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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT OF 1934
Commission file number 333-38157
FIRST WAVE MARINE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0461352
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4000 S. SHERWOOD FOREST BOULEVARD
SUITE 603
BATON ROUGE, LOUISIANA 70816
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 292-8800
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of common stock outstanding as of August 12, 1998: 11,756,955
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FIRST WAVE MARINE, INC.
INDEX TO FORM 10-Q
FOR THE THREE MONTH PERIOD ENDED
JUNE 30, 1998
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1998 and
December 31, 1997 1
Consolidated Statements of Operations for the Three Month
And Six Month Periods Ended June 30, 1998 and 1997 2
Consolidated Statements of Cash Flows for the Six Month
Period Ended June 30, 1998 and 1997 3
Notes to Unaudited Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II: OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds 15
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
</TABLE>
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
ASSETS
June 30, December 31,
1998 1997
----------- --------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 17,371 $ 378
Investments available-for-sale 2,000 --
Investments held-to-maturity 11,028 --
Accounts receivable, less allowance of $213 in 1998
and $37 in 1997 19,740 8,488
Inventories 1,121 792
Costs and estimated earnings in excess of billings on
uncompleted contracts 659 793
Prepaids and other 386 341
Income tax receivable 1,161 773
Deferred income taxes 101 281
----------- --------------
Total current assets 53,567 11,846
Property and equipment, net 61,576 23,326
Financing costs, net 4,209 1,438
Goodwill and other intangibles, net 16,648 2,726
Deposits and other 678 210
----------- --------------
$ 136,678 $ 39,546
=========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 5,687 $ 215
Trade accounts payable 3,904 1,354
Accrued liabilities 8,228 3,319
Accrued interest payable 4,125 637
----------- --------------
Total current liabilities 21,944 5,525
Long-term obligations 3,209 17,781
Subordinated debt 6,328 6,876
Senior notes 90,000 --
Deferred income taxes 5,556 632
Other liabilities 1,536 678
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value, 2,000 shares
authorized, no shares issued -- --
Common stock, $.01 par value, 21,000 shares
authorized, 11,757 shares issued and outstanding
at June 30, 1998 and December 31, 1997 118 118
Additional paid-in capital 3,490 3,490
Retained earnings 4,497 4,446
----------- --------------
8,105 8,054
----------- --------------
$ 136,678 $ 39,546
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</TABLE>
The accompanying notes are an integral part of these statements
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FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Month Periods Ended June 30,
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Repair and upgrades $ 17,328 $ 6,704 $ 30,696 $ 13,505
New construction 2,723 117 3,742 881
Environmental services 1,328 1,195 2,709 2,555
---------- ---------- ---------- ----------
21,379 8,016 37,147 16,941
Cost of revenues 13,749 4,213 23,931 9,493
---------- ---------- ---------- ----------
Gross profit 7,630 3,803 13,216 7,448
General and administrative expenses 3,735 994 7,439 2,807
---------- ---------- ---------- ----------
Income from operations 3,895 2,809 5,777 4,641
Interest expense - net 2,338 424 4,064 842
Minority interest in net earnings of subsidiary -- 237 -- 403
---------- ---------- ---------- ----------
Income before income taxes and extraordinary item 1,557 2,148 1,713 3,396
Income tax expense 646 871 729 1,364
---------- ---------- ---------- ----------
Income before extraordinary item 911 1,277 984 2,032
Extraordinary item-loss on extinguishment of debt, net
of income tax benefit of $559 -- -- (933) --
---------- ---------- ---------- ----------
Net income $ 911 $ 1,277 $ 51 $ 2,032
========== ========== ========== ==========
Basic and diluted earnings per share:
Before extraordinary item $ 0.08 $ 0.12 $ 0.08 $ 0.19
Extraordinary item -- -- (0.08) --
---------- ---------- ---------- ----------
Net income $ 0.08 $ 0.12 $ 0.00 $ 0.19
========== ========== ========== ==========
Weighted-averaged shares:
Basic and diluted 11,757 10,650 11,757 10,650
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
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FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30,
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 51 $ 2,032
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,833 650
Accretion of discounts on investments held-to-maturity (235) --
Minority interest on earnings -- 403
Provision for doubtful accounts 140 --
Gain on sale of property and equipment (8) --
Write-off of property and equipment 68 --
Write-off of financing costs 469 --
Deferred income tax provision 511 344
Change in assets and liabilities, net of effects from acquisitions:
Accounts receivable (7,764) (1,788)
Inventories (299) (217)
Costs and estimated earnings in excess
of billings on uncompleted contracts 831 90
Other assets 716 30
Income tax receivable (1,613) 139
Deposits and other (326) --
Due to bank -- (88)
Trade accounts payable 1,450 (171)
Accrued liabilities 3,305 204
Accrued interest payable 3,488 --
Other liabilities 558 288
-------------- --------------
Net cash provided by operating activities: 3,175 1,916
-------------- --------------
Cash flows from investing activities:
Acquisition of property and equipment (11,605) (300)
Acquisition of businesses, net of cash acquired (19,399) --
Purchase of investments held-to-maturity (10,792) --
Purchase of investments available-for-sale (2,000) --
Proceeds from sales of property and equipment 31 --
Asset acquisition costs (30) --
-------------- --------------
Net cash used in investing activities (43,795) (300)
-------------- --------------
Cash flows from financing activities:
Proceeds from issuance of debt 90,000 841
Payments on long-term debt and notes payable (27,927) (580)
Net payments on revolving lines of credit (1,027) (1,519)
Financing costs (3,433) --
-------------- --------------
Net cash provided by (used in) financing activities 57,613 (1,258)
-------------- --------------
Net increase in cash and cash equivalents 16,993 358
Cash and cash equivalents at beginning of period 378 --
-------------- --------------
Cash and cash equivalents at end of period $ 17,371 $ 358
============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
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FIRST WAVE MARINE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share data)
Note 1 In the opinion of management the accompanying unaudited consolidated
financial statements reflect all adjustments necessary to present
fairly the financial position of First Wave Marine, Inc. ("First Wave"
or the "Company") as of June 30, 1998, and the results of operations
for the three and six month periods ended June 30, 1998 and 1997 and
cash flows for the six month periods ended June 30, 1998 and 1997. All
such adjustments are of a normal recurring nature. These interim
financial statements should be read in conjunction with the audited
financial statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
Note 2 The consolidated financial statements include the accounts of First
Wave and its wholly-owned subsidiaries. All material intercompany
transactions are eliminated in consolidation.
Note 3 The results of operations for the six month period ended June 30,
1998 are not necessarily indicative of the results to be expected for
the entire year.
Note 4 11% Senior Notes Offering - On February 2, 1998, the Company
completed a registered offering of $90,000 aggregate principal amount
of senior notes. The senior notes bear interest at the rate of 11% per
annum; principal is due at maturity in February 2008. The senior notes
are fully and unconditionally guaranteed, jointly and severally, by all
of the Company's direct and indirect subsidiaries. Each subsidiary
guarantor is 100% owned by the Company.
The Company is subject to restrictive covenants under the related trust
indenture. The indenture contains covenants that, among other things,
limit the ability of the Company and its subsidiaries to incur
additional indebtedness, make certain investments, create some types of
liens, enter into certain transactions with affiliates, sell assets,
enter into some types of mergers and consolidations, allow subsidiaries
to create certain dividend and other payment restrictions, enter into
sale and leaseback transactions, and issue or sell capital stock of
subsidiaries.
Separate financial statements and other disclosures concerning the
subsidiary guarantors are not presented because management has
determined such financial statements and other disclosures are not
material to investors. The combined
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condensed income statement information for the Company's subsidiary
guarantors is the same as the Company's. The combined condensed balance
sheet information of the Company's subsidiary guarantors is as follows:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---------- ----------
<S> <C> <C>
Current assets
Cash and cash equivalents $ -- $ 373
Accounts receivable 19,724 8,425
Other 2,239 2,269
---------- ----------
21,963 11,067
Property and equipment 61,418 23,304
Intangible assets 14,248 1,105
Other 387 1,141
---------- ----------
Total assets $ 98,016 $ 36,617
========== ==========
Current liabilities $ 17,205 $ 4,228
Non-current liabilities 54,550 25,565
Stockholders' equity 26,261 6,824
---------- ----------
Total liabilities and Stockholders' equity $ 98,016 $ 36,617
========== ==========
</TABLE>
Note 5 Acquisitions - On February 2, 1998, the Company completed the
acquisition of all of the outstanding capital stock of John Bludworth
Marine, a company that owns and operates shipyard facilities in
Pasadena, Texas and Galveston, Texas. The Company paid $15,000 in cash
and issued a promissory note in the amount of $4,000. The Company used
a portion of the proceeds from its $90,000 senior notes offering
(discussed above) to fund the cash portion of the acquisition. The
promissory note was adjustable upward or downward based upon
outstanding debt and a final calculation of earnings before interest,
taxes, depreciation and amortization of the acquired company. The final
calculation of the applicable outstanding debt of John Bludworth Marine
resulted in an increase to the purchase price of approximately $5,157.
The final calculation of EBITDA resulted in an increase to the purchase
price of approximately $1,480. The promissory note bore interest at
8.5% per annum and was payable on or before July 31, 1998.
On May 27, 1998, $5,157 of the promissory note was paid. The balance of
the note, approximately $5,500 was paid on July 30, 1998.
The acquisition has been accounted for as a purchase and the results of
John Bludworth Marine have been included in the accompanying
consolidated financial statements since the date of the acquisition.
The allocation of the purchase price resulted in intangibles, primarily
goodwill, of approximately $14,081 which is being amortized on a
straight-line basis over a forty year period.
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On May 15, 1998, the Company completed the acquisition of certain
assets of the Barge Building Division of Galveston Shipbuilding Company
("BBD - GSC"). The Company acquired the fixed assets, including land, a
contract to build four tank barges and up to five barge covers, and the
name "Galveston Shipbuilding Company" for $5,500, subject to a final
purchase price adjustment based upon the performance of the business.
The acquisition has been accounted for as a purchase and the results of
BBD - GSC have been included in the accompanying consolidated financial
statements since the date of the acquisition.
The following unaudited pro forma consolidated results of operations
have been prepared as if John Bludworth Marine and BBD-GSC had been
acquired as of January 1 of fiscal 1998 and 1997. This pro forma
information is not necessarily indicative of the results of operations
that would have occurred had the acquisitions been made on those dates
or of results which may occur in the future.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues $ 23,338 $ 18,712 $ 45,128 $ 38,334
Income before extraordinary item 1,133 2,036 1,910 3,549
Net income 1,133 2,036 977 3,549
Basic and diluted earnings per share:
Before extraordinary item $ 0.10 $ 0.19 $ 0.16 $ 0.33
Net income 0.10 0.19 0.08 0.33
</TABLE>
Note 6 Shareholder Line of Credit - In February 1998, the board of directors
of the Company approved a maximum $1,000 line of credit available to
three employee director shareholders of the Company. The line of credit
allows borrowings of up to $600 to one of the shareholders and up to
$200 to each of the other two shareholders. Any borrowings under the
line of credit will bear an interest rate of 6% per annum with interest
payable annually and principal to be amortized over a ten year period
through the pro rata reduction of the line of credit commencing March
2001.
Note 7 Cash and Cash Equivalents - The Company maintains cash and cash
equivalents with various financial institutions. At times, the balances
in these accounts could exceed the FDIC insured balance limit of $100
per bank.
At June 30, 1998, the Company had $13,555 invested in a money market
fund. The fund seeks to pay income monthly and to maintain a constant
value of $1 per share. The fund invests in high quality money market
instruments which consist primarily of U.S. Treasury obligations,
obligations issued or guaranteed by U.S. agencies or instrumentalities,
mortgage-backed securities, commercial paper, bank obligations and
deposit notes.
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<PAGE> 9
Note 8 Investments Available-for-Sale - Included in investments
available-for-sale at June 30, 1998 is an investment in a mutual fund
which invests in another portfolio that invests primarily in "loan
interest" - portions of senior, floating-rate loans made by U.S. banks
and other financial institutions to large corporate customers. The fund
seeks to achieve a high level of current income while minimizing
fluctuations in net asset values. The carrying value and estimated fair
value of the investment at June 30, 1998 were substantially the same.
Note 9 Investments Held-to-Maturity - As a result of the 11% Senior Notes
offering, the Company was required to deposit funds into a trust
account to pay the first and second semi-annual interest payments on
the notes. As a result, two securities were purchased with maturity
dates as near as possible to the interest payment dates. A Fannie Mae
Discount Note with a maturity date of July 27, 1998 was purchased for
approximately $4,824 to cover the August 1, 1998 interest payment. A
U.S. Treasury Bill with a maturity date of January 7, 1999 was
purchased for approximately $4,718 to cover the February 1, 1999
interest payment. At maturity, the value of both securities will
approximate the amount of the semi-annual interest payment, which is
$4,950. The approximate fair value of the above two securities at June
30, 1998 was $9,748.
Also included in "Investments held-to-maturity" are a certificate of
deposit with a financial institution in the amount of $1,000 with a
maturity date of February 4, 1999, and another certificate of deposit
with another financial institution in the amount of $250 with a
maturity date of February 3, 1999. The balances of both certificates of
deposit exceed the FDIC insured balance limit of $100 per bank.
Note 10 Line of Credit - On June 9, 1998, the Company entered into a credit
agreement to obtain a $10,000 revolving line of credit facility with a
financial institution. The facility is collateralized by accounts
receivable. Borrowings on the line of credit bear interest at the Wall
Street Journal Prime Rate plus one-half percent. There were no
borrowings outstanding on the line of credit at June 30, 1998.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
All statements other than statements of historical fact contained in
this Form 10-Q, including statements in this "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
concerning results of operations, results from proposed shipyard
acquisitions, future expansion plans and other matters are
forward-looking statements. Forward-looking statements in this Form
10-Q generally are accompanied by words such as "anticipate,"
"believe," estimate" or "expect" or similar statements. Although the
Company believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given
that such expectations will prove correct. Factors that could cause the
Company's results to differ materially from the results discussed in
such forward-looking statements include risks such as the dependence on
the oil and gas industry, difficulties related to managing growth in
operations, dependence on significant customers, competition, the risks
associated with contractual pricing, the success of the recent
expansion into the offshore drilling rig segment, and labor, operating,
regulatory and other risks in the shipbuilding industry as well as
risks relating to the capital expenditure budgets of the Company's
customers in the offshore support vessel, offshore barge and inland
marine industries. All forward-looking statements in this Form 10-Q are
expressly qualified in their entirety by the cautionary statements in
this paragraph.
The following discussion of the Company's financial condition, results
of operations, liquidity and capital resources should be read in
conjunction with the Company's Consolidated Financial Statements and
the Notes to the Consolidated Financial Statements included elsewhere
in this report.
GENERAL
The Company's business is primarily derived from providing repair and
upgrade services to inland and offshore marine vessels, including
barges, boats, drilling rigs and ships. To a lesser extent the Company
engages in new construction of such inland and offshore marine vessels.
The Company believes the demand for repair and upgrade services is
significantly more stable than the demand for new construction. While
trends in oil and natural gas prices can affect the demand for offshore
support vessels and drilling rigs, the Company anticipates its demand
will remain strong for repair activity even with a short-term downturn
in oil and gas prices. While any prolonged depression in oil and
natural gas prices could have an adverse effect on the Company's
results of operations if a significant number of offshore support
vessels and drilling rigs were taken out of active service in the Gulf
of Mexico, the declines in oil and gas prices in 1998 have not affected
the Company's operations to date.
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The Company currently operates three shipyards in the Houston, Texas
area (Brady Island, Greens Bayou and Pasadena) and three in the
Galveston, Texas area (East Pelican Island, West Pelican Island and
Galveston Island). The Company acquired the Pasadena and West Pelican
Island shipyards on February 2, 1998, and the Galveston Island shipyard
on May 15, 1998. The Company currently employs approximately 1,000
production workers at its six shipyards.
The Company also provides related environmental services, including
cleaning, degassing and wastewater treatment. Although this business
comprises a small percentage of the Company's total revenues, it
generates high margins and enhances the Company's strategy to be the
only one-stop source of all shipyard services for all segments of the
offshore and inland marine markets in Texas.
RECENT DEVELOPMENTS
On May 15, 1998, the Company acquired its Galveston Island shipyard
with its completion of the acquisition of certain assets of the Barge
Building Division of Galveston Shipbuilding Company ("BBD - GSC"). The
Company acquired the fixed assets, including land, a contract to build
four tank barges and up to five barge covers, and the name "Galveston
Shipbuilding Company" for $5.5 million, subject to a final purchase
price adjustment based upon the performance of the business. The
acquisition has been accounted for as a purchase and the results of BBD
- GSC have been included in the accompanying consolidated financial
statements since the date of acquisition.
Simultaneously with closing the senior notes offering, the Company
completed the acquisition of all of the outstanding shares of John
Bludworth Marine, Inc. ("John Bludworth Marine"). The John Bludworth
Marine acquisition provided the Company with the Pasadena facility near
Houston, Texas and the West Pelican Island facility in Galveston,
Texas. The Company paid $15.0 million in cash and issued a promissory
note in the amount of $4.0 million. The promissory note was adjustable
upward or downward based upon outstanding debt and a final calculation
of earnings before interest, taxes, depreciation and amortization
("EBITDA") of the acquired company. The final calculation of the
applicable outstanding debt of John Bludworth Marine resulted in an
increase to the purchase price of approximately $5.2 million. The final
calculation of EBITDA resulted in an increase to the purchase price of
approximately $1.5 million. The promissory note as adjusted for
outstanding debt and EBITDA bore interest at 8.5% per annum and was
payable on or before July 31, 1998. On May 27, 1998, the Company paid
approximately $5.2 million of the promissory note. The Company made the
final payment on the balance of the note, approximately $5.5 million,
on July 30, 1998.
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RESULTS OF OPERATIONS
Comparison of the three months ended June 30, 1998 to the three months
ended June 30, 1997.
Revenues increased 167% to $21.3 million in the 1998 period, compared
with $8.0 million in the 1997 period, primarily due to five additional
shipyards in operation during the 1998 period as compared to only one
shipyard in operation during the 1997 period. The Greens Bayou facility
began operations in the third quarter of 1997. The East Pelican Island
facility, a start-up, began generating revenues in the first quarter of
1998. As discussed above, the Pasadena and West Pelican Island
facilities were acquired on February 2, 1998. The Galveston Island
facility was acquired on May 15, 1998 as a result of the BBD-GSC
acquisition. Only the results of operation of BBD-GSC subsequent to the
date of acquisition are included in the results of operations of the
Company for the three month period ended June 30, 1998.
Cost of revenues rose 226% to $13.7 million in the 1998 period from
$4.2 million in the 1997 period, primarily due to the additional
shipyards in operation during the 1998 period.
Gross profit increased 101% to $7.6 million in the 1998 period from
$3.8 million in the 1997 period due to the additional shipyards in
operation during the 1998 period. The gross profit margin decreased to
36% in the 1998 period from 47% in the 1997 period, primarily due to
the start-up nature of the East Pelican Island shipyard, and the
decrease in higher margin environmental services revenue as a
percentage of total revenue.
General and administrative expenses increased 276% to $3.7 million in
the 1998 period from $1.0 million in the 1997 period. General and
administrative expenses as a percentage of revenues for the 1998 period
represented 17% of total revenues, as compared to 12% for the 1997
period. The increase in general and administrative expenses as a
percentage of revenues is primarily due to the full staffing and
certain overhead expenses incurred at the start-up of the Company's
East Pelican Island operations in advance of revenue generation.
Net interest expense rose to $2.3 million in the 1998 period from
$424,000 in the 1997 period due to three months of interest expense on
the $90 million 11% Senior Notes reflected in the 1998 period.
The elimination of minority interest in the 1998 period from
approximately $237,000 in the 1997 period is due to all minority
shareholders of this subsidiary exchanging their shares for shares in
First Wave effective December 31, 1997. As a result, First Wave has
owned 100% of the common stock of all of its subsidiaries for the
entire 1998 period.
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<PAGE> 13
The decrease in income tax expense from approximately $871,000 in the
1997 period to $646,000 in the 1998 period is directly attributable to
the decrease in income before income taxes and extraordinary item.
The decrease in net earnings from the 1997 period to the 1998 period is
due primarily to the following: the additional interest expense related
to the $90 million senior notes, and the increase in general and
administrative expenses related to the start-up of the Company's East
Pelican Island shipyard during the 1998 period.
Comparison of the six months ended June 30, 1998 to the six months
ended June 30, 1997.
Revenues increased 119% to $37.1 million in the 1998 period, compared
with $16.9 million in the 1997 period, primarily due to five additional
shipyards in operation during the 1998 period as compared to only one
shipyard in operation during the 1997 period. The Greens Bayou facility
began operations in the third quarter of 1997. The East Pelican Island
facility, a start-up, began generating revenues in the first quarter of
1998. As discussed above, the Pasadena and West Pelican Island
facilities were acquired on February 2, 1998 as a result of the John
Bludworth Marine acquisition. The Galveston Island facility was
acquired on May 15, 1998 as a result of the BBD-GSC acquisition. Only
the results of operation of John Bludworth Marine and BBD-GSC
subsequent to the date of acquisition are included in the results of
operations of the Company for the six month period ended June 30, 1998.
Cost of revenues rose 152% to $23.9 million in the 1998 period from
$9.5 million in the 1997 period, primarily due to the additional
shipyards in operation during the 1998 period.
Gross profit increased 77% to $13.2 million in the 1998 period from
$7.4 million in the 1997 period due to the additional shipyards in
operation during the 1998 period. The gross profit margin decreased to
36% in the 1998 period from 44% in the 1997 period, primarily due to
the expenses incurred as a result of the start-up nature of the East
Pelican Island shipyard, and the decrease in higher margin
environmental services revenue as a percentage of total revenue.
General and administrative expenses increased 165% to $7.4 million in
the 1998 period from $2.8 million in the 1997 period. General and
administrative expenses as a percentage of revenues for the 1998 period
represented 20% of total revenues, as compared to 17% for the 1997
period. The increase in general and administrative expenses as a
percentage of revenues is primarily due to the full staffing and
certain overhead expenses incurred at the start-up operations in
advance of revenue generation.
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<PAGE> 14
Net interest expense rose to $4.1 million in the 1998 period from
$842,000 in the 1997 period due to five months of interest expense on
the $90 million 11% Senior Notes reflected in the 1998 period.
The elimination of minority interest in the 1998 period from
approximately $403,000 in the 1997 period is due to all minority
shareholders of this subsidiary exchanging their shares for shares in
First Wave effective December 31, 1997. As a result, First Wave has
owned 100% of the common stock of all of its subsidiaries for the
entire 1998 period.
The decrease in income tax expense from approximately $1.4 million in
the 1997 period to $729,000 in the 1998 period is directly attributable
to the decrease in income before income taxes and the extraordinary
item.
The extraordinary item reflected in the 1998 period of approximately
$933,000 relates to approximately $1.5 million in loss on
extinguishment of debt, net of income tax benefit of approximately
$559,000.
The decrease in net earnings from the 1997 period to the 1998 period is
due primarily to the following: the loss on the extinguishment of debt,
the additional interest expense related to the $90 million senior
notes, and the increase in general and administrative expenses incurred
in connection with the start-up of the East Pelican Island shipyard
during the 1998 period.
INFLATION AND CHANGING PRICES
The Company does not believe that general price inflation has had a
significant impact on the Company's results of operations during the
periods presented. To the extent that the effects of inflation are not
offset by improvements in manufacturing and purchasing efficiency and
labor productivity, the Company generally has been able to take such
effects into account in pricing its contracts with customers. There can
be no assurance, however, that inflation will not have a material
effect on the Company's business in the future.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ongoing liquidity requirements arise primarily from its
need to service debt, fund working capital, acquire additional shipyard
facilities and make capital improvements to its facilities. Prior to
the Company's senior notes offering discussed below, bank financing and
internally generated funds provided funding for these activities.
The Company completed its $90 million 11% Senior Notes offering on
February 2, 1998. Simultaneous with the senior notes offering, the
Company used $15.0 million of the net proceeds of the offering to
complete the John Bludworth Marine
12
<PAGE> 15
acquisition. As a provision of the senior notes offering, the Company
was required to deposit sufficient funds in a trust account to cover
the first two semi-annual interest payments on the senior notes. The
expenses incurred by the Company in connection with the senior notes
offering were approximately $4.4 million. Subsequent to the senior
notes offering and the John Bludworth Marine acquisition, approximately
$25.2 million was used to repay indebtedness of the Company. On May 15,
1998, $5.5 million of the net proceeds of the offering was used to
complete the BBD-GSC acquisition.
Excluding the acquisition of the Pasadena facility, the West Pelican
Island facility and the Galveston Island facility, the Company has used
approximately $11.6 million of proceeds from the senior notes offering
on capital expenditures during the six month period ended June 30,
1998. The Company has budgeted $20 to $22 million of capital
expenditures for the remainder of 1998.
During the current quarter of 1998, the Company used a portion of the
remaining net proceeds of the offering discussed above as follows: $5.5
million was used to complete the BBD- GSC acquisition and $5.2 million
was used to paydown the promissory note to the former owner of John
Bludworth Marine. On July 30, 1998, $5.5 million was used to pay the
balance of the note to the former owner of John Bludworth Marine.
Under its indenture entered into in connection with the senior notes
offering, the Company is permitted to borrow up to the greater of $20
million or 85% of its accounts receivable. On June 9, 1998, the Company
obtained a $10.0 million revolving line of credit collateralized by
accounts receivable. Additionally, the Company has $4.0 million in
borrowing capacity under another revolving line of credit. There were
no borrowings outstanding on any of the lines of credit at June 30,
1998.
Net cash provided by operating activities for the six month periods
ended June 30, 1998 and 1997 was $3.2 million and $1.9 million,
respectively.
Net cash used in investing activities was $43.9 million and $300,000
for the six month periods ended June 30, 1998 and 1997, respectively.
During the 1998 period, cash used in investing activities was for the
completion of the John Bludworth Marine and BBD-GSC acquisitions,
capital improvements and the purchase of investments.
Net cash provided by (used in) financing activities was $57.6 million
and ($1.3) million for the six month periods ended June 30, 1998 and
1997, respectively. Cash provided by financing activities resulted from
the completion of the $90 million 11% Senior Notes offering during the
period. Cash generated from the 11% Senior Notes offering was used to
prepay indebtedness of the Company and pay the remainder of the
financing costs related to the 11% Senior Notes offering.
13
<PAGE> 16
Management believes that with the remaining proceeds from the 11%
Senior Notes offering, cash generated from operations, and, if
necessary, borrowings under the Company's lines of credit, the Company
will have sufficient resources available to meet its anticipated
requirements for capital expenditures and working capital needs through
the remainder of fiscal year 1998.
YEAR 2000 COMPUTER ISSUE
Many computer systems in use today were designed and developed using
two digits, rather than four, to specify the year. As a result, such
systems will recognize the year 2000 as "00". This could cause many
computer applications to fail completely or to create erroneous results
unless corrective measures are taken.
The Company currently believes that with recent upgrades made to its
existing software, the Year 2000 problem will not pose significant
operations problems for the Company's computer systems. The Company has
initiated discussions with its significant suppliers, large customers,
financial institutions and utilities to assure that those parties have
appropriate plans to remediate Year 2000 issues.
14
<PAGE> 17
PART II: OTHER INFORMATION
Item 1. Not Applicable.
Item 2. Use of Proceeds.
The Company completed an offering of $90 million of 11% Senior
Notes on February 2, 1998. The underwriter was Schroder & Co.,
Inc.
Expenses incurred by the Company in connection with the senior
notes offering were as follows (in thousands):
<TABLE>
<S> <C>
Underwriting discounts and commissions $ 3,150
Legal and accounting fees 637
Printing 252
Other 336
-------
$ 4,375
=======
</TABLE>
From February 2, 1998 through June 30, 1998, the Company used
offering proceeds as follows (in thousands):
<TABLE>
<S> <C>
John Bludworth Marine, Inc. acquisition $15,000
Pledged securities - first year's interest 9,542
Repayment of indebtedness, including
prepayment penalties 25,172
Partial payment on promissory note to
former owner of John Bludworth
Marine, Inc. 5,275
BBD-GSC acquisition 5,503
Capital expenditures 11,605
Expenses of offering (see above) 4,375
-------
Total proceeds expended $76,472
=======
</TABLE>
Of the remaining proceeds of $13.5 million, approximately
$10.25 million is included in cash and cash equivalents at
June 30, 1998 and $3.25 million is included in investments.
The remaining proceeds are scheduled to be used as follows:
(1) on July 30, 1998 approximately $5.5 million was used to
pay the balance of the promissory note to the former owner of
John Bludworth Marine, Inc.; and (2) the remainder will be
used to cover a portion of the budgeted capital expenditures.
15
<PAGE> 18
Item 3. Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Shareholders was held on June
29, 1998, at which the shareholders voted on the election of
two directors and the appointment of the Company's independent
public accountants. All 11,545,009 shares of Common Stock
present, in person or by proxy, were voted for the election of
James D. Cole and Paul E. O'Neill, II as directors. All shares
were voted for the appointment of Grant Thornton, LLP as the
Company's independent public accountants for 1998. Directors
whose term of office continued were Samuel F. Eakin, Frank W.
Eakin and David B. Ammons.
Item 5. Not applicable
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
*2.1 Distribution of Stock Agreement between John
Bludworth Marine, Inc., EAE Services, Inc.,
First Wave Marine, Inc., and Newpark Marine
Fabricators, Inc. (now known as Newpark
Shipbuilding--Pelican Island, Inc.), dated
as of July 29, 1998.
*2.2 Articles of Merger of Bludworth Shipyard and
Fabrication, Inc. into Newpark Marine
Fabricators, Inc.(now known as Newpark
Shipbuilding--Pelican Island, Inc.),
effective as of August 6, 1998.
*3.1 Articles of Amendment to the Articles of
Incorporation of Louisiana Ship, Inc. (now
known as Newpark Shipbuilding--Greens Bayou,
Inc.), effective as of August 7, 1998.
*3.2 Articles of Amendment to the Articles of
Incorporation of Newpark Marine Fabricators,
Inc. (now known as Newpark
Shipbuilding--Pelican Island, Inc.),
effective as of August 7, 1998.
*3.3 Articles of Amendment to the Articles of
Incorporation of Newpark Shipbuilding and
Repair, Inc. (now known as Newpark
Shipbuilding--Brady Island, Inc.), effective
as of August 7, 1998.
16
<PAGE> 19
*4.1 Indenture between First Wave Marine, Inc.,
as Issuer and Newpark Shipbuilding and
Repair, Inc. (now known as Newpark
Shipbuilding--Brady Island, Inc.), EAE
Services, Inc., EAE Industries, Inc.,
Newpark Marine Fabricators, Inc. (now known
as Newpark Shipbuilding--Pelican Island,
Inc.) and Louisiana Ship, Inc. (now known as
Newpark Shipbuilding--Greens Bayou, Inc.),
as Subsidiary Guarantors and Bank One, N.A.,
as Trustee, dated as of February 2, 1998.
*4.2 First Supplemental Indenture between First
Wave Marine, Inc., as Issuer, Subsidiary
Guarantors named therein and Bank One, N.A.,
as Trustee, dated as of February 3, 1998.
*4.3 Second Supplemental Indenture between First
Wave Marine, Inc., as Issuer, Subsidiary
Guarantors named therein and Bank One, N.A.,
as Trustee, dated as of May 18, 1998.
*10.1 Pledge and Security Agreement between First
Wave Marine, Inc. and Bank One, N.A., as
Pledge Agent and Trustee, dated as of
February 2, 1998.
10.2 Sale and Purchase Agreement between FW
Marine Properties, Inc. (now known as
Newpark Shipbuilding--Galveston Island,
Inc.) and Galveston Shipbuilding Company,
dated as of May 1, 1998 (incorporated by
reference to Exhibit 2.1 to the Company's
Current Report on Form 8-K, as filed with
the Commission May 29, 1998).
*10.3 Credit Agreement between First Wave Marine,
Inc., as Borrower, each of the banks or
lending institutions from time to time party
thereto, as Banks and Southwest Bank of
Texas, N.A., as Agent, dated as of June
9,1998.
*27.1 Financial Data Schedule.
* Filed herewith
(b) Reports on Form 8-K
On May 29, 1998, the Company filed a report on Form
8-K relating to the acquisition of certain assets of
the Barge Building Division of Galveston Shipbuilding
Company, as amended by report on Form 8-K/A filed on
July 29, 1998.
17
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FIRST WAVE MARINE, INC.
August 14, 1998 By: /s/ DAVID B. AMMONS
----------------------------
David B. Ammons
Executive Vice President and
Chief Financial Officer
August 14, 1998 By: /s/ DALE E. SCHEXNAYDER
----------------------------
Dale E. Schexnayder
Corporate Controller
18
<PAGE> 21
EXHIBIT LIST
<TABLE>
<S> <C>
*2.1 Distribution of Stock Agreement between John Bludworth Marine, Inc.,
EAE Services, Inc., First Wave Marine, Inc., and Newpark Marine
Fabricators, Inc. (now known as Newpark Shipbuilding--Pelican Island,
Inc.), dated as of July 29, 1998.
*2.2 Articles of Merger of Bludworth Shipyard and Fabrication, Inc. into
Newpark Marine Fabricators, Inc.(now known as Newpark
Shipbuilding--Pelican Island, Inc.), effective as of August 6, 1998.
*3.1 Articles of Amendment to the Articles of Incorporation of Louisiana
Ship, Inc. (now known as Newpark Shipbuilding--Greens Bayou, Inc.),
effective as of August 7, 1998.
*3.2 Articles of Amendment to the Articles of Incorporation of Newpark
Marine Fabricators, Inc. (now known as Newpark Shipbuilding--Pelican
Island, Inc.), effective as of August 7, 1998.
*3.3 Articles of Amendment to the Articles of Incorporation of Newpark
Shipbuilding and Repair, Inc. (now known as Newpark Shipbuilding--Brady
Island, Inc.), effective as of August 7, 1998.
*4.1 Indenture between First Wave Marine, Inc., as Issuer and Newpark
Shipbuilding and Repair, Inc. (now known as Newpark Shipbuilding--Brady
Island, Inc.), EAE Services, Inc., EAE Industries, Inc., Newpark Marine
Fabricators, Inc. (now known as Newpark Shipbuilding--Pelican Island,
Inc.) and Louisiana Ship, Inc. (now known as Newpark
Shipbuilding--Greens Bayou, Inc.), as Subsidiary Guarantors and Bank
One, N.A., as Trustee, dated as of February 2, 1998.
*4.2 First Supplemental Indenture between First Wave Marine, Inc., as
Issuer, Subsidiary Guarantors named therein and Bank One, N.A., as
Trustee, dated as of February 3, 1998.
*4.3 Second Supplemental Indenture between First Wave Marine, Inc., as
Issuer, Subsidiary Guarantors named therein and Bank One, N.A., as
Trustee, dated as of May 18, 1998.
*10.1 Pledge and Security Agreement between First Wave Marine, Inc. and Bank
One, N.A., as Pledge Agent and Trustee, dated as of February 2, 1998.
</TABLE>
19
<PAGE> 22
<TABLE>
<S> <C>
10.2 Sale and Purchase Agreement between FW Marine Properties, Inc. (now
known as Newpark Shipbuilding--Galveston Island, Inc.) and Galveston
Shipbuilding Company, dated as of May 1, 1998 (incorporated by
reference to Exhibit 2.1 to the Company's Current Report on Form 8-K,
as filed with the Commission May 29, 1998).
*10.3 Credit Agreement between First Wave Marine, Inc., as Borrower, each of
the banks or lending institutions from time to time party thereto, as
Banks and Southwest Bank of Texas, N.A., as Agent, dated as of June
9,1998.
*27.1 Financial Data Schedule.
</TABLE>
* Filed herewith
20
<PAGE> 1
EXHIBIT 2.1
DISTRIBUTION OF STOCK AGREEMENT
This Agreement dated as of this 29th day of July, 1998, is by and
among:
JOHN BLUDWORTH MARINE, INC., a Texas corporation, domiciled in the
county of Harris, whose mailing address is 2102 Broadway, Houston,
Texas, 77012, represented herein by its duly authorized chief
executive officer, Samuel F. Eakin.
(hereinafter referred to as "Bludworth")
EAE SERVICES, INC., a Texas corporation, domiciled in the county of
Harris, whose mailing address is 2102 Broadway, Houston, Texas, 77012,
represented herein by its duly authorized chief executive officer,
Samuel F. Eakin.
(hereinafter referred to as "EAE")
FIRST WAVE MARINE, INC., a Delaware corporation, domiciled in the
State of Delaware, whose mailing address is 4000 South Sherwood Forest
Boulevard, Suite 603, Baton Rouge, Louisiana, 70816, represented
herein by its chief executive officer, Samuel F. Eakin.
(hereinafter referred to as "First Wave")
NEWPARK MARINE FABRICATORS, INC., a Texas corporation, domiciled in
the County of Galveston, whose mailing address is 2102 Broadway,
Houston, Texas, 77012, represented herein by its duly authorized chief
executive officer, Samuel F. Eakin.
(hereinafter referred to as "NMF")
W I T N E S S E T H:
WHEREAS, Bludworth Shipyard and Fabrication, Inc. is a wholly-owned
subsidiary of Bludworth, which is a wholly-owned subsidiary of EAE, which is
in turn a wholly-owned subsidiary of First Wave.
WHEREAS, NMF is a wholly-owned subsidiary of First Wave.
1
<PAGE> 2
WHEREAS, First Wave and the Boards of Directors of EAE, Bludworth and
NMF have resolved that for operating purposes it would be best if Bludworth
Shipyard and Fabrication, Inc. were merged into NMF because both corporations
have their primary operations on Pelican Island, Galveston, Texas, and that
there is no advantage or desirability for maintaining these as separate
corporations and that such merger is in the best interests of the consolidated
group.
WHEREAS, in order to facilitate such merger, all of the outstanding
stock of Bludworth Shipyard and Fabrication shall be distributed from Bludworth
to EAE to First Wave, which shall contribute such shares to NMF so that
Bludworth Shipyard and Fabrication shall be a wholly-owned subsidiary of NMF.
NOW, THEREFORE BE IT RESOLVED, that the parties agree as follows:
I.
DISTRIBUTION OF STOCK
Bludworth, presently the owner of all of the outstanding shares of
Bludworth Shipyard and Fabrication, Inc. in the amount of 100 shares, hereby
distributes, assigns and transfers all of its rights, title and interests to
the shares of Bludworth Shipyard and Fabrication, Inc. to EAE, which in turn
distributes, assigns and transfers such shares to First Wave, which in turn
contributes, assigns and transfers all of such shares to NMF.
II.
OWNERSHIP BY NMF
As a result of these transactions, parties hereto agree that all of
the outstanding shares of Bludworth Shipyard and Fabrication, Inc. are hereby
owned by NMF.
2
<PAGE> 3
III.
AUTHORIZATION
Parties hereby agree that the Boards of Directors of Bludworth and EAE
hereto have approved this distribution of stock of Bludworth Shipyard and
Fabrication, Inc. to NMF.
IV.
APPLICABLE LAW
This law is governed by the internal laws of the State of Texas.
V.
ASSIGNS
This Agreement shall be binding on the successors and assigns of the
parties hereto.
[THE NEXT PAGE IS THE SIGNATURE PAGE TO THIS AGREEMENT]
3
<PAGE> 4
THUS AGREED, on the date above indicated.
WITNESSES: JOHN BLUDWORTH MARINE, INC.
By: /s/ SAMUEL F. EAKIN
- -------------------------------- --------------------------------
SAMUEL F. EAKIN
Chairman and CEO
EAE SERVICES, INC.
- --------------------------------
By: /s/ SAMUEL F. EAKIN
--------------------------------
SAMUEL F. EAKIN
Chairman and CEO
FIRST WAVE MARINE, INC.
By: /s/ SAMUEL F. EAKIN
--------------------------------
SAMUEL F. EAKIN
Chairman and CEO
NEWPARK MARINE FABRICATORS, INC.
By: /s/ SAMUEL F. EAKIN
--------------------------------
SAMUEL F. EAKIN
Chairman and CEO
4
<PAGE> 1
EXHIBIT 2.2
ARTICLES OF MERGER
OF
BLUDWORTH SHIPYARD AND FABRICATION, INC.
INTO
NEWPARK MARINE FABRICATORS, INC.
Pursuant to the provisions of Article 5.16 of the Texas Business
Corporation Act, Newpark Marine Fabricators, Inc. (the "Corporation"), a
business corporation organized under the laws of the State of Texas, and owning
all of the outstanding shares of Bludworth Shipyard and Fabrication, Inc., a
business corporation organized under the laws of the State of Texas, hereby
execute the following articles of merger.
1. On July 29, 1998, the Shareholders and Directors of Newpark
Marine Fabricators, Inc. adopted a unanimous written consent authorizing the
merger of Bludworth Shipyard and Fabrication, Inc. into Newpark Marine
Fabricators, Inc., the surviving corporation, as follows:
RESOLVED, that all of the shareholders and all of the directors of the
Corporation deem it advisable and in the best interest of the
Corporation that Bludworth Shipyard and Fabrication, Inc., a Texas
Corporation, be merged with and into the Corporation, pursuant to the
Texas Business Corporation Act.
RESOLVED, that the form, terms and provisions of the proposed Articles
of Merger by and between the Corporation and Bludworth Shipyard and
Fabrication, Inc., a Texas corporation, a copy of which has been
presented to the Board of Directors of the Corporation, providing,
among other things, for the merger of Bludworth Shipyard and
Fabrication, Inc., a Texas corporation, into the Corporation pursuant
to which the Corporation shall be the surviving corporation existing
under the laws of the State of Texas be, and it hereby is, in all
respects, approved and adopted and that the officers of the
Corporation, be, and are hereby, authorized and directed in the name
and on behalf of the Corporation to cause such Articles of Merger
substantially in the form thereof to be executed and delivered as
required by the laws of the State of Texas.
RESOLVED, that the officers of the Corporation be, and are hereby
authorized and directed, on behalf of the Corporation, to cause the
Articles of Merger to be
1
<PAGE> 2
executed, acknowledged, filed and recorded with the Secretary of State
of Texas and to cause any other acts which may be necessary or proper
in order to carry into effect the intent and purpose of the foregoing
resolutions to be done in order to enable the Corporation to perform
its obligations under the Articles of Merger.
BE IT FURTHER RESOLVED, that any and all actions previously
taken by the Board of Directors or the officers of the Corporation in
connection with the merger of Bludworth Shipyard and Fabrication, Inc.,
a Texas corporation, with and into the Corporation, be and hereby are
ratified, adopted and approved.
