EXHIBIT 10.29
USD 30,000,000.00
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
THE LENDERS,
DEN NORSKE BANK ASA, AS AGENT
FOR THE LENDERS,
HORIZON VESSELS, INC.
AND
HORIZON OFFSHORE CONTRACTORS, INC.
AS BORROWERS
AND
HORIZON OFFSHORE, INC.
AS GUARANTOR
DATED AS OF DECEMBER 30, 1998
TABLE OF CONTENTS
Section 1. DEFINITIONS......................................................2
1.1 Certain Definitions..............................................2
1.2 Accounting Terms.................................................9
Section 2. .................................................................9
2.1 Revolving Credit Facility........................................9
2.2 Borrowing Base..................................................11
2.3 Counter Indemnity...............................................11
2.4 Drawings Under Letters of Credit................................11
2.5 Variations......................................................11
2.6 Security........................................................12
2.7 Certificates....................................................12
Section 3. The Note........................................................12
Section 4. Manner of Drawdown and Issuance of Letters of Credit............12
4.1 Manner of Drawdown or Issuance..................................12
4.2 Disbursement of Funds...........................................13
4.3 Failure to Borrow; Delay........................................13
Section 5. Interest........................................................13
5.1 Rate of Interest................................................13
5.2 Payment of Interest.............................................14
5.3 Conversion of LIBOR Advance to Prime Advance....................14
5.4 Overdue Payment of Principal and Interest.......................14
5.5 Compliance with Law.............................................14
Section 6. Loan Payments...................................................15
6.1 Payments on Non-Business Days...................................15
6.2 Repayment of Revolving Credit Facility..........................15
6.3 Payment Procedure...............................................15
6.4 Net Payments....................................................16
6.5 Rights of Set-off...............................................16
6.6 Changes in Circumstances........................................16
6.7 Unavailability of Dollars.......................................19
6.8 Holding Account. ..............................................20
6.9 Tax Treaty......................................................20
Section 7. Security........................................................21
7.1 Security Agreement..............................................21
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7.2 Guaranty........................................................21
7.3 Holding Account Agreement. ....................................21
7.4 Further Assurances..............................................21
Section 8. Conditions Precedent............................................21
8.1 Documents Required as Conditions Precedent to the Drawdown of the
First Advance...................................................21
8.2 Additional Conditions Precedent to Subsequent Advances and Letters
of Credit.......................................................24
8.3 Waiver of Conditions Precedent..................................24
Section 9. Fees and Expenses...............................................24
9.1 Fees............................................................24
9.2 Expenses........................................................25
9.3 General Indemnity...............................................25
9.4 Survival........................................................27
Section 10. Representations and Warranties of Borrowers.....................27
10.1 Due Incorporation, Qualification, Etc...........................27
10.2 Capacity........................................................27
10.3 Authority and Enforceability....................................27
10.4 Governmental Approvals..........................................28
10.5 Compliance with Other Instruments...............................28
10.6 Financial Statements............................................28
10.7 Material Adverse Events.........................................29
10.8 Litigation, Etc.................................................29
10.9 Principal Place of Business.....................................29
10.10 Patent and Other Rights.........................................29
10.11 Taxes...........................................................29
10.12 Employee Retirement Income Security Act of 1974.................30
10.13 Investment Company Act of 1940..................................30
10.14 Subsidiaries....................................................30
10.15 Environmental Compliance........................................30
10.16 Indebtedness....................................................31
Section 11. Affirmative Covenants of Borrowers..............................31
11.1 Financial Statements, Reports and Inspection....................32
11.2 Insurance.......................................................34
11.3 Other Debt......................................................34
11.4 Maintenance of Existence; Conduct of Business...................34
11.5 Financial Records...............................................34
11.6 Environmental Compliance........................................35
11.7 Environmental Notifications.....................................35
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11.8 Environmental Indemnification...................................36
11.9 Year 2000 Compliance............................................37
Section 12. Negative Covenants of Borrowers.................................37
12.1 Liens...........................................................37
12.2 Line of Business................................................39
12.3 Consolidation, Merger, Etc......................................39
12.4 Modification of Agreements......................................39
12.5 Indebtedness....................................................39
12.6 Reportable Event................................................39
12.7 Change of Legal Structure.......................................39
12.8 Change of Place of Business.....................................39
12.9 Subsidiaries....................................................39
12.10 Sale of Equipment, Etc..........................................40
12.11 Current Ratio...................................................40
12.12 Working Capital.................................................40
12.13 Fixed Charge Coverage Ratio.....................................40
12.14 Debt Ratio......................................................40
12.15 Net Worth.......................................................40
12.16 Compliance with Federal Reserve Board Regulations...............40
12.17 Loans and Investments...........................................41
12.18 Contracts with Affiliates.......................................41
12.19 Change of Management............................................41
12.20 Lease Expense...................................................41
12.21 Dividends.......................................................41
12.22 Fiscal Years....................................................41
Section 13. Events of Default...............................................41
13.1 Events..........................................................41
13.2 Change of Control...............................................44
Section 14. The Agent.......................................................44
14.1 Appointment and Duties of Agent.................................44
14.2 Discretion and Liability of Agent...............................45
14.3 Event of Default................................................45
14.4 Consultation....................................................46
14.5 Communications to and from Agent................................46
14.6 Limitations of Agency...........................................46
14.7 No Representations or Warranty..................................47
14.8 Lender Credit Decision..........................................47
14.9 Indemnity.......................................................47
14.10 Resignation.....................................................47
14.11 Distribution....................................................48
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14.12 Limitation of Suits.............................................48
14.13 Right of Setoff.................................................48
Section 15. Miscellaneous...................................................49
15.1 Entire Agreement................................................49
15.2 No Waiver.......................................................49
15.3 Survival........................................................49
15.4 Notices.........................................................49
15.5 Termination.....................................................50
15.6 Severability of Provisions......................................50
15.7 Successors and Assigns..........................................50
15.8 Assignment and Participation....................................50
15.9 Counterparts....................................................51
15.10 Jurisdiction....................................................51
15.11 Choice of Law...................................................52
15.12 Waiver of Jury Trial............................................52
15.13 Amendment and Waiver............................................52
15.14 No Oral Agreements..............................................52
15.15 Headings, Etc...................................................53
15.16 Taxes...........................................................53
15.17 Controlling Agreement...........................................53
Exhibit A - Amended and Restated Promissory Note
Exhibit B - Request for Borrowing
Exhibit C - Request for Letter of Credit
Exhibit D - Borrowing Base Report
Exhibit E - Form of Letter of Credit
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT dated as of December __,
1998 (this "Credit Agreement"), among Horizon Vessels, Inc., a corporation
organized and existing under the laws of the State of Delaware, Horizon Offshore
Contractors, Inc., a corporation organized and existing under the laws of the
State of Delaware (individually a "Borrower" and collectively the "Borrowers"),
Horizon Offshore, Inc., a corporation organized and existing under the laws of
the State of Delaware (the "Guarantor"), the financial institutions from time to
time party hereto (the "Lenders"), and Den norske Bank ASA, a banking
corporation organized and existing under the laws of the Kingdom of Norway, as
Agent for the Lenders (the "Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers and the Agent as Lender entered into that certain
Credit Agreement dated as of October 27, 1997 (the "Original Credit Agreement"),
pursuant to which the Agent as Lender made a credit facility available to the
Borrowers in a principal amount of up to Sixteen Million United States Dollars
(USD 16,000,000.00) to repay existing debt of the Borrowers, assist with the
cost of upgrading certain equipment of the Borrowers and provide working capital
for the Borrowers; and
WHEREAS, the Borrowers and the Agent as Lender entered into Amendment No.
1 to the Original Credit Agreement to, among other things, increase the amount
available under the Original Credit Agreement to USD 20,000,000;
WHEREAS, the Borrowers and the Agent as Lender entered into Amendment No.
2 to the Original Credit Agreement to, among other things, increase the amount
available under the Original Credit Agreement to USD 50,000,000;
WHEREAS, the Borrowers intend to repay all amounts outstanding under
Facility A as of the date hereof;
WHEREAS, the Borrowers, the Lenders and the Agent wish to restate the
Original Credit Agreement to provide for a single Revolving Credit Facility as
herein described;
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NOW, THEREFORE, in consideration of the above recitals, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. DEFINITIONS.
1.1 CERTAIN DEFINITIONS. As used herein, the following terms shall have
the following respective meanings:
"ADJUSTED AVAILABLE COMMITMENT" has the meaning set forth in Section 9(c)
hereof.
"ADVANCE" means a loan by the Lenders to the Borrowers under this Credit
Agreement.
"AFFILIATE" of any Person means (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person and
(ii) any director or officer of such first Person or of any Person referred to
in clause (i) above. For the purposes of this definition "control" of any Person
includes (a) with respect to any corporation or other Person having voting
shares or the equivalent and elected directors, managers, or Persons performing
similar functions, the ownership or power to vote, directly or indirectly shares
or the equivalent representing 50% or more of the power to vote in the election
of directors, managers or Persons performing similar functions, (b) ownership of
50% or more of the equity or beneficial interest in any other entity and (c) the
ability to direct the business and affairs of any Person by acting as a general
partner, manager or otherwise.
"AVAILABLE COMMITMENT" has the meaning set forth in Section 2.1(b) hereof.
"BORROWING BASE" means at any time an amount equal to 80% of the face
value of Eligible Accounts.
"BORROWING BASE REPORT" has the meaning set forth in Section 2.2(b)
hereof.
"BREAKAGE COST" means any amount reasonably necessary to compensate the
Lender for costs or expenses incurred by the Lenders in connection with the
payment or acceleration of the Loan, in whole or in part, whether voluntarily or
involuntarily, on a date which is not the last date of the then applicable
Interest Period for the portion of the Loan being paid, including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties.
"BUSINESS DAY" means any day on which commercial banks are open for
business in Houston, Texas, New York, New York and London, England.
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"CASH EQUIVALENTS" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one (1) year from the
date of acquisition, (ii) time deposits (including Eurodollar time deposits) and
certificates of deposit of any bank meeting the qualifications specified in
clause (iv) below with maturities of not more than 90 days from the date of
acquisition, (iii) fully secured repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in clause (i)
entered into with any bank meeting the qualifications specified in clause (iv)
below, (iv) commercial paper issued by the parent corporation of any bank
referred to in this clause (iv) or any commercial bank of recognized standing
having capital and surplus in excess of USD 300,000,000.00 and commercial paper
rated at least A-2 or the equivalent thereof by Standard & Poor's Corporation or
at least P-2 or the equivalent thereof by ▇▇▇▇▇'▇ Investor Services, Inc., and
in each case maturing within 90 days after the date of acquisition, and (v)
remarketed certificates of participation issued through any bank meeting the
qualifications specified in clause (iv) above rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by ▇▇▇▇▇'▇ Investor Services, Inc. and maturing within 90
days after the date of acquisition.
"COMMITMENT" means a maximum of USD 30,000,000.00 as it may be reduced
from time to time pursuant to the provisions of this Credit Agreement.
"COMMITMENT NOTICE" has the meaning set forth in Section 2.1(b) hereof.
"COMMITMENT PERIOD" has the meaning set forth in 2.1(b) hereof.
"CONTROLLED GROUP" means a "controlled group of corporations" as defined
in Section 1563(a) of the Internal Revenue Code of 1986, as amended, determined
without regard to Section 1563(a)(4) and (e) (3) (C) of such Code, of which
either Borrower is a part.
"CREDIT FACILITY" means the aggregate amount of Advances and Letters of
Credit made hereunder and the aggregate amount of the unused but still available
portion of the Commitment.
"CURRENT ASSETS" means those assets of the Guarantor which would in
accordance with GAAP be classified on a consolidated basis as current assets of
a corporation conducting a business the same as or similar to the business of
the Guarantor.
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"CURRENT LIABILITIES" means Indebtedness of the Guarantor which would in
accordance with GAAP be classified on a consolidated basis as current
liabilities of a corporation conducting a business the same as or similar to the
business of the Guarantor, including the current maturities of amounts
outstanding under this Credit Agreement and the current maturities of the
Borrowers' or the Guarantor's other long-term debt.
"CURRENT RATIO" means the ratio of the Guarantor's Current Assets to the
Guarantor's Current Liabilities.
"DEBT RATIO" means the Guarantor's total consolidated long-term funded
debt plus capitalized lease obligations divided by the sum of consolidated
long-term funded debt, capitalized lease obligations and stockholders' equity.
"DOLLARS" and the sign "USD" mean lawful money of the United States of
America.
"DRAWDOWN DATE" means the date upon which an Advance is made or a Letter
of Credit is issued.
"EBITDA" means, for any period, the consolidated earnings of the Guarantor
during such period from continuing operations, before gains or losses on sales
of assets (to the extent such gains or losses are included in earnings from
continuing operations) and extraordinary items, as determined under GAAP,
federal, state, foreign and local income taxes, Interest Expense, depreciation
and amortization.
"ELIGIBLE ACCOUNTS" means, at any time, the aggregate amount of the
Borrowers' accounts receivable for the shipment and sale of products or for
services rendered for which invoices have been issued and payment for which is
due within sixty (60) days. In determining accounts receivable constituting
Eligible Accounts, there shall be excluded (i) accounts receivable remaining
unpaid for a period of more than ninety (90) days from the date of invoice (or
due date in the case of instruments, lease agreements and chattel paper), (ii)
accounts receivable arising from sale to or services rendered for the Guarantor
or any subsidiary of the Guarantor or the Borrowers, (iii) accounts receivable
in which the Agent does not have a first priority perfected security interest,
(iv) accounts receivable which are subject to a right of offset, claim or
defense, (v) accounts receivable due from suppliers of materials or inventory to
the Borrowers to the extent that the Borrowers are indebted to such suppliers
with respect to materials or supplies purchased by the Borrowers from
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such suppliers, (vi) accounts receivable due from customers known to be
insolvent or in bankruptcy proceedings, (vii) accounts receivable due from
non-U.S. companies, except for accounts receivable from non-U.S. subsidiaries of
U.S. companies which accounts are payable in the U.S. and in U.S. Dollars,
(viii) accounts receivable which represent ▇▇▇▇▇▇▇▇ in advance for charter hire
or other contract of affreightment, and (ix) accounts receivable rejected in
whole or in part by the Lenders in their sole discretion as containing
unacceptable risk.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" means each of the Events of Default described in
Section 13 hereof.
