EXHIBIT 10.28
LOAN AGREEMENT
AMONG
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
XXXXXX FINANCIAL LEASING, INC.,
U.S. BANCORP LEASING & FINANCIAL AND
SAFECO CREDIT COMPANY, INC.
AS LENDERS,
THE CIT GROUP/EQUIPMENT FINANCING, INC.,
AS AGENT FOR THE LENDERS
AND
HORIZON VESSELS, INC. AND
HORIZON OFFSHORE CONTRACTORS, INC.
AS BORROWERS
AND
HORIZON OFFSHORE, INC.,
AS GUARANTOR
DATED AS OF DECEMBER 30, 1998
TABLE OF CONTENTS
ARTICLE I.
The Loan...............................................................8
Section 1.1 AMOUNT....................................................8
Section 1.2 NOTICE OF DRAWING.........................................9
Section 1.3 REPAYMENT.................................................9
Section 1.4 INTEREST..................................................9
Section 1.5 PAYMENTS.................................................12
Section 1.6 PREPAYMENT...............................................13
Section 1.7 SECURITY.................................................16
Section 1.8 COMMITMENT FEE...........................................16
Section 1.9 SHARING OF PAYMENTS, ETC.................................16
ARTICLE II.
Conditions Precedent..................................................17
Section 2.1 CONDITIONS PRECEDENT TO FIRST ADVANCE....................17
Section 2.2 CONDITIONS TO SUBSEQUENT ADVANCES........................20
Section 2.3 WAIVER OF CONDITIONS PRECEDENT...........................20
ARTICLE III.
Representations, Warranties and Covenants.............................21
Section 3.1 REPRESENTATIONS OF THE BORROWERs.........................21
Section 3.2 AFFIRMATIVE COVENANTS OF BORROWER........................24
Section 3.3. NEGATIVE COVENANTS OF BORROWERS..........................31
ARTICLE IV.
Events of Default.....................................................36
ARTICLE V.
The Agent.............................................................39
Section 5.1 APPOINTMENT AND DUTIES OF AGENT..........................39
Section 5.2 DISCRETION AND LIABILITY OF AGENT........................39
Section 5.3 EVENT OF DEFAULT.........................................40
Section 5.4 CONSULTATION.............................................41
Section 5.5 COMMUNICATIONS TO AND FROM AGENT.........................41
Section 5.6 LIMITATIONS OF AGENCY....................................41
Section 5.7 NO REPRESENTATIONS OR WARRANTY...........................41
Section 5.8 LENDER CREDIT DECISION...................................42
Section 5.9 INDEMNITY................................................42
Section 5.10 RESIGNATION..............................................42
Section 5.11 DISTRIBUTION.............................................42
Section 5.12 LIMITATION OF SUITS......................................43
Section 5.13 RIGHT OF SETOFF..........................................43
ARTICLE VI.
Miscellaneous.........................................................44
Section 6.1 NOTICES..................................................44
Section 6.2 NO WAIVER................................................45
Section 6.3 APPLICABLE LAW AND JURISDICTION..........................46
Section 6.4 SEVERABILITY.............................................47
Section 6.5 AMENDMENT................................................47
Section 6.6 ASSIGNMENT AND PARTICIPATION.............................47
Section 6.7 COSTS, EXPENSES AND TAXES................................48
Section 6.8 COUNTERPARTS.............................................48
Section 6.9 SECTION HEADINGS.........................................48
Section 6.10 MERGER...................................................49
Schedule 1 - Lender Commitments
Schedule 2 - Vessels
Exhibit A - Note
Exhibit B - Notice of Drawing
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of December 30, 1998, among HORIZON VESSELS,
INC., a Delaware corporation, HORIZON OFFSHORE CONTRACTORS, INC., a Delaware
corporation (collectively the "Borrowers"), THE CIT GROUP/EQUIPMENT FINANCING,
INC., a New York corporation ("CIT"), XXXXXX FINANCIAL LEASING, INC., a Delaware
corporation, U.S. BANCORP LEASING & FINANCIAL, an Oregon corporation and SAFECO
CREDIT COMPANY, INC., a Washington corporation (collectively with CIT, the
"Lenders") and CIT as Agent for the Lenders (the "Agent"). Capitalized terms
used herein and not otherwise defined herein are used with the meanings ascribed
thereto in the Definitions Section of this Agreement.
R E C I T A L S:
1. The Borrowers are in the business of owning and operating offshore
construction vessels.
2. The Borrowers have requested financing from the Lenders in the
principal amount of up to USD 60,000,000 (the "Loan") in order to repay existing
indebtedness, complete modifications and upgrades to the vessel PACIFIC HORIZON
and for working capital purposes.
3. The Loan shall be evidenced by the secured promissory note of the
Borrower (the "Note"), substantially in the form of Exhibit A attached hereto
and made a part hereof.
NOW, THEREFORE, in consideration of the above recitals, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
DEFINITIONS:
The following terms shall have the following meanings for all purposes of
this Agreement and shall be equally applicable to both the singular and the
plural forms of the terms herein defined.
"Advance" means a loan by the Lenders to the Borrowers under
this Loan Agreement.
"Affiliate" of any Person means (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person and
(ii) any director or officer of such first Person or of any Person referred to
in clause (i) above. For the purposes of this definition "control" of any Person
includes (a) with respect to any corporation or other Person having voting
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shares or the equivalent and elected directors, managers, or Persons performing
similar functions, the ownership or power to vote, directly or indirectly shares
or the equivalent representing 50% or more of the power to vote in the election
of directors, managers or Persons performing similar functions, (b) ownership of
50% or more of the equity or beneficial interest in any other entity and (c) the
ability to direct the business and affairs of any Person by acting as a general
partner, manager or otherwise.
"Agreement", "this Agreement", "herein", "hereunder"' or other like words
mean this Loan Agreement as originally executed or as modified, amended or
supplemented from time to time pursuant to the provisions hereof.
"Borrowers" means Horizon Vessels, Inc. and Horizon Offshore
Contractors, Inc. and their successors and permitted assigns.
"Business Day" means a day other than a Saturday or a Sunday or a day on
which commercial banks are authorized to be closed in the State of New York or
the State of Texas.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one (1) year from the
date of acquisition, (ii) time deposits (including Eurodollar time deposits) and
certificates of deposit of any bank meeting the qualifications specified in
clause (iv) below with maturities of not more than 90 days from the date of
acquisition, (iii) fully secured repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in clause (i)
entered into with any bank meeting the qualifications specified in clause (iv)
below, (iv) commercial paper issued by the parent corporation of any bank
referred to in this clause (iv) or any commercial bank of recognized standing
having capital and surplus in excess of USD 300,000,000.00 and commercial paper
rated at least A-2 or the equivalent thereof by Standard & Poor's Corporation or
at least P-2 or the equivalent thereof by Xxxxx'x Investor Services, Inc., and
in each case maturing within 90 days after the date of acquisition, and (v)
remarketed certificates of participation issued through any bank meeting the
qualifications specified in clause (iv) above rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Xxxxx'x Investor Services, Inc. and maturing within 90
days after the date of acquisition.
"Closing Date" means any Business Day on or prior to December 30, 1998 on
which the first Advance is made as designated by the Borrowers in their Notice
of Drawing.
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"Collateral Value" has the meaning set forth in Section 1.6(a)(ii) hereof.
"Commitment" means USD 60,000,000.
"Controlled Group" means a "controlled group of corporations" as defined
in Section 1563(a) of the Internal Revenue Code of 1986, as amended, without
regard to Section 1563(a)(4) and (e)(3)(c) of such Code, of which either
Borrower is a part.
"Current Assets" means the assets of the Guarantor on a consolidated basis
which would in accordance with GAAP be classified as current assets of a
corporation conducting a business the same as or similar to the Borrowers and
the Guarantor.
"Current Ratio" means the ratio of the Guarantor's Current Assets to the
Guarantor's Current Liabilities.
"Current Liabilities" means indebtedness of the Guarantor on a
consolidated basis which would in accordance with GAAP be classified as current
liabilities of a corporation conducting a business the same as or similar to the
Borrowers and the Guarantor, but excluding other debt that is specifically
subordinated to the Loan on terms reasonably acceptable to the Agent.
"Debt Ratio" means the Guarantor's total consolidated long-term funded
debt plus capitalized lease obligations divided by the sum of such consolidated
long-term funded debt, capitalized lease obligations and stockholders' equity.
"DnB" means Den norske Bank ASA, a Norwegian bank.
"DnB Credit Facility" means the Amended and Restated Credit Agreement
dated as of the date hereof, among DnB, the Borrowers and the Guarantor as the
same may be extended, modified or replaced.
"Dollars" or "USD" means lawful currency of the United States of America.
"Drawdown Date" means the date upon which an Advance is made.
"Equipment" shall have the meaning set forth in Section 1.01 of the
Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning set forth in Article IV hereof.
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"EBITDA" means, for any period, the consolidated earnings of the Guarantor
during such period from continuing operations, before gains or losses on sales
of assets (to the extent such gains or losses are included in earnings from
continuing operations) and extraordinary items, as determined under GAAP,
federal, state, foreign and local income taxes, Interest Expense, depreciation
and amortization.
"Excluded Income Taxes" has the meaning set forth in Section 1.5(a)
hereof.
"Fixed Charge Coverage Ratio" means for any period, EBITDA divided by the
sum total of Interest Expense on the Loan, actual Taxes paid and any required
payments under this Agreement and the DnB Credit Facility.
"Fixed Rate" means the sum of (i) the Treasury Rate, (ii) 265 basis points
and (iii) the swap spread on the date the Fixed Rate is elected by the Borrowers
as reported on page 883, or its successor, of the Dow Xxxxx Telerate System.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States of America.
"Governmental Agencies" means any government or any state, department or
other political subdivision thereof or governmental body, agency, authority,
department or commission having jurisdiction over the Borrowers or their
properties (including without limitation any court or tribunal) exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government and any corporation, partnership or other entity
directly or indirectly owned by the foregoing.
"Guaranty" means the guaranty of the Guarantor in favor of the Agent, in
form and substance reasonably acceptable to the Agent.
"Guarantor" means Horizon Offshore, Inc., a Delaware corporation.
"Hazardous Substances" means petroleum and used oil, or any other
pollutant or contaminant, hazardous, dangerous or toxic waste, substance or
material as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601, ET SEQ. (hereinafter
called "CERCLA"); the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss. 6901, ET SEQ. (hereinafter called "RCRA"); the Toxic Substances
Control Act, as amended, 15 U.S.C. ss. 2601, ET SEQ. (hereinafter called
"TSCA"); the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.
1801, ET SEQ. (hereinafter called "HMTA"); the Oil Pollution Act of 1990, Pub.L.
No. 101-380, 104 Stat. 484 (1990) (hereinafter called "OPA"); or any other
statute, law, ordinance,
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code or regulation of any Governmental Agency relating to or imposing liability
or standards of conduct concerning the use, production, generation, treatment,
storage, recycling, handling, transportation, release, threatened release or
disposal of any hazardous, dangerous or toxic waste, substance or material,
currently in effect or at any time hereafter adopted.
"Highwood Note" means the promissory note of the Guarantor in favor of
Highwood Partners, L.P., a Delaware limited partnership, dated August 5, 1998 in
the principal amount of USD 10,000,000 issued in connection with the Guarantor's
stock repurchase program as adopted by the Board of Directors of the Guarantor
on July 29, 1998.
"Indebtedness" of the Borrowers or the Guarantor means all items of
indebtedness which, in accordance with GAAP, would be included in determining
liabilities as shown on the liability side of a balance sheet of the Borrowers
or the Guarantor, as of the date as of which indebtedness and liabilities is to
be determined and shall include all indebtedness and liabilities of others
assumed or guaranteed by the Borrowers or the Guarantor or in respect of which
the Borrowers or the Guarantor are secondarily or contingently liable (other
than by endorsement of instruments in the course of collection and performance
guarantees and similar transactions entered into in the ordinary course of
business) whether by reason of any agreement to acquire such indebtedness or to
supply or advance sums or otherwise but shall exclude deferred Taxes.
