<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 3, 1999
FRIEDE GOLDMAN HALTER, INC.
(FORMERLY KNOWN AS FRIEDE GOLDMAN INTERNATIONAL INC.)
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MISSISSIPPI 0-22595 72-1362492
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
13085 INDUSTRIAL SEAWAY ROAD
GULFPORT, MISSISSIPPI 39503
(Address of principal
executive offices
and zip code)
(228) 896-0029
(Registrant's telephone number,
including area code)
------------
================================================================================
<PAGE>
ITEM 5. OTHER EVENTS
NEW CREDIT FACILITY
Effective on November 3, 1999, Halter Marine Group, Inc., a Delaware
corporation ("Halter Marine"), merged with and into Friede Goldman International
Inc., a Mississippi corporation ("Friede Goldman"), with Friede Goldman
surviving the merger (the "Merger") pursuant to an Agreement and Plan of Merger
dated as of June 1, 1999, as amended by Amendment No. 1 to Agreement and Plan of
Merger dated as of September 14, 1999 (the "Merger Agreement"). At the
effective time of the Merger, Friede Goldman changed its name to "Friede Goldman
Halter, Inc." ("Friede Goldman Halter"). In connection with the Merger, on
November 3, 1999, Friede Goldman Halter entered into a revolving credit facility
(the "Revolving Credit Facility") with a consortium of banks, including Wells
Fargo and Bank One, in an amount of approximately $164 million (subject to
borrowing base limitations). The Revolving Credit Facility is a senior secured
facility with $120 million of availability for cash borrowings and an additional
amount of approximately $44 million available to support letters of credit.
Friede Goldman Halter plans to use the funds available under the Revolving
Credit Facility in order to, among other things, retire Halter Marine's and
Friede Goldman's existing credit facilities and all of the outstanding
indebtedness thereunder. A copy of the Revolving Credit Facility is attached as
an exhibit hereto and is incorporated by reference herein.
SUPPLEMENTAL INDENTURE
As of November 2, 1999, Friede Goldman, Halter Marine and U. S. Trust
Company of Texas, N.A., as Trustee, entered into a First Supplemental Indenture
(the "Supplemental Indenture"), effective as of November 3, 1999, with respect
to the Indenture, dated as of September 15, 1997, between Halter Marine and U.S.
Trust Company of Texas, N.A. (the "Original Indenture"), pursuant to which
Halter Marine issued 4 1/2 % Convertible Subordinated Notes due 2004 (the
"Convertible Notes"). The Supplemental Indenture provides that Friede Goldman,
as successor by merger to Halter Marine under the Original Indenture, assumes
all of the obligations of Halter Marine arising under the Original Indenture and
the Convertible Notes and provides that the Convertible Notes are convertible
into shares of common stock of Friede Goldman Halter. A copy of the
Supplemental Indenture is attached as an exhibit hereto and is incorporated by
reference herein.
AMENDMENT TO BYLAWS
Pursuant to the Merger Agreement, the bylaws of Friede Goldman were amended
so that the provisions therein related to the indemnification of officers and
directors conformed to the corresponding provisions in the Halter Marine bylaws.
The board of directors of Friede Goldman Halter has approved the Amended and
Restated Bylaws of Friede Goldman Halter. A copy of the amended and restated
bylaws is attached as an exhibit hereto.
-2-
<PAGE>
ITEM 7. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ----------------------------------------------------------------
<C> <S>
*3.1 Amended and Restated Bylaws of Friede Goldman Halter, Inc.
*4.1 First Supplemental Indenture, dated as of November 2, 1999 and
effective as of November 3, 1999, by and among Friede Goldman
International Inc., Halter Marine Group, Inc. and U.S. Trust
Company of Texas, N.A.
*10.1 Credit Agreement, dated as of November 3, 1999, among Friede
Goldman Halter, Inc., Wells Fargo Bank (Texas), National
Association, as administrative agent and co-arranger, Banc One
Capital Markets, Inc., as co-arranger and syndication agent, and
the lenders party thereto.
</TABLE>
___________________
* Filed herewith.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FRIEDE GOLDMAN HALTER, INC.
Date: November 8, 1999
By: /s/ Rick S. Rees
----------------
Rick S. Rees
Executive Vice President and Chief
Financial Officer
-4-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------------------------------------------------------------
<C> <S>
*3.1 Amended and Restated Bylaws of Friede Goldman Halter, Inc.
*4.1 First Supplemental Indenture, dated as of November 2, 1999 and
effective as of November 3, 1999, by and among Friede Goldman
International Inc., Halter Marine Group, Inc. and U.S. Trust
Company of Texas, N.A.
*10.1 Credit Agreement, dated as of November 3, 1999, among Friede
Goldman Halter, Inc., Wells Fargo Bank (Texas), National
Association, as administrative agent and co-arranger, Banc One
Capital Markets, Inc., as co-arranger and syndication agent, and
the lenders party thereto.
</TABLE>
___________________
* Filed herewith.
-5-
<PAGE>
EXHIBIT 3.1
================================================================================
AMENDED AND RESTATED BYLAWS
OF
FRIEDE GOLDMAN HALTER, INC.
----------------
DATED: NOVEMBER 3, 1999
===============================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
Offices
Section 1.1 Principal Office 1
Section 1.2 Registered Office 1
Section 1.3 Other Offices 1
ARTICLE II
Shareholders Meetings
Section 2.1 Annual Meeting 1
Section 2.2 Special Meetings 1
Section 2.3 Notice of Meetings and Adjourned Meetings 2
Section 2.4 Voting Lists 2
Section 2.5 Quorum 3
Section 2.6 Organization 3
Section 2.7 Voting 3
Section 2.8 Authorization of Proxies 4
Section 2.9 Shareholders Entitled to Vote 4
Section 2.10 Order of Business 5
Section 2.11 Action by Written Consent 5
Section 2.12 Inspectors of Election 5
Section 2.13 Notice of Shareholder Nominees 5
Section 2.14 Shareholder Proposals 6
ARTICLE III
Directors
Section 3.1 Management 7
Section 3.2 Number and Term 8
Section 3.3 Quorum and Manner of Action 8
Section 3.4 Vacancies 8
Section 3.5 Resignations 9
Section 3.6 Removals 9
Section 3.7 Annual Meetings 9
Section 3.8 Regular Meetings 9
Section 3.9 Special Meetings 10
i
<PAGE>
Section 3.10 Organization of Meetings 10
Section 3.11 Place of Meetings 10
Section 3.12 Compensation of Directors 10
Section 3.13 Action by Unanimous Written Consent 10
Section 3.14 Participation in Meetings by Telephone 11
Section 3.15 Election of Directors by Class Vote of Holders of
Preferred Stock 11
ARTICLE IV
Committees of the Board
Section 4.1 Membership and Authorities 11
Section 4.2 Minutes 12
Section 4.3 Vacancies 12
Section 4.4 Telephone Meetings 12
Section 4.5 Action Without Meeting 12
ARTICLE V
Officers
Section 5.1 Number and Title 13
Section 5.2 Term of Office; Vacancies 13
Section 5.3 Removal of Elected Officers 13
Section 5.4 Resignations 13
Section 5.5 The Chairman of the Board 14
Section 5.6 Chief Executive Officer 14
Section 5.7 President 14
Section 5.8 Vice Presidents 15
Section 5.9 Secretary 15
Section 5.10 Assistant Secretaries 16
Section 5.11 Chief Financial Officer 16
Section 5.12 Treasurer 16
Section 5.13 Assistant Treasurers 17
Section 5.14 Subordinate Officers; Agents 17
Section 5.15 Salaries and Compensation 17
ii
<PAGE>
ARTICLE VI
Indemnification
Section 6.1 Right to Indemnification 17
Section 6.2 Right of Claimant to Bring Suit 18
Section 6.3 Non-Exclusivity of Rights 19
Section 6.4 Insurance 19
Section 6.5 Severability 19
ARTICLE VII
Capital Stock
Section 7.1 Certificates of Stock 20
Section 7.2 Lost Certificates 20
Section 7.3 Fixing Date for Determination of Shareholders of
Record for Certain Purposes 21
Section 7.4 Dividends 21
Section 7.5 Registered Shareholders 21
Section 7.6 Transfer of Stock 21
Section 7.7 Stock Options, Warrants, Etc 22
ARTICLE VIII
Miscellaneous Provisions
Section 8.1 Corporate Seal 22
Section 8.2 Fiscal Year 22
Section 8.3 Checks, Drafts, Notes 22
Section 8.4 Corporate Contracts and Instruments 23
Section 8.5 Notice and Waiver of Notice 23
Section 8.6 Examination of Books and Records 23
Section 8.7 Voting Upon Shares Held by the Corporation 24
ARTICLE IX
Amendments
Section 9.1 Amendment 24
iii
<PAGE>
FRIEDE GOLDMAN HALTER, INC.
AMENDED AND RESTATED BYLAWS
ARTICLE I
Offices
Section 1.1 Principal Office.
The principal office of Friede Goldman Halter, Inc. (the "Corporation")
shall be in Gulfport, Mississippi.
Section 1.2 Registered Office.
The registered office and registered agent of the Corporation required to
be maintained in the State of Mississippi shall be as designated from time to
time by the appropriate filing by the Corporation in the office of the Secretary
of State of the State of Mississippi.
Section 1.3 Other Offices.
The Corporation may also have offices at such other places, both within and
without the State of Mississippi, as the Board of Directors may from time to
time determine or as the business of the Corporation may require.
ARTICLE II
Shareholders Meetings
Section 2.1 Annual Meeting.
The annual meeting of the holders of shares of each class or series of
stock as are entitled to notice thereof and to vote thereat pursuant to
applicable law and the Corporation's articles of incorporation, as amended and
in effect from time to time (the "Articles of Incorporation"), for the purpose
of electing directors and transacting such other proper business as may come
before it shall be held at such time and at such place, within or without the
State of Mississippi, as may be designated by the Board of Directors.
Section 2.2 Special Meetings.
In addition to such special meetings as are provided by law or the Articles
of Incorporation, special meetings of the holders of any class or series or of
all classes or series of the Corporation's
<PAGE>
stock for any purpose or purposes, may be called at any time by the Chief
Executive Officer and shall be called by the Secretary at the written request,
or by resolution adopted by the affirmative vote, of a majority of the Board of
Directors, which request shall fix the date, time and place (within or without
the State of Mississippi), and state the purpose or purposes of the proposed
meeting. Except to the extent specified in the Articles of Incorporation or the
resolutions of the Board of Directors creating any class or series of preferred
stock of the Corporation, Shareholders of the Corporation may not call a special
meeting.
Section 2.3 Notice of Meetings and Adjourned Meetings.
Except as otherwise provided by law, written notice of any meeting of
Shareholders shall be given either by personal delivery or by mail to each
Shareholder of record entitled to vote thereat. Notice of each meeting shall be
in such form as is approved by the Board of Directors and shall state the date,
place and hour of the meeting, and, in the case of a special meeting, the
purpose or purposes for which the meeting is called. Unless otherwise provided
by law, such written notice shall be given not less than 10 nor more than 60
days before the date of the meeting. Except when Shareholder attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business on the grounds that the meeting is not lawfully
called or convened, presence in person or by proxy of a Shareholder shall
constitute a waiver of notice of such meeting. Further, a written waiver of any
notice required by law or by these Bylaws, signed by the person entitled to
notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Except as otherwise provided by law, the business that
may be transacted at any such meeting shall be limited to and consist of the
purpose or purposes stated in such notice. If a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the adjournment is for more than 30 days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each Shareholder of record entitled
to vote at the meeting.
Section 2.4 Voting Lists.
The officer or agent having charge of the stock transfer books for shares
of the Corporation shall make, at least 10 days before each meeting of the
Shareholders, a complete list of Shareholders entitled to vote at such meeting
or any adjournment thereof, arranged in alphabetical order, with the address of
each and the number of shares held by each, which list, for a period of 10 days
prior to such meeting, shall be kept on file either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held, and such list shall be subject to inspection by the Shareholders at any
time during usual business hours. Such list shall also be produced and kept
open at the time and place of the meeting and shall be subject to the inspection
of any Shareholder for the duration of the meeting. The original stock transfer
books shall be prima-facie evidence as to who are the Shareholders entitled to
examine such list or transfer books or to vote at any meeting of Shareholders.
2
<PAGE>
Section 2.5 Quorum.
Except as otherwise provided by law or by the Articles of Incorporation,
the holders of a majority of the Corporation s stock issued and outstanding and
entitled to vote at a meeting, present in person or represented by proxy,
without regard to class or series, shall constitute a quorum at all meetings of
the Shareholders for the transaction of business. If, however, such quorum
shall not be present or represented at any meeting of the Shareholders, the
Chairman of the Board of Directors or other person presiding over such meeting
or the holders of a majority of such shares of stock, present in person or
represented by proxy, may adjourn any meeting from time to time without notice
other than announcement at the meeting, except as otherwise required by these
Bylaws, until a quorum shall be present or represented. At any such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally called.
A holder of a share of the Corporation's capital stock shall be treated as being
present or represented at a meeting if such holder is (i) present in person at
the meeting or (ii) represented at the meeting by a valid proxy, regardless of
whether the instrument granting the proxy is marked as casting a vote or
abstaining, is left blank or does not empower such proxy to vote with respect to
some or all matters to be voted upon at the meeting.
Section 2.6 Organization.
Meetings of the Shareholders shall be presided over by the Chairman of the
Board of Directors, if one shall be elected, or in his absence, by the Chief
Executive Officer, the President or by any Senior Vice President, or, in the
absence of any of such officers, by a chairman to be chosen by a majority of the
Shareholders entitled to vote at the meeting who are present in person or by
proxy. The Secretary, or, in his absence, any Assistant Secretary or any person
appointed by the individual presiding over the meeting, shall act as secretary
at meetings of the Shareholders.
Section 2.7 Voting.
Each Shareholder of record, as determined pursuant to Section 2.9, who is
entitled to vote in accordance with the terms of the Articles of Incorporation
of Incorporation and in accordance with the provisions of these Bylaws, shall,
except to the extent specified in the Articles of Incorporation or any
resolution adopted by the Board of Directors to establish any series of
Preferred Stock of the Corporation, be entitled to one vote, in person or by
proxy, for each share of stock registered in his name on the books of the
Corporation. Every Shareholder entitled to vote at any Shareholders' meeting
may authorize another person or persons to act for him by proxy duly appointed
by instrument in writing subscribed by such Shareholder and executed not more
than three years prior to the meeting, unless the proxy provides for a longer
period. Each proxy shall be revocable unless it expressly states therein that
it is irrevocable and, only so long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A Shareholder s attendance
at any meeting, when such Shareholder has theretofore given a proxy, shall not
have the effect of revoking such proxy unless such Shareholder shall in writing
so notify the Secretary of the meeting prior to the voting of the proxy. Unless
otherwise provided by law, no vote on the election of directors or any question
3
<PAGE>
brought before the meeting need be by ballot unless the chairman of the meeting
shall determine that it shall be by ballot or the holders of a majority of the
shares of stock present in person or by proxy and entitled to participate in
such vote shall so demand. In a vote by ballot, each ballot shall state the
number of shares voted and the name of the Shareholder or proxy voting. Except
as otherwise provided by law, by the Articles of Incorporation or these Bylaws,
(i) action on a matter (other than the election of directors) shall be approved
if the votes cast by holders of shares of stock present and entitled to vote on
the matter at a meeting at which a quorum is present in favor of the matter
exceed the votes cast opposing the matter and (ii) directors shall be elected by
a plurality of the votes cast by the holders of shares present and entitled to
vote in the election at a meeting at which a quorum is present. In the election
of directors, votes may not be cumulated. In determining the number of votes
cast, shares abstaining from voting or not voted on a matter (including director
elections) will not be treated as votes cast.
Section 2.8 Authorization of Proxies.
Without limiting the manner in which a Shareholder may authorize another
person or persons to act for him as proxy, the following are valid means of
granting such authority. A Shareholder may execute a writing authorizing
another person or persons to act for him as proxy. Execution may be accomplished
by the Shareholder or his authorized officer, director, employee or agent
signing such writing or causing his or her signature to be affixed to such
writing by any reasonable means including, but not limited to, by facsimile
signature. A Shareholder may also authorize another person or persons to act
for him as proxy by transmitting or authorizing the transmission of a telegram,
cablegram or other means of electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the Shareholder.
If it is determined that such telegrams, cablegrams or other electronic
transmissions are valid, the inspectors or, if there are no inspectors, such
other persons making that determination shall specify the information upon which
they relied. Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to this section may
be substituted or used in lieu of the original writing or transmission for any
and all purposes for which the writing or transmission could be used, provided
that such copy, facsimile telecommunication or other reproduction shall be a
complete reproduction of the entire original writing or transmission.
Section 2.9 Shareholders Entitled to Vote.
The Board of Directors may fix a date not more than 60 days nor less than
10 days prior to the date of any meeting of Shareholders as a record date for
the determination of the Shareholders entitled to notice of and to vote at such
meeting and any adjournment thereof, and in such case such Shareholders and only
such Shareholders as shall be Shareholders of record on the date so fixed shall
be entitled to notice of and to vote at, such meeting and any adjournment
thereof notwithstanding any transfer of any stock on the books of the
Corporation after such record date fixed as aforesaid.
4
<PAGE>
Section 2.10 Order of Business.
The order of business at all meetings of Shareholders shall be as
determined by the chairman of the meeting or as is otherwise determined by the
vote of the holders of a majority of the shares of stock present in person or by
proxy and entitled to vote without regard to class or series at the meeting.
Section 2.11 Action by Written Consent.
No action required or permitted to be taken by the Shareholders shall be
taken except at an annual or special meeting with prior notice and a vote. No
action may be taken by the Shareholders by written consent.
Section 2.12 Inspectors of Election.
Before any meeting of Shareholders, the Board of Directors may, and if
required by law shall, appoint one or more persons to act as inspectors of
election at such meeting or any adjournment thereof. If any person appointed as
inspector fails to appear or fails or refuses to act, the chairman of the
meeting may, and if required by law or requested by any Shareholder entitled to
vote or his proxy shall, appoint a substitute inspector. If no inspectors are
appointed by the Board of Directors, the chairman of the meeting may, and if
required by law or requested by any Shareholder entitled to vote or his proxy
shall, appoint one or more inspectors at the meeting. Inspectors may include
individuals who serve the Corporation in other capacities (including as
officers, employees, agents or representatives); provided, however, that no
director or candidate for the office of director shall act as an inspector.
Inspectors need not be Shareholders. The inspectors shall (i) determine the
number of shares of capital stock of the Corporation outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum and the validity and effect of proxies and (ii) receive votes or
ballots, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes and ballots, determine the
results and do such acts as are proper to conduct the election or vote with
fairness to all Shareholders. On request of the chairman of the meeting, the
inspectors shall make a report in writing of any challenge, request or matter
determined by them and shall execute a certificate of any fact found by them.
Section 2.13 Notice of Shareholder Nominees.
Only persons who are nominated in accordance with the procedures set forth
in this Section 2.13 shall be eligible for election as directors of the
Corporation. Nominations of persons for election to the Board of Directors of
the Corporation may be made at a meeting of the Corporation's Shareholders (a)
by or at the direction of the Board of Directors or (b) by any Shareholder of
the Corporation entitled to vote for the election of directors at such meeting
who complies with the procedures set forth in this Section 2.13. All nominations
by Shareholders shall be made pursuant to timely notice in proper written form
submitted to the Secretary of the Corporation. To be timely, a Shareholder's
notice must be delivered to or mailed and received at the principal executive
offices
5
<PAGE>
of the Corporation not less than 120 days nor more than 150 days prior to the
anniversary of the annual meeting held for the immediately preceding year,
unless the date of the upcoming annual meeting has been changed by more than 30
days from the date of the prior year's meeting, in which case proposals must be
received at least 60 days prior to the distribution by the Company of proxies
relating to such upcoming annual meeting, or, in the case of a special meeting
at which directors are to be elected and for which less than 40 days' notice or
prior public disclosure of the date of the meeting is given or made to
Shareholders, notice by the Shareholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
To be in proper written form, such Shareholder's notice to the Secretary shall
set forth in writing (a) as to each person whom such Shareholder proposes to
nominate for election or re-election as a director, all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, including,
without limitation, such person's written consent to being named in the proxy
statement as a nominee and to serving as a director if elected; and (b) as to
such Shareholder (i) the name and address, as they appear on the Corporation's
books, and principal occupation of such Shareholder, (ii) the class and number
of shares of the Corporation's capital stock that are beneficially owned by such
Shareholder and the dates upon which such Shareholder acquired such shares and
documentary support for any claims of beneficial ownership, and (iii) a
description of all agreements, arrangements or understandings between such
Shareholder and each such person that such Shareholder proposes to nominate as a
director and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by such
Shareholder. At the request of the Board of Directors, any person nominated by
the Board of Directors for election as a director shall furnish to the Secretary
of the Corporation that information required to be set forth in a Shareholder's
notice of nomination which pertains to the nominee. No person shall be eligible
for election as a director unless nominated in accordance with the procedures
set forth in these Bylaws of the Company. The chairman of the Shareholder's
meeting shall, if the facts warrant, determine and declare to the meeting that a
nomination was not made in accordance with the procedures prescribed by these
Bylaws of the Company, and if he shall so determine, he shall announce such
determination to the meeting and the defective nomination shall be disregarded.
Section 2.14 Shareholder Proposals.
At any special meeting of the Corporation's Shareholders, only such
business shall be conducted as shall have been brought before the meeting by or
at the direction of the Board of Directors. At any annual meeting of the
Shareholders, only such business shall be conducted as shall have been brought
before the meeting (a) by or at the direction of the Board of Directors or (b)
by any Shareholder who complies with the procedures set forth in this Section
2.14; provided, however, that nothing in this Section 2.14 shall be deemed to
preclude discussion by any Shareholder of any business properly brought before
any annual meeting of Shareholders in accordance with such procedures. For
business properly to be brought before an annual meeting by a Shareholder, the
Shareholder must have given timely notice thereof in proper written form to the
Secretary of the Corporation. To be timely, a Shareholder's notice must be
delivered to or mailed and received at
6
<PAGE>
the principal executive offices of the Corporation not less than 120 days nor
more than 150 days prior to the anniversary of the annual meeting held for the
immediately preceding year, unless the date of the upcoming annual meeting has
been changed by more than 30 days from the date of the prior year's meeting, in
which case proposals must be received at least 60 days prior to the distribution
by the Company of proxies relating to such upcoming annual meeting. To be in
proper written form, such Shareholder's notice to the Secretary shall set forth
in writing as to each matter such Shareholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be brought
before the annual meeting, including the exact text of any proposal to be
presented for adoption and any supporting statement (which shall not exceed 500
words in the aggregate), and such Shareholder's reasons for conducting such
business at the annual meeting, (b) the name and address, as they appear on the
Corporation's books, and principal occupation of such Shareholder, (c) the class
and number of shares of the Corporation's capital stock that are beneficially
owned by such Shareholder and the dates upon which such Shareholder acquired
such shares and documentary support for any claims of beneficial ownership, and
(d) any material interest of such Shareholder in such business. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at an
annual meeting except in accordance with the procedures set forth in this
Section 2.14 and the foregoing rights of a Shareholder to propose business for
consideration at an annual meeting of Shareholders shall be subject to such
conditions, restrictions and limitations as may be imposed by the Articles of
Incorporation. The chairman of an annual Shareholder's meeting shall, if the
facts warrant, determine and declare to the meeting that business is not
properly brought before the meeting in accordance with the provisions of this
Section 2.14, and, if he should so determine, he shall so announce such
determination to the meeting and any such business not properly brought before
the meeting shall not be transacted. Notwithstanding any other provision of
these Bylaws, the Corporation shall be under no obligation to include any
Shareholder proposal in its proxy statement material or otherwise present any
such proposal to Shareholders at a meeting of Shareholders if the Board of
Directors reasonably believes that the proponents thereof have not complied with
Sections 13 and 14 of the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder, and the Corporation shall not be
required to include in its proxy statement material to Shareholders any
Shareholder proposal not required to be included in its proxy statement to
Shareholders in accordance with such act, rules or regulations.
ARTICLE III
Directors
Section 3.1 Management.
The property, affairs and business of the Corporation shall be managed by
or under the direction of the Board of Directors which may exercise all powers
of the Corporation and do all lawful acts and things as are not by law, by the
Articles of Incorporation or by these Bylaws directed or required to be
exercised or done by the Shareholders.
7
<PAGE>
Section 3.2 Number and Term.
The actual number of directors constituting the entire Board of Directors
shall be fixed from time to time by resolution of the Board of Directors adopted
by the affirmative vote of a majority of the members of the entire Board of
Directors, but shall consist of not less than three nor more than 15 members.
The Board of Directors shall have sole authority to determine the number of
directors, within the limits set forth above, and may increase or decrease the
exact number of directors from time to time by resolution duly adopted by the
affirmative vote of a majority of the entire Board of Directors; subject to
Miss. Code Ann. Section 79-4-8.03(b) which limits any change to 30% of the
number of directors last approved by the Shareholders. Directors need not be
Shareholders. No decrease in the number of directors shall have the effect of
shortening the term of office of any incumbent director.
Section 3.3 Quorum and Manner of Action.
