LOAN AGREEMENT
This Agreement is dated as of May 22, 1998 and is by and among Whitney
National Bank ("Lender"), a national banking association, and Xxxxxx Industries,
Inc. ("Borrower"), a Louisiana corporation and Orange Shipbuilding Company,
Inc., a Texas corporation, ("Orange" or a "Guarantor", as applicable), a Texas
corporation.
WITNESSETH:
WHEREAS, Lender, Borrower and Orange entered into a Loan Agreement, dated
as of March 19, 1998, covering a term loan in the sum of Twenty-five Million and
No/100 ($25,000,000.00) Dollars (the "Initial Loan Agreement");
WHEREAS, the Borrower has requested Lender to make a Line of Credit in the
amount of $10,000,000 that may be used to fund (i) the working capital needs of
Borrower, (ii) the short term funding of capital expenditures and acquisitions
by Borrower on terms acceptable to Lender and /or (iii) a dividend to certain of
Borrower's shareholders and Lender has agreed to the Line of Credit upon the
terms and conditions set forth.
NOW THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Borrower, Orange and Lender agree to amend and restate Initial Loan Agreement as
follows:
SECTION I. DEFINITIONS
For the purpose of this Agreement, the following terms shall have the
meanings specified below:
"Advance" shall mean a disbursement under the Line of Credit.
"Advance Request" shall mean the Borrower's request for an Advance.
"Agreement" shall mean this Loan Agreement, as it may be amended from time
to time.
"Base Rate" shall mean the Prime Rate minus the applicable margin of 50
basis points during any Interest Period. Prime Rate shall mean that rate of
interest as recorded by Whitney National Bank from time to time as its prime
lending rate with the rate of interest to change when and as said prime lending
rate changes. The Prime Rate is not necessarily the lowest interest rate charged
by Whitney National Bank. Each change in any interest rate provided for herein
based upon the Base Rate resulting from a change in the Prime Rate shall take
effect at the time of such change in the Prime Rate.
"Business Day" shall mean any day on which banks are required to be open to
carry on their normal business in the State of Louisiana.
"Capital Expenditures" shall mean as to any Person, without duplication
and for any period, the cost attributed, in accordance with GAAP consistent with
those applied in preparation of the financial statements referred to in Section
5.2 hereof, to acquisitions during such period by such Person of any asset,
tangible or intangible, or replacements or substitutes therefor or additions
thereto which such
Person treated as a noncurrent asset on such Person's financial statements,
including, without limitation, the acquisition or construction of assets having
a useful life of more than one (1) year, excluding the cost associated with the
purchase of the stock of Orange.
"Closing Date" shall mean the date this Agreement is duly executed by
Lender and the Borrower and Orange.
"Company Agent" shall mean Xxxxxxx X. Xxxxxxx or Xxxxx X. Xxxxxxxxx.
"Xxxxxx Shipyard" shall mean the approximately 11 acres of immovable
property on the Atchafalya River, Morgan City , Louisiana, owned by Xxxxxx and
which is the Borrower's shipyard in Morgan City, Louisiana, as described on
Exhibit A.
"Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.
"Consolidated Funded Debt" shall mean all Debt or other obligations for
borrowed money or for the deferred purchase price of property or services,
whether as maker or endorser, of Borrower, its Parent Company and all of its
Subsidiaries (including without limitation, all notes, debentures, bonds or
similar instruments and all liabilities shown on a balance sheet or financial
statement of Borrower, its Parent Company and all of its Subsidiaries)
"Consolidated Funded Debt Payments" shall mean, at a particular date all
principal and interest payments of Consolidated Funded Debt as required by the
terms of the documents evidencing such Debt and excluding any prepayments of
principal or interest thereunder.
"Current Assets" means, at a particular date, all amounts which would, in
conformity with generally accepted accounting principles in the United States of
America in effect from time to time and applied on a consistent basis, be
included under current assets on a balance sheet of the Borrower, its Parent
Company and all of its Subsidiaries at such date.
"Current Liabilities" means, at a particular date, all amounts which would,
in conformity with generally accepted accounting principles in the United States
of America in effect from time to time and applied on a consistent basis, be
included under current liabilities on a balance sheet of the Borrower, its
Parent Company and all of its Subsidiaries as at such date.
"Debt" of a Person shall mean at a particular date, the sum (without
duplication and in conformity with GAAP of (i) all indebtedness or other
obligations for borrowed money or for the deferred purchase price of property or
services, whether as maker or endorser, (including without limitation, all
notes, debentures, bonds or similar instruments and all liabilities shown on a
balance sheet or financial statement of Borrower, its Parent Company and all of
its Subsidiaries), (ii) capitalized lease obligations of such Person or any
subsidiary thereof, (iii) obligations with respect to any installment sale or
conditional sale agreement or title retention agreement, (iv) indebtedness
arising under acceptance facilities, (v) reimbursement obligations arising in
connection with surety, or performance or other similar bonds and in connection
with letters of credit issued in lieu of such bonds, (vi) the outstanding
2
amount of all other letters of credit and (vii) any withdrawal liability or
obligation of such Person or an ERISA affiliate to a multiemployer plan.
"Debt to Worth Ratio" shall mean the ratio for a given period of Debt to
Tangible Net Worth.
"Default" shall mean the occurrence of any of the events specified in
Section VI.
"EBITDA" shall mean the net income after taxes of Borrower, its Parent
Company and all of its Subsidiaries for each fiscal year of four consecutive
quarters, plus all amounts deducted in determining such net operating income
after taxes on account of (a) all interest paid or payable by Borrower, its
Parent Company and all of its Subsidiaries during such period, (b) all taxes
paid or accrued based on or measured by income and (c) all depreciation and
amortization expenses accrued during such period, all in accordance with GAAP.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eligible Income" shall mean EBITDA minus (i) Capital Expenditures and (ii)
state and federal income taxes for the applicable accounting period.
"Financial Covenants" shall mean all of the financial covenants to be met
by Borrower on a consolidated basis as described in Section 5.01.
"Fixed Charges Coverage Ratio" shall mean the ratio calculated on a rolling
four quarter basis over the life of the Loan of Eligible Income to Consolidated
Funded Debt Payments.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" means any sovereign state or nation or government,
or any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including without limitation, the United States
Department of Defense, the United States Navy, the United States Coast Guard and
United States Army Corp of Engineers.
"Government Contracts" shall have the meaning as provided in Section 4.20.
"Guarantors" shall mean Orange and J. Xxxxxx Xxxxxx (with each a
"Guarantor").
"Hazardous Materials" shall mean:
(a) any "hazardous waste" as defined by either the Resource Conservation
and Recovery Act of 1976 (42 U.S.C. (S)6901 et. seq.), as amended from
time to time, and regulations promulgated thereunder;
3
(b) any "hazardous substance" as defined by either the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. (S)9601 et. seq.) ("CERCLA"), as amended from time to time, and
regulations promulgated thereunder;
(c) asbestos;
(d) polychlorinated biphenyls;
(e) any "regulated substance" as defined under Underground Storage Tank
Regulations, 53 Fed. Reg. 37196 (Sept. 23, 1988), codified as 40 C.F.R.
(S) 280.12, or La. Adm. Code 33:XI.103;
(f) any naturally occurring radioactive materials, the possession, use,
transfer, processing, distribution, or disposal of which is subject to
regulation by the Louisiana Department of Environmental Quality
pursuant to the provisions of La. Adm. Code 33:XV, Chapter 14, as
amended from time to time;
(g) any non-hazardous oil field wastes ("Now") defined and regulated by the
Commissioner of Conservation under La. R.S. 30:1, et seq., or the
Louisiana Abandoned Oil field Waste Site Law, La. R.S. 30:71 et seq.,
as amended from time to time, and regulations promulgated thereunder;
(h) any substance the presence of which on the Property is prohibited by
any lawful rules and regulations of legally constituted authorities
from time to time in force and effect relating to the Property,
including but not limited to any solid waste and underground storage
tanks subject to the regulations of the Louisiana Department of
Environmental Quality ; and
(i) any other substance which by any such rule or regulation requires
special handling in its collection, storage, treatment, or disposal.
"Hazardous Materials Contamination" shall mean (i) the contamination
(whether presently existing or hereafter occurring) of the Property, including
the improvements, facilities, soil, ground, water, air or other elements on, or
of, the Property by Hazardous Materials, (ii) the contamination of the Property,
including the buildings, facilities, soil, ground, water, air or other elements
on, or of, any other property as a result of Hazardous Materials at any time
(whether before or after the date of this Loan Agreement) emanating from the
Property or (iii) the existence of an underground storage tank which is out-of-
service or must be removed in accordance with La. Adm. Code 33:XI, et seq.
"Interest Period" shall mean at the time the Borrower gives a Notice of
Conversion (as defined in Section 2.03) in respect of the making of, or
converting the interest rate on the Loan to accrue at Libor Rate or Base Rate on
the last Business Day prior to the expiration of the then applicable Interest
Period, the Borrower shall have the right to elect, by having the Borrower Agent
give Lender notice thereof the interest period (each an "Interest Period")
applicable to Libor Rate or Base Rate, which Interest Period shall, at the
option of the Borrower, be one month, two month, three month or six month period
for Libor Rate or a thirty day for Base Rate; provided that:
4
(i) the Loan shall at all times accrue interest at the rate chosen during
the applicable Interest Period;
(ii) the Interest Period for any Libor Rate or Base Rate shall commence on
the day on which the preceding Interest Period thereto expires;
(iii) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, however, that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) no Interest Period may be selected nor the rate of interest be changed
at any time when a Default is then in existence; and
(v) no Interest Period shall be selected which extends beyond the
respective Maturity Date for the Loan.
If upon the expiration of any Interest Period, the Borrower have failed to
elect, or are not permitted to elect, a new Interest Period, the Borrower shall
be deemed to have elected to have the Loan accrue interest equal to the Base
Rate effective as of the expiration date of such current Interest Period.
"Libor Rate" shall mean, for any Interest Period, an interest rate per
annum (rounded upward to the nearest hundredths of a percent), as determined by
Lender, which is the offered quotation to Lender of the London interbank offered
rates for Dollar deposits of amounts in immediately available funds in the
London market for one month, two months, three months or six months as recorded
by the Dow Xxxxx Telerate Service, as of the opening of business of Lender or as
soon thereafter as practicable, for a period to accrue equal to such Interest
Period, plus the applicable margin of 200 basis points (2.00% percent). As of
March 19 1998, the Libor Rate with a six month maturity was five and 68/10
(5.68%) percent plus the margin is a total rate of seven and 68/100 (7.68%)
percent per annum.
