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EXHIBIT 10.6
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CREDIT AGREEMENT
DATED AS OF AUGUST 29, 1996
BETWEEN
NEWPARK SHIPBUILDING AND REPAIR, INC.,
AS BORROWER
AND
XXXXXX FINANCIAL LEASING, INC.
AS LENDER
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TABLE OF CONTENTS
SECTION 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement . . . . . . . . . . 11
1.3 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2
AMOUNTS AND TERMS OF LOANS . . . . . . . . . . . . . . . . . . . . . 12
2.1 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(A) Term Loan A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(B) Term Loan B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.2 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(A) Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(B) Computation and Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . 13
(C) Interest Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(A) Prepayment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(B) Fixed Rate Breakage Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(C) Late Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4 Payments and Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(A) Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(B) Manner and Time of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(C) Payments on Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(D) Voluntary Prepayments and Repayments . . . . . . . . . . . . . . . . . . . . . . . 16
(E) Application of Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3
CONDITIONS TO LOANS . . . . . . . . . . . . . . . . . . . . . . . 16
3.1 Conditions to Initial Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(A) Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(B) Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(C) Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(D) Security Interests, UCC Filings and Stock Certificates . . . . . . . . . . . . . . 17
(E) Termination of Prior Indebtedness Liens and Other Liens . . . . . . . . . . . . . . 17
(F) Insurance Policies and Endorsements . . . . . . . . . . . . . . . . . . . . . . . . 17
3.2 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.3 Conditions to Term Loan B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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SECTION 4
BORROWER'S REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 19
4.1 Organization, Powers, Capitalization, Good Standing, Business and Subsidiaries . . . . . . . . . . . 19
(A) Organization and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(B) Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(C) Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(D) Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(E) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(A) Authorization of Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(B) No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(C) Governmental Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(D) Binding Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(E) Valid Issuance of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.3 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(A) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(B) Pro Forma . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(C) Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 Indebtedness and Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.6 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.7 Litigation; Adverse Facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.9 Adverse Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 Performance of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(A) No Other Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(B) ERISA and IRC Compliance and Liability . . . . . . . . . . . . . . . . . . . . . . 24
(C) Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(D) Prohibited Transactions and Payments . . . . . . . . . . . . . . . . . . . . . . . 24
(E) No Termination Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(F) ERISA Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.13 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.14 Broker's Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.15 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(A) No Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(B) Storage of Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(C) Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . 25
4.16 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.17 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.19 Use of Proceeds and Margin Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.20 Representations and Warranties from the Purchase Agreement . . . . . . . . . . . . . . . . . . . . . 27
(A) Borrower Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(B) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.21 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.22 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.23 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.24 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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SECTION 5
BORROWER'S AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 28
5.1 Financial Statements and Other Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(A) Interim Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(B) Year-End Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(C) Borrower Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(D) Accountants' Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(E) Accountants' Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(F) Appraisals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(G) Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(H) SEC Filings and Press Releases . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(I) Subordinated Indebtedness Notices . . . . . . . . . . . . . . . . . . . . . . . . . 31
(J) Events of Default, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(K) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(L) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(M) Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(N) ERISA Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(O) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(P) Supplemented Schedules; Notice of Corporate Changes . . . . . . . . . . . . . . . . 32
(Q) Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(R) Tax Returns and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 32
(S) Management Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(T) Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.2 Access to Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Corporate Existence, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.4 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.5 Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.6 Inspection; Lender Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.7 Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(A) Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(B) Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(C) Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.8 Environmental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.9 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.10 Covenants in Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.11 Mortgages; Title Insurance; Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(A) Title Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(B) Additional Mortgaged Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(C) Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.13 Environmental Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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SECTION 6
INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7
BORROWER'S NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 41
7.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.2 Liens and Related Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(A) No Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(B) No Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(C) No Restrictions on Subsidiary Distributions to Borrower . . . . . . . . . . . . . . 42
7.3 Investments; Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.5 Restricted Junior Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.6 Restriction on Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.7 Disposal of Assets or Subsidiary Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.8 Restriction on Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.9 Sales and Lease-Backs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.10 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.11 Management Fees and Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.12 Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.13 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.14 Changes Relating to Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.15 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.16 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.17 Press Release; Public Offering Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.19 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.20 Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.21 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.22 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
7.23 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement . . . . . . . . . 49
SECTION 8
DEFAULT, RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . 50
8.1 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(A) Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(B) Default in Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(C) Breach of Certain Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(D) Breach of Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
(E) Other Defaults Under Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . 50
(F) Involuntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . 51
(G) Voluntary Bankruptcy; Appointment of Receiver, etc. . . . . . . . . . . . . . . . . 51
(H) Governmental Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(I) Judgment and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(J) Dissolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(K) Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(L) Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(M) ERISA - Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(N) ERISA - Multiemployer Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(O) Invalidity of Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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(P) Damage, Strike, Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(Q) Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(R) Failure of Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(S) Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(T) Board Seat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(U) Adequate Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.2 Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.3 Performance by Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 9
ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . 54
9.1 Assignments and Participations in Loans and Notes . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 54
10.1 Expenses and Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
10.2 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.3 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.4 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.6 Survival of Warranties and Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.7 Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 58
10.8 Marshaling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.9 Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
10.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.12 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.13 Successors and Assigns; Subsequent Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . 59
10.14 No Fiduciary Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.15 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.16 No Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
10.17 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.18 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.19 CONSENT TO JURISDICTION AND SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.20 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
10.21 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.22 Counterparts; Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
v
7
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of August 29, 1996 and entered into by
and between NEWPARK SHIPBUILDING AND REPAIR, INC., a Texas corporation
("Borrower"), with its principal place of business and chief executive office
at 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000 and XXXXXX FINANCIAL LEASING,
INC., a Delaware corporation ("Lender"), with offices at 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
RECITALS:
WHEREAS, pursuant to Section 14 of that certain Equipment Lease Agreement
dated as of March 11, 1994 (the "Equipment Lease") by and among Newpark
Resources, Inc., a Delaware corporation ("Resources"), and Newpark Shipholding
Texas, L.P., a Texas limited partnership and successor by merger to Newpark
Shipholding, Inc., a Texas corporation ("Shipholding"), as Co-Lessees, and
Republic Financial Corporation, a Colorado corporation ("Republic"), as Lessor,
as assigned by Co-Lessees to Borrower pursuant to that certain Assignment and
Assumption Agreement of even date herewith by and among Co-Lessees, Borrower
and Republic, Republic has agreed to sell, and Borrower has agreed to purchase,
certain property of Republic; and
WHEREAS, pursuant to that certain Agreement for Purchase and Sale of
Assets dated as of August 29, 1996 (the "Purchase Agreement") by and between
Borrower and Shipholding, Shipholding has agreed to sell, and Borrower has
agreed to purchase, certain real and personal property of Shipholding (the
"Acquisition"); and
WHEREAS, Borrower desires that Lender extend certain term credit
facilities to Borrower to fund the purchase pursuant to the Equipment Lease and
a portion of the Acquisition, the repayment of certain indebtedness, provide
working capital financing for Borrower and provide funds for other general
purposes of Borrower as permitted herein; and
WHEREAS, Borrower desires to secure all of its obligations under the Loan
Documents by granting to Lender a security interest in and lien upon all of its
personal and real property; and
WHEREAS, each of Newpark Resources, Inc., a Delaware corporation
("Resources"), and Xxxxxx X. Xxxxx ("Xxxxx"), among others, is willing to
guarantee all of the Obligations under the Loan Documents subject to the
limitations, if any, set forth in the guaranty executed by such guarantor; and
WHEREAS, First Wave Marine, Inc., a Texas corporation ("First Wave"),
the majority shareholder of Borrower, is willing to guarantee all of the
Obligations under the Loan Documents and to pledge the capital stock of
Borrower owned by First Wave to Lender to secure the Obligations under the Loan
Documents.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower and Lender agree as
follows:
8
SECTION 1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS
The terms defined below are used in this Agreement as so defined. Terms
defined in the preamble and recitals to this Agreement are used in this
Agreement as so defined.
"ACQUISITION DOCUMENTS" means the Purchase Agreement, the Equipment
Lease and all other documents, agreements and certificates executed in
connection with the Purchase Agreement and, to the extent Borrower is a party
thereto or beneficiary thereof, with the Equipment Lease; excluding, however,
all Loan Documents, Capitalization Documents and Subordinated Loan Documents.
"AFFILIATE" means any Person (other than Lender and, on the Closing
Date, Resources and the Management Shareholders): (a) directly or indirectly
controlling, controlled by, or under common control with, Borrower; (b)
directly or indirectly owning or holding five percent (5%) or more of any
equity interest in Borrower; or (c) five percent (5%) or more of whose voting
stock or other equity interest is directly or indirectly owned or held by
Borrower. For purposes of this definition, "control" (including with
correlative meanings, the terms "controlling", "controlled by" and "under
common control with") means the possession directly or indirectly of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities or by contract or otherwise.
"AGREEMENT" means this Credit Agreement (including all schedules,
exhibits, annexes and appendices hereto).
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as amended from time to time and all rules and regulations
promulgated thereunder.
"BIG SIX ACCOUNTING FIRM" means any of Xxxxxx Xxxxxxxx & Co., KPMG
Peat Marwick, Coopers & Xxxxxxx, Xxxxx & Young, Deloitte & Touche and Price
Waterhouse or any of their respective successors.
"BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the Commonwealth of Pennsylvania or
the State of Illinois.
"CAPITAL EXPENDITURES" means, without duplication, for any period, the
aggregate of all expenditures on a consolidated basis including deposits
(whether paid in cash or property or accrued as liabilities and including the
aggregate amount of all principal payments due for the entire term of all
Capital Leases which are required to be capitalized on the balance sheet) made
by Borrower and its Subsidiaries that, in conformity with GAAP, are required to
be included in the property, plant, or equipment, or similar fixed asset
account.
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"CAPITALIZATION DOCUMENTS" means, collectively: (a) any or all of the
stock certificates, partnership agreement, notes or debentures representing
Securities of the Loan Parties; (b) the indentures or other documents pursuant
to which such notes and debentures are issued or to be issued; (c) each
document governing the issuance of, or setting forth the terms of, such notes
or debentures; and (d) any stockholders, partnership or intercreditor agreement
among or between the holders of Securities of a Loan Party.
"CAPITAL LEASE" means any lease of any property (whether real,
personal or mixed) that, in conformity with GAAP, should be accounted for as a
capital lease.
"CASH EQUIVALENTS" means: (a) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
commercial paper maturing no more than one year from the date issued and, at
the time of acquisition, having a rating of at least A-1 from Standard & Poor's
Corporation or at least P-1 from Xxxxx'x Investors Service, Inc.; (c)
certificates of deposit or bankers' acceptances maturing within one year from
the date of issuance thereof issued by, or overnight reverse repurchase
agreements from, any commercial bank organized under the laws of the United
States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000 and not subject to
setoff rights in favor of such bank; (d) time deposits maturing no more than
thirty (30) days from the date of creation thereof with commercial banks having
membership in the Federal Deposit Insurance Corporation in amounts not
exceeding the lesser of $100,000 or the maximum amount of insurance applicable
to the aggregate amount of a Person's deposits at such institution; and (e)
deposits or investments in mutual or similar funds offered or sponsored by
brokerage or other companies having membership in the Securities Investor
Protection Corporation in amounts not exceeding the lesser of $100,000 or the
maximum amount of insurance applicable to the aggregate amount of a Person's
deposits at such institution.
"CLOSING DATE" means August 30, 1996.
"COLLATERAL" means, collectively: (a) all capital stock and other
property pledged pursuant to the Pledge Agreements; (b) all "Collateral" as
defined in the Security Agreement; (c) all real property mortgaged pursuant to
the Mortgages; and (d) any property or interest provided in addition to or in
substitution for any of the foregoing.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit 1.1(A).
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person: (a) with respect
to any indebtedness, lease, dividend or other obligation of another Person if
the primary purpose or intent
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10
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; (b) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; (c) under Interest Rate
Agreements; or (d) under any foreign exchange contract, currency swap agreement
or other similar agreement or arrangement designed to protect that Person
against fluctuations in currency values. Contingent Obligations shall include
(i) the direct or indirect guarantee, endorsement (other than for collection or
deposit in the ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation of another,
(ii) the obligation to make take-or-pay or similar payments if required
regardless of nonperformance by any other party or parties to an agreement, and
(iii) any liability of such Person for the obligations of another through any
agreement to purchase, repurchase or otherwise acquire such obligation or any
property constituting security therefor, to provide funds for the payment or
discharge of such obligation or to maintain the solvency, financial condition
or any balance sheet item or level of income of another. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if not a fixed and determined amount, the
maximum amount so guaranteed.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject
including, without limitation, the Related Transaction Documents.
"CORPORATE LOAN PARTY" means, collectively, each Loan Party other than
Xxxxx and any other individual who is or becomes a party to any Loan Document.
"DEFAULT" means a condition or event that, after notice or lapse of
time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within the
meaning of Section 3(3) of ERISA which (a) is maintained for employees of any
Corporate Loan Party or any ERISA Affiliate or (b) has at any time within the
preceding six years been maintained for the employees of any Corporate Loan
Party or any current or former ERISA Affiliate.
"ENVIRONMENTAL CLAIMS" has the meaning assigned to that term in
subsection 4.15(A).
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11
"ENVIRONMENTAL LAWS" means all present and future federal, state or
local laws, statutes, ordinances, codes, rules, regulations, orders, decrees or
directives imposing liability or standards of conduct for relating to the
environment, industrial hygiene, land use or the protection of human health and
safety, natural resources, pollution or waste management.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
all rules and regulations promulgated thereunder.
"ERISA AFFILIATE", as applied to any Corporate Loan Party, means any
Person who is a member of a group which is under common control with any
Corporate Loan Party, who together with any Corporate Loan Party is treated as
a single employer within the meaning of Section 414(b) and (c) of the IRC.
"EVENT OF DEFAULT" means each of the events set forth in subsection
8.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934.
"FIRST WAVE NOTE" means that certain promissory note of even date
herewith in the amount of $600,000 made by First Wave payable to Shipholding,
in form and substance satisfactory to Lender.
"FISCAL YEAR" means the year ending December 31 of such year.
"FUNDING DATE" means the date of each funding of a Loan.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of 'Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"GUARANTOR" or "GUARANTORS" means Resources, Xxxxx, First Wave and, if
applicable as provided in subsection 5.12(C), Xxxxx Xxxxx and Xxxxx Xxxxxx.
"GUARANTY" or "GUARANTIES" means individually and/or collectively, the
continuing guaranty to be executed and delivered by each Guarantor, in form and
substance satisfactory to Lender.
"HAZARDOUS MATERIAL" means all or any of the following: (a) substances
that are defined or listed in, or otherwise classified pursuant to, any
applicable Environmental Laws as "hazardous substances", "hazardous materials",
"hazardous wastes", "toxic substances" or any other formulation intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, reproductive toxicity
or "TLCP" toxicity, "EP toxicity"; (b) oil, petroleum or petroleum derived
substances, natural gas, natural gas liquids or synthetic gas and drilling
fluids, produced waters and
5
12
other wastes associated with the exploration, development or production of
crude oil, natural gas or geothermal resources; (c) any flammable substances or
explosives or any radioactive materials; and (d) asbestos in any form or
electrical equipment which contains any oil or dielectric fluid containing
levels of polychlorinated biphenyls in excess of fifty parts per million.
"INDEBTEDNESS", as applied to any Person, means: (a) all indebtedness
for borrowed money; (b) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP; (c) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money; (d) any obligation owed for all or any part of the deferred purchase
price of property or services if the purchase price is due more than six months
from the date the obligation is incurred or is evidenced by a note or similar
written instrument; and (e) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the
indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person. Obligations under Interest Rate
Agreements constitute Contingent Obligations and not Indebtedness.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect a Person against fluctuations in
interest rates.
"INVESTMENT" means, with respect to any Person (a) any direct or
indirect purchase or other acquisition by such Person or any of its
Subsidiaries of any beneficial interest in, including stock, partnership
interest or other Securities of, any other Person (other than a Person that
prior to the relevant purchase or acquisition was a Subsidiary of such Person)
or (b) any direct or indirect loan, advance or capital contribution by such
Person or any of its Subsidiaries to any other Person (other than a Subsidiary
of such Person), including all indebtedness and accounts receivable from that
other Person that are not current assets or did not arise from sales to that
other Person in the ordinary course of business. The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such investment.
"IRC" means the Internal Revenue Code of 1986, and any rule or
regulation promulgated thereunder from time to time.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, regardless of the legal form of such arrangement.
"LIEN" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary, (including any
conditional sale or other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest).
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13
"LOAN" or "LOANS" means Term Loan A and/or Term Loan B.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents and all other instruments, documents and agreements executed by or on
behalf of any Loan Party or Resources and delivered concurrently herewith or at
any time hereafter to or for the benefit of Lender in connection with the Loans
and other transactions contemplated by this Agreement, all as amended,
supplemented or modified from time to time, but excluding all Acquisition
Documents, Capitalization Documents and Subordinated Loan Documents. For
purposes of this Agreement and the other Loan Documents, the Shareholders
Agreement is deemed to be a Loan Document.