"Indemnitee" means the Agent, the Lenders and their officers, directors,
employees, representatives, agents and Affiliates.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
the date hereof between the Agent and DnB in form and substance satisfactory to
the Lenders, as amended, from time to time.
"Interest Period" has the meaning set forth in Section 1.4(d) hereof.
"Interest Rate" has the meaning set forth in Section 1.4(b) hereof.
"LIBOR Rate" means the one-month rate of interest per annum at which
deposits in Dollars are offered to major banks in the London interbank market at
approximately 11:00 a.m. (London time), as reported and published in the Wall
Street Journal for the 15th day of each month, or, if the 15th day of the month
is not a day for which the Wall Street Journal reports LIBOR, then on the first
preceding day on which the Wall Street Journal reports the LIBOR and shall
become effective as of the first day of the succeeding
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calendar month and shall continue in effect to, and including, the last day of
such month.
"Loan" means the current principal amount and unpaid interest outstanding
under this Agreement.
"Loan Documents" means the Note, this Agreement, the Mortgages, the
Security Agreement, the Guaranty and the Intercreditor Agreement.
"Majority Lenders" shall mean those Lenders holding at least 66% of the
Loan.
"Material adverse effect" means having a material adverse effect on the
business, properties or condition (financial or otherwise) of the Borrowers and
the Guarantor taken as a whole.
"Maturity Date" means the date eighty-four (84) months after the date of
the third Advance, but in no event later than June 30, 2006.
"Mortgages" means the United States First Preferred Fleet Mortgage on the
U.S. flag Vessels, the Vanuatu First Preferred Fleet Mortgage on the Vanuatu
flag Vessels and the Bahamian Statutory Mortgage and Deed of Covenants
concerning the Bahamas flag Vessel.
"Net Worth" means, at a particular date, the sum of the Guarantor's
capital stock (excluding treasury stock), warrants, surplus (including earned
surplus, capital surplus and the balance of the current profit and loss account
not transferred to surplus), debt that is specifically subordinated to the Loan
on terms acceptable to the Agent accounted on a consolidated basis appearing on
a consolidated balance sheet prepared in accordance with GAAP as of the date of
determination and after deducting therefrom the net book value of all assets
(after deducting any reserves applicable thereto) which would be treated as
intangibles under GAAP (including without limitation, such items as goodwill,
trademarks, trade names, patents and licenses, franchises and operating rights).
"Note" means the promissory note of the Borrowers in favor of the Agent,
substantially in the form of Exhibit A attached hereto and made a part hereof.
"Notice of Drawing" means the Notice of Drawing from the Borrowers to the
Agent, substantially in the form of Exhibit B attached hereto and made a part
hereof.
"Orderly Liquidation Value" has the meaning set forth in Section
1.6(a)(iii) hereof.
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"Payment Date" has the meaning set forth in Section 1.3(a) hereof.
"Permitted Acquisition" means an acquisition by the Borrowers of an asset
or an entity if such asset or entity is acquired in furtherance of the
Borrowers' current line of business.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, government, Governmental Agency or any
other entity other than the Borrowers and whether acting in an individual,
fiduciary or other capacity.
"Plan" means any employee pension benefit plan subject to Title IV of
ERISA and maintained by either Borrower or any member of a Controlled Group, or
any such plan, to which either Borrower or any member of a Controlled Group is
required to contribute on behalf of any of its employees.
"Prepayment Premium" means the prepayment premiums required by Section
1.6(b) hereof.
"Prime Rate" means with respect to any Interest Period, the rate publicly
announced in New York, New York from time to time as the prime rate of The Chase
Manhattan Bank N.A. (or any successor thereof) ("Chase"). The Prime Rate shall
be determined by the Agent at the close of business two (2) Business Days before
a Payment Date, and shall be effective to but not including the next applicable
Payment Date. The Prime Rate is not intended to be the lowest rate of interest
charged by Chase or the Lenders in connection with extensions of credit to
debtors.
"Responsible Officer" means the Borrowers' chief executive officer, the
Borrowers' chief financial officer or any other officer having principal
responsibility for the financial affairs of the Borrowers.
"Security Agreement" means the Security Agreement among the Agent and the
Borrowers dated as of the date hereof in form and substance satisfactory to the
Agent.
"Taxes" has the meaning set forth in Section 1.5(a) of this Agreement.
"Total Loss" means in respect of a Vessel or an item of Equipment (i) the
actual or constructive or compromised or arranged total loss of such Vessel or
item of Equipment; or (ii) the requisition for title or other compulsory
acquisition of such Vessel or any item of Equipment otherwise than by
requisition for hire; or (iii) the capture, seizure, attachment, detention or
confiscation of such Vessel or any item of Equipment by any government or by
persons acting or purporting to act on behalf of
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any government unless such Vessel or any item of Equipment is released from such
seizure, attachment, detention or confiscation within thirty (30) days of the
occurrence thereof. A Total Loss shall be deemed to have occurred (a) in the
event of an actual total loss of a Vessel or any item of Equipment on the date
of such loss, (b) in the event of damage to a Vessel or any item of Equipment
which results in a constructive or compromised or arranged total loss of such
Vessel or any item of Equipment on the date of the occurrence of the event
giving rise to such damage, or (c) in the case of any event referred to in
clauses (ii) or (iii) above, on the date of the occurrence of such event.
"Treasury Rate" means the interpolated rate per annum for a U.S. Treasury
security with a maturity equal to the remaining term of the Loan at the time the
Borrowers elect to use the Fixed Rate. The Treasury Rate will be determined at
the close of business on the third Business Day after the Borrowers elect to use
the Fixed Rate based on the yields to maturity for U.S. Treasury securities
reported on page 5 ("U.S. Treasury and Money Markets") of the information
ordinarily provided by Dow Xxxxx Telerate System.
"Vessels" means the five (5) U.S. flag vessels, the four (4) Vanuatu flag
vessels and the one (1) Bahamas flag vessel listed on Schedule 2 attached
hereto.
"Working Capital" means the excess of the Guarantor's Current Assets over
its Current Liabilities.
ARTICLE I.
THE LOAN
Section 1.1 AMOUNT.
(a) Subject to the terms and conditions of Section 2.1 of this Agreement,
each Lender agrees, severally and not jointly, to make its percentage share of
the Commitment available to the Borrowers by making Advances to the Borrowers in
an aggregate principal amount up to the lesser of (1) Collateral Value
determined in accordance with Section 1.6(a)(ii) and (2) the Commitment.
(b) Advances made under this Agreement are referred to as the "Loan." All
Advances shall be advanced and made ratably by the Lenders in accordance with
each Lender's portion of the Commitment on the date the Advance is made.
(c) The Loan shall be made in three (3) Advances. Subject to the
limitation contained in Section 1.1(a) above, the Advances shall be in the
following amounts:
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(i) First Advance - USD 50,000,000
(ii) Second Advance - USD 5,000,000
(iii) Third Advance - USD 5,000,000
(d) The second and third Advances may be made on the same date if the
conditions of Section 2.2 below are satisfied.
(e) If the third Advance is not made by June 30, 1999, the obligation of
the Lenders to make such amount available to the Borrowers shall terminate.
Section 1.2 NOTICE OF DRAWING.
The Borrower shall make a request for an Advance by sending to the Agent a
written Notice of Drawing not later than 11:00 a.m., Arizona Time, two (2)
Business Days prior to the date such Advance is requested setting forth the date
the Advance is required and the bank account or accounts to which the Advance is
to be remitted. The Notice of Drawing shall be received by the Agent no later
than two (2) Business Days immediately preceding the Drawdown Date. The Notice
of Drawing shall be irrevocable.
Section 1.3 REPAYMENT.
(a) The Borrowers shall jointly and severally repay the
principal amount of the first Advance in eighty-four (84)
consecutive monthly installments of USD 462,963.00, the
amount of the second Advance in eighty-four (84)
consecutive monthly installments of USD 46,296.00 and the
amount of the third Advance in eighty-four (84)
consecutive monthly installments of USD 46,296.00, with
each such installment to be paid by the Borrowers to the
Agent on a date commencing on the day which is thirty
(30) days after the date of such Advance, and on the same
day of each month thereafter and ending on the Maturity
Date (each such date a "Payment Date"); provided,
however, that the final installment shall include an
amount sufficient to discharge the accrued and unpaid
interest and principal in respect of the Note.
(b) The Loan shall be evidenced by and repayable in accordance with the
terms hereof and of the Note.
Section 1.4 INTEREST.
(a) The Borrowers shall jointly and severally pay interest, in arrears,
on the unpaid principal amount of the Loan from the Closing Date
until the principal amount of the Loan is paid in full on the last
day of each calendar month, commencing January 30, 1999 up to and
including
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the Maturity Date (each such date an "Interest Payment Date") at a
rate of interest per annum (computed on the basis of a 365-day year
and actual days elapsed) equal to the Interest Rate; PROVIDED,
HOWEVER, that all interest accrued on the Loan and unpaid on the
Maturity Date shall be paid on the Maturity Date.
(b) The term "Interest Rate" shall mean, for an Interest Period (as
hereinafter defined), an interest rate per annum at the rate (i)
certified by the Lender to be the LIBOR Rate, plus two and
sixty-five hundredths percent (2.65%)or (ii) if the Borrowers have
exercised the option contained in Section 1.4(f) below, the Fixed
Rate.
(c) If at any time the Agent shall determine that by reason of
circumstances affecting the London interbank market adequate and
reasonable means do not exist for ascertaining the Interest Rate
based on the LIBOR Rate for the succeeding Interest Period or that
the making or continuance of the Loan at an Interest Rate based on
the LIBOR Rate has become impracticable as a result of a contingency
occurring after the date of this Agreement which materially and
adversely affects the London interbank market, the Agent shall
notify the Borrower that the Interest Rate shall be the Prime Rate,
plus one- half of one percent (.5%) per annum. As used in this
Agreement, "Interest Period" shall mean each respective and
successive calendar month commencing on the last day of the month in
which the Closing Date occurs; PROVIDED, HOWEVER, that no Interest
Period shall commence or extend past the Maturity Date.
(d) Any amount of principal or any other amount due hereunder which is
not paid when due, whether at stated maturity, by acceleration or
otherwise, shall bear interest from the date when due until such
amount is paid in full, payable on demand, at a rate per annum equal
at all times to two percent (2%) per annum above the Interest Rate.
(e) In no event shall any interest rate provided for in this Agreement
or the Note exceed the maximum rate permitted by the then applicable
law. It is the intention of the parties hereto to strictly comply
with applicable usury laws; accordingly, it is agreed that,
notwithstanding any provision to the contrary in this Agreement, in
the Notes, or in the other Loan Documents, in no event shall this
Agreement, the Note, or the other Loan Documents be construed to
charge, contract for or require the payment or permit the collection
of interest in excess of the maximum amount permitted by applicable
law. If any such excess interest is contracted for, charged or
received
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under this Agreement, the Note or the other Loan Documents, or in
the event that all of the principal balance shall be prepaid, so
that under any of such circumstances the amount of interest
contracted for, charged or received on the principal balance shall
exceed the maximum amount of interest permitted by applicable law,
then in such event (i) the provisions of this Section 1.4(e) shall
govern and control, (ii) neither the Borrowers nor any other person
or entity now or hereafter liable for the payment thereof shall be
obligated to pay the amount of such interest to the extent that it
is in excess of the maximum amount of interest permitted by
applicable law, (iii) any such excess which may have been collected
shall be either applied as a credit against the then unpaid
principal balance or refunded to the Borrower, at the option of the
Lenders, and (iv) the effective rate of interest shall be
automatically reduced to the maximum lawful contract rate allowed
under applicable law as now or hereafter construed by the courts
having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of
interest contracted for, charged or received under this Agreement,
the Note and the other Loan Documents which are made for the purpose
of determining whether such rate exceeds the maximum lawful contract
rate, shall be made, to the extent permitted by applicable law, by
amortizing, prorating, allocating and spreading in equal parts
during the period of the full stated term of the indebtedness
evidenced hereby, all interest at any time contracted for, charged
or received from the Borrowers or otherwise by the Lenders in
connection with such indebtedness; PROVIDED, HOWEVER, that if any
applicable state law is amended or the law of the United States of
America preempts any applicable state law, so that it becomes lawful
for the Lenders to receive a greater simple interest per annum rate
than is presently allowed, the Borrowers agree that, on the
effective date of such amendment or preemption as the case may be,
the lawful maximum hereunder shall be increased to the maximum
simple interest per annum rate allowed by the higher of the amended
state law or the law of the United States of America.
