EXHIBIT 4.35
NOTE AGREEMENT
Dated as of January 30, 2001
Among
Delta Towing, LLC
as the Borrower,
R&B Falcon Drilling USA, Inc.
as RBF Noteholder
and
Beta Marine Services, L.L.C.
as Beta Noteholder
TABLE OF CONTENTS
Page
ARTICLE I Definitions................................................................. 1
Section 1.1. Definitions.................................................... 1
ARTICLE II Extensions of Credit and Repayments........................................ 11
Section 2.1. The Purchase of the Notes...................................... 11
Section 2.2. Type of Notes.................................................. 12
Section 2.3. Interest....................................................... 12
Section 2.4. Payment of Principal and Interest; Maturity.................... 13
Section 2.5. Applicable Interest Rates...................................... 16
Section 2.6. The Notes...................................................... 16
ARTICLE III Credit Documents and Collateral........................................... 17
Section 3.1. Credit Documents and Further Assurances........................ 17
Section 3.2. Supplements to Fleet Mortgage.................................. 17
ARTICLE IV Indemnification............................................................ 17
Section 4.1. Legal Fees, Other Costs and Indemnification.................... 17
Section 4.2. Intentionally Omitted.......................................... 18
Section 4.3. Increased Cost and Reduced Return.............................. 19
Section 4.4. Payment Office................................................. 19
Section 4.5. Discretion of Noteholder....................................... 19
Section 4.6. Withholding Taxes; Payments Free of Withholding................ 20
ARTICLE V Conditions Precedent........................................................ 21
Section 5.1. Conditions to Effectiveness and RBF Noteholder Purchase........ 21
Section 5.2. Conditions to Beta Noteholder Purchase......................... 22
ARTICLE VI Representations and Warranties............................................. 23
Section 6.1. Representations and Warranties................................. 23
ARTICLE VII Covenants................................................................. 25
Section 7.1. Covenants of the Borrower...................................... 25
ARTICLE VIII Limitation on Dividends.................................................. 36
Section 8.1. Distributions.................................................. 36
ARTICLE IX Books and Records.......................................................... 36
Section 9.1. Books and Records; Examination................................. 36
Section 9.2. Financial Statements and Reports............................... 37
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Section 9.3. Notice of Affiliate Transactions; Annual List.................. 39
ARTICLE X Events of Default........................................................... 39
Section 10.1. Events of Default.............................................. 39
Section 10.2. Non-Bankruptcy Defaults........................................ 42
Section 10.3. Bankruptcy Defaults............................................ 42
Section 10.4. Remedies Upon an Event of Default.............................. 42
Section 10.5. Default Prior to 10-Year Anniversary........................... 43
ARTICLE XI Miscellaneous.............................................................. 43
Section 11.1. Termination and Survival of Obligations........................ 43
Section 11.2. Notices........................................................ 43
Section 11.3. Payments and Computations...................................... 44
Section 11.4. Setoff......................................................... 44
Section 11.5. Amendments, Waivers and Consents............................... 44
Section 11.6. Waivers........................................................ 45
Section 11.7. Successors and Assigns......................................... 45
Section 11.8. Participations and Assignments................................. 45
Section 11.9. Governing Law; Submission to Jurisdiction; Waiver of Jury Trial 48
Section 11.10. Confidentiality of Agreement................................... 49
Section 11.11. Limitation of Liability........................................ 49
Section 11.12. Headings; Counterparts......................................... 49
Section 11.13. Cumulative Rights and Severability............................. 50
Section 11.14. Interest Rate Limitation....................................... 50
Section 11.15. FINAL AGREEMENT OF THE PARTIES................................. 50
Section 11.16. Atlas and Goliath.............................................. 51
Exhibits:
Exhibit 2.6A: Form of Tier 1 Note
Exhibit 2.6B: Form of Tier 2 Note
Exhibit 2.6C: Form of Tier 3 Note
Exhibit 1.01A: Form of Parent Guarantee
Exhibit 1.01B: Form of Parent Pledge Agreement
Exhibit 1.01C: Form of Security Agreement
Schedules:
Schedule 1.1: Related Entities
Schedule 6.1(c): Excepted Matters
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NOTE AGREEMENT
Note Agreement, dated as of January 30, 2001, is among R&B Falcon Drilling
USA, Inc., a Delaware corporation (the "RBF Noteholder"), Beta Marine Services,
L.L.C., a Louisiana limited liability company (the "Beta Noteholder," and
together with the RBF Noteholder and their successors and permitted assigns, the
"Noteholders," and individually, a "Noteholder"), and Delta Towing, LLC, a
Delaware limited liability company (the "Borrower").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following terms used herein have the meanings
set forth, or referred to, below:
"Accounting Determination" is defined in Section 1.02.
"Acquisition Expenditures" is defined in the LLC Agreement.
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with, the Person in question. For
purposes of this definition, "control" means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
a Person, whether through ownership of voting securities or general partnership
or managing member interests, by contract or otherwise. Without limiting the
generality of the foregoing, a Person shall be deemed to control any other
Person in which it owns, directly or indirectly, a majority of the ownership
interests.
Without limiting the generality of the foregoing, each entity described on
Schedule 1.1 shall be deemed to be an Affiliate of Beta Noteholder and the
Borrower under this Agreement, even though Beta or the Borrower may not directly
or indirectly through one or more intermediaries control, and may not be
controlled by or under common control with, such entity, as long as the members
of the ▇▇▇▇▇▇▇ family own directly or indirectly at least 50% in the aggregate
of the ownership interests of such entity.
"Affiliate Transaction" is defined in the LLC Agreement.
"Annual Budget" is defined in Section 9.2(c)(ii).
"Arm's Length Transaction" is defined in the LLC Agreement.
"Asset Sale" has the meaning assigned to such term in the LLC Agreement
other than a Casualty Event.
"Assumed Liabilities" has the meaning assigned to such term in the General
Assignment and Assumption Agreement.
"Audited Financial Statements" is defined in Section 9.2(c)(i).
"Borrower" is defined in the preamble hereof.
"Borrower Independent Auditors" is defined in Section 9.1.
"Borrower Optional Termination" is defined in Section 2.4(f).
"Business Day" means any day that is not a Saturday, Sunday or a holiday on
which national banks in Houston, Texas are closed for business.
"Capital Expenditures" is defined in the LLC Agreement.
"Capital Stock" or "ownership interests" in any Person means any and all
shares, interests, participations or other equivalents in the equity interest
(however designated) in such Person and any rights (other than debt securities
convertible into an equity interest, unless and until so converted), warrants or
options to acquire an equity interest in such Person.
"Casualty Event" means any of the following events: (a) an event resulting
in destruction of or damage to any Property; (b) an event that results in an
insurance settlement on the basis of an actual or a constructive loss of any
Property; (c) theft, illegal confiscation or disappearance of any Property; or
(d) condemnation or other taking of title of any Property by a Governmental
Authority or the requisition or taking of use of any Property by a Governmental
Authority.
"Casualty Proceeds" means all compensation, damages and other payments,
including, without limitation, any insurance proceeds from insurance required to
be provided hereunder or from any other Person pursuant to any charter or other
contract for the use of a Vessel or other Property of the Borrower or any
Subsidiary, if any, received by the Borrower, the Noteholders, or the Trustee
jointly or severally, from any Governmental Authority or other Person with
respect to or in connection with a Casualty Event.
"Classified Vessels" is defined in Section 7.1(y).
"Closing Date" is defined in the Master Formation Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property and assets of the Borrower whether now
owned or hereafter acquired.
"Collateral Trust Agreement" means the Collateral Trust Agreement dated as
of January 31, 2001 among the Trustee, the Noteholders, the Borrower and the
Company.
"Company" means Delta Towing Holdings, LLC, a Delaware limited liability
company.
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"Condition Subsequent" means the execution and delivery of the Parent
Guarantee and the Parent Pledge Agreement by the Company.
"Contribution Agreement" means the Contribution Agreement dated as of
January 31, 2001 between the RBF Noteholder and the Company, as amended,
restated or supplemented from time to time.
"Co-Sale Right Holder" is defined in Section 11.8(d)(i).
"Credit Documents" means this Agreement, the Notes and the Security
Documents.
"Default" means any Event of Default or any event or condition that with
the lapse of time or giving of notice, or both, would constitute an Event of
Default.
"Distributions" is defined in Section 8.1.
"Distribution Calculation Statement" is defined in the LLC Agreement.
"Documented Vessels" means (i) all Vessels described on Schedule 2.1(c) of
the General Assignment and Assumption Agreement, except those Vessels designated
thereon as not being documented Vessels, and (ii) all other documented Vessels
hereafter owned by Borrower or its Subsidiaries.
"Dollar" or "$" mean lawful currency of the United States of America.
"EBITDA" means for the Borrower and its Subsidiaries for any period:
(a) consolidated net income of the Borrower and its Subsidiaries; plus
(b) to the extent deducted in computing such net income, the sum of (i)
Interest Expense, (ii) income tax expense, (iii) depreciation,
depletion and amortization expense, (iv) non-cash charges resulting
from the cumulative effect of changes in accounting principles and
(v) any other non-cash charges or losses; minus
(c) to the extent added in computing such net income, (i) any Interest
Income, (ii) non-cash gains resulting from the cumulative effect of
changes in accounting principles and (iii) any other non-cash
gains;
all as determined on a consolidated basis in accordance with GAAP. For purposes
of this definition, depreciation, depletion and amortization expense will
include any gains (deductions from depreciation, depletion and amortization) or
losses (additions to depreciation, depletion and amortization) on asset
retirements and excess purchase price amortization adjustments. For the
avoidance of doubt, EBITDA shall not include any revenues or expenses
constituting Member-Indemnified Expenditures.
"Effective Date" is defined in Section 5.1.
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"Election Period" is defined in Section 11.8(c)(i).
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violation, investigations or proceedings relating to any
Environmental Law or any permit issued under any Environmental Law ("Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to the
environment.
"Environmental Law" means any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law now or
hereafter in effect, including any judicial, administrative or arbitral order,
consent, decree or judgment, relating to the environment.
"Event of Default" is defined in Section 10.1.
"Excess Cash Flow" means, for each Fiscal Quarter, without duplication:
(a) EBITDA for such Fiscal Quarter, excluding any gain or loss resulting
from any Asset Sale during such Fiscal Quarter; minus
(b) Capital Expenditures of the Borrower in cash and Acquisition
Expenditures of the Borrower in cash during such Fiscal Quarter,
provided that such expenditures are either within the limitations
set forth in Section 8.08 of the LLC Agreement or have been approved
by the Required Noteholders; minus
(c) Interest Expense paid in cash during such Fiscal Quarter; minus
(d) principal prepayments paid in cash on the Notes pursuant to Section
2.4(g) between the Payment Date occurring during such Fiscal
Quarter and the next succeeding Payment Date.
provided, however, that in the event that Working Capital as of the last day of
such Fiscal Quarter is less than $11.5 million, "Excess Cash Flow" shall be
reduced by the difference between Working Capital as of the last day of such
Fiscal Quarter and $11.5 million.
Excess Cash Flow for each Fiscal Quarter shall be as reflected in the
financial statements delivered pursuant to Section 9.2(b)(ii), unless, not later
than twelve (12) months after the delivery to the Noteholder of the examination
report described in Section 9.2(d) for the Fiscal Year in which such Fiscal
Quarter occurs, the Required Noteholders or the Borrower's independent
accountants determine that Excess Cash Flow as so reported is incorrectly
computed and notify the Borrower in writing of the amount that such Excess Cash
Flow should be increased ("Note Payment Increase Amount") or decreased ("Note
Payment Decrease Amount") to correct the computation of Excess Cash Flow.
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"Fiscal Quarter" means the three-month ended March 31, June 30, September
30 and December 31 of each Fiscal Year.
"Fiscal Year" means the 12-month (or shorter) period ending on the last day
of December of each year.
"Fixed Rate" means an interest rate equal to 8% per annum.
"Fleet Mortgage" means the First Preferred Fleet Mortgage dated as of
January 31, 2001, made by the Borrower to the Trustee covering all Documented
Vessels.
"GAAP" means United States generally accepted accounting principles, from
time to time in effect applied on a consistent basis.
"General Assignment and Assumption Agreement" means the General Assignment
and Assumption Agreement dated as of January 30, 2001 between RBF Noteholder and
the Borrower.
"Governmental Authority" means any federal, state, local or foreign
government or any provincial, departmental or other political subdivision
thereof, or any entity, body or authority exercising executive, legislative,
judicial, regulatory, administrative or other governmental functions or any
court, department, commission, board, bureau, agency, instrumentality or
administrative body of any of the foregoing.
"Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person or in any manner, providing for the payment of
any Indebtedness or other obligation of any other Person or otherwise protecting
the holder of such Indebtedness or other obligation against loss (whether
arising by virtue of partnership arrangements, by obtaining letters of credit,
by agreement to keep-well, to purchase assets, goods, securities or services, or
to take-or-pay or otherwise), provided that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. For the purpose of all computations made under this Agreement, the
amount of a Guarantee in respect of any obligation shall be deemed to be equal
to the amount that would apply if such obligation were the direct obligation of
such Person rather than the primary obligor or, if less, the maximum aggregate
potential liability of such Person under the terms of such Guarantee.
"Hazardous Material" has the meaning assigned to that term in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Acts of 1986, and shall
also include oil, gas and other liquid or gaseous hydrocarbons or any other
substance defined as "hazardous" or "toxic" or words with similar meaning and
effect under any Environmental Law applicable to the Borrower.
"Highest Lawful Rate" means as to any Noteholder, the maximum nonusurious
rate of interest that, under applicable law, may be contracted for, taken,
reserved, charged or received by such Noteholder in respect of the Notes or
under the Credit Documents at any time or from time to time. If the maximum
rate of interest which, under applicable law, any of the Noteholders is
permitted to charge the Borrower in respect of the Notes shall change after the
date hereof, to the
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extent permitted by applicable law, the Highest Lawful Rate applicable to such
Notes shall be automatically increased or decreased, as the case may be, as of
the effective time of such change without notice to the Borrower or any other
Person.
"Indebtedness" of any person means, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind; (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments; (c) all obligations of such person
upon which interest charges are customarily paid; (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property or assets purchased by such person; (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable, trade advertising and accrued obligations);
(f) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such person, whether or not the
obligations secured thereby have been assumed; (g) all Guarantees by such person
of Indebtedness of others; (h) all Capital Lease obligations of such person; (i)
all obligations of such person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or exchange
rate hedging arrangements; (j) all obligations of such person as an account
party in respect of letters of credit and bankers' acceptances; and (k) equity
issued by such person that is redeemable before the scheduled maturity of the
Tier 1 Notes. The Indebtedness of any person shall include the Indebtedness of
any partnership in which such person is a general partner, other than to the
extent that the instrument or agreement evidencing such Indebtedness expressly
limits the liability of such person in respect thereof.
"Indemnified Parties" is defined in Section 4.1
"Indemnified Taxes" is defined in Section 4.6.
"Interest Expense" means, for any period, the aggregate of all expenditures
incurred by the Borrower and its Subsidiaries during such period that, in
accordance with GAAP, are or should be included in "interest expense" in the
consolidated statement of income of the Borrower and its Subsidiaries.
"Interest Income" means, for any period, the aggregate of all receipts by
the Borrower and its Subsidiaries during such period that, in accordance with
GAAP, are or should be included in "interest income" in the consolidated
statement of income of the Borrower and its Subsidiaries.
"Investment" is defined in Section 7.1(r).
