SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the quarterly period ended September 30, 1997
Commission File Number: 0-28732
HVIDE MARINE INCORPORATED
State of Incorporation: Florida I.R.S. Employer I.D. 65-0524593
2200 Eller Drive
P.O. Box 13038
Ft. Lauderdale, Florida 33316
(954) 524-4200
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 twelve months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
There were 12,097,518 and 3,181,936 shares of Class A Common Stock, par value
$0.001 per share, and Class B Common Stock, par value $0.001 per share,
respectively, outstanding at November 3, 1997.
<PAGE>
HVIDE MARINE INCORPORATED
Quarter ended September 30, 1997
Index
- --------------------------------------------------------------------------------
Page
Part I. Financial information
Item 1. Financial Statements............................................1
Condensed Consolidated Balance Sheets as of
December 31, 1996 and September 30, 1997 (unaudited)................2
Condensed Consolidated Income Statements
for the three and nine months ended September 30, 1996 and
1997 (unaudited)....................................................4
Condensed Consolidated Statements of Cash Flows for the
nine months ended September 30, 1996 and 1997 (unaudited)...........5
Notes to Condensed Consolidated Financial Statements................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations................12
Part II. Other information
Item 6. Exhibits and Reports on Form 8-K................................22
Signature................................................................23
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The financial information included herein is unaudited. Certain
information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission (the "Commission"), although the
Company believes that the disclosures made are adequate to make the information
presented not misleading. These financial statements should be read in
conjunction with the financial statements and related notes contained in the
Company's 1996 consolidated financial statements previously filed with the
Commission. Other than as indicated herein, there have been no significant
changes from the financial data published in said report. In the opinion of
management, such unaudited information reflects all adjustments, consisting only
of normal recurring accruals, necessary for a fair presentation of the unaudited
information shown.
Results for the interim period presented herein are not necessarily
indicative of results expected for the full year.
1
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
<TABLE>
<CAPTION>
December 31 September 30
1996 1997
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................................................. $ 9,617 $ 7,790
Accounts receivable:
Trade, net............................................................... 16,049 30,617
Insurance claims and other............................................... 1,717 1,740
Inventory, spares and supplies............................................. 5,517 7,928
Prepaid expenses........................................................... 1,253 2,967
Deferred costs, net........................................................ 4,173 6,283
Total current assets................................................... 38,326 57,325
Property:
Construction in progress................................................... 8,041 36,877
Vessels and improvements................................................... 229,776 357,460
Less accumulated depreciation.......................................... (27,480) (39,390)
Furniture and equipment.................................................... 4,502 5,593
Less accumulated depreciation.......................................... (1,409) (1,601)
Net property........................................................ 213,430 358,939
Other assets:
Deferred costs, net........................................................ 4,645 5,806
Due from affiliates........................................................ 49 439
Investment in affiliates................................................... 1,291 1,537
Goodwill, net.............................................................. 8,612 8,233
Deposits and other......................................................... 7,120 988
Total other assets..................................................... 21,717 17,003
Total............................................................... $ 273,473 $ 433,267
</TABLE>
See accompanying notes.
2
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
<TABLE>
<CAPTION>
December 31 September 30
1996 1997
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
Current maturities of long-term debt......................................... $ 24,375 $ 6,847
Current obligations under capital leases..................................... 1,443 1,534
Accounts payable............................................................. 6,278 11,214
Deferred income.............................................................. 2,001 1,784
Accrued liabilities and other................................................ 12,933 11,584
Total current liabilities............................................. 47,030 32,963
Long-term liabilities:
Long-term debt............................................................... 108,154 47,164
Notes payable to related parties............................................. 178 --
Obligations under capital leases............................................. 7,492 6,312
Deferred income taxes........................................................ 6,385 13,795
Other ................................................................... 2,245 2,161
Total long-term liabilities............................................... 124,454 69,432
Total liabilities......................................................... 171,484 102,395
Company-obligated mandatorily redeemable preferred
securities issued by a consolidated subsidiary............................... -- 115,000
Minority partners' equity in subsidiaries....................................... 898 818
Commitments and contingencies
Stockholders' equity:
Preferred Stock, $1.00 par value authorized 10,000,000 shares,
issued and outstanding, none.............................................. -- --
Class A Common Stock--$.001 par value, authorized 100,000,000
shares, issued and outstanding, 7,647,791 and 12,095,568 8 12
Class B Common Stock--$.001 par value, authorized 5,000,000
shares, issued and outstanding, 3,419,577 and 3,181,936 3 3
Additional paid-in capital................................................... 97,153 195,398
Retained earnings............................................................ 3,927 19,641
Total stockholders' equity................................................ 101,091 215,054
Total.............................................................. $ 273,473 $ 433,267
</TABLE>
See accompanying notes.
3
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Income Statements
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1996 1997 1996 1997
(In thousands, except share and per share data)
<S> <C> <C> <C> <C>
Revenues.............................................. $ 30,379 $ 56,906 $ 72,130 $ 142,853
Operating Expenses:
Crew payroll and benefits.......................... 7,830 13,015 19,968 34,109
Charter hire and bond guarantee fee................ 1,161 3,198 3,386 7,087
Repairs and maintenance............................ 2,276 4,988 5,848 11,357
Insurance.......................................... 1,925 2,313 4,957 6,555
Consumables........................................ 1,704 4,078 4,196 9,210
Other.............................................. 1,662 3,225 3,734 8,816
Total operating expenses......................... 16,558 30,817 42,089 77,134
Selling, general and administrative
expenses......................................... 4,036 6,516 11,049 17,568
Depreciation and amortization......................... 2,688 5,169 6,115 13,021
Income from operations............................. 7,097 14,404 12,877 35,130
Net interest expense............................... 2,911 383 8,751 4,529
Other income (expense):
Minority interest and equity in earnings
of subsidiaries.................................. 353 (1,801) 721 (1,807)
Other.............................................. (572) (134) (522) (286)
Total other income (expense)..................... (219) (1,935) 199 (2,093)
Income before provision for
income taxes and extraordinary item 3,967 12,086 4,325 28,508
Provision for income taxes............................ 1,484 4,586 1,616 10,662
Income before extraordinary item...................... 2,483 7,500 2,709 17,846
Loss on early extinguishment of debt, net
of applicable income taxes of $1,405 and
$1,252, respectively............................... 8,016 -- 8,016 2,132
Net (loss) income................................. $ (5,533) $ 7,500 $ (5,307) $ 15,714
Earnings per common and common equivalent share:
Income applicable to common shares
before extraordinary item.......................... $ 0.36 $ 0.48 $ 0.68 $ 1.19
Loss on early extinguishment of debt.................. (1.16) -- (2.00) (0.14)
Net (loss) income applicable to common shares..... $ (0.80) $ 0.48 $ (1.32) $ 1.05
Earnings per common share assuming full dilution:
Income applicable to common shares
before extraordinary item.......................... $ 0.36 $ 0.44 $ 0.68 $ 1.16
Loss on early extinguishment of debt.................. (1.16) -- (2.00) (0.13)
Net (loss) income applicable to common shares $ (0.80 ) $ 0.44 $ (1.32) $ 1.03
Weighted average number of common
shares and common share equivalents
outstanding........................................ 6,934,648 15,618,818 4,012,148 14,973,772
Weighted average number of common
shares outstanding assuming full dilution.......... 6,934,648 19,702,340 4,012,148 16,476,346
</TABLE>
See accompanying notes.
4
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
1996 1997
(In thousands)
<S> <C> <C>
Operating Activities:
Net (loss) income................................................................. $ (5,307) $ 15,714
Adjustments to reconcile net (loss) income to net cash provided by
operating activities:
Loss on early extinguishment of debt, net...................................... 8,016 2,132
Depreciation and amortization.................................................. 6,115 13,021
Provision for bad debts........................................................ 144 496
Loss on disposal of property................................................... -- 63
Amortization of drydocking costs............................................... 1,937 3,871
Amortization of discount on long-term debt..................................... 148 5
(Benefit from) provision for deferred taxes.................................... (1,616) 8,662
Minority partners' equity in losses of subsidiaries, net....................... (651) (80)
Undistributed losses of affiliates, net........................................ (87) (64)
Other non-cash items........................................................... -- 464
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable............................................................ (2,459) (15,087)
Due from affiliates............................................................ (23) (389)
Current and other assets....................................................... 3,219 (8,224)
Accounts payable and other liabilities......................................... 1,602 (2,447)
Net cash provided by operating activities.................................... 11,038 18,137
Investing Activities:
Purchase of property.............................................................. (3,671) (18,688)
Construction in progress.......................................................... (4,064) (23,872)
Proceeds from disposal of property................................................ 21 1,633
Capital contribution to affiliates................................................ (602) (182)
Acquisitions, net of cash acquired of $1,722 in 1996 and $2,819 deposits
utilized in 1997................................................................ (54,136) (96,648)
Net cash used in investing activities........................................ (62,452) (137,757)
Financing Activities:
Net repayments of short-term borrowings........................................... (1,222) (10,647)
Proceeds from long-term debt...................................................... 21,700 59,210
Principal payments of long-term debt.............................................. (41,243) (133,738)
Payment of debt and other financing costs......................................... (628) (984)
Payment of obligations under capital leases....................................... (972) (1,090)
Payment of notes payable to related parties....................................... (370) (178)
Proceeds from issuance of common stock, net of offering costs..................... 76,697 94,111
Proceeds from issuance of preferred securities, net of offering costs............. -- 111,109
Net cash provided by financing activities...................................... 53,962 117,793
Increase (decrease) in cash and cash equivalents..................................... 2,548 (1,827)
Cash and cash equivalents at beginning of period..................................... 3,050 9,617
Cash and cash equivalents at end of period........................................... $ 5,598 $ 7,790
Supplemental schedule of noncash investing and financing activities:
Capital leases assumed for the acquisition of vessels............................. $ 5,410 $ --
Capital stock issued for the acquisition of vessels............................... $ -- $ 3,650
</TABLE>
See accompanying notes.
5
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
(Unaudited)
1. Offerings of Equity Securities
On August 14, 1996, the Company completed the initial public offering
(the "IPO") of 7,000,000 shares of its Class A Common Stock at $12.00 per share.
The net proceeds to the Company were approximately $74,821,000, after deducting
underwriting commissions and other offering expenses. A portion of the net
proceeds was used primarily to repay certain indebtedness that was outstanding
prior to the IPO and for the cash portion of the purchase price of certain
acquisitions consummated subsequent to the IPO. On September 12, 1996, the
underwriters' over-allotment option was exercised, in part, pursuant to which an
additional 159,000 shares were issued. The net proceeds of approximately
$1,774,000 were used by the Company to repay certain outstanding indebtedness.
In addition, on August 14, 1996, the Company issued 182,000 and 1,188,000 shares
of Class A and Class B Common Stock, respectively, in payment of certain
outstanding indebtedness.
On February 5, 1997, the Company completed a second public offering
(the "Second Offering") of 4,000,000 shares of its Class A Common Stock at
$24.875 per share. The net proceeds to the Company were $94,300,000, after
deducting underwriting commissions. Of such amount, approximately $36.2 million
was used to repay certain indebtedness. Of the balance of approximately $58.1
million, $5.5 million was used to fund vessel acquisitions, $20.9 million was
used to fund the remainder of the purchase price of four supply boats and one
crew boat acquired in the second quarter of 1997, $1.8 million was designated to
fund the purchase of one crew boat in the third quarter of 1997, $6.9 million
was designated to fund the refurbishment and lengthening of two supply boats
expected to be put into service during the fourth quarter of 1997, and the
remaining $23.0 million was available for general corporate purposes and to fund
a portion of the costs of the vessels to be constructed.
On June 24, 1997, the Company completed a private offering (the
"Private Offering") of 2,300,000, 6 1/2% Trust Convertible Preferred Securities
(the "Preferred Securities"). The Preferred Securities were issued by Hvide
Capital Trust (the "Trust"), a 100%-owned subsidiary of the Company. The Trust
exists for the sole purpose of issuing the Preferred Securities and investing
the proceeds from the issuance thereof in 6 1/2% Convertible Subordinated
Debentures due June 15, 2012 (the "Debentures") issued by the Company. The net
proceeds to the Company were $111,550,000 after deducting underwriting
commissions. Of such amount, approximately $94.2 million was used to repay
principal and interest outstanding under the Company's credit agreement (the
"Credit Facility"), and $6.0 million was used to repay other indebtedness. The
remaining $11.4 million was available for general corporate purposes.
Holders of the Preferred Securities are entitled to receive
preferential cumulative cash distribution from the Trust at an annual rate of 6
1/2% of the liquidation preference of $50 per Preferred Security accruing from
the date of the original issuance of the Preferred Securities and payable
quarterly in arrears on January 1, April 1, July 1 and October 1 of each year,
commencing on October 1, 1997. The distribution rate and the distribution and
other payment dates for the Preferred Securities correspond to the interest rate
and interest and other payment dates for the Debentures, which are the sole
assets of the Trust.
6
<PAGE>
The Preferred Securities are convertible, beginning September 25, 1997
and prior to the maturity date of the Debentures or, in the case of Preferred
Securities called for redemption, prior to the close of business on the business
day prior to the redemption date, at the option of the holder into shares of
Hvide Class A Common Stock at the rate of 1.7544 shares of Hvide Class A Common
Stock for each Preferred Security (equivalent to a conversion price of $28.50
per share of Hvide Class A Common Stock), subject to adjustment in certain
circumstances.
2. Debt
Long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31 September 30
1996 1997
(Unaudited)
<S> <C> <C>
Borrowings outstanding under lines of credit......................... $ 10,647 $ 17,000
Term Loan............................................................ 58,500 --
Acquisition Line..................................................... 9,700 --
Senior Note.......................................................... 9,153 --
Title XI Debt........................................................ 32,243 28,573
Notes payable........................................................ 12,286 8,438
132,529 54,011
Less: Current maturities............................................ (24,375) (6,847)
$ 108,154 $ 47,164
</TABLE>
The Company currently has a credit agreement (the "Credit Agreement")
that provides for a $175 million revolving line of credit through September 30,
1999 at which time availability decreases by $6 million per quarter until
September 30, 2002 (the "Maturity Date"). The Company's outstanding indebtedness
under the Credit Facility was $17 million at September 30, 1997.
Borrowings under the Credit Agreement bear interest based on one of two
calculations set forth in the Credit Agreement, at the Company's option, plus a
margin based on the Company's compliance with certain financial ratios. One
interest rate calculation is tied to the Eurodollar (the "Eurodollar Rate") and
the other calculation is tied to the higher of the base rate of the
administrative agent named in the Credit Agreement or the Federal Funds
Effective Rate (the "Base Rate"). The Credit Agreement allows the Company to
convert its revolving credit loans from Eurodollar Rate loans to Base Rate
loans, and vice versa, from time to time. Such borrowings were accruing interest
at approximately 6.2% at September 30, 1997. On the Maturity Date, all amounts
outstanding under the revolving line of credit, together with any and all
accrued and unpaid interest, will become due and payable. Prior to the Maturity
Date, the Company can repay any outstanding amount, in whole or in part, without
penalty or premium.
Covenants under the Credit Agreement, among other things, (i) require
the Company to meet certain financial tests, including tests requiring the
maintenance of minimum leverage ratios, debt service coverage ratios, and
indebtedness to tangible net worth ratios; (ii) limit the creation or incurrence
of certain liens; (iii) limit the incurrence of additional indebtedness; (iv)
restrict the Company from making certain investments; (v) restrict certain
payments, including dividends, with respect to shares of any class of capital
stock; (vi) restrict modification of the terms of the Preferred Securities, and
in certain
7
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
circumstances the repayment, redemption, or repurchase of the Preferred
Securities; and (vii) limit certain corporate acts of the Company, such as
making certain dispositions of assets, and entering into certain types of
business transactions, including certain mergers and acquisitions.
On August 30, 1997, the Company secured a $5.6 million stand-by letter
of credit with one of its banks for a period of one year which, unless
terminated, renews automatically for additional one year periods.
The Company's Credit Facility, which was replaced by the Credit
Agreement dated September 30, 1997, was amended on February 3, 1997, provided
for a revolving working capital credit line of $20,000,000 through January 15,
2002 (the "Revolving Line") and a stand-by letter of credit of $5,600,000.
Borrowings outstanding under the Revolving Line totaled $8,000,000 at December
31, 1996.
The Credit Facility also provided for a term loan (the "Term Loan") of
up to $56,750,000 and a $50,000,000 acquisition line of credit (the "Acquisition
Line") to fund the cash portion of acquisitions. Borrowings outstanding under
the Term Loan and Acquisition Line were repaid with a portion of the proceeds
from the Private Offering on June 27, 1997 and the Second Offering on February
5, 1997, respectively.
On September 30, 1994, and as amended on May 24, 1995, the Company
issued a $25,000,000 senior subordinated note (the "Senior Note"). The Company
received proceeds of approximately $23,072,000, net of discount of $1,928,000
which was being amortized as interest expense over the term of the Senior Note.
On August 14, 1996 and September 12, 1996, the Company repaid $13,490,000, and
$1,700,000, respectively, of the principal balance of the Senior Note with a
portion of the proceeds from the IPO and the exercise of the underwriters'
related over-allotment option. The remaining balance of $9,810,000, including
interest, was repaid with a portion of the proceeds of the Second Offering on
February 5, 1997.
On August 14, 1996, the Company assumed $34,650,000 of Title XI Debt in
connection with the acquisitions of certain vessels. The Title XI Debt is
collateralized by first preferred mortgages on certain vessels and bears
interest at rates ranging from 5.4% to 10.1%. The debt is due in semi-annual
principal and interest payments through December 1, 2006. Under the terms of the
Title XI Debt, the Company is required to maintain a minimum level of working
capital, as defined, and comply with certain other financial covenants.
In connection with redemption of the outstanding preferred stock of the
predecessor company in 1994, the Company issued notes payable totaling
approximately $3,561,000 to the former stockholder. On August 14, 1996,
approximately $1,548,000 was repaid with a portion of the proceeds from the IPO.
The remaining balance of approximately $2,013,000 was repaid with a portion of
the proceeds from the Second Offering on February 5, 1997.
In connection with the acquisition of the outstanding common stock of
its previously unconsolidated 50%-owned affiliate, Ocean Specialty Tankers
Corporation ("OSTC"), on August 14,
8
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1996, the Company assumed OSTC's obligations under a $4,000,000 revolving line
of credit secured by the outstanding accounts receivables generated by three
chemical tankers. The revolving line of credit bears interest monthly at LIBOR +
1.5% (7.3% at December 31, 1996). At December 31, 1996 and September 30, 1997,
$2,647,000 and $0 was outstanding under the line of credit.
The Company made interest payments of approximately $12,953,011 and
$6,977,363 for the nine months ended September 30, 1996 and 1997, respectively.
3. Income Taxes
For the nine months ended September 30, 1996 and 1997, the provision
for income taxes was computed using an estimated annual effective tax rate of
37.0% and 37.4%, respectively, adjusted principally for depreciation on vessels
built with capital construction funds.
4. Acquisitions
In January 1997, the Company purchased a supply boat and two tug boats
for cash of approximately $4.7 million and $600,000, respectively.
In February 1997, the Company purchased three crew boats for cash of
approximately $5.6 million.
In February 1997, the Company purchased the outstanding common stock of
an entity for cash of approximately $1.5 million. Pursuant to the purchase
agreement, the Company assumed the entity's commitments to fund the remaining
construction costs of three crew boats, two which are currently under
construction, and one which was completed in June 1997 for an additional cost of
approximately $1.0 million. The aggregate remaining construction cost of the two
vessels under construction is approximately $4.8 million. The fair value of net
assets acquired approximates the purchase price paid by the Company.
In April 1997, the Company purchased two supply boats for cash of
approximately $10.5 million.
In May 1997, the Company acquired 35 offshore energy support vessels
for consideration valued at $58.7 million, consisting of cash of $49.0 million,
a note payable in the amount of $6.0 million, and 141,760 shares of Class A
Common Stock valued by the Company at $3.7 million. Of the cash portion of the
purchase price, $10.5 million was funded from the Company's available cash and
$38.5 million was drawn under the Credit Facility. The $6.0 million note payable
and the $38.5 million of debt incurred to fund the acquisition were repaid with
the proceeds of the Private Offering.
In May 1997, the Company purchased a supply boat for cash of
approximately $2.8 million.
In June 1997, the Company purchased two supply boats and a crew boat
for cash of approximately $13.2 million.
9
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
In July 1997, the Company purchased four double skin barges for cash of
approximately $2.4 million.
In August 1997, the Company purchased one anchor-handling vessel and a
crew boat for cash of approximately $1.7 million and $1.8 million,
respectively.
In September 1997, the Company purchased an anchor-handling vessel for
cash of approximately $5.4 million.
5. Extraordinary Item
On August 14, 1996, the Company paid cash of $26,307,000; issued 55,500
shares of Class A common stock and 1,188,502 shares of Class B common stock to
repay $25,000,000 and $15,190,000 of the Junior and Senior Notes, respectively.
Accordingly, the Company recorded a loss on extinguishment of $8,108,000 for the
write off of deferred financing costs and related debt discounts, net of a tax
benefit of $1,474,000.
In February and June 1997, the Company repaid $33,220,000 and
$93,500,000, respectively, of its outstanding debt and amended its Credit
Facility. As a result, the Company recorded extraordinary losses of $1,754,000
and $378,000, respectively, for the write-off of deferred financing costs
associated with the early extinguishment of debt, net of income tax benefits of
$1,030,000 and $222,000 respectively.
6. Subsequent Events
In October 1997, the Company purchased the outstanding common stock of
an entity for cash of approximately $36.5 million and the assumption of
approximately $24.5 million of long-term debt and other liabilities. Cost in
excess of net assets acquired was approximately $12.5 million which will be
amortized over 20 years.
In October 1997, the Company entered into a joint venture agreement
whereby the venture will design, construct and operate a construction/anchor
handling tug supply vessel. Pursuant to the terms of the venture agreement, the
Company is required to fund $20.8 million of the estimated $37.0 of the
construction costs.
In October 1997, the Company purchased 30 offshore energy support
vessels and a repair facility for cash of approximately $36.0 million.
7. Prospective Accounting Changes
In February 1997, the FASB issued SFAS No. 128 "Earnings Per Share" and
SFAS No. 129 "Disclosure of Information about Capital Structure," which are
effective for fiscal years beginning after December 15, 1997. SFAS No. 128
simplifies the current required calculation of earnings per share ("EPS") under
APB No. 15, "Earnings per Share," by replacing the existing calculation of
primary EPS
10
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
with a basic EPS calculation. It requires a dual presentation, for complex
capital structures, of basic and diluted EPS on the face of the income statement
and requires a reconciliation of basic EPS factors to diluted EPS factors. SFAS
No. 129 requires disclosing information about an entity's capital structure. The
Company plans to adopt SFAS No. 128 and SFAS No. 129 in 1998 and expects no
material impact to the Company's EPS calculation or disclosure information.
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income," which is effective for fiscal years beginning after December 15, 1997.
This Statement established standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The new rule requires that the Company (a) classify items
of other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of the
balance sheet. The Company plans to adopt SFAS No. 130 in 1998 and expects no
material impact to the Company's financial statement presentation.
Also in June 1997, the FASB issued SFAS No. 131 "Disclosure about
Segments of an Enterprise and Related Information," which is effective for
fiscal years beginning after December 15, 1997. This Statement supersedes SFAS
No. 14, "Financial Reporting for Segments of a Business Enterprise," and amends
SFAS No. 94, "Consolidation of all Majority-Owned Subsidiaries." This Statement
requires annual financial statements to disclose information about products and
services, geographic areas and major customers based on a management approach,
along with interim reports. The management approach requires disclosing
financial and descriptive information about an enterprise's reportable operating
segments based on reporting information the way management organizes the
segments for making business decisions and assessing performance. It also
eliminates the requirement to disclose additional information about subsidiaries
that were not consolidated. This new management approach may result in more
information being disclosed than presently practiced and require new interim
information not previously presented. The Company plans to adopt SFAS No. 131 in
1998 with impact only to the Company's disclosure information and not its
results of operation.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This discussion and analysis of the Company's financial condition and
historical results of operations should be read in conjunction with the
condensed consolidated financial statements and the related notes thereto
included elsewhere in this report and the Company's 1996 consolidated financial
statements and the related notes thereto previously filed with the Commission.
Recent Acquisitions
The Company's results of operations have been and will be significantly
affected by a series of acquisitions, aggregating 82 vessels, during 1996 and
the first nine months of 1997 as summarized in the following table.
<TABLE>
<CAPTION>
Number of Assets Aggregate
Period Transactions Acquired Investment
<S> <C> <C> <C> <C>
Offshore Energy Support 1996 7 12 supply boats $46.6 million(1)
11 crew boats(2)
1997 11 10 supply boats $105.9 million
20 anchor-handling vessels
13 crew boats
2 utility boats
4 other vessels
Offshore and Harbor Towing 1996 1 1 offshore tug $3.4 million
1997 1 2 harbor tugs $0.6 million
Chemical Transportation 1996 1 3 chemical carriers $64.7 million
Energy Transportation.......... 1997 1 4 double-hull barges $2.4 million
</TABLE>
(1) Includes one vessel that is currently being upgraded, lengthened, and
refurbished and is expected to enter service during the fourth quarter
of 1997. Aggregate investment includes the estimated cost of such
upgrading, lengthening, and refurbishment.