(f) The Borrowers may elect to pay interest on the Loan at the Fixed
Rate on the following terms:
(i) If no election is received by the Agent, the Borrowers
shall pay interest on the Loan at the LIBOR Rate plus 2.65%.
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(ii) The Borrowers may elect to pay interest on the Loan at
the Fixed Rate only once during the term of this Agreement.
(iii) Any election by the Borrowers to pay interest at the
Fixed Rate must be made by written notice, to the Agent, no later
than three (3) Business Days in advance of an Interest Payment Date.
(iv) Any election by the Borrowers to pay interest at the
Fixed Rate shall be irrevocable and shall be effective commencing on
the next month's Interest Payment Date and for the remaining term of
the Loan.
(v) The Fixed Rate shall be evidenced by a letter agreement
sent by the Agent to the Borrowers within three (3) Business Days
after the Borrowers' notice to the Agent of their election to pay
interest at the Fixed Rate.
Section 1.5 PAYMENTS.
(a) The payment obligations of the Borrowers under the Note and all
other amounts payable under this Agreement shall be paid to the
Agent at such address as the Agent may designate (not less than one
(1) Business Day prior to the due date therefor), not later than the
close of business on the due date thereof, in lawful money of the
United States. All payments shall be made (i) without set-off,
counterclaim or condition and (ii) free and clear of, and without
deduction for or on account of, any present or future taxes, levies,
duties, imposts, charges, fees, deductions or withholdings of any
nature ("Taxes"), unless the Borrowers are required by law or
regulation to make payment subject to any Taxes. In the event that
the Borrowers are required by law or regulation to make any
deduction or withholding on account of any Taxes from any payment
due under this Agreement, then: (a) the Borrowers shall notify the
Agent promptly as soon as they become aware of such requirement and
shall remit promptly the amount of such Taxes to the appropriate
taxation authority, and in any event prior to the date on which
penalties attach thereto; and (b) such payment shall be increased by
such amount as may be necessary to ensure that the Agent receives a
net amount, free and clear of all Taxes, equal to the full amount
which the Agent would have received had such payment not been
subject to such Taxes (other than Excluded Income Taxes as such term
is defined below). Notwithstanding the foregoing, the Borrowers
shall not be liable for, or required to pay, any Taxes
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which are based on the overall income of either the Agent or Lenders
or franchise taxes imposed at any time on either the Agent or the
Lenders by any Governmental Agency ("Excluded Income Taxes"). Each
such payment or reimbursement by the Borrowers shall be net of any
credit or the value of any deduction received by the Agent or the
Lenders thereon to the extent that the same can be determined by the
Agent (as certified by the Agent to the Borrowers, such certificate
to be conclusive absent manifest error). The Borrowers shall
indemnify the Agent and the Lenders against any liability of the
Lenders in respect of such Taxes (other than Excluded Income Taxes)
and shall supply copies of applicable tax receipts.
(b) If any payment to be made by the Borrowers shall become due on a day
which is not a Business Day, such payment shall be made on the next
succeeding Business Day.
(c) Each payment to be made on a Payment Date, an Interest Payment Date
and all prepayments, and other payments shall be applied first to
the payment of accrued and unpaid interest on the Loan, then to the
payment of all other amounts due under this Agreement and the other
Loan Documents, and the balance shall be applied to the payment of
principal due under the Note in inverse order of payment.
(d) The Borrowers shall jointly and severally indemnify the Lenders and
the Agent on demand against all costs, expenses, liabilities and
losses (including funding losses) actually incurred by the Lenders
and the Agent as a result of or in connection with: (a) the
occurrence and/or continuance of any Event of Default (or event
which, with the giving of notice and/or lapse of time or other
applicable condition would constitute an Event of Default); and/or
(b) any judgment or order which relates to any sum due hereunder
being expressed in a currency other than the currency expressed to
be due hereunder and as a result of a variation in rates of exchange
between the rate at which such amount is converted into such other
currency for the purposes of such judgment or order and the rate
prevailing on the date of actual payment of such amount pursuant
thereto; and/or (c) any postponement of the Closing Date occurring
because of one or more of the conditions precedent set forth in
Article II shall not have been satisfied or waived as a result of
the Borrowers' failure to satisfy such condition; and/or (d) any
payment of principal of or interest on the Note made on a Business
Day which is not a Payment Date. The above indemnities are separate
and independent obligations of
13
the Borrowers and apply irrespective of any indulgence granted by
the Lenders or the Agent.
Section 1.6 PREPAYMENT.
(a) MANDATORY PREPAYMENT.
(i) (1) TOTAL LOSS. If there shall have occurred a Total Loss, on
the earlier of (x) the date insurance proceeds are received or
(y) one hundred twenty (120) days after the date of occurrence
of the Total Loss the Borrowers shall either provide as
collateral a replacement vessel or equipment acceptable to the
Agent which is, as determined by the appraiser referred to in
Section 1.6(a)(ii) below, of comparable or greater value to
the lost Vessel, or Equipment, which replacement vessel or
equipment will be added to the lien of the Mortgages or the
Security Agreement or, if after giving effect to the release
of such lost Vessel or Equipment from the lien of the
Mortgages or the Security Agreement, as applicable, the ratio
of the Collateral Value to the outstanding principal amount of
the Loan shall be less than 1.25 to 1, the Borrowers shall pay
within five (5) days of the Agent's demand, the amount of the
Loan necessary to restore such ratio and shall pay accrued
interest thereon to the date of such prepayment together with
any other amount due hereunder or under any Loan Document.
(2) PARTIAL LOSS. If there shall have occurred loss or damage
to a Vessel or any item of Equipment which does not rise to
the level of a Total Loss, the underwriters may pay direct for
the repair, salvage or other charges or, if the Borrowers
shall have first fully repaired the damage or paid all of the
salvage or other charges, may pay the Borrowers as
reimbursement therefore; provided, however, that if such
amounts are greater than USD 500,000.00 and the Borrowers
shall not have fully repaired the damage or paid all of the
salvage or other charges or if an Event of Default has
occurred and is continuing, the underwriters shall not make
such payment without first obtaining the written consent of
the Agent. If the Agent does not so consent, all such proceeds
shall be paid to the Agent for the purpose of prepaying
amounts outstanding hereunder or under any other Loan
Document.
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(3) The Agent shall apply payments received pursuant to this
Section 1.6(a)(i) in accordance with Section 1.5(c) hereof. No
Prepayment Premium shall be payable with respect to any
Mandatory Prepayment made by the Borrower pursuant to this
Section 1.6(a).
(ii) COLLATERAL VALUE. On such dates as may be requested by the
Agent, but not more than once in any twelve (12) month period,
the Agent shall arrange to have Orderly Liquidation Value of
each of the Vessels determined at the Borrowers' expense by an
independent appraisal firm chosen by the Agent and reasonably
acceptable to the Borrowers. The most recent determination of
the aggregate Orderly Liquidation Values of all of the Vessels
is hereinafter referred to as the "Collateral Value". If the
ratio of the Collateral Value to the outstanding principal
amount of the Loan shall be less than 1.25 to 1, then the
Borrowers shall either prepay within five (5) days of the
Agent's demand the amount of the Loan necessary to restore the
ratio referred to herein together with payment of accrued
interest thereon or provide additional security for the Loan
which shall be acceptable in the sole opinion of the Agent for
these purposes. The Agent shall apply payments received under
this Section 1.6(a)(ii) in accordance with Section 1.5(c)
hereof. No Prepayment Premium shall be payable with respect to
any prepayment required by this Section 1.6(a)(ii).
(iii) ORDERLY LIQUIDATION VALUE. The "Orderly Liquidation Value" of
any Vessel shall have the meaning customarily attributed to it
in the equipment appraisal industry at the time of the
valuation, less the estimated marshalling, reconditioning and
sale expenses designed to maximize the resale value of such
Vessel (as determined by the appraisal firm referred to
above). The appraisal firm's valuation shall be made with or
without physical inspection at the Agent's discretion;
PROVIDED HOWEVER, that no more than one physical inspection
shall be permitted in any one twelve (12) month period.
(b) VOLUNTARY PREPAYMENT.
(i) After the first anniversary of the Closing Date, the Borrowers
may prepay in full or in part amounts outstanding under the
Note and this Agreement on any subsequent Payment Date after
giving at least
15
ten (10) Business Days prior notice of such prepayment and
payment to the Lender of accrued and unpaid interest under the
Note and all other amounts due under this Agreement and the
other Loan Documents, including the Prepayment Premium
referred to below. Any notice of prepayment hereunder shall be
irrevocable.
(ii) The Lender shall apply payments received pursuant to this
Section 1.6(b) in accordance with Section 1.5(c) above.
(iii) Prepayments made under this Section 1.6(b) shall include a
Prepayment Premium as follows:
(A) If made on or before the second anniversary of the
Closing Date - four percent (4%) of the aggregate
principal amount prepaid;
(B) If made on or before the third anniversary of the
Closing Date - three percent (3%) of the aggregate
principal amount prepaid;
(C) If made on or before the fourth anniversary of the
Closing Date - two percent (2%) of the aggregate
principal amount prepaid;
(D) If made on or before the fifth anniversary of the
Closing Date - one percent (1%) of the aggregate
principal amount prepaid; or
(E) If made after the fifth anniversary of the Closing Date
- no Prepayment Premium shall be
due.
Section 1.7 SECURITY.
All amounts due hereunder and under the Note shall be secured by the
Guaranty, the Mortgages and the Security Agreement. In addition, the Agent and
DnB will execute and deliver the Intercreditor Agreement and the Borrowers and
the Guarantor will consent to its terms.
Section 1.8 COMMITMENT FEE.
The Borrowers have paid to the Agent a non-refundable commitment fee of
USD 45,000.00.
16
Section 1.9 SHARING OF PAYMENTS, ETC.
The Borrowers agree that, in addition to (and without limitation of) any
right of set-off, bankers' lien or counterclaim a Lender may otherwise have,
each Lender shall be entitled, at its option after an Event of Default has
occurred and is continuing to offset balances held by it for the account of the
Borrowers at any of its offices against any principal of or interest on any
portion of Loan attributable to such Lender hereunder or any other obligation of
the Borrowers hereunder which is not paid (regardless of whether such balances
are then due to the Borrower), in which case it shall promptly notify the
Borrowers and the Agent thereof, PROVIDED that such Lender's failure to give
such notice shall not affect the validity thereof. If a Lender shall obtain
payment of any principal of or interest on any portion of the Loan attributable
to it under this Agreement or other obligation then due to such Lender
hereunder, through the exercise of any right of set-off or lien granted under
Section 5.13 below), bankers' lien, counterclaim or similar right, or otherwise,
it shall promptly purchase from the other Lenders participations in the Loan
attributable to it, or the other obligations of the Borrowers hereunder of, the
other Lenders in such amounts, and make such other adjustments from time to time
as shall be equitable to the end that all the Lenders shall share the benefit of
such payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such benefit) pro-rata in accordance with their
respective portions of the Loan. To such end all the Lenders shall make
appropriate adjustments among themselves (by the resale of participations sold
or otherwise) if such payment is rescinded or must otherwise be restored. The
Borrowers agree, to the fullest extent they may effectively do so under
applicable law, that any Lender so purchasing a participation in the Loan may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of the Loan or other obligations in the amount of such participation.
