EXHIBIT 10.11
CREDIT AGREEMENT
among
HORNBECK OFFSHORE SERVICES, LLC
and
LEEVAC MARINE, LLC,
as Borrowers
and
HIBERNIA NATIONAL BANK,
as Agent
and
THE LENDERS LISTED ON THE SIGNATURE PAGE,
as Banks
----------------------------
Revolving Line of Credit
----------------------------
Dated as of December 31, 2001
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of December 31, 2001, is made among
HORNBECK OFFSHORE SERVICES, LLC, a Delaware limited liability company ("HOS");
LEEVAC MARINE, LLC, a Delaware limited liability company ("LM"; HOS and LM are
sometimes referred to herein collectively as the "Borrowers" and individually as
a "Borrower"); HIBERNIA NATIONAL BANK, a national banking association, as agent
(in such capacity, together with its successors and assigns in such capacity,
the "Agent"), and the lender or lenders listed from time to time on Schedule 1
hereto and on the signature pages hereof (one or more, the "Banks", which term
also shall include, subject to the terms and conditions of Section 10.20 of this
Agreement, Bank Affiliates (hereinafter defined) to the limited extent such Bank
Affiliates are party from time to time to Hedging Agreements (hereinafter
defined) with Borrowers), which agree as follows:
PRELIMINARY STATEMENT
Borrowers desire to obtain a revolving line of credit in an aggregate
amount not to exceed $50,000,000.00 to partially finance working capital needs
and acquisitions, and the Banks have agreed to provide such line of credit, upon
and subject to the terms and conditions hereof.
ARTICLE I
GENERAL TERMS
Section 1.01 Terms Defined Above. As used in this Agreement, the terms
"HOS," "LM," "Borrower," "Agent," and "Banks," shall have the meanings indicated
above.
Section 1.02 Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings, unless the context otherwise requires:
"Advance" shall mean the disbursement of the proceeds of the Credit
Loan and all or any portion of such disbursement so long as same remains
outstanding and unpaid.
"Affiliate" shall mean as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. For purposes of this definition,
"control" of a Person means the power, directly or indirectly, to direct
or in effect cause the direction of the management and policies of such
Person, whether by contract or otherwise.
"Agreement" shall mean this Credit Agreement, as the same may from
time to time be amended, modified or supplemented.
"Amerada Hess Vessels" shall mean the vessels (including barges)
acquired by Leevac Marine, Inc. (predecessor to LM) in June 2001 from
Hygrade Operators, Inc., Red Star Towing and Transportation Company and
Sheridan Towing Company, Inc. (and to the extent relevant, Ira S. Bushey &
Sons, Inc., Spentonbush/Red Star Companies, Inc. and Amerada Hess
Corporation).
"Applicable Margin" shall mean, in accordance with the following:
- --------------------------- -------------------------- -------------------------- -------------------------
For any given fiscal then the Applicable and the Applicable
quarter (the "given Margin for any Loan Margin for any Loan and the Unused
quarter"), if the accruing interest at the accruing interest at the Commitment Fee Rate
Leverage Ratio* of the Floating Rate during the Prime Rate during the during the given
Guarantor (on a given quarter shall be: given quarter shall be: quarter shall be:
consolidated basis with
its Subsidiaries) at the
end of the preceding
quarter was:
- --------------------------- -------------------------- -------------------------- -------------------------
> 3.5:1.0** 3.00% per annum 1.00% per annum 0.375% per annum
- --------------------------- -------------------------- -------------------------- -------------------------
<= 3.5:1.0 and
> 2.75:1.0 2.75% per annum 0.75% per annum 0.375% per annum
- --------------------------- -------------------------- -------------------------- -------------------------
<= 2.75:1.0 and
> 2.0:1.0 2.25% per annum 0.25% per annum 0.25% per annum
- --------------------------- -------------------------- -------------------------- -------------------------
<= 2.0:1.0 1.75% per annum 0.00% per annum 0.25% per annum
- --------------------------- --------------------------- --------------------------- --------------------------
*If the Borrowers' accounts payable are averaging greater than sixty
(60) days outstanding at the time of calculation (i.e., at the end of
the preceding quarter) then Funded Debt shall be used for this
calculation of the Leverage Ratio instead of Net Debt.
**If financial statements under Section 5.01 hereof for the preceding
quarter are not timely provided to the Agent, then the Applicable
Margin shall be calculated based on this level for the given quarter
from the first day thereof through the date on which the financial
statements are provided and a different Applicable Margin demonstrated.
- --------------------------------------------------------------------------------
"Assignment and Acceptance" shall have the meaning set forth in
Section 9.06 hereof.
"Bank Affiliate" shall mean an Affiliate of a Bank listed on
Schedule 1 to this Agreement.
"Borrowing Base" shall mean Twenty-Five Million and No/100
($25,000,000.00) Dollars. Any increase or decrease in the Borrowing Base
is subject to unanimous written approval of the Banks and, in addition,
compliance, demonstrated to Agent's satisfaction, by the Guarantor and the
Borrowers with Section 5.17 and 5.18 hereof and applicable provisions of
the Indenture (including without limitation, to the extent applicable,
compliance with the Consolidated Interest Coverage Ratio test at Section
4.09 of the Indenture).
"Borrowing Base Credit Commitments" shall mean the commitments of
each of the Banks for the Credit Loan set forth on Schedule 1 hereto under
the heading titled "Borrowing Base Credit Commitment," taking into account
the Borrowing Base from time to time in effect but in the same proportions
among the Banks as the Credit Commitments, as amended from time to time.
The Agent shall have the right to substitute a revised Schedule 1 hereto
to reflect adjustments in connection with changes of the Borrowing Base.
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"Business Day" shall mean a day other than a Saturday, Sunday or
legal holiday for commercial banks in New Orleans, Louisiana or New York,
New York.
"Change in Control" shall mean any change of circumstances such that
(i) so long as no Offering Event has occurred such that the shares of
common stock of Guarantor are traded on a pubic exchange, the Control
Group is collectively the beneficial and record owners of less than
fifty-one (51.0%) percent of the voting shares of stock of Guarantor
(other than pursuant to an Offering Event), (ii) neither Christian G.
Vaccari nor Todd M. Hornbeck (so long as either is alive and not
incapacitated) is (x) on the Board of Directors of Guarantor and each
Borrower and (y) a senior officer of Guarantor and each Borrower
equivalent to President or higher, or (iii) Guarantor fails to be the sole
member of each Borrower. For purposes hereof, beneficial ownership will be
determined in the same manner as provided in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934, so long as the applicable Person does
not disclaim beneficial interest of such shares, provided that holders of
awards under the Guarantor's Incentive Compensation Plan will be deemed
beneficial owners of all restricted shares or shares subject to options
granted under such plan without regard to vesting requirements. Any record
owner of warrants or options awarded under the Incentive Plan shall be
deemed to be the record owner of the shares beneficially owned as a result
of the ownership of such warrants or options for purposes of this
definition of Change in Control.
"CIC" shall mean Cari Investment Company, a Louisiana corporation.
"CIC Shareholders" shall mean Jon P. Vaccari, Nori A. Vaccari and
Christian G. Vaccari.
"Closing Date" shall mean the date on which the initial Credit Notes
regarding the Credit Line are executed and delivered by Borrowers to the
Banks.
"Closing Date Shareholders" shall mean those Persons certified to
Agent by Guarantor on the Closing Date as being the record owners of all
issued and outstanding shares of stock of Guarantor.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean the properties, property interests and
rights described in Section 3.01 hereof, or otherwise covered by the
Collateral Documents, as security for the Obligations.
"Collateral Documents" shall mean collectively the documents
required by the Agent to obtain the security interests in the Collateral,
as described in Section 3.01 hereof, and all other agreements, documents
and instruments required in Section 3.01, as the same may from time to
time be amended or supplemented.
"Commitments" shall mean, collectively, the Credit Commitments.
"Common Stock" shall mean the common stock, par value $0.01 per
share, of Guarantor or such other class of securities as shall constitute
the common equity of Guarantor.
"Consolidated Cash Flow" shall have the meaning set forth in the
Indenture.
"Consolidated Interest Coverage Ratio" shall have the meaning set
forth in the Indenture.
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"Control Group" shall mean (i) the Closing Date Shareholders, and
(ii) transferees in any Permitted Transfer.
"Credit Commitments" shall mean the commitments of each of the Banks
for the Credit Loan set forth on Schedule 1 hereto under the heading
titled "Credit Commitment," as amended from time to time.
"Credit Limit" shall mean the lesser of (i) the Borrowing Base from
time to time in effect, and (ii) Fifty Million and No/100 ($50,000,000.00)
Dollars.
"Credit Line" shall mean the lesser of (i) the Borrowing Base from
time to time in effect, and (ii) the credit facility afforded by the Banks
to the Borrowers to receive Advances under this Agreement, up to the
Credit Limit.
"Credit Loan" shall mean the aggregate Advances made by the Banks to
the Borrowers under the Credit Line, in accordance with Section 2.01
hereof, and represented by the Credit Notes.
"Credit Notes" shall mean the promissory notes executed by
Borrowers, each substantially in the form of Exhibit A hereto, initially
dated the Closing Date (and subsequently dated on the date that additional
Banks become a party to this Agreement), payable to the order of each Bank
in the amount of the Bank's Commitment, in representation of the Advances
available to be made under the Credit Loan, together with any and all
amendments, renewals, modifications, extensions for any period, increases
or rearrangements thereof.
"Debt" shall mean any and all amounts or liabilities owing from time
to time by a Borrower or Guarantor, as applicable, to any Person,
including the Agent or any of the Banks, direct or indirect, liquidated or
contingent, now existing or hereafter arising, including without
limitation (i) indebtedness for money borrowed; (ii) unfunded portions of
commitments for money to be borrowed; (iii) the amounts of all standby and
commercial letters of credit and bankers acceptances, matured or
unmatured, issued on behalf of a Borrower or Guarantor, as applicable;
(iv) guaranties of the obligations of any other Person, whether direct or
indirect, whether by agreement to purchase the indebtedness of any other
Person or by agreement for the furnishing of funds to any other Person
through the purchase or lease of goods, supplies or services (or by way of
stock purchase, capital contribution, advance or loan) for the purpose of
paying or discharging the indebtedness of any other Person, or otherwise;
(v) the present value of all obligations for the payment of rent or hire
of property of any kind (real or personal) under leases or lease
agreements required to be capitalized under generally accepted accounting
principles, and (vi) trade payables incurred in the ordinary course of
business or otherwise.
"Default" shall mean the occurrence of any of the events specified
in Article 8 hereof, whether or not any requirement for notice or lapse of
time or other condition precedent has been satisfied.
"Default Rate" shall mean at any date of calculation, the Prime Rate
plus the Applicable Margin plus three (3.00%) percent per annum, but in
any event the Default Rate shall not exceed eighteen (18.0%) percent per
annum.
"Draw Request Certificate" shall have the meaning set forth in
Section 2.02 hereof.
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"EBITDA" shall mean, for any rolling four fiscal quarter period
preceding any applicable date of calculation, the sum of (a) Net Income
for that period, plus (b) depreciation, amortization and all other
non-cash expenses for that period, plus (c) Interest Expense for that
period, plus (d) the aggregate amount of federal and state taxes on or
measured by income for that period (whether or not payable during that
period), all calculated for Guarantor and its Subsidiaries on a
consolidated basis. EBITDA shall be calculated for all periods as defined
above except that (i) with respect to the Amerada Hess Vessels, through
May 31, 2002, as at any applicable date of calculation, EBITDA shall be
calculated for the preceding twelve months on a pro forma basis to include
both (y) EBITDA with respect to such vessels for the period of time owned
by LM, and (z) EBITDA with respect to such vessels under ownership of
Persons other than LM for the period of time beginning with the day after
the preceding year anniversary of the applicable date of calculation and
ending on May 31, 2001 (being the day preceding the date that LM acquired
the Amerada Hess Vessels), and (ii) with respect to the Leverage Ratio
only, as at any date of calculation, (y) with respect to assets acquired
by a Borrower after the Closing Date, whether by out-right purchase
thereof or by virtue of a merger of a company into a Borrower or
acquisition by a Borrower of any other company (which acquisitions or
mergers are not otherwise prohibited by this Agreement), for the first
year after the applicable transaction, EBITDA shall be calculated for the
preceding twelve months on a pro forma basis to include both (A) EBITDA
with respect to the newly acquired assets for the period of time owned by
the applicable Borrower, and (B) EBITDA with respect to such newly
acquired assets, prior to the applicable Borrower's acquisition thereof,
for the period of time beginning with the day after the preceding year
anniversary of the applicable date of calculation and ending on the day
preceding the date that the applicable Borrower acquired such newly
acquired assets (whether by acquisition or merger), and (z) with respect
to any newly constructed vessel of a Borrower having a Qualified Service
Contract upon delivery and acceptance of the vessel, for the first year
following the delivery and acceptance of the vessel, EBITDA shall be
calculated on a pro forma basis to include that which would be included in
Consolidated Cash Flow under the Indenture for purposes of calculating the
Consolidated Interest Coverage Ratio under the Indenture.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" shall mean the occurrence of any of the events
specified in Article 8 hereof, provided that any requirement for notice or
lapse of time or any other condition precedent has been satisfied.
"Fixed Charges" shall mean, for any applicable period of
calculation, the sum of current maturities of principal and capitalized
lease payments on Debt, Interest Expense and current tax obligations
(excluding portions thereof that are deferred and excluding trade payables
incurred in the ordinary course of business).
"Floating Rate" shall mean the LIBO Rate for any applicable Interest
Period.
"Funded Debt" shall mean, as at any applicable date of calculation,
all outstanding Debt of the Guarantor (on a consolidated basis with its
Subsidiaries), as to Debt comprised of money borrowed, letters of credit
and bankers acceptances, matured or unmatured, and the present value of
capitalized lease obligations, but not as to Debt comprised of guaranties,
unfunded commitments to lend and trade payables.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or
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administrative functions of or pertaining to government, including without
limitation, any arbitration panel, any court or any commission.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other direction
or requirement (including without limitation any of the foregoing which
relate to environmental standards or controls, occupational, safety and
health standards or controls and any environmental protection statute) of
any (domestic or foreign) Governmental Authority.
"Guarantor" shall mean HORNBECK-LEEVAC Marine Services, Inc., a
Delaware corporation.