(2) Includes nine vessels acquired under capital lease obligations.
12
<PAGE>
Area of Operations Overview
The financial information presented below represents historical results
by major areas of operations.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
1996 1997 1996 1997
<S> <C> <C> <C> <C>
Revenues:
Marine Support Services:
Offshore Energy Support........................................... $ 11,981 $ 31,791 $ 28,226 $ 72,727
Offshore & Harbor Towing.......................................... 3,351 4,507 10,234 12,992
Marine Support Services Revenues................................ 15,332 36,298 38,460 85,719
Marine Transportation Services:
Chemical Transportation........................................... 9,968 16,110 19,230 44,053
Petroleum Product Transportation.................................. 5,079 4,497 14,440 13,081
Marine Transportation Services.................................. 15,047 20,607 33,670 57,134
Total Revenues........................................................ 30,379 56,905 72,130 142,853
Operating Costs:
Marine Support Services:
Offshore Energy Support........................................... 5,750 13,648 15,371 30,622
Offshore & Harbor Towing.......................................... 1,712 2,993 5,417 8,461
Marine Support Services Operating Costs......................... 7,462 16,641 20,788 39,083
Marine Transportation Services:
Chemical Transportation........................................... 5,997 11,075 11,693 29,324
Petroleum Product Transportation.................................. 3,099 3,100 9,608 8,727
Marine Transportation Operating Costs........................... 9,096 14,175 21,301 38,051
Total Operating Costs................................................. 16,558 30,816 42,089 77,134
Direct Overhead Expense:
Marine Support Services:
Offshore Energy Support........................................... 659 1,793 1,859 3,792
Offshore & Harbor Towing.......................................... 337 466 922 1,282
Marine Support Services Direct Overhead......................... 996 2,259 2,851 5,074
Marine Transportation Services:
Chemical Transportation........................................... 792 993 1,887 3,331
Petroleum Product Transportation.................................. 233 290 684 818
Marine Transportation Direct Overhead........................... 1,025 1,283 2,571 4,149
Total Direct Overhead................................................. 2,021 3,542 5,422 9,223
Fleet Operating EBITDA (1)
Marine Support Services:
Offshore Energy Support........................................... 5,572 16,350 10,996 38,313
Offshore & Harbor Towing.......................................... 1,302 1,048 3,825 3,249
Marine Support Services Fleet EBITDA (1)........................ 6,874 17,398 14,821 41,562
Marine Transportation Services:
Chemical Transportation........................................... 3,179 4,042 5,650 11,398
Petroleum Product Transportation.................................. 1,747 1,107 4,148 3,536
Marine Transportation Fleet EBITDA (1).......................... 4,926 5,149 9,798 14,934
Total Fleet EBITDA (1)................................................ 11,800 22,547 24,619 56,496
Corporate Overhead Expense............................................ 2,015 2,974 5,627 8,345
EBITDA (1)............................................................ 9,785 19,573 18,992 48,151
Depreciation and Amortization Expense................................. 2,688 5,169 6,115 13,021
Income from Operations................................................ $ 7,097 $ 14,404 $ 12,877 $ 35,130
</TABLE>
13
<PAGE>
(1) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interest and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. Fleet EBITDA is EBITDA before corporate overhead
expenses. EBITDA and fleet EBITDA are not required by generally accepted
accounting principles, should not be considered as alternatives to net
income as indicators of the Company's operating performance, or as
alternatives to cash flows from operations as a measure of liquidity, and
do not represent funds available for management's use. The Company's
EBITDA may not be comparable to similarly titled measures reported by
other companies.
Revenue Overview
Marine Support Services
Revenue derived from vessels providing marine support services is
attributable to the Company's offshore energy support fleet and its offshore and
harbor towing operations. Revenue derived from the Company's offshore energy
support services is primarily a function of the size of the Company's fleet,
vessel day rates or charter rates, and fleet utilization. Rates and utilization
are primarily a function of offshore drilling production and construction
activities.
The following table sets forth average day rates achieved by the
offshore supply boats and crew boats owned or operated by the Company in the
Gulf of Mexico and their average utilization for the periods indicated.
<TABLE>
<CAPTION>
1996 1997
Q1 Q2 Q3 Q4 Q1 Q2 Q3
<S> <C> <C> <C> <C> <C> <C> <C>
Number of supply boats at end of period 10 11 16 18 19 21 24
Average supply boat day rates(1) $ 3,468 $ 4,095 $ 5,034 $ 5,776 $ 6,483 $ 7,176 $ 7,636
Average supply boat utilization rates(2) 92% 100% 97% 90% 86% 90% 91%
Number of crew boats at end of period(3) 35 35 36 36 39 39 39
Average crew boat day rates(1)(3) $ 1,469 $ 1,466 $ 1,528 $ 1,531 $ 1,782 $ 1,940 $ 2,119
Average crew boat utilization rates(2)(3) 89% 93% 96% 96% 95% 93% 95%
</TABLE>
(1) Average day rates are calculated by dividing total vessel revenue by the
total number of days the vessel worked.
(2) Utilization rates are calculated by dividing the fleet average number of
days worked by 365.
(3) Excludes utility boats.
Marine Transportation Services
Chemical Transportation. Generally, demand for industrial chemical
transportation services coincides with overall economic activity. Since 1989,
revenue derived from chemical transportation operations has been entirely
attributable to the operations of OSTC, a company owned equally by OMI Corp.
("OMI") and the Company until August 1996, when the Company acquired OMI's
interest in OSTC along with three chemical carriers owned by OMI (the "OMI
Chemical Carriers"). Prior to the acquisition, the Company's chemical
transportation revenue consisted of distributions from OSTC attributable to the
Company's two chemical carriers marketed by OSTC based upon a formula that took
into account individual vessel performance characteristics applied to OSTC's
revenue (net of fuel costs, port charges, and overhead). Since the acquisition,
the Company continues to have OSTC market the five chemical carriers and
receives the revenue attributable to all five of the vessels.
14
<PAGE>
Petroleum Product Transportation. Since entering service in 1975, the
product carrier Seabulk Challenger has derived all of its revenue from
successive voyage and time charters to Shell Oil Company. Under the current
charter, fuel and port costs are for the account of the charterer, charter hire
escalates based upon changes in the consumer price index, and charter hire is
suspended while the vessel is unavailable to transport cargo, as when it is
undergoing repairs or regularly scheduled maintenance. The charter extends to
January 2000, with the charterer retaining the right to early termination upon
the payment to the Company of a significant penalty. In the fourth quarter of
1996, the charter rate was renegotiated and reduced by approximately 6% to
reflect the lower current market rate. Revenue from the Company's towboats and
fuel barges has been derived primarily from contracts of affreightment with
Florida Power & Light Co. ("FPL") and Steuart Petroleum Co. that require the
Company to transport fuel as needed by those two customers with the FPL contract
having a guaranteed minimum utilization.
Overview of Operating Expenses and Capital Expenditures
The Company's operating expenses are primarily a function of fleet size
and utilization levels. The most significant expense categories are crew payroll
and benefits, depreciation and amortization, charter hire, maintenance and
repairs, fuel, and insurance.
The crews of the Company's chemical and product carriers are paid on a
time-for-time basis by which they receive paid leave in proportion to time
served aboard a vessel. The crews of certain tugs, towboats, and offshore energy
support vessels are paid only for days worked.
The Company capitalizes expenditures exceeding $5,000 for product and
chemical tankers and $3,000 for all other vessels where the item acquired has a
useful life of three years or greater. Vessel improvements and vessel
maintenance and repair are capitalized only if they also extend the useful life
of the vessel or increase its value. The Company overhauls main engines and key
auxiliary equipment in accordance with a continuous planned maintenance program.
Under applicable regulations, the Company's chemical and product carriers,
offshore service vessels, and its four largest tugs are required to be drydocked
twice in a five-year period for inspection and routine maintenance and repairs.
These vessels are also required to undergo special surveys every five years
involving comprehensive inspection and corrective measures to insure their
structural integrity and proper functioning of their cargo and ballast piping
systems, critical machinery and equipment, and coatings. The Company's fuel
barges, because they are operated in fresh water, are required to be drydocked
only twice in each ten-year period. The Company's harbor tugs and towboats
generally are not required to be drydocked on a specific schedule. During the
three and nine months ended September 30, 1997, the Company drydocked 13 and 32
vessels, respectively, at an aggregate cost (exclusive of lost revenue) of $1.7
and $3.3 million, respectively, compared with six and 18 vessels drydocked at an
aggregate cost of $0.3 and $0.5 million, respectively, for the three and nine
months ended September 30, 1996. In addition to variable expenses associated
with vessel operations, the Company incurs fixed charges to depreciate its
marine assets. The Company calculates depreciation based on a useful life
ranging from 25 years for its steel-hull offshore energy support vessels to 30
years for aluminum-hull vessels, the lesser of any applicable lease term life or
the Oil Pollution Act of 1990 life for its product and chemical carriers, ten
years for its fuel barges, and 40 years for its towboats and tugs.
Charter hire consists primarily of payments made with respect to the
bareboat charters of the Seabulk Challenger and Seabulk Magnachem which were
acquired pursuant to leveraged lease transactions. The Company has entered into
mortgage financing arrangements for one of the chemical
15
<PAGE>
carriers acquired from OMI. The Company also pays charter hire when it charters
harbor tugs to meet requirements in excess of its own tugs' availability. This
typically occurs in Mobile when the Company charters one or two tugs to assist
with the docking or undocking of a particular vessel.
Insurance costs consist primarily of premiums paid for (i) protection
and indemnity insurance for the Company's marine liability risks, which are
insured by a mutual insurance association of which the Company is a member and
through the commercial insurance markets; (ii) hull and machinery insurance and
other maritime-related insurance, which are provided through the commercial
marine insurance markets; and (iii) general liability and other traditional
insurance, which is provided through the commercial insurance markets. Insurance
costs, particularly costs of marine insurance, are directly related to overall
insurance market conditions and industry and individual loss records, which vary
from year to year.
Results of Operations
Three months ended September 30, 1997 compared with the three months ended
September 30, 1996
Revenue. Revenue increased 87% to $56.9 million for the three months
ended September 30, 1997 from $30.4 million for the three months ended September
30, 1996 primarily due to increased revenue in the Company's offshore energy
support and chemical transportation operations.
Revenue from offshore energy operations increased 165% for the three
months ended September 30, 1997 primarily due to acquisitions and higher day
rates for supply and crew boats resulting from increased offshore exploration
and production activity. Utilization of supply boats decreased to 91% for the
1997 period from 97% for the 1996 period due to a program of regularly scheduled
drydocking, and utilization of crew boats decreased to 95% for the 1997 period
from 96% for the 1996 period. During the 1997 period, day rates for supply boats
owned, operated, or managed by the Company increased 52% from the 1996 period,
while day rates for crew boats owned, operated, or managed by the Company
increased 39% from the 1996 period.
Petroleum product transportation revenue decreased 11% to $4.5 million
for the three months ended September 30, 1997 from $5.1 million for the three
months ended September 30, 1996 primarily due to the reduced charter rate on the
Seabulk Challenger.
Chemical transportation revenue increased 62% to $16.1 million for the
three months ended September 30, 1997 from $10.0 million for the three months
ended September 30, 1996 primarily due to the August 1996 acquisition of the OMI
chemical tankers and remaining 50% interest in OSTC.
Revenue from offshore and harbor towing operations increased 34% for
the three months ended September 30, 1997 to $4.5 million compared to $3.4
million for the three months ended September 30, 1996 due to acquisitions and
the redeployment of certain vessels in the offshore towing sector.
Operating Expenses. Operating expenses increased 86% to $30.8 million
for the three months ended September 30, 1997 from $16.6 million for the three
months ended September 30, 1996 primarily due to increases in crew payroll and
benefits, maintenance and repair, and supplies and consumables resulting from
acquisitions and increased business activity. As a percentage of revenue,
operating
16
<PAGE>
expenses decreased to 54% for the three months ended September 30, 1997 from 55%
for the three months ended September 30, 1996.
Overhead Expenses. Overhead expenses increased 61% to $6.5 million for
the three months ended September 30, 1997 from $4.0 million for the three months
ended September 30, 1996 primarily due to increased staffing requirements due to
acquisitions. As a percentage of revenue, overhead expenses decreased to 11% for
the three months ended September 30, 1997 from 13% for the three months ended
September 30, 1996.
Depreciation and Amortization Expense. Depreciation and amortization
expense increased 92% to $5.2 million for the three months ended September 30,
1997 compared with $2.7 million for the three months ended September 30, 1996 as
a result of an increase in fleet size due to acquisitions.
Income from Operations. Income from operations increased 103% to $14.4
million, or 25% of revenue, for the three months ended September 30, 1997 from
$7.1 million, or 23% of revenue, for the three months ended September 30, 1996
as a result of the factors noted above.
Net Interest Expense. Net interest expense decreased 87% to $0.4
million, or 1% of revenue, for the three months ended September 30, 1997 from
$2.9 million, or 10% of revenue, for the three months ended September 30, 1996
primarily as a result of debt retirement.
Net Income (Loss). The Company had net income of $7.5 million for the
three months ended September 30, 1997 as compared to a net loss of $5.5 million
for the three months ended September 30, 1996 primarily as a result of the
factors noted above.
Nine months ended September 30, 1997 compared with the nine months ended
September 30, 1996
Revenue. Revenue increased 98% to $142.9 million for the nine months
ended September 30, 1997 from $72.1 million for the nine months ended September
30, 1996 primarily due to increased revenue in the Company's offshore energy and
chemical transportation operations.
Revenue from offshore energy operations increased 158% for the nine
months ended September 30, 1997 primarily due to acquisitions, greater
utilization of crew boats and higher day rates resulting from increased offshore
exploration and productions activity. Utilization of supply boats decreased to
89% for the 1997 period from 96% for the 1996 period due to a program of
regularly scheduled dry-docking, and utilization of crew boats increased to 94%
for the 1997 period from 93% for the 1996 period. During the 1997 period, day
rates for supply boats owned, operated or managed by the Company increased 64%
from the 1996 period, and day rates for crew boats owned, operated or managed by
the Company increased 31% from the 1996 period.
Petroleum product transportation revenue decreased 9% to $13.0 million
for the nine months ended September 30, 1997 from $14.4 million for the nine
months ended September 30, 1996 primarily due to the reduced charter rate on the
Seabulk Challenger.
Chemical transportation revenue increased 129% to $44.1 million for the
nine months ended September 30, 1997 from $19.2 million for the nine months
ended September 30, 1996, primarily due to the August 1996 acquisition of the
OMI Chemical Carriers and the remaining 50% interest in OSTC.
17
<PAGE>
Revenue from offshore and harbor tug operations increased 27% to $13.0
million for the nine months ended September 30, 1997 from $10.2 million for the
nine months ended September 30, 1996 primarily as a result of acquisitions and
the redeployment of certain vessels in the offshore towing sector.
Operating Expenses. Operating expenses increased 83% to $77.1 million
for the nine months ended September 30, 1997 from $42.1 million for the nine
months ended September 30, 1996 primarily due to increases in crew payroll and
benefits, maintenance and repair, and supplies and consumables resulting from
acquisitions and increased business activity. As a percentage of revenue,
operating expenses decreased to 54% for the nine months ended September 30, 1997
from 58% for the nine months ended September 30, 1996.
Overhead Expenses. Overhead expenses increased 59% to $17.6 million for
the nine months ended September 30, 1997 from $11.0 million for the nine months
ended September 30, 1996, primarily due to increased staffing requirements due
to acquisitions. As a percentage of revenue, overhead expenses decreased to 12%
for the nine months ended September 30, 1997 from 15% for the nine months ended
September 30, 1996.
Depreciation and Amortization Expense. Depreciation and amortization
expense increased 113% to $13.0 million for the nine months ended September 30,
1997 compared with $6.1 million for the nine months ended September 30, 1996 as
a result of an increase in fleet size due to acquisitions.
Income from Operations. Income from operations increased 173% to $35.1
million, or 25% of revenue, for the nine months ended September 30, 1997 from
$12.9 million, or 18% of revenue, for the nine months ended September 30, 1996
as a result of the factors noted above.
Net Interest Expense. Net interest expense decreased 48% to $4.5
million, 3% of revenue, for the nine months ended September 30, 1997 from $8.8
million, or 12% of revenue, for the nine months ended September 30, 1996
primarily as a result of debt retirement.
Net Income (Loss). The Company had net income of $15.7 million for the
nine months ended September 30, 1997 as compared to a net loss of $5.3 million
for the nine months ended September 30, 1996 primarily as a result of the
factors noted above.
Seasonality
The Company has experienced slight seasonality in its overall
operations. The first half of the year is generally not as strong as the second
half due to lower activity in offshore energy support activity and petroleum
product transportation during the months of February, March, and April.
Liquidity and Capital Resources
The Company's capital requirements historically have arisen primarily
from its working capital needs, acquisition of vessels, improvements to vessels,
and debt service requirements. The Company's principal sources of cash have been
borrowings, cash provided by operating activities, proceeds from the August 1996
IPO, proceeds from the Second Offering in February 1997, and proceeds from the
Private Offering in June 1997.
18
<PAGE>
The Company currently has a Credit Agreement that provides for a $175
million revolving line of credit through September 30, 1999 at which time
availability decreases by $6 million per quarter until the Maturity Date. The
Company's outstanding indebtedness under the Credit Facility was $17 million at
September 30, 1997. The Company's outstanding indebtedness under the Credit
Agreement increased to $101.5 million as of November 7, 1997. Proceeds from the
additional borrowings were primarily used to fund the purchase of additional
marine assets.
Borrowings under the Credit Agreement bear interest based on one of two
calculations set forth in the Credit Agreement, at the Company's option, plus a
margin based on the Company's compliance with certain financial ratios. One
interest rate calculation is tied to the Eurodollar Rate and the other
calculation is tied to the higher of the base rate of the administrative agent
named in the Credit Agreement or the Base Rate. The Credit Agreement allows the
Company to convert its revolving credit loans from Eurodollar Rate loans to Base
Rate loans, and vice versa, from time to time. Such borrowings were accruing
interest at approximately 6.2% at September 30, 1997. On the Maturity Date, all
amounts outstanding under the revolving line of credit, together with any and
all accrued and unpaid interest, will become due and payable. Prior to the
Maturity Date, the Company can repay any outstanding amount, in whole or in
part, without penalty or premium.
Covenants under the Credit Agreement, among other things, (i) require
the Company to meet certain financial tests, including tests requiring the
maintenance of minimum leverage ratios, debt service coverage ratios, and
indebtedness to tangible net worth ratios; (ii) limit the creation or incurrence
of certain liens; (iii) limit the incurrence of additional indebtedness; (iv)
restrict the Company from making certain investments; (v) restrict certain
payments, including dividends, with respect to shares of any class of capital
stock; (vi) restrict modification of the terms of the Preferred Securities, and
in certain circumstances the repayment, redemption, or repurchase of the
Preferred Securities; and (vii) limit certain corporate acts of the Company,
such as making certain dispositions of assets, and entering into certain types
of business transactions, including certain mergers and acquisitions.
Events of default under the Credit Facility include, among other
things, (i) failure to pay principal thereunder when due, or to pay interest or
fees within three business days after the date due; (ii) the breach of certain
financial covenants or the inaccuracy of certain representations or warranties
made under the Credit Facility; (iii) any failure to pay amounts due on certain
indebtedness, or defaults that result in or permit the acceleration of such
indebtedness; (iv) certain events of bankruptcy, insolvency, or dissolution; (v)
certain judgments or orders; (vi) an acceleration of the maturity of the
Preferred Securities or in certain circumstances the prepayment, redemption or
repurchase of the Preferred Securities, or any default under the Preferred
Securities; and (vii) a change in control.
On August 30, 1997, the Company secured a $5.6 million stand-by letter
of credit with one of its banks for a period of one year which, unless
terminated, renews automatically for additional one year periods.
The Credit Agreement replaced the Company's Credit Facility, as
amended, provided for a term loan of up to $56.8 million, a $20.0 million
Revolving Line, a $50.0 million Acquisition Line, and a $5.6 million letter of
credit. Borrowings outstanding under the Revolving Line totaled $8.0 million at
December 31, 1996.
In August 1996, the Company completed the IPO, which resulted in net
proceeds to the Company of approximately $76.7 million. Of such net proceeds,
approximately $34.7 million was used to fund
19
<PAGE>
the $35.5 million cash portion of the $97.5 million aggregate purchase price of
three chemical carriers, ten supply boats and one crew boat (the "August 1996
Acquisitions") and approximately $42.0 million was used to repay certain
indebtedness. The balance of the purchase price of the August 1996 Acquisitions
was paid by the assumption or incurrence of $62.0 million of debt obligations.
In addition, the Company agreed to indemnify certain affiliates of one of the
sellers for certain liabilities up to a maximum of $7.0 million.
On February 5, 1997, the Company completed its Second Offering of
4,000,000 shares of its Class A Common Stock at $24.875 per share. The net
proceeds to the Company were $94,300,000, after deducting underwriting
commissions. Of such amount, approximately $36.2 million was used to repay
certain indebtedness. Of the balance of approximately $58.1 million, $5.5
million was used to fund vessel acquisitions, $20.9 million was used to fund the
remainder of the purchase price of four supply boats and one crew boat acquired
in the second quarter of 1997, $1.8 million was designated to fund the purchase
of one crew boat in the third quarter of 1997, $6.9 million was designated to
fund the refurbishment and lengthening of two supply boats expected to be put
into service during the fourth quarter of 1997, and the remaining $23.0 million
was available for general corporate purposes and to fund a portion of the costs
of the vessels to be constructed.
In May 1997, the Company acquired 35 offshore energy support vessels
for consideration valued at $58.7 million, consisting of cash of $49.0 million,
a note payable in the amount of $6.0 million, and 141,760 shares of Class A
Common Stock valued by the Company at $3.7 million. Of the cash portion of the
purchase price, $10.5 million was funded from the Company's available cash and
$38.5 million was drawn under the Credit Facility. The Company has also agreed
to purchase an additional utility and supply vessel for an aggregate cost of
approximately $2.9 million in cash.
In June 1997, the Company completed the Private Offering, which
resulted in net proceeds to the Company of approximately $111.6 million. Of such
amount, approximately $94.2 million was used to repay amounts outstanding under
the Credit Facility including interest, and $6.0 million was used to repay the
$6.0 million note issued in connection with the May 1997 acquisition. The
remaining $11.4 million is available for general corporate purposes.
The Company's future capital needs are expected to relate primarily to
debt service obligations, maintenance and improvements of its fleet, and
acquisitions. The Company's outstanding indebtedness at September 30, 1997 was
approximately $61.9 million. After giving effect to repayments of an aggregate
of $148.5 million of indebtedness through September 30, 1997 with a portion of
the proceeds of the Second Offering and the Private Offering, the Company's
principal and interest payment obligations for the remainder of 1997 are
estimated to be approximately $2.0 million and $1.2 million, respectively, and
operating lease obligations for the remainder of 1997 are estimated to be
approximately $0.2 million.
Capital requirements for vessel improvements are estimated to be
approximately $17.3 million for 1997, of which $15.7 million had been expended
as of September 30, 1997.
The Company has contracted for the construction of three ship docking
modules ("SDMs(TM)") at an estimated aggregate cost of approximately $14.5
million with delivery expected in late 1997 or early 1998. The Company has
contracted for the construction of six supply boats for delivery during 1997
through 1999 at a cost of $54.4 million. The Company has also agreed to purchase
for an estimated aggregate cost of $12.4 million, five newly constructed
152-foot crew boats scheduled for delivery in
20
<PAGE>
1998 and 1999. The Company currently intends to fund the aggregate costs of the
SDMs(TM), the crew boats, and the supply boats from available working capital,
borrowings under the Credit Agreement, lease financing, or a combination of such
sources.
The Company has a 2.4% equity interest in five 45,300 dwt double-hull
petroleum product carriers currently under construction. The aggregate costs of
the five carriers is estimated to be $255.0 million, of which approximately
$40.0 million will constitute equity investment and $215.0 million will be
financed with the proceeds of government-guaranteed Title XI ship financing
bonds issued in March 1996. Subject to certain conditions, the Company has an
option, exercisable through 2002, to purchase a 49.2% interest at a price equal
to (i) the investor's equity investment plus a stated annual return, or (ii) if
exercised after December 31, 1997, the greater of the fair market value of the
interest or the amount set forth in (i). The Company also has an option,
exercisable on January 15, 1998, to purchase an additional 23.4% interest at a
price equal to the investor's equity investment plus a stated return. Should the
Company fail to exercise the latter option, the investor has the option to
acquire 1.6% of the ownership interest from the Company for nominal
consideration. The total estimated cost of exercising the Company's options is
up to $32.0 million (assuming the options are exercised prior to January 1,
1998). The Company currently has no understanding or agreements with respect to
the financing that it would require if it were to exercise either or both of
these options, and there can be no assurance that such financing will be
available.
