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EXHIBIT 10.1
NEWPARK SHIPBUILDING-XXXXX ISLAND, INC.
LOAN AGREEMENT
Dated as of July 1, 1999
$3,000,000.00
STERLING BANK
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TABLE OF CONTENTS
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ARTICLE I - Definitions....................................................................1
Section 1.1 Definitions...................................................1
ARTICLE II - Advances......................................................................1
Section 2.1 Advances......................................................1
Section 2.2 The Revolving Credit Note.....................................1
Section 2.3 Repayment of Advances.........................................2
Section 2.4 Interest......................................................2
Section 2.5 Borrowing Procedure...........................................2
Section 2.6 Use of Proceeds...............................................2
ARTICLE III - Letters of Credit............................................................3
Section 3.1 Letters of Credit.............................................3
ARTICLE IV - Payments......................................................................3
Section 4.1 Method of Payment.............................................3
Section 4.2 Voluntary Prepayment..........................................3
Section 4.3 Mandatory Prepayment..........................................3
Section 4.4 Computation of Interest.......................................3
Section 4.5 Capital Adequacy..............................................4
ARTICLE V - Security.......................................................................4
Section 5.1 Collateral....................................................4
Section 5.2 Setoff........................................................4
Section 5.3 Guaranty......................................................5
ARTICLE VI - Conditions Precedent..........................................................5
Section 6.1 Initial Extension of Credit...................................5
Section 6.2 All Extensions of Credit......................................7
ARTICLE VII - Representations and Warranties...............................................7
Section 7.1 Corporate Existence...........................................7
Section 7.2 Financial Statements..........................................7
Section 7.3 Corporate Action; No Breach...................................8
Section 7.4 Operation of Business.........................................8
Section 7.5 Litigation and Judgments......................................8
Section 7.6 Rights in Properties; Liens...................................8
Section 7.7 Enforceability................................................8
Section 7.8 Approvals.....................................................9
Section 7.9 Debt..........................................................9
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TABLE OF CONTENTS
(Continued)
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Section 7.10 Taxes.........................................................9
Section 7.11 Use of Proceeds; Margin Securities............................9
Section 7.12 ERISA.........................................................9
Section 7.13 Disclosure................................................... 9
Section 7.14 Subsidiaries.................................................10
Section 7.15 Agreements...................................................10
Section 7.16 Compliance with Laws.........................................10
Section 7.17 Inventory....................................................10
Section 7.18 Investment Company Act.......................................10
Section 7.19 Public Utility Holding Company Act...........................10
Section 7.20 Environmental Matters........................................10
ARTICLE VIII - Affirmative Covenants......................................................11
Section 8.1 Reporting Requirements.......................................12
Section 8.2 Maintenance of Existence; Conduct of Business................14
Section 8.3 Maintenance of Properties....................................14
Section 8.4 Taxes and Claims.............................................14
Section 8.5 Insurance....................................................15
Section 8.6 Inspection Rights............................................15
Section 8.7 Keeping Books and Records....................................15
Section 8.8 Compliance with Laws.........................................15
Section 8.9 Compliance with Agreements...................................15
Section 8.10 Further Assurances...........................................15
Section 8.11 ERISA........................................................15
Section 8.12 Subordination Agreement......................................16
ARTICLE IX - Negative Covenants...........................................................16
Section 9.1 Debt.........................................................16
Section 9.2 Limitation on Liens..........................................16
Section 9.3 Mergers, Etc.................................................17
Section 9.4 Restricted Payments..........................................17
Section 9.5 Loans and Investments........................................17
Section 9.6 Limitation on Issuance of Capital Stock......................17
Section 9.7 Transactions With Affiliates.................................18
Section 9.8 Disposition of Assets........................................18
Section 9.9 Sale and Leaseback...........................................18
Section 9.10 Prepayment of Debt...........................................18
Section 9.11 Nature of Business...........................................18
Section 9.12 Environmental Protection.....................................18
Section 9.13 Accounting...................................................18
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TABLE OF CONTENTS
(Continued)
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ARTICLE X - Financial Covenants...........................................................19
ARTICLE XI - Default......................................................................19
Section 11.1 Events of Default............................................19
Section 11.2 Remedies Upon Default........................................21
Section 11.3 Cash Collateral..............................................22
Section 11.4 Performance by the Lender....................................22
ARTICLE XII - Miscellaneous...............................................................22
Section 12.1 Expenses.....................................................22
Section 12.2 INDEMNIFICATION..............................................22
Section 12.3 Limitation of Liability......................................23
Section 12.4 No Duty......................................................23
Section 12.5 Lender Not Fiduciary.........................................23
Section 12.6 Equitable Relief.............................................24
Section 12.7 No Waiver; Cumulative Remedies...............................24
Section 12.8 Successors and Assigns.......................................24
Section 12.9 Survival.....................................................24
Section 12.10 ENTIRE AGREEMENT; AMENDMENT..................................24
Section 12.11 Maximum Interest Rate........................................24
Section 12.12 Notices......................................................25
Section 12.13 Governing Law; Venue; Service of Process.....................25
Section 12.14 Counterparts.................................................26
Section 12.15 Severability.................................................26
Section 12.16 Headings.....................................................26
Section 12.17 Non-Application of Chapter 346 of Texas Finance Code.........26
Section 12.18 Participations...............................................26
Section 12.19 Construction.................................................26
Section 12.20 Independence of Covenants....................................26
Other Definitional Provisions....................................................10
1. Procedure for Issuing Letters of Credit..................................1
2. Payments Constitute Advances.............................................1
3. Letter of Credit Fee.....................................................1
4. Obligations Absolute.....................................................1
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LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement"), dated as of July 1, 1999 is
between NEWPARK SHIPBUILDING-XXXXX ISLAND, INC., a Texas corporation (the
"Borrower"), and STERLING BANK, a bank organized under the laws of the State of
Texas (the "Lender").
R E C I T A L S:
The Borrower has requested the Lender to extend credit to the Borrower
in the form described in this agreement. The Lender is willing to make such
extensions of credit to the Borrower upon the terms and conditions hereinafter
set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the capitalized
terms shall have the meanings given such terms in Annex I (and as defined in any
other Annex) to this Agreement, except as may be defined above. In the event of
any conflicting definition among Annex I and any other Annex, the definitions
set forth in Annex I shall control unless the definition outside Annex I
specifically states that it is intended to control over the equivalent Annex I
definition. Any Annex page containing the words "NOT APPLICABLE" shall
constitute the agreement of the Lender and the Borrower that the subject matter
of such Annex is inapplicable and of no effect with respect to this Agreement.