"Guarantor Subsidiaries" shall mean those Subsidiaries that from
time to time execute and deliver guaranties of the Obligations under
subsection 3.01(g) hereof, and "Guarantor Subsidiary" means any such
Person.
"Guaranty" shall have the meaning set forth in Section 3.01 hereof.
"Hazardous Materials" shall mean:
(i) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), as
amended from time to time, and regulations promulgated thereunder;
(ii) any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C. Section 9601 et seq.) ("CERCLA"), as amended from time to time, and
regulations promulgated thereunder;
(iii) asbestos;
(iv) polychlorinated biphenyls;
(v) any substance the presence of which on the Vessels is
prohibited by any lawful Governmental Requirement from time to time in
force and effect relating to the Vessels; and
(vi) any other substance which by any Governmental
Requirement requires special handling in its collection, storage,
treatment or disposal.
"Hedging Agreement" shall mean any interest rate, commodity or
foreign exchange swap, collar, cap or similar agreement evidencing Hedging
Obligations.
"Hedging Arrangements" shall have the meaning set forth in the
definition of Hedging Obligations.
"Hedging Obligations" of a Person shall mean any and all obligations
of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced or acquired (including all
renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all agreements, devices or arrangements
designed to protect at least one of the parties thereto from the
fluctuations of interest rates, commodity prices, exchange rates or
forward rates applicable to such party's assets, liabilities or exchange
transactions, including, but not limited
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to, dollar-denominated or cross-currency interest rate exchange
agreements, forward currency exchange agreements, interest rate cap or
collar protection agreements, forward rate currency or interest rate
locks, options, puts and warrants or any similar derivative transactions
("Hedging Arrangements"), and (ii) any and all cancellations, buy backs,
reversals, terminations or assignments of any of the foregoing.
"HNB" shall mean Hibernia National Bank, a national banking
association.
"HOS Fleet Mortgage" shall have the meaning set forth in Section
3.01 hereof.
"HOS Security Agreement" shall have the meaning set forth in Section
3.01 hereof.
"HOS Vessels" shall mean the BJ BLUE RAY (Official Number 1114862),
the HOS INNOVATOR (Official Number 1108573), the HOS CORNERSTONE (Official
Number 1091051) and the HOS DEEPWATER (Official Number 1088301); provided,
that (i) should any other vessels of HOS be required to be mortgaged by
HOS to the Agent in accordance with the terms and conditions of this
Agreement as security for the Obligations, then such vessels upon being so
mortgaged shall be HOS Vessels, and (ii) should the Agent and the Banks
release a HOS Vessel from the Liens securing the Obligations, then such
vessel thereafter no longer shall be a HOS Vessel (provided, further, that
nothing herein shall be deemed to imply that the Agent and the Banks would
be required, or otherwise agree, to so release any HOS Vessel from such
Liens).
"Immediate Family" of a specified Person shall mean such Person's
spouse, mother or father, or any of such specified Person's brothers,
sisters, sons or daughters and, in the case of Todd M. Hornbeck or Troy A.
Hornbeck, either of their two paternal uncles.
"Indenture" shall mean the Indenture dated as of July 24, 2001 among
Guarantor, Borrowers, Energy Services Puerto Rico, LLC, HORNBECK-LEEVAC
Marine Operators, LLC and the Indenture Trustee, as it has been and may
from time to time be amended, modified, supplemented or refinanced.
"Indenture Documents" shall mean the Indenture and all notes,
collateral documents and other agreements, documents and instruments
executed or delivered in connection therewith, together with any and all
renewals, modifications, amendments, extensions for any period, increases
or rearrangements thereof.
"Indenture Noteholders" shall mean the holders from time to time of
the notes issued under the Indenture.
"Indenture Obligations" shall mean any and all amounts, liabilities
and obligations owing from time to time by Borrowers and the Guarantor to
the Indenture Trustee or all or any of the Indenture Noteholders pursuant
to any of the Indenture Documents, whether such amounts, liabilities or
obligations be liquidated or unliquidated, now existing or hereafter
arising, absolute or contingent.
"Indenture Trustee" shall mean Wells Fargo Bank Minnesota, National
Association, as trustee for the Indenture Noteholders under the Indenture,
and its successors and assigns thereunder.
"Interest Expense" shall mean, as of the last day of any rolling
four fiscal quarter period (or such other applicable period as provided in
the definition of EBITDA), the sum of (a) all interest, fees, charges and
related expenses paid or payable (without duplication) for that rolling
four fiscal
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quarter period (or such other applicable period) to a lender in connection
with borrowed money or the deferred purchase price of assets that are
considered "interest expense" under generally accepted accounting
principles, plus (b) the portion of rent paid or payable (without
duplication) for that rolling period (or such other applicable period)
under capital lease obligations that should be treated as interest in
accordance with Financial Accounting Standards Board Statement No. 13.
"Interest Period" shall mean 30, 60, 90 or 180 days, as the case may
be; provided, that (x) if any Interest Period would otherwise end on a day
that is not a LIBOR Business Day, that Interest Period shall be extended
to the next succeeding LIBOR 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 LIBOR Business Day; (y) any Interest Period that begins on the
last LIBOR Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last LIBOR Business Day of a
calendar month; and (z) any Interest Period that would otherwise extend
beyond the Maturity Date shall end on the Maturity Date.
"Interest Rate Contracts" shall mean interest rate swap agreements,
interest rate cap agreements, interest rate collar agreements, interest
rate insurance and other agreements or arrangements designed to provide
protection against fluctuation in interest rates.
"Leverage Ratio" shall mean, as at any applicable date of
calculation, the ratio obtained by dividing Net Debt by EBITDA; provided,
that Funded Debt shall be substituted for Net Debt in certain
circumstances set forth in the definition of Applicable Margin.
"LIBO Rate" means an interest rate per annum equal to the quotient
(converted to a percentage) of (i) the rate per annum as determined by the
Agent at or about 9:30 o'clock A.M. (Central Time) (or as soon thereafter
as practicable) on the second Business Day prior to the first day of the
applicable Interest Period, as being the rate at which deposits of United
States Dollars are offered to the Banks in the London inter-bank market by
the Reference Banks, at the time of determination and in accordance with
the normal practice in such market, for delivery on the first day of such
Interest Period, in amounts equal (as nearly as may be) to the amount of
the Loan on the first day of such Interest Period, divided by (ii) 1.00
minus the LIBOR Reserve Requirement.
"LIBOR Business Day" shall mean any Business Day on which commercial
banks are open for international business (including dealings in U.S.
dollar deposits) in the London inter-bank market.
"LIBOR Reserve Requirement" shall mean that percentage which is
specified by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, but
not limited to, any marginal reserve requirement) for the Banks with
respect to liabilities consisting of or including "Eurocurrency
liabilities" (as defined in Regulation D of the Board of Governors of the
Federal Reserve System) with a maturity equivalent with the applicable
Interest Period. In determining the percentage for the LIBOR Reserve
Requirement, the Agent may use any reasonable averaging and attribution
methods.
"Lien" shall mean any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property,
whether such interest is based on jurisprudence, statute or contract, and
including but not limited to the lien or security interest or ship
mortgage arising from a mortgage, encumbrance, pledge, security agreement,
preferred ship mortgage, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall
include
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reservations, exceptions, encroachments, easements, servitudes, usufructs,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting property. For the purposes of the
Loan Documents, a Person shall be deemed to be the owner of any property
which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the
property has been retained by or vested in some other Person for security
purposes.
"LM Fleet Mortgage" shall have the meaning set forth in Section 3.01
hereof.
"LM Security Agreement" shall have the meaning set forth in Section
3.01 hereof.
"LM Vessels" shall mean the SEA SERVICE (Official Number 570691),
the ATLANTIC SERVICE (Official Number 568767), the BROOKLYN SERVICE
(Official Number 566723), and the SPARTAN SERVICE (Official Number
596900); provided, that (i) should any other vessels of LM be required to
be mortgaged by LM to the Agent in accordance with the terms and
conditions of this Agreement as security for the Obligations, then such
vessels upon being so mortgaged shall be LM Vessels, and (ii) should the
Agent and the Banks release an LM Vessel from the Liens securing the
Obligations, then such vessel thereafter no longer shall be an LM Vessel
(provided, further, that nothing herein shall be deemed to imply that the
Agent and the Banks would be required, or otherwise agree, to so release
any LM Vessel from such Liens).
"Loan Documents" shall mean collectively this Agreement, the Notes,
the Collateral Documents and any other agreement, document or instrument
executed or delivered in connection herewith and therewith (including
without limitation subordination agreements, consents, waivers, Draw
Request Certificates and other certifications and Hedging Agreements
between a Borrower and any Bank), together with any and all renewals,
modifications, amendments, extensions for any period, or rearrangements
hereof or of any thereof.
"Maturity Date" shall mean December 31, 2004.
"Net Debt" shall mean, as at any applicable date of calculation, the
difference of (i) Funded Debt, minus (ii) the amount of cash and cash
equivalents (determined in accordance with generally accepted accounting
principles) owned by Guarantor (on a consolidated basis with its
Subsidiaries) in excess of $2,500,000.
"Net Income" shall mean, with respect to any rolling four fiscal
quarter period (or such other applicable period as provided in the
definition of EBITDA), the consolidated net income for that period,
determined in accordance with generally accepted accounting principles;
provided, that in connection with the calculation of EBITDA for 2001, the
non-cash charges related to Guarantor's amortization of the put feature of
the Warrants and repurchase of the Warrants, and early extinguishment of
indebtedness for borrowed money of Guarantor and the Borrowers in
connection with the refinancing of all such indebtedness with the proceeds
of the Indenture Obligations, shall be added back to Net Income.
"Notes" shall mean, collectively, the outstanding Credit Notes and
"Note" shall mean any of such Credit Notes.
"Obligations" shall mean any and all amounts, liabilities and
obligations owing from time to time by the Borrowers to the Agent or all
or any of the Banks, pursuant to any of the Loan
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Documents, whether such amounts, liabilities or obligations be liquidated
or unliquidated, now existing or hereafter arising, absolute or
contingent.
"Offering Event" shall mean the occurrence of a public sale for cash
of (i) equity securities, (ii) securities convertible into equity
securities or a right, warrant or option to receive or purchase equity
securities (the securities described in (i) and (ii) being collectively
"Equity Securities"), (iii) convertible notes, (iv) notes combined with
Equity Securities, or (v) all or substantially all of the assets, in each
case of any of a Borrower or Guarantor; provided, that any private
placement of equity securities, including the issuance by the Guarantor of
shares of its common stock, shall not be an Offering Event.
"Permitted Liens" shall mean those Liens described in Section 6.01
hereof.
"Permitted Transfer" with respect to Common Stock means (i) a
Transfer by CIC to the CIC Shareholders, pro rata in accordance with their
respective ownership of the capital stock of CIC, (ii) a Transfer by gift
to the spouse or lineal descendants of a Person or to a trust (the trustee
of which is a commercial bank or trust company or a member of such
Person's Immediate Family) or to a family partnership, all of the
beneficial interests in which are owned by such Person and his or her
spouse or lineal descendants, (iii) a Transfer by a Person to any member
of such Person's Immediate Family or to a trust (the trustee of which is a
commercial bank or trust company or a member of such Person's Immediate
Family) or a family partnership, all of the beneficial interests of which
are owned by such Person or a member of such Person's Immediate Family;
provided, that any such Transfer referred to in this subpart (iii) (x) by
Todd M. Hornbeck shall be limited to one-third (1/3) of the Common Stock
owned directly by him on the Closing Date plus any additional shares
acquired by him and (y) by Christian G. Vaccari shall be limited to
one-third (1/3) of the shares of Common Stock held by CIC and attributable
to him (i.e., as of the Closing Date, one-third of one-third of the Common
Stock held by CIC on the Closing Date, plus any additional shares acquired
by CIC), plus any additional shares acquired by him and (iv) a Transfer
pursuant to a divorce decree.
"Person" shall mean any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization, government or any agency or
political subdivision thereof, or any other form of entity.
"Plan(s)" shall mean any employee pension benefit plan within the
meaning of Section (3)(2) of ERISA sponsored and maintained by a Person,
including any such plan to which such Person is required to contribute on
behalf of its employees.
"Prime Rate" shall mean the rate of interest announced publicly by
Citibank, N.A. (or its successor) in New York, New York from time to time
as its "prime rate" or "base rate," which rate is a reference rate and is
not necessarily the lowest rate quoted or charged by Citibank, N.A. (or
its successor) or the Agent or any Bank to their respective customers.
"Qualified Services Contract" shall have the meaning set forth in
the Indenture.
"Reference Banks" shall mean the principal London offices of the
banks shown on the Dow Jones Telerate Matrix for British Bankers
Association Interest Settlement Rates.
"Required Banks" shall mean Banks holding at least sixty-six and
two-thirds (66.667%) percent of the aggregate principal amount of the
Notes.
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"Subsidiaries" shall mean any Person of which Guarantor owns,
directly or indirectly, fifty (50.0%) percent or more of the voting or
other equity interests, and "Subsidiary" means any such Person.
"Surveyor" shall mean any marine engineer/surveyor approved in
writing by the Required Banks, and shall initially mean Norman J. Dufour,
Jr., unless and until the Agent shall have otherwise notified Borrowers in
writing to the contrary.
"Transfer" shall mean any direct or indirect transfer, assignment,
donation, devise, sale, gift, pledge, hypothecation, encumbrance, or other
disposition of any security, or any interest therein, whether voluntary or
involuntary, including without limitation any disposition or transfer as a
part of any liquidation of assets or any reorganization pursuant to the
United States' or any other jurisdiction's bankruptcy laws or other
similar debtor relief laws.
"Unused Commitment Fee" shall mean an amount calculated by
multiplying the Unused Commitment Fee Rate times the average daily
unborrowed amount of the Borrowing Base Credit Commitments for the period
in question, computed on the per annum basis of a year of 360 days for the
actual number of days in the applicable periods.
"Unused Commitment Fee Rate" shall be calculated as set forth in the
definition of Applicable Margin.
"Vessels" shall mean, collectively, the HOS Vessels and the LM
Vessels, and "Vessel" shall mean any of such Vessel.
"Warrants" shall mean the two warrants (numbers 1 and 2) that were
issued by Guarantor to Enron Capital & Trade Resources Corp. and Joint
Energy Development Investments II Limited Partnership, each for the
purchase of an aggregate of 5,250,000 shares of the Common Stock of
Guarantor, and any warrants issued upon the transfer thereof or in
substitution therefor, which Warrants were repurchased by Guarantor on
October 25, 2001.