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, encumbrance, charge or security interest in or on such asset, (b)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or title retention agreement relating to such asset and (c) in the
case of securities, any purchase option, call or similar right of a third party
with respect to such securities.
"LLC Agreement" means the Limited Liability Company Agreement of Delta
Towing Holdings L.L.C. dated as of January 31, 2001, between the Noteholders.
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"Louisiana Collateral Documents" means the Collateral Mortgage Note dated
January 30, 2001, in the principal amount of $147,000,000.00, payable to Bearer;
the Collateral Mortgage dated January 30, 2001 made by the Borrower in favor of
the Trustee, and the Collateral Trust Agreement dated January 30, 2001 made by
the Borrower in favor of the Trustee and any other documents relating to the
Collateral in favor of the Trustee relating to the Obligations.
"Marine Business" has the meaning assigned to such term in the Master
Formation Agreement.
"Maritime Law" means any federal, state, local or foreign statute, law,
rule, regulation, ordinance, code, policy or rule of common law now or hereafter
in effect, including any judicial, administrative or arbitral order, consent,
decree or judgement, relating to the marine activities or trade.
"Master Formation Agreement" means the Master Formation Agreement dated as
of January 30, 2001 by and between ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
the Beta Noteholder and the RBF Noteholder.
"Material Adverse Effect" means an effect that results in a material
adverse (a) change, since the date of this Agreement, in (i) the business,
properties, assets or financial condition of the Borrower or the prospects of
the Obligors, or (ii) the ability of the Obligors to perform their obligations
under any Operative Document to which such Obligor is a party, or (b) change in
the rights and remedies of the Noteholders or the Trustee under the Credit
Documents.
"Member - Indemnified Expenditures" is defined in the LLC Agreement.
"Membership Interest" is defined in the LLC Agreement.
"Note" means any of the Tier 1 Notes, the Tier 2 Note and the Tier 3 Note,
as the same may be amended, renewed, extended, replaced, rearranged or otherwise
modified from time to time.
"Noteholder" has the meaning assigned to such term in the preamble.
"Note Payment Decrease Amount" is defined in the definition of Excess Cash
Flow.
"Note Payment Increase Amount" is defined in the definition of Excess Cash
Flow.
"Obligors" means collectively the Borrower and the Company.
"Obligations" means all obligations of the Obligors to pay principal and
interest on the Notes, fees, costs and expenses, and all other amounts owing
under any Credit Document and to perform all other obligations of the Obligors
under any Credit Document.
"Offer Notice" has the meaning assigned to such terms in Section
11.8(c)(i).
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"Operative Documents" means the Master Formation Agreement, the General
Assignment and Assumption Agreement, the Contribution Agreement, the LLC
Agreement, the other Transaction Documents and the Credit Documents.
"Parent Guarantee" means the Parent Guarantee dated as of January 31, 2001
made by the Company in favor of the Trustee and the Noteholders in the form of
Exhibit 1.01A attached hereto.
"Parent Pledge Agreement" means the Parent Pledge Agreement dated as of
January 31, 2001 made by the Company in favor of the Trustee in the form of
Exhibit 1.01B attached hereto.
"Participants" is defined in Section 11.8.
"Payment Date" means each April 30, July 30, October 30 and January 30
after the Closing Date.
"Payment Office" means the office of the Noteholder or its designee
specified on the appropriate signature page hereto, or designated pursuant to
Section 4.4, as the office to which the Borrower shall make payments on the
Notes held by that Noteholder.
"Permitted Beta Noteholder Transferee" means a transferee of all or any
portion of Beta Noteholder's Note or a transferor's membership interest in Beta
Noteholder; provided that the Transfer to such transferee either (1) occurs by
reason of or incident to the death or divorce of the transferor; provided that
the transferee is a member of the transferor's immediate family or a trust,
corporation, limited liability company or partnership controlled by such
transferor or members of such transferor's immediate family or (2) is made to
the Chouests or to any of the transferor's (or, in the case of a Transfer of
Beta Noteholder's Note, the Chouests') lineal ascendants or descendants;
provided that the transferee does not Transfer such interest except to the
original transferor or to any of such transferor's lineal ascendants or
descendants; provided that at all times prior to his death, ▇▇▇▇ ▇▇▇▇▇▇▇ retains
direct or indirect (including by reason of his percentage ownership in Beta
Noteholder)ownership of at least a 11.25% interest in the Notes issued to Beta
Noteholder following such Transfer.
"Permitted Indebtedness" is defined in Section 7.1(p).
"Permitted Liens" is defined in Section 7.1(o).
"Person" or "person" means any natural person, trust, estate,
unincorporated organization, firm, corporation, association, partnership, joint
venture, joint stock company, limited liability company or Governmental
Authority, whether acting in an individual, fiduciary or other capacity.
"Property" means, with respect to any Person, any interest of such Person
in any kind of asset, whether real, personal or mixed, or tangible or
intangible, including, without limitation, Capital Stock in any other Person.
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"Required Noteholders" means the Noteholders constituting holders of Notes
representing more than fifty percent (50%) of the aggregate principal amount
outstanding under all the Notes.
"Revolving Credit Facility" means the revolving line of credit contemplated
by the Master Formation Agreement or any other working capital facility obtained
by the Borrower in an amount and having terms and conditions acceptable to the
Required Noteholders, as the same may be amended, supplemented, renewed,
extended, replaced, restated, rearranged or otherwise modified from time to
time.
"Security Agreement" means the Security Agreement, dated as of January 31,
2001, between the Borrower and the Trustee in the form attached hereto as
Exhibit 1.01C.
"Security Documents" means the Fleet Mortgage, the Security Agreement, the
Parent Pledge Agreement, the Parent Guarantee, the Collateral Trust Agreement,
the Louisiana Collateral Documents and all other security agreements, mortgages
and other agreements or instruments delivered by the Borrower or any other
Person providing any credit or other support or granting a Lien on any of such
Person's property to any Noteholder or the Trustee for the benefit of the
Noteholders to secure all or any part of the Obligations, as any of the same may
be amended, renewed, restated, extended, supplemented, rearranged or otherwise
modified from time to time.
"Selling Noteholder" is defined in Section 11.8(c)(i).
"Senior Officer" means the president, any vice president or the chief
financial officer of the Borrower.
"Subsidiary" or "subsidiary" means, with respect to any person (herein
referred to as the "parent"), any corporation, partnership, limited liability
company, association or other business entity (a) of which securities or other
ownership interests representing more than 50% of the equity or more than 50% of
the ordinary voting power or more than 50% of the general partner interests are,
at the time any determination is being made, owned, controlled or held, or (b)
that is, at the time any determination is made, otherwise controlled, by the
parent or one or more subsidiaries of the parent or by the parent and one or
more subsidiaries of the parent.
"T2 Prior Interest Amount" is defined in Section 2.3(c).
"T3 Prior Interest Amount" is defined in Section 2.3(d).
"Taxes" or "taxes" means any and all national, federal, state, provincial
or local income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, assets, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on, minimum,
estimated or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
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"Tier 1 Amortization Default" means the failure to pay the principal of the
Tier 1 Notes as required in the proviso to the first sentence of Section 2.4(a).
"Tier 1 Maturity Date" means January 30, 2024.
"Tier 1 Note" is defined in Section 2.6.
"Tier 2 Note" is defined in Section 2.6.
"Tier 3 Note" is defined in Section 2.6.
"Tier 1 Noteholder" means a Noteholder holding a Tier 1 Note.
"Tier 2 Noteholder" means a Noteholder holding a Tier 2 Note.
"Tier 3 Noteholder" means a Noteholder holding a Tier 3 Note.
"Tier 1 Repayment Date" means the date that all principal of and the
accrued interest on the Tier 1 Notes are paid in full.
"Tier 2 Repayment Date" means the date that all principal of and the
accrued interest on the Tier 2 Notes are paid in full.
"Tier 2 & 3 Extended Termination Date" is defined in Section 10.5.
"Tier 2 & 3 Termination Date" means the tenth anniversary date after the
Closing Date, unless on or before such date:
(a) any Noteholder has delivered to the Borrower a notice stating
that a Note Payment Increase Amount is owing;
(b) an Event of Default under Section 10.1(f) or (g) has occurred and
such Event of Default is continuing;
(c) any Noteholder has delivered to the Borrower a notice stating
that an Event of Default has occurred, other than pursuant to
Section 10.1(f) or (g), and such Event of Default is continuing;
or
(d) any Noteholder has delivered to the Borrower a notice stating
that an Event of Default exists as a result of the failure to
cure an Extended Cure Default within the time provided therefor.
In any such event, the Tier 2 & 3 Termination Date shall occur only after
all Obligations that are or have become due and payable, whether by acceleration
or otherwise, on or prior to the applicable Tier 2 & 3 Extended Termination Date
shall have been paid in full.
"Total Loss" means any actual or constructive total loss of a Vessel as
determined by the Required Noteholders.
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"Transfer" or "transfer" means a sale, transfer, conveyance, assignment or
other disposition (or a series of related dispositions), including, without
limitation, any transfer pursuant to an option to purchase, any sale or
assignment (with or without recourse) of any accounts receivable and any sale
and leaseback of assets, but excluding any involuntary transfer by operation of
law and any transfers of an asset pursuant to any casualty or theft with respect
to such asset.
"Transaction Documents" has the meaning set forth in the Master Formation
Agreement but also includes any other documents entered into in connection
therewith.
"Transocean" means Transocean Sedco Forex Inc., a Cayman Islands company.
"Trustee" means The Bank of New York acting in its capacity as trustee for
the Noteholders under the Collateral Trust Agreement and the Security Documents
and any successor trustee appointed under the Collateral Trust Agreement.
"USA" or "US" means the United States of America (including all states and
political subdivisions thereof).
"Unaudited Financial Statements" is defined in Section 9.2(a).
"Vessels" means the offshore tugs, inland tugs, crewboats and service
barges described on Schedule 2.1(c) of the General Assignment and Assumption
Agreement and any other vessels hereafter owned by the Borrower or its
Subsidiaries from time to time.
"Wholly Owned Subsidiary" means, for any Person, any Subsidiary of which
such Person owns, directly or indirectly, 100% of the Capital Stock.
"Working Capital" means as of any date as determined in accordance with
GAAP (i) the consolidated current assets of the Borrower and its Subsidiaries,
minus (ii) the consolidated current liabilities of the Borrower and its
Subsidiaries, (other than the current maturities of the Notes).
The foregoing definitions shall be equally applicable to both the singular
and plural forms of the defined terms. Unless otherwise indicated, references
to a contract or other agreement shall include references to such contracts and
agreements as affected by amendments, restatements, supplements and other
modifications thereto made in accordance with the terms of the Credit Documents
and references to statutes, regulations and other laws are to statutes,
regulations and laws as amended or modified.
ARTICLE II
EXTENSIONS OF CREDIT AND REPAYMENTS
Section 2.1. The Purchase of the Notes. Subject to terms and conditions of
this Agreement, the Noteholders shall severally purchase Notes from the Borrower
to evidence extensions of credit to the Borrower in the aggregate principal
amount not to exceed $147,000,000. The Notes purchased by the RBF Noteholder
shall be in the aggregate principal amount of $144,000,000 and shall evidence
the Borrower's payment obligation for the purchase
11
price of the Marine Business in accordance with, and subject to the terms and
conditions of, the Master Formation Agreement. The Note purchased by the Beta
Noteholder shall be in the principal face amount of $3,000,000 and the proceeds
from that purchase shall be used by the Borrower for working capital purposes.
Section 2.2. Type of Notes. Notes shall be divided into three types,
as follows:
(a) Tier 1 Notes.
(i) The $3,000,000 Note of the Beta Noteholder shall be a Tier 1
Note; and
(ii) The first $80,000,000 of the credit extended by the RBF
Noteholder shall be evidenced by a Tier 1 Note;
(b) Tier 2 Note. The next $20,000,000 of the credit extended by RBF
Noteholder shall be evidenced by a Tier 2 Note; and
(c) Tier 3 Note. The next and remaining amount of credit extended by RBF
Noteholder (i.e., $44,000,000) shall be evidenced by a Tier 3 Note.
Section 2.3. Interest.
(a) Interest will accrue on the principal outstanding under the Notes from
time to time at the Fixed Rate from the Closing Date to the date of
payment thereof and shall be compounded as described in
Section 2.3(b)-(d).
(b) The interest accrued on the principal of the Tier 1 Notes shall be
compounded annually on each anniversary of the Closing Date.
(c) The interest accrued on the principal of, and accrued interest on, the
Tier 2 Note shall not be compounded until the Tier 1 Repayment Date.
Interest on the Tier 2 Note that accrues before the Tier 1 Repayment
Date is referred to as the "T2 Prior Interest Amount". Thereafter, the
interest accrued on the Tier 2 Note and the T2 Prior Interest Amount
on and after the Tier 1 Repayment Date shall be compounded on each
subsequent anniversary of the Closing Date.
(d) The interest accrued on the principal of, and accrued interest on, the
Tier 3 Note shall not be compounded until the Tier 2 Repayment Date.
Interest on the Tier 3 Note that accrues before the Tier 2 Repayment
Date is referred to as the "T3 Prior Interest Amount". Thereafter, the
interest accrued on the Tier 3 Note and the T3 Prior Interest Amount
on and after the Tier 2 Repayment Date shall be compounded on each
subsequent anniversary of the Closing Date.
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Section 2.4. Payment of Principal and Interest; Maturity.
(a) Tier 1 Notes. Subject to the Noteholders' right to accelerate the
Notes in accordance with Sections 10.2 and 10.3, the Borrower shall
pay to the Tier 1 Noteholders on each Payment Date, for application
toward payment of the principal of and accrued and unpaid interest on
the Tier 1 Notes as hereinafter provided, an amount equal to (i) until
the Tier 2 & 3 Termination Date, 100%, and (ii) thereafter 50%, of the
Excess Cash Flow for the preceding Fiscal Quarter until the Tier 1
Repayment Date, provided, however, that, in any event, the Borrower
shall repay at least (1) 10% of the aggregate principal amount of the
Tier 1 Notes no later than the third anniversary of the Closing Date,
(2) 30% of the aggregate principal amount of the Tier 1 Notes no later
than the fifth anniversary of the Closing Date and (3) 75% of the
aggregate principal amount of the Tier 1 Notes no later than the
seventh anniversary of the Closing Date. Each such payment shall be
applied first to interest accrued and unpaid on the Tier 1 Notes for
any previous Fiscal Quarters, and then to the unpaid principal of the
Tier 1 Notes. On each Payment Date, the Borrower shall also pay to the
Tier 1 Noteholders accrued interest on the Tier 1 Notes for the
preceding Fiscal Quarter. Notwithstanding anything to the contrary
contained herein or in the Credit Documents, all principal and accrued
and unpaid interest on, the Tier 1 Notes shall be due and payable on
the Tier 1 Maturity Date, unless earlier accelerated in accordance
with Sections 10.2 and 10.3.
(b) Tier 2 Note. Subject to the Noteholders' right to accelerate the Notes
in accordance with Sections 10.2 and 10.3, the Borrower shall pay to
the Tier 2 Noteholders on each Payment Date on and after the Tier 1
Repayment Date to the Tier 2 Repayment Date, for application toward
payment of the principal of and accrued and unpaid interest on the
Tier 2 Note as hereinafter provided, an amount equal to 75% of the
Excess Cash Flow for the preceding Fiscal Quarter. Each such payment
shall be applied first to the unpaid T2 Prior Interest Amount and then
to the unpaid principal of the Tier 2 Note. On each Payment Date, the
Borrower shall also pay to the Tier 2 Noteholder, accrued and unpaid
interest on the principal of the Tier 2 Note for the preceding Fiscal
Quarter.