"LOAN PARTY" means, collectively, Borrower, Guarantors (other than
Resources) and any other Person (other than Lender, Resources and Management
Shareholders) which is or becomes a party to any Loan Document.
"LOAN YEAR" means each period of twelve (12) consecutive months
commencing on the Closing Date and on each anniversary thereof.
"MANAGEMENT SHAREHOLDERS" means the owners (other than First Wave) of
the outstanding capital stock of Borrower which are or become parties to that
certain Pledge Agreement of even date herewith among such Persons and Lender
with respect to the capital stock of Borrower.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of any Loan Party or Resources on an individual basis or (b) the impairment of
the ability of any Loan Party or Resources to perform its obligations under any
Loan Document to which it is a party or Lender to enforce or collect any of the
Obligations, including the obligations of any Loan Party or Resources to
perform or Lender to enforce any Guaranty. In determining whether any
individual event would result in a Material Adverse Effect, notwithstanding
that such event does not of itself have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then existing events would result in a Material Adverse Effect.
"MORTGAGE" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Loan Party to Lender, with
respect to Mortgaged Property or Additional Mortgaged Property, all in form and
substance satisfactory to Lender.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which any Corporate Loan Party or any ERISA
Affiliate is making, or is accruing an obligation to make, contributions or has
made, or been obligated to make, contributions within the preceding six years.
"NOTE" or "NOTES" means Term Note A and/or Term Note B.
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14
"OBLIGATIONS" means all obligations, liabilities and indebtedness of
every nature of each Loan Party or Resources from time to time owed to Lender
under the Loan Documents including the principal amount of all debts, claims
and indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable whether before or
after the filing of a proceeding under the Bankruptcy Code by or against
Borrower or its Subsidiaries or any other Loan Party or Resources.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Part 3 of Title I of
ERISA, Title IV of ERISA or Section 412 of the IRC and which (a) is maintained
for employees of any Corporate Loan Party or any of their ERISA Affiliates or
(b) has at any time within the preceding six years been maintained for the
employees of any Corporate Loan Party or any of their current or former ERISA
Affiliates.
"PERMITTED ENCUMBRANCES" means the following:
(a) Liens (other than Liens relating to Environmental Claims
or ERISA) for taxes, assessments or other governmental charges not yet
due and payable;
(b) Any attachment or judgment Lien subordinate to Liens in
favor of Lender and which do not constitute an Event of Default under
subsection 8.1(I);
(c) Liens in favor of Lender;
(d) Subject to the Subordination Agreement, liens in
favor of Shipholding securing the Subordinated Note granted pursuant
to the Subordinated Loan Documents;
(e) Liens existing on the date hereof, which Liens are set
forth on Schedule II to the Security Agreement, and renewals and
extensions thereof;
(f) Liens solely encumbering accounts receivable and
inventory of Borrower securing Indebtedness permitted under subsection
7.1(h);
(g) Liens encumbering specific equipment purchased by
Borrower securing Indebtedness permitted under subsections 7.1(e) and
(f); and
(h) Liens securing the flare permitted to be purchased
pursuant to subsection 7.19.
8
15
"PERSON" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof
and their respective permitted successors and assigns (or in the case of a
governmental person, the successor functional equivalent of such Person).
"PLEDGE AGREEMENT" or "PLEDGE AGREEMENTS" means, individually and/or
collectively, the stock pledge agreement to be executed by the Management
Shareholders and the stock pledge agreement to be executed by First Wave, in
each case with respect to the capital stock of Borrower and in each instance in
form and substance satisfactory to Lender.
"PRIOR INDEBTEDNESS" means the indebtedness and other obligations
identified on Schedule 1.1(A), which are to be paid on the Closing Date.
"PRO FORMA" means, with respect to any Person, the unaudited
consolidated balance sheet of such Person and its Subsidiaries as of the
Closing Date after giving effect to the Related Transactions. Notwithstanding
any other term contained in this Agreement, should the application of purchase
or other accounting principles permit such Person, in accordance with GAAP, to
characterize certain expenditures as capital items rather than expense, then
such expenditures shall be treated as expense in the period such expenditures
were incurred or paid for all purposes under this Agreement unless such
expenditure was identified and capitalized in the Pro Forma. The Pro Forma of
Borrower is annexed hereto as Schedule 1.1(B).
"PROJECTIONS" means, with respect to any Person, the forecasted
consolidated and consolidating of such Person: (a) balance sheets; (b) profit
and loss statements; (c) cash flow statements; and (d) capitalization
statements, all prepared Subsidiary by Subsidiary basis and otherwise
consistent with such Person's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.
"RELATED TRANSACTIONS" means the Acquisition, the execution and
delivery of the Related Transactions Documents, the funding of Term Loan A on
the Closing Date, the funding of the Subordinated Indebtedness, the repayment
of the Prior Indebtedness and the payment of all fees, costs and expenses
associated with all of the foregoing.
"RELATED TRANSACTIONS DOCUMENTS" means the Acquisition Documents, the
Loan Documents, the Subordinated Loan Documents and the Capitalization
Documents.
"RESTRICTED JUNIOR PAYMENT" means, with respect to any Person: (a) any
dividend or other distribution, direct or indirect, on account of any shares of
any class of stock, partnership interest or other equity security of such
Person or any of its Subsidiaries
9
16
now or hereafter outstanding, except a dividend payable solely in shares of
that class of stock to the holders of that class; (b) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
stock or other equity security of such Person or any of its Subsidiaries now or
hereafter outstanding; (c) any payment or prepayment of principal of, premium,
if any, or interest on, redemption, conversion, exchange, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, any Subordinated
Indebtedness; and (d) any payment made to retire, or to obtain the surrender
of, any outstanding warrants, options or other rights to acquire shares of any
class of stock or other equity security of such Person or any of its
Subsidiaries now or hereafter outstanding.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, bonds, debentures, options, warrants, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"SECURITY AGREEMENT" means the security agreement to be executed and
delivered by Borrower, in form and substance satisfactory to Lender.
"SECURITY DOCUMENTS" means all instruments, documents and agreements
executed by or on behalf of any Loan Party, Resources or Management
Shareholders to guarantee or provide collateral security with respect to the
Obligations and other transactions contemplated by this Agreement, including,
without limitation, the Guaranties, the Pledge Agreements, the Mortgages, the
Security Agreement and all instruments, documents and agreements executed
pursuant to the terms of the foregoing, including, without limitation, those
executed pursuant to the Security Agreement.
"SHAREHOLDERS AGREEMENT" means that certain Shareholder Agreement of
even date herewith among Borrower, First Wave, Management Shareholders and
Resources.
"SUBORDINATED INDEBTEDNESS" means the Indebtedness evidenced by the
Subordinated Note and all other Indebtedness of Borrower or any of its
Subsidiaries which is subordinated in right of payment to the Obligations.
"SUBORDINATED LOAN DOCUMENTS" means the Subordinated Note, the First
Wave Note, Subordination Agreement and all documents and instruments executed
in connection with any of the foregoing.
"SUBORDINATED NOTE" means that certain promissory note of even date
herewith in the amount of $8,534,000 made by Borrower payable to Shipholding,
in form and substance satisfactory to Lender.
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"SUBORDINATION AGREEMENT" means that certain Subordination and
Intercreditor Agreement of even date herewith among Lender, Shipholding, First
Wave and Borrower.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than 50% of the
total voting power of shares of stock (or equivalent ownership or controlling
interest) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof. A partnership
is a subsidiary of each general partner thereof.
"TERM LOAN A" means the advance made pursuant to subsection 2.1(A).
"TERM LOAN B" means the advance made pursuant to subsection 2.1(B).
"TERM NOTE A" means each promissory note of Borrower evidencing Term
Loan A.
"TERM NOTE B" means each promissory note of Borrower evidencing Term
Loan B.
"TERMINATION EVENT" means: (a) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder; or (b) the
withdrawal of any Corporate Loan Party or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) or 4068(f) of ERISA; or (c) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or the
treatment of a Pension Plan amendment as a termination under Section 4041 of
ERISA; or (d) the institution of proceedings to terminate, or the appointment
of a trustee with respect to, any Pension Plan by the PBGC; or (e) any other
event or condition which would constitute grounds under Section 4042(a) of
ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan; or (f) the partial or complete withdrawal of any Corporate
Loan Party or any ERISA Affiliate from a Multiemployer Plan; or (g) the
imposition of a Lien pursuant to Section 412 of the IRC or Section 302 of
ERISA; or (h) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Sections 4241 or 4245 of ERISA; or (i)
any event or condition which results in the termination of a Multiemployer Plan
under Section 4041A of ERISA or the institution by the PBGC of proceedings to
terminate a Multiemployer Plan under Section 4042 of ERISA.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of Illinois, or as in effect in any jurisdiction in which
Collateral is located.
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1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT
For purposes of this Agreement, all accounting terms not otherwise defined
herein shall have the meanings assigned to such terms in conformity with GAAP.
Financial statements and other information furnished to Lender pursuant to
subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation.
1.3 OTHER DEFINITIONAL PROVISIONS
References to "Sections", "subsections", "Exhibits" and "Schedules" shall
be to Sections, subsections, Exhibits and Schedules, respectively, of this
Agreement unless otherwise specifically provided. Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be used in the
singular or the plural depending on the reference. In this Agreement,
"hereof," "herein," "hereto," "hereunder" and the like mean and refer to this
Agreement as a whole and not merely to the specific section, paragraph or
clause in which the respective word appears; words importing any gender include
the other genders; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible form;
the words "including," "includes" and "include" shall be deemed to be followed
by the words "without limitation"; references to agreements and other
contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and regulations.
SECTION 2
AMOUNTS AND TERMS OF LOANS
2.1 LOANS
(A) TERM LOAN A. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of
Borrower contained herein, Lender agrees to lend to Borrower on the
Closing Date Term Loan A. The aggregate amount of Term Loan A shall
be $11,800,000.00. Term Loan A shall be funded in one drawing.
Amounts borrowed under this subsection 2.1(A) and repaid may not be
reborrowed.
(B) TERM LOAN B. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties
of Borrower contained herein, Lender agrees to lend to Borrower on a
date no later than August 31, 1997 Term Loan B. The aggregate amount
of Term Loan B shall not exceed
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$600,000. Term Loan B shall be funded in one drawing. Amounts
borrowed under this subsection 2.1(B) and repaid may not be
reborrowed.
2.2 INTEREST
(A) RATE OF INTEREST. Term Loan A and all other
Obligations (other than Term Loan B) shall bear interest from the date
such Loans are made or such other Obligations become due to the date
paid at a fixed rate per annum equal to ten and forty-two one
hundredths percent (10.42%). Term Loan B shall bear interest from the
date such Loan is made to the date paid at a fixed rate per annum
equal to the sum of (i) the U.S. Treasury Note yield having a
maturity at least equal to, but not less than, the remaining term of
Term Loan A as of the date which is 3 Business Days prior to the
Funding Date of Term Loan B plus (ii) three and three quarters percent
(3.75%).
Notwithstanding the foregoing, at the election of Lender in
its sole discretion, after the occurrence of an Event of Default and
for so long as such Event of Default continues, the Loans and all
other Obligations shall bear interest until paid in full at a rate per
annum that is four percent (4.0%) in excess of the rate of interest
otherwise payable under this Agreement.
(B) COMPUTATION AND PAYMENT OF INTEREST. Interest on the
Loans and all other Obligations shall be computed on the basis of a
360-day year consisting of twelve (12) thirty (30) day months.
(C) INTEREST LAWS. Notwithstanding any provision to the
neither contrary contained in this Agreement or the other Loan
Documents, Borrower nor any other Loan Party (or Resources) shall be
required to pay, and Lender shall not be permitted to collect, any
amount of interest in excess of the maximum amount of interest
permitted by law ("Excess Interest"). If any Excess Interest is
provided for or determined by a court of competent jurisdiction to
have been provided for in this Agreement or in any of the other Loan
Documents, then in such event: (1) the provisions of this subsection
shall govern and control; (2) neither Borrower nor any other Loan
Party (or Resources) shall be obligated to pay any Excess Interest;
(3) any Excess Interest that Lender may have received hereunder shall
be, at Lender's option, (a) applied as a credit against the
outstanding principal balance of the Obligations or accrued and unpaid
interest (not to exceed the maximum amount permitted by law), (b)
refunded to the payor thereof, or (c) any combination of the
foregoing; (4) the interest rate(s) provided for herein shall be
automatically reduced to the maximum lawful rate allowed from time to
time under applicable law (the "Maximum Rate"), and this Agreement and
the other Loan Documents shall be deemed to have been and shall be,
reformed and modified to reflect such reduction; and (5) neither
Borrower nor any other Loan Party (or Resources) shall have any action
against Lender for any damages arising out of
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the payment or collection of any Excess Interest. Notwithstanding the
foregoing, if for any period of time interest on any Obligation is
calculated at the Maximum Rate rather than the applicable rate under
this Agreement, and thereafter such applicable rate becomes less than
the Maximum Rate, the rate of interest payable on such Obligations
shall remain at the Maximum Rate until each Lender shall have received
the amount of interest which such Lender would have received during
such period on such Obligations had the rate of interest not been
limited to the Maximum Rate during such period.
2.3 FEES
(A) PREPAYMENT FEES. If Borrower prepays the Obligations
in full or in part whether voluntarily, as a result of acceleration or
otherwise, Borrower shall pay to Lender as liquidated damages and
compensation for the costs of being prepared to make funds available
to Borrower under this Agreement, and not as a penalty, an amount
determined by multiplying the percentage set forth below by the sum of
the outstanding principal balance of the Term Loans at the date of
such prepayment or, in the case of a partial prepayment, the amount of
such prepayment: four percent (4%) for a prepayment during the first
Loan Year, three percent (3%) for a prepayment during the second Loan
year, two percent (2%) for a prepayment during the third Loan Year and
one percent (1%) for a prepayment during each Loan Year thereafter.
(B) FIXED RATE BREAKAGE FEE. Upon any prepayment of a
Loan (regardless of the source of such prepayment and whether
voluntary, by acceleration or otherwise), in addition to any other
prepayment fees due from Borrower, Borrower shall pay Lender, an
amount (the "Fixed Rate Breakage Fee" which for purposes hereof shall
not be less than zero) equal to the present value, for each remaining
year of the term of such prepaid Loan, of (1) the yield as reported on
the Closing Date, in the Federal Reserve statistical release H.15
(519) under the caption "U.S. Government Securities/Treasury Constant
Maturities" (hereinafter "H.15 (519)") for a Treasury Note with a term
equal to the Original Term on such Loan on the Closing Date (which
will be obtained by interpolating between the yield reported on the
H.15 (519) for specific whole years) on the date the Loan was funded
less (2) the yield as reported on the date of such prepayment in the
H.15 (519) for a Treasury Note with a term equal to that remaining on
such Loan (which will be obtained by interpolating between the yield
reported on the H.15 (519) for specific whole years) on the date of
such prepayment, multiplied by (a) the outstanding principal balance
of such Loan at the time of prepayment for purposes of calculating
such amount for the month during which such prepayment occurs and by
(b) the principal balance that would have been outstanding at the
beginning of each successive Loan Year in the remaining term of such
Loan had the amortization schedule set forth for such Loan been
adhered to; provided, that the rate determined in (2) above will be
used as the discount rate
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in computing such present value. The Fixed Rate Breakage Fee
represents Lender's reinvestment loss resulting from making a fixed
rate loan.
(C) LATE CHARGES. If payments of principal, interest or
any other amount due hereunder or under any of the other Loan
Documents are not timely made and remain overdue for a period of ten
(10) days, Borrower, without notice or demand by Lender, promptly
shall pay to Lender an amount equal to five percent (5%) of each
delinquent payment.
2.4 PAYMENTS AND PREPAYMENTS
(A) PAYMENTS.
(i) Interest on the outstanding principal balance of
Term Loan A from the Closing Date through August 31, 1996
shall be due and payable on September 3, 1996. Thereafter,
Borrower shall make consecutive monthly payments of principal
and interest with respect to Term Loan A, each in the amount
of $158,696. Each such payment shall be due and payable
monthly on the first day of each month commencing October 1,
1996 and continuing on the first day of each month thereafter.
(ii) Interest on the outstanding principal balance
of Term Loan B from the Funding Date of Term Loan B through
the last day of the month in which the Funding Date occurs
shall be due and payable on the first day of the month
immediately succeeding the month in which such Funding Date
occurs. Thereafter, Borrower will make consecutive monthly
payments of principal and interest with respect to Term Loan B
based on a ten (10) year amortization schedule utilizing the
interest rate calculated pursuant to subsection 2.2(A) with
respect to Term Loan B. Each such payment shall be due and
payable monthly on the first day of each month commencing on
the first day of the second month following the month in which
the Funding Date with respect to Term Loan B occurs and
continuing on the first day of each month thereafter.