Nothing contained herein shall require any Lender to exercise any such right or
shall affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligations
of the Borrowers to such Lender.
ARTICLE II.
CONDITIONS PRECEDENT
Section 2.1 CONDITIONS PRECEDENT TO FIRST ADVANCE.
The Lenders execution and delivery of this Agreement and the making of the
first Advance are subject to the following conditions having been satisfied in
the reasonable opinion of the Lenders on or prior to the Closing Date:
17
(a) Each of this Agreement and the other Loan Documents shall have been
duly authorized and executed with original counterparts thereof
delivered to the Lenders.
(b) The Borrowers and the Guarantor shall have delivered to the Lenders
evidence of good standing, certificates of incumbency and duly
certified resolutions of their Boards of Directors and all such
other corporate documentation authorizing them to enter into the
transactions contemplated by this Agreement and the other Loan
Documents.
(c) The Lenders shall have received opinions from Jones, Walker,
Waechter, Poitevent, Carrere & Xxxxxxx, L.L.P, counsel to the
Borrowers and the Guarantor, and an opinion of Agent's counsel,
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P., each in form and substance
satisfactory to the Lenders.
(d) The representations and warranties contained in Article III of this
Agreement and in each other Loan Document shall be true on the
Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, and no Event of
Default specified in Article IV hereof and no event which, with the
lapse of time or the notice and lapse of time specified in Article
IV hereof, would become such an Event of Default, shall have
occurred and be continuing or shall have occurred at the completion
of the making of the Loan, and the Lenders shall have received
satisfactory certificates signed by Responsible Officers of the
Borrower and the Guarantors, as to all questions of fact involved in
this condition.
(e) There shall have been no material adverse change in the business,
financial condition or operations of the Borrowers and of the
Guarantor taken as a whole since September 30, 1998.
(f) The Lenders shall have received evidence that the person specified
to act as agent for service of process for the Borrowers and the
Guarantor pursuant to Section 6.3 has agreed to so act.
(g) The Lenders shall have received certificates of the Borrowers and
the Guarantor signed by an officer in charge of environmental
affairs and safety as to compliance by the Borrowers and the
Guarantor with all environmental, safety and public health laws and
regulations applicable to the Borrowers and the Guarantor, without
limitation of the foregoing, all other
18
laws and regulations affecting or relating to the Vessels, in each
case the non-compliance with which would have a material adverse
effect.
(h) The Borrowers shall have provided evidence of insurance maintained
by the Borrowers or the Guarantor on the Vessels required by Article
I, Section 15 of the U.S. and Vanuatu Mortgages and Part II Section
5 of the Bahamas Deed of Covenants and Article 5 of the Security
Agreement accompanied by a report of the Borrowers' insurance broker
that such insurance complies with the terms of the Mortgages and the
Security Agreement.
(i) The Mortgages shall have duly executed and delivered and all actions
necessary to perfect the security interests created by the Mortgages
shall have been taken; except for the Bahamas Statutory Mortgage
which shall be filed within five (5) Business Days of the date of
the first Advance.
(j) The Security Agreement shall have been duly executed and delivered
and all actions necessary to perfect the security interests created
by the Security Agreement shall have been taken.
(k) All orders, consents, approvals, licenses, authorizations and
validations of, and filings, recordings and registrations with and
exemptions by any Governmental Agency or any Person (other than any
routine filings which may be required after the date hereof with
appropriate governmental authorities in connection with the
operation of the Vessels) required to (i) authorize the execution,
delivery and performance by the Borrowers and the Guarantor of the
Loan Documents to which they are parties or (ii) prevent the
execution, delivery and performance by the Borrowers and the
Guarantor of the Loan Documents to which they are parties from
resulting in a breach of any of the terms or conditions of, or
resulting in the imposition of any lien, charge or encumbrance upon
any properties of the Borrower or the Guarantor pursuant to, or
constituting a default (with due notice or lapse of time or both),
or resulting in an occurrence of any event for which any holder or
holders of Indebtedness may declare the same due and payable under,
any indenture, agreement, order, judgment or instrument under which
the Borrowers or the Guarantor is a party (other than the Mortgages,
or the Security Agreement) or to the Borrowers' knowledge after due
inquiry by which the Borrowers or the Guarantor or their property
may be bound or affected, or under the
19
Certificates of Incorporation or By-Laws of the Borrowers or the
Guarantor, shall have been obtained or made.
(l) Confirmation of class certificates for the Vessels (except the PEARL
HORIZON, PACIFIC HORIZON (Xxxxxxx) and the PHOENIX HORIZON) from the
American Bureau of Shipping or Lloyds Register of Shipping,
respectively, showing such Vessels to be in the highest class with
such classification society for similar type of vessels, without
recommendations affecting class, dated within thirty (30) days of
the Closing Date.
(m) The Agent shall have received a report appraising the Orderly
Liquidation Value of the Vessels prepared by Marcon International in
form and substance satisfactory to the Lenders.
(n) The Agent shall have received evidence of the amendment and
restatement of the DnB Credit Facility to reduce its amount to USD
30,000,000 and to make such other changes acceptable to the Lenders.
(o) The Lenders shall have received such other documents and instruments
they reasonably request necessary to consummate the transactions
described in this Agreement, in each case in form and substance
reasonably satisfactory to them.
Section 2.2 CONDITIONS TO SUBSEQUENT ADVANCES. The Lenders' obligation to make
Advances subsequent to the first Advance is subject to the following conditions
having been satisfied in the opinion of the Lenders on or prior to the date of
each such subsequent Advance:
(a) Certification by a Responsible Officer that no Event of Default or any
event which with the giving of notice or the passage of time would become an
Event of Default has occurred and is continuing.
(b) For the second Advance, evidence satisfactory to the Agent that the
conversion of the PACIFIC HORIZON (Xxxxxxx) has been completed; which such
evidence shall include, but shall not be limited to, a confirmation of class
certificate for such Vessel showing it to be in the highest class of the
American Bureau of Shipping, Lloyds Register of Shipping or such other
classification Society as the Agent may approve for vessels of similar type
without recommendations affecting class, and evidence that the PEARL HORIZON has
become subject to the operation and lien of the Vanuatu First Preferred Fleet
Mortgage in favor of the Agent.
20
(c) For the third Advance, evidence satisfactory to the Agent that the
conversion of the PHOENIX HORIZON has been completed; which such evidence shall
include, but shall not be limited to, a confirmation of class certificate for
such Vessel showing it to be in the highest class of the American Bureau of
Shipping for vessels of similar type without recommendations affecting class,
Section 2.3 WAIVER OF CONDITIONS PRECEDENT.
All of the conditions precedent contained in this Article II are for the
sole benefit of the Lenders and the Lenders may waive any or all of them in
their absolute discretion.
ARTICLE III.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1 REPRESENTATIONS OF THE BORROWERs.
Each Borrower represents and warrants that:
(a) It is a corporation duly organized and validly existing, in good
standing under the laws of the State of Delaware and has the
requisite power and authority (i) to carry on its business as
presently conducted, (ii) to enter into and perform its obligations
under each Loan Document to which it is a party, and (iii) to borrow
moneys and guarantee the debts of others.
(b) The execution, delivery and performance by it of each Loan Document
to which it is a party, and any other instrument or agreement
provided for by this Agreement, have been duly authorized by all
necessary corporate action, do not require stockholder, approval
other than such as has been duly obtained or given, do not or will
not contravene any of the terms of its certificate of incorporation
or by-laws, and will not violate any provision of law or of any
order of any court or governmental agency if such violation would
result in a material adverse effect, or constitute (with or without
notice or lapse of time or both) a default under, or result (except
as contemplated by this Agreement) in the creation of any security
interest, lien, charge or encumbrance upon any of its properties or
assets pursuant to, any agreement, indenture or other instrument to
which it is a party or by which it may be bound; this Agreement and
each Loan Document to which it is a party has been duly executed and
delivered by such Borrower and constitutes its legal, valid and
binding agreement or instrument, enforceable in accordance with the
respective terms thereof.
21
(c) There are no suits or proceedings pending or to its knowledge
threatened against or affecting the Borrowers or the Guarantor which
if adversely determined would have a material adverse effect.
(d) The principal place of business of the Borrowers and the Guarantor
and the place where all records relating to the transactions
contemplated hereby, including records relating to the operations of
the Vessels are kept is 0000 XxxxXxxx Xxxx., Xxxxx 0000, Xxxxxxx,
Xxxxx 00000.
(e) Other than such as have been obtained, no license, consent, approval
of or filing or registration with any Governmental Agency or other
regulatory authority is required for the execution, delivery and
performance of this Agreement or any Loan Document or any instrument
contemplated herein or therein. The Borrowers and the Guarantor are
the holders of all certificates and authorizations of governmental
authorities required by law to enable them to engage in the business
transacted by them.
(f) No part of the proceeds of the Loan will be used for any purpose
that violates the provisions of any of Regulation T, U or X of the
Board of Governors of the Federal Reserve System or any other
regulation of such Board of Governors. The Borrowers are not engaged
in the business of extending credit to others for the purpose of
purchasing or carrying margin stock within the meaning of
Regulations T, U and X of the Board of Governors of the Federal
Reserve System. If requested by the Agent, the Borrowers will
furnish to the Lenders in connection with the Loan hereunder a
statement in conformity with the requirements of Federal Reserve
Form U-1 referred to in said Regulation U. Neither Borrower is an
"investment company" or a company "controlled" by an "investment
company" (as each of such terms is defined or used in the Investment
Company Act of 1940, as amended). No proceeds of the Loan will be
used to acquire any security in any transaction which is subject to
Sections 13 and 14 of the Securities Exchange Act of 1934, as
amended.
(g) The Borrowers have no subsidiaries. The Guarantor has no active
subsidiaries other than the Borrowers. The inactive subsidiaries of
the Guarantor are Horizon Offshore International, Ltd. and Horizon
Group, LDC.
(h) Each of the Borrowers and the Guarantor has filed or caused to be
filed all tax returns required by the United States of America, the
state of its principal place of business and the states where its
business or operations
22
require such filings which are required to be filed and has paid or
caused to be paid all taxes as shown on such returns or on any
assessment received by it to the extent that such taxes have become
due and except as to such taxes being contested in good faith by
appropriate proceedings for which adequate reserves are being
maintained. Each of the Borrowers and the Guarantor has established
reserves to the extent believed by it to be adequate for the payment
of additional taxes for years which have not been audited by the
respective tax authorities.
(i) The Guarantor is the sole shareholder of each of the Borrowers.
(j) (i) Each of the Borrowers and the Guarantor has duly complied
with, and the Vessels and its other properties and operations
are in compliance with, the provisions of all applicable
environmental, health and safety laws, codes and ordinances
and all rules and regulations promulgated thereunder of all
Governmental Agencies, the non-compliance with which would
have a material adverse effect.
(ii) As of the date of this Agreement, neither the Borrowers nor
the Guarantor has received notice from any Governmental
Agency, and has no knowledge, of any fact(s) which constitute
a violation of any applicable environmental, health or safety
laws, codes or ordinances, and any rules or regulations
promulgated thereunder of all Governmental Agencies, which
relate to the use or ownership of the Vessels or properties
owned or operated by the Borrowers or the Guarantor.