"FIXED CHARGE COVERAGE RATIO" means for any period, EBITDA less amounts
used to repurchase stock of the Guarantor divided by the sum total of Interest
Expense, required principal payments on Indebtedness and capital leases, and
actual Taxes paid.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States of America.
"GOVERNMENTAL AGENCY" means any United States or foreign government or any
state, department or other political subdivision thereof or governmental body,
agency, authority, department or commission (including without limitation any
court or tribunal) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government and any corporation,
partnership or other entity directly or indirectly owned by the foregoing.
"GUARANTY" means the guaranty by the Guarantor of the Borrowers'
obligations under this Credit Agreement and the Note dated as of the date
hereof, as amended and ratified from time to time.
"HAZARDOUS SUBSTANCES" means petroleum and used oil, or any other
pollutant or contaminant, hazardous, dangerous or toxic waste, substance or
material as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. ss. 9601, ET SEQ. (hereinafter
called "CERCLA"); the Resource Conservation and Recovery Act, as amended, 42
U.S.C. ss. 9601, ET SEQ. (hereinafter called "RCRA"); the Toxic Substances
Control Act, as amended, 15 U.S. C. ss. 2601, ET SEQ. (hereinafter called
"TSCA"); the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.
1801, ET SEQ. (hereinafter called "HMTA"); the Oil Pollution Act of 1990, 33
U.S.C. ss. 2701 ET SEQ. (hereinafter called "OPA"); or any other statute, law,
ordinance, code or regulation of any Governmental Agency relating to or imposing
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liability or standards of conduct concerning the use, production, generation,
treatment, storage, recycling, handling, transportation, release, threatened
release or disposal of any waste, substance or material, currently in effect or
at any time hereafter adopted.
"HOLDING ACCOUNT AGREEMENT" means the agreement among The Frost National
Bank, the Borrowers and the Agent establishing the lock box arrangement for the
accounts receivable of the Borrowers, in form and substance satisfactory to the
Agent.
"INDEBTEDNESS" of the Borrowers or the Guarantor means all items of
indebtedness which, in accordance with GAAP, would be included in determining
liabilities as shown on the liability side of a balance sheet of the Borrowers
or the Guarantor, as of the date as of which indebtedness and liabilities is to
be determined and shall include all indebtedness and liabilities of others
assumed or guaranteed by the Borrowers or the Guarantor or in respect of which
the Borrowers or the Guarantor are secondarily or contingently liable (other
than by endorsement of instruments in the course of collection and performance
guarantees and similar transactions entered into in the ordinary course of
business) whether by reason of any agreement to acquire such indebtedness or to
supply or advance sums or otherwise but shall exclude deferred Taxes.
"INDEMNITY PAYMENT" means a payment by the Borrowers to the Agent equal to
the amount each Lender has paid to a beneficiary under a Letter of Credit in
accordance with the terms and conditions of such Letter of Credit and this
Credit Agreement.
"INTEREST EXPENSE" means, with respect to any Person, for any period of
determination, its interest expense determined in accordance with GAAP.
"INTEREST PAYMENT DATE" means, with respect to any Prime Advance, the last
Business Day of each month and, with respect to any LIBOR Advance, the end of
each Interest Period except if such Interest Period is longer than ninety (90)
days, every ninety (90) days and at the end of such Interest Period.
"INTEREST PERIOD" means with respect to any LIBOR Advance, each period
selected by the Borrowers for which the rate of interest on such LIBOR Advance
is fixed being the period commencing on the date of the LIBOR Advance or the
date of the expiration of the preceding Interest Period for such LIBOR Advance
and ending on the corresponding day in the calendar month selected by the
Borrowers which is one (1) month, two (2) months, three (3) months or six (6)
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months later or, if such month has no numerical corresponding day, on the last
Business Day of such month. If the last day of any such Interest Period is not a
Business Day, then such Interest Period shall end on the next succeeding
Business Day, subject to Section 6.1 hereof. If any Interest Period determined
hereunder would extend beyond the Maturity Date, such Interest Period shall end
on the Maturity Date.
"LETTER OF CREDIT" means a standby letter of credit issued by a Lender
pursuant to Section 2.3 below substantially in the form of Exhibit E attached
hereto.
"LIBOR ADVANCE" means an Advance as to which the Borrowers have selected
LIBOR to determine the interest rate.
"LIBOR RATE" means in respect of any Interest Period, the rate of interest
per annum at which deposits in U.S. Dollars are offered to major banks in the
London interbank market at approximately 11:00 a.m. (London time), as reported
by the Telerate System page 3750 or such other page as may replace such page
3750 on such system (rounded upwards, if necessary, to the nearest one-sixteenth
of one percent) for the purpose of reporting London Interbank Offered Rates of
major banks under the heading for British Bankers Association Interest
Settlement Rates in the column designated "USD" (U. S. Dollar), two (2) Business
Days before the first day of an Interest Period. In the event that LIBOR
interest rates are not reported on the Telerate System or such reported rates
are not applicable to the selected Interest Period, the Agent shall notify the
Borrowers and upon such notification, the LIBOR Rate shall mean in respect of
any Interest Period the rate of interest per annum (rounded upwards, if
necessary, to the nearest one sixteenth of one percent) at which the Lenders are
able to acquire funds in Dollars equal to the outstanding amount of the Advance
for which the rate is to be determined for the duration of the relevant Interest
Period in the London Interbank Eurocurrency Market at or about 11:00 a.m. London
time on the second Business Day prior to the commencement of the relevant
Interest Period for value on the first day of such Interest Period, or at such
time in any alternative market for such funds available to the Lenders, as
notified by the Agent to the Borrowers, such notification, absent manifest
error, to be conclusive.
"LOAN" means the principal amounts advanced by the Lenders hereunder and
outstanding, the face amount of all Letters of Credit outstanding hereunder, and
the principal amount of any unpaid Indemnity Payments outstanding hereunder.
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"LOAN DOCUMENTS" means this Credit Agreement, the Security Agreement, the
Guaranty, the Holding Account Agreement and the Note.
"MATERIAL ADVERSE EFFECT" or "MATERIALLY ADVERSELY AFFECTED" means, unless
specified otherwise, to affect in a material manner the ability of the Borrowers
to perform their obligations under this Credit Agreement or the ability of the
Guarantor to perform its obligations under the Guaranty.
"MATURITY DATE" means December 31, 2001.
"NET WORTH" means the sum of the (i) par value of the Guarantor's and the
Borrowers' common stock, (ii) capital in excess of par value of the Guarantor
and the Borrowers and (iii) retained earnings of the Guarantor and the
Borrowers, but excluding the amount of any write-up of any assets over their
depreciated cost.
"NOTE" means the amended and restated secured promissory note of the
Borrowers in the original principal amount of USD 30,000,000.00, substantially
in the form of Exhibit A hereto and all renewals, extensions, rearrangements and
replacements thereof.
"OBLIGATIONS" means and includes all loans, advances, debts, liabilities,
obligations, letters of credit or any other financial accommodations, howsoever
arising, owing by either Borrower to the Agent and the Lenders of every kind and
description (whether or not for the payment of money); direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising
pursuant to the terms of this Credit Agreement, the Note and the other Loan
Documents, including, without limitation, all interest and other expenses that
the Borrowers are obligated to pay thereunder.
"PERSON" means any natural person, corporation, partnership, limited
liability company, firm, association, government, Governmental Agency or any
other entity other than the Borrowers and whether acting in an individual,
fiduciary or other capacity.
"PLAN" means any employee pension benefit plan subject to Title IV of
ERISA and maintained by the Borrower or any member of a Controlled Group, or any
such plan, to which the Borrower or any member of a Controlled Group is required
to contribute on behalf of any of its employees.
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"PRIME ADVANCE" means an Advance as to which the Borrowers have selected
the Prime Rate to determine the interest rate or as to which the Prime Rate has
been applied pursuant to Section 6.3(b) below.
"PRIME RATE" means the rate announced by the Agent at its New York, New
York office from time to time as its prime rate.
"REPORTABLE EVENT" means a reportable event as defined in Section 4043 of
ERISA (29 U.S.C. ss.1343), except events for which the notice provision has been
waived by the Pension Benefit Guaranty Corporation.
"REQUEST FOR BORROWING" means each request for borrowing given by the
Borrowers pursuant to Section 4.1(c) hereof, substantially in the form attached
hereto as Exhibit B.
"REQUEST FOR LETTER OF CREDIT" means a Request for Letter of Credit given
by the Borrowers pursuant to Section 5.1(d) hereof, substantially in the form
attached hereto as Exhibit C.
"REVOLVING CREDIT FACILITY" means the USD 30,000,000.00 senior secured
revolving loan provided for in Section 2 of this Credit Agreement
"SECURITY AGREEMENT" means the amended and restated security agreement on
certain of the Borrowers' assets and revenues from the Borrowers to the Agent
dated as of the date hereof, as amended and ratified.
"TAXES" means any present or future taxes, levies, imposts, duties or
other charges of whatsoever nature imposed by any Governmental Agency or taxing
authority thereof.
"UNAVAILABLE COMMITMENT" has the meaning set forth in Section 2.1(b)
hereof.
"WORKING CAPITAL" means the excess of the Guarantor's Current Assets over
its Current Liabilities.
1.2 ACCOUNTING TERMS. Except as expressly stated herein, all accounting
terms not specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in preparation of the consolidated financial
statements of the Borrowers referred to in Section 11.1 hereof.
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Section 2.
2.1 REVOLVING CREDIT FACILITY.
(a) Upon the terms and subject to the conditions herein set forth,
the Lenders severally agree to make the senior secured revolving credit
available to the Borrowers by, from time to time prior to the Maturity
Date, making an Advance or Advances to the Borrowers or issuing one or
more Letters of Credit for the account of the Borrowers, PROVIDED THAT the
aggregate face amount of all Letters of Credit outstanding hereunder shall
not at any time exceed USD 10,000,000, and PROVIDED FURTHER that the
principal amounts of all outstanding Advances and the face amount of
Letters of Credit shall not exceed, in the aggregate, the lesser of the
Available Commitment (as defined in Section 2.1(b) hereof) and USD
30,000,000.00 at any one time. No Letter of Credit shall have a duration
in excess of two (2) years and no Letter of Credit shall have a duration
beyond the Maturity Date. Within such limit, the Borrowers may borrow,
repay pursuant to Section 6.3(a) and reborrow under this Section 2.1. Each
borrowing by the Borrowers from the Lender under this Section shall be in
an aggregate principal amount of at least USD 200,000.00 and in integral
multiples of USD 100,000.00.
(b) On the date which is five (5) business days prior to the Closing
Date, and on each December 15 and June 15 thereafter until the Maturity
Date, the Borrowers shall provide irrevocable written notice (each a
"Commitment Notice") to the Agent setting forth that amount of the
Commitment that the Borrowers designate shall be available during the
immediately succeeding six-month period commencing with each January 1 and
July 1 (each, a "Commitment Period", provided that the first Commitment
Period shall commence on the Closing Date and end on June 30, 1999). Such
portion of the Commitment shall be in integral multiples of USD 1,000,000
and shall be referred to herein as the "Available Commitment". The
difference between the Commitment and the Available Commitment during any
Commitment Period shall be referred to herein as the "Unavailable
Commitment"; the sum of the Available and Unavailable Commitments shall at
no time exceed the Commitment. If no Commitment Notice is received by the
Agent, the Available
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Commitment for the next succeeding Commitment Period shall be the same as
for the existing Commitment Period.
(c) The Borrowers may, during any Commitment Period, request that
the Available Commitment be increased for such Commitment Period, in
integral multiples of USD 1,000,000 (the "Adjusted Available Commitment"),
upon five (5) days prior written notice to the Agent. The Commitment Fee
set forth in Section 9.1(a) hereof for such Commitment Period shall be
recalculated as if the Available Commitment on the first day of such
Commitment Period were the Adjusted Available Commitment, and the
resulting change in the commitment fee shall be paid by the Borrowers to
the Agent on the date the requested increase become effective. 2.2
BORROWING BASE.
(a) Notwithstanding any other provision of this Credit Agreement,
the aggregate principal amount of Advances and the face amount of Letters
of Credit at any time outstanding shall not be in excess of the Borrowing
Base.
(b) As an additional condition precedent to the initial Advance, all
subsequent Advances and any Letters of Credit issued under the Revolving
Credit Facility, the Borrowers shall provide to the Lender a Borrowing
Base Report substantially in the form of Exhibit D attached hereto PLUS a
report with detailed listing and aging of all accounts receivable of the
Borrowers (together, the "Borrowing Base Report").
(c) If at any time the test of Section 2.2(a) above is not met, the
Borrowers shall at the Agent's direction either (i) within ten (10)
Business Days provide to the Agent sufficient additional collateral in
form and substance satisfactory to the Agent as shall be necessary to
insure that the test of Section 2.2(a) above is satisfied or (ii) within
three (3) Business Days prepay pursuant to Section 6.4 hereof an amount as
may be necessary to reduce the aggregate principal amount outstanding
under the Revolving Credit Facility to an amount which will allow the test
of Section 2.2(a) above to be met. The cure periods listed above shall
start running on the date notice of the Agent's decision is given to the
Borrowers.
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2.3 COUNTER INDEMNITY. The Borrowers jointly and severally agree to make
each Indemnity Payment to the Agent for distribution to the Lenders immediately
on demand of the Agent.
2.4 DRAWINGS UNDER LETTERS OF CREDIT. No Lender shall concern itself with
the regularity or propriety of any demand made under any Letter of Credit,
provided that such demand is made in the manner called for in such Letter of
Credit and (subject to such proviso) it shall not be a defense to a claim of
such Lender under this Section 2.4 that such Lender could have resisted the
payment in respect of which such claim is made.
2.5 VARIATIONS. The Borrowers' obligations under this Section 2 shall not
be in any way discharged or impaired by any variation of the terms of any Letter
of Credit or this Credit Agreement or any document executed pursuant hereto to
which the Borrowers have expressly consented in writing.