Section 1.03 Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with
generally accepted accounting principles as in effect from time to time.
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ARTICLE 2
THE CREDIT LINE
Section 2.01 The Credit Line and the Credit Loan. (a) Subject to and upon
the terms and conditions set forth in this Agreement, and relying upon the
representations and warranties contained in this Agreement, each Bank,
severally, is willing to make multiple Advances to the Borrowers under the
Credit Line prior to the Maturity Date in the aggregate principal amount up to
such Bank's Borrowing Base Credit Commitment set forth on Schedule 1 hereto. The
aggregate amount of the Advances cannot exceed the Credit Limit. The Credit Line
shall be revolving, such that from the Closing Date through the Business Day
immediately preceding the Maturity Date, the Borrowers may borrow, repay and
reborrow under the Credit Line. The Credit Loan and Advances thereunder will be
evidenced by a Credit Note for each Bank in the principal amount, initially, of
such Bank's Credit Commitment. Interest on the Credit Line shall accrue as
described in Section 2.03 hereof and shall be payable, in arrears, also as
provided in Section 2.03. The Credit Notes shall mature and be payable in full
(including without limitation all then outstanding principal and accrued and
unpaid interest) on the Maturity Date.
(b) ANY ADVANCE HEREUNDER TO OR ON BEHALF OF A BORROWER SHALL BE
DEEMED FOR ALL PURPOSES TO BE AN ADVANCE TO BOTH BORROWERS. EACH BORROWER HEREBY
ACKNOWLEDGES AND AGREES THAT IT IS SOLIDARILY (JOINTLY AND SEVERALLY) LIABLE
WITH THE OTHER BORROWER TO THE BANKS FOR THE PAYMENT AND PERFORMANCE OF ALL
ADVANCES AND ANY OTHER OBLIGATIONS INCURRED OR FROM TIME TO TIME DUE AND
PAYABLE.
Section 2.02 Manner and Notice of Advances Under the Credit Line. Subject
to the requirements and limitations set forth in this Section 2.02 and in
Article 7 hereof, Advances may be drawn solely for the purposes set forth in
Section 2.10 hereof.
Borrowers shall provide the Agent with any request for an Advance (i)
prior to 10:00 a.m. (central time) at least two (2) Business Days prior to the
requested date of the Advance to initially accrue interest based on the Floating
Rate and (ii) at least one (1) Business Day prior to the requested date of the
Advance to initially accrue interest based on the Prime Rate, in each case
pursuant to a Draw Request Certificate (the "Draw Request Certificate"), the
form of which is attached hereto as Exhibit B. If the Advance is in connection
with the acquisition of a company or assets of another company (other than in
the ordinary course of business), then Borrowers shall provide to the Agent such
other information in connection therewith as the Agent requests, including
without limitation compliance with subsection 2.01(a) and Section 6.05 hereof if
applicable. The Agent will use its best efforts to give telephone notice to the
Banks of a proposed Advance on the same day such Draw Request Certificate is
received by the Agent from Borrowers, but in any event (x) at least two (2)
Business Days prior to any Advance to initially accrue interest based on the
Floating Rate interest option, and (y) at least one (1) Business Day prior to
any Advance to initially accrue interest based on the Prime Rate interest
option. Advances shall be made only on Business Days. The request for any
Advance shall constitute a certification by Borrowers that all of the
representations and warranties contained in Article 4 (other than those
representations and warranties that are, by their specific terms, limited in
application to a specific date) are true and correct as of the date of such
request and also as of the date of the Advance.
Not later than 12:00 noon (central time) on the date of any Advance, each
of the Banks shall make available to the Agent, in immediately available funds,
the amount of such Bank's pro rata portion (i.e., the percentage of its Credit
Commitment as compared to the aggregate of the Credit Commitments) of the amount
of the requested Advance. Upon receipt from each Bank of such amount, and upon
fulfillment of
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the applicable conditions set forth in Sections 7.01 or 7.02 hereof, the Agent
(on behalf of the Banks) will make available to Borrowers the aggregate amount
of such Advance in accordance with the further terms of this Section 2.02. The
failure or refusal of any Bank to make available to the Agent, at the aforesaid
time and place on any date of an Advance, the amount of its portion of the
requested Advance shall not relieve any other Bank from its several obligation
hereunder to make available to the Agent the amount of such other Bank's portion
of any requested Advance.
The Agent may, unless notified to the contrary by any Bank prior to the
date of an Advance, assume that each Bank has made available to the Agent on
such date of the applicable Advance the amount of each Bank's portion of the
Advance to be made on such date, and the Agent shall, in reliance upon such
assumption, make available to Borrowers a corresponding amount. If any Bank
makes available to the Agent such amount on a date after the date of the
applicable Advance, such Bank shall pay to the 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 Agent for federal
funds acquired by the Agent during each day included in such period, times (ii)
the amount of such Bank's portion of such Advance, times (iii) a fraction, the
numerator of which is the number of days that elapse from and including such
date of the Advance to the date on which the amount of such Bank's portion of
such Advance shall become immediately available to the Agent, and the
denominator of which is 365; provided, that if such Bank has not paid to the
Agent such Bank's portion of the Advance by 12:00 noon (central time) on the
third (3rd) Business Day after the Advance was made to Borrowers, then the
interest rate in clause (i) above shall be the Prime Rate (adjusted daily) from
and after such 2nd Business Day after the Advance was made until and including
the date such Bank makes available to the Agent such Bank's portion of the
Advance; provided, further, that if such Bank has not paid to the Agent such
Bank's portion of the Advance by 12:00 noon (central time) on the fifteenth
(15th) Business Day after the Advance was made to Borrowers, then the interest
rate in clause (i) above shall be the Prime Rate (adjusted daily) plus three
(3.0%) percent per annum from and after such 15th Business Day after the Advance
was made until and including the date such Bank makes available to the Agent
such Bank's portion of the Advance. A statement of the Agent submitted to each
Bank with respect to any amounts owing under this paragraph shall be prima facie
evidence of the amount due and owing to the Agent by such Bank. If any Bank
fails to pay to Agent its portion of any Advance within thirty (30) days after
an Advance or if any Bank twice fails to timely make its portion of Advances to
be made to Borrowers available to the Agent before 12:00 noon (central time) on
the dates Advances are made to Borrowers, then, if requested to do so by
Borrower or any other Bank or the Agent, such Bank shall sell all of its
interests, rights and obligations under this Agreement (including all of its
Commitment and its portion of the Credit Loan at the time owing to it) and the
Note held by it to another Bank or bank under Section 9.06 hereof.
Absent manifest error, the credit advice resulting from the deposit of the
proceeds of the Advance in Borrowers' account with the Agent shall be deemed
conclusive evidence of Borrowers' solidary (joint and several) indebtedness to
the Banks in connection with the Credit Loan.
When each Advance is made by the Agent to a Borrower hereunder, Borrowers
shall be deemed to have renewed and reissued each Credit Note for the amount of
such Advance represented by said Credit Note plus the amount of all previous
Advances then outstanding and all other amounts due under each Credit Note.
Section 2.03 Interest on the Credit Loan. (a) The Credit Loan shall bear
interest from the date of each Advance until paid at either (i) the Prime Rate
plus the Applicable Margin, per annum, adjusted daily, or (ii) the Floating Rate
plus the Applicable Margin, per annum, adjusted on the first day of each
Interest Period (i.e., in accordance with the definition of LIBO Rate,
determined two (2) Business Days prior to each Interest Period). Interest on the
Credit Loan shall be payable in arrears (x) if accruing based on the Prime Rate
interest option, on the last day of each month and, with respect to any of the
Credit Loan being converted to accrue interest based on the Floating Rate
interest option, on the date of such conversion with
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respect to such portion being converted, (y) if accruing based on the Floating
Rate interest option, on the last day of each applicable Interest Period (unless
an Interest Period is for 180 days, in which case interest on such applicable
Advances shall be payable on the 90th day of such Interest Period and on the
last day of such Interest Period), and (z) on the maturity of the Credit Loan on
the Maturity Date. All payments of interest shall be computed on the per annum
basis of a year of 360 days for the actual number of days (including the first
day but excluding the last day) elapsed.
(b) The Prime Rate shall remain fixed for one Business Day, to be
adjusted daily. The Floating Rate shall remain fixed for the duration of any
Interest Period for which the Floating Rate interest option is selected.
Borrowers shall provide to the Agent at least two (2) Business Days' prior
written notice of the change of interest accrual on any portion of the Credit
Loan from the Prime Rate interest option to the Floating Rate interest option.
At least two (2) Business Days prior to the end of an Interest Period, Borrowers
shall provide the Agent with written notice as to whether the applicable portion
of the Credit Loan is to continue accruing interest at the Floating Rate
interest option (and if so, then for what new Interest Period) or to accrue at
the Prime Rate interest option after the end of the Interest Period until
further notice to the contrary from Borrowers. If Borrowers do not timely notify
the Agent of their election for any portion of the Credit Loan accruing interest
at the Floating Rate interest option (i.e., at least two (2) Business Days prior
to the end of an Interest Period), then the interest rate on such portion of the
Credit Loan shall, following the end of such Interest Period, accrue interest
based on the Prime Rate interest option.
(c) Borrowers will indemnify the Banks against, and reimburse the
Agent (for payment to the Banks) on demand for, any loss or expense actually and
demonstrably incurred or sustained by the Banks (including without limitation,
any loss or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by the Banks to fund or maintain Floating Rate
advances) as a result of any payment or prepayment (whether authorized or
required hereunder or otherwise) of all or a portion of any Floating Rate
advance on a day other than the day on which the applicable Interest Period
ends. For purposes of this Section, funding losses arising by reason of
liquidation or reemployment of deposits or other funds acquired by the Banks to
fund or maintain Floating Rate advances shall be calculated as the remainder
obtained by subtracting: (1) the yield (reflecting both stated interest rate and
discount, if any) to maturity of obligations of the United States Treasury as
determined by the Agent in an amount equal or comparable to such advance for the
period of time commencing on the date of the payment, prepayment or change of
rate as provided above and ending on the last day of the subject interest
period, from (2) the Floating Rate of the subject Interest Period, times the
number of days from the date of payment, prepayment or change of rate to the
last day of the subject interest period, divided by 360. Any payment due under
this Section will be paid to the Agent within five days after demand therefor by
the Agent, and if not timely received by the Agent, such amount shall thereafter
accrue interest at the Default Rate and be payable on demand.
(d) The determination by the Agent of an interest rate hereunder or
interest amount due hereunder shall for all purposes be prima facie evidence of
the correctness of such rate or calculation.
(e) At no time shall there be more than five (5) separate portions
of the Credit Loan accruing interest based on the Floating Rate interest option,
and no portion of the Credit Loan accruing interest based on the Floating Rate
interest option shall be for a principal amount of less than $1,000,000.00.
Section 2.04 Default Rate. If an Event of Default shall occur in the
payment on the due date of any payment of principal or interest due hereunder,
Borrowers will pay interest on any such past due installment (retroactively)
from the date of the Default on such payment up to the date of actual payment
(as well after as before judgment) at the Default Rate. Upon the acceleration of
the principal indebtedness represented by the Credit Notes resulting from an
Event of Default hereunder, the accelerated principal
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balance of the Credit Loan shall bear interest from the date of acceleration up
to the date of actual payment (as well after as before judgment) at the Default
Rate. All such interest at the Default Rate shall be payable on demand.
Section 2.05 Prepayments. The Credit Loan shall or may be prepaid as
follows:
(i) Mandatory Prepayments -
(y) The Required Banks shall be entitled to require
mandatory prepayments of the Credit Loan as set forth in Section 5.08 of
this Agreement, unless other Collateral satisfactory to the Required Banks
is substituted for the Collateral subject thereto, pursuant to
documentation in form and substance satisfactory to the Agent.
(z) Borrowers shall prepay the Credit Loan from time
to time as may be necessary so that the principal amount of the Credit
Line outstanding does not exceed the Credit Limit then in effect.
(ii) Voluntary Prepayments - Borrowers may make voluntary
prepayments from time to time on the Credit Loan outstanding hereunder, in
whole or in part, without premium or penalty (other than as provided in
subsection 2.03(c) above and as otherwise may have been or be agreed to),
upon at least two (2) Business Days' notice to the Agent setting forth (x)
the proposed date of prepayment (which shall be a Business Day), and (y)
the principal amount of the prepayment (which shall be an amount equal to
at least one hundred thousand dollars ($100,000.00) or any lesser
remaining balance of the Credit Loan then outstanding).
(iii) As to any prepayment, whether mandatory or voluntary, (y)
Borrowers shall pay all accrued interest on the portions of the Credit
Loan so prepaid, at the time of prepayment, and (z) prepayments shall be
applied first, to that portion of the Credit Loan accruing interest based
on the Prime Rate interest option and, second, to the remaining amounts of
the Credit Loan outstanding with due regard, to the extent practicable, to
minimizing any fees under subsection 2.03(c).
Section 2.06 Business Days. If the date for any payment or prepayment
hereunder falls on a day which is not a Business Day, then for all purposes of
this Agreement (unless otherwise provided herein) the same shall be deemed to
have fallen on the next following Business Day, and such extension of time shall
in such case be included in the computation of payments of interest.
Section 2.07 Nature of Commitment. The Banks' obligation to make any
Advance shall be deemed to be a transaction made pursuant to a contract to make
a loan or extend debt financing or financial accommodations to Borrowers within
the meaning of Sections 365(c)(2) and 365(e)(2)(B) of the Bankruptcy Code of the
United States.
Section 2.08 Payments. Borrowers shall make each payment hereunder and
under the Notes and any other Loan Document in lawful money of the United States
of America in same day funds to the Agent at its main office in New Orleans,
Louisiana, not later than 11:00 a.m. (Central Time) on the day when due, or such
other place in the United States as designated in writing by the Agent. The
Agent shall promptly send to each Bank by federal wire transfer its respective
proportionate share of all amounts to which the Banks are entitled.