In the event that all principal of and accrued interest on the Tier 2
Note and the unpaid T2 Prior Interest Amount are not repaid on or
before the later of the Tier 2 & 3 Termination Date and, if
applicable, the Tier 2 & 3 Extended Termination Date, the Tier 2
Noteholders shall waive and lose their right to receive any repayment
of the remaining principal of and interest on the Tier 2 Note and the
unpaid T2 Prior Interest Amount other than payment of any remaining
unpaid principal and interest on the Tier 2 Note payable in connection
with the period ending on the Tier 2 & 3 Termination Date.
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(c) Tier 3 Note. Subject to the Noteholders' right to accelerate the Notes
in accordance with Sections 10.2 and 10.3, the Borrower shall pay to
the Tier 3 Noteholders on each Payment Date on and after the Tier 2
Repayment Date until the Tier 2 & 3 Repayment Date, for application
toward payment of the principal of and accrued and unpaid interest on
the Tier 3 Note as hereinafter provided, an amount equal to 50% of the
Excess Cash Flow for the preceding Fiscal Quarter. Each such payment
shall be applied first to the unpaid T3 Prior Interest Amount and then
to the unpaid principal of the Tier 3 Note. On each Payment Date, the
Borrower shall also pay to the Tier 3 Noteholder, accrued and unpaid
interest on the principal of the Tier 3 Note for the preceding Fiscal
Quarter.
In the event that all principal and accrued interest on the Tier 3
Note and the unpaid T3 Prior Interest Amounts are not repaid on or
before the later of the Tier 2 & 3 Termination Date and, if
applicable, the Tier 2 & 3 Extended Termination Date, the Tier 3
Noteholders shall waive and lose their right to receive any repayment
of the remaining principal and interest of the Tier 3 Note and the
unpaid T3 Prior Interest Amount other than payment of any remaining
unpaid principal and interest on the Tier 3 Note payable in connection
with the period ending on the Tier 2 & 3 Termination Date.
(d) Casualty Event. All Casualty Proceeds shall be paid directly to the
Trustee to be held and applied by the Trustee as provided in Section
4.05 of the Collateral Trust Agreement. To the extent the Borrower or
any Subsidiary or Affiliate of the Borrower receives any Casualty
Proceeds, within one (i) Business Day after such receipt, the Borrower
shall deposit, or cause to be deposited, the same with the Trustee.
All Casualty Proceeds that are not paid to the Borrower to repair,
restore or replace the affected Property (or in reimbursement
therefor) pursuant to Section 4.05 of the Collateral Trust Agreement
shall, unless the Required Noteholders otherwise agree in writing, be
used by the Borrower or the Trustee, as the case may be, to prepay the
Obligations to the extent of such proceeds, such prepayment to be
applied as follows:
(i) first, to any unpaid fees, expenses or amounts other than
principal or interest comprising the Obligations;
(ii) second, to accrued and unpaid interest on the Tier 1 Notes
during such Fiscal Quarter;
(iii) third, to the accrued and unpaid interest on the Tier 1 Notes
for any previous Fiscal Quarter;
(iv) fourth, to the unpaid principal of the Tier 1 Notes;
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(v) fifth, to the accrued and unpaid interest on the Tier 2 Note
during such current Fiscal Quarter;
(vi) sixth, to the accrued and unpaid interest on the Tier 2 Note for
any previous Fiscal Quarter;
(vii) seventh, to the unpaid T2 Prior Interest Amount;
(viii) eighth, to the unpaid principal of the Tier 2 Note;
(ix) ninth, to the accrued and unpaid interest on the Tier 3 Note
during such current Fiscal Quarter;
(x) tenth, to the accrued and unpaid interest on the Tier 3 Note for
any previous Fiscal Quarter;
(xi) eleventh, to the unpaid T3 Prior Interest Amount;
(xii) twelfth, to the unpaid principal of the Tier 3 Note; and
(xiii) any excess Proceeds remaining after such application, shall be
paid to the Borrower or to such other person as may be directed
by a court of competent jurisdiction.
The Borrower shall forthwith upon receipt turn any proceeds received
at any time by the Borrower, over to the Noteholders for application
as set forth above.
(e) Asset Sales. The cash proceeds of any Asset Sale (net of direct costs
of such Asset Sale) shall be deposited with the Trustee within one (i)
Business Day after receipt thereof by the Borrower or any Subsidiary
or Affiliate of the Borrower and held by the Trustee in accordance
with Section 4.04 of the Collateral Trust Agreement. On the 91st day
after the receipt of such proceeds, the Trustee shall apply the same
toward payment of the Obligations as though such proceeds were
Casualty Proceeds being so applied to the Obligations under Section
2.4(d), unless upon request by the Borrower the Required Noteholders
agree in writing, in their sole discretion, to another use of those
proceeds by the Borrower. Notwithstanding the foregoing, cash proceeds
of any Asset Sale that are received or held by the Trustee at a time
when an Event of Default exists shall be applied by the Trustee toward
payment of the Obligations as aforesaid absent contrary instructions
from the Required Noteholders.
(f) Borrower's Optional Termination. The Borrower may for any reason at
any time elect to terminate the arrangements provided in this
Agreement (a "Borrower's Optional Termination"). The Borrower shall
give the Noteholders at least three (3) Business Days' written notice
of the date on which it intends to effect a Borrower's Optional
Termination. Such
15
election shall be irrevocable and upon the date specified therein all
Obligations shall be due and payable. On the date so specified, the
Borrower shall prepay all Obligations.
(g) Optional Payments. The Borrower may prepay the Notes without premium
or penalty at any time in whole or at any time and from time to time
in part, so long as the Borrower shall have given notice of such
prepayment to the Noteholders no later than 12:00 noon (Houston time)
three (3) Business Days before the date of such prepayment. Such
notice shall be irrevocable and the amount of any prepayment specified
in such notice shall be due and payable on the date so specified and
shall be applied to the Obligations as though the amounts were
Casualty Proceeds required to be prepaid under Section 2.4(d).
(h) Note Payment Increase/Decrease Amount. The Borrower shall pay any Note
Payment Increase Amount, within 10 days after receipt of any notice
that a Note Payment Increase Amount is due and owing. The Noteholders
shall pay to the Borrowers severally in accordance with their
respective pro rata shares of any Note Payment Decrease Amount, any
Note Payment Decrease Amount within 10 days after their receipt of any
notice that a Note Payment Decrease Amount is due and owing.
(i) Pro Rata. All payments of principal and interest on the Notes shall be
paid to the Noteholders that are holders of the applicable Notes, pro
rata in accordance with the principal amount of such type of Note held
by each such Noteholder.
Section 2.5. Applicable Interest Rates. (a) Each Note shall bear interest
(computed on the basis of a 365- or 366-day year and actual days elapsed) on the
unpaid principal amount thereof from the date that the Note was purchased
hereunder until maturity (whether by acceleration or otherwise), at a rate per
annum equal to the Fixed Rate.
(b) If any payment of any Obligations is not made when due (whether by
acceleration or otherwise), such amount shall bear interest (computed
on the basis of a year of 365 or 366 days, as applicable, and actual
days elapsed) until such principal then due is paid in full, payable
on demand, at a rate per annum equal to the sum of two percent (2%)
per annum plus the Fixed Rate.
(c) Accrued interest on the Obligations shall be paid pursuant to Section
2.4.
Section 2.6. The Notes. The Notes shall be payable to the order of the
applicable Noteholder and be in the form of Exhibits 2.6A, 2.6B and 2.6C (the
"Tier 1 Notes," the "Tier 2 Note" and the "Tier 3 Note", respectively). Each
Noteholder shall record on its books and records or on a schedule to its Notes
the initial amount of the principal owing thereunder and all payments of
principal and interest received by such Noteholder allocable to such Note. Such
records, whether shown on the books and records of the Noteholders or on a
schedule to the
16
Notes, shall be conclusive evidence as to all such matters absent manifest
error; provided, however, that the failure of any Noteholder to record any of
the foregoing or any error in any such record shall not limit or otherwise
affect the obligation of the Borrower to repay all principal outstanding under
the Notes, together with accrued interest thereon. The Borrower agrees to
execute and deliver to the Noteholders appropriate additional Notes as may be
necessary in connection with any assignments pursuant to Section 11.8.
ARTICLE III
CREDIT DOCUMENTS AND COLLATERAL
Section 3.1. Credit Documents and Further Assurances. The Borrower shall
perform its obligations under the Credit Documents. At any time or from time to
time upon the request of any Noteholder, the Borrower shall execute and deliver
(or cause to be executed and delivered) such further documents and do such other
acts and things as any Noteholder or the Trustee may reasonably request in order
to effect fully the transactions contemplated by the Credit Documents. Without
limiting the generality of the foregoing, the Borrower shall execute and deliver
any documents, including amendments to, or replacements of, the Credit Documents
and take such other action as may be necessary or as the Noteholder shall have
reasonably requested to perfect the first priority liens in the Collateral in
favor of the Trustee and/or the Noteholders to secure the Obligations.
Section 3.2. Supplements to Fleet Mortgage. The Borrower shall, from time
to time, execute and deliver any and all supplements to the Fleet Mortgage and
other documents, to make subject to the first priority Lien of the Fleet
Mortgage and other Security Documents any Documented Vessels of Borrower within
10 days after the Borrower acquires any Documented Vessels that are not so
mortgaged.
ARTICLE IV
INDEMNIFICATION
Section 4.1. Legal Fees, Other Costs and Indemnification. The Borrower,
upon demand by the appropriate Person, agrees to pay the out-of-pocket costs and
expenses (a) of the Noteholders and the Trustee, including, without limitation,
the fees and disbursements of legal counsel to the Noteholders and the Trustee,
in connection with any amendment, waiver or consent related thereto, whether or
not the transactions contemplated therein are consummated, and (b) of the
Trustee and the Noteholders in connection with advising the Trustee and the
Noteholders of their rights and responsibilities under the Credit Documents
during any Default or Event of Default or in connection with the enforcement by
the Noteholders and the Trustee of any of the Credit Documents against the
Borrower. The Borrower further agrees to indemnify the Noteholders, the Trustee
and their respective directors, officers, employees and attorneys (in each case
in their capacities as such) (collectively, the "Indemnified Parties"), against
all losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all reasonable attorneys' fees and other
reasonable expenses of litigation or preparation therefor, whether or not such
Indemnified Party is a party thereto which any of them may pay or incur arising
out of or relating to (i) any action, suit or proceeding by any Governmental
Authority or any other Person against the Indemnified Party and relating to any
applicable law, (ii) any action, suit or proceeding by any Person not a party to
this Agreement (a "third party") or
17
Governmental Authority against such Indemnified Party and relating to the
execution, delivery or performance (or non-performance) of any Credit Document
by the Borrower, the extensions of credit evidenced by the Notes or the
application or proposed application by the Borrower of the proceeds of any Note,
REGARDLESS OF WHETHER SUCH CLAIMS OR ACTIONS ARE FOUNDED IN WHOLE OR IN PART
UPON STRICT LIABILITY OR THE ALLEGED SIMPLE OR CONTRIBUTORY NEGLIGENCE OF ANY OF
THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES OR ATTORNEYS, (iii) any investigation of any third party or any
Governmental Authority involving the Noteholders or the Trustee (in such
capacity hereunder) and related to any use made or proposed to be made by the
Borrower of the proceeds of the credit extended hereunder, or any transaction
financed or to be financed in whole or in part, directly or indirectly with the
proceeds of any credit extended hereunder, and (iv) any investigation of any
third party or any Governmental Authority, litigation or proceeding involving
the Noteholders or the Trustee and related to any environmental cleanup, audit
or compliance with respect to the Borrower or its properties, or any other
matter relating to any Environmental Law or the presence of any Hazardous
Material (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any Environmental
Law) with respect to the Borrower or its properties or operations, regardless of
whether caused by, or within the control of, the Borrower; provided, however,
that the Borrower shall not be obligated to indemnify any Indemnified Party for
any of the foregoing arising out of such Indemnified Party's gross negligence,
or willful misconduct. The Borrower, upon demand by any Noteholder or the
Trustee at any time, shall reimburse the applicable Indemnified Party for any
legal or other expenses incurred in connection with investigating or defending
against any of the foregoing. The Noteholders and the Borrower agree that any
payments by the Borrower under this Section 4.1 are not duplicative of
recoveries to be made by the Noteholders under the other Operative Documents.
Section 4.2. Intentionally Omitted.
Section 4.3. Increased Cost and Reduced Return.
(a) If, on or after the date hereof, the adoption of or any change in any
applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency:
(i) subjects any Noteholder (or its Payment Office) to any tax, duty
or other expense related to any Note, or shall change the basis
of taxation of payments to any Noteholder (or its Payment Office)
of the principal of or interest on its Notes, or any other
amounts due under this Agreement; or
(ii) imposes, modifies or deems applicable any reserve, special
deposit or similar requirement or imposes on any Noteholder (or
its Payment Office) or on the interbank market any other
condition affecting the principal amount of the Notes held by it,
or its participation in any thereof;
18
and the result of any of the foregoing is to increase the cost to such
Noteholder (or its Payment Office) of maintaining any Note or participating
therein, or to reduce the amount of any sum received or receivable by such
Noteholder (or its Payment Office) in connection therewith under this Agreement,
by an amount deemed by such Noteholder to be material, then from time to time,
within thirty (30) days after receipt of a certificate from such Noteholder
pursuant to subsection (b) below setting forth in reasonable detail such
determination and the basis thereof, the Borrower shall be obligated to pay to
such Noteholder such additional amount or amounts as will compensate such
Noteholder for such future increased cost or reduction.
(b) If any Noteholder seeks compensation under this Section 4.3, such
Noteholder shall give written notice to the Borrower of the
circumstances that entitle such Noteholder to such compensation. A
certificate of any Noteholder claiming compensation under this Section
4.3 and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Person may use any reasonable averaging
and attribution methods.
Section 4.4. Payment Office. Any Noteholder may, at its option, elect to
change its Payment Office from time to time and designate another in a written
notice to the Borrower.
Section 4.5. Discretion of Noteholder. Subject to the other provisions of
this Agreement, any Noteholder shall be entitled to purchase and maintain its
Notes in any manner it sees fit.