2.6 SECURITY. The Borrowers' obligations under this Section 2 shall be in
addition to and not in substitution for any security now or hereafter held by
the Agent in respect of their obligations under this Credit Agreement.
2.7 CERTIFICATES. A certificate together with evidence of payment
submitted by a Lender to the Borrowers as to the amount of any Indemnity Payment
owed to such Lender in respect of a Letter of Credit shall (save for manifest
error) be conclusive and binding on the Borrowers for all purposes.
Section 3. THE NOTE.
(a) The Borrowers' joint and several obligations to pay the
principal of, and interest on, the Loan shall be evidenced by the Note.
(b) At the time of the making of each Advance, and upon each payment
of the principal of the Loan, the Agent shall, and is hereby authorized
to, make a notation on the Note specifying the date and the amount of such
Advance or such payment. Failure to make any such notation shall not limit
or otherwise affect the Borrowers' or any guarantor's obligations in
respect of this Credit Agreement or the Note.
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Section 4. MANNER OF DRAWDOWN AND ISSUANCE OF LETTERS OF CREDIT.
4.1 MANNER OF DRAWDOWN OR ISSUANCE. The Borrowers may draw an Advance or
have a Letter of Credit issued upon:
(a) The issuing Lender's prior satisfaction that the relevant
conditions set out in Section 8 herein have been complied with;
(b) No event having occurred to the actual knowledge of the
Borrowers which, with or without notice or lapse of time, would constitute
an Event of Default;
(c) The issuing Lender having received from the Borrowers, for an
Advance, an irrevocable Request for Borrowing (i) before 10:00 a.m. New
York time at least three (3) and not more than ten (10) Business Days in
the case of a LIBOR Advance and (ii) before 3:00 p.m. New York time at
least one (1) and not more than ten (10) Business Days in the case of a
Prime Advance prior to the Drawdown Date selected by the Borrowers.
(d) The issuing Lender having received from the Borrowers, for the
issuance of a Letter of Credit, an irrevocable Request for Letter of
Credit at least five (5) Business Days prior to the Drawdown Date on which
the Letter of Credit is to be issued.
4.2 DISBURSEMENT OF FUNDS. Disbursement of each Advance proceeds shall be
made by the issuing Lender to the Borrowers as directed by the Borrowers in the
Request for Borrowing.
4.3 FAILURE TO BORROW; DELAY. If the borrowing described in any Request
for Borrowing or the issuance of a Letter of Credit described in any Request for
Letter of Credit fails to take place or is delayed because any of the conditions
specified in Section 8 below are not satisfied, the Borrowers shall jointly and
severally indemnify the Lenders against any loss incurred as a result of the
giving of such Request for Borrowing or Request for Letter of Credit, including
without limitation any loss resulting from actions taken by the Lender to fund
the requested Advance, but excluding any loss resulting from the gross
negligence or willful misconduct of the Lenders. A certificate of any Lender
stating in reasonable detail the amount of, and basis for, any such loss
incurred by such Lender shall be conclusive absent manifest error.
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Section 5. INTEREST.
5.1 RATE OF INTEREST.
(a) The Borrowers agree to pay interest in respect of all amounts
outstanding under any LIBOR Advance at a rate per annum of the LIBOR Rate
plus 2 and 1/2%.
(b) The Borrowers agree to pay interest in respect of all amounts
outstanding under any Prime Advance at a rate per annum of the Prime Rate
plus 1/2%.
(c) Interest on unpaid principal amounts of LIBOR Advances shall be
computed on the basis of a year of 360 days and the actual number of days
elapsed.
(d) Interest on unpaid principal amounts of Prime Advances shall be
computed on the basis of a year of 365 days or, when applicable, 366 days.
(e) The Borrowers agree to pay interest in respect of all Indemnity
Payments at a rate per annum equal to the Prime Rate plus 2 and 1/2% from
the date the obligation to make an Indemnity Payment arises to the date of
payment. Interest on unpaid Indemnity Payments shall be computed on the
basis of a year of 365 days or, when applicable, 366 days.
5.2 PAYMENT OF INTEREST. Except as provided in Section 5.1(e) above with
respect to interest on Indemnity Payments, interest shall be paid by the
Borrowers on each Interest Payment Date.
5.3 CONVERSION OF LIBOR ADVANCE TO PRIME ADVANCE.
(a) At the end of any Interest Period for a LIBOR Advance, the
Borrowers may, by irrevocable written notice to the Agent received at
least three (3) Business Days prior to the end of such Interest Period,
elect to convert such Advance to a Prime Advance.
(b) The Borrowers shall notify the Agent before 10:00 a.m. New York
time three (3) Business Days prior to the end of each Interest Period for
any LIBOR Advance as to the length selected by the Borrowers for the next
Interest Period. If no such notice is given, such LIBOR Advance shall
automatically convert to a Prime Advance.
5.4 OVERDUE PAYMENT OF PRINCIPAL AND INTEREST. Overdue principal of, and
(to the extent permitted by law) overdue interest in respect of, amounts due
under this Credit Agreement shall bear
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interest, payable on demand, at a rate per annum which shall be 2% in excess of
the interest rate otherwise applicable pursuant to Section 5.1 above.
5.5 COMPLIANCE WITH LAW. Notwithstanding any provision of this Credit
Agreement or the Note to the contrary, in no event shall the aggregate amount of
consideration which constitutes interest under any applicable law which is
contracted for, charged or received hereunder or under this Credit Agreement or
the Note ("Interest") exceed the maximum amount of nonusurious interest allowed
by law, and any excess shall be credited on this Credit Agreement or the Note
(or if all obligations under this Credit Agreement and the Note shall have been
paid in full, refunded to the Borrowers). For purposes of the foregoing, the
maximum amount of interest allowed by law shall be calculated by determining the
amount of interest that could be contracted for, charged or received during the
term hereof at the maximum rate of nonusurious interest allowed from time to
time by applicable law as is now or, to the extent allowed by law, as may
hereafter be in effect (the "maximum nonusurious interest rate") and, if at any
time the rate of Interest to accrue would exceed the maximum nonusurious
interest rate, the rate of Interest to accrue under the Note shall be limited to
the maximum nonusurious interest rate, but any subsequent reductions in the
LIBOR Rate or the Prime Rate shall not reduce the rate of Interest to accrue
under this Credit Agreement or on the Note below the maximum nonusurious
interest rate until the total amount of Interest accrued and paid under this
Credit Agreement or on the Note equals the amount of Interest which could have
accrued if a rate per annum equal to the LIBOR Rate plus 2 and 1/2% or the Prime
Rate plus 1/2% had at all times been in effect.
Section 6. LOAN PAYMENTS
6.1 PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made
hereunder or under the Note shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day; provided, however, that if such next succeeding Business Day is in
a new month, then the payment required under this Credit Agreement or the Note
shall be made on the first Business Day preceding the original date on which
payment was due. If a payment of principal has been extended pursuant to this
Section 6.1, interest shall be payable on such principal at the applicable rate
during such extension.
6.2 REPAYMENT OF REVOLVING CREDIT FACILITY.
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(a) The Borrowers may repay any amounts outstanding under the
Revolving Credit Facility prior to the Maturity Date, on the following
terms and conditions:
(i) any amounts outstanding as LIBOR Advances may be repaid
upon irrevocable written notice to the Agent three (3) days prior to
the end of an Interest Period without prepayment fee or penalty, but
any repayment made before the end of an Interest Period must be
accompanied by Breakage Costs;
(ii) any amounts outstanding as Prime Advances may be repaid
upon irrevocable written notice to the Agent no later than 4:00 p.m.
New York time on the day before repayment and without prepayment fee
or penalty.
(b) The Borrowers shall jointly and severally repay all amounts
outstanding under the Revolving Credit Facility to the Lenders in one
payment on the Maturity Date.
6.3 PAYMENT PROCEDURE. All payments and prepayments made by the Borrowers
under the Note or this Credit Agreement shall be made by wire transfer in
immediately available funds before 12:00 noon, New York Time on the date such
payment is required to be made to the Lenders pursuant to the Agent's written
instructions. Any payment received and accepted by the Lenders after such time
shall be considered for all purposes (including the calculation of interest, to
the extent permitted by law) as having been made on the next following Business
Day. All payments and prepayments received shall be applied first to accrued
interest and then to the reduction of principal.
6.4 NET PAYMENTS.
(a) All sums payable by the Borrowers under this Credit Agreement,
or the Note, whether of principal, interest, fees or otherwise, shall be
paid in full without set-off or counterclaim and in such amounts as may be
necessary in order that all such payments (after deduction or withholding
for or on account of any Taxes, other than any Tax, on or measured by the
income of the Lenders) shall not be less than the amounts otherwise
specified to be paid under this Credit Agreement or the Note.
(b) A certificate as to any additional amounts payable to the
Lenders under this Section 6.4 submitted to the Borrowers by the Agent
shall show in reasonable detail the amount payable and the calculations
used to determine in good faith such amount and shall be conclusive absent
manifest error.
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(c) With respect to each deduction or withholding for or on account
of any Taxes, the Borrowers shall promptly furnish to the Agent such
certificates, receipts and other documents as may be required (in the
reasonable judgment of the Lender) to establish any income tax credit to
which a Lender may be entitled. In the event that such a deduction or
withholding for Taxes becomes so applicable, the Lenders and the Borrowers
will use their best efforts to minimize the effect of such Taxes.
6.5 RIGHTS OF SET-OFF. The Agent and the Lenders shall, with respect to
the Loan and all other amounts payable hereunder, have all rights of set-off,
banker's lien and counterclaim as they are entitled to exercise under the law of
the jurisdiction in which such rights are exercised.
6.6 CHANGES IN CIRCUMSTANCES.
(a) If, by reason of any change subsequent to the date of this
Credit Agreement in applicable law or regulation or regulatory requirement
or directive whether or not having the force of law or in the
interpretation or application thereof by the governmental or
quasi-governmental or judicial authority or central bank charged with the
administration or interpretation of such law or regulation (a "Change in
Circumstance"), a Lender shall determine in good faith that it has become
unlawful or impossible for it to perform its obligations hereunder, the
Agent shall immediately notify the Borrowers and, after such notice, the
liability of such Lender to advance or maintain the Advances or issue
Letters of Credit shall immediately cease or, (i) if any Advance has been
made, the Borrowers shall prepay to such Lender such Advance, or (ii) if
any Letter of Credit has been issued, the Borrowers, such Lender and the
Agent shall use their reasonable good faith efforts to secure a
replacement letter of credit at the sole expense of the Borrowers;
PROVIDED THAT if the Borrowers are unable to secure such replacement
letter of credit, the Borrowers shall deposit with such Lender at an
account designated by that Lender an amount equal to the face amount of
all then outstanding Letters of Credit. In any such event, but without
prejudice to the aforesaid obligation of the Borrowers to prepay, the
Borrowers, such Lender and the Agent shall negotiate in good faith for a
period not to exceed ninety (90) days commencing from the date notice is
given by the Agent as provided above, with a view to agreeing to terms for
making or continuing to make available the Commitment from another
jurisdiction
17
or funding of the affected Advance and issuing or reissuing the affected
Letters of Credit from alternative sources.
(b) If the effect of any Change in Circumstance having effect after
the date hereof, is to:
(i) change the basis of taxation to a Lender of payment of
principal or interest or any other payment due pursuant to the terms
of this Credit Agreement or the Note (other than an increase in the
rate of taxation on the Lender's overall net income); or
(ii) impose or modify or deem applicable any reserve
requirements or require the making of any special deposits against
or in respect of any assets or liabilities of, deposits with or for
the account of or loans by a Lender; or
(iii) impose on any Lender any other condition affecting the
Commitment or the Loan or any part thereof, the result of which is
either to increase the cost to such Lender of making available or
maintaining the Commitment or the Loan or any part thereof or to
reduce the amount of any payment received by the Lender hereunder;
then and in any such case if such increase or reduction in the
opinion of the Lender materially affects the interests of the
Lender;
(A) the Lender shall notify the Borrowers of any of the
above circumstances and the Lender shall use all reasonable
efforts (without any financial commitment on its part) to
avoid the effects of any such change and in particular, shall
consider (without any commitment on its part) fulfilling its
obligations under this Credit Agreement through another office
or transferring its interest in this Credit Agreement and the
Note at par to one or more of its Affiliates not affected by
the Change in Circumstances if such transfer can be
accomplished without material added cost to the Lender and in
a manner compatible with its operational procedures; or
(B) If the efforts referred to in (A) above fail to have
the effect of eliminating the increased cost incurred by the
Lender or the reduction in the amount of any payment received,
the Borrowers shall within three (3)
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Business Days following demand (whether made before or after
any repayment of the amounts outstanding under this Credit
Agreement and the Note) pay to the Lender such amount as the
Lender shall certify to be necessary to compensate the Lender
for such additional cost or reduction; provided, however, that
despite such payments, the Lender and the Borrowers shall
continue to use their best efforts to reduce the effect of
such Change in Circumstance; and
(C) At any time thereafter, so long as the Change in
Circumstance giving rise to the obligation to make the
compensating payment continues, the Borrowers may, upon giving
the Lender not less than ten (10) Business Days' written
notice which shall be irrevocable, prepay to the Lender the
Loan (except for outstanding Letters of Credit) and shall
deposit with the Lender at an account designated by the Lender
an amount equal to the face amount of all then outstanding
Letters of Credit.
(c) If any amounts outstanding under this Credit Agreement are to be
prepaid by the Borrowers pursuant to any of the provisions of this Section
6.6, the Borrowers shall simultaneously with such prepayment pay to the
Lenders all Breakage Costs and all accrued interest and fees on the
amounts to be prepaid.
(d) The certificate of determination of a Lender, as to any matters
referred to in this Section 6.6 shall show in reasonable detail the amount
payable and the calculations used in good faith to determine such amount
and shall, save for any manifest error, be conclusive and binding on the
Borrowers.