(iii) The outstanding principal balances of Term
Loan A and Term Loan B and all accrued and unpaid interest
shall be due and payable on August 31, 2003 or any earlier
date on which the Obligations shall be required to be paid in
full, whether by acceleration or otherwise. In addition to
the foregoing, interest shall be payable on the date of
prepayment of any Loan, whether by acceleration or otherwise.
(B) MANNER AND TIME OF PAYMENT. All payments by Borrower
of the Obligations shall be made without deduction, defense, setoff or
counterclaim and in same day funds and delivered to Lender by wire
transfer to Lender's account, ABA No. 0000-0000-0, Account No. 0000000
at The First National Bank of Chicago, Xxx Xxxxx Xxxxxxxx Xxxxx,
Xxxxxxx, XX 00000,
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Reference: Commercial Equipment Finance Division Loan Account No.
192-0136 or at such other place as Lender may direct from time to time
by notice to Borrower. Borrower shall receive credit for such funds
on the date received if such funds are received by Lender by 12:00
noon (Chicago time) on such day. In the absence of timely receipt,
such funds shall be deemed to have been paid by Borrower on the next
succeeding Business Day. Borrower shall issue to the bank at which
Borrower maintains its depositary accounts an irrevocable direction to
pay to Lender automatically (via ACH debit) no later than the seventh
day of each month, the payments required to be made pursuant to
subsection 2.4(A). Such irrevocable direction may not be amended or
revoked without the prior written consent of Lender.
(C) PAYMENTS ON BUSINESS DAYS. Whenever any payment to
be made hereunder shall be stated to be due on a day that is not a
Business Day, the payment may be made on the next succeeding Business
Day and such extension of time shall be included in the computation of
the amount of interest or fees due hereunder.
(D) VOLUNTARY PREPAYMENTS AND REPAYMENTS. Borrower may,
upon at least thirty (30) day's prior written notice to Lender, prepay
the Loans in whole at any time or from time to time in part; provided
that (1) concurrently with such payment Borrower pays any fees due
under subsection 2.3, (2) Loans may be prepaid only on a day on which
a payment is scheduled to be made hereunder, (3) each partial
prepayment under the Loans shall be in the minimum principal of
$100,000 and (4) no partial prepayment shall be permitted if an Event
of Default has occurred and is continuing. After notice of prepayment
is given, the amount specified to be prepaid in such notice shall
become due and payable on the prepayment date.
(E) APPLICATION OF PREPAYMENTS. All prepayments under
Section 2.4 shall include payment of accrued interest, fees and
expenses and shall be applied to the payment of interest, fees and
expenses before application to principal. All payments of principal
shall be applied in inverse order of maturity.
SECTION 3
CONDITIONS TO LOANS
The obligations of Lender to make Loans are subject to satisfaction of
all of the applicable conditions set forth below.
3.1 CONDITIONS TO INITIAL LOANS
The obligations of Lender to fund Term Loan A on the Closing Date are,
in addition to the conditions precedent specified in subsection 3.2, subject to
the prior or concurrent satisfaction of the conditions set forth below.
(A) DELIVERIES. Lender shall have received the
documents, instruments, agreements and other deliveries set
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forth in the Closing Agenda provided by Lender to Borrower, all of
which must be in form and substance satisfactory to Lender and duly
executed, notarized and delivered, as applicable.
(B) PURCHASE AGREEMENT AND EQUIPMENT LEASE. On the
Closing Date: (1) each of the Equipment Lease and the Purchase
Agreement shall be in full force and effect and no material term or
condition thereof shall have been amended, modified or waived after
the execution thereof except with the prior written consent of Lender;
(2) none of the parties to the Purchase Agreement and Equipment Lease
shall have failed to perform any material obligation or covenant
required by the Purchase Agreement and Equipment Lease to be performed
or complied with by it on or before the Closing Date. In addition,
all certificates, opinions and letters delivered in connection with
the Purchase Agreement and Equipment Lease shall be addressed to
Lender or accompanied by a written authorization from the person
delivering such certificate, opinion or letter stating that Lender may
rely on such document as though it were addressed to it.
(C) PERFORMANCE OF AGREEMENTS. Each of the Loan Parties
and Resources shall have performed in all material respects all
agreements which this Agreement provides shall be performed on or
before the Closing Date except as otherwise agreed to in writing by
Lender.
(D) SECURITY INTERESTS, UCC FILINGS AND STOCK
CERTIFICATES. Lender shall have received satisfactory evidence that
Lender has a valid and perfected first priority security interest in
the Collateral, subject only to Permitted Encumbrances. Borrower and
the other Loan Parties shall have delivered to or caused to be
delivered to Lender executed documents (including financing statements
under the UCC and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as Lender may
deem necessary to perfect its security interests in the Collateral.
(E) TERMINATION OF PRIOR INDEBTEDNESS LIENS AND OTHER
LIENS. Lender shall have received a pay-off letter from each holder
of Prior Indebtedness, together with duly executed UCC-3 termination
statements, mortgage releases and such other instruments, in form and
substance satisfactory to Lender, as shall be necessary to terminate
and satisfy all Liens created pursuant to the Prior Indebtedness and
all other Liens except Permitted Encumbrances.
(F) INSURANCE POLICIES AND ENDORSEMENTS. Copies of
policies of insurance required to be maintained under this Agreement
and the other Loan Documents together with endorsements satisfactory
to Lender naming Lender as loss payee and additional insured under
such policies.
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3.2 CONDITIONS TO ALL LOANS
The obligations of Lender to fund Term Loan A and Term Loan B on each
Funding Date are subject to the further conditions precedent set forth below.
(A) The representations and warranties contained herein
and in the Loan Documents shall be true, correct and complete in all
material respects on and as of that Funding Date to the same extent as
though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into
account any amendments to the Schedules or Exhibits as a result of any
disclosures made in writing by Borrower to Lender after the Closing
Date and approved by Lender.
(B) No event shall have occurred and be continuing or
would result from the consummation of the borrowing that would
constitute an Event of Default or a Default.
(C) No order, judgment or decree of any court, arbitrator
or governmental authority shall purport to enjoin or restrain Lender
from making any Loans.
3.3 CONDITIONS TO TERM LOAN B.
The obligations of Lender to fund Term Loan B is subject to the
further conditions precedent set forth below:
(A) The proceeds of Term Loan B shall be used solely to
purchase preferred stock of First Wave, which acquisition shall be on
terms and conditions acceptable to Lender. Lender shall have received
such information with respect to such acquisition as Lender shall
reasonably require.
(B) Lender shall have received written notice of the
request for disbursement of Term Loan B not less than sixty days (60)
prior to the requested Funding Date with respect thereto.
(C) Borrower shall have executed and delivered to Lender
a Term Note B in the amount of Term Loan B and with other appropriate
insertions and otherwise in form and substance similar to Term Note A.
(D) Borrower shall execute and deliver to Lender such
security agreements and financing statements as Lender shall require.
Lender shall have received a perfected first (or, in the event other
financing is involved, a second) priority security interest in the
equipment and other assets which are purchased by First Wave from the
proceeds of such acquisition and shall have received evidence of the
proper filing in all required filing offices of duly executed UCC
financing statements or amendments to existing financing statements
and other appropriate security instruments, including, if applicable,
mortgages or deeds of trusts with respect to real property.
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(E) There shall have occurred no adverse change or effect
upon the business, operations, properties, assets or condition
(financial or otherwise) of any Loan Party or Resources.
(F) Term Loan A shall not have been prepaid.
(G) The Funding Date with respect to Term Loan B shall be
no later than August 31, 1997.
(H) The conditions specified in subsection 7.3(c) shall
have been satisfied.
(I) Borrower shall have executed a pledge agreement, in
form and substance satisfactory to Lender, with respect to the
preferred stock of First Wave purchased with the proceeds of Term Loan
B.
SECTION 4
BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make Loans,
Borrower represents and warrants to Lender that the following statements are
and, after giving effect to the Related Transactions, will be true, correct and
complete:
4.1 ORGANIZATION, POWERS, CAPITALIZATION, GOOD STANDING, BUSINESS AND
SUBSIDIARIES
(A) ORGANIZATION AND POWERS. Each of the Corporate Loan
Parties is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
formation (which jurisdiction is set forth on Schedule 4.1(A)). Each
of the Corporate Loan Parties has all requisite power and authority to
own and operate its properties, to carry on its business as now
conducted and proposed to be conducted, to enter into each Related
Transactions Document to which it is a party and to carry out the
Related Transactions.
(B) CAPITALIZATION. The authorized capital stock of each
of the Corporate Loan Parties which is a corporation is as set forth
on Schedule 4.1(B). All issued and outstanding shares of capital
stock of each of such Corporate Loan Parties are duly authorized and
validly issued, fully paid, nonassessable, free and clear of all Liens
other than, with respect to the capital stock of Borrower, those in
favor of Lender, and such shares were issued in compliance with all
applicable state and federal laws concerning the issuance of
securities. The capital stock of each of such Corporate Loan Parties
is owned by the stockholders and in the amounts set forth on Schedule
4.1(B). No shares of the capital stock of any such Corporate Loan
Party, other than those described above, are issued and outstanding.
Except as provided under Texas law, there are no preemptive or other
outstanding
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rights, options, warrants, conversion rights or similar agreements or
understandings for the purchase or acquisition from any Corporate Loan
Party of any shares of capital stock or other securities of any such
entity.
(C) QUALIFICATION. Each of the Corporate Loan Parties is
duly qualified and in good standing wherever necessary to carry on its
present business and operations. All jurisdictions in which each
Corporate Loan Party is qualified to do business are set forth on
Schedule 4.1(C).
(D) CONDUCT OF BUSINESS. On the date hereof and after
the consummation of the Related Transactions, the Loan Parties will be
engaged only in businesses of the type described on Schedule 4.1(D).
(E) SUBSIDIARIES. No Corporate Loan Party has any
Subsidiaries except as set forth on Schedule 4.1(E) and Schedule
4.1(E) accurately sets forth the percentage ownership of such
Corporate Loan Party, as applicable, of each of their respective
Subsidiaries.
4.2 AUTHORIZATION OF BORROWING, ETC.
(A) AUTHORIZATION OF BORROWING. Borrower has the power
and authority to incur the Indebtedness evidenced by the Notes. The
execution, delivery and performance of each of the Related
Transactions Documents and the consummation of the Related
Transactions by each Loan Party have been duly authorized by all
necessary corporate and shareholder action.
(B) NO CONFLICT. The execution, delivery and performance
by each Loan Party of each Related Transactions Document to which it
is a party and the consummation of the Related Transactions do not and
will not: (1) violate any provision of law applicable to such Loan
Party, the certificate or articles of incorporation or bylaws of any
Loan Party which is a corporation, or any order, judgment or decree of
any court or other agency of government binding on any Loan Party; (2)
conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of
any Loan Party; (3) result in or require the creation or imposition of
any material Lien upon any of the properties or assets of any Loan
Party (other than Liens in favor of Lender); or (4) require any
approval or consent of any Person under any Contractual Obligation of
any Loan Party which has not been obtained.
(C) GOVERNMENTAL CONSENTS. The execution, delivery and
performance by each Loan Party of each Related Transactions Document
to which it is a party, and the consummation of the Related
Transactions do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by,
any federal, state or other governmental authority or regulatory body
except for filings required by federal or state securities laws (which
filings have been made and true and complete copies of which have been
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delivered to Lender), filings required in connection with the
perfection of security interests granted pursuant to the Loan
Documents, and other filings, authorizations, consents and approvals,
all of which have been made or obtained or the absence of which would
not have a Material Adverse Effect. The Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 does not apply to the Acquisition or the
purchase pursuant to the Equipment Lease.
(D) BINDING OBLIGATION. This Agreement is, and the
Acquisition Documents and the other Related Transactions Documents,
including the Notes, when executed and delivered will be, the legally
valid and binding obligations of the applicable Loan Parties,
respectively, each enforceable against the Loan Parties, as
applicable, in accordance with their respective terms.
(E) VALID ISSUANCE OF SECURITIES. Borrower has the power
and authority to incur the Indebtedness evidenced by the Subordinated
Note and to issue the Subordinated Note. Such Securities are the
legally valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms (including those
pertaining to subordination). Borrower has delivered to Lender a
complete and correct copy of the Subordinated Loan Documents and each
of the representations and warranties given by Borrower therein is
true and correct in all material respects. The subordination
provisions of the Subordinated Loan Documents will be enforceable
against the holders of the Subordinated Note by the holder of any
Notes which has not effectively waived the benefits thereof. All
obligations, including the Obligations to pay principal of and
interest on the Loans, constitute senior Indebtedness entitled to the
benefits of subordination created by the Subordinated Loan Documents.
The principal of and interest on the Notes and all other Obligations
will constitute "senior debt" as that or any similar term is or may be
used in any other instrument evidencing or applicable to any other
Subordinated Indebtedness of Borrower. Borrower acknowledges that
Lender is entering into this Agreement in reliance upon the
subordination provisions of the Subordinated Loan Documents and this
subsection 4.2(E).
4.3 FINANCIAL CONDITION
(A) FINANCIAL STATEMENTS. All financial statements
concerning a Loan Party which have been or will hereafter be furnished
by or on behalf of Borrower to Lender pursuant to this Agreement or
other Loan Documents, including those listed below, have been or will
be prepared in accordance with GAAP consistently applied (except as
disclosed therein) and do or will present fairly the financial
condition of the corporations covered thereby as at the dates thereof
and the results of their operations for the periods then ended.
(1) The consolidated balance sheets at December 31, 1994 and
December 31, 1995 and the related statements of
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income of Borrower and its Subsidiaries, for the fiscal years
then ended, certified by Xxxxx Xxxxxxxx.
(2) The consolidated balance sheet at March 31, 1996 and the
related statement of income of Borrower and its Subsidiaries
for the 3 months then ended.
(B) PRO FORMA. The Pro Forma of Borrower was prepared by
Borrower based on the unaudited consolidated balance sheet of Borrower
dated as of December 31, 1995 and was prepared in accordance with
GAAP, with only such adjustments thereto as would be required in
accordance with GAAP.
(C) PROJECTIONS. The Projections delivered and to be
delivered (including the Projections of Borrower annexed hereto as
Schedule 4.3) have been and will be prepared by Borrower in light of
the past operations of the business of Borrower and its Subsidiaries.
The Projections represent and will represent as of the date thereof
the good faith estimate of Borrower and its senior management
concerning the most probable course of its business.
4.4 INDEBTEDNESS AND CONTINGENT OBLIGATIONS
As of the Closing Date after giving effect to the Related
Transactions, no Corporate Loan Party has any Indebtedness or Contingent
Obligations except as set forth on Schedule 4.4.
4.5 NO MATERIAL ADVERSE CHANGE
Since December 31, 1995 there have been no events or changes in facts
or circumstances affecting any Loan Party which individually or in the
aggregate have had or would reasonably be expected to have a material adverse
effect.
4.6 TITLE TO PROPERTIES; LIENS
Each of the Loan Parties has good, sufficient and legal title, subject
to Permitted Encumbrances, to all their respective material properties and
assets. Except for Permitted Encumbrances, all such properties and assets are
free and clear of Liens. Schedule 4.6 sets forth all of the real property
owned by Borrower.
4.7 LITIGATION; ADVERSE FACTS
Except as set forth on Schedule 4.7, there are no judgments
outstanding against any Loan Party or affecting any property of any Loan Party,
nor is there any action, charge, claim, demand, suit, proceeding, petition,
governmental investigation or arbitration now pending or, to the best knowledge
of Borrower after due inquiry, threatened against any Loan Party, or affecting
any property of any Loan Party. No Loan Party has received any opinion or
memorandum or legal advice from legal counsel to the effect that it is exposed
to any liability or disadvantage which could reasonably be expected to result
in any Material Adverse Effect. The actions, charges, claims, demand, suits,
proceedings, petitions, investigations and arbitrations set forth on Schedule
4.7 or disclosed pursuant to
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subsection 5.1(K) will not result, if adversely determined, and could not
reasonably be expected to result, either individually or in the aggregate, in
any Material Adverse Effect and do not relate to and will not affect the
consummation of the Related Transactions.