2. The total number and percentage of outstanding shares of
Bludworth Shipyard and Fabrication, Inc., the subsidiary corporation and the
number and percentage of shares owned by Newpark Marine Fabricators, Inc. the
parent corporation is:
<TABLE>
<CAPTION>
NUMBER AND PERCENTAGE OF NUMBER AND PERCENTAGE OF
CLASS SHARES OUTSTANDING SHARES OWNED BY PARENT
- --------- --------------------------- -------------------------
<S> <C> <C>
Common Stock, 100 (100%) 100 (100%)
no par value
</TABLE>
3. The surviving corporation Newpark Marine Fabricators, Inc.
will be responsible for the payment of all fees and franchise taxes of the
merged corporation(s) and will be obligated to pay such fees and franchise
taxes if the same are not timely paid.
Dated: July 29, 1998 NEWPARK MARINE FABRICATORS, INC.
By: /s/ SAMUEL F. EAKIN
-----------------------------------
SAMUEL F. EAKIN
Chairman and Chief Executive
Officer
2
<PAGE> 1
EXHIBIT 3.1
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
LOUISIANA SHIP, INC.
Pursuant to the terms and provisions of Article 4.04 of the Texas
Business Corporation Act, Louisiana Ship, Inc., a Texas corporation, adopts the
following Articles of Amendment to its Articles of Incorporation.
I.
The name of the corporation is Louisiana Ship, Inc.
II.
The Articles of Incorporation are amended as follows:
Article I of the Articles of Incorporation shall be amended in its
entirety by substituting the following therefor:
"CORPORATE NAME
The name of the corporation is Newpark Shipbuilding--Greens Bayou,
Inc."
III.
Each amendment made by the Articles of Amendment to the Articles of
Incorporation has been effected in conformity with the provisions of the Texas
Business Corporation Act. The Articles of Amendment to the Articles of
Incorporation, including each amendment set forth above, were adopted by the
shareholders of the corporation on July 31, 1998.
- 1 -
<PAGE> 2
IV.
The number of shares of the corporation outstanding at the time of the
adoption of, and entitled to vote on, these amendments was Eight Hundred
Thousand (800,000).
V.
The number of shares that voted for these amendments was Eight Hundred
Thousand (800,000), and no shares were voted against the amendment.
VI.
The Articles of Amendment to the Articles of Incorporation do not
provide for an exchange, reclassification or cancellation of issued shares.
VII.
The Articles of Amendment to the Articles of Incorporation do not
effect a change in the amount of stated capital.
Dated: July 31, 1998.
LOUISIANA SHIP, INC.
BY: /s/ FRANK W. EAKIN
----------------------
FRANK W. EAKIN
PRESIDENT
- 2 -
<PAGE> 1
EXHIBIT 3.2
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
NEWPARK MARINE FABRICATORS, INC.
Pursuant to the terms and provisions of Article 4.04 of the Texas
Business Corporation Act, Newpark Marine Fabricators, Inc., a Texas
corporation, adopts the following Articles of Amendment to its Articles of
Incorporation.
I.
The name of the corporation is Newpark Marine Fabricators, Inc.
II.
The Articles of Incorporation are amended as follows:
Article One of the Articles of Incorporation shall be amended in its
entirety by substituting the following therefor:
"CORPORATE NAME
The name of the corporation is Newpark Shipbuilding--Pelican Island,
Inc."
III.
Each amendment made by the Articles of Amendment to the Articles of
Incorporation has been effected in conformity with the provisions of the Texas
Business Corporation Act. The Articles of Amendment to the Articles of
Incorporation, including each amendment set forth above, were adopted by the
shareholders of the corporation on July 31, 1998.
- 1 -
<PAGE> 2
IV.
The number of shares of the corporation outstanding at the time of the
adoption of, and entitled to vote on, these amendments was One Hundred (100).
V.
The number of shares that voted for these amendments was One Hundred
(100), and no shares were voted against the amendment.
VI.
The Articles of Amendment to the Articles of Incorporation do not
provide for an exchange, reclassification or cancellation of issued shares.
VII.
The Articles of Amendment to the Articles of Incorporation do not
effect a change in the amount of stated capital.
Dated: July 31, 1998.
NEWPARK MARINE FABRICATORS, INC.
BY: /s/ FRANK W. EAKIN
----------------------
FRANK W. EAKIN
PRESIDENT
- 2 -
<PAGE> 1
EXHIBIT 3.3
ARTICLES OF AMENDMENT TO
ARTICLES OF INCORPORATION OF
NEWPARK SHIPBUILDING AND REPAIR, INC.
Pursuant to the terms and provisions of Article 4.04 of the Texas Business
Corporation Act, Newpark Shipbuilding and Repair, Inc., a Texas corporation,
adopts the following Articles of Amendment to its Articles of Incorporation.
I.
The name of the corporation is Newpark Shipbuilding and Repair, Inc.
II.
The Articles of Incorporation are amended as follows:
Article I of the Articles of Incorporation shall be amended in its entirety
by substituting the following therefor:
"CORPORATE NAME
The name of the corporation is Newpark Shipbuilding-Brady Island, Inc."
III.
Each amendment made by the Articles of Amendment to the Articles of
Incorporation has been effected in conformity with the provisions of the Texas
Business Corporation Act. The Articles of Amendment to the Articles of
Incorporation, including each amendment set forth above, were adopted by the
shareholders of the corporation on July 31, 1998.
-1-
<PAGE> 2
IV.
The number of shares of the corporation outstanding at the time of the
adoption of, and entitled to vote on, these amendments was One Hundred Thousand
(100,000).
V.
The number of shares that voted for these amendments was One Hundred
Thousand (100,000), and no shares were voted against the amendment.
VI.
The Articles of Amendment to the Articles of Incorporation do not provide
for an exchange, reclassification or cancellation of issued shares.
VII.
The Articles of Amendment to the Articles of Incorporation do not effect a
change in the amount of stated capital.
Dated: July 31, 1998.
NEWPARK SHIPBUILDING
AND REPAIR, INC.
BY: FRANK W. EAKIN
------------------
Frank W. Eakin
President
-2-
<PAGE> 1
EXHIBIT 4.1
================================================================================
FIRST WAVE MARINE, INC.
as Issuer
NEWPARK SHIPBUILDING AND REPAIR, INC.
EAE SERVICES, INC.
EAE INDUSTRIES, INC.
NEWPARK MARINE FABRICATORS, INC.
LOUISIANA SHIP, INC.
as Subsidiary Guarantors
$90,000,000
11% SENIOR NOTES DUE 2008
-----------------
INDENTURE
Dated as of February 2, 1998
-----------------
BANK ONE, N.A.
as Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
- --------------- -----------------
<S> <C>
310(a)(1)........................................................................... 7.10
(a)(2)......................................................................... 7.10
(a)(3)......................................................................... N.A.
(a)(4)......................................................................... N.A.
(a)(5)......................................................................... 7.10
(b) ........................................................................... 7.3,7.10
(c) ........................................................................... N.A.
311(a) ........................................................................... 7.11
(b) ........................................................................... 7.11
(c) ........................................................................... N.A.
312 (a) ........................................................................... 2.5
(b) ........................................................................... 12.3
(c) ........................................................................... 12.3
313 (a) ........................................................................... 7.6
(b)(1)......................................................................... N.A.
(b)(2)......................................................................... 7.6,7.7
(c) ........................................................................... 7.6,12.2
(d) ........................................................................... 7.6
314 (a) ........................................................................... 4.3,12.5
(b) ........................................................................... 11.2
(c)(1)......................................................................... 12.4
(c)(2)......................................................................... 11.4,12.4
(c)(3)......................................................................... N.A.
(d) ........................................................................... 11.3,11.4
(e) ........................................................................... 12.5
(f) ........................................................................... N.A.
315 (a) ........................................................................... 7.1(b)
(b) ........................................................................... 7.5,12.2
(c) ........................................................................... 7.1(a)
(d) ........................................................................... 7.1(c)
(e) ........................................................................... 6.11
316 (a)(last sentence).............................................................. 2.9
(a)(1)(A)...................................................................... 6.5
(a)(1)(B)...................................................................... 6.4
(a)(2)......................................................................... N.A.
(b) ........................................................................... 6.7
(c) ........................................................................... 9.4
</TABLE>
ii
<PAGE> 3
<TABLE>
<S> <C>
317 (a)(1).......................................................................... 6.8
(a)(2)......................................................................... 6.9
(b) ........................................................................... 2.4
318 (a) ........................................................................... 12.1
(b) ........................................................................... N.A.
(c) ........................................................................... 12.1
</TABLE>
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
iii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE........................................................................................ 1
Section 1.1. Definitions....................................................................... 1
Section 1.2. Other Definitions................................................................. 15
Section 1.3. Incorporation by Reference of Trust Indenture Act................................. 16
Section 1.4. Rules of Construction............................................................. 16
ARTICLE 2
THE NOTES........................................................................................... 17
Section 2.1. Form and Dating................................................................... 17
Section 2.2. Execution and Authentication...................................................... 19
Section 2.3. Trustee, Registrar and Paying Agent............................................... 20
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST............................................... 20
Section 2.5. Holder Lists...................................................................... 21
Section 2.6. Transfer and Exchange............................................................. 21
Section 2.7. Replacement Notes................................................................. 22
Section 2.8. Outstanding Notes................................................................. 23
Section 2.9. Treasury Notes.................................................................... 23
Section 2.10. Temporary Notes................................................................... 23
Section 2.11. Cancellation...................................................................... 24
Section 2.12. Defaulted Interest................................................................ 24
Section 2.13. Persons Deemed Owners............................................................. 24
Section 2.14. CUSIP Numbers..................................................................... 25
ARTICLE 3
REDEMPTION AND PREPAYMENT........................................................................... 25
Section 3.1. Notices to Trustee................................................................ 25
Section 3.2. Selection of Notes to Be Redeemed................................................. 25
Section 3.3. Notice of Redemption.............................................................. 26
Section 3.4. Effect of Notice of Redemption.................................................... 27
Section 3.5. Deposit of Redemption Price....................................................... 27
Section 3.6. Notes Redeemed in Part............................................................ 27
Section 3.7. Optional Redemption............................................................... 27
Section 3.8. Mandatory Redemption.............................................................. 28
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ARTICLE 4
COVENANTS........................................................................................... 28
Section 4.1. Payment of Notes.................................................................. 28
Section 4.2. Maintenance of Office or Agency................................................... 29
Section 4.3. Provisions of Reports and Other Information....................................... 29
Section 4.4. Compliance Certificate............................................................ 30
Section 4.5. Taxes............................................................................. 31
Section 4.6. Stay, Extension and Usury Laws.................................................... 31
Section 4.7. Limitation on Restricted Payments................................................. 31
Section 4.8. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. ........................................................ 34
Section 4.9. Limitation on Indebtedness........................................................ 35
Section 4.10. LIMITATION ON ASSET SALES......................................................... 36
Section 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES........................................ 38
Section 4.12. LIMITATION ON LIENS............................................................... 38
Section 4.13. LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.......................................................... 39
Section 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL........................................ 39
Section 4.15. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS..................................... 40
Section 4.16. COVENANT WITH RESPECT TO BUSINESS ACTIVITIES...................................... 41
Section 4.17. CORPORATE EXISTENCE............................................................... 41
Section 4.18. PLEDGE ACCOUNT.................................................................... 41
ARTICLE 5
SUCCESSORS.......................................................................................... 42
Section 5.1. MERGER, CONSOLIDATION, OR SALE OF ASSETS.......................................... 42
Section 5.2. Successor Company Substituted..................................................... 43
ARTICLE 6
DEFAULTS AND REMEDIES............................................................................... 43
Section 6.1. Events of Default................................................................. 43
Section 6.2. Acceleration...................................................................... 45
Section 6.3. Other Remedies.................................................................... 46
Section 6.4. Waiver of Past Defaults........................................................... 46
Section 6.5. Control by Majority............................................................... 46
Section 6.6. Limitation on Suits............................................................... 46
Section 6.7. Rights of Holders of Notes to Receive Payment..................................... 47
Section 6.8. Collection Suit by Trustee........................................................ 47
Section 6.9. Trustee May File Proofs of Claim.................................................. 47
Section 6.10. Priorities........................................................................ 48
Section 6.11. Undertaking for Costs............................................................ 49
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ARTICLE 7
TRUSTEE............................................................................................. 49
Section 7.1. Duties of Trustee................................................................. 49
Section 7.2. Rights of Trustee................................................................. 50
Section 7.3. Individual Rights of Trustee...................................................... 51
Section 7.4. Trustee's Disclaimer.............................................................. 51
Section 7.5. Notice of Defaults................................................................ 51
Section 7.6. Reports by Trustee to Holders of the Notes........................................ 52
Section 7.7. Compensation and Indemnity........................................................ 52
Section 7.8. Replacement of Trustee............................................................ 53
Section 7.9. Successor Trustee by Merger, etc.................................................. 54
Section 7.10. Eligibility; Disqualification..................................................... 54
Section 7.11. Preferential Collection of Claims Against Company................................. 55
ARTICLE 8
DEFEASANCE AND DISCHARGE............................................................................ 55
Section 8.1. Option to Effect Legal Defeasance or Covenant Defeasance.......................... 55
Section 8.2. Legal Defeasance.................................................................. 55
Section 8.3. Covenant Defeasance............................................................... 56
Section 8.4. Conditions to Legal or Covenant Defeasance........................................ 56
Section 8.5. Discharge......................................................................... 57
Section 8.6. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.................................................... 58
Section 8.7. Repayment to Company.............................................................. 59
Section 8.8. Reinstatement..................................................................... 59
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER.................................................................... 59
Section 9.1. Without Consent of Holders of Notes............................................... 59
Section 9.2. With Consent of Holders of Notes.................................................. 60
Section 9.3. Compliance with Trust Indenture Act............................................... 62
Section 9.4. Revocation and Effect of Consents................................................. 62
Section 9.5. Notation on or Exchange of Notes.................................................. 63
Section 9.6. Trustee to Sign Amendments, etc................................................... 63
Section 9.7. Payments for Consent.............................................................. 63
ARTICLE 10
SUBSIDIARY GUARANTEES............................................................................... 63
Section 10.1. Guarantees........................................................................ 63
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Section 10.2. Subsidiary Guarantors May Consolidate, Etc., on Certain Terms..................... 65
Section 10.3. Limitation on Liability........................................................... 66
Section 10.4. Successors and Assigns............................................................ 67
Section 10.5. No Waiver......................................................................... 67
Section 10.6. Modification...................................................................... 67
Section 10.7. Release of Subsidiary Guarantor................................................... 67
Section 10.8. Execution of Supplemental Indenture by Future Restricted
Subsidiaries...................................................................... 67
ARTICLE 11
COLLATERAL AND SECURITY............................................................................. 68
Section 11.1. Pledge Agreement.................................................................. 68
Section 11.2. Recording and Opinions............................................................ 69
Section 11.3. Release of Collateral............................................................. 69
Section 11.4. Certificate of the Company........................................................ 70
Section 11.5. Authorization of Actions to Be Taken by the Trustee Under the
Pledge Agreement.................................................................. 70
Section 11.6. Authorization of Receipt of Funds by the Trustee Under the
Pledge Agreement.................................................................. 71
Section 11.7. Termination of Security Interest................................................. 71
ARTICLE 12
MISCELLANEOUS....................................................................................... 71
Section 12.1. Trust Indenture Act Controls...................................................... 71
Section 12.2. Notices........................................................................... 71
Section 12.3. Communication by Holders of Notes with Other Holders of Notes..................... 73
Section 12.4. Certificate and Opinion as to Conditions Precedent................................ 73
Section 12.5. Statements Required in Certificate or Opinion..................................... 73
Section 12.6. Rules by Trustee and Agents....................................................... 74
Section 12.7. No Personal Liability of Directors, Officers, Employees and Others................ 74
Section 12.8. Governing Law..................................................................... 74
Section 12.9. No Adverse Interpretation of Other Agreements..................................... 74
Section 12.10. Successors........................................................................ 74
Section 12.11. Severability...................................................................... 75
Section 12.12. Originals......................................................................... 75
Section 12.13. Table of Contents, Headings, etc.................................................. 75
Section 12.14. Counterparts...................................................................... 75
EXHIBITS
Exhibit A FORM OF NOTE................................................................................. A-1
Exhibit B CERTIFICATE OF TRANSFEROR.................................................................... B-1
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This INDENTURE, dated as of February 2, 1998, is by and among First
Wave Marine, Inc., a Delaware corporation (the "Company"), as issuer, Newpark
Shipbuilding and Repair, Inc., a Texas corporation, as an Initial Subsidiary
Guarantor, EAE Services, Inc., a Texas corporation, as an Initial Subsidiary
Guarantor, EAE Industries, Inc., a Texas corporation, as an Initial Subsidiary
Guarantor, Newpark Marine Fabricators, Inc., a Texas corporation, as an Initial
Subsidiary Guarantor, Louisiana Ship, Inc., a Texas corporation, as an Initial
Subsidiary Guarantor, and Bank One, N.A., as trustee (the "Trustee").
The parties listed above agree as follows for the benefit of each other
and for the equal and ratable benefit of the Holders of the 11% Senior Notes due
2008 (the "Notes").
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1. DEFINITIONS.
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Restricted Subsidiary of such specified Person,
including, without limitation, Indebtedness Incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Restricted Subsidiary of such specified Person and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar or Paying Agent.
"Applicable Law", except as the context may otherwise require, means
all applicable laws, rules, regulations, ordinances, judgments, decrees,
injunctions, writs and orders of any court or governmental or congressional
agency or authority and rules, regulations, orders, licenses and permits of any
United States federal, state, municipal, regional, or other governmental body,
instrumentality, agency or authority.
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"Asset Sale" means (a) the direct or indirect sale, lease, license,
conveyance or other disposition of any assets or rights (including, without
limitation, by way of a sale and leaseback or similar arrangement, by merger or
consolidation) by the Company or a Restricted Subsidiary (a "disposition"), in
one transaction or a series of transactions; provided that the disposition of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole will be governed by the provisions of Section 4.14
and/or Section 5.1 and not by the provisions of Section 4.10, and (b) the
issuance or disposition by the Company or any of its Restricted Subsidiaries of
Equity Interests of the Company's Restricted Subsidiaries. Notwithstanding the
foregoing, none of the following will be deemed an Asset Sale: (i) a disposition
of assets by the Company to a Restricted Subsidiary or by a Restricted
Subsidiary to the Company or to a Restricted Subsidiary; (ii) an issuance of
Equity Interests by a Restricted Subsidiary to the Company or to a Restricted
Subsidiary; (iii) a Restricted Payment that is permitted by Section 4.7; (iv)
dispositions in any fiscal year with Net Proceeds in the aggregate of $1,000,000
or less; (v) any liquidation of any Cash Equivalent; (vi) any disposition of
defaulted receivables for collection; and (vii) the grant of any Lien securing
Indebtedness (or any foreclosure thereon) to the extent that such Lien is
granted in compliance with Section 4.12.
"Attributable Debt" in respect of a sale and leaseback transaction
means, at the time of determination, the present value (discounted at the rate
of interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Bank Credit Agreement" means any senior revolving credit facility
governing Indebtedness for borrowed money owed by the Company or a Restricted
Subsidiary to banks, trust companies or other institutions that are principally
engaged in the business of lending money to businesses.
"Bankruptcy Law" means Title 11, United States Code, as may be amended
from time to time, or any similar federal or state law for the relief of
debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person, or any authorized committee of the Board of Directors
of such Person.
"Board Resolutions" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday, Sunday, public
holiday or day on which banking institutions in New York (or, with respect to
any payments or transfers to be made by the Trustee or any Agent, as applicable,
in the city where such Trustee or Agent is located) are authorized or obligated
by law or executive order to close.
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"Capital Lease Obligation" means, at the time any determination thereof
is to be made, the amount of the liability in respect of a capital lease that
would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) Government Securities having maturities of
not more than twelve months from the date of acquisition, (ii) certificates of
deposit and Eurodollar time deposits with maturities of twelve months or less
from the date of acquisition, bankers' acceptances with maturities not exceeding
six months and overnight bank deposits, in each case with any member bank of the
U.S. Federal Reserve System having capital and surplus in excess of
$500,000,000, (iii) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any financial institution meeting the qualifications specified
in clause (ii) above, and (iv) commercial paper having the rating of at least
P-1 from Moody's Investors Service, Inc., or any successor to its rating
business, or at least A-1 from Standard & Poor's Ratings Group, or any successor
to its rating business, and in each case maturing within 180 days after the date
of acquisition.
"Certificated Notes" means Notes issued in definitive, fully registered
form to beneficial owners of interests in the Global Note pursuant to Section
2.06(a) hereof.
"Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than a Restricted Subsidiary; (ii) the adoption of a
plan relating to the liquidation or dissolution of the Company; (iii) the
consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any "person" (as defined above),
other than a Permitted Holder, becomes the "beneficial owner" (as such term is
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of a greater percentage of the voting stock of the Company than the
percentage of the voting stock of the Company held by the Permitted Holders;
(iv) the first day on which the Permitted Holders in the aggregate hold less
than 35% of the voting stock of the Company; or (v) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors.
"Closing Date" means the date of original issuance of the Notes.
"Collateral" means the Pledged Securities and the proceeds thereof.
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"Commission" or "SEC" means the Securities and Exchange Commission, and
any successor thereto.
"Consolidated EBITDA" means, with respect to the Company for any
period, the sum of, without duplication, (i) the Consolidated Net Income of the
Company and its Restricted Subsidiaries for such period, plus (ii) to the extent
deducted in the computation of such Consolidated Net Income, the Consolidated
Interest Expense for such period, plus (iii) to the extent deducted in the
computation of such Consolidated Net Income, amortization or write-off of
deferred financing charges for such period, plus (iv) provision for taxes based
on income or profits for such period (to the extent such income or profits were
included in computing Consolidated Net Income for such period), plus (v) to the
extent deducted in the computation of such Consolidated Net Income, consolidated
depreciation, depletion, amortization and other noncash charges of the Company
and its Restricted Subsidiaries required to be reflected as expenses on the
books and records of the Company, minus (vii) cash payments with respect to any
nonrecurring, noncash charges previously added back pursuant to clause (v), and
excluding (viii) the impact of foreign currency translations. Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depreciation and amortization and other noncash charges of a Restricted
Subsidiary shall be added to Consolidated Net Income to compute Consolidated
EBITDA only to the extent (and in the same proportion) that the Net Income of
such Subsidiary was included in calculating the Consolidated Net Income of the
Company and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (unless such approval has been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.
"Consolidated Indebtedness" means, with respect to any Person as of any
date of determination, the sum, without duplication, of (i) the total amount of
Indebtedness of such Person and its Restricted Subsidiaries, plus (ii) the
aggregate liquidation value of all Disqualified Stock (and in the case of a
Restricted Subsidiary of the Company, preferred stock other than preferred stock
held by the Company or any of its Restricted Subsidiaries) of such Person, in
each case, determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means with respect to the
Company and its Restricted Subsidiaries for any period, the ratio of (i)
Consolidated EBITDA of the Company and its Restricted Subsidiaries for such
period to (ii) Consolidated Interest Expense of the Company and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries Incurs any Indebtedness (other than revolving credit
borrowings pursuant to Indebtedness already Incurred in accordance herewith) or
issues or redeems preferred stock subsequent to the commencement of the
four-quarter reference period for which the Consolidated Interest Coverage Ratio
is being calculated but on or prior to the date on which the event for which the
calculation of the Consolidated Interest Coverage Ratio is being made (the
"Calculation Date") , then the Consolidated Interest Coverage Ratio shall be
calculated giving pro forma effect to such Incurrence of Indebtedness, or such
issuance or redemption of
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preferred stock, as if the same had occurred at the beginning of the applicable
four-quarter reference period. For purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period, and (ii) the Consolidated EBITDA attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of during the four quarter reference period or subsequent to such
reference period and on or prior to the Calculation Date, shall be excluded as
of the first day of the four quarter reference period, and (iii) the
Consolidated Interest Expense attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
during the four quarter reference period or subsequent to such reference period
and on or prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Consolidated Interest Expense
will not be obligations of the Company or any of its Restricted Subsidiaries
following the Calculation Date.
"Consolidated Interest Expense" means, with respect to any Person for
any period, the sum, without duplication, of (i) the consolidated interest
expense of such Person and its Restricted Subsidiaries for such period, whether
paid or accrued (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, interest payments in respect of Indebtedness of
another Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), (ii) the consolidated
interest expense of such Person and its Restricted Subsidiaries that was
capitalized during such period, in each case, on a consolidated basis and in
accordance with GAAP, and (iii) the product of (A) the aggregate amount of
dividends paid (to the extent not accrued in a prior period) or accrued on
Disqualified Stock of the Company and its Restricted Subsidiaries or preferred
stock of the Company's Restricted Subsidiaries, to the extent such Disqualified
Stock or preferred stock is owned by Persons other than the Company and its
Restricted Subsidiaries and (B) a fraction, the numerator of which is one and
the denominator of which is one minus the then current combined federal, state,
local and foreign statutory tax rate of such Person, expressed as a decimal.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person as to which Consolidated Net
Income is being calculated, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by such Restricted Subsidiary
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of such Net Income would not be permitted at the date of determination
directly or indirectly, pursuant to the terms of its charter and by-laws and all
agreements, instruments, judgments, decrees, orders, statutes, rules or
governmental regulations applicable to such Restricted Subsidiary or its
stockholders, (iii) the Net Income (if positive) of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, and (iv) the cumulative effect of a change in
accounting principles shall be excluded.
"Consolidated Net Worth" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common equity holders of
such Person and its consolidated Restricted Subsidiaries as of such date plus
(ii) the respective amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred equity (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends or other
distributions, unless such dividends or other distributions may be declared and
paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred equity, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the Closing Date in the book value of any asset owned by
such Person or a consolidated Restricted Subsidiary of such Person, (y) all
investments as of such date in Persons that are not Restricted Subsidiaries
(except, in each case, Permitted Investments), and (z) all unamortized debt
discount and expense and unamortized deferred charges as of such date, all of
the foregoing determined in accordance with GAAP.
"Continuing Director" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Closing Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board of Directors at the time of
such nomination of election.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 12.2 hereof or such other address as to which the
Trustee may give notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator, custodian or similar official under any Bankruptcy Law.
"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the Person specified in Section 2.3 hereof as
the Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depositary" shall mean or include such successor.
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"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the Notes mature.
"Eligible Receivables" means the trade receivables of the Company and
its Restricted Subsidiaries less the allowance for doubtful accounts, each of
the foregoing determined in accordance with GAAP.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries in existence on the Closing Date pro forma after giving
effect to the offering and sale of the Notes and the use of proceeds therefrom.
"Fair Market Value" means, with respect to any asset or property, the
sale value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy; provided that if such value exceeds
$1,000,000, such determination shall be made in good faith by the Board of
Directors of the Company.
"GAAP" means generally accepted accounting principles in the United
States of America set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as have been approved by a
significant segment of the accounting profession, which are in effect on the
date of this Indenture.
"Government Securities" means direct obligations of, or obligations
fully guaranteed by, or participations in pools consisting solely of obligations
of or obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States of
America is pledged.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
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"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest or currency exchange rate swap
agreements, interest or currency exchange rate cap agreements and interest or
currency exchange rate collar agreements and (ii) other agreements or
arrangements, in any case, designed to protect such Person against fluctuations
in interest or currency exchange rates (as appropriate, "Interest Rate Hedges"
and "Currency Hedges").
"Holder" or "Securityholder" means a Person in whose name a Note is
registered on the Register.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Indebtedness or
other obligation or the recording, as required pursuant to GAAP or otherwise, of
any such Indebtedness or other obligation on the balance sheet of such Person
(and "Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in GAAP that
results in an obligation of such Person that exists at such time, and is not
theretofore classified as Indebtedness, becoming Indebtedness shall not be
deemed an Incurrence of such Indebtedness.
"Indebtedness" means, with respect to any Person, (a) any liability of
such Person, whether or not contingent (i) for borrowed money, or under any
reimbursement obligation relating to a letter of credit, bankers' acceptance or
note purchase facility; (ii) evidenced by a bond, note, debenture or similar
instrument (including a purchase money obligation); (iii) for the payment of
money relating to a Capital Lease Obligation; (iv) for or pursuant to
Disqualified Stock; (v) for or pursuant to preferred stock of any Restricted
Subsidiary of the Company (other than preferred stock held by the Company or any
of its Restricted Subsidiaries); (vi) representing the balance deferred and
unpaid of the purchase price of any property or services (except any such
balance that constitutes a trade payable or accrued liability in the ordinary
course of business that is not overdue by more than 90 days or is being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted); or (vii) under or in respect of Hedging Obligations; (b)
any liability of others described in the preceding clause (a) that such Person
has guaranteed, that is recourse to such Person or that is otherwise its legal
liability, or the payment of which is secured by (or for which the holder of
such liability has an existing right to be secured by) any Lien upon property
owned by such Person, even though such Person has not assumed or become liable
for the payment of such liability; and (c) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any liability of the
types referred to in clauses (a) and (b) above. The amount of any non-interest
bearing or other discount Indebtedness shall be deemed to be the principal
amount thereof that would be shown on the balance sheet of the issuer dated such
date prepared in accordance with GAAP, but such Indebtedness shall be deemed to
have been Incurred only on the date of the original issuance thereof.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
8
<PAGE> 16
"Initial Subsidiary Guarantors" means collectively Newpark Shipbuilding
and Repair, Inc., a Texas corporation, EAE Services, Inc., a Texas corporation,
EAE Industries, Inc., a Texas corporation, Newpark Marine Fabricators, Inc., a
Texas corporation, and Louisiana Ship, Inc., a Texas corporation.
"Interest Payment Date" means each February 1 and August 1 of each
year.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations (but
excluding endorsements of negotiable instruments for collection in the ordinary
course of business)), advances or capital contributions (excluding commission,
travel and similar advances to directors, officers and employees made in the
ordinary course of business), purchases or other acquisitions (for
consideration) of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP; provided that an acquisition of Equity
Interests or other securities by the Company or any of its Restricted
Subsidiaries for consideration consisting of common equity securities of the
Company shall not be deemed to be an Investment.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, and any
lease in the nature thereof) .
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however, (i) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with (a) any sales of
assets (including, without limitation, dispositions pursuant to sale and
leaseback transactions) other than in the ordinary course of business or (b) the
disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, (ii) any extraordinary or non-recurring gain (but
not loss), together with any related provision for taxes on such extraordinary
or non-recurring gain (but not loss), and (iii) unrealized foreign exchange
gains (but not losses).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, (i) Cash Equivalents received as consideration
in such Asset Sale, (ii) any cash received upon the disposition of any non-cash
consideration received in such Asset Sale, and (iii) any assumption of
liabilities deemed to constitute "cash" for purposes of Section 4.10), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions), any
relocation expenses incurred as a result thereof, any taxes paid or payable by
the Company or any of its Restricted Subsidiaries as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
9
<PAGE> 17
arrangements), amounts required to be paid to any Person (other than the Company
and its Restricted Subsidiaries) having a Lien on the assets subject to the
Asset Sale, amounts required to be paid to any Person (other than the Company or
any Restricted Subsidiary) owning a beneficial interest in the assets subject to
the Asset Sale, and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP (provided that the
amount of any such reserve shall be deemed to constitute Net Proceeds at the
time such reserve shall have been released or is not otherwise required to be
retained for such purpose).
"Non-Recourse Debt" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender, (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity and (iii) as to which the lenders have expressly waived any
recourse which they may have, in law, equity or otherwise, whether based on
misrepresentation, control, ownership or otherwise, to the Company or any of its
Restricted Subsidiaries, including, without limitation, a waiver of the benefits
of the provisions of Section 1111(b) of the Bankruptcy Law.
"Note Custodian" means the Trustee, as custodian with respect to the
Notes in global form, or any successor entity thereto.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the chief executive
officer, the president, the chief operating officer, the chief financial
officer, the chief accounting officer, the treasurer, any assistant treasurer,
the controller, the secretary, any assistant secretary or any vice-president of
such Person.
"Officers' Certificate" means a certificate signed on behalf of a
Person by two Officers of such Person, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of such Person, that meets the requirements of Section 12.5 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.5 hereof. The counsel may be counsel to the Company, any Subsidiary of the
Company or the Trustee.
"Permitted Holders" means (i) Samuel F. Eakin, Frank W. Eakin and David
B. Ammons; (ii) each of their beneficiaries, estates, spouse and lineal
descendants, legal
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<PAGE> 18
representatives of any of the foregoing and the trustee of any bona fide trust
of which any of the foregoing are the sole beneficiaries or grantors and (iii)
all Affiliates controlled by the individuals named in clause (i) (provided that,
for purposes of this clause (iii) only, the proviso set forth in the definition
of the term "Affiliate" shall be deemed modified to provide that beneficial
ownership of 50% or more of the voting securities of a Person shall constitute,
and shall be necessary to constitute, control).
"Permitted Investments" means (i) any Investment in the Company (other
than the purchase of any Equity Interests of the Company) or in a Restricted
Subsidiary of the Company; (ii) any Investment in Cash Equivalents; (iii) any
Investment by the Company or any of its Restricted Subsidiaries in a Person
engaged in the Shipyard Business if, as a result of such Investment, (A) such
Person becomes a Restricted Subsidiary of the Company or (B) such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary of the Company; (iv) any Investment in Government
Securities in accordance with the provisions of the Pledge Agreement; (v)
Investments the payment for which consists exclusively of Equity Interests
(excluding Disqualified Stock) of the Company; (vi) Investments in shares of
money market mutual or similar funds having assets in excess of $500,000,000;
and (vii) Investments in negotiable instruments held for collection in the
ordinary course of business and lease, utility and similar deposits.
"Permitted Liens" means (i) Liens on receivables securing Permitted
Indebtedness Incurred pursuant to clause (i) of the definition of such term;
(ii) Liens in favor of the Company and/or its Restricted Subsidiaries; (iii)
Liens on property of a Person existing at the time such Person is merged into or
consolidated with the Company or any of its Restricted Subsidiaries, provided
that such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company or any such Restricted Subsidiary;
(iv) Liens securing any Acquired Indebtedness and which exist at the time of
acquisition thereof by the Company or any of its Restricted Subsidiaries,
provided that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens arising under this Indenture in favor of the Trustee;
(vi) Liens existing on the Closing Date; (vii) Liens arising by reason of (1)
any judgment, decree or order of any court not constituting an Event of Default;
(2) taxes not yet delinquent or which are being contested in good faith by
appropriate proceedings which suspend the collection thereof, promptly
instituted and diligently conducted, and for which adequate reserves have been
established to the extent required by GAAP; (3) security for payment of workers'
compensation or other insurance; (4) good faith deposits in connection with
tenders, leases and contracts (other than contracts for the payment of money),
bids, licenses, performance or similar bonds and other obligations of a like
nature, in the ordinary course of business; (5) zoning restrictions, easements,
licenses, reservations, provisions, covenants, conditions, waivers, restrictions
on the use of property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, Liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through or
under a landlord or owner of the leased property, with or without consent of the
lessees), none of which materially impairs the use of any parcel of property
material to
11
<PAGE> 19
the operation of the business of the Company or any Restricted Subsidiary or the
value of such property for the purpose of such business; (6) deposits to secure
public or statutory obligations or in lieu of surety or appeal bonds; (7)
surveys, exceptions, title defects, encumbrances, easements, reservations of, or
rights of others for, rights of way, sewers, electric lines, telegraph or
telephone lines and other similar purposes or zoning or other restrictions as to
the use of real property not interfering with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries; or (8) operation
of law or statute and incurred in the ordinary course of business, including
without limitation, those in favor of mechanics, materialmen, suppliers,
laborers or employees, and, if securing sums of money, for sums which are not
yet delinquent or are being contested in good faith by appropriate proceedings
which suspend the collection thereof, promptly instituted and diligently
conducted, and for which adequate reserves have been established to the extent
required by GAAP; (viii) Liens created by the Pledge Agreement; (ix) Liens
resulting from the deposit of funds or Government Securities in trust for the
purpose of decreasing or defeasing Indebtedness of the Company and its
Restricted Subsidiaries so long as such deposit of funds or Government
Securities and such decreasing or defeasing of Indebtedness are permitted under
Section 4.7; (x) Liens securing obligations in a maximum aggregate amount not to
exceed $5,000,000; and (xi) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien referred
to in the foregoing clauses (iii), (iv) and (vi) above; provided that the
principal amount of the Indebtedness secured thereby shall not exceed the
principal amount of Indebtedness secured thereby immediately prior to the time
of such extension, renewal or replacement, and that such extension, renewal or
replacement Lien shall be limited to all or a part of the property that secured
the Lien so extended, renewed or replaced (plus improvements on such property).
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used by such Person to extend, refinance, renew, replace,
defease or refund other Indebtedness of such Person ("Old Indebtedness");
provided that: (i) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Old Indebtedness; (ii) such Permitted
Refinancing Indebtedness has a final maturity date equal to or later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Old Indebtedness;
(iii) if the Old Indebtedness is subordinated in right of payment to the Notes,
such Permitted Refinancing Indebtedness is subordinated in right of payment to
the Notes on terms at least as favorable to the Holders as those contained in
the documentation governing the Old Indebtedness; (iv) such Permitted
Refinancing Indebtedness is on terms that are no more restrictive, as a whole,
than those governing such Old Indebtedness; and (v) such Permitted Refinancing
Indebtedness is Incurred only by the Company or the Restricted Subsidiary that
is the obligor on the Old Indebtedness.
"Person" means any individual, corporation, limited liability company,
partnership, limited partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
12
<PAGE> 20
"Pledge Account" means an account established with the Trustee pursuant
to the terms of the Pledge Agreement for the deposit of the Pledged Securities
purchased by the Company with a portion of the proceeds from the sale of the
Notes.
"Pledge Agreement" means the Pledge and Security Agreement, dated as of
the Closing Date, by and among the Company, the Trustee and the Pledge Agent
named therein, governing the disbursement of funds from the Pledge Account, as
such may be amended from time to time pursuant to the terms thereof.
"Pledged Securities" means the securities purchased with a portion of
the proceeds from the sale of the Notes, which shall consist of Government
Securities, to be deposited in the Pledge Account.
"Public Equity Offering" means an underwritten public offering for cash
by the Company of its Capital Stock (other than Disqualified Stock) to any
Person other than a Subsidiary of the Company pursuant to a registration
statement that has been declared effective by the Commission (other than a
registration statement on Form S-8 or any successor form or otherwise relating
to equity securities issuable under any employee benefit plan of the Company).
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such Person
that is not an Unrestricted Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended.
"Shipyard Business" means the business of the provision of
construction, repair, fabrication, labor and environmental services to the
maritime, transportation and oil field industries, together with all activities
ancillary thereto.
"Subordinated Indebtedness" means Indebtedness of the Company (or a
Restricted Subsidiary) that is expressly subordinated in right of payment to the
Notes (or a Subsidiary Guarantee, as appropriate).
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital
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<PAGE> 21
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
Subsidiaries of such Person (or a combination thereof) and (ii) any partnership
(a) the sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (b) the only general partners of which
are such Person or of one or more Subsidiaries of such Person (or any
combination thereof). Unless indicated to the contrary, "Subsidiary" refers to a
Subsidiary of the Company.
"Subsidiary Guarantee" means an unconditional guaranty of the Notes and
this Indenture given by any Restricted Subsidiary or other Person pursuant to
the terms of this Indenture or any supplement hereto.
"Subsidiary Guarantors" means (i) as of the Closing Date, the Initial
Subsidiary Guarantors, and (ii) thereafter, any other Restricted Subsidiary that
becomes a guarantor of the Notes in compliance with the provisions of this
Indenture and executes a supplemental indenture agreeing to be bound by the
terms of this Indenture; in each case until such time, if any, as such
Restricted Subsidiary is released from the Subsidiary Guarantee as permitted by
this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) and the rules and regulations thereunder, as in effect on the date
on which this Indenture is qualified under the TIA (except as provided in
Sections 9.1(f) and 9.3 hereof).
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture and
thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to
a Board Resolution of the Company, but only to the extent that such Subsidiary
(i) has no Indebtedness other than Non-Recourse Debt, (ii) does not own any
Equity Interests of, or own or hold any Lien on, any property of the Company or
any Restricted Subsidiary of the Company (other than any Subsidiary of the
Subsidiary to be so designated), (iii) has not, and the Subsidiaries of such
Subsidiary have not at the time of designation, and does not thereafter, Incur
any Indebtedness pursuant to which the lender has recourse to any of the assets
of the Company or any of its Restricted Subsidiaries, (iv) is not party to any
material agreement, contract, arrangement or understanding with the Company or
any of its Restricted Subsidiaries unless the terms of any such agreement,
contract, arrangement or understanding are no less favorable to the Company or
such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Company, (v) is a Person with respect to
which neither the Company nor any of its Restricted Subsidiaries has any direct
or indirect obligation (a) to subscribe for additional Equity Interests or (b)
to maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results, (vi) has not
guaranteed or otherwise directly or indirectly provided credit support for any
Indebtedness of the Company or any of its Restricted Subsidiaries and (vii) has
at least one director on its board of directors
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<PAGE> 22
that is not a director or executive officer of the Company or any of its
Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors of the Company
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution of the Company giving effect to such designation and an
Officers' Certificate certifying that (i) such designation complied with the
foregoing conditions, (ii) such designation was permitted by Section 4.7, (iii)
immediately after giving effect to such designation, the Company could Incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated Interest
Coverage Ratio test set forth in Section 4.9(a), and (iv) no Default or Event of
Default would be in existence immediately following such designation. If, at any
time, any Unrestricted Subsidiary would fail to meet the foregoing requirements
as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness, Liens or
agreements of such Subsidiary shall be deemed to be Incurred or created by a
Restricted Subsidiary of the Company as of such date (and, if such Indebtedness,
Liens or agreements are not permitted to be Incurred or created as of such date
under the covenants described in Article IV of this Indenture, the Company shall
be in default of such covenants). The Board of Directors of the Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary,
provided that such designation shall be deemed to be an Incurrence of
Indebtedness and a creation of Liens and agreements by a Restricted Subsidiary
of the Company of any outstanding Indebtedness, Liens or agreements of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness, Liens and agreements are permitted under the covenants described
in Article IV of this Indenture, and (ii) no Default or Event of Default would
be in existence immediately following such designation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.2. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction"........................................... 4.11
"Asset Sale Offer"................................................ 4.10(b)
"Change of Control Offer"......................................... 4.14(a)
</TABLE>
15
<PAGE> 23
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Change of Control Payment"....................................... 4.14(a)
"Change of Control Payment Date".................................. 4.14(b)
"Covenant Defeasance"............................................. 8.3
"Discharge"....................................................... 8.5
"DTC"............................................................. 2.1(b)
"DTC Participants"................................................ 2.1(b)
"Event of Default"................................................ 6.1
"Excess Proceeds"................................................. 4.10(b)
"Global Note"..................................................... 2.1(a)
"Legal Defeasance"................................................ 8.2
"Paying Agent".................................................... 2.3
"Payment Default" ................................................ 6.1(e)
"Permitted Indebtedness".......................................... 4.9(b)
"Register"........................................................ 2.3
"Registrar"....................................................... 2.3
"Restricted Payments"............................................. 4.7(a)
"SEC"............................................................. 1.1 ("Commission")
</TABLE>
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor upon
the Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
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<PAGE> 24
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions;
(f) references to sections of or rules under the Exchange Act or the
Securities Act shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time; and
(g) "herein," "hereof" and other words or similar import refer to this
Indenture as a whole (as amended or supplemented from time to time) and not to
any particular Article, Section or other subdivision.