Section 4.6. Withholding Taxes; Payments Free of Withholding. Except as
otherwise required by law, each payment by the Borrower to the Noteholders under
this Agreement or any other Credit Document shall be made without withholding
for or on account of any present or future taxes imposed by or within the
jurisdiction in which the Borrower is domiciled, any jurisdiction from which the
Borrower makes any payment, or (in each case) any political subdivision or
taxing authority thereof or therein, excluding taxes, assessments or other
governmental charges:
(i) Imposed on, based upon, or measured by its income, and branch
profits, franchise and similar taxes imposed on it, by any
jurisdiction in which such Noteholder is organized or maintains its
principal place of business or Payment Office or which subjects
such Noteholder to tax by reason of a connection between the taxing
jurisdiction and such Noteholder (other than a connection resulting
from the transactions contemplated by this Agreement);
(ii) Imposed as a result of a connection between the taxing jurisdiction
and such Noteholder, other than a connection resulting from the
transactions contemplated by this Agreement;
(iii) Imposed as a result of the transfer by such Noteholder of its
interest in this Agreement or any other Credit Document or a
designation by the Noteholder of a new Payment Office;
19
(iv) Which would not have been imposed but for (A) the failure of
such Noteholder to provide an Internal Revenue Service Form W-
8BEN or W-8ECI, as the case may be, or any substitute or
successor form prescribed by the Internal Revenue Service, or
any other certification, documentation or proof which is
reasonably requested by the Borrower, or (B) a determination by
a taxing authority or a court of competent jurisdiction that a
certification, documentation or other proof provided by such
Noteholder to establish an exemption from such tax, assessment
or other governmental charge is false;
(all such non-excluded taxes, assessments or other governmental charges and
liabilities being herein referred to as "Indemnified Taxes"). If any such
withholding is so required, the Borrower shall make the withholding, pay the
amount withheld to the appropriate Governmental Authority before penalties
attach thereto or interest accrues thereon and forthwith pay such additional
amount as may be necessary to ensure that the net amount actually received by
the Noteholders is free and clear of such Indemnified Taxes (including
Indemnified Taxes on such additional amount) and is equal to the amount that the
Noteholders would have received had such withholding not been made. If any
Noteholder pays any amount in respect of any Indemnified Taxes, penalties or
interest, the Borrower shall reimburse such Noteholder for such payment on
demand in the currency in which such payment was made. If the Borrower pays any
Indemnified Taxes, or penalties or interest in connection therewith, it shall
deliver official tax receipts evidencing the payment or certified copies
thereof, or other satisfactory evidence of payment if such tax receipts have not
yet been received by the Borrower (with such tax receipts to be promptly
delivered when actually received), to the Noteholder on whose account such
withholding was made within fifteen (15) days of such payment. The Borrower
shall pay the Noteholders any indemnification or compensation hereunder no later
than thirty (30) days after the date on which such Noteholder makes written
demand upon the Borrower therefor.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1. Conditions to Effectiveness and RBF Noteholder Purchase. This
Agreement shall become effective and RBF Noteholder shall purchase its Notes on
the first date (the "Effective Date") all conditions in this Section 5.1 are
satisfied.
(a) On or before such date, the Borrower shall deliver to the Noteholders
the following documents in form and substance acceptable to the
Noteholders:
(i) A certificate of the Secretary or Assistant Secretary of each
Obligor certifying (A) the resolutions of such Obligor's board of
managers or other governing body approving each Operative
Document to which it is a party, (B) the name, signature, and
authority of each officer who executes on such Obligor's behalf
any Operative Document (on which certificate the Noteholders may
conclusively rely until a revised certificate is received), (C)
such Obligor's certificate of formation and limited liability
20
company agreement certified by the appropriate authority in its
jurisdiction of formation, and (D) good standing certificates
issued by the appropriate authority of each jurisdiction where
such Obligor has material operations as and to the extent agreed
with the Noteholders;
(ii) The Security Documents (other than the Parent Guarantee and the
Parent Pledge Agreement);
(iii) All instruments and other documents required, or deemed desirable
by the Noteholders, to perfect the Noteholders' or the Trustee's
first priority security interest in the Collateral in all
appropriate jurisdictions as collateral security for the
Obligations;
(iv) Executed copies of all (A) documents evidencing any necessary
corporate and limited liability company action, consents and
government authorizations taken or obtained by the Obligors or
their members in connection with the Operative Documents and (B)
Operative Documents;
(v) [Intentionally Omitted]
(vi) Such other approvals, opinions or documents as the Noteholder may
request;
(vii) The sale of the Marine Business to the Borrower shall have
occurred on terms contemplated by the Operative Documents;
(viii) The Noteholders shall have received evidence satisfactory to the
Noteholders that the Fleet Mortgage, bills of sale and other
documentation respecting the Documented Vessels was sent for
filing for recordation in the Coast Guard's National Vessel
Documentation Center in compliance with Maritime Law; and
(ix) No default or event of default (in each case, as defined in each
Operative Document) under any Operative Document by any Obligor
or any other Person has occurred, the Obligors have no notice
that (A) any Obligor or any of their Affiliates or any other
Person has reason to, could or intends to take or has taken any
steps to cancel or terminate any Operative Document, and (B) the
Operative Documents are not otherwise in full force and effect;
and the Obligors are not otherwise aware that any default or
event of default (as defined in each Operative Document) under
the Operative Documents has occurred and is continuing
(regardless of the giving of any notice or the expiration of any
applicable grace period).
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(b) The Borrower shall have furnished to the Noteholders a certificate
executed on behalf of the Borrower by a Senior Officer, which
indicates that it is made in favor of and for the benefit of the
Trustee and the Noteholders certifying, representing and warranting
that all conditions to the Effective Date have occurred.
(c) No Default or Event of Default shall then exist or shall occur as a
result of the purchase of the Notes hereunder; and
(d) The representations and warranties of the Borrower in Section 6.1 are
true and correct on the Effective Date and after giving effect to the
purchase of the Notes by the Noteholders.
Section 5.2. Conditions to Beta Noteholder Purchase. The conditions to the
obligation of the Beta Noteholder to purchase its Tier 1 Note are:
(a) the occurrence of the Effective Date; and
(b) the purchase by the RBF Noteholder of the Notes to be held by it, and
upon the satisfaction of such conditions, the Beta Noteholder shall
purchase its Tier 1 Note from the Borrower.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1. Representations and Warranties. The Borrower represents and
warrants to the Noteholder that each of the following statements is true and
correct in all material respects:
(a) Existence and Qualification. The Borrower (i) is a duly organized and
existing limited liability company in good standing under the laws of
the State of Delaware; (ii) has all necessary limited liability
company power to own and operate the Vessels and to carry on the
Marine Business contemplated in connection therewith; and (iii) is
duly licensed or qualified and in good standing in each jurisdiction
in which the nature of the business transacted by it or the nature of
the property owned or leased by it makes such licensing or
qualification necessary.
(b) Limited Liability Company Power and Authority; Validity. The Borrower
has the limited liability company power and authority to execute,
deliver and carry out the terms and provisions of the Operative
Documents to which it is a party and to consummate the transactions
contemplated hereby and has taken all necessary limited liability
company and member action to authorize the execution, delivery and
performance of such Operative Documents and to consummate the
transactions contemplated hereby. The Borrower has duly executed and
delivered each Operative Document to which it is a party and each such
Operative Document constitutes the legal, valid and binding obligation
of such Person
22
enforceable against it in accordance with its terms, subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors' rights
generally and equitable principles.
(c) No Violation. Neither the execution, delivery or performance by each
Obligor of the Operative Documents to which it is a party nor
compliance by it with the terms and provisions thereof, nor the
consummation by it of the transactions contemplated herein or therein,
will (i) contravene in any material respect any applicable provision
of any law, statute, rule or regulation, or any applicable order,
writ, injunction or decree of any court or governmental
instrumentality, including, without limitation, the Maritime Law of
the USA, with respect to the location of the Vessels or any other
applicable jurisdiction, except as described on Schedule 6.1(c) (the
"Excepted Matters"), (ii) conflict with or result in any breach of any
term, covenant, condition or other provision of, or constitute a
default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien other than any Permitted Lien
upon any of the property or assets of the Borrower under, the terms of
any legal or contractual obligation to which the Borrower is a party
or by which it or any of their properties or assets is bound or to
which any of them may be subject, or (iii) violate or conflict with
any provision of the organizational documents of the Borrower.
(d) Litigation. There are no actions, suits, proceedings or counterclaims
(including, without limitation, arbitration, derivative or injunctive
actions) pending or, to the knowledge of the Borrower, threatened
against the Obligors or their Affiliates that are reasonably likely to
have a Material Adverse Effect.
(e) Use of Proceeds; Margin Regulations.
(i) The proceeds of the Notes shall be used only as described in
Section 2.1.
(ii) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock. No
proceeds of any Note will be used for a purpose which violates
Regulation U or X of the Board of Governors of the Federal
Reserve System. After application of the proceeds of the Notes,
none of the assets of the Borrower consists of "margin stock" (as
defined in Regulation U of the Board of Governors of the Federal
Reserve System).
(f) Investment Company Act. The Borrower is not an "investment company" or
a company "controlled" by an "investment company," within the meaning
of the Investment Company Act of 1940, as amended.
23
(g) Public Utility Holding Company Act. The Borrower is not a "holding
company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
(h) No Material Adverse Change. There has occurred no event or effect,
other than any event specifically permitted, contemplated or provided
for under any Operative Document, that has had or is reasonably likely
to have a Material Adverse Effect.
(i) Consents. Except for the Excepted Matters, at the time of consummation
thereof, all consents and approvals of, and filings and registrations
with, and all other actions of, all Governmental Authorities,
authorities or instrumentalities required to have been obtained or
made by the Obligors and their Affiliates prior to such time in order
to consummate the purchase of the Notes hereunder, and to execute,
deliver and perform the Operative Documents, have been or will have
been obtained or made and are or will be in full force and effect.
(j) Compliance with Statutes, Etc. Except for the Excepted Matters, the
Obligors and their Affiliates are in compliance with all applicable
Maritime Law and other statutes, regulations and orders of, and all
applicable restrictions imposed by, all Governmental Authorities,
domestic and foreign, including, without limitation, all applicable
laws with respect to the location of the Vessels, in respect of the
conduct of their business as currently conducted by the ownership and
operation of their properties as currently operated by it, except for
such instances of non-compliance as are not reasonably likely to,
individually or in the aggregate, have a Material Adverse Effect, and
has all necessary permits and licenses, and other necessary
authorizations, with respect thereto with such exceptions (if any) as
are not reasonably likely to, individually or in the aggregate, have a
Material Adverse Effect.
ARTICLE VII
COVENANTS
Section 7.1. Covenants of the Borrower. The Borrower hereby covenants and
agrees that until the Obligations have been paid in full:
(a) Operative Documents. The Borrower acknowledges that it is fully aware
of and will fully comply with and perform its obligations under the
Operative Documents.
(b) Limited Liability Company Existence. The Borrower will preserve and
maintain its limited liability company existence. The Borrower shall
not make or permit to exist any Investment or enter into or permit to
exist any
24
partnerships, joint ventures or any other business combinations,
mergers or consolidations involving itself or any subsidiary.
(c) Maintenance of Property and Operations. The Borrower shall obtain and
maintain all material permits, licenses, consents, approvals and other
authorizations, including those required under all applicable laws,
from all Governmental Authorities necessary to be obtained by it in
connection with the operation and maintenance of the Vessels and the
Marine Business.
The Borrower will maintain and operate the Vessels in a good operating
condition (ordinary wear and tear excepted), in compliance with all
applicable contracts and other agreements, laws and regulations and in
accordance with manufacturer's warranties and recommended maintenance
procedures, insurance policies and industry practices.
The Borrower shall, at its own expense, insofar as is practicable,
perform all ordinary maintenance on the Vessels and make all proper
renewals and replacements necessitated by wear, tear and normal
depreciation. Unless a Casualty Event results in a total loss, actual
or constructive, as constructive total loss is defined in the relevant
policy or policies of hull insurance, the Borrower shall, in a
workmanlike manner, diligently commence and pursue the repair,
restoration or replacement of any Property damaged as a result of a
Casualty Event such that the damaged Property is restored to at least
its value and operating condition immediately prior to the subject
Casualty Event, or is replaced with comparable or better Property,
unless the subject Property, at the time of such Casualty Event, was
no longer used or useful to its Marine Business; provided, however,
that in the event the Borrower does not receive the Casualty Proceeds
in accordance with Section 4.05(c) of the Collateral Trust Agreement,
the Borrower shall not be obligated to make such repair or
restoration.
(d) Taxes. The Borrower will and shall cause each of its Subsidiaries to,
file all tax returns required to be filed in any jurisdiction and to
duly pay and discharge all Taxes upon or against it or its properties
before penalties accrue thereon, unless and to the extent that the
same are being contested in good faith and by appropriate proceedings
and reserves have been established in conformity with GAAP and for
which the non-payment thereof is not expected to result in a Material
Adverse Effect.
(e) Burdensome Restrictions. Promptly upon any Senior Officer becoming
aware thereof, the Borrower shall give to the Noteholders written
notice of (i) the adoption of any new requirement of law which is
reasonably likely to have a Material Adverse Effect, and (ii) the
existence or occurrence of any strike, slow down or work stoppage
which is reasonably likely to have a Material Adverse Effect.
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(f) Insurance. The Borrower shall maintain (and shall cause each of its
Subsidiaries to maintain), or cause to be maintained, at its own
expense, with reputable insurance companies or mutual associations
(clubs) reasonably acceptable to the Required Noteholders, at a
minimum, the following types of insurance in at least the following
amounts and other insurances in such other amounts and having such
other terms as the Required Noteholders may require from time to time:
(i) Worker's compensation and employer's liability insurance to the
extent required by applicable law. Such policy to contain
coverages for risks arising from Maritime Law and the ▇▇▇▇▇ Act
and similar laws with a limit no less than US $5,000,000
(including excess liability) combined single limit per occurrence.
(ii) Comprehensive general liability or commercial general liability
(or equivalent coverage (including excess liability)) insurance
including contractual liability, pollution and suitably endorsed
to cover maritime operations with minimum limits of $5,000,000 per
occurrence for deaths or injuries and property damage arising out
of one accident).
(iii) All Vessels owned, chartered or operated in performance of any
operations of the Borrower, shall be covered with (A) P&I
Insurance (on SP23 Form or equivalent) including crew, in the
amount that would be obtained by reasonably prudent operators of
businesses similar to the Marine Business, but in no event less
than $5,000,000 (including excess liability), and (B) hull
insurance (on a current American Institute or equivalent hull
form), including wreck removal coverage (legal, contractual and
voluntary) and full collision coverage (floating and stationary)
(x) against the risks of fire, explosion and marine perils
(including without limitation a collision or Four-Fourths Running
Down Clause and Inchmaree Clause in favor of the Trustee), (y)
against pollution liability risks under policies of insurance
issued in accordance with the Oil Pollution Act of 1990, and (z)
against all other risks insured under the form of policy known as
"American Institute Hull Form" or equivalent. The hull policy with
respect to the Vessels shall have a minimum value of not less than
the appraised value of such Vessels or, if there shall not be an
appraised value for a Vessel, a value agreed to between the
Required Noteholders and the Borrower; provided, however, that for
at least the first five (5) months after the Closing Date the
value shall not be less than the current insured value under the
policies in effect as of the Closing Date.
(iv) If any Vessel shall at any time be located in war-endangered
waters or in other waters which may under the hull policy be
26
considered excluded by any "free of capture and seizure" clause,
the Borrower shall give prompt prior written notice thereof to the
Noteholders, and at the request of the Required Noteholder shall
insure (through a separate policy or by endorsement to the
applicable hull policy) such Vessel against war and political
risks in the amount required to be maintained under the hull
policy with respect thereto.
(v) The Borrower may exclude from the Hull and P. & I. insurance any
breach of warranty coverage, and may eliminate from the Hull and
P. & I. insurance any risks ordinarily covered thereunder,
provided that it insures such risks under a separate or different
form of policy.
(vi) Where the valuation of the Vessels in any policy of insurance
required hereunder may be pertinent, such valuation shall not
exceed the amount insured thereby, and policy franchises or
deductible averages shall not exceed the sum of $50,000.00 as to
each loss covered by hull insurance and $50,000.00 as to each loss
covered by P. & I. insurance. Excess liability, increased value,
disbursements and other forms of total loss insurance, in such
amounts as marine underwriters may allow, may be carried as part
of the total amount of the hull insurance required hereunder.