4.8 PAYMENT OF TAXES
Except to the extent permitted by subsection 5.4, all material tax
returns and reports of each Loan Party and each of its Subsidiaries (and their
predecessors in interest) required to be filed by any of them have been timely
filed, and all taxes, assessments, fees and other governmental charges upon
such Persons and upon their respective properties, assets, income and
franchises which are shown on such returns as due and payable have been paid
when due and payable. None of the United States income tax returns of the Loan
Parties are under audit. No tax liens are outstanding and no claims are being
asserted with respect to any such taxes. The charges, accruals and reserves on
the books of the Loan Parties in respect of any taxes or other governmental
charges are in accordance with GAAP.
4.9 ADVERSE CONTRACTS
None of the Loan Parties and none of their respective Subsidiaries is
a party to nor is it or any of its property subject to or bound by any forward
purchase contract, futures contract, covenant not to compete, unconditional
purchase, take or pay or other agreement which restricts its ability to conduct
its business or, either individually or in the aggregate, has a Material
Adverse Effect or could reasonably be expected to have a Material Adverse
Effect.
4.10 PERFORMANCE OF AGREEMENTS
None of the Loan Parties and none of their respective Subsidiaries is
in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation of
any such Person, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default.
4.11 GOVERNMENTAL REGULATION
None of the Loan Parties and none of their respective Subsidiaries is,
or after giving effect to any loan will be, subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act or the
Investment Company Act of 1940 or to any federal or state statute or regulation
limiting its ability to incur indebtedness for borrowed money.
4.12 EMPLOYEE BENEFIT PLANS
(A) NO OTHER PLANS. No Corporate Loan Party nor any
ERISA Affiliate maintains or contributes to, or has any obligation
under, any Employee Benefit Plans other than those identified on
Schedule 4.12.
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(B) ERISA AND IRC COMPLIANCE AND LIABILITY. Each
Corporate Loan Party, and each ERISA Affiliate is in compliance with
all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans
except where failure to comply would not result in a material
liability to any Corporate Loan Party and except for any required
amendments for which the remedial amendment period as defined in
Section 401(b) of the Code has not yet expired. Each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the IRC
has been determined by the Internal Revenue Service ("IRS") to be so
qualified, and each trust related to such plan has been determined to
be exempt under Section 501(a) of the IRC. No material liability has
been incurred by any Corporate Loan Party, or ERISA Affiliate which
remains unsatisfied for any taxes or penalties with respect to any
Employee Benefit Plan or any Multiemployer Plan.
(C) FUNDING. No Pension Plan has been terminated, nor
has any accumulated funding deficiency (as defined in Section 412 of
the IRC) been incurred (without regard to any waiver granted under
Section 412 of the IRC), nor has any funding waiver from the IRS been
received or requested with respect to any Pension Plan, nor has any
Corporate Loan Party, or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by
Section 412 of the IRC, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412 of the IRC or Section 302 of ERISA, nor has there been any
event requiring any disclosure under Section 4041(c)(3)(C), 4063(a) or
4068(f) of ERISA with respect to any Pension Plan.
(D) PROHIBITED TRANSACTIONS AND PAYMENTS. No Corporate
Loan Party nor any ERISA Affiliate has: (1) engaged in a nonexempt
prohibited transaction described in Section 406 of ERISA or Section
4975 of the IRC; (2) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no
premium payments which are due and unpaid; (3) failed to make a
required contribution or payment to a Multiemployer Plan; or (4)
failed to make a required installment or other required payment under
Section 412 of the IRC.
(E) NO TERMINATION EVENT. No Termination Event has
occurred or is reasonably expected to occur.
(F) ERISA LITIGATION. No material proceeding, claim,
lawsuit and/or investigation is existing or, to the best knowledge of
Borrower after due inquiry, threatened concerning or involving any (1)
employee welfare benefit plan (as defined in Section 3(1) of ERISA)
currently maintained or contributed to by any Corporate Loan Party, or
any ERISA Affiliate, (2) Pension Plan or (3) Multiemployer Plan.
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4.13 INTELLECTUAL PROPERTY
Each Loan Party owns, is licensed to use or otherwise has the right to
use, all patents, trademarks, trade names, copyrights, technology, know-how and
processes used in or necessary for the conduct of its business as currently
conducted that are material to the condition (financial or other), business or
operations of such Person (collectively called "Intellectual Property") and all
such Intellectual Property is identified on Schedule 4.13 and fully protected
and/or duly and properly registered, filed or issued in the appropriate office
and jurisdictions for such registrations, filing or issuances. All
Intellectual Property that is registered or for which application for
registration is pending is identified on Schedule 4.13. Except as disclosed in
Schedule 4.13, no material claim has been asserted by any Person with respect
to the use of any Intellectual Property, or challenging or questioning the
validity or effectiveness of any Intellectual Property. Except as disclosed in
Schedule 4.13, the use of such Intellectual Property by such Person does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liabilities on the part of such
Person that are material to such Person.
4.14 BROKER'S FEES
No closing, broker's or finder's fee, commission, compensation,
reimbursement or other similar payment will be payable with respect to the
issuance and sale of the Notes, consummation of the Acquisition, the purchase
pursuant to the Equipment Lease or any of the other transactions contemplated
hereby or by any Related Transactions Documents. Except for reimbursements of
out-of-pocket expenses to Xxxxx & Company, Ltd. approved in writing by Lender,
no fee, commission, compensation, reimbursement or other payment will be paid
or payable by or to any Loan Party or any Affiliate thereof for any other
services rendered to Borrower or any of its Subsidiaries ancillary to the
transactions contemplated hereby.
4.15 ENVIRONMENTAL COMPLIANCE
(A) NO ENVIRONMENTAL CLAIMS. Except as set forth on
Schedule 4.15(A), there are no claims, liabilities, investigations,
litigation, administrative proceedings, whether pending or threatened,
or judgments or orders relating to any Hazardous Materials
(collectively called "Environmental Claims") asserted or threatened
against any Loan Party or relating to any real property currently or
formerly owned, leased or operated by any Loan Party. No Loan Party
or any other Person has caused or permitted any Hazardous Material to
be used, generated, reclaimed, transported, released, treated, stored
or disposed of in a manner which could form the basis for an
Environmental Claim against any Loan Party. Except as set forth on
Schedule 4.15(A), no Loan Party has assumed (by contract or by
operation of law) any liability of any Person for cleanup, remediation
compliance or required Capital Expenditures in connection with any
Environmental Claim. The items disclosed pursuant to this subsection
4.15(A) could not
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reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect.
(B) STORAGE OF HAZARDOUS MATERIALS. Except as set forth
on Schedule 4.15(B), no Hazardous Materials are or were stored or
otherwise located, and no underground storage tanks or surface
impoundments are or were located, on real property currently or
formerly owned, leased or operated by any Loan Party or to the best
knowledge of Borrower after due inquiry, on adjacent parcels of real
property, and no part of such real property or, to the best knowledge
of Borrower after due inquiry, no part of such adjacent parcels of
real property, including the groundwater located thereon, is presently
contaminated by Hazardous Materials. The items disclosed pursuant to
this subsection 4.15(B) could not reasonably be expected to have,
either individually or in the aggregate, a Material Adverse Effect.
(C) COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as set
forth on Schedule 4.15(C), each Loan Party has been and is currently
in compliance with all applicable Environmental Laws, including
obtaining and maintaining in effect all permits, licenses or other
authorizations required by applicable Environmental Laws. The items
disclosed pursuant to this subsection 4.15(C) will not, either
individually or in the aggregate, have a Material Adverse Effect.
4.16 EMPLOYEE MATTERS
Except as set forth on Schedule 4.16, (a) no Loan Party nor any of
their respective employees is subject to any collective bargaining agreement,
(b) no petition for certification or union election is pending with respect to
the employees of any Loan Party and no union or collective bargaining unit has
sought such certification or recognition with respect to the employees of any
Loan Party and (c) there are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of Borrower after due inquiry,
threatened between any Loan Party and its respective employees, other than
employee grievances arising in the ordinary course of business which could not
reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect. Except as set forth on Schedule 4.16, neither of
Borrower nor any of its Subsidiaries is subject to an employment contract.
4.17 SOLVENCY
As of and from and after the date of this Agreement and after giving
effect to the consummation of the Related Transactions, Borrower: (a) owns and
will own assets the fair saleable value of which are (i) greater than the total
amount of liabilities (including contingent liabilities) of such Loan Party and
(ii) greater than the amount that will be required to pay the probable
liabilities of such Loan Party's then existing debts as they become absolute
and matured considering all financing alternatives and potential asset sales
reasonably available to such Loan Party; (b) has capital that is not
unreasonably small in relation to its
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business as presently conducted or any contemplated or undertaken transaction;
and (c) does not intend to incur and does not believe that it will incur debts
beyond its ability to pay such debts as they become due.
4.18 DISCLOSURE
No representation or warranty of any Loan Party contained in this
Agreement, the financial statements referred to in subsection 4.3, the other
Related Transactions Documents or any other document, certificate or written
statement furnished to Lender by or on behalf of any such Person for use in
connection with the Loan Documents or the Related Transactions Documents
contain any untrue statement of a material fact or omitted, omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the
same were made. The Projections and pro forma financial information contained
in such materials are based upon good faith estimates and assumptions believed
by such Persons to be reasonable at the time made, it being recognized by
Lender that such projections as to future events are not to be viewed as facts
and that actual results during the period or periods covered by any such
projections may differ from the projected results. There is no material fact
known to Borrower that has had or will have a Material Adverse Effect and that
has not been disclosed herein.
4.19 USE OF PROCEEDS AND MARGIN SECURITY
Borrower shall use the proceeds of all Loans and the Subordinated Note
for proper business purposes (as described in the recitals to this Agreement)
consistent with all applicable laws, statutes, rules and regulations and, with
respect to Term Loan A, as described in Schedule 1.1(A). Schedule 1.1(A)
completely and accurately describes the indebtedness or other obligations being
paid with proceeds of Term Loan A. No portion of the proceeds of any Loan
shall be used by Borrower or any of its Subsidiaries in any manner that might
cause the borrowing or the application of such proceeds to violate Regulation
G, Regulation U, Regulation T or Regulation X or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Exchange
Act.
4.20 REPRESENTATIONS AND WARRANTIES FROM THE PURCHASE AGREEMENT.
(A) BORROWER WARRANTIES. Borrower represents and
warrants that each of the representations and warranties given by each
party to the Purchase Agreement are true and correct in all material
respects as of the date hereof and as of the Closing Date, and such
representations and warranties are hereby incorporated herein by this
reference as of such dates with the same effect as though set forth in
their entirety herein.
(B) SURVIVAL. The representations and warranties of each
party to the Purchase Agreement incorporated in this Agreement by
subsection 4.20(A) shall, solely for the purposes of this Agreement,
survive the execution and delivery of the
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Purchase Agreement, the execution and delivery of this Agreement, the
making of the Loans hereunder and the execution and delivery of the
Notes.
4.21 COMPLIANCE WITH LAWS
Each Loan Party and each of their respective Subsidiaries are not in
violation of any law, ordinance, rule, regulation, order, policy, guideline or
other requirement of any domestic or foreign government or any instrumentality
or agency thereof, having jurisdiction over the conduct of their respective
businesses or the ownership of their respective properties, including, without
limitation, any violation relating to any use, release, storage, transport or
disposal of any Hazardous Material, which violation would subject any Loan
Party or any such Subsidiary, or any of their respective officers to criminal
liability or could reasonably be expected to have, either individually or
together with all such other violations, a Material Adverse Effect and no such
violation has been alleged. Each Loan Party has filed in a timely manner all
reports, documents and other materials required to be filed by them with any
governmental bureau, agency or instrumentality (and the information contained
in each of such filings is true, correct and complete in all respects), except
where failure to make such filings would not have a Material Adverse Effect.
Each Loan Party has retained all records and documents required to be retained
by it pursuant to any law, ordinance, rule, regulation, order, policy,
guideline or other requirement of any governmental authority, except where
failure to retain such records would not subject any Loan Party or such
Subsidiary or any of their respective officers to criminal liability and could
not reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect.
4.22 INVESTMENTS
Borrower does not have an Investment in any Person other than
Investments permitted under subsection 7.3.
4.23 TITLE
Borrower has legal title to all of the real and personal property set
forth in the appraisal prepared by Xxxxxxx-Xxxxxxxx, Inc. entitled "An
Appraisal of Newpark Shipbuilding and Repair, Located at 0000 Xxxxxxx, Xxxxxxx,
Xxxxxx Xxxxxx, Xxxxx" dated as of July 15, 1996 and the appraisal prepared by
J. R. Xxxxxx & Associates, Inc. dated July 12, 1996 and entitled Newpark
Shipbuilding & Repair, Inc. Appraisal-Drydocks and Marine Related Equipment.
4.24 INSURANCE
Schedule 4.24 sets forth a complete and accurate description of all
policies of insurance that will be in effect as of the Closing Date for
Borrower and its Subsidiaries. Borrower and its Subsidiaries are adequately
insured under such policies, no notice of cancellation has been received with
respect to such policies and Borrower and its Subsidiaries are in compliance
with all conditions contained in such policies.
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SECTION 5
BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants and agrees that until payment in full of all
Obligations, unless Lender shall otherwise give its prior written consent,
Borrower shall perform and comply with, and shall cause each of its
Subsidiaries to perform and comply with, all covenants in this Section 5
applicable to such Person.
5.1 FINANCIAL STATEMENTS AND OTHER REPORTS
Borrower will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of financial statements in
conformity with GAAP. Borrower will deliver to Lender the financial statements
and other reports described below.
(A) INTERIM FINANCIALS. As soon as available and in any
event within sixty (60) days after the end of each quarter and, if
requested by Lender, within thirty-five (35) days after the end of
each month, Borrower will deliver the consolidated and consolidating
balance sheet of Borrower (showing intercompany eliminations), as at
the end of such period and the related consolidated and consolidating
statements of income (showing intercompany eliminations),
stockholders' equity. At Lender's request, Borrower shall deliver
statements of cash flow for such period and for the period from the
beginning of the then current fiscal year to the end of such period.
(B) YEAR-END FINANCIALS. As soon as available and in any
event within one hundred and ten (110) days after the end of each
Fiscal Year, Borrower will deliver: (1) the consolidated balance sheet
of Borrower as at the end of such year and the related consolidated
statements of income, stockholders' equity and cash flow for such
fiscal year; (2) a schedule of the outstanding Indebtedness for
borrowed money of Borrower and its Subsidiaries describing in
reasonable detail each such debt issue or loan outstanding and the
principal amount and amount of accrued and unpaid interest with
respect to each such debt issue or loan; (3) a report with respect to
the financial statements from Xxxxx Xxxxxxxx or a Big Six Accounting
Firm selected by Borrower, or other firm of independent certified
public accountants acceptable to Lender, which report shall be without
Qualification and shall state that (a) such consolidated financial
statements present fairly the consolidated financial position of
Borrower and its Subsidiaries as at the dates indicated and the
results of their operations and cash flow for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years
and (b) that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance
with generally accepted auditing standards; and (4) copies of the
consolidating financial
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statements of Borrower and its Subsidiaries, including (a)
consolidating balance sheets of Borrower and its Subsidiaries as at
the end of such Fiscal Year showing intercompany eliminations and (b)
related consolidating statements of earnings of Borrower and its
Subsidiaries showing intercompany eliminations. As used in this
subsection 5.1(B), "Qualification" means, with respect to any
certificate covering financial statements, a qualification to such
certificate (such as a "subject to" or "except for" statement or
emphasis paragraph therein) (a) resulting from a limitation on the
scope of examination of such financial statements or the underlying
data, (b) as to the capability of the Person whose financial
statements are certified to continue operations as a going concern, or
(c) which could be eliminated by changes in financial statements or
notes thereto covered by such certificate (such as by the creation of
or increase in a reserve or a decrease in the carrying value of
assets) and which if so eliminated by the making of any such change
and after giving effect thereto would occasion a Default or an Event
of Default; provided that, without limitation, neither of the
following shall constitute a Qualification: (x) a consistency
exception relating to a change in accounting principles with which the
independent public accountants for the Person whose financial
statements are being certified have concurred, or (y) a qualification
relating to the outcome or disposition of threatened litigation,
pending litigation being contested in good faith, pending or
threatened claims or other contingencies, the impact of which
litigation, claims or contingencies cannot be determined with
sufficient certainty to permit quantification in such financial
statements.
(C) BORROWER COMPLIANCE CERTIFICATE. Together with each
delivery of financial statements of Borrower and its Subsidiaries
pursuant to subdivisions (A) and (B) above, Borrower will deliver a
fully and properly completed Compliance Certificate signed by the
chief executive officer or chief financial officer of Borrower's
general partner.
(D) ACCOUNTANTS' CERTIFICATION. Together with each
delivery of consolidated financial statements of Borrower and its
Subsidiaries pursuant to subsection 5.1(B), Borrower will deliver a
written statement by its independent certified public accountants (a)
stating that the examination has included a review of the terms of
this Agreement as same relate to accounting matters and (b) stating
whether, in connection with the examination, any condition or event
that constitutes a Default or an Event of Default has come to their
attention and, if such a condition or event has come to their
attention, specifying the nature and period of existence thereof.