ARTICLE 2
THE NOTES
SECTION 2.1. FORM AND DATING.
(a) General Form of Notes. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto, which
Exhibit is part of this Indenture. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be issued only in
registered form without coupons and only in minimum denominations of $1,000 and
integral multiples thereof. The terms and provisions contained in the Notes
shall constitute, and are hereby expressly made, a part of this Indenture and
the Company and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. The Notes
shall be issued initially in the form of a permanent, global note in definitive,
fully registered form, without coupons, substantially in the form of Exhibit A
hereto (including the text and schedule called for by footnotes 1 and 2 thereto)
(the "Global Note"). Upon issuance, such Global Note shall be duly executed by
the Company and authenticated by the Trustee as hereinafter provided and
deposited with the Trustee as custodian for the Depositary. Any Certificated
Note that may be issued pursuant to Section 2.06(a) hereof, shall be issued in
the form of a note in definitive, fully registered form, without coupons,
substantially in the form set forth in Exhibit A hereto (excluding the text and
schedule
17
<PAGE> 25
called for by footnotes 1 and 2 thereto). Upon issuance, any such Certificated
Note shall be duly executed by the Company and authenticated by the Trustee as
hereinafter provided.
(b) Form of Global Notes. Each Global Note (i) shall represent such
portion of the outstanding Notes as shall be specified therein, (ii) shall
provide that it shall represent the aggregate amount of outstanding Notes from
time to time endorsed thereon and that the aggregate amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions, (iii) shall be registered in
the name of the Depositary or its nominee, duly executed by the Company and
authenticated by the Trustee as provided herein, for credit to the respective
accounts of the Holders (or such accounts as they may direct) at the Depositary,
(iv) shall be delivered by the Trustee or its Agent to the Depositary or a Note
Custodian pursuant to the Depositary's instructions and (v) shall bear a legend
substantially to the following effect:
"Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), New York, New
York, to the Company or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as is required by an authorized representative of DTC (and any
payment hereon is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein."
Members of, or participants in, the Depositary ("DTC Participants") shall have
no rights under this Indenture with respect to any Global Note held on their
behalf by the Depositary, and the Depositary may be treated by the Company, the
Trustee, and any agent of the Company or the Trustee as the absolute owner of
such Global Note for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee, or any agent of the
Company or the Trustee from giving effect to any written certification, proxy or
other authorization furnished to the Depositary or impair, as between the
Depositary and its agent members, the operation of customary practices governing
the exercise of the rights of a Holder of any Note.
Whenever, as a result of an optional redemption of Notes by the
Company, a Change of Control Offer, an Asset Sale Offer or an exchange pursuant
to the second sentence of Section 2.06(a) hereof, a Global Note is redeemed,
repurchased or exchanged in part, such Global Note shall be surrendered by the
Holder thereof to the Trustee who shall cause an adjustment to be made to
Schedule A thereof so that the principal amount of such Global Note will be
equal to the portion of such Global Note not redeemed, repurchased or exchanged
and shall thereafter return such Global Note to such Holder, provided that any
such Global Note shall be in a principal amount of $1,000 or an integral
multiple thereof.
(c) Form of Certificated Notes. Certificated Notes may be produced in
any manner determined by the Officers of the Company executing such Notes, as
evidenced by their
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execution of such Notes. The Trustee must register Certificated Notes so issued
in the name of, and cause the same to be delivered to, such Person (or its
nominee). Except as provided in Section 2.6, any Person having a beneficial
interest in the Global Note may not exchange such beneficial interest for fully
Certificated Notes in duly registered form.
(d) Provisions Applicable to Forms of Notes. The Notes may also have
such additional provisions, omissions, variations or substitutions as are not
inconsistent with the provisions of this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with this Indenture, any Applicable Law or
with any rules made pursuant thereto or with the rules of any securities
exchange or governmental agency or as may be determined consistently herewith by
the Officers of the Company executing such Notes, as conclusively evidenced by
their execution of such Notes. All Notes shall be otherwise substantially
identical except as provided herein.
Subject to the provisions of this Article 2, a registered Holder of a
beneficial interest in a Global Note may grant proxies and otherwise authorize
any Person to take any action that a Holder is entitled to take under this
Indenture or the Notes.
SECTION 2.2. EXECUTION AND AUTHENTICATION.
An Officer of the Company shall sign the Notes for the Company by
manual or facsimile signature. The Company's seal may be reproduced on the Notes
and may be in facsimile form.
If an Officer of the Company whose signature is on a Note no longer
holds that office at the time a Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid or obligatory for any purpose or entitled to
the benefits of this Indenture until authenticated by the manual signature of
the Trustee or its authenticating agent. The signature shall be conclusive
evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon the delivery to the Trustee of a written order
of the Company signed by two Officers, from time to time, authenticate Notes for
original issue up to an aggregate principal amount of $90,000,000. The aggregate
principal amount of Notes outstanding at any time may not exceed such amount
except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent to authenticate Notes.
An authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company or an Affiliate of the Company.
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SECTION 2.3. TRUSTEE, REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register ("Register") of the Notes and of their transfer
and exchange. The Company may also from time to time appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar upon notice
to the Holders. The Company shall notify the Trustee in writing of the name and
address of any Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act, subject to the last paragraph of this Section 2.3, as such. The
Company or any of its Subsidiaries may act as Paying Agent or Registrar;
provided, however, that none of the Company, its Subsidiaries or the Affiliates
of the foregoing shall act (i) as Paying Agent in connection with any
redemption, offer to purchase, discharge or defeasance, as otherwise specified
in this Indenture, and (ii) as Paying Agent or Registrar if a Default or Event
of Default has occurred and is continuing.
The Company hereby appoints Bank One, N.A., at its Corporate Trust
Office, as the Trustee hereunder and Bank One, N.A., hereby accepts such
appointment. The Trustee shall have the powers and authority granted to and
conferred upon it in the Notes and hereby and such further powers and authority
to act on behalf of the Company as may be mutually agreed upon by the Company
and the Trustee, and the Trustee shall keep a copy of this Indenture available
for inspection during normal business hours at its Corporate Trust Office.
The Company initially appoints DTC to act as Depositary with respect to
the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
All of the terms and provisions with respect to such powers and
authority contained in the Notes are subject to and governed by the terms and
provisions hereof.
The Trustee may resign as Registrar or Paying Agent upon 30 days prior
written notice to the Company.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of the
Holders and the Trustee all money held by the Paying Agent for the payment of
principal of, premium, if any, and interest on the Notes, and shall notify the
Trustee of any default by the Company in making any such payment. While any such
default continues, the Trustee may require a Paying Agent to
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pay all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment of all
such money over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
SECTION 2.5. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable to it the most recent list available to it of the names and
addresses of all Holders and shall otherwise strictly comply with TIA Section
312(a). If the Trustee is not the Registrar, the Company shall furnish to the
Trustee at least ten Business Days before each Interest Payment Date and at such
other times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may require of the names and addresses of the Holders
of Notes and the Company shall otherwise strictly comply with TIA Section
312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
(a) The Global Note shall be exchanged by the Company for one or more
Certificated Notes if (a) the Depositary (i) has notified the Company that it is
unwilling or unable to continue as, or ceases to be, a clearing agency
registered under Section 17A of the Exchange Act and (ii) a successor to the
Depositary registered as a clearing agency under Section 17A of the Exchange Act
is not able to be appointed by the Company within 90 calendar days or (b) the
Depositary is at any time unwilling or unable to continue as Depositary and a
successor to the Depositary is not able to be appointed by the Company within 90
calendar days. If an Event of Default occurs and is continuing, the Company
shall, at the request of the Holder thereof, exchange all or part of the Global
Note for one or more Certificated Notes; provided that the principal amount of
each of such Certificated Notes and such Global Note, after such exchange, shall
be $1,000 or an integral multiple thereof. In addition, the Holder of a
beneficial interest in the Global Note may at any time exchange such interest
for a Certificated Note in a principal amount of $1,000 or an integral multiple
thereof. Whenever a Global Note is exchanged as a whole for one or more
Certificated Notes, such Global Note shall be surrendered by the Holder thereof
to the Trustee for cancellation. Whenever a Global Note is exchanged in part for
one or more Certificated Notes pursuant to this Section 2.06(a), it shall be
surrendered by the Holder thereof to the Trustee and the Trustee shall make the
appropriate notations thereon pursuant to Section 2.1(b) hereof. All
Certificated Notes issued in exchange for a Global Note or any portion thereof
shall be registered in such names, and delivered, as the Depositary shall
instruct the Trustee.
(b) A Holder may transfer a Note only upon the surrender of such Note
for registration of transfer. No such transfer shall be effected until, and the
transferee shall succeed to the rights of a Holder only upon, final acceptance
and registration of the transfer in the
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Register by the Registrar. When Notes are presented to the Registrar with a
request to register the transfer of, or to exchange, such Notes, the Registrar
shall register the transfer or make such exchange as requested if its
requirements for such transactions and any applicable requirements hereunder are
satisfied. To permit registrations of transfers and exchanges, the Company shall
execute and the Trustee shall authenticate Certificated Notes at the Registrar's
request.
(c) The Company shall not be required to make and the Registrar need
not register transfers or exchanges of Certificated Notes (i) selected for
redemption (except, in the case of Certificated Notes to be redeemed in part,
the portion thereof not to be redeemed) and (ii) for a period of 15 calendar
days before a selection of Notes to be redeemed.
(d) No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment by Holders of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer of Notes.
(e) All Notes issued upon any registration of transfer or exchange
pursuant to the terms of this Indenture will evidence the same debt and will be
entitled to the same benefits under this Indenture as the Notes surrendered for
such registration of transfer or exchange.
(f) Any Holder of a Global Note shall, by acceptance of such Global
Note, agree that transfers of beneficial interests in such Global Note may be
effected only through a book entry system maintained by such Holder (or its
agent), and that ownership of a beneficial interest in the Notes represented
thereby shall be required to be reflected in book entry form. Transfers of a
Global Note shall be limited to transfers in whole and not in part, to the
Depositary, its successors, and their respective nominees. Interests of
beneficial owners in a Global Note shall be transferred in accordance with the
rules and procedures of the Depositary (or its successors).
SECTION 2.7. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and
the Trustee receive evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall, upon the written request of the Holder
thereof, issue and the Trustee, upon the written order of the Company signed by
two Officers of the Company, shall authenticate a replacement Note if the
Trustee's requirements are met. If required by the Trustee or the Company, an
indemnity bond must be supplied by such Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the Trustee, any
Agent and any authenticating agent from any loss that any of them may suffer if
a Note is replaced. The Company may charge for its expenses in replacing a Note.
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Every replacement Note is an additional obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
The provisions of this Section 2.7 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.8. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those canceled by it (or its agent), those delivered to
it (or its agent) for cancellation, those reductions in the interest in a Global
Note effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding. Except as set forth in Section 2.9
hereof, a Note does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note (other than a mutilated Note surrendered for replacement) is held
by a bona fide purchaser (as such term is defined in Section 8-302 of the
Uniform Commercial Code as in effect in the State of New York).
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Responsible Officer of the Trustee has actual knowledge are so
owned shall be so disregarded.
SECTION 2.10. TEMPORARY NOTES.
Until definitive Notes are ready for delivery, the Company may prepare
and the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by two
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Officers of the Company. Temporary Notes shall be substantially in the form of
definitive Notes but may have variations that the Company considers appropriate
for temporary Notes and as shall be reasonably acceptable to the Trustee.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes.
Until such exchange, Holders of temporary Notes shall be entitled to
all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee or its Agent
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee (or its Agent) and no one else shall cancel all Notes surrendered
for registration of transfer, exchange, payment, replacement or cancellation and
shall destroy canceled Notes (subject to the record retention requirement of the
Exchange Act). Certification of the destruction of all canceled Notes shall be
delivered to the Company from time to time. The Company may not issue new Notes
to replace Notes that it has paid or that have been delivered to the Trustee (or
its Agent) for cancellation. If the Company acquires any of the Notes, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are surrendered
to the Trustee (or its Agent) for cancellation pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.1 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
defaulted interest to be paid.
SECTION 2.13. PERSONS DEEMED OWNERS.
Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent, the Company and any agent of the foregoing shall
deem and treat the Person in whose name any Note is registered as the absolute
owner of such Note for all purposes (including the purpose of receiving payment
of principal of and interest on such Notes; provided
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that defaulted interest shall be paid as set forth in Section 2.12), and none of
the Trustee, any Agent, the Company or any agent of the foregoing shall be
affected by notice to the contrary.
SECTION 2.14. CUSIP NUMBERS
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will print CUSIP numbers on the
Notes, and the Trustee may use CUSIP numbers in notices of redemption and
purchase as a convenience to Holders; provided, however, that any such notices
may state that no representation is made as to the correctness of such numbers
as printed on the Notes and that reliance may be placed only on the other
identification numbers printed on the Notes, and any such redemption or purchase
shall not be affected by any defect or omission in such numbers.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.1. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 30 days but not more than 60 days before a redemption date (unless a
shorter period is acceptable to the Trustee), an Officers' Certificate setting
forth (i) the clause of Section 3.7 pursuant to which the redemption shall
occur, (ii) the redemption date, (iii) the principal amount of Notes to be
redeemed, (iv) the redemption price and accrued and unpaid interest and (v)
whether it requests the Trustee to give notice of such redemption. Any such
notice may be canceled at any time prior to the mailing of notice of such
redemption to any Holder and shall thereby be void and of no effect.
SECTION 3.2. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, the
Trustee shall select the Notes to be redeemed among the Holders of the Notes in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed, or, if the Notes are not so listed, on a
pro rata basis, by lot or by such other method as the Trustee shall deem fair
and appropriate; provided that no Notes of $1,000 principal amount or less shall
be redeemed in part. In the event of partial redemption by lot, the particular
Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee
from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or
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whole multiples of $1,000; except that if all of the Notes of a Holder are to be
redeemed, the entire outstanding amount of Notes held by such Holder, even if
not a multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Company shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at such Holder's
registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price and accrued and unpaid interest;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date and the only remaining right of the Holders of such Notes is
to receive payment of the redemption price upon surrender to the Paying Agent of
the Notes redeemed;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 40 days prior to the
redemption date (unless a shorter period is acceptable to the Trustee), an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
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SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Unless otherwise stated therein, once notice of redemption is mailed in
accordance with Section 3.3 hereof, Notes called for redemption become
irrevocably due and payable on the redemption date at the redemption price.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
On or prior to the redemption date, the Company shall deposit with the
Paying Agent (other than the Company or any of its Subsidiaries) money
sufficient in same day funds to pay the redemption price of and accrued interest
on all Notes to be redeemed on that date. The Paying Agent shall promptly return
to the Company any money deposited with the Paying Agent by the Company in
excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed. If the money is deposited on the
redemption date, such deposit shall be made by 10:00 a.m. New York City time.
If the Company complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption whether or not such Notes are
presented for payment, and the only remaining right of the Holders of such Notes
shall be to receive payment of the redemption price upon surrender to the Paying
Agent of the Notes redeemed. If a Note is redeemed on or after an interest
record date but on or prior to the related interest payment date, then any
accrued and unpaid interest shall be paid to the Person in whose name such Note
was registered at the close of business on such record date. If any Note called
for redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal from the redemption date until such principal is
paid and to the extent lawful, on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.1
hereof.
SECTION 3.6. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.7. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.7, the Company
shall not have the option to redeem the Notes pursuant to this Section 3.7 prior
to February 1, 2003. Thereafter, the Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest thereon to
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<PAGE> 35
the applicable redemption date, if redeemed during the twelve-month period
beginning on February 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003 105.5000%
2004 103.6667%
2005 101.8333%
2006 and thereafter 100.0000%
</TABLE>
(b) Notwithstanding the foregoing, on and prior to September 15, 2001,
the Company, at its option, may redeem, from time to time, up to 35% of the
aggregate principal amount of the Notes at a redemption price of 111.00% of the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date with the net proceeds of a Public Equity Offering; provided that
no less than 65% of the aggregate principal amount of the Notes initially issued
remains outstanding immediately after giving effect to such redemption; and
provided, further, that notice of such redemption shall have been given not
later than 30 days, and such redemption shall occur not later than 90 days,
after the date of the closing of the transaction giving rise to such Public
Equity Offering.
(c) Any redemption pursuant to this Section 3.7 shall be made pursuant
to the provisions of Sections 3.1 through 3.6 hereof.
SECTION 3.8. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.14 hereof, the Company
shall not be required to repurchase the Notes or make mandatory redemption or
sinking fund payments with respect to the Notes.
ARTICLE 4
COVENANTS
SECTION 4.1. PAYMENT OF NOTES.
The Company shall pay or cause to be paid in New York, New York the
principal of, premium, if any, and interest on the Notes on the dates and in the
manner provided herein and in the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent (or, with
respect to the first two interest payments, the Pledge Agent under the Pledge
Agreement), if other than the Company or a Subsidiary thereof, holds as of 10:00
a.m. New York City time on the due date money deposited by the Company in same
day funds and designated for and sufficient to pay all principal, premium, if
any, and interest then due. The Paying Agent shall return to the Company, no
later than three Business Days
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following the date of payment, any money (including accrued interest) in excess
of the amounts paid on the Notes.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate specified
therefor in the Notes; it shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law to the extent that such interest is
an allowed claim against the debtor under such Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, the City of New York for such purposes. The Company shall give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of the Company in accordance with Section 2.3.
SECTION 4.3. PROVISIONS OF REPORTS AND OTHER INFORMATION.
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will furnish to
the Trustee and the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Forms 10-Q and 10-K if the Company were such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its Subsidiaries and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants and
(ii) all current reports that would be required to be filed with the Commission
on Form 8-K if the Company were required to file
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such reports. In addition, whether or not required by the rules and regulations
of the Commission, the Company will file a copy of all such information and
reports with the Commission for public availability (unless the Commission will
not accept such a filing) and make such information available to securities
analysts and prospective investors upon request. If required by the terms
thereof, the Company shall also comply with the provisions of TIA Section
314(a).
(b) If the Company instructs the Trustee to distribute any of the
documents described in Section 4.3(a) to the Holders, the Company shall provide
the Trustee with a sufficient number of copies of all such documents that the
Company may be required to deliver to such Holders.
SECTION 4.4. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 45 days after the
end of each fiscal year, an Officers' Certificate stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge the Company
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of, or interest on, the Notes are
prohibited or, if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.3 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default,
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an Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto.
SECTION 4.5. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except (i) such as are contested in good faith and by appropriate proceedings or
(ii) such as for which reserve or other appropriate provision, if any, as shall
be required to be in conformity with GAAP, has been made therefor, or (iii)
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
SECTION 4.6. STAY, EXTENSION AND USURY LAWS.
The Company and each Subsidiary Guarantor covenants (to the extent that
it may lawfully do so) that it shall not at any time insist upon, plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay,
extension or usury law wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this Indenture; and the
Company and each Subsidiary Guarantor (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law, and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.7. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any Restricted
Subsidiary's Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation) other than dividends or
distributions (A) paid or payable in Equity Interests (other than Disqualified
Stock) of the Company or (B) paid or payable to the Company or any Wholly Owned
Restricted Subsidiary of the Company; (ii) purchase, redeem or otherwise acquire
or retire for value any Equity Interests of the Company or any Affiliate of the
Company or any Restricted Subsidiary of the Company (other than any such Equity
Interests owned by the Company or any Wholly Owned Restricted Subsidiary of the
Company); (iii) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value prior to the scheduled maturity, scheduled
repayment or scheduled sinking fund payment, any Subordinated Indebtedness
(except, if no Default or Event of Default is continuing or would result
therefrom, any such payment, purchase, redemption, defeasance or other
acquisition or retirement for value made out of Excess Proceeds available for
general corporate purposes if (1) such payment or other action is required by
the indenture or other agreement or instrument pursuant to which such
Subordinated Indebtedness was issued and (2) the Company has purchased all Notes
and other senior Indebtedness properly tendered pursuant to an Asset Sale Offer
required under
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Section 4.10; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above being
collectively referred to hereinafter as "Restricted Payments"), unless, at the
time of and after giving effect to such Restricted Payment:
(i) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(ii) the Company would, at the time of such Restricted Payment
and after giving pro forma effect thereto as if such Restricted Payment
had been made at the beginning of the applicable fiscal quarter, have
been permitted to Incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Interest Coverage Ratio test set forth in
Section 4.9(a); and
(iii) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments declared or made by the Company
and its Restricted Subsidiaries after the Closing Date shall not
exceed, at the date of determination, the sum of (1) 50% of aggregate
Consolidated Net Income of the Company from the beginning of the first
fiscal quarter commencing after the Closing Date to the end of the
Company's most recently ended fiscal quarter for which financial
statements are available at the time of such Restricted Payment (or, if
such aggregate Consolidated Net Income for such period is a deficit,
less 100% of such deficit), plus (2) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale after the
Closing Date of Equity Interests of the Company or of Disqualified
Stock or debt securities of the Company that have been converted into
such Equity Interests (other than Equity Interests (or Disqualified
Stock or convertible debt securities) sold to a Subsidiary of the
Company and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus (3) the aggregate net
cash proceeds received by the Company as capital contributions to the
Company (other than from a Subsidiary of the Company) after the Closing
Date, plus (4) if any Restricted Investment that was made after the
Closing Date is sold for cash, to the extent such amount is not
included in the Consolidated Net Income of the Company, the lesser of
(A) the Net Proceeds from such sale to the extent received by the
Company or any Restricted Subsidiary, and (B) the initial amount of
such Restricted Investment, plus (5) in the event an Unrestricted
Subsidiary is redesignated as a Restricted Subsidiary, an amount equal
to the lesser of (A) the book value of such Unrestricted Subsidiary,
and (B) the Fair Market Value of such Unrestricted Subsidiary.
(b) The foregoing provisions of this Section 4.7 shall not prohibit the
following Restricted Payments:
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(i) the payment of any dividend or other distribution within
60 days after the date of declaration thereof, if at said date of
declaration such payment would have complied with the provisions of
this Indenture;
(ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company (other than
Disqualified Stock) in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Subsidiary of the
Company) of other Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash
proceeds that are utilized for any such redemption, repurchase,
retirement or other acquisition shall be excluded from clause (iii) of
the preceding subsection 4.7(a) (both for purposes of determining the
aggregate amount of Restricted Payments made and for purposes of
determining the aggregate amount of Restricted Payments permitted);
(iii) the payment, purchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Indebtedness with
the net cash proceeds from a substantially concurrent Incurrence of
Permitted Refinancing Indebtedness or the substantially concurrent sale
(other than to a Subsidiary of the Company) of Equity Interests of the
Company (other than Disqualified Stock); provided that the amount of
any such net cash proceeds that are utilized for any such payment,
purchase, redemption, defeasance or other acquisition or retirement
shall be excluded from clause (iii) of the preceding subsection 4.7(a)
(both for purposes of determining the aggregate amount of Restricted
Payments made and for purposes of determining the aggregate amount of
Restricted Payments permitted);
(iv) any Restricted Investment made with the net cash proceeds
from a substantially concurrent sale (other than to a Subsidiary of the
Company) of Equity Interests of the Company (other than Disqualified
Stock); and
(v) so long as no Default or Event of Default is continuing,
any Restricted Investment which, together with all other Restricted
Investments outstanding made pursuant to this clause (v) does not
exceed $3 million.
Except to the extent specifically noted above, Restricted Payments made
pursuant to this Section 4.7(b) shall be included in calculating the amount of
Restricted Payments made after the Closing Date.
(c) The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if (i) such designation would not
cause a Default or Event of Default, (ii) at the time of and after giving effect
to such designation, the Company could incur $1.00 of additional Indebtedness
pursuant to the Consolidated Interest Coverage Ratio test set forth in Section
4.9(a), and (iii) each of the other requirements of the definition of the term
"Unrestricted Subsidiary" are satisfied. For purposes of making such
determination,
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all outstanding Investments by the Company and its Restricted Subsidiaries
(except to the extent repaid in cash) in the Subsidiary so designated will be
deemed to be Restricted Payments at the time of such designation and will reduce
the amount available for Restricted Payments under the first paragraph of this
covenant. All such outstanding Investments will be deemed to constitute
Restricted Payments in an amount equal to the greater of (i) the net book value
of such Investments at the time of such designation and (ii) the Fair Market
Value of such Investments at the time of such designation. Such designation will
only be permitted if such Restricted Payment would be permitted at such time and
if such Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. Upon being so designated as an Unrestricted Subsidiary, any
Subsidiary Guarantee that was previously executed by such Unrestricted
Subsidiary shall be deemed terminated.
(d) The amount of all Restricted Payments not made in cash shall be the
Fair Market Value (which, if it exceeds $1 million, shall be determined by, and
set forth in, a resolution of the Board of Directors of the Company and
described in an Officers' Certificate delivered to the Trustee) on the date of
the Restricted Payment of the asset(s) proposed to be transferred by the Company
or any Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payments during such quarter were permitted and setting forth the
basis upon which the calculations required by this Section 4.7 were computed,
which calculations may be based upon the Company's latest available financial
statements.
SECTION 4.8. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries on its
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits or (b) pay any Indebtedness owed to the Company or any
of its Restricted Subsidiaries, (ii) make loans or advances to the Company or
any of its Restricted Subsidiaries, (iii) transfer any of its properties to the
Company or any of its Restricted Subsidiaries, (iv) grant any Liens in favor of
the Holders of the Notes and the Trustee or (v) guarantee the Notes or any
renewals or refinancings thereof, except for such encumbrances or restrictions
existing under or by reason of (A) Existing Indebtedness, (B) the Bank Credit
Agreement, (C) applicable law, (D) any instrument governing Indebtedness or
Capital Stock of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition (except to the extent
such Indebtedness was Incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties of any Person, other than the Person, or the property of the
Person, so acquired, provided that in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be Incurred, (E)
customary non-assignment provisions in leases, licenses, sales agreements or
other contracts
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(but excluding contracts related to the extension of credit) entered into in the
ordinary course of business and consistent with past practices, (F) restrictions
imposed pursuant to a binding agreement for the sale or disposition of all or
substantially all of the Equity Interests or assets of any Restricted
Subsidiary, provided such restrictions apply solely to the Equity Interests or
assets being sold, (G) restrictions imposed by Permitted Liens on the transfer
of the assets that are subject to such Liens, and (H) Permitted Refinancing
Indebtedness Incurred to refinance Existing Indebtedness or Indebtedness of the
type described in clause (D) above, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are no more
restrictive, as a whole, than those contained in the agreements governing the
Indebtedness being refinanced.
SECTION 4.9. LIMITATION ON INDEBTEDNESS.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, Incur any Indebtedness (including
Acquired Indebtedness), except for Permitted Indebtedness, unless (i) at the
time of such event and after giving effect thereto on a pro forma basis the
Company's Consolidated Interest Coverage Ratio for the four full fiscal quarters
immediately preceding such event, taken as one period, would have been at least
equal to (A) 2.0 to 1.0 for the first two years after the Closing Date and (B)
2.25 to 1.0 thereafter and (ii) no Default or Event of Default shall have
occurred and be continuing at the time such additional Indebtedness is Incurred
or would occur as a consequence of the Incurrence of such additional
Indebtedness.
(b) "Permitted Indebtedness" means any and all of the following:
(i) Indebtedness of the Company and its Restricted
Subsidiaries pursuant to the Bank Credit Agreement (including all
Guarantees thereof) in an aggregate amount not to exceed the greater of
(A) $20 million or (B) 85% of Eligible Receivables, less the aggregate
amount of all payments thereon which are applied to permanently reduce
the outstanding amount of or the commitments with respect to such
Indebtedness;
(ii) Indebtedness represented by the Notes, this Indenture,
the Subsidiary Guarantees and the Pledge Agreement;
(iii) intercompany Indebtedness between or among the Company
and any of its Restricted Subsidiaries; provided that (A) if the
Company is an obligor on such Indebtedness, such Indebtedness is
expressly subordinate to the payment in full of all Obligations with
respect to the Notes and (B) any subsequent issuance or transfer of
Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary of the
Company, or any sale or other transfer of any such Indebtedness to a
Person that is not either the Company or a Restricted Subsidiary of the
Company, shall be
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deemed to constitute a new Incurrence of such Indebtedness by the
Company or such Restricted Subsidiary, as the case may be;
(iv) Permitted Refinancing Indebtedness Incurred in exchange
for, or the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund, (A) Indebtedness (other than Permitted
Indebtedness) that was Incurred in compliance with this Indenture, (B)
Indebtedness referred to in clause (b) (ii) of this Section, or (C)
Existing Indebtedness;
(v) Indebtedness of a Restricted Subsidiary of the Company
constituting a Guarantee of Indebtedness of the Company or a Restricted
Subsidiary which Indebtedness was Incurred pursuant to this Section
4.9(b) or the Consolidated Interest Coverage Ratio test set forth in
Section 4.9(a);
(vi) Hedging Obligations of the following types: (A) Interest
Rate Hedges the notional principal amount of which does not exceed the
principal amount of the Indebtedness to which such Interest Rate Hedge
relates, and (B) Currency Hedges that do not increase the outstanding
loss potential or liabilities other than as a result of fluctuations in
foreign currency exchange rates;
(vii) Indebtedness (in addition to Indebtedness permitted by
any other clause of this Section 4.9(b)) in an aggregate principal
amount at any time outstanding not to exceed $5 million; and
(viii) Existing Indebtedness.
(c) For purposes of determining compliance with this Section 4.9, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described herein, the Company, in its sole discretion,
will classify such item of Indebtedness and only be required to include the
amount and type of such Indebtedness in one of the above clauses and (ii) an
item of Indebtedness may be divided and classified in more than one of the types
of Indebtedness described herein.
SECTION 4.10. LIMITATION ON ASSET SALES.
(a) The Company will not, and will not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale unless (i) the Company or such
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the Fair Market Value (which, if it exceeds $1
million, shall be determined by, and set forth in, a resolution of the Board of
Directors of the Company and described in an Officers' Certificate of the
Company delivered to the Trustee) of the assets (including, if appropriate,
Equity Interests) disposed of or issued, as appropriate, and (ii) at least 75%
of the consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents. For purposes of this
Section (and not for purposes of any other provision of this
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Indenture), the term "cash" shall be deemed to include (i) any notes or other
obligations received by the Company or such Restricted Subsidiary as
consideration as part of such Asset Sale that are immediately converted by the
Company or such Restricted Subsidiary into actual cash (to the extent of the
actual cash so received), and (ii) any liabilities of the Company or such
Restricted Subsidiary (as shown on the most recent balance sheet of the Company
or such Restricted Subsidiary) that (A) are assumed by the transferee of the
assets which are the subject of such Asset Sale as consideration therefor in a
transaction the result of which is that the Company and all of its Subsidiaries
are released from all liability for such assumed liability, (B) are not by their
terms subordinated in right of payment to the Notes, (C) are not owed to the
Company or any Subsidiary of the Company, and (D) constitute short-term
liabilities (as determined in accordance with GAAP).
(b) Within 180 days after the receipt of any Net Proceeds from an Asset
Sale, the Company may apply, directly or indirectly, such Net Proceeds (a) to
permanently reduce Indebtedness under the Bank Credit Agreement (and to
correspondingly reduce commitments with respect thereto) or (b) to invest in
properties and assets that will be used in the Shipyard Business of the Company
and its Restricted Subsidiaries. Pending the final application of any such Net
Proceeds, the Company may temporarily invest such Net Proceeds in any manner
that is not prohibited by this Indenture (including, without limitation, to the
reduction of Indebtedness under the Bank Credit Agreement). Any Net Proceeds
from Asset Sales that are not applied or invested as provided in the first
sentence of this Section 4.10(b) will be deemed to constitute "Excess Proceeds."
When the aggregate amount of Excess Proceeds exceeds $5 million, the Company
will be required to make an offer to all Holders of Notes and, if the Company is
required to do so under the terms of any other senior Indebtedness, to the
holders of such other senior Indebtedness (an "Asset Sale Offer") to purchase
Notes and principal of such other senior Indebtedness, on a pro rata basis,
having an aggregate principal amount equal to the Excess Proceeds, at an offer
price in cash equal to, in the case of the Notes, 100% of the principal amount
thereof, plus accrued and unpaid interest thereon to the date of purchase, and,
in the case of all other senior Indebtedness, 100% of the principal amount
thereof, plus accrued and unpaid interest, or premium, if any, thereon to the
date of purchase, in accordance with the procedures set forth in this Indenture.
To the extent that the aggregate principal amount of Notes tendered pursuant to
an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds for general corporate purposes. If the aggregate
principal amount of Notes and such other senior Indebtedness surrendered by
holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select
the Notes to be purchased in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not so listed, on a pro rata basis with such other senior Indebtedness
based on the outstanding principal amounts thereof (with such adjustments as may
be deemed appropriate by the Company so that only Notes with denominations of
$1,000 or integral multiples thereof shall be purchased). Upon completion of
such offer to purchase, the amount of Excess Proceeds shall be reset at zero.
(c) The Company will not, and will not permit any of its Restricted
Subsidiaries to, transfer, convey, sell, lease or otherwise dispose of any
Capital Stock of any
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Restricted Subsidiary of the Company to any Person (other than the Company or a
Wholly Owned Restricted Subsidiary of the Company), unless (i) such transfer,
conveyance, sale, lease or other disposition is of all of the Capital Stock of
such Restricted Subsidiary owned by the Company and its Restricted Subsidiaries
or is otherwise permitted under Section 4.13 and (ii) such transaction is
conducted in accordance with clauses (a) and (b) above.
(d) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes using Excess Proceeds.
SECTION 4.11. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate of the Company (other than the Company or a Restricted Subsidiary), in
one transaction or a series of transactions (each of the foregoing an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction with an unrelated
Person and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions after the
Closing Date involving aggregate consideration in excess of $500,000, an
Officer's Certificate certifying that such Affiliate Transaction complies with
clause (i) above, (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions after the Closing Date involving an aggregate
consideration in excess of $2 million, a resolution described in an Officers'
Certificate, certifying that such Affiliate Transaction complies with clause (i)
above and such Affiliate Transaction has been approved by a majority of the
disinterested members of the Board of Directors of the Company and (c) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
after the Closing Date involving aggregate consideration in excess of $5
million, an opinion as to the fairness to the Company of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of recognized national standing; provided that the
following types of transactions shall not constitute Affiliate Transactions: (1)
any transaction with an officer or director of the Company or any Restricted
Subsidiary in connection with such individual's compensation (including
directors' fees), employee benefits, severance arrangements or indemnification
(to the extent consistent with applicable law and the charter and bylaws of the
Company or such Restricted Subsidiary), in each case entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business, (2)
transactions between or among the Company and its Restricted Subsidiaries, (3)
Restricted Payments that are permitted by the provisions of Section 4.7; (4)
sales of Capital Stock of the Company made at prevailing market rates; and (5)
loans to officers, directors and employees of the Company and its Restricted
Subsidiaries made in the ordinary course of business in an aggregate amount not
to exceed $1 million at any one time outstanding.
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SECTION 4.12. LIMITATION ON LIENS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, affirm, assume or suffer
to exist any Lien of any kind on any property now owned or hereafter acquired,
or any income or profits therefrom or assign or convey any right to receive
income therefrom, unless (i) in the case of Liens securing obligations
subordinate to the Notes, the Notes are secured by a valid, perfected Lien on
such property that is senior in priority to such Liens, (ii) in the case of
Liens securing obligations subordinate to a Subsidiary Guarantee, such
Subsidiary Guarantee is secured by a valid, perfected Lien on such property that
is senior in priority to such Liens, and (iii) in all other cases, the Notes
(and, if such Lien secures obligations of a Restricted Subsidiary, a Subsidiary
Guarantee of such Restricted Subsidiary) are equally and ratably secured;
provided, however, that the foregoing shall not prohibit or restrict Permitted
Liens.
SECTION 4.13. LIMITATION ON ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES.
The Company will not, and will not permit any Restricted Subsidiary to
(i) sell, assign, transfer, convey or otherwise dispose of, any Equity Interests
of any Restricted Subsidiary, other than to the Company or a Wholly Owned
Restricted Subsidiary, (ii) permit any Restricted Subsidiary to issue any Equity
Interests (including, without limitation, pursuant to any merger, consolidation,
recapitalization or similar transaction) other than to the Company or a Wholly
Owned Restricted Subsidiary or (iii) permit any Person other than the Company or
a Wholly Owned Restricted Subsidiary to own any Equity Interests of any
Restricted Subsidiary, except for (A) a sale to a Person of all of the Equity
Interests of a Restricted Subsidiary, which sale was made by the Company or a
Restricted Subsidiary subject to, and in compliance with, Section 4.10, (B) the
issuance and subsequent ownership of directors' qualifying shares, and (C) the
Equity Interests of a Restricted Subsidiary owned by a Person at the time such
Restricted Subsidiary became a Restricted Subsidiary or acquired by such Person
in connection with the formation of the Restricted Subsidiary, provided that the
Equity Interests owned by such Person do not exceed 20% of the total Equity
Interests of such Restricted Subsidiary.
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company will be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes,
at an offer price in cash equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest thereon, to the date of repurchase
(the "Change of Control Payment").
(b) Notice of a Change of Control Offer shall be mailed by the Company,
with a copy to the Trustee, or, at the Company's option, by the Trustee (at the
Company's expense) not more than 20 calendar days after the Change of Control to
each Holder of the Notes at such Holder's last registered address appearing in
the Register. In such notice, the Company shall
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describe the transaction that constitutes the Change of Control and offer to
repurchase Notes pursuant to the procedures required by this Section 4.14 and
described in such notice. The notice shall contain all instructions and
materials necessary to enable Holders to tender Notes pursuant to the Change of
Control Offer. In addition, the notice shall state: (1) that the Change of
Control Offer is being made pursuant to this Section 4.14 and that all Notes (or
portions thereof) properly tendered will be accepted for payment; (2) the Change
of Control Payment and the purchase date, which shall be no sooner than 30 nor
later than 60 days from the date on which the Company notifies the Holders of
the occurrence of the Change of Control (the "Change of Control Payment Date");
(3) that any Note (or portion thereof) not properly tendered will continue to
accrue interest; (4) that, unless the Company defaults in the payment of the
Change of Control Payment, all Notes (or portions thereof) accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest after the
Change of Control Payment Date; and (5) the procedures that Holders of Notes
must follow in order to tender their Notes (or portions thereof) for payment and
the procedures that Holders of Notes must follow in order to withdraw an
election to tender Notes (or portions thereof) for payment. The Company will
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(c) On the Change of Control Payment Date, the Company will, to the
extent lawful, (i) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (ii) deposit with the Trustee
an amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions thereof being purchased by the
Company. The Trustee will promptly mail to each Holder of Notes so tendered the
Change of Control Payment for such Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new Note equal in principal amount to any unpurchased portion of the Notes
surrendered, if any; provided that each such new Note will be in a principal
amount of $1,000 or an integral multiple thereof. The Company will publicly
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Payment Date. Unless the Company defaults in the
payment for any Notes properly tendered pursuant to the Change of Control Offer,
any Notes accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date.
(d) The Company will not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.14 applicable to a Change of Control Offer made by the
Company and purchases all Notes validly tendered and not withdrawn under such
Change of Control Offer.
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SECTION 4.15. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company or any Restricted Subsidiary may enter into a sale and leaseback
transaction if (a) the Company could have (i) Incurred Indebtedness in an amount
equal to the Attributable Debt relating to such sale and leaseback transaction
pursuant to either (1) the Consolidated Interest Coverage Ratio test set forth
in Section 4.9(a) or (2) clause (vii) of Section 4.9(b) and (ii) incurred a Lien
to secure such Indebtedness pursuant to Section 4.12, and (b) the sale portion
of such sale and leaseback transaction complies with Section 4.10, and the net
proceeds from such sale are applied in accordance with Section 4.10.
SECTION 4.16. COVENANT WITH RESPECT TO BUSINESS ACTIVITIES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, engage in any business other than the Shipyard Business.
SECTION 4.17. CORPORATE EXISTENCE
Except as otherwise permitted pursuant to the terms hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of each of its Subsidiaries, in accordance with their respective
organizational documents (as the same may be amended from time to time), and
(ii) the material rights (charter and statutory), licenses and franchises of the
Company and its Subsidiaries; provided, however, that the Company shall not be
required to preserve any such right, license or franchise of itself or any of
its Subsidiaries, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the Notes.
SECTION 4.18. PLEDGE ACCOUNT
The Company shall, on the date hereof, enter into the Pledge Agreement,
and pursuant thereto, shall purchase and pledge to the Trustee, for the benefit
of the Holders of the Notes, the Pledged Securities, in such amount as will be
sufficient upon receipt of scheduled interest and principal payments of such
securities, in the opinion of a nationally recognized firm of independent public
accountants selected by the Company (to be delivered promptly after the Closing
Date), to provide for payment in full when due of the first two scheduled
interest payments on the Notes. If for any reason the Pledged Securities,
together with the other funds in the Pledge Account, shall not, in the opinion
of such independent public accounting firm, be sufficient to provide for payment
of such first two interest payments, the Company shall immediately pledge to the
Trustee pursuant to the Pledge Agreement additional Pledged Securities or other
funds in such amounts as shall be sufficient, in the opinion of such
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independent public accounting firm, to provide for payment in full of such
interest payments, and shall promptly deliver an opinion from such accounting
firm with regard thereto.
ARTICLE 5
SUCCESSORS
SECTION 5.1. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving entity), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another Person, unless:
(i) the Company is the surviving entity, or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia;
(ii) the Person formed by or surviving any such consolidation or
merger (if other than the Company) or the Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Company under the Notes and
this Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee;
(iii) immediately after giving effect to such transaction, no Default
or Event of Default exists or would exist;
(iv) except in the case of a merger of the Company with or into a
Wholly Owned Restricted Subsidiary of the Company, the Company or the
Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made (A) will (treating any
Indebtedness not previously an obligation of the Company or any of its
Restricted Subsidiaries as a result of such transaction as having been
Incurred at the time of such transaction) have Consolidated Net Worth
immediately after the transaction equal to or greater than the Consolidated
Net Worth of the Company immediately preceding the transaction and (B)
will, at the time of such transaction and after giving pro forma effect
thereto as if such transaction had occurred at the beginning of the
applicable fiscal quarter, be permitted to Incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Interest Coverage
Ratio test set forth in Section 4.9(a); and
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(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more of the Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
SECTION 5.2. SUCCESSOR COMPANY SUBSTITUTED.
Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole in accordance with Section 5.1 hereof, the successor
corporation formed by such consolidation or into which the Company is merged or
to which such transfer is made, shall succeed to, and be substituted for, and
may exercise every right and power of the Company under this Indenture with the
same effect as if such successor corporation had been named as the Company
herein; and thereafter, if the Company is dissolved following a transfer of all
or substantially all of its assets in accordance with this Indenture, the
Company shall be discharged and released from all obligations and covenants
under this Indenture and the Notes. The Trustee shall enter into a supplemental
indenture to evidence the succession and substitution of such successor Person
and such discharge and release of the Company.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
An "Event of Default" occurs if one of the following shall have
occurred (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the Company defaults in the payment of interest on the
Notes when the same become due and payable, which default continues for
a period of 30 calendar days (provided that such 30-day grace period
shall be inapplicable for the first two Interest Payment Dates);
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(b) the Company defaults in the payment of the principal of or
premium, if any, on the Notes when the same become due and payable
whether at maturity, by acceleration, upon redemption or repurchase, or
otherwise;
(c) the Company or a Restricted Subsidiary fails to comply
with any of its obligations under Articles 5, 10 or 11 or Sections
4.10, 4.14 or 4.18;
(d) the Company or any Restricted Subsidiary of the Company
fails to comply with any of its covenants or agreements in the Notes
and this Indenture (other than those referred to in clauses (a), (b)
and (c) above and (i) below) and such failure continues for 30 calendar
days after receipt by the Company of a notice of default specifying
such Default;
(e) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of
its Restricted Subsidiaries (or the payment of which is Guaranteed by
the Company or any of its Restricted Subsidiaries), whether such
Indebtedness or Guarantee now exists or is created after the date of
this Indenture, which default (i) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness
following the expiration of the grace period provided in such
Indebtedness on the date of such default (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness (including any
obligation to redeem or repurchase such Indebtedness) prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the
maturity of which has been so accelerated, aggregates $1 million or
more;
(f) failure by the Company or any of its Restricted
Subsidiaries to pay final non-appealable judgments rendered against the
Company or any of its Restricted Subsidiaries aggregating in excess of
$1 million, which judgments are not paid, discharge or stayed for a
period of 60 calendar days after such judgments become final and
non-appealable;
(g) the Company or any Restricted Subsidiary of the Company
pursuant to or within the meaning of any Bankruptcy Law: (i) commences
a voluntary case or proceeding, (ii) consents to the entry of an order
for relief against it in an involuntary case or proceeding, (iii)
consents to the appointment of a Custodian of it or for all or
substantially all of its property, (iv) makes a general assignment for
the benefit of its creditors, or (v) admits in writing its inability to
pay its debts generally as they become due;
(h) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against the
Company or any Restricted Subsidiary of the Company in an involuntary
case or proceeding, (ii) appoints a Custodian of the
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Company or any Restricted Subsidiary of the Company or for all or
substantially all of its respective properties, (iii) orders the
liquidation of the Company or any Restricted Subsidiary of the Company,
(iv) adjudicates the Company or any Restricted Subsidiary of the
Company as bankrupt or insolvent, or (v) ratifies an accord or
composition in bankruptcy between the Company or a Restricted
Subsidiary and the respective creditors thereof; and in each case the
order or decree remains unstayed and in effect for 60 calendar days;
(i) breach by the Company of any representation or warranty
set forth in the Pledge Agreement, or default by the Company in the
performance of any covenant set forth in the Pledge Agreement and the
expiration of any cure period set forth therein, or repudiation by the
Company of any of its obligations under the Pledge Agreement or the
unenforceability of the Pledge Agreement against the Company for any
reason (other than as permitted pursuant to the terms thereof), which
in any one of the foregoing cases or in the aggregate results in a
material impairment of the rights intended to be afforded thereby; or
(j) any Guarantee of the Notes shall be held in a judicial
proceeding to be unenforceable or invalid or shall cease for any reason
to be in full force and effect, or any Restricted Subsidiary, or any
Person acting on behalf of any Restricted Subsidiary, shall deny or
disaffirm its obligations under its Guarantee of any Notes.
A Default under clause (d) above is not an Event of Default until the
Trustee notifies the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes at the time outstanding notify the Company and the
Trustee, of the Default and the Company does not cure such Default within the
time period specified in clause (d) above after receipt of such notice. Such
notice must be in writing and specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default."
SECTION 6.2. ACCELERATION.
If any Event of Default (other than an Event of Default described in
clauses (g) and (h) of Section 6.1 hereof) occurs and is continuing, then the
Trustee or the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes by written notice to the Company (and to the Trustee, if given
by the Holders) may declare the unpaid principal of, and any accrued interest
on, all the Notes to be due and payable immediately. If any Event of Default
specified in clauses (g) or (h) of Section 6.1 hereof occurs, all outstanding
principal and interest on the Notes shall be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder. The
Holders of a majority in aggregate principal amount of the Notes then
outstanding, by written notice to the Trustee and to the Company, may rescind an
acceleration (except an acceleration due to a default in payment of the
principal of, premium or interest on any of the Notes) if the rescission would
not conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, premium or interest that have become due solely
because of the acceleration) have been cured or waived.
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In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company or a
Restricted Subsidiary with the intention of avoiding payment of the premium that
the Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.7(a), an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the Notes. If an Event of Default occurs prior to February 1, 2003 by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of the
Company or a Restricted Subsidiary with the intention of avoiding the
prohibition on redemption of the Notes prior to such date, then the premium
specified in Section 3.7(b) shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes.
SECTION 6.3. OTHER REMEDIES.
Subject to Section 6.2, if an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy by proceeding at law or
in equity to collect any payment due on the Notes or to enforce the performance
of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Subject to Section 9.2, Holders of a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may, on behalf of
the Holders of all of the Notes, waive an existing Default or Event of Default
and its consequences hereunder except a continuing Default or Event of Default
in the payment of the principal of, premium or interest on the Notes. Upon any
such waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon.
SECTION 6.5. CONTROL BY MAJORITY.
The Holders of a majority in aggregate principal amount of the Notes
then outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture or that the Trustee determines may be
unduly prejudicial to the rights of another Holder or that involves the Trustee
in personal liability. The Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.
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SECTION 6.6. Limitation on Suits.
Subject to the provisions of Section 6.7 hereof, no Holder of a Note
may pursue any remedy with respect to this Indenture or the Notes (including
without limitation the institution of any proceeding, judicial or otherwise,
with respect to the Notes or this Indenture or for the appointment of a receiver
or trustee for the Company and/or any of its Subsidiaries) unless:
(a) the Holder has given to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding have made a written request to the
Trustee to pursue the remedy;
(c) such Holders have offered to provide to the Trustee
indemnity reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee has not complied with the request within 60
calendar days after receipt of the request and the offer of indemnity;
and
(e) during such 60-day period, the Holders of a majority in
aggregate principal amount of the Notes then outstanding have not given
the Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights
of another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.7. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal of, and premium, if any, and
interest on, the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.1(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for principal of, and premium,
if any, and interest on, the Notes and interest on overdue principal and, to the
extent lawful, interest, and such further amount as shall be sufficient to cover
the costs and expenses of collection, including the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel.
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SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers
or documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof out
of the estate in any such proceeding, shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.7 hereof,
including payment of all compensation, expense and liabilities incurred, and all
advances made, by the Trustee and the costs and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes for
principal, premium, if any, and interest ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for
principal, premium, if any, and interest, respectively; and
Third: the remainder to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10. At least 15 calendar days before
such record date, the
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Company shall mail to each Holder and the Trustee a notice that states the
record date, the payment date and the amount to be paid.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, each party to this Indenture agrees, and each Holder by its
acceptance of its Notes shall be deemed to have agreed, that any court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.7
hereof, or a suit by Holders of more than 10% in principal amount of the then
outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent Person would
exercise or use under the circumstances in the conduct of its own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee shall not be liable hereunder except for such duties
of the Trustee which shall be determined solely by the express provisions of
this Indenture and the Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine whether or not
such documents conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received by
it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Inden ture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section 7.1.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability whatsoever in the performance of
any of its duties hereunder or in the exercise of any of its rights or powers
hereunder. The Trustee shall be under no obligation to exercise any of its
rights and powers under this Indenture at the request of any Holders, unless
such Holder shall have offered to the Trustee security and indemnity
satisfactory to it in its sole subjective discretion (which discretion shall be
exercised in good faith) against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provision of this Section 7.1 and to the provisions of the TIA.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) Subject to Section 7.1, the Trustee may conclusively rely upon any
document believed by it to be genuine and to have been signed or presented by
the proper Person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and require an Officers' Certificate or an Opinion of Counsel or
both. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
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(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes in its sole subjective discretion (which
discretion shall be exercised in good faith) to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) The permissive right of the Trustee to act hereunder shall not be
construed as a duty.
(f) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(g) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
security or indemnity satisfactory to the Trustee in its sole subjective
discretion (which discretion shall be exercised in good faith) against the
costs, expenses and liabilities that might be incurred by it in compliance with
such request or direction.
(h) The Trustee shall not be required to take notice or deemed to have
notice of any Event of Default hereunder, except failure by the Company to make
any of the payments to the Trustee pursuant to Section 6.1(a) or Section 6.1(b)
hereof, unless the Trustee shall be specifically notified in writing of such
Event of Default by the Company or by one or more of the Holders.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest (as such term is defined in TIA Section 310(b)), it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee
(to the extent permitted under TIA Section 310(b)) or resign. Any Agent may do
the same with like rights and duties. The Trustee is also subject to Sections
7.10 and 7.11 hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as
to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
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SECTION 7.5. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
actually known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after such event
occurs. Except in the case of a Default or Event of Default under Section 6.1(a)
or (b), the Trustee may withhold such notice if it determines that withholding
the notice is in the interests of the Holders of the Notes.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders of the Notes a brief report dated as of such
reporting date that complies with TIA Section 313(a) (but if no event described
in TIA Section 313(a) has occurred within the twelve months preceding the
reporting date, no report need be transmitted). The Trustee also shall comply
with TIA Section 313(b)(2). The Trustee shall also transmit by mail all
reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to the Company and filed with the SEC and each stock
exchange, if any, on which the Notes are listed in accordance with and to the
extent required by TIA Section 313(d). The Company shall promptly notify the
Trustee if the Notes become listed on any stock exchange or automatic quotation
system.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation as shall be agreed upon between the Company and the Trustee for its
acceptance of this Indenture and services hereunder, including extraordinary
services such as default administration. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Company
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.7) and defending itself against any claim (whether asserted by
the Company or any Holder or any other Person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall promptly notify the Company of any
claim for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have
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separate counsel and the Company shall pay the reasonable fees and expenses of
such counsel; provided that the Company will not be required to pay such fees
and expenses if it assumes the Trustee's defense with counsel acceptable to and
approved by the Trustee (such approval not to be unreasonably withheld) and
there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without its written consent, which consent shall not be unreasonably withheld.
The Company need not reimburse the Trustee for any expense or indemnity against
any liability or loss of the Trustee to the extent such expense, liability or
loss is attributable to the negligence, bad faith or willful misconduct of the
Trustee.
The obligations of the Company under this Section 7.7 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2).
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing upon 60 days notice and be discharged
from the trust hereby created by so notifying the Company in writing. The
Holders of Notes of a majority in principal amount of the then outstanding Notes
may remove the Trustee by so notifying the Trustee and the Company in writing
and may appoint a successor trustee with the consent of the Company. The Company
may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a receiver, Custodian or public officer takes charge of
the Trustee or its property; or
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(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint or request
the Trustee to appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in principal amount of the then
outstanding Notes may appoint a successor Trustee to replace the successor
Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of Notes of at least 10% in principal amount of the then outstanding
Notes may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.8, the Company's obligations under Section 7.7 hereof shall
continue for the benefit of the retiring Trustee.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
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This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
DEFEASANCE AND DISCHARGE
SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article 8.
SECTION 8.2. LEGAL DEFEASANCE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes and all
obligations of the Restricted Subsidiaries under the Subsidiary Guarantees on
the date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire Indebtedness represented by the
outstanding Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.6 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged pursuant to this Indenture: (a) the
rights of Holders of outstanding Notes to receive solely from the trust fund
described in Section 8.4 hereof, and as more fully set forth in such Section,
payments in respect of the principal of and premium, if any, and interest on
such Notes when such payments are due, (b) the Company's obligations with
respect to such Notes under Sections 2.3, 2.4, 2.6, 2.7, 2.10 and 4.2 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder
and the Company's obligations in connection therewith and (d) Sections 3.1
through 3.7 hereof and this Article 8. Subject to compliance with this Article
8, the Company may exercise its option under this Section 8.2 notwithstanding
the prior exercise of its option under Section 8.3 hereof.
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SECTION 8.3. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, and subject to the satisfaction of the
conditions set forth in Section 8.4 hereof, the Company and the Subsidiary
Guarantors shall be released from their obligations under the covenants
contained in Sections 4.3, 4.4, 4.5, 4.7, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13,
4.14, 4.15, 4.16, 4.17, 4.18, 5.1 and 5.2 and Articles 10 and 11 with respect to
the outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes shall thereafter
be deemed not "outstanding" for the purposes of any direction, waiver, consent
or declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed "outstanding"
for all other purposes hereunder (it being understood that such Notes shall not
be deemed outstanding for accounting purposes). For this purpose, Covenant
Defeasance means that, with respect to the outstanding Notes, the Company may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether directly or
indirectly, by reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.1 hereof, but, except as specified above,
the remainder of this Indenture and such Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.1 hereof of the option
applicable to this Section 8.3 hereof, subject to the satisfaction of the
conditions set forth in Section 8.4 hereof, Sections 6.1(e), 6.1(f), 6.1(i) and
6.1(j) hereof shall not constitute Events of Default.
SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section
8.2 or Section 8.3 to the outstanding Notes:
(a) The Company must irrevocably deposit, or caused to be deposited,
with the Trustee (or another trustee satisfying the requirements of this
Indenture), in trust for such purpose, specifically pledged as security for the
benefit of the Holders of the Notes, (1) cash in U.S. dollars in an amount, (2)
non-callable Government Securities which through the payment of principal and
interest in accordance with their terms will provide money in an amount, or (3)
a combination thereof, in such amounts, as will be sufficient, without
reinvestment (and without other assets, including without limitation, the
Pledged Securities and other assets held pursuant to the Pledge Agreement), in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
the principal of and premium, if any, and interest on the outstanding Notes on
the stated maturity or on the applicable redemption date, as the case may be,
together with all other amounts payable by the Company under this Indenture.
(b) In the case of an election under Section 8.2, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the
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Trustee confirming that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (ii) since the date
hereof, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such Opinion of Counsel shall
confirm that, the Holders of the outstanding Notes will not recognize income,
gain or loss for federal income tax purposes as a result of such Legal
Defeasance and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such Legal
Defeasance had not occurred.
(c) In the case of an election under Section 8.3, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred.
(d) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Sections 6.1(g) and (h) are
concerned, at any time in the period ending on the 91st day after the date of
deposit (it being understood that this condition shall not be deemed satisfied
until the expiration of such period).
(e) Such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound.
(f) The Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of Notes over the other creditors of the Company with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or others.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Legal Defeasance under Section 8.2
or the Covenant Defeasance under Section 8.3, as the case may be, have been
complied with as contemplated by this Section 8.4.
SECTION 8.5. DISCHARGE.
This Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
Notes) as to all outstanding Notes ("Discharge") when (i) either (a) all such
Notes theretofore authenticated and delivered (except lost, stolen or destroyed
Notes that have been replaced or paid and Notes for whose payment money has
theretofore been deposited in trust with the Trustee and thereafter repaid to
the Company or discharged from such trust) have been delivered to the Trustee
for cancellation; or (b) all such Notes not theretofore delivered to the Trustee
for cancellation have become due and
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payable, will become due and payable by their terms within one year, or are to
be called for redemption within one year under arrangements satisfactory to the
Trustee for the giving of notice of redemption, and in each case the Company has
irrevocably deposited or caused to be deposited with the Trustee, as trust funds
solely for the benefit of the Holders for that purpose, funds in an amount of
money in U.S. dollars sufficient to pay and discharge the entire indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, for the
principal amount, premium, if any, and accrued and unpaid interest to the date
of such deposit together with irrevocable instructions from the Company
directing the Trustee to apply such funds to the payment thereof; (ii) the
Company has paid all other sums payable by it under this Indenture; and (iii)
the Company has delivered irrevocable instructions to the Trustee to apply the
deposited money toward the payment of the Notes at maturity, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an Opinion of
Counsel stating that all conditions precedent under this Indenture to
satisfaction and discharge have been complied with.
SECTION 8.6. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.7 hereof, all money and Government Securities
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.6, the "Trustee") pursuant
to Section 8.4 or 8.5 hereof in respect of the outstanding Notes shall be held
in trust and applied by the Trustee, in accordance with the provisions of such
Notes and this Indenture, to the payment, either directly or through any Paying
Agent (including the Company or any of its Subsidiaries or Affiliates acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or Government Securities
deposited pursuant to this Section 8.6 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or Government Securities held by it as provided in this
Section 8.6 which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee (which may be the opinion delivered under Section 8.4 hereof), are in
excess of the amount thereof that would then be required to be deposited to
effect an equivalent Legal Defeasance, Covenant Defeasance or Discharge.
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SECTION 8.7. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company or any of its Subsidiaries or Affiliates, in trust for the
payment of the principal of, premium, if any, or interest on any Note and
remaining unclaimed for one year after such principal, premium, if any, or
interest has become due and payable shall be paid to the Company on its request
or (if then held by the Company or any of its Subsidiaries or Affiliates) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company or any of its Subsidiaries or Affiliates
as trustee thereof, shall thereupon cease.
SECTION 8.8. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any U.S. dollars or
Government Securities in accordance with Section 8.2, 8.3 or 8.5 hereof, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
the Company's obligations under this Indenture and the Notes shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.2, 8.3 or
8.5 hereof until such time as the Trustee or Paying Agent is permitted to apply
all such assets in accordance with Section 8.2, 8.3 or 8.5 hereof, as the case
may be; provided, however, that, if the Company makes any payment of principal
of, premium, if any, or interest on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money held by the Trustee or Paying
Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.1. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.2 of this Indenture, the Company, the
Subsidiary Guarantors and the Trustee may amend or supplement this Indenture,
the Notes or the Pledge Agreement without the consent of any Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of Notes in the case of a merger or consolidation pursuant to Article 5
hereof;
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(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any such Holder;
(e) to add a Subsidiary Guarantor pursuant to the provisions set forth
in this Indenture; or
(f) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA as then in effect.
Upon the request of the Company and the Subsidiary Guarantors,
accompanied by a Board Resolution of the Company and each Subsidiary Guarantor
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 7.2 hereof,
the Trustee shall join with the Company and the Subsidiary Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained. After an amendment or supplement
under this Section 9.1 becomes effective, the Company shall mail to the Holders
of Notes a notice briefly describing the amendment or supplement. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture.
SECTION 9.2. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.2, this Indenture, the Notes
or the Pledge Agreement may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and, subject to Sections 6.4
and 6.7, any existing Default or Event of Default (other than a Default or Event
of Default in the payment of principal of, premium, if any, or interest on, the
Notes, except a payment default resulting from an acceleration that has been
rescinded) or compliance with any provision of this Indenture or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Notes).
Upon the request of the Company and the Subsidiary Guarantors,
accompanied by a Board Resolution of the Company and each Subsidiary Guarantor
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence satisfactory to the Trustee of the
consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 7.2 hereof, the Trustee shall join with the
Company and the Subsidiary Guarantors in the execution of such amended or
supplemental Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental
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Indenture that adversely affects its own rights, duties, liabilities or
immunities under this Indenture or otherwise.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.2 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2 becomes
effective, the Company shall mail to the Holders of Notes a notice briefly
describing the amendment, supplement or waiver. Any failure of the Company to
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such amended or supplemental Indenture or waiver.
Subject to Sections 6.4 and 6.7 hereof, the Holders of a majority in principal
amount of the Notes then outstanding may waive compliance in a particular
instance by the Company with any provision of this Indenture, the Notes or the
Pledge Agreement. However, without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Notes held by a non-consenting
Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note or
alter the provisions with respect to the redemption of the Notes (other than the
provisions relating to Section 4.14);
(c) reduce the rate of or change the time for payment of interest on
any Note;
(d) waive a Default or Event of Default in the payment of principal of,
premium, if any, or interest on the Notes (except a rescission of acceleration
of the Notes by the Holders of at least a majority in aggregate principal amount
of the Notes and a waiver of the payment default that resulted from such
acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of, premium, if any, or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.14);
(h) release any Collateral from the Lien created by the Pledge
Agreement, except in accordance with the terms thereof, or amend the terms
thereof relating to the release of Collateral;
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(i) release any Subsidiary Guarantor from its Subsidiary Guarantee
except as permitted hereunder;
(j) make any change in the provisions of this Indenture requiring any
Guarantee hereof or in the provisions of any such Guarantees; or
(k) make any change in the foregoing amendment and waiver provisions.
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the TIA as
then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment has
been approved by the requisite Holders. An amendment, supplement or waiver
becomes effective when approved by the requisite Holders and executed by the
Trustee (or, if otherwise provided in such waiver, supplement or amendment, in
accordance with its terms) and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to consent to such amendment or waiver or revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more than 90 days after
such record date except to the extent that the requisite number of consents to
the amendment, supplement or waiver have been obtained within such 90-day period
or as set forth in the next paragraph of this Section 9.4.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (a)
through (k) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Note who has consented to it and every
subsequent Holder of a Note or portion of a Note that evidences the same
indebtedness as the consenting Holder's Note.
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SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue, and the Trustee shall authenticate, new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. In
executing any amended or supplemental indenture, the Trustee shall be entitled
to receive and (subject to Section 7.1) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture.
SECTION 9.7. PAYMENTS FOR CONSENT.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
any Notes for or as an inducement to any consent, waiver or amendment of any
terms or provisions of this Indenture, the Notes, the Pledge Agreement or the
Subsidiary Guarantees unless such consideration is offered to be paid or is paid
to all Holders of the Notes that so consent, waive or agree to amend in the time
frame set forth in solicitation documents relating to such consent, waiver or
agreement.
ARTICLE 10
SUBSIDIARY GUARANTEES
SECTION 10.1. GUARANTEES.
Each Subsidiary Guarantor hereby, jointly and severally,
unconditionally and irrevocably guarantees, to each Holder and to the Trustee
and its successors and assigns the due and punctual payment of principal of,
premium, if any, and interest on the Notes and all other amounts due and payable
under this Indenture and the Notes by the Company whether at maturity, by
acceleration, redemption, repurchase or otherwise, including, without
limitation, interest on the overdue principal of, premium, if any, and interest
on the Notes, to the extent lawful, all in accordance with the terms hereof and
thereof.
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Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of the obligations contained in the Notes
and this Indenture and also waives notice of protest for nonpayment, notice of
intent to accelerate and notice of acceleration. Each Subsidiary Guarantor
waives notice of any default under the Notes or the obligations guaranteed
hereby. The obligations of each Subsidiary Guarantor hereunder shall not be
affected by (a) the failure of any Holder or the Trustee to assert any claim or
demand or to enforce any right or remedy against the Company or any other Person
under this Indenture, the Notes or any other agreement or otherwise; (b) any
extension or renewal of any thereof; (c) any rescission, waiver, amendment or
modification of any of the terms or provisions of this Indenture, the Notes
or any other agreement; (d) the release of any security held by any Holder or
the Trustee for the obligations guaranteed hereby or any of them; (e) the
failure of any Holder or the Trustee to exercise any right or remedy against any
other guarantor of the obligations guaranteed hereby; or (f) any change in the
ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein constitutes a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the obligations guaranteed hereby.
Except as expressly set forth in Sections 8.2, 8.3, 10.3 and 10.7, the
obligations of each Subsidiary Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
obligations guaranteed hereby or otherwise. Without limiting the generality of
the foregoing, the obligations of each Subsidiary Guarantor herein shall not be
discharged or impaired or otherwise affected by the failure of any Holder or the
Trustee to assert any claim or demand or to enforce any remedy under this
Indenture, the Notes or any other agreement, by any waiver or modification of
any thereof, by any default, failure or delay, willful or otherwise, in the
performance of the obligations guaranteed hereby, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of such Subsidiary Guarantor or would
otherwise operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of principal of, premium, if any, or
interest on any obligation guaranteed hereby is rescinded or must otherwise be
restored by any Holder or the Trustee upon the bankruptcy or reorganization of
the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of, premium, if any, or interest on any obligation guaranteed
hereby when and as the same shall become due, whether at maturity, by
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acceleration, by redemption or otherwise, or to perform or comply with any other
obligation guaranteed hereby, each Subsidiary Guarantor hereby promises to and
will, upon receipt of written demand by the Trustee, forthwith pay, or cause to
be paid, in cash, to the Holders or the Trustee an amount equal to the sum of
(i) the unpaid amount of such obligations, (ii) accrued and unpaid interest on
such obligations (but only to the extent not prohibited by law) and (iii) all
other monetary obligations of the Company to the Holders and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in respect of any obligations guaranteed hereby until
payment in full of all such obligations. Each Subsidiary Guarantor further
agrees that, as between it, on the one hand, and the Holders and the Trustee, on
the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article 6 for the purposes of such Subsidiary
Guarantor's Subsidiary Guarantee herein, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of
such obligations as provided in Article 6, such obligations (whether or not due
and payable) shall forthwith become due and payable by such Subsidiary Guarantor
for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
SECTION 10.2. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Subject to paragraph (b) of this Section 10.2, no Restricted
Subsidiary may consolidate or merge with or into (whether or not such Restricted
Subsidiary is the surviving Person), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or assets in one
or more related transactions, to another Person unless (i) the Person formed by
or surviving any such consolidation or merger (if other than such Restricted
Subsidiary) or the Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all the obligations
of such Restricted Subsidiary under the Subsidiary Guarantee, pursuant to a
supplemental indenture in form satisfactory to the Trustee; (ii) immediately
after such transaction, no Default or Event of Default exists; (iii) the Company
and its Restricted Subsidiaries would, at the time of such transaction and after
giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable fiscal quarter, be permitted to Incur at least $1.00
of additional Indebtedness pursuant to the Consolidated Interest Coverage Ratio
test set forth in Section 4.9(a); (iv) the Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such consolidation, merger or transfer complies with the provisions of this
Indenture; and (v) such Restricted Subsidiary (if such Restricted Subsidiary is
the surviving Person) shall have delivered a written instrument in form
satisfactory to the Trustee confirming its Subsidiary Guarantee after giving
effect to such consolidation, merger or transfer. Notwithstanding the foregoing,
any Restricted Subsidiary may merge into, consolidate with or transfer all or
part of its properties or assets to the Company or one or more Restricted
Subsidiaries.
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(b) In the event of a sale, assignment, transfer, lease, conveyance or
other disposition of all of the Equity Interests in, or all or substantially all
of the assets of, a Restricted Subsidiary to any Person that is not the Company
or any of its Restricted Subsidiaries, whether by way of merger, consolidation
or otherwise, if (i) the Net Proceeds of such sale or other disposition are
applied in accordance with the provisions of Section 4.10, (ii) no Default or
Event of Default exists or would exist under this Indenture after giving effect
to such transaction, (iii) all obligations of such Restricted Subsidiary under
any other Indebtedness of the Company or any of its Restricted Subsidiaries
shall have been terminated (including, without limitation, all Guarantees of any
such Indebtedness), (iv) all Liens on assets of such Restricted Subsidiary that
secure any other Indebtedness of the Company or any of its Restricted
Subsidiaries shall have been terminated, and (v) all obligations of the Company
and its Restricted Subsidiaries under other Indebtedness of such Restricted
Subsidiary shall have been terminated (including, without limitation, all
Guarantees of such Indebtedness), then (A) in the case of such a sale or other
disposition, whether by way of merger, consolidation or otherwise, of all of the
Equity Interests in such former Restricted Subsidiary, such former Restricted
Subsidiary will be released and relieved of any obligations under its Subsidiary
Guarantee, or (B) in the case of a sale or other disposition of all or
substantially all of the assets of such Restricted Subsidiary, the Person
acquiring such assets will not be required to assume the obligations of such
Restricted Subsidiary under its Subsidiary Guarantee.
SECTION 10.3. LIMITATION ON LIABILITY.
Any term or provision of this Indenture to the contrary
notwithstanding, the maximum aggregate amount of the obligations guaranteed
hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that
can be hereby guaranteed without rendering this Indenture, as it relates to such
Subsidiary Guarantor, voidable under applicable law relating to fraudulent
conveyance or fraudulent transfer or similar laws affecting the rights of
creditors generally. To effectuate the foregoing intention, the obligations of
each Subsidiary Guarantor shall be limited to the maximum amount as will, after
giving effect to all other contingent and fixed liabilities of such Subsidiary
Guarantor and after giving effect to any collections from, rights to receive
contributions from, or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations hereunder,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
any Applicable Law. Each Subsidiary Guarantor that makes a payment or
distribution under a Subsidiary Guarantee shall be entitled to a contribution
from each other Subsidiary Guarantor so long as the exercise of such right does
not impair the rights of the Holders under the Subsidiary Guarantees.
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SECTION 10.4. SUCCESSORS AND ASSIGNS.
This Article 10 shall be binding upon each Subsidiary Guarantor and its
successors and assigns and shall inure to the benefit of the successors and
assigns of the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and privileges
conferred upon that party in this Indenture and in the Notes shall automatically
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of this Indenture.
SECTION 10.5. NO WAIVER.
Neither a failure nor a delay on the part of either the Trustee or the
Holders in exercising any right, power or privilege under this Article 10 shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise of any right, power or privilege. The
rights, remedies and benefits of the Trustee and the Holders herein expressly
specified are cumulative and not exclusive of any other rights, remedies or
benefits which either may have under this Article 10 at law, in equity, by
statute or otherwise.
SECTION 10.6. MODIFICATION.
No modification, amendment or waiver of any provision of this Article
10, nor the consent to any departure by any Subsidiary Guarantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Trustee, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
any Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to
any other or further notice or demand in the same, similar or other
circumstances.
SECTION 10.7. RELEASE OF SUBSIDIARY GUARANTOR.
Upon the sale or disposition of a Subsidiary Guarantor (or
substantially all of its assets) or the designation of a Subsidiary Guarantor as
an Unrestricted Subsidiary pursuant to and in compliance with the terms of this
Indenture, including, but not limited to the provisions of Section 10.2, such
Subsidiary shall be released from and relieved of its obligations under its
Subsidiary Guarantee upon execution and delivery of a supplemental indenture
satisfactory to the Trustee. Such supplemental indenture shall be accompanied by
an Officers' Certificate and an Opinion of Counsel, each stating that such
supplemental indenture and release of the Subsidiary Guarantee complies with the
provisions of this Indenture and that all conditions precedent to such
supplemental indenture and release of the Subsidiary Guarantee have been
complied with.
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SECTION 10.8. EXECUTION OF SUPPLEMENTAL INDENTURE BY FUTURE RESTRICTED
SUBSIDIARIES.
The Company shall cause any Person that becomes a Restricted Subsidiary
after the Closing Date (including any Subsidiary that was previously an
Unrestricted Subsidiary and which becomes a Restricted Subsidiary) to promptly
execute and deliver to the Trustee a supplemental indenture pursuant to which
such Restricted Subsidiary shall become a Subsidiary Guarantor under this
Article 10 and shall guarantee the Notes pursuant to the terms hereof.
Concurrently with the execution and delivery of such supplemental indenture, the
Company shall deliver to the Trustee an Opinion of Counsel to the effect that
such supplemental indenture has been duly authorized, executed and delivered by
such Restricted Subsidiary and that, subject to the application of bankruptcy,
insolvency, moratorium, fraudulent conveyance or transfer and other similar laws
relating to creditors' rights generally and to the principles of equity, whether
considered in a proceeding at law or in equity, the Subsidiary Guarantee of such
Subsidiary Guarantor is a legal, valid and binding obligation of such Subsidiary
Guarantor, enforceable against such Subsidiary Guarantor in accordance with its
terms.
ARTICLE 11
COLLATERAL AND SECURITY
SECTION 11.1. PLEDGE AGREEMENT.
(a) The due and punctual payment of the principal of, premium, and
interest on the Notes when and as the same shall be due and payable on each
Interest Payment Date, at maturity or by acceleration, and interest on the
overdue principal of and interest (to the extent permitted by law), if any, on
the Notes and payment and performance of all other obligations of the Company to
the Holders of the Notes or the Trustee under this Indenture and the Pledge
Agreement with respect to the Notes, according to the terms hereunder or
thereunder, shall be secured as provided in the Pledge Agreement which the
Company and the Trustee have entered into simultaneously with the execution of
this Indenture. Upon the acceleration of the maturity of the Notes prior to the
termination of the Pledge Agreement, the Pledge Agreement will provide for the
foreclosure by the Trustee of the net proceeds of the Pledge Account. Each
Holder of the Notes, by its acceptance thereof, consents and agrees to the terms
of the Pledge Agreement (including, without limitation, the provisions providing
for foreclosure and disbursement of Collateral) as the same may be in effect or
may be amended from time to time in accordance with its terms and authorizes and
directs the Trustee to enter into the Pledge Agreement and to perform its
obligations and exercise its rights thereunder in accordance therewith. The
Company shall deliver to the Trustee copies of the Pledge Agreement, and shall
do or cause to be done all such acts and things as may be necessary or proper,
or as may be required by the provisions of the Pledge Agreement, to assure and
confirm to the Trustee the security interest in the Collateral contemplated by
the Pledge Agreement or any part thereof, as from time to time constituted, so
as to render the same available for the security and benefit of
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this Indenture with respect to, and of, the Notes, according to the intent and
purposes expressed in the Pledge Agreement. Prior to the termination of the
Pledge Agreement pursuant to its terms, the Company shall take any and all
actions reasonably required to cause the Pledge Agreement to create and maintain
(to the extent possible under applicable law), as security for the obligations
of the Company hereunder, a valid and enforceable perfected first priority Lien
in and on all the Collateral, in favor of the Trustee for the benefit of the
Trustee and the Holders of the Notes, superior to and prior to the rights of all
third Persons and subject to no other Liens. The Trustee shall have no
responsibility for perfecting or maintaining the perfection of the Trustee's
security interest in the Collateral or for filing any instrument, document or
notice in any public office at any time or times.
(b) The Pledge Agreement shall further provide that in the event a
portion of the Notes has been retired by the Company, if no Default or Event of
Default is then continuing, depending upon the amount available in the Pledge
Account, funds representing the interest payments which have not previously been
made on such retired Notes shall, upon the written request of the Company to the
Trustee, be paid to the Company upon compliance with the release of collateral
provisions of the TIA and upon receipt of a notice relating thereto from the
Trustee.
SECTION 11.2. RECORDING AND OPINIONS.
(a) The Company shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either (i)
stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by the Pledge Agreement and reciting with respect to the security
interests in the Collateral the details of such action, or (ii) stating that in
the opinion of such counsel no such action is necessary to make such Lien
effective.
(b) The Company shall furnish to the Trustee on February 1, 1999, and
on each February 1 thereafter until the date upon which the balance of Available
Funds (as defined in the Pledge Agreement) shall have been reduced to zero, an
Opinion of Counsel, dated as of such date, satisfying the requirements of TIA
ss.314(b) and either (i) stating that (A) in the opinion of such counsel, all
action has been taken with respect to the recording, registering, filing,
re-recording, re-registering and refiling of all supplemental indentures,
financing statements, continuation statements, and other instruments of further
assurance as is necessary to maintain the Lien of the Pledge Agreement and
reciting with respect to the security interests in the Collateral the details of
such action or referring to prior Opinions of Counsel in which such details are
given and (B) based on relevant laws as in effect on the date of such Opinion of
Counsel, all financing statements and continuation statements have been executed
and filed that are necessary as of such date and during the succeeding 12 months
fully to preserve and protect, to the extent such protection and preservation
are possible by filing, the rights of the Holders of Notes and the Trustee
hereunder and under the Pledge Agreement with respect to the
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security interests in the Collateral or (ii) stating that, in the opinion of
such counsel, no such action is necessary to maintain such Lien.
SECTION 11.3. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 11.3,
Collateral may be released from the Lien created by the Pledge Agreement only in
accordance with the provisions of the Pledge Agreement.
(b) Except to the extent that any Lien on proceeds of Collateral is
automatically released by operation of Section 9-306 of the Uniform Commercial
Code or other similar law, no Collateral shall be released from the Lien created
by the Pledge Agreement pursuant to the provisions of the Pledge Agreement,
other than to the Holders pursuant to the terms thereof, unless there shall have
been delivered to the Trustee the certificates, if any, required by Section
11.3(d) and Section 11.4.
(c) At any time when an Event of Default shall have occurred and be
continuing and the maturity of the Notes shall have been accelerated (whether by
declaration or otherwise), no Collateral shall be released pursuant to the
provisions of the Pledge Agreement, and no release of Collateral in
contravention of this Section 11.3(c) shall be effective as against the Holders
of the Notes, except for the disbursement of all Available Funds (as defined in
the Pledge Agreement) to the Trustee pursuant to Section 6(b)(iii) of the Pledge
Agreement.
(d) On or before each of the first two Interest Payment Dates, if the
conditions set forth in Sections 3.2(a) and 3.2(c) of the Pledge Agreement have
been satisfied, then the Pledge Agent under the Pledge Agreement may release
Collateral from the Liens created by this Indenture and the Pledge Agreement
and apply such funds as required by Section 4.1 of this Indenture. Any such
release of Collateral shall not be deemed to impair the security under this
Indenture in contravention of the provisions hereof. To the extent applicable,
the Company shall cause TIA Section 314(d) relating to the release of property
or securities from the Lien and security interest of the Pledge Agreement to be
complied with. Any certificate or opinion required by TIA Section 314(d) may be
made by an Officer of the Company except in cases where TIA Section 314(d)
requires that such certificate or opinion be made by an independent Person,
which Person shall be an independent engineer, appraiser or other expert
selected or approved by the Trustee in the exercise of reasonable care.
SECTION 11.4. CERTIFICATE OF THE COMPANY.
The Company shall furnish to the Trustee, prior to any proposed release
of Collateral other than pursuant to the express terms of the Pledge Agreement,
(i) all documents required by TIA Section 314 and (ii) an Opinion of Counsel to
the effect that such accompanying documents constitute all documents required
by TIA ss.314 and that such release is permitted by the terms of this Indenture
and the Pledge Agreement.
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SECTION 11.5. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
PLEDGE AGREEMENT.
Subject to the provisions of Section 7.1 and Section 7.2, the Trustee
may, without the consent of the Holders of the Notes, on behalf of the Holders
of the Notes, take all actions it deems necessary or appropriate in order to (a)
enforce any of the terms of the Pledge Agreement and (b) collect and receive any
and all amounts payable in respect of the obligations of the Company hereunder
and thereunder. The Trustee shall have power to institute and maintain such
suits and proceedings as it may deem expedient to prevent any impairment of the
Collateral by any acts that may be unlawful or in violation of the Pledge
Agreement or this Indenture, and such suits and proceedings as the Trustee may
deem expedient to preserve or protect its interests and the interests of the
Holders of the Notes in the Collateral (including power to institute and
maintain suits or proceedings to restrain the enforcement of or compliance with
any legislative or other governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or compliance with,
such enactment, rule or order would impair the security interest hereunder or be
prejudicial to the interests of the Holders of the Notes or of the Trustee).
SECTION 11.6. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
PLEDGE AGREEMENT.
The Trustee is authorized to receive any funds for the benefit of the
Holders of the Notes disbursed under the Pledge Agreement, and to make further
distributions of such funds to the Holders of the Notes according to the
provisions of this Indenture.
SECTION 11.7. TERMINATION OF SECURITY INTEREST.
Upon the earliest to occur of (i) the date upon which the balance of
Available Funds (as defined in the Pledge Agreement) shall have been reduced to
zero, (ii) if no Default or Event of Default exists, the date upon which the
Company shall have paid in full in accordance with the terms of this Indenture
the first two scheduled interest payments due on the Notes, (iii) the payment in
full of all obligations of the Company under this Indenture and the Notes, (iv)
Legal Defeasance under Article 8, (v) Covenant Defeasance under Article 8, and
(vi) the termination of the Pledge Agreement pursuant to the terms thereof, the
Trustee shall at the written request of the Company, release the Liens pursuant
to this Indenture and the Pledge Agreement upon the Company's compliance with
the provisions of the TIA pertaining to release of collateral.
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ARTICLE 12
MISCELLANEOUS
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), such TIA-imposed duties shall control
under this Indenture.
SECTION 12.2. NOTICES.
Any notice or communication by the Company, any Subsidiary Guarantor or
the Trustee to the other shall be sufficiently given if in writing and delivered
in person or mailed by first class mail (registered or certified, return receipt
requested), telex, telecopier or overnight air courier guaranteeing next day
delivery, addressed as follows:
If to the Company or any Subsidiary Guarantor:
First Wave Marine, Inc.
4000 S. Sherwood Forest Blvd.
Suite 603
Baton Route, Louisiana 70816
Telephone: (504) 292-8800
Telecopy: (504) 292-8801
Attention: Chief Financial Officer
If to the Trustee:
Bank One, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Telephone: (614) 248-6229
Telecopy: (614) 248-5195
Attention: Corporate Trust Department
The Company, any Subsidiary Guarantor or the Trustee, by notice to the
other, may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall
be deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery, in each case to the address shown above.
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Notwithstanding the foregoing, notices to the Trustee shall only be effective
upon actual receipt thereof by the Trustee at the Corporate Trust Office of the
Trustee.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 12.3. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. The
Company, the Subsidiary Guarantors, the Trustee, the Registrar and anyone else
shall have the protection of TIA Section 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or any Subsidiary
Guarantor to the Trustee to take any action under this Indenture, the Company or
such Subsidiary Guarantor, as the case may be, shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.5 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been satisfied;
and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 12.5 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e), shall comply with the definition of the term "Officers'
Certificate" and shall include:
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(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condi tion or covenant has been satisfied.
SECTION 12.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 12.7. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
OTHERS.
No past, present or future director, officer, employee, incorporator,
partner or stockholder of either of the Company or any of its Subsidiaries, as
such, shall have any liability for any obligations of the Company or its
Subsidiaries under the Notes, the Subsidiary Guarantees or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. This waiver and release are part of the consideration for issuance of
the Notes and the Subsidiary Guarantees.
SECTION 12.8. GOVERNING LAW.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK. THE
COMPANY HEREBY SUBMITS TO THE PERSONAL JURISDICTION OF ANY COMPETENT COURT OF
THE STATE OF NEW YORK, OR A UNITED STATES FEDERAL COURT SITTING IN NEW YORK
CITY.
SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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SECTION 12.10. SUCCESSORS.