6.7 UNAVAILABILITY OF DOLLARS.
(a) In the event that a Lender is not able to obtain Dollars in the
London Interbank Market, in the manner in effect on the date of this
Credit Agreement, the Dollars required by such Lender to fund the Loan
shall be made available from such other financial sources as may be
available to such Lender. In such an event the rate of interest applicable
to the Loan for the relevant Interest Period will be for LIBOR Advances,
the aggregate of 3% and for Prime Advances, 1/2% and the cost (expressed
as a per annum percentage) to the
19
Lender from such financial sources and for periods as may be elected by
the Lender. Each change in such cost in respect of funding the Loan will
cause an immediate corresponding change in the rate of interest payable by
the Borrowers. This arrangement shall be temporary and should Dollars
subsequently become available to the Lender in the London Interbank
Market, in the manner in effect on the date of this Credit Agreement, then
from the conclusion of the then current Interest Period for funding from
alternative sources, the Loan will bear interest at the rate detailed in
Section 5.1(a) above.
(b) In the event that a Lender is unable (for any reason whatsoever)
to acquire the required Dollars from any source, the parties hereto shall
meet to discuss an alternative arrangement. In the absence of mutual
agreement and at the end of ten (10) Business Days after the meeting
referred to above the obligation of the Lender hereunder to make available
the Loan shall be extinguished forthwith and the Loan shall be repaid
forthwith by the Borrowers to such Lender along with all fees and Breakage
Costs for the Loan.
6.8 HOLDING ACCOUNT.
(a) On or before the first Drawdown Date, the Borrowers shall cause
to be established in the name of the Borrowers for the benefit of the
Lenders an account and lock box (the "Holding Account" and the "Lock Box")
at the Houston, Texas office of The Frost National Bank pursuant to the
Holding Account Agreement. The Borrowers shall instruct all of their
customers and account debtors to make all payments to the Lock Box or the
Holding Account of all accounts receivable of the Borrowers, including but
not limited to Accounts as defined in the Security Agreement. Any payments
received directly by the Borrowers from their customers or account debtors
will be deposited immediately in the Holding Account. Until an Event of
Default shall have occurred, the Borrowers shall have the right to
transfer from the Holding Account any amounts in the Holding Account.
After an Event of Default shall have occurred all amounts in the Holding
Account may be applied by the Agent for the benefit of the Lenders in
payment of any amounts due and outstanding under this Credit Agreement or
the Note.
(b) On each Interest Payment Date, the Maturity Date, and each day
on which any commitment fee is payable and only in the event that the
Borrowers have failed to make a
20
payment in accordance with the terms of this Credit Agreement and the
Note, all amounts in the Holding Account (including interest accrued),
shall be used first to pay interest due on such Interest Payment Date,
second to pay any commitment fee due on such date and third to repay the
principal amount outstanding on the Note which is due and payable to the
Lenders on such date. After such payments have been made, all other funds
in the Holding Account shall be released to the Borrowers.
(c) The Holding Account shall terminate and any funds remaining in
it shall be paid the Borrowers upon the fulfillment of all of the
Borrowers' Obligations or upon the prior written consent of the Lenders.
6.9 TAX TREATY. Each Lender that is organized under the laws of a country
other than the United States of America agrees:
(a) To complete and deliver to the Borrowers on or before the first
Drawdown Date Internal Revenue Service Form 4224.
(b) To complete and deliver to the Borrowers from time to time,
provided the Lender is eligible to do so, any successor or additional
forms required in order to secure an exemption from, or reduction in the
rate of, income tax withholding imposed by the United States of America.
Each such Lender shall amend or supplement any such form as required and
permitted by applicable law to insure that it is in full force and effect,
accurate and complete at all times.
Section 7. SECURITY.
7.1 SECURITY AGREEMENT. The Credit Facility and all other amounts due
under this Credit Agreement shall be secured in accordance with the provisions
of the Security Agreement.
7.2 GUARANTY. The Credit Facility and all other amounts due under this
Credit Agreement shall be secured in accordance with the provisions of the
Guaranty.
7.3 HOLDING ACCOUNT AGREEMENT. The Credit Facility and all other amounts
due under this Credit Agreement shall be secured in accordance with the terms of
the Holding Account Agreement.
7.4 FURTHER ASSURANCES. The Borrowers agree to execute and deliver to the
Agent such financing statements or other instruments or documents as the Agent
may reasonably request in order
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to perfect the security created by the Security Agreement, and the Holding
Account Agreement or otherwise required by this Credit Agreement.
Section 8. CONDITIONS PRECEDENT.
8.1 DOCUMENTS REQUIRED AS CONDITIONS PRECEDENT TO THE DRAWDOWN OF THE
FIRST ADVANCE. The obligation of the Lenders to make the first Advance (or issue
the first Letter of Credit, whichever is earlier) is subject to the condition
precedent that the Agent shall have received at or prior to the first Drawdown
Date all of the following, each dated on or before the first Drawdown Date and
each in form and substance satisfactory to the Lenders.
(a) The executed Note and the other Loan Documents.
(b) Certified copies of the resolutions of the Boards of Directors
of the Borrowers and the Guarantor authorizing the execution and delivery
by the Guarantor and the Borrowers of the Loan Documents to which they are
parties and all documents evidencing other necessary corporate action with
respect to the Loan Documents.
(c) Certificates of the Secretaries or the Assistant Secretaries of
the Guarantor and the Borrowers certifying the names and true signatures
of the officers of the Guarantor and the Borrowers authorized to sign the
Loan Documents on behalf of the Guarantor and the Borrowers and the other
documents or certificates to be executed by the Guarantor and the
Borrowers pursuant to this Credit Agreement.
(d) Copies certified as of a recent date by the Secretaries or the
Assistant Secretaries of the Guarantor and the Borrowers of their By-Laws.
(e) Copies of the Guarantor's and the Borrowers' Certificates of
Incorporation certified by the relevant officials of their jurisdiction of
incorporation within thirty (30) days from the date of the first Drawdown
Date and certificates dated within thirty (30) days of the first Drawdown
Date of the relevant officials of their jurisdiction of incorporation as
to the existence and good standing of the Guarantor and the Borrower.
(f) An opinion of Jones, Walker, Waechter, Poitevent, Carrere &
▇▇▇▇▇▇▇, counsel to the Guarantor and the Borrowers, acceptable to the
Agent.
(g) An opinion of Gardere ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., special
counsel to the Lender, acceptable to the Agent.
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(h) The Borrowers shall have executed and delivered to the Agent
copies of all documents and filings and shall have taken all actions
necessary to perfect the security interests created by the Holding Account
Agreement and the Security Agreement as first priority perfected security
interests.
(i) All orders, consents, approvals, licenses, authorizations and
validations of, and filings, recordings and registrations with and
exemptions by any Governmental Agency or any Person (other than any
routine filings which may be required after the date hereof with
appropriate governmental authorities in connection with the operation of
the Borrowers' assets) required to (i) authorize the execution, delivery
and performance by the Borrowers and the Guarantor of the Loan Documents
to which they are parties or (ii) prevent the execution, delivery and
performance by the Borrowers and the Guarantor of the Loan Documents to
which they are parties from resulting in a breach of any of the terms or
conditions of, or resulting in the imposition of any lien, charge or
encumbrance upon any properties of the Borrowers or the Guarantor pursuant
to, or constituting a default (with due notice or lapse of time or both),
or resulting in an occurrence of any event for which any holder or holders
of Indebtedness may declare the same due and payable under, any indenture,
agreement, order, judgment or instrument under which any Borrower or the
Guarantor is a party (other than the Holding Account Agreement or the
Security Agreement) or to the Borrowers' knowledge after due inquiry by
which the Borrowers or the Guarantor or their property may be bound or
affected, or under the Certificates of Incorporation or ByLaws of the
Borrowers or the Guarantor, shall have been obtained or made.
(j) Payment by the Borrowers of the fees referred to in Section 9.1
below and referred to in the side letter dated the date hereof among the
Agent and the Borrowers required to be paid on or before the first
Drawdown Date.
(k) Except for indebtedness referred to in Section 10.16 below, all
of the Indebtedness of the Borrowers for borrowed money arising in the
future shall be fully subordinated to the Obligations on terms and
conditions acceptable to the Lenders.
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(l) There shall have been no material adverse change in the
financial condition of any Borrower or the Guarantor since the financial
statements delivered to the Agent for the period ending September 30,
1998.
(m) If the first Drawdown Date is not the date hereof, certificates
dated the first Drawdown Date of an officer of the Borrowers and the
Guarantor, respectively, certifying that:
(i) The representations and warranties contained in Section 10
below and in Section 7 of the Guaranty are correct on and as of the
first Drawdown Date as through made on and as of such date except
those expressly made as of another date; and
(ii) No event has occurred and is continuing, or would result
from the first Advance or first issuance of a Letter of Credit which
constitutes an Event of Default or with the passing of time or the
giving of notice would constitute an Event of Default.
(n) A Commitment Notice for the Commitment Period commencing January
1, 1999.
8.2 ADDITIONAL CONDITIONS PRECEDENT TO SUBSEQUENT ADVANCES AND LETTERS OF
CREDIT. The obligation of the Lenders to make each subsequent Advance and to
issue each subsequent Letter of Credit shall be subject to the further condition
precedent that the Agent shall have received at or prior to the date of such
subsequent Advance or the date of issuance of such subsequent Letter of Credit,
each dated on or before the date of the subsequent Advance or subsequent Letter
of Credit and each in form and substance satisfactory to the Lenders:
(a) a certificate (dated the date of such Advance or Letter of
Credit) of an officer of the Borrowers and the Guarantor, respectively,
certifying that:
(i) The representations and warranties contained in
Section 10 below and in Section 6 of the Guaranty are correct
on and as of the date such Advance is made or Letter of Credit
is issued as though made on and as of such date except those
expressly made as of another date; and
24
(ii) No event has occurred and is continuing, or would
result from such Advance, or from the issuance of such Letter
of Credit, which constitutes an Event of Default or with the
passing of time or the giving of notice would constitute an
Event of Default.
(b) payment by the Borrowers of the fees required to be paid on or
before such date by Section 9.1 below.
8.3 WAIVER OF CONDITIONS PRECEDENT. All of the conditions precedent
contained in this Section 8 are for the sole benefit of the Lenders and the
Lenders may waive any or all of them in their absolute discretion.
Section 9. FEES AND EXPENSES.
9.1 FEES.
(a) The Borrowers shall pay to the Agent for distribution to the
Lenders a commitment fee of one-half of one percent (1/2%) per annum of
the daily undrawn portion of the Available Commitment up to and including
the Maturity Date. Such commitment fee shall begin to accrue on the date
of this Credit Agreement and shall be payable quarterly in arrears, the
first such payment to be made on March 31, 1999 and quarterly thereafter.
The amount of the commitment fee shall be computed on the basis of a year
of 360 days and the actual number of days elapsed.
(b) The Borrowers shall pay to the Agent for distribution to the
Lenders a commitment fee of one-quarter of one percent (1/4%) per annum of
the Unavailable Commitment up to and including the Maturity Date, payable
quarterly in arrears, the first such payment to be made on March 31, 1999
and quarterly thereafter.
(c) The Borrowers shall pay to the Agent for distribution to the
issuing Lender a letter of credit fee equal to one and one half percent
(1-1/2%) per annum on the face amount of each Letter of Credit
outstanding, payable quarterly in arrears.
9.2 EXPENSES. The Borrowers jointly and severally agree, whether or not
any Advance is made or Letter of Credit is issued, to promptly pay or reimburse
the Agent upon demand for all reasonable fees and disbursement of the Agent,
including, but not limited to, travel and other out-of-pocket expenses of the
Agent and the reasonable fees and expenses of external counsel and technical
25
consultants to the Agent, incurred in connection with (a) the preparation,
execution and delivery of the Loan Documents, the making of Advances and
issuance of Letters of Credit under this Credit Agreement and all other
documents referred to herein and any amendments, renegotiation, refinancing or
waivers to or termination of any thereof, (b) the recording, filing and
perfection of all security interests created by the Loan Documents and (c) the
protection of the rights of the Agent and the Lenders under this Credit
Agreement and all other documents referred to herein and the enforcement of
payment of the Obligations, whether by judicial proceedings or otherwise.
9.3 GENERAL INDEMNITY. The Borrowers hereby jointly and severally agree
to:
(a) pay and hold the Agent and the Lenders harmless from and against
any and all present and future stamp and other similar Taxes with respect
to the Note and the other Loan Documents and save the Agent and each
Lender harmless from and against any and all liabilities with respect to
or resulting from any delay or omission to pay such Taxes, and will
indemnify the Agent and each Lender for the full amount of Taxes paid by
the Lender in respect of payments made or to be made hereunder and any
liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes were correctly or
legally asserted;
(b) indemnify the Agent and each Lender, and its officers,
directors, employees, representatives, agents, attorneys and Affiliates
(an "Indemnitee") from and hold each of them harmless against and promptly
upon demand pay or reimburse each of them for, any and all actions, suits,
proceedings (including any investigations, litigation or inquiries),
claims, demands and causes of action, and, in connection therewith, all
reasonable costs, losses, liabilities, damages or expenses of any kind or
nature whatsoever (collectively the "Indemnity Matters") which may be
incurred by or asserted against or involve any of them (whether or not any
of them is designated a party thereto) as a result of, arising out of or
in any way related to (i) any actual or proposed use by the Borrowers of
the proceeds of the Loan, (ii) the operations of the business of the
Borrowers, (iii) the failure of the Borrowers to comply with any
requirement of any Government Agency, or (iv) any other aspect of this
Credit Agreement, the Note and the other Loan Documents, including,
without limitation, the reasonable fees and disbursements of counsel and
all other expenses incurred in
26
connection with investigating, defending or preparing to defend any such
action, suit, proceeding (including any investigations, litigation or
inquiries) or claim and including all Indemnity Matters arising by reason
of the negligence of any Indemnitee;
(c) In the case of any indemnification hereunder, the Agent, any
Lender or other Person indemnified hereunder shall give notice to the
Borrowers within a reasonable period of time of any such claim or demand
being made against it and the Borrower shall have the non-exclusive right
to join in the defense against any such claim or demand provided that if
the Borrowers provide a defense, the Indemnitee shall bear its own cost of
defense unless there is a conflict of interest between the Borrowers and
such Indemnitee.
(d) No Indemnitee may settle any claim to be indemnified pursuant to
this Section 9.3 without the consent of the indemnitor, such consent not
to be unreasonably withheld; PROVIDED, that the indemnitor may not
reasonably withhold consent to any settlement that an Indemnitee proposes,
if the indemnitor does not have the financial ability to pay all of its
obligations outstanding and asserted against the Indemnitee at that time,
including the maximum potential claims against the Indemnitee to be
indemnified pursuant to this Section 9.3.