The Company is party to litigation with one of the shipyards that
contracted to complete the Seabulk America for the Company, which shipyard is
seeking to recover from the Company approximately $6.1 million for alleged
additions and changes to the contract work and costs of alleged delay and
disruption, in addition to $2.4 million of the $5.9 million contract price that
the Company has withheld. In addition, the shipyard is seeking legal fees and
expenses. The Company has asserted counterclaims aggregating $5.6 million for
contract deletions, unfinished and defective work, and liquidated damages for
late delivery. The Company has obtained a $5.6 million letter of credit to
finance any additional payment that it might ultimately be required to make
pursuant to this litigation.
The Company believes that the remaining proceeds of the Second Offering
and Private Offering, cash generated from operations, and amounts available
under the Credit Agreement will be sufficient to fund debt service requirements,
planned capital expenditures, and working capital requirements for the
foreseeable future. The Company also believes that such resources together with
the potential future use of debt or equity financing, will allow the Company to
pursue its strategy of growth through acquisitions. However, since future cash
flows are subject to a number of uncertainties, including the condition of the
markets served by the Company, there can be no assurance that these resources
will continue to be sufficient to fund the Company's cash requirements.
Effect of Inflation
The Company does not consider inflation a significant business risk in
the current and foreseeable future although the Company has experienced some
cost increases. In some cases, these increases have been offset by charter hire
escalation clauses.
Prospective Accounting Changes
In February 1997, the FASB issued SFAS No. 128 "Earnings Per Share" and
SFAS No. 129 "Disclosure of Information about Capital Structure," which are
effective for fiscal years beginning after
21
<PAGE>
December 15, 1997. SFAS No. 128 simplifies the current required calculation of
EPS under APB No. 15, "Earnings per Share," by replacing the existing
calculation of primary EPS with a basic EPS calculation. It requires a dual
presentation, for complex capital structures, of basic and diluted EPS on the
face of the income statement and requires a reconciliation of basic EPS factors
to diluted EPS factors. SFAS No. 129 requires disclosing information about an
entity's capital structure. The Company plans to adopt SFAS No. 128 and SFAS No.
129 in 1998 and expects no material impact to the Company's EPS calculation or
disclosure information.
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income," which is effective for fiscal years beginning after December 15, 1997.
This Statement established standards for the reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The new rule requires that the Company (a) classify items
of other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of the
balance sheet. The Company plans to adopt SFAS No. 130 in 1998 and expects no
material impact to the Company's financial statement presentation.
Also in June 1997, the FASB issued SFAS No. 131 "Disclosure about
Segments of an Enterprise and Related Information," which is effective for
fiscal years beginning after December 15, 1997. This Statement supersedes SFAS
No. 14, "Financial Reporting for Segments of a Business Enterprise," and amends
SFAS No. 94, "Consolidation of all Majority-Owned Subsidiaries." This Statement
requires annual financial statements to disclose information about products and
services, geographic areas and major customers based on a management approach,
along with interim reports. The management approach requires disclosing
financial and descriptive information about an enterprise's reportable operating
segments based on reporting information the way management organizes the
segments for making business decisions and assessing performance. It also
eliminates the requirement to disclose additional information about subsidiaries
that were not consolidated. This new management approach may result in more
information being disclosed than presently practiced and require new interim
information not previously presented. The Company plans to adopt SFAS No. 131 in
1998 with impact only to the Company's disclosure information and not its
results of operation.
22
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
10.22(d) Revolving Credit Agreement dated September 30, 1997 by and among
Hvide Marine Incorporated, Citibank, N.A., as Administrative Agent, BankBoston,
N.A., as Syndicate Agent, with Citicorp Securities, Inc. and BankBoston
Securities Inc., having acted as Arrangers.
b. Reports on Form 8-K.
None
23
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HVIDE MARINE INCORPORATED
/s/ JOHN J. KRUMENACKER
- -----------------------------------------------------
John J. Krumenacker
Controller and Chief Accounting Officer
November 7, 1997
24
REVOLVING CREDIT AGREEMENT
DATED as of September 30, 1997
among
HVIDE MARINE INCORPORATED
and
The Guarantors Identified Herein
and
The Lending Institutions Identified Herein
and
CITIBANK, N.A., as Administrative Agent
and
BANKBOSTON, N.A., as Syndication Agent
with
CITICORP SECURITIES, INC.
and
BANCBOSTON SECURITIES INC.
Having Acted as Arrangers
<PAGE>
TABLE OF CONTENTS
1. DEFINITIONS AND RULES OF INTERPRETATION...........................1
1.1. Definitions.......................................................1
1.2. Rules of Interpretation..........................................15
2. THE REVOLVING CREDIT FACILITY....................................17
2.1. Commitment to Lend...............................................17
2.2. Commitment Fee...................................................17
2.3. Reduction of Total Commitment....................................17
2.4. The Revolving Credit Notes.......................................18
2.5. Interest on Revolving Credit Loans...............................19
2.6. Requests for Revolving Credit Loans..............................19
2.7. Conversion Options...............................................20
2.7.1. Conversion to Different Type of Revolving Credit Loan....20
2.7.2. Continuation of Type of Revolving Credit Loan............20
2.7.3. Eurodollar Rate Loans....................................21
2.8. Funds for Revolving Credit Loans.................................21
2.8.1. Funding Procedures.......................................21
2.8.2. Advances by Administrative Agent.........................21
3. REPAYMENT OF THE REVOLVING CREDIT LOANS..........................22
3.1. Maturity.........................................................22
3.2. Mandatory Repayments of Revolving Credit Loans...................22
3.3. Optional Repayments of Revolving Credit Loans....................22
4. GUARANTY.........................................................23
4.1. Guaranty of Payment and Performance..............................23
4.2. Guarantors' Agreement to Pay Enforcement Costs, etc..............24
4.3. Waivers by the Guarantors; Banks' Freedom to Act.................24
4.4. Unenforceability of Obligations Against Borrower.................25
4.5. Subrogation; Subordination.......................................26
4.5.1. Postponement of Rights Against Borrower..................26
4.5.2. Subordination............................................26
4.5.3. Provisions Supplemental..................................26
4.6. Further Assurances...............................................27
4.7. Reinstatement....................................................27
4.8. Successors and Assigns...........................................27
4.9. Severability.....................................................27
4.10. Limitation on Guaranty...........................................28
5. FEES.............................................................28
5.1. Closing Fee......................................................28
5.2. Agency Fee.......................................................28
6. CERTAIN GENERAL PROVISIONS.......................................28
6.1. Funds for Payments...............................................28
6.1.1. Payments to Administrative Agent.........................28
6.1.2. No Offset, etc...........................................29
6.1.3. Receipt of Funds By Administrative Agent.................29
<PAGE>
6.2. Computations.....................................................29
6.3. Inability to Determine Eurodollar Rate...........................30
6.4. Illegality.......................................................30
6.5. Additional Costs, etc............................................31
6.6. Capital Adequacy.................................................32
6.7. Certificate......................................................33
6.8. Indemnity........................................................33
6.9. Interest After Default...........................................33
6.9.1. Overdue Amounts..........................................33
6.9.2. Amounts Not Overdue......................................33
6.10. Replacement of Banks.............................................34
7. GUARANTIES.......................................................35
8. REPRESENTATIONS AND WARRANTIES...................................36
8.1. Corporate Authority..............................................36
8.1.1. Incorporation; Good Standing.............................36
8.1.2. Authorization............................................36
8.1.3. Enforceability...........................................37
8.2. Governmental Approvals...........................................37
8.3. Title to Properties; Leases......................................37
8.4. Financial Statements.............................................37
8.4.1. Fiscal Year, Fiscal Quarters.............................37
8.4.2. Financial Statements.....................................37
8.5. No Material Changes, etc.; Solvency..............................38
8.6. Franchises, Patents, Copyrights, etc.............................38
8.7. Litigation.......................................................38
8.8. No Materially Adverse Contracts, etc.............................39
8.9. Compliance with Other Instruments, Laws, etc.....................39
8.10. Tax Status.......................................................39
8.11. No Event of Default..............................................40
8.12. Holding Company and Investment Company Acts......................40
8.13. Absence of Financing Statements, etc.............................40
8.14. Certain Transactions.............................................40
8.15. Employee Benefit Plans...........................................40
8.15.1. In General...............................................40
8.15.2. Terminability of Welfare Plans...........................41
8.15.3. Guaranteed Pension Plans.................................41
8.15.4. Multiemployer Plans......................................41
8.16. Use of Proceeds..................................................42
8.16.1. General..................................................42
8.16.2. Regulations U and X......................................42
8.16.3. Ineligible Securities....................................42
8.17. Environmental Compliance.........................................42
8.18. Subsidiaries, etc................................................43
8.19. Concerning the Vessels...........................................43
8.20. Disclosure.......................................................43
9. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS.........43
9.1. Punctual Payment.................................................43
<PAGE>
9.2. Maintenance of Office.............................................43
9.3. Records and Accounts..............................................44
9.4. Financial Statements, Certificates and Information................44
9.5. Notices...........................................................46
9.5.1. Defaults..................................................46
9.5.2. Environmental Events......................................46
9.5.3. Notice of Litigation and Judgments........................47
9.6. Corporate Existence; Maintenance of Properties; Etc...............47
9.7. Insurance.........................................................47
9.8. Taxes.............................................................48
9.9. Inspection of Properties and Books................................48
9.10. Compliance with Laws, Contracts, Licenses, and Permits............48
9.11. Employee Benefit Plans............................................49
9.12. Use of Proceeds...................................................49
9.13. Concerning the Vessels; Citizenship...............................49
9.14. Further Assurances................................................49
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE
GUARANTORS......................................................50
10.1. Restrictions on Indebtedness......................................50
10.2. Restrictions on Liens.............................................51
10.3. Restrictions on Investments.......................................52
10.4. Distributions.....................................................53
10.5. Merger, Consolidation and Disposition of Assets...................53
10.5.1. Mergers and Acquisitions..................................53
10.5.2. Disposition of Assets.....................................54
10.6. Sale and Leaseback................................................54
10.7. Compliance with Environmental Laws................................54
10.8. Trust Securities..................................................55
10.9. Employee Benefit Plans............................................55
10.10. Business Activities.......................................56
10.11. Fiscal Year; Fiscal Quarters..............................56
10.12. Transactions with Affiliates..............................56
11. FINANCIAL COVENANTS OF THE BORROWER...............................56
11.1. Leverage Ratio....................................................56
11.2. Debt Service Coverage Ratio.......................................56
11.3. Indebtedness to Tangible Net Worth Ratio..........................56
12. CLOSING CONDITIONS................................................57
12.1. Loan Documents....................................................57
12.2. Certified Copies of Charter Documents.............................57
12.3. Corporate, Action.................................................57
12.4. Incumbency Certificate............................................57
12.5. Certificates of Insurance.........................................57
12.6. Opinion of Counsel................................................58
12.7. Payment of Fees...................................................58
12.8. Payoff Letter.....................................................58
<PAGE>
13. CONDITIONS TO ALL BORROWINGS......................................58
13.1. Representations True; No Event of Default.........................58
13.2. No Legal Impediment...............................................59
13.3. Governmental Regulation...........................................59
13.4. Proceedings and Documents.........................................59
14. EVENTS OF DEFAULT; ACCELERATION; ETC..............................59
14.1. Events of Default and Acceleration................................59
14.2. Termination of Commitments........................................62
14.3. Remedies..........................................................63
15. AGREEMENT OF THE BANKS............................................63
16. THE AGENTS........................................................63
16.1. Authorization.....................................................63
16.2. Employees and Agents..............................................64
16.3. No Liability......................................................64
16.4. No Representations................................................65
16.4.1. General...................................................65
16.4.2. Closing Documentation, etc................................65
16.5. Payments..........................................................66
16.5.1. Payments to Administrative Agent..........................66
16.5.2. Distribution by Agents....................................66
16.5.3. Delinquent Banks..........................................66
16.6. Holders of Notes..................................................67
16.7. Indemnity.........................................................67
16.8. Agents as Banks...................................................67
16.9. Resignation.......................................................67
16.10. Notification of Defaults and Events of Default............68
17. EXPENSES AND INDEMNIFICATION......................................68
17.1. Expenses..........................................................68
17.2. Indemnification...................................................69
17.3. Survival..........................................................70
18. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.....................70
18.1. Sharing of Information with Section 20 Subsidiary.................70
18.2. Confidentiality...................................................70
18.3. Prior Notification................................................71
18.4. Other.............................................................71
19. SURVIVAL OF COVENANTS, ETC........................................71
20. ASSIGNMENT AND PARTICIPATION......................................72
20.1. Conditions to Assignment by Banks.................................72
20.2. Certain Representations and Warranties; Limitations; Covenants....72
20.3. Register..........................................................73
20.4. New Notes.........................................................74
20.5. Participations....................................................74
20.6. Disclosure........................................................75
<PAGE>
20.7. Assignee or Participant Affiliated with the Borrower..............75
20.8. Miscellaneous Assignment Provisions...............................76
20.9. Assignment by Borrower............................................76
21. NOTICES, ETC......................................................76
22. GOVERNING LAW.....................................................77
23. HEADINGS..........................................................78
24. COUNTERPARTS......................................................78
25. ENTIRE AGREEMENT, ETC.............................................78
26. WAIVER OF JURY TRIAL..............................................78
27. CONSENTS, AMENDMENTS, WAIVERS, ETC................................79
28. SEVERABILITY......................................................79
<PAGE>
List of Exhibits and Schedules
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Loan Request
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Schedule 1.1 Banks; Commitments; Commitment Percentages; Domestic
Lending Offices; Eurodollar Lending Offices
Schedule 5.1 Closing Fees
Schedule 8.3 Title to Properties
Schedule 8.7 Litigation
Schedule 8.8 Materially Adverse Contracts
Schedule 8.18 Subsidiaries
Schedule 10.1 Existing Indebtedness
Schedule 10.2 Existing Liens
Schedule 10.3 Existing Investments
<PAGE>
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of September 30, 1997, by
and among HVIDE MARINE INCORPORATED (the "Borrower"), a Florida corporation
having its principal place of business at 2200 Eller Drive, P.O. Box 13038, Port
Everglades Station, Fort Lauderdale, FL 33316, the Guarantors referred to
herein, the lending institutions listed on Schedule 1 hereto, CITIBANK, N.A. as
administrative agent (the "Administrative Agent"), and BANKBOSTON, N.A., as
syndication agent (the "Syndication Agent").
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions. The following terms shall have the meanings set forth in
this ss.1 or elsewhere in the provisions of this Credit Agreement referred to
below:
Adjustment Date. The first day of the month immediately following the month
in which a Compliance Certificate is delivered by the Borrower pursuant to
ss.9.4(d) hereof.
Administrative Agent. As defined in the preamble hereto.
Administrative Agent's Head Office. The Administrative Agent's head
office located at Two Penn's Way, Suite 200, Newcastle, Delaware 19720, or at
such other location as the Administrative Agent may designate from time to time.
Affiliate. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower were
issuing securities.
Agency Fee Letter. The letter agreement, dated as of September 30, 1997,
among the Borrower, the Administrative Agent and the Syndication Agent.
Agents. Collectively, the Administrative Agent and the Syndication Agent.
Agents' Special Counsel. Bingham, Dana & Gould LLP or such other counsel as
may be approved by the Agents.
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable percentage
set forth below with respect to the Leverage Ratio, determined on a Pro Forma
Basis as of the end of the fiscal quarter of the Borrower immediately preceding
the date of such Compliance Certificate:
<TABLE>
<CAPTION>
Eurodollar Base Rate Commitment
Level Leverage Ratio Rate Loans Fee
Loans
<S> <C> <C> <C> <C> <C>
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
I Less than or equal to 4.25 to 1.00 and 1.25% 0.25% 0.30%
greater than or equal to 3.25 to 1.00
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
II Less than 3.25 to 1.00 and greater than 1.00% 0% 0.20%
or equal to 2.25 to 1.00
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
III Less than 2.25 to 1.00 and greater than 0.75% 0% 0.20%
or equal to 1.50 to 1.00
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
IV Less than 1.50 to 1.00 0.50% 0% 0.15%
- --------- ---- -------------------------------------------- --------------- ------------------ ------------------
</TABLE>
Notwithstanding the foregoing, (a) until the delivery of the Compliance
Certificate for the fiscal quarter of the Borrower ending on or about September
30, 1997, the Leverage Ratio shall be calculated based on the Borrower's Pro
Forma Consolidated Historical Financial Statements as presented in the S-1 and
(b) if the Borrower fails to deliver any Compliance Certificate pursuant to
ss.9.4(d) hereof, then for the period commencing on the date such Compliance
Certificate was due through the date immediately preceding the Adjustment Date
that occurs immediately following the date on which such Compliance Certificate
is delivered, the Applicable Margin shall be that percentage corresponding to
Level I in the table above.
Assignment and Acceptance. See ss.20.1.
Balance Sheet Date. December 31, 1996.
Banks. The lending institutions listed on Schedule 1 hereto and any other
Person who becomes an assignee of any rights and obligations of a Bank pursuant
to ss.20.
Base Rate. The higher of (i) the annual rate of interest announced from
time to time by the Administrative Agent at its head office in New York, New
York, as its "base rate" and (ii) one-half of one percent (1/2%) above the
Federal Funds Effective Rate. For the purposes of this definition, "Federal
Funds Effective Rate" shall mean for any day, the rate per annum 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, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average of the
quotations for such day on such transactions received by the Administrative
Agent from three funds brokers of recognized standing selected by the
Administrative Agent.
Base Rate Loans. Revolving Credit Loans bearing interest calculated by
reference to the Base Rate.
Borrower. As defined in the preamble hereto.
Business Day. Any day on which banking institutions in New York, New
York and Boston, Massachusetts, are open for the transaction of banking business
and, in the case of Eurodollar Rate Loans, also a day which is a Eurodollar
Business Day.
Capitalized Lease. With respect to the Borrower and its Subsidiaries,
any lease of any property (whether real, personal or mixed) by such Persons as
lessee that, in accordance with generally accepted accounting principles, either
would be required to be classified and accounted for as a capital lease on a
balance sheet of such Persons or otherwise be disclosed as such in a note to
such balance sheet, other
<PAGE>
than, in the case of the Borrower or a Subsidiary of the Borrower, any such
lease under which the Borrower or such Subsidiary is the lessor.
Change of Control. Either (a) Mr. Erik J. Hvide, members of his
immediate family, and estate planning trusts for the benefit of the foregoing
shall, at any time, cease to own shares of capital stock of the Borrower
representing at least twenty percent (20%) of the total shareholder votes of the
Borrower or (b) any Person or group of Persons shall, at any time, own a greater
percentage of the total shareholder votes of the Borrower than Mr. Erik J.
Hvide, members of his immediate family, and estate planning trusts for the
benefit of the foregoing.
<PAGE>
Closing Date. The first date on which the conditions set forth in ss.12
have been satisfied and any Revolving Credit Loan is to be made hereunder.
Code. The Internal Revenue Code of 1986.
Commitment. With respect to each Bank, the amount set forth on Schedule
1 hereto as the amount of such Bank's commitment to make Loans to the Borrower,
as the same may be reduced from time to time; or if such commitment is
terminated pursuant to the provisions hereof, zero.
Commitment Percentage. With respect to each Bank, the percentage set forth
on Schedule 1 hereto as such Bank's percentage of the Total Commitment.
Compliance Certificate. See ss.9.4(d).
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of the Borrower and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated EBITDA. With respect to the Borrower and its Subsidiaries
and for any period, the Consolidated Net Income of such Persons for such period,
plus, to the extent deducted in the calculation of Consolidated Net Income and
without duplication, Consolidated Total Interest Expense, income taxes paid,
depreciation, amortization and other non-cash adjustments to income for such
period, excluding amortized drydocking expenses.
Consolidated EBITDAR. Consolidated EBITDA for any period, plus, without
duplication, Consolidated Rental Expense for such period.
Consolidated Net Income. The consolidated net income of the Borrower
and its Subsidiaries, after deduction of all expenses, taxes, and other proper
charges, determined in accordance with generally accepted accounting principles,
without giving effect to any adjustments, accruals, deductions or entries
resulting from any gains or losses from the sale or other disposition of assets
of such Person during such period.
Consolidated Rental Expense. With respect to the Borrower and its
Subsidiaries and for any period, all payments of such Persons for such period
under operating leases and all other rental payments as determined in accordance
with generally accepted accounting principles.
<PAGE>
Consolidated Tangible Net Worth. The excess of the total assets of the
Borrower and its Subsidiaries on a consolidated basis over Consolidated Total
Liabilities, excluding, however, from the determination of total assets (i)
goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof and other similar intangibles, (ii) unamortized debt
discount and expense, (iii) all reserves carried and not deducted from assets,
(iv) treasury stock and capital stock, obligations or other securities of or
capital contributions to or investments in any Subsidiary, (v) sinking or other
analogous funds established for the purpose of redemption, retirement or
prepayment of capital stock, (vi) any write up in the book value of any assets
resulting from a revaluation thereof subsequent to December 31, 1996, (vii)
capitalized expenses in connection with the issuance of debt or equity and
(viii) any items not included in clauses (i) through (vii) above which are
treated as intangibles in conformity with generally accepted accounting
principles.
Consolidated Total Indebtedness. As of any date, all Indebtedness of
the Borrower and its Subsidiaries, determined on a consolidated basis for such
Persons in accordance with generally accepted accounting principles.
Consolidated Total Interest Expense. With respect to the Borrower and
its Subsidiaries and for any period, the interest expense net of interest income
of such Persons for such period as determined in accordance with generally
accepted accounting principles.
Consolidated Total Liabilities. All the obligations in accordance with
generally accepted accounting principles which are included in determining the
total liabilities as shown on the liabilities side of the consolidated balance
sheet of the Borrower and its Subsidiaries.
Conversion Request. A notice given by the Borrower to the Administrative
Agent of the Borrower's election to convert or continue a Loan in accordance
with ss.2.7.
Credit Agreement. This Revolving Credit Agreement, including the Schedules
and Exhibits hereto.
Debt Service Coverage Ratio. As at the end of each fiscal quarter of
the Borrower, the ratio of (a) Consolidated EBITDA for the period of the four
consecutive fiscal quarters of the Borrower then ending to (b) Consolidated
Total Interest Expense for the period of the four consecutive fiscal quarters of
the Borrower then ending.
Default. See ss.14.1.
Delinquent Bank. See ss.16.5.3.
Derivative Transaction. Any of (i) "swap agreement" as defined in
Section 101(53B) of the United States Bankruptcy Code (other than a spot foreign
exchange transaction), (ii) any equity swap, floor, collar, cap or option
transaction, (iii) any option to enter into any of the foregoing, and (iv) any
combination of the foregoing.
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Borrower or any of
its Subsidiaries, other than dividends payable solely in shares of common stock
of the Borrower or such Subsidiary; the purchase, redemption, or other
retirement of any shares of any class of capital stock of the Borrower or such
Subsidiary, directly or indirectly through a Subsidiary of the Borrower or such
Subsidiary or otherwise; the return of capital by
<PAGE>
the Borrower or such Subsidiary to its shareholders as such; or any other
distribution on or in respect of any shares of any class of capital stock of the
Borrower or such Subsidiary.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank designated
as such in Schedule 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans.
Drawdown Date. The date on which any Revolving Credit Loan is made or
is to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with ss.2.7.
Eligible Assignee. Any of (i) a commercial bank organized under the
laws of the United States, or any State thereof or the District of Columbia, and
having total assets in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the United States, or
any State thereof or the District of Columbia, and having a net worth of at
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (iii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having total assets in excess of $1,000,000,000, provided that such bank is
acting through a branch or agency located in the country in which it is
organized or another country which is also a member of the OECD; (iv) the
central bank of any country which is a member of the OECD; and (v) if, but only
if, any Event of Default has occurred and is continuing, any other bank,
insurance company, commercial finance company or other financial institution
approved by the Administrative Agent, such approval not to be unreasonably
withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning of
ss.3(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. See ss.8.17.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with
the Borrower under ss.414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of ss.4043 of ERISA and the regulations
promulgated thereunder.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Administrative Agent
in its sole discretion acting in good faith.
<PAGE>
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of such
Bank, if any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate of interest equal to (i) the arithmetic average of the rates
per annum for each Reference Bank (rounded upwards to the nearest 1/16 of one
percent) at which each such Reference Bank's Eurodollar Lending Office is
offered Dollar deposits at 11:00 a.m. (London time) two Eurodollar Business Days
prior to the beginning of such Interest Period in the interbank eurodollar
market where the eurodollar and foreign currency and exchange operations of such
Eurodollar Lending Office are customarily conducted, for delivery on the first
day of such Interest Period for the number of days comprised therein and in an
amount comparable to the amount of the Eurodollar Rate Loan of such Reference
Bank to which such Interest Period applies, divided by (ii) a number equal to
1.00 minus the Eurocurrency Reserve Rate, if applicable.