This Indenture shall inure to the benefit of and be binding upon the
parties hereto and each of their respective successors and assigns, except that
the Company may not assign this Indenture or its obligations hereunder except as
expressly permitted by Sections 5.1 and 5.2. Without limiting the generality of
the foregoing, this Indenture shall inure to the benefit of all Holders from
time to time. Nothing expressed or mentioned in this Indenture is intended or
shall be construed to give any Person, other than the parties hereto, their
respective successors and assigns, and the Holders, any legal or equitable
right, remedy or claim under or in respect of this Indenture or any provision
herein contained.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes 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 12.12. ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
SECTION 12.14. COUNTERPARTS
This Indenture may be signed in counterparts and by the different
parties hereto in separate counterparts, each of which shall constitute an
original and all of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first above written.
THE COMPANY:
FIRST WAVE MARINE, INC.
By: /s/ DAVID B. AMMONS
---------------------------------------
David B. Ammons
Executive Vice President, Chief
Financial Officer and Secretary
INITIAL SUBSIDIARY GUARANTORS:
NEWPARK SHIPBUILDING AND REPAIR, INC.
By: /s/ DAVID B. AMMONS
---------------------------------------
David B. Ammons
Executive Vice President, Chief
Financial Officer and Secretary
EAE SERVICES, INC.
By: /s/ DAVID B. AMMONS
---------------------------------------
David B. Ammons
Executive Vice President, Chief
Financial Officer and Secretary
EAE INDUSTRIES, INC.
By: /s/ DAVID B. AMMONS
---------------------------------------
David B. Ammons
Executive Vice President, Chief
Financial Officer and Secretary
76
<PAGE> 84
NEWPARK MARINE FABRICATORS, INC.
By: /s/ DAVID B. AMMONS
---------------------------------
David B. Ammons
Executive Vice President, Chief
Financial Officer and Secretary
LOUISIANA SHIP, INC.
By: /s/ DAVID B. AMMONS
---------------------------------
David B. Ammons
Executive Vice President, Chief
Financial Officer and Secretary
TRUSTEE:
BANK ONE, N.A., as Trustee
By: /s/ JON A BEACHAM
---------------------------------
Name: Jon A. Beacham
--------------------------------
Title: Authorized Signer
-------------------------------
77
<PAGE> 85
EXHIBIT A
(Form of Face of Note)
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), New York, New
York, to the Company or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
such other name as may be requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or such other entity as may be requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.[1]
- --------
[1] This paragraph should be included only if the Note is issued in global form.
A-1
<PAGE> 86
FIRST WAVE MARINE, INC.
11% Senior Notes due 2008
No. $__________
CUSIP #33748XAA3
First Wave Marine, Inc., a Delaware corporation (the "Company"),
promises to pay to _________________ or its registered assigns, the principal
sum indicated on Schedule A hereof on February 1, 2008.
Interest Payment Dates: February 1 and August 1, commencing on
August 1, 1998.
Record Dates: January 15 and July 15.
Dated: ___________, _____
FIRST WAVE MARINE, INC.
By:
---------------------------------
Name:
-----------------------------
Title:
-----------------------------
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
This is one of the
Notes referred to in the
within-mentioned Indenture:
BANK ONE, N.A., as Trustee
By:
-----------------------------
Authorized Signatory
Dated:
--------------------------
A-2
<PAGE> 87
(Form of Reverse Side of Note)
11% Senior Notes due 2008
Capitalized terms used herein but not defined shall have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. The Notes will be limited in aggregate principal amount to
$90 million (except as otherwise provided in Section 2.7 of the Indenture
referred to below) and will mature on February 1, 2008. The Company promises to
pay interest on the principal amount of this Note from the Closing Date until
maturity. The Company will pay interest semi-annually on February 1 and August 1
of each year, commencing August 1, 1998, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date") to
Holders of record on the immediately preceding January 15 and July 15, as
appropriate (each, a "Record Date"). Interest on the Notes will accrue at the
rate of 11% per annum from the most recent date to which interest has been paid
or, if no interest has been paid, from the Closing Date. The Company shall pay
interest (including post-petition interest in any proceeding under any
Bankruptcy Law to the extent that such interest is an allowed claim enforceable
against the debtor under such Bankruptcy Law) on overdue principal and premium,
if any, from time to time on demand at the rate equal to 1% per annum in excess
of the rate then in effect; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue installments of
interest (without regard to any applicable grace periods) from time to time on
demand at the same rate to the extent lawful. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company shall pay the principal of, and
premium, and interest on, the Notes on the dates and in the manner provided
herein and in the Indenture. Principal of, and premium, and interest on,
Certificated Notes will be payable, and Certificated Notes may be presented for
registration of transfer or exchange, at the office or agency of the Company
maintained for such purpose. Principal of, and premium, and interest on, Global
Notes will be payable by the Company through the Trustee to the Depositary by
wire transfer of immediately available funds. Holders of Certificated Notes will
be entitled to receive interest payments by wire transfer in immediately
available funds if appropriate wire transfer instructions have been received in
writing by the Trustee not less than 15 days prior to the applicable Interest
Payment Date. Such wire instructions, upon receipt by the Trustee, shall remain
in effect until revoked by such Holder. If wire instructions have not been
received by the Trustee with respect to any Holder of a Certificated Note,
payment of interest may be made by check in immediately available funds mailed
to such Holder at the address set forth upon the Register maintained by the
Registrar.
3. PAYING AGENT AND REGISTRAR. Initially, Bank One, N.A., the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in
A-3
<PAGE> 88
any such capacity, except that none of the Company, its Subsidiaries or their
Affiliates shall act (i) as Paying Agent in connection with any redemption,
offer to purchase, discharge or defeasance, as otherwise specified in the
Indenture, and (ii) as Paying Agent or Registrar if a Default or Event of
Default has occurred and is continuing.
4. INDENTURE.
The Company issued the Notes under an Indenture dated as of
February 2, 1998 (as such may be amended, supplemented or restated from time to
time, the "Indenture") by and among the Company, the Initial Subsidiary
Guarantors named therein, and the Trustee. The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb).
The Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. The Notes are senior
obligations of the Company limited to $90 million in aggregate principal amount
(except as otherwise provided in Section 2.7 of the Indenture).
Each of the Initial Subsidiary Guarantors will Guarantee the
Notes, and the Indenture requires the Company to cause any other Person that
becomes a Restricted Subsidiary after the Closing Date to execute and deliver to
the Trustee a supplemental indenture pursuant to which such Restricted
Subsidiary will Guarantee the Notes. So long as no Default or Event of Default
exists or would be caused thereby, any Person that is no longer a Restricted
Subsidiary may, by execution and delivery to the Trustee of a supplemental
indenture satisfactory to the Trustee, be released from its Subsidiary Guarantee
and cease to Guarantee the Notes.
The Indenture contains certain covenants that, among other
things, limit the ability of the Company and its Restricted Subsidiaries to
incur additional Indebtedness, pay dividends or make other distributions,
repurchase any capital stock or Subordinated Indebtedness, make certain
investments, create certain liens, enter into certain transactions with
affiliates, sell assets, enter into certain mergers and consolidations, allow
Restricted Subsidiaries to create certain dividend and other payment
restrictions, enter into sale and leaseback transactions, and issue or sell
capital stock of Restricted Subsidiaries.
5. OPTIONAL REDEMPTION.
The Notes will not be redeemable at the Company's option prior
to February 1, 2003, except as provided below. Thereafter, the Notes will be
subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' notice to the Holders, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on February 1 of the years
indicated below:
A-4
<PAGE> 89
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003............................................... 105.5000%
2004............................................... 103.6667%
2005............................................... 101.8333%
2006 and thereafter................................ 100.0000%
</TABLE>
Notwithstanding the foregoing, on and prior to February 1,
2001, the Company, at its option, may redeem, from time to time, up to 35% of
the aggregate principal amount of the Notes at a redemption price of 111% of the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date with the net proceeds of a Public Equity Offering, as described
in Section 3.7 of the Indenture; provided that no less than 65% of the aggregate
principal amount of the Notes initially issued remains outstanding immediately
after giving effect to such redemption; and provided, further, that such notice
of redemption shall be given not later than 30 days, and such redemption shall
occur not later than 90 days, after the date of the closing of the transaction
giving rise to such Public Equity Offering. Unless the Company defaults in
making such redemption payment, on and after the redemption date, interest
ceases to accrue on the Notes or portions thereof called for redemption.
6. MANDATORY REDEMPTION. Except as set forth in paragraph 7
below, the Company shall not be required to make mandatory redemption payments
with respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon a Change of Control, the Company shall be required to
make an offer to Holders to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of each Holder's Notes at a purchase price equal to
101% of the aggregate principal amount thereof, plus accrued and unpaid interest
thereon to the date of purchase as provided in, and subject to the terms of, the
Indenture.
(b) If the Company or any Restricted Subsidiary consummates
any Asset Sale, the Company may be required, subject to the terms and conditions
of the Indenture, to utilize a certain portion of the proceeds received from
such Asset Sale to repurchase Notes at a purchase price equal to 100% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase.
8. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any
A-5
<PAGE> 90
Note being redeemed in part. Also, it need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be redeemed
or during the period between a Record Date and the corresponding Interest
Payment Date.
9. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
10. UNCLAIMED MONEY. If money for the payment of principal,
premium, or interest remains unclaimed for one year, the Trustee and the Paying
Agent will pay the money back to the Company at its request. After that, all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
11. DEFEASANCE PRIOR TO REDEMPTION OR MATURITY. Subject to certain
conditions contained in the Indenture, the Company at any time may terminate
some or all of its obligations under the Notes and the Indenture if the Company
deposits with the Trustee money or Government Securities sufficient to pay the
principal of, premium, and interest on, the Notes to redemption or maturity, as
the case may be.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding, and any existing Default or Event or Default or compliance
with any provision of the Indenture or the Notes may be waived with the consent
of the Holders of a majority in principal amount of the then outstanding Notes.
Without the consent of any Holder of a Note, the Indenture or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's obligations to Holders of
Notes in case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder, or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the TIA as then in effect.
13. DEFAULTS AND REMEDIES.
Events of Default include: (i) default for 30 days in the
payment when due of any interest payable with respect to the Notes at any time
(provided that such 30-day grace period shall be inapplicable for the first two
scheduled interest payments due on the Notes); (ii) default in payment when due
(whether at maturity, upon redemption or repurchase, or otherwise) of the
principal of or premium, if any, on the Notes; (iii) failure by the Company or
any Restricted Subsidiary to comply with the provisions described under Articles
5, 10 or 11 or Sections 4.10 or 4.14 of the Indenture; (iv) failure by the
Company or any Restricted Subsidiary for 30 calendar days after notice from the
Trustee or Holders of at least 25% in aggregate principal amount of the Notes to
the Company and the Trustee to comply with any of its other agreements in the
Indenture, the Notes or the Pledge Agreement; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced
A-6
<PAGE> 91
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is Guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or Guarantee now exists or
is created after the date of the Indenture, which default (a) is caused by a
failure to pay principal of or premium, if any, or interest on such Indebtedness
following the expiration of the grace period provided in such Indebtedness on
the date of such default (a "Payment Default") or (b) results in the
acceleration of such Indebtedness (including any obligation to redeem or
repurchase such Indebtedness) prior to its express maturity and, in each case,
the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated, aggregates $1 million
or more; (vi) failure by the Company or any of its Restricted Subsidiaries to
pay final non-appealable judgments rendered against the Company or any of its
Restricted Subsidiaries aggregating in excess of $1 million, which judgments are
not paid, discharged or stayed for a period of 60 days after such judgments
become final and non-appealable; (vii) certain events of bankruptcy or
insolvency with respect to the Company or any Restricted Subsidiary; (viii)
certain events of breach, default, repudiation or unenforceability of the Pledge
Agreement; and (ix) any Guarantee of the Notes shall be held in a judicial
proceeding to be unenforceable or invalid or shall cease for any reason to be in
full force and effect, or any Restricted Subsidiary, or any Person acting on
behalf of any Restricted Subsidiary, shall deny or disaffirm its obligations
under its Guarantee of any Notes.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect any
payment due, or to enforce the performance of any provision, under the Notes or
the Indenture. The Trustee may refuse to enforce the Indenture or the Notes
unless it receives reasonable indemnity or security. Holders of Notes may not
enforce the Indenture or the Notes except as provided in the Indenture. Subject
to certain limitations, Holders of a majority in principal amount of the Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Notes notice of any continuing Default or Event of
Default (except under clauses (i) or (ii) above) if it determines that
withholding notice is in their interest.
14. PLEDGE AGREEMENT. In order to secure the due and punctual payment
of the principal of, premium, and interest on the Notes and the payment and
performance of all other obligations of the Company to the Holders of the Notes
or the Trustee under the Indenture, the Company has granted a first priority
Lien on certain funds and Government Securities to the Trustee for the benefit
of the Holders, as more particularly described in the Pledge Agreement. If the
funds and Government Securities held in the Pledge Account exceed the amount
sufficient, in the opinion of a nationally recognized firm of independent public
accountants selected by the Company, to provide for payment in full of the first
two scheduled interest payments due on the Notes (or, in the event an interest
payment or interest payments have been made, an amount sufficient to provide for
payment in full of any interest payments remaining, up to and including the
second scheduled interest payment), if no Default or Event of Default is then
continuing, upon the satisfaction of certain conditions specified in the Pledge
Agreement, any such excess
A-7
<PAGE> 92
amount of funds and Government Securities shall be paid to the Company. Upon
such payment to the Company, the Lien of the Trustee thereon for the benefit of
the Holders shall be released.
15. TRUSTEE'S DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee, subject to the
provisions of TIA Section 310.
16. NO RECOURSE AGAINST OTHERS. No past or present director, officer,
employee, incorporator, partner or stockholder of either of the Company or any
of its Subsidiaries, as such, shall have any liability for any obligations of
the Company or its Subsidiaries under any of the Notes, the Subsidiary
Guarantees or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. This waiver and release are part of the
consideration for the issuance of the Notes.
17. AUTHENTICATION. This Note shall not be valid until authenticated
by the manual signature of the Trustee or an authenticating agent.
18. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
20. GOVERNING LAW. THE INDENTURE AND THIS NOTE SHALL BE GOVERNED
BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL
LAW OF THE STATE OF NEW YORK.
21. SUCCESSOR CORPORATION. In the event a successor corporation assumes
all the obligations of the Company under the Notes and the Indenture, pursuant
to the terms thereof, the Company will be released from all such obligations.
A-8
<PAGE> 93
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and the Pledge Agreement. Requests
may be made to:
First Wave Marine, Inc.
4000 S. Sherwood Forest Blvd.
Suite 603
Baton Rouge, Louisiana 70816
Phone No.: (504) 292-8800
Telecopier No.: (504) 292-8801
Attention: Chief Financial Officer
A-9
<PAGE> 94
ASSIGNMENT FORM
To assign this Note, fill in the form below and have your
signature guaranteed:
(I) or (we) assign and transfer this Note to
-----------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
-----------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: Your Name:
--------------------------- -------------------------------
(Print your name exactly as it
appears on the face of this Note)
Your Signature:
--------------------------
(Sign exactly as your name
appears on the face of this Note)
Signature Guarantee*:
--------------------
- ----------------------
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-10
<PAGE> 95
OPTION OF HOLDER TO ELECT PURCHASE
If you elect to have this Note purchased by the Company
pursuant to Section 4.10 or Section 4.14 of the Indenture, check the appropriate
box below:
[ ] Section 4.10
[ ] Section 4.14
If you elect to have only part of this Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount (in minimum denominations of $1000 or integral multiples thereof) you
elect to have purchased: $___________
Date: Your Name:
------------------------ --------------------------------
(Print your name exactly as it
appears on the face of this Note)
Your Signature:
---------------------------
(Sign exactly as your name
appears on the face of this Note)
Social Security or Tax
Identification No.:
----------------------
Signature Guarantee*:
--------------------
- ---------------------
* Participant in a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
A-11
<PAGE> 96
SCHEDULE A
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL NOTE [2]
The initial principal amount at maturity of this Global Note
shall be $ _____________ . The following increases or decreases in this Global
Note have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount
decrease in increase in of this Global Signature of
Principal Amount Principal Amount Note following authorized officer
Date of of this Global of this Global such decrease (or of Trustee or
Exchange Note Note increase) Note Custodian
- ---------------------- ---------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C>
</TABLE>
[2] This schedule should be included only if the Note is issued in global form.
A-12
<PAGE> 1
EXHIBIT 4.2
- --------------------------------------------------------------------------------
FIRST WAVE MARINE, INC.
as Issuer
SUBSIDIARY GUARANTORS
named herein
and
BANK ONE, N.A.
as Trustee
--------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of February 3, 1998
--------------
Supplementing and Amending the Indenture
dated as of February 2, 1998
$90,000,000 11% Senior Notes due 2008
- --------------------------------------------------------------------------------
<PAGE> 2
This FIRST SUPPLEMENTAL INDENTURE, dated as of February 3, 1998, is by
and among FIRST WAVE MARINE, INC., a Delaware corporation (the "Company"),
NEWPARK SHIPBUILDING AND REPAIR, INC., a Texas corporation ("Newpark
Shipbuilding"), EAE SERVICES, INC., a Texas corporation ("EAE Services"), EAE
INDUSTRIES, INC., a Texas corporation ("EAE Industries"), NEWPARK MARINE
FABRICATORS, INC., a Texas corporation ("Newpark Marine"), LOUISIANA SHIP,
INC., a Texas corporation ("Louisiana Ship" and, together with Newpark
Shipbuilding, EAE Services, EAE Industries and Newpark Marine, the "Initial
Subsidiary Guarantors"), JOHN BLUDWORTH MARINE, INC., a Texas corporation
("Bludworth Marine"), BLUDWORTH SHIPYARD AND FABRICATION, INC., a Texas
corporation ("Bludworth Shipyard"), and BANK ONE, N.A., as trustee (the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company, the Initial Subsidiary Guarantors and the
Trustee are parties to that certain Indenture, dated as of February 2, 1998
(the "Original Indenture," this Original Indenture as supplemented and amended
by this First Supplemental Indenture is referred to herein as the "Indenture"),
pursuant to which the 11% Senior Notes due 2008 (the "Notes") were issued; and
WHEREAS, the Company, EAE Services, John L. Bludworth, III, Bludworth
Marine and Bludworth Shipyard have entered into a Stock Purchase Agreement,
dated as of October 15, 1997, pursuant to which EAE Services purchased all of
the issued and outstanding capital stock of Bludworth Marine; and
WHEREAS, Bludworth Shipyard is a wholly-owned subsidiary of Bludworth
Marine; and
WHEREAS, Bludworth Marine and Bludworth Shipyard are now Restricted
Subsidiaries of the Company; and
WHEREAS, Section 10.8 of the Original Indenture provides that the
Company shall cause any Person that becomes a Restricted Subsidiary after the
Closing Date to promptly execute and deliver to the Trustee a supplemental
indenture pursuant to which such Restricted Subsidiary shall become a
Subsidiary Guarantor under Article 10 of the Indenture and shall guarantee the
Notes pursuant to the terms thereof; and
WHEREAS, capitalized terms used herein and not otherwise defined are
used as defined in the Original Indenture.
2
<PAGE> 3
NOW, THEREFORE, in consideration of these premises and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company, the Initial Subsidiary Guarantors, Bludworth Marine
and Bludworth Shipyard agree as follows for the benefit of each other, the
Trustee and the equal and ratable benefit of the Holders of the Notes, and
hereby amend and supplement the Indenture as follows:
SECTION 1. ADDITION OF SUBSIDIARY GUARANTORS. In accordance with
Section 10.8 of the Indenture, each of Bludworth Marine and Bludworth Shipyard
hereby agree to become Subsidiary Guarantors under Article 10 of the Indenture
and hereby guarantee the Notes pursuant to the terms thereof.
SECTION 2. MODIFICATION OF INDENTURE. Upon the execution and delivery
of this First Supplemental Indenture, the Indenture shall be modified to
reflect the addition of Bludworth Marine and Bludworth Shipyard as Subsidiary
Guarantors under the Indenture, and this First Supplemental Indenture shall
form a part of the Indenture for all purposes.
SECTION 3. RATIFICATION. Except to the extent amended by or
inconsistent with this First Supplemental Indenture, the Company, the Initial
Subsidiary Guarantors, Bludworth Marine, Bludworth Shipyard and the Trustee
hereby ratify and reconfirm the Indenture in its entirety.
SECTION 4. MISCELLANEOUS.
A. Counterparts. This First Supplemental Indenture may
be executed in any number of counterparts, each of which so executed shall be
an original, but all such counterparts shall together constitute but one and
the same instrument.
B. Meaning of Terms. Any capitalized terms used in this
First Supplemental Indenture and not defined herein that are defined in the
Original Indenture shall have the meanings specified in the Original Indenture,
unless the contest shall otherwise require.
C. Governing Law. THIS FIRST SUPPLEMENTAL INDENTURE
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAW OF THE STATE OF NEW YORK.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the date first above written.
FIRST WAVE MARINE, INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
NEWPARK SHIPBUILDING AND
REPAIR, INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
EAE SERVICES, INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
EAE INDUSTRIES, INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
NEWPARK MARINE FABRICATORS,
INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
4
<PAGE> 5
LOUISIANA SHIP, INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
JOHN BLUDWORTH MARINE, INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
BLUDWORTH SHIPYARD AND
FABRICATION, INC.
By: /s/ DAVID B. AMMONS
------------------------
David B. Ammons
Executive Vice President
BANK ONE, N.A.,
as Trustee
By: /s/ JON BEACHAM
------------------------
Name: Jon Beacham
----------------------
Title: Authorized Signer
---------------------
5
<PAGE> 1
EXHIBIT 4.3
- --------------------------------------------------------------------------------
FIRST WAVE MARINE, INC.
as Issuer
SUBSIDIARY GUARANTORS
named herein
and
BANK ONE, N.A.
as Trustee
-----------------------------
SECOND SUPPLEMENTAL INDENTURE
Dated as of May 18, 1998
-----------------------------
Supplementing and Amending the Indenture
dated as of February 2, 1998
as amended by the First Supplemental Indenture
dated as of February 3, 1998
$90,000,000 11% Senior Notes due 2008
- --------------------------------------------------------------------------------
<PAGE> 2
This SECOND SUPPLEMENTAL INDENTURE, dated as of May 18, 1998, is by
and among FIRST WAVE MARINE, INC., a Delaware corporation (the "Company"),
NEWPARK SHIPBUILDING AND REPAIR, INC., a Texas corporation ("Newpark
Shipbuilding"), EAE SERVICES, INC., a Texas corporation ("EAE Services"), EAE
INDUSTRIES, INC., a Texas corporation ("EAE Industries"), NEWPARK MARINE
FABRICATORS, INC., a Texas corporation ("Newpark Marine"), LOUISIANA SHIP,
INC., a Texas corporation ("Louisiana Ship"), JOHN BLUDWORTH MARINE, INC., a
Texas corporation ("Bludworth Marine"), BLUDWORTH SHIPYARD AND FABRICATION,
INC., a Texas corporation ("Bludworth Shipyard" and, together with Newpark
Shipbuilding, EAE Services, EAE Industries, Newpark Marine, Louisiana Ship and
Bludworth Marine, the "Existing Subsidiary Guarantors"), FW MARINE PROPERTIES
INC., a Texas corporation ("FW Marine") and BANK ONE, N.A., as trustee (the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company, the Existing Subsidiary Guarantors and the
Trustee are parties to that certain Indenture, dated as of February 2, 1998
(the "Original Indenture"), pursuant to which the 11% Senior Notes due 2008
(the "Notes") were issued, as amended by that certain First Supplemental
Indenture dated February 3, 1998 (the Original Indenture as supplemented and
amended by the First Supplemental Indenture is referred to herein as the
"Indenture"); and
WHEREAS, the Company was issued all of the authorized stock of FW
Marine on April 27, 1998, thereby causing FW Marine to be a wholly owned
subsidiary of the Company; and
WHEREAS, FW Marine and Galveston Shipbuilding Company have entered
into a Sale and Purchase Agreement dated as of May 1, 1998, pursuant to which
FW Marine purchased certain assets of Galveston Shipbuilding Company; and
WHEREAS, FW Marine is now a Restricted Subsidiary of the Company; and
WHEREAS, Section 10.8 of the Indenture provides that the Company shall
cause any Person that becomes a Restricted Subsidiary after the Closing Date to
promptly execute and deliver to the Trustee a supplemental indenture pursuant
to which such Restricted Subsidiary shall become a Subsidiary Guarantor under
Article 10 of the Indenture and shall guarantee the Notes pursuant to the terms
thereof; and
WHEREAS, capitalized terms used herein and not otherwise defined are
used as defined in the Indenture.
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<PAGE> 3
NOW, THEREFORE, in consideration of these premises and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Company, the Existing Subsidiary Guarantors and FW Marine
agree as follows for the benefit of each other, the Trustee and the equal and
ratable benefit of the Holders of the Notes, and hereby amend and supplement
the Indenture as follows:
SECTION 1. ADDITION OF SUBSIDIARY GUARANTORS. In accordance with
Section 10.8 of the Indenture, FW Marine agrees to become a Subsidiary
Guarantor under Article 10 of the Indenture and hereby guarantees the Notes
pursuant to the terms thereof.
SECTION 2. MODIFICATION OF INDENTURE. Upon the execution and delivery
of this Second Supplemental Indenture, the Indenture shall be modified to
reflect the addition of FW Marine as a Subsidiary Guarantor under the
Indenture, and this Second Supplemental Indenture shall form a part of the
Indenture for all purposes.
SECTION 3. RATIFICATION. Except to the extent amended by or
inconsistent with this Second Supplemental Indenture, the Company, the Existing
Subsidiary Guarantors, FW Marine and the Trustee hereby ratify and reconfirm
the Indenture in its entirety.
SECTION 4. MISCELLANEOUS.
A. Counterparts. This Second Supplemental Indenture may
be executed in any number of counterparts, each of which so executed shall be
an original, but all such counterparts shall together constitute but one and
the same instrument.
B. Meaning of Terms. Any capitalized terms used in this
Second Supplemental Indenture and not defined herein that are defined in the
Indenture shall have the meanings specified in the Indenture, unless the
contest shall otherwise require.
C. Governing Law. THIS SECOND SUPPLEMENTAL INDENTURE
SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE INTERNAL LAW OF THE STATE OF NEW YORK.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed as of the date first above written.
FIRST WAVE MARINE, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
NEWPARK SHIPBUILDING AND
REPAIR, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
EAE SERVICES, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
EAE INDUSTRIES, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
NEWPARK MARINE FABRICATORS,
INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
4
<PAGE> 5
LOUISIANA SHIP, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
JOHN BLUDWORTH MARINE, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
BLUDWORTH SHIPYARD AND
FABRICATION, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
FW MARINE PROPERTIES, INC.
By: /s/ DAVID B. AMMONS
-------------------------
David B. Ammons
Executive Vice President
BANK ONE, N.A.,
as Trustee
By: /s/ DAVID B. KNOX
-------------------------
Name: David B. Knox
-----------------------
Title: Authorized Signer
----------------------
5
<PAGE> 1
EXHIBIT 10.1
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of February 2,
1998, is by and among Bank One, N.A., as pledge agent (in such capacity, the
"Pledge Agent"), Bank One, N.A., as Trustee (in such capacity, the "Trustee")
under the Indenture (as defined herein), and First Wave Marine, Inc., a
Delaware corporation (the "Company").
RECITALS
A. Pursuant to the Indenture, dated as of the date
hereof, by and among the Company, the Trustee and the Subsidiary Guarantors
named therein (as such may be amended or supplemented from time to time, the
"Indenture"), the Company is issuing $90,000,000 aggregate principal amount of
its 11% Senior Notes Due 2008 (the "Notes").
B. As security for its obligations under the Notes and
the Indenture, the Company hereby grants to the Trustee, for the benefit of the
Trustee and the holders of the Notes, a security interest in and lien upon the
Pledge Account (as defined herein).
C. The parties have entered into this Agreement in order
to set forth the conditions upon which, and the manner in which, funds will be
disbursed from the Pledge Account and released from the security interest and
Lien described above.
NOW, THEREFORE, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. DEFINED TERMS. All capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Indenture. In
addition to any other defined terms used herein, the following terms shall
constitute defined terms for purposes of this Agreement and shall have the
meanings set forth below:
"Agreement" means this Pledge and Security Agreement, as
amended or supplemented from time to time.
"Applied" means that disbursed funds have been applied (i) to
the payment of interest on the Notes, (ii) pursuant to Section 3.3, or (iii)
pursuant to Section 6(b) (iii).
"Available Funds" means (A) the sum of (i) the Initial Pledge
Amount and (ii) interest earned or dividends paid on the funds in the Pledge
Account (including holdings of Government Securities), less (B) the aggregate
disbursements previously made pursuant to this Agreement.
"Collateral" shall have the meaning given in Section 6(a)
hereof.
"Initial Pledge Amount" shall mean approximately $9,900,000.
<PAGE> 2
"Payment Notice and Disbursement Request" means a notice sent
by the Trustee to the Pledge Agent requesting a disbursement of funds from the
Pledge Account, in substantially the form of Exhibit A hereto. Each Payment
Notice and Disbursement Request shall be signed by an officer of the Trustee.
"Pledge Account" shall mean the pledge account established
pursuant to Section 2.2.
2. PLEDGE ACCOUNT; PLEDGE AGENT.
2.1 Appointment of Pledge Agent. The Company and the
Trustee hereby appoint the Pledge Agent, and the Pledge Agent hereby accepts
appointment, as Pledge Agent, under the terms and conditions of this Agreement.
2.2 Establishment of Pledge Account. On the Closing
Date, the Pledge Agent shall establish a pledge account entitled "Pledge
Account pledged by First Wave Marine, Inc. to Bank One, N.A., as Trustee" (the
"Pledge Account") at its office located at 100 East Broad, Columbus, Ohio
43271-0181. All funds accepted by the Pledge Agent pursuant to this Agreement
shall be held for the exclusive benefit of the Trustee and the holders of the
Notes, as secured parties hereunder (the "Beneficiaries"). All such funds
shall be held in the Pledge Account until disbursed or paid in accordance with
the terms hereof. The Pledge Account, the funds held therein and any
Government Securities held by the Pledge Agent shall be under the sole dominion
and control of the Pledge Agent for the benefit of the Beneficiaries. On the
Closing Date, the Company shall deliver the Initial Pledge Amount to the Pledge
Agent for deposit into the Pledge Account against the Pledge Agent's written
acknowledgment and receipt.
2.3 Pledge Agent Compensation. The Company shall pay to
the Pledge Agent such compensation for services to be performed by it under
this Agreement as the Company and the Pledge Agent may agree in writing from
time to time. The Pledge Agent shall be paid any compensation owed to it
directly by the Company and shall not disburse from the Pledge Account any such
amounts.
The Company shall reimburse the Pledge Agent upon request for
all reasonable expenses, disbursements, and advances incurred or made by the
Pledge Agent in implementing any of the provisions of this Agreement, including
compensation and the reasonable expenses and disbursements of its counsel. The
Pledge Agent shall be paid any such expenses owed to it directly by the Company
and shall not disburse from the Pledge Account any such amounts.
2.4 Investment of Funds in Pledge Account. Funds
deposited in the Pledge Account shall be invested and reinvested only upon the
following terms and conditions:
(a) Acceptable Investments. All funds deposited or held
in the Pledge Account at any time shall be invested by the Pledge
Agent in Government Securities in accordance with the Initial
Instructions annexed hereto as Exhibit B and thereafter the Company's
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<PAGE> 3
written instructions from time to time to the Pledge Agent; provided,
however, that the Company shall only designate investment of funds in
Government Securities maturing in an amount sufficient to and/or
generating interest income sufficient to, when added to the balance of
funds held in the Pledge Account, provide for the payment of interest
on the outstanding Notes on each Interest Payment Date beginning on
and including August 1, 1998 and through and including the Interest
Payment Date on February 1, 1999; provided, further, however, that any
such written instruction shall specify the particular investment to be
made, shall state that such investment is authorized to be made hereby
and in particular satisfies the requirements of the preceding proviso
and Section 2.4(e), shall contain the certification referred to in
Section 2.4(b), if required, and shall be executed by an Officer of
the Company. All Government Securities shall be assigned to and held
in the possession of, or, in the case of Government Securities
maintained in book entry form with the Federal Reserve Bank,
transferred to a book entry account in the name of, the Pledge Agent,
for the benefit of the Trustee, with such guarantees as are customary,
except that Government Securities maintained in book entry form with
the Federal Reserve Bank shall be transferred to a book entry account
in the name of the Pledge Agent at the Federal Reserve Bank that
includes only Government Securities held by the Pledge Agent for its
customers and segregated by separate recordation in the books and
records of the Pledge Agent. The Pledge Agent shall not be liable for
losses on any investments made by it pursuant to and in compliance
with such instructions. In the absence of qualifying instructions
from the Company that meet the requirements of this Section 2.4(a),
the Pledge Agent shall have no obligation to invest funds held in the
Pledge Account.
(b) Security Interest in Investments. No investment of
funds in the Pledge Account shall be made unless the Company has
certified to the Pledge Agent and the Trustee that, upon such
investment, the Trustee will have a first priority perfected security
interest in the applicable investment. If a certificate as to a class
of investments has been provided to the Pledge Agent, a certificate
need not be issued with respect to individual investments in
securities in that class if the certificate applicable to the class
remains accurate with respect to such individual investments, which
continued accuracy the Pledge Agent may conclusively assume. On the
Closing Date, and from time to time thereafter as required by Section
11.2 of the Indenture and as required by the TIA, until the
termination of this Agreement, the Trustee shall receive an Opinion of
Counsel to the Company, dated each such date as applicable, which
opinion shall meet the requirements of Section 314(b) of the TIA and
shall comply with Section 11.2 of the Indenture.
(c) Interest and Dividends. All interest earned and
dividends paid on funds invested in Government Securities shall be
deposited in the Pledge Account as additional Collateral for the
exclusive benefit of the Beneficiaries and, if not required to be
disbursed in accordance with the terms hereof, shall be reinvested in
accordance with the terms hereof at the Company's written instruction,
and shall be available for disbursement to the Company upon
satisfaction of the conditions set forth in Section 3.3.
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<PAGE> 4
(d) Limitation on Pledge Agent's Responsibilities. The
Pledge Agent's sole responsibilities under this Section 2 shall be (A)
to retain possession of certificated Government Securities (except,
however, that the Pledge Agent may surrender possession to the issuer
of any such Government Security for the purposes of effecting
assignment, crediting interest, or reinvesting such security or
reducing such security to cash) and to be the registered or designated
owner of Government Securities which are not certificated, (B) to
follow the Company's written instructions given in accordance with
Section 2.4(a), (C) to invest and reinvest funds pursuant to this
Section 2.4 and (D) to use reasonable efforts to reduce to cash such
Government Securities as may be required to fund any disbursement or
payment in accordance with Section 3. In connection with clause (A)
above, the Pledge Agent will maintain continuous possession in the
State of New York of certificated Government Securities and cash
included in the Collateral and will cause uncertificated Government
Securities to be registered in the book-entry system of, and
transferred to an account of the Pledge Agent or a sub-agent of the
Pledge Agent at, the Federal Reserve Bank of New York or Dallas.
Except as provided in Section 6, the Pledge Agent shall have no other
responsibilities with respect to perfecting or maintaining the
perfection of the Trustee's security interest in the Collateral and
shall not be required to file any instrument, document or notice in
any public office at any time or times. In connection with clause (D)
above and subject to the following sentence, the Pledge Agent shall
not be required to reduce to cash any Government Securities to fund
any disbursement or payment in accordance with Section 3 in the
absence of written instructions signed by an Officer of the Company
specifying the particular investment to liquidate. If no such written
instructions are received, the Pledge Agent may liquidate those
Government Securities having the lowest interest rate per annum or if
none such exist, those having the nearest maturity.
(e) Manner of Investment. Funds deposited in the Pledge
Account shall initially be invested in accordance with the Initial
Instructions (attached hereto as Exhibit B), which is in a manner such
that there will be sufficient funds available without any further
investment by the Company to cover all interest due on the outstanding
Notes, as such interest becomes due, for each Interest Payment Date
beginning on and including the Closing Date and through and including
February 1, 1999, provided that such investments shall have such
maturities and/or interest payment dates such that funds will be
available with respect to each such Interest Payment Date no later
than the time the Pledge Agent is required to disburse such funds to
the Trustee pursuant to Section 3.1. The Pledge Agent shall have no
responsibility for determining whether funds held in the Pledge
Account shall have been invested in such a manner so as to comply with
the requirements of this subsection (e)
2.5 Substitution of Pledge Agent. The Pledge Agent may
resign by giving no less than 20 Business Days prior written notice to the
Company and the Trustee. Such resignation shall take effect upon the later to
occur of (i) delivery of all funds and Government Securities maintained by the
Pledge Agent hereunder and copies of all books, records, plans and other
documents in the Pledge Agent's possession relating to such funds or Government
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<PAGE> 5
Securities or this Agreement to a successor Pledge Agent mutually approved by
the Company and the Trustee (which approvals shall not be unreasonably withheld
or delayed) and (ii) the Company, the Trustee and such successor agent enter
into this Agreement or any written successor agreement no less favorable to the
interests of the holders of the Notes and the Trustee than this Agreement. The
Pledge Agent shall thereafter be discharged of all obligations under this
Agreement and shall have no further duties, obligations or responsibilities in
connection herewith, except as set forth in Section 4. If a successor pledge
agent has not been appointed or has not accepted such appointment within 20
Business Days after notice of resignation is given to the Company, the Pledge
Agent may apply to a court of competent jurisdiction for the appointment of a
successor pledge agent.
2.6 Pledge Account Statement. At least 30 days prior to
each Interest Payment Date, the Pledge Agent shall deliver to the Company and
the Trustee a statement setting forth with reasonable particularity the balance
of funds then in the Pledge Account and the manner in which such funds are
invested. The parties hereto irrevocably instruct the Pledge Agent that on the
first date upon which the balance in the Pledge Account (including the holdings
of all Government Securities) is reduced to zero, the Pledge Agent shall
deliver to the Company and to the Trustee a notice that the balance in the
Pledge Account has been reduced to zero.
3. DISBURSEMENTS.
3.1 Payment Notice and Disbursement Request;
Disbursements. The Trustee shall, at least five Business Days prior to an
Interest Payment Date, submit to the Pledge Agent a completed Payment Notice
and Disbursement Request substantially in the form of Exhibit A hereto.
The Pledge Agent's disbursement pursuant to any Payment Notice
and Disbursement Request shall be subject to the satisfaction of the applicable
conditions set forth in Section 3.2. If such Payment Notice and Disbursement
Request is not rejected by the Pledge Agent, the Pledge Agent, as soon as
reasonably practicable on the Interest Payment Date, but in no event later than
12:00 Noon (New York City time) on the Interest Payment Date, shall disburse
the funds requested in such Payment Notice and Disbursement Request by wire or
book-entry transfer of immediately available funds to the account of the
Trustee for the benefit of the Beneficiaries. The Pledge Agent shall notify
the Trustee as soon as reasonably possible (but not later than two Business
Days from the date of receipt of the Payment Notice and Disbursement Request)
if any Payment Notice and Disbursement Request is rejected and the reason(s)
therefor. In the event such rejection is based upon nonsatisfaction of the
condition in Section 3.2(a) below, the Trustee shall thereupon resubmit the
Payment Notice and Disbursement Request with appropriate changes.
3.2 Conditions Precedent to Disbursement. The Pledge
Agent's payment of any disbursement shall be made only if: (a) the Trustee
shall have submitted, in accordance with the provisions of Section 3.1 herein,
a completed Payment Notice and Disbursement Request to the Pledge Agent
substantially in the form of Exhibit A with blanks appropriately filled in, (b)
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<PAGE> 6
the Company shall have complied with the requirements of Section 11.3 of the
Indenture, and (c) the Pledge Agent shall not have received any notice from the
Trustee that as a result of an Event of Default the indebtedness represented by
the Notes has been accelerated and has become due and payable (in which event
the Pledge Agent shall apply all Available Funds as required by Section 6(b)
(iii)).
3.3 Disbursements to Company. If (i) a portion of the
Notes has been retired by the Company and submitted to the Trustee for
cancellation or the Company has deposited with the Trustee from funds otherwise
available to the Company cash sufficient to pay interest scheduled to be paid
on an Interest Payment Date, and as a result of such retirement or deposit, or
(ii) as a result of overfunding of the Pledge Account, interest or dividends
earned on Collateral, or realization of proceeds thereof in accordance with the
terms hereof, the funds or Pledged Securities held in the Pledge Account exceed
the amount sufficient, in the opinion of a nationally recognized firm of
independent public accountants selected by the Company, to provide for payment
in full of the first two scheduled interest payments due on the Notes (or, in
the event an interest payment or interest payments have been made, an amount
sufficient to provide for payment in full of any interest payments remaining,
up to and including the second scheduled interest payment), if no Default or
Event of Default is then continuing, upon the written request of the Company to
the Pledge Agent and the Trustee, any such excess amount of Collateral shall be
paid to the Company upon compliance with the release of collateral provisions
of the TIA and upon receipt by the Pledge Agent of a notice relating thereto
from the Trustee.
4. PLEDGE AGENT.
The Pledge Agent's responsibility and liability under this
Agreement shall be limited as follows: (i) the Pledge Agent does not
represent, warrant or guaranty to the holders of the Notes from time to time
the performance of the Company; (ii) the Pledge Agent shall have no
responsibility to the Company or the holders of the Notes or the Trustee from
time to time as a consequence of performance or non-performance by the Pledge
Agent hereunder, except for any gross negligence or willful misconduct of the
Pledge Agent; (iii) the Company shall remain solely responsible for all aspects
of the Company's business and conduct; and (iv) the Pledge Agent is not
obligated to supervise, inspect or inform the Company or any third party of any
matter referred to above.
No implied covenants or obligations shall be inferred from
this Agreement against the Pledge Agent, nor shall the Pledge Agent be bound by
the provisions of any agreement beyond the specific terms hereof. Specifically
and without limiting the foregoing, the Pledge Agent shall in no event have any
liability in connection with its investment, reinvestment or liquidation, in
good faith and in accordance with the terms hereof, of any funds or Government
Securities held by it hereunder, including without limitation any liability for
any delay not resulting from gross negligence or willful misconduct in such
investment, reinvestment or liquidation, or for any loss of principal or income
incident to any such delay.
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<PAGE> 7
The Pledge Agent shall be entitled to rely upon any judicial
order or judgment, upon any written opinion of counsel or upon any
certification, instruction, notice, or other writing delivered to it by the
Company or the Trustee in compliance with the provisions of this Agreement
without being required to determine the authenticity or the correctness of any
fact stated therein or the propriety or validity of service thereof. The
Pledge Agent may act in reliance upon any instrument comporting with the
provisions of this Agreement or signature believed by it to be genuine and may
assume that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.