"Lien" shall mean any mortgage, pledge, hypothecation, security interest,
encumbrance, lien, judgment, garnishment, seizure, tax lien or levy (statutory
or otherwise) or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, or any
capitalized lease, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).
"Line Note" shall mean the note evidencing the Line as described in
Article II.
"Line of Credit" shall mean the $10,000,000.00 line of credit as described
in Article II.
"Loan" shall mean collectively the Line of Credit and the Term Loan and
shall include all principal, interest, attorney's fees and costs owed thereon.
"Net Tangible Assets" of any Person shall mean, as of any date, the
aggregate book value of the assets which would be reflected on a balance sheet
of such Person prepared as of such date in accordance
5
with GAAP, less the aggregate book value of such Person's intangible assets
(i.e., patents, copyrights, trademarks, trade names, goodwill, franchises and
other similar intangibles) as of such date.
"Note" shall mean collectively the Line Note and other notes evidencing the
Loan.
"Obligations" shall mean all obligations (monetary or otherwise, including,
but not limited to, all representations, warranties and covenants contained in
this Agreement) of the Borrower to Lender, whether direct or contingent, due or
to become due, now existing or hereafter arising, including future advances,
with interest, attorneys' fees, expenses of collection and costs arising under
or in connection with this Agreement, the Loan, the Note, the Collateral
Documents, promissory notes, checks, overdrafts, letter of credit agreements,
endorsements and continuing guaranties.
"Orange Shipyard" shall mean the approximately 12 acres of real property
on the Sabine River, Orange, Texas, owned by Orange Shipbuilding Company, Inc.
and which is Orange's shipyard, as described on Exhibit B.
"Parent Company" shall mean a Delaware corporation to be created with the
same name as Borrower which will own all of the capital stock of Borrower.
"Permitted Liens" shall mean those presently outstanding Liens of the
Borrower and (i) pledges or deposits by the Borrower under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Debt of the Borrower) or leases (other than capitalized leases) to
which the Borrower is a party, or deposits to secure statutory obligations of
the Borrower or deposits of cash or U.S. Government Bonds to secure surety or
appeal bonds to which the Borrower is a party, or deposits as security for
contested taxes or import duties or for the payment of rent; (ii) Liens imposed
by law, such as carriers', warehousemen's, materialmen's and mechanics' liens,
incurred in the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on the Borrower's books; (iii) judgment Liens
in existence less than 30 days after the entry thereof or with respect to which
execution has been stayed or the payment of which is covered in full (subject to
a customary deductible) by insurance; (iv) Liens for property taxes not yet
delinquent and Liens for property taxes the payment of which is being actively
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on the Borrower's books; and (v) minor survey
exceptions, minor encumbrances, easements or reservations of, or rights of
others for rights-of-way, highways and railroad crossings, sewers, electric
lines, telegraph and telephone lines and other similar purposes, or zoning or
other restrictions as to the use of real property or Liens incidental to the
conduct of the business of the Borrower or to the ownership of its property
which were not incurred in connection with Debt of the Borrower, which Liens do
not in the aggregate materially detract from the value of said properties or
materially impair their use in the operation of the business taken as a whole of
the Borrower.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation (including the Borrower), a trust, an unincorporated
organization, government or any department or agency thereof, each Affiliate and
each Subsidiary.
6
"Plan" shall mean any employee benefit plan which is covered by ERISA and
in respect of which the Borrower is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Property" shall mean the Xxxxxx Shipyard and the Orange Shipyard and any
other immovable or real property owned by the Borrower, its Parent Company or
any of its Subsidiaries.
"Subsidiary" shall mean, with respect to any Person, any corporation,
association, partnership, joint venture or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned 50% or more by such Person.
"Tangible Net Worth" means, at a particular date, all amounts which would
be included under shareholders' equity on the balance sheet of Borrower, its
Parent Company and all of its Subsidiaries in conformity with generally accepted
accounting principles in the United States of America in effect from time to
time and applied on a consistent basis excluding any amount attributable to
goodwill or other intangibles of Borrower, its Parent Company and all of its
Subsidiaries.
"Term Loan" shall mean Borrower's existing term loan described in
Section 2.02 (a).
"Unused Line of Credit" shall mean $10,000,000.00 minus the outstanding
principal balance of the Line of Credit.
SECTION II
THE CREDIT
SECTION 2.01. COMMITMENT TO LEND. Subject to and upon the terms and
conditions contained in this Agreement, and relying on the representations and
warranties contained in this Agreement, Lender agrees to make the Line of Credit
to the Borrower, said extension of credit being more particularly described
hereinafter.
SECTION 2.02. (a) TERM LOAN. On March 15, 1998, Lender lent to the
Borrower the principal sum of Twenty-five Million and No/100 ($25,000,000.00)
Dollars (the "Term Loan") which was evidenced by a promissory note payable to
the order of Lender in the amount of $25,000,000.00, with interest to accrue at
the Libor Rate or Base Rate in accordance with Section 2.03. The Term Loan was
initially payable interest only on the last day of each month commencing March
31, 1998 and thereafter on the last day of each month until May 31, 1998.
Thereafter, the Term Loan shall be payable in 70 equal monthly principal
payments of $209,000.00, plus accrued interest with a final payment of all
unpaid principal and interest then due payable on April 30, 2004. The first
installment of principal and interest on the Term Loan shall be payable on June
30, 1998 with the succeeding installments payable on the last day of each month
until the Term Loan has been paid in full. Borrower hereby acknowledges and
affirms the Term Loan.
(b) LINE OF CREDIT. Subject to and upon the terms and conditions
contained in this Agreement, and relying on the representations and warranties
contained in this Agreement, the Lender agrees to make Advances to Borrower
periodically during the Line of Credit Period in an aggregate principal amount
outstanding not to exceed the sum of TEN MILLION AND NO/100 ($10,000,000.00)
DOLLARS (the "Line of Credit"). On April 30, 1999, Lender's obligations to make
any Advance on the
7
Line of Credit shall cease. The Line of Credit shall be evidenced by a
promissory note executed by the Borrower in a form acceptable to Lender, dated
the Closing Date, in the principal sum of $10,000,000.00, payable to the order
of the Lender on April 30, 1999. During the Line of Credit Period, the Advances
shall accrue interest at Libor Rate or Base Rate in accordance with Section 2.03
and shall be payable interest only monthly in arrears on the last day of each
month, beginning May 30, 1998, and continuing on the last day of each succeeding
month until April 30, 1999.
(c) ADVANCES. Upon the terms and subject to the conditions hereof,
Borrower may request an Advance under the Line of Credit during Lender's regular
business hours in accordance with the provisions of Section 2.03. Borrower
shall make a request for an Advance under the Line of Credit by delivering to
Lender by mail, hand-delivery, facsimile or by telephonic notice to Lender's
applicable officer specifying (i) the amount to be borrowed, and (ii) the date
the funds will be borrowed, and all Advance Requests shall be made by the
Borrower's Agent. Borrower hereby authorizes Company's Agent to borrow money
and contract obligations with Lender. Until Borrower notifies Lender in writing
of the withdrawal of Company's Agent's rights and powers, Lender shall be able
to rely conclusively upon the right of Company's Agent to make Advances on
behalf of Borrower. Borrower agrees that only its duly authorized Company's
Agent shall make an Advance under the Line of Credit.
All proceeds of any Advance shall be deposited to Borrower's account at
Lender.
(d) CREDIT ADVICE. After the borrowing of any Advance in accordance with
this Agreement, Lender will mail to Borrower at the most recent address shown on
Lender's records a credit advice showing the amount of the Advance and the
amount of funds credited into Borrower's Account. Within ten (10) days after
the date of such advices, Borrower shall notify Lender of any inaccuracy in the
credit advices or the lack of authority to borrow the Advance. Failure by
Borrower to notify Lender timely shall preclude the Borrower from asserting
against Lender the inaccuracy of such advices and/or the lack of authorization
of such Advance. Lender's failure to mail the credit advice shall not alter
Borrower's obligation to repay the Line of Credit or make Lender liable to
Borrower for failure to mail the credit advice.
(e) INTERNAL RECORDS SHALL CONTROL. The principal amount shown on the
face of the Line Note evidences the maximum aggregate principal amount that may
be outstanding on the Line of Credit. Borrower agrees that the internal records
of Lender shall constitute for all purposes prima facie evidence of (i) the
amount of principal and interest owing on the Loan from time to time, (ii) the
amount of each Advance made to Borrower under the Line of Credit and (iii) the
amount of each principal and/or interest payment received by Lender on the Loan,
unless such internal records of Lender are manifestly erroneous.
SECTION 2.03. CONVERSION. (a) The Borrower has previously determined that
the Term Loan shall accrue interest at Libor Rate with an Interest Period to
expire on September 18, 1998. On the date of the initial Advance, Borrower will
determine the Interest Period and whether the Advance will accrue interest at
Libor Rate or the Base Period. Upon the expiration of such Interest Period and
any Interest Period thereafter, the Borrower shall have the option to convert
the interest rate accruing on all (but not less than all) of the outstanding
principal balance of the Term Loan or the Line of Credit, as applicable, into a
Libor Rate or Base Rate; provided that (i) a Loan can not be converted when any
Default has occurred and is continuing and in such event the Loan shall continue
to accrue interest at the rate in
8
effect as of the date of such Default, and (ii) no conversions of any Loan are
allowed until the expiration of the Interest Period applicable to the existing
rate of interest has expired.
(b) Each conversion shall be enacted by the Company Agent by giving
Lender at its main office prior to 11:00 a. m. (New Orleans time) on or before
the last Business Day of the applicable Interest Rate Period written or
telephone notice of the conversion (each a "Notice of Conversion") specifying if
the applicable Loan is to be converted into accruing interest at Libor Rate or
Base Rate and the Interest Period to be applicable thereto. In the absence of
any specific rate election by the Borrower or if Borrower fails to provide such
notice to the Lender in a timely manner, the Loan shall accrue interest at the
Base Rate. Borrower may prepay the Loan without payment of premium or penalty.
(c) Interest on the outstanding principal owed on the Loan shall be
computed and assessed on the basis of the actual number of days elapsed over a
year composed of 360 days.