(vii) The Borrower shall select its own insurance brokers (unless such
brokers be unsatisfactory to the Required Noteholders) and all
such insurance shall be effected by the Borrower through such
brokers on policy forms acceptable to, and in companies in good
standing and satisfactory to, the Required Noteholders.
(viii) Except for such deductibles permitted by Section 7.1(f)(vi), the
Borrower shall not self-insure any of such risks. The Borrower's
hull policies (including any war and political risk coverage) and
its liability policies shall each name the Noteholders and the
Trustee as a named assured and the Trustee as sole loss payee.
Each of such policies shall be written by reputable insurers and
be reasonably acceptable to the Required Noteholders and shall
provide that neither the Trustee nor any Noteholder shall have any
responsibility for payment of premium and that it shall not
terminate without at least thirty (30) days' (or such fewer days,
if any, in the case of cancellation pursuant to any war and
related risk termination clauses contained in such policies)
advance written notice to the Trustee and the Noteholders.
(ix) All insurances and the policies evidencing the same shall by their
terms be taken out in the joint names of the Borrower and the
Trustee and shall by their terms be payable to the Trustee. Such
27
amounts shall be applied as described in Section 2.4(d) hereof.
The Borrower pays the amount of the deductible.
(x) The Borrower warrants that it will maintain all such insurance
unimpaired by any act, and that it will not be guilty of or permit
any act of omission or commission which will in any way
invalidate, void or suspend any insurance herein provided to be
maintained. Each policy of insurance required to be maintained by
the Borrower hereunder shall be endorsed with the undertaking of
the insurance company or underwriters issuing such policy to the
effect that such policy shall not lapse, expire, terminate or be
canceled for any reason whatsoever, or be modified in any material
respect, without at least thirty (30) days prior written notice to
the Trustee and the Noteholders. The Borrower shall, within a
reasonable period of time, pay for any loss of or damage to a
Vessel by any cause whatsoever, and shall discharge or obtain the
release of any third party claims whatsoever not covered by
insurance or for which no reimbursement or incomplete
reimbursement is secured from the insurance. Such policies shall
not provide for or purport to provide for any recourse against the
Trustee of the Noteholders for payment of club calls, assessments
or advances.
(g) Insurance Certificate. On or before May 1 in each year, commencing May
1, 2002, a certificate of insurance signed by an independent marine
insurance broker retained by the Borrower and acceptable to the
Required Noteholders (i) listing the policies of insurance outstanding
and in force on such date in respect of the Vessels and the Borrower
and its Subsidiaries as of such date, the names of the companies
issuing such insurance, the amounts and expiration dates of such
insurance and the risks covered thereby, and (ii) stating that
attached to such certificate are true, correct and complete copies of
all policies of insurance referred to therein or of certificates of
the issuers of such policies or their agents evidencing the existence
of such policies, and that such insurance complies with the
requirements contained in Section 7.1(f) of this Agreement. If such
certificate does not reflect coverage that is required by the Credit
Documents, any failure by the Trustee or any Noteholder to object
thereto shall in no event constitute a waiver of the requirements of
this Agreement or the Credit Documents. Within three Business Days of
the Closing Date, the Borrower shall deliver to the RBF Noteholder an
insurance certificate on behalf of the Borrower dated no later than
ten (10) days following the Closing Date from the Borrower describing
in reasonable detail the insurance maintained by the Borrower as
required by the Operative Documents.
(h) Other Information. Promptly, and in any event within five Business
Days, after the Borrower obtains knowledge of any of the following,
the
28
Borrower will provide the Noteholders with written notice in
reasonable detail of:
(i) Any pending or threatened material Environmental Claim against the
Borrower or any property owned or operated by the Borrower;
(ii) Any condition or occurrence on any property owned or operated by
the Borrower that results in material noncompliance by the
Borrower with any Environmental Law;
(iii) The taking of any material remedial action in response to the
actual or alleged presence of any Hazardous Material on any
property owned or operated by the Borrower other than in the
ordinary course of business;
(iv) The occurrence of any Default or Event of Default;
(v) Any litigation or governmental proceeding affecting the Borrower
or its Affiliates that might reasonably be expected to result in a
Material Adverse Effect;
(vi) Any circumstance that has had or reasonably threatens a Material
Adverse Effect, including, without limitation, the revocation,
change, modification or reconsideration of any license, consent or
approval which has had or reasonably threatens a Material Adverse
Effect;
(vii) Any investigation of the Borrower or its operations for a
violation of any applicable law or any material contract,
agreement, license or permit;
(viii) Promptly after the filing or receiving thereof, copies of all
material reports and notices with respect to the Vessels which the
Borrower or any Subsidiary files with the United States Coast
Guard or the United States Maritime Administration or which the
Borrower or any Subsidiary receives from either of the foregoing
entities; and
(ix) With reasonable promptness, such other information as any
Noteholder or the Trustee on behalf of the Noteholders may
reasonably request.
(i) Noteholder Inspection Rights. Upon reasonable notice from any
Noteholder, the Borrower will permit such Noteholder (and such Persons
as such Noteholder may reasonably designate) during normal business
hours at such entity's sole expense unless a Default or Event of
Default shall have occurred and be continuing, in which event at the
Borrower's expense, to visit and inspect any of the properties of the
Borrower, to examine all of its books and records, to make copies and
extracts
29
therefrom, verify the computation of any Excess Cash Flow, and to
discuss its affairs, finances and accounts with its officers and
independent public accountants (and by this provision the Borrower
authorizes such accountants to discuss with the Noteholders (and such
Persons as such Noteholder may reasonably designate) the affairs,
finances and accounts of the Borrower), all as often, and to such
extent, as may be reasonably requested.
(j) Conduct of Business. The Borrower shall not and shall not permit any
Subsidiary to directly or indirectly engage in any line of business
other than (i) the Marine Business as in effect on the Effective Date
or (ii) any other line of business that is approved in writing by the
Required Noteholders.
(k) Other Agreements. The Borrower shall not enter into any agreement
(other than the Operative Documents) expressly and directly
prohibiting the creation or assumption of any Lien upon its
properties, revenues or assets, whether now owned or hereafter
acquired, or prohibiting or restricting the ability of the Borrower
from amending or otherwise modifying any Operative Document.
(l) Change of Flag. Without the consent of the Required Noteholders, the
Borrower shall not, and shall not permit any Subsidiary to, change the
registry and flag of any Vessel or any of its Subsidiaries to any
jurisdiction other than the United States of America.
(m) Restrictions on Charterers of Vessels. The Borrower shall not, and
shall not permit any Subsidiary to, bareboat or demise charter any
Vessel for operation in the coastwise trade to any Person that is not
a citizen of the United States within the meaning of Section 2 of the
Shipping Act of 1916, as amended, for the purpose of operating in the
coastwise trade of the United States. The Borrower shall remain a
citizen within the meaning of Section 2 of the Shipping Act of 1916,
as amended, for the purposes of operating the Vessels in coastwise
trade of the United States.
(n) Restrictions on Fundamental Changes and Issuance of Additional Equity.
The Borrower shall not, nor permit any Subsidiary to, reorganize,
merge or consolidate with any Person (other than a Wholly Owned
Subsidiary) or become a party to any merger or consolidation with, or
purchase or otherwise acquire all or substantially all of the assets
or any of the stock of, any other Person (other than a Wholly Owned
Subsidiary), or sell or transfer all or substantially all of its or
any Subsidiary's assets or any of its stock. The Borrower shall not
issue any additional equity or options, warrants or other rights to
acquire any of the Borrower's Capital Stock to any Person other than
to the Noteholders.
30
(o) Liens. The Borrower shall not create, incur, assume or suffer to exist
any Lien of any kind on any Property of the Borrower, except the
following (collectively, the "Permitted Liens"):
(i) Intentionally Omitted.
(ii) Liens arising in the ordinary course of business of the Borrower
and its Subsidiaries by operation of law, deposits, pledges or
other Liens in connection with workers' compensation, unemployment
insurance, old age benefits, social security obligations, taxes,
assessments, public or statutory obligations or other similar
charges, pledges or other Liens in connection with (or to obtain
letters of credit in connection with) bids, performance, return-
of-money or payment bonds, contracts or leases to which the
Borrower is a party or other deposits required to be made in the
ordinary course of business; provided, that in each case the
obligation secured is not for Indebtedness for borrowed money and
is not overdue or, if overdue, is being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP have
been provided therefor;
(iii) For Property other than the Vessels, mechanics', worker's,
materialmen's, landlords', carriers' or other similar Liens
arising in the ordinary course of business (or deposits to obtain
the release of such Liens) related to obligations not overdue for
more than thirty (30) days, or, if so overdue, that are being
contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor; provided in each
case, that such Lien or claim is not prior to or on a parity with
or which might impair the Lien of the applicable Security Document
and which does not involve any risk of seizure or sale of any such
Property;
(iv) Liens for Taxes which are being contested in good faith by
appropriate proceedings and reserves in conformity with GAAP have
been provided therefor;
(v) Liens arising out of judgments or awards against the Borrower or
in connection with surety or appeal bonds or the like in
connection with bonding such judgments or awards, the time for
appeal from which or petition for rehearing of which shall not
have expired or for which the Borrower shall be prosecuting an
appeal or proceeding for review, and for which it shall have
obtained (within thirty (30) days with respect to a judgment or
award rendered in the United States a stay of execution or the
like pending such appeal or proceeding for review; provided, that
the aggregate amount of uninsured or underinsured liabilities
(including interest,
31
costs, fees and penalties, if any) of the Borrower secured by such
Liens shall not exceed $100,000 at any one time outstanding;
(vi) Rights reserved to or vested in any municipality or governmental,
statutory or public authority by the terms of any right, power,
franchise, grant, license or permit, or by any provision of law,
to terminate such right, power, franchise, grant, license or
permit or to purchase, condemn, expropriate or recapture or to
designate a purchaser of any of the property of a Person; and
(vii) Liens created by the Operative Documents.
(viii) With respect to the Vessels, Liens (a) for crew's wages (1) for
fifteen (15) days after the termination of a voyage, or (2) which
shall then be contested in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve as
shall be required by GAAP shall have been made therefor, (b) for
general average (1) which are unclaimed, (2) for fifteen (15) days
after having been claimed, (3) which are covered by insurance, or
(4) which shall then be contested in good faith by appropriate
action promptly initiated and diligently conducted, if such
reserve as shall be required by GAAP shall have been made
therefor, (c) for salvage, whether voluntary or contract, (1)
which are unclaimed, (2) for fifteen (15) days after having been
claimed, (3) which are covered by insurance, or (4) which shall
then be contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as shall be
required by GAAP shall have been made therefor, (d) otherwise
incident to the then current operations of the Vessels, for the
wages that are not past due of a stevedore when employed directly
by Borrower, or the operator, master or agent of any Vessel, and
(e) for repairs or with respect to any changes made in any Vessel
(1) which are unclaimed, (2) for fifteen (15) days after having
been claimed, (3) which are covered by insurance, or (4) which
shall then be contested in good faith by appropriate action
promptly initiated and diligently conducted, if such reserve as
shall be required by GAAP shall have been made therefor; provided
in each case, that such Lien or claim does not involve any risk of
seizure or sale of any Vessel.
(ix) Liens in existence on the Closing Date.
(p) Indebtedness. The Borrower shall not, and shall not permit any
Subsidiary to, incur, assume or suffer to exist any Indebtedness,
except the following (collectively, the "Permitted Indebtedness"):
(i) Indebtedness to the Noteholders under the Credit Documents;
32
(ii) Revolving Credit Facility or letter of credit facility in an
aggregate principal amount not to exceed $4,000,000 at any time
outstanding; and
(iii) Other unsecured Indebtedness permitted in writing by the Required
Noteholders.
(q) Use of Property and Facilities; Environmental Laws. The Borrower shall
and shall cause each of its Subsidiaries to, comply in all material
respects with all Environmental Laws applicable to or affecting the
properties or business operations of the Borrower or any of its
Subsidiaries, where the failure to comply is reasonably likely to have
a Material Adverse Effect.
(r) Advances, Investments and Loans; No Subsidiaries. The Borrower shall
not and shall not permit any of its Subsidiaries to, lend money or
make advances to any Person, guarantee any obligations of any Person
or purchase or acquire any stock, indebtedness, obligations or
securities of, or any other interest in, or make any capital
contribution to, any other Person (any of the foregoing, an
"Investment") except those permitted in the Company Investment
Guideline stipulated in Schedule 8.10 of the LLC Agreement and the
Borrower will not acquire or permit to exist any Subsidiary without
the consent of the Required Noteholders.
(s) Modifications of Organizational Documents and Operative Documents.
(i) The Borrower shall not amend, modify or change in any way adverse
to the interests of the Noteholders, its limited liability company
certificate, organizational agreement or other corporate
governance documents.
(ii) The Borrower shall not, after the date hereof, enter into, or
amend or modify, any Operative Document to which it is a party
without the prior written consent of the Required Noteholders.
(t) Transfers of Assets. The Borrower shall not permit any transfer of an
asset except:
(i) the retirement or replacement in the ordinary course of business
of equipment (other than Vessels) that is worn out, obsolete or no
longer useful in the Borrower's business if the proceeds thereof
are applied to replace such asset or to repay the Notes;
(ii) any Investment permitted by Section 7.1(r);
(iii) the Liens permitted by Section 7.1(o);
(iv) any Asset Sale for cash where the consideration involved is equal
to or less than $2 million or any series of Asset Sales within a
33
Fiscal Year where the aggregate consideration involved is equal to
or less than $2 million, in either case, including contingent
liabilities only to the extent required to be reflected on the
balance sheet of the Company in accordance with GAAP; and
(v) Payments on Indebtedness permitted to be incurred or exist under
this Agreement and other payments made in the ordinary course of
business and otherwise in compliance with the terms of the Credit
Documents.
(u) Capital Expenditures. The Borrower shall not make any or incur
liability for any Capital Expenditures (excluding Member-Indemnified
Expenditures) and Acquisition Expenditures that exceed $4 million in
the aggregate for each Fiscal Year or $150,000 per individual
expenditure or group of related expenditures.
(v) Transactions with Affiliates. Except as permitted pursuant to Section
8.09 of the LLC Agreement or otherwise specifically permitted herein,
the Borrower shall not enter into or engage in any transaction or
arrangement or series of related transactions or arrangements,
including, without limitation, the purchase from, sale to or exchange
of property with, or the rendering of any service by or for, any
Affiliate; provided that each such permitted transaction shall be an
Arm's Length Transaction.
(w) Operating Lease. The Borrower shall not enter into any operating lease
if the aggregate amount payable in any 12-month period on all
operating leases exceeds $100,000.
(x) Compliance with Laws. Without limiting any of the other covenants of
the Borrower in this Article VII, the Borrower shall conduct its
business, and otherwise be, in compliance with all applicable laws,
regulations, ordinances and orders of any Governmental Authorities;
provided, however, that this Section 7.1(x) shall not require the
Borrower to comply with any such law, regulation, ordinance or order
if the failure to comply therewith is not reasonably likely to have a
Material Adverse Effect.
(y) Classification of Vessels. The Borrower shall, and shall cause each of
its Subsidiaries to, maintain each Vessel that is acquired on the
Effective Date that is so classified and each other Vessel that it
elects thereafter to have classified such that at all times each such
Vessel ("Classified Vessels") shall remain in class with the American
Bureau of Shipping or a similar classification society, to the extent
such Vessel as a result of its operations is required to be in class.