At all meetings of the Board of Directors a majority of the total number of
directors holding office shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by law, by the Articles of Incorporation
or by these Bylaws. When the Board of Directors consists of one director, the
one director shall constitute a majority and a quorum. If at any meeting of the
Board of Directors there shall be less than a quorum present, a majority of
those present may adjourn the meeting from time to time until a quorum is
obtained, and no further notice thereof need be given other than by announcement
at such adjourned meeting. Attendance by a director at a meeting shall
constitute a waiver of notice of such meeting except where a director attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business on the ground that the meeting is not
lawfully called or convened. A director who is present at a meeting of the
Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to such action unless his dissent shall be entered in
the minutes of the meeting or unless he shall file his written dissent to such
action with the person acting as Secretary of the meeting before the adjournment
thereof or shall forward any dissent by certified or registered mail to the
Secretary immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any director who voted in favor of such action.
Section 3.4 Vacancies.
Except as otherwise provided by law and the Articles of Incorporation, in
the case of any increase in the authorized number of directors or of any vacancy
in the Board of Directors, however created, the additional director or directors
may be elected, or, as the case may be, the vacancy or vacancies shall be filled
by majority vote of the directors remaining on the whole Board of Directors
although less than a quorum, or by a sole remaining director. In the event one
or more directors shall resign, effective at a future date, such vacancy or
vacancies shall be filled by a majority of the directors who will remain on the
whole Board of Directors, although less than a quorum, or by a sole remaining
director. Any director elected or chosen as provided herein shall serve until
the sooner of
8
<PAGE>
(i) the unexpired term of the directorship to which he is appointed; or (ii)
until his successor is elected and qualified; or (iii) until his earlier
resignation or removal. If, as a result of a disaster or emergency (as
determined in good faith by the then remaining Directors), it becomes impossible
to ascertain whether or not vacancies exist on the Board of Directors and a
person is or persons are elected by the Directors, who in good faith believe
themselves to be a majority of the remaining Directors, to fill a vacancy or
vacancies that such remaining Directors in good faith believe exists, then the
acts of such person or persons who are so elected as Directors shall be valid
and binding upon the Corporation and the Shareholders, although it may
subsequently develop that at the time of the election (i) there was in fact no
vacancy or vacancies existing on the Board of Directors or (ii) the directors
who so elected such person or persons did not in fact constitute a majority of
the remaining Directors.
Section 3.5 Resignations.
A director may resign at any time upon written notice of resignation to the
Corporation, delivered to the Secretary. Any resignation shall be effective
immediately unless a certain effective date is specified therein, in which event
it will be effective upon such date and acceptance of any resignation shall not
be necessary to make it effective.
Section 3.6 Removals.
Any director or the entire Board of Directors may be removed before the
expiration of such Director's term of office only for cause, and another person
or persons may be elected to serve for the remainder of his or their term, and
only upon the affirmative vote of the holders of a majority of the shares of the
Corporation entitled to vote in the election of directors. Shareholders may not
remove any director without cause. In case any vacancy so created shall not be
filled by the Shareholders at such meeting, such vacancy may be filled by the
directors as provided in Section 3.4.
Section 3.7 Annual Meetings.
The annual meeting of the Board of Directors shall be held, if a quorum be
present, immediately following each annual meeting of the Shareholders at the
place such meeting of Shareholders took place, for the purpose of organization
and transaction of any other business that might be transacted at a regular
meeting thereof, and no notice of such meeting shall be necessary. If a quorum
is not present, such annual meeting may be held at any other time or place that
may be specified in a notice given in the manner provided in Section 3.9 for
special meetings of the Board of Directors or in a waiver of notice thereof.
Section 3.8 Regular Meetings.
Regular meetings of the Board of Directors may be held without notice at
such places and times as shall be determined from time to time by resolution of
the Board of Directors. Except as
9
<PAGE>
otherwise provided by law, any business may be transacted at any regular meeting
of the Board of Directors.
Section 3.9 Special Meetings.
Special meetings of the Board of Directors may be called by the Chief
Executive Officer or by the Secretary on the written request of one-third of the
members of the whole Board of Directors stating the purpose or purposes of such
meeting. Notices of special meetings, if mailed, shall be mailed to each
director not later than two days before the day the meeting is to be held or if
otherwise given in the manner permitted by these Bylaws, not later than the day
before such meeting. Neither the business to be transacted at, nor the purpose
of, any special meeting need be specified in any notice or written waiver of
notice unless so required by the Articles of Incorporation or by the Bylaws.
Unless limited by law, the Articles of Incorporation or by these Bylaws, any and
all business may be transacted at a special meeting.
Section 3.10 Organization of Meetings.
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as such Board of Directors may from time to time
determine, and all matters shall be determined by the vote of a majority of the
directors present at any meeting at which there is a quorum, except as otherwise
provided by these Bylaws or required by law.
Section 3.11 Place of Meetings.
The Board of Directors may hold their meetings and have one or more
offices, and keep the books of the Corporation, inside or outside the State of
Mississippi, at any office or offices of the Corporation, or at any other place
as they may from time to time by resolution determine.
Section 3.12 Compensation of Directors.
The Board of Directors shall have the authority to fix, and from time to
time to change, the compensation of Directors. Directors shall not receive any
stated salary for their services as directors, but by resolution of the Board of
Directors a fixed honorarium or fees and expenses, if any, of attendance may be
paid by the Corporation for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
such committee meetings.
Section 3.13 Action by Unanimous Written Consent.
Unless otherwise restricted by law, the Articles of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting if all
members of the Board of Directors or of such
10
<PAGE>
committee, as the case may be, consent thereto in writing and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
the committee.
Section 3.14 Participation in Meetings by Telephone.
Unless otherwise restricted by the Articles of Incorporation or these
Bylaws, members of the Board of Directors or of any committee thereof may
participate in a meeting of such Board of Directors or committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other. Participation in a
meeting pursuant to this Section 3.14 shall constitute presence in person at
such meeting, except where a person participates in the meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
Section 3.15 Election of Directors by Class Vote of Holders of Preferred
Stock.
Notwithstanding the foregoing provisions of this Article III, if the
resolutions of the Board of Directors creating any class or series of preferred
stock of the Corporation entitle the holders of such preferred stock, voting
separately by class or series, to elect additional Directors under specified
circumstances, then all provisions of such resolutions relating to the
nomination, election, term of office, removal, filling of vacancies and other
features of such directorships shall, as to such directorships, govern and
control over any conflicting provisions of this Article III, and such Directors
so elected need not be divided into classes pursuant to this Article III unless
expressly provided by the provisions of such resolutions.
ARTICLE IV
Committees of the Board
Section 4.1 Membership and Authorities.
The Board of Directors may, by resolution or resolutions passed by a
majority of the whole Board of Directors, designate one or more Directors to
constitute an Executive Committee and such other committees as the Board of
Directors may determine, each of which committees to the extent provided in said
resolution or resolutions or in these Bylaws, shall have and may exercise all
the powers of the Board of Directors in the management of the business and
affairs of the Corporation, except in those cases where the authority of the
Board of Directors is specifically denied to the Executive Committee or such
other committee or committees by law, the Articles of Incorporation or these
Bylaws, and may authorize the seal of the Corporation to be affixed to all
papers that may require it. The designation of an Executive Committee or other
committee and the delegation thereto of authority shall not operate to relieve
the Board of Directors, or any member thereof, of any responsibility imposed
upon it or him by law. Each member of a committee of the Board of
11
<PAGE>
Directors shall serve as such until the earliest of (i) his death, (ii) the
expiration of his term as a Director, (iii) his resignation as a member of such
committee or as a Director and (iv) his removal as a member of such committee or
as a Director.
Section 4.2 Minutes.
Each committee designated by the Board of Directors shall keep regular
minutes of its proceedings and shall provide a report of its proceedings to the
Board of Directors when required or requested by the Board of Directors.
Section 4.3 Vacancies.
The Board of Directors may designate one or more of its members as
alternate members of any committee who may replace any absent or disqualified
member at any meeting of such committee. If no alternate members have been
appointed, the committee member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any absent or disqualified member. The Board of
Directors shall have the power at any time to fill vacancies in, to change the
membership of, and to dissolve, any committee.
Section 4.4 Telephone Meetings.
Members of any committee designated by the Board of Directors may
participate in or hold a meeting by use of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in a meeting pursuant to this
Section 4.4 shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground that
the meeting is not lawfully called or convened.
Section 4.5 Action Without Meeting.
Any action required or permitted to be taken at a meeting of any committee
designated by the Board of Directors may be taken without a meeting if a consent
in writing, setting forth the action so taken, is signed by all the members of
the committee and filed with the minutes of the committee proceedings. Such
consent shall have the same force and effect as a unanimous vote at a meeting.
12
<PAGE>
ARTICLE V
Officers
Section 5.1 Number and Title.
The elected officers of the Corporation shall be chosen by the Board of
Directors and shall be a Chief Executive Officer, the President, a Vice
President, a Secretary and a Treasurer. The Board of Directors may also choose
a Chairman of the Board, who must be a member of the Board of Directors, and
additional Vice Presidents (including one or more Executive Vice Presidents and
one or more Senior Vice Presidents), a Chief Financial Officer, a General
Counsel, one or more Assistant Secretaries and/or one or more Assistant
Treasurers. One person may hold any two or more of these offices.
Section 5.2 Term of Office; Vacancies.
So far as is practicable, all elected officers shall be elected by the
Board of Directors at the annual meeting of the Board of Directors in each year,
and except as otherwise provided in this Article V, shall hold office until the
next such meeting of the Board of Directors in the subsequent year and until
their respective successors are elected and qualified or until their earlier
resignation or removal. All appointed officers shall hold office at the
pleasure of the Board of Directors. If any vacancy shall occur in any office,
the Board of Directors may elect or appoint a successor to fill such vacancy for
the remainder of the term.
Section 5.3 Removal of Elected Officers.
Any elected officer may be removed at any time, with or without cause, by
affirmative vote of a majority of the whole Board of Directors, at any regular
meeting or at any special meeting called for such purpose.
Section 5.4 Resignations.
Any officer may resign at any time upon written notice of resignation to
the Chief Executive Officer, Secretary or Board of Directors of the Corporation.
Any resignation shall be effective immediately unless a date certain is
specified for it to take effect, in which event it shall be effective upon such
date, and acceptance of any resignation shall not be necessary to make it
effective, irrespective of whether the resignation is tendered subject to such
acceptance. Any such resignation is without prejudice to the rights, if any, of
the Corporation under any contract to which the officer is a party.
13
<PAGE>
Section 5.5 The Chairman of the Board.
The Chairman of the Board, if one shall be elected, shall preside at all
meetings of the Shareholders and Board of Directors. In addition, the Chairman
of the Board shall perform whatever duties and shall exercise all powers that
are given to him by the Board of Directors.
Section 5.6 Chief Executive Officer.
(a) The Chief Executive Officer shall be the chief executive officer of
the Corporation and, subject to the supervision, direction and control of the
Board of Directors and the Chairman of the Board (if any), shall have general
supervision, direction and control of the business and officers of the
Corporation with all such powers as may be reasonably incident to such
responsibilities. The Chief Executive Officer shall implement the general
directives, plans and policies formulated by the Board of Directors and shall
further have such duties, responsibilities and authorities as may be assigned to
him by the Board of Directors. The Chief Executive Officer shall have the
general powers and duties of management usually vested in the chief executive
officer of a corporation. The Chief Executive Officer may sign, with any other
proper officer, certificates for shares of the Corporation and any deeds, bonds,
mortgages, contracts and other documents which the Board of Directors has
authorized to be executed, except where required by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board or Directors or these Bylaws to some other
officer or agent of the Corporation.
(b) During the time of any vacancy in the office of Chairman of the
Board or in the event of the absence or disability of the Chairman of the Board,
the Chief Executive Officer shall have the duties and powers of the Chairman of
the Board unless otherwise determined by the Board of Directors. In the absence
of the Chairman of the Board, if one be elected, the Chief Executive Officer
shall preside at meetings of the Shareholders and Board of Directors and shall
be ex officio a member of all standing committees. During the time of any
vacancy in the office of President or in the event of the absence or disability
of the President, the Chief Executive Officer shall have the duties and powers
of the President unless otherwise determined by the Board of Directors. In no
event shall any third party having any dealings with the Corporation be bound to
inquire as to any facts required by the terms of this Section 5.6 for the
exercise by the Chief Executive Officer of the powers of the Chairman of the
Board or the President.
Section 5.7 President.
(a) The President shall be the chief operating officer of the Corporation
and, subject to the supervision, direction and control of the Chief Executive
Officer and the Board of Directors, shall manage the day-to-day operations of
the Corporation. He shall have the general powers and duties of management
usually vested in the chief operating officer of a corporation and such other
powers and duties as may be assigned to him by the Board of Directors, the Chief
Executive Officer or these Bylaws. The President may sign, with any other proper
officer, certificates for shares of the Corporation and any deeds, bonds,
mortgages, contracts and other
14
<PAGE>
documents which the Board of Directors has authorized to be executed, except
where required by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board or
Directors or these Bylaws to some other officer or agent of the Corporation. In
the absence of the President, his duties shall be performed and his authority
may be exercised by the Chief Executive Officer or a Vice President of the
Corporation as may have been designated by the President with the right reserved
to the Board of Directors to designate or supersede any designation so made.
(b) During the time of any vacancy in the offices of the Chairman of the
Board and Chief Executive Officer or in the event of the absence or disability
of the Chairman of the Board and the Chief Executive Officer, the President
shall have the duties and powers of the Chief Executive Officer unless otherwise
determined by the Board of Directors. In no event shall any third party having
any dealings with the Corporation be bound to inquire as to any facts required
by the terms of this Section 5.7 for the exercise by the President of the powers
of the Chief Executive Officer.
Section 5.8 Vice Presidents.
In the absence or disability of the President, the Vice Presidents, if any,
in order of their rank as fixed by the Board of Directors, or if not ranked, the
Vice President designated by the President, shall perform all the duties of the
President as chief operating officer of the Corporation, and when so acting
shall have all the powers of, and be subject to all the restrictions upon, the
President as chief operating officer of the Corporation. In no event shall any
third party having dealings with the Corporation be bound to inquire as to any
facts required by the terms of this Section 5.8 for the exercise by any Vice
President of the powers of the President as chief operating officer of the
Corporation. The Vice Presidents shall have such other powers and perform such
other duties as from time to time may be assigned to them by these Bylaws and as
may from time to time be assigned to them by the Board of Directors, the Chief
Executive Officer or the President, and may sign, with any other proper officer,
certificates for shares of the Corporation.
Section 5.9 Secretary.
The Secretary shall keep or cause to be kept, at the principal office of
the Corporation or such other place as the Board of Directors may order, a book
of minutes of all meetings and actions of the Board of Directors, committees of
the Board of Directors and Shareholders, with the time and place of holding,
whether regular or special, and, if special, how authorized, the notice thereof
given, the names of those present at meetings of the Board of Directors and
committees thereof, the number of shares present or represented at Shareholders'
meetings and the proceedings thereof. The Secretary, if available, shall attend
all meetings of the Board of Directors and all meetings of the Shareholders and
record the proceedings of the meetings in a book to be kept for that purpose and
shall perform like duties for any committee of the Board of Directors as the
Board of Directors or such committee shall designate him to serve. The
Secretary shall give, or cause to be given, notice of all meetings of the
Shareholders and meetings of the Board of Directors and committees thereof
15
<PAGE>
and shall perform such other duties incident to the office of secretary or as
may be prescribed by the Board of Directors or the President, under whose
supervision he shall be. The Secretary shall have custody of the corporate seal
of the Corporation, if one be adopted pursuant to Section 8.1, and he, or any
Assistant Secretary, or any other person whom the Board of Directors may
designate, shall have authority to affix the same to any instrument requiring
it, and when so affixed it may be attested by his signature or by the signature
of any Assistant Secretary or by the signature of such other person so affixing
such seal.
Section 5.10 Assistant Secretaries.
Each Assistant Secretary shall have the usual powers and duties pertaining
to his office, together with such other powers and duties as may be assigned to
him by the Board of Directors, the Chief Executive Officer, the President or the
Secretary. The Assistant Secretary or such other person as may be designated by
the Chief Executive Officer shall exercise the powers of the Secretary during
that officer s absence or inability to act.
Section 5.11 Chief Financial Officer.
The Chief Financial Officer shall be the chief financial officer of the
Corporation and, subject to the supervision, direction and control of the Chief
Executive Officer and the Board of Directors, shall manage the day-to-day
financial operations of the Corporation. He shall have the general powers and
duties of management usually vested in the chief financial officer of a
corporation and such other powers and duties as may be assigned to him by the
Board of Directors, the Chief Executive Officer or these Bylaws. The Chief
Financial Officer may sign, with any other proper officer, certificates for
shares of the Corporation and any deeds, bonds, mortgages, contracts and other
documents which the Board of Directors has authorized to be executed, except
where required by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the Board or
Directors or these Bylaws to some other officer or agent of the Corporation. In
the absence of the Chief Financial Officer, his duties shall be performed and
his authority may be exercised by the Treasurer or a Vice President of the
Corporation as may have been designated by the President with the right reserved
to the Board of Directors to designate or supersede any designation so made.
Section 5.12 Treasurer.
The Treasurer shall have the custody of and be responsible for the
corporate funds and securities, shall keep full and accurate accounts of
receipts and disbursements in the books belonging to the Corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the Corporation in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the Corporation as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and shall
render to the President and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires, an account of all his transactions as
Treasurer and of the financial condition of the Corporation and he shall perform
all other duties
16
<PAGE>
incident to the position of Treasurer, or as may be prescribed by the Board of
Directors or the Chief Executive Officer. If required by the Board of Directors,
he shall give the Corporation a bond in such sum and with such surety or
sureties as shall be satisfactory to the Board of Directors for the faithful
performance of the duties of his office and for the restoration to the
Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 5.13 Assistant Treasurers.
Each Assistant Treasurer shall have the usual powers and duties pertaining
to his office, together with such other powers and duties as may be assigned to
him by the Board of Directors, the President or the Treasurer. The Assistant
Treasurer or such other person designated by the Chief Executive Officer shall
exercise the power of the Treasurer during that officer s absence or inability
to act.
Section 5.14 Subordinate Officers; Agents.
The Board of Directors may (a) appoint such other officers subordinate to
the Chief Executive Officer and President (including a Chief Financial Officer
and/or a General Counsel) as it shall deem necessary or desirable who shall hold
their offices for such terms, have such authority and perform such duties as the
Board of Directors may from time to time determine, or (b) delegate to any
committee or officer the power to appoint any such subordinate officers. The
Board of Directors may also appoint one or more agents as it shall deem
necessary or desirable who shall have such authority and perform such duties as
the Board of Directors may from time to time determine. Any agent may be removed
at any time, with or without cause, by affirmative vote of a majority of the
whole Board of Directors, at any regular meeting or at any special meeting
called for such purpose.
Section 5.15 Salaries and Compensation.
The salary or other compensation of officers shall be fixed from time to
time by the Board of Directors. The Board of Directors may delegate to any
committee or officer the power to fix from time to time the salary or other
compensation of officers and agents.
ARTICLE VI
Indemnification
Section 6.1 Right to Indemnification.
Each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that such person, or a person of whom such person is the legal
17
<PAGE>
representative, is or was or has agreed to become a director or officer of the
Corporation or is or was serving or has agreed to serve at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise, including service
with respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving or having agreed to serve as a director,
officer, employee or agent, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Mississippi Business
Corporation Act (the "MBCA"), as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights that said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines,
amounts paid or to be paid in settlement and excise taxes or penalties arising
under the Employee Retirement Income Security Act of 1974, as in effect from
time to time) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
such person's heirs, executors and administrators; provided, however, that,
except as provided in Section 6.2 hereof, the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors. The right to indemnification conferred in
this Section shall be a contract right and shall include the right to have the
Corporation pay, subject to the provisions of Sections 8.51 and 8.53 of MBCA,
the expenses incurred in defending any such proceeding in advance of its final
disposition; any advance payments to be paid by the Corporation within 20
calendar days after the receipt by the Corporation of a statement or statements
from the claimant requesting such advance or advances from time to time;
provided, however, that, if and to the extent the MBCA requires, the payment of
such expenses incurred by a director or officer in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Section 6.1 or otherwise.
The Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and rights to have the Corporation
pay the expenses incurred in defending any proceeding in advance of its final
disposition, to any employee or agent of the Corporation to the fullest extent
of the provisions of this Article VI with respect to the indemnification and
advancement of expenses of directors and officers of the Corporation.
Section 6.2 Right of Claimant to Bring Suit.
If a claim under Section 6.1 is not paid in full by the Corporation within
30 calendar days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met
18
<PAGE>
the standard of conduct which make it permissible under the MBCA for the
Corporation to indemnify the claimant for the amount claimed, but the burden of
proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth in the
MBCA, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
Section 6.3 Non-Exclusivity of Rights.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Article VI shall not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the Articles of
Incorporation, Bylaws, agreement, vote of shareholders or disinterested
directors or otherwise. No repeal or modification of this Article VI shall in
any way diminish or adversely affect the rights of any director, officer,
employee or agent of the Corporation hereunder in respect of any occurrence or
matter arising prior to any such repeal or modification.
Section 6.4 Insurance.
The Corporation may maintain insurance, at its expense, to protect itself
and any director, officer, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
such expense, liability or loss, whether or not the Corporation would have the
power to indemnify such person against such expense, liability or loss under the
MBCA.
Section 6.5 Severability.
If any provision or provisions of this Article VI shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (1) the validity,
legality and enforceability of the remaining provisions of this Article VI
(including, without limitation, each portion of any Section of this Article VI
containing any such provision held to be invalid, illegal or unenforceable, that
is not itself held to be invalid, illegal or unenforceable) shall not in any way
be affected or impaired thereby; and (2) to the fullest extent possible, the
provisions of this Article VI (including, without limitation, each such portion
of any Section of this Article VI containing any such provision held to be
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested by the provision held invalid, illegal or unenforceable.
19
<PAGE>
ARTICLE VII
Capital Stock
Section 7.1 Certificates of Stock.
Certificates of stock shall be issued to each Shareholder certifying the
number of shares owned by him in the Corporation and shall be in a form not
inconsistent with the Articles of Incorporation and as approved by the Board of
Directors. The certificates shall be signed by the Chairman of the Board, the
Chief Executive Officer, the President or a Vice President and by the Secretary
or an Assistant Secretary, or the Treasurer or an Assistant Treasurer and may be
sealed with the seal of the Corporation or a facsimile thereof. Any or all of
the signatures on the certificate may be a facsimile. In case any officer,
transfer agent or registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer, transfer agent
or registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer agent or
registrar at the date of issue.
If the Corporation shall be authorized to issue more than one (1) class of
stock or more than one (1) series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided by statute, in lieu of the foregoing requirements, there may
be set forth on the face or back of the certificate which the Corporation shall
issue to represent such class or series of stock, a statement that the
Corporation will furnish without charge to each Shareholder who so requests the
powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. The Board of
Directors shall have the power and authority to provide that certificates
representing shares of stock of the Corporation bear such legends and statements
as the Board of Directors deems appropriate in connection with the requirements
of federal or state securities laws or other applicable laws.
Section 7.2 Lost Certificates.
The Board of Directors may direct a new certificate to be issued in place
of any certificate theretofore issued by the Corporation alleged to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
owner of such certificate, or his legal representative. When authorizing the
issuance of a new certificate, the Board of Directors may in its discretion, as
a condition precedent to the issuance thereof, require the owner, or his legal
representative, to give a bond in such form and substance with such surety as it
may direct, to indemnify the Corporation against any claim that may be made on
account of the alleged loss, theft or destruction of such certificate or the
issuance of such new certificate.
20
<PAGE>
Section 7.3 Fixing Date for Determination of Shareholders of Record for
Certain Purposes.
(a) In order that the Corporation may determine the Shareholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of capital stock or for the purpose of any other lawful action, the
Board of Directors may fix, in advance, a record date, which shall not be more
than 60 days prior to the date of payment of such dividend or other distribution
or allotment of such rights or the date when any such rights in respect of any
change, conversion or exchange of stock may be exercised or the date of such
other action. In such a case, only Shareholders of record on the date so fixed
shall be entitled to receive any such dividend or other distribution or
allotment of rights or to exercise such rights or for any other purpose, as the
case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
(b) If no record date is fixed, the record date for determining
Shareholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 7.4 Dividends.
Subject to the provisions of the Articles of Incorporation, if any, and
except as otherwise provided by law, the directors may declare dividends upon
the capital stock of the Corporation as and when they deem it to be expedient.
Such dividends may be paid in cash, in property or in shares of the Corporation
s capital stock. Before declaring any dividend the Directors may set apart out
of the funds of the Corporation available for dividend such sum or sums as the
directors from time to time in their discretion think proper for working capital
or as a reserve fund to meet contingencies or for equalizing dividends, or for
such other purposes as the directors shall determine to be conducive to the
interests of the Corporation and the directors may modify or abolish any such
reserve in the manner in which it was created.
Section 7.5 Registered Shareholders.
Except as expressly provided by law, the Articles of Incorporation and
these Bylaws, the Corporation shall be entitled to treat registered Shareholders
as the only holders and owners in fact of the shares standing in their
respective names and the Corporation shall not be bound to recognize any
equitable or other claim to or interest in such shares on the part of any other
person, regardless of whether it shall have express or other notice thereof.