(e) Notwithstanding anything to the contrary in this Credit
Agreement, the Borrowers shall have no indemnity obligation with respect
to any Indemnitee Matter caused by or resulting from the gross negligence
or willful misconduct of the Agent, any Lender or any other Indemnitee.
(f) The indemnity and hold harmless contained in this Section 9.3
shall not extend to the Agent, any Lender or any other Indemnitee in its
or his capacity as an equity investor in the Borrowers or as an owner of
any property or interest as to which the Borrowers are also an owner but
only to the Agent's or any Lender's capacity as a lender or a holder of
security interests.
9.4 SURVIVAL. The obligations of the Borrowers under this Section 9 shall
survive payment of all other amounts due under this Credit Agreement.
Section 10. REPRESENTATIONS AND WARRANTIES OF BORROWERS.
Each Borrower represents and warrants to the Lenders as follows:
27
10.1 DUE INCORPORATION, QUALIFICATION, ETC. It is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing as a foreign corporation to
do business in the jurisdictions in which the failure to be so qualified would
have a material adverse effect on its business or financial condition, and it
has full corporate power and authority to own its properties and assets and to
conduct its business as presently conducted.
10.2 CAPACITY. It has full corporate power and authority to execute and
deliver, and to perform and observe the provisions of the Loan Documents to
which it is a party and to carry out the transactions contemplated hereby and
thereby.
10.3 AUTHORITY AND ENFORCEABILITY. The execution, delivery and performance
by such Borrower of the Loan Documents to which it is a party have been or will
be duly authorized by all necessary corporate action. This Credit Agreement
(including the New York choice of law) constitutes, and the other Loan Documents
to which it is a party constitute, or will constitute, legal, valid and binding
obligations of such Borrowers enforceable against it in accordance with their
respective terms, subject to laws affecting creditors' rights generally and
applicable equitable principles. The Security Agreement and the Holding Account
Agreement shall on the first Drawdown Date create and constitute valid and
perfected security interests in and to the properties covered thereby, subject
to the exceptions contained therein, enforceable against all third parties,
subject to laws affecting creditors' rights generally and applicable equitable
principles, and shall secure the Credit Facility.
10.4 GOVERNMENTAL APPROVALS. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with
(other than any routine filings which may be required after the date hereof with
appropriate governmental authorities required in connection with the perfection
of the security interests created by any of the Loan Documents), or exemption
by, any Governmental Agency, is required to authorize the execution, delivery
and performance by such Borrower of the Loan Documents to which it is a party.
10.5 COMPLIANCE WITH OTHER INSTRUMENTS. The execution and delivery of this
Credit Agreement and compliance with its terms, the issuance of the Note and the
execution and delivery of the Security Agreement and the Holding Account
Agreement and the compliance with their terms
28
as contemplated herein, do not result in a breach of any of the terms or
conditions of, or result in the imposition of any lien, charge or encumbrance
(except those contemplated by this Credit Agreement) upon any properties of such
Borrower pursuant to, or constitute a default (with due notice or lapse of time
or both), or result in an occurrence of any event for which any holder or
holders of Indebtedness may declare the same due and payable under any
indenture, agreement, order, judgment or instrument under which such Borrower is
a party or to such Borrower's knowledge, after due inquiry, by which such
Borrower or its property may be bound or affected, or under the Certificate of
Incorporation or By-Laws of such Borrower, and, to such Borrower's knowledge,
after due inquiry, do not violate any provision of applicable law.
10.6 FINANCIAL STATEMENTS.
(a) The consolidated balance sheets of the Borrowers and the
Guarantor as of September 30, 1998 and the related consolidated statements
of income and cash flow of the Borrowers and the Guarantor for the month
and year to date period ended on that date, copies of which have been
furnished to the Agent, have been prepared in accordance with GAAP and
fairly present the financial conditions of the Borrowers and the Guarantor
as of such date and the results of the operations of the Borrowers and the
Guarantor for the period ended on such date.
(b) As of September 30, 1998 the Borrowers and the Guarantor have no
contingent liabilities which, if determined adversely to them (either
singly or in the aggregate), would have a material adverse effect.
10.7 MATERIAL ADVERSE EVENTS. Since September 30, 1998 neither the
business, the prospects, the properties nor the condition (financial or
otherwise) of any Borrower or the Guarantor have been materially adversely
affected.
10.8 LITIGATION, ETC. Except as disclosed in writing to the Agent, there
are no actions, suits or proceedings pending, or to the knowledge of the
Borrowers threatened, against or affecting the Borrowers or the Guarantor, at
law or in equity which, if adversely determined, would have a material adverse
effect on the Borrowers or the Guarantor. To the Borrowers' knowledge, as of
September 30, 1998, neither Borrower or the Guarantor was in violation with
respect to any applicable laws or regulations which non-compliance would have a
material adverse effect nor is any
29
Borrower or the Guarantor in violation or default with respect to any order,
writ, injunction, demand or decree of any court or any Person or in violation or
default (nor is there any waiver in effect which, if not in effect, would result
in a violation or default) in any material respect under any indenture,
agreement or other instrument under which any Borrower or the Guarantor is a
party or may be bound, default under which would have a material adverse effect.
10.9 PRINCIPAL PLACE OF BUSINESS. The chief executive office and principal
place of business of the Borrowers and the Guarantor is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
10.10 PATENT AND OTHER RIGHTS. The Borrowers and the Guarantor have the
right to use all patents, licenses, trademarks, trade names, trade secrets,
copyrights and all rights with respect thereto, which are required to conduct
their businesses as now conducted without known conflict with the rights of
others which would materially and adversely affect such businesses.
10.11 TAXES. The Borrowers and the Guarantor have filed or caused to be
filed all tax returns which are required to be filed by them, pursuant to the
laws, regulations or orders of each Person with taxing power over the Borrowers
and the Guarantor or their assets. The Borrower and the Guarantor have paid, or
made provision for the payment of, all Taxes which have or may have become due
pursuant to said returns, or otherwise, or pursuant to any assessment received
by the Borrowers and the Guarantor, except such Taxes, if any, as are being
contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided. The charges, accruals and reserves in
respect of Taxes on the books of the Borrowers and the Guarantor are adequate
(determined in accordance with GAAP). There are no proposed material tax
assessments against any Borrower or the Guarantor and no extension of time for
the assessment of federal, state or local Taxes of the Borrowers or the
Guarantor is in effect or has been requested.
10.12 EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. No Reportable Event
has occurred and is continuing with respect to any Plan.
10.13 INVESTMENT COMPANY ACT OF 1940. Neither Borrower is an "investment
company" within the meaning of the Investment Company Act of 1940.
10.14 SUBSIDIARIES. The Borrowers have no subsidiaries. The Guarantor has
no active subsidiaries other than the Borrowers. The inactive subsidiaries of
the Guarantor are Horizon
30
Offshore International, Ltd. and Horizon Group, LDC., each of which shall remain
inactive unless the Lenders otherwise agree in writing.
10.15 ENVIRONMENTAL COMPLIANCE.
(a) The Borrowers have duly complied in all material respects with,
and their properties and operations are in compliance in all material
respects with, the provisions of all applicable environmental, health and
safety laws, codes and ordinances and all rules and regulations
promulgated thereunder of all Governmental Agencies unless such compliance
would violate the laws or regulations of the jurisdiction in which their
properties or operations are located.
(b) As of the date of this Credit Agreement, the Borrowers have
received no notice from any Governmental Agency, and have no knowledge, of
any fact(s) which constitute a violation of any applicable environmental,
health or safety laws, codes or ordinances, and any rules or regulations
promulgated thereunder of all Governmental Agencies, which relate to the
use or ownership of the properties owned or operated by the Borrowers.
(c) The Borrowers have been issued all required permits, licenses,
certificates and approvals of all Governmental Agencies relating to (i)
air emissions, (ii) discharges to surface water of ground water, (iii)
noise emissions, (iv) solid or liquid waste disposal, (v) the use,
generation, storage, transportation, treatment, recycling or disposal of
Hazardous Substances or (vi) other environmental, health or safety matters
necessary for the ownership or operation of the properties owned or
operated by the Borrowers and such permits, licenses, certificates and
approvals are in full force and effect on the date of this Credit
Agreement.
(d) To the best of the Borrowers' knowledge, except in accordance
with a valid governmental permit, license, certificate or approval, there
has been no spill or unauthorized discharge or release of any Hazardous
Substance to the environment at, from or as a result of any operations or
any of the properties owned or operated by the Borrowers required to be
reported to any Governmental Agency.
31
(e) There has been no material complaint, compliance order,
compliance schedule, notice letter, notice of citation or other similar
notice from any applicable environmental agency which concerns the
operations of the properties owned or operated by the Borrowers.
10.16 INDEBTEDNESS. The Borrowers have no indebtedness for borrowed money
other than the Indebtedness hereunder, and a loan of approximately USD
60,000,000 from the lenders under that certain Loan Agreement dated as of the
date hereof among the financial institutions named therein, The CIT
Group/Equipment Financing, Inc., as Agent for financial institutions, and the
Borrowers.
Section 11. AFFIRMATIVE COVENANTS OF BORROWERS.
Until the payment in full of all amounts due under this Credit Agreement
and the Note by the Borrowers, unless compliance shall have been waived by the
Lenders, the Borrowers and the Guarantor agree that:
11.1 FINANCIAL STATEMENTS, REPORTS AND INSPECTION.
(a) The Borrowers and the Guarantor will furnish to the Agent:
(i) as soon as possible and in any event within two (2)
Business Days after an officer of the Borrowers has knowledge of the
occurrence of any Event of Default or of any default in the
performance of the Loan Documents, or any event which with the
giving of notice or lapse of time, or both, would constitute an
Event of Default or such a default, which is continuing on the date
of such statement, the statement of the chief financial officer of
the Borrowers setting forth the details of such Event of Default or
event or default and the action which the Borrowers propose to take
with respect thereto;
(ii) as soon as available and in any event within forty-five
(45) days after the close of each quarter of the Guarantor's fiscal
years, a copy of quarterly consolidated financial statements for the
Guarantor prepared in accordance with GAAP and certified by the
chief financial officer or chief accounting officer of the Guarantor
together with consolidating statements of each Borrower;
32
(iii) as soon as available and in any event within ninety (90)
days after the close of the Guarantor's fiscal years, a copy of the
consolidated annual audited financial statements for such year for
the Guarantor certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, LLP or other independent
public accountants of recognized standing acceptable to the Lenders;
(iv) on the fifteenth (15th) day and the last day of each
month, a barge status report in form and substance satisfactory to
the Agent;
(v) as soon as possible and in any event by December 1 of each
year an annual business plan for the Borrowers for the coming year,
including projections of expenses and revenues; and
(vi) (A) as soon as possible, and in any event, within thirty
(30) days after either Borrower or the Guarantor knows that any
Reportable Event with respect to any Plan has occurred, a statement
of an officer of the Borrowers or the Guarantor setting forth
details as to such Reportable Event and the action which the
Borrowers or the Guarantor propose to take with respect thereto,
together with a copy of the notice of such Reportable Event given to
the Pension Benefit Guaranty Corporation if a copy of such notice is
available to the Borrowers or the Guarantor and (B) promptly after
receipt thereof a copy of any notice relating to a Reportable Event
having a material adverse effect, the Borrowers, or the Guarantor or
any member of the Controlled Group may receive from the Pension
Benefit Guaranty Corporation or the Internal Revenue Service with
respect to any Plan; PROVIDED, HOWEVER, this Section 11.1(a)(vii)(B)
shall not apply to notice of general application promulgated by the
Department of Labor.
(b) The Borrowers or the Guarantor will, upon request, furnish to
the Agent such information as the Agent may reasonably request with
respect to the business, affairs or condition (financial or otherwise) of
the Borrowers or the Guarantor and will permit the Agent or its
representatives at any reasonable time or times during normal business
hours upon three (3) Business Days' prior notice, to inspect the
properties of the Borrowers or the Guarantor, to inspect, audit and
examine the books or records of the Borrowers or the
33
Guarantor and to take extracts therefrom and will reimburse the Agent for
all reasonable expenses incurred in connection therewith.
(c) Within forty-five (45) days of the close of the first three
quarters of the Guarantor's fiscal year and on the dates that the annual
reports required pursuant to Section 11.1(a)(iii) above are provided to
the Agent, the Guarantor shall furnish to the Agent a certificate signed
by the chief financial officer or chief accounting officer of the
Guarantor certifying that (A) the representations and warranties contained
in Section 10 of this Credit Agreement are correct on and as of the date
of such certificate as though made on and as of such date except those
expressly made as of another date and (B) the Guarantor is in compliance
with all of the covenants contained in Sections 12.11, 12.12, 12.13, 12.14
and 12.15 of this Credit Agreement, such certificates showing the relevant
computations for such compliance.
(d) As soon as possible and in any event within ninety (90) days of
the end of each of the Guarantor's fiscal years, a certificate from the
Guarantor's auditors referred to in Section 11.1(a)(iii) above, certifying
that (A) such auditor is not aware of any Events of Default and (B) the
Guarantor is in compliance with the covenants contained in Sections 12.11,
12.12, 12.13, 12.14 and 12.15 of this Credit Agreement, such certificates
showing the relevant computations for such compliance.
(e) In addition to the right of inspection referred to in Section
11.1(b) above, the Agent may call for up to four audits of the accounts
receivable of the Borrowers annually, or more if the Lenders have
reasonable cause to believe that the value of such accounts receivable or
the Borrowers' accounting practices are in doubt. The costs of any such
audits shall be for the account of the Borrowers and the Borrowers shall
cooperate with the Agent, the Lenders and their agents in connection with
such audits.
(f) In addition to the requirements of Section 2.2(b) above, the
Borrowers shall provide to the Agent a Borrowing Base Report each Friday,
or the next succeeding Business Day, if any Friday is not a Business Day.