ARTICLE II
Advances
Section 2.1 Advances. Subject to the terms and conditions of this
Agreement, the Lender agrees to make one or more Advances to the Borrower 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 the
amount of the Commitment, provided that the aggregate amount of all Advances at
any time outstanding shall not exceed the lesser of (a) the amount of the
Commitment minus all outstanding Letter of Credit Liabilities or (b) the
Borrowing Base minus all outstanding Letter of Credit Liabilities. Subject to
the foregoing limitations, and the other terms and provisions of this Agreement,
the Borrower may borrow, repay, and reborrow hereunder.
Section 2.2 The Revolving Credit Note. The obligation of the Borrower
to repay the Advances and interest thereon shall be evidenced by the Revolving
Credit Note executed by the
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Borrower, payable to the order of the Lender, in the principal amount of the
Commitment as originally in effect, and dated the date hereof.
Section 2.3 Repayment of Advances. The Borrower shall repay the unpaid
principal amount of all Advances on the Termination Date.
Section 2.4 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. If at any
time the rate of interest specified in clause (b) above shall exceed the Maximum
Rate, thereby causing the interest accruing 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) above had at all times been in effect. Accrued and
unpaid interest on the Advances shall be payable on each Payment Date and on the
Termination Date. Notwithstanding the foregoing, any outstanding principal of
any Advance and (to the fullest extent permitted by law) any other amount
payable by the Borrower under this Agreement or any other Loan Document that is
not paid in full when due (whether at stated maturity, by acceleration, or
otherwise) shall bear interest at the Default Rate for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Additionally, upon the occurrence of an Event of Default (and from the
date of such occurrence) all outstanding and unpaid principal amounts of all of
the Obligations shall, to the extent permitted by law, bear interest at the
Default Rate until such time as the Lender shall waive in writing the
application of the Default Rate to such Event of Default situation. Interest
payable at the Default Rate shall be payable from time to time on demand.
Section 2.5 Borrowing Procedure. The Borrower shall give the Lender
notice of each Advance by means of an Advance Request Form containing the
information required therein and delivered (by hand or by mechanically confirmed
facsimile) to the Lender no later than 1:00 p.m. (Texas time) on the day on
which the Advance is desired to be funded. The Lender at its option may accept
telephonic requests for Advances, provided that such acceptance shall not
constitute a waiver of the Lender's right to require delivery of an Advance
Request Form in connection with subsequent Advances. Any telephonic request for
an Advance by the Borrower shall be promptly confirmed by submission of a
properly completed Advance Request Form to the Lender. Subject to the terms and
conditions of this Agreement, each Advance shall be made available to the
Borrower by depositing the same, in immediately available funds, in an account
of the Borrower maintained with the Lender at the Principal Office designated by
the Borrower.
Section 2.6 Use of Proceeds. The proceeds of Advances shall be used by
the Borrower for working capital in the ordinary course of business and to
refinance obligations owing to Comerica Bank-Texas.
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ARTICLE III
Letters of Credit
Section 3.1 Letters of Credit. If any Letters of Credit are to be
issued by the Lender for the account of the Borrower, such issuance of Letter of
Credit and the Borrower's obligations thereunder shall be governed by Annex II,
and any other agreements referenced in Annex II.
ARTICLE IV
Payments
Section 4.1 Method of Payment. All payments of principal, interest, and
other amounts to be made by the Borrower under this Agreement and the other Loan
Documents shall be made to the Lender at the Principal Office in Dollars and
immediately available funds, without setoff, deduction, or counterclaim, not
later than 11:00 A.M., Houston, Texas time on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower
shall, at the time of making each such payment, specify to the Lender the sums
payable by the Borrower under this Agreement and the other Loan Documents to
which such payment is to be applied (and in the event the Borrower fails to so
specify, or if an Event of Default has occurred and is continuing, the Lender
may apply such payment to the Obligations in such order and manner as it may
elect in its sole discretion). Whenever any payment under this Agreement or any
other Loan Document shall be stated to be due on a day that is not a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of interest and commitment fee, as the case may be.
Section 4.2 Voluntary Prepayment. Subject to anything to the contrary
contained elsewhere in this Agreement, the Borrower may, on at least one (1)
Business Days prior notice to the Lender, prepay the Advances in whole at any
time or from time to time in part without premium or penalty but with accrued
interest to the date of prepayment on the amount so prepaid, provided that each
partial prepayment shall be in the principal amount of $10,000.00 or an integral
multiple thereof.
Section 4.3 Mandatory Prepayment. If at any time the outstanding
principal amount of the Advances plus the Letter of Credit Liabilities exceeds
the Borrowing Base, the Borrower shall promptly prepay the outstanding Advances
by the amount of the excess plus accrued and unpaid interest on the amount so
prepaid or, if no Advances are outstanding, the Borrower shall immediately
pledge to the Lender cash or cash equivalent investments in an amount equal to
the excess as security for the Obligations.
Section 4.4 Computation of Interest. Interest on the Advances and all
other amounts payable by the Borrower hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the first
day but excluding the last day) unless such
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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.
Section 4.5 Capital Adequacy. If after the date hereof, the Lender
shall have determined that the adoption or implementation of any applicable law,
rule, or regulation regarding capital adequacy (including, without limitation,
any law, rule, or regulation implementing the Basle Accord), or any change
therein, or any change in the interpretation or administration thereof by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by the Lender (or its parent) with any
guideline, request, or directive regarding capital adequacy (whether or not
having the force of law) of any such central bank or other Governmental
Authority (including, without limitation, any guideline or other requirement
implementing the Basle Accord), has or would have the effect of reducing the
rate of return on the 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 the Lender (or its parent) could have achieved but for such adoption,
implementation, change, or compliance (taking into consideration the Lender's
policies with respect to capital adequacy) by an amount deemed by the Lender to
be material, then from time to time, within ten (10) Business Days after demand
by the Lender, the Borrower shall pay to the Lender (or its parent) such
additional amount or amounts as will compensate the Lender for such reduction. A
certificate of the 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, the Lender may use any reasonable
averaging and attribution methods.
ARTICLE V
Security
Section 5.1 Collateral. To secure full and complete payment and
performance of the Obligations, the Borrower shall execute and deliver or cause
to be executed and delivered the documents described below covering the property
and collateral described in this Section 5.1 (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) The Borrower shall grant to the Lender a first priority
security interest in all of its accounts, accounts receivable, and
general intangibles relating to accounts receivable, whether now owned
or hereafter acquired, and all products and proceeds thereof, pursuant
to the Security Agreement.
(b) The Borrower shall execute and cause to be executed such
further documents and instruments, including without limitation,
Uniform Commercial Code financing statements, as the Lender, in its
sole discretion, deems necessary or desirable to create, evidence,
preserve, and perfect its liens and security interests in the
Collateral.