(E) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof,
Borrower will deliver copies of all significant reports submitted to
Borrower by independent public accountants in connection with each
annual, interim or special audit of the financial statements of
Borrower made by such
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accountants, including the comment letter submitted by such
accountants to management in connection with their annual audit.
(F) APPRAISALS. From time to time, if Lender determines
that obtaining appraisals is necessary in order to comply with
applicable laws or regulations, Lender will obtain appraisal reports
in form and substance and from appraisers satisfactory to Lender
stating the then current fair market values of all or any portion of
the real estate owned by Borrower or any of its Subsidiaries. In
addition, not more than once each Loan Year prior to an Event of
Default and at any time while and so long as an Event of Default shall
have occurred and be continuing, Borrower, at Lender's request, will
obtain and deliver to Lender appraisal reports in form and substance
and from appraisers satisfactory to Lender, stating (1) the then
current fair market and orderly liquidation values of all or any
portion of the equipment and real estate owned by Borrower or any of
its Subsidiaries and (2) the then current business value of Borrower
or any of its Subsidiaries.
(G) PROJECTIONS. At Lender's request, Borrower will
deliver promptly Projections of Borrower and its Subsidiaries for the
current and forthcoming three Fiscal Years, year by year, and for the
current and forthcoming Fiscal Year, month by month.
(H) SEC FILINGS AND PRESS RELEASES. Promptly upon their
becoming available, Borrower will deliver copies of: (1) all financial
statements, reports, notices and proxy statements sent or made
available by Borrower to its security holders; (2) all regular and
periodic reports and all registration statements and prospectuses, if
any, filed by Borrower with any securities exchange or with the
Securities and Exchange Commission or any governmental or private
regulatory authority; and (3) all press releases and other statements
made available by Borrower to the public concerning developments in
the business of any such Person.
(I) SUBORDINATED INDEBTEDNESS NOTICES. Borrower shall
promptly deliver copies of all notices given or received by Borrower
with respect to Subordinated Indebtedness, including those with
respect to noncompliance with any term or condition related to any
Subordinated Indebtedness, and shall notify Lender within two (2)
Business Days of any potential or actual event of default with respect
to any Subordinated Indebtedness.
(J) EVENTS OF DEFAULT, ETC. Promptly upon any officer of
Borrower obtaining knowledge of any of the following events or
conditions, Borrower shall deliver a certificate of Borrower's chief
executive officer specifying the nature and period of existence of
such condition or event and what action Borrower has taken, is taking
and proposes to take with respect thereto: (1) any condition or event
that constitutes an Event of Default or Default; (2) any notice that
any Person has given to Borrower or any of its Subsidiaries or any
other
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action taken with respect to a claimed default or event or condition
of the type referred to in subsection 8.1(B); or (3) any Material
Adverse Effect.
(K) LITIGATION. Promptly upon any officer of Borrower
obtaining knowledge of (1) the institution of any action, suit,
proceeding, governmental investigation or arbitration not previously
disclosed by Borrower to Lender against or affecting any Loan Party or
any property of any Loan Party or (2) any material development in any
action, suit, proceeding, governmental investigation or arbitration at
any time pending against or affecting any Loan Party or any property
of any Loan Party which, in each case, is reasonably likely to have a
Material Adverse Effect, Borrower will promptly give notice thereof
to Lender and provide such other information as may be reasonably
available to them to enable Lender and its counsel to evaluate such
matter.
(L) EMPLOYEE BENEFIT PLANS. With reasonable promptness,
and in any event within thirty (30) days, Borrower will give notice of
and/or deliver to Lender copies of: (1) the establishment of any new
Employee Benefit Plan, Pension Plan or Multiemployer Plan the
commencement of contributions to any Employee Benefit Plan, Pension
Plan or Multiemployer Plan to which any Corporate Loan Party or any of
its ERISA Affiliates was not previously contributing or any increase
in the benefits of any existing Employee Benefit Plan, Pension Plan or
Multiemployer Plan; (2) each funding waiver request filed with respect
to any Employee Benefit Plan and all communications received or sent
by any Corporate Loan Party or any ERISA Affiliate with respect to
such request; and (3) the failure of any Corporate Loan Party or ERISA
Affiliate to make a required installment or payment under Section 302
of ERISA or Section 412 of the IRC by the due date.
(M) TERMINATION EVENTS. Promptly and in any event within
ten (10) days of becoming aware of the occurrence of or forthcoming
occurrence of any (1) Termination Event or (2) "prohibited
transaction", as such term is defined in Section 406 of ERISA or
Section 4975 of the IRC, in connection with any Pension Plan or any
trust created thereunder, Borrower will deliver to Lender a notice
specifying the nature thereof, what action the applicable Corporate
Loan Party has taken, is taking or proposes to take with respect
thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with
respect thereto.
(N) ERISA NOTICES. With reasonable promptness but in any
event within ten (10) days for purposes of clauses (1), (2) and (3),
Borrower will deliver to Lender copies of: (1) any favorable or
unfavorable determination letter from the Internal Revenue Service
regarding the qualification of an Employee Benefit Plan under Section
401(a) of the IRC; (2) all notices received by any Corporate Loan
Party or any ERISA Affiliate of the PBGC's intent to terminate any
Pension Plan or to have a trustee appointed to administer any Pension
Plan;
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(3) each Schedule B (Actuarial Information) to the annual report (Form
5500 Series) filed by any Corporate Loan Party or any ERISA Affiliate
with the Internal Revenue Service with respect to each Pension Plan;
and (4) all notices received by any Corporate Loan Party or any ERISA
Affiliate from a Multiemployer Plan sponsor concerning the imposition
or amount of withdrawal liability pursuant to Section 4202 of ERISA.
Borrower will notify Lender in writing within two (2) Business Days of
any Corporate Loan Party obtaining knowledge or reason to know that
any Corporate Loan Party or any ERISA Affiliate has filed or intends
to file a notice of intent to terminate any Pension Plan under a
distress termination within the meaning of Section 4041(c) of ERISA.
(O) INSURANCE. Within the sixty (60) day period prior to
the end of each Fiscal Year of Borrower, Borrower will deliver a
report in form and substance reasonably satisfactory to Lender
outlining all material insurance coverage maintained as of the date of
such report by Borrower and its Subsidiaries and all material
insurance coverage planned to be maintained by such Persons in the
subsequent Fiscal Year.
(P) SUPPLEMENTED SCHEDULES; NOTICE OF CORPORATE CHANGES.
At Lender's request, Borrower shall supplement in writing and deliver
to Lender revisions of the Schedules annexed to this Agreement to the
extent necessary to disclose new or changed facts or circumstances
after the Closing Date; provided that subsequent disclosures shall not
constitute a cure or waiver of any Default or Event of Default
resulting from the matters disclosed. Borrower shall provide written
notice to Lender of (1) all jurisdictions in which a Corporate Loan
Party becomes qualified after the Closing Date to transact business,
(2) any material change after the Closing Date in the authorized and
issued capital stock or other equity interests of any Corporate Loan
Party or any of their respective Subsidiaries or any other material
amendment to their charter, by-laws or other organization documents
and (3) any Subsidiary created or acquired by any Corporate Loan Party
after the Closing Date, such notice, in each case, to identify the
applicable jurisdictions, capital structures or Subsidiaries, as
applicable.
(Q) TAX RETURNS. As soon as available and in any event
not later than thirty (30) days after the filing thereof, Borrower
will cause to be delivered to Lender the first 2 pages of executed IRS
Form 1040 (or its equivalent) and all Form W-2's and Form 1099's for
each of Xxxxx Xxxxx and Xxxxx Xxxxxx.
(R) TAX RETURNS AND FINANCIAL STATEMENTS. As soon as
available and in any event not later than thirty (30) days after the
filing thereof, Borrower will cause to be delivered to Lender complete
executed (i) tax returns for (a) Borrower, if any, and (b) First Wave
so long as First Wave files consolidated returns which include
Borrower, which tax returns shall be accompanied by an explanation of
Borrower's tax liability in connection with such tax return, and (ii)
IRS
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Form 1040 (or its equivalent) for Xxxxx, which tax return shall be
accompanied by complete personal financial statements of Xxxxx
certified by Xxxxx as true, correct and complete copies, for each year
during the term hereof.
(S) MANAGEMENT REPORT. Together with each delivery of
financial statements of Borrower and its Subsidiaries pursuant to
subdivisions (A) and (B) of this subsection 5.1, Borrower will deliver
a management report: (1) describing the operations and financial
condition of Borrower and its Subsidiaries for the period then ended
and the portion of the current fiscal year then elapsed (or for the
Fiscal Year then ended in the case of year-end financials); (2)
setting forth in comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year and the
corresponding figures from the most recent Projections for the current
Fiscal Year delivered to Lender pursuant to 5.1(G), if any; and (3)
discussing the reasons for any significant variations. The
information above shall be presented in reasonable detail and shall be
certified by the chief financial officer of Borrower to the effect
that such information fairly presents the results of operations and
financial condition of Borrower and its Subsidiaries as at the dates
and for the periods indicated.
(T) OTHER INFORMATION. With reasonable promptness,
Borrower will deliver such other information and data with respect to
any Loan Party or any Subsidiary of any Loan Party as from time to
time may be reasonably requested by Lender.
5.2 ACCESS TO ACCOUNTANTS
Borrower authorizes Lender to discuss the financial condition of
Borrower and its Subsidiaries with Borrower's independent public accountants
upon reasonable notice to Borrower of its intention to do so. Borrower shall
be given the reasonable opportunity to participate in any such discussion. At
Lender's request, Borrower shall deliver a letter to such accountants
authorizing them to comply with the provisions of subsection 5.1 and this
subsection 5.2.
5.3 CORPORATE EXISTENCE, ETC.
Except as otherwise permitted by Section 7.6, Borrower will, and will
cause each of its Subsidiaries to, at all times preserve and keep in full force
and effect its corporate existence and all rights and franchises material to
its business.
5.4 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION
Borrower will, and will cause each of its Subsidiaries to, pay (a) all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or with respect to any of its franchises, business, income
or property before any penalty accrues thereon and (b) all claims (including
claims for labor, services, materials and supplies) for sums that have become
due and payable and that by law have or may become a Lien upon any of its
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properties or assets before any penalty or fine is incurred with respect
thereto; provided that no such tax, charge or claim need be paid if Borrower or
one of its Subsidiaries is contesting same in good faith by appropriate
proceedings promptly instituted and diligently conducted and if Borrower or
such Subsidiary has established a reserve with respect to such tax, charge or
claim, or other appropriate provision, if any, as shall be required in
conformity with GAAP.
5.5 MAINTENANCE OF PROPERTIES; INSURANCE
(A) Borrower will maintain or cause to be maintained in
good repair, working order and condition and in compliance with all
applicable laws, rules, regulations and manufacturer's basic warranty,
extended warranty and/or maintenance programs, all properties used in
the business of Borrower and its Subsidiaries and will make or cause
to be made all appropriate repairs, renewals and replacements thereof.
Any alteration or modification that may at any time be required to
comply with any applicable law, rule, regulation, warranty or
maintenance program shall promptly be made by Borrower.
(B) With respect to Borrower's business and properties
and the business and properties of its Subsidiaries, Borrower will
maintain or cause to be maintained, with financially sound and
reputable insurers, the following coverages with the following limits:
(1) "Special Form" Physical Damage insurance
including windstorm, flood insurance if the property is
located within a federal mandated Flood Area and earthquake
insurance if the property is located within an earthquake
zone. Such insurance shall be written for the full
replacement cost of the property as determined by Borrower and
Lender.
(2) Business Interruption insurance for at least
6 months of net income before income of Borrower taxes plus
continuing expenses of Borrower.
(3) Commercial general liability insurance,
including products/completed operations, ship repairers legal
liability and contractual liability, insuring the
indemnification provisions contained in this Agreement, in an
amount not less than $5,000,000 per occurrence.
(4) Hull and machinery insurance with respect to
any vessels owned or operated by Borrower. Such insurance
shall be written on a form at least as broad as the American
Institute Hull Clauses (June 2, 1977) and shall be written on
an agreed value basis in an amount not less than the greater
of the current Casualty Loss Value of each such vessel or the
full commercial value of each such vessel.
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(5) Protection and Indemnity (P&I) insurance and
water quality insurance (in accordance with the Oil Pollution
Act and the Water Pollution Control Act) or equivalent
insurance with respect to each vessel owned or operated by
Borrower except for the NP Sunshade, Official No. 504633.
(6) Workers Compensation (not included in P&I)
with statutory limits coverage and employer's liability
insurance with limits not less than $5,000,000 for each
accident.
Each policy set forth above shall contain the following provisions:
(1) With respect to property, business
interruption and hull and machinery insurance, Lender shall be
named by endorsement as mortgagee/loss payee.
(2) With respect to commercial general liability,
umbrella/excess liability, protection and indemnity and water
quality insurance, Lender shall be named by endorsement as
additional insured.
(3) Such insurance shall not be invalidated and
shall protect the interests of Lender/additional insureds
regardless of any action or inaction of Borrower or any other
insured whether or not such action or inaction is a breach or
violation of any warranties, declarations or conditions.
(4) Such insurance as is afforded the additional
insureds shall be primary and without any right of
contribution from any insurance which is carried by the
additional insureds. Any insurance carried by the additional
insureds shall be deemed to be excess insurance and solely for
the benefit of said additional insureds.
(5) With respect to insurance as is afforded
additional insureds, the inclusion of more than one
corporation, person, organization, firm or entity as insured
or additional insured under the policies shall not in any way
affect the rights of any such corporation, person,
organization, firm, or entity with respect to any claim,
demand, suit, or judgement made, brought or recovered by or in
favor of any other insured or additional insured. The policy
shall protect each corporation, person, organization, firm or
entity in the same manner as though a separate policy had been
issued to each, but nothing herein shall operate to increase
the insurer's limit of liability as set forth in the policy.
(6) All insurance shall provide for 30 days prior
written notice from the underwriter or the insurance broker to
Lender of any cancellation or material change.
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Prior to the commencement of this Agreement and on or before the
expiration of each insurance policy, the insurance broker and/or
insurance company shall issue:
(1) Evidence of property insurance for property,
business interruption and hull and machinery insurance,
reflecting limits, policy numbers, expiration dates, all
risk/special form, replacement cost, agreed amount/
co-insurance percentage and locations covered. Lender shall
be named as mortgagee/loss payee with no less than 30 days
notice of cancellation.
(2) Loss payable/Mortgagee endorsement for each
policy on the evidence of property certificate shall be
executed by the insurance company and/or insurance broker.
(3) Certificate of insurance for commercial
general liability, umbrella/excess liability, protection and
indemnity and water quality insurance policies reflecting
limits, policy numbers and expiration dates. Lender shall be
named as additional insured with no less than 30 days notice
of cancellation.
(4) Additional insured endorsement for each
policy on the certificate of insurance shall be executed by
the insurance company and/or insurance broker.
(5) Certificate of insurance evidencing workers
compensation coverage.
All casualty insurance proceeds in excess of $50,000 shall be payable
to Lender and applied, at Lender's option, to the Indebtedness.
5.6 INSPECTION; LENDER MEETING
Upon reasonable prior notice by Lender to Borrower (provided notice
need not be given after the occurrence of a Default or an Event of Default),
Borrower shall permit any authorized representatives designated by Lender to
visit and inspect any of the properties of Borrower or any of its Subsidiaries,
including its and their financial and accounting records, and to make copies
and take extracts therefrom, and to discuss its and their affairs, finances and
business with its and their officers and independent public accountants, at
such reasonable times (which shall be during normal business hours prior to the
occurrence of a Default or an Event of Default, and at any time after the
occurrence of a Default or an Event of Default), and in each case as often as
may be reasonably requested. Without in any way limiting the foregoing,
Borrower will participate and will cause its key management personnel to
participate in a meeting of Lender at least once during each fiscal year to be
held at such time and at such place as may be agreed to by Borrower and Lender.
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5.7 ENVIRONMENTAL COMPLIANCE
(A) ENVIRONMENTAL LAWS. Each Loan Party shall at all
times comply with all applicable Environmental Laws.
(B) REMEDIAL ACTION. Each Loan Party and each of their
respective Subsidiaries shall promptly take any and all necessary
remedial actions in response to the presence, storage, use, disposal,
transportation, release or discharge of any Hazardous Materials on,
under or about any real property owned, leased or operated by any Loan
Party or any of their Subsidiaries. In the event any Loan Party or
any of their Subsidiaries undertakes any remedial action with respect
to any Hazardous Material on, under or about any real property owned,
leased or operated by any Loan Party or any of their Subsidiaries,
such Loan Party or Subsidiary shall conduct and complete such remedial
action in compliance with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all federal,
state and local governmental authorities except when such Loan Party's
or Subsidiary's liability for such presence, storage, use, disposal,
transportation, release or discharge of any Hazardous Material is
being contested in good faith by such Loan Party or Subsidiary and
appropriate reserves therefor have been established in accordance with
GAAP.