15
Section 2.09 Certain Fees. (a) Borrowers shall pay to the Agent (i) on the
Closing Date, for disbursement in accordance with subsection 9.01(a) hereof to
the Banks pro-rata according to their Credit Commitments, a nonrefundable loan
origination fee equal to $50,000, and (ii) after the Closing Date,
simultaneously with any increase in the Borrowing Base, for disbursement in
accordance with subsection 9.01(a) hereof to the Banks pro-rata according to the
respective increases in their respective Credit Commitments, a nonrefundable
loan origination fee equal to 0.25% of the amount of the increase of the
Borrowing Base.
(b) Borrowers shall pay to the Agent, for disbursement in accordance
with subsection 9.01(a) hereof to the Banks pro-rata according to their Credit
Commitments, not later than the fifth (5th) Business Day after the end of each
fiscal quarter, an Unused Commitment Fee in arrears for the prior quarter. On
the Maturity Date, Borrowers shall pay to the Agent, for disbursement in
accordance with Article 9 hereof to the Banks pro-rata according to their Credit
Commitments, an Unused Commitment Fee in arrears for the period from the first
day of the fiscal quarter in which the Maturity Date occurs up to, but not
including, the Maturity Date.
(c) Borrowers shall pay to the Agent, for its own account, such fees
as are agreed to in a separate agreement among Borrowers and the Agent with
respect to the Agent's services provided hereunder and in connection herewith.
Section 2.10 Use of Proceeds. Borrowers shall use the proceeds of the
Advances exclusively for their working capital purposes and for funding, subject
to the terms and conditions hereof, acquisitions of assets and companies and
construction of vessels.
Section 2.11 Inability to Determine Floating Rate. In the event, prior to
the commencement of any Interest Period relating to any portion of the Credit
Loan to accrue interest based on the Floating Rate interest option, the Agent
shall determine or be notified by the Required Banks that adequate and
reasonable methods do not exist for ascertaining the Floating Rate that would
otherwise determine the rate of interest to be applicable to any portion of the
Credit Loan to accrue interest based on the Floating Rate interest option during
any Interest Period, the Agent shall forthwith give notice of such determination
(which shall be conclusive and binding on Borrowers and the Banks absent
manifest error) to Borrowers and the Banks. In such event (i) the applicable
request giving rise to such determination, (x) if a request for an Advance,
shall be deemed to have requested that the Advance accrue interest based on the
Prime Rate interest option, and (y) if a request to convert to, or continue,
interest accrual based on the Floating Rate interest option, shall be denied and
that portion of the Credit Loan shall accrue interest based on the Prime Rate
interest option, (ii) each portion of the Credit Loan then accruing interest
based on the Floating Rate interest option will automatically, on the last day
of the then current Interest Period thereof, convert to accrue interest based on
the Prime Rate interest option, and (iii) no further Advances shall be made that
are to accrue interest based on the Floating Rate interest option until the
Agent or the Required Banks determines that the circumstances giving rise to
such suspension no longer exist, whereupon the Agent or, as the case may be, the
Agent upon the instruction of the Required Banks, shall so notify Borrowers and
the Banks.
Section 2.12 Illegality. Notwithstanding any other provisions herein, if
any present or future law, regulation, treaty or directive or the interpretation
or application thereof shall, subsequent to the date hereof, make it unlawful
for any Bank to make any Advance or maintain any portion of the Credit Loan, in
either case with interest accruing based on the Floating Rate interest option,
such Bank shall forthwith give notice of such circumstances to Borrowers and the
other Banks and thereupon (a) the commitment of such Bank to make Advances
accruing interest based on the Floating Rate interest option or to convert
portions of the Credit Loan so as to accrue interest based on the Floating Rate
interest option shall forthwith be suspended and (b) such Bank's portion of the
Credit Loan then accruing interest based on the Floating Rate interest
16
option will automatically, on the last day of the then current respective
Interest Periods thereof (unless required by law to be an earlier date), convert
to accrue interest based on the Prime Rate interest option. Borrowers hereby
agree promptly to pay the 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
Section 2.12, including any interest or fees payable by such Bank to lenders of
funds obtained by it in order to make or maintain hereunder its portion of the
Credit Loan accruing interest based on the Floating Rate interest option.
Section 2.13 Additional Costs, etc. If any present or future applicable
law relative to Floating Rate application, 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 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 Agent to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Agreement, the other Loan Documents, such Bank's
Commitment or the Credit Loan (other than taxes based upon or measured by
the revenue, income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except
for changes in taxes on revenue, income or profits) of payments to any
Bank of the principal of or the interest on the Credit Loan or any other
amounts payable to any Bank or the Agent under this Agreement or the other
Loan Documents, or
(c) impose or increase or render applicable (other
than to the extent specifically provided for elsewhere in this 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 commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other
conditions or requirements with respect to this Agreement, the other Loan
Documents, the Credit Loan, such Bank's Commitment, or any class of loans
or commitments of which the Credit Loan or such Bank's Commitment form 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 the Credit Loan or
the Commitment of such Bank, or
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank or the Agent hereunder on
account of the Commitment of such Bank or the Credit Loan, or
(iii) to require such Bank or the 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
Agent from Borrowers hereunder,
17
then, and in each such case, Borrowers will, upon demand made by such Bank or
the Agent (as the case may be) at any time and from time to time and as often as
the occasion therefor may arise, pay to such Bank or the Agent such additional
amounts as will be sufficient to compensate such Bank or the Agent for such
additional cost, reduction, payment or foregone interest or other sum.
Section 2.14 Capital Adequacy. If after the date hereof any Bank
determines that (i) the adoption of or change in any law, governmental rule,
regulations, 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 any
corporation controlling such Bank 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 commitment or portion of the Credit Loan to a level below that which
such Bank could have achieved but for such adoption, change or compliance
(taking into consideration such Bank'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 to be material, then such Bank may notify Borrowers
of such fact. To the extent that the amount of such reduction in the return on
capital is not reflected in the Prime Rate, Borrowers agree to pay such Bank for
the amount of such reduction in the return on capital as and when such reduction
is determined upon presentation by such Bank of a certification in accordance
with Section 2.15 hereof. Each Bank shall allocate such cost increases among its
customers in good faith and on an equitable basis.
Section 2.15 Certificate. A certificate setting forth any additional
amounts payable pursuant to Section 2.13 or 2.14 and a complete explanation of
such amounts which are due, submitted by any Bank or the Agent to Borrowers,
shall for all purposes be prima facie evidence that such amounts are due and
owing.
Section 2.16 Indemnity. Borrowers agree to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense that such Bank may
sustain or incur as a consequence of (i) default by Borrowers in payment of the
principal amount of or any interest on any portion of the Credit Loan accruing
interest based on the Floating Rate interest option 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 portion of the
Credit Loan accruing interest based on such Floating Rate interest option or
(ii) default by Borrowers in making a borrowing after Borrowers have provided a
Draw Request Certificate requesting that the Advance to be made accrue interest
based on the Floating Rate interest option.
Section 2.17 Application of Payments. Payments made under this Agreement
and the other Loan Documents, whether made when due under the Loan Documents or
after foreclosure on Collateral, for application to the Obligations shall be
applied to the Obligations as follows:
(i) to the Agent, with respect to fees and expenses accrued and
outstanding (including without limitation reasonable attorneys' fees and
expenses);
(ii) to the Banks, ratably according to their Credit Commitments,
with respect to fees under Section 2.09 hereof;
(iii) to the Banks, with respect to other fees and expenses and late
charges accrued and outstanding with respect to the Obligations (including
without limitation reasonable attorneys' fees and expenses of the Banks in
accordance with Section 5.07 hereof), "pro-rata according to the
respective loan amounts then outstanding" (hereinafter defined). Of the
fees and expenses and late charges due with respect to the Credit Loan (as
opposed to Hedging Obligations), such amounts shall then be paid to the
Banks ratably according to the Banks' applicable Commitments;
18
(iv) to the Banks, with respect to interest accrued and outstanding
on the Obligations, "pro-rata according to the respective loan amounts
then outstanding". Of the interest accrued and then outstanding with
respect to the Credit Loan (as opposed to Hedging Obligations), such
amounts shall then be paid to the Banks ratably according to the Banks'
applicable Commitments; and
(v) to the Banks, with respect to principal amounts of the Credit
Loan due and payable and Hedging Obligations then due and unpaid,
"pro-rata according to the respective loan amounts then outstanding". Of
the principal due with respect to the Credit Loan (as opposed to the
Hedging Obligations), such amounts shall then be paid to the Banks ratably
according to the Banks' applicable Commitments.
"Pro-rata according to the respective loan amounts then outstanding" shall be
determined --
(i) in instances other than with respect to foreclosure on
Collateral or the exercise by the Agent of its other rights and
remedies under the Loan Documents, applicable amounts under a
subsection as to Hedging Obligations shall not be considered, and
(ii) in instances with respect to foreclosure on Collateral or the
exercise by the Agent of its other rights and remedies under the
Loan Documents, by adding the aggregate principal amounts of the
Credit Loan outstanding and Hedging Obligations then due and unpaid
before giving effect to the payment and then dividing that sum by
the Credit Loan amount outstanding and the Hedging Obligations due
and unpaid to determine the Credit Loan's and Hedging Obligations'
respective percentages of application; following such allocation to
Hedging Obligations, the Bank holding such Hedging Obligations shall
be entitled to the amount so allocated for application against the
relevant Hedging Obligations.
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ARTICLE 3
SECURITY FOR THE OBLIGATIONS
Section 3.01 Security. The Obligations shall be secured by the following:
(a) A Security Agreement by HOS in favor of the Agent, for the
ratable benefit of the Banks (as it may from time to time be amended, modified,
supplemented or restated, the "HOS Security Agreement"), pursuant to which HOS
shall grant and maintain in favor of Agent a first security interest in all of
HOS's right, title and interest in and to the HOS Vessels and all related
property and rights of HOS (including without limitation all goods, machinery,
equipment (including without limitation equipment furnished by HOS), inventory,
contract rights, construction plans and specifications and general intangibles
relating to the HOS Vessels, as well as all of HOS's rights under charter hire
and accounts relative to HOS Vessels), together with proper UCC-1 Financing
Statements duly filed in Louisiana and Delaware and appropriate consents.
(b) A Security Agreement by LM in favor of the Agent, for the
ratable benefit of the Banks (as it may from time to time be amended, modified,
supplemented or restated, the "LM Security Agreement"), pursuant to which LM
shall grant and maintain in favor of Agent a first security interest in all of
LM's right, title and interest in and to the LM Vessels and all related property
and rights of LM (including without limitation all goods, machinery, equipment,
contract rights, construction plans and specifications and general intangibles
relating to the LM Vessels, as well as all of LM's rights under charter hire and
accounts relative to the LM Vessels), together with proper UCC-1 Financing
Statements duly filed in Louisiana and appropriate consents.
(c) A First Preferred Fleet Mortgage by LM in favor of the Agent,
for the ratable benefit of the Banks (as it may from time to time be amended,
modified, supplemented or restated, the "LM Fleet Mortgage"), pursuant to which
LM shall grant and maintain a first preferred ship mortgage lien in favor of
Agent in all of LM's right, title and interest in and to the LM Vessels, duly
filed with the United States Coast Guard.
(d) A First Preferred Fleet Mortgage by HOS in favor of the Agent,
for the ratable benefit of the Banks (as it may from time to time be amended,
modified, supplemented or restated, the "HOS Fleet Mortgage"), pursuant to which
HOS shall grant and maintain a first preferred ship mortgage lien in favor of
Agent in all of HOS's right, title and interest in and to the HOS Vessels, duly
filed with the United States Coast Guard.
(e) A first security interest in all deposit accounts of either
Borrower individually or both Borrowers jointly with the Agent, including
without limitation as provided in the HOS Security Agreement and the LM Security
Agreement.
(f) The Guaranty Agreement dated of even date herewith by Guarantor
in favor of the Banks (as it may from time to time be amended, modified,
supplemented or restated, the "Guaranty") guarantying the payment and
performance of the Obligations.
(g) (i) Upon the formation or acquisition of any Subsidiary under
Section 6.05 hereof which results in Guarantor having Subsidiaries (other than
Borrowers and HORNBECK-LEEVAC Marine Operators, LLC) with assets totaling
$40,000,000.00 or more, or upon any Subsidiaries (other than Borrowers and
HORNBECK-LEEVAC Marine Operators, LLC) from time to time existing having assets
totaling $40,000,000.00 or more, and (ii) thereafter, upon the formation or
acquisition of any Subsidiary under
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Section 6.05 hereof, such Subsidiary or Subsidiaries as are satisfactory to the
Required Banks in their sole discretion (such that the Subsidiaries, other than
Borrowers and HORNBECK-LEEVAC Marine Operators, LLC, not guarantying the
Obligations have assets totaling less than $40,000,000.00) shall guaranty the
payment and performance of the Obligations by executing and delivering in favor
of the Agent, for the ratable benefit of the Banks, a guaranty agreement
comparable to the Guaranty but in any event in form and substance satisfactory
to the Agent and the Required Banks, and such Subsidiary also shall grant to the
Agent, for the ratable benefit of the Banks, security interests or mortgages in
such collateral as may be required by the Required Banks in accordance with
Section 5.17 hereof (also pursuant to documentation in form and substance
satisfactory to the Agent and the Required Banks).
(h) Borrowers acknowledge and agree that they shall be required to
supplement the Collateral and the Collateral Documents with additional first
priority Liens securing the Obligations as required in Sections 5.17 and 5.18 of
this Agreement, pursuant to documentation in form and substance satisfactory to
Agent.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and the Banks to enter into this Agreement,
Borrowers hereby represent and warrant to the Agent and the Banks (which
representations and warranties shall be deemed to be restated by Borrowers in
connection with any Advance) that:
Section 4.01 Existence. (a) Each Borrower is a limited liability company
duly organized, legally existing and in good standing under the laws of its
state of organization, and, as of the date of the first Advance and thereafter,
is duly qualified as a foreign limited liability company in all jurisdictions
wherein the property it owns or the business it transacts make such
qualification necessary.
(b) The chief executive office of HOS is located at 414 North
Causeway Boulevard, Mandeville, Louisiana 70448. The federal taxpayer
identification number of HOS is 76-0497638.
(c) The chief executive office of LM is located at 414 North
Causeway Boulevard, Mandeville, Louisiana 70448. The federal taxpayer
identification number of LM is 72-1053262.
Section 4.02 Power and Authorization. Each Borrower is duly authorized and
empowered to execute, deliver and perform the Loan Documents to which it is a
party. All action on the part of each Borrower requisite for the due creation
and execution of its Loan Documents has been duly and effectively taken.
