder,
any Person shall acquire after the date hereof more than fifty percent (50%)
of the then outstanding stock of Guarantor having ordinary voting power, a
"Change of Control" shall be deemed to have occurred. Borrowers shall
promptly, but in any event within ten (10) days, give written notice to Agent
upon obtaining knowledge of an event which is or would constitute a Change of
Control. Upon the happening of a Change of Control, Lenders shall have the
right to declare all amounts outstanding under this Agreement to be due and
payable on a date not earlier than ten (10) days from the date of the
exercise of said right. All amounts outstanding under this Agreement shall
thereupon become due and payable on the date specified in the notice sent to
Borrowers by Agent, including the principal amount thereof plus accrued
interest thereon to the accelerated maturity date and any amounts owed by
Borrowers or Guarantor to Agent and Lenders pursuant to this Agreement.
Section X.4. CASH COLLATERAL. If any Event of Default shall occur, Borrowers
shall, if requested by Agent, immediately deposit with and pledge to Agent,
cash or cash equivalent investments in an amount equal to the outstanding
Letter of Credit Liabilities as security for the Obligations.
Section X.5. PERFORMANCE BY AGENT. If Borrowers shall fail to perform any
covenant, duty, or agreement contained in any of the Loan Documents, Agent
may perform or attempt to perform such covenant, duty, or agreement on behalf
of Borrowers. In such event, Borrowers shall, at the request of Agent,
promptly pay any amount expended by Agent in such performance or attempted
performance to
41
Agent, together with interest thereon at the Default Rate from the date of
such expenditure until paid. Notwithstanding the foregoing, it is expressly
agreed that neither Agent nor any Lender shall have any liability or
responsibility for the performance of any obligation of Borrowers under this
Agreement or any other Loan Document.
ARTICLE XI.
THE AGENT; LENDERS
Section XI.1. APPOINTMENT AND AUTHORIZATION. (a) Each Lender hereby
irrevocably (subject to Section 11.9) appoints, designates and authorizes
Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, Agent
shall not have any duty or responsibility except those expressly set forth
herein, nor shall Agent have or be deemed to have any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or any
other Loan Documents or otherwise exist against Agent.
(b) Issuing Bank shall act on behalf of Lenders with respect to any Letters
of Credit issued by it and the documents associated therewith. The Issuing
Bank shall have all of the benefits and immunities (i) provided to Agent in
this Article XI with respect to any acts taken or omissions suffered by
Issuing Bank in connection with Letters of Credit issued by it or proposed to
be issued by it and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term "Agent", as used
in this Article XII, including Issuing Bank with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with respect to
Issuing Bank.
Section XI.2. DELEGATION OF DUTIES. Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects
with reasonable care.
Section XI.3. LIABILITY OF AGENT. None of Agent nor any of its directors,
officers, employees or agents shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Documents or the transactions contemplated hereby (except
for their own gross negligence or willful misconduct), or (ii) be responsible
in any manner to any Lender for any recital, statement, representation or
warranty made by any Borrower or any Subsidiary or Affiliate of any Borrower,
or any officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document referred
to or provided for in, or received by Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Loan Document, or for any failure of any Borrower or any other party to any
Loan Document to perform its obligations hereunder or thereunder.
42
Agent shall not be under any obligation to any Lender to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or
to inspect the properties, books or records of any Borrower or any of any
Borrower's Subsidiaries or Affiliates.
Section XI.4. RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to Borrowers), independent accountants and other experts selected by
Agent. Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, confirmation from Lenders of their
obligation to indemnify Agent against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action. Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any other Loan Documents in
accordance with a request or consent of the Majority Lenders and such request
and any action taken or failure to act pursuant thereto shall be binding upon
all Lenders.
Section XI.5. NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default or Unmatured Event of
Default except with respect to defaults in the payment of principal, interest
and fees required to be paid to Agent for the account of Lenders, unless
Agent shall have received written notice from a Lender or any Borrower
referring to this Agreement, describing such Event of Default or Unmatured
Event of Default and stating that such notice is a "notice of default". The
Agent will notify Lenders of its receipt of any such notice. Agent shall take
such action with respect to such Event of Default or Unmatured Event of
Default as may be requested by the Majority Lenders in accordance with
Article XI; provided that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Event of Default or
Unmatured Event of Default as it shall deem advisable or in the best interest
of Lenders.