Section 5.2 Setoff. If an Event of Default shall have occurred and be
continuing, the Lender shall have the right to set off and apply against the
Obligations in such manner as the Lender
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may determine, at any time and without notice to the 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 the Lender to the Borrower whether or
not the Obligations are then due. As further security for the Obligations, the
Borrower hereby grants to the Lender a security interest in all money,
instruments, and other property of the Borrower now or hereafter held by the
Lender, including, without limitation, property held in safekeeping. In addition
to the Lender's right of setoff and as further security for the Obligations, the
Borrower hereby grants to the Lender a security interest in all deposits
(general or special, time or demand, provisional or final) and other accounts of
the Borrower now or hereafter on deposit with or held by the Lender and all
other sums at any time credited by or owing from the Lender to the Borrower. The
rights and remedies of the Lender hereunder are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the
Lender may have.
Section 5.3 Guaranty. The performance and repayment of the Obligations
shall be guaranteed by the Corporate Guarantor pursuant the Corporate Guaranty
and by the Individual Guarantor pursuant to the Individual Guaranty.
ARTICLE VI
Conditions Precedent
Section 6.1 Initial Extension of Credit. The obligation of the Lender
to make the initial Advance or issue the initial Letter of Credit is subject to
the condition precedent that the Lender shall have received on or before the day
of such Advance or Letter of Credit all of the following, each dated (unless
otherwise indicated) the date hereof, in form and substance satisfactory to the
Lender:
(a) Resolutions. Resolutions of the Board of Directors of the
Borrower certified by the Secretary or an Assistant Secretary of the
Borrower which authorize the execution, delivery, and performance by
the Borrower of this Agreement and the other Loan Documents to which
the Borrower is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of the Borrower
certifying the names of the officers of the Borrower authorized to sign
this Agreement and each of the other Loan Documents to which the
Borrower is or is to be a party (including the certificates
contemplated herein) together with specimen signatures of such
officers;
(c) Articles of Incorporation. The articles of incorporation
of the Borrower certified by the Secretary of State of state of
incorporation of the Borrower and as of a date acceptable to the
Lender;
(d) Bylaws. The bylaws of the Borrower certified by the
Secretary or an Assistant Secretary of the Borrower;
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(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation of the Borrower as
to the existence and good standing of the Borrower, each dated within
ten (10) days prior to the date of the initial Advance or Letter of
Credit;
(f) Note. The Note executed by the Borrower;
(g) Security Agreement. The Security Agreement executed by the
Borrower;
(h) Financing Statements. Uniform Commercial Code financing
statements executed by the Borrower and covering such Collateral as the
Lender may request;
(i) Guaranty. The Guaranty executed by the Guarantor;
(j) Insurance Policies. Copies of all insurance policies
required by Section 8.5;
(k) UCC Search. The results of a Uniform Commercial Code
search showing all financing statements and other documents or
instruments on file against the Borrower in the office of the Secretary
of State of Texas, such search to be as of a date no more than ten (10)
days prior to the date of the initial Advance or the Letter of Credit;
(l) Environmental Certificate. A certificate from Borrower to
Lender setting forth the current status of the matter disclosed in
Schedule 7.20, attached hereto;
(m) Opinion of Counsel. A favorable opinion of in-house
counsel to the Borrower and the Guarantor, as to the matters set forth
in Exhibit "G" hereto, and such other matters as the Lender may
reasonably request; and
(n) Facility Fee. Receipt by Lender of a Facility Fee of
$15,000.00.
(o) Subordinated Debt. Confirmation, in a form acceptable to
the Lender, from Newpark Shipholding L.P. that the terms of the
Subordination Agreement dated September 4, 1996 by and between the
Borrower (formerly known as NEWPARK SHIPBUILDING AND REPAIR, INC.),
NEWPARK SHIPHOLDING, L.P. and COMERICA BANK-TEXAS remain in effect and
subordinate the Subordinated Debt to the Obligations.
(p) Subordination Agreement - Parent. The Subordination
Agreement - Parent.
(q) Transfer of Note and Lien. A transfer of note and lien
from Comerica Bank-Texas, in form acceptable to the Lender,
transferring to the Lender the indebtedness owing by the Borrower and
secured by the Collateral together with such UCC-3 assignments as the
Lender shall require.
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(r) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including reasonable attorneys' fees) referred to in Section
12.1, to the extent incurred, shall have been paid in full by the
Borrower.
Section 6.2 All Extensions of Credit. The obligation of the Lender to
make any Advance or issue any Letter of Credit (including the initial Advance
and the initial Letter of Credit) is subject to the following additional
conditions precedent:
(a) Request for Advance or Letter of Credit. The Lender shall
have received in accordance with this Agreement, as the case may be, an
Advance Request Form or Letter of Credit Request Form dated the date of
such Advance or Letter of Credit and executed by an authorized officer
of the Borrower;
(b) No Default. No Default shall have occurred and be
continuing, or would result from such Advance or Letter of Credit;
(c) Representations and Warranties. All of the representations
and warranties contained in Article VI hereof and in the other Loan
Documents shall be true and correct on and as of the date of such
Advance with the same force and effect as if such representations and
warranties had been made on and as of such date; and
(d) Additional Documentation. The Lender shall have received
such additional approvals, opinions, or documents as the Lender or its
legal counsel may reasonably request.
ARTICLE VII
Representations and Warranties
To induce the Lender to enter into this Agreement, the Borrower
represents and warrants to the Lender that:
Section 7.1 Corporate Existence. The Borrower and each Subsidiary (a)
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation; (b) has all requisite
corporate power and authority to own its assets and carry on its business as now
being or as proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a material adverse effect
on its business, condition (financial or otherwise), operations, prospects, or
properties. The Borrower has the corporate power and authority to execute,
deliver, and perform its obligations under this Agreement and the other Loan
Documents to which it is or may become a party.
Section 7.2 Financial Statements. The Borrower has delivered to the
Lender consolidated financial statements of the Borrower and its Subsidiaries
prepared by the Borrower as at and for the fiscal year ended 1998 and financial
statements of the Borrower and its Subsidiaries for the three (3)-month period
ended March 31, 1999. Such financial statements are true and correct,
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have been prepared in accordance with GAAP, and fairly and accurately present,
on a consolidated basis, the financial condition of the Borrower and its
Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. Neither the Borrower
nor any of its Subsidiaries has any material contingent liabilities, liabilities
for taxes, unusual forward or long-term commitments, or unrealized or
anticipated losses from any unfavorable commitments except as referred to or
reflected in such financial statements. There has been no material adverse
change in the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower or any of its Subsidiaries since the
effective date of the most recent financial statements referred to in this
Section.