Section 7.6 Transfer of Stock.
Transfers of shares of the capital stock of the Corporation shall be made
only on the books of the Corporation by the registered owners thereof, or by
their legal representatives or their duly
21
<PAGE>
authorized attorneys. Upon any such transfers the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person in charge
of the stock transfer books and ledgers, by whom they shall be canceled and new
certificates shall thereupon be issued.
Section 7.7 Stock Options, Warrants, Etc.
Unless otherwise expressly prohibited in the resolutions of the Board of
Directors creating any class or series of preferred stock of the Corporation,
the Board of Directors shall have the power and authority to create and issue
(whether or not in connection with the issue and sale of any stock or other
securities of the Corporation), warrants, rights or options entitling the
holders thereof to purchase from the Corporation any shares of capital stock of
the Corporation of any class or series or any other securities of the
Corporation for such consideration and to such persons, firms or Corporations as
the Board of Directors, in its sole discretion, may determine setting aside from
the authorized but unissued stock of the Corporation the requisite number of
shares for issuance upon the exercise of such warrants, rights or options. Such
warrants, rights and options shall be evidenced by one or more instruments
approved by the Board of Directors. The Board of Directors shall be empowered
to set the exercise price, duration, time for exercise and other terms of such
warrants, rights and operations; provided, however, that the consideration to be
received for any shares of capital stock subject thereto shall not be less than
the par value thereof.
ARTICLE VII
Miscellaneous Provisions
Section 8.1 Corporate Seal.
If one be adopted, the corporate seal shall have inscribed thereon the name
of the Corporation and shall be in such form as may be approved by the Board of
Directors. Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
Section 8.2 Fiscal Year.
The fiscal year of the Corporation shall be the calendar year unless
changed by resolution of the Board of Directors.
Section 8.3 Checks, Drafts, Notes.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the Corporation shall be signed
by such officer or officers, agent or agents of the Corporation, and in such
manner as shall from time to time be determined by resolution (whether general
or special) of the Board of Directors or may be prescribed by any officer or
officers, or any officer and agent jointly, thereunto duly authorized by the
Board of Directors.
22
<PAGE>
Section 8.4 Corporate Contracts and Instruments.
Subject always to the specific directions of the Board of Directors, the
Chairman of the Board (if any), the Chief Executive Officer, the President, any
Vice President, the Secretary or the Treasurer may enter into contracts and
execute instruments in the name and on behalf of the Corporation. The Board of
Directors and, subject to the specific directions of the Board of Directors, the
Chairman of the Board (if any), the Chief Executive Officer or the President may
authorize one or more officers, employees or agents of the Corporation to enter
into any contact or execute any instrument in the name of and on behalf of the
Corporation, and such authority may be general or confined to specific
instances.
Section 8.5 Notice and Waiver of Notice.
Whenever notice is required to be given to any director or Shareholder
under the provisions of applicable law, the Articles of Incorporation or of
these Bylaws it shall not be construed to only mean personal notice, rather,
such notice may also be given in writing, by mail, addressed to such director or
Shareholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid (unless prior to the mailing of such notice he shall
have filed with the Secretary of the Corporation a written request that notices
intended for him be mailed to some other address in which case, such notice
shall be mailed to the address designated in the request), and such notice shall
be deemed to be given at the time when the same shall be deposited in the United
States mail. Notice to directors may also be given by telegram, cable or other
form of recorded communication, by personal delivery or by telephone. Whenever
notice is required to be given under any provision of law, the Articles of
Incorporation or these Bylaws, a waiver thereof in writing, by telegraph, cable
or other form of recorded communication, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent to notice. Attendance of a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting at the beginning of the meeting, to
the transaction of any business on the ground that the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose
of, any regular or special meeting of the Shareholders, directors, or members of
a committee of directors need be specified in any written waiver of notice
unless so required by the Articles of Incorporation or these Bylaws.
Section 8.6 Examination of Books and Records.
The Board of Directors shall determine from time to time whether, and if
allowed, when and under what conditions and regulations the accounts and books
of the Corporation (except such as may by statute be specifically opened to
inspection) or any of them shall be open to inspection by the Shareholders, and
the Shareholders' rights in this respect are and shall be restricted and limited
accordingly.
23
<PAGE>
Section 8.7 Voting Upon Shares Held by the Corporation.
Unless otherwise provided by law or by the Board of Directors, the Chairman
of the Board of Directors, if one shall be elected, or the Chief Executive
Officer, if a Chairman of the Board of Directors shall not be elected, acting on
behalf of the Corporation, shall have full power and authority to attend and to
act and to vote at any meeting of Shareholders of any corporation in which the
Corporation may hold stock and, at any such meeting, shall possess and may
exercise any and all of the rights and powers incident to the ownership of such
stock which, as the owner thereof, the Corporation might have possessed and
exercised, if present. The Board of Directors by resolution from time to time
may confer like powers upon any person or persons.
ARTICLE IX
Amendments
Section 9.1 Amendment.
Except as otherwise expressly provided in the Articles of Incorporation,
the directors, by the affirmative vote of a majority of the entire Board of
Directors and without the assent or vote of the Shareholders, may at any
meeting, provided the substance of the proposed amendment shall have been stated
in the notice of the meeting, make, repeal, alter, amend or rescind any of these
Bylaws. The Shareholders shall not make, repeal, alter, amend or rescind any of
the provisions of these Bylaws except by the holders of not less than 80% of the
total voting power of all shares of stock of the Corporation entitled to vote in
the election of directors, considered for purposes of this Article IX as one
class.
[End]
24
<PAGE>
EXHIBIT 4.1
================================================================================
HALTER MARINE GROUP, INC.
AND
FRIEDE GOLDMAN INTERNATIONAL INC.
TO
U.S. TRUST COMPANY OF TEXAS, N.A.
AS TRUSTEE
---------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of November 2, 1999
---------------
Supplementing and Amending Indenture dated as of September 15, 1997
between Halter Marine Group, Inc. and U.S. Trust Company of Texas, N.A.,
relating to 4 1/2% Convertible Subordinated Notes due 2004
================================================================================
<PAGE>
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of November 2, 1999 and
effective and conditioned upon the consummation of the Merger (as defined below)
(this "Supplemental Indenture"), is by and among Halter Marine Group, Inc., a
corporation duly organized and existing under the laws of the State of Delaware
("Halter Marine"), having its principal executive office at 13085 Industrial
Seaway Road, Gulfport, Mississippi 39503; Friede Goldman International Inc., a
corporation duly organized and existing under the laws of the State of
Mississippi and the surviving corporation of the Merger (as defined below)
("Friede Goldman"), having its principal executive office at 525 East Capitol
Street, 7th Floor, Jackson, Mississippi 39201; and U.S. Trust Company of Texas,
N.A., a national banking association duly organized and existing under the laws
of the United States of America, as trustee (the "Trustee").
RECITALS
1. Halter Marine has executed and delivered to the Trustee an Indenture,
dated as of September 15, 1997 (the "Indenture"), providing for the issuance of
4 1/2% Convertible Subordinated Notes due 2004 in an original principal amount
of $185,000,000 (the "Securities").
2. Halter Marine will be merged with and into Friede Goldman in
accordance with the provisions of the Agreement and Plan of Merger dated as of
June 1, 1999, as amended by Amendment No. 1 to Agreement and Plan of Merger
dated as of September 14, 1999, between Friede Goldman and Halter Marine (the
"Merger Agreement"), with Friede Goldman surviving the merger (the "Merger").
3. At the Effective Time (as defined herein in Section 5.2), each share
of common stock of Halter Marine issued and outstanding immediately prior to the
Merger will be converted into the right to receive the number of shares of the
common stock, par value $0.01 per share, of Friede Goldman (the "Friede Goldman
Shares") as determined by the Merger Agreement.
4. The Merger is permitted pursuant to Section 5.1 and Section 13.6 of
the Indenture.
5. In connection with the Merger, Friede Goldman and Halter Marine have
duly determined to make, execute and deliver to the Trustee this Supplemental
Indenture in order to reflect the consummation of the Merger as required by
Section 5.1 and Section 13.6 of the Indenture and to provide for Friede Goldman,
as successor to Halter Marine, to assume all of the obligations of Halter Marine
arising under the Indenture and the Securities.
6. In accordance with Section 9.1 of the Indenture, without the consent
of any Holder, Halter Marine and the Trustee may enter into a supplemental
indenture to evidence the succession of another corporation to Halter Marine and
the assumption by any such successor of the obligations of Halter Marine in the
Indenture and the Securities.
2
<PAGE>
7. Halter Marine and Friede Goldman have duly authorized the execution
and delivery of this Supplemental Indenture and all things necessary have been
done to make this Supplemental Indenture a valid agreement of Halter Marine and
Friede Goldman, in accordance with its terms.
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises, it is mutually agreed, for the
equal and proportionate benefit of the respective Holders from time to time of
the Securities, as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1 INDENTURE TERMS.
Capitalized terms used but not defined in this Supplemental Indenture have
the respective meanings assigned to them in the Indenture.
ARTICLE TWO
SUCCESSOR CORPORATION
SECTION 2.1 FRIEDE GOLDMAN AS A SUCCESSOR.
As of the Effective Time, Friede Goldman shall become a successor to and
shall be substituted for Halter Marine under the Indenture, as modified by this
Supplemental Indenture, and shall assume by this Supplemental Indenture all of
the obligations of Halter Marine in connection with the Securities and the
Indenture. As of the Effective Time, Friede Goldman may exercise every right
and power of Halter Marine under the Indenture with the same effect as if Friede
Goldman had been named in the Indenture as Halter Marine.
ARTICLE THREE
CONCERNING THE SECURITIES
SECTION 3.1 CONVERSION PRIVILEGE.
The Holder of each Security outstanding on the Effective Time shall have
the right from and after the Effective Time, during the period such Security
shall be convertible as specified in Article 13 of the Indenture, to convert
such Security only into the number of Friede Goldman Shares, and cash in lieu of
fractional Friede Goldman Shares, receivable upon the effectiveness of the
Merger by a holder of the number of shares of Common Stock of Halter Marine
issuable upon conversion
3
<PAGE>
of such Security immediately prior to the Merger, at the Conversion Price and
subject to adjustment as provided in Section 3.2 herein.
SECTION 3.2 CONVERSION PRICE.
The Conversion Price shall be as specified in Section 13.4 of the
Indenture, as adjusted in accordance with the provisions of Section 13.5 of the
Indenture prior to the Merger. For events occurring from and after the
Effective Time, the Conversion Price shall be adjusted in a manner as nearly
equivalent as may be practicable to the adjustments provided for in Article XIII
of the Indenture.
ARTICLE FOUR
CONCERNING THE TRUSTEE
SECTION 4.1 TERMS AND CONDITIONS.
The Trustee accepts this Supplemental Indenture and agrees to perform the
duties of the Trustee upon the terms and conditions set forth herein and in the
Indenture.
SECTION 4.2 NO RESPONSIBILITY.
The Trustee shall not be responsible for or in respect of the validity or
sufficiency of any provision of this Supplemental Indenture relating either to
the kind or amount of stock or securities or property (including cash)
receivable by Holders of Securities upon the conversion of their Securities
after the Merger or to any adjustment to be made with respect thereto.
ARTICLE FIVE
EFFECT OF EXECUTION AND DELIVERY HEREOF
SECTION 5.1 EFFECT OF EXECUTION AND DELIVERY.
As of the Effective Time and from and after the execution and delivery of
this Supplemental Indenture, (i) the Indenture shall be deemed to be amended and
modified as provided herein, (ii) this Supplemental Indenture shall form a part
of the Indenture, (iii) except as modified and amended by this Supplemental
Indenture, the Indenture shall continue in full force and effect, (iv) the
Securities shall continue to be governed by the Indenture, as modified and
amended by this Supplemental Indenture, and (v) every Holder of Securities
heretofore and hereafter authenticated and delivered under the Indenture shall
be bound by this Supplemental Indenture.
4
<PAGE>
SECTION 5.2 EFFECTIVE TIME.
This Supplemental Indenture shall become effective upon the Effective Time
as defined in the Merger Agreement. The Effective Time is defined in the Merger
Agreement as the date and time of the filing of (i) a certificate of merger with
the Secretary of State of the State of Delaware, in such form as required by,
and executed in accordance with the relevant provisions of the General
Corporation Law of the State of Delaware and (ii) the articles of merger with
the Secretary of State of the State of Mississippi, in such form as required by,
and executed in accordance with the relevant provisions of, the Mississippi
Business Corporation Act, or if another date and time is specified in such
filings, such specified date and time.
SECTION 5.3 THE COMPANY.
Pursuant to the Merger Agreement, as of the Effective Time, Friede Goldman
International Inc. will be renamed "Friede Goldman Halter, Inc." As of the
Effective Time, all references to the "Company," as defined in the Indenture,
shall be deemed to refer to Friede Goldman Halter, Inc., until a successor
replaces Friede Goldman Halter, Inc. pursuant to the Indenture, and shall
thereafter mean such successor.
ARTICLE SIX
MISCELLANEOUS PROVISIONS
SECTION 6.1 HEADINGS DESCRIPTIVE.
The headings of the several Articles and Sections of this Supplemental
Indenture are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Supplemental Indenture.
SECTION 6.2 RIGHTS AND OBLIGATIONS OF THE TRUSTEE.
All of the provisions of the Indenture, including but not limited to the
compensation and indemnity obligations pursuant to Section 7.7 of the Indenture,
with respect to the rights, privileges, immunities, powers and duties of the
Trustee shall be applicable in respect of this Supplemental Indenture as fully
and with the same effect as if set forth herein in full.
SECTION 6.3 SUCCESSORS AND ASSIGNS.
This Supplemental Indenture shall be binding upon and inure to the benefit
of and be enforceable by the respective successors and assigns of the parties
hereto.
5
<PAGE>
SECTION 6.4 COUNTERPARTS.
This Supplemental Indenture may be executed in several counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
SECTION 6.5 SEPARABILITY.
In case any provision in this Supplemental Indenture shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 6.6 GOVERNING LAW.
THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
[Signatures on following page]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
FRIEDE GOLDMAN INTERNATIONAL INC.
By: /s/ James A. Lowe, III
------------------------------------
James A. Lowe, III
Secretary and General Counsel
HALTER MARINE GROUP, INC.
By: /s/ Rick S. Rees
------------------------------------
Rick S. Rees
Vice President and Chief Financial Officer
U.S. TRUST COMPANY OF TEXAS, N.A.,
as Trustee
By: /s/ Bill Barber
------------------------------------
Bill Barber
Vice President
7
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
Among
THE LENDERS,
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION,
as Administrative Agent and Co-Arranger,
BANC ONE CAPITAL MARKETS, INC.,
as Co-Arranger and Syndication Agent,
and
FRIEDE GOLDMAN HALTER, INC.,
as Borrower
Dated as of November 3, 1999
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Section 1. Definitions.............................................. 1
1.1 Certain Definitions...................................... 1
1.2 Accounting Terms......................................... 13
Section 2.............................................................. 13
2.1 Revolving Credit Facility................................ 13
2.2 Borrowing Base........................................... 14
2.3 LC Facility.............................................. 15
2.4 Counter Indemnity........................................ 15
2.5 Drawings Under Letters of Credit......................... 15
2.6 Variations............................................... 15
2.7 Security................................................. 16
2.8 Certificates............................................. 16
Section 3. The Notes................................................ 16
Section 4. Manner of Drawdown and Issuance of Letters of Credit..... 16
4.1 Manner of Drawdown or Issuance........................... 16
4.2 Disbursement of Funds.................................... 17
4.3 Failure to Borrow; Delay................................. 17
Section 5. Interest................................................. 17
5.1 Rate of Interest......................................... 17
5.2 Payment of Interest...................................... 18
5.3 Conversion of LIBOR Advance to Base Rate Advance......... 18
5.4 Overdue Payment of Principal and Interest................ 18
5.5 Compliance with Law...................................... 18
Section 6. Loan Payments............................................ 19
6.1 Payments on Non-Business Days............................ 19
6.2 Repayment of Revolving Credit Facility................... 19
6.3 Payment Procedure........................................ 20
6.4 Net Payments............................................. 20
6.5 Rights of Set-off........................................ 20
6.6 Changes in Circumstances................................. 21
6.7 Unavailability of Dollars................................ 22
6.8 Lockbox.................................................. 23
6.9 Tax Treaty............................................... 23
i
<PAGE>
Section 7. Security................................................. 24
7.1 Security Agreement, Mortgage and Pledge................. 24
7.2 Guaranty................................................. 24
7.3 Lockbox Agreement........................................ 24
7.4 Further Assurances....................................... 24
Section 8. Conditions Precedent..................................... 24
8.1 Documents Required as Conditions Precedent to the
Drawdown of the First Advance........................... 24
8.2 Additional Conditions Precedent to All Advances and
Letters of Credit....................................... 27
8.3 Waiver of Conditions Precedent........................... 28
Section 9. Fees and Expenses........................................ 28
9.1 Fees..................................................... 28
9.2 Expenses................................................. 28
9.3 General Indemnity........................................ 29
9.4 Survival................................................. 30
Section 10. Representations and Warranties of Borrower............... 30
10.1 Due Incorporation, Qualification, Etc.................... 30
10.2 Capacity................................................. 30
10.3 Authority and Enforceability............................. 30
10.4 Governmental Approvals................................... 31
10.5 Compliance with Other Instruments........................ 31
10.6 Financial Statements..................................... 31
10.7 Material Adverse Events.................................. 32
10.8 Litigation, Etc.......................................... 32
10.9 Principal Place of Business.............................. 32
10.10 Patent and Other Rights.................................. 32
10.11 Taxes.................................................... 32
10.12 Employee Retirement Income Security Act of 1974.......... 33
10.13 Investment Company Act of 1940........................... 33
10.14 Environmental Compliance................................. 33
10.15 Indebtedness............................................. 34
Section 11. Affirmative Covenants of the Borrower.................... 34
11.1 Financial Statements, Reports and Inspection............. 34
11.2 Insurance................................................ 36
11.3 Other Debt............................................... 36
11.4 Maintenance of Existence; Conduct of Business............ 36
ii
<PAGE>
11.5 Financial Records........................................ 36
11.6 Environmental Compliance................................. 37
11.7 Environmental Notifications.............................. 37
11.8 Environmental Indemnification............................ 38
11.9 Year 2000 Compliance..................................... 38
Section 12. Negative Covenants of Borrower........................... 39
12.1 Liens.................................................... 39
12.2 Line of Business......................................... 41
12.3 Consolidation, Merger, Etc............................... 41
12.4 Modification of Agreements............................... 41
12.5 Indebtedness............................................. 41
12.6 Reportable Event......................................... 41
12.7 Change of Legal Structure................................ 41
12.8 Change of Place of Business.............................. 42
12.9 Subsidiaries............................................. 42
12.10 Sale of Fixed Assets or Accounts......................... 42
12.11 Leverage Ratio........................................... 42
12.12 Fixed Charge Coverage Ratio.............................. 42
12.13 Net Worth................................................ 42
12.14 Compliance with Federal Reserve Board Regulations........ 42
12.15 Loans and Investments.................................... 43
12.16 Contracts with Affiliates................................ 43
12.17 Dividends................................................ 44
12.18 Fiscal Years............................................. 44
Section 13. Events of Default........................................ 44
13.1 Events................................................... 44
Section 14. The Agent................................................ 46
14.1 Appointment and Duties of Agent.......................... 46
14.2 Discretion and Liability of Agent........................ 47
14.3 Event of Default......................................... 47
14.4 Consultation............................................. 47
14.5 Communications to and from Agent......................... 48
14.6 Limitations of Agency.................................... 48
14.7 No Representations or Warranty........................... 48
14.8 Lender Credit Decision................................... 48
14.9 Indemnity................................................ 49
14.10 Resignation.............................................. 49
14.11 Distribution............................................. 49
iii
<PAGE>
14.12 Limitation of Suits...................................... 49
14.13 Right of Setoff.......................................... 49
Section 15. Miscellaneous............................................ 50
15.1 Entire Agreement......................................... 50
15.2 No Waiver................................................ 50
15.3 Survival................................................. 50
15.4 Notices.................................................. 50
15.5 Termination.............................................. 51
15.6 Severability of Provisions............................... 51
15.7 Successors and Assigns................................... 51
15.8 Assignment and Participation............................. 51
15.9 Counterparts............................................. 52
15.10 Jurisdiction............................................. 52
15.11 Choice of Law............................................ 53
15.12 Waiver of Jury Trial..................................... 53
15.13 Amendment and Waiver..................................... 53
15.14 No Oral Agreements....................................... 54
15.15 Headings, Etc............................................ 54
15.16 Taxes.................................................... 54
15.17 Controlling Agreement.................................... 54
iv
<PAGE>
Exhibit A-1 - Form of Promissory Note
Exhibit A-2 - Form of Swing Note
Exhibit B - Request for Borrowing
Exhibit C - Request for Letter of Credit
Exhibit D - Borrowing Base Report
Exhibit E - Form of Letter of Credit
Exhibit F - Continuation/Conversion Notice
Exhibit G - Form of Assignment and Acceptance
Schedule 1 - Lenders
Schedule 2 - Vessels
Schedule 3 - Indebtedness Paid at Closing
Schedule 4 - Guarantors
Schedule 5 - Existing Letters of Credit
Schedule 6 - Real Property
Schedule 10.8 - Litigation
Schedule 12.1 - Existing Liens
Schedule 12.5 - Existing Indebtedness
Schedule 12.15 - Investments
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of November 3, 1999 (the "Credit
Agreement"), is among Friede Goldman Halter, Inc., a corporation organized and
existing under the laws of the State of Mississippi (the "Borrower"), the
financial institutions from time to time party hereto (the "Lenders"), Wells
Fargo Bank (Texas), National Association, a national banking association, as
Administrative Agent and Co-Arranger (the "Agent"), and Bank One Capital
Markets, Inc., as Co-Arranger and Syndication Agent.
W I T N E S S E T H:
WHEREAS, the Lenders wish to make available to the Borrower a senior
secured revolving credit facility available to the Borrower in a principal
amount of up to One Hundred Twenty Million United States Dollars (USD
120,000,000) and to make a senior secured letter of credit facility available to
the Borrower in a principal amount of up to Forty-Four Million Two Hundred
Eighteen Thousand Two Hundred Fifty United States Dollars (USD 44,218,250) to
repay existing debt of the Borrower, to replace certain existing letters of
credit, to provide additional letter of credit capacity and to provide working
capital for the Borrower; and
NOW, THEREFORE, in consideration of the above recitals, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
Section 1. Definitions.
1.1 Certain Definitions. As used herein, the following terms shall have
the following respective meanings:
"Acquisition" shall mean any transaction or series of transactions by which
the Borrower or any Guarantor acquires (x) any or all of the stock or other
securities of any class of any Person (other than Cash Equivalents) or (y) a
substantial portion of the assets, or a division or line of business of any
Person.
"Adjusted Commitment" means, as the context may require, either the
Revolving Loan Commitment or the LC Commitment as reduced from time to time in
accordance with Sections 2.1(b), 2.1(d) or 2.3(c), respectively, of this Credit
Agreement.
"Advance" means a Base Rate Advance or a LIBOR Advance (including a Swing
Line Advance).
1
<PAGE>
"Affiliate" of any Person means (i) any Person directly or indirectly
controlled by, controlling or under common control with such first Person and
(ii) any director or officer of such first Person or of any Person referred to
in clause (i) above. For the purposes of this definition "control" of any
Person includes (a) with respect to any corporation or other Person having
voting shares or the equivalent and elected directors, managers, or Persons
performing similar functions, the ownership or power to vote, directly or
indirectly shares or the equivalent representing 50% or more of the power to
vote in the election of directors, managers or Persons performing similar
functions, (b) ownership of 50% or more of the equity or beneficial interest in
any other entity and (c) the ability to direct the business and affairs of any
Person by acting as a general partner, manager or otherwise.
"Applicable Commitment Fee Percentage" shall mean, from the date of the
execution of this Agreement through the Maturity Date, the applicable percentage
per annum set forth below in the column entitled "Commitment Fee" for the
applicable period set forth below on the average daily amount by which the
Commitment exceeds an amount equal to the sum of outstanding Advances and the
face amount (including the Dollar Equivalent of the face amounts of outstanding
Offshore Currency Letters of Credit) of outstanding Tranche A and Tranche B
Letters of Credit.
Period Commitment Fee
-------- --------------
Level I: When the Borrower's Leverage Ratio is less
than 1.5 to 1.0 0.50%
Level II: When the Borrower's Leverage Ratio is
greater than or equal to 1.5 to 1.0 0.75%
Notwithstanding the foregoing table, the initial Applicable Commitment Fee
Percentage shall be 0.75%, from the date hereof until the earlier of (a)
December 31, 2000 and (b) the Voluntary Step Down Date. Any change in the
Applicable Commitment Fee Percentage shall be effective on the date the
applicable certificate described in Section 11.1(c) is due hereunder.
"Applicable Margin Amount" shall mean, at any time with respect to all
Advances, the basis points corresponding to the type of Advance and Borrower's
Leverage Ratio as set forth in the table below.