At any time the Pledge Agent may request in writing an
instruction in writing from the Company, and may at its own option include in
such request the course of action it proposes to take and the date on which it
proposes to act, regarding any matter arising in connection with its duties and
obligations hereunder; provided, however, that the Pledge Agent shall state in
such request that it believes in good faith that such proposed course of action
is consistent with another identified provision of this Agreement. The Pledge
Agent shall not be liable to the Company for acting without the Company's
consent in accordance with such a proposal on or after the date specified
therein if (i) the specified date is at least two (2) Business Days after the
Company receives the Pledge Agent's request for instructions and its proposed
course of action, and (ii) prior to so acting, the Pledge Agent has not
received the written instructions requested from the Company.
The Pledge Agent may act pursuant to the written advice of
counsel chosen by it with respect to any matter relating to this Agreement and
(subject to clause (ii) of the first paragraph of this Section 4) shall not be
liable for any action taken or omitted in accordance with such advice.
The Pledge Agent shall not be called upon to advise any party
as to selling or retaining, or taking or refraining from taking any action with
respect to, any securities or other property deposited hereunder.
In the event of any ambiguity in the provisions of this
Agreement with respect to any funds or property deposited hereunder, the Pledge
Agent shall be entitled to refuse to comply with any and all claims, demands or
instructions with respect to such funds or property, and the Pledge Agent shall
not be or become liable for its failure or refusal to comply with conflicting
claims, demands or instructions. The Pledge Agent shall be entitled to refuse
to act until either any conflicting or adverse claims or demands shall have
been finally determined by a court of competent jurisdiction or settled by
agreement between the conflicting claimants as evidenced in a writing,
satisfactory to the Pledge Agent, or the Pledge Agent shall have received
security or an indemnity satisfactory to the Pledge Agent sufficient to save
the Pledge Agent harmless from and against any and all loss, liability or
expense which the Pledge Agent may incur by reason of its acting. The Pledge
Agent may in addition elect in its sole option to commence an interpleader
action or seek other judicial relief or orders as the Pledge Agent may deem
necessary.
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<PAGE> 8
No provision of this Agreement shall require the Pledge Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder.
5. INDEMNITY. The Company shall indemnify, hold
harmless and defend the Pledge Agent and its directors, officers, agents,
employees and controlling persons, from and against any and all claims,
actions, obligations, liabilities and expenses, including defense costs,
investigative fees and costs, legal fees, and claims for damages, arising from
the Pledge Agent's performance or non-performance, or in connection with its
acceptance or appointment as Pledge Agent, under this Agreement, except to the
extent that such liability, expense or claim is solely and directly
attributable to the negligence or willful misconduct of any of the foregoing
persons. The provisions of this Section 5 shall survive any termination,
satisfaction or discharge of this Agreement as well as the resignation or
removal of the Pledge Agent.
6. GRANT OF SECURITY INTERESTS; INSTRUCTIONS TO PLEDGE
AGENT.
(a) The Company hereby irrevocably grants a first
priority security interest in and lien on, and pledges, assigns, and
sets over to the Trustee for the benefit of the Beneficiaries, all of
the Company's right, title and interest in the Pledge Account, and all
property now or hereafter placed or deposited in, or delivered to the
Pledge Agent for placement or deposit in, the Pledge Account,
including, without limitation, all funds held therein, all Government
Securities held by (or otherwise maintained in the name of) the Pledge
Agent pursuant to Section 2, and all proceeds thereof as well as all
rights of the Company under this Agreement (collectively, the
"Collateral"), in order to secure the due and punctual payment of the
principal of, premium, and interest on the Notes when and as the same
shall be due and payable on each Interest Payment Date, at maturity or
by acceleration, and interest on the overdue principal of and interest
(to the extent permitted by law), if any, on the Notes and the payment
and performance of all other obligations of the Company to the Holders
of the Notes or the Trustee under the Indenture and this Agreement
with respect to the Notes, according to the terms hereunder or
thereunder. The Pledge Agent hereby acknowledges the Trustee's
security interest and lien as set forth above. The Company shall take
all actions necessary on its part to insure the continuance of a first
priority security interest in the Collateral in favor of the Trustee
in order to secure all such obligations and indebtedness.
(b) The Company and the Trustee hereby irrevocably
instruct the Pledge Agent to, and the Pledge Agent shall: (i) (A)
maintain sole dominion and control over funds and Government
Securities in the Pledge Account for the benefit of the Trustee to the
extent specifically required herein, (B) maintain, or cause its agent
within the State of New York to maintain, possession of all
certificated Government Securities purchased hereunder that are
physically possessed by the Pledge Agent in order for the Trustee to
enjoy a continuous perfected first priority security interest therein
under the law of the State of New York (the Company hereby agreeing
that in the event any certificated
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<PAGE> 9
Government Securities are in the possession of the Company or a third
party, the Company shall use its best efforts to deliver all such
certificates to the Pledge Agent), (C) take all steps specified by the
Company pursuant to Section 6 to cause the Trustee to enjoy a
continuous perfected first priority security interest under any
applicable Federal and State of New York law in all Government
Securities purchased hereunder that are not certificated and (D)
maintain the Collateral free and clear of all Liens, security
interests, safekeeping or other charges, demands and claims against
the Pledge Agent of any nature now or hereafter existing in favor of
anyone other than the Trustee; (ii) promptly notify the Trustee if the
Pledge Agent receives written notice that any Person other than the
Trustee has a Lien or security interest upon any portion of the
Collateral; and (iii) in addition to disbursing amounts pledged
pursuant to any Payment Notice and Disbursement Requests given to it
by the Trustee pursuant to Section 3, upon receipt of written notice
from the Trustee of the acceleration of the maturity of the Notes, and
direction from the Trustee to disburse all Available Funds to the
Trustee, as promptly as practicable, after following, if it so
chooses, the procedures set forth in the fourth paragraph of Section
4, disburse all funds held in the Pledge Account to the Trustee and
transfer title to all Government Securities held by the Pledge Agent
hereunder to the Trustee. The Lien and security interest provided for
by this Section 6 shall automatically terminate and cease as to, and
shall not extend or apply to, and the Trustee shall have no security
interest in or Lien on, any funds disbursed by the Pledge Agent to the
Company pursuant to this Agreement to the extent not inconsistent with
the terms hereof. Notwithstanding any other provision contained in
this Agreement, the Pledge Agent shall act solely as the Trustee's
agent in connection with its duties under this Agreement. The Pledge
Agent shall not have any right to receive compensation from the
Trustee and shall have no authority to obligate the Trustee or to
compromise or pledge its security interest hereunder. Accordingly,
the Pledge Agent is hereby directed to cooperate with the Trustee in
the exercise of its rights in the Collateral provided for herein.
(c) Any money and Government Securities collected by the
Trustee pursuant to Section 6(b) (iii) shall be applied as provided in
Section 6.10 of the Indenture.
(d) Upon demand, the Company will execute and deliver to
the Trustee such instruments and documents as the Trustee may deem
necessary or advisable to confirm or perfect the rights of the Trustee
under this Agreement and the Trustee's interest in the Collateral.
The Trustee shall be entitled to take all necessary action to preserve
and protect the security interest created hereby as a lien and
encumbrance upon the Collateral.
(e) The Company hereby appoints the Trustee as its
attorney-in-fact with full power of substitution to do any act which
the Company is obligated hereto to do, and the Trustee may exercise
such rights as the Company might exercise with respect to the
Collateral and take any action in the Company's name to protect the
Trustee's security interest hereunder. In addition to the rights
provided under Section 6(b)(iii) hereof, upon
9
<PAGE> 10
an Event of Default and for so long as such Event of Default
continues, the Trustee may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party under
the Uniform Commercial Code or other applicable law, and the Trustee
may also upon obtaining possession of the Collateral as set forth
herein, without notice to the Company except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the
Trustee's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Trustee may deem
commercially reasonable. The Company acknowledges and agrees that any
such private sale may result in prices and other terms less favorable
to the seller than if such sale were a public sale. The Company
agrees that, to the extent notice of sale shall be required by law, at
least 10 days notice to the Company of the time and place of any
public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Trustee shall not be
obligated to make any sale regardless of notice of sale having been
given. The Trustee may adjourn any public or private sale from time
to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
7. TERMINATION. Upon the earliest to occur of (i) the
date upon which the balance of Available Funds shall have been reduced
to zero, (ii) if no Default or Event of Default exists, the date upon
which the Company shall have paid in full in accordance with the terms
of the Indenture the first two scheduled interest payments due on the
Notes, (iii) the payment in full of all obligations of the Company
under the Indenture and the Notes, (iv) Legal Defeasance under Article
8 of the Indenture, (v) Covenant Defeasance under Article 8 of the
Indenture, and (vi) the agreement of the parties hereto to terminate
this Agreement (in accordance with the terms hereof and not in
violation of the Indenture; provided, that the Trustee may not agree
to terminate unless it has received the consent of 100% of the holders
of all of the Notes outstanding), then the Trustee shall at the
written request of the Company, release the Liens pursuant to the
Indenture and this Agreement upon the Company's compliance with the
provisions of the TIA pertaining to release of collateral and
terminate this Agreement; provided, however, that the obligations of
the Company under Section 2.3 and Section 5 (and any existing claims
thereunder) shall survive termination of this Agreement and any
resignation of the Pledge Agent.
8. MISCELLANEOUS.
8.1 Waiver. Any party hereto may specifically waive any
breach of this Agreement by any other party, but no such waiver shall be deemed
to have been given unless such waiver is in writing, signed by the waiving
party and specifically designating the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.
10
<PAGE> 11
8.2 Invalidity. If for any reason whatsoever any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases,
such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the parties'
intent.
8.3 Assignment. This Agreement is personal to the
parties hereto, and the rights and duties of any party hereunder shall not be
assignable except with the prior written consent of the other parties.
Notwithstanding the foregoing, this Agreement shall inure to and be binding
upon the parties and their successors and permitted assigns.
8.4 Benefit. The parties hereto and their successors and
permitted assigns, but no others, shall be bound hereby and entitled to the
benefits hereof; provided, however, that the Holders shall be entitled to the
benefits hereof and to enforce this Agreement, subject to Article 6 of the
Indenture.
8.5 Time. Time is of the essence with respect to each
provision of this Agreement.
8.6 Entire Agreement; Amendments. This Agreement and the
Indenture contain the entire agreement among the parties with respect to the
subject matter hereof and supersede any and all prior agreements,
understandings and commitments, whether oral or written. This Agreement may be
amended only in accordance with Article 9 of the Indenture and further by a
writing signed by a duly authorized representative of each party hereto.
8.7 Notices. All notices and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed to have been duly given and received when actually
received, including: (a) on the day of hand delivery; (b) three business days
following the day sent, when sent by United States certified mail, postage and
certification fee prepaid, return receipt requested, addressed as set forth
below; (c) when transmitted by telecopy with verbal confirmation of receipt by
the telecopy operator to the telecopy number set forth below; or (d) one
business day following the day timely delivered to a next-day air courier
addressed as set forth below:
To Pledge Agent:
Bank One, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Telephone: (614) 248-6229
Telecopy: (614) 248-5195
Attention: Corporate Trust Department
11
<PAGE> 12
To Trustee:
Bank One, N.A.
100 East Broad Street
Columbus, Ohio 43271-0181
Telephone: (614) 248-6229
Telecopy: (614) 248-5195
Attention: Corporate Trust Department
To the Company:
First Wave Marine, Inc.
4000 S. Sherwood Forest Blvd.
Suite 603
Baton Rouge, Louisiana 70816
Telephone: (504) 292-8800
Telecopy: (504) 292-8801
Attention: Chief Financial Officer
or at such other address as the specified entity most recently may have
designated in writing in accordance with this Section.
8.8 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
8.9 Captions. Captions in this Agreement are for
convenience only and shall not be considered or referred to in resolving
questions of interpretation of this Agreement.
8.10 Choice of Law. THE CONSTRUCTION AND ENFORCEABILITY
OF ANY AND ALL TERMS AND PROVISIONS OF THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. THE COMPANY HEREBY SUBMITS TO THE
PERSONAL JURISDICTION OF ANY COMPETENT COURT OF THE STATE OF NEW YORK, OR A
UNITED STATES FEDERAL COURT SITTING IN NEW YORK CITY.
8.11 Representations and Warranties.
(a) The Company hereby represents and warrants that this
Agreement has been duly authorized, executed and delivered on its
behalf and constitutes the legal, valid and binding obligation of the
Company. The execution, delivery and performance of this Agreement by
the Company does not violate any applicable law or regulation to which
the Company is subject and does not require the consent of any
governmental or other regulatory body to which the Company is subject,
except for such consents and approvals as have been obtained and are
in full force and effect.
12
<PAGE> 13
(b) Each of the Pledge Agent and the Trustee hereby
represents and warrants that this Agreement has been duly authorized,
executed and delivered on its behalf and constitutes its legal, valid
and binding obligation of the Pledge Agent and the Trustee,
respectively.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
13
<PAGE> 14
IN WITNESS WHEREOF, the parties have executed and delivered
this Pledge Agreement as of the day first above written.
PLEDGE AGENT: BANK ONE, N.A., as Pledge Agent
By: /s/ JON A. BEACHAM
-------------------------------------------
Name: Jon A. Beacham
----------------------------------------
Title: Authorized Signer
----------------------------------------
TRUSTEE: BANK ONE, N.A., as Trustee
By: /s/ JON A. BEACHAM
-------------------------------------------
Name: Jon A. Beacham
----------------------------------------
Title: Authorized Signer
----------------------------------------
COMPANY: FIRST WAVE MARINE, INC.
By: /s/ DAVID B. AMMONS
-------------------------------------------
David B. Ammons
Executive Vice President, Chief Financial
Officer and Secretary
14
<PAGE> 15
EXHIBIT A
Form of Payment Notice and Disbursement Request
[Letterhead of the Trustee]
[Date]
- ----------------------------------------
- ----------------------------------------
- ----------------------------------------
Attention: Corporate Trust Department
Re: Disbursement Request No._____________________
[indicate whether revised]
Ladies and Gentlemen:
We refer to the Pledge and Security Agreement, dated as of
_____________, 1998 by and among you (the "Pledge Agent"), the undersigned as
Trustee, and First Wave Marine, Inc., a Delaware corporation (the "Company")
(as amended and supplemented to the date hereof, the "Pledge Agreement").
Capitalized terms used herein shall have the meaning given in the Pledge
Agreement unless otherwise defined herein.
This letter constitutes a Payment Notice and Disbursement Request
under the Pledge Agreement.
[CHOOSE ONE OF THE FOLLOWING, AS APPLICABLE:]
[The undersigned hereby notifies you that a scheduled interest payment
in the amount of $___________ is due and payable on _____________, ____ and the
Company has not deposited with the Trustee from funds otherwise available to
the Company funds sufficient to pay such interest payment. Accordingly, the
undersigned requests a disbursement of funds contained in the Pledge Account in
such amount to the Trustee.]
[The undersigned (i) hereby notifies you that [CHOOSE ONE:]
[Notes equaling $_____________ in aggregate principal amount have been
retired]
[The Company deposited with the Trustee from funds otherwise available
to the Company funds sufficient to pay interest that was due on a prior
Interest Payment Date]
A-1
<PAGE> 16
[as a result of interest or dividends earned on Collateral, or
realization of proceeds thereof in accordance with the terms of the
Pledge Agreement, excess Collateral exists]
and (ii) authorizes you to release $____________ of funds in the
Pledge Account to the Company (to an account designated by the Company
in writing), which amount represents the amount permitted to be
released in accordance with Section 3.3 of the Pledge Agreement.]
[The undersigned hereby notifies you that there has been an
acceleration of the maturity of the Notes. Accordingly, you are hereby
requested to disburse all remaining funds contained in the Pledge Account to
the Trustee such that the balance in the Pledge Account is reduced to zero.]
In connection with the requested disbursement, the undersigned hereby
notifies you that:
1. [The Notes have not, as a result of an Event of Default, been
accelerated and become due and payable.]
2. All prior disbursements from the Pledge Account have been
Applied.
3. [add wire instructions]
The Pledge Agent is entitled to rely on the foregoing in disbursing
funds relating to this Payment Notice and Disbursement Request.
BANK ONE, N.A., as Trustee
By:
-------------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
A-2
<PAGE> 1
EXHIBIT 10.3
CREDIT AGREEMENT
among
FIRST WAVE MARINE, INC., as Borrower,
and
each of the banks or lending institutions
from time to time party hereto, as Banks
and
SOUTHWEST BANK OF TEXAS, N.A., as Agent
Dated as of June 9, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Definitions.................................................................1
Section 1.1 Definitions.............................................1
Section 1.2 Other Definitional Provisions..........................11
ARTICLE II
Advances...................................................................12
Section 2.1 Commitments............................................12
Section 2.2 Note...................................................12
Section 2.3 Repayment of Advances..................................12
Section 2.5 Letters of Credit......................................12
Section 2.6 Procedure for Issuing Letters of Credit................12
Section 2.7 Payments Constitute Advances...........................13
Section 2.8 Letter of Credit Fee...................................13
Section 2.10 Obligations Absolute...................................13
Section 2.11 Limitation of Liability................................14
ARTICLE III
Requests for Advances; Interest; Payments; Fees
Section 3.1 Borrowing Procedure....................................14
Section 3.3 Unused Availability Commitment Fee.....................15
Section 3.4 Reduction or Termination of Commitments................15
Section 3.6 Administrative Fee.....................................16
ARTICLE IV
Payments and Allocations of Advances; Yield Protection and Illegality......16
Section 4.1 Method of Payment......................................16
Section 4.2 Voluntary Prepayment...................................16
Section 4.3 Mandatory Prepayments..................................16
Section 4.4 Pro Rata Treatment.....................................17
Section 4.5 Non-Receipt of Funds by the Agent......................17
Section 4.6 Withholding Taxes......................................17
Section 4.7 Withholding Tax Exemption..............................18
Section 4.8 Computation of Interest................................18
Section 4.9 Additional Costs in Respect of Letters of Credit.......18
Section 4.10 Capital Adequacy.......................................19
</TABLE>
-- i --
<PAGE> 3
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
ARTICLE V
<S> <C>
Security...................................................................19
Section 5.1 Collateral.............................................19
Section 5.2 Setoff.................................................19
ARTICLE VI
Conditions Precedent.......................................................20
Section 6.1 Initial Advance or Letter of Credit....................20
Section 6.2 All Advances...........................................22
ARTICLE VII
Representations and Warranties.............................................22
Section 7.1 Corporate Existence....................................22
Section 7.2 Financial Statements...................................22
Section 7.3 Corporate Action; No Breach............................23
Section 7.4 Operation of Business..................................23
Section 7.5 Litigation and Judgments...............................23
Section 7.6 Rights in Properties; Liens............................23
Section 7.7 Enforceability.........................................23
Section 7.8 Approvals..............................................23
Section 7.9 Debt...................................................24
Section 7.10 Taxes..................................................24
Section 7.11 Use of Proceeds; Margin Securities.....................24
Section 7.12 ERISA..................................................24
Section 7.13 Disclosure.............................................24
Section 7.14 Subsidiaries...........................................24
Section 7.15 Agreements.............................................25
Section 7.16 Compliance with Laws...................................25
Section 7.17 Inventory..............................................25
Section 7.18 Investment Company Act.................................25
Section 7.19 Public Utility Holding Company Act.....................25
Section 7.20 Environmental Matters..................................25
ARTICLE VIII
Positive Covenants.........................................................26
Section 8.1 Reporting Requirements.................................26
</TABLE>
-- ii --
<PAGE> 4
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 8.2 Maintenance of Existence; Conduct of Business..........28
Section 8.3 Maintenance of Properties..............................28
Section 8.4 Taxes and Claims.......................................29
Section 8.5 Insurance..............................................29
Section 8.6 Inspection Rights; Field Audit.........................29
Section 8.7 Keeping Books and Records..............................29
Section 8.8 Compliance with Laws...................................29
Section 8.9 Compliance with Agreements.............................29
Section 8.10 Further Assurances.....................................29
Section 8.11 ERISA..................................................30
ARTICLE IX
Negative Covenants.........................................................30
Section 9.1 Debt...................................................30
Section 9.2 Limitation on Liens....................................30
Section 9.3 Mergers, Etc...........................................31
Section 9.4 Restricted Payments....................................31
Section 9.5 Investments............................................31
Section 9.6 Limitation on Issuance of Capital Stock................32
Section 9.7 Transactions With Affiliates...........................32
Section 9.8 Disposition of Assets..................................32
Section 9.9 Sale and Leaseback.....................................32
Section 9.10 Prepayment of Debt.....................................32
Section 9.11 Nature of Business.....................................32
Section 9.12 Environmental Protection...............................32
Section 9.13 Accounting.............................................33
ARTICLE X
Financial Covenants........................................................33
Section 10.1 Funded Debt/Cash Flow Ratio............................33
Section 10.4 Minimum Consolidated Working Capital...................34
Section 10.5 Minimum Cash Balances..................................34
Section 10.6 Capital Expenditures...................................34
Section 10.7 Operating Leases.......................................34
ARTICLE XI
Default....................................................................34
Section 11.1 Events of Default......................................34
</TABLE>
-- iii --
<PAGE> 5
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
Section 11.2 Remedies...............................................36
Section 11.4 Performance by the Agent...............................37
ARTICLE XII
The Agent..................................................................37
Section 12.1 Appointment, Powers and Immunities.....................37
Section 12.2 Rights of Agent as a Bank..............................39
Section 12.3 Sharing of Payments, Etc...............................39
Section 12.4 INDEMNIFICATION........................................40
Section 12.5 Independent Credit Decisions...........................40
Section 12.6 Several Commitments....................................41
Section 12.7 Successor Agent........................................41
ARTICLE XIII
Miscellaneous..............................................................41
Section 13.1 Expenses...............................................41
Section 13.2 INDEMNIFICATION........................................42
Section 13.3 Limitation of Liability................................42
Section 13.4 No Duty................................................43
Section 13.5 No Fiduciary Relationship..............................43
Section 13.6 Equitable Relief.......................................43
Section 13.7 No Waiver; Cumulative Remedies.........................43
Section 13.8 Successors and Assigns.................................43
Section 13.9 Survival...............................................45
Section 13.10 Amendments, Etc........................................46
Section 13.11 Maximum Interest Rate..................................46
Section 13.12 Notices................................................46
Section 13.13 Governing Law; Venue; Service of Process...............47
Section 13.14 Counterparts...........................................47
Section 13.15 Severability...........................................47
Section 13.16 Headings...............................................47
Section 13.17 Non-Application of Chapter 346 of Texas Finance Code...47
Section 13.18 Construction...........................................47
Section 13.19 Independence of Covenants..............................48
Section 13.20 WAIVER OF JURY TRIAL...................................48
Section 13.22 NO ORAL AGREEMENTS.....................................51
</TABLE>
-- iv --
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement"), dated as of June 9, 1998, is
among FIRST WAVE MARINE, INC., a corporation duly organized and validly
existing under the laws of the state of Delaware ("Borrower"), each of the
banks or other lending institutions which is or which may from time to time
become a signatory hereto or any successor or assignee thereof (individually, a
"Bank" and, collectively, the "Banks"), and SOUTHWEST BANK OF TEXAS, N.A., a
national banking association ("SWBT"), as agent for itself and the other Banks
(in such capacity, together with its successors in such capacity, the "Agent").
R E C I T A L S:
The Borrower has requested that the Banks make a revolving line of
credit available to the Borrower with advances thereunder not to exceed an
aggregate principal amount of $10,000,000 outstanding at any time. The Banks
are willing to make such loans to the Borrower upon the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"AAA" is defined in Section 13.21(b) of this Agreement.
"Advance" means an advance of funds under the Total
Commitment by the Banks or any of them to the Borrower pursuant to
Article II.
"Advance Request Form" means a certificate, in substantially
the form of Exhibit "B-1" hereto, properly completed and signed by the
Borrower requesting an Advance.
"Affiliate" means, as to any Person, any other Person (a)
that directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, such
Person; (b) that directly or indirectly beneficially owns or holds
five percent or more of any class of voting stock of such Person; or
(c) five percent or more of the voting stock of which is directly or
indirectly beneficially owned or held by the Person in question. The
term "control" means the possession, directly or indirectly, of the
power to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the Agent
or any Bank be deemed an Affiliate of the Borrower or any of its
Subsidiaries.
- 1 -
<PAGE> 7
"Agent" is defined in the preamble to this Agreement.
"Agreement" is defined in the preamble to this Agreement.
"Applicable Rate" means a rate per annum equal to the sum of
the Base Rate plus one-half percent.
"Assigning Bank" is defined in Section 13.8(b) of this
Agreement.
"Assignee" is defined in Section 13.8(b) of this Agreement.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Bank and its assignee and accepted by the
Agent pursuant to Section 13.8, in substantially the form of Exhibit
"E" hereto.
"Bank" and "Banks" are defined in the preamble of this
Agreement.
"Base Rate" means, at any time, the Wall Street Journal Prime
Rate, or if there is more than one Wall Street Journal Prime Rate, the
highest Wall Street Journal Prime Rate, which rate may not be the
lowest or best rate of interest charged by a bank to its borrowers.
Each change in any interest rate provided for herein based upon the
Base Rate resulting from a change in the Base Rate shall take effect
without notice to the Borrower at the time of such change in the Base
Rate.
"Bludworth Acquisition" means the acquisition by the Borrower
of all of the outstanding capital stock of John Bludworth Marine, Inc.
pursuant to the terms of that certain Stock Purchase Agreement dated
October 15, 1997, as amended by and among the Borrower, EAE Services,
Inc., John L. Bludworth, III, John Bludworth Marine, Inc. and
Bludworth Shipyard and Fabrication, Inc.
"Borrower" is defined in the preamble of this Agreement.
"Borrower Security Agreement" means the Security Agreement of
the Borrower in favor of the Agent for the benefit of the Banks, in
substantially the form of Exhibit "D-1" hereto, as the same may be
amended, supplemented, or modified from time to time.
"Borrowing Base" means, at any particular time, an amount
equal to the sum of 80% of Eligible Accounts.
"Borrowing Base Certificate" means a report substantially in
the form of Exhibit "F " hereto properly completed and executed by an
authorized officer of the Borrower.
"Business Day" means any day on which commercial banks are
not authorized or required to close in Houston, Texas.
"Capital Expenditures" shall be determined in accordance with
GAAP.
- 2 -
<PAGE> 8
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real or personal
property, or both, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person
under GAAP. For purposes of this Agreement, the amount of such Capital
Lease Obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning specified in Section 5.1.
"Commitment" means, as to each Bank, the obligation of such
Bank to make Advances hereunder in an aggregate principal amount at
any one time outstanding up to but not exceeding the amount set forth
opposite the name of such Bank on the signature pages hereto under the
heading "Commitment," as the same may be reduced pursuant to Section
3.4 or terminated pursuant to Section 3.4 or 11.2.
"Consolidated" means all items that, in conformity with GAAP,
would be included in the consolidated financial statements of the
Borrower and its Subsidiaries.
"Consolidated Current Assets" means, at any particular time,
all amounts which, in conformity with GAAP, would be included as
current assets on a consolidated balance sheet of the Borrower and the
Subsidiaries.
"Consolidated Current Liabilities" means, at any particular
time, all amounts which, in conformity with GAAP, would be included as
current liabilities on a consolidated balance sheet of the Borrower
and the Subsidiaries.
"Consolidated Tangible Net Worth" means, at any particular
time, all amounts which, in conformity with GAAP, would be included as
stockholders' equity on a consolidated balance sheet of the Borrower
and the Subsidiaries; provided, however, there shall be excluded
therefrom: (a) any amount at which shares of capital stock of the
Borrower appears as an asset on the Borrower's balance sheet, (b)
goodwill, including any amounts, however designated, that represent
the excess of the purchase price paid for assets or stock over the
value assigned thereto, (c) patents, trademarks, trade names, and
copyrights, (d) deferred expenses, (e) loans and advances to any
stockholder, director, officer, or employee of the Borrower, any
Subsidiary of the Borrower or any Affiliate of the Borrower, and (f)
all other assets that are properly classified as intangible assets.
"Consolidated Working Capital" means, at any particular time,
the amount by which Consolidated Current Assets exceed Consolidated
Current Liabilities.
"Contribution and Indemnification Agreement" means a
contribution and indemnification agreement of the Borrower and each
Guarantor, in substantially the form
- 3 -
<PAGE> 9
of Exhibit "G", as the same may be amended, supplemented or modified
from time to time.
"Debt" means as to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services,
excluding trade accounts payable of such Person arising in the
ordinary course of business that are not past due by more than 90
days, (d) all Capital Lease Obligations of such Person, (e) all Debt
or other obligations of others Guaranteed by such Person, (f) all
obligations secured by a Lien existing on property owned by such
Person, whether or not the obligations secured thereby have been
assumed by such Person or are non-recourse to the credit of such
Person, (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments, and (h)
all liabilities of such Person in respect of unfunded vested benefits
under any Plan.
"Debt Service Coverage Ratio" means, for any particular
period, the ratio of (a) EBITDA during the preceding four fiscal
quarters to (b) the sum of all amounts paid by the Borrower and the
Subsidiaries during such preceding four-quarter period for (i)
interest expense, (ii) required principal reductions on all Funded
Debt, and (iii) required principal reductions on all Subordinated
Debt.
"Default" means an Event of Default or an event or condition
the occurrence of which with notice or lapse of time, or both, would
become an Event of Default.
"Default Rate" means the Maximum Rate or, if no Maximum Rate
exists, the sum of the Applicable Rate in effect from day to day plus
five percent.
"Dispute" is defined in Section 13.21(a) of this Agreement.
"Dollars" and "$" mean lawful money of the United States of
America.
"EBITDA" means, at any particular time, the sum of (a)
Consolidated net income of the Borrower and the Subsidiaries for such
period, plus, to the extent deducted in arriving at Consolidated net
income for the period, (b) depreciation, amortization, non-cash
charges, taxes, and interest expense of the Borrower and the
Subsidiaries for such period.
"Eligible Accounts" means the aggregate of all accounts
receivable of Borrower and the Guarantors acceptable to Agent in its
sole discretion and satisfy the following conditions: (i) are due and
payable within 30 days; (ii) have been outstanding less than 90 days
past the original date of invoice; (iii) have arisen in the ordinary
course of business from services performed by Borrower or such
Guarantor to or for the account debtor or the sale by Borrower or such
Guarantor of goods in which Borrower or such Guarantor had sole
ownership where such goods have been shipped or delivered to the
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<PAGE> 10
account debtor; (iv) represent complete bona fide transactions which
require no further act under any circumstances on the part of Borrower
or any Guarantor to make such accounts receivable payable by the
account debtor; (v) the goods sold which gave rise to such accounts
receivable were shipped or delivered to the account debtor on an
absolute sale basis and not on consignment, a sale or return basis, a
guaranteed sale basis, a bill and hold basis, or on the basis of any
similar understanding; (vi) the goods sold which gave rise to such
accounts receivable were not, at the time of sale thereof, subject to
any Lien, except the security interest in favor of Agent, for the
benefit of the Banks, created by the Loan Documents; (vii) are not
subject to any provision prohibiting assignment or requiring notice of
or consent to such assignment; (viii) are subject to a perfected,
first priority security interest in favor of Agent, for the benefit of
the Banks, and are not subject to any other Lien; (ix) are not subject
to setoff, counterclaim, defense, allowance, dispute, or adjustment
other than normal discounts for prompt payment, and the goods sold
which gave rise to such accounts receivable have not been returned,
rejected, repossessed, lost, or damaged; (x) the account debtor is not
insolvent or the subject of any bankruptcy or insolvency proceeding
and has not made an assignment for the benefit of creditors, suspended
normal business operations, dissolved, liquidated, terminated its
existence, ceased to pay its debts as they become due, or suffered a
receiver or trustee to be appointed for any of its assets or affairs;
(xi) are not evidenced by chattel paper or an instrument of any kind;
(xii) are owed by a Person or Persons that are citizens of or
organized under the laws of the United States or any State and are not
owed by any Person located outside of the United States of America;
(xiii) if any accounts receivable are owed by the United States of
America or any department, agency, or instrumentality thereof, the
Federal Assignment of Claims Act shall have been complied with; and
(xiv) are not owed by an Affiliate of Borrower or any Guarantor. No
account receivable owed by an account debtor to Borrower or any
Guarantor shall be included as an Eligible Account if more than 20% of
the balances then outstanding on accounts receivable owed by such
account debtor and its Affiliates to Borrower or any Guarantor have
remained unpaid for more than 89 days from the dates of their original
invoices. Additionally, accounts receivable owed by any single account
debtor shall not be included as Eligible Accounts to the extent that
the balances then outstanding on accounts receivable owed by such
account debtor (unless otherwise approved in writing by the Agent in
its sole discretion) exceed 20% of the balances then outstanding on
all accounts receivable of the Borrower. The amount of any Eligible
Accounts owed by an account debtor to Borrower or any Guarantor shall
be reduced by the amount of all "contra accounts" and other
obligations owed by Borrower or any Guarantor to such account debtor.
"Eligible Assignee" means any commercial bank, savings and
loan association, savings bank, finance company, insurance company,
pension fund, mutual fund, or other financial institution (whether a
corporation, partnership, or other entity) acceptable to the Agent.
"Environmental Laws" means any and all federal, state, and
local laws, regulations, and requirements pertaining to health,
safety, or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. ss. 9601 et seq., the Resource Conservation and
Recovery Act of 1976,
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<PAGE> 11
42 U.S.C. ss. 6901 et seq., the Occupational Safety and Health Act, 29
U.S.C. ss. 651 et seq., the Clean Air Act, 42 U.S.C. ss. 7401 et seq.,
the Clean Water Act, 33 U.S.C. ss. 1251 et seq., and the Toxic
Substances Control Act, 15 U.S.C. ss. 2601 et seq., as such laws,
regulations, and requirements may be amended or supplemented from time
to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting
fees and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim
or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute,
including any Environmental Law, permit, order or agreement with any
Governmental Authority or other Person, arising from environmental,
health or safety conditions or the Release or threatened Release of a
Hazardous Material into the environment, resulting from the past,
present, or future operations of such Person or its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Borrower or any
Subsidiary or is under common control (within the meaning of Section
414(c) of the Code) with the Borrower or any Subsidiary.
"Event of Default" has the meaning specified in Section 11.1.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 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 that (a) if the day for which such rate is to be determined
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 such rate
is not so published on such next succeeding Business Day, the Federal
Funds Rate for any day shall be the average rate charged to the Agent
(in its individual capacity) on such day on such transactions as
determined by the Agent.
"Funded Debt" means, at any particular time, the sum of the
following, calculated on a consolidated basis for the Borrower and the
Subsidiaries in accordance with GAAP:
(a) all obligations for borrowed money (whether as a
direct obligor on a promissory note, bond, debenture
or other similar instrument, as a reimbursement
obligor with respect to an issued letter of credit
or similar instrument, as an obligor under a
Guarantee of borrowed money, or as any
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<PAGE> 12
other type of direct or contingent obligor),
excluding the Newpark Debt and the Subordinated Debt
plus (but without duplication)
(b) all Capital Lease Obligations (other than the
interest component of such obligations).
"Funded Debt to Cash Flow Ratio" means, for any particular
period, the ratio of (a) Funded Debt to (b) EBITDA.
"GAAP" means generally accepted accounting principles,
applied on a consistent basis, as set forth in Opinions of the
Accounting Principles Board of the American Institute of Certified
Public Accountants or in statements of the Financial Accounting
Standards Board, or both, or their respective successors and which are
applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material
respects to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit
in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor" means, collectively, each Subsidiary of the
Borrower excluding Newpark Shipbuilding & Repair, Inc., that now or
hereafter executes a Guaranty in favor of the Agent, for the benefit
of the Banks.
"Guaranty" means a guaranty agreement of each Guarantor in
favor of the Agent, for the benefit of the Banks, in substantially the
form of Exhibit "C" hereto, as the same may be amended, supplemented,
or modified from time to time.
"Guarantor Security Agreement" means the security agreement
of each Guarantor in favor of the Agent, for the benefit of the Banks,
in substantially the form of Exhibit
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<PAGE> 13
"D-2", hereto, as the same may be amended, supplemented, or modified
from time to time.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Indenture" means that certain Indenture dated as of February
2, 1998, executed by and among the Borrower, as issuer, certain of its
Subsidiaries and BankOne, N.A., as trustee, as amended by First
Supplemental Indenture dated as of February 3, 1998.
"Issuing Bank" means SWBT or another Bank at the request of
SWBT.
"Letter of Credit" means any letter of credit issued by an
Issuing Bank for the account of the Borrower or a Subsidiary pursuant
to Article II.
"Letter of Credit Liabilities" means, at any time, the
aggregate face amounts of all outstanding Letters of Credit.
"Letter of Credit Request Form" means a certificate, in
substantially the form of Exhibit "B-2" hereto, properly completed and
signed by the Borrower requesting issuance of a Letter of Credit.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement and all promissory
notes, security agreements, deeds of trust, assignments, guaranties,
and other instruments, documents, and agreements executed and
delivered pursuant to or in connection with this Agreement, as such
instruments, documents, and agreements may be amended, modified,
renewed, extended, or supplemented from time to time.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, or financial or other condition
of Borrower or any of its Subsidiaries, or (b) the Borrower's ability
to perform and pay the Obligations in accordance with the terms
thereof or the Agent's and the Banks' rights to enforce or collect the
Obligations.
"Maximum Rate" means, at any time and with respect to any
Bank, the maximum rate of interest under applicable law that such Bank
may charge the Borrower. The Maximum Rate shall be calculated in a
manner that takes into account any and all fees, payments, and other
charges in respect of the Loan Documents that constitute interest
under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the
Maximum Rate shall take effect
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<PAGE> 14
without notice to the Borrower at the time of such change in the
Maximum Rate. For purposes of determining the Maximum Rate under Texas
law, the applicable rate ceiling shall be the applicable weekly
ceiling described in, and computed in accordance with, Article
5069-1D.001, Vernon's Texas Civil Statutes, as the same may be amended
or modified from time to time.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made
by the Borrower or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"Net Proceeds" from any issuance, sale or other disposition
of any shares of equity securities (or any securities convertible or
exchangeable for any such shares, or any rights, warrants, or options
to subscribe for or purchase any such shares) means the amount equal
to (a) the aggregate gross proceeds of such issuance, sale or other
disposition, less (b) the following: (i) placement agent fees, (ii)
underwriting discounts and commissions, (iii) bank and other lender
fees, and (iv) legal fees and other expenses payable by the issuer in
connection with such issuance, sale or other disposition.
"Newpark Debt" means (a) the $8,534,000 promissory note of
Newpark Shipbuilding and Repair, Inc., payable to the order of Newpark
Shipholding Texas, L.P., a copy of which note has been delivered to
the Agent, and (b) existing Debt of Newpark Shipbuilding and Repair,
Inc. to Comerica Bank-Texas.
"Note" means a promissory note of the Borrower payable to the
order of a Bank, in substantially the form of Exhibit "A" hereto, and
all extensions, renewals, and modifications thereof and all
substitutions therefor.
"Obligated Party" means any Person, including the Guarantors,
who is or becomes party to any agreement that guarantees or secures
payment and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrower to the Agent and the Banks, or any or some
of them, arising out of or pursuant to any of the Loan Documents, now
existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, including, without limitation, the
obligations, indebtedness, and liabilities of the Borrower under this
Agreement and the other Loan Documents, and all interest accruing
thereon and all attorneys' fees and other expenses incurred in the
enforcement or collection thereof.
"Operating Lease" means any lease (other than a lease
constituting a Capital Lease Obligation) of real or personal property.
"Payor" is defined in Section 4.5 of this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
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"Permitted Investments" is defined in Section 9.5 of this
Agreement.
"Permitted Liens" is defined in Section 9.2 of this Agreement.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, limited liability
company, limited liability partnership, Governmental Authority, or
other entity.
"Plan" means any employee benefit or other plan established
or maintained by the Borrower or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"Principal Office" means the principal office of the Agent,
presently located at Houston, Texas.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Register" is defined in Section 13.8(d) of this Agreement.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System as the same may be amended or
supplemented from time to time.
"Regulatory Change" means, with respect to any Bank, any
change after the date of this Agreement in United States federal,
state, or foreign laws or regulations (including Regulation D) or the
adoption or making after such date of any interpretations, directives,
or requests applying to a class of banks including such Bank of or
under any United States federal or state, or any foreign, laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of property owned by such
Person, including, without limitation, the movement of Hazardous
Materials through or in the air, soil, surface water, ground water, or
property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor
or outdoor environment, (b) prevent the Release or threat of Release
or minimize the further Release of Hazardous Materials so that they do
not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, or (c) perform
pre-remedial studies and investigations and post-remedial monitoring
and care.
"Required Banks" means, at any time while two or fewer Banks
are party to this Agreement, Banks having at least 100% of the amount
of the Total Commitment and, at
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any time while more than two Banks are party to this Agreement, Banks
holding at least 66-2/3% of the outstanding aggregate principal amount
of the Total Commitment.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"RICO" means the Racketeer Influenced and Corrupt
Organization Act of 1970, as amended from time to time.
"Senior Unsecured Debt" means up to $90,000,000 of senior
unsecured Debt issued by the Borrower pursuant to the terms of the
Indenture upon the terms and conditions set forth therein.
"Subordinated Debt" means any Debt of the Borrower
subordinated in payment and collection, pursuant to a valid, binding
and enforceable executed Subordination Agreement, to the Debt of the
Borrower to the Agent and the Banks.
"Subordination Agreement" means a subordination agreement in
form and substance satisfactory to Agent, in its sole discretion.
"Subsidiary" means any Person with respect to which Borrower
or any one or more Subsidiaries owns directly or indirectly 50% or
more of the issued and outstanding voting stock (or equivalent
interests).
"SWBT" is defined in the preamble of this Agreement.
"Termination Date" means April 30, 1999, or such earlier date
and time on which the Commitments terminate as provided in this
Agreement.
"Total Commitment" means $10,000,000, as the same may be
reduced pursuant to Section 3.4 or terminated pursuant to Section 3.4
or 11.2.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas.
"Wall Street Journal Prime Rate" means the rate or rates of
interest published in the Money Rates Section of the Wall Street
Journal as the Prime Rate.
Section 1.2 Other Definitional Provisions. All definitions contained
in this Agreement are equally applicable to the singular and plural forms of
the terms defined. The words "hereof," "herein," and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
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ARTICLE II
Advances
Section 2.1 Commitments. Subject to the terms and conditions of this
Agreement, each Bank severally agrees to make one or more Advances to the
Borrower from time to time from the date hereof to and including the
Termination Date in an aggregate principal amount at any time outstanding up to
but not exceeding such Bank's Commitment as then in effect minus such Bank's
proportionate share of outstanding Letter of Credit Liabilities; provided that
the aggregate amount of all Advances at any time outstanding plus all Letter of
Credit Liabilities shall not exceed the lesser of (a) the Total Commitment
minus the Letter of Credit Liabilities or (b) the Borrowing Base minus the
Letter of Credit Liabilities. Subject to the foregoing limitations, and the
other terms and provisions of this Agreement, the Borrower may borrow, repay,
and reborrow hereunder.