Section 4.03 Binding Obligations. The Loan Documents to which each
Borrower is a party constitute valid and binding obligations of such Borrower,
enforceable against each Borrower in accordance with their respective terms
(except that enforcement may be subject to any applicable bankruptcy, insolvency
or similar laws generally affecting the enforcement of creditors' rights).
Section 4.04 No Legal Bar or Resultant Lien. The Loan Documents do not and
will not violate any provisions of either Borrower's certificates of formation
or operating agreement, will not violate any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which either Borrower
is subject, and will not result in the creation or imposition of any Lien upon
any property of either Borrower, other than as contemplated by this Agreement.
Section 4.05 No Consents. The execution, delivery and performance by each
Borrower of the Loan Documents to which it is a party did not and do not require
the consent or approval of any other Person (including without limitation any
charterer) except those which have been obtained and remain in full force and
effect.
Section 4.06 Financial Condition. All historical financial statements of
each Borrower delivered to the Agent and the Banks fairly and accurately present
the financial position of each Borrower and such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, and there are no
contingent liabilities not disclosed thereby which would or could materially
adversely affect the financial condition of either Borrower. Since the close of
the period covered by the latest historical financial statement delivered to the
Agent with respect to each Borrower, there has been no material adverse change
in the assets, liabilities or financial condition of such Borrower or the
prospects of such Borrower performing its obligations under the Loan Documents.
Except as otherwise disclosed to the Agent and the Banks in writing, no event
has occurred (including, without limitation, any litigation or administrative
proceedings) and no condition exists or, to the knowledge
22
of either Borrower, is threatened, which (i) might render either Borrower unable
to perform its obligations under this Agreement or the other Loan Documents to
which it is a party, (ii) would constitute a Default hereunder, or (iii) might
materially adversely affect the financial condition of either Borrower or the
validity or priority of the lien of the Collateral Documents to which either
Borrower is a party.
Section 4.07 Investments and Guaranties. Neither Borrower has made
investments in, advances to or guaranties of the obligations of any Person,
except as reflected in the financial statements described in Section 4.06
hereof, or as set forth on Schedule 4.07 attached hereto or as otherwise
disclosed to the Agent and the Banks in writing, or as expressly permitted by
this Agreement.
Section 4.08 Liabilities and Litigation. Neither Borrower has any material
(individually or in the aggregate) liabilities, direct or contingent, except as
disclosed or referred to in the financial statements described in Section 4.06
hereof, or as set forth on Schedule 4.08 attached hereto or as otherwise
disclosed to the Agent and the Banks in writing. Except as referred to in the
financial statements described in Section 4.06 hereof and except as set forth on
Schedule 4.08 attached hereto or as otherwise disclosed to the Agent and the
Banks in writing, there is no litigation, legal or administrative proceeding,
investigation or other action of any nature pending or, to the knowledge of
either Borrower, threatened against or affecting either Borrower which involves
the possibility of any judgment or liability not fully covered by insurance
(except for a deductible of up to $50,000), and which may materially and
adversely affect, whether individually or in the aggregate, the business or the
property of either Borrower or either Borrower's ability to carry on business as
now conducted.
Section 4.09 Taxes and Governmental Charges. Each Borrower has filed all
tax returns and reports required to be filed and has paid all taxes,
assessments, fees and other governmental charges levied upon it or upon its
property or income which are due and payable, including interest and penalties,
or have provided adequate reserves for the payment thereof adequate under
generally accepted accounting principles (provided that such reserves may be set
up under generally accepted accounting principles).
Section 4.10 Defaults. Neither Borrower is in default (in any respect
which materially and adversely affects its business, properties, operations or
condition, financial or otherwise) under any indenture, mortgage, deed of trust,
agreement or other instrument to which it is a party or by which it is bound,
except as otherwise disclosed to the Agent and the Banks in writing.
Section 4.11 Casualties and Condemnation. Since the date of the most
recent financial statements furnished to the Agent and the Banks, neither the
business nor the property of either Borrower has been materially and adversely
affected as a result of any casualty, fire, explosion, earthquake, flood,
drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of property or cancellation of contracts, permits or
concessions by any domestic or foreign government or any agency thereof, riot,
activities of armed forces or acts of God or of any public enemy, except as
otherwise disclosed in writing to the Agent and the Banks.
Section 4.12 Use of Proceeds; Margin Stock. The proceeds of the extensions
of credit hereunder will be used by Borrowers for the purposes listed in Section
2.10. None of such proceeds will be used for the purpose of, and neither
Borrower is engaged in the business of extending credit for the purpose of,
purchasing or carrying any "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 221), or for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of said
Regulation U. Neither Borrower is engaged principally, or as one of such
Borrower's important activities, in the business of extending credit for the
purpose of purchasing or carrying margin stocks. Neither either Borrower nor any
other Person acting
23
on behalf of either Borrower has taken or will take any action which might cause
this Agreement to violate Regulation U or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Securities Exchange
Act of 1934 or any rule or regulation thereunder, in each case as now in effect
or as the same may hereinafter be in effect.
Section 4.13 Compliance with the Law. To the best of the Borrowers'
knowledge after due inquiry, except as set forth on Schedule 4.13 attached
hereto, neither Borrower (i) is in violation of any Governmental Requirement to
which such Borrower or any of its property is subject, or (ii) has failed to
obtain any license, permit, franchise or other authorization required by any
Governmental Authority or otherwise necessary to the ownership of any of its
property or the conduct of its business; in each case, which violation or
failure could reasonably be anticipated to materially and adversely affect the
business, profits, property or condition (financial or otherwise) of such
Borrower.
Section 4.14 ERISA. Each Borrower and its Plans are in compliance in all
material respects with the applicable provisions of ERISA, and no Reportable
Event, as such term is defined in Title IV of ERISA, has occurred with respect
to any Plan of either Borrower.
Section 4.15 No Material Misstatements. No information, exhibit or report
furnished by either Borrower to the Agent and the Banks in connection with this
Agreement or the other Loan Documents or in the negotiation of this Agreement or
the other Loan Documents contained any material misstatement of fact or omitted
to state a material fact necessary to make the statements contained herein and
therein not misleading.
Section 4.16 Utility or Investment Company. Neither Borrower is engaged in
the generation, transmission, or distribution and sale of electric power;
transportation, distribution and sale through a local distribution system of
natural or other gas for domestic, commercial, industrial, or other use;
ownership or operation of a pipeline for the transmission or sale of natural or
other gas, crude oil or petroleum products to other pipeline companies,
refineries, local distribution systems, municipalities, or industrial consumers;
provision of telephone or telegraph service to others; production, transmission,
or distribution and sale of steam or water; operation of a railroad; or
provision of sewer service to others. Neither Borrower is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Section 4.17 Title to Collateral. As of the date of the first Advance and
thereafter, each Borrower has good and merchantable title to its Collateral,
free of all liens and encumbrances other than Permitted Liens.
Section 4.18 Hazardous Materials. Neither Borrower has any knowledge that
any Hazardous Materials are now located on or in the Vessels, or that any other
Person has ever caused or permitted any Hazardous Materials to be placed, held,
located or disposed of on, the Vessels or any part thereof, except for such
Hazardous Materials that may have been placed, held or located on the Vessels in
accordance with, and otherwise not in violation of, all Governmental
Requirements.
Section 4.19 Borrowers Ownership; Change in Control. Guarantor is the sole
member of each Borrower. No event resulting in a Change in Control has occurred.
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24
ARTICLE 5
AFFIRMATIVE COVENANTS
Unless the Agent's and the Required Banks' (or, if required by Section
10.12 hereof, all of the Banks') prior written consent to the contrary is
obtained, Borrowers will at all times comply with the covenants contained in
this Article 5 (or cause Guarantor compliance with the applicable covenants),
from the date hereof and for so long as any part of the Obligations is
outstanding.
Section 5.01 Financial Statements and Reports. Borrowers will promptly
furnish, or cause to be furnished, to Agent and each of the Banks such
information regarding the business and affairs and financial condition of
Borrowers and Guarantor as the Agent or the Required Banks may reasonably
request. Without limiting the generality of the foregoing, Borrowers will
furnish or cause to be furnished to Agent and each of the Banks, each of the
following:
(a) Guarantor Annual Reports - as soon as available and in any event
within one hundred twenty (120) days after the close of each fiscal year
of Guarantor, the audited consolidated and consolidating balance sheets of
Guarantor as of the end of such year, the audited consolidated and
consolidating statements of income of Guarantor for such year, the audited
consolidated and consolidating statements of shareholders equity of
Guarantor for such year, and the audited consolidated and consolidating
statements of cash flow of Guarantor for such year, setting forth in each
case in comparative form the corresponding figures for the preceding
fiscal year, accompanied by the unqualified opinions of Andersen LLP or
another independent certified public accountant acceptable to the Required
Banks; and
(b) Borrowers Annual Reports - for any year in which there is a
Subsidiary (other than HORNBECK-LEEVAC Marine Operators, LLC, Energy
Services Puerto Rico, LLC and Borrowers) that is not a Guarantor
Subsidiary, as soon as available and in any event within one hundred
twenty (120) days after the close of such year, the audited balance sheet
of each Borrower as of the end of such year, the audited statement of
income of each Borrower for such year, the audited statement of
shareholders equity of each Borrower for such year, and the audited
statement of cash flow of each Borrower for such year, setting forth in
each case in comparative form the corresponding figures for the preceding
fiscal year, accompanied by the unqualified opinions of Andersen LLP or
another independent certified public accountant acceptable to the Required
Banks; and
(c) Subsidiaries Annual Reports - promptly upon the request of the
Agent or the Required Banks after April 30 in any year, the balance sheet
of any Subsidiary or Subsidiaries (that are not Borrowers or Guarantor
Subsidiaries) as of the end of the most recently completed fiscal year,
the statement of income of such Subsidiary or Subsidiaries for such year,
the statement of shareholders equity of such Subsidiary or Subsidiaries
for such year, and the statement of cash flow of such Subsidiary or
Subsidiaries for such year, setting forth in each case in comparative form
the corresponding figures for the preceding fiscal year, certified as
being true, correct and complete in all material respects by the chief
financial officer of Guarantor; and
(d) Guarantor Quarterly Reports - as soon as available and in any
event within sixty (60) days after the end of each quarter, the
consolidated and consolidating balance sheets of Guarantor as of the end
of such quarter, the consolidated and consolidating statements of income
of Guarantor for such quarter and for the period from the beginning of the
fiscal year through such quarter, the consolidated and consolidating
statements of shareholders equity of Guarantor for such quarter and for
the period from the beginning of the fiscal year through such quarter, and
the consolidated and
25
consolidating statements of cash flow of Guarantor for such quarter and
for the period from the beginning of the fiscal year through such quarter,
setting forth in each case in comparative form the corresponding figures
for the corresponding period of the preceding fiscal year (if in existence
in such preceding fiscal year), certified as being true, correct and
complete in all material respects by the chief financial officer of
Guarantor; and
(e) Audit Reports - promptly upon receipt thereof, copies of each
other report submitted to either Borrower or Guarantor by independent
accountants in connection with any annual, interim or special audit made
by them of the books of either Borrower or Guarantor; and
(f) Budget - on or before December 31 of each calendar year
(commencing December 31, 2002) up to and including the Maturity Date,
Guarantor's consolidated annual projections (including income statements,
balance sheets and statements of cash flow) for the next calendar year
and, within sixty (60) days following the end of each calendar quarter, a
report showing budgeted amounts for the past fiscal quarter versus actual
expenditures.
All such balance sheets and other reports referred to above shall be in such
detail as the Agent or the Required Banks may reasonably request and shall
conform to generally accepted accounting principles applied on a consistent
basis, except only for such changes in accounting principles or practice with
which the independent certified public accountants concur.
Section 5.02 Certificates of Compliance. (a) Concurrently with the
furnishing of the annual financial statements pursuant to subsectionS 5.01(a)
and (b) hereof, Borrowers will furnish or cause to be furnished to the Agent,
for distribution to the Banks, certificates from the independent certified
public accountants for Borrowers and Guarantor stating that in the ordinary
course of their audit of Borrowers or Guarantor, as applicable, insofar as it
relates to accounting matters, their audit has not disclosed the existence of
any condition which constitutes a Default, or if their audit has disclosed the
existence of any such condition, specifying the nature, period of existence and
status thereof; provided, that the independent certified public accountants
shall not be liable to the Agent or the Banks for their failure to discover a
Default.
(b) Concurrently with the furnishing of the quarterly financial
statements pursuant to subsection 5.01(d) hereof, Borrowers will furnish to
Agent a certificate that there is no Default or Event of Default at such time
and Borrowers will cause Guarantor to deliver a certificate to Agent specifying
any changes in the ownership of Guarantor that Guarantor is aware of since the
last certificate of the ownership of Guarantor and certifying that no Change in
Control has occurred.
Section 5.03 Taxes and Other Liens. Each Borrower will, and will cause
Guarantor to, pay and discharge promptly when due all taxes, assessments and
governmental charges or levies imposed upon such Borrower or Guarantor or upon
its income or upon any of its property as well as all claims of any kind
(including claims for labor, materials, supplies and rent) which, if unpaid,
might become a Lien upon any or all of its property; provided, that a Borrower
or Guarantor shall not be required to pay any such tax, assessment, charge, levy
or claim if the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently conducted and if
the contesting party shall have set up reserves therefor adequate under
generally accepted accounting principles (provided that such reserves may be set
up under generally accepted accounting principles).
Section 5.04 Existence; Compliance. Each Borrower will, and will cause
Guarantor to, maintain its limited liability company existence and rights. Each
Borrower will, and will cause Guarantor to, observe and comply with all valid
laws, statutes, codes, acts, ordinances, orders, judgments, decrees,
injunctions,
26
rules, regulations, certificates, franchises, permits, licenses, authorizations,
directions and requirements of all federal, state, county, municipal and other
governments, departments, commissions, boards, courts, authorities, officials
and officers, domestic or foreign, unless any such failure to observe and comply
would not have a material adverse effect on the business, profits, property or
condition (financial or otherwise) of either Borrower or of Guarantor.