Eurodollar Rate Loans. Revolving Credit Loans bearing interest calculated
by reference to the Eurodollar Rate.
Event of Default. See ss.14.1.
Existing Credit Agreement. The Amended and Restated Credit Agreement,
dated as of February 3, 1997, by and among the Borrower and the other borrowers
party thereto, Citibank, N.A., as administrative agent and co-agent, BankBoston,
N.A., as letter of credit agent and co-agent, and the banks party thereto.
Generally accepted accounting principles. (i) When used in ss.11,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the fiscal year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrower reflected in its financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with past financial
statements of the Borrower adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of ss.3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantors. Each entity executing this Credit Agreement as a guarantor
and each additional Subsidiary of the Borrower which delivers a guaranty of the
Obligations pursuant to ss.7 hereof.
Guaranty. The Guaranty set forth in ss.4 hereof and each additional
guaranty of the Obligations delivered pursuant to ss.7 hereof.
<PAGE>
Indebtedness. (a) Any liability of any Person (i) for borrowed money,
or under any reimbursement obligation related to a letter of credit or bid or
performance bond facility, or (ii) evidenced by a bond, note, debenture or other
evidence of indebtedness (including a purchase money obligation) representing
extensions of credit or given in connection with the acquisition of any
business, property, service or asset of any kind (other than a trade payable or
other current liability arising in the ordinary course of business) or (iii) for
obligations with respect to (A) an operating lease calculated on the basis of
the present value discounted at ten percent (10%) on the future payments from
such Person under such operating lease, or (B) a lease of real or personal
property that is or would be classified and accounted for as a Capitalized
Lease; (b) any liability of others either for any lease, dividend or letter of
credit, or for any obligation described in the preceding clause (a) that (i) the
Person has guaranteed or that is otherwise its legal liability (whether
contingent or otherwise or direct or indirect, but excluding endorsements of
negotiable instruments for deposit or collection in the ordinary course of
business) or (ii) is secured by any Lien on any property or asset owned or held
by that Person, regardless whether the obligation secured thereby shall have
been assumed by or is a personal liability of that Person; 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.
Ineligible Securities. Securities which may not be underwritten or dealt in
by member banks of the Federal Reserve System under Section 16 of the Banking
Act of 1993 (12 U.S.C. ss.24, Seventh), as amended.
Interest Payment Date. (i) As to any Base Rate Loan, the last day of
the calendar quarter with respect to interest accrued during such calendar
quarter, including, without limitation, the calendar quarter which includes the
Drawdown Date of such Base Rate Loan; (ii) as to any Eurodollar Rate Loan in
respect of which the Interest Period is (A) 3 months or less, the last day of
such Interest Period and (B) more than 3 months, the date that is 3 months from
the first day of such Interest Period and, in addition, the last day of such
Interest Period.
Interest Period. With respect to each Revolving Credit Loan, (i)
initially, the period commencing on the Drawdown Date of such Loan and ending on
the last day of one of the periods set forth below, as selected by the Borrower
in a Loan Request or as otherwise required by the terms of this Credit Agreement
(A) for any Base Rate Loan, the last day of the calendar quarter; and (B) for
any Eurodollar Rate Loan, 1, 2, 3, or 6 months; and (ii) thereafter, each period
commencing on the last day of the next preceding Interest Period applicable to
such Revolving Credit Loan and ending on the last day of one of the periods set
forth above, as selected by the Borrower in a Conversion Request; provided that
all of the foregoing provisions relating to Interest Periods are subject to the
following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business
Day, that Interest Period shall be extended to the next
succeeding Eurodollar Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end
on the immediately preceding Eurodollar Business Day;
(b )if any Interest Period with respect to a Base Rate Loan would
end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in
ss.2.7, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate
Loan and the continuance of all Base Rate Loans as Base Rate
Loans on the last day of the then current Interest Period with
respect thereto;
(d) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month
(or on a day for which there is no
<PAGE>
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Eurodollar
Business Day of a calendar month; and
(e) any Interest Period that would otherwise extend beyond the
Maturity Date shall end on the Maturity Date.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be deducted in respect of each such Investment any amount received as a
return of capital (but only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); (iii) there shall not be
deducted in respect of any Investment any amounts received as earnings on such
Investment, whether as dividends, interest or otherwise; and (iv) there shall
not be deducted from the aggregate amount of Investments any decrease in the
value thereof.
Leverage Ratio. As at the end of each fiscal quarter of the Borrower,
the ratio of (a) Consolidated Total Indebtedness as at the end of such fiscal
quarter to (b) Consolidated EBITDAR for the period of the four consecutive
fiscal quarters of the Borrower then ending.
Loan Documents. This Credit Agreement, the Guaranties, the Notes and the
Agency Fee Letter.
Loan Request. See ss.2.6.
Loans. The Revolving Credit Loans.
Maturity Date. September 30, 2002.
Multiemployer Plan. Any multiemployer plan within the meaning of ss.3(37)
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
Notes. The Revolving Credit Notes.
Obligations. All indebtedness, obligations and liabilities of any of
the Borrower and its Subsidiaries to any of the Banks and the Agents,
individually or collectively, existing on the date of this Credit Agreement or
arising thereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of any of the Loans made or any of the Notes, or other instruments at
any time evidencing any thereof.
Outstanding. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by ss.4002 of ERISA
and any successor entity or entities having similar responsibilities.
<PAGE>
Permitted Acquisition. The acquisition by the Borrower or any of its
Subsidiaries of any Person, business, division, or specified group of assets,
provided that the following conditions are met with respect to any such
acquisition:
(a) immediately before, immediately after, and after giving effect
to, such acquisition, no Default or Event of Default shall
have occurred and be continuing;
(b) concurrently with the effectiveness of any such acquisition
involving consideration paid or to be paid by the Borrower and
its Subsidiaries (including assumption of liabilities) in
excess of $30,000,000, the Borrower shall have delivered to
the Agents and the Banks a Compliance Certificate
demonstrating the Borrower's compliance with the covenants set
forth in ss.11 hereof on a Pro Forma Basis (after giving
effect to such acquisition) for the immediately succeeding
three (3) fiscal quarters of the Borrower;
(c) either (i) such acquisition is the acquisition of assets only
(for use in substantially the same line of business as the
line of business of the Borrower) and not the capital stock or
other equity interests of any Person; or (ii) such acquisition
involves the purchase of the capital stock or other equity
interests of a Person and each of the following conditions is
met:
(A) such acquisition is the acquisition of one hundred percent (100%) of
the capital stock or other equity interests of such Person,
(B) such Person is in substantially the same line of business as the
Borrower,
(C) such acquisition has been approved by the board of directors (or other
similar body) of such Person, and
(D) concurrently with the effectiveness of such acquisition, the Borrower
shall cause such Person to guaranty all of the Obligations hereunder
pursuant to a Guaranty in form and substance satisfactory to the
Administrative Agent, which such Guaranty shall be a Loan Document
hereunder.
Permitted Liens. Liens, security interests and other encumbrances permitted
by ss.10.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Pro Forma Basis. In connection with any proposed Permitted Acquisition,
(i) the calculation of compliance with the financial covenants set forth in
ss.11 hereof by the Borrower and its Subsidiaries (including the Person or
asset(s) to be acquired) with reference to the audited historical financial
results of such Person, if available, and if not so available, then with
reference to such management certified financial results of such Person as shall
be reasonably acceptable to the Administrative Agent (or, if an acquisition of
assets, the financial results attributable to such assets) and the Borrower and
its Subsidiaries for the applicable Test Period ending immediately prior to the
date of such acquisition, after giving effect on a pro forma basis to such
Permitted Acquisition in the manner described below and (ii) the calculation of
compliance with the financial covenants set forth in ss.11 hereof by the
Borrower and its Subsidiaries (including the Person or assets(s) to be acquired)
with reference to the audited historical financial results of such Person, if
available, and if not so available, such management certified financial results
of such Person as shall be reasonably acceptable to the Administrative Agent
(or, if an acquisition of assets, the
<PAGE>
financial results attributable to such assets) and the Borrower and its
Subsidiaries for each of the three fiscal quarters of the Borrower immediately
following such Permitted Acquisition, in each case for the Test Period
applicable to such financial covenant, after giving effect on a pro forma basis
to such Permitted Acquisition in the manner described below:
(i) all Indebtedness (whether under this Credit Agreement or otherwise)
and any other balance sheet adjustments incurred or made in connection with the
Permitted Acquisition shall be deemed to have been incurred or made on the first
day of the Test Period, and all Indebtedness of the Person acquired or to be
acquired in such Permitted Acquisition which was or will have been repaid in
connection with the consummation of the Permitted Acquisition shall be deemed to
have been repaid concurrently with the incurrence of the Indebtedness incurred
in connection with the Permitted Acquisition;
(ii) all Indebtedness assumed to have been incurred pursuant to the
preceding clause (i) shall be deemed to have borne interest at the sum of (a)
the arithmetic mean of (x) the Eurodollar Rate for Eurodollar Rate Loans having
an Interest Period of one month in effect on the first day of the Test Period
and (y) the Eurodollar Rate for Eurodollar Rate Loans having an Interest Period
of one month in effect on the last day of the Test Period plus (b) the
Applicable Margin then in effect (after giving effect to the Permitted
Acquisition on a Pro Forma Basis); and
(iii) other reasonable cost savings, expenses and other income
statement or operating statement adjustments which are attributable to the
change in ownership and/or management resulting from such Permitted Acquisition
as may be approved by the Administrative Agent in writing (which approval shall
not be unreasonably withheld) shall be deemed to have been realized on the first
day of the Test Period.
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by the Borrower or any of its Subsidiaries.
Record. The grid attached to a Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
Reference Bank. Citibank, N.A..
Register. See ss.20.3.
Required Banks. As of any date, the Banks holding at least sixty-six
and two-thirds percent (66- 2/3%) of the outstanding principal amount of the
Notes on such date; and if no such principal is outstanding, the Banks whose
aggregate Commitments constitutes at least sixty-six and two-thirds percent
(66-2/3%) of the Total Commitment.
Revolving Credit Loans. Revolving credit loans made or to be made by the
Banks to the Borrower pursuant to ss.2.
Revolving Credit Note Record. A Record with respect to a Revolving Credit
Note.
Revolving Credit Notes. See ss.2.4.
S-1. The Form S-1, Registration No. 33-18525 filed with the Securities and
Exchange Commission of the United States of America on December 23, 1996, as
amended.
<PAGE>
Section 20 Subsidiary. A Subsidiary of the bank holding company
controlling any Bank, which Subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Syndication Agent. As defined in the preamble hereto.
Test Period. In connection with the calculation of the financial
covenants set forth in ss.11 hereof following any Permitted Acquisition, the
period of all fiscal quarters (and any portion of a fiscal quarter) prior to the
date of such Permitted Acquisition included in the definition of such financial
covenant.
Total Commitment. The sum of the Commitments of the Banks, as in effect
from time to time.
Trust Securities. The 6 1/2% Trust Convertible Preferred Securities, issued
by Hvide Capital Trust, a Delaware statutory business trust and the 6 1/2%
Convertible Subordinated Debentures due June 15, 2012 issued by the Borrower to
Hvide Capital Trust.
Type. As to any Revolving Credit Loan, its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
Vessel(s). Collectively, all vessels owned by the Borrower and its
Subsidiaries, and individually, any of such vessels.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
1.2 Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, restated, modified or
supplemented from time to time in accordance with its terms
and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) Reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting
principles applied on a consistent basis by the accounting
entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
<PAGE>
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the
Uniform Commercial Code as in effect in the State of New York,
have the meanings assigned to them therein, with the term
"instrument" being that defined under Article 9 of the Uniform
Commercial Code.
(h) Reference to a particular "ss." refers to that section of this
Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not
to any particular section or subdivision of this Credit
Agreement.
(j) Unless otherwise expressly indicated, in the computation of
periods of time from a specified date to a later specified
date, the word "from" means "from and including," the words
"to" and "until" each mean "to but excluding," and the word
"through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use
several different limitations, tests or measurements to
regulate the same or similar matters. All such limitations,
tests and measurements are, however, cumulative and are to be
performed in accordance with the terms thereof.
(l) This Credit Agreement and the other Loan Documents are the
result of negotiation among, and have been reviewed by counsel
to, among others, the Agents, the Borrower and the Guarantors
and are the product of discussions and negotiations among all
parties. Accordingly, this Credit Agreement and the other Loan
Documents are not intended to be construed against the Agents
or any of the Banks merely on account of either Agent's or any
Bank's involvement in the preparation of such documents.
2. THE REVOLVING CREDIT FACILITY.
2.1 Commitment to Lend. Subject to the terms and conditions set forth in this
Credit Agreement, each of the Banks severally agrees to lend to the Borrower and
the Borrower may borrow, repay, and reborrow from time to time from the Closing
Date up to but not including the Maturity Date upon notice by the Borrower to
the Administrative Agent given in accordance with ss.2.6, such sums as are
requested by the Borrower up to a maximum aggregate amount outstanding (after
giving effect to all amounts requested) at any one time equal to such Bank's
Commitment, provided that the sum of the outstanding amount of the Revolving
Credit Loans (after giving effect to all amounts requested) shall not at any
time exceed the Total Commitment. The Revolving Credit Loans shall be made pro
rata in accordance with each Bank's Commitment Percentage. Each request for a
Revolving Credit Loan hereunder shall constitute a representation and warranty
by the Borrower that the conditions set forth in ss.12 and ss.13, in the case of
the initial Revolving Credit Loans to be made on the Closing Date, and ss.13, in
the case of all other Revolving Credit Loans, have been satisfied on the date of
such request.
2.2 Commitment Fee. The Borrower agrees to pay to the Administrative Agent for
the accounts of the Banks in accordance with their respective Commitment
Percentages a commitment fee equal to the Applicable Margin on the average daily
amount during each calendar quarter or portion thereof from the date hereof to
the Maturity Date by which the Total Commitment exceeds the outstanding amount
of Revolving Credit Loans during such calendar quarter. The commitment fee shall
be payable quarterly in arrears on the first day of each calendar quarter for
the immediately preceding calendar quarter
<PAGE>
commencing on the first such date following the date hereof, with a final
payment on the Revolving Credit Maturity Date or any earlier date on which the
Commitments shall terminate.
2.3 Reduction of Total Commitment.
(a) Automatic. The Total Commitment shall be automatically and permanently
reduced by an amount equal to $6,000,000 on the last day of each calendar
quarter of the Borrower, commencing with the calendar quarter of the
Borrower ending on or about September 30, 1999. Upon the effective date of
each such reduction the Commitments of the Banks shall be reduced pro rata
in accordance with their respective Commitment Percentages of the amount of
such reduction. Upon the effective date of each such reduction the Borrower
shall pay to the Administrative Agent, for the respective amounts of the
Banks, the full amount of any commitment fee then accrued on the amount of
such reduction. No such reduction of the Commitments may be reinstated.
(b) Optional. The Borrower shall have the right at any time and from time to
time upon three (3) Business Days prior written notice to the
Administrative Agent to reduce by $10,000,000 or an integral multiple of
$1,000,000 in excess thereof or terminate entirely the Total Commitment,
whereupon the Commitments of the Banks shall be reduced pro rata in
accordance with their respective Commitment Percentages of the amount
specified in such notice or, as the case may be, terminated. Promptly after
receiving any notice of the Borrower delivered pursuant to thisss.2.3, the
Administrative Agent will notify the Banks of the substance thereof. Upon
the effective date of any such reduction or termination, the Borrower shall
pay to the Administrative Agent for the respective accounts of the Banks
the full amount of any commitment fee then accrued on the amount of the
reduction. No reduction or termination of the Commitments may be
reinstated.
2.4 The Revolving Credit Notes. The Revolving Credit Loans shall be evidenced by
separate promissory notes of the Borrower in substantially the form of Exhibit A
hereto (each a "Revolving Credit Note"), dated as of the Closing Date and
completed with appropriate insertions. One Revolving Credit Note shall be
payable to the order of each Bank in a principal amount equal to such Bank's
Commitment or, if less, the outstanding amount of all Revolving Credit Loans
made by such Bank, plus interest accrued thereon, as set forth below. The
Borrower irrevocably authorizes each Bank to make or cause to be made, at or
about the time of the Drawdown Date of any Revolving Credit Loan or at the time
of receipt of any payment of principal on such Bank's Revolving Credit Note, an
appropriate notation on such Bank's Revolving Credit Note Record reflecting the
making of such Revolving Credit Loan or (as the case may be) the receipt of such
payment. The outstanding amount of the Revolving Credit Loans set forth on such
Bank's Revolving Credit Note Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to such Bank, but the failure to
record, or any error in so recording, any such amount on such Bank's Revolving
Credit Note Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any Revolving Credit Note to make payments of
principal of or interest on any Revolving Credit Note when due.
2.5 Interest on Revolving Credit Loans. Except as otherwise provided in ss.6.9,
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at the
rate per annum equal to the Base Rate plus the Applicable
Margin.
<PAGE>
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at the
rate per annum equal to the Eurodollar Rate plus the
Applicable Margin determined for such Interest Period.
(c) The Borrower promises to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect
thereto.
2.6 Requests for Revolving Credit Loans.
The Borrower shall give to the Administrative Agent written notice in the form
of Exhibit B hereto (or telephonic notice confirmed in a writing in the form of
Exhibit B hereto) of each Revolving Credit Loan requested hereunder (a "Loan
Request") no less than (i) 10:00 a.m. on the proposed Drawdown Date of any Base
Rate Loan (which must be a Business Day) and (ii) three (3) Eurodollar Business
Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan (which must
be a Business Day). Each such notice shall specify (A) the principal amount of
the Revolving Credit Loan requested, (B) the proposed Drawdown Date of such
Revolving Credit Loan, (C) the Interest Period for such Revolving Credit Loan
and (D) the Type of such Revolving Credit Loan. Promptly upon receipt of any
such notice, the Administrative Agent shall notify each of the Banks thereof.
Each Loan Request shall be irrevocable and binding on the Borrower and shall
obligate the Borrower to accept the Revolving Credit Loan requested from the
Banks on the proposed Drawdown Date. Each Loan Request shall be in a minimum
aggregate amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
2.7 Conversion Options.
2.7.1 Conversion to Different Type of Revolving Credit Loan. The
Borrower may elect from time to time to convert any outstanding Revolving Credit
Loan to a Revolving Credit Loan of another Type, provided that (i) with respect
to any such conversion of a Eurodollar Rate Loan to a Base Rate Loan, the
Borrower shall give the Administrative Agent prior written notice of such
election not later than 10:00 a.m. on the proposed effective date of such
election; (ii) with respect to any such conversion of a Base Rate Loan to a
Eurodollar Rate Loan, the Borrower shall give the Administrative Agent at least
three (3) Eurodollar Business Days prior written notice of such election; (iii)
with respect to any such conversion of a Eurodollar Rate Loan into a Base Rate
Loan, such conversion shall only be made on the last day of the Interest Period
with respect thereto; and (iv) no Loan may be converted into a Eurodollar Rate
Loan when any Default or Event of Default has occurred and is continuing. On the
date on which such conversion is being made each Bank shall take such action as
is necessary to transfer its Commitment Percentage of such Revolving Credit
Loans to its Domestic Lending Office or its Eurodollar Lending Office, as the
case may be. All or any part of outstanding Revolving Credit Loans of any Type
may be converted into a Revolving Credit Loan of another Type as provided
herein, provided that any partial conversion shall be in an aggregate principal
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof.
Each Conversion Request relating to the conversion of a Base Rate Loan to a
Eurodollar Rate Loan shall be irrevocable by the Borrower.
2.7.2 Continuation of Type of Revolving Credit Loan. Any Revolving
Credit Loan of any Type may be continued as a Revolving Credit Loan of the same
Type upon the expiration of an Interest Period with respect thereto by
compliance by the Borrower with the notice provisions contained in ss.2.7.1;
provided that no Eurodollar Rate Loan may be continued as such when any Default
or Event of Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the first Interest Period
relating thereto ending during the continuance of any Default or Event of
Default of which officers of the Administrative Agent active upon the Borrower's
account have actual
<PAGE>
knowledge. In the event that the Borrower fails to provide any such notice with
respect to the continuation of any Eurodollar Rate Loan as such, then such
Eurodollar Rate Loan shall be automatically converted to a Base Rate Loan on the
last day of the first Interest Period relating thereto. The Administrative Agent
shall notify the Banks promptly when any such automatic conversion contemplated
by this ss.2.7 is scheduled to occur.
2.7.3 Eurodollar Rate Loans. Any conversion to or from Eurodollar Rate
Loans shall be in such amounts and be made pursuant to such elections so that,
after giving effect thereto, the aggregate principal amount of all Eurodollar
Rate Loans having the same Interest Period shall not be less than $5,000,000 or
an integral multiple of $1,000,000 in excess thereof. No more than five (5)
Eurodollar Rate Loans shall be outstanding at one time.
2.8 Funds for Revolving Credit Loans.
2.8.1. Funding Procedures. Not later than 12:00 noon (New York time) on
the proposed Drawdown Date of any Revolving Credit Loans, each of the Banks will
make available to the Administrative Agent, at the Administrative Agent's Head
Office, in immediately available funds, the amount of such Bank's Commitment
Percentage of the amount of the requested Revolving Credit Loans. Upon receipt
from each Bank of such amount, and upon receipt of the documents required by
ss.ss.12 and 13 and the satisfaction of the other conditions set forth therein,
to the extent applicable, the Administrative Agent will make available to the
Borrower the aggregate amount of such Revolving Credit Loans made available to
the Administrative Agent by the Banks. The failure or refusal of any Bank to
make available to the Administrative Agent at the aforesaid time and place on
any Drawdown Date the amount of its Commitment Percentage of the requested
Revolving Credit Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Administrative Agent the amount of
such other Bank's Commitment Percentage of any requested Revolving Credit Loans.
2.8.2 Advances by Administrative Agent. The Administrative Agent may,
unless notified to the contrary by any Bank prior to a Drawdown Date, assume
that such Bank has made available to the Administrative Agent on such Drawdown
Date the amount of such Bank's Commitment Percentage of the Revolving Credit
Loans to be made on such Drawdown Date, and the Administrative Agent may (but it
shall not be required to), in reliance upon such assumption, make available to
the Borrower a corresponding amount. If any Bank makes available to the
Administrative Agent such amount on a date after such Drawdown Date, such Bank
shall pay to the Administrative Agent on demand an amount equal to the product
of (i) the average computed for the period referred to in clause (iii) below, of
the weighted average interest rate paid by the Administrative Agent for federal
funds acquired by the Administrative Agent during each day included in such
period, times (ii) the amount of such Bank's Commitment Percentage of such
Revolving Credit Loans, times (iii) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Commitment Percentage of such Revolving Credit
Loans shall become immediately available to the Administrative Agent, and the
denominator of which is 365. A statement of the Administrative Agent submitted
to such Bank with respect to any amounts owing under this paragraph shall be
prima facie evidence of the amount due and owing to the Administrative Agent by
such Bank. If the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans is not made available to the Administrative Agent by such Bank
within three (3) Business Days following such Drawdown Date, the Administrative
Agent shall be entitled to recover such amount from the Borrower on demand, with
interest thereon at the rate per annum applicable to the Revolving Credit Loans
made on such Drawdown Date.
<PAGE>
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. Maturity. The Borrower promises to pay on the Maturity Date, and there
shall become absolutely due and payable on the Maturity Date, all of the
Revolving Credit Loans outstanding on such date, together with any and all
accrued and unpaid interest thereon.
3.2. Mandatory Repayments of Revolving Credit Loans. If at any time the
aggregate outstanding amount of the Revolving Credit Loans exceeds the Total
Commitment, then the Borrower shall immediately pay the amount of such excess to
the Administrative Agent for the respective accounts of the Banks for
application to the Revolving Credit Loans. Each prepayment of Revolving Credit
Loans shall be allocated among the Banks, in proportion, as nearly as
practicable, to the respective unpaid principal amount of each Bank's Revolving
Credit Note, with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
3.3. Optional Repayments of Revolving Credit Loans. The Borrower shall have the
right, at its election, to repay the outstanding amount of the Revolving Credit
Loans, as a whole or in part, at any time without penalty or premium, provided
that any full or partial prepayment of the outstanding amount of any Eurodollar
Rate Loans pursuant to this ss.3.3 may be made only on the last day of the
Interest Period relating thereto. The Borrower shall give the Administrative
Agent notice of any proposed prepayment pursuant to this ss.3.3 of Base Rate
Loans not later than 11:00 a.m. New York time on the date of such prepayment and
of any proposed prepayment pursuant to this ss.3.3 of Eurodollar Rate Loans not
less than two (2) Eurodollar Business Days prior to the date of such prepayment,
in each case specifying the proposed date of prepayment of Revolving Credit
Loans, the principal amount to be prepaid and which Loan is to be repaid. Each
such partial prepayment of the Revolving Credit Loans shall be in a minimum
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof,
shall be accompanied by the payment of accrued interest on the principal prepaid
to the date of prepayment and shall be applied, in the absence of instruction by
the Borrower, first to the principal of Base Rate Loans and then to the
principal of Eurodollar Rate Loans. Each partial prepayment shall be allocated
among the Banks, in proportion, as nearly as practicable, to the respective
unpaid principal amount of each Bank's Revolving Credit Note, with adjustments
to the extent practicable to equalize any prior repayments not exactly in
proportion.