2
<PAGE>
Applicable Margin
(basis points)
-----------------------
Borrower's LIBOR Base Rate
Leverage Ratio Margin Margin
-------------- ------ ---------
Level I: less than 1.0 137.5 25.0
Level II: 3/1.00 to 1.50 175.0 50.0
Level III: 3/1.50 to 2.00 212.5 75.0
Level IV: 3/2.00 to 2.50 250.0 100.0
Level V: 3/2.50 275.0 125.0
Notwithstanding the foregoing table, the initial Applicable Margin Amount
for LIBOR Advances shall be 275 basis points and for Base Rate Advances shall be
125 basis points, from the date hereof until the earlier of (a) December 31,
2000 and (b) the Voluntary Step Down Date. Any change in the Applicable Margin
shall be effective on the date the applicable certificate described in Section
11.1(c) is due hereunder.
"Asset Sale" means the sale of any fixed assets, excluding sales in the
ordinary course of business in any calendar year, in a single transaction or a
series of related transactions, provided that such transaction or series of
transactions results in the receipt of Net Proceeds in excess of USD 2,500,000
per calendar year. Notwithstanding the foregoing, the following transactions
will be deemed not to be Asset Sales: (A) a sale of assets by the Borrower to a
Guarantor or by a Guarantor to the Borrower or to another Guarantor; (B) any
trade or exchange by the Borrower or any Guarantor of equipment or other assets
for equipment or other assets owned or held by another Person, provided that the
fair market value of the assets traded or exchanged by the Borrower or such
Guarantor (together with any cash or Cash Equivalents) is reasonably equivalent
to the fair market value of the assets (together with any cash or Cash
Equivalents) to be received by the Borrower or such Guarantor and (C) a sale of
assets which are promptly replaced thereafter by assets of a similar type and
value.
"Base Rate" means the sum of (a) on any day the higher of (i) the Prime
Rate in effect on that day, and (ii) the Federal Funds Rate in effect on that
day, plus (b) one-half of one percent (0.5%); provided that from the period
December 15, 1999 through January 31, 2000, the margin added to the Federal
Funds Rate for purposes of calculating the Base Rate shall be one and one-half
percent (1.5%).
3
<PAGE>
"Base Rate Advance" means an Advance as to which the Borrower has selected
the Base Rate to determine the interest rate or as to which the Base Rate has
been applied pursuant to Section 5.3(b) below.
"Borrowing Base" means at any time an aggregate amount equal to the sum
(without duplication) of (a) eighty percent (80%) of the face value of Eligible
Accounts, (b) fifty percent (50%) of Eligible Inventory and (c) thirty percent
(30%) of Net Investment in Work in Process; provided that no more than thirty
percent (30%) of the Borrowing Base shall consist of the aggregate of the
amounts set forth in subparagraphs (b) and (c) of this definition.
"Borrowing Base Report" means the Borrowing Base Report of the Borrower
substantially in the form of Exhibit D attached hereto.
"Breakage Cost" means any amount reasonably necessary to compensate the
Lender for actual costs or expenses incurred by the Lenders in connection with
the payment or acceleration of any LIBOR Advance (other than a Swing Line Loan)
, in whole or in part, whether voluntarily or involuntarily, on a date which is
not the last date of the then applicable Interest Period for the portion of any
LIBOR Advance (other than a Swing Line Loan) being paid, including (without
limitation) any loss incurred in obtaining, liquidating or employing deposits
from third parties.
"Business Day" means any day on which commercial banks are open for
business in San Francisco, California, Houston, Texas and London, England.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof having maturities of not more than one (1) year from the
date of acquisition, (ii) time deposits (including Eurodollar time deposits) and
certificates of deposit of any bank meeting the qualifications specified in
clause (iv) below with maturities of not more than 90 days from the date of
acquisition, (iii) repurchase obligations with a term of not more than 90 days
for underlying securities of the types described in clause (i) entered into with
any bank meeting the qualifications specified in clause (iv) below, (iv)
commercial paper issued by the parent corporation of any bank referred to in
this clause (iv) or any commercial bank of recognized standing having capital
and surplus in excess of USD 300,000,000 and commercial paper rated at least A-2
or the equivalent thereof by Standard & Poor's Corporation or at least P-2 or
the equivalent thereof by Moody's Investor Services, Inc., and in each case
maturing within 90 days after the date of acquisition, (v) remarketed
certificates of participation issued through any bank meeting the qualifications
specified in clause (iv) above rated at least A-2 or the equivalent thereof by
Standard & Poor's Corporation or at least P-2 or the equivalent thereof by
Moody's Investor Services, Inc. and maturing within 90 days after the date of
acquisition; and (vi) investments by the Borrower in money market funds approved
by the Agent; provided that the investment guidelines
4
<PAGE>
for such funds have not changed in any material respect from those in effect on
the date of this Credit Agreement or the date of approval, as the case may be.
"Change of Control" means the occurrence of one or more of the following
events: (i) the Borrower shall cease to beneficially own, directly or
indirectly, 100% of the issued and outstanding shares of capital stock (measured
by ordinary voting power) of any Guarantor; (ii) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions) of all or
substantially all of the assets of the Borrower to any Person or group of
related Persons for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended; (iii) the approval by the holders of the capital stock of the
Borrower of any plan or proposal for the liquidation or dissolution of the
Borrower; or (iv) the replacement of a majority of the Board of Directors of the
Borrower over a two year period from the directors who constituted the Board of
Directors of the Borrower at the beginning of such period, and such replacement
shall not have been approved by a vote of at least a majority of the Board of
Directors of the Borrower then still in office who either were members of such
Board of Directors at the beginning of such period of whose election as a member
of such Board of Directors was previously so approved.
"Closing Date" means the date on which the first Advance hereunder is made.
"Commitment" means a maximum of USD 164,218,250 as it may be reduced from
time to time pursuant to the provisions of this Credit Agreement.
"Commitment Percentage" means each Lender's portion of the Commitment as
shown opposite its name on Schedule 1 to this Credit Agreement.
"Confidential Information Memorandum" means the information and materials
provided in the Confidential Information Memorandum dated October 5, 1999 and
distributed to each Lender.
"Controlled Group" means a "controlled group of corporations" as defined in
Section 1563(a) of the Internal Revenue Code of 1986, as amended, determined
without regard to Section 1563(a)(4) and (e) (3) (C) of such Code, of which
Borrower or any Guarantor is a part.
"Dollar Equivalent" means on any date the equivalent amount in United
States Dollars of an amount expressed in an Offshore Currency as determined by
the Agent on such date on the basis of the Rate of Exchange on the last Business
Day of the most recent month.
"Dollars" and the sign "USD" mean lawful money of the United States of
America.
"Drawdown Date" means the date upon which an Advance is made or a Letter of
Credit is issued.
5
<PAGE>
"EBITDA" means, for any period, the consolidated earnings of the Borrower
during such period from continuing operations, before (i) gains or losses on
sales of assets (to the extent such gains or losses are included in earnings
from continuing operations), (ii) extraordinary items, as determined under GAAP,
(iii) federal, state, foreign and local income taxes, (iv) Interest Expense, and
(v) depreciation and amortization; provided, however, that following an
acquisition by the Borrower (including the acquisition of Halter Marine Group,
Inc.) or any of its subsidiaries, the calculation of EBITDA for the fiscal
quarter in which such acquisition occurred and each of the three fiscal quarters
immediately following such acquisition shall be made with reference to the
historical financial results of the Person, business, division or group of
assets acquired in such acquisition and the Borrower and its subsidiaries for
the applicable four quarter period (the "Test Period") after giving effect on a
pro forma basis to such acquisition and assuming that such acquisition had been
consummated at the beginning of the Test Period.
"Eligible Accounts" means, at any time, the aggregate amount of all
accounts receivable of the Borrower and its United States subsidiaries for the
sale of products or for services rendered for which invoices have been issued
and payment for which is due within ninety (90) days of the invoice date,
including without limitation, progress payments on current construction
projects. In determining accounts receivable constituting Eligible Accounts,
there shall be excluded (i) accounts receivable remaining unpaid for a period of
more than ninety (90) days from the date of invoice (or due date in the case of
instruments, lease agreements and chattel paper), (ii) accounts receivable
arising from sale to or services rendered for the Guarantors or any subsidiary
of the Guarantors or the Borrower, (iii) accounts receivable in which the Agent
does not have a first priority perfected security interest, (iv) accounts
receivable which are subject to a pending right of offset, claim or defense, (v)
that portion of accounts receivable due from suppliers of materials or inventory
to the Borrower equal to the amount that the Borrower is indebted to such
suppliers with respect to materials or supplies purchased by the Borrower from
such suppliers, (vi) accounts receivable from any Governmental Agency to the
extent the approval of such agency to the assignment thereof under the Security
Agreement has not been obtained, (vii) accounts receivable due from customers
known to be insolvent or in bankruptcy proceedings, (viii) accounts receivable
rejected in whole or in part by the Agent in its sole discretion as containing
unacceptable risk, (ix) that portion of any account which is more than twenty
percent (20%) of the Borrower's total accounts receivable; (x) the entire amount
owed by any party if more than fifty percent (50%) of all amounts owed by such
party to the Borrower are unpaid for more than ninety (90) days and (xi) any
retainage amounts for contracts which it is reasonably expected will not be
completed within one hundred eighty (180) days of their execution; provided,
however, that accounts receivable of any Canadian subsidiary of the Borrower may
be included in the Borrowing Base (subject to the other terms hereof) upon the
written request of the Borrower and consent of the Majority Lenders.
"Eligible Inventory" means the lesser of (a) the cost and (b) the fair
market value of all inventory, raw materials, parts and spare parts routinely
used by the Borrower and its United States subsidiaries in its business of the
construction and repair of vessels, rigs and similar equipment, which would be
accounted for as inventory under GAAP, and in which the Agent has a first
priority
6
<PAGE>
perfected security interest, but shall specially exclude any of the foregoing
that (i) is subject to a security interest or lien to any Person other than the
Agent other than liens described in clauses (a) and (b) of Section 12.1 or (ii)
is located in a jurisdiction other than a state of the United States; provided,
however, that inventory located in Canada may be included as Eligible Inventory
upon the written request of the Borrower and consent thereto by the Majority
Lenders.
"Equipment" shall have the meaning set forth in Section 1.01(e) of the
Security Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means each of the Events of Default described in Section
13 hereof.
"Existing Letters of Credit" means the Letters of Credit listed on Schedule
5 hereto.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day; provided (a) if such day is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business Day, and
(b) if no such rate is so published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to the Agent on
such day on overnight Federal funds transactions as determined by the Agent.
"Fixed Charge Coverage Ratio" means on a rolling four quarter basis, EBITDA
less capital expenditures used for the maintenance or repair of existing assets
and cash payments in respect of taxes, divided by the sum total of cash payments
in respect of Interest Expense, required principal payments on Indebtedness,
required payments under capital leases and cash dividends or distributions;
provided that for purposes of this calculation, the minimum level of "capital
expenditures used for the maintenance or repair of existing assets" shall be USD
12,000,000 irrespective of actual capital expenditures for such period.
"GAAP" means generally accepted accounting principles in effect from time
to time in the United States of America.
"General Syndication" means the assignment of some portion of the
Commitment by one or more of the original Lenders party hereto which will occur
subsequent to the first Drawdown Date, the amount and timing of which will be
determined by the Agent with the consent of the Majority Lenders. The Agent
will act as the sole book runner for any General Syndication and will determine
the final allocation of the Commitment among the Lenders.
"Governmental Agency" means any United States or foreign government or any
state, department or other political subdivision thereof or governmental body,
agency, authority,
7
<PAGE>
department or commission (including without limitation any court or tribunal)
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any corporation, partnership or
other entity directly or indirectly owned by the foregoing.
"Guaranty" means the guaranty by the Guarantors of the Borrower's
obligations under this Credit Agreement and the Notes dated as of the date
hereof, as amended and ratified from time to time.
"Guarantors" means the subsidiaries of the Borrower listed on Schedule 4
attached hereto.
"Hazardous Substances" means petroleum and used oil, or any other pollutant
or contaminant, hazardous, dangerous or toxic waste, substance or material as
defined in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. (S) 9601, et seq. (hereinafter called
"CERCLA"); the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
(S) 9601, et seq. (hereinafter called "RCRA"); the Toxic Substances Control Act,
as amended, 15 U.S.C. (S) 2601, et seq. (hereinafter called "TSCA"); the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. (S) 1801, et seq.
(hereinafter called "HMTA"); the Oil Pollution Act of 1990, 33 U.S.C. (S) 2701
et seq. (hereinafter called "OPA"); or any other statute, law, ordinance, code
or regulation of any Governmental Agency relating to or imposing liability or
standards of conduct concerning the use, production, generation, treatment,
storage, recycling, handling, transportation, release, threatened release or
disposal of any waste, substance or material, currently in effect or at any time
hereafter adopted.
"Indebtedness" of the Borrower or the Guarantors means (without
duplication); (a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments; (b) any direct or contingent obligations of such Person
arising under financial letters of credit, banker's acceptances, bank
guarantees, and all drawn but unreimbursed obligations arising under letters of
credit (other than financial letters of credit); (c) all obligations of such
person as lessee under capitalized leases which have been or should become in
accordance with GAAP, recorded as capitalized lease obligations; (d) all
leveraged leases and synthetic leases in which the Borrower or a Guarantor is
the lessee; (e) all obligations of such Person to pay the deferred purchase
price of property or services, and (f) obligations described in clauses (a)
through (d) above and secured by a lien on property owned by such Person
(including indebtedness arising under conditional sales or other title retention
agreements) whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; and (g) all guarantee obligations of such
Person in respect of any of the foregoing.
"Indemnity Payment" means a payment by the Borrower to the Agent equal to
the amount each Lender has paid to a beneficiary under a Letter of Credit or its
Dollar Equivalent as of the date of payment to such beneficiary as determined by
the Agent, in accordance with the terms and conditions of such Letter of Credit
and this Credit Agreement.
8
<PAGE>
"Interest Expense" means, with respect to any Person, for any period of
determination, its interest expense determined in accordance with GAAP.
"Interest Payment Date" means, with respect to any Base Rate Advance, the
last Business Day of each calendar quarter and, with respect to any LIBOR
Advance, the last day of the relevant Interest Period except if such Interest
Period is longer than three (3) months, every three (3) months and the last day
of such Interest Period.
"Interest Period" means with respect to any LIBOR Advance, each period
selected by the Borrower for which the rate of interest on such LIBOR Advance is
fixed being the period commencing on the date of the LIBOR Advance or the date
of the expiration of the preceding Interest Period for such LIBOR Advance and
ending on the corresponding day in the calendar month selected by the Borrower
which is one (1) month, two (2) months, three (3) months or six (6) months later
or, if such month has no numerical corresponding day, on the last Business Day
of such month. If the last day of any such Interest Period is not a Business
Day, then such Interest Period shall end on the next succeeding Business Day,
subject to Section 6.1 hereof. If any Interest Period determined hereunder
would extend beyond the Maturity Date, such Interest Period shall end on the
Maturity Date.
"Issuing Lender" means Wells Fargo Bank, N.A., Bank One, N.A., any
affiliate thereof, or any Lender approved by the Agent and the Borrower.
"LC Commitment" means a maximum of USD 44,218,250 as it may be reduced from
time to time pursuant to the provisions of this Credit Agreement.
"LC Facility" means the senior secured letter of credit facility set forth
in Section 2.3.
"Letter of Credit" means a Tranche A Letter of Credit or a Tranche B Letter
of Credit.
"Leverage Ratio" means, for any period, the ratio of the Borrower's Senior
Debt to EBITDA for such period, calculated at the end of each fiscal quarter for
the immediately preceding twelve-month period.
"LIBOR Advance" means an Advance as to which the Borrower has selected the
LIBOR Rate.
"LIBOR Rate" means in respect of any Interest Period, the rate of interest
per annum at which deposits in U.S. Dollars are offered to major banks in the
London interbank market at approximately 11:00 a.m. (London time), as reported
by the Telerate System page 3750 or such other page as may replace such page
3750 on such system (rounded upwards, if necessary, to the nearest one-sixteenth
of one percent) for the purpose of reporting London Interbank Offered Rates of
major banks under the heading for British Bankers Association Interest
Settlement Rates in the column designated "USD" (U. S. Dollar), two (2) Business
Days before the first day of an Interest Period. In the event that LIBOR
interest rates are not reported on the Telerate System or such reported rates
are not applicable to the selected Interest Period, the Agent shall notify the
Borrower and upon such
9
<PAGE>
notification, the LIBOR Rate shall mean in respect of any Interest Period the
rate of interest per annum (rounded upwards, if necessary, to the nearest one
sixteenth of one percent) at which the Lenders are able to acquire funds in
Dollars equal to the outstanding amount of the Advance for which the rate is to
be determined for the duration of the relevant Interest Period in the London
Interbank Eurocurrency Market at or about 11:00 a.m. London time on the second
Business Day prior to the commencement of the relevant Interest Period for value
on the first day of such Interest Period, or at such time in any alternative
market for such funds available to the Lenders, as notified by the Agent to the
Borrower, such notification, absent manifest error, to be conclusive.
"Loan" means the principal amounts advanced by the Lenders hereunder and
outstanding, the face amounts of all Letters of Credit outstanding hereunder,
(including the Dollar Equivalent of the face amounts of outstanding Offshore
Currency Letters of Credit), the principal amount of outstanding Swing Line
Advances, and the principal amount of any unpaid Indemnity Payments outstanding
hereunder.
"Loan Documents" means this Credit Agreement, the Security Agreements, the
Mortgages, the Ship Mortgages, the Pledges, the Guaranty, the Lockbox Agreement,
the Notes and the Swing Note.
"Lockbox Agreement" means the agreement between the Borrower and the Agent
establishing the lock box arrangement for the accounts receivable of the
Borrower, in form and substance satisfactory to the Agent.
"Majority Lenders" shall mean Lenders having Commitment Percentages
comprising fifty-one percent (51%) or more of the Commitment Percentages, or, if
the Commitments have been terminated or canceled in full, Lenders owed fifty-one
percent (51%) or more of the outstanding Advances.
"Material adverse effect" or "materially adversely affected" means, unless
specified otherwise, to affect in a material manner the ability of the Borrower
to perform its obligations under this Credit Agreement or any other Indebtedness
greater than USD 2,000,000 or the ability of the Guarantors to perform their
obligations under the Guaranty or any other Indebtedness greater than USD
2,000,000.
"Maturity Date" means November 3, 2002.
"Mortgages" means the Mortgages, Deeds of Trust, Security Agreements and
Assignments of Leases and Rents to be executed by the Borrower and certain of
the Guarantors in respect of certain real properties as listed in Schedule 6
hereto.
"Net Investment in Work in Process" means, for any construction or repair
contract to which the Borrower or any United States subsidiary of the Borrower
is party, the amount by which (a) the aggregate of (i) the cost of the hulls,
machinery, parts and materials, engines, equipment, decks,
10
<PAGE>
cranes, masts, and similar such items in respect of such contract ("Cost") plus
(ii) the excess of estimated earnings from such contract over the billings
therefor, exceeds (b) the excess of billings for such contract over the Costs
therefor; excluding, however, any work-in-process under contracts in which the
Borrower grants progressive title in the vessel to the contracting party.
"Net Proceeds" means the aggregate cash proceeds received by the Borrower
or any Guarantor in respect of any Asset Sale, net of (without duplication) (a)
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, sales commissions, recording
fees, title transfer fees, title insurance premiums, appraiser fees and costs
incurred in connection with preparing such asset for sale) and any relocation
expenses incurred as a result thereof, (b) taxes paid or estimated to be payable
as a result thereof, (c) amounts required to be applied to the repayment of
Indebtedness (other than under this Agreement) secured by a lien on the asset or
assets that were the subject of such Asset Sale and (d) any reserve established
in accordance with GAAP or any amount placed in escrow, in either case for
adjustment in respect of the sale price of such asset or assets, until such time
as such reserve is reversed or such escrow arrangement is terminated, in which
case Net Proceeds shall include only the amount of the reserve so reversed or
the amount returned to the Borrower or the Guarantor from such escrow
arrangement, as the case may be.
"Net Worth" means the stockholders equity of the Borrower and its
subsidiaries determined on a consolidated basis in accordance with GAAP.
"Notes" means the secured promissory notes of the Borrower in the aggregate
original principal amount of USD 164,218,250, substantially in the form of
Exhibit A-1 hereto, including without limitation the Swing Note, and all
renewals, extensions, rearrangements and replacements thereof.
"Obligations" means and includes all loans, advances, debts, liabilities,
obligations, letters of credit or any other financial accommodations, howsoever
arising, owing by the Borrower to the Agent and the Lenders pursuant to the
terms of this Credit Agreement, the Notes and the other Loan Documents of every
kind and description (whether or not for the payment of money); direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, including, without limitation, all interest and other
expenses that the Borrower is obligated to pay thereunder.
"Ocean Rig Dispute" means the dispute between the Borrower and Ocean Rig
ASA, Inc. concerning the construction, delivery and price of the Bingo 9001 and
Bingo 9002 drilling rigs.
"Offshore Currency" means any lawful currency (other than United States
Dollars) that the relevant Issuing Lender with respect to any Offshore Currency
Letter of Credit, in its sole reasonable opinion, at any time determines to be
(a) freely traded in the offshore interbank foreign exchange markets, (b) freely
transferable and (c) freely convertible into United States Dollars.
11
<PAGE>
"Offshore Currency Letter of Credit" means any Letter of Credit denominated
in an Offshore Currency.
"Permitted Liens" has the meaning provided in Section 12.1 hereof.
"Person" means any natural person, corporation, partnership, limited
liability company, firm, association, government, Governmental Agency or any
other entity other than the Borrower and its subsidiaries and whether acting in
an individual, fiduciary or other capacity.
"Plan" means any employee pension benefit plan subject to Title IV of ERISA
and maintained by the Borrower or any member of a Controlled Group, or any such
plan, to which the Borrower or any member of a Controlled Group is required to
contribute on behalf of any of its employees.
"Pledges" means the Stock Pledge Agreement and Pledge Agreement, each dated
as of the date hereof executed by the Borrower and certain of the Guarantors in
favor of the Agent in respect of the issued and outstanding voting shares,
membership interests or partnership interests, as the case may be, of each of
the Guarantors, as amended from time to time.
"Prime Rate" means the rate announced by the Agent at its San Francisco,
California office from time to time as its prime rate, it being understood that
the Prime Rate is one of the Agent's base rates and serves as the basis upon
which effective rates of interest are calculated for those loans making
reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as the Agent may
designate. Each change in the Prime Rate will be effective on the day the
change is announced by the Agent.
"Rate of Exchange" means the Agent's then current selling rate of exchange
in San Francisco, California for sales of the currency of payment of any draft
drawn under an Offshore Currency Letter of Credit, or of any fees or expenses or
other amounts payable under this Credit Agreement or any Letter of Credit, for
cable transfer to the country of which such currency is the legal tender.
"Reportable Event" means a reportable event as defined in Section 4043 of
ERISA (29 U.S.C. (S)1343), except events for which the notice provision has been
waived by the Pension Benefit Guaranty Corporation.
"Request for Borrowing" means each request for borrowing given by the
Borrower pursuant to Section 4.1(c) hereof, substantially in the form attached
hereto as Exhibit B.
"Request for Letter of Credit" means a Request for Letter of Credit given
by the Borrower pursuant to Section 4.1(d) hereof, substantially in the form
attached hereto as Exhibit C.
12
<PAGE>
"Revolving Credit Facility" means the USD 120,000,000 senior secured
revolving loan provided for in Section 2 of this Credit Agreement.
"Revolving Loan Commitment" means a maximum of USD 120,000,000 as it may be
reduced from time to time pursuant to the provisions of this Credit Agreement.
"Security Agreements" means the security agreements on certain of the
Borrower's and Guarantors' assets and revenues from the Borrower and the
Guarantors to the Agent dated as of the date hereof, as each may be amended in
the future, and shall include, without limitation, all fixture filings executed
by the Borrower and the Guarantors in favor of the Agent or for the benefit of
the Agent.
"Senior Credit Facilities" means the Revolving Credit Facility and the LC
Facility.
"Senior Debt" means the consolidated Indebtedness of the Borrower and its
subsidiaries less Subordinated Debt.
"Ship Mortgages" means the U.S. First Preferred Fleet Mortgages dated the
date hereof in favor of the Agent in respect of the Vessels, as amended from
time to time.
"Subordinated Debt" means (i) the convertible subordinated notes in the
aggregate principal amount of USD 185,000,000 issued by Halter Marine Group,
Inc. (the Borrower's predecessor-in-interest) on September 15, 1997, bearing
interest at 4.5% per annum, due 2004 and (ii) other Indebtedness of the Borrower
or the Guarantors which by its terms is expressly subordinated to the
Obligations as to right and time of payment and as to any other rights and
remedies thereunder to the satisfaction of the Majority Lenders.
"Swing Line" means the line of credit provided by the Agent pursuant to
Section 2.1(c).
"Swing Line Advances" has the meaning set forth in Section 2.1(c).
"Swing Note" means the promissory note of the Borrower payable to the order
of the Agent in substantially the form of the attached Exhibit "A-2", evidencing
indebtedness of the Borrower to the Agent from Swing Line Advances owing to the
Agent.