(iii) Each of the Borrowers and the Guarantor has been issued all
required permits, licenses, certificates and approvals of all
Governmental Agencies relating to (a) air emissions, (b)
discharges to surface water or ground water, (c) noise
emissions, (d) solid or liquid waste disposal, (e) the use,
generation, storage, transportation, treatment, recycling or
disposal of Hazardous Substances or (f) other environmental,
health or safety matters which are material and necessary for
the ownership or operation of the Vessels or other properties
owned or operated by the Borrowers or the Guarantor and such
permits, licenses, certificates and approvals are in full
force and effect on the date of this Agreement, except for
such permits, licenses, certificates and approvals as to which
23
the failure to have issued or to have in effect would not
result in a material adverse effect.
(iv) Except in accordance with a valid governmental permit,
license, certificate or approval, there has been no spill or
unauthorized discharge or release of any Hazardous Substance
to the environment at, from, or as a result of any operations
on the Vessels or other properties and operations owned or
operated by either Borrower or the Guarantor required to be
reported to any Governmental Agency by either Borrower or the
Guarantor.
(v) There has been no material complaint, compliance order,
compliance schedule, notice letter, notice of citation or
other similar notice from any applicable environmental agency
delivered to either Borrower or the Guarantor which concerns
the operations of the Vessels or other properties owned or
operated by either Borrower or the Guarantor and which would
result in a material adverse effect.
(k) All representations and warranties made by the Borrower herein or by
either Borrower or the Guarantor pursuant to any Loan Document or
made in any certificate or written statement delivered pursuant
hereto or thereto (i) do not contain any untrue statement of or omit
to state a material fact necessary to make the statements contained
herein or therein not misleading and (ii) shall survive the making
of the Loan hereunder and the execution and delivery to the Agent of
the Note and any other Loan Document.
Section 3.2 AFFIRMATIVE COVENANTS OF BORROWERs.
Until the payment in full of all amounts due under this Agreement and the
Note by the Borrowers, unless compliance shall have been waived by the Lenders,
the Borrowers and the Guarantor agree that:
(a) FINANCIAL STATEMENTS, REPORTS AND INSPECTION.
(i) The Borrowers and the Guarantor will furnish to the Lender:
(A) as soon as possible and in any event within two (2)
Business Days after an officer of the Borrowers has
knowledge of the occurrence of any Event of Default or
of any default in the performance of the Loan Documents,
or any
24
event which with the giving of notice or lapse of time,
or both, would constitute an Event of Default or such a
default, which is continuing on the date of such
statement, the statement of the chief financial officer
of the Borrowers setting forth the details of such Event
of Default or event or default and the action which the
Borrowers propose to take with respect thereto;
(B) as soon as available and in any event within forty-five
(45) days after the close of each quarter of the
Guarantor's fiscal years, a copy of quarterly
consolidated financial statements for the Guarantor
prepared in accordance with GAAP and certified by the
chief financial officer or chief accounting officer of
the Borrowers together with consolidating statements of
the Guarantor.
(C) as soon as available and in any event within ninety (90)
days after the close of the Guarantor's fiscal years, a
copy of the consolidated annual audited financial
statements for such year for the Guarantor certified by
Xxxxxx Xxxxxxxx, LLP or other independent public
accountants of recognized standing acceptable to the
Agent;
(D) as soon as available and in any event within thirty (30)
days after the end of each month, a barge locations
report in form and substance satisfactory to the Agent;
(E) a Barge Activity Schedule as often as is requested by
the Agent.
(F) as soon as possible and in any event by December 1 of
each year an annual business plan for the Borrowers for
the coming year, including projections of utilization of
the Vessels, expenses and revenues; and
(G) (x) as soon as possible, and in any event, within 30
days after the Borrowers or the Guarantor knows
that any Reportable Event with respect to any Plan
has occurred, a statement of an officer of the
Borrowers or the Guarantor setting forth details
as to such Reportable Event and the action which
the Borrowers or the Guarantor
25
propose to take with respect thereto, together
with a copy of the notice of such Reportable Event
given to the Pension Benefit Guaranty Corporation
if a copy of such notice is available to the
Borrowers or the Guarantor and (y) promptly after
receipt thereof a copy of any notice relating to a
Reportable Event having a material adverse effect,
the Borrowers, or the Guarantor or any member of
the Controlled Group may receive from the Pension
Benefit Guaranty Corporation or the Internal
Revenue Service with respect to any Plan;
PROVIDED, HOWEVER, this Section 3.2(a)(i)(G)(y)
shall not apply to notice of general application
promulgated by the Department of Labor.
(ii) The Borrowers or the Guarantor will, upon request, furnish to
the Agent such information as the Agent may reasonably request
with respect to the business, affairs or condition (financial
or otherwise) of the Borrowers or the Guarantor and will
permit the Lenders or their representatives at any reasonable
time or times during normal business hours upon three (3)
Business Days' prior notice, to inspect the properties of the
Borrowers or the Guarantor, to inspect, audit and examine the
books or records of the Borrowers or the Guarantor and to take
extracts therefrom and will reimburse the Lenders for all
reasonable expenses incurred in connection therewith.
(iii) Within forty-five (45) days of the close of the first three
quarters of the Borrowers' fiscal year and on the dates that
the annual reports required pursuant to Section 3.2(a)(i)(C)
above are provided to the Lenders, the Borrowers shall furnish
to the Agent a certificate signed by the chief financial
officer or chief accounting officer of the Borrowers
certifying that (x) the representations and warranties
contained in Section 3.1 of this Agreement are correct on and
as of the date of such certificate as though made on and as of
such date except those expressly made as of another date and
(y) the Borrowers are in compliance with all of the covenants
contained in Sections 3.3(m), 3.3(n), 3.3(o), 3.3(p) and
3.3(q) of this Agreement, such certificates showing the
relevant computations for such compliance.
26
(b) INSURANCE. The Borrowers shall insure, or cause to be insured, the
Vessels pursuant to the terms of Article I, Section 15 of the U.S.
and Vanuatu Mortgages and Part II, Section 5 of the Bahamas Deed of
Covenants and the Equipment pursuant to the terms of Article 5 of
the Security Agreement. The Borrowers will promptly notify the
Lenders of any material changes in such insurances or any change in
the underwriters or clubs providing such insurances. The Borrowers
shall annually but no later than the anniversary of the date of this
Agreement furnish the Lenders with evidence of all such insurance
policies currently in force.
(c) OTHER DEBT. The Borrowers and the Guarantor will promptly pay and
discharge any and all Indebtedness, liens, charges, and all Taxes
imposed upon them or upon their income or profits, or upon any of
their properties prior to the date on which penalties accrue
thereon, and lawful claims which, if unpaid, might become a lien or
charge upon the property of the Borrowers or the Guarantor, except
such as may in good faith be contested or disputed, provided
appropriate reserves are maintained in accordance with GAAP. A
portion of the proceeds of the first Advance will be used to prepay
all amounts outstanding under the Highwood Note.
(d) MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. The Borrowers and the
Guarantor will preserve and maintain their corporate existence,
their business as presently conducted, and all of their rights,
privileges and franchises necessary or desirable in the normal
conduct of said business, and will conduct their businesses in an
orderly, efficient and regular manner.
(e) FINANCIAL RECORDS. The Borrowers and the Guarantor will keep books
of record and account in which proper entries will be made of their
transactions in accordance with GAAP.
(f) MAINTENANCE OF VESSELS. The Borrowers will maintain, or cause to be
maintained, the Vessels in the highest classification for such
vessels with the American Bureau of Shipping, Lloyds Register of
Shipping or such other classification society as the Agent may
approve.
(g) ENVIRONMENTAL COMPLIANCE.
(i) The Borrowers will comply with, will cause the Guarantor to
comply with and will use their best efforts to cause their
agents, contractors and subcontractors (while such Persons are
acting within
27
the scope of their contractual relationship with the
Borrowers) to so comply with (i) all applicable environmental,
health and safety laws, codes and ordinances, and all rules
and regulations promulgated thereunder of all Governmental
Agencies and (ii) the terms and conditions of all applicable
permits, licenses, certificates and approvals of all
Governmental Agencies now or hereafter granted or obtained
with respect to the Vessels or other properties owned or
operated by the Borrowers and the Guarantor unless such
compliance would violate the laws or regulations of the
jurisdictions in which the Vessels are located or operating.
(ii) The Borrowers will use their and will cause the Guarantor to
use its best efforts and safety practices to prevent the
unauthorized release, discharge, disposal, escape or spill of
Hazardous Substances on or about the Vessels or other
properties owned or operated by the Borrowers or the
Guarantor.
(h) ENVIRONMENTAL NOTIFICATIONS. The Borrowers shall notify the Agent,
in writing, within five (5) Business Days of any of the following
events occurring after the date of this Agreement:
(i) Any written notification made by the Borrowers or the
Guarantor to any U.S. or foreign federal, state or local
environmental agency required under any federal, state or
local environmental statute, regulation or ordinance relating
to a spill or unauthorized discharge or release of any
Hazardous Substance to the environment at, from, or as a
result of any operations on, the Vessels or other properties
owned or operated by the Borrowers or the Guarantor;
(ii) Knowledge by an officer of the Borrowers of receipt of service
by the Borrowers or the Guarantor of any complaint, compliance
order, compliance schedule, notice letter, notice of
violation, citation or other similar notice or any judicial
demand by any U.S. or foreign court, federal, state or local
environmental agency, alleging (A) any spill, unauthorized
discharge or release of any Hazardous Substance to the
environment from, or as a result of the operations on, the
Vessels or other properties owned or operated by the Borrowers
or the Guarantor, or (B) violations of applicable laws,
regulations or permits regarding the
28
generation, storage, handling, treatment, transportation,
recycling, release or disposal of Hazardous Substances on or
as a result of operations on the Vessels or other properties
owned or operated by the Borrowers or the Guarantor.
(iii) It is understood by the parties hereto that the above
mentioned notices are solely for the Agent's and the Lenders'
information, may not otherwise be required by any U.S. or
foreign federal, state or local environmental laws,
regulations or ordinances, and are to be considered
confidential information by the Agent and the Lenders.
(iv) The term "environmental agency" as used herein shall include,
but not be limited to, the United States Environmental
Protection Agency, the United States Coast Guard, the United
States Minerals Management Service, the United States
Department of Transportation (in its administration of the
Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801,
ET SEQ.) and other analogous or similar Governmental Agencies
regulating or administering statutes, regulations or
ordinances relating to or imposing liability or standards of
conduct concerning the generation, storage, use, production,
transportation, handling, treatment, recycling, release or
disposal of any Hazardous Substance.
(i) ENVIRONMENTAL INDEMNIFICATION.
(i) The Borrowers hereby jointly and severally agree to indemnify
and hold the Indemnitees harmless from and against any and all
claims, losses, liability, damages and injuries of any kind
whatsoever asserted against any Indemnitee with respect to or
as a direct result of the presence, escape, seepage, spillage,
release, leaking, discharge or migration from the Vessels or
other properties owned or operated by the Borrowers or the
Guarantor of any Hazardous Substance, including without
limitation, any claims asserted or arising under any
applicable environmental, health and safety laws, codes and
ordinances, and all rules and regulations promulgated
thereunder of all Governmental Agencies, whether or not caused
by or within the control of the Borrowers.
29
(ii) It is the parties' understanding that neither the Agent, the
Lenders nor any other Indemnitee does now, has never and does
not intend in the future to exercise any operational control
or maintenance over the Vessels or any other properties owned
or operated by the Borrowers or the Guarantor, nor has any of
them in the past, presently, or intends in the future to,
maintain an ownership interest in the Vessels or any other
properties owned or operated by the Borrowers or the Guarantor
except as may arise upon enforcement of the Agent's rights
under the Mortgages or the Security Agreement.