Section 2.2 Note. The obligation of the Borrower to repay each Bank
for Advances made by such Bank and interest thereon shall be evidenced by a
Note executed by the Borrower, payable to the order of such Bank, in the
principal amount of such Bank's Commitment as originally in effect, and dated
the date hereof.
Section 2.3 Repayment of Advances. The Borrower shall repay the
unpaid principal amount of all Advances on the Termination Date.
Section 2.4 Use of Proceeds. The proceeds of the Advances shall be
used by the Borrower for working capital and general corporate purposes in the
ordinary course of business.
Section 2.5 Letters of Credit. Subject to the terms and conditions of
this Agreement, the Issuing Bank agrees to issue one or more Letters of Credit
for the account of the Borrower or a Guarantor from time to time from the date
hereof to and including the Termination Date; provided, however, that the
Letter of Credit Liabilities shall not at any time exceed an amount equal to
the lesser of (a) $2,000,000, (b) the amount of the Total Commitment minus the
outstanding Advances, or (c) the Borrowing Base minus the outstanding Advances.
Each Letter of Credit shall have an expiration date not to exceed 360 days,
shall not have an expiration date beyond the Termination Date, shall be payable
in Dollars, shall have a minimum face amount of $10,000 that is entered into in
the ordinary course of the Borrower's or such Guarantor's business, must be
satisfactory in form and substance to the Issuing Bank, and shall be issued
pursuant to such documents and instruments (including, without limitation, the
Issuing Bank's standard application for issuance of letters of credit as then
in effect) as the Issuing Bank may require.
Section 2.6 Procedure for Issuing Letters of Credit. Each Letter of
Credit shall be issued on at least five Business Days prior notice from the
Borrower to the Agent by means of a Letter of Credit Request Form describing
the transaction proposed to be supported thereby and specifying (a) the
requested date of issuance (which shall be a Business Day), (b) the face amount
of the Letter of Credit, (c) the expiration date of the Letter of Credit, (d)
the name and address of the beneficiary, and (e) the form of the draft and any
other documents required to be presented
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<PAGE> 18
at the time of any drawing (such notice to set forth the exact wording of such
documents or to attach copies thereof).
Section 2.7 Payments Constitute Advances. Each payment by the Issuing
Bank pursuant to a drawing under a Letter of Credit shall constitute and be
deemed an Advance to the Borrower and this Agreement as of the day and time
such payment is made by the Issuing Bank and in the amount of such payment.
Section 2.8 Letter of Credit Fee. The Borrower shall pay to Agent for
the account of the Banks a letter of credit fee payable on the date each Letter
of Credit is issued in an amount equal to the greater of (a) one percent per
annum of the face amount of such Letter of Credit, for the period during which
such Letter of Credit will remain outstanding, based on a 360 day year and the
actual number of days elapsed or (b) $300.
Section 2.9 Pro Rata Participations in Letters of Credit. By the
issuance of a Letter of Credit hereunder by a Bank and without further action
on the part of the Agent or the Banks, each Bank hereby agrees to purchase and
such Bank agrees to sell, an undivided participation (which participation shall
be nonrecourse to such Bank) in such Letter of Credit and each payment made
under such Letter of Credit equal to such Bank's pro rata (based on its
Commitment) share of such Letter of Credit and each payment made under such
Letter of Credit, effective upon the issuance of the Letter of Credit. Each
Bank hereby absolutely and unconditionally assumes, as primary obligor and not
as a surety, and agrees to pay and discharge, and to indemnify and hold the
issuing Bank harmless from liability in respect of such Bank's pro rata share
of any payment made under such Letter of Credit.
Section 2.10 Obligations Absolute. The obligations of the Borrower
under this Agreement and the other Loan Documents (including without limitation
the obligation of the Borrower to reimburse the Issuing Bank for draws under
any Letter of Credit) shall be absolute, unconditional, and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement and
the other Loan Documents under all circumstances whatsoever, including without
limitation the following circumstances:
(a) Any lack of validity or enforceability of any Letter
of Credit or any other Loan Document;
(b) Any amendment or waiver of or any consent to
departure from any Loan Document;
(c) The existence of any claim, set-off, counterclaim,
defense or other rights which the Borrower, any Obligated Party, or
any other Person may have at any time against any beneficiary of any
Letter of Credit, the Agent, any Bank, or any other Person, whether in
connection with this Agreement or any other Loan Document or any
unrelated transaction;
(d) Any statement, draft, or other document presented under
any Letter of Credit appearing regular on its face but proving to be
forged, fraudulent, invalid, or
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<PAGE> 19
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever; or
(e) Payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or other document which does not
strictly comply with the terms of such Letter of Credit.
Section 2.11 Limitation of Liability. The Borrower assumes all risks
of the acts or omissions of any beneficiary of any Letter of Credit with
respect to its use of such Letter of Credit. Neither the Agent nor any Bank nor
any of its respective officers or directors shall have any responsibility or
liability to the Borrower or any other Person for: (a) the failure of any draft
to bear any reference or adequate reference to any Letter of Credit, or the
failure of any documents to accompany any draft at negotiation, or the failure
of any Person to surrender or to take up any Letter of Credit or to send
documents apart from drafts as required by the terms of any Letter of Credit,
or the failure of any Person to note the amount of any instrument on any Letter
of Credit, each of which requirements, if contained in any Letter of Credit
itself, it is agreed may be waived by the Agent and the Banks, (b) errors,
omissions, interruptions, or delays in transmission or delivery of any
messages, (c) the validity, sufficiency, or genuineness of any draft or other
document, or any endorsement(s) thereon, even if any such draft, document or
endorsement should in fact prove to be in any and all respects invalid,
insufficient, fraudulent, or forged or any statement therein is untrue or
inaccurate in any respect, or (d) the payment by a Bank to the beneficiary of
any Letter of Credit against presentation of any draft or other document that
does not strictly comply with the terms of the Letter of Credit. The Borrower
shall have a claim against the Agent or any Bank, and the Agent and the Banks
shall be liable to the Borrower, to the extent, and solely to the extent, of
any direct, but not consequential, damages suffered by the Borrower which the
Borrower proves in a final nonappealable judgment were caused by (i) the
Agent's, the Issuing Bank's or a Bank's willful misconduct or gross negligence
in determining whether documents presented under any Letter of Credit complied
with the terms thereof or (ii) the Issuing Bank's willful failure to pay under
any Letter of Credit after presentation to it of documents strictly complying
with the terms and conditions of such Letter of Credit. The Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
ARTICLE III
Requests for Advances; Interest; Payments; Fees
Section 3.1 Borrowing Procedure. The Borrower shall give the Agent
notice by means of an Advance Request Form of each requested Advance at least
one Business Day before the requested date of each Advance, specifying: (a) the
requested date of such Advance (which shall be a Business Day), and (b) the
amount of such Advance. The Agent at its option may accept telephonic requests
for Advances, provided that such acceptance shall not constitute a waiver of
the Agent's right to delivery of an Advance Request Form in connection with
subsequent Advances. Any telephonic request for an Advance by the Borrower
shall be promptly confirmed
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<PAGE> 20
by submission of the properly completed appropriate advance request form to the
Agent. Each Advance shall be in a minimum principal amount of $50,000 or an
integral multiple thereof. The Agent shall notify each Bank of the contents of
each such notice. Not later than 1:00 P.M. Houston, Texas time on the date
specified for each Advance hereunder, each Bank will make available to the
Agent at the Principal Office in immediately available funds, for the account
of the Borrower, the amount requested by the Agent from it, which shall not
exceed its pro rata share of the Total Commitment. After the Agent's receipt of
such funds and subject to the other terms and conditions of this Agreement, the
Agent will make each Advance available to the Borrower by depositing the same,
in immediately available funds, in an account of the Borrower (designated by
the Borrower) maintained with the Agent at the Principal Office. All notices
under this Section shall be irrevocable and shall be given not later than 11:00
A.M. Houston, Texas, time on the day which is not less than the number of
Business Days specified above for such notice.
Section 3.2 Interest. The unpaid principal amount of the Advances
shall bear interest at a varying rate per annum equal from day to day to the
lesser of (a) the Maximum Rate, or (b) the Applicable Rate. If at any time the
Applicable Rate for any Advance shall exceed the Maximum Rate, thereby causing
the interest accruing on such Advance to be limited to the Maximum Rate, then
any subsequent reduction in the Applicable Rate for such Advance shall not
reduce the rate of interest on such Advance below the Maximum Rate until the
aggregate amount of interest accrued on such Advance equals the aggregate
amount of interest which would have accrued on such Advance if the Applicable
Rate had at all times been in effect. Accrued and unpaid interest on the
Advances shall be due and payable as follows:
(i) on the first day of each calendar month, beginning
June 1, 1998; and
(ii) on the Termination Date.
Notwithstanding the foregoing, any outstanding principal of any Advance and (to
the fullest extent permitted by law) any other amount payable by the Borrower
under this Agreement or any other Loan Document that is not paid in full when
due (whether at stated maturity, by acceleration, or otherwise) shall bear
interest at the Default Rate for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand.
Section 3.3 Unused Availability Commitment Fee. The Borrower agrees to
pay to the Agent for the account of each Bank (pro rata in accordance with the
Commitment of each Bank) an unused availability commitment fee on the daily
average unused amount of the Total Commitment for the period from and including
the date of this Agreement to and including the Termination Date, at the rate
of one-quarter of one percent per annum, based on a 360 day year and the actual
number of days elapsed. For purposes of calculating the commitment fee
hereunder, the Credit Commitment shall be deemed utilized by the amount of all
Advances plus the outstanding Letter of Credit Liabilities. The accrued unused
availability commitment fee shall be payable in arrears on the first day of
each calendar quarter beginning July 1, 1998, and on the Termination Date.
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Section 3.4 Reduction or Termination of Commitments. The Borrower
shall have the right to terminate in whole or reduce in part the unused portion
of the Total Commitment upon at least three Business Days' prior notice (which
notice shall be irrevocable) to the Agent specifying the effective date
thereof, whether a termination or reduction is being made, and the amount of
any partial reduction, provided that each partial reduction shall be in the
amount of $1,000,000 or an integral multiple thereof and the Borrower shall
simultaneously prepay the amount by which the unpaid principal amount of the
respective Advances exceeds the Total Commitment (after giving effect to such
notice) plus accrued and unpaid interest on the principal amount so prepaid.
The Commitment may not be reinstated after it has been terminated or reduced.
Section 3.5 Facility Fee. On the date hereof, the Borrower shall
pay to Agent for the benefit of the Banks a facility fee of $50,000.
Section 3.6 Administrative Fee. The Borrower shall pay to Agent,
solely for its own account, an annual administrative fee as separately agreed
between the Borrower and the Agent.
ARTICLE IV
Payments and Allocations of Advances; Yield Protection and Illegality
Section 4.1 Method of Payment. All payments of principal, interest,
and other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Agent at the Principal Office for the
account of each Bank's Applicable Lending Office in Dollars and in immediately
available funds, without setoff, deduction, or counterclaim, not later than
11:00 A.M., Houston, Texas time on the date on which such payment shall become
due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day). The Borrower shall, at the
time of making each such payment, specify to the Agent the sums payable by the
Borrower under this Agreement and the other Loan Documents to which such
payment is to be applied (and in the event that the Borrower fails to so
specify, or if an Event of Default has occurred and is continuing, the Agent
may apply such payment to the Obligations in such order and manner as it may
elect in its sole discretion, subject to Sections 4.3 and 4.4 hereof). Each
payment received by the Agent under this Agreement or any other Loan Document
for the account of a Bank shall be paid promptly to such Bank, in immediately
available funds, for the account of such Bank. Whenever any payment under this
Agreement or any other Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of the payment of interest and commitment fee, as the case may be.
Section 4.2 Voluntary Prepayment. The Borrower may, upon at least one
Business Day prior notice to the Agent, prepay the Advances in whole at any
time or from time to time in part without premium or penalty but with accrued
interest to the date of prepayment on the amount so prepaid, provided that each
partial prepayment shall be in a minimum principal amount of
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<PAGE> 22
$50,000 or an integral multiple thereof. All notices under this Section shall
be irrevocable and shall be given not later than 11:00 A.M. Houston, Texas,
time on the day specified above.
Section 4.3 Mandatory Prepayments. If at any time the aggregate
outstanding principal amount of the Advances plus the Total Letter of Credit
Liabilities exceeds the Borrowing Base, the Borrower shall promptly prepay the
outstanding Advances by the amount of the excess plus accrued and unpaid
interest on the amount so prepaid. If no Advances are outstanding, the Borrower
shall immediately pledge to the Lender cash or cash equivalent investments in
an amount equal to the excess as security for the Obligations.
Section 4.4 Pro Rata Treatment. Except to the extent otherwise
provided herein: (a) each Advance shall be by the Banks, each payment of
commitment fee under Section 3.3 shall be made for the account of the Banks,
and each termination or reduction of the Total Commitment under Section 3.4
shall be applied to the respective Commitments of the Banks, pro rata according
to the respective unused Total Commitment; (b) the making, of Advances shall be
made pro rata among the Banks according to the amounts of their respective
Commitment; and (c) each payment and prepayment of principal of or interest on
Advances by the Borrower shall be made to the Agent for the account of the
Banks holding Advances pro rata in accordance with the respective unpaid
principal amounts of such Advances held by such Banks.
Section 4.5 Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrower (the "Payor") prior to the date on
which such Bank is to make payment to the Agent of the proceeds of an Advance
to be made by it hereunder or the Borrower is to make a payment to the Agent
for the account of one or more of the Banks, as the case may be (such payment
being herein called the "Required Payment"), which notice shall be effective
upon receipt, that the Payor does not intend to make the Required Payment to
the Agent, the Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Agent, the recipient of
such payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to the Federal Funds Rate for
such period.
Section 4.6 Withholding Taxes. All payments by the Borrower of
principal of and interest on the Advances and of all fees and other amounts
payable under any Loan Document are payable without deduction for or on account
of any present or future taxes, duties or other charges levied or imposed by
the United States of America or by the government of any jurisdiction outside
the United States of America or by any political subdivision or taxing
authority of or in any of the foregoing through withholding or deduction with
respect to any such payments. If any such taxes, duties or other charges are so
levied or imposed, the Borrower will pay additional interest or will make
additional payments in such amounts so that every net payment of principal of
and interest on the Advances and of all other amounts payable by it under any
Loan Document, after withholding or deduction for or on account of any such
present or future taxes, duties or other charges, will not be less than the
amount provided for herein or therein, provided that the Borrower shall have no
obligation to pay such additional amounts to
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<PAGE> 23
any Bank to the extent that such taxes, duties, or other charges are levied or
imposed by reason of the failure of such Bank to comply with the provisions of
Section 4.7. The Borrower shall furnish promptly to the Agent for distribution
to each affected Bank, as the case may be, official receipts evidencing any
such withholding or reduction.
Section 4.7 Withholding Tax Exemption. Each Bank that is not
incorporated under the laws of the United States of America or a state thereof
agrees that it will deliver to the Borrower and the Agent two duly completed
copies of United States Internal Revenue Service Form 1001 or 4224, certifying
in either case that such Bank is entitled to receive payments from the Borrower
under any Loan Document without deduction or withholding of any United States
federal income taxes. Each Bank that so delivers a Form 1001 or 4224 further
undertakes to deliver to Borrower and the Agent two additional copies of such
form (or a successor form) on or before the date such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Borrower or the Agent,
in each case certifying that such Bank is entitled to receive payments from the
Borrower under any Loan Document without deduction or withholding of any United
States federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises the Borrower
and the Agent that it is not capable of receiving such payments without any
deduction or withholding of United States federal income tax.
Section 4.8 Computation of Interest. Interest on the Advances and all
other amounts payable by the Borrower hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the
first day but excluding the last day) unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be.
Section 4.9 Additional Costs in Respect of Letters of Credit. If as a
result of any Regulatory Change there shall be imposed, modified, or deemed
applicable any tax, reserve, special deposit, or similar requirement against or
with respect to or measured by reference to Letters of Credit issued or to be
issued hereunder or the Issuing Bank's commitment to issue Letters of Credit
hereunder, and the result shall be to increase the cost to the Issuing Bank of
issuing or maintaining any Letter of Credit or its commitment to issue Letters
of Credit hereunder or reduce any amount receivable by the Issuing Bank
hereunder in respect of any Letter of Credit (which increase in cost, or
reduction in amount receivable, shall be the result of the Issuing Bank's
reasonable allocation of the aggregate of such increases or reductions
resulting from such event), then, upon demand by the Issuing Bank, the Borrower
agrees to pay the Issuing Bank such additional amounts as shall be sufficient
to compensate the Issuing Bank for such increased costs or reductions in
amount. A statement as to such increased costs or reductions in amount incurred
by the Issuing Bank, submitted by the Issuing Bank to the Borrower, shall be
conclusive as to the amount thereof, provided that the determination thereof is
made on a reasonable basis.
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<PAGE> 24
Section 4.10 Capital Adequacy. If after the date hereof, any Bank
shall have determined that the adoption or implementation of any applicable
law, rule, or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any central bank
or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Bank (or its parent) with any
guideline, request, or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority,
has or would have the effect of reducing the rate of return on such Bank's (or
its parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which such Bank (or its
parent) could have achieved but for such adoption, implementation, change or
compliance (taking into consideration such Bank's policies with respect to
capital adequacy) by an amount deemed by such Bank to be material, then from
time to time, within 60 days after demand by such Bank (with a copy to the
Agent), the Borrower shall pay to such Bank such additional amount or amounts
as will compensate such Bank (or its parent) for such reduction. A certificate
of such Bank claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive,
provided that the determination thereof is made on a reasonable basis. In
determining such amount or amounts, such Bank may use any reasonable averaging
and attribution methods.
ARTICLE V
Security
Section 5.1 Collateral. To secure full and complete payment and
performance of the Obligations, the Borrower shall execute and deliver or cause
to be executed and delivered the documents described below covering the
property and collateral described in this Section 5.1 (which, together with any
other property and collateral which may now or hereafter secure the Obligations
or any part thereof, is sometimes herein called the "Collateral"):
(a) The Borrower shall grant to the Agent for the benefit of
the Banks a first priority, and perfected, security interest in all of
its accounts, accounts receivable, money, chattel paper, documents,
and instruments, whether now owned or hereafter acquired, and all
products and proceeds thereof, pursuant to the Borrower Security
Agreement.
(b) The Borrower shall execute and cause to be executed such
further documents and instruments, including without limitation,
Uniform Commercial Code financing statements, as the Agent, in its
sole discretion, deems necessary or desirable to evidence and perfect
its Liens and security interests in the Collateral.
(c) The Borrower shall cause each present and future
Subsidiary, excluding Newpark Shipbuilding and Repair, Inc., to
guaranty the Obligations and to grant to the Agent for the benefit of
the Banks a first priority and perfected security interest in the
accounts receivable of such Subsidiary pursuant to a Guarantor
Security Agreement.
Section 5.2 Setoff. If an Event of Default shall have occurred and is
continuing, each Bank is hereby authorized at any time and from time to time,
without notice to the Borrower (any
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such notice being hereby expressly waived by the Borrower), to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Bank
to or for the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under this Agreement,
such Bank's Note, or any other Loan Document, irrespective of whether or not
the Agent or such Bank shall have made any demand under this Agreement or any
of such Bank's Notes or such other Loan Document and although such obligations
may be unmatured. Each Bank agrees promptly to notify the Borrower (with a copy
to the Agent) after any such setoff and application, provided that the failure
to give such notice shall not affect the validity of such setoff and
application. The rights and remedies of each Bank hereunder are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which such Bank may have.
ARTICLE VI
Conditions Precedent
Section 6.1 Initial Advance or Letter of Credit. The obligation of
each Bank to make its initial Advance and the obligation of the Issuing Bank to
issue the initial Letter of Credit is subject to the condition precedent that
the Agent shall have received on or before the day of such Advance or Letter of
Credit all of the following, each dated (unless otherwise indicated) the date
hereof, in form and substance satisfactory to the Agent:
(a) Resolutions. Resolutions of the Board of Directors of the
Borrower and each Guarantor certified by its Secretary or an Assistant
Secretary which authorize the execution, delivery, and performance by
the Borrower and each Guarantor of this Agreement and the other Loan
Documents to which the Borrower or such Guarantor is or is to be a
party;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of the Borrower
and each Guarantor certifying the names of the officers of the
Borrower and each Guarantor authorized to sign this Agreement and each
of the other Loan Documents to which the Borrower or such Guarantor is
or is to be a party (including the certificates contemplated herein)
together with specimen signatures of such officers;
(c) Articles of Incorporation. The articles of incorporation
of the Borrower and each Guarantor certified by the Secretary of State
of the state of incorporation of the Borrower or such Guarantor and
dated within 30 days prior to the date of the initial Advance or the
initial Letter of Credit;
(d) Bylaws. The bylaws of the Borrower and each Guarantor
certified by the Secretary or an Assistant Secretary of the Borrower
or such Guarantor;
(e) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation of the
Borrower and each Guarantor as to the
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existence and good standing of the Borrower and each Guarantor, each
dated within 30 days prior to the date of the initial Advance or the
initial Letter of Credit;
(f) Notes. The Notes executed by the Borrower in favor
of each Bank;
(g) Borrower Security Agreement. The Borrower Security
Agreement executed by the Borrower;
(h) Guarantor Security Agreement. The Guarantor Security
Agreement executed by each Guarantor.
(i) Guaranty. The Guaranty executed by each Guarantor.
(j) Contribution and Indemnification Agreement. The
Contribution and Indemnification Agreement, executed by the Borrower
and each Guarantor;
(k) Financing Statements. Uniform Commercial Code
financing statements executed by the Borrower and each Guarantor and
covering the Collateral;
(l) UCC Search. The results of a Uniform Commercial Code
search showing all financing statements and other documents or
instruments on file against the Borrower in each jurisdiction where
the Collateral is located, such search to be as of a date no more than
10 days prior to the date of the initial Advance or the initial Letter
of Credit;
(m) Opinion of Counsel. A favorable opinion of Borrower's
legal counsel, in form and substance satisfactory to the Agent as to
such matters as the Agent may reasonably request;
(n) Attorneys' Fees and Expenses. Evidence that the
costs and expenses (including reasonable attorneys' fees) referred to
in Section 13.1, to the extent incurred, shall have been paid in full
by the Borrower;
(o) Facility Fee. A facility fee (to be shared by the
Banks) in the amount of $50,000, which fee shall be deemed fully earned
and non-refundable on the date hereof;
(p) No Material Adverse Change. Evidence that, in the
sole discretion of the Agent and the Banks, no material adverse change
has occurred in the financial condition, business or operations of the
Borrower or any Guarantor or in its assets, liabilities and
properties, and that no material threatened or pending litigation
exists which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect; and
(q) Bludworth Acquisition and Debt Offering. Evidence
satisfactory to the Agent that, as of the date of this Agreement, the
Bludworth Acquisition and the offering of the Senior Unsecured Debt
pursuant to the Indenture have been completed.
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Section 6.2 All Advances. The obligation of each Bank to make any
Advance and of the Issuing Bank to issue any Letter of Credit (including the
initial Advance and the initial Letter of Credit) is subject to the following
additional conditions precedent:
(a) Advance Request Form. The Agent shall have received an
Advance Request Form, or a Letter of Credit Request Form, as
applicable, dated the date of such Advance or Letter of Credit,
executed by an authorized officer of the Borrower;
(b) No Default. No Default shall have occurred and be
continuing, or would result from such Advance or Letter of Credit;
(c) Representations and Warranties. All of the
representations and warranties contained in Article VII hereof and in
the other Loan Documents shall be true and correct on and as of the
date of such Advance or Letter of Credit with the same force and
effect as if such representations and warranties had been made on and
as of such date; and
(d) Additional Documentation. The Agent shall have
received such additional approvals, opinions, or documents as the Agent
or its legal counsel, Winstead Sechrest & Minick P.C., may reasonably
request.
ARTICLE VII
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, the
Borrower represents and warrants to the Agent and the Banks that:
Section 7.1 Corporate Existence. The Borrower and each Guarantor (a)
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation; (b) has all requisite
corporate power and authority to own its assets and carry on its business as
now being or as proposed to be conducted; and (c) is qualified to do business
in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a Material
Adverse Effect. The Borrower and each Guarantor has the corporate power and
authority to execute, deliver, and perform its obligations under this Agreement
and the other Loan Documents to which it is or may become a party.
Section 7.2 Financial Statements. The Borrower has delivered to the
Agent audited consolidated financial statements of the Borrower and its
Subsidiaries as at and for the fiscal year ended December 31, 1997. Such
financial statements are true and correct, have been prepared in accordance
with GAAP, and fairly and accurately present, on a consolidated basis, the
financial condition of the Borrower and its Subsidiaries as of the respective
dates indicated therein and the results of operations for the respective
periods indicated therein. Neither the Borrower nor any of its Subsidiaries has
any material contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses from any unfavorable
commitments except as referred to or reflected in such financial statements.
There has been no material adverse change in the business, condition (financial
or otherwise), operations, prospects, or properties of
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the Borrower or any of its Subsidiaries since the effective date of the most
recent financial statements referred to in this Section.
Section 7.3 Corporate Action; No Breach. The execution, delivery, and
performance by the Borrower and each Guarantor of this Agreement and the other
Loan Documents to which the Borrower or such Guarantor is or may become a party
and compliance with the terms and provisions hereof and thereof have been duly
authorized by all requisite corporate action on the part of the Borrower or
such Guarantor and do not and will not (a) violate or conflict with, or result
in a breach of, or require any consent under (i) the articles of incorporation
or bylaws of the Borrower or any Guarantor, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any material agreement or instrument to which
the Borrower or any Guarantor is a party or by which any of them or any of
their property is bound or subject, or (b) constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
(except as provided in Article VI) upon any of the revenues or assets of the
Borrower or any Guarantor.
Section 7.4 Operation of Business. The Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, and the Borrower and each of its Subsidiaries are not in
violation of any valid rights of others with respect to any of the foregoing.
Section 7.5 Litigation and Judgments. Except as disclosed on Schedule
7.5 hereto, there is no action, suit, investigation, or proceeding before or by
any Governmental Authority or arbitrator pending, or to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary, that
would, if adversely determined, have a Material Adverse Effect. There are no
outstanding judgments against the Borrower or any Subsidiary.
Section 7.6 Rights in Properties; Liens. The Borrower and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets, and leasehold interests reflected in the financial
statements described in Section 7.2, and none of the properties, assets, or
leasehold interests of the Borrower or any Subsidiary is subject to any Lien,
except Permitted Liens.
Section 7.7 Enforceability. This Agreement constitutes, and the other
Loan Documents to which the Borrower or any Guarantor is a party, when
delivered, shall constitute the legal, valid, and binding obligations of the
Borrower or such Guarantor, enforceable against the Borrower or such Guarantor
in accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement of
creditors' rights.
Section 7.8 Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by the Borrower
of this Agreement and the other Loan Documents to which the Borrower is or may
become a party or for the validity or enforceability thereof.
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Section 7.9 Debt. The Borrower and its Subsidiaries have no Debt,
except as disclosed on Schedule 7.9 hereto.
Section 7.10 Taxes. The Borrower and each Subsidiary have filed all
tax returns (federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid
all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable. The Borrower knows of no
pending investigation of the Borrower or any Subsidiary by any taxing authority
or of any pending but unassessed tax liability of the Borrower or any
Subsidiary. The federal income tax liability of the Borrower and its
Subsidiaries or their predecessors in interest have been audited by the
Internal Revenue Service and has been finally determined and satisfied for all
taxable years up to and including the taxable year ended December 31, 1995.
Section 7.11 Use of Proceeds; Margin Securities. Neither the Borrower
nor any Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations G, T, U, or X of
the Board of Governors of the Federal Reserve System), and no part of the
proceeds of any Advance will be used to purchase or carry any margin stock or
to extend credit to others for the purpose of purchasing or carrying margin
stock.
Section 7.12 ERISA. The Borrower and each Subsidiary are in compliance
in all material respects with all applicable provisions of ERISA. Neither a
Reportable Event nor a Prohibited Transaction has occurred and is continuing
with respect to any Plan. No notice of intent to terminate a Plan has been
filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. Neither the Borrower nor any ERISA Affiliate has completely or
partially withdrawn from a Multiemployer Plan. The Borrower and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans, and the present value of all vested benefits under each
Plan do not exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with ERISA. Neither the Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
Section 7.13 Disclosure. No statement, information, report,
representation, or warranty made by the Borrower in this Agreement or in any
other Loan Document or furnished to the Agent or any Bank in connection with
this Agreement or any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
the Borrower which has a Material Adverse Effect, or which might in the future
have a Material Adverse Effect that has not been disclosed in writing to the
Agent and the Banks.
Section 7.14 Subsidiaries. The Borrower has no Subsidiaries other than
those listed on Schedule 7.14 hereto, and Schedule 7.14 sets forth the
jurisdiction of incorporation of each Subsidiary and the percentage of the
Borrower's ownership of the outstanding voting stock of each Subsidiary. All of
the outstanding capital stock of each Subsidiary has been validly issued, is
fully paid, and is nonassessable.
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Section 7.15 Agreements. Neither the Borrower nor any Subsidiary is a
party to any indenture, loan, or credit agreement, or to any lease or other
agreement or instrument, or subject to any charter or corporate restriction
which could have a Material Adverse Effect. Neither the Borrower nor any
Subsidiary is in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in
any agreement or instrument material to its business to which it is a party.
Section 7.16 Compliance with Laws. Neither the Borrower nor any
Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.
Section 7.17 Inventory. All inventory of the Borrower has been and
will hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as
amended (29 U.S.C. ss.ss. 201-219), and the regulations promulgated thereunder.
Section 7.18 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 7.19 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 7.20 Environmental Matters. Except as disclosed on Schedule
7.20 hereto:
(a) The Borrower, each Subsidiary, and all of their
respective properties, assets, and operations are in full compliance
with all Environmental Laws except where the failure to comply would
not have a Material Adverse Effect. The Borrower is not aware of, nor
has the Borrower received notice of, any past, present, or future
conditions, events, activities, practices, or incidents which may
interfere with or prevent the compliance or continued compliance of
the Borrower and the Subsidiaries with all Environmental Laws;
(b) The Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under
applicable Environmental Laws, and all such permits are in good
standing and the Borrower and its Subsidiaries are in compliance with
all of the terms and conditions of such permits;
(c) Except in compliance with Environmental Laws, no
Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any
of the properties or assets of the Borrower or any Subsidiary. The use
which the Borrower and the Subsidiaries make and intend to make of
their respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal, or
Release of any Hazardous Material on, in, or from any of their
properties or assets;
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<PAGE> 31
(d) Except as disclosed in writing to the Agent, neither the
Borrower nor any of its Subsidiaries nor any of their respective
currently or previously owned or leased properties or operations is
subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any Governmental Authority or
other Person or subject to any judicial or docketed administrative
proceeding with respect to (i) failure to comply with Environmental
Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities
arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated with
the currently or previously owned or leased properties or operations
of the Borrower or any of its Subsidiaries that could reasonably be
expected to give rise to any Environmental Liabilities which could
reasonably be expected to have a Material Adverse Effect;
(f) Neither the Borrower nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq.,
regulations thereunder or any comparable provision of state law. The
Borrower and its Subsidiaries are in compliance with all applicable
financial responsibility requirements of all Environmental Laws except
where the failure to comply would not have a Material Adverse Effect;
(g) Neither the Borrower nor any of its Subsidiaries has
filed or failed to file any notice required under applicable
Environmental Law reporting a Release; and
(h) No Lien arising under any Environmental Law has attached
to any property or revenues of the Borrower or its Subsidiaries.
ARTICLE VIII
Positive Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following positive covenants unless the
Agent and the Required Banks otherwise agree in writing:
Section 8.1 Reporting Requirements. The Borrower will furnish to the
Agent and each Bank:
(a) Annual Financial Statements. As soon as available, and in
any event within 90 days after the end of each fiscal year of the
Borrower, beginning with the fiscal year ending December 31, 1997, (i)
a copy of the audited annual financial statements of the Borrower and
the Subsidiaries for such fiscal year containing, on a consolidated
basis, balance sheets and related statements of income, retained
earnings, and cash flow as at the end of such fiscal year and for the
12-month period then ended, in each case prepared in accordance with
GAAP, setting forth in comparative form the figures for the preceding
fiscal year, all in reasonable detail and audited and certified with
an unqualified opinion
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<PAGE> 32
by independent certified public accountants of recognized standing
mutually acceptable to the Agent and the Borrower, and (ii) unaudited
consolidating work papers prepared in connection with the audited
financial statements delivered pursuant to subsection (i) above;
(b) Quarterly Financial Statements. As soon as available, and
in any event within 60 days after the end of each fiscal quarter, (i)
a copy of the unaudited interim financial statements of the Borrower
and the Subsidiaries as of the end of such fiscal quarter and for the
portion of the fiscal year then ended, containing, on a consolidated
basis, balance sheets and related statements of income, retained
earnings, and cash flow, in each case setting forth in comparative
form the figures for the corresponding period of the preceding fiscal
year, all in reasonable detail certified by the chief financial
officer of the Borrower to have been prepared in accordance with GAAP
and to fairly and accurately present (subject to normal year-end audit
adjustments) the financial condition and results of operations of the
Borrower and the Subsidiaries, on a consolidating basis, at the date
and for the periods indicated therein, and (ii) unaudited
consolidating work papers prepared in connection with the audited
financial statements delivered pursuant to subsection (i) above;
(c) Monthly Reports. As soon as available, but in any event,
within 30 days after the end of each calendar month during the term
hereof, (i) an accounts receivable aging certified by a responsible
officer of the Borrower, (ii) an accounts payable aging certified by a
responsible officer of the Borrower, and (iii) a Borrowing Base
Certificate.
(d) Certificate of No Default. Concurrently with the delivery
of the items referred to in subsections 8.1(b) hereof, a certificate
of the chief executive officer of the Borrower (i) stating that to the
best of such officer's knowledge, no Default has occurred and is
continuing, or if a Default has occurred and is continuing, a
statement as to the nature thereof and the action that is proposed to
be taken with respect thereto, and (ii) showing in reasonable detail
the calculations demonstrating compliance with Article IX;
(e) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to the Borrower
or any Subsidiary by independent certified public accountants with
respect to the business, condition (financial or otherwise),
operations, prospects, or properties of the Borrower or any
Subsidiary;
(f) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator affecting the Borrower or any
Subsidiary which, if determined adversely to the Borrower or such
Subsidiary, could have a Material Averse Effect;
(g) Notice of Default. As soon as possible and in any event
within five days after the occurrence of each Default, a written
notice setting forth the details of such Default and the action that
the Borrower has taken and proposes to take with respect thereto;
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<PAGE> 33
(h) ERISA Reports. Promptly after the filing or receipt
thereof, copies of all reports, including annual reports, and notices
which the Borrower or any Subsidiary files with or receives from the
PBGC or the U.S. Department of Labor under ERISA; and as soon as
possible and in any event within five days after the Borrower or any
Subsidiary knows or has reason to know that any Reportable Event or
Prohibited Transaction has occurred with respect to any Plan or that
the PBGC or the Borrower or any Subsidiary has instituted or will
institute proceedings under Title IV of ERISA to terminate any Plan, a
certificate of the chief financial officer of the Borrower setting
forth the details as to such Reportable Event or Prohibited
Transaction or Plan termination and the action that the Borrower
proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other
party pursuant to the terms of any indenture, loan, or credit or
similar agreement and not otherwise required to be furnished to the
Agent and the Banks pursuant to any other clause of this Section;
(j) Notice of Material Adverse Change. As soon as possible
and in any event within five days after the occurrence thereof,
written notice of any matter that could have a Material Adverse
Effect;
(k) Proxy Statements, Etc. As soon as available, one copy of
each financial statement, report, notice or proxy statement sent by
the Borrower or any Subsidiary to its stockholders generally and one
copy of each regular, periodic or special report, registration
statement, or prospectus filed by the Borrower or any Subsidiary with
any securities exchange or the Securities and Exchange Commission or
any successor agency; and
(l) General Information. Promptly, such other information
concerning the Borrower or any Subsidiary as the Agent or any Bank may
from time to time reasonably request.
Section 8.2 Maintenance of Existence; Conduct of Business. The
Borrower will preserve and maintain, and will cause each Subsidiary to preserve
and maintain, its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Borrower will conduct,
and will cause each Subsidiary to conduct, its business in an orderly and
efficient manner in accordance with good business practices.
Section 8.3 Maintenance of Properties. The Borrower will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition.
Section 8.4 Taxes and Claims. The Borrower will pay or discharge, and
will cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any
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<PAGE> 34
of its property, and (b) all lawful claims for labor, material, and supplies,
which, if unpaid, might become a Lien upon any of its property; provided,
however, that neither the Borrower nor any Subsidiary shall be required to pay
or discharge any tax, levy, assessment, or governmental charge which is being
contested in good faith by appropriate proceedings diligently pursued, and for
which adequate reserves have been established in conformity with GAAP.
Section 8.5 Insurance. The Borrower will maintain, and will cause each
of the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Borrower and the Subsidiaries
operate, provided that in any event the Borrower will maintain and cause each
Subsidiary to maintain workmen's compensation insurance, property insurance,
comprehensive general liability insurance, products liability insurance, and
business interruption insurance reasonably satisfactory to the Banks.
Section 8.6 Inspection Rights; Field Audit. At any reasonable time and
from time to time, the Borrower will permit, and will cause each Subsidiary to
permit, representatives of the Agent and each Bank to examine, copy, and make
extracts from its books and records, to visit and inspect its properties, and
to discuss its business, operations, and financial condition with its officers,
employees, and independent certified public accountants. In addition, the
Borrower will permit, and will cause each Subsidiary to permit, representatives
of the Agent and each Bank to conduct an annual field audit of the Borrower's
and the Subsidiaries' accounts receivable at the expense of the Borrower.
Section 8.7 Keeping Books and Records. The Borrower will maintain, and
will cause each Subsidiary to maintain, proper books of record and account in
which full, true, and correct entries in conformity with GAAP shall be made of
all dealings and transactions in relation to its business and activities.
Section 8.8 Compliance with Laws. The Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator.
Section 8.9 Compliance with Agreements. The Borrower will comply, and
will cause each Subsidiary to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its
properties or business.
Section 8.10 Further Assurances. The Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and instruments
and take such further action as may be requested by the Agent to carry out the
provisions and purposes of this Agreement and the other Loan Documents and to
create, preserve, and perfect the Liens of Agent for the benefit of the Banks
in the Collateral.
Section 8.11 ERISA. The Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
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<PAGE> 35
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following negative covenants unless the
Agent and the Required Banks otherwise agree in writing:
Section 9.1 Debt. The Borrower will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume,
or permit to exist, any Debt, except:
(a) Obligations to the Banks pursuant to the Loan
Documents;
(b) the Senior Unsecured Debt;
(c) existing Newpark Debt;
(d) Existing Debt described on Schedule 7.9 hereto;
(e) existing Capital Lease Obligations with respect to the
Greens Bayou facility; and
(f) purchase money Debt not to exceed $200,000.
Section 9.2 Limitation on Liens. The Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Lien upon any of its property, assets,
or revenues, whether now owned or hereafter acquired, except for the following
Liens (collectively, the "Permitted Liens"):
(a) Liens disclosed on Schedule 9.2 hereto;
(b) Liens in favor of the Agent for the benefit of the
Banks;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that
do not (individually or in the aggregate) materially affect the value
of the assets encumbered thereby or materially impair the ability of
the Borrower or the Subsidiaries to use such assets in their
respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(d) Liens for taxes, assessments, or other governmental
charges which are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
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<PAGE> 36
(e) Liens of mechanics, materialmen, warehousemen, carriers,
or other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs
or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, contracts (other than for payment of Debt), or
leases made in the ordinary course of business; and
(g) Liens securing purchase money Debt permitted under
Section 9.1(f); provided such Liens do not encumber or extend to any
property other than property purchased with the proceeds of such
purchase money Debt.
Section 9.3 Mergers, Etc. The Borrower will not, and will not permit
any Subsidiary to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or any part of the business or assets of any Person or
any shares or other evidence of beneficial ownership of any Person, or wind-up,
dissolve, or liquidate itself.
Section 9.4 Restricted Payments. The Borrower will not declare or pay
any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital stock, or redeem, purchase,
retire, or otherwise acquire any of its capital stock, or permit any of its
Subsidiaries to purchase or otherwise acquire any capital stock of the Borrower
or another Subsidiary, or set apart any money for a sinking or other analogous
fund for any dividend or other distribution on its capital stock or for any
redemption, purchase, retirement, or other acquisition of any of its capital
stock.
Section 9.5 Investments. The Borrower will not make, and will not
permit any Subsidiary to make, any advance, loan, extension of credit, or
capital contribution to or investment in, or purchase or own, or permit any
Subsidiary to purchase or own, any stock, bonds, notes, debentures, or other
securities of, any Person, except the following (collectively, "Permitted
Investments"):
(a) readily marketable direct obligations of the United
States of America or any agency thereof with maturities of one year or
less from the date of acquisition;
(b) fully insured certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial
bank operating in the United States of America having capital and
surplus in excess of $50,000,000;
(c) publicly traded commercial paper of a domestic issuer if
at the time of purchase such paper is rated in one of the two highest
rating categories of Standard and Poor's, a division of McGraw-Hill
Companies, or Moody's Investors Service, Inc.;
(d) existing investments by the Borrower in Subsidiaries; and
(e) advances from the Subsidiaries to the Borrower.
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<PAGE> 37
Section 9.6 Limitation on Issuance of Capital Stock. The Borrower will
not, and will not permit any of its Subsidiaries to, at any time issue, sell,
assign, or otherwise dispose of (a) any of its capital stock, (b) any
securities exchangeable for or convertible into or carrying any rights to
acquire any of its capital stock, or (c) any option, warrant, or other right to
acquire any of its capital stock, except issuances pursuant to the Borrower's
existing stock or equity plan, a copy of which has been delivered to the Agent
and, in the Borrower's case, a public offering of its equity securities for
cash.
Section 9.7 Transactions With Affiliates. The Borrower will not enter
into, and will not permit any Subsidiary to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of the Borrower or such
Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of the Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to the Borrower or such Subsidiary than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of the Borrower or such Subsidiary.
Section 9.8 Disposition of Assets. The Borrower will not sell, lease,
assign, transfer, or otherwise dispose of any of its assets, or permit any
Subsidiary to do so with any of its assets, except (i) dispositions of
inventory in the ordinary course of business and (ii) dispositions of equipment
in the ordinary course of business, provided that such equipment is not
necessary for the operation of the Borrower's or such Subsidiary's business.