Section 7.3 Corporate Action; No Breach. The execution, delivery, and
performance by the Borrower of this Agreement and the other Loan Documents to
which the Borrower is or may become a party and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate action on the part of the Borrower and do not and will not (a) violate
or conflict with, or result in a breach of, or require any consent under (i) the
articles of incorporation or bylaws of the Borrower or any of the Subsidiaries,
(ii) any applicable law, rule, or regulation or any order, writ, injunction, or
decree of any Governmental Authority or arbitrator, or (iii) any agreement or
instrument to which the Borrower or any of the Subsidiaries is a party or by
which any of them or any of their property is bound or subject, or (b)
constitute a default under any such agreement or instrument, or result in the
creation or imposition of any Lien (except as provided in Article V) upon any of
the revenues or assets of the Borrower or any Subsidiary.
Section 7.4 Operation of Business. The Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and the Borrower and each of its Subsidiaries are not in
violation of any valid rights of others with respect to any of the foregoing.
Section 7.5 Litigation and Judgments. Except as disclosed on Schedule
7.5 hereto, there is no action, suit, investigation, or proceeding before or by
any Governmental Authority or arbitrator pending, or to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary, that
would, if adversely determined, have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of the
Borrower or any Subsidiary or the ability of the Borrower to pay and perform the
Obligations. There are no outstanding judgments against the Borrower or any
Subsidiary.
Section 7.6 Rights in Properties; Liens. The Borrower 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 7.2, and none of the properties, assets, or
leasehold interests of the Borrower or any Subsidiary is subject to any Lien,
except as permitted by Section 9.2.
Section 7.7 Enforceability. This Agreement constitutes, and the other
Loan Documents to which the Borrower is party, when delivered, shall constitute
legal, valid, and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their respective terms, except
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as limited by bankruptcy, insolvency, or other laws of general application
relating to the enforcement of creditors' rights.
Section 7.8 Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower of
this Agreement and the other Loan Documents to which the Borrower is or may
become a party or the validity or enforceability thereof.
Section 7.9 Debt. The Borrower and its Subsidiaries have no Debt,
except as disclosed on Schedule 7.9 hereto.
Section 7.10 Taxes. The Borrower and each Subsidiary have filed all tax
returns (federal, state, and local) required to be filed, including all income,
franchise, employment, property, and sales tax returns, and have paid all of
their respective liabilities for taxes, assessments, governmental charges, and
other levies that are due and payable. The Borrower knows of no pending
investigation of the Borrower or any Subsidiary by any taxing authority or of
any pending but unassessed tax liability of the Borrower or any Subsidiary.
Section 7.11 Use of Proceeds; Margin Securities. Neither the Borrower
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 G, T, U, or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
Section 7.12 ERISA. The Borrower and each Subsidiary are in compliance
in all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan. No notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or appoint a
trustee to administer, a Plan, nor has the PBGC instituted any such proceedings.
Neither the Borrower nor any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan. The Borrower and each ERISA Affiliate have
met their minimum funding requirements under ERISA with respect to all of their
Plans, and the present value of all vested benefits under each Plan do not
exceed the fair market value of all Plan assets allocable to such benefits, as
determined on the most recent valuation date of the Plan and in accordance with
ERISA. Neither the Borrower nor any ERISA Affiliate has incurred any liability
to the PBGC under ERISA.
Section 7.13 Disclosure. No statement, information, report,
representation, or warranty made by the Borrower in this Agreement or in any
other Loan Document or furnished to the Lender in connection with this Agreement
or any of the transactions contemplated hereby contains any untrue statement of
a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to the
Borrower which has a material adverse effect, or which might in the future have
a material adverse effect, on the business,
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condition (financial or otherwise), operations, prospects, or properties of the
Borrower or any Subsidiary that has not been disclosed in writing to the Lender.
Section 7.14 Subsidiaries. The Borrower has no Subsidiaries other than
those listed on Schedule 7.14 which sets forth the jurisdiction of incorporation
of each Subsidiary and the percentage of the Borrower's ownership of the
outstanding voting stock of each Subsidiary. All of the outstanding capital
stock of each Subsidiary has been validly issued, is fully paid, and is
nonassessable.
Section 7.15 Agreements. Neither the Borrower nor any Subsidiary is a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could have a material adverse effect on the business, condition (financial
or otherwise), operations, prospects, or properties of the Borrower or any
Subsidiary, or the ability of the Borrower to pay and perform its obligations
under the Loan Documents to which it is a party. Neither the Borrower nor any
Subsidiary is in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in any
agreement or instrument material to its business to which it is a party.
Section 7.16 Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation in any material respect of any law, rule, regulation,
order, or decree of any Governmental Authority or arbitrator.
Section 7.17 Inventory. All inventory of the Borrower has been and will
hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as amended
(29 U.S.C. Sections 201-219), and the regulations promulgated thereunder.
Section 7.18 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 7.19 Public Utility Holding Company Act. Neither the Borrower
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
amended.