(iii) Should, however, the Agent, the Lenders or any other
Indemnitee hereafter exercise any ownership interest in or
operational control over the Vessels or any other properties
owned or operated by the Borrowers or the Guarantor, e.g.,
including but not limited to, through foreclosure, then the
above stated indemnity and hold harmless shall be limited with
respect to any actions or failures to act by the Agent, the
Lenders or other Indemnitee subsequent to exercising such
interest or operational control, to the extent such action or
inaction by the Agent, the Lenders or other Indemnitee is
admitted by the Agent, the Lenders or other Indemnitee or is
found by a court of competent jurisdiction to have caused or
made worse any condition for which liability is asserted,
including but not limited to, the presence, escape, seepage,
spillage, leaking, discharge or migration on or from the
Vessels or other properties owned or operated by the Borrowers
or the Guarantor of any Hazardous Substance.
(iv) The indemnity and hold harmless contained in this Section
3.2(i) shall not extend to the Agent, the Lenders or any other
Indemnitee in its capacity as an equity investor in the
Borrowers or the Guarantor or as an owner of any property or
interest as to which the Borrowers or the Guarantor, are also
an owner but only to the such Indemnitee's capacity as a
lender or a holder of security interests.
(j) NOTIFICATION OF TOTAL LOSS. In the event of any Total Loss or
requisition of any Vessel or any item of Equipment, the Borrowers
shall give written or telefax notice to the Agent not later than ten
(10) days after they have actual knowledge of such occurrence.
30
(k) YEAR 2000 COMPLIANCE. On or prior to March 31, 1999 (the "COMPLIANCE
DATE"), the Borrowers and the Guarantor shall take all actions
necessary to insure that the automated systems used by the Borrowers
and the Guarantor that are material to their operations
(collectively, "MISSION-CRITICAL SYSTEMS"), including without
limitation, software, hardware and other data processing devices,
shall not fail, malfunction or produce incorrect results with
respect to data, calculations and other processing involving dates
before, as of or after December 31, 1999, regardless of the form of
the date data is received or processed (collectively "YEAR 2000
COMPLIANT" or "YEAR 2000 COMPLIANCE"). Without limiting the
generality of the foregoing, on or prior to the Compliance Date, the
Borrowers and the Guarantor shall test and certify that their
Mission-Critical Systems are Year 2000 Compliant in accordance with
commercially reasonable practices and industry standards. The
Borrowers and the Guarantor agree that upon the reasonable request
of the Agent, the Borrowers and the Guarantor will make their
employees, consultants, premises, records and documentation
available to the Lenders with respect to their Year 2000 Compliance
efforts.
(l) The Borrowers shall maintain in effect the DnB Credit Facility
or an equivalent revolving credit facility acceptable to the Agent.
Section 3.3. NEGATIVE COVENANTS OF BORROWERS.
Until the payment in full of all amounts due under this Agreement and the
Note by the Borrowers, the Borrowers and the Guarantor agree that they will not
without the prior written consent of the Lenders:
(a) Create, incur, assume or suffer to exist any lien (including any
encumbrance or security interest) of any kind upon the Vessels or
the Equipment, except for the liens and other encumbrances set forth
below (the "Permitted Liens"):
(i) liens for Taxes not at the time delinquent or thereafter
payable without penalty or being contested in good faith,
provided provision is made to the extent required by GAAP for
the eventual payment thereof in the event it is found that
such are payable by the Borrowers or the Guarantor;
(ii) liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary
31
course of business for sums not overdue or being contested in
good faith, provided provision is made to the extent required
by GAAP for the eventual payment thereof in the event it is
found that such sums are payable by the Borrowers or the
Guarantor;
(iii) maritime liens:
(A) arising in the ordinary course of business by operation
of law that are being contested in good faith by
appropriate proceedings and for which reserves have been
made to the reasonable satisfaction of the Lenders or
(B) arising in connection with salvage and general average;
or
(C) arising in connection with crew wages claimed but not
paid;
(iv) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance
or other forms of governmental insurance or benefits, or to
secure performance of tenders and statutory obligations
entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds in the ordinary course
of business or easements, rights of way and similar
encumbrances incurred in the ordinary course of business and
not interfering with the ordinary conduct of the business of
the Borrowers and the Guarantor;
(v) judgment liens in existence less than thirty (30) days after
the entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full by
insurance;
(vi) liens required by the terms of this Agreement;
(vii) purchase money security interests in connection with capital
expenditures permitted by Section 3.3(y) below; and
(viii) a lien in favor of DnB to secure the DnB Credit Facility on
the Charters, the Accounts and the Holding Account as defined
in the Intercreditor Agreement.
32
(b) LINE OF BUSINESS. Enter into any new line of business unrelated to
their present activities after the date of this Agreement.
(c) CONSOLIDATION, MERGER, ETC. Consolidate with or merge with, or sell
(whether in one transaction or in a series of transactions) all or
substantially all of their assets to any Person, except for
Permitted Acquisitions.
(d) MODIFICATION OF AGREEMENTS. Amend, modify or otherwise change any of
the Loan Documents.
(e) INDEBTEDNESS. Incur any Indebtedness, except:
(i) the Loan;
(ii) amounts due under the DnB Credit Facility;
(iii) accounts payable and accrued liabilities incurred in the
ordinary course of business;
(iv) letters of credit, performance and bid bonds obtained by the
Borrowers or the Guarantor in the ordinary course of their
business in an aggregate amount of the higher of the amount
permitted under the DnB Credit Facility or USD 10,000,000.00
at any time;
(v) supersedeas bonds obtained by the Borrowers or the Guarantor
in the ordinary course of their business;
(vi) purchase money indebtedness in connection with capital
expenditures permitted by Section 3.3(x).
(f) REPORTABLE EVENT. Cause or allow to occur a Reportable Event.
(g) CHANGE OF LEGAL STRUCTURE. Cause or allow to occur any material
change in their present Certificate of Incorporation or By-Laws that
would adversely affect the rights of the Lenders or change their
jurisdiction of incorporation.
(h) CHANGE OF PLACE OF BUSINESS. Make any change in the address of their
principal place of business or their chief executive office except
upon thirty (30) days' prior written notice to the Agent.
(i) MANAGEMENT OF VESSELS. Subject to subsection (j) below, change the
flag, class, ownership, management or control of any Vessel.
33
(j) CHARTER. Cause or allow any Vessel to be bareboat chartered to any
Person for a period longer than six (6) months without the prior
written consent of the Agent, which consent shall not be
unreasonably withheld.
(k) MODIFICATIONS TO VESSELS. Other than the upgrades and modifications
commenced on or before the date of this Agreement, cause or allow
any change in the physical characteristics of any Vessel that would,
in the reasonable judgment of the Agent, materially interfere with
the suitability of such Vessel for normal commercial offshore
construction operations; the consent of the Agent to any such
modification not to be unreasonably withheld.
(l) SALE OF VESSEL, ETC. Sell, transfer or assign any Vessel or
Equipment, or any right to receive the revenue from any Vessel
provided, however, that:
(i) the Borrowers and the Guarantor may sell, transfer or assign
any surplus or scrap equipment from the Vessels or Vessel's
Equipment in the ordinary course of business in an amount of
up to USD 500,000.00 annually;
(ii) the Borrowers and the Guarantor may sell, transfer or assign
any item of Equipment or any other equipment from the Vessels
if they first replace such items with equipment of equal or
greater value; and
(iii) the Borrowers may sell the PACIFIC HORIZON (Barge) but an
amount equal to the most recent Orderly Liquidation Value of
such Vessel shall be paid by the Borrowers to the Agent within
ten (10) Business Days of such sale and shall be used to
prepay the Loan pursuant to Section 1.6(a) above.
(m) CURRENT RATIO. Permit their Current Ratio to be less than 1.1 to 1
at any time.
(n) WORKING CAPITAL. Permit their consolidated Working Capital to be
less than USD 3,000,000.00 at any time.
(o) FIXED CHARGE COVERAGE RATIO. Permit their Fixed Charge Coverage
Ratio to be less than:
(i) 1.25 to 1 at March 31, 1999;
(ii) 1.35 to 1 at June 30, 1999; and
34
(iii) 1.50 to 1 at September 30, 1999 and at any time thereafter;
for the twelve (12) month period ending immediately prior to
the relevant date of determination.
(p) DEBT RATIO. Permit their Debt Ratio at any time to be greater than
55%.
(q) NET WORTH. Permit their Net Worth at any time to be less than USD
85,000,000 plus 75% of annual positive net income after December 31,
1998, plus 75% of the net proceeds received by the Borrowers or the
Guarantor from any future public or private sales of the common
stock of any of them.
(r) PAYMENTS ON SUBORDINATED DEBT. Pay any interest or principal on any
debt subordinated to the Loan except (i) regularly scheduled
payments of principal and interest under the DnB Credit Facility,
and (ii) the balance as of the date of the first Advance under the
Highwood Note.
(s) COMPLIANCE WITH FEDERAL RESERVE BOARD REGULATIONS. No part of the
proceeds of the Loan will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System, or for the purpose of purchasing or carrying or
trading in any securities under such circumstances as to involve the
Borrowers or the Guarantor in a violation of Regulation X of said
Board or the Lenders in a violation of Regulation U of said Board.
In particular, without limitation of the foregoing, neither the
Borrowers nor the Guarantor will use any part of the proceeds of the
Loan to be made hereunder to acquire for itself or for any other
person any publicly-held securities of any kind. The assets of the
Borrowers and the Guarantor do not and will not include any margin
securities, and the Borrowers and the Guarantor have no present
intention of acquiring any margin securities. As used in this
Section 3.3(u), the terms "margin security" and "purpose of
purchasing or carrying" shall have the meanings assigned to them in
the aforesaid Regulation U, and the term "publicly-held", in respect
of securities, shall have the meaning assigned to it in Section
220.7(a) of Regulation T of said Board. If requested by the Lenders,
the Borrowers will furnish to the Lenders a statement or statements
in conformity with the requirements of Federal Reserve Form U-1
referred to in said Regulation U.
(t) LOANS AND INVESTMENTS. Advance funds to, or make investments in,
(whether by way of loan, stock purchase
35
or capital contribution) any Person other than in Cash Equivalents.
(u) CONTRACTS WITH AFFILIATES. Enter into any transaction with any
director, officer, employee, shareholder or Affiliate of the
Borrowers or the Guarantor except on terms no less favorable to the
Borrowers than the Borrowers could obtain in an arms length
transaction with Persons not affiliated with the Borrowers.
(v) CHANGE OF MANAGEMENT OR OWNERSHIP. Cause or allow to occur any
material change in their present executive management.
(w) LEASE EXPENSE. Excluding capital leases, incur or pay more than USD
5,000,000.00 per year for the lease, charter or rental of equipment,
vessels or real property in excess of twelve (12) months, other than
rental for their principal place of business referred to in Section
3.1(d) above.
(x) CAPITAL EXPENDITURES. Capital expenditures may only be made for the
purpose of the acquisition or upgrading of marine construction
vessels and the acquisition of equipment and accessories related to
such vessels, or other equipment in the ordinary course of the
Borrower's business.
(y) DIVIDENDS. Allow the Guarantor to make any dividend payments or
other distributions to its stockholders or redeem or otherwise
acquire any of its stock; except for purchases by the Guarantor of
its stock pursuant to the stock repurchase program adopted by the
Board of Directors of the Guarantor on July 29, 1998 in an amount
after the date of the first Advance not to exceed USD 2,500,000.
(z) USE OF VESSELS. Cause or allow any Vessel to be used outside of the
Gulf of Mexico.
(aa) FISCAL YEARS. Change or allow to change the fiscal year of either
Borrower or the Guarantor from one ending on December 31.
ARTICLE IV.