11.2 INSURANCE. The Borrowers shall insure, or cause to be insured, the
properties of the Borrowers under policies of insurance customarily obtained by
businesses in the same or similar
34
business as the Borrowers. The Borrowers will promptly notify the Agent of any
material changes in such insurances or any change in the underwriters or clubs
providing such insurances.
11.3 OTHER DEBT. The Borrowers will promptly pay and discharge any and all
Indebtedness, liens, charges, and all Taxes imposed upon them or upon their
income or profits, or upon any of their properties prior to the date on which
penalties accrue thereon, and lawful claims which, if unpaid, might become a
lien or charge upon the property of the Borrowers, except such as may in good
faith be contested or disputed, provided appropriate reserves are maintained in
accordance with GAAP.
11.4 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. The Borrowers and the
Guarantor will preserve and maintain their corporate existence, their business
as presently conducted, and all of their rights, privileges and franchises
necessary or desirable in the normal conduct of said business, and will conduct
their businesses in an orderly, efficient and regular manner.
11.5 FINANCIAL RECORDS. The Borrowers and the Guarantor will keep books of
record and account in which proper entries will be made of their transactions in
accordance with GAAP.
11.6 ENVIRONMENTAL COMPLIANCE.
(a) The Borrowers will comply with and will use their best efforts
to cause their agents, contractors and sub-contractors (while such Persons
are acting within the scope of their contractual relationship with the
Borrowers) to so comply with (i) all applicable environmental, health and
safety laws, codes and ordinances, and all rules and regulations
promulgated thereunder of all Governmental Agencies and (ii) the terms and
conditions of all applicable permits, licenses, certificates and approvals
of all Governmental Agencies now or hereafter granted or obtained with
respect to the properties owned or operated by the Borrowers unless such
compliance would violate the laws or regulations of the jurisdictions in
which the properties or operations of the Borrowers are located.
(b) The Borrowers will use their best efforts and safety practices
to prevent the unauthorized release, discharge, disposal, escape or spill
of Hazardous Substances on or about the properties owned or operated by
the Borrowers.
35
11.7 ENVIRONMENTAL NOTIFICATIONS. The Borrowers shall notify the Agent, in
writing, within five (5) Business Days of any of the following events occurring
after the date of this Credit Agreement:
(a) Any written notification made by the Borrowers to any U.S. or
foreign federal, state or local environmental agency required under any
federal, state or local environmental statute, regulation or ordinance
relating to a spill or unauthorized discharge or release of any Hazardous
Substance to the environment at, from, or as a result of any operations
on, the properties and operations owned or operated by the Borrowers;
(b) Knowledge by an officer of the Borrowers of receipt of service
by the Borrowers of any complaint, compliance order, compliance schedule,
notice letter, notice of violation, citation or other similar notice or
any judicial demand by any U.S. or foreign court, federal, state or local
environmental agency, alleging (i) any spill, unauthorized discharge or
release of any Hazardous Substance to the environment from, or as a result
of the operations on, the properties owned or operated by the Borrowers or
(ii) violations of applicable laws, regulations or permits regarding the
generation, storage, handling, treatment, transportation, recycling,
release or disposal of Hazardous Substances on or as a result of
operations on the properties and operations owned or operated by the
Borrowers.
(c) It is understood by the parties hereto that the above mentioned
notices are solely for the Lenders' information, may not otherwise be
required by any U.S. or foreign federal, state or local environmental
laws, regulations or ordinances, and are to be considered confidential
information by the Agent and the Lenders.
(d) The term "environmental agency" as used herein shall include,
but not be limited to, the United States Environmental Protection Agency,
the United States Coast Guard, the United States Minerals Management
Service, the United States Department of Transportation (in its
administration of the Hazardous Materials Transportation Act, 49 U.S.C.
ss. 1801, ET SEQ.) and other analogous or similar Governmental Agencies
regulating or administering statutes, regulations or ordinances relating
to or imposing liability or standards of conduct concerning the
generation, storage, use, production, transportation, handling, treatment,
recycling, release or disposal of any Hazardous Substance.
36
11.8 ENVIRONMENTAL INDEMNIFICATION.
(a) The Borrowers hereby agree to indemnify and hold the Indemnitees
harmless from and against any and all claims, losses, liability, damages
and injuries of any kind whatsoever asserted against any Indemnitee with
respect to or as a direct result of the presence, escape, seepage,
spillage, release, leaking, discharge or migration from the properties
owned or operated by the Borrowers of any Hazardous Substance, including
without limitation, any claims asserted or arising under any applicable
environmental, health and safety laws, codes and ordinances, and all rules
and regulations promulgated thereunder of all Governmental Agencies,
regardless of whether or not caused by or within the control of the
Borrowers.
(b) It is the parties' understanding that neither the Agent, the
Lenders nor any other Indemnitee does now, has never and does not intend
in the future to exercise any operational control or maintenance over of
the properties and operations owned or operated by the Borrowers, nor has
any of them in the past, presently, or intends in the future to, maintain
an ownership interest in the properties owned or operated by the Borrowers
except as may arise upon enforcement of the Agent's or the Lenders' rights
under the Security Agreement.
(c) The indemnity and hold harmless contained in this Section 11.8
shall not extend to the Agent, any Lender or any other Indemnitee in its
or his capacity as an equity investor in the Borrowers or as an owner of
any property or interest as to which the Borrowers are also an owner but
only to the Agent's and the Lenders' capacity as a lender or a holder of
security interests.
11.9 YEAR 2000 COMPLIANCE. On or prior to March 31, 1999 (the "COMPLIANCE
DATE"), the Borrowers and the Guarantor shall take all actions necessary to
insure that the automated systems used by the Borrowers and the Guarantor that
are material to their operations (collectively, "MISSION-CRITICAL SYSTEMS"),
including without limitation, software, hardware and other data processing
devices, shall not fail, malfunction or produce incorrect results with respect
to data, calculations and other processing involving dates before, as of or
after December 31, 1999, regardless of the form of the date data is received or
processed (collectively "YEAR 2000 COMPLIANT" or "YEAR 2000
37
COMPLIANCE"). Without limiting the generality of the foregoing, on or prior to
the Compliance Date, the Borrowers and the Guarantor shall test and certify that
their Mission-Critical Systems are Year 2000 Compliant in accordance with
commercially reasonable practices and industry standards. The Borrowers and the
Guarantor agree that upon the reasonable request of the Lenders, the Borrowers
and the Guarantor will make their employees, consultants, premises, records and
documentation available to the Agent with respect to their Year 2000 Compliance
efforts. Section 12. NEGATIVE COVENANTS OF BORROWERS. Until the payment in full
of all amounts due under this Credit Agreement and the Note by the Borrowers,
the Borrowers and the Guarantor agree that they will not without the prior
written consent of the Lenders:
12.1 LIENS. Create, incur, assume or suffer to exist any lien (including
any encumbrance or security interest) of any kind upon any of their other
assets, revenues or right to receive revenue whether now owned or hereafter
acquired, except for the liens and other encumbrances set forth below (the
"Permitted Liens"):
(a) liens for Taxes not at the time delinquent or thereafter payable
without penalty or being contested in good faith, provided provision is
made to the extent required by GAAP for the eventual payment thereof in
the event it is found that such are payable by the Borrowers;
(b) liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being contested in good faith, provided provision is made to the extent
required by GAAP for the eventual payment thereof in the event it is found
that such sums are payable by the Borrowers;
(c) maritime liens:
(i) arising in the ordinary course of business by operation of
law that are being contested in good faith by appropriate
proceedings and for which reserves have been made to the reasonable
satisfaction of the Lenders or
(ii) arising in connection with salvage and general average;
or
(iii) arising in connection with crew wages claimed but not
paid;
(d) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental
38
insurance or benefits, or to secure performance of tenders and statutory
obligations entered into in the ordinary course of business or to secure
obligations on surety or appeal bonds in the ordinary course of business
or easements, rights of way and similar encumbrances incurred in the
ordinary course of business and not interfering with the ordinary conduct
of the business of the Borrowers;
(e) judgment liens in existence less than thirty (30) days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full by insurance;
(f) liens required by the terms of this Credit Agreement;
(g) purchase money security interests in connection with
Indebtedness referred to in Section 12.5(e) below; and
(h) liens in favor of The CIT Group/Equipment Financing, Inc., as
Agent ("CIT") pursuant to the Loan Agreement dated as of the date hereof
among the Borrowers, CIT, as Agent and the lenders named therein, and any
replacements and extensions thereof.
12.2 LINE OF BUSINESS. Enter into any new line of business unrelated to
their present activities after the date of this Credit Agreement.
12.3 CONSOLIDATION, MERGER, ETC. Consolidate with or merge with, or sell
(whether in one transaction or in a series of transactions) all or substantially
all of their assets to any Person.
12.4 MODIFICATION OF AGREEMENTS. Amend, modify or otherwise change any of
the Loan Documents.
12.5 INDEBTEDNESS. Incur any Indebtedness, except:
(a) the Advances and the Letters of Credit;
(b) accounts payable and accrued liabilities incurred in the
ordinary course of business;
(c) letters of credit, performance and bid bonds obtained by the
Borrowers in the ordinary course of their business, other than the Letters
of Credit, up to an aggregate amount of USD 15,000,000.00 at any time;
(d) supersedeas bonds obtained by the Borrowers in the ordinary
course of their business;
39
(e) purchase money indebtedness in connection with capital
expenditures but with no more than USD 3,000,000.00 of such debt being
outstanding at any time; and
(f) indebtedness to CIT in the principal amount of up to USD
60,000,000 (plus interest and fees) and replacements and extensions
thereof.
12.6 REPORTABLE EVENT. Cause or allow to occur a Reportable Event.
12.7 CHANGE OF LEGAL STRUCTURE. Cause or allow to occur any material
change in their present Certificate of Incorporation or By-Laws adversely
affecting the Lenders or change their jurisdiction of incorporation.
12.8 CHANGE OF PLACE OF BUSINESS. Make any change in the address of their
principal place of business or their chief executive office except upon thirty
(30) days' prior written notice to the Agent.
12.9 SUBSIDIARIES. Create or acquire any subsidiaries, unless the
Borrowers notify the Agent of the creation or the acquisition of such subsidiary
and such subsidiary, at the Lenders' request, guarantees the Borrowers'
obligations hereunder in form and substance satisfactory to the Lenders.
12.10 SALE OF FIXED ASSETS OR ACCOUNTS. Sell, transfer or assign any fixed
assets or any account receivable; provided, however, that the Borrowers may
sell, transfer or assign any surplus or scrap equipment in the ordinary course
of business in an amount of up to USD 5,000,000.00 annually.
12.11 CURRENT RATIO. Permit the Current Ratio to be less than 1.1 to 1 at
any time.
12.12 WORKING CAPITAL. Permit its consolidated Working Capital to be less
than USD 3,000,000.00 at any time.
12.13 FIXED CHARGE COVERAGE RATIO. Permit its Fixed Charge Coverage Ratio
to be less than 1.25 to 1.0 for the period from the Closing Date through March
31, 1999 and 1.5 to 1.0 thereafter on a rolling four quarter basis.
12.14 DEBT RATIO. Permit its Debt Ratio at any time to be greater than
55%.
12.15 NET WORTH. Permit its Net Worth to be less than the aggregate of (a)
USD 93,000,000, (b) seventy-five percent (75%) of positive net income for each
fiscal quarter, on a cumulative basis commencing with the quarter beginning
October 1, 1998, and (c) seventy-five
40
percent (75%) of the net proceeds of future offerings by the Guarantor of common
stock or other equity of the Guarantor.
12.16 COMPLIANCE WITH FEDERAL RESERVE BOARD REGULATIONS. No part of the
proceeds of any Advance, and no Letter of Credit, will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or for the purpose of purchasing or carrying or trading in any
securities under such circumstances as to involve the Borrowers or the Guarantor
in a violation of Regulation X of said Board or the Lenders in a violation of
Regulation U of said Board. In particular, without limitation of the foregoing,
neither the Borrowers nor the Guarantor will use any part of the proceeds of any
Advance to be made hereunder to acquire for itself or for any other person any
publicly-held securities of any kind. The assets of the Borrowers and the
Guarantor do not and will not include any margin securities, and the Borrowers
and the Guarantor have no present intention of acquiring any margin securities.
As used in this Section 12.17, the terms "margin security" and "purpose of
purchasing or carrying" shall have the meanings assigned to them in the
aforesaid Regulation U, and the term "publicly-held", in respect of securities,
shall have the meaning assigned to it in Section 220.7(a) of Regulation T of
said Board. If requested by any Lender, the Borrowers will furnish to such
Lender a statement or statements in conformity with the requirements of Federal
Reserve Form U-1 referred to in said Regulation U.
12.17 LOANS AND INVESTMENTS. Advance funds to, or make investments in,
(whether by way of loan, stock purchase or capital contribution) any Person
other than in Cash Equivalents and other than for the payment of costs and
expenses as set forth in the Limited Liability Company Agreement between the
Guarantor and DSND Sondenfjeldske ASA in respect of DSND Horizon, LLC, a
Delaware limited liability company.
12.18 CONTRACTS WITH AFFILIATES. Enter into any transaction with any
director, officer, employee, shareholder or Affiliate of the Borrowers or the
Guarantor except on terms no less favorable to the Borrowers than the Borrowers
could obtain in an arms length transaction with Persons not affiliated with the
Borrowers.
12.19 CHANGE OF MANAGEMENT. Cause or allow to occur any material change in
their present executive management.
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12.20 LEASE PAYMENTS. Excluding capitalized leases, incur or pay more than
USD 2,000,000 per year in the aggregate for operating leases or rental of
equipment, vessels or real property having a term in excess of twelve (12)
months, other than rental for their principal place of business referred to in
Section 10.9 above.
12.21 DIVIDENDS. Allow the Guarantor to make any dividend payments or
other distributions to its stockholders or redeem or otherwise acquire any of
its stock, except as may be necessary or advisable to complete the transaction
contemplated by the USD 10,000,000 stock repurchase plan adopted by the Board of
Directors of the Guarantor on July 29, 1998 (which completion shall be no later
than December 31, 1999).
12.22 FISCAL YEARS. Change or allow to change, the fiscal year of either
Borrower or the Guarantor from one ending on December 31.
Section 13. EVENTS OF DEFAULT.