Section 7.20 Environmental Matters. Except as disclosed on Schedule
7.20 hereto:
(a) The Borrower, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all
Environmental Laws. The Borrower is not aware of, nor has the Borrower
received notice of, any past, present, or future conditions, events,
activities, practices, or incidents which may interfere with or prevent
the compliance or continued compliance of the Borrower and the
Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits
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are in good standing and the Borrower and its Subsidiaries are in
compliance with all of the terms and conditions of such permits;
(c) Except as used in compliance with all applicable
Environmental Laws, (i) no Hazardous Materials exist on, about, or
within or have been used, generated, stored, transported, disposed of
on, or Released from any of the properties or assets of the Borrower or
any Subsidiary, and (ii) the use which the Borrower and the
Subsidiaries make and intend to make of their respective properties and
assets will not result in the use, generation, storage, transportation,
accumulation, disposal, or Release of any Hazardous Material on, in, or
from any of their properties or assets;
(d) Neither the Borrower nor any of its Subsidiaries nor any
of their respective currently or previously owned or leased properties
or operations is subject to any outstanding or threatened order from or
agreement with any Governmental Authority or other Person or subject to
any judicial or docketed administrative proceeding with respect to (i)
failure to comply with Environmental Laws, (ii) Remedial Action, or
(iii) any Environmental Liabilities arising from a Release or
threatened Release;
(e) There are no conditions or circumstances associated with
the currently or previously owned or leased properties or operations of
the Borrower or any of its Subsidiaries that could reasonably be
expected to give rise to any Environmental Liabilities;
(f) Neither the Borrower nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
regulations thereunder or any comparable provision of state law. The
Borrower and its Subsidiaries are in compliance with all applicable
financial responsibility requirements of all Environmental Laws;
(g) Neither the Borrower nor any of its Subsidiaries has filed
or failed to file any notice required under applicable Environmental
Law reporting a Release; and
(h) No Lien arising under any Environmental Law has attached
to any property or revenues of the Borrower or its Subsidiaries.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or the Lender has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants, unless the
Lender shall otherwise consent in writing:
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Section 8.1 Reporting Requirements. The Borrower will furnish to the
Lender:
(a) Annual Financial Statements. As soon as available, and in
any event within ninety (90) days after the end of each fiscal year of
the Borrower, beginning with the fiscal year ending December 31, 1999,
(i) a copy of the financial statements of the Borrower for such fiscal
year containing balance sheets and statements of income, retained
earnings, and cash flow 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 and certified by the chief financial officer of the Borrower, or
to the effect that such report has been prepared in accordance with
GAAP; and (ii) a certificate to the Lender from the independent
certified public accountants of the Corporate Guarantor (A) stating
that to their knowledge no Default has occurred and is continuing, or
if in their opinion a Default has occurred and is continuing, a
statement as to the nature thereof, and (B) confirming the calculations
set forth in the officer's certificate delivered simultaneously
therewith;
(b) Quarterly Financial Statements. As soon as available, and
in any event within forty-five (45) days after the end of each of the
quarters of each fiscal year of the Borrower, a copy of an unaudited
financial report of the Borrower and the Subsidiaries as of the end of
such fiscal quarter and for the portion of the fiscal year then ended,
containing, on a consolidated and consolidating basis, balance sheets
and statements of income, retained earnings, and cash flow, in each
case setting forth in comparative form the figures for the
corresponding period of the preceding fiscal year, all in reasonable
detail certified by the chief financial officer of the Borrower to have
been prepared in accordance with GAAP and to fairly and accurately
present (subject to year-end audit adjustments) the financial condition
and results of operations of the Borrower and the Subsidiaries, on a
consolidated and consolidating basis, at the date and for the periods
indicated therein;
(c) Certificate of No Default. Concurrently with the delivery
of each of the financial statements referred to in subsections 8.1(a)
and 8.1(b), a certificate of the chief financial officer of the
Borrower (i) stating that to the best of such officer's knowledge, no
Default has occurred and is continuing, or if a Default has occurred
and is continuing, a statement as to the nature thereof and the action
which is proposed to be taken with respect thereto, and (ii) showing in
reasonable detail the calculations demonstrating compliance with
Article X;
(d) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to the Borrower or
any Subsidiary by independent certified public accountants with respect
to the business, condition (financial or otherwise), operations,
prospects, or properties of the Borrower or any Subsidiary;
(e) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator affecting the Borrower or any
Subsidiary which, if determined adversely to the Borrower or such
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Subsidiary, could have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or
properties of the Borrower or such Subsidiary;
(f) Notice of Default. As soon as possible and in any event
within five (5) days after the occurrence of each Default, a written
notice setting forth the details of such Default and the action that
the Borrower has taken and proposes to take with respect thereto;
(g) ERISA Reports. Promptly after the filing or receipt
thereof, copies of all reports, including annual reports, and notices
which the Borrower or any Subsidiary files with or receives from the
PBGC or the U.S. Department of Labor under ERISA; and as soon as
possible and in any event within five (5) days after the Borrower or
any Subsidiary knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that
the PBGC or the Borrower or any Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, a
certificate of the chief financial officer of the Borrower setting
forth the details as to such Reportable Event or Prohibited Transaction
or Plan termination and the action that the Borrower proposes to take
with respect thereto;
(h) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party
pursuant to the terms of any indenture, loan, or credit or similar
agreement and not otherwise required to be furnished to the Lender
pursuant to any other clause of this Section;
(i) Notice of Material Adverse Change. As soon as possible and
in any event within five (5) days after the occurrence thereof, written
notice of any matter that could have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any Subsidiary;
(j) Borrowing Base Report. As soon as available, and in any
event within fifteen (15) days after the end of each calendar month, a
Borrowing Base Report, in a form acceptable to the Lender, certified by
the chief financial officer of the Borrower;
(k) Accounts Receivable and Accounts Payable Aging. As soon as
available, and in any event within thirty (30) days after the end of
each calendar month, an account receivable aging, classifying the
Borrower's domestic and export accounts receivable in categories of
0-30, 31-60, 61-90 and over 90 days from date of invoice, and in such
form and detail as the Lender shall require, and account payable aging
by categories of 0-30, 31-60 and over 60, from date of invoice, also in
such detail as the Lender shall reasonably require, and in each case
certified by the chief financial officer of the Borrower;
(l) Individual Guarantor Financial Statement. The Borrower
shall cause the Individual Guarantor to provide (i) an annual financial
statement, in such form and detail as the Lender shall reasonably
require, including a balance sheet and cash flow statement prepared in
a manner consistent with prior statements delivered to the Lender
within ninety (90) days after the end of each calendar year and (ii)
annually, a copy of the Individual
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Guarantor's filed tax return, within thirty (30) days of the day it is
filed with the Internal Revenue Service;
(m) Corporate Guarantor Financial Statement. The Borrower
shall cause the Corporate Guarantor to provide (i) a 10-K report within
ninety (90) days after the end of each fiscal year-end of Corporate
Guarantor, and (ii) within forty-five (45) days after the end of each
fiscal quarter-end of Corporate Guarantor, (A) a 10-Q report, (B) a
Covenant Compliance Certificate with the required calculations of
financial covenants accurately completed and certifying compliance with
(I) the $90,000,000 Senior Notes Indenture, (II) any existing or future
working capital or credit facility, and (III) the Subordination
Agreement, and (iii) annually, (A) a copy of the Corporate Guarantor's
filed tax return, within thirty (30) days of the day it is filed with
the Internal Revenue Service, and (B) a copy of the annual audit report
of the Corporate Guarantor for each fiscal year, beginning with the
fiscal year ending December 31, 1999 as soon as available, and in any
event within one hundred twenty (120) days after the end of each fiscal
year of Corporate Guarantor containing, on a consolidated and
consolidating basis, balance sheets, and statements of income, retained
earnings and cash flow 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
and audited and certified by Corporate Guarantor's independent
certified public accountants of recognized standing acceptable to the
Lender, to the effect that such report has been prepared in accordance
with GAAP;
(n) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by the
Borrower or any Subsidiary to its stockholders generally and one copy
of each regular, periodic or special report, registration statement, or
prospectus filed by the Borrower or any Subsidiary with any securities
exchange or the Securities and Exchange Commission or any successor
agency; and
(o) General Information. Promptly, such other information
concerning the Borrower or any Subsidiary as the Lender may from time
to time reasonably request.
Section 8.2 Maintenance of Existence; Conduct of Business. The Borrower
will preserve and maintain, and will cause 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. The Borrower will conduct, and will
cause each Subsidiary to conduct, its business in an orderly and efficient
manner in accordance with good business practices.