SECTION 2.04. INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that
Lender shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto):
(i) on any Interest Period or date of conversion that, by reason of
any changes arising after the date of this Agreement affecting the
London interbank market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Libor Rate; or
(ii) at any time, that Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to any Libor Rate because of any change since the date of this
Agreement in any applicable law or governmental rule, regulation,
order, guideline or request or in the interpretation or administration
thereof and including the introduction of any new law or governmental
rule, regulation, order, guideline or request, such as, for example,
but not limited to: (A) a change in the basis of taxation of payment
to Lender of the principal or interest on such Libor Rate (except for
changes in the rate of tax on, or determined by reference to, the net
income or profits of Lender) or (B) a change in official reserve
requirements; or
(iii) at any time, that the making or continuance of any Libor Rate
has been made (x) unlawful by any law or governmental rule, regulation
or order, (y) impossible by compliance by Lender in good faith with
any governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the date of
this Agreement which materially and adversely affects the London
interbank market;
then, and in any such event, Lender shall promptly give notice (by telephone
confirmed in writing) to the Borrower. Thereafter (x) in the case of clause (i)
above, Libor Rate shall no longer be available until such time as Lender
notifies the Borrower that the circumstances giving rise to such notice no
longer exist, and any Notice of Conversion given by the Borrower with respect to
Libor Rate which have not yet been incurred (including by way of conversion)
shall be deemed rescinded by the Borrower, (y) in the case of clause (ii) above,
the Borrower agrees to pay to Lender, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a different method
of calculating, interest or
9
otherwise as agreed to by Lender and the Borrower) as shall be required to
compensate Lender for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional amounts owed to
Lender, showing the basis for the calculation thereof, submitted to the Borrower
by Lender in good faith shall, absent manifest error, be final and conclusive
and binding on all the parties hereto) and (z) in the case of clause (iii)
above, the Loan shall accrue interest at the Base Rate. Lender agrees that if it
gives notice to the Borrower of any of the events described in clause (i) or
(iii) above, it shall promptly notify the Borrower and if such event ceases to
exist. If any such event described in clause (iii) above ceases to exist as to
Lender, Lender's obligations to convert the interest accruing on the Loan into
Libor Rate on the terms and conditions contained herein shall be reinstated.
(b) At any time that any Libor Rate Loan is affected by the circumstances
described in Section 2.04 (a)(ii) or (iii), the Loan shall accrue interest at
the Base Rate.
SECTION 2.05. USE OF PROCEEDS. Subject to the compliance with the terms
and conditions of this Agreement, Borrower may be able to use the Line of Credit
to fund a one time dividend (the "Dividend") not to exceed $10,000,000.00 to
certain shareholders of Borrower provided that the funding of any Dividend
occurs on or before May 30, 1998. Subject to the satisfaction of the Financial
Covenants by Borrower after June 30, 1998, the Line of Credit may be used to
fund the working capital needs of Borrower and/or the short term funding of
Borrower's capital expenditures and acquisitions on terms acceptable to Lender.
SECTION 2.06. PREPAYMENT. Borrower shall be entitled to prepay the Loan
in whole or in part, without payment of premium or penalty.
SECTION 2.07. COMMITMENT FEE. In consideration of Lender making the Line
of Credit, Borrower agrees to pay to Lender, in arrears, a fee within ten
calendar days of the last day of March, June, September and December in each
year and on the maturity day of the Line of Credit, a commitment fee per annum
equal to one quarter of one percent (1/4% or 25 basis points) of the average
Unused Line of Credit during the preceding fiscal quarter, or portion thereof.
The average Unused Line of Credit shall be determined by dividing the sum of the
Unused Line of Credit for each day of that quarter by 90.
ARTICLE III
SECURITY FOR THE OBLIGATIONS
SECTION 3.01. COLLATERAL. The Loan and the Obligations shall be secured
by a first Lien in favor of Lender on the following collateral (the
"Collateral") to be documented upon terms and conditions satisfactory to Lender
(the "Collateral Documents"):
(a) Continuing Guaranties previously executed by Guarantors whereby
Orange solidarily agrees to repay all of the Obligations and J. Xxxxxx Xxxxxx
agrees to solidarily repay $2,000,000.00 of the Loan;
XXXXXX INDUSTRIES SHIPYARD
(b) A Collateral Note by Borrower in amount of $50,000,000.00 secured
by and paraphed for identification with a first, valid and enforceable
collateral mortgage mortgaging the Xxxxxx
10
Shipyard and all improvements and component parts located thereon, which
mortgage shall include an assignment of leases and rents;
(c) A Security Agreement executed by Borrower granting a security
interest in the Collateral Note;
(d) A Security Agreement and Financing Statements by Borrower granting
a first lien and security interest in all furniture, equipment, inventory,
fixtures, accounts, documents and general intangibles, including without
limitation, franchise agreements, operating agreements, contract rights,
licenses, permits and parish and city ordinances and approvals relating to or
usable in connection with the use, occupancy, operation, ownership or
maintenance of the Xxxxxx Shipyard;
ORANGE SHIPYARD
(e) A deed of trust by Orange mortgaging the Orange Shipyard and all
improvements and component parts located thereon, which deed of trust shall
include an assignment of leases and rents; and
(f) A Security Agreement and Financing Statements by Orange granting a
first lien and security interest in all furniture, equipment, inventory,
fixtures, accounts, documents and general intangibles, including without
limitation, franchise agreements, operating agreements, contract rights,
licenses, permits and parish and city ordinances and approvals relating to or
usable in connection with the use, occupancy, operation, ownership or
maintenance of the Orange Shipyard.
SECTION 3.02. GUARANTY. The Continuing Guaranty of J. Xxxxxx Xxxxxx
shall be released if the after the date of this Agreement, the ratio of
Borrower's total Debt to Tangible Net Worth reduces to 2.5 or less as shown by
the annual audited financial records of Borrower and as reasonably determined by
Lender.
SECTION IV
REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement, the Borrower
represents and warrants to Lender as follows:
SECTION 4.01. CORPORATE EXISTENCE. (a) Borrower is a validly organized
corporation duly existing and in good standing under the laws of the State of
Louisiana and is duly qualified as a foreign corporation in all jurisdictions
wherein the property owned or the business transacted by it make such
qualifications necessary. Orange is a validly organized corporation duly
existing and in good standing under the laws of the State of Texas and is duly
qualified as a foreign corporation in all jurisdictions wherein the property
owned or the business transacted by it make such qualifications necessary.
(b) Borrower has never done business under any name other than the
name of the Borrower set forth above. Borrower's tax identification number is
00-0000000 and its principal place of business is 0000 Xxxxx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxxxx 00000.
11
(c) Orange has never done business under any name other than the
name of the Orange set forth above and as Xxxxx Industries, Inc. Orange's tax
identification number is 00-0000000 and its principal place of business is 000
Xxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
SECTION 4.02. CORPORATE POWER AND AUTHORIZATION. The making and
performance by the Borrower of this Agreement, the borrowing by the Borrower and
the issuance of the Note and Collateral Documents by it hereunder, have been
duly authorized by all necessary corporate action and will not (i) violate any
provision of law or of the articles of incorporation or by-laws of the Borrower,
or (ii) result in a breach of, or constitute a default under, any agreement,
indenture or other instrument to which the Borrower is a party or by which it is
bound, the result of which would be to have material and adverse effect on the
business or property of the Borrower. The making and performance by Orange of
this Agreement, the issuance of the Continuing Guaranty and the Collateral
Documents by it hereunder have been duly authorized by all necessary corporate
action and will not (i) violate any provision of law or of the articles of
incorporation or by-laws of Orange, or (ii) result in a breach of, or constitute
a default under, any agreement, indenture or other instrument to which Orange is
a party or by which it is bound, the result of which would be to have material
and adverse effect on the business or property of Orange.
SECTION 4.03. NO CONSENT. No consent or approval of any governmental
agency or authority is required in connection with the execution, delivery and
performance by Borrower or Orange of this Agreement, the Note, the Collateral
Documents and all other documents required hereunder.
SECTION 4.04. ENFORCEABLE OBLIGATIONS. This Agreement, the Collateral
Documents and the Note to which the Borrower and/or Orange, as applicable is a
party, when duly executed and delivered for value will be legal, valid and
binding obligations of the Borrower and/or Orange, as applicable, enforceable
against the Borrower and/or Orange, as applicable in accordance with their
respective terms.
SECTION 4.05. NO MATERIAL LIABILITIES OR LITIGATION. Except for
liabilities incurred in the normal course of business, the Borrower does not
have any material (individually or in the aggregate) liabilities, direct or
contingent. In addition, there are no pending or threatened actions or
proceedings before any court or administrative agency which may materially and
adversely affect the Borrower's business, operations, assets conditions or
property, financial or otherwise.
SECTION 4.06. FINANCIAL CONDITION. The financial statements of Borrower as
heretofore furnished to Lender have been prepared in accordance with the
generally accepted accounting principles applied on a consistent basis and
fairly present the financial condition of Borrower as of those dates. To the
best of Borrower's knowledge and belief, Borrower does not have any contingent
obligation or liability for taxes not disclosed by or reserved against in said
financial statements, and there have been no material adverse changes in the
financial condition of Borrower from that set forth in said financial
statements. The financial statements of each Guarantor as heretofore furnished
to Lender fairly present the financial condition of such Guarantor as of the
date hereof. To the best of Guarantors' knowledge and belief, no Guarantor has
contingent obligation or liability for taxes not disclosed by or reserved
against in said financial statements, and there have been no material adverse
changes in the financial condition of such Guarantor from that set forth in said
financial statements. Since the close of the period covered by the latest
financial statement delivered to Lender with respect to the Borrower and
Guarantors, there has been no material adverse change in the assets, liabilities
or financial condition of the Borrower or any Guarantor. No event has occurred
(including, without limitation, any litigation or administrative proceedings)
and no condition exists or, to the knowledge of Borrower or any Guarantor,
12
is threatened, which (i) might render Borrower or any Guarantor unable to
perform its obligations under this Agreement, the Note or the Collateral
Documents, or (ii) would constitute a Default hereunder, or (iii) might
adversely affect the financial condition of the Borrower or any Guarantor or the
validity or priority of the lien of the Collateral Documents. All parties
acknowledge that Lender is relying upon said financial statements in entering
into this Agreement and the Loan.
SECTION 4.07. LIABILITIES AND LITIGATION. There is no litigation, legal
or administrative proceeding, investigation or other action of any nature
pending or, to the knowledge of Borrower and/or Guarantors, threatened against
or affecting Borrower or Guarantors which involves the possibility of any
judgment or liability not fully covered by insurance, and which may materially
and adversely affect the business or assets of the Borrower or Guarantors or
their respective ability to carry on business as now conducted.