EVENTS OF DEFAULT
If any of the following events shall occur and be continuing, (each an
"Event of Default"):
36
(a) the Borrowers shall fail to pay any principal of or interest on the
Note, which failure shall continue for three Business Days after the
date when due;
(b) any representation or warranty made by the Borrowers or the
Guarantor herein or made in any certificate or financial statement
furnished to the Lenders or the Agent hereunder or under any of the
Loan Documents shall prove to have been incorrect in any material
respect when made;
(c) default in the performance of any agreement, covenant, term or
condition contained herein or in any Loan Document to be performed
by the Borrowers or the Guarantor other than (a). above, if such
default has continued for ten (10) days after notice thereof by the
Agent to the Borrowers;
(d) an event of default under the DnB Credit Facility or any other loan
agreement, credit agreement, security agreement, guaranty agreement
or lease agreement now existing or hereafter entered into by the
Borrowers or the Guarantor in an aggregate amount in excess of USD
100,000.00 shall not have been remedied within any stated grace
periods.
(e) Any of the following Events of Default shall occur:
(i) the entry by a court of competent jurisdiction of one or more
final judgments against either Borrower or the Guarantor in an
uninsured or unindemnified aggregate amount in excess of USD
150,000.00 which is not discharged, waived, appealed, stayed,
bonded or satisfied for a period of thirty (30) consecutive
days;
(ii) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of either Borrower
or the Guarantor in an involuntary case or proceeding under
U.S. bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal, state, or foreign bankruptcy,
insolvency, or other similar law or (B) a decree or order
adjudging either Borrower or the Guarantor a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or
in respect of either Borrower or the Guarantor under U.S.
bankruptcy laws, as now or hereafter constituted, or any other
applicable Federal, state or foreign bankruptcy, insolvency,
or similar law, or appointing a custodian, receiver,
liquidator,
37
assignee, trustee, sequestrator or other similar official of
either Borrower or the Guarantor or of any substantial part of
the property or assets of either Borrower or the Guarantor, or
ordering the winding up or liquidation of the affairs of
either Borrower or the Guarantor, and the continuance of any
such decree or order for relief or any such other decree or
order unstayed and in effect for a period of sixty (60)
consecutive days;
(iii) (A) the commencement by either Borrower or the Guarantor of a
voluntary case or proceeding under U.S. bankruptcy laws, as
now or hereafter constituted, or any other applicable Federal,
state or foreign bankruptcy, insolvency or other similar law
or of any other case or proceeding to be adjudicated a
bankrupt or insolvent; or (B) the consent by either Borrower
or the Guarantor to the entry of a decree or order for relief
in respect of such Borrower or the Guarantor in an involuntary
case or proceeding under U.S. bankruptcy laws, as now or
hereafter constituted, or any other applicable Federal, state,
or foreign bankruptcy, insolvency or other similar law or to
the commencement of any bankruptcy or insolvency case or
proceeding against either Borrower or the Guarantor; or (C)
the filing by either Borrower or the Guarantor of a petition
or answer or consent seeking reorganization or relief under
U.S. bankruptcy laws, as now or hereafter constituted, or any
other applicable Federal, state or foreign bankruptcy,
insolvency or other similar law; or (D) the consent by either
Borrower or the Guarantor to the filing of such petition or to
the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or
similar official of either Borrower or the Guarantor or of any
substantial part of the Property or assets of either Borrower
or the Guarantor or of any substantial part of the Property or
assets of either Borrower or the Guarantor, or the making by
either Borrower or the Guarantor of an assignment for the
benefit of creditors; or (E) the admission by either Borrower
or the Guarantor in writing of its inability to pay its debts
generally as they become due; or (F) the taking of corporate
action by either Borrower or the Guarantor in furtherance of
any such action; or
(f) the Guaranty shall for any reason cease to be, or be asserted by
either Borrower or the Guarantor, as
38
applicable, not to be, in full force and effect (except pursuant to
the release of the Guaranty in accordance herewith),
then the Agent may by written notice to the Borrowers (1) immediately terminate
the commitment of the Lenders hereunder; (2)declare the principal of, and
interest accrued to the date of such declaration on, the Note together with all
other amounts due hereunder or under any of the Loan Documents, to be forthwith
due and payable, whereupon the same shall become forthwith due and payable
(PROVIDED, HOWEVER, no notice or declaration shall be required and such amounts
shall be immediately due and payable upon the occurrence of an event described
in Article IV(e)(iii) or (iv) hereof) and (3) exercise any remedies to which it
may be entitled by any Loan Document or by applicable law.
ARTICLE V.
THE AGENT
Section 5.1 APPOINTMENT AND DUTIES OF AGENT.
(a) The parties hereto agree that The CIT Group/Equipment Financing,
Inc. shall act, subject to the terms and conditions of this Article
V, as the Agent for the Lenders in connection with the Loan, and to
the extent set forth herein each Lender hereby irrevocably appoints,
authorizes, empowers and directs the Agent to take such action on
its behalf and to exercise such powers as are specifically delegated
to the Agent herein or are reasonably incidental thereto in
connection with the administration of and the enforcement of any
rights or remedies with respect to this Agreement, the Note and the
other Loan Documents. It is expressly understood and agreed that the
obligations of the Agent under the Loan Documents are only those
expressly set forth in this Agreement. The Agent shall use
reasonable diligence to examine the face of each document received
by it hereunder to determine whether such documents, on its face,
appears to be what it purports to be. However, the Agent shall not
under any duty to examine into and pass upon the validity or
genuineness of any documents received by it hereunder and the Agent
shall be entitled to assume that any of the same which appears
regular on its face is genuine and valid and what it purports to be.
(b) The Agent shall act pursuant to the instructions of the Majority
Lenders in all matters relating to the Loan Documents including but
not limited to, all collateral for the Loan and waivers or
amendments of the Loan Documents.
39
Section 5.2 DISCRETION AND LIABILITY OF AGENT.
Subject to Sections 5.1(b) above and 5.3 and 5.5 below, the Agent shall be
entitled to use its discretion with respect to exercising or refraining from
exercising any rights which may be vested in it under any of the Loan Documents
or otherwise, or with respect to taking or refraining from taking any action or
actions which it may be able to take under any of the Loan Documents. Neither
the Agent nor any of its directors, officers, employees, agents or
representatives shall be liable for any action taken or omitted by it hereunder
or in connection herewith, except for its own gross negligence or wilful
misconduct. The Agent shall incur no liability under, or in respect of this
Agreement or the other Loan Agreements by acting upon a notice, certificate,
warranty or other paper or instrument reasonably believed by it to be genuine or
authentic or to be signed by the proper party or parties, or with respect to
anything which it may do or refrain from doing in the reasonable exercise of its
judgment, or which may seem to it to be necessary or desirable in the premises.
Section 5.3 EVENT OF DEFAULT.
(a) The Agent shall be entitled to assume that no Event of Default or
event which would constitute an Event of Default after notice or
lapse of time, or both, has occurred and is continuing, unless the
Agent has actual knowledge of such facts or has received notice from
a Lender in writing that such Lender considers that an Event of
Default or event which would constitute an Event of Default after
notice or lapse of time, or both, has occurred and is continuing and
which specifies the nature thereof.
(b) In the event that the Agent shall acquire actual knowledge of any
Event of Default or event which would constitute an Event of Default
after notice or lapse of time, or both, the Agent shall promptly
notify (either orally, confirmed in writing, or in writing) the
Lenders of such Event of Default or event and shall, take such
action and assert such rights as are contemplated under this
Agreement and in an emergency, or if requested in writing by the
Majority Lenders shall, take such action and assert such rights as
are contemplated under this Agreement. The Agent shall be
indemnified pro rata by the Lenders against any liability or
expenses, including, but not limited to, travel expenses and
external counsel fees and expenses, incurred in connection with
taking such action. The Agent may refrain from acting in accordance
with any instructions from the Majority
40
Lenders until it shall have been indemnified to its satisfaction
against any and all costs and expenses which it will or may expend
or incur in complying with such instructions.
Section 5.4 CONSULTATION.
When acting in connection with this Agreement, or the other Loan
Documents, the Agent may engage and pay for the advice and services of any
lawyers, accountants, surveyors, appraisers or other experts whose advice or
services may to it appear necessary, expedient or desirable and the Agent shall
be entitled to fully rely upon any opinion or such advice so obtained.
Section 5.5 COMMUNICATIONS TO AND FROM AGENT.
When any notice, approval, consent, waiver or other communication or
action is required or may be delivered by the Lenders hereunder or the other
Loan Documents, action by the Agent shall be effective for all purposes
hereunder; provided, that upon any occasion requiring or permitting an approval,
consent, waiver, election or other action on the part of the Lenders, unless
action by the Agent alone, or only upon instruction of all of the Lenders, is
expressly permitted or required hereunder, action shall be taken by the Agent
for and on behalf of or for the benefit of all the Lenders as provided in
Section 5.3 above. The Borrowers and the Guarantor may rely on any communication
from the Agent hereunder or the other Loan Documents, and need not inquire into
the propriety of or authorization for such communication. Upon receipt by the
Agent from the Borrowers, the Guarantor or any Lender of any communication it
will, in turn, promptly forward such communication to the Lenders; PROVIDED,
HOWEVER, that the Agent shall not be liable for any costs, expenses or losses
arising from any failure to so forward any such communication.
Section 5.6 LIMITATIONS OF AGENCY.
Notwithstanding anything in the Loan Documents, expressed or implied, it
is agreed by the parties hereto, that the Agent will act under the Loan
Documents as Agent solely for the Lenders and only to the extent specifically
set forth herein, and will, under no circumstances, be considered to be an agent
or fiduciary of any nature whatsoever in respect to any other person. The Agent
may generally engage in any business with the Borrowers and the Guarantor or any
of their Affiliates as if it was not the Agent.
Section 5.7 NO REPRESENTATIONS OR WARRANTY.
41
(a) No Lender (including the Agent) makes to any other Lender any
representation or any warranty, expressed or implied, or assumes any
responsibility with respect to the Loan or the execution,
construction or enforceability of the Loan Documents or any
instrument or agreement executed by the Borrowers, the Guarantor or
any other Person in connection therewith.
(b) The Agent takes no responsibility for the accuracy or completeness
of any information concerning the Borrowers and the Guarantor
distributed by the Agent in connection with the Loan nor for the
truth of any representation or warranty given or made herein, nor
for the validity, effectiveness, adequacy or enforceability of this
Agreement or any of the other Loan Documents.
Section 5.8 LENDER CREDIT DECISION.
Each Lender acknowledges that it has independent of and without reliance
upon any other Lender (including the Agent) or any information provided by any
other Lender (including the Agent) and based on the financial statements of the
Borrowers and the Guarantor and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independent of and
without reliance upon any other Lender (including the Agent) and based on such
documents and information as it shall deem appropriate at that time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and any other documents relating thereto.
Section 5.9 INDEMNITY.
Notwithstanding any of the provisions hereof, to the extent the Agent has
not been so indemnified by the Borrowers, the Lenders shall severally indemnify
the Agent against any and all losses, costs, liabilities, damages or expenses,
including but not limited to, reasonable travel expenses and external counsel's
reasonable fees and expenses, arising from, or in connection with, its
performance as Agent hereunder and not caused by its gross negligence or willful
misconduct.
Section 5.10 RESIGNATION.
The Agent may resign as such at any time upon at least thirty (30) days'
prior notice to the Borrower and the Lenders, provided that such resignation
shall not take effect until a successor agent has been appointed. In the event
of a resignation by the Agent,
42
the Lenders shall promptly appoint a successor agent from among the Lenders.
Section 5.11 DISTRIBUTION.
The Agent shall be responsible for promptly distributing each Lender's
share of all net amounts received by the Agent under any of the Loan Documents
pursuant to the letter agreements among the Agent and the Lenders dated the date
hereof. Each Lender shall be responsible for designating by written notice to
the Agent the account to which such distribution shall be deposited.