"Taxes" means any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any Governmental Agency or taxing
authority thereof other than any taxes on the net income or receipts of any
Lender (or any alternative or minimum Taxes imposed in lieu of any such Taxes),
and any franchise Taxes (or any alternative or minimum Taxes imposed in lieu of
any such Taxes) imposed on any Lender.
"Tranche A Letter of Credit" means a letter of credit issued pursuant to
Section 2.1, or any Existing Letter of Credit that is a performance letter of
credit.
13
<PAGE>
"Tranche B Letter of Credit" means a standby letter of credit issued
pursuant to the LC Facility, or any Existing Letter of Credit that is a
financial letter of credit.
"Vessels" means the U.S. flag vessels listed on Schedule 2 hereto.
"Voluntary Step Down Date" means the date prior to December 31, 2000 that
the Borrower, in its sole discretion, elects to step down the Leverage Ratio
requirement in Section 12.11 hereof from 2.75 to 1.0 to 2.5 to 1.0, but not
before the Borrower delivers its audited financial statements for the period
ending December 31, 1999 to the Agent.
1.2 Accounting Terms. Except as expressly stated herein, all accounting
terms not specifically defined herein shall be construed in accordance with GAAP
consistent with those applied in preparation of the consolidated financial
statements of the Borrower referred to in Section 11.1 hereof.
Section 2.
2.1 Revolving Credit Facility.
(a) Upon the terms and subject to the conditions herein set forth,
the Lenders severally agree to make the senior secured revolving credit
available to the Borrower by, from time to time prior to the Maturity Date,
making one or more Advances to the Borrower or by having the Issuing Lender
issue one or more Tranche A Letters of Credit (including, subject to Section 2.9
hereof, Offshore Currency Letters of Credit), for the account of the Borrower,
provided that the aggregate face amount of all Tranche A Letters of Credit
outstanding hereunder (including the Dollar Equivalent of the face amounts of
outstanding Offshore Currency Letters of Credit) shall not at any time exceed
USD 25,000,000, and provided further that the principal amounts of all
outstanding Advances and the face amount of Tranche A Letters of Credit
(including the Dollar Equivalent of the face amounts of outstanding Offshore
Currency Letters of Credit) shall not exceed, in the aggregate, the Revolving
Loan Commitment. No Tranche A Letter of Credit shall have a duration in excess
of one (1) year except with the consent of the Agent and no Tranche A Letter of
Credit shall have a duration beyond the Maturity Date. Within such limit, the
Borrower may borrow, repay pursuant to Section 6.2(a) and reborrow under this
Section 2.1. Each Advance by the Borrower from the Lenders under this Section
shall be in an aggregate principal amount of at least USD 500,000 and in
integral multiples of USD 100,000 in the case of each Base Rate Advance, and at
least USD 2,000,000 and in integral multiples of USD 100,000 in the case of each
LIBOR Advance.
(b) The Borrower may reduce the Revolving Loan Commitment, in integral
multiples of USD 1,000,000, upon five (5) days prior written notice to the
Agent. No subsequent increase of the Revolving Loan Commitment shall be
allowed.
(c) On the terms and conditions set forth in this Credit Agreement,
the Agent shall from time to time on any Business Day during the period from the
date of this Credit
14
<PAGE>
Agreement until the Maturity Date make advances ("Swing Line Advances") under
the Swing Note to the Borrower in an aggregate outstanding principal amount not
to exceed Twelve Million and No/100 Dollars ($12,000,000) with such payment
terms and principal maturities as the Agent and the Borrower may agree; provided
that (i) Swing Line Advances shall bear interest at the one-month LIBOR Rate as
in effect from time to time plus the then applicable LIBOR Margin as set forth
in the Applicable Margin Amount, (ii) no Swing Line Advances shall mature after
the Maturity Date, and (iii) no Swing Line Advances shall have a maturity longer
than ten (10) days, at which time Borrower shall repay the Swing Line Advances
with the proceeds of Advances under the Revolving Credit Facility. Upon the date
of such payment all accrued but unpaid interest on the Swing Note to such date
shall be due and payable by the Borrower to Agent. Upon the Agent's written
request or upon the acceleration of the Maturity Date pursuant to this Credit
Agreement, each Lender shall pay to Agent such Lender's pro rata share based on
their respective Commitment Percentage of all outstanding Swing Line Advances as
a Base Rate Advance under such Lender's Commitment, but in no event shall any
Lender be obligated to fund more than its Commitment Percentage.
(d) The Revolving Loan Commitment shall be reduced by fifty percent
(50%) of the Net Proceeds of any Asset Sales up to a maximum reduction of USD
25,000,000 in the Revolving Loan Commitment.
2.2 Borrowing Base.
(a) Notwithstanding any other provision of this Credit Agreement, the
aggregate principal amount of Advances and the face amount of Tranche A Letters
of Credit at any time outstanding (including the Dollar Equivalent of the face
amounts of outstanding Offshore Currency Letters of Credit) shall not be in
excess of the Borrowing Base.
(b) If at any time the test of Section 2.2(a) above is not met, the
Borrower shall at the Agent's direction either (i) within ten (10) Business Days
provide to the Agent sufficient additional collateral in form and substance
satisfactory to the Agent as shall be necessary to insure that the test of
Section 2.2(a) above is satisfied or (ii) within three (3) Business Days repay
the Loan in an amount as may be necessary to reduce the aggregate principal
amount outstanding under the Revolving Credit Facility to an amount which will
allow the test of Section 2.2(a) above to be met. The cure periods listed above
shall start running on the date notice of the Agent's decision is given to the
Borrower or, if the Agent does not send such notice, on the date that the chief
financial officer of the Borrower (or any other officer having principal
responsibility for the accounting or financial affairs of the Borrower) is aware
that the test of Section 2.2(a) above has not been met.
2.3 LC Facility.
(a) Upon the terms and subject to the conditions herein set forth,
the Lenders severally agree to make a letter of credit facility available to the
Borrower by, from time to time prior to the Maturity Date, having the Issuing
Lender issue one or more Tranche B Letters of Credit for the account of the
Borrower, provided that the aggregate face amount of all Tranche B Letters of
15
<PAGE>
Credit outstanding hereunder shall not at any time exceed the lesser of (i) 80%
of the appraised orderly liquidation value of the Borrower's Equipment, and (ii)
the LC Commitment. No Tranche B Letter of Credit shall have an expiration date
that is later than the Maturity Date.
(b) If at any time the test of Section 2.3(a) above is not met as
shown by an appraisal, the Agent shall provide written notice thereof to the
Borrower (attaching thereto a copy of the appraisal) and the Borrower shall,
within ten (10) Business Days of receiving such notice, provide to the Agent
sufficient additional collateral in form and substance satisfactory to the Agent
as shall be necessary to insure that the test of Section 2.3(a) above is
satisfied. The cure period listed above shall start running on the date the
test of Section 2.3(a) above is not met.
(c) The Borrower may reduce the LC Commitment in integral multiples of
USD 1,000,000 upon five (5) days' prior written notice to the Agent; provided
that after giving effect to any such reduction the aggregate face amount of all
outstanding Tranche B Letters of Credit does not exceed the Adjusted Commitment.
No subsequent increase of the LC Commitment shall be allowed.
2.4 Counter Indemnity. The Borrower agrees to make each Indemnity Payment
to the Agent for distribution to the Issuing Lender immediately on demand of the
Issuing Lender.
2.5 Drawings Under Letters of Credit. No Lender issuing a Letter of
Credit shall concern itself with the regularity or propriety of any demand made
under any Letter of Credit, provided that such demand is made in the manner
called for in such Letter of Credit and (subject to such proviso) it shall not
be a defense to a claim of such Lender under this Section 2.5 that such Lender
could have resisted the payment in respect of which such claim is made.
2.6 Variations. The Borrower's obligations under Section 2.4 hereof shall
not be in any way discharged or impaired by any variation of the terms of any
Letter of Credit or this Credit Agreement or any document executed pursuant
hereto to which the Borrower has expressly consented in writing.
2.7 Security. The Borrower's obligations under Section 2.4 hereof shall
be in addition to and not in substitution for any security now or hereafter held
by the Agent in respect of its obligations under this Credit Agreement.
2.8 Certificates. A certificate together with evidence of payment
submitted by an issuing Lender to the Borrower as to the amount of any Indemnity
Payment owed to such Lender in respect of a Letter of Credit shall (save for
manifest error) be conclusive and binding on the Borrower for all purposes.
2.9 Offshore Currency Letters of Credit. The Borrower may request that
one or more Tranche A Letters of Credit be issued in an Offshore Currency
denomination. The aggregate Dollar Equivalent of all Offshore Currency Letters
of Credit, as of the issuance date of any such Offshore Currency Letter of
Credit, shall not exceed USD 2,000,000, as determined by the Agent. No
16
<PAGE>
Tranche B Letter of Credit shall be an Offshore Currency Letter of Credit. No
Issuing Lender shall be obligated to issue an Offshore Currency Letter of Credit
if such Issuing Lender has determined, in its sole discretion, that it is unable
to fund obligations in the requested Offshore Currency. The Agent shall provide
to the Borrower, as of the last Business Day of each month, the Dollar
Equivalent of outstanding Offshore Currency Letters of Credit for purposes of
the Borrower's calculation of the Borrowing Base for such month.
Section 3. The Notes.
(a) The Borrower's obligations to pay the principal of, and interest
on, the Loan shall be evidenced by the Notes.
(b) At the time of the making of each Advance, and upon each payment
of the principal of the Loan, the Agent may, and is hereby authorized to, make a
notation on the Notes specifying the date and the amount of such Advance or such
payment. Failure to make any such notation shall not limit or otherwise affect
the Borrower's or any Guarantors' obligations in respect of this Credit
Agreement or the Notes.
Section 4. Manner of Drawdown and Issuance of Letters of Credit.
4.1 Manner of Drawdown or Issuance. The Borrower may draw an Advance or
have a Letter of Credit issued, increased or extended upon:
(a) The Agent's prior satisfaction that the relevant conditions set
out in Section 8 herein have been complied with;
(b) No event having occurred to the actual knowledge of the Borrower
which, with or without notice or lapse of time, would constitute an Event of
Default;
(c) The Agent having received from the Borrower, for an Advance, an
irrevocable Request for Borrowing (i) before 8:00 a.m. San Francisco time at
least three (3) and not more than ten (10) Business Days in the case of a LIBOR
Advance (which the Agent shall forward to the Lenders no later than 12:00 p.m.
San Francisco time two (2) Business Days prior to the requested Drawdown Date)
and (ii) before 12:00 p.m. San Francisco time at least one (1) and not more than
ten (10) Business Days in the case of a Base Rate Advance (which the Agent shall
forward to the lenders no later than 12:00 p.m. San Francisco time one (1)
Business Day prior to the requested Drawdown Date) prior to the Drawdown Date
selected by the Borrower; or the Agent, having received from the Borrower for a
Swing Line Advance an Irrevocable Request for Borrowing before 8:00 a.m. San
Francisco time on the date such Swing Line Advance is requested;
(d) The Agent having received from the Borrower, for the issuance of a
Letter of Credit, an irrevocable Request for Letter of Credit at least three (3)
Business Days prior to the Drawdown Date on which the Letter of Credit is to be
issued;
17
<PAGE>
(e) There shall be no more than five (5) outstanding LIBOR Advances
(excluding Swing Line Advances) at any time.
4.2 Disbursement of Funds. Disbursement of the proceeds of each Advance
shall be made by the Agent to the Borrower as directed by the Borrower in the
Request for Borrowing.
4.3 Failure to Borrow; Delay. If the borrowing described in any Request
for Borrowing or the issuance of a Letter of Credit described in any Request for
Letter of Credit fails to take place or is delayed because any of the conditions
specified in Section 8 below are not satisfied, the Borrower shall indemnify the
Lenders against any loss incurred as a result of the giving of such Request for
Borrowing or Request for Letter of Credit, including without limitation any loss
resulting from actions taken by the Lenders to fund the requested Advance, but
excluding any loss resulting from the gross negligence or willful misconduct of
the Lenders. A certificate of the Agent stating in reasonable detail the amount
of, and basis for, any such loss incurred by such Lender shall be conclusive
absent manifest error.
Section 5. Interest.
5.1 Rate of Interest.
(a) The Borrower agrees to pay interest in respect of all amounts
outstanding under any LIBOR Advance at a rate per annum equal to the LIBOR Rate
plus the Applicable Margin Amount.
(b) The Borrower agrees to pay interest in respect of all amounts
outstanding under any Base Rate Advance at a rate per annum equal to the Base
Rate plus the Applicable Margin Amount.
(c) Interest on unpaid principal amounts shall be computed on the
basis of a year of 360 days and the actual number of days elapsed.
(d) The Borrower agrees to pay interest in respect of all Indemnity
Payments at a rate per annum equal to the Base Rate plus 2% from the date the
obligation to make an Indemnity Payment arises to the date of payment. Interest
on unpaid Indemnity Payments shall be computed on the basis of a year of 360
days.
5.2 Payment of Interest. Except as provided in Section 5.1(d) above with
respect to interest on Indemnity Payments, interest shall be paid by the
Borrower on each Interest Payment Date.
18
<PAGE>
5.3 Conversion of LIBOR Advance to Base Rate Advance.
(a) At the end of any Interest Period for a LIBOR Advance, the
Borrower may, by irrevocable written notice to the Agent received before 8:00
a.m. San Francisco time at least three (3) Business Days prior to the end of
such Interest Period, elect to convert such Advance to a Base Rate Advance.
(b) The Borrower shall notify the Agent before 8:00 a.m. San Francisco
time three (3) Business Days prior to the end of each Interest Period for any
LIBOR Advance as to the length selected by the Borrower for the next Interest
Period. If no such notice is given, such LIBOR Advance shall automatically
convert to a Base Rate Advance.
(c) A notice under Section 5.3(a) or (b) above shall be substantially
in the form attached as Exhibit F.
5.4 Overdue Payment of Principal and Interest. Upon the occurrence and
continuation of an Event of Default, overdue principal of, and (to the extent
permitted by law) overdue interest in respect of, amounts due under this Credit
Agreement shall bear interest, payable on demand, at a rate per annum which
shall be 2% in excess of the interest rate otherwise applicable pursuant to
Section 5.1 above.
5.5 Compliance with Law. Notwithstanding any provision of this Credit
Agreement or the Notes to the contrary, in no event shall the aggregate amount
of consideration which constitutes interest under any applicable law which is
contracted for, charged or received hereunder or under this Credit Agreement or
the Notes ("Interest") exceed the maximum amount of nonusurious interest allowed
by law, and any excess shall be credited on this Credit Agreement or the Notes
(or if all obligations under this Credit Agreement and the Notes shall have been
paid in full, refunded to the Borrower). For purposes of the foregoing, the
maximum amount of interest allowed by law shall be calculated by determining the
amount of interest that could be contracted for, charged or received during the
term hereof at the maximum rate of nonusurious interest allowed from time to
time by applicable law as is now or, to the extent allowed by law, as may
hereafter be in effect (the "maximum nonusurious interest rate") and, if at any
time the rate of Interest to accrue would exceed the maximum nonusurious
interest rate, the rate of Interest to accrue under the Notes shall be limited
to the maximum nonusurious interest rate, but any subsequent reductions in the
LIBOR Rate or the Base Rate shall not reduce the rate of Interest to accrue
under this Credit Agreement or on the Notes below the maximum nonusurious
interest rate until the total amount of Interest accrued and paid under this
Credit Agreement or on the Notes equals the amount of Interest which could have
accrued if a rate per annum equal to the LIBOR Rate plus the Applicable Margin
Amount or the Base Rate plus the Applicable Margin Amount had at all times been
in effect.
19
<PAGE>
Section 6. Loan Payments
6.1 Payments on Non-Business Days. Whenever any payment to be made
hereunder or under the Notes shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day; provided, however, that if such next succeeding Business Day is in
a new month, then the payment required under this Credit Agreement or the Notes
shall be made on the first Business Day preceding the original date on which
payment was due. If a payment of principal has been extended pursuant to this
Section 6.1, interest shall be payable on such principal at the applicable rate
during such extension.
6.2 Repayment of Revolving Credit Facility.
(a) The Borrower may repay any amounts outstanding under the Revolving
Credit Facility prior to the Maturity Date, on the following terms and
conditions:
(i) amounts outstanding as LIBOR Advances may be repaid upon
irrevocable written notice to the Agent three (3) days prior to the end of an
Interest Period without prepayment fee or penalty, but any repayment made before
the end of an Interest Period must be accompanied by Breakage Costs, provided
that each such repayment shall be in a minimum amount of USD 2,000,000, and
integral multiples of USD 100,000 plus all accrued and unpaid interest thereon;
(ii) any amounts outstanding as Base Rate Advances may be repaid
upon irrevocable written notice to the Agent no later than 10:00 a.m. San
Francisco time on the day before repayment and without prepayment fee or
penalty; and
(iii) any Swing Line Advances may be repaid upon irrevocable
written notice to the Agent no later than 8:00 a.m. San Francisco time on the
date of repayment and without prepayment fee or penalty.
(b) The Borrower shall repay all amounts outstanding under the
Revolving Credit Facility to the Lenders in one payment on the Maturity Date.
6.3 Payment Procedure. (a) All payments and prepayments made by the
Borrower under the Notes, the Swing Note or this Credit Agreement shall be made
by wire transfer in immediately available funds before 10:00 a.m., San Francisco
time on the date such payment is required to be made to the Lenders pursuant to
the Agent's written instructions. Any payment received and accepted by the
Lenders after such time shall be considered for all purposes (including the
calculation of interest, to the extent permitted by law) as having been made on
the next following Business Day. All payments and prepayments received shall be
applied first to accrued interest, then to outstanding fees and then to the
reduction of principal.
20
<PAGE>
(b) If any payment required to be made by the Borrower under the
Notes, the Swing Note or this Credit Agreement is not received by the Agent by
10:00 a.m. San Francisco time on the date such payment is required to be made,
the Borrower hereby authorizes the Agent to make such payment or as much of such
payment as is possible, from accounts of the Borrower at the Agent or from funds
held by the Agent pursuant to the Lockbox Agreement.
6.4 Net Payments.
(a) All sums payable by the Borrower under this Credit Agreement or
the Notes, whether of principal, interest, fees or otherwise, shall be paid in
full without set-off or counterclaim and in such amounts as may be necessary in
order that all such payments (after deduction or withholding for or on account
of any Taxes, other than any Tax, on or measured by the income of the Lenders)
shall not be less than the amounts otherwise specified to be paid under this
Credit Agreement or the Notes.
(b) A certificate as to any additional amounts payable to the Lenders
under this Section 6.4 submitted to the Borrower by the Agent shall show in
reasonable detail the amount payable and the calculations used to determine in
good faith such amount and shall be conclusive absent manifest error.
(c) With respect to each deduction or withholding for or on account of
any Taxes, the Borrower shall promptly furnish to the Agent such certificates,
receipts and other documents as may be required (in the reasonable judgment of
the Agent) to establish any income tax credit to which a Lender may be entitled.
In the event that such a deduction or withholding for Taxes becomes so
applicable, the Lenders and the Borrower will use their best efforts to minimize
the effect of such Taxes.
6.5 Rights of Set-off. The Agent and the Lenders shall, with respect to
the Loan and all other amounts payable hereunder, have all rights of set-off,
banker's lien and counterclaim as they are entitled to exercise under the law of
the jurisdiction in which such rights are exercised.
6.6 Changes in Circumstances.
(a) If, by reason of any change subsequent to the date of this Credit
Agreement in applicable law or regulation or regulatory requirement or directive
whether or not having the force of law or in the interpretation or application
thereof by the governmental or quasi-governmental or judicial authority or
central bank charged with the administration or interpretation of such law or
regulation (a "Change in Circumstance"), a Lender shall determine in good faith
that it has become unlawful or impossible for it to perform its obligations
hereunder, the Agent shall immediately notify the Borrower and, after such
notice, the liability of such Lender to advance or maintain the Advances or
issue Letters of Credit shall immediately cease or, (i) if any Advance has been
made, the Borrower shall prepay to such Lender its pro rata portion of the
Advance, or (ii) if any Letter of Credit has been issued by such Lender (the
"Affected Letter of Credit"), the Borrower and the Agent shall use
21
<PAGE>
their reasonable good faith efforts to secure a replacement letter of credit at
the sole expense of the Borrower; provided that if the Borrower is unable to
secure such replacement letter of credit, the Borrower shall deposit with the
Agent at an account designated by the Agent an amount equal to the face amount
of the Affected Letter of Credit. In any such event, but without prejudice to
the aforesaid obligation of the Borrower to prepay, the Borrower, such Lender
and the Agent shall negotiate in good faith for a period not to exceed ninety
(90) days commencing from the date notice is given by the Agent as provided
above, with a view to agreeing to terms for making or continuing to make
available the Commitment from another jurisdiction or funding of the affected
portion of the Advance and issuing or reissuing the Affected Letters of Credit
from alternative sources.
(b) If the effect of any Change in Circumstance having effect after
the date hereof, is to:
(i) change the basis of taxation to a Lender of payment of
principal or interest or any other payment due pursuant to the terms of this
Credit Agreement or the Notes (other than an increase in the rate of taxation on
a Lender's overall net income); or
(ii) impose or modify or deem applicable any reserve requirements
or require the making of any special deposits against or in respect of any
assets or liabilities of, deposits with or for the account of or loans by a
Lender; or
(iii) impose on any Lender any other condition affecting the
Commitment or the Loan or any part thereof, the result of which is either to
increase the cost to such Lender of making available or maintaining the
Commitment or the Loan or any part thereof or to reduce the amount of any
payment received by the Lender hereunder; then and in any such case if such
increase or reduction in the opinion of the Lender materially affects the
interests of the Lender;
(A) the Lender shall notify the Borrower of any of the above
circumstances and the Lender shall use all reasonable efforts (without any
financial commitment on its part) to avoid the effects of any such change and in
particular, shall consider (without any commitment on its part) fulfilling its
obligations under this Credit Agreement through another office or transferring
its interest in this Credit Agreement and the Notes or the Swing Note at par to
one or more of its Affiliates not affected by the Change in Circumstances if
such transfer can be accomplished without material added cost to such Lender and
in a manner compatible with its operational procedures; or
(B) If the efforts referred to in (A) above fail to have the
effect of eliminating the increased cost incurred by the Lender or the reduction
in the amount of any payment received, the Borrower shall within three (3)
Business Days following demand (whether made before or after any repayment of
the amounts outstanding under this Credit Agreement and the Notes) pay to the
Lender such amount as the Agent shall certify to be necessary to compensate the
Lender for such additional cost or reduction; provided, however, that despite
such payments, the Lender and
22
<PAGE>
the Borrower shall continue to use their best efforts to reduce the effect of
such Change in Circumstance; and
(C) At any time thereafter, so long as the Change in
Circumstance giving rise to the obligation to make the compensating payment
continues, the Borrower may, upon giving the Lender not less than ten (10)
Business Days' written notice which shall be irrevocable, prepay to the Lender
the affected portion of the Loan (except for outstanding Letters of Credit) and
shall deposit with the Lender at an account designated by the Lender an amount
equal to the face amount of all then outstanding Letters of Credit (including
the Dollar Equivalent of the face amounts of outstanding Offshore Currency
Letters of Credit).
(c) If any amounts outstanding under this Credit Agreement are to be
prepaid by the Borrower prior to the last day of the relevant Interest Period
pursuant to any of the provisions of this Section 6.6, the Borrower shall
simultaneously with such prepayment pay to the Agent for distribution to any
affected Lender all Breakage Costs and all accrued interest and fees on the
amounts to be prepaid.
(d) The certificate of determination of the Agent, as to any matters
referred to in this Section 6.6 shall show in reasonable detail the amount
payable and the calculations used in good faith to determine such amount and
shall, save for any manifest error, be conclusive and binding on the Borrower.
6.7 Unavailability of Dollars.
(a) In the event that a Lender is not able to obtain Dollars in the
London Interbank Market, in the manner in effect on the date of this Credit
Agreement, the Dollars required by such Lender to fund the Loan shall be made
available from such other financial sources as may be available to such Lender.
In such an event the rate of interest applicable to the Loan for the relevant
Interest Period will be the aggregate of the most recent Applicable Margin
Amount for LIBOR Advances and the cost (expressed as a per annum percentage) to
the Lender from such financial sources and for periods as may be elected by the
Lender. Each change in such cost in respect of funding the Loan will cause an
immediate corresponding change in the rate of interest payable by the Borrower.
This arrangement shall be temporary and should Dollars subsequently become
available to the Lender in the London Interbank Market, in the manner in effect
on the date of this Credit Agreement, then from the conclusion of the then
current Interest Period for funding from alternative sources, the Loan will bear
interest at the rate detailed in Section 5.1(a) above.
(b) In the event that a Lender is unable (for any reason whatsoever)
to acquire the required Dollars from any source, the parties hereto shall meet
to discuss an alternative arrangement. In the absence of mutual agreement and
at the end of ten (10) Business Days after the meeting referred to above the
obligation of the Lender hereunder to make available the Loan shall be
extinguished forthwith and the affected portion of the Loan shall be repaid
forthwith by the Borrower to such Lender along with all fees and Breakage Costs
for the Loan.