Section XI.6. CREDIT DECISION. Each Lender acknowledges that Agent has not
made any representation or warranty to it, and that no act by Agent hereafter
taken, including any review of the affairs of any Borrower and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
Agent to any Lender. Each Lender represents to Agent that it has,
independently and without reliance upon Agent and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial
and other condition and creditworthiness of any Borrower and its
Subsidiaries, and made its own decision to enter into this Agreement and to
extend credit to Borrowers hereunder. Each Lender also represents that it
will, independently and without reliance upon Agent and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit analysis, appraisals and decisions in taking or not
taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of any Borrower. Except for notices, reports and other
documents
43
expressly herein required to be furnished to the Lenders by Agent, Agent
shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial or other condition or creditworthiness of any Borrower or
its Subsidiaries which may come into the possession of the Agent.
Section XI.7. INDEMNIFICATION. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand Agent and its
directors, officers, employees and agents (to the extent not reimbursed by or
on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), pro rata, from and against any and all Claims; provided that no Lender
shall be liable for any payment to any such Person of any portion of the
Claims resulting from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse Agent upon
demand for its Pro Rata Share of any costs or out-of-pocket expenses
(including reasonable attorneys' fees) incurred by Agent in connection with
the preparation, execution, delivery, administration, modification, amendment
or enforcement (whether through negotiations, legal proceedings or otherwise)
of, or legal advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document contemplated by or
referred to herein, to the extent that Agent is not reimbursed for such
expenses by or on behalf of Borrowers. The undertaking in this Section shall
survive repayment of the Advances, cancellation of each Note, expiration or
termination of the Letters of Credit, any foreclosure under, or modification,
release or discharge of, any or all of the Loan Documents, termination of
this Agreement and the resignation or replacement of Agent.
Section XI.8. AGENT IN INDIVIDUAL CAPACITY. Southwest Bank of Texas, N.A. and
its Affiliates may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other business
with any Borrower and its Subsidiaries and Affiliates as though Southwest
Bank of Texas, N.A. were not Agent or Issuing Bank hereunder and without
notice to or consent of Lenders. Lenders acknowledge that, pursuant to such
activities, Southwest Bank of Texas, N.A. or its Affiliates may receive
information regarding any Borrower or its Affiliates (including information
that may be subject to confidentiality obligations in favor of such Borrower
or such Affiliate) and acknowledge that Agent shall be under no obligation to
provide such information to them. With respect to the Advances and Southwest
Bank of Texas, N.A.'s Pro Rata Share thereof, Southwest Bank of Texas, N.A.
and its Affiliates shall have the same rights and powers under this Agreement
as any other Lender and may exercise the same as if Southwest Bank of Texas,
N.A. were not Agent and Issuing Bank, and the terms "Lender" and "Lenders"
including Southwest Bank of Texas, N.A. and its Affiliates, to the extent
applicable, in their individual capacities.
Section XI.9. SUCCESSOR AGENT. Agent may resign as Agent upon thirty (30)
days' notice to Lenders. If Agent resigns under this Agreement, Lenders
shall, with (so long as no Event of Default exists) the consent of Borrowers
(which shall not be unreasonably withheld or delayed), appoint from among
Lenders a successor agent for Lenders. If no successor agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with Lenders and Borrowers, a successor agent from among
Lenders. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of
the retiring Agent and the term "Agent" shall mean such successor agent, and
the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of
44
this Article XI and Sections 12.1, 12.2 and 12.3 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement. If no successor agent has accepted appointment as Agent by
the date which is thirty (30) days following a retiring Agent's notice or
resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and Lenders shall perform all of the duties of Agent
hereunder until such time, if any, as the Majority Lenders appoint a
successor agent as provided for above.
Section XI.10. COLLATERAL MATTERS. Lenders irrevocably authorize Agent, at
its option and in its discretion, to release any Lien granted to or held by
Agent under any Loan Document (i) upon termination of the Combined
Commitments and payment in full of all Advances, Letter of Credit Liabilities
and all other obligations of Borrowers hereunder and the expiration of
termination of all Letters of Credit; (ii) constituting property sold or to
be sold or disposed of as part of or in connection with any disposition
permitted hereunder; or (iii) subject to Section 12.7, if approved,
authorized or ratified in writing by the Majority Lenders. Upon request by
Agent at any time, Lenders will confirm in writing Agent's authority to
release, or subordinate its interest in, particular types or items of
collateral pursuant to this Section 11.10.