Section 5.12 LIMITATION OF SUITS.
All rights of action and claims under this Agreement, the Mortgages and
the Security Agreement of the Lenders shall be prosecuted and enforced only by
the Agent. The Lenders agree that they shall not independently institute any
proceedings, judicial or otherwise, to enforce their rights against the
Borrowers under this Agreement, the Mortgages or the Security Agreement.
However, notwithstanding anything contained in this Section 5.12, the Lenders
shall always retain their ability to retain independent counsel and to protect
their rights under this Agreement and the other Loan Documents.
Section 5.13 RIGHT OF SETOFF.
Upon the occurrence and during the continuation of any Event of Default,
the Lenders each are hereby authorized at any time and from time to time,
without notice to the Borrowers (any such notice being expressly waived by the
Borrowers), to setoff and apply any and all deposits (general or special, time
or demand, provisional or final, whether or not such setoff results in any loss
of interest or other penalty, and including without limitation all certificates
of deposit) at any time held by the Lenders and all of the indebtedness arising
in connection with this Agreement irrespective of whether or not such Lender
will have made any demand under this Agreement, the Note or any other Loan
Document. The Borrowers also hereby grant to each of the Lenders a security
interest in and hereby transfer, assign, set over and convey to each of the
Lenders, as security for payment of the Loan, all such deposits, funds or
property of the Borrowers or indebtedness of any Lender to the Borrowers. Should
the right of any Lender to realize funds in any manner set forth hereinabove be
challenged and any application of such funds be reversed, whether by court order
or otherwise, the Lenders shall make restitution or refund to the Borrower pro
rata in accordance with their respective portions of the Loan. Each Lender
agrees to promptly notify the Borrowers and
43
the Agent after any such setoff and application, provided that the failure to
give such notice will not affect the validity of such setoff and application.
The rights of the Agent and the Lenders under this Section 5.13 are in addition
to other rights and remedies (including without limitation other rights of
setoff) which the Agent or the Lenders may have. Nothing contained herein shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrowers to such Lender.
ARTICLE VI.
MISCELLANEOUS
Section 6.1 NOTICES.
All notices, requests and demands shall be in writing (including
telecopier transmission) given to or made upon the respective parties hereto as
follows:
In the case of the Borrowers, at
Horizon Vessels, Inc.
Horizon Offshore Contractors, Inc.
0000 XxxxXxxx Xxxx., Xxx. 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx, Executive Vice President and CFO
Telecopier: (000) 000-0000
In the case of the Guarantor, at
Horizon Offshore, Inc.
0000 XxxxXxxx Xxxx., Xxx. 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx, Executive Vice President and CFO
Telecopier: (000) 000-0000
In the case of the Lenders, at
The CIT Group/Equipment Financing, Inc.
X.X. Xxx 00000
Xxxxx, Xxxxxxx 00000-0000
Attention: Vice President - Credit
Telecopier: (000) 000-0000
44
Xxxxxx Financial, Inc.
Equipment Financial Leasing Group
000 X. Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Region Credit Manager
Telecopier: (000) 000-0000
U.S. Bancorp Leasing & Financial
0000 X.X. Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Xxxxxxxx Xxxx
Telecopier: (000) 000-0000
Safeco Credit Company, Inc.
00000 Xxxxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx, Division Credit Manager
Telecopier: (000) 000-0000
In the case of the Agent, at
The CIT Group/Equipment Financing, Inc.
0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Vice President-Credit
Telecopier: (000) 000-0000
or in such other manner as any party hereto shall designate by written notice to
the other parties hereto. All such notices shall be effective upon delivery or
three (3) days after being deposited in the United States mail with postage
prepaid certified, return receipt requested in a correctly addressed wrapper, or
upon receipt if delivered to Federal Express or similar courier company or
transmitted by telefax during normal business hours. All notices, demands,
requests, communications and other documents delivered hereunder or under the
Loan Documents, unless submitted in the English language, shall be accompanied
by certified English translation thereof.
Section 6.2 NO WAIVER.
No failure on the part of the Lenders or the Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise by the Lenders or the Agent of any right
hereunder
45
preclude any other or further exercise thereof or the exercise of any other
right.
Section 6.3 APPLICABLE LAW AND JURISDICTION.
(a) THIS AGREEMENT AND THE LOAN DOCUMENTS PROVIDED FOR HEREIN
(INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY
HEREOF AND THEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, OTHER THAN
CONFLICT OF LAWS RULES THEREOF. Any legal action or proceeding
against the Borrowers or the Guarantor with respect to this
Agreement or any Loan Document may be brought in the courts of the
State of New York, the U.S. Federal Courts in such state, sitting in
the County of New York, or in the courts of any other jurisdiction
where such action or proceeding may be properly brought, and the
Borrowers and the Guarantor hereby irrevocably accept the
jurisdiction of such courts for the purpose of any action or
proceeding. The Borrowers and the Guarantor hereby designate and
irrevocably appoint and empower CT Corporation System (the "Process
Agent"), currently located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 in each case as its authorized agent to accept, receive and
acknowledge for and on behalf of each and its property service of
any and all process which may be served but only in any action, suit
or proceeding of the nature referred to above in the State of New
York and further agree that failure of such firm to give the
Borrowers or the Guarantor any notice of any such service shall not
impair or affect the validity of such service or of any judgment
rendered in any action or proceeding based thereon. The Borrowers
and the Guarantor hereby irrevocably authorize and direct the
Process Agent to accept such service on their behalf. The Borrowers
and the Guarantor further irrevocably consent to the service of
process out of said courts by the mailing thereof by the Agent by
U.S. registered or certified mail postage prepaid to the party to be
served at its address designated in Section 6.1. The Borrowers and
the Guarantor agree that a final judgment in any action or
proceeding shall be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided
by law. Nothing in this Section 6.3 shall affect the right of the
Lenders or the Agent to serve legal process in any other manner
permitted by law or affect the right of the Lenders or the Agent to
bring any action or proceeding against the Borrowers or the
Guarantor or their properties in the courts of any other
jurisdiction. To the extent that the Borrowers or the Guarantor has
or hereafter may acquire
46
any immunity from jurisdiction of any court or from any legal
process (whether through service of notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise)
with respect to either itself or its property, the Borrowers and the
Guarantor hereby irrevocably waive such immunity in respect of their
obligations under this Agreement and the other Loan Documents. The
Borrowers and the Guarantor hereby irrevocably waive any objection
which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this
Agreement or any Loan Document brought in the Supreme Court of the
State of New York, County of New York or the U.S. District Court for
the Southern District of New York, and hereby further irrevocably
waive any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.
(b) THE LENDERS, THE AGENT, THE BORROWERS AND THE GUARANTOR IRREVOCABLY
WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE
OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY.
Section 6.4 SEVERABILITY.
In the event that any provision of this Agreement is held to be void or
unenforceable in any jurisdiction, all other provisions shall remain unaffected
and be enforceable in accordance with their terms in such jurisdiction, and all
provisions of this Agreement shall remain unaffected and shall be enforceable in
accordance with their terms in all other jurisdictions.
Section 6.5 AMENDMENT.
Neither this Agreement nor any provision hereof, including without
limitation this Section 6.5, may be amended, modified, waived, discharged or
terminated orally, but only by an instrument in writing signed by the parties
hereto. This Agreement shall be binding upon and inure to the benefit of the
Borrowers, the Guarantor, the Agent and the Lenders, and their respective
successors and assigns, except that the Borrowers and the Guarantor shall not
have the right to assign their rights hereunder or any interest herein without
the prior written consent of the Agent.
Section 6.6 ASSIGNMENT AND PARTICIPATION.
47
The Lenders shall have the right, provided they comply with all applicable
state and federal securities laws, to assign or grant participation in all or
any portion of the Loan outstanding under this Agreement or the Note to any
affiliate of the Lenders or to any foreign, federal or state banking
institution, savings and loan institution or finance company upon thirty (30)
days written notice to the Borrowers of such assignment or participation.
Section 6.7 COSTS, EXPENSES AND TAXES.
The Borrowers jointly and severally agree to pay on demand all reasonable
fees, costs and expenses in connection (i) with the preparation, execution,
delivery, administration, amendment and enforcement of this Agreement, the Note,
the other Loan Documents and any other documents to be delivered hereunder and
thereunder (including, without limitation, the appraisal and inspection reports
required hereunder) and any amendment, modification or supplement hereto or
thereto, including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Lenders and the Agent, and any special counsel
associated with them, and with respect thereto and the filing of any document or
instrument in connection with any of the foregoing, (ii) with respect to
reasonable fees and out of pocket expenses of counsel for advising the Lenders
and the Agent as to their rights and responsibilities under this Agreement and
the transactions contemplated thereby after an Event of Default or an event
which, with the giving of notice or lapse of time, or both, shall have occurred,
and (iii) with any filing or recording of any document or instrument. In
addition, the Borrowers shall jointly and severally pay any and all stamp and
other taxes (including, without limitation penalties and interest assessed
thereon) other than Excluded Income Taxes payable or determined to be payable in
connection with the execution, delivery or performance of this Agreement and the
Loan Documents and any other documents to be delivered hereunder and thereunder
and agrees to save the Agent and Lenders harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes.
Section 6.8 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument.
Section 6.9 SECTION HEADINGS.
48
The headings of the various Sections and subsections of this Agreement are
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
Section 6.10 MERGER.
THIS AGREEMENT AND THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AMONG
THE BORROWERS, THE AGENT, THE LENDERS AND THE GUARANTOR AND SUPERSEDE ALL PRIOR
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, IF ANY, RELATING TO THE SUBJECT
MATTER HEREOF AND THEREOF.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HORIZON OFFSHORE, INC.
By: ____________________________
Name: ___________________________
Title:___________________________
HORIZON VESSELS, INC.
By: ____________________________
Name: ___________________________
Title:___________________________
49
HORIZON OFFSHORE CONTRACTORS, INC.
By: ____________________________
Name: ___________________________
Title:___________________________
THE CIT GROUP/EQUIPMENT FINANCING,
INC.
By: ____________________________
Name: ___________________________
Title:___________________________
XXXXXX FINANCIAL LEASING, INC.
By: ____________________________
Name: ___________________________
Title:___________________________
U.S. BANCORP LEASING & FINANCIAL
By: ____________________________
Name: ___________________________
Title:___________________________
SAFECO CREDIT COMPANY, INC.
By: ____________________________
Name: ___________________________
50
Title:___________________________
THE CIT GROUP/EQUIPMENT FINANCING,
INC., AS AGENT
By: ____________________________
Name: ___________________________
Title:___________________________
51
SCHEDULE 1 TO
LOAN AGREEMENT
LENDER PORTION OF COMMITMENT
1. The CIT Group/Equipment
Financing, Inc. USD 30,000,000
2. Xxxxxx Financial
Leasing, Inc. USD 15,000,000
3. U. S. Bancorp Leasing
& Financial USD 10,000,000
4. Safeco Credit Company,
Inc. USD 5,000000
52
SCHEDULE 2 TO
LOAN AGREEMENT
VESSELS
NAME FLAG OFFICIAL NO.
---- ---- ------------
1. AMERICAN HORIZON U.S. 294383
2. CAJUN HORIZON X.X. 000000
3. GULF HORIZON X.X. 000000
4. LONE STAR HORIZON U.S. 285456
5. CANYON HORIZON Vanuatu 1093
6. PHOENIX HORIZON Vanuatu 1037
7. PACIFIC HORIZON (Xxxxxxx) U.S. 537871
8. PEARL HORIZON (presently Panama
flag but in the process of being
transferred to Vanuatu flag) Vanuatu _______
9. PACIFIC HORIZON (Barge) Vanuatu 1100
10. DSND STEPHANITURM Bahamas 725330
53