Section 5.05 Further Assurance. Borrowers will promptly (and in no event
later than 30 days after written notice from the Agent is received) cure or
cause to be cured any defects in the creation, execution and delivery of any of
the Loan Documents. Borrowers will, at their expense, promptly (and in no event
later than 30 days after written notice from the Agent is received) execute and
deliver, or cause to be executed and delivered, to the Agent and the Banks upon
request all such other and further documents, agreements and instruments
(including without limitation further security agreements, financing statements,
continuation statements, and assignments of accounts and contract rights) in
compliance with or accomplishment of the covenants and agreements of each
Borrower and Guarantor in the Loan Documents or to further evidence and more
fully describe the Collateral, including any renewals, additions, substitutions,
replacements or accessions to the Collateral, or to correct any omissions in the
Collateral Documents, or more fully state the security obligations set out
herein or in any of the Collateral Documents, or to perfect, protect or preserve
any Liens created pursuant to any of the Collateral Documents, or to make any
recordings, to file any notices, or obtain any consents as may be necessary or
appropriate in connection with the transactions contemplated by this Agreement.
Section 5.06 Performance of Obligations. Borrowers will repay the Credit
Loan in accordance with the Notes and this Agreement. Each Borrower will do and
perform every act required of such Borrower, and will cause the other Borrower
and Guarantor to do and perform every act required of them, by the Loan
Documents at the time or times and in the manner specified.
Section 5.07 Reimbursement of Expenses. Borrowers will pay (i) all
reasonable legal fees incurred by the Agent in connection with the preparation,
execution, delivery, filing, recording and administration of the Loan Documents
and all related documents (including any amendments), and (ii) all reasonable
legal fees incurred by the Agent and the Banks in connection with the
enforcement of the Loan Documents and all related documents; provided, that
Borrowers shall not be responsible for the costs and expenses of the Agent or
any Bank in connection with the preparation of documentation regarding an
assignment by a Bank (other than Hibernia National Bank, individually) of its
portion of the Loans (and, with respect to any assignments by Hibernia National
Bank, Borrowers shall be liable for the costs and expenses, but in any event not
more than $2,500.00 of costs and expenses per assignment). Except as otherwise
set forth in Section 5.18 hereof, Borrowers will pay all costs and other
expenses in connection with any appraisal required or performed under this
Agreement and otherwise payable to the Surveyor in connection with this
Agreement. Borrowers will upon request promptly reimburse the Agent and the
Banks for all reasonable amounts expended, advanced or incurred by the Agent and
the Banks to satisfy any obligation of Borrowers under this Agreement, or to
protect the property of a Borrower or Guarantor or to collect the Obligations,
or to enforce the rights of the Agent and the Banks under this Agreement or the
other Loan Documents, which amounts will include all court costs, reasonable
attorneys' fees (including without limitation, any reasonable attorneys' fees
incurred in connection with any bankruptcy proceeding affecting the Agent's and
the Banks' rights hereunder and any attorneys' fees incurred in connection with
preparation for trial or appeal), fees of auditors and accountants, and
investigation expenses reasonably incurred by the Agent and the Banks in
connection with any such matters, together with interest at the Default Rate on
each such amount from the date that the same is expended, advanced or incurred
by the Agent and the Banks until the date of reimbursement to the Agent and the
Banks.
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Section 5.08 Insurance. (a) Borrowers shall cause the Agent to be named as
loss payee, for the ratable benefit of the Banks, as to the Collateral and as
mortgagee and the Agent and the Banks to be named as additional insureds, with a
waiver of rights of subrogation, under an all risk insurance policy, and the
Agent and the Banks to be named as additional insureds, with a waiver of rights
of subrogation, under the comprehensive general liability insurance, statutory
workers' compensation insurance and longshoreman and harbor workers' act
coverage policies.
(b) Borrowers may purchase such insurance from any insurance company
or broker that is acceptable to the Agent, which approval shall not be
unreasonably withheld. All such insurance policies, including renewals and
replacements, must also be in form and substance acceptable to the Agent, which
approval shall not be unreasonably withheld, and must additionally contain a
non-contributory loss payable endorsement in favor of the Agent, for the ratable
benefit of the Banks, providing in part that (i) all proceeds under such
policies of insurance will be delivered directly to the Agent (payable as
hereinafter provided), (ii) all returned premiums under such policies of
insurance (to the extent the same were not paid by a Borrower) will be delivered
and paid directly to the Agent, and (iii) no act or omission on the part of a
Borrower, or any of their officers, agents, employees or representatives, nor
breach of any warranty contained in such policies, shall affect the obligations
of the insurer to pay the full amount of any loss to the Agent. Such policies of
insurance must also contain a provision prohibiting cancellation or the
alteration of such insurance without at least thirty (30) days' prior written
notice to the Agent of such intended cancellation or alteration.
(c) Borrowers agree to provide, or cause to be provided to, the
Agent with originals or certified copies of such policies of insurance or
certificates with respect thereto. Borrowers further agree to promptly furnish
the Agent with copies of all renewal notices and, if requested by the Agent,
with copies of receipts for paid premiums. Borrowers shall provide, or cause to
be provided to, the Agent binders or such other proof acceptable to the Agent
that renewal or replacement policies of insurance will be in effect before any
such existing policy or policies should expire. If Borrowers' insurance policies
and renewals are held by another Person, Borrowers agree to supply, or cause to
be supplied, original or certified copies of the same to the Agent, together
with binders or such other proof acceptable to the Agent that renewal or
replacement policies of insurance will be in effect before any such existing
policy or policies should expire.
(d) In the event Borrowers should, for any reason whatsoever, fail
to cause any insurance required hereunder or under the LM Fleet Mortgage or the
HOS Fleet Mortgage to be maintained as herein or therein provided, or to cause
such policies to be and remain so assigned or payable as provided herein, or to
cause to be delivered to the Agent satisfactory evidence thereof, then the
Agent, if it so elects, may itself have any such insurance effected in such
amounts and in such companies as it may deem proper and may pay the premiums
therefor and Borrowers shall reimburse the Agent (and the Banks, if applicable)
upon demand for the amount of the premiums paid, together with interest thereon
at the Default Rate from date until paid. The Agent and the Banks shall not be
responsible for the solvency of any company issuing any insurance policy,
whether or not selected or approved by the Agent or the Banks, or for the
collection of any amounts due under any such policy, and shall be responsible
and accountable only for such money as may be actually received by the Agent or
the Banks.
(e) Borrowers agree to immediately notify the Agent in writing of
any material casualty to or accident involving an LM Vessel or a HOS Vessel or
any other vessel owned by either Borrower, whether or not such casualty or loss
is covered by insurance. Borrowers further agree to promptly notify the
applicable Borrower's insurance company and to submit an appropriate claim and
proof of claim to the insurance company in the event that an LM Vessel or a HOS
Vessel or any other vessel owned by either Borrower, is lost, damaged, or
destroyed as a result of an insured hazard. As to the LM Vessels and the HOS
Vessels, the Agent may submit such a claim and proof of claim to the insurance
company on the applicable
28
Borrower's behalf, should the applicable Borrower fail to do so promptly for any
reason. As to the LM Vessels and the HOS Vessels, each Borrower hereby
irrevocably appoints the Agent as its agent and attorney-in-fact, each such
agency being coupled with an interest, to make, settle and adjust claims under
such policy or policies of insurance (regardless of whether a settlement or
adjustment of a claim is an Event of Default) and to endorse the name of such
Borrower on any check or other item of payment for the proceeds thereof; it
being understood, however, that unless one or more Defaults exist under this
Agreement, the Agent will not settle or adjust any such claim without the prior
approval of such Borrower (which approval shall not be unreasonably withheld).
(f) In the event of an actual, constructive, agreed, compromised or
arranged total loss or of any requisition of an LM Vessel or a HOS Vessel, all
insurance payments therefor shall be made payable, and delivered, only to the
Agent and no other Person. Neither Borrower shall declare or agree with
underwriters that an LM Vessel or a HOS Vessel is a constructive or compromised,
agreed or arranged constructive total loss without the prior written consent of
the Agent and the Required Banks. The proceeds of all other insurance (i)
covering an LM Vessel shall be made payable to LM and the Agent jointly, and
delivered to the Agent, and (ii) covering a HOS Vessel shall be made payable to
HOS and the Agent jointly, and delivered to the Agent. Subject to the last
sentence of this paragraph, the Agent shall make available to the applicable
Borrower the proceeds of all insurance (x) by an appropriate payment order
directed to the interested underwriter to pay any outstanding bill for repairing
or replacing an LM Vessel or a HOS Vessel and/or any outstanding third-party
claims or (y) to reimburse the applicable Borrower in whole or in part for any
expenditures the applicable Borrower may have made for repairing or replacing an
LM Vessel or a HOS Vessel and/or to pay any third party claims, but the Agent,
as a condition precedent to such reimbursement, may require the applicable
Borrower to furnish the Agent with receipted bills or waivers of liens or
appropriate releases for any third-party claims. In connection with any repair
to or replacement of an LM Vessel or a HOS Vessel, the applicable Borrower shall
be required to pay the amount of the deductible and the applicable Borrower
shall be required to pay any balance of the cost of repairs or replacement not
covered by insurance. Notwithstanding the foregoing provisions of this Section
5.08, but subject to clause (B) of the next sentence following this sentence,
the insurance policies may provide that on any insurance payments for hull
coverage not exceeding $25,000.00, those payments may be paid to the applicable
Borrower. Notwithstanding anything contained herein to the contrary, the Agent
shall, at the option of the Required Banks, be entitled to receive any insurance
proceeds and apply them to the Obligations (in accordance with Section 2.17
hereof, and if there is then existing an Event of Default, then there shall be
deemed to have been a foreclosure on Collateral for purposes of Section 2.17) if
(A) there has been an actual, constructive, agreed or arranged total loss or
requisition of a HOS Vessel or an LM Vessel or (B) there otherwise has been and
is then continuing any Event of Default.
(g) The Agent's receipt of such insurance proceeds and the
application of such proceeds as provided herein shall not, however, affect the
Agent's Liens against the LM Vessels or the HOS Vessels, for the ratable benefit
of the Banks. Other than the circumstances where insurance proceeds relative to
the loss of or damage to an LM Vessel or a HOS Vessel are applied to the
repayment of the Obligations, nothing under this Section shall be deemed to
excuse Borrowers from their obligations to promptly repair, replace or restore
any lost or damaged vessel, whether or not the same are covered by insurance,
whether or not such proceeds of insurance are available, and whether or not such
proceeds are sufficient in amount to complete such repair, replacement or
restoration, to the satisfaction of the Agent. Furthermore, unless otherwise
confirmed by the Agent and the Banks in writing, the application or release of
any insurance proceeds by the Agent shall not be deemed to cure or waive any
Event of Default under this Agreement. Any proceeds which have not been
disbursed within one (1) month after their receipt and which a Borrower has not
committed to the repair or restoration of an LM Vessel or a HOS Vessel shall be
used to repay the Credit Loan (in accordance with Section 2.17 hereof).
29
(h) Borrowers, upon request of the Agent, shall furnish, or cause to
be furnished, to the Agent reports on each existing policy of insurance showing
such information as the Agent or the Required Banks may request, including
without limitation the following: (i) the name of the insurer; (ii) the risks
insured; (iii) the amount of the policy; (iv) the property insured; (v) the then
current value on the basis of which insurance has been obtained and the manner
of determining that value; and (vi) the expiration date of the policy.
Section 5.09 Accounts and Records. Borrowers will keep, and will cause
Guarantor to keep, books of record and accounts in which true and correct
entries will be made as to all material matters of all dealings or transactions
in relation to the respective business and activities, sufficient to permit
reporting in accordance with generally accepted accounting principles,
consistently applied.
Section 5.10 Right of Inspection. (a) Borrowers will, and will cause
Guarantor to, permit any officer, employee or agent of the Agent, any Bank, the
Surveyor, the United States Coast Guard or the American Bureau of Shipping to
visit and inspect the HOS Vessels and the LM Vessels, and to visit and inspect
the other Collateral, and (b) Borrowers will, and will cause Guarantor to,
permit any officer, employee or agent of the Agent and (upon the occurrence and
continuance of an Event of Default) any Bank to examine the books of record and
accounts of Borrowers and Guarantor, take copies and extracts therefrom, and
discuss the affairs, finances and accounts of Borrowers and Guarantor with
Borrowers' and Guarantor's officers, accountants, counsel and auditors, all of
the foregoing at such reasonable times and on reasonable notice and without
hindrance or delay and as often as the Agent, any Bank (if applicable), the
Surveyor, the United States Coast Guard or the American Bureau of Shipping may
reasonably desire.
Section 5.11 Maintenance of Properties. Borrowers shall maintain and
preserve, and cause Guarantor to maintain and preserve, all of Borrowers' and
Guarantor's respective properties (and any property leased by or consigned to a
Borrower or Guarantor or held under title retention or conditional sales
contracts) that are used or useful in the conduct of Borrowers' and Guarantor's
respective business in the ordinary course in good working order and condition
at all times, ordinary wear and tear excepted, and make all repairs,
replacements, additions, betterments and improvements to its properties to the
extent necessary so that any failure will not materially and adversely affect
the business of a Borrower or Guarantor. Without limiting the generality of the
foregoing, Borrowers shall at all times maintain the Vessels in compliance with
the requirements of the American Bureau of Shipping or any other classification
society acceptable to the Agent, for the highest classification for vessels of
like age and type, and upon the Agent's request therefor, the Borrowers shall
promptly provide to the Agent copies of certificates duly issued by the American
Bureau of Shipping or other classification society acceptable to the Agent, to
the effect that the Vessels have been given the highest classification and
rating for vessels of the same respective ages and types, free of all
recommendations and notations of such classification society affecting class.
Section 5.12 Notice of Certain Events. (a) Borrowers shall promptly notify
the Agent if either Borrower learns of the occurrence of any event which
constitutes a Default, together with a detailed statement by a responsible
officer of each Borrower as to the nature of the Default and the steps being
taken to cure the effect of such Default.
(b) Borrowers shall promptly notify the Agent of any change in
location of a Borrower's principal place of business or the office of a Borrower
where records concerning accounts and contract rights are kept, or any change in
the federal taxpayer identification number or organizational identification
number of a Borrower.
30
(c) Borrowers shall promptly provide the Agent, upon request
therefor by the Agent, listings of the Borrowers' assets and the condition
thereof, in form and substance satisfactory to the Agent.
(d) Borrowers shall promptly submit such information in form and
substance satisfactory to the Agent as may be reasonably requested by the Agent
concerning construction of new vessels for the Borrowers.