Section XI.11. TAX TREATY. Each Lender that is organized under the laws of a
country other than the United States of America agrees (a) on or before the
date the first Advance is made, to complete and deliver to Borrowers Internal
Revenue Service Form 4224, and (b) to complete and deliver to Borrowers from
time to time, provided such Lender is eligible to do so, any successor or
additional forms required in order to secure an exemption from, or reduction
in the rate of, income tax withholding imposed by the United States of
America. Each Lender shall amend or supplement any such form as required and
permitted by applicable law to insure that it is in full force and effect,
accurate and complete at all times.
ARTICLE XII.
MISCELLANEOUS
Section XII.1. EXPENSES. Borrowers hereby agree to pay Agent and Lenders, as
applicable, on demand (a) all reasonable costs and expenses incurred by Agent
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 Agent's legal
counsel, (b) all reasonable costs and expenses incurred by Agent and each
Lender in connection with the enforcement of this Agreement or any other Loan
Document, including, without limitation, the fees and expenses of each such
Person's legal counsel, and (c) all other reasonable costs and expenses
incurred by Agent 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 any 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 XII.2. INDEMNIFICATION. EACH BORROWER HEREBY INDEMNIFIES AGENT,
ISSUING BANK AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLDS EACH OF
THEM
45
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 ANY BORROWER OF ANY REPRESENTATION,
WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN
DOCUMENTS, (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 ANY BORROWER OR ANY SUBSIDIARY, (E) ANY
ACT OR OMISSION OF AGENT OR ANY LENDER BASED UPON ANY FAX OR ELECTRONIC
TRANSMISSION, OR (F) ANY MATTER RELATED TO ANY LETTER OF CREDIT, INCLUDING,
WITH RESPECT TO ALL OF THE ABOVE, ANY CLAIM WHICH ARISES AS A RESULT OF THE
NEGLIGENCE OF AGENT OR ANY LENDER; PROVIDED, HOWEVER, THAT BORROWERS'
INDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 12.2 SHALL NOT APPLY TO THE
EXTENT THAT THE CLAIMS ARISE AS A RESULT OF THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY INDEMNIFIED PERSON.
Section XII.3. LIMITATION OF LIABILITY. Neither Agent, Issuing Bank, any
Lender nor any affiliate, officer, director, employee, attorney, or agent of
such Person shall have any liability with respect to, and each 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 any 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. Each Borrower hereby waives, releases, and agrees not to xxx
Agent, Issuing Bank, any Lender or any of such Person's affiliates, officers,
directors, employees, attorneys, or 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 XII.4. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Agent, Issuing Bank, or any 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 XII.5. SUCCESSORS AND ASSIGNS. This Agreement is binding upon and
shall inure to the benefit of Agent, Issuing Bank, each Lender and each
Borrower and their respective successors and assigns, except that no Borrower
may assign or transfer any of its rights or obligations under this Agreement
without prior written consent of Agent.
Section XII.6. SURVIVAL. All representations and warranties made in this
Agreement or any other Loan
46
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 Agent,
Issuing Bank or any Lender or any closing shall affect the representations
and warranties or the right of Agent, Issuing Bank or any Lender to rely upon
them. Without prejudice to the survival of any other obligation of Borrowers
hereunder, the obligations of Borrowers under Sections 12.1 and 12.2 shall
survive repayment of the Notes and termination of the Commitments and the
Letters of Credit.
Section XII.7. AMENDMENTS. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement or any Note shall in
any event be effective unless the same shall be in writing and signed and
delivered by Lenders having an aggregate Pro Rata Share of not less than the
aggregate Pro Rata Share expressly designated herein with respect thereto or,
in the absence of such designation as to any provision of this Agreement or
any Note, by the Majority Lenders, and then any such amendment, modification,
waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given. No amendment, modification, waiver or
consent shall change the Pro Rata Share of any Lender without the consent of
such Lender. No amendment, modification, waiver or consent shall (i) increase
the Combined Commitments, (ii) extend the date for payment of any principal
of or interest on the Advances or any fees payable hereunder, (iii) reduce
the principal amount of any Advance, the rate of interest thereon or any fees
payable hereunder, (iv) release any guaranty or all or any substantial part
of the collateral granted under the Loan Documents (except that Agent shall
be entitled to release any Collateral to the extent the sale or disposition
thereof is permitted under this Agreement as in effect on the Closing Date),
or (v) reduce the aggregate Pro Rata Share required to effect an amendment,
modification, waiver or consent without, in each case, the consent of all
Lenders. No amendment or modification shall increase a Lender's commitment
without such Lender's prior written consent. No provision of Article XII or
other provision of this Agreement affecting Agent in its capacity as such
shall be amended, modified or waived without the consent of Agent. No
provision of this Agreement relating to the rights or duties of the Issuing
Bank in its capacity as such shall be amended, modified or waived without the
consent of the Issuing Bank.