4. GUARANTY.
4.1 Guaranty of Payment and Performance. Each of the Guarantors and the Borrower
is a member of a group of interrelated and interdependent corporations, the
success of any one of which is dependent upon the success of the others. Each of
the Guarantors expects to receive substantial direct and indirect benefits from
the extensions of credit to the Borrower hereunder (which benefits are hereby
acknowledged). In consideration thereof, each of the Guarantors hereby jointly
and severally guarantees to the Agents and the Banks, the full and punctual
payment when due (whether at stated maturity, by required pre-payment, by
acceleration or otherwise), as well as the performance, of all of the
Obligations including all such which would become due but for the operation of
the automatic stay pursuant to ss.362(a) of the Federal Bankruptcy Code and the
operation of ss.ss.502(b) and 506(b) of the Federal Bankruptcy Code. Each of the
Guarantors is accepting joint and several liability hereunder in consideration
of the other Guarantors accepting joint and several liability hereunder. This
Guaranty is an absolute, unconditional and continuing guaranty of the full and
punctual payment and performance of all of the Obligations and not of their
collectability only and is in no way conditioned upon any requirement that the
Agents or any Bank first attempt to collect any of the Obligations from the
Borrower or resort to any collateral security or other means of obtaining
payment. Should the Borrower default in the payment or performance of any of the
Obligations, the obligations of the Guarantors hereunder
<PAGE>
with respect to such Obligations in default shall, upon demand by the
Administrative Agent, become immediately due and payable to the Administrative
Agent, for the benefit of the Banks and the Agents, without demand or notice of
any nature, all of which are expressly waived by each of the Guarantors.
Payments by the Guarantors hereunder may be required by the Administrative Agent
on any number of occasions. All payments by any of the Guarantors hereunder
shall be made to the Administrative Agent, in the manner and at the place of
payment specified therefor in ss.6.1.1 hereof, for the account of the Banks and
the Agents.
4.2 Guarantors' Agreement to Pay Enforcement Costs, etc. Each of the Guarantors
further jointly and severally agrees, as the principal obligor and not as a
guarantor only, to pay to the Administrative Agent, on demand, all reasonable
costs and expenses (including court costs and reasonable legal expenses,
including the allocated cost of staff counsel) incurred or expended by any Agent
or any Bank in connection with the Obligations, this Guaranty and the
enforcement thereof, together with interest on amounts recoverable under this
ss.4 from the time when such amounts become due until payment, whether before or
after judgment, at the rate of interest for overdue principal set forth in
ss.6.9 hereof, provided that if such interest exceeds the maximum amount
permitted to be paid under applicable law, then such interest shall be reduced
to such maximum permitted amount.
4.3 Waivers by the Guarantors; Banks' Freedom to Act. Each of the Guarantors
agrees that the Obligations will be paid and performed strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agents or any Bank with respect thereto. Each of the Guarantors
waives promptness, diligence, presentment, demand, protest, notice of
acceptance, notice of any Obligations incurred and all other notices of any
kind, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
require the marshalling of assets of the Borrower or any other entity or other
Person primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. Without limiting the generality of the
foregoing, each of the Guarantors agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any Obligation and
agrees that the obligations of such Guarantor hereunder shall not be released or
discharged, in whole or in part, or otherwise affected by (i) the failure of the
Agents or any Bank to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Person primarily or secondarily liable
with respect to any of the Obligations; (ii) any extensions, compromise,
refinancing, consolidation or renewals of any Obligation; (iii) any change in
the time, place or manner of payment of any of the Obligations or any
rescissions, waivers, compromise, refinancing, consolidation or other amendments
or modifications of any of the terms or provisions of this Credit Agreement, the
other Loan Documents or any other agreement evidencing, securing or otherwise
executed in connection with any of the Obligations, (iv) the addition,
substitution or release of any entity or other Person primarily or secondarily
liable for any Obligation; (v) the adequacy of any rights which the Agents or
any Bank may have against any collateral security or other means of obtaining
repayment of any of the Obligations; (vi) the impairment of any collateral
securing any of the Obligations, including without limitation the failure to
perfect or preserve any rights which the Agents or any Bank might have in such
collateral security or the substitution, exchange, surrender, release, loss or
destruction of any such collateral security; or (vii) any other act or omission
which might in any manner or to any extent vary the risk of such Guarantor or
otherwise operate as a release or discharge of such Guarantor, all of which may
be done without notice to such Guarantor. To the fullest extent permitted by
law, each of the Guarantors hereby expressly waives any and all rights or
defenses arising by reason of (A) any "one action" or "anti-deficiency" law
which would otherwise prevent the Agents or any Bank from bringing any action,
including any claim for a deficiency, or exercising any other right or remedy
(including any right of set-off), against such Guarantor before or after the
Agent's or such Bank's commencement or completion of any foreclosure action,
whether judicially, by exercise
<PAGE>
of power of sale or otherwise, or (B) any other law which in any other way would
otherwise require any election of remedies by the Agents or any Bank.
4.4. Unenforceability of Obligations Against Borrower. If for any reason the
Borrower has no legal existence or is under no legal obligation to discharge any
of the Obligations, or if any of the Obligations have become irrecoverable from
the Borrower by reason of the Borrower's insolvency, bankruptcy or
reorganization or by other operation of law or for any other reason, this
Guaranty shall nevertheless be binding on each of the Guarantors to the same
extent as if each such Guarantor at all times had been the principal obligor on
all such Obligations. In the event that acceleration of the time for payment of
any of the Obligations is stayed upon the insolvency, bankruptcy or
reorganization of the Borrower, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of this Credit Agreement, the
other Loan Documents or any other agreement evidencing, securing or otherwise
executed in connection with any Obligation shall be immediately due and payable
by each of the Guarantors.
4.5. Subrogation; Subordination.
4.5.1. Postponement of Rights Against Borrower. Until the final payment
and performance in full in cash of all of the Obligations and the termination of
the Commitments: none of the Guarantors shall exercise any rights against the
Borrower arising as a result of payment by each such Guarantor hereunder, by way
of subrogation, reimbursement, restitution, contribution or otherwise, and none
of the Guarantors will prove any claim in competition with the Agents or any
Bank in respect of any payment hereunder in any bankruptcy, insolvency or
reorganization case or proceedings of any nature; none of the Guarantors will
claim any setoff, recoupment or counterclaim against the Borrower in respect of
any liability of any such Guarantor to the Borrower; and each of the Guarantors
waives any benefit of and any right to participate in any collateral security
which may be held by the Agents or any Bank.
4.5.2. Subordination. The payment of any amounts due with respect to
any indebtedness of the Borrower for money borrowed or credit received now or
hereafter owed to any of the Guarantors is hereby subordinated to the prior
payment in full in cash of all of the Obligations. Each of the Guarantors agrees
that, after the occurrence of any default in the payment or performance of any
of the Obligations, such Guarantor will not demand, sue for or otherwise attempt
to collect any such indebtedness of the Borrower to such Guarantor until all of
the Obligations shall have been paid in full. If, notwithstanding the foregoing
sentence, any of the Guarantors shall collect, enforce or receive any amounts in
respect of such indebtedness while any Obligations are still outstanding, such
amounts shall be collected, enforced and received by such Guarantor as trustee
for the Banks and the Agents and be paid over to the Administrative Agent, for
the benefit of the Banks and the Agents, on account of the Obligations without
affecting in any manner the liability of the Guarantors under the other
provisions of this Guaranty.
4.5.3. Provisions Supplemental. The provisions of this ss.4.5 shall be
supplemental to and not in derogation of any rights and remedies of the Banks
and the Agents under any separate subordination agreement which an Agent may at
any time and from time to time enter into with any of the Guarantors for the
benefit of the Banks and the Agents.
4.6. Further Assurances. Each of the Guarantors agrees that it will from time to
time, at the request of the Agents, do all such things and execute all such
documents as the Agents may consider necessary or desirable to give full effect
to this Guaranty and to perfect and preserve the rights and powers of the Banks
and the Agents hereunder. Each of the Guarantors acknowledges and confirms that
such Guarantor itself has established its own adequate means of obtaining from
the Borrower on a continuing basis all information desired by such Guarantor
concerning the financial condition of the Borrower and that such
<PAGE>
Guarantor will look to the Borrower and not to the Agents or any Bank in order
for such Guarantor to keep adequately informed of changes in the Borrower's
financial condition.
4.7. Reinstatement. Notwithstanding any termination of this Guaranty, this
Guaranty shall continue to be effective or be reinstated, if at any time any
payment made or value received with respect to any Obligation is rescinded or
must otherwise be returned by an Agent or any Bank upon the insolvency,
bankruptcy or reorganization of the Borrower or any Guarantor, or otherwise, all
as though such payment had not been made or value received.
4.8. Successors and Assigns. This Guaranty shall be binding upon each of the
Guarantors, its successors and assigns, and shall inure to the benefit of the
Agents and the Banks and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing sentence, each Bank may, in
accordance with the provisions of ss.20, assign or otherwise transfer this
Credit Agreement, the other Loan Documents or any other agreement or note held
by it evidencing, securing or otherwise executed in connection with the
Obligations, or sell participations in any interest therein, to any other
Person, and such other Person shall thereupon become vested, to the extent set
forth in the agreement evidencing such assignment, transfer or participation,
with all the rights in respect thereof granted to such Bank herein. None of the
Guarantors may assign any of its obligations hereunder.
4.9. Severability. It is the intention and agreement of the Guarantors, the
Agents and the Banks that the obligations of the Guarantors under this Guaranty
shall be valid and enforceable against the Guarantors to the maximum extent
permitted by applicable law. Accordingly, if any provision of this Guaranty
creating any obligation of any Guarantor shall be declared to be invalid or
unenforceable in any respect or to any extent, it is the stated intention and
agreement of the Guarantors, the Agents and the Banks that any balance of the
obligation created by such provision and all other obligations of such Guarantor
to the Agent and the Banks created by other provisions of this Guaranty shall
remain valid and enforceable. Likewise, if by final order, a court of competent
jurisdiction shall declare any sums which the Agents or the Banks may be
otherwise entitled to collect from the Guarantors under this Guaranty to be in
excess of those permitted under any law (including any federal or state
fraudulent conveyance or like statute or rule of law) applicable to the
obligations under this Guaranty, it is the stated intention and agreement of the
Guarantors, the Agents and the Banks that all sums not in excess of those
permitted under such applicable law shall remain fully collectible by the Agents
and the Banks from the Guarantors.
4.10. Limitation on Guaranty. Notwithstanding anything else set forth in this
Section 4, it is understood and agreed by the Borrower, the Guarantors, the
Agents and the Banks that the maximum liability of Seabulk Transmarine
Partnership, Ltd. under the Guaranty shall be limited to sixty-six and
two-thirds percent (66-2/3%) of the fair market value, from time to time, of the
United States Flag Vessel The Seabulk America, Official No. 961357.
5. FEES.
5.1. Closing Fee. The Borrower agrees to pay to the Administrative Agent, on the
Closing Date, for the account of each Bank, a closing fee in the amount set
forth opposite such Bank's name on Schedule 5.1 hereto.
5.2. Agency Fee. The Borrower shall pay to the Administrative Agent and the
Syndication Agent an Agency fee as provided in the Agency Fee Letter.
6. CERTAIN GENERAL PROVISIONS.
<PAGE>
6.1 Funds for Payments.
6.1.1. Payments to Administrative Agent. All payments of principal,
interest, commitment fees, and any other amounts due hereunder or under any of
the other Loan Documents shall be made to the Administrative Agent, for the
respective accounts of the Banks and the Agents, at the Administrative Agent's
Head Office or at such other location in the New York, New York area that the
Administrative Agent may from time to time designate, in each case in
immediately available funds.
6.1.2. No Offset, etc. All payments by the Borrower hereunder and under
any of the other Loan Documents shall be made without setoff or counterclaim and
free and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein unless
the Borrower is compelled by law to make such deduction or withholding. If any
such obligation is imposed upon the Borrower with respect to any amount payable
by it hereunder or under any of the other Loan Documents, the Borrower will pay
to the Administrative Agent, for the account of the Banks or (as the case may
be) the Agents, on the date on which such amount is due and payable hereunder or
under such other Loan Document, such additional amount in Dollars as shall be
necessary to enable the Banks or the Agents to receive the same net amount which
the Banks or the Agents would have received on such due date had no such
obligation been imposed upon the Borrower. The Borrower will deliver promptly to
the Administrative Agent certificates or other valid vouchers for all taxes or
other charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
6.1.3. Receipt of Funds By Administrative Agent. The Borrower agrees
that, on each day on which a payment is due hereunder with respect to any Loan
or under any Note, it will deliver to the Administrative Agent, not later than
12:00 noon (New York time), the amount so due on such day.
6.2. Computations. All computations of interest on the Base Rate Loans and of
commitment fees and other fees hereunder shall be based on a 365/366-day year
and paid for the actual number of days elapsed. All computations of interest on
the Eurodollar Rate Loans shall be based on a 360-day year and paid for the
actual number of days elapsed. Except as otherwise provided in the definition of
the term "Interest Period" with respect to Eurodollar Rate Loans, whenever a
payment hereunder or under any of the other Loan Documents becomes due on a day
that is not a Business Day, the due date for such payment shall be extended to
the next succeeding Business Day, and interest shall accrue during such
extension. The outstanding amount of the Loans as reflected on the Revolving
Credit Note Records from time to time shall be considered correct and binding on
the Borrower unless within five (5) Business Days after receipt of any notice by
the Administrative Agent or any of the Banks of such outstanding amount, the
Administrative Agent or such Bank shall notify the Borrower to the contrary.
6.3. Inability to Determine Eurodollar Rate. In the event, prior to the
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Administrative Agent shall determine or be notified by the Required Banks that
adequate and reasonable methods do not exist for ascertaining the Eurodollar
Rate that would otherwise determine the rate of interest to be applicable to any
Eurodollar Rate Loan during any Interest Period, the Administrative Agent shall
forthwith give notice of such determination (which shall be conclusive and
binding on the Borrower and the Banks) to the Borrower and the Banks. In such
event (i) any Loan Request or Conversion Request with respect to Eurodollar Rate
Loans shall be automatically withdrawn and shall be deemed a request for Base
Rate Loans, (ii) each Eurodollar Rate Loan will automatically, on the last day
of the then current Interest Period relating thereto, become a Base Rate Loan,
and (iii) the obligations of the Banks to make Eurodollar Rate Loans shall be
suspended until the Administrative Agent or the Required Banks determines that
the circumstances giving rise to such
<PAGE>
suspension no longer exist, whereupon the Administrative Agent or, as the case
may be, the Administrative Agent upon the instruction of the Required Banks,
shall so notify the Borrower and the Banks.
6.4. Illegality. Notwithstanding any other provisions herein, if any present or
future law, regulation, treaty or directive or in the interpretation or
application thereof shall make it unlawful for any Bank to make or maintain
Eurodollar Rate Loans, such Bank shall forthwith give notice of such
circumstances to the Borrower and the other Banks and thereupon (i) the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (ii) such
Bank's Revolving Credit Loans then outstanding as Eurodollar Rate Loans, if any,
shall be converted automatically to Base Rate Loans on the last day of each
Interest Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law. The Borrower hereby agrees promptly to pay the
Administrative Agent for the account of such Bank, upon demand by such Bank, any
additional amounts necessary to compensate such Bank for any costs incurred by
such Bank in making any conversion in accordance with this ss.6.4, including any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Rate Loans hereunder.
6.5. Additional Costs, etc. If any present or future applicable law, which
expression, as used herein, includes statutes, rules and regulations thereunder
and interpretations thereof by any competent court or by any governmental or
other regulatory body or official charged with the administration or the
interpretation thereof and requests, directives, instructions and notices at any
time or from time to time hereafter made upon or otherwise issued to any Bank or
the Administrative Agent by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law), shall:
(a) subject any Bank or the Administrative Agent to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any
nature with respect to this Credit Agreement, the other Loan
Documents, such Bank's Commitment or the Loans (other than
taxes based upon or measured by the income or profits of such
Bank or the Administrative Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Loans or any other amounts
payable to any Bank or the Administrative Agent under this
Credit Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit
Agreement) any special deposit, reserve, assessment,
liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or
letters of credit issued by, or commitments of an office of
any Bank, or
(d) impose on any Bank or the Administrative Agent any other
conditions or requirements with respect to this Credit
Agreement, the other Loan Documents, the Loans, such Bank's
Commitment, or any class of loans, letters of credit or
commitments of which any of the Loans or such Bank's
Commitment forms a part, and the result of any of the
foregoing is
(i) to increase the cost to any Bank of making, funding, issuing, renewing,
extending or maintaining any of the Loans or such Bank's Commitment, or
<PAGE>
(ii) to reduce the amount of principal, interest, or other amount payable to
such Bank or the Administrative Agent hereunder on account of such Bank's
Commitment or any of the Loans, or
(iii)to require such Bank or the Administrative Agent to make any payment or to
forego any interest or other sum payable hereunder, the amount of which
payment or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by such Bank or the
Administrative Agent from the Borrower hereunder, then, and in each such
case, the Borrower will, upon demand made by such Bank or (as the case may
be) the Administrative Agent at any time and from time to time and as often
as the occasion therefor may arise, pay to such Bank or the Administrative
Agent such additional amounts as will be sufficient to compensate such Bank
or the Administrative Agent for such additional cost, reduction, payment or
foregone interest or other sum.
6.6. Capital Adequacy. If after the date hereof any Bank or the Administrative
Agent determines that (i) the adoption of or change in any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) regarding capital requirements for banks or bank holding companies
or any change in the interpretation or application thereof by a court or
governmental authority with appropriate jurisdiction, or (ii) compliance by such
Bank or the Administrative Agent or any corporation controlling such Bank or the
Administrative Agent with any law, governmental rule, regulation, policy,
guideline or directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect of reducing the return on such
Bank's or the Administrative Agent's commitment with respect to any Loans to a
level below that which such Bank or the Administrative Agent could have achieved
but for such adoption, change or compliance (taking into consideration such
Bank's or the Administrative Agent's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by such Bank or (as the case may be) the Administrative Agent to
be material, then such Bank or the Administrative Agent may notify the Borrower
of such fact. To the extent that the amount of such reduction in the return on
capital is not reflected in the Base Rate, the Borrower agrees to pay such Bank
or (as the case may be) the Administrative Agent for the amount of such
reduction in the return on capital as and when such reduction is determined upon
presentation by such Bank or (as the case may be) the Administrative Agent of a
certificate in accordance with ss.6.7 hereof. Each Bank shall allocate such cost
increases among its customers in good faith and on an equitable basis.
6.7. Certificate. A certificate setting forth any additional amounts payable
pursuant to ss.ss.6.5 or 6.6 and a brief explanation of such amounts which are
due, submitted by any Bank or the Administrative Agent to the Borrower, shall be
conclusive, absent manifest error, that such amounts are due and owing.
6.8. Indemnity. The Borrower agrees to indemnify each Bank and to hold each Bank
harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (i)
default by the Borrower in payment of the principal amount of or any interest on
any Eurodollar Rate Loans as and when due and payable, including any such loss
or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (ii)
default by the Borrower in making a borrowing or conversion after the Borrower
has given (or is deemed to have given) a Loan Request or a Conversion Request
relating thereto in accordance with ss.2.6 or ss.2.7 or (iii) the making of any
payment of a Eurodollar Rate Loan or the making of any conversion of any such
Loan to a Base Rate Loan on a day that is not the last day of the
<PAGE>
applicable Interest Period with respect thereto, including interest or fees
payable by such Bank to lenders of funds obtained by it in order to maintain any
such Loans.
6.9. Interest After Default.
6.9.1. Overdue Amounts. Overdue principal and (to the extent permitted
by applicable law) interest on the Loans and all other overdue amounts payable
hereunder or under any of the other Loan Documents shall bear interest
compounded monthly and payable on demand at a rate per annum equal to two
percent (2%) above the Base Rate until such amount shall be paid in full (after
as well as before judgment).
6.9.2. Amounts Not Overdue. During the continuance of a Default or an
Event of Default the principal of the Revolving Credit Loans not overdue shall,
until such Default or Event of Default has been cured or remedied or such
Default or Event of Default has been waived by the Required Banks pursuant to
ss.27, bear interest at a rate per annum equal to the greater of (i) two percent
(2%) above the rate of interest otherwise applicable to such Revolving Credit
Loans pursuant to ss.2.5 and (ii) the rate of interest applicable to overdue
principal pursuant to ss.6.9.1.
6.10. Replacement of Banks. If any Bank (an "Affected Bank") (i) makes demand
upon the Borrower for (or if the Borrower is otherwise required to pay) amounts
pursuant to ss.ss.6.5 or 6.6, (ii) is unable to make or maintain Eurodollar Rate
Loans as a result of a condition described in ss.6.4 or (iii) defaults in its
obligation to make Loans in accordance with the terms of this Agreement (such
Bank being referred to as a "Defaulting Bank"), the Borrower may, within ninety
(90) days of receipt of such demand, notice (or the occurrence of such other
event causing the Borrower to be required to pay such compensation or causing
ss.6.4 to be applicable), or default, as the case may be, by notice (a
"Replacement Notice") in writing to the Agents and such Affected Bank (A)
request the Affected Bank to cooperate with the Borrower in obtaining a
replacement bank satisfactory to the Agents and the Borrower (the "Replacement
Bank"); (B) request the non-Affected Banks to acquire and assume all of the
Affected Bank's Loans and Commitment as provided herein, but none of such Banks
shall be under an obligation to do so; or (C) designate a Replacement Bank
reasonably satisfactory to the Agents. If any satisfactory Replacement Bank
shall be obtained, and/or if any one or more of the non-Affected Banks shall
agree to acquire and assume all of the Affected Bank's Loans and Commitment,
then such Affected Bank shall assign, in accordance with ss.20, all of its
Commitment, Loans, Notes and other rights and obligations under this Agreement
and all other Loan Documents to such Replacement Bank or non-Affected Banks, as
the case may be, in exchange for payment of the principal amount so assigned and
all interest and fees accrued on the amount so assigned, plus all other
Obligations then due and payable to the Affected Bank; provided, however, that
(i) such assignment shall be without recourse, representation or warranty and
shall be on terms and conditions reasonably satisfactory to such Affected Bank
and such Replacement Bank and/or non-Affected Banks, as the case may be, (ii)
prior to any such assignment, the Borrower shall have paid to such Affected Bank
all amounts properly demanded and unreimbursed under ss.ss.6.5, 6.6 and 6.7, and
(iii) no such assignment shall be effective (A) while any Default or Event of
Default shall have occurred and be continuing or (B) until the Borrower shall
have paid the Administrative Agent an administration fee of $3,000 if such
Replacement Bank is not already a Bank under this Credit Agreement. Upon the
effective date of such assignment, the Borrower shall issue replacement Notes to
such Replacement Bank and/or non-Affected Banks, as the case may be, and such
institution shall become a "Bank" for all purposes under this Agreement and the
other Loan Documents.
<PAGE>
7. GUARANTIES.
(a) The Obligations shall be guaranteed pursuant to the terms of the Guaranty.
The Borrower shall, at the request of the Administrative Agent, cause each
of its Subsidiaries acquired or formed after the Closing Date, no later
than thirty (30) days after the acquisition or formation of such
Subsidiary, to (i) execute and deliver to each of the Banks and the
Administrative Agent a guaranty which is substantially in the form of the
Guaranty and which is satisfactory to the Banks and the Administrative
Agent in all respects and (ii) execute and deliver to each of the Banks and
the Administrative Agent all other documents and instruments, including,
without limitation, corporate authority documents and legal opinions, as
the Administrative Agent may reasonably request in connection with the
delivery of such guaranty. The Borrower shall deliver to the Banks and the
Administrative Agent an updated Schedule 8.18 upon the acquisition or
formation of any Subsidiary.
(b) In the event that, at any time, (i) any Subsidiary of the Borrower, whether
now existing or formed after the date hereof, which is not a Guarantor (a
"Non-Guarantor Subsidiary") acquires, in any manner (including, without
limitation, through (A) an Investment by the Borrower or any of its
Subsidiaries in such Non-Guarantor Subsidiary, (B) a merger of such
Non-Guarantor Subsidiary with another Person, or (C) the transfer of assets
from another Subsidiary of the Borrower to such Non-Guarantor Subsidiary),
any assets with a net book value in excess of $100,000, other than stock or
other equity interests in any Person which is a Subsidiary of the Borrower,
or (ii) if such Non-Guarantor Subsidiary shall have any business operations
or activities (other than the ownership of such stock or equity interests),
or (iii) if such Non-Guarantor Subsidiary shall become liable with respect
to any indebtedness in excess of $10,000 (other than indebtedness owing to
the Borrower or a Guarantor), the Borrower shall immediately (x) inform the
Administrative Agent and the Banks of such occurrence and (y) unless
otherwise agreed to in writing by the Administrative Agent, cause such
Non-Guarantor Subsidiary to (1) execute and deliver to each of the Banks
and the Administrative Agent a guaranty of the Obligations which is
substantially in the form of the Guaranty and which is satisfactory to the
Banks and the Administrative Agent in all respects and (2) execute and
deliver to each of the Banks and the Administrative Agent all other
documents and instruments, including, without limitation, corporate
authority documents and legal opinions, as the Administrative Agent may
reasonably request in connection with the delivery of such guaranty;
provided, that (I) with respect to the Subsidiaries of the Borrower
organized under the laws of the Marshall Islands, the Borrower shall have
thirty (30) days from the Closing Date to cause such Subsidiaries to
deliver a guaranty as provided in thisss.7(b) and (II) the provisions of
thisss.7(b) shall not apply to Seabulk Chemical Carriers, Inc., so long as
it shall be contractually prohibited from delivering a guaranty of the
Obligations.