Section 8.3 Maintenance of Properties. The Borrower will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition.
Section 8.4 Taxes and Claims. The Borrower will pay or discharge, and
will cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes,
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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 the Borrower nor any Subsidiary shall be
required to pay or discharge any tax, levy, assessment, or governmental charge
which is being contested in good faith by appropriate proceedings diligently
pursued, and for which adequate reserves have been established.
Section 8.5 Insurance. The Borrower will maintain, and will cause each
of the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and the Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each
Subsidiary to maintain workmen's compensation insurance, property insurance,
comprehensive general liability insurance, products liability insurance, and
business interruption insurance reasonably satisfactory to the Lender. Each
insurance policy of the Borrower and Corporate Guarantor shall provide that such
policy will not be cancelled or reduced without thirty (30) days prior written
notice to the Lender.
Section 8.6 Inspection Rights. At any reasonable time and from time to
time, the Borrower will permit, and will cause each Subsidiary to permit,
representatives of the Lender to examine, copy, and make extracts from its books
and records, to visit and inspect its properties, and to discuss its business,
operations, and financial condition with its officers, employees, and
independent certified public accountants.
Section 8.7 Keeping Books and Records. The Borrower will maintain, and
will cause 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 8.8 Compliance with Laws. The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator.
Section 8.9 Compliance with Agreements. The Borrower will comply, and
will cause each Subsidiary to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its properties
or business.
Section 8.10 Further Assurances. The Borrower will, and will cause each
Subsidiary to, execute and deliver such further agreements and instruments and
take such further action as may be requested by the Lender to carry out the
provisions and purposes of this Agreement and the other Loan Documents and to
create, preserve, and perfect the Liens of the Lender in the Collateral.
Section 8.11 ERISA. The Borrower will comply, and will cause 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.
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Section 8.12 Subordination Agreement. The Borrower will comply with the
provisions of the Subordination Agreement and the Subordination Agreement -
Parent.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or the Lender has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants, unless the
Lender shall otherwise consent in writing:
Section 9.1 Debt. The Borrower will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume, or
permit to exist, any Debt, except:
(a) Debt to the Lender; and
(b) Debt of up to $100,000.00 each fiscal year incurred to
acquire assets in the ordinary course of business.
(c) Existing Debt described on Schedule 9.1 hereto including
the Subordinated Debt.
Section 9.2 Limitation on Liens. The Borrower will not incur, create,
assume, or permit to exist, and will not permit 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:
(a) Liens disclosed on Schedule 9.1 hereto including the Liens
securing the Subordinated Debt;
(b) Liens in favor of the Lender;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do
not (individually or in the aggregate) materially affect the value of
the assets encumbered thereby or materially impair the ability of the
Borrower or the Subsidiaries to use such assets in their respective
businesses, and none of which is violated in any material respect by
existing or proposed structures or land use;
(d) Liens for taxes, assessments, or other governmental
charges which are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
or other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business; and
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(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, or contracts (other than for payment of Debt), or
leases made in the ordinary course of business.
Section 9.3 Mergers, Etc. The Borrower will not, and will not permit
any Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or any part of the assets of any Person or any shares or
other evidence of beneficial ownership of any Person, or wind-up, dissolve, or
liquidate.
Section 9.4 Restricted Payments. Excluding (a) the semiannual payment
resulting from either the monthly interest payments or monthly accruals by
Borrower equal to the product of the Senior Debt Allocation times the monthly
accrual for the semiannual payments due on the $90,000,000 Senior Notes
Indenture and (b) dividends, other payments and distributions, in aggregate, not
to exceed $1,000,000.00 during the term of this Agreement, the Borrower will not
declare or pay any dividends or make any other payment or distribution (in cash,
property, or obligations) on account of its capital stock, or redeem, purchase,
retire, or otherwise acquire any of its capital stock, or permit any of its
Subsidiaries to purchase or otherwise acquire any capital stock of the Borrower
or another Subsidiary, 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 9.5 Loans and Investments. The Borrower will not make, and will
not permit any Subsidiary to make, any advance, loan, extension of credit, or
capital contribution to or investment in, or purchase, or permit any Subsidiary
to purchase, any stock, bonds, notes, debentures, or other securities of, any
Person, except:
(a) readily marketable direct obligations of the United States
of America or any agency thereof with maturities of one year or less
from the date of acquisition;
(b) fully insured certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial
bank operating in the United States of America having capital and
surplus in excess of $50,000,000.00; and
(c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest rating
categories of Standard and Poor's Corporation or Xxxxx'x Investors
Service.
Section 9.6 Limitation on Issuance of Capital Stock. The Borrower will
not, and will not permit any of its Subsidiaries to, at any time issue, sell,
assign, or otherwise dispose of (a) any of its capital stock, (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its capital stock, or (c) any option, warrant, or other right to acquire any of
its capital stock.
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Section 9.7 Transactions With Affiliates. The Borrower will not enter
into, and will not permit any Subsidiary to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than would
be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary, NOTWITHSTANDING THE FORGOING, BUT
SUBJECT TO THE PROVISIONS OF THE SUBORDINATION AGREEMENT-PARENT OF EVEN DATE
HEREWITH, THE BORROWER MAY CONTINUE TO TRANSACT BUSINESS WITH ITS AFFILIATES IN
THE MANNER CURRENTLY CONDUCTED.
Section 9.8 Disposition of Assets. The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, or permit any
Subsidiary to do so with any of its assets, except dispositions of asset, in
arms-length transactions for fair value in the ordinary course of business not
to exceed, in aggregate $500,000.00 during the terms of this Agreement.
Section 9.9 Sale and Leaseback. The Borrower will not enter into, and
will not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 9.10 Prepayment of Debt. The Borrower will not prepay, and will
not permit any Subsidiary to prepay, any Debt, except (i) the Obligations or
(ii) the Subordinate Debt provided such Subordinate Debt is reduced solely from
proceeds of the Corporate Guarantor's public offering.
Section 9.11 Nature of Business. The Borrower will not, and will not
permit any Subsidiary to, engage in any business other than the businesses in
which they are engaged as of the date hereof.
Section 9.12 Environmental Protection. The Borrower will not, and will
not permit any of its Subsidiaries to, (a) other than in compliance with
applicable Environmental Laws, 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 Material, (b) other than in
compliance with applicable Environmental laws, generate any Hazardous Material,
(c) conduct any activity that is likely to cause a Release or threatened Release
of any Hazardous Material, or (d) otherwise conduct any activity or use any of
their respective properties or assets in any manner that is likely to violate
any Environmental Law or create any Environmental Liabilities for which the
Borrower or any of its Subsidiaries would be responsible.