Each Classified Vessel shall be in compliance with the requirements of
the American Bureau of Shipping or any other similar classification
society, for the highest classification for vessels of like age and
type at all times and upon request of the Required Noteholders, the
Borrower shall promptly provide to the Noteholders a
34
copy of a certificate duly issued by the American Bureau of Shipping
or other classification society, to the effect that the Classified
Vessels have been given the highest classification and rating for
vessels of the same age and type free of all recommendations and
notations of such classification society affecting class.
(z) Separate Legal Existence of the Borrower and its Subsidiaries. The
Borrower will and will cause its Subsidiaries to maintain their
respective financial and other records and books of account separate
from those of any other Person, and will maintain and cause its
Subsidiaries to maintain their respective assets in a manner that
facilitates their identification and segregation from those of any
other Person. The Borrower will observe and will cause its
Subsidiaries to observe all requisite corporate formalities in their
respective business affairs, and will not commingle or permit any
Subsidiary to commingle their respective funds or other assets with
those of any other Person or maintain joint bank accounts with any
other Person.
(aa) Non Discrimination or Adverse Transaction. The Borrower shall not, and
shall not permit any Subsidiary to, enter into any contract, agreement
or other arrangement with another Person that is less favorable to the
Borrower and its Subsidiaries than an Arm's Length Transaction.
(bb) No Management or Other Fees. The Borrower shall not pay any management
or similar fees to any Person other than under the Administrative
Support Services Agreement.
ARTICLE VIII
LIMITATION ON DIVIDENDS
Section 8.1. Distributions. The Borrower shall not, and shall not permit
any Subsidiary, to (i) declare or pay any dividend on, or make any distribution
in respect of, or purchase, redeem, retire or otherwise acquire for value any
equity interest of the Borrower or any Affiliate of the Borrower, or warrants,
rights or options to acquire such equity interest, other than (x) dividends
payable solely in such equity interests (other than preferred or other
redeemable stock), or in warrants, rights or options to acquire such equity
interests and (y) dividends or distributions by a Subsidiary to the Borrower or
to a Wholly Owned Subsidiary of Borrower; (ii) make any principal payment on, or
redeem, repurchase, defease or otherwise acquire or retire for value, prior to
any scheduled principal payment, scheduled sinking fund payment or other stated
maturity, Indebtedness of the Borrower or any Subsidiary which is subordinated
in right of payment to the Notes (collectively, "Distributions"), except
Distributions in cash made after the earlier to occur of (x) the Tier 1
Repayment Date and (y) the Tier 2 & 3 Termination Date, if at the time such
Distributions are paid and after giving effect thereto:
(i) no Default or Event of Default shall have occurred and be
continuing;
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(ii) such Distribution shall be made within 15 days after the most recent
Payment Date; and
(iii) the aggregate amount of Distributions in any Fiscal Quarter shall
not exceed, while the (x) Tier 2 Note is outstanding, 25% of the
Excess Cash Flow for the preceding Fiscal Quarter, and (y) Tier 3
Note is outstanding, 50% of the Excess Cash Flow for the preceding
Fiscal Quarter.
ARTICLE IX
BOOKS AND RECORDS
Section 9.1. Books and Records; Examination. The Borrower shall keep or
cause to be kept such books of account and records with respect to the
Borrower's business in order to be able to prepare financial statements in
accordance with GAAP. Each Noteholder and its duly authorized representatives
shall have the right at any time to examine, or to appoint independent certified
public accountants to examine, but in any event during normal business hours and
without unreasonably interfering with the operation of Borrower's business, the
books, records and accounts of the Borrower and its Subsidiaries, their
operations and all other matters that such Noteholder may wish to examine,
including, without limitation, all documentation relating to actual or proposed
transactions with the Borrower, the Company or any Affiliate thereof. The
Borrower's books of account shall be kept using the method of accounting
determined by the Borrower and acceptable to the Required Noteholders. The
Borrower's independent auditors (the "Borrower Independent Auditors") shall be
an independent public accounting firm selected by the Borrower and approved by
the Required Noteholders, and shall initially be Ernst & Young. The Borrower
shall not replace or appoint the Borrower Independent Auditors without written
approval of the Required Noteholders.
Section 9.2. Financial Statements and Reports.
(a) Unaudited Monthly Financial Statements. (i) The Borrower shall prepare
and send to each Noteholder (at the same time) promptly, but in no
event later than noon on the 15th Business Day after the last day of
each month, unaudited financial statements with respect to the
Borrower and its Subsidiaries: a balance sheet, a statement of
operations, a statement of cash flows and a statement of changes in
members' capital (collectively, "Unaudited Financial Statements") as
at the end of and for such month;
(ii) The Borrower shall prepare and send to each Noteholder promptly,
but in no event later than noon on the 20th Business Day after
the last day of each month, an unaudited financial summary
booklet containing a breakdown of such operating and financial
information of the Borrower and its subsidiaries as at the end of
and for such month as any Noteholder shall reasonably request
including a variance analysis with commentary as compared with
the Annual Budget; provided, however, that each Noteholder shall
be provided with the same information at the same time as each
other Noteholder.
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(b) Annual Budget and Unaudited Quarterly Financial Statements and
Forecasts. The Borrower shall prepare and send to each Noteholder (at the same
time) promptly, but in no event later than the 30th day after the last day of
each Fiscal Quarter, (i) Unaudited Financial Statements as at the end of and for
such Fiscal Quarter, (ii) an unaudited statement of the Excess Cash Flow for
such Fiscal Quarter and (iii) a twelve month operating budget forecast covering
those items set forth in the Annual Budget which shall consist of projections of
those financial statements included in the Audited Financial Statements and
major projects, setting forth material assumptions and containing reasonable
detail.
(c) Audited Annual Financial Statements. (i) Within 75 days after
the end of each Fiscal Year, the Borrower shall cause (A) an examination to be
made, at the expense of the Borrower, by the Borrower Independent Auditors,
covering (1) the assets, liabilities and capital of the Borrower and its
subsidiaries, and the Borrower's and its subsidiaries' operations during such
Fiscal Year, (2) an examination of the Distributions Calculation Statement for
such Fiscal Year, and (3) all other matters customarily included in such
examinations and (B) to be delivered to each Noteholder (at the same time) a
copy of the report of such examination, stating that such examination has been
performed in accordance with generally accepted auditing standards, together
with the following financial statements with respect to the Borrower and its
subsidiaries certified by such accountants as having been prepared in accordance
with GAAP: a balance sheet, a statement of operations, a statement of cash
flows and a statement of changes in members' capital at the end of and for such
Fiscal Year (collectively, the "Audited Financial Statements").
(ii) Within 30 days after the Closing Date for Fiscal Year 2001,
and promptly, but in any event within 30 days after the end of each Fiscal Year
thereafter, the Borrower shall deliver to the Noteholders a projection of the
Borrower's consolidated balance sheet and consolidated income, capital and cash
flows for that Fiscal Year showing such projected budget for each Fiscal Quarter
of the Borrower and its Subsidiaries ending during such year (the "Annual
Budget"), as approved by the board of managers, setting forth material
assumptions and containing reasonable detail.
(d) Schedule of Repayment and Distribution. (i) Preliminary Annual
Repayment and Distribution Schedule. The Borrower shall prepare and send to
each Noteholder (at the same time) promptly, but in no event later than the 75th
day after the last day of each Fiscal Year, a schedule showing the respective
repayment and/or distribution schedule of the Notes based on the Borrower's
estimated Excess Cash Flow for such Fiscal Year.
(ii) Examination. Within 15 days after the date the Borrower
determines its net taxable income and Excess Cash Flow with respect to any
Fiscal Year, but in no event later than three months after the end of such
Fiscal Year, the Borrower shall cause (A) an examination to be made, at the
expense of the Borrower, by the Borrower Independent Auditors, covering the
determination of the Borrower's taxable income and Excess Cash Flow with respect
to such Fiscal Year and (B) to be delivered to each Noteholder (at the same
time) a copy of the report of such examination, stating that such examination
has been performed in accordance with generally accepting auditing standards.
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(e) Each of the statements and reports delivered pursuant to this
Section 9.2 (a) - (c) shall present in comparative form figures for the
corresponding period, if any, of the preceding Fiscal Year, all in reasonable
detail and satisfactory in form and substance to the Noteholders. Together with
the delivery of such financial statements, the Borrower shall deliver a
certificate of the chief financial officer of the Borrower stating that the
chief financial officer has examined such statements and that such statements
fairly present (i) the financial condition, results of operations, changes in
members' capital and cash flows of the Borrower and its Subsidiaries in
accordance with GAAP and (ii) the Excess Cash Flow for the applicable Fiscal
Quarter and whether during such period a Default or Event of Default exists, and
if such exists, specifying the nature thereof and what actions the Borrower
intends to take with respect thereto; and
(f) The Borrower shall prepare and send to each Noteholder (at the
same time) promptly such other financial information as a Noteholder shall from
time to time reasonably request.
Section 9.3. Notice of Affiliate Transactions; Annual List. (a) The
Borrower shall notify each Noteholder of any Affiliate Transaction that the
Borrower or any of its Subsidiaries is considering entering into or renewing or
extending the term thereof (whether pursuant to contractual provisions thereof
or otherwise), which notice shall be given, to the extent reasonably possible,
sufficiently in advance of the time that the Borrower intends to enter into,
renew or extend the term of such Affiliate Transaction so as to provide the
Noteholders with a reasonable opportunity to examine the documentation related
to such Affiliate Transaction.
(b) Within 60 days after the end of each Fiscal Year, the Borrower shall
prepare and distribute to each Noteholder a list setting forth a description of
each Affiliate Transaction entered into by the Borrower or any of its
Subsidiaries during such Fiscal Year and identifying all of the parties to such
Affiliate Transactions; provided, however, that if two or more Affiliate
Transactions either (i) constitute a series of related transactions or
agreements or (ii) are substantially the same type of transaction or agreement,
the Borrower need not separately describe each such Affiliate Transaction but
instead can describe such related or similar Affiliate Transactions as a group.
ARTICLE X
EVENTS OF DEFAULT
Section 10.1. Events of Default. Any one or more of the following shall
constitute an Event of Default:
(a) Default by the Borrower in the payment when due of the principal of
any Note, other than principal that is paid when due as a Note
Increase Payment Amount so long as the initial calculation by the
Borrower resulting in the adjustment giving rise to the Note Increase
Payment Amount was made in good faith;
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(b) Default by the Borrower in the payment when due of any interest on the
Notes or any fee, expense or other amount payable hereunder and such
failure continues for two (2) Business Days thereafter;
(c) Default by (i) the Borrower in the observance or performance of the
covenants set forth in Section 7.1(c), (d) and (y) of this Agreement
and such failure continues for 15 days or (ii) any Obligor in the
observance or performance of any other covenant set forth in this
Agreement or other Operative Documents; provided, however, that if any
such Default relates to a covenant relating to the Borrower's ability
to engage in the coastwise trade of the United States, such Default
shall not constitute an Event of Default until such time as any
Governmental Authority shall take any action that impedes the
Borrower's ability to engage in the coastwise trade of the United
States;
(d) Any representation or warranty made herein or in any other Operative
Document by the Borrower or the Company proves untrue in any material
respect as of the date of the making thereof; provided, however, that
if any such Default relates to a representation or warranty relating
to the Borrower's ability to engage in the coastwise trade of the
United States, such Default shall not constitute an Event of Default
until such time as any Governmental Authority shall take any action
that impedes the Borrower's ability to engage in the coastwise trade
of the United States;
(e) Default occurs in the payment when due of principal or interest in
respect of (i) the Revolving Credit Facility or (ii) Indebtedness in
the aggregate principal amount of $250,000 which is then in default,
of the Company, the Borrower or any of their respective Subsidiaries
after any applicable grace period therefor, or any other event occurs
which would permit the lenders under (i) the Revolving Credit Facility
or (ii) the holder or beneficiary of any other such Indebtedness, or a
trustee therefor, to cause the acceleration of the maturity of any
such Indebtedness or any mandatory unscheduled prepayment, purchase,
or other early funding thereof;
(f) The Company, the Borrower or any of their respective Subsidiaries (i)
has entered involuntarily against it an order for relief under the
United States Bankruptcy Code or a comparable action is taken under
any bankruptcy or insolvency law of another country or political
subdivision of such country, (ii) generally does not pay, or admits
its inability generally to pay, its debts as they become due, (iii)
makes a general assignment for the benefit of creditors, (iv) applies
for, seeks, consents to, or acquiesces in, the appointment of a
receiver, custodian, trustee, liquidator or similar official for it or
any substantial part of its property under the Bankruptcy Code or
under the bankruptcy or insolvency laws of another country or a
political subdivision of such country, (v) institutes any proceeding
seeking to have entered against it an order for relief under the
United States Bankruptcy
39
Code or any comparable law, to adjudicate it insolvent, or seeking
dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fails
to file an answer or other pleading denying the material allegations
of or consents to or acquiesces in any such proceeding filed against
it, (vi) takes any corporate action in direct furtherance of any
matter described in clauses (i)-(v) above, or (vii) fails to contest
in good faith any appointment or proceeding described in this Section
10.1(f);
(g) A custodian, receiver, trustee, liquidator or similar official is
appointed for the Company, the Borrower or any of their respective
Subsidiaries or any substantial part of its property under the
Bankruptcy Code or under the bankruptcy or insolvency laws of another
country or a political subdivision of such country, or a proceeding
described in Section 10.1(f)(v) is instituted against the Company, the
Borrower or any of their respective Subsidiaries, and such appointment
continues undischarged or such proceeding continues undismissed and
unstayed for a period of sixty (60) days;
(h) The Company, the Borrower or any of their respective Subsidiaries
fails within thirty (30) days with respect to a judgment or an order
(or such earlier date as any execution on such judgment or order shall
take place) to vacate, pay, bond or otherwise discharge any judgment
or order for the payment of money the uninsured portion of which is in
excess of $250,000 with respect to the Company, the Borrower or such
Subsidiary and which is not stayed on appeal or otherwise being
appropriately contested in good faith in a manner that stays
execution;
(i) The Company, the Borrower or any Person authorized to act on behalf of
the Company, the Borrower or any of its Subsidiaries challenges the
validity of any Operative Document or the Company, the Borrower's
obligations thereunder in any material respect, or any Operative
Document ceases, other than in accordance with its terms, to be valid
and binding or ceases, in any material respect, other than in
accordance with its terms, to give to the Trustee and the Noteholders
the Liens, rights, and powers purported to be granted in their favor
thereby;
(j) The Company shall fail to directly own at least one hundred percent
(100%) of the Membership Interests of the Borrower; or ▇▇▇▇ ▇▇▇▇▇▇▇
fails at all times before his death to own directly or indirectly
11.25% of the Membership Interests in the Company;
(k) Any default (as defined in the applicable contract) or event of
default (as defined in the applicable contract) by Company, the
Borrower, the Beta Noteholder under any of the Operative Documents
shall occur and shall be continuing or any of such contracts shall be
cancelled, terminated or
40
performance of any material party suspended as a result of such
default or event of default;
(l) Any Governmental Authority shall take any action that impedes the
Borrower's ability to engage in the coastwise trade of the United
States;
(m) Any Condition Subsequent shall not be fully satisfied on or before the
date on which the Beta Noteholder purchases its Tier 1 Note; or
(n) Upon filing the Fleet Mortgage for recordation pursuant to Section
5.1(a)(viii), the Coast Guard's National Vessel Documentation Center
is unable to provide satisfactory evidence to the Required Noteholders
that the Borrower owns the Vessels covered thereby free and clear of
all recorded liens other than the Fleet Mortgage.