(C) FURTHER ASSURANCE. If Lender at any time has a
reasonable basis to believe that there may be a material violation of
any Environmental Law by, or any material liability arising thereunder
of, any Loan Party or any of their Subsidiaries or related to any real
property owned, leased or operated by any Loan Party or any of their
Subsidiaries or real property adjacent to such real property, then
Borrower agrees, upon request from Lender, to provide Lender with such
reports, certificates, engineering studies or other written material
or data as Lender may reasonably require so as to satisfy Lender that
such Loan Party or Subsidiary is in compliance with all applicable
Environmental Laws.
5.8 ENVIRONMENTAL DISCLOSURE
(A) Borrower shall promptly advise Lender in writing and
in reasonable detail of: (1) any release, disposal or discharge by
any Loan Party or any of their Subsidiaries of any Hazardous Material
required to be reported to any federal, state or local governmental or
regulatory agency under all applicable Environmental Laws except such
releases, disposals or discharges pursuant to and in compliance with
valid permits, authorizations or registrations under said
Environmental Laws; (2) any and all written communications sent or
received by any Loan Party or any of their Subsidiaries with respect
to any Environmental Claims or any release, disposal or discharge of
Hazardous Material required to be reported to any federal, state or
local governmental or regulatory agency; (3) any remedial action taken
by any Loan Party or any of their Subsidiaries or any other Person in
response to any Hazardous Material on, under or about any real
property owned, leased or operated by any Loan Party, the
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existence of which could result in an Environmental Claim that could
have a Material Adverse Effect; (4) the discovery by any Loan Party or
any of their Subsidiaries of any occurrence or condition on any real
property adjoining or in the vicinity of any real property owned,
leased or operated by any Loan Party that could cause such real
property or any part thereof to be classified as "border-zone
property" or to be otherwise subject to any restrictions on the
ownership, occupancy, transferability or use thereof under any
Environmental Laws; and (5) any request for information from any
governmental agency that indicates such agency is investigating
whether any Loan Party or any of their Subsidiaries may be potentially
responsible for a release, disposal or discharge of Hazardous
Materials.
(B) Borrower shall promptly notify Lender of (1) any
proposed acquisition of stock, assets, or property by any Loan Party
that could reasonably be expected to expose such Loan Party or any of
their Subsidiaries to, or result in, Environmental Claims that could
have a Material Adverse Effect and (2) any proposed action to be taken
by any Loan Party or any of their Subsidiaries to commence any
operations that could reasonably be expected to subject such Loan
Party or Subsidiary to additional laws, rules or regulations,
including laws, rules and regulations requiring additional or amended
environmental permits or licenses. Borrower shall, at its own
expense, provide copies of such documents or information as Lender may
reasonably request in relation to any matters disclosed pursuant to
this subsection 5.8.
5.9 COMPLIANCE WITH LAWS
Borrower will (a) comply with and will cause each of its Subsidiaries
to comply with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority as now in effect and which may be imposed
in the future in all jurisdictions in which Borrower or its Subsidiaries are
now doing business or may hereafter be doing business, other than those laws,
rules, regulations and orders the noncompliance with which would not reasonably
be expected to have, either individually or in the aggregate, a Material
Adverse Effect, and (b) maintain and will cause each of its Subsidiaries to
maintain, as the case may be, all licenses and permits now held or hereafter
acquired by Borrower, the loss, suspension, or revocation of which, or failure
to renew, could have a Material Adverse Effect.
5.10 COVENANTS IN ACQUISITION DOCUMENTS
At all times prior to the effective date of the Acquisition, Borrower
shall comply with its covenants under the applicable Acquisition Documents.
5.11 MORTGAGES; TITLE INSURANCE; SURVEYS
(A) TITLE INSURANCE. On the Closing Date (or within
thirty (30) days following delivery of any Mortgage with respect to
Additional Mortgaged Property), Borrower shall
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deliver or cause to be delivered to Lender ALTA lender's title
insurance policies issued by title insurers reasonably satisfactory to
Lender (the "Mortgage Policies") in form and substance and in amounts
reasonably satisfactory to Lender assuring Lender that the Mortgages
are valid and enforceable first priority mortgage liens on the
respective Mortgaged Property or Additional Mortgaged Property, free
and clear of all defects and encumbrances except Permitted
Encumbrances. The Mortgage Policies shall be in form and substance
reasonably satisfactory to Lender and shall include an endorsement
insuring against mechanics' liens and for any other matter that Lender
may reasonably request, and shall provide for affirmative insurance as
Lender may reasonably request. In the case of each leasehold
constituting Mortgaged Property or Additional Mortgaged Property,
Lender shall have received such estoppel letters, consents and waivers
from the landlords, non-disturbance agreements from any holders of
mortgages or deeds of trust and subordination and attornment
agreements from the tenants on such real estate as may have been
requested by Lender, which items shall be in form and substance
satisfactory to Lender.
(B) ADDITIONAL MORTGAGED PROPERTY. Lender may from time
to time designate real property or leasehold interests of Borrower or
any of its Subsidiaries after the date hereof as "Additional Mortgaged
Property", in which case Borrower shall as promptly as possible (and
in any event within sixty (60) days after such designation) deliver to
Lender a fully executed Mortgage, in form and substance satisfactory
to Lender together with title insurance policies and surveys as
required by this subsection 5.11. Borrower agrees that, following the
taking of the actions with respect to any Additional Mortgaged
Property required by the immediately preceding sentence, Lender shall
have a valid and enforceable first priority mortgage on the respective
Additional Mortgaged Property, free and clear of all defects and
encumbrances except for Permitted Encumbrances.
(C) SURVEYS. On or before the Closing Date (or within
thirty (30) days following delivery of any Mortgage with respect to
Additional Mortgaged Property), Borrower shall deliver or cause to be
delivered to Lender current surveys, certified by a licensed surveyor,
for all real property that is the subject of the Mortgage Policies
including Additional Mortgaged Property for which a Mortgage Policy is
issued. All such surveys shall be sufficient to allow the issuer of
the mortgage policy to issue an ALTA lender's policy.
5.12 FURTHER ASSURANCES
(A) Borrower shall and shall cause each Loan Party to,
from time to time, execute such guaranties, financing statements,
documents, security agreements and reports as Lender at any time may
reasonably request to evidence, perfect or otherwise implement the
guaranties and other security for repayment of the Obligations
provided for in the Loan Documents.
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(B) At Lender's request, Borrower shall cause any
Subsidiaries of Borrower promptly to guarantee the Obligations and to
grant to Lender a security interest in the real, personal and mixed
property of such Subsidiary to secure the Obligations. The
documentation for such guarantee or security shall be substantially
similar to the Loan Documents with such modifications as are
reasonably requested by Lender.
(C) In the event Xxxxx Xxxxx and/or Xxxxx Xxxxxx acquire,
directly or indirectly, any voting equity interest in any Loan Party,
Borrower shall cause such person to personally guarantee the
Obligations of Borrower under the Loan Documents, the principal amount
of which guarantee shall be limited to an equitable percentage of the
Loans based upon such Persons aggregate voting interest, directly or
indirectly, in Borrower, as reasonably determined by Lender.
5.13 ENVIRONMENTAL CONDITIONS.
Within 60 days after the Closing Date, Borrower shall deliver to
Lender evidence of Borrower's compliance with the recommendations on
environmental testing and reporting set forth in the Environmental Site
Assessment prepared by ATEC Associates, Inc., Report No. 44-07-96-00127 and
those set forth in the compliance audit letter from ATEC Associates, Inc. to
Xx. Xxxx Xxxxxx, dated August 22, 1996 with respect to ATEC Project No.
44-07-96-00158 and report to be issued pursuant thereto.
SECTION 6
INTENTIONALLY OMITTED
SECTION 7
BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees that until payment in full of all
Obligations, unless Lender shall otherwise give its prior written consent,
Borrower shall comply with and shall cause each other Loan Party to comply with
all covenants in this Section 7 applicable to such Person.
7.1 INDEBTEDNESS
Borrower will not and will not permit any of its Subsidiaries directly
or indirectly to create, incur, assume, guarantee, or otherwise become or
remain directly or indirectly liable with respect to any Indebtedness except:
(a) The Obligations;
(b) Indebtedness arising as a result of Contingent
Obligations permitted under subsection 7.4;
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(c) Indebtedness evidenced by the Subordinated Note;
(d) Indebtedness existing on the Closing Date as
described on Schedule 7.1, it being agreed that the amount of the
existing LaSalle National Bank revolving Indebtedness may not exceed
$3,300,000 in the aggregate at any time outstanding;
(e) Indebtedness incurred to finance vessel construction
not to exceed $1,700,000 in the aggregate at any time outstanding;
(f) Indebtedness incurred by Borrower in connection with
Capitalized Leases and other Indebtedness not in excess of $250,000,
in the aggregate, per annum;
(g) provided no Default or Event of Default has occurred
and is continuing or would arise as a result thereof, Indebtedness
incurred by Borrower as a result of a mandate by any governmental
authority to purchase equipment or make Capital Expenditures in order
to comply with such governmental authorities mandate so long as (i)
Borrower provides Lender with evidence of such mandate prior to the
incurrence of such Indebtedness and (ii) if Lender determines in its
sole and absolute discretion not to fund such purchase of equipment or
Capital Expenditure, then Lender has consented to the incurrence of
such Indebtedness and the execution of such documents and agreements
to be executed in connection therewith (which consent shall not be
unreasonably withheld). Lender agrees that the flare described in
subsection 7.19 is equipment required to be purchased by governmental
authority mandate; and
(h) working capital Indebtedness not to exceed, in the
aggregate, $4,500,000 incurred to refinance the LaSalle National Bank
revolving line of credit described on Schedule 7.1; provided (i)
simultaneously with the incurrence of such Indebtedness, Borrower
grants to Lender, or confirms the grant of, a security interest in
inventory, accounts receivable and general intangibles, and (ii) the
lender extending such Indebtedness enters into such documents and
agreements reasonably requested by Lender.
7.2 LIENS AND RELATED MATTERS
(A) NO LIENS. Borrower will not and will not permit any
of its Subsidiaries directly or indirectly to create, incur, assume or
permit to exist any Lien on or with respect to any property or asset
(including any document or instrument with respect to goods or
accounts receivable) of Borrower or any of its Subsidiaries, whether
now owned or hereafter acquired, or any income or profits therefrom,
except Permitted Encumbrances.
(B) NO NEGATIVE PLEDGES. Neither Borrower nor any
Subsidiary of Borrower shall enter into or assume any agreement (other
than the Loan Documents and the Subordinated
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Loan Documents) prohibiting the creation or assumption of any Lien
upon its properties or assets, whether now owned or hereafter
acquired.
(C) NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO
BORROWER. Except as provided herein, Borrower will not and will not
permit any of its Subsidiaries directly or indirectly to create or
otherwise cause or suffer to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any such
Subsidiary to: (1) pay dividends or make any other distribution on any
of such Subsidiary's capital stock or other equity interest owned by
Borrower or any Subsidiary of Borrower; (2) subject to subordination
provisions satisfactory to Lender, pay any indebtedness owed to
Borrower or any other Subsidiary; (3) make loans or advances to
Borrower or any other Subsidiary; or (4) transfer any of its property
or assets to Borrower or any other Subsidiary.
7.3 INVESTMENTS; JOINT VENTURES
Borrower will not and will not permit any of its Subsidiaries directly
or indirectly to make or own any Investment in any Person including any Joint
Venture, except:
(a) as set forth on Schedule 7.3; and
(b) Borrower and its Subsidiaries may make and own
Investments in Cash Equivalents; provided that such Cash Equivalents
are not subject to setoff rights in favor of the issuing bank arising
from any banking relationship with Borrower or its Subsidiaries; and
(c) Borrower may purchase preferred stock of First Wave
with the proceeds of Term Loan B provided (i) no Default or Event of
Default has occurred and is continuing; (ii) the terms and conditions
of such purchase are acceptable to Lender; and (iii) the conditions
specified in subsections 3.2 and 3.3 shall have been satisfied.
7.4 CONTINGENT OBLIGATIONS
Borrower will not and will not permit any of its Subsidiaries directly
or indirectly to create or become or be liable with respect to any Contingent
Obligation except:
(a) Contingent Obligations existing on the Closing Date
and described in Schedule 7.4 annexed hereto; and
(b) Contingent Obligations with respect to Indebtedness
permitted by subsection 7.1.
7.5 RESTRICTED JUNIOR PAYMENTS
Borrower will not and will not permit any of its Subsidiaries to
directly or indirectly declare, order, pay, make or set apart any sum for any
Restricted Junior Payment, except:
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(a) so long as no Default or Event of Default has
occurred and is continuing or would arise as a result thereof and
subject to the terms and provisions of the Pledge Agreements, Borrower
may repurchase its capital stock from the Management Shareholders in
accordance with the provisions of the Shareholder Agreement and Stock
Purchase Agreement dated January 31, 1995 among First Wave, Borrower
and Management Shareholders in effect as of the date hereof;
(b) Borrower may make payments and distributions to First
Wave solely to permit First Wave to pay actual federal and state
income taxes then due and owing by First Wave; provided, however,
Borrower's contribution to taxes as a result of the filing of a
consolidated return by First Wave shall not be greater, nor the
receipt of tax benefits less, than they would have been had Borrower
not filed a consolidated return with First Wave; and
(c) so long as no Default or Event of Default has
occurred and is continuing or would arise as a result thereof,
Borrower may make payments, dividends and distributions to First Wave
solely to permit First Wave to pay scheduled installments of principal
and interest on the First Wave Note as in effect on the date hereof.
7.6 RESTRICTION ON FUNDAMENTAL CHANGES
Neither Borrower nor any of its Subsidiaries will: (a) amend, modify
or waive any term or provision of their articles of incorporation or by-laws
unless required by law provided in no event will Borrower amend, or permit the
amendment of, Article Seven of the Articles of Incorporation of Borrower; (b)
enter into any transaction of merger or consolidation; (c) liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution); (d) convey,
sell, lease, sublease, transfer or otherwise dispose of, in one transaction or
a series of transactions, any part of its business or assets, or the capital
stock of or other equity interests in any of its Subsidiaries, whether now
owned or hereafter acquired; or (e) acquire by purchase or otherwise all or any
substantial part of the business or assets of, or stock or other evidence of
beneficial ownership of, any Person, except: (i) the Loan Parties may enter
into transactions contemplated by the Acquisition Documents and may consummate
the Acquisition; (ii) Borrower and its Subsidiaries may make Investments
permitted under subsection 7.3; and (iii) any Subsidiary of Borrower may be
merged with or into Borrower (provided that Borrower is the surviving entity)
or any other Subsidiary of Borrower.
7.7 DISPOSAL OF ASSETS OR SUBSIDIARY STOCK
(A) Neither Borrower nor any of its Subsidiaries will
sell, lease, transfer or otherwise dispose of any of its property,
business or assets, or grant any Person an option to acquire any such
property, business or assets except for dispositions of obsolete
equipment not used or useful in the business.
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(B) Borrower will not and will not permit any of its
Subsidiaries directly or indirectly to issue, sell, assign, pledge or
otherwise encumber or dispose of any of the shares of capital stock or
other equity securities in Borrower or any such Subsidiary including
warrants, rights or options to acquire shares or other equity
securities of any of its Subsidiaries, except to Borrower.
7.8 RESTRICTION ON LEASES
Borrower will not and will not permit any of its Subsidiaries to
become or remain liable in any way, whether directly or by assignment or as a
guarantor or other surety, for the obligations of the lessee under any lease
(other than intercompany leases between Borrower and its Subsidiaries), if the
aggregate amount of all rents paid by Borrower and its Subsidiaries under all
such leases would exceed $200,000 in any Fiscal Year.
7.9 SALES AND LEASE-BACKS
Borrower will not and will not permit any of its Subsidiaries directly
or indirectly to become or remain liable as lessee or as guarantor or other
surety with respect to any lease of any property whether real or personal or
mixed or whether now owned or hereafter acquired which Borrower or any of its
Subsidiaries has sold or transferred or intends to sell or transfer to any
other Person.