Section 9.13 Accounting. The Borrower will not, and will not permit any
of its Subsidiaries to, change its fiscal year or make any change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Lender, or (b) in tax reporting treatment, except as required
by law and disclosed to the Lender.
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ARTICLE X
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or the Lender has any Commitment hereunder, the
Borrower will observe and perform the financial covenants contained in Annex IV
attached hereto, unless the Lender shall otherwise consent in writing:
ARTICLE XI
Default
Section 11.1 Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) The Borrower shall fail to pay when due the Obligations or
any part thereof.
(b) Any representation or warranty made or deemed made by the
Borrower or any Obligated Party (or any of their respective officers)
in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) The Borrower or any Obligated Party shall fail to perform,
observe, or comply with any covenant, agreement, or term contained in
this Agreement or any other Loan Document.
(d) The Borrower, any Subsidiary, or any Obligated Party shall
commence a voluntary proceeding seeking liquidation, reorganization, or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian, or other
similar official of it or a substantial part of its property or shall
consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as
they become due or shall take any corporate action to authorize any of
the foregoing.
(e) An involuntary proceeding shall be commenced against the
Borrower, any Subsidiary, or any Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under
any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian, or other similar official for it or a substantial part of
its property, and such involuntary proceeding shall remain undismissed
and unstayed for a period of thirty (30) days.
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(f) The Borrower, any Subsidiary or any Obligated Party shall
fail to discharge within a period of thirty (30) days after the
commencement thereof any attachment, sequestration, or similar
proceeding or proceedings involving an aggregate amount in excess of
THIRTY THOUSAND DOLLARS ($30,000.00) against any of its assets or
properties.
(g) A final judgment or judgments for the payment of money in
excess of THIRTY THOUSAND DOLLARS ($30,000.00) in the aggregate shall
be rendered by a court or courts against the Borrower, any of its
Subsidiaries, or any Obligated Party and the same shall not be
discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within thirty (30)
days from the date of entry thereof and the Borrower or the relevant
Subsidiary or Obligated Party 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.
(h) The Borrower, any Subsidiary, or any Obligated Party shall
fail to pay when due any principal of or interest on any Debt (other
than the Obligations), or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof, or any event shall have occurred
that permits (or, with the giving of notice or lapse of time or both,
would permit) any holder or holders of such Debt or any Person acting
on behalf of such holder or holders to accelerate the maturity thereof
or require any such prepayment.
(i) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
the Borrower, any Subsidiary, any Obligated Party or any of their
respective shareholders, or the Borrower or any Obligated Party shall
deny that it has any further liability or obligation under any of the
Loan Documents, or any lien or security interest created by the Loan
Documents shall for any reason cease to be a valid, first priority
perfected security interest in and lien upon any of the Collateral
purported to be covered thereby.
(j) Any of the following events shall occur or exist with
respect to the Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA from
a Multiemployer Plan or the reorganization, insolvency, or termination
of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, have
subjected or could in the reasonable opinion of the Lender subject the
Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the
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PBGC, or otherwise (or any combination thereof) which in the aggregate
exceed or could reasonably be expected to exceed THIRTY THOUSAND
DOLLARS ($30,000.00).
(k) The Individual Guarantor shall have died or have been
declared incompetent by a court of proper jurisdiction; or the
Corporate Guarantor shall have dissolved, liquidated or otherwise
ceased doing business.
(l) Xxxxxx X. Xxxxx shall cease to be active in the management
of the Borrower.
(m) The Borrower, any of its Subsidiaries, or any Obligated
Party, or any of their properties, revenues, or assets, shall become
subject to an order of forfeiture, seizure, or divestiture (whether
under RICO or otherwise) and the same shall not have been discharged
within thirty (30) days from the date of entry thereof.
(n) Any portion of the record or beneficial ownership of the
Borrower shall have been transferred, assigned or hypothecated to any
Person, when compared to such ownership as of the date of this
Agreement.
(o) The first day on which (i) the Permitted Holders in the
aggregate hold less than 35% of the voting stock of the Corporate
Guarantor, or (ii) any one of Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx or Xxxxx
X. Xxxxxx fails to be a member of the board of directors of Corporate
Guarantor. For purposes of this paragraph "o", "Permitted Holders"
means (i) Xxxxxx X. Xxxxx, Xxxxx X. Xxxxx and Xxxxx X. Xxxxxx; (ii)
each of their beneficiaries, estates, spouse and lineal descendants,
legal representatives of any of the foregoing and the trustee of any
bona fide trust of which any of the foregoing are the sole
beneficiaries or grantors and (iii) all Affiliates controlled by the
individuals named in clause (i) (provided that, for purposes of this
clause (iii) only, the definition of the term "Affiliate" shall be
deemed modified to provide that beneficial ownership of 50% or more of
the voting securities of a Person shall constitute, and shall be
necessary to constitute, control).
(p) The Lender shall at any time deem itself insecure or
believe that the prospect of payment or performance of the Obligations
or any portion thereof is impaired.
Section 11.2 Remedies Upon Default. If any Event of Default shall occur
and be continuing, the Lender may without notice terminate the Commitment and
declare 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 the Borrower; provided,
however, that upon the occurrence of an Event of Default under Section 11.1(d)
or Section 11.1(e), the Commitment shall automatically terminate, and the
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 the Borrower. If any Event of
Default shall occur and be continuing,
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the Lender may exercise all rights and remedies available to it in law or in
equity, under the Loan Documents, or otherwise.
Section 11.3 Cash Collateral. If any Event of Default shall occur and
be continuing, the Borrower shall, if requested by the Lender, immediately
deposit with and pledge to the Lender cash or cash equivalent investments in an
amount equal to the outstanding Letter of Credit Liabilities as security for the
Obligations.
Section 11.4 Performance by the Lender. If the Borrower shall fail to
perform any covenant or agreement contained in any of the Loan Documents, the
Lender may perform or attempt to perform such covenant or agreement on behalf of
the Borrower. In such event, the Borrower shall, at the request of the Lender,
promptly pay any amount expended by the Lender in connection with such
performance or attempted performance to the Lender, together with interest
thereon at the Default Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that the Lender shall not have any liability
or responsibility for the performance of any obligation of the Borrower under
this Agreement or any other Loan Document.
ARTICLE XII
Miscellaneous
Section 12.1 Expenses. The Borrower hereby agrees to pay on demand: (a)
all costs and expenses of the Lender in connection with the preparation,
negotiation, execution, and delivery 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 legal counsel for the Lender, (b) all costs and expenses of the
Lender in connection with any Default and the enforcement of this Agreement or
any other Loan Document, including, without limitation, the fees and expenses of
legal counsel for the Lender, (c) all transfer, stamp, documentary, or other
similar taxes, assessments, or charges levied by any Governmental Authority in
respect of this Agreement or any of the other Loan Documents, (d) all costs,
expenses, assessments, and other charges incurred in connection with any filing,
registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and (e) all other
costs and expenses incurred by the Lender in connection with this Agreement or
any other Loan Document, including, without limitation, all costs, expenses, and
other charges incurred in connection with obtaining any mortgagee title
insurance policy, survey, audit, or appraisal in respect of the Collateral.