Section 10.2. Non-Bankruptcy Defaults. When any Event of Default (other
than those described in Section 10.1(f) or (g) with respect to the Borrower) has
occurred and is continuing, the Required Noteholders may, without notice to the
Borrower declare the outstanding principal of and the accrued and unpaid
interest on the Notes and all other Obligations to be forthwith due and payable
and thereupon all outstanding amounts under the Notes, including both principal
of and interest thereon, shall be and become immediately due and payable
together with all other Obligations without further demand, presentment, protest
or notice of any kind, including, but not limited to, notice of intent to
accelerate and notice of acceleration, each of which is expressly waived by the
Borrower.
Section 10.3. Bankruptcy Defaults. When any Event of Default described in
Section 10.1(f) or (g) has occurred and is continuing with respect to the
Borrower, then all outstanding principal of and accrued and unpaid interest
under the Notes shall immediately become due and payable together with all other
Obligations, without presentment, demand, protest or notice of any kind, each of
which is expressly waived by the Borrower.
Section 10.4. Remedies Upon an Event of Default. (a) If an Event of Default
has occurred and is continuing, the Trustee may, and, the Trustee, if directed
in writing by the Required Noteholders, shall, exercise any of the rights or
remedies granted to it under the Collateral Trust Agreement or any of the other
Operative Documents, in addition to any rights or remedies of such parties set
forth in this Agreement.
(b) If an Event of Default has occurred and is continuing, then the
Trustee and the Required Noteholders may, and the Trustee, if directed
in writing by the Required Noteholders, shall, take all steps
necessary or advisable to protect and enforce its rights hereunder,
whether by action, suit or proceeding at law or in equity, for the
specific performance of any covenant, condition or agreement contained
herein, or in aid of the execution of any power herein granted, or for
the enforcement of any other appropriate legal or equitable remedy or
otherwise as such party shall deem necessary or advisable.
41
(c) If any Obligor shall fail to make any payment or perform any act
required to be made or performed under any Operative Document, the
Trustee and the Required Noteholders, without waiving any default or
releasing any Obligor from any obligation, may (but shall be under no
obligation to unless directed in writing by the Required Noteholders)
make such payment and perform such act for the account and at the
expense of such Obligor, and may enter upon any of the Properties for
such purpose and take all such action thereon as, at the Trustee's or
the Required Noteholders' sole discretion, may be necessary or
appropriate therefor. All sums so paid by the Trustee and the Required
Noteholders and all costs and expenses (including reasonable
attorneys' fees and expenses so incurred, together with interest
thereon to the extent permitted by law) shall be paid by the
applicable Obligor to the Trustee and the Required Noteholders on
demand.
Notwithstanding Sections 10.2 through 10.4, unless the Trustee or the
Required Noteholders shall have notified the Borrower in writing within 30 days
of the occurrence of any Tier 1 Amortization Default and thereafter commenced
the exercise of their rights and remedies in respect of such Tier 1 Amortization
Default within six months of its occurrence, and no other Default or Event of
Default shall have occurred and be continuing, then such Tier 1 Amortization
Default shall be deemed waived upon the expiration of such six month period.
Any such deemed waiver shall not affect the rights and remedies of the
Noteholders or the Trustee with respect to any other Default or Event of
Default, including any other Tier 1 Amortization Default.
Section 10.5. Default Prior to 10-Year Anniversary. Notwithstanding
anything set forth in Section 10.1 to the contrary, upon the occurrence of any
event (an "Extended Cure Default") described in Section 10.1(c), (d) or (k)
(with respect to (k), other than any such event that has resulted in any such
contract being canceled or terminated) during the last six months of the tenth
year following the Closing Date, such event shall not be considered an Event of
Default unless the Required Noteholders have given notice of any such Default
and it is not cured within thirty (30) days after that notice. If the notice of
an Extended Cure Default is given to the Borrower less than thirty (30) days
prior to the Tier 2 & 3 Termination Date, the Tier 2 & 3 Termination Date will
be extended by that number of days necessary to enable the Borrower to have a
full 30-day period in which to cure the subject Extended Cure Default. The date
to which the Tier 2 & 3 Termination Date is extended is the "Tier 2 & 3 Extended
Termination Date."
ARTICLE XI
MISCELLANEOUS
Section 11.1. Termination and Survival of Obligations. This Agreement shall
terminate when the principal amount of and all accrued interest on the Notes and
all other Obligations shall have been indefeasibly paid or performed in full or
otherwise discharged in accordance with the terms hereof; provided, however, the
rights and remedies of the Noteholders and the Trustee under Articles III and IV
shall survive such termination.
Section 11.2. Notices. Unless otherwise specified, all notices and other
communications hereunder shall be in writing (including by telecopier or other
facsimile communication), given
42
to the appropriate Person at its address or telecopy number set forth on the
signature pages hereof or at such other address or telecopy number as such
Person may specify, and effective when received at the address specified by such
Person. Each party hereto, however, authorizes the Noteholders and Trustee to
act on telephone notices from any person the Noteholders in good faith believe
to be acting on behalf of the relevant party and, at the Noteholder's option, to
tape record any such telephone conversation. Borrower agrees to deliver promptly
to the Noteholders a confirmation of each telephone notice given or received by
such party (signed by an authorized officer of such party). The Noteholders' and
Trustee's records of all such conversations shall be deemed correct absent
manifest error and, if the confirmation of a conversation differs in any
material respect from the action taken by the Noteholders, the records of the
Noteholder shall govern absent manifest error.
Section 11.3. Payments and Computations. Notwithstanding anything herein to
the contrary, any amounts to be paid or transferred by the Borrower to, or for
the benefit of, the Noteholders or any other Person shall be paid or transferred
to the Noteholders (for the benefit of the Noteholders or any other Person). All
amounts to be paid or deposited hereunder shall be paid or transferred on the
day when due in immediately available Dollars (and, if due from the Borrower, by
11:00 a.m. (Houston time), with amounts received after such time being deemed
paid on the Business Day following such receipt). The Borrower shall, to the
extent permitted by law, pay to the Noteholders upon demand, for the account of
the applicable Person, interest on all amounts not paid or transferred by the
Borrower when due hereunder at a rate equal to the Fixed Rate plus 2% per annum,
calculated from the date any such amount became due until the date paid in full.
Any payment or other transfer of funds scheduled to be made on a day that is not
a Business Day shall be made on the next Business Day, and any interest rate
accruing on such amount to be paid or transferred shall continue to accrue to
such next Business Day.
Section 11.4. Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, but for
the ratable benefit of Noteholders, upon the occurrence of, and throughout the
continuance of, any Event of Default involving a failure to pay interest or
principal when due and upon expiration of any applicable grace period, each
Noteholder, but for the ratable benefit of Noteholders is hereby authorized by
the Borrower at any time or from time to time, to the extent permitted by law,
without notice to the Borrower or any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts, and in whatever currency denominated) and any other
Indebtedness, payables, charter payment, contract or other obligation at any
time owing by such Noteholder or that subsequent holder to or for the credit or
the account of the Borrower, whether or not matured, against and on account of
the due and unpaid obligations and liabilities of the Borrower to the
Noteholders or that subsequent holder under the Credit Documents, irrespective
of whether or not that Noteholder or that subsequent holder shall have made any
demand hereunder.
Section 11.5. Amendments, Waivers and Consents. Any provision of the Credit
Documents may be amended or waived if, but only if, such amendment or waiver is
in writing and is signed (and/or consented to) by (a) the Borrower, and (b) the
Required Noteholders; provided that any increase or reduction in the interest
rate on the Notes and acceleration of the Tier 2 & 3 Termination Date, a
deferral of the payment dates set forth in the proviso to Section
43
2.4(a), or any increase or reduction in the portion of Excess Cash Flow to be
allocated to the Notes shall require the approval of all Noteholders. Any
consent to be delivered by the Noteholders under the Credit Documents shall not
be effective unless contained in a writing signed by the Required Noteholder, or
if, described in the foregoing proviso, all Noteholders.
Section 11.6. Waivers. No failure or delay of the Noteholders or the
Trustee in exercising any power, right, privilege or remedy hereunder shall
operate as a waiver thereof, nor (to the fullest extent permitted by applicable
law) shall any single or partial exercise of any such power, right, privilege or
remedy preclude any other or further exercise thereof or the exercise of any
other power, right, privilege or remedy. Any failure to insist upon the strict
performance of any provision hereof or to exercise any option, right, power or
remedy contained herein shall not constitute a waiver or relinquishment thereof
for the future. The Trustee and the Required Noteholders shall be entitled to
injunctive relief in case of the violation or attempted or threatened violation
of any of the provisions hereof by any other party hereto, a decree compelling
performance of any of the provisions hereof or any other remedy allowed by law
or in equity. Any waiver hereof shall be effective only in the specific instance
and for the specific purpose for which such waiver was given. After any waiver,
the Borrower and the Noteholders shall be restored to their former position and
rights and any Default waived shall be deemed to be cured and not continuing,
but no such waiver shall extend to (or impair any right consequent upon) any
subsequent or other Default.
Section 11.7. Successors and Assigns. This Agreement shall be binding upon
the Borrower and the Noteholders and their respective successors and assigns,
and shall inure to the benefit of the Borrower and the Noteholders and their
respective successors and assigns; provided, however, that the Borrower may not
assign any of its rights or obligations under this Agreement or any other Credit
Document without the written consent of the Required Noteholders. Assignments by
the Noteholders hereunder are subject to the terms and conditions of Section
11.8 hereof.
Section 11.8. Participations and Assignments. (a) Participations. Subject
to Section 11.8(c) and (d), the Noteholders may at any time sell to Persons
("Participants") participating interests in any Note owing to the Noteholders,
or any other interest of the Noteholders hereunder. The Borrower agrees that if
amounts outstanding under this Agreement shall have become due and payable, each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as the
Noteholders under this Agreement. The Borrower also agrees that each Participant
shall be entitled to the benefits of Sections 4.1, 4.2, 4.3 and 4.6 with respect
to the principal amount of the Notes outstanding from time to time.
(b) Assignments. Subject to Section 11.8(c) and (d), any Noteholder may
at any time sell to any Person all or a portion of its interest in the Notes.
Upon such execution, delivery and acceptance, from and after the effective date
of the transfer, (i) such Noteholder thereunder shall be a party hereto and, to
the extent of such assignment, have the rights and obligations of the transferor
Noteholder hereunder and (ii) the transferor Noteholder thereunder shall, to the
extent provided in such assignment, be released from its obligations under this
Agreement (and, in the case of an assignment covering all or the remaining
portion of a transferor Noteholder's rights
44
and obligations under this Agreement, such transferor Noteholder shall cease to
be a party hereto except as to Sections 4.1, 4.2, 4.3 and 4.6 for periods prior
to the effective date of such assignment). Such assignment shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to reflect
the addition of such transferee and the resulting adjustment of percentages
arising from the purchase by such transferee of all or a portion of the rights
and obligations of such transferor Noteholder under this Agreement and the other
Credit Documents.
(c) Right of First Refusal. (i) If either Noteholder (the "Selling
Noteholder") shall desire to sell participating interests in any Note or all or
a portion of its interests in any Note pursuant to Section 11.8 (a) or (b)
(other than a Transfer by RBF Noteholder pursuant to Section 11.8(g) or a
Transfer by Beta Noteholder or the Chouests or any Permitted Beta Noteholder
Transferee pursuant to Section 11.8(h)), then such Selling Noteholder shall give
notice (the "Offer Notice") to the other Noteholder, identifying the proposed
Participant or the proposed purchaser from whom it has received a bona fide
offer and setting forth the proposed sale price and the other material terms and
conditions upon which such Selling Noteholder is proposing to sell participating
interests or all or a portion of its interests in the Notes to such Participant
or proposed purchaser. Such other Noteholder shall have 60 days from receipt of
the Offer Notice to elect, by notice to such Selling Noteholder, to purchase the
participating interests or the portion of the Notes offered for sale on the
terms and conditions set forth in the Offer Notice (such 60-day period
hereinafter referred to as the "Election Period").
(ii) If a Noteholder makes such election, the notice of election shall
state a closing date not later than 90 days after the date of the Offer Notice.
If such Noteholder breaches its obligation to purchase the participating
interests or interests of the Selling Noteholder on the same terms and
conditions as those contained in the Offer Notice after giving notice of its
election to make such purchase (other than where such breach is due to
circumstances beyond such Noteholder's reasonable control), then, in addition to
all other remedies available, the Selling Noteholder may, at any time for a
period of 270 days after such default, sell such the participating interests or
interest in the Notes to any Person at any price and upon any other terms.
(iii) If the other Noteholder does not give notice within the
Election Period following the Offer Notice from the Selling Noteholder that it
(i) elects to purchase the participating interests or interest in the Notes of
the Selling Noteholder or (ii) elects to purchase its interest in the Notes
pursuant to the terms and conditions set forth in the Offer Notice in accordance
with Section 11.08(d), the Selling Noteholder may, within 120 days after the end
of the Election Period, sell the participating interests or such interest in the
Notes to the identified purchaser on terms and conditions no less favorable to
the Selling Noteholder than the terms and conditions set forth in such Offer
Notice. In the event the Selling Noteholder shall desire to offer its interest
in the Notes for sale on terms and conditions less favorable to it than those
previously set forth in an Offer Notice, the procedures set forth in this
Section 11.8(c) must again be initiated and applied with respect to the terms
and conditions as modified.
(d) Right of Co-Sale. (i) If a Selling Noteholder has delivered an Offer
Notice to the other Noteholder pursuant to Section 11.8(c) and the other
Noteholder does not give notice during the Election Period that it elects to
purchase participating interests or interest in the Note, such other Noteholder
(the "Co-Sale Right Holder") shall have the right, exercisable upon notice
45
to the Selling Noteholder within the Election Period, to sell all (but not part)
of its interest in the Notes pursuant to the specified terms and conditions set
forth in the Offer Notice.
(ii) If the Co-Sale Right Holder gives notice within the Election
Period that it elects to sell all (but not part) of its interest in the Notes
pursuant to the specified terms and conditions set forth in the Offer Notice,
the Selling Noteholder may, within 120 days after the end of the Election
Period, sell the Noteholder's interest in the Notes to the identified purchaser
on terms and conditions no less favorable to the Selling Noteholder than the
terms and conditions set forth in such Offer Notice; provided that the
identified purchaser also purchases all (but not part) of the Co-Sale Right
Holder's interest in the Notes on the same terms and conditions as the purchase
of the Selling Noteholder's interests in the Notes.
(e) Except for Transfers of membership interests in Beta to or among
Permitted Beta Noteholder Transferees, no Noteholder may sell any participation
in any of its Notes or to sell all or a portion of its interest in the Notes
unless such sale also encompasses the sale of all of the Membership Interest
owned by such Noteholder.
(f) Certain Actions Constituting a Transfer by Beta Noteholder. A merger,
consolidation or similar business combination transaction by Beta Noteholder
with another Person, a sale of all or substantially all of the assets of Beta
Noteholder to another Person, the Transfer of limited liability company
interests in Beta Noteholder by the owner thereof to another Person or the
issuance of limited liability company interests by Beta Noteholder shall
constitute a Transfer of Beta Noteholder's Note subject to this Section 11.8.