23
<PAGE>
6.8 Lockbox.
(a) On or before the first Drawdown Date, the Borrower shall cause to
be established in the name of the Borrower for the benefit of the Lenders an
account and lockbox (the "Lockbox") with the Agent pursuant to the Lockbox
Agreement. The Borrower shall instruct all of its customers and account
debtors to make all payments to the Lockbox of all accounts receivable of the
Borrower, including but not limited to Accounts as defined in the Security
Agreement. Any payments received directly by the Borrower from their customers
or account debtors will be deposited immediately in the Lockbox. Until an Event
of Default shall have occurred, the Borrower shall have the right to transfer
from the Lockbox any amounts in the Lockbox. After an Event of Default shall
have occurred all amounts in the Lockbox may be applied by the Agent for the
benefit of the Lenders in payment of any amounts due and outstanding under this
Credit Agreement or the Notes.
(b) On each Interest Payment Date, the Maturity Date, and each day on
which any commitment fee or letter of credit fee is payable and only in the
event that the Borrower has failed to make a payment in accordance with the
terms of this Credit Agreement and the Notes, all amounts in the Lockbox
(including interest accrued), shall be used first to pay interest due on such
Interest Payment Date, second to pay any commitment fee or letter of credit fee
due on such date and third to repay the principal amount outstanding on the
Notes which is due and payable to the Lenders on such date. After such payments
have been made, all other funds in the Lockbox shall be released to the
Borrower.
(c) The Lockbox shall terminate and any funds remaining in it shall be
paid the Borrower upon the fulfillment of all of the Borrower's Obligations.
6.9 Tax Treaty. Each Lender organized under the laws of a jurisdiction
outside the United States (a "Foreign Lender") as to which payments to be made
under this Credit Agreement or under the Notes are exempt from United States
withholding tax under an applicable statute or tax treaty shall provide to the
Borrower and the Agent a properly completed and executed IRS Form 4224 or Form
1001 or other applicable form, certificate or document prescribed by the IRS or
the United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
the Borrower and the Agent prior to becoming a Lender hereunder. No foreign
Person may become a Lender hereunder if such Person is unable to deliver a
Certificate of Exemption.
Section 7. Security.
7.1 Security Agreement, Mortgage and Pledge. The Obligations (including
without limitation the Swing Note) and all other amounts due under this Credit
Agreement shall be secured in accordance with the provisions of the Security
Agreement, the Mortgage and the Pledge.
24
<PAGE>
7.2 Guaranty. The Obligations (including without limitation the Swing
Note) and all other amounts due under this Credit Agreement shall be guaranteed
in accordance with the provisions of the Guaranty.
7.3 Lockbox Agreement. The Obligations (including without limitation the
Swing Note) and all other amounts due under this Credit Agreement shall be
secured in accordance with the terms of the Lockbox Agreement.
7.4 Further Assurances. The Borrower agrees to execute and deliver to the
Agent such financing statements or other instruments or documents as the Agent
may reasonably request in order to perfect the security created by the Security
Agreement, the Mortgage, the Pledge and the Lockbox Agreement or otherwise
required by this Credit Agreement.
Section 8. Conditions Precedent.
8.1 Documents Required as Conditions Precedent to the Drawdown of the
First Advance. The obligation of the Lenders to make the first Advance (or
issue the first Letter of Credit, whichever is earlier) is subject to the
condition precedent that the Agent shall have received at or prior to the first
Drawdown Date all of the following, each dated on or before the first Drawdown
Date and each in form and substance satisfactory to the Lenders.
(a) The executed Notes, Swing Note and the other Loan Documents.
(b) Certified copies of the resolutions of the Boards of Directors of
the Borrower and the Guarantors authorizing the execution and delivery by the
Borrower and the Guarantors of the Loan Documents to which they are parties and
all documents evidencing other necessary corporate action with respect to the
Loan Documents.
(c) Certificates of the Secretaries or the Assistant Secretaries of
the Borrower and the Guarantors certifying the names and true signatures of the
officers of the Guarantors and the Borrower authorized to sign the Loan
Documents on behalf of the Borrower and the Guarantors and the other documents
or certificates to be executed by the Borrower and the Guarantors pursuant to
this Credit Agreement.
(d) Copies certified as of a recent date by the Secretaries or the
Assistant Secretaries of the Borrower and the Guarantors of their By-Laws or
similar such document.
(e) Copies of the Guarantors' Certificates of Incorporation (or
equivalent documents) certified by the Secretaries or the Assistant Secretaries
of the Guarantors, respectively, as of the date of the first Drawdown Date
except that in the case of Friede Goldman Offshore, Inc. and Halter Marine, Inc.
the Certificates of Incorporation shall be certified by the relevant officials
25
<PAGE>
of their jurisdictions of incorporation within thirty (30) days from the date of
the first Drawdown Date.
(f) A copy of the Borrower's Certificate of Merger certified by the
Secretary of State of Mississippi and, within thirty (30) days of the first
Drawdown Date a copy of the Certificate of Incorporation or Articles of
Incorporation of the Borrower certified by the Secretary of State of
Mississippi.
(g) Certificates dated within thirty (30) days of the first Drawdown
Date of the relevant officials of their jurisdiction of organization as to the
existence and good standing of the Borrower and the Guarantors.
(h) An opinion of Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, counsel to the Borrower and the Guarantors, and of each of special
Nevada and Mississippi counsel to the Borrower and the Guarantors, acceptable to
the Agent.
(i) An opinion of Gardere Wynne Sewell & Riggs, L.L.P., special
counsel to the Lenders, acceptable to the Agent.
(j) The Borrower shall have executed and delivered to the Agent copies
of all documents and filings and shall have taken all actions necessary to
perfect the security interests created by the Ship Mortgages, the Lockbox
Agreement, the Security Agreements and the Pledges as first priority perfected
security interests.
(k) All orders, consents, approvals, licenses, authorizations and
validations of, and filings, recordings and registrations with and exemptions by
any Governmental Agency or any Person (other than any routine filings which may
be required after the date hereof with appropriate governmental authorities in
connection with the operation of the Borrower's assets) required to (i)
authorize the execution, delivery and performance by the Borrower and the
Guarantors of the Loan Documents to which they are parties or (ii) prevent the
execution, delivery and performance by the Borrower and the Guarantors of the
Loan Documents to which they are parties from resulting in a breach of any of
the terms or conditions of, or resulting in the imposition of any lien, charge
or encumbrance upon any properties of the Borrower or the Guarantors pursuant
to, or constituting a default (with due notice or lapse of time or both), or
resulting in an occurrence of any event for which any holder or holders of
Indebtedness may declare the same due and payable under, any indenture,
agreement, order, judgment or instrument under which the Borrower or any
Guarantor is a party (other than the Lockbox Agreement, the Security Agreement
or the Pledge) or to the Borrower's knowledge after due inquiry by which the
Borrower or the Guarantors or their property may be bound or affected, or under
the Certificates of Incorporation or By-Laws of the Borrower or the Guarantors
or similar such documents, shall have been obtained or made to the extent
required to avoid a material adverse effect.
26
<PAGE>
(l) Payment by the Borrower of the fees referred to Section 9.1 below
required to be paid on or before the first Drawdown Date.
(m) Except for indebtedness referred to in Section 10.16 below, all of
the Senior Debt of the Borrower shall be fully repaid and all liens securing
such indebtedness shall have been released or adequate provision shall have been
made for securing such releases.
(n) There shall have been no material adverse change in the financial
condition of the Borrower or the Guarantors since the pro forma financial
statements delivered to the Agent for the period ending June 30, 1999.
(o) A landlord consent with respect to each property at which any
Inventory, work-in-progress or Equipment is located; provided, however, that the
Borrower shall use its best efforts within 60 days but shall have no more than
120 days after the first Drawdown Date to provide such consents and if a consent
for any property is not provided within such period, any Inventory, work-in-
progress or Equipment located on such property shall be excluded from the
Borrowing Base.
(p) The Agent shall have completed and shall be reasonably satisfied
with its due diligence review of the assets, business and financial condition of
the Borrower and its subsidiaries, including, without limitation the Borrower's
3-year annual financial projections.
(q) The Agent shall have received collateral audits in form and
substance reasonably satisfactory to the Lenders.
(r) The Agent shall have received an appraisal or appraisals of the
Equipment in form and substance reasonably satisfactory to the Lenders.
(s) The Agent shall have received certificates of insurance reasonably
acceptable to the Agent, evidencing the insurances required under the Security
Agreement and the Ship Mortgages and within thirty (30) days of the first
Drawdown Date the Borrower shall provide to the Agent an opinion of an
independent insurance broker reasonably acceptable to the Agent to the effect
that the insurances evidenced by such certificates comply with the requirements
of the Security Agreement and the Ship Mortgages.
(t) The Agent shall have received a fax copy of the Promissory Note of
Friede Goldman France SAS (with original to be delivered to the Agent within
three (3) Business Days of the Closing Date) and the original Promissory Note of
Friede Goldman Canada, Inc., each in the amount of USD 10,000,000, each payable
to the Borrower, and each endorsed to the Agent.
(u) If the first Drawdown Date is not the date hereof, certificates
dated the first Drawdown Date of an officer of the Borrower and the Guarantors,
respectively, certifying that:
27
<PAGE>
(i) The representations and warranties contained in Section 10
below and in Section 7 of the Guaranty are correct on and as of the first
Drawdown Date as through made on and as of such date except those expressly made
as of another date; and
(ii) No event has occurred and is continuing, or would result
from the first Advance or first issuance of a Letter of Credit which constitutes
an Event of Default or with the passing of time or the giving of notice would
constitute an Event of Default.
8.2 Additional Conditions Precedent to All Advances and Letters of Credit.
The obligation of the Lenders to make each Advance and to issue, increase or
extend each Letter of Credit shall be subject to the further condition precedent
that the Agent shall have received at or prior to the date of such Advance or
the date of issuance, increase or extension of such Letter of Credit, each dated
on or before the date of the Advance or Letter of Credit and each in form and
substance satisfactory to the Lenders:
(a) a certificate (dated the date of such Advance or Letter of Credit)
of an officer of the Borrower and the Guarantors, respectively, certifying that:
(i) The representations and warranties contained in Section 10
below and in Section 7 of the Guaranty are correct on and as of the date such
Advance is made or Letter of Credit is issued, increased or extended as though
made on and as of such date except those expressly made as of another date; and
(ii) No event has occurred and is continuing, or would result
from such Advance, or from the issuance, increase or extension of such Letter of
Credit, which constitutes an Event of Default or with the passing of time or the
giving of notice would constitute an Event of Default.
(b) payment by the Borrower of the fees required to be paid on
or before such date by Section 9.1 below; and
(c) any required Borrowing Base Report.
8.3 Waiver of Conditions Precedent. All of the conditions precedent
contained in this Section 8 are for the sole benefit of the Lenders and the
Lenders may waive any or all of them in their absolute discretion.
Section 9. Fees and Expenses.
9.1 Fees.
(a) The Borrower shall pay to the Agent for distribution to the
Lenders (i) a commitment fee equal to the daily undrawn portion of the Revolving
Credit Facility (including
28
<PAGE>
without limitation, Swing Line Advances) less the face amount of outstanding
Tranche A Letters of Credit (including the Dollar Equivalent of the face amounts
of outstanding Offshore Currency Letters of Credit) times the Applicable
Commitment Fee Percentage and (ii) a commitment fee equal to the unused portion
of the LC Facility up to and including the Maturity Date times the Applicable
Commitment Fee Percentage. Such commitment fee shall begin to accrue on the date
of this Credit Agreement and shall be payable quarterly in arrears, the first
such payment to be made on December 31, 1999 and quarterly thereafter. The
amount of the commitment fee shall be computed on the basis of a year of 360
days and the actual number of days elapsed.
(b) The Borrower shall pay to the Agent for distribution to the
Issuing Lender an annual letter of credit fee equal to the face amount of each
Letter of Credit (including the Dollar Equivalent of the face amounts of
outstanding Offshore Currency Letters of Credit) outstanding times the
Applicable Margin Amount then in effect for LIBOR Advances, payable quarterly in
arrears; provided that the Agent shall deduct from such fee, for payment to the
Issuing Lender, an amount equal to one-tenth of one percent (0.10%) of the face
amount of each such Letter of Credit (including the Dollar Equivalent of the
face amounts of outstanding Offshore Currency Letters of Credit); and provided
further, that if any Existing Letter of Credit is not replaced with a new Letter
of Credit within ninety (90) days following the date hereof, the Borrower shall
pay to the Issuing Lender for such Existing Letters of Credit an additional
letter of credit fee equal to one-tenth of one percent (0.10%) of the face
amount of each such Letter of Credit, payable quarterly in arrears.
(c) The Borrower shall pay to the Agent for distribution to the
Lenders on the Closing Date an underwriting fee in an amount equal to two
percent (2%) of the commitment of each Lender set forth in the original
commitment letter of such Lender to the Borrower if such commitment is equal to
or greater than USD 58,000,000; provided that if such commitment is less than
USD 58,000,000, such underwriting fee shall be proportionately reduced by
multiplying it by a fraction, the numerator of which is the amount of such
commitment and the denominator of which is USD 58,000,000.
9.2 Expenses. The Borrower agrees, whether or not any Advance is made or
Letter of Credit is issued, to promptly pay or reimburse the Agent upon demand
for all reasonable fees and disbursements of the Agent, including, but not
limited to, travel and other out-of-pocket expenses of the Agent and the
reasonable fees and expenses of external counsel and technical consultants to
the Agent, incurred in connection with (a) the preparation, execution and
delivery of the Loan Documents, the making of Advances and issuance of Letters
of Credit under this Credit Agreement and all other documents referred to herein
and any amendments, renegotiation, refinancing or waivers to or termination of
any thereof, (b) the recording, filing and perfection of all security interests
created by the Loan Documents and (c) the protection of the rights of the Agent
and the Lenders under this Credit Agreement and all other documents referred to
herein and the enforcement of payment of the Obligations, whether by judicial
proceedings or otherwise, and shall promptly pay and reimburse the Lenders for
any such fees and disbursements incurred in connection with the protection of
the rights of the Lenders hereunder and enforcement of payment of the
Obligations, whether by judicial proceedings or otherwise.
29
<PAGE>
9.3 General Indemnity. The Borrower hereby agrees to:
(a) pay and hold the Agent and the Lenders harmless from and against
any and all present and future stamp and other similar Taxes with respect to the
Notes, the Swing Note and the other Loan Documents and save the Agent and each
Lender harmless from and against any and all liabilities with respect to or
resulting from any delay or omission to pay such Taxes, and will indemnify the
Agent and each Lender for the full amount of Taxes paid by the Lender in respect
of payments made or to be made hereunder and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted;
(b) except as otherwise provided in Section 9.2 hereof (and without
duplication thereof), indemnify the Agent and each Lender, and its officers,
directors, employees, representatives, agents, attorneys and Affiliates (an
"Indemnitee") from and hold each of them harmless against and promptly upon
demand pay or reimburse each of them for, any and all actions, suits,
proceedings (including any investigations, litigation or inquiries), claims,
demands and causes of action, and, in connection therewith, all reasonable
costs, losses, liabilities, damages or expenses of any kind or nature whatsoever
(collectively the "Indemnity Matters") which may be incurred by or asserted
against or involve any of them (whether or not any of them is designated a party
thereto) as a result of, arising out of or in any way related to (i) any actual
or proposed use by the Borrower of the proceeds of the Loan, (ii) the operations
of the business of the Borrower, (iii) the failure of the Borrower to comply
with any requirement of any Government Agency, or (iv) any other aspect of this
Credit Agreement, the Notes, the Swing Note and the other Loan Documents,
including, without limitation, the reasonable fees and disbursements of counsel
and all other expenses incurred in connection with investigating, defending or
preparing to defend any such action, suit, proceeding (including any
investigations, litigation or inquiries) or claim and including all Indemnity
Matters arising by reason of the negligence of any Indemnitee;
(c) In the case of any indemnification hereunder, the Agent, any
Lender or other Person indemnified hereunder shall give notice to the Borrower
within a reasonable period of time of any such claim or demand being made
against it and the Borrower shall have the non-exclusive right to provide the
defense against any such claim or demand provided that if the Borrower provides
a defense, the Borrower shall bear the cost of the Indemnitee's defense unless
there is a conflict of interest between the Borrower and such Indemnitee.
(d) No Indemnitee may settle any claim to be indemnified pursuant to
this Section 9.3 without the consent of the indemnitor, such consent not to be
unreasonably withheld; provided, that the indemnitor may not reasonably withhold
consent to any settlement that an Indemnitee proposes, if the indemnitor does
not have the financial ability to pay all of its obligations outstanding and
asserted against the Indemnitee at that time, including the maximum potential
claims against the Indemnitee to be indemnified pursuant to this Section 9.3.
30
<PAGE>
(e) Notwithstanding anything to the contrary in this Credit Agreement,
the Borrower shall have no indemnity obligation with respect to any Indemnitee
Matter caused by or resulting from the gross negligence or willful misconduct of
the Agent, any Lender or any other Indemnitee.
(f) The indemnity and hold harmless contained in this Section 9.3
shall not extend to the Agent, any Lender or any other Indemnitee in its or his
capacity as an equity investor in the Borrower or as an owner of any property or
interest as to which the Borrower is also an owner but only to the Agent's or
any Lender's capacity as a lender or a holder of security interests.
9.4 Survival. The obligations of the Borrower under this Section 9 shall
survive payment of all other amounts due under this Credit Agreement.
Section 10. Representations and Warranties of Borrower.
The Borrower represents and warrants to the Lenders as follows:
10.1 Due Incorporation, Qualification, Etc. It is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified and in good standing as a foreign corporation to
do business in the jurisdictions in which the failure to be so qualified would
have a material adverse effect on its business or financial condition, and it
has full corporate power and authority to own its properties and assets and to
conduct its business as presently conducted.
10.2 Capacity. It has full corporate power and authority to execute and
deliver, and to perform and observe the provisions of the Loan Documents to
which it is a party and to carry out the transactions contemplated hereby and
thereby.
10.3 Authority and Enforceability. The execution, delivery and
performance by the Borrower of the Loan Documents to which it is a party have
been or will be duly authorized by all necessary corporate action. This Credit
Agreement (including the Texas choice of law) constitutes, and the other Loan
Documents to which it is a party constitute, or will constitute, legal, valid
and binding obligations of the Borrower enforceable against it in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditor' rights and remedies generally. The Security Agreement, the Mortgage,
the Pledge and the Lockbox Agreement shall on the first Drawdown Date create and
constitute valid and perfected security interests in and to the properties
covered thereby, subject to the exceptions contained therein, enforceable
against all third parties, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally, and shall secure the Obligations.
10.4 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with
(other than any routine filings which may be
31
<PAGE>
required after the date hereof with appropriate governmental authorities
required in connection with the perfection of the security interests created by
any of the Loan Documents), or exemption by, any Governmental Agency, is
required to authorize the execution, delivery and performance by the Borrower of
the Loan Documents to which it is a party.
10.5 Compliance with Other Instruments. The execution and delivery of
this Credit Agreement and compliance with its terms, the issuance of the Notes
and the Swing Note, and the execution and delivery of the Security Agreement,
the Mortgage, the Pledge and the Lockbox Agreement and the compliance with their
terms as contemplated herein, do not result in a breach of any of the terms or
conditions of, or result in the imposition of any lien, charge or encumbrance
(except those contemplated by this Credit Agreement) upon any properties of the
Borrower pursuant to, or constitute a default (with due notice or lapse of time
or both), or result in an occurrence of any event for which any holder or
holders of Indebtedness may declare the same due and payable under any
indenture, agreement, order, judgment or instrument under which the Borrower is
a party or to the Borrower's knowledge, after due inquiry, by which the Borrower
or its property may be bound or affected, or under the Certificate of
Incorporation or By-Laws of the Borrower, and, to the Borrower's knowledge,
after due inquiry, do not violate any provision of applicable law, in each case,
to the extent that any such breach, imposition, event or violation could
reasonably be expected to have a material adverse effect.
10.6 Financial Statements.
(a) The pro forma consolidated balance sheets of the Borrower as of
June 30, 1999 and the related consolidated statements of income for the year to
date period ended on that date, copies of which have been furnished to the
Agent, have been prepared in accordance with GAAP, have been prepared by the
Borrower giving pro forma effect to the merger creating the Borrower and have
been based on the unaudited consolidated balance sheets and related consolidated
statements of income of the Borrower and its subsidiaries dated June 30, 1999.
(b) Since June 30, 1999 and except for performance guarantees and the
obligation to make indemnity payments under performance bonds issued in their
ordinary course of business, the Borrower and the Guarantors have incurred no
contingent liabilities which, if determined adversely to them (either singly or
in the aggregate), would reasonably be expected to have a material adverse
effect.
10.7 Material Adverse Events. Since June 30, 1999 neither the business,
the prospects, the properties nor the condition (financial or otherwise) of the
Borrower and its subsidiaries, taken as a whole, have been materially adversely
affected except as disclosed in the Confidential Information Memorandum.
10.8 Litigation, Etc. Since June 30, 1999, and except as disclosed on
Schedule 10.8 and in the Confidential Information Memorandum, there are no
actions, suits or proceedings pending, or to the knowledge of the Borrower
threatened, against or affecting the Borrower or the Guarantors,
32
<PAGE>
at law or in equity which, if adversely determined, could reasonably be expected
to have a material adverse effect on their condition (financial or otherwise of
the Borrower on a consolidated basis. To the Borrower's knowledge, neither the
Borrower nor any Guarantor is in violation with respect to any applicable laws
or regulations which non-compliance would have a material adverse effect on
their condition (financial or otherwise) nor is the Borrower or any Guarantor in
violation or default with respect to any order, writ, injunction, demand or
decree of any court or any Person or in violation or default (nor is there any
waiver in effect which, if not in effect, would result in a violation or
default) in any material respect under any indenture, agreement or other
instrument under which the Borrower or any Guarantor is a party or may be bound,
default under which could reasonably be expected to have a material adverse
effect on their condition (financial or otherwise).
10.9 Principal Place of Business. The chief executive office and
principal place of business of the Borrower and the Guarantors is located at
13085 Seaway Road, Gulfport, Mississippi 39503.
10.10 Patent and Other Rights. The Borrower and the Guarantors have the
right to use all patents, licenses, trademarks, trade names, trade secrets,
copyrights and all rights with respect thereto, which are required to conduct
their businesses as now conducted without known conflict with the rights of
others which would materially and adversely affect such businesses.
10.11 Taxes. The Borrower and the Guarantors have filed or caused to be
filed all tax returns which are required to be filed by them, pursuant to the
laws, regulations or orders of each Person with taxing power over the Borrower
and the Guarantors or their assets. The Borrower and the Guarantors have paid,
or made provision for the payment of, all Taxes which have or may have become
due pursuant to said returns, or otherwise, or pursuant to any assessment
received by the Borrower and the Guarantors, except such Taxes, if any, as are
being contested in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided. The charges, accruals and reserves in
respect of Taxes on the books of the Borrower and the Guarantors are adequate
(determined in accordance with GAAP). There are no proposed material tax
assessments against the Borrower or the Guarantors and no extension of time for
the assessment of federal, state or local Taxes of the Borrower or the
Guarantors is in effect or has been requested.
10.12 Employee Retirement Income Security Act of 1974. No Reportable
Event has occurred and is continuing with respect to any Plan.
10.13 Investment Company Act of 1940. The Borrower is not an "investment
company" within the meaning of the Investment Company Act of 1940.
10.14 Environmental Compliance.
(a) The Borrower and the Guarantors have duly complied in all material
respects with, and their properties and operations are in compliance in all
material respects with, the
33
<PAGE>
provisions of all applicable environmental, health and safety laws, codes and
ordinances and all rules and regulations promulgated thereunder of all
Governmental Agencies.
(b) Neither the Borrower nor any Guarantor has received any notice
from any Governmental Agency, or has any knowledge, of any fact(s) which
constitute a material violation of any applicable environmental, health or
safety laws, codes or ordinances, and any rules or regulations promulgated
thereunder of all Governmental Agencies, which relate to the use or ownership of
the properties owned or operated by the Borrower or the Guarantors.
(c) The Borrower and the Guarantors have been issued all required
permits, licenses, certificates and approvals of all Governmental Agencies
relating to (i) air emissions, (ii) discharges to surface water of ground water,
(iii) noise emissions, (iv) solid or liquid waste disposal, (v) the use,
generation, storage, transportation, treatment, recycling or disposal of
Hazardous Substances or (vi) other environmental, health or safety matters
necessary for the ownership or operation in all material respects of the
properties owned or operated by the Borrower or the Guarantors and such permits,
licenses, certificates and approvals are in full force and effect on the date of
this Credit Agreement.
(d) To the best of the Borrower's knowledge, except in accordance with
a valid governmental permit, license, certificate or approval, there has been no
spill or unauthorized discharge or release of any Hazardous Substance to the
environment at, from or as a result of any operations or any of the properties
owned or operated by the Borrower or the Guarantors required to be reported to
any Governmental Agency that could reasonably be expected to have a material
adverse effect.
(e) There has been no complaint, compliance order, compliance
schedule, notice letter, notice of citation or other similar notice from any
applicable environmental agency which concerns the operations of the properties
owned or operated by the Borrower or the Guarantors required to be reported to
any Governmental Agency that could reasonably be expected to have a material
adverse effect.