8. REPRESENTATIONS AND WARRANTIES. The Borrower and each Guarantor represents
and warrants to the Banks and the Agents as follows:
8.1. Corporate Authority.
8.1.1. Incorporation; Good Standing. Each of the Borrower and its
Subsidiaries (i) is a corporation or limited partnership, as the case may be,
duly organized, validly existing and in good
<PAGE>
standing under the laws of its state of incorporation or organization, (ii) has
all requisite corporate or limited partnership power to own its property and
conduct its business as now conducted and as presently contemplated, and (iii)
is in good standing as a foreign corporation or a foreign limited partnership,
as the case may be, and is duly authorized to do business in each jurisdiction
where such qualification is necessary except where a failure to be so qualified
would not have a materially adverse effect on the business, assets or financial
condition of the Borrower or such Subsidiary.
8.1.2. Authorization. The execution, delivery and performance of this
Credit Agreement and the other Loan Documents to which the Borrower or any of
its Subsidiaries is or is to become a party and the transactions contemplated
hereby and thereby (i) are within the corporate or limited partnership, as the
case may be, authority of such Person, (ii) have been duly authorized by all
necessary corporate or limited partnership, as the case may be, proceedings,
(iii) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which the Borrower or any of
its Subsidiaries is subject or any judgment, order, writ, injunction, license or
permit applicable to the Borrower or any of its Subsidiaries and (iv) do not
conflict with any provision of the corporate charter, bylaws, or partnership
agreement of, or any agreement or other instrument binding upon, the Borrower or
any of its Subsidiaries.
8.1.3. Enforceability. The execution and delivery of this Credit
Agreement and the other Loan Documents to which the Borrower or any of its
Subsidiaries is or is to become a party will result in valid and legally binding
obligations of such Person enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
8.2. Governmental Approvals. The execution, delivery and performance by the
Borrower and any of its Subsidiaries of this Credit Agreement and the other Loan
Documents to which the Borrower or any of its Subsidiaries is or is to become a
party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained.
8.3. Title to Properties; Leases. Except as indicated on Schedule 8.3 hereto,
the Borrower and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Borrower and its Subsidiaries as at the
Balance Sheet Date or acquired since that date (except property and assets sold
or otherwise disposed of in the ordinary course of business since that date),
subject to no rights of others, including any mortgages, leases, conditional
sales agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
8.4. Financial Statements.
8.4.1. Fiscal Year, Fiscal Quarters. The Borrower and each of its
Subsidiaries has a fiscal year which is the twelve months ending on December 31
of each calendar year and fiscal quarters ending on March 31, June 30, September
30, and December 31 of each calendar year.
8.4.2. Financial Statements. There has been furnished to each of the
Banks a consolidated balance sheet of the Borrower and its Subsidiaries as at
the Balance Sheet Date, and a consolidated statement of income of the Borrower
and its Subsidiaries for the fiscal year then ended, certified by Ernst & Young
LLP. Such balance sheet and statement of income have been prepared in accordance
with
<PAGE>
generally accepted accounting principles and fairly present the financial
condition of the Borrower as at the close of business on the date thereof and
the results of operations for the fiscal year then ended. There are no
contingent liabilities of the Borrower or any of its Subsidiaries as of such
date involving material amounts, known to the officers of the Borrower, which
were not disclosed in such balance sheet and the notes related thereto.
8.5. No Material Changes, etc.; Solvency.
(a) Since the Balance Sheet Date there has occurred no materially adverse
change in the condition (financial or otherwise), operations, performance,
properties, or prospects of the Borrower and its Subsidiaries as shown on
or reflected in the consolidated balance sheet of the Borrower and its
Subsidiaries as at the Balance Sheet Date, or the consolidated statement of
income for the fiscal year then ended, other than changes in the ordinary
course of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of
the Borrower or any of its Subsidiaries. Since the Balance Sheet Date, the
Borrower has not made any Distribution, except as permitted underss.10.4.
(b) The Borrower and each of the Guarantors (before and after giving effect to
the transactions contemplated by this Agreement and the other Loan
Documents) (i) is solvent, (ii) has assets having a fair value in excess of
its liabilities, (iii) has assets having a fair value in excess of the
amount required to pay its liabilities on existing debts as such debts
become absolute and matured, and (iv) has, and expects to continue to have,
access to adequate capital for the conduct of its business and the ability
to pay its debts from time to time incurred in connection with the
operation of its business as such debts mature.
8.6. Franchises, Patents, Copyrights, etc. Each of the Borrower and its
Subsidiaries possesses all franchises, patents, copyrights, trademarks, trade
names, licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without known
conflict with any rights of others.
8.7. Litigation. Except as set forth in Schedule 8.7 hereto, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or any of its Subsidiaries before any court, tribunal or
administrative agency or board that, if adversely determined, might, either in
any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of the Borrower and its Subsidiaries or
materially impair the right of the Borrower and its Subsidiaries, considered as
a whole, to carry on business substantially as now conducted by them, or result
in any substantial liability not adequately covered by insurance, or for which
adequate reserves are not maintained on the consolidated balance sheet of the
Borrower and its Subsidiaries, or which question the validity of this Credit
Agreement or any of the other Loan Documents, or any action taken or to be taken
pursuant hereto or thereto.
8.8. No Materially Adverse Contracts, etc. Except as disclosed on Schedule 8.8,
neither the Borrower nor any of its Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation that has or is expected in the future to have a materially adverse
effect on the business, assets or financial condition of the Borrower or any of
its Subsidiaries. Neither the Borrower nor any of its Subsidiaries is a party to
any contract or agreement that has or is expected, in the judgment of the
Borrower's officers, to have any materially adverse effect on the business of
the Borrower or any of its Subsidiaries.
<PAGE>
8.9. Compliance with Other Instruments, Laws, etc. Neither the Borrower nor any
of its Subsidiaries is in violation of any provision of its charter documents,
bylaws, or any agreement or instrument to which it may be subject or by which it
or any of its properties may be bound or any decree, order, judgment, statute,
license, rule or regulation, in any of the foregoing cases in a manner that
could result in the imposition of substantial penalties or materially and
adversely affect the financial condition, properties or business of the Borrower
or any of its Subsidiaries.
8.10. Tax Status. The Borrower and its Subsidiaries (i) have made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which any of them is subject, (ii) have paid all
taxes and other governmental assessments and charges shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (iii) have set aside on their
books provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Borrower know of no basis
for any such claim.
8.11. No Event of Default. No Default or Event of Default has occurred and is
continuing.
8.12. Holding Company and Investment Company Acts. Neither the Borrower nor any
of its Subsidiaries is a "holding company", or a "subsidiary company" of a
"holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
8.13. Absence of Financing Statements, etc. Except with respect to Permitted
Liens, there is no financing statement, security agreement, chattel mortgage,
real estate mortgage, vessel mortgage or other document filed or recorded with
any filing records, registry or other public office, that purports to cover,
affect or give notice of any present or possible future lien on, or security
interest in, any assets or property of the Borrower or any of its Subsidiaries
or any rights relating thereto.
8.14. Certain Transactions. Except for arm's length transactions pursuant to
which the Borrower or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Borrower or such
Subsidiary could obtain from third parties, none of the officers, directors, or
employees of the Borrower or any of its Subsidiaries is presently a party to any
transaction with the Borrower or any of its Subsidiaries (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Borrower, any corporation, partnership, trust or other entity
in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.
8.15. Employee Benefit Plans.
8.15.1. In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all material
respects with the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting prohibited
transactions and the bonding of fiduciaries and other persons handling plan
funds as required by ss.412 of ERISA. The Borrower has heretofore delivered to
the Administrative Agent the most recently completed annual report, Form 5500,
with all required attachments, and actuarial statement required to be submitted
under ss.103(d) of ERISA, with respect to each Guaranteed Pension Plan.
<PAGE>
8.15.2. Terminability of Welfare Plans. No Employee Benefit Plan, which is an
employee welfare benefit plan within the meaning of ss.3(1) or ss.3(2)(B) of
ERISA, provides benefit coverage subsequent to termination of employment, except
as required by Title I, Part 6 of ERISA or the applicable state insurance laws.
The Borrower may terminate each such Plan at any time (or at any time subsequent
to the expiration of any applicable bargaining agreement) in the discretion of
the Borrower without liability to any Person other than for claims arising prior
to termination.
8.15.3. Guaranteed Pension Plans. Each contribution required to be made to a
Guaranteed Pension Plan, whether required to be made to avoid the incurrence of
an accumulated funding deficiency, the notice or lien provisions of ss.302(f) of
ERISA, or otherwise, has been timely made. No waiver of an accumulated funding
deficiency or extension of amortization periods has been received with respect
to any Guaranteed Pension Plan, and neither the Borrower nor any ERISA Affiliate
is obligated to or has posted security in connection with an amendment to a
Guaranteed Pension Plan pursuant to ss.307 of ERISA or ss.401(a)(29) of the
Code. No liability to the PBGC (other than required insurance premiums, all of
which have been paid) has been incurred by the Borrower or any ERISA Affiliate
with respect to any Guaranteed Pension Plan and there has not been any ERISA
Reportable Event (other than an ERISA Reportable Event as to which the
requirement of 30 days notice has been waived), or any other event or condition
which presents a material risk of termination of any Guaranteed Pension Plan by
the PBGC. Based on the latest valuation of each Guaranteed Pension Plan (which
in each case occurred within twelve months of the date of this representation),
and on the actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans within the
meaning of ss.4001 of ERISA did not exceed the aggregate value of the assets of
all such Guaranteed Pension Plans, disregarding for this purpose the benefit
liabilities and assets of any Guaranteed Pension Plan with assets in excess of
benefit liabilities.
8.15.4. Multiemployer Plans. Neither the Borrower nor any ERISA Affiliate has
incurred any material liability (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under ss.4201 of ERISA or as a result of a sale of assets
described in ss.4204 of ERISA. Neither the Borrower nor any ERISA Affiliate has
been notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of ss.4241 or ss.4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that any Multiemployer Plan
intends to terminate or has been terminated under ss.4041A of ERISA.
8.16. Use of Proceeds.
8.16.1. General. The proceeds of the Loans shall be used for working
capital and general corporate purposes and to finance Permitted Acquisitions.
8.16.2. Regulations U and X. No portion of any Loan is to be used for
the purpose of purchasing or carrying any "margin security" or "margin stock" as
such terms are used in Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224.
8.16.3. Ineligible Securities. No portion of the proceeds of any Loan
is to be used for the purpose of (a) knowingly purchasing, or providing credit
support for the purchase of, Ineligible Securities from a Section 20 Subsidiary
during any period in which such Section 20 Subsidiary makes a market in such
Ineligible Securities, (b) knowingly purchasing, or providing credit support for
the purchase of, during the underwriting or placement period, any Ineligible
Securities being underwritten or privately placed by a Section 20 Subsidiary, or
(c) making, or providing credit support for the making of, payments of principal
or interest on Ineligible Securities underwritten or privately placed by a
Section
<PAGE>
20 Subsidiary and issued by or for the benefit of the Borrower or any Subsidiary
or other Affiliate of the Borrower.
8.17. Environmental Compliance. None of the Borrower, its Subsidiaries or any
operator of the Real Estate or any operations thereon is in violation, or
alleged violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental Laws"), which
violation would have a material adverse effect on the environment or the
business, assets or financial condition of the Borrower or any of its
Subsidiaries.
8.18. Subsidiaries, etc. All Subsidiaries, direct and indirect, of the Borrower
are listed on Schedule 8.18 hereto. Except as set forth on Schedule 8.18 hereto,
neither the Borrower nor any Subsidiary of the Borrower is engaged in any joint
venture or partnership with any other Person.
8.19. Concerning the Vessels. Each Vessel operated in the coastwise trade of the
United States of America is operated in accordance with the Shipping Act of
1916, as amended and in effect and the regulations promulgated thereunder. Each
Vessel is maintained and operated in compliance with all applicable
Environmental Laws.
8.20. Disclosure. None of this Credit Agreement or any of the other Loan
Documents contains any untrue statement of a material fact or omits to state a
material fact (known to the Borrower or any of its Subsidiaries in the case of
any document or information not furnished by it or any of its Subsidiaries)
necessary in order to make the statements herein or therein not misleading.
There is no fact known to the Borrower or any of its Subsidiaries which
materially adversely affects, or which is reasonably likely in the future to
materially adversely affect, the business, assets, financial condition or
prospects of the Borrower or any of its Subsidiaries, exclusive of effects
resulting from changes in general economic conditions, legal standards or
regulatory conditions.
9. AFFIRMATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS.
The Borrower and each of the Guarantors covenants and agrees that, so long as
any Loan or Note is outstanding or any Bank has any obligation to make any
Loans:
9.1. Punctual Payment. The Borrower will duly and punctually pay or cause to be
paid the principal and interest on the Loans, the commitment fees, the Agency
fees and all other amounts provided for in this Credit Agreement and the other
Loan Documents to which the Borrower or any of its Subsidiaries is a party, all
in accordance with the terms of this Credit Agreement and such other Loan
Documents.
9.2. Maintenance of Office. The Borrower will, and will cause each of its
Subsidiaries to, maintain its chief executive office in Fort Lauderdale,
Florida, or at such other place in the United States of America as the Borrower
or such Subsidiary shall designate upon written notice to the Administrative
Agent, where notices, presentations and demands to or upon the Borrower or such
Subsidiary in respect of the Loan Documents to which the Borrower or such
Subsidiary is a party may be given or made.
9.3. Records and Accounts. The Borrower will (i) keep, and cause each of its
Subsidiaries to keep, true and accurate records and books of account in which
full, true and correct entries will be made in
<PAGE>
accordance with generally accepted accounting principles, (ii) maintain adequate
accounts and reserves for all taxes (including income taxes), depreciation,
depletion, obsolescence and amortization of its properties and the properties of
its Subsidiaries, contingencies, and other reserves, and (iii) at all times
engage Ernst & Young LLP or other independent certified public accountants
satisfactory to the Administrative Agent as the independent certified public
accountants of the Borrower and its Subsidiaries and will not permit more than
thirty (30) days to elapse between the cessation of such firm's (or any
successor firm's) engagement as the independent certified public accountants of
the Borrower and its Subsidiaries and the appointment in such capacity of a
successor firm as shall be satisfactory to the Administrative Agent.
9.4. Financial Statements, Certificates and Information. The Borrower will
deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than one hundred twenty
(120) days after the end of each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower and its Subsidiaries and the
consolidating balance sheet of the Borrower and its Subsidiaries, each as
at the end of such year, and the related consolidated statement of income
and consolidated statement of cash flow and consolidating statement of
income and consolidating statement of cash flow for such year, each setting
forth in comparative form the figures for the previous fiscal year and all
such statements to be in reasonable detail, prepared in accordance with
generally accepted accounting principles, and all such consolidated
statements to be certified without qualification by Ernst & Young LLP or by
other independent certified public accountants satisfactory to the
Administrative Agent;
(b) as soon as practicable, but in any event not later than forty-five (45)
days after the end of each of the fiscal quarters of the Borrower, copies
of the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries and the unaudited consolidating balance sheet of the Borrower
and its Subsidiaries, each as at the end of such quarter, and the related
consolidated statement of income and consolidated statement of cash flow
and consolidating statement of income and consolidating statement of cash
flow for the portion of the Borrower's fiscal year then elapsed, all in
reasonable detail and prepared in accordance with generally accepted
accounting principles, together with a certification by the principal
financial or accounting officer of the Borrower that the information
contained in such financial statements fairly presents the financial
position of the Borrower and its Subsidiaries on the date thereof (subject
to year-end adjustments);
(c) as soon as practicable, but in any event within thirty (30) days after the
end of each month in each fiscal year of the Borrower, unaudited monthly
consolidated financial statements of the Borrower and its Subsidiaries for
such month and unaudited monthly consolidating financial statements of the
Borrower and its Subsidiaries for such month, each prepared in accordance
with generally accepted accounting principles;
(d) simultaneously with the delivery of the financial statements referred to in
subsections (a) and (b) above, a statement certified by the principal
financial or accounting officer of the Borrower in substantially the form
of Exhibit C hereto (the "Compliance Certificate") and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in ss.11 and (if applicable) reconciliations to reflect changes
in generally accepted accounting principles since the Balance Sheet Date;
<PAGE>
(e) contemporaneously with the filing or mailing thereof, copies of all
material of a financial nature filed with the Securities and Exchange
Commission or sent to the equity holders or debt holders of the Borrower;
(f) as soon as the same become available and in any event not later than
January 31 of each year, an annual business plan of the Borrower and its
Subsidiaries on a consolidated basis for such fiscal year and financial
projections for the Borrower and its Subsidiaries on a consolidated basis
for the next succeeding three (3) fiscal years, including statements of
income and cash flow and balance sheets and the assumptions underlying such
plan, all such statements to be in reasonable detail and certified by the
chief financial officer of the Borrower as a reasonable forecast of the
anticipated financial condition of the Borrower and its Subsidiaries on a
consolidated basis and business segment basis in respect of such fiscal
years; and
(g) from time to time such other financial data and information (including
accountants', management letters) as the Administrative Agent or any Bank
may reasonably request.
9.5. Notices.
9.5.1. Defaults. The Borrower will promptly notify the Administrative
Agent and each of the Banks in writing of the occurrence of any Default or Event
of Default. If any Person shall give any notice or take any other action in
respect of a claimed default (whether or not constituting an Event of Default)
under this Credit Agreement or any other note, evidence of Indebtedness,
indenture or other obligation to which or with respect to which the Borrower or
any of its Subsidiaries is a party or obligor, whether as principal, guarantor,
surety or otherwise, the Borrower shall forthwith give written notice thereof to
the Administrative Agent and each of the Banks, describing the notice or action
and the nature of the claimed default.
9.5.2. Environmental Events. The Borrower will promptly give notice to
the Administrative Agent and each of the Banks (i) of any material violation of
any Environmental Law that the Borrower or any of its Subsidiaries reports in
writing or is reportable by such Person in writing (or for which any written
report supplemental to any oral report is made) to any federal, state or local
environmental agency and (ii) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any agency
of potential environmental liability, of any federal, state or local
environmental agency or board, that has the potential to materially adversely
affect the assets, liabilities, financial conditions or operations of the
Borrower or any of its Subsidiaries.
9.5.3. Notice of Litigation and Judgments. The Borrower will, and will
cause each of its Subsidiaries to, give notice to the Administrative Agent and
each of the Banks in writing within fifteen (15) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting the Borrower or any of its Subsidiaries or to which the
Borrower or any of its Subsidiaries is or becomes a party involving an uninsured
claim against the Borrower or any of its Subsidiaries that could reasonably be
expected to have a materially adverse effect on the Borrower or any of its
Subsidiaries and stating the nature and status of such litigation or
proceedings. The Borrower will, and will cause each of its Subsidiaries to, give
notice to the Administrative Agent and each of the Banks, in writing, in form
and detail satisfactory to the Administrative Agent, within ten (10) days of any
judgment not covered by insurance, final or otherwise, against the Borrower or
any of its Subsidiaries in an amount in excess of $1,000,000.
<PAGE>
9.6. Corporate Existence; Maintenance of Properties; Etc.
(a) The Borrower will do or cause to be done all things necessary to preserve
and keep in full force and effect its corporate or limited partnership, as
the case may be, existence, rights and franchises and those of its
Subsidiaries.
(b) The Borrower (i) will cause all of its properties and those of its
Subsidiaries used or useful in the conduct of its business or the business
of its Subsidiaries to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment, (ii) will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Borrower may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (iii) will, and
will cause each of its Subsidiaries to, continue to engage primarily in the
businesses now conducted by them and in related businesses; provided that
nothing in thisss.9.6 shall prevent the Borrower from discontinuing the
operation and maintenance of any of its properties or any of those of its
Subsidiaries if such discontinuance is, in the judgment of the Borrower,
desirable in the conduct of its or their business and that do not in the
aggregate materially adversely affect the business of the Borrower and its
Subsidiaries on a consolidated basis.
9.7. Insurance. The Borrower will, and will cause each of its Subsidiaries to,
maintain with financially sound and reputable insurers insurance with respect to
its properties and business against such casualties and contingencies as shall
be in accordance with the general practices of businesses engaged in similar
activities in similar geographic areas and in amounts, containing such terms, in
such forms and for such periods as may be reasonable and prudent and reasonably
satisfactory to the Administrative Agent.
9.8. Taxes. The Borrower will, and will cause each of its Subsidiaries to, duly
pay and discharge, or cause to be paid and discharged, before the same shall
become overdue, all taxes, assessments and other governmental charges imposed
upon it and its real properties, sales and activities, or any part thereof, or
upon the income or profits therefrom, as well as all claims for labor,
materials, or supplies that if unpaid might by law become a lien or charge upon
any of its property; provided that any such tax, assessment, charge, levy or
claim need not be paid if the validity or amount thereof shall currently be
contested in good faith by appropriate proceedings and if the Borrower or such
Subsidiary shall have set aside on its books adequate reserves with respect
thereto; and provided further that the Borrower and each Subsidiary of the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor.
9.9. Inspection of Properties and Books. The Borrower shall permit the Banks,
through the Administrative Agent or any of the Banks' other designated
representatives, to visit and inspect any of the properties of the Borrower or
any of its Subsidiaries, to examine the books of account of the Borrower and its
Subsidiaries (and to make copies thereof and extracts therefrom), and to discuss
the affairs, finances and accounts of the Borrower and its Subsidiaries with,
and to be advised as to the same by, its and their officers, all at such
reasonable times and intervals as the Administrative Agent or any Bank may
reasonably request.
9.10. Compliance with Laws, Contracts, Licenses, and Permits. The Borrower will,
and will cause each of its Subsidiaries to, comply with (i) in all material
respects, the applicable laws and regulations wherever its business is
conducted, including all Environmental Laws, (ii) the provisions of its charter
documents and by-laws, (iii) all agreements and instruments by which it or any
of its properties may be
<PAGE>
bound and (iv) all applicable decrees, orders, and judgments. If any
authorization, consent, approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or required in order
that the Borrower or any of its Subsidiaries may fulfill any of its obligations
hereunder or any of the other Loan Documents to which the Borrower or such
Subsidiary is a party, the Borrower will, or (as the case may be) will cause
such Subsidiary to, immediately take or cause to be taken all reasonable steps
within the power of the Borrower or such Subsidiary to obtain such
authorization, consent, approval, permit or license and furnish the
Administrative Agent and the Banks with evidence thereof.
9.11. Employee Benefit Plans. The Borrower will (i) promptly upon filing the
same with the Department of Labor or Internal Revenue Service upon request of
the Administrative Agent, furnish to the Administrative Agent a copy of the most
recent actuarial statement required to be submitted under ss.103(d) of ERISA and
Annual Report, Form 5500, with all required attachments, in respect of each
Guaranteed Pension Plan and (ii) promptly upon receipt or dispatch, furnish to
the Administrative Agent any notice, report or demand sent or received in
respect of a Guaranteed Pension Plan under ss.ss.302, 4041, 4042, 4043, 4063,
4065, 4066 and 4068 of ERISA, or in respect of a Multiemployer Plan, under
ss.ss.4041A, 4202, 4219, 4242, or 4245 of ERISA.
9.12. Use of Proceeds. The Borrower will use the proceeds of the Loans solely
for working capital and general corporate purposes and to finance Permitted
Acquisitions.
9.13. Concerning the Vessels; Citizenship. The Borrower will, and will cause
each of its Subsidiaries to operate each Vessel in compliance with all
applicable governmental rules, regulations and requirements, including, without
limitation, the Shipping Act of 1916, as amended and in effect, and all
Environmental Laws. The Borrower shall, and shall cause each Subsidiary owning a
Vessel engaging in the coastwise trade of the United States of America to,
remain a "citizen of the United States" within the meaning of Section 2 of the
Shipping Act, 1916, as amended, for purposes of engaging in the coastwise trade
of the United States of America.
9.14. Further Assurances. The Borrower will, and will cause each of its
Subsidiaries to, cooperate with the Banks and the Administrative Agent and
execute such further instruments and documents as the Banks or the
Administrative Agent shall reasonably request to carry out to their satisfaction
the transactions contemplated by this Credit Agreement and the other Loan
Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND THE GUARANTORS.