13.1 EVENTS. An "Event of Default" shall exist if any of the following
events shall occur and be continuing:
(a) The Borrowers shall default in the payment or prepayment when
due of any principal or interest on the Loan or any fees or other amount
payable by them hereunder or under any other Loan Document and such
default shall continue for three (3) Business Days after such amount is
due; or
(b) The Borrowers or the Guarantor shall default in the payment when
due of any principal of or interest on any of their other Indebtedness in
an aggregate amount in excess of USD 100,000.00; or any event specified in
any note, agreement, indenture or other document evidencing or relating to
any such Indebtedness shall occur if the effect of such event is to cause,
or (with the giving of any notice or the lapse of time or both) to permit
the holder or holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause, such Indebtedness to become
due prior to its stated maturity; or
(c) Any representation, warranty or certification made or deemed
made herein or in any other Loan Document by the Borrowers or the
Guarantor or any certificate furnished to the Agent or the Lenders
pursuant to the provisions hereof or any other Loan
42
Document, shall prove to have been false or misleading as of the time made
or furnished in any material respect; or
(d) The Borrowers or the Guarantor shall fail to perform or observe
any provision of the Loan Documents to which they are parties and such
failure shall continue unremedied for a period of ten (10) Business Days
after (i) the failure arises and (ii) the Borrowers or the Guarantor have
knowledge of such failure, or ten (10) Business Days after the Agent gives
the Borrowers notice of such failure; or
(e) The Borrowers or the Guarantor shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts
become due; or
(f) The Borrowers or the Guarantor shall (i) apply for or consent to
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its
property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the U.S. Bankruptcy Code (as now or
hereafter in effect), (iv) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (v) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to,
any petition filed against it in an involuntary case under the U.S.
Bankruptcy Code, or (vi) take any corporate action for the purpose of
effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Borrowers or the Guarantor in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of
the Borrowers or the Guarantor or of all or any substantial part of the
assets of any of them, or (iii) similar relief in respect of the Borrowers
or the Guarantor under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order, judgment
or decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of sixty (60) days; or an
order for relief against the Borrowers or the Guarantor shall be entered
in an involuntary case under the U.S. Bankruptcy Code; or
43
(h) A judgment for the payment of money in excess of USD 150,000.00
shall be rendered by a court against any of the Borrowers or the Guarantor
and the same shall not be discharged (or provision shall not be made for
such discharge), or a stay of execution thereof shall not be procured,
within thirty (30) days from the date of entry thereof and the Borrowers
or the Guarantor, respectively, shall not, within said period of thirty
(30) days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal; or
(i) The Guaranty shall cease to be in full force and effect.
THEN, or at any time thereafter, while any such event remains unremedied or
uncured:
The Lenders may, upon written notice to the Borrowers, terminate the
Commitment to make Advances or to issue Letters of Credit and/or declare the
entire outstanding unpaid principal amount of the Note, all Breakage Costs and
all interest accrued and unpaid thereon and all other amounts payable hereunder
and thereunder to be forthwith due and payable, whereupon the same shall become
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrowers
and also demand that the Borrowers cooperate with it in order to permit any
outstanding Letters of Credit to be terminated, or if such termination cannot be
accomplished, the Borrowers shall deposit with each issuing Lender an amount
equal to the aggregate amounts of any outstanding Letters of Credit which
deposit shall be held by such Lender as security until all of the Letters of
Credit are terminated or expire. The Agent and the Lenders may immediately and
without expiration of any additional period of grace, enforce payment of all
obligations of the Borrowers under this Credit Agreement and under the Note. In
addition, the Agent and the Lenders may exercise any or all of such remedies as
may be available to it under applicable law or granted pursuant to the Loan
Documents.
Any declaration made pursuant to this Section 13.1 is subject to the
condition that, if at any time after the outstanding principal of the Note shall
have become due and payable, and before any foreclosure action has been taken by
the Agent or any Lender under any of the Loan Documents to realize upon the
security provided by such documents, all Breakage Costs and all arrears of
interest upon the Note and all other obligations owed to the Lenders (except
that principal of the Note which by such declaration shall have become payable)
shall have been duly paid, and every other default
44
and Event of Default shall have been made good waived or cured, then the Lenders
may, by written notice to the Borrowers, rescind and annul such declaration and
its consequences; but no such rescission or annulment shall extend to or affect
any subsequent default or Event of Default or impair any right consequent
thereon.
13.2 CHANGE OF CONTROL. If at any time while any amount is outstanding
under this Credit Agreement or any Lender has a Commitment hereunder, any Person
other than DSND Sondenfjeldske ASA shall acquire after the date hereof more than
thirty percent (30%) of the then outstanding stock of the Guarantor having
ordinary voting power, a "Change of Control" shall be deemed to have occurred.
The Borrowers shall promptly, but in any event within ten (10) days give written
notice to the Agent upon obtaining knowledge of an event which is or would
constitute a Change of Control. The Lenders shall, upon the happening of a
Change of Control, have the privilege of declaring all amounts outstanding under
this Credit Agreement to be due and payable on a date not earlier than ten (10)
days from the date of the exercise of said privilege. All amounts outstanding
under this Credit Agreement shall thereupon become due and payable on the date
specified in the notice sent to the Borrowers by the Agent including the
principal amount thereof plus accrued interest thereon to the accelerated
maturity date and any amounts owed by the Borrowers or the Guarantor to the
Lender pursuant to this Credit Agreement.
Section 14. THE AGENT
14.1 APPOINTMENT AND DUTIES OF AGENT. The parties hereto agree that Den
norske Bank ASA shall act, subject to the terms and conditions of this Section
14, as the Agent for the Lenders in connection with the Loan, and to the extent
set forth herein each Lender hereby irrevocably appoints, authorizes, empowers
and directs the Agent to take such action on its behalf and to exercise such
powers as are specifically delegated to the Agent herein or are reasonably
incidental thereto in connection with the administration of and the enforcement
of any rights or remedies with respect to this Credit Agreement, the Note and
the other Loan Documents. It is expressly understood and agreed that the
obligations of the Agent under the Loan Documents are only those expressly set
forth in this Credit Agreement. The Agent shall use reasonable diligence to
examine the face of each document received by it hereunder to determine whether
such documents, on its face, appears to be what it purports to be. However, the
Agent shall not under any duty to examine into and pass upon
45
the validity or genuineness of any documents received by it hereunder and the
Agent shall be entitled to assume that any of the same which appears regular on
its face is genuine and valid and what it purports to be.
14.2 DISCRETION AND LIABILITY OF AGENT. Subject to Sections 14.3 and 14.5
below, the Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
under any of the Loan Documents or otherwise, or with respect to taking or
refraining from taking any action or actions which it may be able to take under
any of the Loan Documents. Neither the Agent nor any of its directors, officers,
employees, agents or representatives shall be liable for any action taken or
omitted by it hereunder or in connection herewith, except for its own gross
negligence or wilful misconduct. The Agent shall incur no liability under, or in
respect of this Credit Agreement or the other Loan Documents by acting upon a
notice, certificate, warranty or other paper or instrument reasonably believed
by it to be genuine or authentic or to be signed by the proper party or parties,
or with respect to anything which it may do or refrain from doing in the
reasonable exercise of its judgment, or which may seem to it to be necessary or
desirable in the premises.
14.3 EVENT OF DEFAULT.
(a) The Agent shall be entitled to assume that no Event of Default or
event which would constitute an Event of Default after notice or lapse of time,
or both, has occurred and is continuing, unless the Agent has actual knowledge
of such facts or has received notice from a Lender in writing that such Lender
considers that an Event of Default or event which would constitute an Event of
Default after notice or lapse of time, or both, has occurred and is continuing
and which specifies the nature thereof.
(b) In the event that the Agent shall acquire actual knowledge of any
Event of Default or event which would constitute an Event of Default after
notice or lapse of time, or both, the Agent shall promptly notify (either
orally, confirmed in writing, or in writing) the Lenders of such Event of
Default or event and shall, take such action and assert such rights as are
contemplated under this Credit Agreement and in an emergency, or if requested in
writing by the Lenders shall, take such action and assert such rights as are
contemplated under this Agreement. The Agent shall be indemnified pro rata by
the Lenders against any liability or expenses, including, but not limited to,
46
travel expenses and internal and external counsel fees and expenses, incurred in
connection with taking such action. The Agent may refrain from acting in
accordance with any instructions from the Lenders until it shall have been
indemnified to its satisfaction against any and all costs and expenses which it
will or may expend or incur in complying with such instructions.
14.4 CONSULTATION. When acting in connection with this Credit Agreement,
or the other Loan Documents, the Agent may engage and pay for the advice and
services of any lawyers, accountants, surveyors, appraisers or other experts
whose advice or services may to it appear necessary, expedient or desirable and
the Agent shall be entitled to fully rely upon any opinion or such advice so
obtained.
14.5 COMMUNICATIONS TO AND FROM AGENT. When any notice, approval, consent,
waiver or other communication or action is required or may be delivered by the
Lenders hereunder or the other Loan Documents, action by the Agent shall be
effective for all purposes hereunder; provided, that upon any occasion requiring
or permitting an approval, consent, waiver, election or other action on the part
of the Lenders, unless action by the Agent alone, or only upon instruction of
all of the Lenders, is expressly permitted or required hereunder, action shall
be taken by the Agent for and on behalf of or for the benefit of all the Lenders
as provided in Section 14.3 above. The Borrowers and the Guarantor may rely on
any communication from the Agent hereunder or the other Loan Documents, and need
not inquire into the propriety of or authorization for such communication.
14.6 LIMITATIONS OF AGENCY. Notwithstanding anything in the Loan
Documents, expressed or implied, it is agreed by the parties hereto, that the
Agent will act under the Loan Documents as Agent solely for the Lenders and only
to the extent specifically set forth herein, and will, under no circumstances,
be considered to be an agent or fiduciary of any nature whatsoever in respect to
any other person. The Agent may generally engage in any business with the
Borrowers and the Guarantor or any of their affiliates as if it was not the
Agent.
14.7 NO REPRESENTATIONS OR WARRANTY.
(a) No Lender (including the Agent) makes to any other Lender any
representation or any warranty, expressed or implied, or assumes any
responsibility with respect to the Loan or the execution, construction or
enforceability of the Loan Documents or any instrument or agreement executed by
the Borrowers, the Guarantor or any other Person in connection therewith.
47
(b) The Agent takes no responsibility for the accuracy or completeness of
any information concerning the Borrowers and the Guarantor distributed by the
Agent in connection with the Loan nor for the truth of any representation or
warranty given or made herein, nor for the validity, effectiveness, adequacy or
enforceability of this Agreement or any of the other Loan Documents.
14.8 LENDER CREDIT DECISION. Each Lender acknowledges that it has,
independent of and without reliance upon any other Lender (including the Agent)
or any information provided by any other Lender (including the Agent) and based
on the financial statements of the Borrowers and the Guarantor and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Credit Agreement. Each Lender also
acknowledges that it will, independent of and without reliance upon any other
Lender (including the Agent) and based on such documents and information as it
shall deem appropriate at that time, continue to make its own credit decisions
in taking or not taking action under this Agreement and any other documents
relating thereto.
14.9 INDEMNITY. Notwithstanding any of the provisions hereof, to the
extent the Agent has not been so indemnified by the Borrowers, the Lenders shall
severally indemnify the Agent against any and all losses, costs, liabilities,
damages or expenses, including but not limited to, reasonable travel expenses
and internal and external counsel's reasonable fees and expenses, arising from,
or in connection with, its performance as Agent hereunder and not caused by its
gross negligence or willful misconduct.
14.10 RESIGNATION. The Agent may resign as such at any time upon at least
thirty (30) days' prior notice to the Borrower and the Lenders, provided that
such resignation shall not take effect until a successor agent has been
appointed. In the event of a resignation by the Agent, the Lenders shall
promptly appoint a successor agent from among the Lenders.
14.11 DISTRIBUTION. The Agent shall be responsible for promptly
distributing each Lender's share of all net amounts received by the Agent under
any of the Loan Documents pursuant to the letter agreement among the Agent and
the Lenders dated the date hereof. Each Lender shall be responsible for
designating by written notice to the Agent the account to which such
distribution shall be deposited.
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14.12 LIMITATION OF SUITS. All rights of action and claims under this
Credit Agreement and the Security Agreement of the Lenders shall be prosecuted
and enforced only by the Agent. The Lenders agree that they shall not
independently institute any proceedings, judicial or otherwise, to enforce their
rights against the Borrowers under this Agreement or the Security Agreement.
However, notwithstanding anything contained in this Section 14.12, the Lenders
shall always retain their ability to retain independent counsel and to protect
their rights under this Credit Agreement and the other Loan Documents.
14.13 RIGHT OF SETOFF. Upon the occurrence and during the continuation of
any Event of Default, the Lenders each are hereby authorized at any time and
from time to time, without notice to the Borrowers (any such notice being
expressly waived by the Borrowers), to setoff and apply any and all deposits
(general or special, time or demand, provisional or final, whether or not such
setoff results in any loss of interest or other penalty, and including without
limitation all certificates of deposit) at any time held by the Lenders and all
of the indebtedness arising in connection with this Credit Agreement
irrespective of whether or not such Lender will have made any demand under this
Credit Agreement, the Note or any other Loan Document. The Borrowers also hereby
grant to each of the Lenders a security interest in and hereby transfer, assign,
set over and convey to each of the Lenders, as security for payment of the Loan,
all such deposits, funds or property of the Borrowers or indebtedness of any
Lender to the Borrowers. Should the right of any Lender to realize funds in any
manner set forth hereinabove be challenged and any application of such funds be
reversed, whether by court order or otherwise, the Lenders shall make
restitution or refund to the Borrower pro rata in accordance with their
respective portions of the Loan. Each Lender agrees to promptly notify the
Borrowers and the Agent after any such setoff and application, provided that the
failure to give such notice will not affect the validity of such setoff and
application. The rights of the Agent and the Lenders under this Section 14.13
are in addition to other rights and remedies (including without limitation other
rights of setoff) which the Agent or the Lenders may have. Nothing contained
herein shall affect the right of any Lender to exercise, and retain the benefits
of exercising, any such right with respect to any other indebtedness or
obligation of the Borrowers to such Lender.