7.10 TRANSACTIONS WITH AFFILIATES
Borrower will not and will not permit any of its Subsidiaries directly
or indirectly to enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of Borrower or with any director, officer or
employee of any Loan Party, except (a) as set forth on Schedule 7.10, (b)
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of Borrower or any of its Subsidiaries and upon
fair and reasonable terms which are fully disclosed to Lender and are no less
favorable to Borrower or such Subsidiary than would be obtained in a comparable
arm's length transaction with a Person that is not an Affiliate of Borrower and
(c) compensation arrangements which are governed by subsection 7.11 below.
Notwithstanding the foregoing, except as permitted by subsection 7.11 below, no
payments may be made with respect to any items set forth on Schedule 7.10 upon
the occurrence and during the continuation of a Default or Event of Default.
7.11 MANAGEMENT FEES AND COMPENSATION
(A) Borrower will not and will not permit any other Loan
Party or any of Borrower's Affiliates to pay any management,
consulting or similar fees (collectively, "Management Fees") to any
Affiliate of Borrower or to any director, officer or employee of any
Loan Party except as set forth on Schedule 7.11.
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(B) Borrower will not and will not permit any Subsidiary
to pay compensation to the individuals identified on Schedule 7.11 in
excess of those amounts set forth on Schedule 7.11, whether such
compensation consists of salary, bonus, management, consulting or
other fees, capital distributions, or other benefits or otherwise
(collectively, "Salaries").
(C) Notwithstanding the foregoing, no payments may be
made with respect to (i) Management Fees set forth on Schedule 7.11
upon the occurrence and during the continuance of a Default or Event
of Default under subsection 8.1, (ii) Salaries payable to Xxxxx and
Xxxxx Xxxxxx set forth on Schedule 7.11 upon the occurrence and during
the continuance of a Default or Event of Default under subsection
8.1(A) and (iii) Salary payable to Xxxxx Xxxxx set forth on Schedule
7.11 upon the occurrence and during the continuance of a Default or
Event of Default under subsection 8.1(A) which is not cured within 30
days after such Default or Event of Default.
7.12 ENVIRONMENTAL LIABILITIES
Borrower will not and will not permit any Loan Party to: (a) violate
any applicable Environmental Law; or (b) dispose of any Hazardous Materials
into or onto or (except in accordance with applicable law) from, any real
property owned, leased or operated by any Loan Party; or (c) permit any Lien
imposed pursuant to any Environmental Law to be imposed or to remain on any
real property owned, leased or operated by any Loan Party.
7.13 CONDUCT OF BUSINESS
From and after the Closing Date, Borrower will not and will not permit
any of its Subsidiaries to engage in any business other than businesses of the
type described on Schedule 4.1(D).
7.14 CHANGES RELATING TO SUBORDINATED INDEBTEDNESS
Borrower will not and will not permit any of its Subsidiaries to
change or amend the terms of any Subordinated Indebtedness.
7.15 FISCAL YEAR
Neither Borrower nor any Subsidiary of Borrower shall change its
Fiscal Year.
7.16 COMPLIANCE WITH ERISA
Neither Borrower nor any Subsidiary of Borrower shall:
(a) permit the occurrence of any Termination Event which
would result in a liability to any Corporate Loan Party or ERISA
Affiliate in excess of $100,000;
(b) permit the present value of all benefit liabilities
under all Pension Plans to exceed the current value of the assets of
such Pension Plans allocable to such benefit liabilities by more than
$100,000;
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(c) permit any accumulated funding deficiency in excess
of $100,000 (as defined in Section 302 of ERISA and Section 412 of the
IRC) with respect to any Pension Plan, whether or not waived;
(d) fail to make any contribution or payment to any
Multiemployer Plan which any Corporate Loan Party or ERISA Affiliate
may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto which results in or
is likely to result in a liability in excess of $100,000;
(e) engage, or permit any Corporate Loan Party or ERISA
Affiliate to engage, in any prohibited transaction under Section 406
of ERISA or Section 4975 of the IRC for which a civil penalty pursuant
to Section 502(i) of ERISA or a tax pursuant to Section 4975 of the
IRC in excess of $100,000 is imposed;
(f) permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to any Corporate Loan Party or ERISA Affiliate or increase
the obligation of any Corporate Loan Party or ERISA Affiliate to a
Multiemployer Plan which liability or increase, individually or
together with all similar liabilities and increases, is material to
any Corporate Loan Party or ERISA Affiliate; or
(g) fail, or permit any Corporate Loan Party or ERISA
Affiliate to fail, to establish, maintain and operate each Employee
Benefit Plan in compliance in all material respects with the
provisions of ERISA, the IRC and all other applicable laws and the
regulations and interpretations thereof.
7.17 PRESS RELEASE; PUBLIC OFFERING MATERIALS
Borrower will not and will not permit any Loan Party to disclose the
name of Lender in any press release or in any prospectus, proxy statement or
other materials filed with any governmental entity relating to a public
offering of the capital stock of any Corporate Loan Party.
7.18 SUBSIDIARIES
Borrower will not and will not permit any of its Subsidiaries to
establish, create or acquire any new Subsidiary.
7.19 CAPITAL EXPENDITURE LIMITS
The aggregate amount of all Capital Expenditures of Borrower and its
Subsidiaries will not exceed $1,100,000 for the 1996 Fiscal Year and $750,000
in any Fiscal Year thereafter; provided, however, that a maximum of up to
$250,000 per annum may be financed through Capital Leases and other
Indebtedness. In addition to the foregoing, Borrower may make a one-time
Capital Expenditure not to
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exceed $600,000 for the purchase of a flare and related equipment which is
already on order.
7.20 FIXED CHARGE COVERAGE
Borrower shall not permit Fixed Charge Coverage for the twelve (12)
month period ending on the last day of each quarter to be less than 1.1.
7.21 LEVERAGE RATIO
Borrower shall not permit Leverage Ratio as of and for the twelve (12)
month period on the last day of each quarter to be greater than 6.0.
7.22 DEFINITIONS
For purposes of this Section 7, the following terms shall have the
following meanings:
"CAPITAL EXPENDITURES" means, without duplication, for any period, the
aggregate of all expenditures on a consolidated basis including deposits
(whether paid in cash or property or accrued as liabilities and including the
aggregate amount of all principal payments due for the entire term of all
Capital Leases which are required to be capitalized on the balance sheet) made
by Borrower and its Subsidiaries that, in conformity with GAAP, are required to
be included in the property, plant, or equipment, or similar fixed asset
account.
"CAPITAL LEASE" means any lease of any property (whether real,
personal or mixed) that, in conformity with GAAP, should be accounted for as a
capital lease.
"EBIDAT" means, without duplication, for any period, the following,
each calculated for such period: (a) Net Income; plus (b) any provision for
(or less any benefit from) income or franchise taxes included in the
determination of Net Income; plus (c) Interest Expense deducted in the
determination of Net Income; plus (d) amortization and depreciation deducted in
the determination of Net Income; plus (e) losses from (or less gains from)
asset dispositions or other non-cash items (excluding sales, expenses or losses
related to current assets) included in the determination of Net Income; less
(f) after tax extraordinary gains (or plus after tax extraordinary losses) (in
each case as defined under GAAP); plus (g) expenses of the Related Transactions
included in the determination of Net Income provided that such expenses were
accrued for or otherwise identified in the Pro Forma delivered by Borrower to
Lender at closing; less (h) changes pursuant to the last sentence of subsection
6.9 applicable to, but not included in, such Pro Forma.
"FIXED CHARGE COVERAGE" means, for any period, (a) EBIDAT, less (b)
the unfinanced portion of Capital Expenditures; divided by (c) Fixed Charges.
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"FIXED CHARGES" means, without duplication, for any period, the
following, each calculated for such period: (a) Interest Expenses; plus (b) any
provision for (or less any benefit from) income or franchise taxes included in
the determination of Net Income, adjusted for the net change in deferred tax
and liability accounts; plus (c) scheduled payments of principal with respect
to all Indebtedness (including scheduled payments of Capital Leases) of
Borrower and its Subsidiaries on a consolidated basis, plus (d) Restricted
Junior Payments with respect to Borrower made in cash.
"INTEREST EXPENSES" means, without duplication, for any period, the
following, each calculated for such period: interest expense (net of any
interest income) deducted in the determination of Net Income excluding: (a)
the amortization of fees and costs incurred with respect to the Related
Transactions which have been capitalized as transaction costs; and (b) any
interest paid in kind.
"LEVERAGE RATIO" means, for any period, (a) total Indebtedness as of
the last day of such period, divided by (b) EBIDAT, for such period.
"NET INCOME" means, for any period, the net income (or loss) of
Borrower after provision for or benefit from income and franchise taxes
determined in accordance with GAAP, but excluding: (a) the income (or loss) of
any Person (other than Subsidiaries of Borrower) in which Borrower has an
ownership interest unless received by Borrower in a cash distribution; and (b)
the income (or loss) of any Person accrued prior to the date it became a
Subsidiary of Borrower or is merged into or consolidated with Borrower.
7.23 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS
UNDER AGREEMENT
For purposes of this Agreement, all accounting terms not otherwise
defined herein shall have the meanings assigned to such terms in conformity with
GAAP. Financial statements and other information furnished to Lender pursuant to
subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation. No "Accounting Changes" (as defined below) shall
effect financial covenants, standards or terms in this Agreement; provided, that
Borrower shall prepare footnotes to each Compliance Certificate and the
financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "Accounting Changes" means: (a)
changes in accounting principles required by GAAP and implemented by Borrower;
(b) changes in accounting principles recommended by Borrower's certified public
accountants; and (c) changes in carrying value of Borrower's (or any of its
Subsidiaries') assets, liabilities or equity accounts resulting from (i) the
application of purchase accounting principles (A.P.B. 16 and/or 17 and EITF
88-16 and FASB 109) to the Related Transactions or (ii) as the result of any
other adjustments that,
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in each case, were applicable to, but not included in, the Pro Forma delivered
by Borrower to Lender. All such adjustments resulting from expenditures made
subsequent to the Closing Date (including, but not limited to, capitalization
of costs and expenses or payment of pre-Closing Date liabilities) shall be
treated as expenses in the period the expenditures are made and deducted as
part of the calculation of EBIDAT in such period.
SECTION 8
DEFAULT, RIGHTS AND REMEDIES
8.1 EVENT OF DEFAULT
"Event of Default" shall mean the occurrence or existence of any one
or more of the following:
(A) PAYMENT. Failure to pay (i) any installment of
principal or interest of the Loan within ten (10) days after the date
such payment is due, or (ii) any other amount due under this Agreement
or any other Loan Document within twenty (20) days after delivery of
notice from Lender with respect thereto; or
(B) DEFAULT IN OTHER AGREEMENTS. (1) Failure of
Borrower, any of Borrower's Subsidiaries, any other Loan Party or
Resources to pay when due or within any applicable grace period any
principal or interest on Indebtedness (other than the Loans) or any
Contingent Obligations or (2) breach or default of Borrower, any of
Borrower's Subsidiaries, any other Loan Party or Resources with
respect to any Indebtedness (other than the Loans) or any Contingent
Obligations, if the effect of such failure to pay, default or breach
is to cause or to permit the holder or holders then to cause
Indebtedness and/or Contingent Obligations to become or be declared
due prior to their stated maturity, whether or not such failure to
pay, default or breach is waived by such holder or holders; or
(C) BREACH OF CERTAIN PROVISIONS. (A) Failure of
Borrower to perform or comply with any term or condition contained in
subsections 5.1, 5.5(B) or 5.6 or contained in Section 7; or (B)
failure of any Guarantor to perform or comply with any term or
condition contained in the Guaranty executed by such Guarantor; or
(D) BREACH OF WARRANTY. Any representation, warranty,
certification or other statement made by any Loan Party or Resources
in any Loan Document or in any statement or certificate at any time
given by such Person in writing pursuant or in connection with any
Loan Document is false in any material respect on the date made; or
(E) OTHER DEFAULTS UNDER LOAN DOCUMENTS. Borrower, any
other Loan Party or Resources defaults in the performance of or
compliance with any term contained in this Agreement or the other Loan
Documents and such default is not remedied or waived within thirty
(30) days after receipt by Borrower of
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notice from Lender of such default (other than occurrences described
in other provisions of this subsection 8.1 for which a different grace
or cure period is specified or which constitute immediate Events of
Default); or
(F) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(1) A court enters a decree or order for relief with respect to
Borrower, any of its Subsidiaries, any Guarantor, any other Loan Party
or Resources in an involuntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, which decree or order is not stayed or other
similar relief is not granted under any applicable federal or state
law; or (2) the continuance of any of the following events for
forty-five (45) days unless dismissed, bonded or discharged: (a) an
involuntary case is commenced against Borrower, any of its
Subsidiaries, any Guarantor, any other Loan Party or Resources, under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; or (b) a decree or order of a court for the
appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over Borrower, any of
its Subsidiaries, any Guarantor, any other Loan Party or Resources, or
over all or a substantial part of its property, is entered; or (c) an
interim receiver, trustee or other custodian is appointed without the
consent of Borrower, any of its Subsidiaries, any Guarantor, any other
Loan Party or Resources, for all or a substantial part of the property
of Borrower, any such Subsidiary, any Guarantor, any other Loan Party
or Resources; or
(G) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(1) An order for relief is entered with respect to Borrower, any of
its Subsidiaries, any Guarantor, any other Loan Party or Resources; or
(2) Borrower, any of its Subsidiaries, any Guarantor, any other Loan
Party or Resources commences a voluntary case under the Bankruptcy
Code or any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or consents to the entry of an order for
relief in an involuntary case or to the conversion of an involuntary
case to a voluntary case under any such law or consents to the
appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its property; or (3)
Borrower, any of its Subsidiaries, any Guarantor, any other Loan Party
or Resources makes any assignment for the benefit of creditors; or (4)
the Borrower, any of its Subsidiaries, any Guarantor, any other Loan
Party or Resources adopts any resolution or otherwise authorizes
action to approve any of the actions referred to in this subsection
8.1(G); or
(H) GOVERNMENTAL LIENS. Any lien, levy or assessment is
filed or recorded with respect to or otherwise imposed upon all or any
part of the Collateral or the assets of Borrower, any of its
Subsidiaries, any other Loan Party or Resources by the United States
or any department or instrumentality thereof or by any state, county,
municipality or other governmental
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agency (other than Permitted Encumbrances) and such lien, levy or
assessment is not stayed, vacated, paid or discharged within ten (10)
days; or
(I) JUDGMENT AND ATTACHMENTS. Any money judgment, writ
or warrant of attachment, or similar process (other than those
described in subsection 8.1(H)) involving (1) an amount in any
individual case in excess of $100,000 or (2) an amount in the
aggregate at any time in excess of $250,000 (in either case not
adequately covered by insurance as to which the insurance company has
acknowledged coverage) is entered or filed against Borrower or any of
its Subsidiaries, any other Loan Party, Resources or any of their
respective assets and remains undischarged, unvacated, unbonded or
unstayed for a period of thirty (30) days or in any event later than
five (5) days prior to the date of any proposed sale thereunder; or
(J) DISSOLUTION. Any order, judgment or decree is
entered against Borrower, any of its Subsidiaries, any Guarantor, any
other Loan Party or Resources decreeing the dissolution or split up of
Borrower, that Subsidiary, Guarantor, such Loan Party or Resources and
such order remains undischarged or unstayed for a period in excess of
twenty (20) days; or
(K) SOLVENCY. Borrower, any Guarantor, any other Loan
Party or Resources ceases to be solvent or admits in writing its
present or prospective inability to pay its debts as they become due;
or
(L) INJUNCTION. Borrower or any of its Subsidiaries or
any Guarantor is enjoined, restrained or in any way prevented by the
order of any court or any administrative or regulatory agency from
conducting all or any material part of its business and such order
continues for more than thirty (30) days; or
(M) ERISA - PENSION PLANS. (1) Any Corporate Loan Party
or any ERISA Affiliate fails to make full payment when due of all
amounts which, under the provisions of any Pension Plan or Section 412
of the IRC, any Corporate Loan Party or any ERISA Affiliate is
required to pay as contributions thereto and such failure results in
or is likely to result in a Material Adverse Effect; or (2) an
accumulated funding deficiency in excess of $100,000 occurs or exists,
whether or not waived, with respect to any Pension Plan; or (3) a
Termination Event occurs which results in or is likely to result in a
Material Adverse Effect; or
(N) ERISA - MULTIEMPLOYER PLANS. Any Corporate Loan
Party or any ERISA Affiliate as employers under one or more
Multiemployer Plans makes a complete or partial withdrawal from such
Multiemployer Plans and the plan sponsor of such Multiemployer Plans
notifies such withdrawing employer that such employer has incurred a
withdrawal liability requiring payments in an amount exceeding
$100,000; or
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(O) INVALIDITY OF LOAN DOCUMENTS. Any of the Loan
Documents for any reason, other than a partial or full release in
accordance with the terms thereof, ceases to be in full force and
effect or is declared to be null and void, or any Corporate Loan Party
or Resources denies that it has any further liability under any Loan
Documents to which it is party, or gives notice to such effect; or
(P) DAMAGE, STRIKE, CASUALTY. Any material damage to, or
loss, theft or destruction of, any Collateral, whether or not insured,
or any strike, lockout, labor dispute, embargo, condemnation, act of
God or public enemy, or other casualty which causes, for more than
fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of
Borrower, any of its Subsidiaries, Resources or any other Loan Party
if any such event or circumstance could reasonably be expected to have
a Material Adverse Effect; or
(Q) LICENSES AND PERMITS. The loss, suspension or
revocation of, or failure to renew, any license or permit now held or
hereafter acquired by Borrower, any of its Subsidiaries, Resources or
any other Loan Party, if such loss, suspension, revocation or failure
to renew could have a Material Adverse Effect; or
(R) FAILURE OF SECURITY. Lender does not have or ceases
to have a valid and perfected first priority security interest in the
Collateral (subject to Permitted Encumbrances), in each case, for any
reason other than the failure of Lender to take any action within its
control; or
(S) CHANGE IN CONTROL. (A) First Wave ceases to own and
control, directly, at least 80% of the issued and outstanding shares
of each class of capital stock of Borrower, free and clear of all
Liens (other than those in favor of Lender); (B) Xxxxx ceases to own
and control, directly, at least 100% of the issued and outstanding
voting shares of each class of capital stock of First Wave, free and
clear of all Liens; provided, however, with respect to this clause
(B), if Xxxxx Xxxxx and/or Xxxxx Xxxxxx exercises their option to
convert their non-voting capital stock of First Wave to voting capital
stock of First Wave, guarantees the Obligations as set forth in
subsection 5.12(C) of this Agreement, then such percentage threshold
shall be lowered to the percentage equal to 100% minus the amount of
such voting capital stock owned by Xxxxx Xxxxx and Xxxxx Xxxxxx, in
the aggregate; or (C) Resources ceases to beneficially own and
control, directly or indirectly, 100% of the equity interests of
Shipholding, free and clear of all Liens; or
(T) BOARD SEAT. An individual designated by Resources is
not a member of the Board of Directors of Borrower, provided in the
event of the death of the then acting Resources Designated Director
(as defined in the Shareholder Agreement), an Event of Default shall
not be deemed to occur
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if a new Resources Designated Director is elected to the Board of
Directors, within 30 days of the vacancy.