The Borrower and each Guarantor covenants and agrees that, so long as any Loan
or Note is outstanding or any Bank has any obligation to make any Loans:
10.1. Restrictions on Indebtedness. The Borrower will not, and will not permit
any of its Subsidiaries to, create, incur, assume, guarantee or be or remain
liable, contingently or otherwise, with respect to any Indebtedness other than:
10.2 Indebtedness to the Banks and the Agents arising under any of the Loan
Documents;
(b) endorsements for collection, deposit or negotiation and warranties of
products or services, in each case incurred in the ordinary course of
business;
<PAGE>
(c) Indebtedness incurred in connection with the acquisition after the date
hereof of any real or personal property by the Borrower or such Subsidiary
or under any Capitalized Lease, provided that the aggregate amount of such
Indebtedness does not exceed seventy percent (70%) of the fair market value
(determined in good faith by the Borrower) of the property so acquired
(except that, with respect to not more than $15,000,000 of Indebtedness
permitted pursuant to this clause (c), such Indebtedness may be in an
amount up to one hundred percent (100%) of the fair market value
(determined in good faith by the Borrower) of the property so acquired) and
provided further that the aggregate principal amount of such Indebtedness
of the Borrower and its Subsidiaries shall not exceed the aggregate amount
of $100,000,000 at any one time;
(d) Indebtedness existing on the date hereof and listed and described on
Schedule 10.1 hereto;
(e) Indebtedness of a Subsidiary of the Borrower owing to the Borrower or
another Subsidiary of the Borrower; and
(f) additional unsecured Indebtedness of the Borrower incurred after the
Closing Date so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom.
10.2. Restrictions on Liens. The Borrower will not, and will not permit any of
its Subsidiaries to, (i) create or incur or suffer to be created or incurred or
to exist any lien, encumbrance, mortgage, pledge, charge, restriction or other
security interest of any kind upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon the income or profits
therefrom; (ii) transfer any of such property or assets or the income or profits
therefrom for the purpose of subjecting the same to the payment of Indebtedness
or performance of any other obligation in priority to payment of its general
creditors; (iii) acquire, or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or purchase money security
agreement, device or arrangement; or (iv) suffer to exist for a period of more
than thirty (30) days after the same shall have been incurred any Indebtedness
or claim or demand against it that if unpaid might by law or upon bankruptcy or
insolvency, or otherwise, be given any priority whatsoever over its general
creditors; provided that the Borrower or any of its Subsidiaries may create or
incur or suffer to be created or incurred or to exist:
(a) liens in favor of the Borrower on all or part of the assets of Subsidiaries
of the Borrower securing Indebtedness owing by Subsidiaries of the Borrower
to the Borrower;
(b) liens to secure taxes, assessments and other government charges in respect
of obligations not overdue or liens to secure claims for labor, material or
supplies in respect of obligations not overdue;
(c) deposits or pledges made in connection with, or to secure payment of,
workmen's compensation, unemployment insurance, old age pensions or other
social security obligations;
(d) liens in respect of judgments or awards that have been in force for less
than the applicable period for taking an appeal so long as execution is not
levied thereunder or in respect of which the Borrower or such Subsidiary
shall at the time in good faith be prosecuting an appeal or proceedings for
review and in respect of which a stay of execution shall have been obtained
pending such appeal or review;
<PAGE>
(e) liens or claims of carriers, warehousemen, mechanics, ship repairers and
materialmen, and other like liens, in existence less than 120 days from the
date of creation thereof in respect of obligations which are either (i) not
overdue or (ii) being contested in good faith by the Borrower;
(f) encumbrances on Real Estate consisting of easements, rights of way, zoning
restrictions, restrictions on the use of real property and defects and
irregularities in the title thereto, landlord's or lessor's liens under
leases to which the Borrower or a Subsidiary of the Borrower is a party,
and other minor liens or encumbrances none of which in the opinion of the
Borrower interferes materially with the use of the property affected in the
ordinary conduct of the business of the Borrower and its Subsidiaries,
which defects do not individually or in the aggregate have a materially
adverse effect on the business of the Borrower individually or of the
Borrower and its Subsidiaries on a consolidated basis;
(g) liens existing on the date hereof and listed on Schedule 10.2 hereto; and
(h) purchase money security interests in or purchase money mortgages on real or
personal property acquired after the date hereof to secure purchase money
Indebtedness of the type and amount permitted by ss.10.1(c), incurred in
connection with the acquisition of such property, which security interests
or mortgages cover only the real or personal property so acquired and
secure only the debt incurred to acquire such property as permitted under
ss.10.1(c) and liens on the assets subject to Capitalized Leases permitted
under ss.10.1(c).
10.3. Restrictions on Investments. The Borrower will not, and will not permit
any of its Subsidiaries to, make or permit to exist or to remain outstanding any
Investment except Investments in:
(a) marketable direct or guaranteed obligations of the United States of America
that mature within one (1) year from the date of purchase by the Borrower;
(b) demand deposits, certificates of deposit, bankers acceptances and time
deposits of United States banks having total assets in excess of
$1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a corporation
organized and existing under the laws of the United States of America or
any state thereof that at the time of purchase have been rated and the
ratings for which are not less than "P1" if rated by Moody's Investors
Service, Inc. ("Moody's") and not less than "A1" if rated by Standard and
Poor's Rating Group ("S&P"); provided that such Investment in such
commercial paper otherwise permitted hereunder shall be permitted if such
commercial paper is rated either (i) not less than "P 2" by Moody's and "A
1" by S&P or (ii) not less than "A 2" by S&P and "P 1" by Moody's;
(d) Investments existing on the date hereof and listed on Schedule 10.3 hereto;
(e) Investments with respect to Indebtedness permitted by ss.10.1(e) so long as
such entities remain Subsidiaries of the Borrower and Guarantors hereunder;
(f) Investments consisting of the Guaranty and Investments by the Borrower in
Subsidiaries of the Borrower;
<PAGE>
(g) Investments consisting of promissory notes received as proceeds of asset
dispositions permitted by ss.10.5.2;
(h) Investments in Permitted Acquisitions; and
(i) Investments consisting of loans and advances to employees for moving,
entertainment, travel and other similar expenses in the ordinary course of
business not to exceed $500,000 in the aggregate at any time outstanding.
10.4. Distributions.
(a) The Borrower will not make any Distributions; provided that so
long as no Default or Event of Default shall have occurred and
be continuing or would result from the making of such
Distribution, the Borrower may make Distributions consisting
of dividends on its Class A Common Stock and Class B Common
Stock in an aggregate amount in any fiscal year not to exceed
fifty percent (50%) of Consolidated Net Income for such fiscal
year.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, create or permit to exist any restriction on
the ability of any Subsidiary of the Borrower to pay dividends
to the Borrower.
10.5. Merger, Consolidation and Disposition of Assets.
10.5.1. Mergers and Acquisitions. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to any merger or consolidation
except the merger or consolidation of one or more of the Subsidiaries of the
Borrower with and into the Borrower, with the Borrower being the surviving
corporation of such merger or consolidation, or the merger or consolidation of
two or more Subsidiaries of the Borrower; provided that, in each case, no
Default or Event of Default shall have occurred and be continuing, or would
result from such merger or consolidation. The Borrower will not, and will not
permit any of its Subsidiaries to, effect any asset acquisition or stock
acquisition, other than (i) Permitted Acquisitions and (ii) the acquisition of
assets in the ordinary course of business consistent with past practices.
10.5.2. Disposition of Assets. The Borrower will not, and will not
permit any of its Subsidiaries to, become a party to or agree to or effect any
disposition of assets, other than (a) the sale of inventory and the disposition
of assets no longer used or useful in the business or operations of the
Borrower, in each case in the ordinary course of business consistent with past
practices; (b) the transfer of assets from any Subsidiary of the Borrower to the
Borrower or to another Subsidiary of the Borrower; and (c) other dispositions of
assets not otherwise permitted pursuant to the foregoing clauses of this
ss.10.5.2, provided that the aggregate fair market value of the assets so
disposed of in any period of twelve (12) consecutive months shall not exceed
$10,000,000.
10.6. Sale and Leaseback. The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any arrangement, directly or indirectly, whereby the
Borrower or any Subsidiary of the Borrower shall sell or transfer any property
owned by it in order then or thereafter to lease such property or lease other
property that the Borrower or any Subsidiary of the Borrower intends to use for
substantially the same purpose as the property being sold or transferred.
10.7. Compliance with Environmental Laws. The Borrower will not, and will not
permit any of its Subsidiaries to, (i) use any of the Real Estate or any portion
thereof for the handling, processing, storage
<PAGE>
or disposal of hazardous substances, (ii) cause or permit to be located on any
of the Real Estate any underground tank or other underground storage receptacle
for hazardous substances, (iii) generate any hazardous substances on any of the
Real Estate, (iv) conduct any activity at any Real Estate, on any Vessel, or use
any Real Estate or any Vessel in any manner so as to cause a release (i.e.
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping) or threatened release of
hazardous substances on, upon or into the Real Estate or from any Vessel, if
such activity or release could reasonably be expected to have a material adverse
effect on the environment or the business, assets or financial condition of the
Borrower or any of its Subsidiaries or (v) otherwise conduct any activity at any
Real Estate or use any Real Estate or operate any Vessel in any manner that
would violate any Environmental Law or bring such Real Estate or such Vessel in
violation of any Environmental Law.
10.8. Trust Securities. The Borrower will not, and will not permit any of its
Subsidiaries to, amend, supplement or otherwise modify the terms of any of the
Trust Securities or prepay, redeem or repurchase any of the Trust Securities;
provided, that the Borrower and any of its Subsidiaries may redeem the Trust
Securities so long as (i) immediately after, and after giving effect to such
redemption, no Default or Event of Default shall have occurred and be continuing
and (ii) on the date of such redemption the average sale price of the Borrower's
Class A Common Stock on The Nasdaq National Market is at least $2.00 above the
"conversion price" relating to the conversion of the Trust Securities into the
Class A Common Stock of the Borrower, as such conversion price is adjusted
pursuant to the terms of the Trust Securities.
10.9. Employee Benefit Plans. Neither the Borrower nor any ERISA Affiliate will
(a) engage in any "prohibited transaction" within the meaning of
ss.406 of ERISA or ss.4975 of the Code which could result in a
material liability for the Borrower or any of its
Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in ss.302 of
ERISA, whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent
which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance
on the assets of the Borrower or any of its Subsidiaries
pursuant to ss.302(f) or ss.4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in circumstances requiring
the posting of security pursuant to ss.307 of ERISA or
ss.401(a)(29) of the Code; or
(e) permit or take any action which would result in the aggregate
benefit liabilities (with the meaning of ss.4001 of ERISA) of
all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose
the benefit liabilities and assets of any such Plan with
assets in excess of benefit liabilities.
10.10. Business Activities. The Borrower will not, and will not permit any of
its Subsidiaries to, engage directly or indirectly (whether through Subsidiaries
or otherwise) in any type of business other than the businesses conducted by
them on the Closing Date and in related businesses.
10.11. Fiscal Year; Fiscal Quarters. The Borrower will not, and will not permit
any of it Subsidiaries to, change the date of the end of its fiscal year or any
of its fiscal quarters from that set forth in ss.8.4.1.
<PAGE>
10.12. Transactions with Affiliates. The Borrower will not, and will not permit
any of its Subsidiaries to, engage in any transaction with any Affiliate (other
than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any such Affiliate or, to the knowledge of the
Borrower, any corporation, partnership, trust or other entity in which any such
Affiliate has a substantial interest or is an officer, director, trustee or
partner, on terms more favorable to such Person than would have been obtainable
on an arm's-length basis in the ordinary course of business.
11. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants and agrees that,
so long as any Loan or Note is outstanding or any Bank has any obligation to
make any Loans:
11.1. Leverage Ratio. The Borrower will not permit the Leverage Ratio,
determined at the end of each fiscal quarter of the Borrower, to exceed
4.25:1.00.
11.2. Debt Service Coverage Ratio. The Borrower will not permit the Debt Service
Coverage Ratio, determined at the end of each fiscal quarter of the Borrower, to
be less than 2.5:1.0.
11.3. Indebtedness to Tangible Net Worth Ratio. The Borrower will not permit the
ratio of (a) Consolidated Total Indebtedness to (b) Consolidated Tangible Net
Worth, at any time, to exceed 1.50:1.0.
12. CLOSING CONDITIONS. The obligations of the Banks to make the initial
Revolving Credit Loans shall be subject to the satisfaction of the following
conditions precedent on or prior to September 30, 1997:
12.1. Loan Documents. Each of the Loan Documents shall have been duly executed
and delivered by the respective parties thereto, shall be in full force and
effect and shall be in form and substance satisfactory to each of the Banks.
Each Bank shall have received a fully executed copy of each such document.
12.2. Certified Copies of Charter Documents. Each of the Banks shall have
received from the Borrower and each of its Subsidiaries a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (i) its charter or other incorporation documents as in effect
on such date of certification, and (ii) its by-laws as in effect on such date.
12.3. Corporate, Action. All corporate action necessary for the valid execution,
delivery and performance by the Borrower and each of its Subsidiaries of this
Credit Agreement and the other Loan Documents to which it is or is to become a
party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
12.4. Incumbency Certificate. The Administrative Agent shall have received from
the Borrower and each of its Subsidiaries an incumbency certificate, dated as of
the Closing Date, signed by a duly authorized officer of the Borrower or such
Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (i) to sign, in the name and on behalf of
each of the Borrower or such Subsidiary, each of the Loan Documents to which the
Borrower or such Subsidiary is or is to become a party; (ii) in the case of the
Borrower, to make Loan Requests and Conversion Requests; and (iii) to give
notices and to take other action on its behalf under the Loan Documents.
12.5.Certificates of Insurance. The Administrative Agent shall have
received (i) a certificate of insurance from an independent insurance
broker dated as of the Closing Date, identifying insurers, types
<PAGE>
of insurance, insurance limits, and policy terms, and otherwise describing the
insurance obtained in accordance with the provisions hereof and (ii) certified
copies of all policies evidencing such insurance (or certificates therefor
signed by the insurer or an agent authorized to bind the insurer).
12.6. Opinion of Counsel. Each of the Banks and the Agents shall have received a
favorable legal opinion addressed to the Banks and the Agents, dated as of the
Closing Date, in form and substance satisfactory to the Banks and the Agents,
from (a) Gene Douglas, Esq., counsel to the Borrower and its Subsidiaries and
(b) Bingham, Dana & Gould LLP, counsel to the Agents.
12.7. Payment of Fees. The Borrower shall have paid to the Administrative Agent,
for the account of the Banks or the Agents, as appropriate, the fees to be paid
on the Closing Date.
12.8. Payoff Letter. The Administrative Agent shall have received a payoff
letter from the agents and lenders party to the Existing Credit Agreement,
indicating the amount of the loan obligations of the Borrower and its
Subsidiaries to such agents and lenders to be discharged on the Closing Date and
an acknowledgment by such agents and lenders that upon receipt of such funds
they will forthwith execute and deliver to the Administrative Agent or caused to
be executed and delivered to the Administrative Agent for filing all termination
statements and mortgage discharges and take such other actions as may be
necessary to discharge all vessel mortgages, deeds of trust and security
interests granted by the Borrower or any of its Subsidiaries in favor or for the
benefit of such agents or such lenders.
13. CONDITIONS TO ALL BORROWINGS. The obligations of the Banks to make any
Loan whether on or after the Closing Date, shall also be subject to the
satisfaction of the following conditions precedent:
13.1. Representations True; No Event of Default. Each of the representations and
warranties of any of the Borrower and its Subsidiaries contained in this Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the making of such Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents and to the
extent that such representations and warranties relate expressly to an earlier
date) and no Default or Event of Default shall have occurred and be continuing
or would result from the making of such Loan.
13.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan.
13.3. Governmental Regulation. Each Bank shall have received such statements in
substance and form reasonably satisfactory to such Bank as such Bank shall
require for the purpose of compliance with any applicable regulations of the
Comptroller of the Currency or the Board of Governors of the Federal Reserve
System.
13.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agents and the Administrative Agent's Special
Counsel, and the Banks, the Agents and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agents may reasonably request.
<PAGE>
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. Events of Default and Acceleration. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the Loans when the same
shall become due and payable, whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed for payment;
(b) the Borrower or any of its Subsidiaries shall fail to pay any interest on
the Loans, the commitment fee, the Agency fee, or other sums due hereunder
or under any of the other Loan Documents, within three (3) Business Days of
when the same shall become due and payable, whether at the stated date of
maturity or any accelerated date of maturity or at any other date fixed for
payment;
(c) the Borrower or any of its Subsidiaries shall fail to comply with any of
their covenants contained in ss.ss.9.5, 9.6(a), 9.7, 9.12, 9.13, 10 or 11;
(d) the Borrower or any of its Subsidiaries shall fail to perform any term,
covenant or agreement contained herein or in any of the other Loan
Documents (other than those specified elsewhere in this ss.14.1) for thirty
(30) days after written notice of such failure has been given to the
Borrower by an Agent;
(e) any representation or warranty of the Borrower or any of its Subsidiaries
in this Credit Agreement or any of the other Loan Documents or in any other
document or instrument delivered pursuant to or in connection with this
Credit Agreement shall prove to have been false in any material respect
upon the date when made or deemed to have been made or repeated;
(f) the Borrower or any of its Subsidiaries shall default in the payment when
due of any principal of or interest on any Indebtedness in excess of
$1,000,000, or any event specified in any note, agreement, indenture or
other document evidencing or securing any such Indebtedness shall occur if
the effect of such event is to cause, or (with the giving of notice or the
lapse of time or both) to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause such
Indebtedness to become due, or to be prepaid in full prior to its stated
maturity; or the Borrower or any of its Subsidiaries shall default in the
payment when due of any amount in excess of $1,000,000 under any Derivative
Transaction; or any event specified in any Derivative Transaction to which
the Borrower or any Subsidiary is a party shall occur if the effect of such
event is to cause, or (with the giving of notice or the lapse of time or
both) to permit, termination or liquidation payments in respect of such
Derivative Transaction in excess of $1,000,000 to become due;
(g) the Borrower or any of its Subsidiaries shall make an assignment for the
benefit of creditors, or admit in writing its inability to pay or generally
fail to pay its debts as they mature or become due, or shall petition or
apply for the appointment of a trustee or other custodian, liquidator or
receiver of the Borrower or any of its Subsidiaries or of any substantial
part of the assets of the Borrower or any of its Subsidiaries or shall
commence any case or other proceeding relating to the Borrower or any of
its Subsidiaries under any
<PAGE>
bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar
law of any jurisdiction, now or hereafter in effect, or shall
take any action to authorize or in furtherance of any of the
foregoing, or if any such petition or application shall be
filed or any such case or other proceeding shall be commenced
against the Borrower or any of its Subsidiaries and the
Borrower or any of its Subsidiaries shall indicate its
approval thereof, consent thereto or acquiescence therein or
such petition or application shall not have been dismissed
within forty-five (45) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee, custodian,
liquidator or receiver or adjudicating the Borrower or any of its
Subsidiaries bankrupt or insolvent, or approving a petition in any such
case or other proceeding, or a decree or order for relief is entered in
respect of the Borrower or any Subsidiary of the Borrower in an involuntary
case under federal bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and unstayed, for
more than thirty days, whether or not consecutive, any final judgment
against the Borrower or any of its Subsidiaries that, with other
outstanding final judgments, undischarged, against the Borrower or any of
its Subsidiaries exceeds in the aggregate $1,000,000;
(j) the holders of all or any part of the Trust Securities shall accelerate the
maturity of all or any part of the Trust Securities or the Trust Securities
shall be prepaid, redeemed or repurchased in whole or in part or any
default or event of default under the Trust Securities shall occur;
(k) if any of the Loan Documents shall be cancelled, terminated, revoked or
rescinded or any action at law, suit or in equity or other legal proceeding
to cancel, revoke or rescind any of the Loan Documents shall be commenced
by or on behalf of the Borrower or any of its Subsidiaries party thereto or
any of their respective stockholders, or any court or any other
governmental or regulatory authority or agency of competent jurisdiction
shall make a determination that, or issue a judgment, order, decree or
ruling to the effect that, any one or more of the Loan Documents is
illegal, invalid or unenforceable in accordance with the terms thereof;
(l) the Borrower or any ERISA Affiliate incurs any liability to the PBGC or a
Guaranteed Pension Plan pursuant to Title IV of ERISA in an aggregate
amount exceeding $1,000,000 or the Borrower or any ERISA Affiliate is
assessed withdrawal liability pursuant to Title IV of ERISA by a
Multiemployer Plan requiring aggregate annual payments exceeding
$1,000,000, or any of the following occurs with respect to a Guaranteed
Pension Plan: (i) an ERISA Reportable Event, or a failure to make a
required installment or other payment (within the meaning ofss.302(f)(1) of
ERISA), provided that the Administrative Agent determines in its reasonable
discretion that such event (A) could be expected to result in liability of
the Borrower or any of its Subsidiaries to the PBGC or such Guaranteed
Pension Plan in an aggregate amount exceeding $1,000,000 and (B) could
constitute grounds for the termination of such Guaranteed Pension Plan by
the PBGC, for the appointment by the appropriate United States District
Court of a trustee to administer such Guaranteed Pension Plan or for the
imposition of a lien in favor of such Guaranteed Pension Plan; or (ii) the
appointment by a United States District Court of a trustee to administer
such Guaranteed Pension Plan; or (iii) the institution by the PBGC of
proceedings to terminate such Guaranteed Pension Plan; or
<PAGE>
(m) a Change of Control shall have occurred; then, and in any such event, so
long as the same may be continuing, the Administrative Agent may, and upon
the request of the Required Banks shall, by notice in writing to the
Borrower declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents to be, and they shall thereupon
forthwith become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; provided that in the event of any Event of Default
specified inss.ss.14.1(g) or 14.1(h), all such amounts shall become
immediately due and payable automatically and without any requirement of
notice from the Administrative Agent or any Bank.
14.2. Termination of Commitments. If any one or more of the Events of Default
specified in ss.14.1(g) or ss.14.1(h) shall occur, any unused portion of the
credit hereunder shall forthwith terminate and each of the Banks shall be
relieved of all further obligations to make Loans to the Borrower. If any other
Event of Default shall have occurred and be continuing, the Administrative Agent
may and, upon the request of the Required Banks, shall, by notice to the
Borrower, terminate the unused portion of the credit hereunder, and upon such
notice being given such unused portion of the credit hereunder shall terminate
immediately and each of the Banks shall be relieved of all further obligations
to make Loans. No termination of the credit hereunder shall relieve the Borrower
or any of its Subsidiaries of any of the Obligations.
14.3. Remedies. In case any one or more of the Events of Default shall have
occurred and be continuing, and whether or not the Banks shall have accelerated
the maturity of the Loans pursuant to ss.14.1, each Bank, if owed any amount
with respect to the Loans or other Obligations, may proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Administrative Agent or the holder of any Note is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
15. AGREEMENT OF THE BANKS.
Each of the Banks agrees with each other Bank that if such Bank shall receive
from the Borrower or any Guarantor, whether by voluntary payment, counterclaim,
cross action, enforcement of the claim evidenced by the Notes held by, such Bank
by proceedings against the Borrower or any Guarantor at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by, such Bank any amount in excess of its ratable portion
of the payments received by all of the Banks with respect to the Notes held by,
all of the Banks, such Bank will make such disposition and arrangements with the
other Banks with respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result in each
Bank receiving in respect of the Notes held by it, its proportionate payment as
contemplated by this Credit Agreement; provided that if all or any part of such
excess payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
16. THE AGENTS.
<PAGE>
16.1. Authorization.
(a) Each Agent is authorized to take such action on behalf of each of the Banks
and to exercise all such powers as are hereunder and under any of the other
Loan Documents and any related documents delegated to such Agent, together
with such powers as are reasonably incident thereto, provided that no
duties or responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by either Agent.
(b) The relationship between each Agent and each of the Banks is that of an
independent contractor. The use of the terms "Agent", "Agents",
"Administrative Agent", and "Syndication Agent" is for convenience only and
such terms are used to describe, as a form of convention, the independent
contractual relationship between the Agents and each of the Banks. Nothing
contained in this Credit Agreement nor the other Loan Documents shall be
construed to create an agency, trust or other fiduciary relationship
between the Agents and any of the Banks.
(c) As an independent contractor empowered by the Banks to exercise certain
rights and perform certain duties and responsibilities hereunder and under
the other Loan Documents, each Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the Uniform Commercial
Code, for purposes of actions for the benefit of the Banks and the Agents
with respect to all collateral security and guaranties contemplated by the
Loan Documents. Such actions include the designation of an Agent as
"secured party", "mortgagee" or the like on all financing statements and
other documents and instruments, whether recorded or otherwise, relating to
the attachment, perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral security intended to
secure the payment or performance of any of the Obligations, all for the
benefit of the Banks and the Agents.
16.2. Employees and Agents. Each Agent may exercise its powers and execute its
duties by or through employees or agents and shall be entitled to take, and to
rely on, advice of counsel concerning all matters pertaining to its rights and
duties under this Credit Agreement and the other Loan Documents. Each Agent may
utilize the services of such Persons as such Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Borrower.