Section XII.8. 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
with this loan transaction, the provisions of this Section shall govern and
prevail and neither any Borrower nor the sureties, guarantors, successors, or
assigns of any 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 Agent, Issuing Bank or any
Lender ever receives, collects, or applies as interest any such sum, such
amount which would be in excess of the maximum amount permitted by applicable
law shall be applied as a payment and reduction of the principal of the
indebtedness evidenced by the Notes; and, if the principal of the Notes has
been paid in full, any remaining excess shall forthwith be paid to Borrowers.
In determining whether or not the interest paid or payable exceeds the
Maximum Rate, Borrowers and Agent, Issuing Bank and Lenders 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
47
by the Notes so that interest for the entire term does not exceed the Maximum
Rate.
Section XII.9. NOTICES. All notices and other communications provided for in
this Agreement and the other Loan Documents shall be in writing and may be
telecopied (faxed), mailed by certified mail return receipt requested, or
delivered to the intended recipient at the addresses specified on the
signature pages hereof or at such other address as shall be designated by any
such party in a notice to the other parties given in accordance with this
Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy (fax), subject to 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 addressed as aforesaid; provided, however, that notices to
Agent pursuant to Article II shall not be effective until received by Agent.
Section XII.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 any 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 each 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. Each 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. 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 any Borrower or with respect to any of its
property in courts in other jurisdictions. Any action or proceeding by any
Borrower against Agent or any Lender shall be brought only in a court located
in Xxxxxx County, Texas.
Section XII.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 XII.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 XII.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 XII.14. NON-APPLICATION OF CHAPTER 346 OF TEXAS FINANCE CODE. The
provisions of Chapter 346 of the Texas Finance Code 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.
Section XII.15. ASSIGNMENTS. Any Lender may, with the prior written consents
of Issuing Bank and Agent and (which consents shall not be unreasonably
delayed or withheld and, in any event, shall not be required for an
assignment by any Lender to one of its Affiliates), at any time assign and
delegate to an Eligible
48
Assignee all or any fraction of such Lender's Advances and Commitment in a
minimum aggregate amount equal to the lesser of the amount of the assigning
Lender's Pro Rata Share of the Combined Commitments and $5,000,000.00;
provided that Borrowers and Agent shall be entitled to continue to deal
solely and directly with such Lender in connection with the interests so
assigned and delegated to an Eligible Assignee until the date when all of the
following conditions shall have been met:
(a) the assigning Lender and the Eligible Assignee shall have executed and
delivered to Borrowers and Agent an Assignment and Acceptance, together with
any documents required to be delivered thereunder, which Assignment and
Acceptance shall have been accepted by Agent;
(b) except in the case of an assignment by a Lender to one of its Affiliates,
the assigning Lender or the Eligible Assignee shall have paid Agent a
processing fee of $3,500; and
(c) five Business Days (or such lesser period of time as the Agent and the
assigning Lender shall agree) shall have passed after written notice of such
assignment and delegation, together with payment instructions, addresses and
related information with respect to such Eligible Assignee, shall have been
given to Borrowers and Agent by such assigning Lender and the Eligible
Assignee.
From and after the date on which the conditions described above have been
met, (x) such Eligible Assignee shall be deemed automatically to have become
a party hereto and, to the extent that rights and obligations hereunder have
been assigned and delegated to such Eligible Assignee pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
hereunder and (y) the assigning Lender, to the extent that rights and
obligations hereunder have been assigned and delegated by it pursuant to such
Assignment and Acceptance, shall be released from its obligations hereunder.
Within five Business Days after effectiveness of any assignment and
delegation, Borrowers shall execute and deliver to Agent (for delivery to the
Eligible Assignee and the assigning Lender, as applicable) a new Note in the
principal amount of the Eligible Assignee's Pro Rata Share of the Combined
Commitments and, if the assigning Lender has retained a Commitment hereunder,
a replacement Note in the principal amount of the Pro Rata Share of the
Combined Commitments retained by the assigning Lender (such Note to be in
exchange for, but not in payment of, the portion of the predecessor Note not
being assigned). Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Note and in this Agreement. Any
attempted assignment and delegation not made in accordance with this Section
12.15 shall be null and void.