SECTION 4.08. TAXES AND GOVERNMENTAL CHARGES. Borrower and Orange have
filed all tax returns and reports required to be filed by all applicable
jurisdictions and have paid all taxes, assessments, fees and other governmental
charges levied upon it or upon any property owned by them or upon their income,
which are due and payable, including interest and penalties, or has provided
adequate reserves for the payment thereof.
SECTION 4.09. TITLE TO PROPERTY. Borrower and Orange, as applicable, have
good, valid and merchantable title to the Property, free of all Liens except (i)
those created by the Collateral Documents, or (ii) those disclosed to Lender in
writing prior to date hereof, including those reflected on the title commitment
covering portions of the Property. Furthermore, neither Borrower nor Orange has
heretofore conveyed or agreed to convey or encumber any Collateral in any way,
except in favor of the Lender or as disclosed to Lender in writing prior to date
hereof.
SECTION 4.10. DEFAULT. Neither Borrower nor any Guarantor is in default
(in any respect which materially and adversely affects its business, property,
operations or condition, financial or otherwise) under any indenture, mortgage,
deed of trust, agreement or other instrument to which Borrower and/or any
Guarantor is a party or by which either is bound or subject to any charter or
other corporate restriction which materially and adversely affects its
business, properties or assets, operation or condition, whether financial or
otherwise, except as disclosed to the Lender in writing. No Default hereunder
has occurred and is continuing.
SECTION 4.11. NO CONSENT. Borrower's and Orange's execution, delivery and
performance of this Agreement, the Note and the Collateral Documents, as
applicable, do not require the consent or approval of any other Person,
including without limitation any regulatory authority or governmental body of
the United States or any state thereof or any political subdivision of the
United States or any state thereof.
SECTION 4.12. COMPLIANCE WITH THE LAW. Borrower and/or Orange (i) is not
in violation of any law, judgment, decree, order, ordinance or governmental rule
or regulation to which the Borrower or any of its property are subject; and (ii)
has not failed to obtain any license, permit, franchise or other governmental
authorization necessary to the ownership of any of its property or the conduct
of its business; in each case, which violation or failure could reasonably be
anticipated to materially and adversely affect the business, prospects, profits,
property or condition (financial or otherwise) of the Borrower.
13
SECTION 4.13. OTHER INFORMATION. All information, reports, papers and
data given to Lender by the Borrower and each Guarantor pursuant to this
Agreement and in connection with the Borrower's application for the Loan are
accurate and correct in all material respects. All financial projections given
to Lender were prepared in good faith based on facts and circumstances existing
at the time of preparation and were believed by the Borrower to be accurate in
all material respects. No information, exhibit or report furnished by the
Borrower to Lender in connection with the negotiation of this Agreement contains
any material misstatement of fact or fails to state a material fact or any fact
necessary to make the statement contained therein not materially misleading.
SECTION 4.14. ENVIRONMENTAL MATTERS. (a) To the best of the Borrower's
knowledge, all operating facilities and property owned, leased, used, or
operated by the Borrower and/or Orange have been, and will continue to be,
owned, leased, used, or operated by the Borrower and/or Orange in substantial
compliance with applicable environmental laws, regulations, and guidelines.
There has been no claim, complaint, or notice received by the Borrower with
respect to a violation of environmental laws which remains unsettled or
unresolved as of the date hereof, including but not limited to, any unsettled or
unresolved liabilities relating to, arising out of or resulting from (i) any
emission, discharge or release of any pollutant, contaminant, Hazardous
Material, toxic material or other similar waste or (ii) any processing,
distribution, use, treatment, transport, removal, storage and/or disposal of
materials or wastes into or upon the ambient air, surface water, ground water or
land owned by the Borrower or any alleged violation of any federal, state, or
local statute, regulation, or ordinance relating to the environment. There has
been no complaint or notice received by the Borrower or Orange regarding
potential liability under the Comprehensive Environmental Response Compensation
and Liability Act, as amended, the Resource Conservation and Recovery Act, as
amended, or any comparable state or local law which is unsettled or remains
unresolved as of the date hereof. To the Borrower's knowledge, there has been
no release of a Hazardous Material at any facility or property owned, leased,
used, or operated by the Borrower or Orange which caused or could have cause a
material adverse change in the Borrower's financial condition, business or
ability to pay or perform its Obligations. For purposes of the last sentence of
this Section III (k), "release" shall have the meaning assigned to it under the
Comprehensive Environmental Response Compensation and Liability Act.
(b) Borrower has obtained all permits, licenses or similar
authorizations to construct, occupy, operate or use any buildings, improvements,
fixtures and equipment forming a part of the Property by reason of any Hazardous
Materials. The use which the Borrower makes and intends to make of the Property
will not result in any Hazardous Materials Contamination.
SECTION 4.15. GOVERNMENTAL REQUIREMENTS. The Property is in compliance
with all current Governmental Requirements affecting the Property, including,
without limitation, all current zoning and land use regulations, building codes
and all restrictions and requirements imposed by applicable governmental
authorities with respect to the construction of any improvements on the Property
and the contemplated use of the Property.
SECTION 4.16. CONTINUING ACCURACY. All of the representations and
warranties contained in this article or elsewhere in this Agreement shall be
true through and until the Obligations are fully satisfied, and Borrower shall
promptly notify Lender of any event which would render any of said
representations and warranties untrue or misleading.
14
SECTION 4.17. AMERICANS WITH DISABILITIES ACT. The Property shall be
readily accessible to individuals with disabilities, and complies with all
terms and conditions of the Americans With Disabilities Act, 42 U.S.C. (S)1210,
et seq. and all regulations and orders promulgated thereunder.
SECTION 4.18. CLEAN AIR ACT. The Property now complies with and upon
completion of the Improvements shall continue to comply with all terms and
conditions of 42 U.S.C. (S) 7401, et seq. and all regulations and orders
promulgated thereunder.
SECTION 4.19. LICENSES, PERMITS. The Borrower and Orange have all
permits, certificates, licenses (including patent and copyright licenses)
approvals and other authorizations required in connection with the operation of
their business.
SECTION 4.20. GOVERNMENT CONTRACTS. Neither Borrower nor Orange has ever
been debarred or suspended from contracting (as a first tier or any other level
of subcontractor) for or bidding on any Governmental Contract (as such term is
defined below). Neither Borrower nor Orange is currently debarred or suspended
from (or has received notice that it is under investigation with respect to a
possible debarment or suspension from) bidding on or entering into any contract
with or for any Governmental Authority (a "Government Contract"). Neither
Borrower nor Orange has been given notice (i) that any Government Contract may
be or will be terminated for the convenience of a Governmental Authority or a
default by Borrower or Orange, as the case may be, (ii) that a major program or
contract of Borrower or Orange will be eliminated or substantially reduced or
suspended, (iii) requiring or resulting in, loss of use or substantial
impairment or interference of use by Borrower or Orange, as the case may be, of
any facilities owned by a Governmental Authority, or (iv) that any relevant
budget authority or contract authority has been exceeded with respect to any
material Government Contract. Neither the Borrower or Orange anticipates
incurring cost overruns on any Government Contracts which would have a material
adverse effect on the financial condition of Borrower or Orange.
SECTION 4.21. FEDERAL REGULATIONS. No part of the proceeds of the Loan
will be used as "purpose credit" within the meaning of such term under
Regulations U or G of the Board of Governors of the Federal Reserve System as
now and from time to time hereafter in effect, if such use would violate the
provisions of Regulations U or G.
SECTION 4.22. SUBSIDIARIES. At the Effective Date, the Borrower has no
Subsidiaries except Orange, and the Borrower owns all of the capital stock of
Orange.
SECTION 4.23. GOVERNMENT CONTRACTS. Borrower and Orange have the right
under their Government Contracts to grant a security interest to the proceeds
therefrom under the Collateral Documents and the Collateral Documents create a
non-perfected security interest in the Government Contracts. To the best of
Borrower's and Orange's respective knowledge, there are no offsets, and there
are not currently threatened or pending any claims or offsets against Borrower
or Orange by any Governmental Authority.
SECTION 4.24. ASSETS MORTGAGED TO LENDER. All drydocks, barges and other
vessels and equipment of Borrower and Orange are not documented vessels with the
United States Coast Guard and are free and clear of any Liens, except the
Collateral Documents or Permitted Liens. In the event any asset of Borrower or
Orange becomes a documented vessel with the United States Coast Guard,
15
Borrower agrees to notify Lender and to execute a preferred maritime ship
mortgage encumbering such asset in favor of Lender upon terms and conditions
reasonably acceptable to Lender. All immovable and real property of Borrower and
Orange are mortgaged to Lender under the Collateral Documents, except the
shipyard owned by Borrower in Amelia, Louisiana. All equipment of Borrower and
Orange are subject to a perfected security interest in favor of Lender in
accordance with the terms of the Collateral Documents.
SECTION V
AFFIRMATIVE COVENANTS
The Borrower agrees that, so long the Loan remains unpaid, or any other
amount or any Obligations are owing to Lender hereunder, the Borrower, its
Parent Company and all of its Subsidiaries, as applicable, shall comply with the
covenants in this Section.
SECTION 5.01. FINANCIAL COVENANTS. Borrower shall comply with the
following Financial Covenants until the Loan has been paid in full, except as
provided herein:
(a) DEBT TO TANGIBLE NET WORTH. The Borrower on a consolidated basis with
its Parent Company and all of its Subsidiaries when combined with the Parent
Company and each Subsidiary shall maintain a Debt to Net Worth Ratio of no
greater than 6.5 until December 30, 1998. Thereafter the Borrower when combined
with the Parent Company and each Subsidiary shall maintain a Debt to Net Worth
ratio of no greater than the following ratios at the end of the referenced
fiscal year:
Date Debt to Net Worth Ratio
---- -----------------------
December 31, 1998 3.5
December 31, 1999 2.5
December 31, 2000, until 1.5
the Loan is paid in full.
(b) CONSOLIDATED FUNDED DEBT TO EBITDA RATIO. Borrower on a consolidated
basis with its Parent Company and all of its Subsidiaries shall maintain at all
times during the existence of the Loan a maximum ratio of Consolidated Funded
Debt to EBITDA that shall not exceed 3.0 during the fiscal year ending December
31, 1998 and 2.5 during each fiscal quarter thereafter (on a rolling four
quarter basis).
(c) FIXED CHARGE COVERAGE RATIO. Borrower on a consolidated basis with
its Parent Company and all of its Subsidiaries shall maintain at all times
during the existence of the Loan a Fixed Charge Coverage Ratio of at least 1.5
as of the fiscal year ending December 31, 1998 and each fiscal quarter
thereafter.