This paragraph (f) shall not be deemed to limit actions constituting a Transfer
of Beta Noteholder's Note.
(g) Permitted RBF Noteholder Transfers. RBF Noteholder may Transfer all
(but not part) of its Notes at any time to R&B Falcon Corporation, a Delaware
corporation ("RBF Corporation"), or to any Wholly Owned Subsidiary of RBF
Corporation, provided that so long as such Wholly Owned Subsidiary holds such
transferred Notes, such Wholly Owned Subsidiary shall remain a Wholly Owned
Subsidiary of RBF Corporation or of RBF Noteholder. In the event RBF Noteholder
shall be party to a merger, consolidation or similar business combination
transaction with a third party or sell all, substantially all or a substantial
portion of its assets to a third party, RBF Noteholder may Transfer all (but not
part) of its Notes to such third party. Neither the Transfer of the capital
stock of RBF Noteholder by the owner thereof to another Person nor the issuance
of capital stock by RBF Noteholder shall constitute a Transfer of RBF
Noteholder's Note subject to this Article 11.8.
(h) Permitted Beta Noteholder Transfers. Beta Noteholder (and any Permitted
Beta Noteholder Transferee) may Transfer all or a part of its Note, and the
Chouests (and any Permitted Beta Noteholder Transferee) may Transfer all or a
part of their membership interest in Beta Noteholder, at any time to a Permitted
Beta Noteholder Transferee.
Section 11.9. Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial. (a) THIS AGREEMENT AND THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE
OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES).
46
(b) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO
AGREE THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE NOTEHOLDERS OR THE TRUSTEE OR THE BORROWER SHALL BE BROUGHT AND
MAINTAINED IN THE DELAWARE CHANCERY COURT; PROVIDED THAT IF THE DELAWARE
CHANCERY COURT DOES NOT HAVE JURISDICTION WITH RESPECT TO SUCH MATTER, THE
PARTIES HERETO SHALL BE ENTITLED TO ENFORCE SPECIFICALLY THE TERMS AND
PROVISIONS OF THIS AGREEMENT IN ANY COURT OF THE UNITED STATES LOCATED IN THE
STATES OF DELAWARE, LOUISIANA OR TEXAS, THIS BEING IN ADDITION TO ANY OTHER
REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY. IN ADDITION, EACH OF THE
PARTIES HERETO (I) CONSENTS TO SUBMIT ITSELF TO THE PERSONAL JURISDICTION OF THE
DELAWARE CHANCERY COURT IN THE EVENT THAT ANY DISPUTE ARISES OUT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT; PROVIDED
THAT IF THE DELAWARE CHANCERY COURT DOES NOT HAVE JURISDICTION WITH RESPECT TO
ANY SUCH DISPUTE, SUCH PARTY CONSENTS TO SUBMIT ITSELF TO THE PERSONAL
JURISDICTION OF ANY FEDERAL COURT LOCATED IN THE STATES OF DELAWARE, LOUISIANA
OR TEXAS, (II) AGREES TO APPOINT AND MAINTAIN AN AGENT IN THE STATE OF DELAWARE
FOR SERVICE OF LEGAL PROCESS, (III) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR
DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY
SUCH COURT, (IV) AGREES THAT IT WILL NOT PLEAD OR CLAIM IN ANY SUCH COURT THAT
ANY ACTION RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND
(V) AGREES THAT IT WILL NOT INITIATE ANY ACTION RELATING TO THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN
(1) THE DELAWARE CHANCERY COURT, OR (2) IF THE DELAWARE CHANCERY COURT DOES NOT
HAVE JURISDICTION WITH RESPECT TO SUCH ACTION, A FEDERAL COURT SITTING IN THE
STATES OF DELAWARE, LOUISIANA OR TEXAS. TO THE EXTENT THAT THE BORROWER HAS OR
HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OF THE STATE
OF DELAWARE, TEXAS OR LOUISIANA OR FROM ANY LEGAL PROCESS WITH RESPECT TO ANY
ACTION COMMENCED IN ANY SUCH COURT (WHETHER THROUGH SERVICE OF NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
(c) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR
DEFEND ANY RIGHTS UNDER THIS AGREEMENT
47
OR ANY OTHER CREDIT DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Section 11.10. Confidentiality of Agreement. Unless otherwise consented to
by the Noteholders, the Borrower hereby agrees that it will not disclose the
contents of any Operative Document, or any other confidential or proprietary
information furnished by the Noteholders, to any Person other than to the
auditors and attorneys of the Borrower or as required by applicable law.
Section 11.11. Limitation of Liability. No Person shall make a claim
against the Borrower, Noteholders or the Trustee (or their Affiliates,
directors, officers, members, managers, employees, attorneys or agents) for any
special, indirect, consequential or punitive damages under any claim for breach
of contract or other theory of liability in connection with the Credit Documents
or the transactions contemplated thereby, and the Borrower (for itself and all
other Persons claiming by or through the Borrower) hereby waives any claim for
any such damages. No member, director, manager, officer, or agent of any Obligor
or Noteholder shall have any liability on the Notes or other Obligations except
to the extent (a) such Person is a party thereto in his individual capacity or
otherwise agrees pursuant to a written agreement wherein such Person expressly
assumes such liability in his individual capacity or (b) of such Person's fraud,
willful misconduct or intentional misapplication of cash or other assets of any
Obligor. Notwithstanding anything to the contrary contained in this Section
11.11, this Section 11.11 shall not affect any obligation of the Obligors and
the Noteholders under the Operative Documents (other than the Notes).
Section 11.12. Headings; Counterparts. Article and section headings in this
Agreement are for reference only and shall not affect the construction of this
Agreement. This Agreement may be executed by different parties on any number of
counterparts, each of which shall constitute an original and all of which, taken
together, shall constitute one and the same agreement.
Section 11.13. Cumulative Rights and Severability. To the extent permitted
by applicable law, all rights and remedies of the Noteholders and the Trustee
hereunder shall be cumulative and non-exclusive of any rights or remedies such
Persons have under law or otherwise. Any provision hereof that is prohibited or
unenforceable in any jurisdiction shall, in such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and without affecting such provision in any other
jurisdiction.
Section 11.14. Interest Rate Limitation. Each provision in this Agreement
and each other Credit Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, to any
Noteholder, or charged, contracted for, reserved, taken or received by any
Noteholder, for the use, forbearance or detention of the money to be loaned
under this Agreement or any Credit Document or otherwise (including any sums
paid as required
48
by any covenant or obligation contained herein or in any other Credit Document
which is for the use, forbearance or detention of such money), exceed the
Highest Lawful Rate, and all amounts owed under this Agreement and each other
Credit Document shall be held to be subject to reduction so that any and all
amounts so paid or agreed to be paid, charged, contracted for, reserved, taken
or received which are for the use, forbearance or detention of money under this
Agreement or such Credit Document shall in no event exceed the Highest Lawful
Rate. Anything in any Note or any other Credit Document to the contrary
notwithstanding, the Borrower shall not be required to pay unearned interest on
any Note and the Borrower shall not be required to pay interest on the
Obligations at a rate in excess of the Highest Lawful Rate, and if the effective
rate of interest which would otherwise be payable under such Note and such
Credit Documents would exceed the Highest Lawful Rate, or if the holder of such
Note shall receive any unearned interest or shall receive monies that are deemed
to constitute interest which would increase the effective rate of interest
payable by the Borrower under such Note and the other Credit Documents to a rate
in excess of the Highest Lawful Rate, then (a) the amount of interest which
would otherwise be payable by the Borrower shall be reduced to the amount
allowed under applicable law and (b) any unearned interest paid by the Borrower
or any interest paid by the Borrower in excess of the Highest Lawful Rate shall
in the first instance be credited on the principal of the Obligations of the
Borrower (or if all such Obligations shall have been paid in full, refunded to
the Borrower). It is further agreed that, without limitation of the foregoing,
all calculations of the rate of interest contracted for, reserved, taken,
charged or received by any Noteholder under the Notes and the Obligations and
under the other Credit Documents are made for the purpose of determining whether
such rate exceeds the Highest Lawful Rate, and shall be made, to the extent
permitted by usury laws applicable to such Noteholder, by amortizing, prorating
and spreading in equal parts during the period of the full stated term of the
Notes and this Agreement and all interest at any time contracted for, charged or
received by such Noteholder in connection therewith.
Section 11.15. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT (INCLUDING
THE SCHEDULES AND EXHIBITS HERETO), THE NOTES, AND THE OTHER CREDIT DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER
HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 11.16. Atlas and Goliath. Notwithstanding anything to the contrary
in this Agreement or in the other Credit Documents, Borrower shall not be
required to establish or maintain the coastwise trade eligibility of the Vessels
"Atlas", "Goliath", "Caribe Falcon", "Caribe Honor" and "Caribe Princess";
provided, however, that in the event either Vessel becomes so eligible, all
obligations, terms and conditions set forth herein and in the other Credit
Documents relating to coastwise trade shall thereafter apply to such Vessel.
49
In Witness Whereof, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers on and as of the
respective dates set forth opposite their signatures below.
Delta Towing, LLC, as the Borrower
Dated as of January 30, 2001 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Address (after January 31, 2001):
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, President
with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
R&B Falcon Drilling USA, Inc., as a
Noteholder
Dated as of January 30, 2001 By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Address (after January 31, 2001):
c/o Transocean Sedco Forex Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: General Counsel
50
Beta Marine Services, L.L.C., as a
Noteholder
Dated January 31, 2001 but By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
effective as of January 30, 2001 ----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, Member
Address (after January 31, 2001):
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, President
with a copy to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
51
EXHIBIT 2.6A
FORM OF
PROMISSORY NOTE
(TIER 1)
__________________________ $ Dated: _________ __, ____
FOR VALUE RECEIVED, the undersigned, ________________ (the
"Borrower"), HEREBY PROMISES TO PAY to the order of _________________ (the
"Noteholder") the principal amount of ________________ Dollars ($________) on or
before the Tier 1 Maturity Date (as such term is defined in the hereinafter
described Note Agreement).
The Borrower hereby promises to pay interest on the principal amount
of this Note outstanding from time to time from the date of this Note until such
principal amount is paid in full, at such interest rates, on such dates and at
such times as are specified in the Note Agreement dated as of ____________ __,
____ among _________________________________________ (as the same may from time
to time be amended, modified or supplemented, the "Note Agreement," and the
terms defined therein and not otherwise defined herein being used herein as
therein defined).
Both principal and interest on this Note are payable in same day funds
in lawful money of the United States of America to the Noteholder at the Payment
Office, or at such other place as the Noteholder shall designate in writing to
the Borrower in a notice given in accordance with Section 11.02 of the Note
Agreement.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Note Agreement. The obligations of the Borrower hereunder are
secured by the Security Documents. The Note Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events, for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions therein specified, and to
the effect that no provision of the Note Agreement or this Note shall require
the payment or permit the collection of interest in excess of the Highest Lawful
Rate.
Except for notices specifically provided for in the Note Agreement,
the Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default or intent
to accelerate, protest and notice of protest and diligence in collecting and
bringing of suit against any party hereto, and agree to all renewals, extensions
or partial payments hereon and to any release or substitution of security
herefor, in whole or in part, with or without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
By:
----------------------------------
Name:
Title:
EXHIBIT 2.6B
FORM OF
PROMISSORY NOTE
(TIER 2)
________________$ Dated: __________ ___, ____
FOR VALUE RECEIVED, the undersigned, _____________________________
(the "Borrower"), HEREBY PROMISES TO PAY to the order of
_________________________ (the "Noteholder") the principal amount of ___________
_________________ Dollars ($____________) or any lesser amount as may be
permitted by the hereinafter described Note Agreement, as and when the same
becomes due under the terms of the Note Agreement.
The Borrower hereby promises to pay interest on the principal amount
of this Note outstanding from time to time from the date of this Note until such
principal amount is paid in full, at such interest rates, on such dates and at
such times, as are specified in the Note Agreement dated as of ______________
__, ____ among ___________________________________________ (as the same may from
time to time be amended, modified or supplemented, the "Note Agreement," and the
terms defined therein and not otherwise defined herein being used herein as
therein defined).
Both principal and interest on this Note are payable in same day funds
in lawful money of the United States of America to the Noteholder at the Payment
Office, or at such other place as the Noteholder shall designate in writing to
the Borrower in a notice given in accordance with Section 11.02 of the Note
Agreement.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Note Agreement. The obligations of the Borrower hereunder are
secured by the Security Documents. The Note Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events, for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions therein specified, and to
the effect that no provision of the Note Agreement or this Note shall require
the payment or permit the collection of interest in excess of the Highest Lawful
Rate.
Except for notices specifically provided for in the Note Agreement,
the Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default or intent
to accelerate, protest and notice of protest and diligence in collecting and
bringing of suit against any party hereto, and agree to all renewals, extensions
or partial payments hereon and to any release or substitution of security
herefor, in whole or in part, with or without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
By:
-----------------------------
Name:
Title:
EXHIBIT 2.6C
FORM OF
PROMISSORY NOTE
(Tier 3)
____________________$ Dated: ___________ __, ____
FOR VALUE RECEIVED, the undersigned, _________________________ (the
"Borrower"), HEREBY PROMISES TO PAY to the order of ___________________________
(the "Noteholder") the principal amount of _________________ Dollars
($_____________) or any lesser amount as may be permitted by the hereinafter
described Note Agreement, as and when the same becomes due under the terms of
the Note Agreement.
The Borrower hereby promises to pay interest on the principal amount
of this Note outstanding from time to time from the date of this Note until such
principal amount is paid in full, at such interest rates, on such dates and at
such times, as are specified in the Note Agreement dated as of _____________
__,____ among ___________________________________________ (as the same may from
time to time be amended, modified or supplemented, the "Note Agreement," and the
terms defined therein and not otherwise defined herein being used herein as
therein defined).
Both principal and interest on this Note are payable in same day funds
in lawful money of the United States of America to the Noteholder at the Payment
Office, or at such other place as the Noteholder shall designate in writing to
the Borrower in a notice given in accordance with Section 11.02 of the Note
Agreement.
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Note Agreement. The obligations of the Borrower hereunder are
secured by the Security Documents. The Note Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events, for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions therein specified, and to
the effect that no provision of the Note Agreement or this Note shall require
the payment or permit the collection of interest in excess of the Highest Lawful
Rate.
Except for notices specifically provided for in the Note Agreement,
the Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default or intent
to accelerate, protest and notice of protest and diligence in collecting and
bringing of suit against any party hereto, and agree to all renewals, extensions
or partial payments hereon and to any release or substitution of security
herefor, in whole or in part, with or without notice, before or after maturity.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
By:
----------------------------------
Name:
Title:
SCHEDULE 1.01
RELATED ENTITIES
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Offshore, L.L.C.
Alpha Marine Services, L.L.C.
▇▇▇▇▇▇▇ Offshore Services, L.L.C.
Holiday Offshore, L.L.C.
United Marine Holdings, L.L.C.
C-Port, L.L.C.
C-Port 2, L.L.C.
C-Logistics, L.L.C.
Offshore Support Services, L.L.C.
▇▇▇▇▇▇ Terminals, Inc.
North American Offshore, LLC
SCHEDULE 6.1(C)
EXCEPTED MATTERS
Although Borrower believes that the transactions contemplated by the Operative
Documents comply with laws applicable to the coastwise trade business, including
the ▇▇▇▇▇ Act, the Vessel Documentation Act and Section 2 of the Shipping Act,
1916, as amended, it is not making any representation or warranty regarding such
compliance.