Notwithstanding the foregoing provisions of this Section 12.15 or any other
provision of this Agreement, any Lender may at any time assign all or any
portion of its Commitments and its Note to a Federal Reserve Bank (but no
such assignment shall release any Lender from any of its obligations
hereunder).
SECTION XII.16. WAIVER OF TRIAL BY JURY. TO THE FULLEST EXTENT PERMITTED, BY
APPLICABLE LAW, EACH BORROWER, AGENT AND EACH LENDER HEREBY VOLUNTARILY,
KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) BETWEEN OR AMONG BORROWERS AND AGENT OR ANY LENDER ARISING OUT OF
OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENTS OR ANY
RELATIONSHIP BETWEEN BORROWER AND AGENT OR ANY LENDER. THIS PROVISION IS A
MATERIAL INDUCEMENT TO LENDERS TO PROVIDE THE
49
FINANCING DESCRIBED IN THIS AGREEMENT.
SECTION XII.17. 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.
BORROWERS:
HORIZON OFFSHORE CONTRACTORS, INC.
By:
------
Xxxxx X. Xxxxx
Executive Vice President
Address for Notices:
0000 XxxxXxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
HORIZON SUBSEA SERVICES, INC.
By:
------
Xxxxx X. Xxxxx
Executive Vice President
Address for Notices:
0000 XxxxXxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
50
HORIZON VESSELS, INC.
By:
------
Xxxxx X. Xxxxx
Executive Vice President
Address for Notices:
0000 XxxxXxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
AGENT:
SOUTHWEST BANK OF TEXAS, N.A.
By:
------
Xxxxxxx X. Xxxxxx
Senior Vice President
Address for Notices:
Five Post Oak Park
0000 Xxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
LENDERS:
Commitment: $9,375,000.00 SOUTHWEST BANK OF TEXAS, N.A.
By:
------
Xxxxxxx X. Xxxxxx
Senior Vice President
Address for Notices:
Five Post Oak Park
0000 Xxxx Xxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
51
Fax No.: 000-000-0000
Commitment: $6,250,000.00 DRESDNER BANK LATEINAMERIKA AG
By:
------
Name:
----
Title:
---
By:
------
Name:
----
Title:
---
Address for Notices:
000 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
Fax No.: 000-000-0000
Commitment: $6,250,000.00 BANK OF SCOTLAND
By:
------
Name:
----
Title:
---
Address for Notices:
000 0xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax No.: 000-000-0000
Commitment: $3,125,000.00 HIBERNIA NATIONAL BANK
By:
------
Name:
----
Title:
---
52
Address for Notices:
000 Xxxxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Fax No.: 000-000-0000
53
LIST OF SCHEDULES
SCHEDULE ITEM
-------- ----
6.5 Litigation
6.14 Subsidiaries
54
Schedule 6.5
Litigation
1. HORIZON OFFSHORE CONTRACTORS, INC. VS. SAIBOS CML - further described in
letter dated March 13, 2001 from Xxxxxxx X. Xxxxxxx, General Counsel of
Guarantor to Xxx X. Xxxxxx, counsel to Agent and Lenders.
55
Schedule 6.14
Subsidiaries
SUBSIDIARY JURISDICTION OF ORGANIZATION
---------- ----------------------------
Horizon Offshore Contractors, Ltd. Cayman
Horizon Group L.D.C. Cayman
Horizon Offshore Nigeria Ltd. Nigeria
HOC Offshore, S. de X.X. de C.V. Mexico
Tiburon Ingenieria y Construccion, S. de.
X.X. de C.V. Mexico
Progressive Pipeline Contractors, Inc. Delaware - in process of formation
Affiliated Marine Contractors, Inc. Delaware - in process of formation
Texas Offshore contractors Corp. Delaware - in process of formation
56
LIST OF EXHIBITS
EXHIBIT DOCUMENT
------- --------
A Form of Note
B Security Agreement-Guarantor
C Security Agreement-Contractors
D Security Agreement-Subsea
E Security Agreement-Vessels
F Guaranty Agreement
G Advance Request Form
H Borrowing Base Certificate
I No Default Certificate
J Arbitration Agreement
K Assignment and Acceptance
M Intercreditor Agreement