(d) CURRENT RATIO. Borrower on a consolidated basis with its Parent
Company and all of its Subsidiaries shall maintain at all times during the
existence of the Loan a ratio of Current Assets (minus any Prepayments) to
Current Liabilities of 1.5 to 1.0 or greater.
During the period from the date of the Advance of the Dividend until June
30, 1998, Borrower shall not be required to comply with the Financial Covenants
listed in Subsection (a) through (c).
16
Commencing on June 30, 1998 and thereafter, Borrower shall comply with all of
the Financial Covenants.
SECTION 5.02. FINANCIAL STATEMENTS. (a) Borrower shall, from time to
time, promptly furnish to Lender as soon as available, but in any event within
ninety (90) days after the close of Borrower's fiscal year a copy of the audited
financial statements of Borrower, its Parent Company and all of its Subsidiaries
of a consolidated basis, as of the close of such fiscal year prepared in
reasonable detail and in accordance with generally accepted accounting
principles in the United States in effect from time to time and applied
consistently throughout the period reflected therein, with such financial
statements to include a balance sheet of the Borrower and Orange as of the end
of such year and the related statement of operations, of stockholder's equity
and of cash flow prepared in reasonable detail and in conformity with generally
accepted accounting principles in the United States in effect from time to time
and applied on a basis consistent with that of the preceding fiscal year, and
prepared by independent certified public accountants selected by Borrower and
satisfactory to Lender.
(b) Borrower shall, from time to time, promptly furnish Lender as soon as
available, but in any event within forty-five (45) days after the end of each
quarter of each fiscal year of Borrower, the unaudited balance sheet of
Borrower, its Parent Company and all of its Subsidiaries as of the end of each
such quarter and the related unaudited statements of operations, of
shareholder's equity and of cash flow for such quarter and the portion of the
fiscal year throughout such date, all prepared in reasonable detail and in
conformity with good accounting practices in the United States in effect from
time to time and applied consistently throughout the period reflected therein
and certified by the chief financial officer of Borrower.
(c) Immediately upon becoming aware of the occurrence of any event which
constitutes a Default or which could constitute a Default with the passage of
time or the giving of notice, or both, Borrower shall give written notice to
Lender describing such occurrence together with a detailed statement by the
Company Agent of the steps being taken by Borrower to cure the effect of such
event.
(d) Borrower shall furnish to Lender concurrently with the delivery of the
financial statements referred to in subsections (a) and (b) above, a certificate
of the chief financial officer of Borrower (i) stating that such officer has no
knowledge of any Default, or any other event with which the passage of time
would become a Default under this Agreement or the Collateral Documents, except
as specified in such certificate and (ii) showing in detail the calculations
supporting such statements in respect to Section 5.01. The Borrower shall
furnish to Lender with reasonable promptness, such additional financial and
other information as Lender may from time to time reasonably request.
SECTION 5.03. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Borrower
and Orange shall continue to engage principally in the business of the same
general type now conducted by it and preserve, renew and keep in full force and
effect its corporate existence and take all reasonable action to maintain all
rights, privileges and franchises necessary in the normal conduct of its
business and comply with all laws.
SECTION 5.04. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Borrower, its Parent Company and its Subsidiaries shall keep proper books and
records in conformity in all material respects of GAAP and permit
representatives of Lender to visit and inspect any of its properties and examine
the books and records of the Borrower at any reasonable time during normal
business hours and
17
as often as may reasonably be necessary, and to discuss the business,
operations, properties and financial and other condition of the Borrower, its
Parent Company and its Subsidiaries with officers of the Borrower, its Parent
Company and its Subsidiaries and with its independent certified public
accountants.
SECTION 5.05. NOTICE OF CERTAIN EVENTS. (a) The Borrower shall promptly
notify Lender if the Borrower learns of the occurrence of any event which
constitutes a Default, together with a detailed statement by the Company Agent
of the steps being taken to cure the effect of such Default.
(b) The Borrower shall promptly notify Lender of any change in
location of the Borrower's and/or Orange' principal places of business or the
office where Borrower and/or Orange keeps its records concerning accounts and
contract rights.
(c) The Borrower shall promptly notify Lender of the arising of any
litigation or dispute threatened against or affecting the Borrower, its Parent
Company and/or any of its Subsidiaries or the Property which, if adversely
determined, would have a material adverse effect upon the financial condition or
business of the Borrower and/or Orange. In the event of such litigation, the
Borrower will cause such proceedings to be vigorously contested in good faith
and, in the event of any adverse ruling or decision, the Borrower shall
prosecute all allowable appeals. Lender may (but shall not be obligated to),
without prior notice to Borrower, commence, appear in or defend any action or
proceeding purporting to affect the Loan, or the respective rights and
obligations of Lender or Borrower pursuant to this Agreement. Lender may (but
shall not be obligated to) pay all necessary expenses, including reasonable
attorneys' fees and expenses incurred in connection with such proceedings or
actions, which Borrower agrees to repay to Lender upon demand.
SECTION 5.06. ENVIRONMENTAL INDEMNITY. (a) Borrower and Orange agree to
(i) give notice to Lender immediately upon its acquiring knowledge of the
violation of any Governmental Requirement regarding the presence of any
Hazardous Materials on the Property and/or of any Hazardous Materials
Contamination with a full description thereof; and (ii) promptly comply with any
Governmental Requirement requiring removal, treatment or disposal of such
Hazardous Materials or Hazardous Materials Contamination and provide Lender with
satisfactory evidence of such compliance. Upon the discovery of any Hazardous
Materials Contamination, or upon the occurrence of a Default and the expiration
of the cure period provided in Section 7.02, Lender shall have the right to
cause an environmental audit or review of the Property to be performed by a firm
acceptable to Lender at the sole cost and expense of Borrower.
(b) Borrower and Orange shall solidarily defend, indemnify and hold
Lender, its directors, officers, agents and employees harmless from any and all
liabilities (including strict liability), actions, demands, penalties, losses,
costs or expenses (including, without limitation, reasonable attorneys' fees and
remedial costs), suits, costs of any settlement or judgment and claims of any
and every kind whatsoever which may now or in the future be paid, incurred, or
suffered by, or asserted against Lender by any person or entity or governmental
agency for, with respect to, or as a direct or indirect result of, the presence
on or under, or the escape, seepage, leakage, spillage, discharge, emission,
discharging or release from or onto the Property of any Hazardous Materials or
any Hazardous Materials Contamination, or arise out of, or result from, the
environmental condition of the Property or the applicability of any Governmental
Requirement relating to Hazardous Materials (including, without limitation,
CERCLA or any so called federal, state or local "super fund" or "super lien"
laws, statute, ordinance, code, rule, regulation, order or decree) regardless of
whether or not caused by or within the
18
control of Borrower and/or Orange. These representations, covenants and
warranties contained in this Section 5.07 shall survive the termination of this
Agreement.
SECTION 5.07. INDEMNIFICATION. (a) Borrower and Orange shall solidarily
defend, indemnify Lender and hold Lender harmless from claims of brokers with
whom the Borrower and/or Orange has dealt in the execution hereof or the
consummation of the transactions contemplated hereby.
(b) The Borrower and Orange shall solidarily defend, indemnify Lender
and hold Lender harmless from any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, costs and expenses of whatever kind
or nature which may be imposed on, incurred by or asserted at any time against
Lender in any way relating to, or arising in connection with, the use or
occupancy of any of the Property.
(c) Borrower and Orange solidarily agree to defend, indemnify, hold
harmless and fully protect Lender from any allegation or charge whatsoever of
negligence, misfeasance or nonfeasance of Lender in whole or in part, pertaining
to any defect in the Property, and particularly, any failure of Lender or any
agent, officer, employee or representative of Lender, to note any defect in
materials or workmanship or of physical conditions or failure to comply with any
ordinances, statutes or other governmental requirements, or to call to the
attention of any person whatsoever, or take any action, or to demand that any
action be taken, with regard to any such defect or failure or lack of
compliance.
SECTION 5.08. MAINTENANCE OF THE PROPERTY. Borrower shall cause the
Property to be maintained in good condition and repair and will not commit or
suffer to be committed any waste of the Property. The Property shall not be
removed, demolished or materially altered (except for normal replacement),
without the prior written consent of Lender. Borrower shall promptly comply
with all laws, orders, and ordinances affecting the Property or the use thereof,
and shall promptly repair, replace or rebuild any part of the Property which may
be damaged or destroyed by any casualty (including any casualty for which
insurance was not obtained or obtainable) and shall complete and pay for, within
a reasonable time, any structure at any time in the process of construction or
repair on the Property. Except with regard to normal and customary utility
servitudes, the Borrower will not, without obtaining the prior written consent
of Lender, initiate, join in, or consent to any private restrictive covenant,
zoning ordinance, or other public or private restrictions, limiting or defining
the uses which may be made of the Property or any part thereof.
SECTION 5.09. AMERICANS WITH DISABILITIES ACT. (a) Borrower and Orange
shall (i) maintain the Property to be readily accessible to individuals with
disabilities, (ii) provide goods, services, accommodations, access and
facilities without discrimination on the basis of disability, and (iii) comply
with all terms and conditions of the Americans With Disabilities Act, 42 U.S.C.
(S)1210, et seq. and all regulations and orders promulgated thereunder.
(b) Borrower and Orange shall defend, indemnify and hold Lender harmless
from any and all liabilities (including strict liability), actions, demands,
penalties, losses, costs or expenses (including, without limitation, reasonable
attorneys' fees and remedial costs), suits, costs of any settlement or judgment
and claims of any and every kind whatsoever which may now or in the future be
paid, incurred, or suffered by, or asserted against Lender by any person or
entity or governmental agency for, with respect to, or as a direct or indirect
result of, any violations of the Americans With Disabilities Act or
19
any regulations or orders promulgated thereunder resulting from the operation,
maintenance or renovation of the Property.
SECTION 5.10. CLEAN AIR ACT. (a) Borrower and Orange shall maintain the
Property in full compliance with all terms and conditions of the Clean Air Act
42 U.S.C. (S)7401, et seq. and all regulations and orders promulgated
thereunder.
(b) Borrower and Orange shall defend, indemnify and hold Lender harmless
from any and all liabilities (including strict liability), actions, demands,
penalties, losses, costs or expenses (including, without limitation, reasonable
attorneys' fees and remedial costs), suits, costs of any settlement or judgment
and claims of any and every kind whatsoever which may now or in the future be
paid, incurred, or suffered by, or asserted against Lender by any person or
entity or governmental agency for, with respect to, or as a direct or indirect
result of, any violations of the Clean Air Act or any regulations or orders
promulgated thereunder resulting from the operation, maintenance or renovation
of the Property.