(e) Borrowers shall promptly notify the Agent of any defaults or
alleged defaults of any party with respect to any construction contract for
new-build vessels or any charter agreement, and thereafter keep the Agent
advised of any developments in connection therewith. As of the Closing Date, the
Borrowers have notified the Agent of a dispute between HOS and Mariner Energy,
Inc. concerning whether or not there exist any defaults under the charter
agreement between such parties as to two of HOS's vessels chartered to Mariner
Energy, Inc.
(f) Borrowers shall promptly notify the Agent of any and all Liens
filed or otherwise asserted, and attachments made, against the HOS Vessels or
the LM Vessels, together with copies of all related instruments and any other
materials that the Agent shall require.
(g) Borrowers shall cause Guarantor to provide to the Agent (i)
written notice of any sale or transfer of shares of five (5%) percent or more of
the stock of Guarantor promptly after any such sale or transfer and (ii) upon
request therefor by the Agent from time to time, evidence satisfactory to the
Agent that no Change in Control has occurred.
(h) Borrowers shall promptly notify Agent upon the acceptance and
delivery of any new-build vessel.
Section 5.13 Indemnity. Borrowers hereby agree to defend, indemnify and
hold the Agent and the Banks and their respective directors, officers, agents
and employees harmless from and against all claims, demands, causes of action,
liabilities, losses, costs and expenses (including, without limitation, costs of
suit, reasonable legal fees and fees of expert witnesses; provided, that such
costs of suit, reasonable legal fees and fees of expert witnesses shall be only
those incurred by the Agent; provided, further, that such limitation in
connection with the indemnity hereunder shall not limit the application of
Section 5.07 hereof) arising from or in connection with (i) the presence in, on
or under all Collateral and their other properties of any Hazardous Material, or
any releases or discharges thereof on, under or from such property, (ii) any
activity carried on or undertaken on or off such property, whether prior to or
during the term of this Agreement, and whether by a Borrower, a contractor or
any predecessor in title or any officers, employees, agents, contractors, or
subcontractors of a Borrower, a contractor or any predecessor in title, or any
third persons at any time occupying or present on such property, in connection
with the handling, use, generation, manufacture, treatment, removal, storage,
decontamination, clean-up, transport or disposal of any such Hazardous Material
at any time located or present on or under such property, (iii) any and all
other third party claims in connection with any of the Collateral or their other
properties, or (iv) any breach of any representation, warranty or covenant under
the terms of this Agreement. The foregoing indemnity shall further apply to any
residual contamination affecting any natural resources, and to any contamination
of any property or natural resources arising in connection with the generation,
use, handling, storage, transport or disposal of any such Hazardous Material,
and irrespective of whether any of such activities were or will be undertaken in
accordance with applicable Governmental Regulations, and shall survive the
termination of this Agreement and all of the other Loan Documents. The indemnity
herein shall not apply to the extent of any gross negligence or willful
misconduct on the part of the Agent or the Banks.
31
Section 5.14 ERISA Information and Compliance. Borrowers will promptly
furnish to the Agent (i) promptly after the filing thereof with the United
States Secretary of Labor or the Pension Benefit Guaranty Corporation, copies of
each annual and other report with respect to each Plan or any trust created by
either Borrower, and (ii) immediately upon becoming aware of the occurrence of
any "reportable event," as such term is defined in Section 4043 of ERISA, or of
any "prohibited transaction," as such term is defined in Section 4975 of the
Internal Revenue Code of 1986, as amended, in connection with any Plan or any
trust created by either Borrower, a written notice signed by the president, the
chairman or the chief financial officer of each Borrower specifying the nature
thereof, what action the applicable Borrower is taking or proposes to take with
respect thereto, and, when known, any action taken by the Internal Revenue
Service with respect thereto. Each Borrower will comply with all of the
applicable funding and other requirements of ERISA as such requirements relate
to the Plans of such Borrower.
Section 5.15 Charters. HOS shall perform all of its obligations in respect
of, and observe all of the terms and provisions of, any charter of a HOS Vessel,
and shall use its best efforts to keep all such agreements in full force and
effect for the applicable term thereof. LM shall perform all of its obligations
in respect of, and observe all of the terms and provisions of, any charter of an
LM Vessel, and shall use its best efforts to keep all such agreements in full
force and effect for the applicable term thereof. Notwithstanding the foregoing,
no breach by a Borrower under a charter shall be a Default or Event of Default
hereunder unless the result would have a material adverse effect on the
financial condition of a Borrower or otherwise on a Borrower's ability to repay
the Obligations.
Section 5.16 Intentionally omitted.
Section 5.17 Collateral Value. The Borrowers shall cause the fair market
value of the Vessels (and other vessels of Guarantor Subsidiaries included
within the Collateral in accordance with subsection 3.01(g) hereof) at all times
to be greater than or equal to two hundred (200%) percent of the Borrowing Base
from time to time in effect. If from time to time, in order for Borrowers to
comply with the preceding sentence, additional vessels are required to be
mortgaged to the Agent, then (i) the Agent shall be entitled to choose in its
sole and absolute discretion which additional vessel or vessels, not otherwise
subject to a Permitted Lien, shall be so mortgaged so that Borrowers with be in
compliance with the preceding sentence, and (ii) the applicable Borrower(s) or
Guarantor Subsidiary(ies) owning such vessel(s) shall promptly supplement and
amend the applicable Collateral Documents, or enter into Collateral Documents,
pursuant to documentation in form and substance satisfactory to the Agent, so as
to grant to the Agent, for the ratable benefit of the Banks, first preferred
ship mortgage liens thereon and first priority security interests in all related
assets (see, subsections 3.01(a) - (d)), and in connection therewith Borrowers
shall provide to the Agent evidence of insurance required under the Loan
Documents and applicable Certificates of Documentation as to the vessels and
vessel abstracts thereon showing the HOS Mortgage or the LM Mortgage (or other
first preferred ship mortgage, if by a Guarantor Subsidiary), as the case may
be, as the only recorded Lien thereon. If the market value of the Vessels (and
other vessels granted as Collateral) is greater than two hundred (200%) percent
of the Borrowing Base, Borrowers shall not be entitled to the release of any
Collateral without the written consent of all Banks. Borrowers shall not
substitute vessels (and related assets) for existing Vessels that are Collateral
without the written consent of the Required Banks.
Section 5.18 Appraisal. The Banks shall be entitled to require, at any
time (but in any event only one (1) time) that Borrowers obtain appraisals
relative to the Vessels. The foregoing limitation shall not apply (i) in
connection with increases of the Borrowing Base and (ii) during the occurrence
and continuance of any Default or Event of Default, in which event the Agent or
the Required Banks shall be entitled to require other appraisals relative to the
Vessels. Borrowers shall, in accordance with Section 5.07 hereof, be liable for
all expenses in connection with any such appraisals. In addition to the
foregoing, the Required
32
Banks may from time to time in their discretion obtain further appraisals
relative to the Vessels, at the pro-rata cost and expense of all the Banks
(computed by reference to each Bank's respective Commitments).
Section 5.19 Deposit Accounts. Borrowers shall (and Borrowers shall cause
Guarantor to) maintain all material banking accounts (deposit, collection and
disbursement) at the Agent. The foregoing is not applicable to investment
accounts of Borrowers and Guarantor.
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ARTICLE 6
NEGATIVE COVENANTS
Unless the Agent's and the Required Banks' (or, if required by Section
10.12 hereof, all the Banks') prior written consent to the contrary is obtained,
Borrowers will at all times comply with the covenants contained in this Article
6 (or cause Guarantor compliance with the applicable covenants), from the date
hereof and for so long as any part of the Obligations is outstanding.
Section 6.01 Liens. Neither Borrower will create, incur, assume, or permit
to exist any Lien on any of its Collateral or other properties, except for:
(i) The security interests in its Collateral and any other
Liens in favor of the Agent and the Banks to secure the Obligations;
(ii) Any other liens or security interests in favor of the
Agent and the Banks;
(iii) Liens for taxes, assessments, or other governmental
charges not yet due or which are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such reserve as shall be
required by generally accepted accounting principles shall have been made
therefor;
(iv) Liens of landlords, carriers, warehousemen, mechanics,
laborers, seamen (for the last voyage of the applicable Vessel or other vessel
belonging to a Borrower) and materialmen arising by law in the ordinary course
of business for sums either not yet due or being contested in good faith by
appropriate action promptly initiated and diligently conducted, if such reserve
as shall be required by generally accepted accounting principles shall have been
made therefor;
(v) Precautionary Liens on property covered by capital leases;
(vi) legal or equitable encumbrances deemed to exist by reason
of negative pledge covenants and other covenants or undertakings of like nature
(provided, that any such covenant or undertaking shall not apply to Borrowers'
ability to grant Liens in favor of the Agent and the Banks);
(vii) Purchase money Liens granted by a Borrower on equipment
(including vessels) of such Borrower that is not Collateral, securing the
purchase price of such equipment; provided, that such Lien shall not extend to
or cover any other property of either Borrower or Guarantor; provided, further,
that the foregoing shall not be deemed to permit any such acquisitions of
equipment that otherwise would result in an Event of Default under Section 6.05
hereof or subsection 8.01(o) hereof);
(viii) Liens granted by a Borrower on the vessels under
construction on the Closing Date or other vessels acquired or constructed by a
Borrower after July 19, 2001, securing Debt incurred by a Borrower for the
acquisition of assets or construction of vessels by a Borrower after the Closing
Date or securing refinances of such Debt (but not principal amounts over and
above the principal amount(s) refinanced; provided, that the foregoing shall not
be deemed to permit any such acquisitions of equipment that otherwise would
result in an Event of Default under Section 6.05 hereof or subsection 8.01(o)
hereof); and
(ix) Liens on property of a Borrower that is not Collateral,
which Liens arise from a judgment or judgments against a Borrower; provided,
that such Liens shall not exceed $500,000.00 in the
34
aggregate during the term of the Loan and such Borrower shall nevertheless
diligently contest any such judgment.
Section 6.02 Debt. On the Closing Date, and also on the date that the
initial Collateral is granted to the Agent for the ratable benefit of the Banks,
neither Borrower will (and Borrowers shall cause Guarantor not to) be liable for
any Debt for borrowed money (other than in connection with the Obligations) that
is secured by any assets of either Borrower or of Guarantor.
Section 6.03 Dividends. Neither Borrower shall, and Borrowers shall cause
Guarantor to not, declare or make any cash dividends, or reservations therefor,
or make any distribution of cash or property, or both, in respect of any
membership interests or shares of the capital stock, as the case may be, of
either Borrower or of Guarantor; provided, that (i) Borrowers shall be permitted
to make cash distributions, collectively, to Guarantor (x) that are
simultaneously invested as equity in the other Borrower, and (y) otherwise, of
up to $500,000 in any calendar year in the aggregate for both Borrowers
collectively, but in any such event under clause (x) or (y), only if there is no
Default or Event of Default and the making of any such dividend shall not give
rise to a Default or an Event of Default, and (ii) stock dividends, stock splits
and reverse stock splits with respect to Guarantor shall be permitted; provided,
further, that Borrowers shall promptly notify the Agent (or cause the Guarantor
to notify the Agent) of any such permitted dividends, splits or reverse splits.
Section 6.04 Nature of Business. Neither Borrower will engage in any
material respect in any business other than the marine vessel business.
Section 6.05 Mergers and Consolidations; Asset Acquisitions; Guarantor
Subsidiaries. (a) Neither Borrower will acquire, merge with or consolidate with
any Person, nor will it sell, assign, lease or otherwise dispose of (whether in
one transaction or in a series of transactions) any Collateral or all or
substantially all of its property (whether now owned or hereafter acquired) to
any Person; provided, that -
(x) a Borrower may merge with another Person (other than the
other Borrower and the Guarantor) if, and only if, (1) such Borrower
is the surviving entity, (2) the merging Person is primarily in the
business of owning and/or operating vessels, (3) immediately
preceding and after giving effect to such merger, (A) there is no
Default or Event of Default and (B) the Borrowers shall have
$10,000,000 in cash or cash equivalents in an account maintained at
the Agent or otherwise available for the making of Advances under
the Credit Line (taking into account the Credit Limit), (4) after
giving effect to such merger, (A) such Borrower shall have at least
as much tangible net worth as it had before giving effect to the
merger and (B) had the merger occurred on the last day of the most
recently ended fiscal quarter, the Leverage Ratio of Guarantor (on a
consolidated basis with its Subsidiaries) would be at least 0.375
below the maximum ratio permitted under subsection 8.01(p) for such
quarter end before an Event of Default otherwise would exist
thereunder, and (5) Borrowers shall have provided the Agent at least
fifteen (15) days advance notice of the merger and such information
and materials in connection therewith that the Agent or any Bank
reasonably requests, and
(y) a Borrower may acquire or form a Subsidiary if, and only
if, (1) the Subsidiary is primarily in the business of owning and/or
operating vessels, (2) immediately preceding and after giving effect
to such acquisition or formation, (A) there is no Default or Event
of Default and (B) the Borrowers shall have $10,000,000 in cash or
cash equivalents in an account maintained at the Agent or otherwise
available for the making of Advances under the Credit Line (taking
into account the Credit Limit), (3) after giving effect to such
35
acquisition or formation, had the acquisition or formation occurred on the
last day of the most recently ended fiscal quarter, the Leverage Ratio of
Guarantor (on a consolidated basis with its Subsidiaries, including the
new Subsidiary) would be at least 0.375 below the maximum ratio permitted
under subsection 8.01(p) for such quarter end before an Event of Default
otherwise would exist thereunder, (4) such Borrower shall control the
management and operations of such Subsidiary, (5) simultaneously with the
acquisition or formation of such Subsidiary, such Subsidiary shall (if
required under subsection 3.01(g) hereof) execute and deliver to the
Agent, for the ratable benefit of the Banks, a guaranty of the payment of
the Obligations and also grant collateral therefor as may be required by
the Required Banks in accordance with Section 5.17 hereof, (6) the
Guarantor and the Borrowers shall not at any time be or become liable for
such Subsidiary's Debts, then or thereafter arising, and (7) the Borrowers
shall have provided the Agent at least fifteen (15) days advance notice of
the acquisition and such information and materials in connection therewith
that the Agent or any Bank reasonably requests.