Section 12.2 INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE LENDER
AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL
LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME
SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE
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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 THE 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 MATERIAL LOCATED ON, ABOUT, WITHIN, OR
AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR ANY SUBSIDIARY, (E)
THE USE OR PROPOSED USE OF ANY LETTER OF CREDIT, (F) ANY AND ALL TAXES, LEVIES,
DEDUCTIONS, AND CHARGES IMPOSED ON THE LENDER OR ANY OF THE LENDER'S
CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (G) ANY INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE
FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN
DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO
BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS
AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 12.3 Limitation of Liability. Neither the Lender nor any
Affiliate, officer, director, employee, attorney, or agent of the Lender shall
have any liability with respect to, and the 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 the 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. The Borrower hereby waives,
releases, and agrees not to xxx the Lender or any of the Lender'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 12.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Lender shall have the right
to act exclusively in the interest of the Lender and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to the Borrower or any of the Borrower's shareholders
or any other Person.
Section 12.5 Lender Not Fiduciary. The relationship between the
Borrower and the Lender is solely that of debtor and creditor, and the Lender
has no fiduciary or other special relationship with the Borrower, and no term or
condition of any of the Loan Documents shall be
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construed so as to deem the relationship between the Borrower and the Lender to
be other than that of debtor and creditor.
Section 12.6 Equitable Relief. The Borrower recognizes that in the
event the Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may prove to be inadequate relief to the
Lender. The Borrower therefore agrees that the Lender, if the Lender so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 12.7 No Waiver; Cumulative Remedies. No failure on the part of
the 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 12.8 Successors and Assigns. This Agreement is binding upon and
shall inure to the benefit of the Lender and the Borrower and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Lender.
Section 12.9 Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Lender or any closing shall affect the representations and
warranties or the right of the Lender to rely upon them. Without prejudice to
the survival of any other obligation of the Borrower hereunder, the obligations
of the Borrower under Sections 4.5, 12.1, and 12.2 shall survive repayment of
the Note and termination of the Commitment and the Letters of Credit.
Section 12.10 ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, THE NOTE,
AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF 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.
The provisions of this Agreement and the other Loan Documents to which the
Borrower is a party may be amended or waived only by an instrument in writing
signed by the parties hereto.
Section 12.11 Maximum Interest Rate. No provision of this Agreement or
any other Loan Document shall require the payment or the collection of interest
in excess of the maximum amount
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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 Loan Document or
otherwise in connection with this loan transaction, the provisions of this
Section shall govern and prevail and neither the Borrower nor the sureties,
guarantors, successors, or assigns of the 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 the
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 Note; and, if the principal of the Note has been paid in full,
any remaining excess shall forthwith be paid to the Borrower. In determining
whether or not the interest paid or payable exceeds the Maximum Rate, the
Borrower and the Lender shall, to the extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof, and
(c) amortize, prorate, allocate, and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the indebtedness
evidenced by the Note so that interest for the entire term does not exceed the
Maximum Rate.
Section 12.12 Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents to which the Borrower is a
party shall be given or made by telex, telegraph, telecopy, cable, or in writing
and telexed, telecopied, telegraphed, cabled, mailed by certified mail return
receipt requested, or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party at such other address as shall be designated by such party in a notice to
the other party 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 telex or telecopy, subject to telephone
confirmation of receipt, or delivered to the telegraph or cable office, subject
to telephone confirmation of receipt, or 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, notices to the Lender pursuant to
Article II and Article III shall not be effective until received by the Lender.
Section 12.13 Governing 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. Any action or proceeding against the
Borrower under or in connection with any of the Loan Documents may be brought in
any state or federal court in Xxxxxx County, Texas. The Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and (b)
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. The Borrower agrees that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of Section 12.12.
Nothing herein or in any of the other Loan Documents shall affect the right of
the Lender to serve process in any other manner permitted by law or shall limit
the right of the Lender to bring any action or proceeding against the Borrower
or with respect to any of its property in courts in other jurisdictions. Any
action or proceeding by the Borrower against the Lender shall be brought only in
a court located in Xxxxxx County, Texas.
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Section 12.14 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 12.15 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 12.16 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 12.17 Non-Application of Chapter 346 of Texas Finance Code. The
provisions of Chapter 346 of the Texas Finance Code (or any other statutory
equivalent) 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 12.18 Participations. The Lender shall have the right at any
time and from time to time to grant participations in the Note and any other
Loan Documents. Each actual or proposed participant shall be entitled to receive
all information received by the Lender regarding the Borrower and its
Subsidiaries, including, without limitation, information required to be
disclosed to a participant pursuant to Banking Circular 181 (Rev., August 2,
1984), issued by the Comptroller of the Currency (whether the actual or proposed
participant is subject to the circular or not).
Section 12.19 Construction. The Borrower and the Lender acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by the Borrower and the
Lender.
Section 12.20 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
[REMAINDER OF THIS PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
NEWPARK SHIPBUILDING-XXXXX ISLAND,
INC., a Texas corporation
By: /s/ Xxxxxx X. Xxxxx
-------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
Address for Notices:
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
Attention: Xxxxx X. Xxxxxx
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LENDER:
STERLING BANK,
a bank organized under the laws of
the State of Texas
By: /s/ Xxxxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxxx X. Xxxxxxxx
Senior Vice President
Address for Notices:
00000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Fax No.: 000-000-0000
Telephone No.: 000-000-0000
Attention: Xxxxxxxx X. Xxxxxxxx
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INDEX TO EXHIBITS
-----------------
Exhibit Description of Exhibit Section
------- ---------------------- -------
A Note 2.2
B Security Agreement 5.1(b)
C Guaranty from Individual Guarantor 5.3
D Guaranty from Corporate Guarantor 5.3
INDEX TO SCHEDULES
------------------
Schedule Description of Exhibit Section
-------- ---------------------- -------
7.5 Existing Litigation 7.5
7.9 Existing Debt 7.9
7.14 List of Subsidiaries 7.14
7.20 Environmental Matters 7.20
9.1 Existing Debt 9.1
9.2 Existing Liens 9.2
INDEX TO ANNEXES
----------------
Annex Description of Annex Section
----- -------------------- -------
I Definitions 1.1
II Letters of Credit 3.1
III Intentionally Omitted
IV Financial Covenants Article X
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