SECTION 5.11. ERISA. Borrower shall fulfill its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code of 1986, as
amended, with respect to each Plan, and neither the Borrower nor any Affiliate
or Subsidiary shall take any action that would result in the termination of a
Plan by the Pension Benefit Guaranty Corporation.
SECTION 5.12. TAXES AND OTHER LIENS. Borrower and Orange will pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or upon the Property as well as all
claims of any kind (including claims for labor, materials, supplies and rent)
which, if unpaid, might become a Lien upon any or all of the Property; provided,
however, the Borrower and/or Orange shall not be required to pay any such tax,
assessment, charge, levy or claim if the amount, applicability or validity
thereof shall currently be contested in good faith by appropriate proceedings
diligently conducted and if Borrower and/or Orange have set up reserves therefor
adequate under generally accepted accounting principles or if the claim is
covered by insurance or the payment or performance bonds. Borrower shall
furnish Lender with proof of payment of all taxes, assessments, charges, levies
or claims not later than the date on which penalties might attach thereto, or in
the event that the Borrower and/or Orange contests any such taxes, assessments,
charges, levies or claims in accordance with this section, Borrower and/or
Orange shall furnish Lender with a description of the contested matter and all
actions taken by Borrower and/or Orange in connection with such contest.
SECTION 5.13. MAINTENANCE OF BORROWER'S AND ITS SUBSIDIARIES' EXISTENCE.
Borrower and its Subsidiaries will (i) maintain their respective corporate
existence and rights; (ii) observe and comply (to the extent necessary so that
any failure will not materially and adversely affect the business of the
Borrower and/or its Subsidiaries) with all applicable Governmental Requirements
applicable to Borrower and/or its Subsidiaries or the Property (including
without limitation applicable statutes, regulations, orders and restrictions
relating to environmental standards or controls or to energy regulations); and
(iii) maintain the Property in generally good and workable condition at all
times and make all repairs, replacements, additions, betterments and
improvements to the Property to the extent necessary so that any failure will
not materially and adversely affect the business of the Borrower and/or its
Subsidiaries.
SECTION 5.14. FURTHER ASSURANCES. Borrower will promptly (and in no event
later than 30 days after written notice from Lender is received) cure any
defects in the creation, execution and delivery of this Agreement, the Note or
the Collateral Documents. Borrower and/or Orange at Borrower's expense
20
will promptly execute and deliver to Lender upon request all such other and
further documents, agreements and instruments in compliance with or
accomplishment of the covenants and agreements of the Borrower and/or Orange in
this Agreement, the Note or in the Collateral Documents or to further evidence
and more fully describe the Collateral, or to correct any omissions in the
Collateral Documents, or more fully state the security obligations set out
herein or in any of the Collateral Documents, or to perfect, protect or preserve
any Liens created pursuant to any of the Collateral Documents, or to make any
recordings, to file any notices, or obtain any consents as may be necessary or
appropriate in connection with the transactions contemplated by this Agreement.
SECTION 5.15. REIMBURSEMENT OF EXPENSES. Borrower will pay all reasonable
legal fees incurred by Lender in connection with the preparation of this
Agreement, the Note and the Collateral Documents. Borrower will, upon request,
promptly reimburse Lender for all amounts expended, advanced or incurred by
Lender to satisfy any obligation of the Borrower under this Agreement, or to
protect the Property or business of the Borrower or to collect the Obligations,
or to enforce the rights of Lender under this Agreement, which amounts will
include all court costs, attorneys fees, fees of auditors and accountants and
investigation expenses reasonably incurred by Lender in connection with any such
matters, together with interest at the interest rate set forth in the Note on
each such amount from the date that the same is expended, advanced or incurred
by Lender until the date of reimbursement to Lender.
SECTION 5.16. INSURANCE. (a) The Borrower shall procure and maintain for
the benefit of Lender original paid-up insurance policies from companies
satisfactory to Lender, in amounts, in form and substance, and with expiration
dates acceptable to Lender and containing a noncontributory standard mortgagee
clause or its equivalent in a form satisfactory to Lender, or the statutory
mortgagee clause, if any, required in the state where the Property is located,
or a mortgagee's loss payable endorsement, in favor of Lender, providing the
following types of insurance on the Property:
(i) Multi-Peril Hazard Insurance. For the Property, multi-peril
hazard insurance. In each case, the policies will afford insurance against loss
or damage by fire, lightning, explosion, earthquake, collapse, theft, sprinkler
leakage, vandalism and malicious mischief and such other perils as are included
in so-called "all-risks" or "extended coverage" and against such other insurable
perils as, under good insurance practices, from time to time are insured against
for properties of similar character and location; such insurance to be not less
than 100% of the full replacement cost of the improvements located on the
Property, without deduction for depreciation; said policies to contain
replacement costs and stipulated value endorsements.
(ii) Comprehensive General Liability Insurance. Comprehensive public
liability insurance with respect to the Property and the operations related
thereto, whether conducted on or off the Property, against liability for
personal injury (including bodily injury and death) and property damage, of not
less than a total of $5,000,000.00 combined single limit bodily injury and
property damage; such comprehensive public liability insurance to be on a per
occurrence basis and to specifically include but not limited to water damage
liability, products liability, motor vehicle liability for all owned and
nonowned vehicles, including rented and leased vehicles, and contractual
indemnification.
(iii) Workers' Compensation and General Liability. Workers'
compensation and general liability insurance against loss, damage or injury to
employees, agents or representatives of the Borrower and/or its Subsidiaries or
of any contractor and subcontractor, or insurance against loss,
21
damage or injury caused by any employees, agents or representatives of the
Borrower and/or its Subsidiaries or of any contractor or subcontractor.
(iv) Flood Insurance. Flood Insurance Policy in the amount of the
Loan or the maximum amount obtainable, whichever is less, if the property is
located in a Flood Hazard Area as defined by the Federal Emergency Management
Agency.
(v) Other Insurance. Such other insurance on the Property or any
replacements or substitutions therefor and in such amounts as may from time to
time be reasonably required by Lender against other insurable casualties which
at the time are commonly insured against in the case of premises similarly
situated, due regard being given to the height and type of the improvements on
the Property, its construction, location, use and occupancy, or any replacements
or substitutions therefor.
(b) All of the foregoing policies shall contain an agreement by the
insurer not to cancel or amend the policies without giving Lender at least
thirty (30) days' prior written notice of its intention to do so and shall
provide that the policies shall be payable not withstanding the acts of Borrower
or its Subsidiaries, as applicable.
(c) At or before Closing, Borrower shall deliver original binders
evidencing the insurance and within 15 days of closing the original or certified
policies to Lender, and Borrower shall deliver original or certified renewal
policies with satisfactory evidence of payment not less than fifteen (15) days
in advance of the expiration date of the existing policy or policies. In the
event Borrower and/or its Subsidiaries should, for any reason whatsoever, fail
to keep the Property or any part thereof so insured, or to keep said policies so
payable, or fail to deliver to Lender the original or certified policies of
insurance and the renewals thereof upon demand, then Lender after giving written
notice to Borrower of that deficiency and if after 15 days after delivery of
such notice, there is still no insurance coverage, then Lender, if it so elects,
may itself have such insurance effected in such amounts and in such companies as
it may deem proper and may pay the premiums therefor. The Borrower shall
reimburse Lender upon demand for the amount of premium paid, together with
interest thereon at 15% percent per annum from date until paid.
(d) Borrower and Orange agree to notify Lender immediately in writing
of any material fire or other casualty to or accident involving any of the
Property, whether or not such fire, casualty or accident is covered by
insurance. Borrower and Orange further agree to notify promptly Borrower's
and/or Orange insurance company and to submit an appropriate claim and proof of
claim to the respective insurance company if any of the Property is damaged or
destroyed by fire or other casualty.
(e) Lender is hereby authorized and empowered, at its option, to
collect and receive the proceeds from any policy or policies of insurance, and
each insurance company is hereby authorized and directed to make payment of all
such losses directly to Lender instead of to the Borrower and/or Orange and
Lender jointly. Lender shall apply the net proceeds thereof, in accordance with
Subsections (f), (g) and/or (h) hereof.
(f) If there is a fire or casualty loss which damages a portion (but
not all) of the improvements on any of the Property and as long as no Default
has occurred and is continuing, then the Proceeds of the insurance shall be
deposited into a cash collateral account and such proceeds will be applied to
the payment of the cost of restoration of the improvements upon such terms and
conditions as
22
Lender may deem necessary or appropriate in its reasonable discretion; provided,
however, that (i) such insurance proceeds must be adequate to cover the cost of
restoration of the improvements, or if the proceeds are insufficient, then the
Borrower shall give Lender such adequate protection and assurance as Lender may,
in its reasonable discretion require, that additional funds will be provided by
the Borrower in order to complete the restoration of the Improvements (ii) the
Borrower shall have provided Lender with such adequate protection and assurance
as Lender may, in its reasonable discretion require, that the Borrower has
sufficient funds on hand to pay interest and principal on the Loan during the
restoration period, and (iii) the first priority of the Collateral Documents in
the Property is not impaired. In connection with any restoration of any of the
improvements, the Borrower and/or Orange shall provide Lender with a detailed
cost breakdown showing by line item all costs projected for such restoration and
a revised and updated cost breakdown shall be furnished by the Borrower and/or
Orange to Lender on a monthly basis.
(g) If there is a fire or casualty loss which constitutes a total
loss or a constructive total loss of any of the Property, or if not all of the
conditions set forth in subclause (i) through (iv) of Subsection (f) above are
satisfied, then the insurance proceeds shall be applied to the payment of the
Obligations. If such insurance proceeds are not sufficient to pay the
Obligations in full, Lender shall have a right to accelerate the maturity of the
Obligations and proceed against the Borrower or the remainder of the Property;
and if the proceeds exceed the amount necessary to pay the Obligations in full,
then such excess shall be paid to Borrower.
(h) Upon demand of Lender and after the occurrence of a Default, the
Borrower shall pay to Lender, together with, at the same time as and in addition
to the payments of principal and/or interest due on the Note, a pro rata portion
of the property taxes, assessments, governmental charges, levies and insurance
premiums relating to the Property next to become due, as estimated by Lender, so
that Lender will have sufficient funds on hand to pay such taxes, assessments,
governmental charges, levies and premiums not less than thirty (30) days prior
to the due date thereof. All such amounts shall be held by Lender (not in
trust) without interest as further security for the Obligations. Lender may
apply all or a portion of the amounts so paid at such time and in such order as
Lender, in its uncontrolled discretion shall determine, to the payment of the
taxes, assessments, governmental charges, levies and insurance premiums, as the
case may be.