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Section 15. MISCELLANEOUS.
15.1 ENTIRE AGREEMENT. This Credit Agreement with its Schedule and
Exhibits embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings relating to the
subject matter hereof.
15.2 NO WAIVER. No failure to exercise, and no delay in exercising any
right, power or remedy hereunder or under any document delivered pursuant hereto
shall impair any right, power or remedy which the Lender may have, nor shall any
such delay be construed to be a waiver of any of such rights, powers or
remedies, or an acquiescence in any breach or default under this Credit
Agreement or any document delivered pursuant hereto, nor shall any waiver of any
breach or default of the Borrowers hereunder be deemed a waiver of any default
or breach subsequently occurring. The rights and remedies herein specified are
cumulative and not exclusive of any rights or remedies which the Agent or the
Lenders would otherwise have.
15.3 SURVIVAL. All representations, warranties and agreements herein
contained on the part of the Borrowers shall survive the making of the Advances
or the issuance of the Letters of Credit hereunder and all such representations,
warranties, and agreements shall be effective as long as any amount arising
pursuant to the terms of this Credit Agreement or the Note remains unpaid.
15.4 NOTICES.
(a) All notices, requests, consents, demands, and other
communications provided for or permitted hereunder shall be effective
three (3) days after being duly deposited in the mails, certified, return
receipt requested, or upon receipt if delivered to Federal Express or
similar courier company or transmitted by telefax, addressed to the
respective party at the address set forth below.
BORROWERS AND GUARANTOR: Horizon Offshore, Inc.
Horizon Vessels, Inc.
Horizon Offshore Contractors, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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AGENT: Den norske Bank ASA, as Agent
▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Den norske Bank ASA
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attention: Customer Service
Telefax No.: (▇▇▇) ▇▇▇-▇▇▇▇
15.5 TERMINATION. This Credit Agreement shall terminate when all
obligations of the Borrowers incurred under the Loan Documents shall have been
discharged in full.
15.6 SEVERABILITY OF PROVISIONS. In case any one or more of the provisions
contained in this Credit Agreement should be invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby.
15.7 SUCCESSORS AND ASSIGNS. This Credit Agreement shall be binding upon
and inure to the benefit of the Borrowers, the Agent and the Lenders and their
respective successors and permitted assigns; provided, however, that the
Borrowers may not transfer their rights to borrow under this Credit Agreement
without the prior written consent of the Lenders.
15.8 ASSIGNMENT AND PARTICIPATION.
(a) Subject to compliance with the provisions of this Section 15.8,
the Lenders shall have the right to assign all or part of the obligations
of the Borrowers outstanding under this Credit Agreement or the Note
evidencing such obligations to Affiliates of the Lenders or to any
foreign, federal or state banking institution, savings and loan
association or finance company, with the written consent of the Borrowers,
which shall not be unreasonably withheld or delayed. The Agent shall
inform the Borrowers in advance as to any proposed assignment by a Lender
and the identity of the prospective assignee.
(b) Any assigning Lender shall pay an assignment fee to the Agent of
USD 1,500 per assignment. Each assignment shall be in increments of USD
1,000,000 and shall be no less than USD 5,000,000.
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(c) The Lenders may sell participations (without the consent of the
Borrowers) to one or more parties, in or to all or a portion of their
rights and obligations under this Credit Agreement, the Note and the other
Loan Documents; provided, that (i) each such Lender's obligations under
this Credit Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance
of such obligations and (iii) the Borrowers, the Guarantor and the Agent
shall continue to deal solely and directly with such Lender in connection
with this Credit Agreement, the Note and the other Loan Documents.
(d) The Borrowers hereby agree to assist with any assignment made
pursuant to this Section 15.8 by executing and delivering any documents or
instruments reasonably requested by the Lenders in connection with any
such assignment, including but not limited to, amendments to this Credit
Agreement, consents to assignments or new promissory Note.
15.9 COUNTERPARTS. This Credit Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Credit Agreement by signing any such
counterpart.
15.10 JURISDICTION. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO THIS CREDIT
AGREEMENT AND THE NOTE MAY BE INSTITUTED IN THE COURTS OF THE STATE OF NEW YORK
OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. BY
EXECUTION AND DELIVERY OF THIS CREDIT AGREEMENT THE LENDERS, THE AGENT, THE
BORROWERS AND THE GUARANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE
JURISDICTION OF EACH SUCH COURT, AND IRREVOCABLY AND UNCONDITIONALLY WAIVE (i)
ANY OBJECTION THE BORROWERS, THE GUARANTOR, THE AGENT OR THE LENDERS MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE IN ANY OF SUCH COURTS, AND (ii) ANY CLAIMS
THAT ANY ACTION OR PROCEEDING BROUGHT IN ANY OF SUCH COURTS HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION 17.10
SHALL LIMIT OR RESTRICT THE RIGHT OF THE AGENT OR THE LENDERS TO BRING SUIT
AGAINST THE BORROWERS
52
OR THE GUARANTOR ANYWHERE IN THE WORLD TO ENFORCE THE SECURITY PROVIDED IN THE
SECURITY AGREEMENT.
15.11 CHOICE OF LAW. THIS CREDIT AGREEMENT AND THE NOTE ISSUED HEREUNDER
AND ALL ISSUES ARISING IN CONNECTION WITH THIS CREDIT AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT THAT WITH
RESPECT TO THE PROVISIONS OF THIS CREDIT AGREEMENT AND THE NOTE WHICH PROVIDE
FOR OR RELATE TO THE PAYMENT OF INTEREST, PROVISIONS OF APPLICABLE FEDERAL LAW
WHICH PERMIT THE LENDERS TO CHARGE THE HIGHER OF THE RATE PERMITTED BY SUCH
APPLICABLE LAW OR BY THE LAWS OF THE STATE IN WHICH EACH LENDER IS LOCATED SHALL
BE DEEMED GOVERNING AND CONTROLLING.
15.12 WAIVER OF JURY TRIAL. THE BORROWERS, THE GUARANTOR, THE AGENT AND
THE LENDERS HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT, RELATED TO, OR
CONNECTED WITH THIS CREDIT AGREEMENT, ANY OF THE LOAN DOCUMENTS OR THE
RELATIONSHIP ESTABLISHED HEREUNDER.
15.13 AMENDMENT AND WAIVER. Except as otherwise provided herein, no
provision of this Credit Agreement may be amended, modified, supplemented,
changed, waived, discharged or terminated, unless all parties hereto consent in
writing.
15.14 NO ORAL AGREEMENTS. THIS WRITTEN CREDIT AGREEMENT WITH ITS SCHEDULE
AND EXHIBITS REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES CONCERNING THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
15.15 HEADINGS, ETC. The table of contents of this Credit Agreement and
the headings of various sections and subsections herein are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof. References to sections or subsections
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without reference to the document in which they are contained are references to
this Credit Agreement.
15.16 TAXES. Any Taxes payable or ruled payable by any Government Agency
in respect of this Credit Agreement, the Note or any other Loan Document, other
than any Tax on or measured by the income of the Lenders, shall be paid by the
Borrowers, together with any interest and penalties.
15.17 CONTROLLING AGREEMENT. In the event of a conflict between the
provisions of this Credit Agreement and those of any other Loan Document, the
provisions of this Credit Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement
to be executed as of the day and year first above written.
HORIZON VESSELS, INC.
By: ____________________________
Name: ___________________________
Title:___________________________
HORIZON OFFSHORE CONTRACTORS, INC.
By: ____________________________
Name: ___________________________
Title:___________________________
HORIZON OFFSHORE, INC.
By: ____________________________
Name: ___________________________
Title:___________________________
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LENDERS:
DEN NORSKE BANK ASA
By: ____________________________
Name: ___________________________
Title:___________________________
By: ____________________________
Name: ___________________________
Title:___________________________
AGENT:
DEN NORSKE BANK ASA
By: ____________________________
Name: ___________________________
Title:___________________________
By: ____________________________
Name: ___________________________
Title:___________________________
55
EXHIBIT A TO
CREDIT AGREEMENT
AMENDED AND RESTATED PROMISSORY NOTE
USD 30,000,000.00 December ___, 1998
FOR VALUE RECEIVED, HORIZON VESSELS, INC., a corporation organized and
existing under the laws of the State of Delaware and HORIZON OFFSHORE
CONTRACTORS, INC., a corporation organized and existing under the laws of the
State of Delaware (collectively, the "Borrowers") hereby jointly and severally
promise to pay to DEN NORSKE BANK ASA, as Agent (the "Payee"), or order, on or
before December 31, 2001, or otherwise, as hereinafter provided, THIRTY MILLION
AND NO/100 DOLLARS OF THE UNITED STATES OF AMERICA (USD 30,000,000.00) and to
pay interest on the unpaid portion of said principal sum outstanding from time
to time, as hereinafter provided.
PRINCIPAL AND INTEREST
1.1 (a) Interest on this Note shall be payable at the times and the rates
as provided in Section 5.1 of the Amended and Restated Credit Agreement (the
"Credit Agreement") dated as of December ___, 1998, among the Borrowers, Horizon
Offshore, Inc., the Lenders named therein and the Payee as Agent for the
Lenders.
(b) In case any payment of principal or interest is not paid when
due, additional interest at the rate determined as provided in Section 5.4 of
the Credit Agreement shall be payable on all overdue principal and, to the
extent that the same may be lawful, on all overdue interest.
1.2 Interest shall be calculated on the outstanding principal amounts as
provided in Section 5.1(c) and 5.1(d) of the Credit Agreement.
1.3 The principal of this Note shall be payable as provided in Section 6.3
of the Credit Agreement.
1.4 Notwithstanding any provision of this Note to the contrary, in no
event shall the aggregate amount of consideration which constitutes interest
under any applicable law which is contracted for, charged or received hereunder
or under this Note ("Interest") exceed the maximum
1
amount of nonusurious interest allowed by law, and any excess shall be credited
on this Note (or if all obligations under this Note shall have been paid in
full, refunded to the Borrowers). For purposes of the foregoing, the maximum
amount of interest allowed by law shall be calculated by determining the amount
of interest that could be contracted for, charged or received during the term
hereof at the maximum rate of nonusurious interest allowed from time to time by
applicable law as is now or, to the extent allowed by law, as may hereafter be
in effect (the "maximum nonusurious interest rate") and, if at any time the rate
of Interest to accrue would exceed the maximum nonusurious interest rate, the
rate of Interest to accrue under this Note shall be limited to the maximum
nonusurious interest rate, but any subsequent reductions in the LIBOR Rate (as
defined in the Credit Agreement) shall not reduce the rate of Interest to accrue
on this Note below the maximum nonusurious interest rate until the total amount
of Interest accrued and paid on this Note equals the amount of Interest which
could have accrued if a rate per annum equal to the LIBOR Rate plus 2 and 1/2%
or the Prime Rate plus 1/2% had at all times been in effect.
SECURITY
2.1 This Note is issued under and pursuant to the Credit Agreement and is
secured by, among other things, a Security Agreement on certain other assets and
revenues of the Borrowers (the "Security Agreement"). Reference is hereby made
to the Credit Agreement and the Security Agreement for a description of the
property thereby mortgaged, the nature and extent of the security afforded
thereby and the rights of the Borrowers and the Payee with respect to such
security as provided in the Security Agreement. Payment of this Note may be
demanded by the holder hereof prior to the maturity of this Note under certain
circumstances and conditions, in the manner, and with the effect, provided in
the Credit Agreement.
2.2 This Note evidences the advances made by the Lenders under the
Revolving Credit Facility of the Credit Agreement. This Note is given in
amendment, restatement and extension of that certain Amended and Restated
Promissory Note dated May 13, 1998 of the Borrower to the Payee in the original
amount of USD 20,000,000, which was given in amendment and restatement of that
certain Amended and Restated Promissory Note dated December 30, 1997 of the
Borrower to the Payee in the original principal amount of USD 20,000,000.00 and
the indebtedness evidenced thereby and liens securing such Promissory Note are
not extinguished hereby but carried forward.
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MISCELLANEOUS
3.1 All parties hereto, including endorsers hereof, hereby waive
presentment for payment, demand, protest and notice of protest and non-payment
hereof and hereby consent that any and all securities or other property, if any,
held by or for the holders hereof at any time as security for this Note may be
exchanged, released or surrendered and that the time of payment of this Note may
be extended, all in the sole discretion of the holder hereof and without notice
and without affecting in any manner the liability of the parties hereto.
3.2 No course of dealing between the Borrowers and the Payee in exercising
any rights hereunder shall operate as a waiver of any right of any holder except
to the extent expressly waived in writing by such holder.
3.3 Whenever any payment to be made hereunder shall be due on a day which
is not a Business Day, the due date thereof shall be extended to the next
succeeding Business Day; provided, however, that if such next succeeding
Business Day is in a new calendar month, then the payment required hereunder
shall be made on the last Business Day preceding the original date on which
payment was due. If a payment of principal has been extended pursuant to this
Section 3.3, interest shall be payable on such principal at the applicable rate
during such extension.
3.4 Any notice to be given pursuant to this Note shall be given in
accordance with Section 15.4 of the Credit Agreement.
3.5 THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK EXCEPT THAT WITH RESPECT TO THE
PROVISIONS OF THIS NOTE WHICH PROVIDE FOR OR RELATE TO THE PAYMENT OF INTEREST,
ANY PROVISIONS OF APPLICABLE FEDERAL LAW WHICH PERMIT THE PAYEE TO CHARGE THE
HIGHER OF THE RATE PERMITTED BY SUCH APPLICABLE LAW OR BY THE LAWS OF THE STATE
IN WHICH THE PAYEE IS LOCATED SHALL BE DEEMED GOVERNING AND CONTROLLING.
3.6 THE BORROWERS HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO
WHICH THEY ARE A PARTY INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR
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OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS NOTE OR
ANY OF THE LOAN DOCUMENTS.
3.7 Capitalized terms used in this Note but not defined herein shall have
the meanings given to them in the Credit Agreement.
IN WITNESS WHEREOF, the Borrowers have caused this Note to be duly
executed the day and year first above written.
HORIZON VESSELS, INC.
By:
Name:
Title:
HORIZON OFFSHORE CONTRACTORS, INC.
By:
Name:
Title:
4