Section 9.9 Sale and Leaseback. The Borrower will not enter into, and
will not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 9.10 Prepayment of Debt. The Borrower will not prepay, and
will not permit any Subsidiary to prepay, any Debt, except the Obligations;
provided, however, that (a) the Borrower may use Net Proceeds to prepay either
(a) the Newpark Debt or (b) up to 35% of the Senior Unsecured Debt.
Section 9.11 Nature of Business. The Borrower will not, and will not
permit any Subsidiary to, engage in any business other than the businesses in
which they are engaged on the date hereof.
Section 9.12 Environmental Protection. Except in compliance with
Environmental Laws, the Borrower will not, and will not permit any of its
Subsidiaries to, (a) use (or permit any tenant to use) any of their respective
properties or assets for the handling, processing, storage, transportation, or
disposal of any Hazardous Material, (b) generate any Hazardous Material, (c)
conduct any activity that is likely to cause a Release or threatened Release of
any Hazardous Material, or (d) otherwise conduct any activity or use any of
their respective properties or assets in any manner that is likely to violate
any Environmental Law or create any Environmental Liabilities for which the
Borrower or any of its Subsidiaries would be responsible and which would have a
Material Adverse Effect.
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<PAGE> 38
Section 9.13 Accounting. The Borrower will not, and will not permit
any of its Subsidiaries to, change its fiscal year or make any change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Agent, or (b) in tax reporting treatment, except as required
by law and disclosed to the Agent.
Section 9.14 Compensation. The Borrower will not pay, and will not
permit any Subsidiary to pay, to Samuel F. Eakin or any family member (by blood
or marriage) of Samuel F. Eakin, Frank Eakin or David B. Ammons, or any of
them, any cash compensation (including salary, bonus and other cash
compensation) which would cause the aggregate combined cash compensation of
Samuel F. Eakin and his family members to be greater than the amounts referred
to in that certain Prospectus dated January 27, 1998 relating to the offering
of the Senior Unsecured Debt, plus discretionary bonuses not to exceed, in the
aggregate, 25% of Consolidated Net Income.
ARTICLE X
Financial Covenants
The Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, the
Borrower will perform and observe the following financial covenants unless the
Agent and the Required Banks otherwise agree in writing:
Section 10.1 Funded Debt/Cash Flow Ratio. The Borrower will at all
times maintain a Funded Debt to Cash Flow Ratio, calculated at the end of each
fiscal quarter on a rolling four-quarter basis, not to exceed the following:
<TABLE>
<CAPTION>
Period Ratio
- ------ -----
<S> <C>
through 6/30/98 8.0 to 1.0
7/1/98 to 9/30/98 7.5 to 1.0
10/1/98 to 12/31/98 7.0 to 1.0
Thereafter 6.0 to 1.0
</TABLE>
Section 10.2 Debt Service Ratio. The Borrower will at all times
maintain a Debt Service Ratio calculated at the end of each fiscal quarter
beginning with the quarter ending March 31, 1998, on a rolling four-quarter
basis, not less than 1.50 to 1.0.
Section 10.3 Minimum Consolidated Tangible Net Worth. The Borrower
will at all times maintain Consolidated Tangible Net Worth calculated at the
end of each fiscal quarter beginning with the fiscal quarter ending March 31,
1998, in an amount not less than the sum of (a) Consolidated Tangible Net Worth
as of March 31, 1998, plus (b) 75% of Consolidated Net Income (without any
deduction for losses), for each fiscal quarter of the Borrower ended through
the date of determination beginning with the fiscal quarter ending March 31,
1998, plus (c) 100%
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<PAGE> 39
of the Net Proceeds received by the Borrower or any Subsidiary from any
issuance, sale or other disposition of any shares of capital stock or other
equity securities.
Section 10.4 Minimum Consolidated Working Capital. The Borrower will
at all times maintain a Consolidated Working Capital, calculated at the end of
each fiscal quarter, of not less than $17,500,000.
Section 10.5 INTENTIONALLY DELETED.
Section 10.6 Capital Expenditures. The Borrower will not permit the
aggregate Capital Expenditures of the Borrower and the Subsidiaries to exceed
$35,000,000 during the term hereof; provided, that for the purpose of
determining the aggregate Capital Expenditures, to the extent that the Borrower
or any Subsidiary acquires the assets of or any shares or other beneficial
ownership of any Person in a transaction consented to by the Agent and the
Required Banks, any portion of the purchase price that would otherwise be
characterized as Capital Expenditures shall not be included in the
determination of Capital Expenditures for the purposes of this Section 10.5.
Section 10.7 Operating Leases. The Borrower will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any liability for payments under any
Operating Leases, except liabilities under Operating Leases which do not in the
aggregate require the Borrower and the Subsidiaries on a consolidated basis to
make payments (including taxes, insurance, maintenance, and similar expenses
which the Borrower or any Subsidiary is obligated to pay under any such
Operating Lease) in any fiscal year of the Borrower in excess of $1,000,000.
ARTICLE XI
Default
Section 11.1 Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) The Borrower or any Obligated Party shall fail to pay
when due the Obligations or any part thereof.
(b) Any representation or warranty made or deemed made by the
Borrower or any Obligated Party (or any of their respective officers)
in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) The Borrower shall fail to perform, observe, or comply
with any covenant, agreement, or term contained in this Agreement or
any other Loan Document and, in the case of breaches of Articles VIII
(other than Sections 8.1(d) and 8.6) and thereof, such failure shall
continue for 10 days after its occurrence.
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<PAGE> 40
(d) The Borrower, any Subsidiary, or any Obligated Party
shall commence a voluntary proceeding seeking liquidation,
reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency, or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it or shall
make a general assignment for the benefit of creditors or shall
generally fail to pay its debts as they become due or shall take any
corporate action to authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against the
Borrower, any Subsidiary, or any Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under
any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official for it or a substantial part of
its property, and such involuntary proceeding shall remain undismissed
and unstayed for a period of 30 days.
(f) The Borrower, any Subsidiary, or any Obligated Party
shall fail to discharge within a period of 30 days after the
commencement thereof any attachment, sequestration, or similar
proceeding or proceedings involving an aggregate amount in excess of
$100,000 against any of its assets or properties.
(g) A final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate shall be rendered by a court or
courts against the Borrower, any of its Subsidiaries, or any Obligated
Party 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 30 days from the date of entry thereof and the
Borrower or the relevant Subsidiary or Obligated Party shall not,
within said period of 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.
(h) The Borrower, any Subsidiary, or any Obligated Party
shall fail to pay when due any principal of or interest on any Debt
(other than the Obligations), or the maturity of any such Debt shall
have been accelerated, or any such Debt shall have been required to be
prepaid prior to the stated maturity thereof, or any event shall have
occurred that permits (or, with the giving of notice or lapse of time
or both, would permit) any holder or holders of such Debt or any
Person acting on behalf of such holder or holders to accelerate the
maturity thereof or require any such prepayment.
(i) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
the Borrower, any Subsidiary, any Obligated Party or any of their
respective shareholders, or the Borrower or any Obligated Party shall
deny that it has any further liability or obligation under any of the
Loan Documents, or any lien or security interest created by the Loan
Documents shall for any reason cease to be a valid,
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<PAGE> 41
first priority perfected security interest in and lien upon any of the
Collateral purported to be covered thereby.
(j) Any of the following events shall occur or exist with
respect to the Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer Plan; and in each case above, such
event or condition, together with all other events or conditions, if
any, have subjected or could in the reasonable opinion of Required
Banks subject the Borrower to any tax, penalty, or other liability to
a Plan, a Multiemployer Plan, the PBGC, or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably
be expected to exceed $100,000.
(k) The Borrower or any of its Subsidiaries, or any of their
properties, revenues, or assets, shall become the subject of an order
of forfeiture, seizure, or divestiture (whether under RICO or
otherwise) and the same shall not have been discharged (or provisions
shall not be made for such discharge) within 30 days from the date of
entry thereof.
Section 11.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by Required Banks, shall) do any one
or more of the following:
(a) Acceleration. Declare all outstanding principal of and
accrued and unpaid interest on the Notes and all other obligations of
the Borrower under the Loan Documents immediately due and payable, and
the same shall thereupon become immediately due and payable, without
notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other
formalities of any kind, all of which are hereby expressly waived by
the Borrower.
(b) Termination of Total Commitment. Terminate the Total
Commitment without notice to the Borrower.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to the Agent for the benefit of itself and the Banks to secure
payment and performance of the Obligations in accordance with the
terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded
by the laws of the State of Texas or any other jurisdiction, by any of
the Loan Documents, by equity, or otherwise.
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Provided, however, that upon the occurrence of an Event of Default under
Subsection (d) or (e) of Section 14.1, the Total Commitment of all of the Banks
shall automatically terminate, and the outstanding principal of and accrued and
unpaid interest on the Notes and all other obligations of the Borrower under
the Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Borrower.
Section 11.3 Cash Collateral. If any Event of Default shall occur and
be continuing, the Borrower shall, if requested by the Agent, immediately
deposit with and pledge to the Agent on behalf of the Banks cash or cash
equivalent investments in an amount equal to the outstanding Letter of Credit
Liabilities as security for the Obligations.
Section 11.4 Performance by the Agent. If the Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or
attempt to perform such covenant or agreement on behalf of the Borrower. In
such event, the Borrower shall, at the request of the Agent, promptly pay any
amount expended by the Agent or the Banks in connection with such performance
or attempted performance to the Agent at the Principal Office, together with
interest thereon at the Default Rate from and including the date of such
expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent
nor any Bank shall have any liability or responsibility for the performance of
any obligation of the Borrower under this Agreement or any of the other Loan
Documents.
ARTICLE XII
The Agent
Section 12.1 Appointment, Powers and Immunities. In order to expedite
the various transactions contemplated by this agreement, the Banks hereby
irrevocably appoint and authorize SWBT to act as their Agent hereunder and
under each of the other Loan Documents. SWBT consents to such appointment and
agrees to perform the duties of the Agent as specified herein. The Banks
authorize and direct the Agent to take such action in their name and on their
behalf under the terms and provisions of the Loan Documents and to exercise
such rights and powers thereunder as are specifically delegated to or required
of the Agent for the Banks, together with such rights and powers as are
reasonably incidental thereto. The Agent is hereby expressly authorized to act
as the Agent on behalf of itself and the other Banks:
(a) To receive on behalf of each of the Banks any payment of
principal, interest, fees or other amounts paid pursuant to this
Agreement and the Notes and to distribute to each Bank its pro rata
share of all payments so received as provided in this Agreement;
(b) To receive all documents and items to be furnished under
the Loan Documents;
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(c) To act as nominee for and on behalf of the Banks in and
under the Loan Documents;
(d) To arrange for the means whereby the funds of the Banks
are to be made available to the Borrower;
(e) To distribute to the Banks information, requests,
notices, payments, prepayments, documents and other items received
from the Borrower, the other Obligated Parties, and other Persons;
(f) To execute and deliver to the Borrower, the other
Obligated Parties, and other Persons, all requests, demands,
approvals, notices, and consents received from the Banks;
(g) To the extent permitted by the Loan Documents, to
exercise on behalf of each Bank all rights and remedies of Banks upon
the occurrence of any Event of Default;
(h) To accept, execute, and deliver the Security Agreement
and any other security documents as the secured party; and
(i) To take such other actions as may be requested by
Required Banks.
Neither the Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or omitted
to be taken by any of them hereunder or otherwise in connection with this
Agreement or any of the other Loan Documents except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Agent (i) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (ii) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Bank;
(iii) shall not be required to initiate any litigation or collection
proceedings hereunder or under any other Loan Document except to the extent
requested by Required Banks; (iv) shall not be responsible to the Banks for any
recitals, statements, representations or warranties contained in this Agreement
or any other Loan Document, or any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Loan Document, or for the value, validity, effectiveness, enforceability, or
sufficiency of this Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure by any Person
to perform any of its obligations hereunder or thereunder; (v) may consult with
legal counsel (including counsel for the Borrower), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants, or experts; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate, or other instrument or writing believed by it to be
genuine and signed or sent by the proper party or parties. As to any matters
not expressly provided for by this Agreement, the Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in
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accordance with instructions signed by Required Banks, and such instructions of
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks; provided, however, that the Agent shall not be
required to take any action which exposes the Agent to personal liability or
which is contrary to this Agreement or any other Loan Document or applicable
law.
Section 12.2 Rights of Agent as a Bank. With respect to its
Commitment, the Advances made by it and the Note issued to it, SWBT in its
capacity as a Bank hereunder shall have the same rights and powers hereunder as
any other Bank and may exercise the same as though it were not acting as the
Agent, and the term "Bank" or "Banks" shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent and its
Affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to, act as trustee under indentures of, provide merchant
banking services to, and generally engage in any kind of business with the
Borrower, any of its Subsidiaries, any other Obligated Party, and any other
Person who may do business with or own securities of the Borrower, any
Subsidiary, or any other Obligated Party, all as if it were not acting as the
Agent and without any duty to account therefor to the Banks.
Section 12.3 Sharing of Payments, Etc. If any Bank shall obtain any
payment of any principal of or interest on any Advance made by it under this
Agreement or payment of any other obligation under the Loan Documents then owed
by the Borrower or any other Obligated Party to such Bank, whether voluntary,
involuntary, through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, in excess of its pro rata share,
such Bank shall promptly purchase from the other Banks participations in the
Advances held by them hereunder in such amounts, and make such other
adjustments from time to time as shall be necessary to cause such purchasing
Bank to share the excess payment ratably with each of the other Banks in
accordance with its pro rata portion thereof. To such end, all of the Banks
shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any Bank
so purchasing a participation in the Advances made by the other Banks may
exercise all rights of setoff, banker's lien, counterclaim, or similar rights
with respect to such participation as fully as if such Bank were a direct
holder of Advances to the Borrower in the amount of such participation. Nothing
contained herein shall require any Bank to exercise any such right or shall
affect the right of any Bank to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of the Borrower.
Section 12.4 INDEMNIFICATION. THE BANKS HEREBY AGREE TO INDEMNIFY THE
AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE
BORROWER UNDER SECTIONS 13.1 AND 13.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENTS, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY
BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT IN ANY
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WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN
OR OMITTED TO BE TAKEN BY THE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN
DOCUMENTS; PROVIDED, FURTHER, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF
THE FOREGOING TO THE EXTENT CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE BANKS THAT THE AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS
AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT.
WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES TO
REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON
THE BASIS OF THE SUM OF THE BANKS' COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) INCURRED BY THE AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE AGENT IS NOT
REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 12.5 Independent Credit Decisions. Each Bank agrees that it
has independently and without reliance on the Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any
other Bank, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Agent shall not be required to keep itself informed as to the
performance or observance by the Borrower or any Obligated Party of this
Agreement or any other Loan Document or to inspect the properties or books of
the Borrower or any Obligated Party. Except for notices, reports and other
documents and information expressly required to be furnished to the Banks by
the Agent hereunder or under the other Loan Documents, the Agent shall not have
any duty or responsibility to provide any Bank with any credit or other
financial information concerning the affairs, financial condition or business
of the Borrower or any Obligated Party (or any of their Affiliates) which may
come into the possession of the Agent or any of its Affiliates.
Section 12.6 Several Commitments. The Commitments and other
obligations of the Banks under this Agreement are several. The default by any
Bank in making an Advance in accordance with its respective Commitment shall
not relieve the other Banks of their obligations under this Agreement. In the
event of any default by any Bank in making any Advance, each nondefaulting Bank
shall be obligated to make its Advance but shall not be obligated to advance
the amount which the defaulting Bank was required to advance hereunder. In no
event shall any Bank be required to advance an amount or amounts which shall in
the aggregate exceed such
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Bank's respective Commitment. No Bank shall be responsible for any act or
omission of any other Bank.
Section 12.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, the Agent may resign at any
time by giving notice thereof to the Banks and the Borrower and the Agent may
be removed at any time with or without cause by Required Banks. Upon any such
resignation or removal, Required Banks will have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by Required
Banks and shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Required Banks' removal
of the retiring Agent, then the retiring Agent may, on behalf of the Banks,
appoint a successor Agent, which shall be a commercial bank organized under the
laws of the United States of America or any State thereof and having combined
capital and surplus of at least $100,000,000. Upon the acceptance of its
appointment as successor Agent, such successor Agent shall thereupon succeed to
and become vested with all rights, powers, privileges, immunities, and duties
of the resigning or removed Agent, and the resigning or removed Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any Agent's resignation or removal as Agent, the
provisions of this Article XII shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was the
Agent.
ARTICLE XIII
Miscellaneous
Section 13.1 Expenses. The Borrower hereby agrees to pay on demand:
(a) all costs and expenses of the Agent and the Banks in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents and any and all amendments, modifications, renewals,
extensions, and supplements thereof and thereto, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent and the Banks,
(b) all costs and expenses of the Agent and the Banks in connection with any
Default and the enforcement of this Agreement or any other Loan Document,
including, without limitation, the reasonable fees and expenses of legal
counsel for the Agent and the Banks, (c) all transfer, stamp, documentary, or
other similar taxes, assessments, or charges levied by any Governmental
Authority in respect of this Agreement or any of the other Loan Documents, (d)
all costs, expenses, assessments, and other charges incurred in connection with
any filing, registration, recording, or perfection of any security interest or
Lien contemplated by this Agreement or any other Loan Document, and (e) all
other costs and expenses incurred by the Agent and the Banks in connection with
this Agreement or any other Loan Document, including, without limitation, all
costs, expenses, and other charges incurred in connection with obtaining any
audit, or appraisal in respect of the Collateral; provided that, unless a
Default or Event of Default has occurred or is continuing, the Borrower shall
not be required to pay for more than one annual field audit of accounts
receivable.
Section 13.2 INDEMNIFICATION. THE BORROWER SHALL INDEMNIFY THE
AGENT AND EACH BANK AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD
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EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS,
DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING
ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B)
ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY
THE BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED
RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON,
ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWER OR
ANY SUBSIDIARY, (E) THE USE OR PROPOSED USE OF ANY LETTER OF CREDIT, (F) ANY
AND ALL TAXES, LEVIES, DEDUCTIONS, AND CHARGES IMPOSED ON THE LENDER OR ANY OF
THE LENDER'S CORRESPONDENTS IN RESPECT OF ANY LETTER OF CREDIT, OR (G) ANY
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION,
ANY THREATENED INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY
OF THE FOREGOING. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY
OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT
EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS'
FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF
SUCH PERSON BUT NOT ARISING OUT OF OR RESULTING FROM THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF SUCH PERSON.
Section 13.3 Limitation of Liability. None of the Agent, any Bank, or
any Affiliate, officer, director, employee, attorney, or agent thereof shall
have any liability with respect to, and the Borrower hereby waives, releases,
and agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by the Borrower in
connection with, arising out of, or in any way related to, this Agreement or
any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents. The Borrower hereby waives,
releases, and agrees not to sue the Agent or any Bank or any of their
respective Affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or
any of the transactions contemplated by this Agreement or any of the other Loan
Documents.
Section 13.4 No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Agent and the Banks
shall have the right to act exclusively in the interest of the Agent and the
Banks and shall have no duty of disclosure, duty of loyalty, duty of care, or
other duty or obligation of any type or nature whatsoever to the Borrower or
any of the Borrower's shareholders or any other Person.
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Section 13.5 No Fiduciary Relationship. The relationship between the
Borrower and each Bank is solely that of debtor and creditor, and neither the
Agent nor any Bank has any fiduciary or other special relationship with the
Borrower, and no term or condition of any of the Loan Documents shall be
construed so as to deem the relationship between the Borrower and any Bank to
be other than that of debtor and creditor.
Section 13.6 Equitable Relief. The Borrower recognizes that in the
event the Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may prove to be inadequate relief to the
Agent and the Banks. The Borrower therefore agrees that the Agent and the
Banks, if the Agent or the Banks so request, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the part of
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights and remedies
provided by law.
Section 13.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the Agent
and all of the Banks. Any Bank may sell participations to one or more
banks or other institutions in or to all or a portion of its rights
and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Commitments
and the Advances owing to it); provided, however, that (i) such Bank's
obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitment) shall remain
unchanged, (ii) such Bank shall remain solely responsible to the
Borrower for the performance of such obligations, (iii) such Bank
shall remain the holder of its Note for all purposes of this
Agreement, (iv) the Borrower shall continue to deal solely and
directly with such Bank in connection with such Bank's rights and
obligations under this Agreement and the other Loan Documents, and (v)
such Bank shall not sell a participation that conveys to the
participant the right to vote or give or withhold consents under this
Agreement or any other Loan Document, other than the right to vote
upon or consent to (A) any increase of such Bank's Commitment, (B) any
reduction of the principal amount of, or interest to be paid on, the
Advances of such Bank, (C) any reduction of any commitment fee or
other amount payable to such Bank under any Loan Document, or (D) any
postponement of any date for the payment of any amount payable in
respect of the Advances of such Bank.
(b) The Borrower and each of the Banks agree that any Bank
(the "Assigning Bank") may at any time assign to one or more Eligible
Assignees all, or a proportionate part of all, of its rights and
obligations under this Agreement and the other Loan
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Documents (including, without limitation, its Commitment and Advances)
(each an "Assignee"); provided, however, that (i) each such assignment
shall be of a consistent, and not a varying, percentage of all of the
assigning Bank's rights and obligations under this Agreement and the
other Loan Documents, (ii) except in the case of an assignment of all
of a Bank's rights and obligations under this Agreement and the other
Loan Documents, the amount of the Commitment of the assigning Bank
being assigned pursuant to each assignment (determined as of the date
of the Assignment Acceptance with respect to such assignment) shall in
no event be less than $2,500,000, and (iii) the parties to each such
assignment shall execute and deliver to the Agent for its acceptance
and recording in the Register (as defined below), an Assignment and
Acceptance, together with the Note subject to such assignment, and a
processing and recordation fee of $3,500. Upon such execution,
delivery, acceptance, and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, or,
if so specified in such Assignment and Acceptance, the date of
acceptance thereof by the Agent, (x) the assignee thereunder shall be
a party hereto as a "Bank" and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and under the Loan Documents and (y) the Bank that is an
assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement and the other Loan Documents (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of
a Bank's rights and obligations under the Loan Documents, such Bank
shall cease to be a party thereto).
(c) By executing and delivering an Assignment and Acceptance,
the Bank that is an assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance,
such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or
representations made in or in connection with the Loan Documents or
the execution, legality, validity, and enforceability, genuineness,
sufficiency, or value of the Loan Documents or any other instrument or
document furnished pursuant thereto; (ii) such assigning Bank makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or any Obligated Party or
the performance or observance by the Borrower or any Obligated Party
of its obligations under the Loan Documents; (iii) such assignee
confirms that it has received a copy of the other Loan Documents,
together with copies of the financial statements referred to in
Section 7.2 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently
and without reliance upon the Agent or such assignor and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents; (v) such
assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and exercise such powers under the Loan Documents as are
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delegated to the Agent by the terms thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to
be performed by it as a Bank.
(d) The Agent shall maintain at its Principal Office a copy
of each Assignment and Acceptance delivered to and accepted by it and
a register for the recordation of the names and addresses of the Banks
and the Commitment of, and principal amount of the Advances owing to,
each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower, the Agent, and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder
for all purposes under the Loan Documents. The Register shall be
available for inspection by the Borrower or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and assignee representing that it is an Eligible
Assignee, together with any Note subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit "E" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrower. Within five Business Days after its receipt of such
notice, the Borrower, at its expense, shall execute and deliver to the
Agent in exchange for the surrendered Note or Notes, a new Note or
Notes to the order of such Eligible Assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained a Commitment, a new Note or
Notes to the order of the assigning Bank in an amount equal to the
Commitment retained by it hereunder (each such promissory note shall
constitute a "Note" for purposes of the Loan Documents). Such new
Notes shall be in an aggregate principal amount of the surrendered
Note or Notes, shall be dated the effective date of such Assignment
and Acceptance, and shall otherwise be in substantially the form of
Exhibit "A" hereto.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower or its
Subsidiaries furnished to such Bank by or on behalf of the Borrower or
its Subsidiaries.
Section 13.9 Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Agent or any Bank or any closing shall affect the
representations and warranties or the right of the Agent or any Bank to rely
upon them. Without prejudice to the survival of any other obligation of the
Borrower hereunder, the obligations of the Borrower under Article IV and
Sections 12.1 and 12.2 shall survive repayment of the Notes and termination of
the Commitments.
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Section 13.10 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, the Notes, or any other Loan Document to which the Borrower
is a party, nor any consent to any departure by the Borrower therefrom, shall
in any event be effective unless the same shall be agreed or consented to by
Required Banks 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 Banks and the Borrower, do any of the following: (a)
increase Commitments of the Banks or subject the Banks 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) waive any of the conditions specified in Article III; (e) change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Notes or the number of Banks which shall be required for the Banks or
any of them to take any action under this Agreement; (f) change any provision
contained in this Section 13.10; or (g) release any Collateral. Notwithstanding
anything to the contrary contained in this Section, no amendment, waiver, or
consent shall be made with respect to Article XIII hereof without the prior
written consent of the Agent.
Section 13.11 Maximum Interest Rate. No provision of this Agreement or
of any other Loan Document shall require the payment or the collection of
interest in excess of the maximum amount permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Loan Document or otherwise in connection
with this loan transaction, the provisions of this Section shall govern and
prevail and neither the Borrower nor the sureties, guarantors, successors, or
assigns of the Borrower shall be obligated to pay the excess amount of such
interest or any other excess sum paid for the use, forbearance, or detention of
sums loaned pursuant hereto. In the event any Bank ever receives, collects, or
applies as interest any such sum, such amount which would be in excess of the
maximum amount permitted by applicable law shall be applied as a payment and
reduction of the principal of the indebtedness evidenced by the Notes; and, if
the principal of the Notes has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrower and each Bank shall, to
the extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the indebtedness evidenced by the
Notes so that interest for the entire term does not exceed the Maximum Rate.
Section 13.12 Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents to which the Borrower is a
party shall be given or made by telex, telegraph, telecopy, cable, or in
writing and telexed, telecopied, telegraphed, cabled, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party at such other address as shall be designated by such party
in a notice to each other party given in accordance with this Section. Except
as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telex or telecopy, subject
to telephone confirmation of receipt, or delivered to the telegraph or cable
office, subject
- 46 -
<PAGE> 52
to telephone confirmation of receipt, or when personally delivered or, in the
case of a mailed notice, when duly deposited in the mails, in each case given
or addressed as aforesaid; provided, however, notices to the Agent pursuant to
Article II shall not be effective until received by the Agent.
Section 13.13 Governing Law; Venue; Service of Process. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America. This Agreement
has been entered into in Harris County, Texas, and it shall be performable for
all purposes in Harris County, Texas. Any action or proceeding against the
Borrower under or in connection with any of the Loan Documents may be brought
in any state or federal court in Harris County, Texas. The Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and
(b) waives any objection it may now or hereafter have as to the venue of any
such action or proceeding brought in any such court or that any such court is
an inconvenient forum. The Borrower agrees that service of process upon it may
be made by certified or registered mail, return receipt requested, at its
address specified or determined in accordance with the provisions of Section
13.12. Nothing herein or in any of the other Loan Documents shall affect the
right of the Agent or any Bank to serve process in any other manner permitted
by law or shall limit the right of the Agent or any Bank to bring any action or
proceeding against the Borrower or with respect to any of its property in
courts in other jurisdictions. Any action or proceeding by the Borrower against
the Agent or any Bank shall be brought only in a court located in Harris
County, Texas.
Section 13.14 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.15 Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 13.16 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.17 Non-Application of Chapter 346 of Texas Finance Code.
The provisions of Chapter 346 of the Texas Finance Code (Vernon's Texas Code
Annotated) are specifically declared by the parties hereto not to be applicable
to this Agreement or any of the other Loan Documents or to the transactions
contemplated hereby.
Section 13.18 Construction. The Borrower, the Agent, and each Bank
acknowledges that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
- 47 -
<PAGE> 53
Section 13.19 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 13.20 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY BANK IN THE NEGOTIATION, ADMINISTRATION, OR
ENFORCEMENT THEREOF.
Section 13.21 ARBITRATION.
(a) ARBITRATION. NOTWITHSTANDING ANY PROVISION IN ANY LOAN
DOCUMENT TO THE CONTRARY, UPON THE DEMAND OF ANY PARTY, ANY DISPUTE
SHALL BE RESOLVED BY BINDING ARBITRATION (EXCEPT AS SET FORTH IN (E)
BELOW) IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. A "DISPUTE"
SHALL MEAN ANY ACTION, DISPUTE, CLAIM OR CONTROVERSY OF ANY KIND,
WHETHER IN CONTRACT OR TORT, STATUTORY OR COMMON LAW, LEGAL OR
EQUITABLE, NOW EXISTING OR HEREAFTER ARISING UNDER OR IN CONNECTION
WITH, OR IN ANY WAY PERTAINING TO, ANY OF THE LOAN DOCUMENTS, OR ANY
PAST, PRESENT OR FUTURE EXTENSIONS OF CREDIT AND OTHER ACTIVITIES,
TRANSACTIONS OR OBLIGATIONS OF ANY KIND RELATED DIRECTLY OR INDIRECTLY
TO ANY OF THE LOAN DOCUMENTS, INCLUDING WITHOUT LIMITATION, ANY OF THE
FOREGOING ARISING IN CONNECTION WITH THE EXERCISE OF ANY SELF-HELP,
ANCILLARY OR OTHER REMEDIES PURSUANT TO ANY OF THE LOAN DOCUMENTS. ANY
PARTY MAY BY SUMMARY PROCEEDINGS BRING AN ACTION IN COURT TO COMPEL
ARBITRATION OF A DISPUTE. ANY PARTY WHO FAILS OR REFUSES TO SUBMIT TO
ARBITRATION FOLLOWING A LAWFUL DEMAND BY ANY OTHER PARTY SHALL BEAR
ALL COSTS AND EXPENSES INCURRED BY SUCH OTHER PARTY IN COMPELLING
ARBITRATION OF ANY DISPUTE.
(b) GOVERNING RULES. ARBITRATION PROCEEDINGS SHALL BE
ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION ("AAA") OR SUCH
OTHER ADMINISTRATOR AS THE PARTIES SHALL MUTUALLY AGREE UPON IN
ACCORDANCE WITH THE AAA COMMERCIAL ARBITRATION RULES. ALL DISPUTES
SUBMITTED TO ARBITRATION SHALL BE RESOLVED IN ACCORDANCE WITH THE
FEDERAL ARBITRATION ACT (TITLE 9 OF THE UNITED STATES CODE),
NOTWITHSTANDING ANY CONFLICTING CHOICE OF LAW PROVISION IN ANY OF THE
LOAN DOCUMENTS. THE ARBITRATION
- 48 -
<PAGE> 54
SHALL BE CONDUCTED AT A LOCATION IN TEXAS SELECTED BY THE AAA OR OTHER
ADMINISTRATOR. IF THERE IS ANY INCONSISTENCY BETWEEN THE TERMS HEREOF
AND ANY SUCH RULES, THE TERMS AND PROCEDURES SET FORTH HEREIN SHALL
CONTROL. ALL STATUTES OF LIMITATION APPLICABLE TO ANY DISPUTE SHALL
APPLY TO ANY ARBITRATION PROCEEDING. ALL DISCOVERY ACTIVITIES SHALL BE
EXPRESSLY LIMITED TO MATTERS DIRECTLY RELEVANT TO THE DISPUTE BEING
ARBITRATED. JUDGMENT UPON ANY AWARD RENDERED IN AN ARBITRATION MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION; PROVIDED HOWEVER, THAT
NOTHING CONTAINED HEREIN SHALL BE DEEMED TO BE A WAIVER BY ANY PARTY
THAT IS A BANK OF THE PROTECTIONS AFFORDED TO IT UNDER 12 U.S.C.
SECTION 91 OR ANY SIMILAR APPLICABLE STATE LAW.
(c) NO WAIVER; PROVISIONAL REMEDIES, SELF-HELP AND
FORECLOSURE. NO PROVISION HEREOF SHALL LIMIT THE RIGHT OF ANY PARTY TO
EXERCISE SELF-HELP REMEDIES SUCH AS SETOFF, FORECLOSURE AGAINST OR
SALE OF ANY REAL OR PERSONAL PROPERTY COLLATERAL OR SECURITY, OR TO
OBTAIN PROVISIONAL OR ANCILLARY REMEDIES, INCLUDING WITHOUT LIMITATION
INJUNCTIVE RELIEF, SEQUESTRATION, ATTACHMENT, GARNISHMENT OR THE
APPOINTMENT OF A RECEIVER, FROM A COURT OF COMPETENT JURISDICTION
BEFORE, AFTER OR DURING THE PENDENCY OF ANY ARBITRATION OR OTHER
PROCEEDING. THE EXERCISE OF ANY SUCH REMEDY SHALL NOT WAIVE THE RIGHT
OF ANY PARTY TO COMPEL ARBITRATION HEREUNDER.
(d) ARBITRATOR QUALIFICATIONS AND POWERS; AWARDS. ARBITRATORS
MUST BE ACTIVE MEMBERS OF THE TEXAS STATE BAR WITH EXPERTISE IN THE
SUBSTANTIVE LAWS APPLICABLE TO THE SUBJECT MATTER OF THE DISPUTE.
ARBITRATORS ARE EMPOWERED TO RESOLVE DISPUTES BY SUMMARY RULINGS IN
RESPONSE TO MOTIONS FILED PRIOR TO THE FINAL ARBITRATION HEARING.
ARBITRATORS (I) SHALL RESOLVE ALL DISPUTES IN ACCORDANCE WITH THE
SUBSTANTIVE LAW OF THE STATE OF TEXAS, (II) MAY GRANT ANY REMEDY OR
RELIEF THAT A COURT OF THE STATE OF TEXAS COULD ORDER OR GRANT WITHIN
THE SCOPE HEREOF AND SUCH ANCILLARY RELIEF AS IS NECESSARY TO MAKE
EFFECTIVE ANY AWARD, AND (III) SHALL HAVE THE POWER TO AWARD RECOVERY
OF ALL COSTS AND FEES, TO IMPOSE SANCTIONS AND TO TAKE SUCH OTHER
ACTIONS AS THEY DEEM NECESSARY TO THE SAME EXTENT A JUDGE COULD
PURSUANT TO THE FEDERAL RULES OF CIVIL PROCEDURE, THE TEXAS RULES OF
CIVIL PROCEDURE OR OTHER APPLICABLE LAW. ANY DISPUTE IN WHICH THE
AMOUNT IN CONTROVERSY IS $5,000,000 OR LESS SHALL BE DECIDED BY A
SINGLE ARBITRATOR WHO SHALL NOT RENDER AN AWARD OF GREATER THAN
$5,000,000 (INCLUDING DAMAGES, COSTS, FEES AND EXPENSES). BY
SUBMISSION TO A SINGLE ARBITRATOR, EACH PARTY EXPRESSLY WAIVES ANY
RIGHT OR CLAIM TO RECOVER MORE THAN $5,000,000. ANY DISPUTE IN WHICH
THE AMOUNT IN
- 49 -
<PAGE> 55
CONTROVERSY EXCEEDS $5,000,000 SHALL BE DECIDED BY MAJORITY VOTE OF A
PANEL OF THREE ARBITRATORS; PROVIDED HOWEVER, THAT ALL THREE
ARBITRATORS MUST ACTIVELY PARTICIPATE IN ALL HEARINGS AND
DELIBERATIONS.
(e) JUDICIAL REVIEW. NOTWITHSTANDING ANYTHING HEREIN TO THE
CONTRARY, IN ANY ARBITRATION IN WHICH THE AMOUNT IN CONTROVERSY
EXCEEDS $25,000,000, THE ARBITRATORS SHALL BE REQUIRED TO MAKE
SPECIFIC, WRITTEN FINDINGS OF FACT AND CONCLUSIONS OF LAW. IN SUCH
ARBITRATIONS (I) THE ARBITRATORS SHALL NOT HAVE THE POWER TO MAKE ANY
AWARD WHICH IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE OR WHICH IS BASED
ON LEGAL ERROR, (II) AN AWARD SHALL NOT BE BINDING UPON THE PARTIES
UNLESS THE FINDINGS OF FACT ARE SUPPORTED BY SUBSTANTIAL EVIDENCE AND
THE CONCLUSIONS OF LAW ARE NOT ERRONEOUS UNDER THE SUBSTANTIVE LAW OF
THE STATE OF TEXAS, AND (III) THE PARTIES SHALL HAVE IN ADDITION TO
THE GROUNDS REFERRED TO IN THE FEDERAL ARBITRATION ACT FOR VACATING,
MODIFYING OR CORRECTING AN AWARD THE RIGHT TO JUDICIAL REVIEW OF (A)
WHETHER THE FINDINGS OF FACT RENDERED BY THE ARBITRATORS ARE SUPPORTED
BY SUBSTANTIAL EVIDENCE, AND (B) WHETHER THE CONCLUSIONS OF LAW ARE
ERRONEOUS UNDER THE SUBSTANTIVE LAW OF THE STATE OF TEXAS. JUDGMENT
CONFIRMING AN AWARD IN SUCH A PROCEEDING MAY BE ENTERED ONLY IF A
COURT DETERMINES THE AWARD IS SUPPORTED BY SUBSTANTIAL EVIDENCE AND
NOT BASED ON LEGAL ERROR UNDER THE SUBSTANTIVE LAW OF THE STATE OF
TEXAS.
(f) MISCELLANEOUS. TO THE MAXIMUM EXTENT PRACTICABLE, THE
AAA, THE ARBITRATORS AND THE PARTIES SHALL TAKE ALL ACTION REQUIRED TO
CONCLUDE ANY ARBITRATION PROCEEDING WITHIN 180 DAYS OF THE FILING OF
THE DISPUTE WITH THE AAA. NO ARBITRATOR OR OTHER PARTY TO AN
ARBITRATION PROCEEDING MAY DISCLOSE THE EXISTENCE, CONTENT OR RESULTS
THEREOF, EXCEPT FOR DISCLOSURES OF INFORMATION BY A PARTY REQUIRED IN
THE ORDINARY COURSE OF ITS BUSINESS, BY APPLICABLE LAW OR REGULATION,
OR TO THE EXTENT NECESSARY TO EXERCISE ANY JUDICIAL REVIEW RIGHTS SET
FORTH HEREIN. IF MORE THAN ONE AGREEMENT FOR ARBITRATION BY OR BETWEEN
THE PARTIES POTENTIALLY APPLIES TO A DISPUTE, THE ARBITRATION
PROVISION MOST DIRECTLY RELATED TO THE LOAN DOCUMENTS OR THE SUBJECT
MATTER OF THE DISPUTE SHALL CONTROL. THIS ARBITRATION PROVISION SHALL
SURVIVE TERMINATION, AMENDMENT OR EXPIRATION OF ANY OF THE LOAN
DOCUMENTS OR ANY RELATIONSHIP BETWEEN THE PARTIES.
Section 13.22 NO ORAL AGREEMENTS. THIS AGREEMENT, THE NOTES, AND
THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN PRESENT THE FINAL
- 50 -
<PAGE> 56
AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
[Balance of this page intentionally left blank.]
- 51 -
<PAGE> 57
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWER:
FIRST WAVE MARINE, INC.
By: /s/ Samuel F. Eakin
-------------------------
Samuel F. Eakin
Chief Executive Officer
Address for Notices:
4000 S. Sherwood Forest Boulevard
Suite 603
Baton Rouge, Louisiana 70816
Attention: Chief Financial Officer
Fax No.: (504) 292-8801
Telephone No.: (504) 292-8800
AGENT:
SOUTHWEST BANK OF TEXAS, N.A.
By: /s/ Carmen A. Dunmire
--------------------------
Carmen A. Dunmire
Vice President
Address for Notices:
5 Post Oak Park
4400 Post Oak Parkway
Houston, Texas 77027
Attention: Carmen A. Dunmire
Fax No.: 713/621-2031
Telephone No.: 713/235-8881
- 52 -
<PAGE> 58
BANKS:
SOUTHWEST BANK OF TEXAS, N.A.
Commitment: $10,000,000 By: /s/ Carmen A. Dunmire
-------------------------
Carmen A. Dunmire
Vice President
Address for Notices:
5 Post Oak Park
4400 Post Oak Parkway
Houston, Texas 77027
Attention: Carmen A. Dunmire
Fax No.: 713/621-2031
Telephone No.: 713/235-8881
- 53 -
<PAGE> 59
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Section
------- ---------------------- -------
<S> <C> <C>
"A" Form of Note 2.2, 6.1(f)
"B-1" Advance Request Form 3.1
"B-2" Letter of Credit Request Form 2.6
"C" Guaranty 6.1(i)
"D-1" Borrower Security Agreement 5.1(a), 6.1(g)
"D-2" Guarantor Security Agreement 5.1(c), 6.1(h)
"E" Assignment and Acceptance 13.8
"F" Borrowing Base Certificate 6.1(r)
"G" Contribution and Indemnification Agreement 6.1(j)
</TABLE>
INDEX TO SCHEDULES
<TABLE>
<CAPTION>
Schedule Description of Schedule
-------- -----------------------
<S> <C>
7.5 Existing Litigation
7.9 Existing Debt
7.14 List of Subsidiaries
7.20 Environmental Matters
9.2 Existing Liens
</TABLE>
<PAGE> 60
SCHEDULE 7.5
Existing Litigation
<PAGE> 61
SCHEDULE 7.9
Existing Debt
<TABLE>
<CAPTION>
Payee Amount Maturity Date
- ----- ------ -------------
<S> <C>
SFA Industries, Inc. $[50,000]
</TABLE>
<PAGE> 62
SCHEDULE 7.14
List of Subsidiaries
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF JURISDICTION OF VOTING STOCK OWNED
SUBSIDIARY INCORPORATION BY THE BORROWER
================================================================================
<S> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
</TABLE>
<PAGE> 63
SCHEDULE 7.20
Environmental Matters
<PAGE> 64
SCHEDULE 9.2
Existing Liens
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 17,371
<SECURITIES> 13,028
<RECEIVABLES> 19,953
<ALLOWANCES> 213
<INVENTORY> 1,121
<CURRENT-ASSETS> 53,567
<PP&E> 65,206
<DEPRECIATION> 3,630
<TOTAL-ASSETS> 136,678
<CURRENT-LIABILITIES> 21,944
<BONDS> 0
0
0
<COMMON> 118
<OTHER-SE> 7,987
<TOTAL-LIABILITY-AND-EQUITY> 136,678
<SALES> 37,147
<TOTAL-REVENUES> 37,147
<CGS> 23,931
<TOTAL-COSTS> 23,931
<OTHER-EXPENSES> 7,439
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,064
<INCOME-PRETAX> 1,713
<INCOME-TAX> 729
<INCOME-CONTINUING> 984
<DISCONTINUED> 0
<EXTRAORDINARY> 933
<CHANGES> 0
<NET-INCOME> 51
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