SECTION 5.17. INITIAL PUBLIC OFFERING. It is contemplated that all of the
shareholders of Borrower will be exchanging the stock of the Borrower in return
for the stock of the Parent Company so that the Parent Company will own all of
the capital stock of Borrower. In the event Borrower or the Parent Company or
any other entity which owns all or substantially all of the capital stock of
Borrower offers its stock to be sold in a public offering within the meaning of
the Securities Act of 1933, the net proceeds from such sale shall be used to
prepay in whole or part the principal balance then owed on the Line of Credit
and then to the Term Loan, unless otherwise agreed to in writing by the Lender.
SECTION 5.18. SURVEY AND POST CLOSING ITEMS. Borrower agrees to furnish a
perimeter survey of the Xxxxxx Shipyard, showing any encroachments and access to
the property and to cure all title defects of the Property, as shown on Lender's
title commitments covering the Property, to the satisfaction of Lender's counsel
on or prior to June 15, 1998.
23
SECTION VI
NEGATIVE COVENANTS
Borrower agrees that, so long as the Loan remain unpaid, or any other
amount or any Obligations are owing to Lender hereunder, the Borrower, its
Parent Company and all of its Subsidiaries, as applicable, shall comply with the
applicable covenants contained in this Section.
SECTION 6.01. LIMITATIONS ON LIENS. Borrower and/or any of its
Subsidiaries shall not create, encumber or suffer any Lien, other than the
Collateral Documents and Permitted Liens, to exist on the Property or any other
Collateral without the prior written consent of Lender.
SECTION 6.02. ENVIRONMENTAL LIABILITIES. Borrower and/or any of its
Subsidiaries shall not violate any Governmental Requirement regarding Hazardous
Materials and shall not create or allow any Hazardous Materials Contamination;
and, without limiting the foregoing, or otherwise dispose of (or permit any
Person to dispose of) any Hazardous Material (except in accordance with
applicable law) into or onto or from, the Property, nor allow any Lien imposed
pursuant to any Governmental Requirement relating to Hazardous Materials or the
disposal thereof to be imposed or to remain on the Property.
SECTION 6.03. ERISA COMPLIANCE. Borrower and/or any of its Subsidiaries
shall not at any time permit any Plan maintained by it to engage in any
"prohibited transaction" as such term is defined in Section 4975 of the Code;
incur any "accumulated funding deficiency" as such term is defined in Section
302 of ERISA; or terminate any such Plan in a manner which could result in the
imposition of a Lien on the property of the Borrower and/or Orange pursuant to
Section 4068 of ERISA.
SECTION 6.04. CONSOLIDATION/MERGER. Neither Borrower, its Parent Company
nor a Subsidiary shall merge or consolidate with any other Person without the
written consent of Lender, except that Borrower, its Parent Company or a
Subsidiary may merge or consolidate with another corporation, provided that:
(a) the "surviving corporation" is organized under the laws of the
United States or a jurisdiction thereof, and
(b) the "surviving corporation" shall be engaged in substantially the
same line of business conducted by the Borrower on the Closing
Date, and
(c) the "surviving corporation" expressly assumes the Obligations and
executes such collateral documents and other agreements all upon
terms and conditions as reasonably requested by Lender.
SECTION 6.05. RESTRICTED PAYMENTS. Other than the Dividend, neither
Borrower, its Parent nor any Subsidiary shall declare or pay any dividend on, or
declare or make any other distribution on account of, any shares of any class of
its stock now or hereafter outstanding, or set apart any sum for such purpose
without the Lender's prior written consent.
SECTION 6.06. TRANSACTION WITH AFFILIATES. Neither Borrower, its Parent
nor any Subsidiary shall enter into any transaction (including the purchase,
sale or exchange of property or the rendering of any service) with any Affiliate
except upon fair and reasonable terms which are at least as favorable to
24
the Borrower, its Parent or any Subsidiary as would be obtained in a comparable
arm's length transaction with a non-Affiliate.
SECTION 6.07. TRANSFER OF BORROWER'S OR ORANGE'S STOCK. Other than a
transfer of its capital stock to the Parent Company to facilitate a public
offering within the meaning of the Securities Act of 1933 of the Parent
Company's capital stock, neither the capital stock of Borrower nor the capital
stock of Orange shall be sold, transferred, exchange, pledged or encumbered to
or in favor of a third Person without the prior written consent of Lender.
SECTION 6.08. PARENT COMPANY. Without the prior written consent of
Lender, the Parent Company shall not ever have any employees, assets or
liabilities (other than the assets and liabilities of Borrower and its
Subsidiaries on a consolidated basis) and shall not ever create or incur any
Debt.
ARTICLE VII
CONDITIONS OF LENDING
SECTION 7.01. CONDITIONS OF INITIAL ADVANCE. The obligation of the Lender
to make the initial Advance is subject to the accuracy of each and every
representation and warranty of the Borrower contained in this Agreement, and to
the receipt of the following on or before the Closing Date:
(a) Agreement. A duly executed counterpart of this Agreement signed
by all the parties thereto.
(b) Note. The duly executed Line Note signed by the Borrower.
(c) Corporate Authorization. Such authorization by the Board of
Directors of Borrower's in form and substance satisfactory to the Lender with
respect to the authorization of this Agreement, the Note and the Collateral
Documents, as the case may be and the individuals authorized to sign such
instruments.
(d) Fees. Pay all fees and expenses of Lender's counsel, appraisers,
inspectors and related experts.
(e) Collateral Documents. Duly executed counterparts or originals of
the Collateral Documents and receipt of the Collateral.
(f) Opinion. A legal opinion from counsel of Borrower addressed to
Lender in a form acceptable to Lender opining that this Agreement, the Note and
the Collateral Documents are the valid, legal and binding obligation of Borrower
enforceable in accordance with their terms, that the execution of this
Agreement, the Note, and the Collateral Documents are in conformity with and do
not violate any Governmental Requirements and that this Agreement, the Note and
the Collateral Documents were duly authorized and executed by the Borrower.
(g) Representations. Each of the representations and warranties of
the Borrower contained in this Agreement shall be true and correct on and as of
the date of the initial advance, except as such representations and warranties
relate to matters that are permitted by this Agreement.
25
SECTION 7.02. EACH ADDITIONAL ADVANCE. The obligation of the Lender to
make additional advances on the Line of Credit is subject to the satisfaction of
each of the following conditions:
(a) Each of the representations and warranties of the Borrower
contained in this Agreement shall be true and correct on and as of the date of
such subsequent advance, except as such representations and warranties relate to
matters that are permitted by this Agreement.
(b) At the time of each subsequent advance, no Default shall have
occurred and be continuing and no event with the passage of time or notice (or
both) would be a Default shall have occurred and be continuing.
(c) There shall have occurred no material adverse charges, either
individually or in the aggregate, in the assets, liabilities, financial
conditions, business operations, affairs or circumstances of the Borrower and/or
Guarantor from those reflected in the most recent financial statements furnished
to the Lender prior to the Closing Date, except to the extent that such changes
are permitted by this Agreement; and
(d) The satisfaction with any documentation or other conditions as
required herein.
SECTION VIII
EVENTS OF DEFAULT
SECTION 8.01. DEFAULTS. The occurrence of any one or more of the following
events shall constitute a default (a "Default") under this Agreement:
(a) the failure of Borrower to pay promptly when due any interest or
principal on any of the Obligations, including but not limited to the Loan;
(b) the failure of Borrower, Orange and/or any Guarantor to observe
or perform promptly when due any covenant, agreement, or obligation due to the
Lender;
(c) the failure to pay on demand any amounts advanced by Lender for
the payment of taxes and assessments or the cost of obtaining the release of any
Collateral from any seizure, Lien, or attachment;
(d) the inaccuracy at any time of any warranty, representation, or
statement made to Lender by Borrower, Orange and/or any Guarantor, whether such
warranty, representation, or statement is made (i) in this Agreement, the Note,
or the Collateral Documents, or (ii) in any other agreement, document, or
writing;
(e) any default on or in connection with any Obligation;
(f) any material discrepancy between any financial statement
submitted to Lender by Borrower and/or any Guarantor and its actual financial
condition;
26
(g) any garnishment, seizure, or attachment of, or any tax lien or
tax levy against, any assets of Borrower, Orange and/or any Guarantor,
including, without limitation, those assets that are Collateral, unless the same
is being contested in good faith and is secured by adequate reserves in an
amount sufficient to satisfy same;
(h) one or more judgments, decrees, arbitration award, rulings or
decisions shall be entered against Borrower, Orange and/or any Guarantor
involving in the aggregate a liability (not paid or fully covered by insurance
including self-insurance or the payment or performance bonds) of $100,000 or
more and all such judgments, decrees, awards and rulings shall not have been
vacated, paid, discharged, stayed or bonded pending appeal within 60 days from
the entry thereof;
(i) Borrower shall default in any payment of principal of or interest
on any Debt other than the Loan in the aggregate principal amount of more than
$100,000, in each instance, beyond the period of grace, if any, provided in the
instrument or agreement under which such Debt or observance or performance of
any other agreement or condition relating to any such Debt or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such Debt or
beneficiary or beneficiaries of such (or a trustee, agent or other Person acting
on behalf of such holder or holders or beneficiary or beneficiaries) to cause,
with the giving of notice if required, such Debt to become due prior to its
stated maturity;
(j) a receiver, conservator, liquidator or trustee of the Borrower,
Orange and/or any Guarantor, or of any of their property (including the
Property) is appointed by order or decree of any court or agency or supervisory
authority having jurisdiction; or an order for relief is entered against the
Borrower, Orange and/or any Guarantor under the Federal Bankruptcy Code; or the
Borrower, Orange and/or any Guarantor is adjudicated bankrupt or insolvent; or
any material portion of any property of any of the Borrower, Orange and/or any
Guarantor (including the Property) is sequestered by court order and such order
remains in effect for more than thirty (30) days after such party obtains
knowledge thereof; or a petition is filed against the Borrower, Orange and/or
any Guarantor under any state, reorganization, arrangement, insolvency,
readjustment of debt, dissolution, liquidation or receivership law of any
jurisdiction, whether now or hereafter in effect, and such petition is not
dismissed within sixty (60) days;
(k) the Borrower, Orange and/or any Guarantor files a case under the
Federal Bankruptcy Code or seeks relief under any provision of any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in effect, or
consents to the filing of any case or petition against it under any such law;
(l) the Borrower, Orange and/or any Guarantor makes an assignment for
the benefit of its creditors, or admits in writing its inability to pay its
debts generally as they become due, or consents to the appointment of a
receiver, trustee or liquidator of the Borrower, Orange and/or any Guarantor or
of all or any part of its property;
(m) the entry of a final court order that enjoins or restrains
Borrower's and/or Orange conduct of its business activities;
27
(n) the existence or future enactment of any law, by any federal,
state, parish, county, municipal, or other taxing authority, requiring or
permitting Borrower to deduct any amount from any payments to be made on the
Loan or any other Obligation;
(o) the failure of Borrower and/or Orange to pay any federal, state,
or local tax, fee, or duty, unless the same is being contested in good faith and
is secured by an adequate reserve in an amount sufficient to satisfy same and
enforcement proceedings have not begun;
(p) any material adverse change in Borrower's financial condition,
business, or ability to pay or perform its obligations to Lender; or
(q) the Collateral, or any material portion thereof, is condemned or
expropriated under power of eminent domain by any legally constituted
governmental authority.