10.15 Indebtedness. The Borrower has no indebtedness for borrowed money
other than the Indebtedness hereunder, the Indebtedness listed on Schedule 3
attached hereto to be paid at closing and the Indebtedness listed on Schedule
12.5.
Section 11. Affirmative Covenants of the Borrower.
Until the payment in full of all amounts due under this Credit Agreement,
the Notes and the Swing Note by the Borrower and the termination of the
Commitments, unless compliance shall have been waived by the Lenders, the
Borrower agrees that:
34
<PAGE>
11.1 Financial Statements, Reports and Inspection.
(a) The Borrower will furnish to the Agent, with sufficient copies for
each Lender (which the Agent shall distribute promptly to such Lenders):
(i) as soon as possible and in any event within two (2) Business
Days after an officer of the Borrower has knowledge of the occurrence of any
Event of Default or any event which with the giving of notice or lapse of time,
or both, would constitute an Event of Default which is continuing on the date of
such statement, the statement of the chief financial officer or treasurer of the
Borrower setting forth the details of such Event of Default and the action which
the Borrower proposes to take with respect thereto;
(ii) as soon as available and in any event within forty-five
(45) days after the close of each quarter of the Borrower's fiscal years, a copy
of (A) quarterly consolidated financial statements for the Borrower prepared in
accordance with GAAP and certified by the chief financial officer or chief
accounting officer or treasurer of the Borrower together with consolidating
statements of the Borrower, or (B) the Borrower's 10-Q filing with the
Securities and Exchange Commission ("SEC") for such quarter;
(iii) as soon as available and in any event within ninety (90)
days after the close of the Borrower's fiscal years, a copy of (A) the
consolidated and consolidating annual audited financial statements for such year
for the Borrower certified by Ernst & Young LLP or other independent public
accountants of recognized standing acceptable to the Lenders, or (B) the
Borrower's 10-K filing with the SEC for such year;
(iv) as soon as available and in any event within thirty (30)
days after the end of each month, a job status report in respect of contracts
having a total contract value of USD 30,000,000 or greater, in form and
substance satisfactory to the Agent;
(v) as soon as possible and in any event by December 1 of each
year an annual business plan for the Borrower for the coming year, including
projections of consolidated expenses and revenues; and
(vi) (A) as soon as possible, and in any event, within thirty
(30) days after the Borrower or any Guarantor knows that any Reportable Event
with respect to any Plan has occurred, a statement of an officer of the Borrower
or such Guarantor setting forth details as to such Reportable Event and the
action which the Borrower or any Guarantor propose to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the Pension
Benefit Guaranty Corporation if a copy of such notice is available to the
Borrower or any Guarantor and (B) promptly after receipt thereof a copy of any
notice relating to a Reportable Event having a material adverse effect, that the
Borrower, or any Guarantor or any member of the Controlled Group may receive
from the Pension Benefit Guaranty Corporation or the Internal Revenue Service
with respect
35
<PAGE>
to any Plan; provided, however, this Section 11.1(a)(vi)(B) shall not apply to
notice of general application promulgated by the Department of Labor.
(b) The Borrower or the Guarantors will, upon request, furnish to the
Agent such information as the Agent may reasonably request with respect to the
business, affairs or condition (financial or otherwise) of the Borrower or the
Guarantors and will permit the Lenders or their representatives at any
reasonable time or times during normal business hours upon three (3) Business
Days' prior notice, to inspect the properties of the Borrower or the Guarantors,
to inspect, audit and examine the books or records of the Borrower or the
Guarantors and to take extracts therefrom and will reimburse the Agent for all
reasonable expenses incurred in connection therewith. The Agent may order an
appraisal of the Borrower's Equipment and an audit of the Borrower's other
assets once per each 12-month period following the Closing Date, the cost of
which shall be borne by the Borrower. The Agent may, prior to the Maturity Date
and at the direction of any Lender order a one-time appraisal of the Borrower's
and Guarantors' real property, the costs of which shall be borne by the
Borrower. The Agent may, with the consent of the Majority Lenders, order
additional such appraisals and audits, the cost of which shall be borne by the
Lenders (unless an Event of Default shall have occurred in which case the cost
shall be borne by the Borrower). Each such appraisal shall be conducted by an
appraiser reasonably acceptable to the Agent. The Borrower shall provide to the
Agent Phase I Environmental Site Assessments for each of the properties subject
to the Mortgages within sixty (60) days after the date hereof and any further
environmental reports or studies in respect of such properties as the Agent may
deem reasonably necessary in its sole discretion. Each such report or study
shall be performed by an assessor reasonably acceptable to the Agent and the
costs of such reports or studies shall be borne by the Borrower.
(c) Within forty-five (45) days of the close of the first three
quarters of the Borrower's fiscal year and on the dates that the annual reports
required pursuant to Section 11.1(a)(iii) above are provided to the Agent, the
Borrower shall furnish to the Agent a certificate signed by the chief financial
officer, chief accounting officer or treasurer of the Borrower certifying (A)
that the representations and warranties contained in Section 10 of this Credit
Agreement and Section 7 of the Guaranty are correct on and as of the date of
such certificate as though made on and as of such date except those expressly
made as of another date, (B) that the Borrower is in compliance with all of the
covenants contained in Sections 12.11, 12.12 and 12.13 of this Credit Agreement,
such certificates showing the relevant computations for such compliance, and (C)
for the first such certificate hereunder, the amounts and nature of merger-
related costs and expenses.
(d) As soon as possible and in any event within ninety (90) days of
the end of each of the Borrower's fiscal years, a certificate from the
Borrower's auditors referred to in Section 11.1(a)(iii) above, certifying that
(A) such auditor is not aware of any Events of Default and (B) the Borrower is
in compliance with the covenants contained in Sections 12.11, 12.12 and 12.13 of
this Credit Agreement, such certificates showing the relevant computations for
such compliance.
36
<PAGE>
(e) The Borrower shall provide to the Agent a Borrowing Base Report on
the thirtieth (30th) day of each month, or the next succeeding Business Day, if
such day is not a Business Day, providing a calculation of the Borrowing Base
for the immediately preceding month, plus a detailed listing and aging report of
accounts receivable, and upon the request of the Agent, a detailed listing and
aging report of accounts payable.
(f) As soon as possible, a copy of any filing made by the Borrower
with the SEC (except as provided in subsection (a) above).
11.2 Insurance. The Borrower shall insure, or cause to be insured, the
properties of the Borrower and the Guarantors as required by the Security
Agreement and the Mortgage. The Borrower will provide certificates evidencing
such insurances to the Agent on each anniversary of the date hereof and will
promptly notify the Agent of any material changes in such insurances or any
change in the underwriters or clubs providing such insurances.
11.3 Other Debt. The Borrower will, and will cause each Guarantor to,
promptly pay and discharge any and all liens, charges, and all Taxes imposed
upon them or upon their income or profits, or upon any of their properties prior
to the date on which penalties accrue thereon, and lawful claims which, if
unpaid, might become a lien or charge upon their properties, except such as may
in good faith be contested or disputed, provided appropriate reserves are
maintained in accordance with GAAP and to pay all Indebtedness as required by
the agreements governing such Indebtedness.
11.4 Maintenance of Existence; Conduct of Business. The Borrower and the
Guarantors will preserve and maintain their corporate existence, their business
as presently conducted, and all of their rights, privileges and franchises
necessary or desirable in the normal conduct of said business, and will conduct
their businesses in an orderly, efficient and regular manner.
11.5 Financial Records. The Borrower and the Guarantors will keep books
of record and account in which proper entries will be made of their transactions
in accordance with GAAP.
11.6 Environmental Compliance.
(a) The Borrower will comply in all material respects with and will
use its best efforts to cause the Guarantors, and each of their agents,
contractors and sub-contractors (while such Persons are acting within the scope
of their contractual relationship with the Borrower or the Guarantors) to so
comply with (i) all applicable environmental, health and safety laws, codes and
ordinances, and all rules and regulations promulgated thereunder of all
Governmental Agencies and (ii) the terms and conditions of all applicable
permits, licenses, certificates and approvals of all Governmental Agencies now
or hereafter granted or obtained with respect to the properties owned or
operated by the Borrower or the Guarantors unless such compliance would violate
the laws or regulations of the jurisdictions in which the properties or
operations of the Borrower or the Guarantors are located.
37
<PAGE>
(b) The Borrower will use its best efforts and safety practices, and
will cause the Guarantors to use their best efforts and safety practices, to
prevent the unauthorized release, discharge, disposal, escape or spill of
Hazardous Substances on or about the properties owned or operated by the
Borrower or the Guarantors.
11.7 Environmental Notifications. The Borrower shall notify the Agent, in
writing, within ten (10) Business Days of any of the following events occurring
after the date of this Credit Agreement to the extent such event could
reasonably be expected to have a material adverse effect:
(a) Any written notification made by the Borrower or any Guarantor to
any U.S. or foreign federal, state or local environmental agency required under
any federal, state or local environmental statute, regulation or ordinance
relating to a spill or unauthorized discharge or release of any Hazardous
Substance to the environment at, from, or as a result of any operations on, the
properties and operations owned or operated by the Borrower or any Guarantor;
(b) Knowledge by an officer of the Borrower or any Guarantor of
receipt of service by the Borrower or any Guarantor of any complaint, compliance
order, compliance schedule, notice letter, notice of violation, citation or
other similar notice or any judicial demand by any U.S. or foreign court,
federal, state or local environmental agency, alleging (i) any spill,
unauthorized discharge or release of any Hazardous Substance to the environment
from, or as a result of the operations on, the properties owned or operated by
the Borrower or any Guarantor or (ii) violations of applicable laws, regulations
or permits regarding the generation, storage, handling, treatment,
transportation, recycling, release or disposal of Hazardous Substances on or as
a result of operations on the properties and operations owned or operated by the
Borrower or any Guarantor.
(c) It is understood by the parties hereto that the above mentioned
notices are solely for the Lenders' information, may not otherwise be required
by any U.S. or foreign federal, state or local environmental laws, regulations
or ordinances, and are to be considered confidential information by the Agent
and the Lenders.
(d) The term "environmental agency" as used herein shall include, but
not be limited to, the United States Environmental Protection Agency, the United
States Coast Guard, the United States Minerals Management Service, the United
States Department of Transportation (in its administration of the Hazardous
Materials Transportation Act, 49 U.S.C. ' 1801, et seq.) and other analogous or
similar Governmental Agencies regulating or administering statutes, regulations
or ordinances relating to or imposing liability or standards of conduct
concerning the generation, storage, use, production, transportation, handling,
treatment, recycling, release or disposal of any Hazardous Substance.
11.8 Environmental Indemnification.
(a) The Borrower hereby agrees to indemnify and hold the Indemnitees
harmless from and against any and all claims, losses, liability, damages and
injuries of any kind whatsoever asserted against any Indemnitee with respect to
or as a direct result of the presence, escape, seepage,
38
<PAGE>
spillage, release, leaking, discharge or migration from the properties owned or
operated by the Borrower or any Guarantor of any Hazardous Substance, including
without limitation, any claims asserted or arising under any applicable
environmental, health and safety laws, codes and ordinances, and all rules and
regulations promulgated thereunder of all Governmental Agencies, regardless of
whether or not caused by or within the control of the Borrower or any Guarantor.
(b) It is the parties' understanding that neither the Agent, the
Lenders nor any other Indemnitee does now, has never and does not intend in the
future to exercise any operational control or maintenance over of the properties
and operations owned or operated by the Borrower or any Guarantor, nor has any
of them in the past, presently, or intends in the future to, maintain an
ownership interest in the properties owned or operated by the Borrower or any
Guarantor except as may arise upon enforcement of the Agent's or the Lenders'
rights under the Security Agreement.
(c) The indemnity and hold harmless contained in this Section 11.8
shall not extend to the Agent, any Lender or any other Indemnitee in its or his
capacity as an equity investor in the Borrower or any Guarantor or as an owner
of any property or interest as to which the Borrower or any Guarantor is also an
owner but only to the Agent's and the Lenders' capacity as a lender or a holder
of security interests.
11.9 Year 2000 Compliance. On or prior to November 30, 1999 (the
"Compliance Date"), the Borrower and the Guarantors shall take all actions
necessary to insure that the automated systems used by the Borrower and the
Guarantors that are material to their operations (collectively, "Mission-
Critical Systems"), including without limitation, software, hardware and other
data processing devices, shall not fail, malfunction or produce incorrect
results with respect to data, calculations and other processing involving dates
before, as of or after December 31, 1999, regardless of the form of the date
data is received or processed (collectively "Year 2000 Compliant" or "Year 2000
Compliance"). Without limiting the generality of the foregoing, on or prior to
the Compliance Date, the Borrower shall, and shall cause the Guarantors to, test
and certify that their Mission-Critical Systems are Year 2000 Compliant in
accordance with commercially reasonable practices and industry standards. The
Borrower agrees that upon the reasonable request of the Lenders, the Borrower
shall, and shall cause the Guarantors to, make their employees, consultants,
premises, records and documentation available to the Agent with respect to their
Year 2000 Compliance efforts.
11.10 Security Interests. The Borrower shall, and shall cause each
Guarantor to, ensure that, within thirty (30) days following the Closing Date,
all additional documents and instruments required by the Agent are executed and
delivered, and all filings and further actions reasonably required by the Agent,
are taken to effect the granting and perfection of the security interests
contemplated under the Loan Documents, except as otherwise provided herein. The
Borrower shall and shall cause each Guarantor to ensure that, at such time as
the Borrower or a Guarantor becomes the registered owner of the U.S. flag
vessels CHIEF, Official No. 535748 and CHRISTINE DAISY, Official No. 510390,
such vessels shall be mortgaged to the Agent pursuant to the Ship Mortgages.
The Borrower shall, and shall cause each Guarantor to ensure that the Mortgages
are executed and
39
<PAGE>
filed in the appropriate jurisdictions and to the satisfaction of the Agent
within ninety (90) days following the date hereof. The Agent shall reasonably
cooperate with the Borrower and the Guarantors in effecting such execution,
delivery and filing.
Section 12. Negative Covenants of Borrower. Until the payment in full of all
amounts due under this Credit Agreement, the Notes and the Swing Note by the
Borrower and the termination of the Commitments, the Borrower agrees that it
will not, and will not allow any direct or indirect subsidiary to, without the
prior written consent of the Lenders:
12.1 Liens. Create, incur, assume or suffer to exist any lien (including
any encumbrance or security interest) of any kind upon any of their assets,
revenues or right to receive revenue whether now owned or hereafter acquired
(including, without limitation, any real property and any property located in a
jurisdiction other than the United States), nor enter into any agreement to
restrict its ability to pledge or encumber any of its assets, except for the
liens and other encumbrances set forth below and any agreement to restrict its
ability to further pledge or encumber the assets subject to the liens and
encumbrances set forth below (the "Permitted Liens"):
(a) liens for Taxes or assessments or governmental charges or levies
not at the time delinquent or thereafter payable without penalty or being
contested in good faith, provided provision is made to the extent required by
GAAP for the eventual payment thereof in the event it is found that such are
payable by the Borrower;
(b) liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue or
being contested in good faith, provided provision is made to the extent required
by GAAP for the eventual payment thereof in the event it is found that such sums
are payable by the Borrower or the Guarantors;
(c) liens incurred in the ordinary course of business in connection
with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders and
statutory obligations entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds in the ordinary course of business
or easements, rights of way and similar encumbrances incurred in the ordinary
course of business and not interfering with the ordinary conduct of the business
of the Borrower or the Guarantors;
(d) judgment liens in existence less than thirty (30) days after the
entry thereof or with respect to which execution has been stayed or the payment
of which is covered in full by insurance;
(e) liens required by the terms of this Credit Agreement and liens
permitted by the Mortgage and the Security Agreement; and
(f) (i) deposits to secure the performance of bids, tenders or trade
contracts, or to secure statutory obligations, surety or appeal bonds or other
liens of like general nature incurred
40
<PAGE>
in the ordinary course of business and (ii) liens arising in the ordinary course
of business or incidental to the ownership of properties and assets and not
incurred in connection with the borrowing of money (including liens in
connection with worker's compensation, unemployment insurance and other like
laws, carrier's, mechanic's, materialmen's, repairmen's, vendor's,
warehousemen's and attorneys' liens and statutory landlords' liens);
(g) survey exceptions, issues with regard to the merchantability of
title, easements or reservations, mineral rights, or rights of others for
rights-of-way, servitudes, utilities and other similar purposes, or zoning or
other restrictions as to the use of real properties, which could not reasonably
be expected to have a material adverse effect;
(h) liens permitted by the Majority Lenders in writing;
(i) liens reflected on Schedule 12.1 attached hereto and certain
capitalized leases of Friede Goldman Newfoundland Limited in an amount not to
exceed USD 4,000,000, in each case in existence as of the date of this Credit
Agreement, and any extensions, renewals and refinancings thereof provided that
any such refinancing shall not increase the principal indebtedness secured
thereby without the prior written consent of the Majority Lenders.
(j) non-perfected liens in favor of Firemen's Fund Insurance Company
or other bonding company(ies) rated A-VII or better by A.M. Best Company
pursuant to a bonding company indemnity agreement(s) in customary form.
(k) liens granted in the ordinary course of business on vessels, rigs
or equipment under construction or materials used in the construction of such
property in favor of the purchaser, owner or supplier of such vessels, rigs,
equipment or materials (or the lenders to such purchasers, owners or suppliers);
(l) liens in existence on the date of acquisition encumbering the
assets or stock of any subsidiary acquired after the date of this Credit
Agreement;
(m) liens securing Indebtedness permitted by Section 12.5(h) below.
12.2 Line of Business. Enter into any new line of business unrelated to
their present activities after the date of this Credit Agreement.
12.3 Consolidation, Merger, Etc. Consolidate with or merge with, or sell
(whether in one transaction or in a series of transactions) all or substantially
all of their assets to any Person.
12.4 Modification of Agreements. Amend, modify or otherwise change any of
the Loan Documents.
12.5 Indebtedness. Incur or assume any Indebtedness, except:
41
<PAGE>
(a) the Advances and the Letters of Credit;
(b) accounts payable and accrued liabilities incurred in the ordinary
course of business;
(c) Indebtedness secured by Permitted Liens and any refinancing or
replacement of such Indebtedness.
(d) endorsements for collection, deposits or negotiation and
warranties of products or services, in each case incurred in the ordinary course
of business;
(e) Indebtedness in respect of performance, surety or appeal bonds
obtained in the ordinary course of Borrower's or any of its subsidiary's
business;
(f) Indebtedness existing on the Closing Date and listed and described
on Schedule 12.5 hereto and Indebtedness issued to refinance or replace such
Indebtedness;
(g) Indebtedness in connection with an acquisition permitted by
Section 12.15 below.
(h) other Indebtedness not otherwise permitted by this Section 12.5 in
the principal amount outstanding of up to USD 15,000,000 in any year, and up to
an aggregate of USD 25,000,000 from the date hereof through the Maturity Date.
12.6 Reportable Event. Cause or allow to occur a Reportable Event.
12.7 Change of Legal Structure. Cause or allow to occur any material
change in their present Certificate of Incorporation or By-Laws adversely
affecting the Lenders or change their jurisdiction of incorporation.
12.8 Change of Place of Business. Make any change in the address of their
principal place of business or their chief executive office except upon thirty
(30) days' prior written notice to the Agent.
12.9 Subsidiaries. Create or acquire any subsidiaries, unless (a) the
Borrower notifies the Agent of the creation or the acquisition of such
subsidiary and such subsidiary, at the Agent's request, guarantees the
Borrower's obligations hereunder in form and substance satisfactory to the
Lenders, or, (b) in the case of any direct foreign subsidiary, such subsidiary
executes a promissory note in favor of the Borrower which shall be assigned to
the Agent, or (c) in the case of an indirect foreign subsidiary, such subsidiary
executes a promissory note in favor of a direct foreign subsidiary, each
substantially in the form of the notes described in Section 8.1(t) hereof .
Neither the Borrower nor any of its direct or indirect subsidiaries shall
transfer or sell any shares of capital stock of any subsidiary, whether domestic
or foreign, without the prior written consent of the Majority Lenders.
42
<PAGE>
12.10 Sale of Fixed Assets or Accounts. Sell, transfer or assign any
fixed assets or any account receivable; provided, however, that the Borrower may
sell, transfer or assign any assets in the ordinary course of business in an
amount of up to USD 15,000,000 in any year and up to an aggregate of USD
40,000,000 from the date of this Credit Agreement through the Maturity Date.
12.11 Leverage Ratio. Permit the Leverage Ratio to be greater than (a)
2.75 to 1.0 from the date hereof through September 30, 2000 and (b) 2.25 to 1.0
at any time thereafter.
12.12 Fixed Charge Coverage Ratio. Permit its Fixed Charge Coverage Ratio
to be less than 1.5 to 1.0 on a rolling four quarter basis.
12.13 Net Worth. Permit its Net Worth to be less than the aggregate of
(a) ninety percent (90%) of Borrower's Net Worth as of the Closing Date less
merger-related expenses not to exceed USD 10,000,000 which may be realized up to
twelve months after the Closing Date, (b) seventy-five percent (75%) of
positive net income for each fiscal quarter, on a cumulative basis commencing
with the quarter beginning October 1, 1999, and (c) seventy-five percent (75%)
of the net proceeds of future offerings by the Borrower of common stock or other
equity of the Borrower.
12.14 Compliance with Federal Reserve Board Regulations. No part of the
proceeds of any Advance, and no Letter of Credit, will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System, or for the purpose of purchasing or carrying or trading in any
securities under such circumstances as to involve the Borrower or the Guarantors
in a violation of Regulation X of said Board or the Lenders in a violation of
Regulation U of said Board. In particular, without limitation of the foregoing,
neither the Borrower nor any Guarantor will use any part of the proceeds of any
Advance to be made hereunder to acquire for itself or for any other person any
publicly-held securities of any kind. The assets of the Borrower and the
Guarantors do not and will not include any margin securities, and the Borrower
and the Guarantors have no present intention of acquiring any margin securities.
As used in this Section 12.14, the terms "margin security" and "purpose of
purchasing or carrying" shall have the meanings assigned to them in the
aforesaid Regulation U, and the term "publicly-held", in respect of securities,
shall have the meaning assigned to it in Section 220.7(a) of Regulation T of
said Board. If requested by any Lender, the Borrower will furnish to such Lender
a statement or statements in conformity with the requirements of Federal Reserve
Form U-1 referred to in said Regulation U.
12.15 Loans and Investments. Advance funds to, or make investments in,
(whether by way of loan, guarantee or other credit support, stock purchase or
capital contribution) any Person other than in Cash Equivalents, except for:
(a) In addition to the investments permitted in clauses (b) and (d) of
this Section 12.15 and the fixed asset acquisitions permitted by clause (e) of
this Section 12.15, (i) during the period from the date hereof through the
earlier of (1) December 31, 2000 or (2) the Voluntary Step
43
<PAGE>
Down Date, Acquisitions for which the total purchase price does not exceed
$25,000,000 in capital stock of the Borrower; (ii) thereafter until March 31,
2001 Acquisitions for which the total purchase price does not exceed USD
50,000,000 of which no more than USD 25,000,000 may be in the form of cash or
debt (whether assumed or newly incurred) in the aggregate in any calendar year;
and (iii) thereafter Acquisitions for which the total purchase price does not
exceed USD 100,000,000 of which no more than USD 25,000,000 may be in the form
of cash or debt (whether assumed or newly incurred) in the aggregate in any
calendar year; provided, that each such Acquisition shall only be of an entity
in the same or similar line of business as the Borrower and which is domiciled
in the U.S.; and provided further, that no Event of Default shall exist before
or after giving effect to any such acquisition on a trailing twelve months pro
forma basis;
(b) investments in joint ventures or similar arrangements existing as
of the effective date hereof as listed and described in Schedule 12.15 attached
hereto and any future retained earnings in respect thereof;
(c) guarantees, loans or advances to officers or employees of the
Borrower or a subsidiary of the Borrower in the aggregate principal amount of up
to USD 500,000 at any one time outstanding;
(d) present and future investments in joint ventures or similar
arrangements including guarantees of joint venture obligations up to USD
5,000,000 in respect of any one such investment and not to exceed USD 25,000,000
in respect of all such investments; and
(e) capitalized fixed asset additions, not to exceed USD 25,000,000
per calendar year; provided that, notwithstanding anything herein to the
contrary, neither the Borrower nor any of its U.S. subsidiaries shall make
advances or loans to any one non-U.S. subsidiary in excess of USD 10,000,000,
and to all non-U.S. subsidiaries which exceed, in the aggregate, USD 20,000,000.
12.16 Contracts with Affiliates. Enter into any transaction with any
director, officer, employee, shareholder or Affiliate of the Borrower or the
Guarantors except on terms no less favorable to the Borrower than the Borrower
could obtain in an arms length transaction with Persons not affiliated with the
Borrower or the Guarantors.
12.17 Dividends. Without the consent of the Majority Lenders, make any
dividend payments (other than dividends payable in stock) or other distributions
to its stockholders or redeem or otherwise acquire any of its stock; provided
that, following the date which is the earlier of (a) December 31, 2000 and (b)
the Voluntary Step Down Date, the Borrower may redeem or retire subordinated
indebtedness, in an amount not to exceed, in the aggregate, USD 30,000,000.