16.3. No Liability. Neither Agent nor any of their respective shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that each Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
16.4. No Representations.
16.4.1. General. Neither Agent shall be responsible for the execution
or validity or enforceability of this Credit Agreement, the Notes, any of the
other Loan Documents or any instrument at any time constituting, or intended to
constitute, collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or collectability of any
such amounts owing with respect to the Notes, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on
<PAGE>
behalf of the Borrower or any of its Subsidiaries, or be bound to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
covenants or agreements herein or in any instrument at any time constituting, or
intended to constitute, collateral security for the Notes or to inspect any of
the properties, books or records of the Borrower or any of its Subsidiaries.
Neither Agent shall be bound to ascertain whether any notice, consent, waiver or
request delivered to it by the Borrower or any holder of any of the Notes shall
have been duly authorized or is true, accurate and complete. Neither Agent has
made nor does it now make any representations or warranties, express or implied,
nor does it assume any liability to the Banks, with respect to the credit
worthiness or financial condition of the Borrower or any of its Subsidiaries.
Each Bank acknowledges that it has, independently and without reliance upon
either Agent or any other Bank, and based upon such information and documents as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Credit Agreement.
16.4.2. Closing Documentation, etc. For purposes of determining
compliance with the conditions set forth in ss.12, each Bank that has executed
this Credit Agreement shall be deemed to have consented to, approved or
accepted, or to be satisfied with, each document and matter either sent, or made
available, by an Agent to such Bank for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to such Bank, unless an officer of such Agent active
upon the Borrower's account shall have received notice from such Bank prior to
the Closing Date specifying such Bank's objection thereto and such objection
shall not have been withdrawn by notice to such Agent to such effect on or prior
to the Closing Date.
16.5. Payments.
16.5.1. Payments to Administrative Agent. A payment by the Borrower to
the Administrative Agent hereunder or any of the other Loan Documents for the
account of any Bank shall constitute a payment to such Bank. The Administrative
Agent agrees promptly to distribute to each Bank such Bank's pro rata share of
payments received by the Administrative Agent for the account of the Banks
except as otherwise expressly provided herein or in any of the other Loan
Documents.
16.5.2. Distribution by Agents. If in the opinion of an Agent the
distribution of any amount received by it in such capacity hereunder, under the
Notes or under any of the other Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make distribution shall
have been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and distributed by
an Agent is to be repaid, each Person to whom any such distribution shall have
been made shall either repay to such Agent its proportionate share of the amount
so adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
16.5.3. Delinquent Banks. Notwithstanding anything to the contrary
contained in this Credit Agreement or any of the other Loan Documents, any Bank
that fails (i) to make available to the Administrative Agent its pro rata share
of any Loan or (ii) to comply with the provisions of ss.15 with respect to
making dispositions and arrangements with the other Banks, where such Bank's
share of any payment received, whether by setoff or otherwise, is in excess of
its pro rata share of such payments due and payable to all of the Banks, in each
case as, when and to the full extent required by the provisions of this Credit
Agreement, shall be deemed delinquent (a "Delinquent Bank") and shall be deemed
a Delinquent Bank until such time as such delinquency is satisfied. A Delinquent
Bank shall be deemed to have assigned any and all payments due to it from the
Borrower, whether on account of outstanding Loans, interest, fees or otherwise,
to the remaining nondelinquent Banks for application to, and reduction of, their
respective pro rata shares of all outstanding Loans. The Delinquent Bank hereby
authorizes the Administrative Agent to distribute such payments to the
nondelinquent Banks in proportion to their
<PAGE>
respective pro rata shares of all outstanding Loans. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Loans of the
nondelinquent Banks, the Banks' respective pro rata shares of all outstanding
Loans have returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
16.6. Holders of Notes. Each Agent may deem and treat the payee of any Note as
the absolute owner or purchaser thereof for all purposes hereof until it shall
have been furnished in writing with a different name by such payee or by a
subsequent holder, assignee or transferee.
16.7. Indemnity. The Banks ratably agree hereby to indemnify and hold harmless
each Agent and its affiliates from and against any and all claims, actions and
suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which such Agent or such affiliate has not been
reimbursed by the Borrower as required by ss.17), and liabilities of every
nature and character arising out of or related to this Credit Agreement, the
Notes, or any of the other Loan Documents or the transactions contemplated or
evidenced hereby or thereby, or such Agent's actions taken hereunder or
thereunder, except to the extent that any of the same shall be directly caused
by such Agent's willful misconduct or gross negligence.
16.8. Agents as Banks. In its individual capacity, each of Citibank, N.A. and
BankBoston, N.A. shall have the same obligations and the same rights, powers and
privileges in respect to its Commitment and the Loans made by it, and as the
holder of any of the Notes, as it would have were it not also an Agent.
16.9. Resignation. Either Agent may resign at any time by giving sixty (60) days
prior written notice thereof to the Banks and the Borrower. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Agent shall be reasonably acceptable to the Borrower.
If no successor Agent shall have been so appointed by the Required Banks and
shall have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a rating of not less than A or its equivalent by Standard & Poor's
Corporation. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
16.10. Notification of Defaults and Events of Default. Each Bank hereby agrees
that, upon learning of the existence of a Default or an Event of Default, it
shall promptly notify the Agents thereof. Each Agent hereby agrees that upon
receipt of any notice under this ss.16.10 it shall promptly notify the other
Banks of the existence of such Default or Event of Default.
17. EXPENSES AND INDEMNIFICATION.
17.1. Expenses. The Borrower agrees to pay (i) the reasonable costs of producing
and reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (ii) any taxes (including any
interest and penalties in respect thereto) payable by the Agents or any of the
Banks (other than taxes based upon any Agent's or any Bank's net income) on or
with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify
<PAGE>
each Agent and each Bank with respect thereto), (iii) the reasonable fees,
expenses and disbursements of the Administrative Agent's Special Counsel and any
local counsel to the Agents incurred in connection with the preparation,
execution, delivery, syndication, administration or interpretation of the Loan
Documents and other instruments mentioned herein, each closing hereunder, any
amendments, modifications, approvals, consents or waivers hereto or hereunder,
or the cancellation of any Loan Document upon payment in full in cash of all of
the Obligations and the termination of the Commitments or pursuant to any terms
of such Loan Document providing for such cancellation, (iv) the fees, expenses
and disbursements of each of the Agents or any of its affiliates incurred by
such Agent or such affiliate in connection with the preparation, syndication,
administration or interpretation of the Loan Documents and other instruments
mentioned herein, (v) all reasonable out-of-pocket expenses (including without
limitation reasonable attorneys' fees and costs, which attorneys may be
employees of any Bank or Agent, and reasonable consulting, accounting,
appraisal, investment banking and similar professional fees and charges)
incurred by any Bank or Agent in connection with (A) the enforcement of or
preservation of rights under any of the Loan Documents against the Borrower or
any of its Subsidiaries or the administration thereof after the occurrence of a
Default or Event of Default and (B) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or
Agent's relationship with the Borrower or any of its Subsidiaries and (vi) all
reasonable fees, expenses and disbursements of any Bank or Agent incurred in
connection with UCC searches and obtaining vessel abstracts from the Coast Guard
National Vessel Documentation Center.
16.7. Indemnification. The Borrower agrees to indemnify and hold harmless the
Agents, their affiliates and the Banks and their respective directors, officers,
employees and representatives from and against any and all claims, actions and
suits whether groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature and character arising
out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (i) any actual
or proposed use by the Borrower or any of its Subsidiaries of the proceeds of
any of the Loans, (ii) the Borrower or any of its Subsidiaries entering into or
performing this Credit Agreement or any of the other Loan Documents or (iii)
with respect to the Borrower and its Subsidiaries and their respective
properties and assets, the violation of any Environmental Law, the presence,
disposal, escape, seepage, leakage, spillage, discharge, emission, release or
threatened release of any hazardous substances or any action, suit, proceeding
or investigation brought or threatened with respect to any hazardous substances
(including, but not limited to, claims with respect to wrongful death, personal
injury or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or other
proceeding. In litigation, or the preparation therefor, the Banks and the Agents
and their affiliates shall be entitled to select their own counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of such counsel. If, and to the extent that the
obligations of the Borrower under this ss.17.2 are unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment in
satisfaction of such obligations which is permissible under applicable law.
17.3. Survival. The covenants contained in this ss.17 shall survive payment or
satisfaction in full of all other Obligations and the termination of the
Commitments.
18. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
18.1. Sharing of Information with Section 20 Subsidiary. The Borrower
acknowledges that from time to time financial advisory, investment banking and
other services may be offered or provided to the Borrower or one or more of its
Subsidiaries, in connection with this Credit Agreement or otherwise, by a
Section 20 Subsidiary. The Borrower, for itself and each of its Subsidiaries,
hereby authorizes (a) such
<PAGE>
Section 20 Subsidiary to share with each Agent and each Bank any information
delivered to such Section 20 Subsidiary by the Borrower or any of its
Subsidiaries, and (b) each Agent and each Bank to share with such Section 20
Subsidiary any information delivered to such Agent or such Bank by the Borrower
or any of its Subsidiaries pursuant to this Credit Agreement, or in connection
with the decision of such Bank to enter into this Credit Agreement; it being
understood, in each case, that any such Section 20 Subsidiary receiving such
information shall be bound by the confidentiality provisions of this Credit
Agreement. Such authorization shall survive the payment and satisfaction in full
of all of Obligations.
18.2. Confidentiality. Each of the Banks and the Agents agrees, on behalf of
itself and each of its affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep confidential, in
accordance with their customary procedures for handling confidential information
of the same nature and in accordance with safe and sound banking practices, any
non-public information supplied to it by the Borrower or any of its Subsidiaries
pursuant to this Credit Agreement that is identified by such Person as being
confidential at the time the same is delivered to the Banks or the Agents,
provided that nothing herein shall limit the disclosure of any such information
(a) after such information shall have become public other than through a
violation of this ss.18, (b) to the extent required by statute, rule, regulation
or judicial process, (c) to counsel for any of the Banks or the Agents, (d) to
bank examiners or any other regulatory authority having jurisdiction over any
Bank or the Agents, or to auditors or accountants, (e) to an Agent, any Bank or
any Section 20 Subsidiary, (f) in connection with any litigation to which any
one or more of the Banks, the Agents or any Section 20 Subsidiary is a party, or
in connection with the enforcement of rights or remedies hereunder or under any
other Loan Document, (g) to a Subsidiary or affiliate of such Bank as provided
in ss.18.1 or (h) to any assignee or participant (or prospective assignee or
participant) so long as such assignee or participant agrees to be bound by the
provisions of ss.20.6.
18.3. Prior Notification. Unless specifically prohibited by applicable law or
court order, each of the Banks and the Agents shall, prior to disclosure
thereof, notify the Borrower of any request for disclosure of any such
non-public information by any governmental agency or representative thereof
(other than any such request in connection with an examination of the financial
condition of such Bank by such governmental agency) or pursuant to legal
process.
18.4. Other. In no event shall any Bank or Agent be obligated or required to
return any materials furnished to it or any Section 20 Subsidiary by the
Borrower or any of its Subsidiaries. The obligations of each Bank and each Agent
under this ss.18 shall supersede and replace the obligations of such Bank and
each Agent under any confidentiality letter in respect of this financing signed
and delivered by such Bank or such Agent to the Borrower prior to the date
hereof and shall be binding upon any assignee of, or purchaser of any
participation or interest in any of the Loans.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in the
Notes, in any of the other Loan Documents or in any documents or other papers
delivered by or on behalf of the Borrower or any of its Subsidiaries pursuant
hereto shall be deemed to have been relied upon by the Banks and the Agents,
notwithstanding any investigation heretofore or hereafter made by any of them,
and shall survive the making by the Banks of any of the Loans and shall continue
in full force and effect so long as any amount due under this Credit Agreement
or the Notes or any of the other Loan Documents remains outstanding or any Bank
has any obligation to make any Loans, and for such further time as may be
otherwise expressly specified in this Credit Agreement. All statements contained
in any certificate or other paper delivered to any Bank or Agent at any time by
or on behalf of the Borrower or any of its Subsidiaries
<PAGE>
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrower or such Subsidiary
hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. Conditions to Assignment by Banks. Except as provided herein, each Bank
may assign to one or more Eligible Assignees all or a portion of its interests,
rights and obligations under this Credit Agreement (including all or a portion
of its Commitment Percentage and Commitment and the same portion of the Loans at
the time owing to it and the Notes held by it); provided that (i) either (a)
such assignment is to another Bank or an affiliate of the assigning Bank or (b)
an Agent and, unless a Default or Event of Default shall have occurred and be
continuing, the Borrower shall have given its prior written consent to such
assignment, which consent will not be unreasonably withheld, (ii) each such
assignment shall be of a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this Credit Agreement, (iii) each
assignment shall be in a minimum amount of $10,000,000 or a larger integral
multiple of $1,000,000 in excess thereof and (iv) the parties to such assignment
shall execute and deliver to the Administrative Agent, for recording in the
Register (as hereinafter defined), an Assignment and Acceptance, substantially
in the form of Exhibit D hereto (an "Assignment and Acceptance"), together with
any Notes subject to such assignment. 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 (5) Business Days
after the execution thereof, (i) the assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder, and (ii) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Administrative Agent
of the registration fee referred to in ss.20.3, be released from its obligations
under this Credit Agreement.
20.2. Certain Representations and Warranties; Limitations; Covenants. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim, the assigning Bank makes no representation or warranty,
express or implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with
this Credit Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Credit Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
the attachment, perfection or priority of any security interest or
mortgage;
(b) the assigning Bank makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower and
its Subsidiaries or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or observance by the
Borrower and its Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of their obligations
under this Credit Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of this Credit
Agreement, together with copies of the most recent financial statements
referred to in ss.8.4 and ss.9.4 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;
<PAGE>
(d) such assignee will, independently and without reliance upon the assigning
Bank, the Agents or any other Bank 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 Credit
Agreement;
(e) such assignee represents and warrants that it is an Eligible Assignee;
(f) such assignee appoints and authorizes the Agents to take such action as
agent on its behalf and to exercise such powers under this Credit Agreement
and the other Loan Documents as are delegated to the Agents by the terms
hereof or thereof, together with such powers as are reasonably incidental
thereto;
(g) such assignee agrees that it will perform in accordance with their terms
all of the obligations that by the terms of this Credit Agreement are
required to be performed by it as a Bank; and
(h) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance.
20.3. Register. The Administrative Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar list (the
"Register") for the recordation of the names and addresses of the Banks and the
Commitment Percentage of, and principal amount of the Revolving Credit Loans
owing to the Banks from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrower, the Agents and
the Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Credit Agreement. The Register shall be
available for inspection by the Borrower and the Banks at any reasonable time
and from time to time upon reasonable prior notice. Upon each such recordation,
the assigning Bank agrees to pay to the Administrative Agent a registration fee
in the sum of $3,500.
20.4. New Notes. Upon its receipt of an Assignment and Acceptance executed by
the parties to such assignment, together with each Note subject to such
assignment, the Administrative Agent shall (i) record the information contained
therein in the Register, and (ii) give prompt notice thereof to the Borrower and
the Banks (other than the assigning Bank). Within five (5) Business Days after
receipt of such notice, the Borrower, at its own expense, shall execute and
deliver to the Administrative Agent, in exchange for each surrendered Note, a
new Note to the order of such Eligible Assignee in an amount equal to the amount
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained some portion of its obligations
hereunder, a new Note to the order of the assigning Bank in an amount equal to
the amount retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an aggregate principal
amount equal to the aggregate principal amount of the surrendered Notes, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the assigned Notes. Within five (5)
days of issuance of any new Notes pursuant to this ss.20.4, the Borrower shall
deliver an opinion of counsel, addressed to the Banks and the Agents, relating
to the due authorization, execution and delivery of such new Notes and the
legality, validity and binding effect thereof, in form and substance
satisfactory to the Banks. The surrendered Notes shall be cancelled and returned
to the Borrower.
20.5. Participations. Each Bank may sell participations to one or more banks or
other entities in all or a portion of such Bank's rights and obligations under
this Credit Agreement and the other Loan Documents; provided that (i) each such
participation shall be in an amount of not less than $5,000,000, (ii) any such
sale or participation shall not affect the rights and duties of the selling Bank
hereunder to
<PAGE>
the Borrower and (iii) the only rights granted to the participant pursuant to
such participation arrangements with respect to waivers, amendments or
modifications of the Loan Documents shall be the rights to approve waivers,
amendments or modifications that would reduce the principal of or the interest
rate on any Loans, extend the term or increase the amount of the Commitment of
such Bank as it relates to such participant, reduce the amount of any commitment
fees to which such participant is entitled or extend any regularly scheduled
payment date for principal or interest.
20.6. Disclosure. The Borrower agrees that in addition to disclosures made in
accordance with standard and customary banking practices any Bank may disclose
information obtained by such Bank pursuant to this Credit Agreement to assignees
or participants and potential assignees or participants hereunder; provided that
such assignees or participants or potential assignees or participants shall
agree (i) to treat in confidence such information unless such information
otherwise becomes public knowledge, (ii) not to disclose such information to a
third party, except as required by law or legal process and (iii) not to make
use of such information for purposes of transactions unrelated to such
contemplated assignment or participation.
20.7. Assignee or Participant Affiliated with the Borrower. If any assignee Bank
is an Affiliate of the Borrower, then any such assignee Bank shall have no right
to vote as a Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to any of the Loan Documents or for purposes
of making requests to the Administrative Agent pursuant to ss.14.1 or ss.14.2,
and the determination of the Required Banks shall for all purposes of this
Credit Agreement and the other Loan Documents be made without regard to such
assignee Bank's interest in any of the Loans. If any Bank sells a participating
interest in any of the Loans to a participant, and such participant is the
Borrower or an Affiliate of the Borrower, then such transferor Bank shall
promptly notify the Administrative Agent of the sale of such participation. A
transferor Bank shall have no right to vote as a Bank hereunder or under any of
the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or modifications to any of the Loan Documents
or for purposes of making requests to the Administrative Agent pursuant to
ss.14.1 or ss.14.2 to the extent that such participation is beneficially owned
by the Borrower or any Affiliate of the Borrower, and the determination of the
Required Banks shall for all purposes of this Credit Agreement and the other
Loan Documents be made without regard to the interest of such transferor Bank in
the Loans to the extent of such participation.
20.8. Miscellaneous Assignment Provisions. Any assigning Bank shall retain its
rights to be indemnified pursuant to ss.17 with respect to any claims or actions
arising prior to the date of such assignment. If any assignee Bank is not
incorporated under the laws of the United States of America or any state
thereof, it shall, prior to the date on which any interest or fees are payable
hereunder or under any of the other Loan Documents for its account, deliver to
the Borrower and the Administrative Agent certification as to its exemption from
deduction or withholding of any United States federal income taxes. If any
Reference Bank transfers all of its interest, rights and obligations under this
Credit Agreement, the Administrative Agent shall, in consultation with the
Borrower and with the consent of the Borrower and the Required Banks, appoint
another Bank to act as a Reference Bank hereunder. Anything contained in this
ss.20 to the contrary notwithstanding, any Bank may at any time pledge all or
any portion of its interest and rights under this Credit Agreement (including
all or any portion of its Notes) to any of the twelve Federal Reserve Banks
organized under ss.4 of the Federal Reserve Act, 12 U.S.C. ss.341. No such
pledge or the enforcement thereof shall release the pledgor Bank from its
obligations hereunder or under any of the other Loan Documents.
20.9. Assignment by Borrower. The Borrower shall not assign or transfer any of
its rights or obligations under any of the Loan Documents without the prior
written consent of each of the Banks.
<PAGE>
21. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all notices and
other communications made or required to be given pursuant to this Credit
Agreement or the Notes shall be in writing and shall be delivered in hand,
mailed by United States registered or certified first class mail, postage
prepaid, sent by overnight courier, or sent by facsimile or and confirmed by
delivery via courier or postal service, addressed as follows:
(a) if to the Borrower, at 2200 Eller Drive, Building 27, P.O. Box
13038, Fort Lauderdale, FL 33316, Attention: Gene Douglas,
Vice President - Legal & General Counsel, Telecopier No.
954-527-1772, or at such other address for notice as the
Borrower shall last have furnished in writing to the Person
giving the notice;
(b) if to the Administrative Agent, at 399 Park Avenue, Global
Shipping Division, 8th Floor, New York, NY 10043, Telecopier
No. 212-793-3588, or such other address for notice as the
Administrative Agent shall last have furnished in writing to
the Person giving the notice;
(c) if to the Syndication Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Victor Garcia, Vice President,
Telecopier No. 617-434-1955, or such other address for notice
as the Syndication Agent shall last have furnished in writing
to the Person giving the notice; and
(d) if to any Bank, at such Bank's address set forth on Schedule 1
hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the
notice.
Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand, overnight courier or facsimile
to a responsible officer of the party to which it is directed, at the time of
the receipt thereof by such officer or the sending of such facsimile and (ii) if
sent by registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.
22. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED THEREIN,
EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE STATE OF
NEW YORK AND SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF SAID STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). EACH OF THE BORROWER AND EACH GUARANTOR AGREES THAT
ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR ANY FEDERAL
COURT SITTING THEREIN AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER OR
SUCH GUARANTOR BY MAIL AT THE ADDRESS SPECIFIED IN ss.21. EACH OF THE BORROWER
AND EACH GUARANTOR HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN
AN INCONVENIENT COURT.
<PAGE>
23. HEADINGS.
The captions in this Credit Agreement are for convenience of reference only and
shall not define or limit the provisions hereof.
24. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection herewith or
therewith express the entire understanding of the parties with respect to the
transactions contemplated hereby. Neither this Credit Agreement nor any term
hereof may be changed, waived, discharged or terminated, except as provided in
ss.27.
26. WAIVER OF JURY TRIAL.
Each party hereto hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of which rights and
obligations. Except as prohibited by law, the Borrower hereby waives any right
it may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrower (i)
certifies that no representative, agent or attorney of any Bank or the Agents
has represented, expressly or otherwise, that such Bank or the Agents would not,
in the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that the Agents and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement to be
given by the Banks may be given, and any term of this Credit Agreement, the
other Loan Documents or any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrower or any of its
Subsidiaries of any terms of this Credit Agreement, the other Loan Documents or
such other instrument or the continuance of any Default or Event of Default may
be waived (either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the Borrower and
the written consent of the Required Banks. Notwithstanding the foregoing, the
rate of interest on the Notes (other than interest accruing pursuant to ss.6.9.2
following the effective date of any waiver by the Required Banks of the Default
or Event of Default relating thereto), the amount of the Commitments of the
Banks, and the amount of commitment fee hereunder may not be changed without the
written consent of the Borrower and the written consent of each Bank affected
thereby; the Maturity Date and the date of any payment of any principal,
interest or fees hereunder may not be postponed without the written consent of
each Bank affected thereby; this ss.27, each other provision hereof which
specifies the number or percentage of Banks required to make any determinations,
consent to any matter,
<PAGE>
or waive any rights hereunder or to modify any provision hereof, and the
definition of Required Banks may not be amended without the written consent of
all of the Banks; and the amount of the Agency fee and ss.16 may not be amended
without the written consent of each of the Agents. No waiver shall extend to or
affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Agents or
any Bank in exercising any right shall operate as a waiver thereof or otherwise
be prejudicial thereto. No notice to or demand upon the Borrower shall entitle
the Borrower to other or further notice or demand in similar or other
circumstances.
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction, and shall not
in any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Credit Agreement in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have duly executed this Credit Agreement as
of the date first set forth above.
HVIDE MARINE INCORPORATED
By:
Title:
SEABULK TRANSMARINE PARTNERSHIP, LTD., as Guarantor By its general partner
Seabulk Tankers, Ltd.
By its general partner Hvide Marine
Transport, Incorporated
By:
Title:
SEABULK OFFSHORE LTD., as Guarantor By its general partner Seabulk Tankers Ltd.
By its general partner Hvide Marine Transport, Incorporated
By:
Title:
HVIDE MARINE TRANSPORT, INCORPORATED, as Guarantor
<PAGE>
By:
Title:
SEABULK TANKERS, LTD., as Guarantor
By its general partner Hvide Marine Transport, Incorporated
By:
Title:
SEABULK OFFSHORE HOLDINGS, INC., as Guarantor
By:
Title:
SEABULK OFFSHORE INTERNATIONAL, INC., as Guarantor
By:
Title:
SEABULK OCEAN SYSTEMS CORPORATION, as Guarantor
By:
Title:
SUN STATE MARINE SERVICES, INC., as Guarantor
By:
Title:
<PAGE>
CITIBANK, N.A., individually and as Administrative Agent
By:
Title:
BANKBOSTON, N.A., individually and as Syndication Agent
By:
Title:
BNY FINANCIAL CORPORATION
By:
Title:
HIBERNIA NATIONAL BANK
By:
Title:
AMSOUTH BANK
By:
Title:
<PAGE>
FIRST NATIONAL BANK OF COMMERCE
By:
Title:
SUMITOMO BANK, LIMITED
By:
Title:
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