SECTION 7.02. NOTICE OF DEFAULT AND REMEDIES. Upon the happening of any
event of Default and such Default continues for a period of ten (10) days for a
payment default under the Loan or the Obligations or thirty (30) days for any
other type of default, after Lender has mailed or sent written notice of such
Default to the Borrower (but with no notice required in the event of a Default
under paragraphs (j), (k), or (l) of Section 7.01), Lender may declare the
entire principal amount of all Obligations then outstanding, including the Loan
and interest accrued thereon, to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice of
default of any kind, all of which are hereby expressly waived by the Borrower
and Lender is then authorized to exercise any and all of its rights and remedies
under the Collateral Documents and/or the Obligations.
SECTION 7.03. RIGHT OF SET-OFF AND COMPENSATION. Upon the occurrence and
continuance of a Default and expiration of the notice provided in Section 7.02,
Lender is hereby authorized at any time and from time to time, without notice to
Borrower (any such notice being expressly waived by the Borrower) to set-off,
compensate and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held, and other indebtedness at any time owing
by the Lender to or for the credit or the account of the Borrower against any
and all of the Obligations of the Borrower, irrespective of whether or not the
Lender shall have made any demand under this Agreement or the Note and although
such Obligations may be unmatured. The Lender agrees promptly to notify the
Borrower after any such set-off, compensation and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Lender under this Section are in addition to
other rights of set-off and compensation which the Lender may have under the
Collateral Documents or otherwise. Lender shall have the right to impute all
payments on the Obligations in any order as Lender may desire.
SECTION VIII
MISCELLANEOUS
SECTION 8.01. NOTICES. All notices and other communications given
hereunder or in connection herewith shall be in writing, shall be sent by
registered or certified mail, return receipt requested, postage prepaid, or by
hand delivery with acknowledged receipt of delivery, shall be deemed given on
the date of acceptance or refusal of acceptance shown on such receipt; and shall
be addressed to the party to receive such notice at the following applicable
addresses:
28
If to the Borrower: Xxxxxx Industries, Inc.
0000 Xxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
If to Lender: Whitney National Bank
000 Xx. Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Santa Xxxx, III
Assistant Vice President
Any party may, by notice given as aforesaid, change its address for all
subsequent notices.
SECTION 8.02. AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement or of the Note shall be effective unless the same shall be in
writing and signed by Lender and the Borrower. No waiver of Borrower's
Obligations shall be effective unless in writing and signed by Lender, and then
such waiver shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 8.03. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and
no delay in exercising, on the part of Lender, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
SECTION 8.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder and in any document, certificate
or statement delivered pursuant hereto or in connection herewith shall survive
the execution and delivery of this Agreement, the Collateral Documents and the
Note.
SECTION 8.05. HEADINGS. The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of this Agreement or the interpretation hereof in any respect.
SECTION 8.06. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of Lender, the Borrower and their respective
successors and assigns.
SECTION 8.07. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable under applicable law shall be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof.
SECTION 8.08. GOVERNING LAW. This Agreement, the Note and the rights and
obligations of the parties under this Agreement and the Note shall be governed
by, and construed and interpreted in accordance with, the law of the State of
Louisiana.
29
SECTION 8.09. TIME OF THE ESSENCE. Time shall be deemed of the essence
with respect to the performance of all of the terms, provisions and conditions
on the part of the Borrower and the Lender to be performed hereunder.
SECTION 8.10. SUCCESSORS AND ASSIGNS; PARTICIPANTS. (a) All covenants
and agreements contained by or on behalf of the Borrower in this Agreement, the
Note and the Collateral Documents shall bind its successors and assigns and
shall inure to the benefit of the Lender and its successors and assigns.
(b) This Agreement is for the benefit of the Lender and for such other
Person or Persons as may from time to time become or be the holders of any of
the Obligations, and this Agreement shall be transferable and negotiable, with
the same force and effect and to the same extent as the Obligations may be
transferable, it being understood that, upon the transfer or assignment by the
Lender of any of the Obligations, the legal holder of such Obligations shall
have all of the rights granted to the Lender under this Agreement.
(c) Borrower hereby recognizes and agrees that the Lender may, from time
to time, one or more times, transfer all or any portion of the Obligations to
one or more third parties. Such transfers may include, but are not limited to,
sales of participation interests in such Obligations in favor of one or more
third-party lenders. Borrower specifically (i) consents to all such transfers
and assignments, waives any subsequent notice of and right to consent to any
such transfers and assignments as may be provided under applicable Louisiana
law; (ii) agrees that the purchaser of a participation interest in the
Obligations will be considered as the absolute owner of a percentage interest of
such Obligations and that such a purchaser will have all of the rights granted
to the purchaser under any participation agreement governing the sale of such a
participation interest; (iii) waives any right of off-set that Borrower may have
against the Lender, and/or any purchaser of such a participation interest in the
Obligations and unconditionally agrees that either the Lender or such a
purchaser may enforce Borrower's Obligations under this Agreement, irrespective
of the failure or insolvency of the Lender or any such purchaser; (iv) agrees
that any purchaser of a participation interest in the Obligations may exercise
any and all rights of counterclaim, set-off, banker's lien and other liens with
respect to any and all monies owing to the Borrower in accordance with the terms
of the Obligations, including but not limited to this Agreement; and (v) agrees
that, upon any transfer of all or any portion of the Obligations, the Lender may
transfer and deliver any and all collateral securing repayment of such
Obligations to the transferee of such Obligations and such collateral shall
secure any and all of the Obligations in favor of such a transferee, and after
any such transfer has taken place, the Lender shall be fully discharged from any
and all future liability and responsibility to Borrower with respect to such
collateral, and the transferee thereafter shall be vested with all the powers,
rights and duties with respect to such collateral.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
SECTION 8.12. PAYMENT OF EXPENSES AND INDEMNITY.
(a) The Borrower agrees (i) to promptly pay or reimburse Lender for all of
Lender's reasonable out-of-pocket costs, expenses and attorneys' fees incurred
in connection with the preparation, execution and delivery of this Agreement,
the Note, the Collateral Documents and any other documents prepared in
connection herewith, and (ii) to promptly pay or reimburse Lender for all of
Lender's reasonable
30
out-of-pocket costs and expenses incurred in connection with the preparation,
execution and delivery of any amendment, supplement or modification to this
Agreement, the Note, the Collateral Documents and any other documents prepared
in connection herewith, together with the reasonable fees and disbursements of
counsel to Lender and the reasonable costs and expenses incurred in connection
with the enforcement or preservation of any rights under this Agreement, the
Note, the Collateral Documents and any such other documents.
(b) In consideration of the execution and delivery of this Agreement by
Lender, the Borrower hereby indemnifies, exonerates and holds Lender and its
respective officers, directors, employees, and agents, (herein collectively
called the "Bank Parties" and individually called a "Bank Party") free and
harmless from and against any and all actions, causes of action, suits, losses,
costs, liabilities and damages, and expenses actually incurred in connection
therewith (irrespective of whether such Bank Party is a party to the action for
which indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "Indemnification Liabilities"), incurred by
the Bank Parties or any of them as a result of, or arising out of, or relating
to:
(i) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of the Loan; or
(ii) any investigation, litigation, or proceeding related to any
acquisition or proposed acquisition by the Borrower or any of its
Subsidiaries of all or any portion of the stock or all or
substantially all of the assets of any Person, regardless of whether
any Bank Party is a party thereto; or
(iii) the presence on or under, or the escape, seepage leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by the Borrower or any Subsidiary of any
Hazardous Material (including, without limitation, any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under the Comprehensive Environmental Response. Compensation
and Liability Act, any so-called "Superfund" or "Superlien" law, or
any other federal, state, local or other statute, law, ordinance,
code, rule, regulation, order or decree regulating, relating to or
imposing liability or standards on conduct concerning, any Hazardous
Material), regardless of whether caused by, or within the control of,
the Borrower or any Subsidiary;
except for any such Indemnification Liabilities arising for the account of a
particular Bank Party which a court of competent jurisdiction shall have
determined in a final proceeding to have arisen by reason of the relevant Bank
Party's gross negligence, bad faith, willful misconduct or breach of contractual
obligation arising under this Agreement and owed to the Borrower (which shall be
the sole responsibility of such Bank Party). The agreements in this Section
shall survive payment of the Loan and the Obligations and all other amounts
payable hereunder.
SECTION 8.13. ENTIRE AGREEMENT. This Agreement, the Note, the Collateral
Documents and the other documents executed in connection herewith constitute the
entire agreement between the parties hereto with respect to the subject matter
hereof. To the extent the terms of the Collateral Documents conflict with the
terms of this Agreement, the terms of this Agreement shall control.
31
[Intentionally Deleted]
32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
XXXXXX INDUSTRIES, INC.
BY: /s/ XXXX X. XXXXXX, XX.
------------------------------------------
Xxxx X. Xxxxxx, Xx.
Its: Vice President
ORANGE SHIPBUILDING COMPANY, INC.
BY: /s/ XXXX X. XXXXXX, XX.
-----------------------------------------
Xxxx X. Xxxxxx, Xx.
Its: Vice President
WHITNEY NATIONAL BANK
BY: /s/ XXXXX X. SANTA XXXX, III
-----------------------------------------
Xxxxx X. Santa Xxxx, III
ITS: Assistant Vice President
33