12.18 Fiscal Years. Change or allow to change, the fiscal year of the
Borrower or any Guarantor from one ending on December 31.
44
<PAGE>
Section 13. Events of Default.
13.1 Events. An "Event of Default" shall exist if any of the following
events shall occur and be continuing:
(a) The Borrower shall default in the payment or prepayment when due
of any principal or interest on the Loan or any fees or other amount payable by
them hereunder or under any other Loan Document and such default shall continue
for three (3) Business Days after such amount is due; or
(b) The Borrower or the Guarantors shall default in the payment when
due of any principal of or interest on any of their other Indebtedness in an
aggregate amount in excess of USD 2,000,000; or any event specified in any
notes, agreement, indenture or other document evidencing or relating to any such
Indebtedness shall occur if the effect of such event is to cause, or (with the
giving of any notice or the lapse of time or both) to permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause, such Indebtedness to become due prior to its stated maturity;
or
(c) Any representation, warranty or certification made or deemed made
herein or in any other Loan Document by the Borrower or the Guarantors or any
certificate furnished to the Agent or the Lenders pursuant to the provisions
hereof or any other Loan Document, shall prove to have been false or misleading
as of the time made or furnished in any material respect; or
(d) The Borrower or the Guarantors shall fail to perform or observe
any provision of the Loan Documents to which they are parties and such failure
shall continue unremedied for a period of ten (10) Business Days after (i) the
failure arises and (ii) the Borrower or the Guarantors have knowledge of such
failure, or ten (10) Business Days after the Agent gives the Borrower notice of
such failure; or
(e) The Borrower or any Guarantor shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due; or
(f) The Borrower or any direct or indirect subsidiary shall (i) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a substantial
part of its property, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the U.S. Bankruptcy Code (as
now or hereafter in effect), (iv) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, winding-up, or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the U.S. Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing; or
(g) A proceeding or case shall be commenced, without the application
or consent of the Borrower or any direct or indirect subsidiary in any court of
competent jurisdiction, seeking
45
<PAGE>
(i) its liquidation, reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Borrower or any direct or
indirect subsidiary or of all or any substantial part of the assets of any of
them, or (iii) similar relief in respect of the Borrower or any direct or
indirect subsidiary under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of sixty (60) days; or an order for relief
against the Borrower or any direct or indirect subsidiary shall be entered in an
involuntary case under the U.S. Bankruptcy Code; or
(h) A judgment for the payment of money in excess of USD 2,000,000
shall be rendered by a court against any of the Borrower or any Guarantor and
the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within thirty
(30) days from the date of entry thereof and the Borrower or any Guarantor,
respectively, shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal;
(i) The Guaranty or any other Loan Document shall cease to be in full
force and effect;
(j) a Change of Control shall have occurred; or
(k) any security interest provided in the Loan Documents or the
perfection thereof shall fail or otherwise have lapsed, written notice thereof
has been provided by the Agent to the Borrower, and the Borrower fails to
cooperate with the Agent or take all reasonable steps needed to effect the
granting of such security interest and the perfection thereof within ten (10)
days of such written notice.
THEN, or at any time thereafter, while any such event remains unremedied or
uncured:
The Agent may (and at the written request of the Majority Lenders shall)
upon written notice to the Borrower, terminate the Commitment to make Advances
or to issue Letters of Credit and/or declare the entire outstanding unpaid
principal amount of the Notes and the Swing Note, all Breakage Costs and all
interest accrued and unpaid thereon and all other amounts payable hereunder and
thereunder to be forthwith due and payable, whereupon the same shall become
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower and
also demand that the Borrower cooperate with it in order to permit any
outstanding Letters of Credit to be terminated, or if such termination cannot be
accomplished, the Borrower shall deposit with each issuing Lender an amount
equal to the aggregate amounts of any outstanding Letters of Credit (including
the Dollar Equivalent of the face amounts of outstanding Offshore Currency
Letters of Credit) which deposit shall be held by such Lender as security until
all of the Letters of Credit are terminated or expire; provided that the
Commitments
46
<PAGE>
shall automatically terminate upon the occurrence of any Event of Default under
Section 13(f) or (g) above. The Agent and the Lenders may immediately and
without expiration of any additional period of grace, enforce payment of all
obligations of the Borrower under this Credit Agreement, under the Notes and
under the Swing Note. In addition, the Agent and the Lenders may exercise any or
all of such remedies as may be available to it under applicable law or granted
pursuant to the Loan Documents.
Any declaration made pursuant to this Section 13.1 is subject to the
condition that, if at any time after the aggregate outstanding principal of the
Notes and the Swing Note shall have become due and payable, and before any
foreclosure action has been taken by the Agent or any Lender under any of the
Loan Documents to realize upon the security provided by such documents, and
provided that all Breakage Costs and all arrears of interest upon the Notes and
the Swing Note and all other obligations owed to the Lenders (except that
aggregate principal of the Notes which by such declaration shall have become
payable) shall have been duly paid, and every other default and Event of Default
shall have been made good waived or cured, then the Lenders may, by written
notice to the Borrower, rescind and annul such declaration and its consequences;
but no such rescission or annulment shall extend to or affect any subsequent
default or Event of Default or impair any right consequent thereon.
Section 14. The Agent
14.1 Appointment and Duties of Agent. The parties hereto agree that
Wells Fargo Bank (Texas), National Association shall act, subject to the terms
and conditions of this Section 14, as the Agent for the Lenders in connection
with the Loan, and to the extent set forth herein each Lender hereby irrevocably
appoints, authorizes, empowers and directs the Agent to take such action on its
behalf and to exercise such powers as are specifically delegated to the Agent
herein or are reasonably incidental thereto in connection with the
administration of and the enforcement of any rights or remedies with respect to
this Credit Agreement, the Notes and the other Loan Documents. It is expressly
understood and agreed that the obligations of the Agent under the Loan Documents
are only those expressly set forth in this Credit Agreement. The Agent shall
use reasonable diligence to examine the face of each document received by it
hereunder to determine whether such documents, on its face, appears to be what
it purports to be. However, the Agent shall not be under any duty to examine
into and pass upon the validity or genuineness of any documents received by it
hereunder and the Agent shall be entitled to assume that any of the same which
appears regular on its face is genuine and valid and what it purports to be.
Banc One Capital Markets, Inc., in its capacity as Syndication Agent and Co-
Arranger, shall have no rights or obligations hereunder or under any of the Loan
Documents.
14.2 Discretion and Liability of Agent. Subject to Sections 14.3 and 14.5
below, the Agent shall be entitled to use its discretion with respect to
exercising or refraining from exercising any rights which may be vested in it
under any of the Loan Documents or otherwise, or with respect to taking or
refraining from taking any action or actions which it may be able to take under
any of the Loan Documents. Neither the Agent nor any of its directors,
officers, employees, agents or
47
<PAGE>
representatives shall be liable for any action taken or omitted by it hereunder
or in connection herewith, except for its own gross negligence or wilful
misconduct. The Agent shall incur no liability under, or in respect of this
Credit Agreement or the other Loan Documents by acting upon a notice,
certificate, warranty or other paper or instrument reasonably believed by it to
be genuine or authentic or to be signed by the proper party or parties, or with
respect to anything which it may do or refrain from doing in the reasonable
exercise of its judgment, or which may seem to it to be necessary or desirable
in the premises.
14.3 Event of Default.
(a) The Agent shall be entitled to assume that no Event of Default or
event which would constitute an Event of Default after notice or lapse of time,
or both, has occurred and is continuing, unless the Agent has actual knowledge
of such facts or has received notice from a Lender in writing that such Lender
considers that an Event of Default or event which would constitute an Event of
Default after notice or lapse of time, or both, has occurred and is continuing
and which specifies the nature thereof.
(b) In the event that the Agent shall acquire actual knowledge of any
Event of Default or event which would constitute an Event of Default after
notice or lapse of time, or both, the Agent shall promptly notify (either
orally, confirmed in writing, or in writing) the Lenders of such Event of
Default or event and may take such action and assert such rights as are
contemplated under this Credit Agreement and in an emergency, or if requested in
writing by the Majority Lenders shall, take such action and assert such rights
as are contemplated under this Agreement; provided that the unanimous consent of
the Lenders shall be required for the Agent to commence foreclosure proceedings
in respect of any real property subject to the Mortgages. The Agent shall be
indemnified pro rata by the Lenders against any liability or expenses,
including, but not limited to, travel expenses and internal and external counsel
fees and expenses, incurred in connection with taking such action. The Agent
may refrain from acting in accordance with any instructions from the Lenders
until it shall have been indemnified to its satisfaction against any and all
costs and expenses which it will or may expend or incur in complying with such
instructions.
14.4 Consultation. When acting in connection with this Credit Agreement,
or the other Loan Documents, the Agent may engage and pay for the advice and
services of any lawyers, accountants, surveyors, appraisers or other experts
whose advice or services may to it appear necessary, expedient or desirable and
the Agent shall be entitled to fully rely upon any opinion or such advice so
obtained.
14.5 Communications to and from Agent. When any notice, approval,
consent, waiver or other communication or action is required or may be delivered
by the Lenders hereunder or the other Loan Documents, action by the Agent shall
be effective for all purposes hereunder; provided, that upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of the Lenders, unless action by the Agent alone, or only upon
instruction of all of the Lenders, is expressly permitted or required hereunder,
action shall be taken by the Agent for and on
48
<PAGE>
behalf of or for the benefit of all the Lenders as provided in Section 14.3
above. The Borrower and the Guarantors may rely on any communication from the
Agent hereunder or the other Loan Documents, and need not inquire into the
propriety of or authorization for such communication.
14.6 Limitations of Agency. Notwithstanding anything in the Loan
Documents, expressed or implied, it is agreed by the parties hereto, that the
Agent will act under the Loan Documents as Agent solely for the Lenders and only
to the extent specifically set forth herein, and will, under no circumstances,
be considered to be an agent or fiduciary of any nature whatsoever in respect to
any other person. The Agent may generally engage in any business with the
Borrower and the Guarantors or any of their affiliates as if it was not the
Agent.
14.7 No Representations or Warranty.
(a) No Lender (including the Agent) makes to any other Lender any
representation or any warranty, expressed or implied, or assumes any
responsibility with respect to the Loan or the execution, construction or
enforceability of the Loan Documents or any instrument or agreement executed by
the Borrower, the Guarantors or any other Person in connection therewith.
(b) The Agent takes no responsibility for the accuracy or completeness
of any information concerning the Borrower and the Guarantors distributed by the
Agent in connection with the Loan nor for the truth of any representation or
warranty given or made herein, nor for the validity, effectiveness, adequacy or
enforceability of this Agreement or any of the other Loan Documents.
14.8 Lender Credit Decision. Each Lender acknowledges that it has,
independent of and without reliance upon any other Lender (including the Agent)
or any information provided by any other Lender (including the Agent) and based
on the financial statements of the Borrower and the Guarantors and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Credit Agreement. Each Lender also
acknowledges that it will, independent of and without reliance upon any other
Lender (including the Agent) and based on such documents and information as it
shall deem appropriate at that time, continue to make its own credit decisions
in taking or not taking action under this Agreement and any other documents
relating thereto.
14.9 Indemnity. Notwithstanding any of the provisions hereof, to the
extent the Agent has not been so indemnified by the Borrower, the Lenders shall
severally indemnify the Agent against any and all losses, costs, liabilities,
damages or expenses, including but not limited to, reasonable travel expenses
and internal and external counsel's reasonable fees and expenses, arising from,
or in connection with, its performance as Agent hereunder and not caused by its
gross negligence or willful misconduct.
14.10 Resignation. The Agent may resign as such at any time upon at least
thirty (30) days' prior notice to the Borrower and the Lenders, provided that
such resignation shall not take effect
49
<PAGE>
until a successor agent has been appointed. In the event of a resignation by the
Agent, the Lenders shall promptly appoint a successor agent from among the
Lenders.
14.11 Distribution. The Agent shall be responsible for promptly
distributing each Lender's share of all net amounts received by the Agent under
any of the Loan Documents pursuant to each Lender's percentage of commitment.
Each Lender shall be responsible for designating by written notice to the Agent
the account to which such distribution shall be deposited.
14.12 Limitation of Suits. All rights of action and claims of the Lenders
under this Credit Agreement, the Mortgage, the Pledge and the Security Agreement
shall be prosecuted and enforced only by the Agent. The Lenders agree that they
shall not independently institute any proceedings, judicial or otherwise, to
enforce their rights against the Borrower under this Agreement, the Mortgage,
the Pledge or the Security Agreement. However, notwithstanding anything
contained in this Section 14.12, the Lenders shall always retain their ability
to retain independent counsel and to protect their rights under this Credit
Agreement and the other Loan Documents.
14.13 Right of Setoff. Upon the occurrence and during the continuation of
any Event of Default, the Lenders each are hereby authorized at any time and
from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to setoff and apply any and all deposits
(general or special, time or demand, provisional or final, whether or not such
setoff results in any loss of interest or other penalty, and including without
limitation all certificates of deposit) at any time held by the Lenders and all
of the indebtedness arising in connection with this Credit Agreement
irrespective of whether or not such Lender will have made any demand under this
Credit Agreement, the Notes or any other Loan Document; provided that such
Lender shall share such deposits ratably among the other Lenders. Should the
right of any Lender to realize funds in any manner set forth hereinabove be
challenged and any application of such funds be reversed, whether by court order
or otherwise, the Lenders shall make restitution or refund to the Borrower pro
rata in accordance with their respective portions of the Loan. Each Lender
agrees to promptly notify the Borrower and the Agent after any such setoff and
application, provided that the failure to give such notice will not affect the
validity of such setoff and application. The rights of the Agent and the
Lenders under this Section 14.13 are in addition to other rights and remedies
(including without limitation other rights of setoff) which the Agent or the
Lenders may have. Nothing contained herein shall affect the right of any Lender
to exercise, and retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower to such Lender.
Section 15. Miscellaneous.
15.1 Entire Agreement. This Credit Agreement with its Schedules and
Exhibits embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings relating to the
subject matter hereof.
15.2 No Waiver. No failure to exercise, and no delay in exercising any
right, power or remedy hereunder or under any document delivered pursuant hereto
shall impair any right, power
50
<PAGE>
or remedy which the Lender may have, nor shall any such delay be construed to be
a waiver of any of such rights, powers or remedies, or an acquiescence in any
breach or default under this Credit Agreement or any document delivered pursuant
hereto, nor shall any waiver of any breach or default of the Borrower hereunder
be deemed a waiver of any default or breach subsequently occurring. The rights
and remedies herein specified are cumulative and not exclusive of any rights or
remedies which the Agent or the Lenders would otherwise have.
15.3 Survival. All representations, warranties and agreements herein
contained on the part of the Borrower shall survive the making of the Advances
or the issuance of the Letters of Credit hereunder and all such representations,
warranties, and agreements shall be effective as long as any amount arising
pursuant to the terms of this Credit Agreement, the Notes or the Swing Note
remains unpaid.
15.4 Notices.
(a) All notices, requests, consents, demands, and other communications
provided for or permitted hereunder shall be effective three (3) days after
being duly deposited in the mails, certified, return receipt requested, or upon
receipt if delivered to Federal Express or similar courier company or
transmitted by telefax, addressed to the respective party at the address set
forth below.
Borrower and Guarantors: Friede Goldman Halter, Inc.
13085 Seaway Road
Gulfport, Mississippi 39503
Attention: Chief Financial Officer
Telefax No.: (228) 897-4866
Agent: Wells Fargo Bank (Texas), National Association, as
Agent
c/o Wells Fargo Bank
201 Third Street, 8th Floor
San Francisco, CA 94103
Attention: Athene Mims, Vice President and Manager
Telefax No.: (415) 512-7059
or to such other addresses as the parties hereto may notify.
15.5 Termination. This Credit Agreement shall terminate when all
obligations of the Borrower incurred under the Loan Documents shall have been
discharged in full and all of the Commitments have been terminated.
15.6 Severability of Provisions. In case any one or more of the
provisions contained in this Credit Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
51
<PAGE>
15.7 Successors and Assigns. This Credit Agreement shall be binding upon
and inure to the benefit of the Borrower, the Agent and the Lenders and their
respective successors and permitted assigns; provided, however, that the
Borrower may not transfer their rights to borrow under this Credit Agreement
without the prior written consent of the Lenders.
15.8 Assignment and Participation.
(a) Subject to compliance with the provisions of this Section 15.8,
the Lenders shall have the right to assign all or part of the obligations of the
Borrower outstanding under this Credit Agreement or the Notes evidencing such
obligations to Affiliates of the Lenders or to any foreign, federal or state
banking institution, savings and loan association, finance company, investment
bank or investment partnership. The Agent shall inform the Borrower in advance
as to any proposed assignment by a Lender and the identity of the prospective
assignee. Each such assignment shall be evidenced by execution and delivery of
an Assignment and Acceptance substantially in the form of Exhibit G hereto,
executed by the assigning Lender and the assignee, a copy which shall be
delivered to the Agent.
(b) Except in connection with the General Syndication: (i) any
assigning Lender shall pay an assignment fee to the Agent of USD 3,500 per
assignment, (ii) any assignment shall be in increments of USD 1,000,000 and
shall be no less than USD 5,000,000 and (iii) no assignment shall be effective
without the prior written consent of the Agent, which shall not be unreasonably
withheld, conditioned or delayed.
(c) The Lenders may sell participations (without the consent of the
Borrower) to one or more parties, in or to all or a portion of their rights and
obligations under this Credit Agreement, the Notes and the other Loan Documents;
provided, that any participation by a Lender of all or any part of its
Commitment shall be in an amount at least equal to USD 5,000,000 (other than the
right of each Lender, on a one time basis, to sell a participation of less than
USD 5,000,000) and with the understanding that all amounts payable by the
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action hereunder
except actions directly affecting (i) any reduction in the principal amount of,
or interest rate or fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the scheduled amortization of the principal
amount of any Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the collateral
subject to the Loan Documents (other than in accordance with the terms of this
Agreement or the other Loan Documents). Neither the Borrower nor any Guarantor
shall have any obligation or duty to any participant. Neither Administrative
Agent nor any Lender (other than the Lender selling a participation) shall have
any duty to any participant and may continue to deal solely with the Lender
selling a participation as if no such sale had occurred.
52
<PAGE>
(d) Notwithstanding anything herein contained to the contrary, no
assignment or participation may be made prior to the earlier of (i) General
Syndication and (ii) the 30th day following the resolution of the Ocean Rig
Dispute, without the consent of the Majority Lenders.
(e) The Borrower hereby agrees to assist with any assignment made
pursuant to this Section 15.8 by executing and delivering any documents or
instruments reasonably requested by the Lenders in connection with any such
assignment, including but not limited to, amendments to this Credit Agreement,
consents to assignments or new promissory Notes.
(f) So long as no Event of Default shall have occurred and be
continuing, no Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of the date of
the proposed assignment or sale, the assignee Lender or participant would be
subject to capital adequacy or similar requirements or increased costs under
Section 6.6(b), an inability to fund LIBOR Advances under Section 6.6(a) or
Section 6.7, or withholding taxes in accordance with Section 6.9.
15.9 Counterparts. This Credit Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Credit Agreement by signing any such
counterpart.
15.10 Jurisdiction. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO THIS
CREDIT AGREEMENT AND THE NOTES MAY BE INSTITUTED IN THE COURTS OF THE STATE OF
TEXAS OR THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS.
BY EXECUTION AND DELIVERY OF THIS CREDIT AGREEMENT THE LENDERS, THE AGENT AND
THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMIT TO THE JURISDICTION OF EACH
SUCH COURT, AND IRREVOCABLY AND UNCONDITIONALLY WAIVE (i) ANY OBJECTION THE
BORROWER, THE AGENT OR THE LENDERS MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE IN ANY OF SUCH COURTS, AND (ii) ANY CLAIMS THAT ANY ACTION OR PROCEEDING
BROUGHT IN ANY OF SUCH COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM;
PROVIDED, HOWEVER, THAT NOTHING IN THIS SECTION 15.10 SHALL LIMIT OR RESTRICT
THE RIGHT OF THE AGENT OR THE LENDERS TO BRING SUIT AGAINST THE BORROWER OR THE
GUARANTORS ANYWHERE IN THE WORLD TO ENFORCE THE SECURITY PROVIDED IN THE
SECURITY AGREEMENT.
15.11 Choice of Law. THIS CREDIT AGREEMENT AND THE NOTES ISSUED HEREUNDER
AND ALL ISSUES ARISING IN CONNECTION WITH THIS CREDIT AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF TEXAS, EXCEPT THAT WITH
RESPECT TO THE PROVISIONS OF THIS CREDIT AGREEMENT AND THE NOTES WHICH PROVIDE
FOR OR RELATE TO THE PAYMENT OF INTEREST, PROVISIONS OF APPLICABLE FEDERAL LAW
WHICH PERMIT
53
<PAGE>
THE LENDERS TO CHARGE THE HIGHER OF THE RATE PERMITTED BY SUCH APPLICABLE LAW OR
BY THE LAWS OF THE STATE IN WHICH EACH LENDER IS LOCATED SHALL BE DEEMED
GOVERNING AND CONTROLLING.
15.12 Waiver of Jury Trial. THE BORROWER, THE AGENT AND THE LENDERS
HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY
ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT, RELATED TO, OR CONNECTED
WITH THIS CREDIT AGREEMENT, ANY OF THE LOAN DOCUMENTS OR THE RELATIONSHIP
ESTABLISHED HEREUNDER.
15.13 Amendment and Waiver. No amendment or waiver of any provision of
this Credit Agreement, the Notes, or any other Loan Document, nor any consent to
any departure by the Borrower or the Guarantors therefrom, shall in any event be
effective unless the same shall be agreed or consented to by the Majority
Lenders, the Agent and the Borrower, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver, or consent shall, unless in writing
and signed by all of the Lenders and the Borrower, do any of the following: (a)
increase Commitments of the Lenders or subject the Lenders to any additional
obligations; (b) reduce the principal of, or interest on, the Notes or any fees
or other amounts payable hereunder; (c) postpone any date fixed for any payment
of principal of, or interest on, the Notes or any fees or other amounts payable
hereunder (d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes or the number of Lenders which shall be
required for the Lenders or any of them to take any action under this Credit
Agreement; (e) change any provision contained in this Section 15.13; (f) release
any of the collateral for the Obligations, including, without limitation, the
Guaranty; or (g) change the percentages set forth in the definition of
"Borrowing Base"; provided, however, that the Agent may release any collateral
in order to give effect to, or otherwise in connection with, any asset sale,
lease or other disposition, or secured financing or other financing transaction
permitted hereby, in which case the Lenders authorize the Agent to execute and
deliver any and all related release documents without the further consent of any
Lender. Each Lender and holder of any Note shall be bound by any modification
or amendment authorized by this Section 15.13 regardless of whether its Notes
shall be marked to make reference thereto, and any consent by any Lender or
holder of a Note pursuant to this Section shall bind any person subsequently
acquiring a Note from it, whether or not such Note shall be so marked.
15.14 No Oral Agreements. THIS WRITTEN CREDIT AGREEMENT WITH ITS
SCHEDULES AND EXHIBITS REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES
CONCERNING THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
15.15 Headings, Etc. The table of contents of this Credit Agreement and
the headings of various sections and subsections herein are for convenience of
reference only and shall not modify,
54
<PAGE>
define, expand or limit any of the terms or provisions hereof. References to
sections or subsections without reference to the document in which they are
contained are references to this Credit Agreement.
15.16 Taxes. Any Taxes payable or ruled payable by any Government Agency
in respect of this Credit Agreement, the Notes, the Swing Note or any other Loan
Document, other than any Tax on or measured by the income of the Lenders, shall
be paid by the Borrower, together with any interest and penalties.
15.17 Controlling Agreement. In the event of a conflict between the
provisions of this Credit Agreement and those of any other Loan Document, the
provisions of this Credit Agreement shall control.
55
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Credit Agreement to
be executed as of the day and year first above written.
FRIEDE GOLDMAN HALTER, INC.
By: /s/ EMILE J. DUMESNIL
Name: Emile J. Dumesnil
Title: Senior Vice President and Treasurer
LENDERS:
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By: /s/ JOSEPH P. MAXWELL
Name: Joseph P. Maxwell
Title: Vice President
ROYAL BANK OF CANADA
By: /s/ J.D. FROST
Name: J.D. Frost
Title: Senior Manager
HIBERNIA NATIONAL BANK
By: /s/ BRUCE ROSS
Name: Bruce Ross
Title: Senior Vice President
BANK ONE, N.A.
By: /s/ MICHAEL A. HOSKINS
Name: Michael A. Hoskins
Title: Authorized Officer
56
<PAGE>
ADMINISTRATIVE AGENT AND CO-ARRANGER:
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION
By: /s/ JOSEPH P. MAXWELL
Name: Joseph P. Maxwell
Title: Vice President
SYNDICATION AGENT AND CO-ARRANGER:
BANC ONE CAPITAL MARKETS, INC.
By: /s/ MICHAEL A. HOSKINS
Name: Michael A. Hoskins
Title: Authorized Officer
57