8.2 ACCELERATION
Upon the occurrence of any Event of Default described in the foregoing
subsections 8.1(F) or 8.1(G), the unpaid principal amount of and accrued
interest and fees on the Term Loans and all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
requirements of any kind, all of which are hereby expressly waived by Borrower.
Upon the occurrence and during the continuance of any other Event of Default,
Lender may declare all or any portion of the Loans and all or some of the other
Obligations to be, and the same shall forthwith become, immediately due and
payable together with accrued interest thereon, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
requirements of any kind, all of which are hereby expressly waived by Borrower.
8.3 PERFORMANCE BY LENDER.
If Borrower, any other Loan Party or Resources shall fail to perform
any covenant, duty or agreement contained in any of the Loan Documents, Lender
may perform or attempt to perform such covenant, duty or agreement on behalf of
Borrower after the expiration of any cure or grace periods set forth herein or
therein. In such event, Borrower shall, at the request of Lender, promptly pay
any amount reasonably expended by Lender in such performance or attempted
performance to Lender, together with interest thereon at the rate of interest
in effect upon the occurrence of an Event of Default as specified in subsection
2.2(A) from the date of such expenditure until paid. Notwithstanding the
foregoing, it is expressly agreed that Lender shall not have any liability or
responsibility for the performance of any obligation of Borrower, any other
Loan Party or Resources under this Agreement or any other Loan Document.
SECTION 9
ASSIGNMENT AND PARTICIPATION
9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND NOTES.
Lender may assign its rights and delegate its obligations under this
Agreement and further may assign, or sell participations in, all or any part of
the Loans to an Affiliate or to another Person.
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SECTION 10
MISCELLANEOUS
10.1 EXPENSES AND ATTORNEYS' FEES
Whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to promptly pay all fees, costs and expenses
incurred by Lender in connection with any matters contemplated by or arising
out of this Agreement or the other Loan Documents including the following, and
all such fees, costs and expenses shall be part of the Obligations, payable on
demand and secured by the Collateral: (a) reasonable fees, costs and expenses
(including attorneys' fees, allocated costs of internal counsel and fees of
environmental consultants, industry consultants, accountants and other
professionals retained by Lender) incurred in connection with the examination,
review, due diligence investigation, documentation and closing of the financing
arrangements evidenced by the Loan Documents; (b) fees, costs and expenses
(including reasonable attorneys' fees, allocated costs of internal counsel and
fees of environmental consultants, industry consultants, accountants and other
professionals retained by Lender) incurred in connection with the negotiation,
preparation, execution and administration of the Loan Documents, the Loans, the
Related Transactions Documents and any amendments, modifications and waivers
relating thereto and all fees, costs and expenses incurred by Lender in
connection with the inspections and investigations described in subsection 5.6;
(c) fees, costs and expenses incurred in creating, perfecting and maintaining
perfection of Liens in favor of Lender, pursuant to any Loan Document,
including lien search fees, filing and recording fees, taxes and expenses,
title insurance policy fees, fees and expenses of attorneys for providing such
opinions as Lender may reasonably request and fees and expenses of attorneys to
Lender; (d) fees, costs and expenses (including attorneys' fees and allocated
costs of internal counsel) incurred in connection with the review,
documentation, negotiation, closing and administration of any subordination or
intercreditor agreements; (e) fees, costs, expenses (including attorneys' fees
and allocated costs of internal counsel) and costs of settlement incurred in
collecting upon or enforcing rights against the Collateral; and (f) fees, costs
and expenses (including attorneys' fees, allocated costs of internal counsel
and fees of other professionals retained by Lender) incurred in any action to
enforce this Agreement or the other Loan Documents or to collect any payments
due from Borrower, any other Loan Party or Resources under this Agreement, the
Notes or any other Loan Document or incurred in connection with any refinancing
or restructuring of the credit arrangements provided under this Agreement,
whether in the nature of a "workout" or in connection with any insolvency or
bankruptcy proceedings or otherwise.
10.2 INDEMNITY
In addition to the payment of expenses pursuant to subsection 10.1,
whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to indemnify, pay and hold Lender and any holder of any of the
Notes, and the officers, directors,
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employees, agents, affiliates and attorneys of Lender and such holders
(collectively called the "Indemnities") harmless from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, broker's or finders fees, costs, expenses and disbursements of
any kind or nature whatsoever (including the fees and disbursements of counsel
for such Indemnities in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) that may be imposed on, incurred by, or
asserted against that Indemnitee, in any manner relating to or arising out of
(a) the negotiation, execution, delivery, performance, administration, or
enforcement of any of the Related Transactions Documents, (b) any of the
transactions contemplated by the Related Transactions Documents, (c) any breach
by Borrower, any other Loan Party or Resources of any representation, warranty,
covenant, or other agreement contained in any of the Related Transactions
Documents, (d) the presence, release, threatened release, disposal, removal, or
cleanup of any Hazardous Material located on, about, within or affecting any of
the properties or assets of any Loan Party or any of their Subsidiaries or any
violation of any applicable Environmental Law for which any Loan Party is
liable, (e) the statements contained in the commitment letters, if any,
delivered by Lender, (f) Lender's agreement to make the Loans hereunder, or (i)
the use or intended use of the proceeds of any of the Loans (the foregoing
liabilities herein collectively referred to as the "Indemnified Liabilities");
provided that Borrower shall have no obligation to an Indemnitee hereunder with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of that Indemnitee as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnities or any of them.
10.3 AMENDMENTS AND WAIVERS
Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement, the Notes or any
other Loan Document, or consent to any departure by any Loan Party or Resources
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Lender. Each amendment, modification, termination or waiver
shall be effective only in the specific instance and for the specific purpose
for which it was given. No amendment, modification, termination or waiver
shall be required for Lender to take additional Collateral pursuant to any Loan
Document. No amendment, modification, termination or waiver of any provision
of any Note shall be effective without the written concurrence of the holder of
that Note. No notice to or demand on Borrower, any other Loan Party or
Resources in any case shall entitle Borrower, any other Loan Party or Resources
to any other or further notice or demand in similar or other circumstances.
Any amendment, modification, termination, waiver or consent effected in
accordance
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with this subsection 10.3 shall be binding upon each holder of the Notes at the
time outstanding, each future holder of the Notes, and, if signed by a Loan
Party or Resources, on such Loan Party or Resources.
10.4 INTENTIONALLY OMITTED
10.5 NOTICES
Unless otherwise specifically provided herein, any notice or other
communication required or permitted to be given shall be in writing addressed
to the respective party as set forth below and may be personally served,
telecopied, telexed or sent by overnight courier service or United States mail
and shall be deemed to have been given: (a) if delivered in person, when
delivered; (b) if delivered by telecopy or telex, on the date of transmission
if transmitted on a Business Day before 4:00 p.m. (Atlanta time) or, if not, on
the next succeeding Business Day; (c) if delivered by overnight courier, two
days after delivery to such courier properly addressed; or (d) if by U.S. Mail,
four Business Days after depositing in the United States mail, with postage
prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower: Newpark Shipbuilding and Repair, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
With a copy to: Xxxxxxxxx, Sachse & Xxxxxx, LLP
23rd floor, One American Place
P. O. Box. 3197
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
With a courtesy copy to: Newpark Resources, Inc.
0000 Xxxxx Xxxxxxxx Xxxx.
Xxxxx 0000
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx
Telecopy: (000) 000-0000
With a courtesy copy to: First Wave Marine, Inc.
0000 X. Xxxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx
Telecopy: (000) 000-0000
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If to Lender: Xxxxxx Financial Leasing, Inc.
900 Circle 00 Xxxxxxx, X.X.
Xxxxx 0000
Xxxxxxx Xxxxxxx 00000
Attention: Credit Manager
Commercial Equipment Finance Division
Telecopy: (000) 000-0000
With a copy to: Xxxxxx Financial Leasing, Inc.
900 Circle 00 Xxxxxxx, X.X.
Xxxxx 0000
Xxxxxxx Xxxxxxx 00000
Attention: Xxxxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
or to such other address as the party addressed shall have previously
designated by written notice to the serving party,
given in accordance with this subsection 10.5. A notice not given as provided
above shall, if it is in writing, be deemed given if and when actually received
by the party to whom given. The parties hereto hereby agree that the failure
to deliver a courtesy copy of any notice provided hereunder to Resources or
First Wave shall not effect the validity or enforceability of such notice to
Borrower or any other party hereto.
10.6 SURVIVAL OF WARRANTIES AND CERTAIN AGREEMENTS
All agreements, representations and warranties made herein shall
survive the execution and delivery of this Agreement, the making of the Loans
hereunder and the execution and delivery of the Notes. Notwithstanding
anything in this Agreement or implied by law to the contrary, the agreements of
Borrower set forth in subsections 10.1, 10.2 and 10.15 shall survive the
payment of the Loans and the termination of this Agreement.
10.7 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE
No failure or delay on the part of Lender or any holder of any Note in
the exercise of any power, right or privilege hereunder or under the Notes or
any other Loan Document shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under this Agreement, the Notes and the other Loan
Documents are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
10.8 MARSHALING; PAYMENTS SET ASIDE
Lender shall not be under any obligation to marshal any assets in
favor of any Loan Party, Resources or any other party or against or in payment
of any or all of the Obligations. To the extent that any Loan Party or
Resources makes a payment or payments to Lender, or Lender enforces their
security interests or exercise its rights of setoff, and such payment or
payments or the proceeds of such
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enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
recovery, the Obligations or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
10.9 INDEPENDENCE OF COVENANTS
All covenants hereunder shall be given in any jurisdiction independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default or an Event of Default if such action is taken or
condition exists.
10.10 SEVERABILITY
The invalidity, illegality or unenforceability in any jurisdiction of
any provision in or obligation under this Agreement, the Notes or other Loan
Documents shall not affect or impair the validity, legality or enforceability
of the remaining provisions or obligations under this Agreement, the Notes or
other Loan Documents or of such provision or obligation in any other
jurisdiction.
10.11 HEADINGS
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.12 APPLICABLE LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
10.13 SUCCESSORS AND ASSIGNS; SUBSEQUENT HOLDERS OF NOTES
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns except that Borrower
may not assign its rights or obligations hereunder without the written consent
of Lender.
10.14 NO FIDUCIARY RELATIONSHIP
No provision in this Agreement or in any of the other Loan Documents
and no course of dealing between the parties shall be deemed to create any
fiduciary duty by Lender to Borrower, any other Loan Party or Resources.
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10.15 LIMITATION OF LIABILITY
Neither Lender nor any affiliate, officer, director, employee,
attorney, or agent of Lender shall have any liability with respect to, and
Borrower hereby waives, releases, and agrees not to xxx any of them upon, any
claim for any special, indirect, incidental, or consequential damages suffered
or incurred by Borrower in connection with, arising out of, or in any way
related to, this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Borrower hereby waives, releases, and agrees not to xxx Lender or any of
Lender's affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or
any of the transactions contemplated by this Agreement or any of the Related
Transactions Documents.
10.16 NO DUTY
All attorneys, accountants, appraisers, and other professional Persons
and consultants retained by Lender shall have the right to act exclusively in
the interest of Lender and shall have no duty of disclosure, duty of loyalty,
duty of care, or other duty or obligation of any type or nature whatsoever to
Borrower or any of Borrower's partners or any other Person.
10.17 ENTIRE AGREEMENT
This Agreement, the Notes, and the other Loan Documents referred to
herein embody the final, entire agreement among the parties hereto and
supersede any and all prior commitments, agreements, representations, and
understandings, whether written or oral, relating to the subject matter hereof
and may not be contradicted or varied by evidence of prior, contemporaneous, or
subsequent oral agreements or discussions of the parties hereto. There are no
oral agreements among the parties hereto.
10.18 CONSTRUCTION
Lender and Borrower acknowledge that each of them has had the benefit
of legal counsel of its own choice and has been afforded an opportunity to
review this Agreement and the other Loan Documents with its legal counsel and
that this Agreement and the other Loan Documents shall be construed as if
jointly drafted by Lender and Borrower.
10.19 CONSENT TO JURISDICTION AND SERVICE OF PROCESS
BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS AND IRREVOCABLY
AGREES THAT, SUBJECT TO LENDER'S ELECTION, ALL ACTIONS OR PROCEEDINGS ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS SHALL BE
LITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS,
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AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH THIS AGREEMENT, SUCH NOTE, SUCH OTHER LOAN DOCUMENT OR SUCH
OBLIGATION. BORROWER DESIGNATES AND APPOINTS CT CORPORATION SYSTEM AND SUCH
OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY BORROWER WHICH IRREVOCABLY AGREE
IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE ON ITS BEHALF SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY BORROWER TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO
BORROWER AT ITS ADDRESS PROVIDED IN SUBSECTION 10.5 EXCEPT THAT UNLESS
OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT
AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY BORROWER
REFUSES TO ACCEPT SERVICE, BORROWER HEREBY AGREES THAT SERVICE UPON IT BY MAIL
SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF
LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
10.20 WAIVER OF JURY TRIAL
BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO
THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE LENDER/BORROWER
RELATIONSHIP THAT IS BEING ESTABLISHED. BORROWER AND LENDER ALSO WAIVE ANY
BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE
REQUIRED OF LENDER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND
THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW AND STATUTORY CLAIMS. BORROWER AND LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER
IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
10.21 CONFIDENTIALITY
Lender agrees to exercise its best efforts to keep any non-public
information delivered or made available to Lender pursuant to the Loan
Documents, which Borrower has identified in writing to the Lender as
confidential information, confidential from any Person other than Persons
employed or retained by Lender who are or are expected to become engaged in
evaluating, approving,
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structuring or administering the Loans; provided that, nothing herein shall
prevent Lender from disclosing such information to any bona fide assignee,
transferee or participant that has agreed to comply with this subsection 10.21
in connection with the contemplated assignment or transfer of any Loans or
participation therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process or as required in
connection with the exercise of any remedy under the Loan Documents.
10.22 COUNTERPARTS; EFFECTIVENESS
This Agreement and any amendments, waivers, consents, or supplements
may be executed in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which counterparts together shall constitute but
one and the same instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
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Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
XXXXXX FINANCIAL LEASING, INC.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXXXX
----------------------------
Title: Asst. Vice President
-------------------------
NEWPARK SHIPBUILDING AND REPAIR,
INC., a Texas corporation
By: /s/ XXXXXX X. XXXXX
----------------------------
Title: CEO
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