(b) Other than with respect to new build vessels (including barges)
constructed for a Borrower pursuant to construction contracts to which such
Borrower from time to time is a party, neither Borrower will acquire or
construct any vessel (including barges) or other capital assets unless (1)
immediately preceding and after giving effect to such acquisition, (A) there is
no Default or Event of Default and (B) the Borrowers shall have $10,000,000 in
cash or cash equivalents in an account maintained at the Agent or otherwise
available for the making of Advances under the Credit Line (taking into account
the Credit Limit), (2) after giving effect to such acquisition, (A) such
Borrower shall have at least as much tangible net worth as it had before giving
effect to the acquisition and (B) had the acquisition occurred on the last day
of the most recently ended fiscal quarter, the Leverage Ratio of Guarantor (on a
consolidated basis with its Subsidiaries) would be at least 0.375 below the
maximum ratio permitted under subsection 8.01(p) for such quarter end before an
Event of Default otherwise would exist thereunder, and (3) Borrowers shall have
provided the Agent at least fifteen (15) days advance notice of the acquisition
and such information and materials in connection therewith that the Agent or any
Bank reasonably requests.
If a Borrower desires to take any action contrary to the terms of this Section
6.05, the Agent and the Required Banks shall not unreasonably withhold their
consent with respect thereto; provided, that before the Agent and the Banks
decide whether to consent, the Agent and the Banks shall have been provided with
all such information and materials that they request and had sufficient time to
assess the proposed action and, further, if the Agent and the Required Banks so
consent, then Guarantor and Borrowers and such other Persons as may be required
by the Agent shall execute and deliver such documents as the Agent requires, in
form and substance satisfactory to the Agent.
(c) Guarantor shall not, and Borrowers will not permit Guarantor to,
acquire, merge with or consolidate with any Person, or sell, assign, lease or
otherwise dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its property (whether now owned or hereafter
acquired) to any Person; provided, that
(x) the Guarantor may merge with another Person (other than
either Borrower) if, and only if, (1) the Guarantor is the surviving
entity, (2) the merging Person is primarily in the business of
owning companies that own and/or operate vessels, (3) immediately
preceding and after giving effect to such merger, (A) there is no
Default or Event of Default and (B) the Borrowers shall have
$10,000,000 in cash or cash equivalents in an account maintained at
the Agent or otherwise available for the making of Advances under
the Credit Line (taking into account the Credit Limit), (4) after
giving effect to such merger, (A) the Guarantor shall have at least
as much tangible net worth as it had before giving effect to the
36
merger and (B) had the merger occurred on the last day of the most
recently ended fiscal quarter, the Leverage Ratio of Guarantor (on a
consolidated basis with its Subsidiaries) would be at least 0.375
below the maximum ratio permitted under subsection 8.01(p) for such
quarter end before an Event of Default otherwise would exist
thereunder, and (5) the Guarantor shall have provided the Agent at
least fifteen (15) days advance notice of the merger and such
information and materials in connection therewith that the Agent or
any Bank reasonably requests, and
(y) the Guarantor may acquire or form a Subsidiary if, and
only if, (1) the Subsidiary is primarily in the business of owning
and/or operating vessels or owning other companies that primarily
are in the business of owning and/or operating vessels, (2)
immediately preceding or after giving effect to such acquisition or
formation, (A) there is no Default or Event of Default and (B) the
Borrowers shall have $10,000,000 in cash or cash equivalents in an
account maintained at the Agent or otherwise available for the
making of Advances under the Credit Line (taking into account the
Credit Limit), (3) after giving effect to such acquisition or
formation, had the acquisition or formation occurred on the last day
of the most recently ended fiscal quarter, the Leverage Ratio of
Guarantor (on a consolidated basis with its Subsidiaries, including
the new Subsidiary) would be at least 0.375 below the maximum ratio
permitted under subsection 8.01(p) for such quarter end before an
Event of Default otherwise would exist thereunder, (4) Guarantor
shall control the management and operations of such Subsidiary, (5)
simultaneously with the acquisition or formation of such Subsidiary,
such Subsidiary shall (if required under subsection 3.01(g) hereof)
execute and deliver to the Agent, for the ratable benefit of the
Banks, a guaranty of the payment of the Obligations and also grant
collateral therefor as may be required by the Required Banks in
accordance with Section 5.17 hereof, (6) the Guarantor and the
Borrowers shall not at any time be or become liable for such
Subsidiary's Debts, then or thereafter arising, and (7) the
Guarantor shall have provided the Agent at least fifteen (15) days
advance notice of the acquisition and such information and materials
in connection therewith that the Agent or any Bank reasonably
requests.
If Guarantor desires to take any action contrary to the terms of this Section
6.05, the Agent and the Required Banks shall not unreasonably withhold their
consent with respect thereto; provided, that before the Agent and the Banks
decide whether to consent, the Agent and the Banks shall have been provided with
all such information and materials that they request and had sufficient time to
assess the proposed action and, further, if the Agent and the Required Banks so
consent, then Guarantor and Borrowers and such other Persons as may be required
by the Agent shall execute and deliver such documents as the Agent requires, in
form and substance satisfactory to the Agent.
Section 6.06 ERISA Compliance. Neither Borrower will at any time permit
any Plan maintained by it to engage in any "prohibited transaction" as such term
is defined in Section 4975 of the Code; incur any "accumulated funding
deficiency" as such term is defined in Section 302 of ERISA; or terminate any
such Plan in a manner which could result in the imposition of a Lien on the
property of such Borrower pursuant to Section 4068 of ERISA.
Section 6.07 Indenture Documents. Borrowers shall not amend or waive (and
Borrowers shall cause Guarantor to not amend or waive) the Indenture Documents,
or enter into other documents in connection therewith (and Borrowers shall cause
Guarantor to not enter into other documents in connection therewith), to
increase the interest rates or fees or premiums thereunder, to add any
additional collateral thereunder, to increase or decrease the principal amount
subject thereto if the incurrence of the Debt will result in a Default or an
Event of Default, to add other circumstances that would require prepayment of
the
37
underlying loans, to change any sections containing provisions relating to
insurance requirements or the applications of insurance proceeds or other
insurance-related matters, to change any sections containing provisions relating
to asset sales, to change Section 4.09 thereof, to reduce any standstill
periods, to place further restrictions on the ability of Borrowers or Guarantor
to operate or conduct their business, to add any other defaults or events of
default (or amend the definitions thereof in a manner that would be more
restrictive on Borrowers, Guarantor, or any Subsidiaries), to change any defined
terms therein that are incorporated into this Agreement (and any defined terms
used in such defined terms, and so on), or to change the maturity, amortization
and other payment schedules of the underlying loans. In addition, Borrowers
shall not otherwise amend or waive (and Borrowers shall cause Guarantor not to
amend or waive) the Indenture Documents in any manner so as to make any of the
covenants therein more restrictive than when first executed or so as to result
in a Default or Event of Default or provide for Borrower or the Guarantor to
take or not take any action that could result in a Default or Event of Default.
As to all other amendments and waivers to such documents, Borrowers shall
provide to the Agent an executed copy promptly after the execution and delivery
thereof.
Section 6.08 Indenture Obligations and Other Debt Payments and
Prepayments. Borrowers shall not pay (or allow same by an other Person) the
Indenture Obligations or any other Debt (other than the Obligations and trade
payables coming due in the ordinary course of business) incurred after the
Closing Date if there is then existing a Default or an Event of Default or if
doing so would give rise to a Default or an Event of Default. Borrowers shall
not prepay (or allow same by any other Person) any Debt, other than (i) the
Credit Loan, in accordance with this Agreement, (ii) trade payables, in the
ordinary course of business, and (iii) as to all other Debt (including without
limitation the Indenture Obligations), so long as there is no Default or Event
of Default then existing and doing so would not give rise to a Default or an
Event of Default and the Borrowers shall have $10,000,000 in cash or cash
equivalents in an account maintained at the Agent or otherwise available for the
making of Advances under the Credit Line (taking into account the Credit Limit),
partial prepayments of such other Debt or the refinancing of any such other Debt
in full. If any Debt is to be incurred by the Borrowers or the Guarantor for any
prepayments, reference is hereby made to Section 10.12 hereof as to certain
conditions that may have to be satisfied before the incurrence of such Debt.
Section 6.09 Loans. Except for intra-company Debt owed by a Borrower to
another Borrower in connection with accounting allocations between such Persons
(provided, that such Debt shall be unsecured and subordinated to the Obligations
upon terms and conditions satisfactory to Agent) and loans or advances to
officers, directors and employees of a Borrower or the Guarantor made in the
ordinary course of business and consistent with past practices of the Borrowers
and the Guarantor in an aggregate amount not to exceed $500,000 outstanding at
any one time, Borrowers and Guarantor shall not lend or advance any money to any
Person.
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ARTICLE 7
CONDITIONS OF LENDING
Section 7.01 General Conditions to Initial Advance. The obligation of the
Banks to make the initial Advance under this Agreement is subject to (a) the
accuracy as of the date of the initial Advance of each and every representation
and warranty of Borrowers and Guarantor made in this Agreement or any other Loan
Document, or in any certificate delivered to the Agent and the Banks pursuant to
or in connection with this Agreement, (b) the absence as of the date of the
initial Advance of a Default or Event of Default hereunder, (c) the performance
by each Borrower of its obligations to be performed hereunder on or before the
date of such Advance, including without limitation those set forth in Section
2.02 hereinabove, and (d) the satisfaction of the following conditions as of or
prior to the date of such Advance: (i) Borrowers shall have paid or caused to be
paid all fees and out-of-pocket expenses of the Agent in connection with the
preparation, execution and delivery of all of the Loan Documents executed on the
date of this Agreement and the consummation of the transactions contemplated
thereby; and (ii) the Agent shall have received the following, each in form and
substance satisfactory to the Agent and (except for the Notes) in sufficient
counterparts:
(A) Duly executed counterparts of this Agreement signed by all
the parties hereto.
(B) The duly executed Credit Notes, each dated the Closing
Date.
(C) Duly executed counterparts of the Collateral Documents.
(D) All consents to, waivers (other than those that are not
required until the initial Advance in accordance with the further
terms of this Section 7.01) and subordination agreements respecting
the transactions contemplated hereby as may be required by the
Agent.
(E) Certificates of good standing as to each Borrower and
Guarantor issued by the Secretary of State of their respective
states of organization and from the other jurisdictions where
Borrowers are qualified to conduct business.
(F) The duly executed certificate of the Secretary of each
Borrower setting forth (i) resolutions of its managers in form and
substance satisfactory to the Agent with respect to the
authorization of this Agreement and the other Loan Documents to
which it is a party and the transactions contemplated hereby and
thereby; (ii) the names and true signatures of the officers or other
persons authorized to sign such instruments; and (iii) copies of the
certificates of formation (and all prior merger or conversion, as
the case may be, documentation) and the operating agreement of such
Borrower.
(G) The duly executed certificate of the Secretary of
Guarantor setting forth (i) resolutions of its directors in form and
substance satisfactory to Agent with respect to the authorization of
the Loan Documents to which it is a party and the transactions
contemplated hereby and thereby; (ii) the names and true signatures
of the officers authorized to sign such instruments; and (iii)
copies of the certificate of incorporation and the bylaws of
Guarantor.
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(H) Copies of (i) all charter agreements then effective
relating to the LM Vessels and the HOS Vessels, (ii) Certificates of
Documentation for the LM Vessels and the HOS Vessels, (iii) vessel
abstracts for the LM Vessels and the HOS Vessels showing the LM
Fleet Mortgage and the HOS Fleet Mortgage, as the case may be, as
the only recorded Lien thereon.
(I) Evidence that the insurance as to the Borrowers required
hereunder and under the other Loan Documents has been obtained and
is in full force and effect.
(J) The fees set forth in Section 2.09 hereof or otherwise
required under any other Loan Documents.
(K) A copy of the Indenture.
(L) A certificate of Guarantor certifying as to the Closing
Date Shareholders.
(M) Current surveys of the Vessels from the Surveyor to the
Agent showing an orderly liquidation value of at least $75,000,000.
(N) A Draw Request Certificate.
(O) Any other document (including without limitation legal
opinions of counsel to Borrowers and Guarantor) which the Agent may
reasonably request.
Section 7.02 Conditions to Each Additional Advance. The obligation of the
Banks to make additional Advances is subject to (a) the accuracy as of the date
of such subsequent Advance of each and every representation and warranty of
Borrowers and Guarantor made in this Agreement or any other Loan Document, or in
any certificate delivered to the Agent and the Banks pursuant to or in
connection with this Agreement, (b) the absence of a Default or Event of Default
hereunder as of the date of such subsequent Advance, (c) the performance by each
Borrower of the respective obligations to be performed hereunder on or before
such date, or the satisfaction of other conditions hereunder on or before such
date, including without limitation those obligations and conditions set forth in
Section 2.02 hereinabove, and (d) the Agent shall have received on or before
such date the following:
(A) A Draw Request Certificate.
(B) In connection with acquisitions, any other document which
the Agent may reasonably request.
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ARTICLE 8
DEFAULT
Section 8.01 Events of Default. Any of the following events shall be
considered an "Event of Default" as that term is used herein:
(a) Principal and Interest Payments; Fees. Borrowers fail to
make payment when due of any installment of principal or interest on
the Loans, or of any fee or any other Obligation or Debt to the
Agent or any of the Banks, whether or not related to the Credit
Loan, and (other than with respect to the payment due on the
Maturity Date) such failure is not cured within three (3) Business
Days after the applicable due date; or
(b) Representations and Warranties. Any representation or
warranty made by a Borrower, Guarantor or a Guarantor Subsidiary
under the Loan Documents proves to have been incorrect in any
material adverse respect as of the date thereof, or any
representation, statement (including financial statements),
certificate or data furnished or made by a Borrower, Guarantor or a
Guarantor Subsidiary (or any officer, accountant or attorney
thereof) under the Loan Documents proves to have been untrue in any
material adverse respect as of the date as of which the facts
therein set forth were stated or certified; or
(c) Covenants. A Borrower, Guarantor or a Guarantor Subsidiary
defaults in the observance or performance of any of the covenants or
agreements contained in this Agreement, the Notes or any of the
other Loan Documents (including without limitation Hedging
Agreements) or any Hedging Arrangements, or any other present or
future agreements relating to any Debt between a Borrower and the
Banks, to be kept or performed by a Borrower or any such other
Person (other than a default under any other paragraph of this
Section 8.01) and such Default continues unremedied for a period of
thirty (30) days after the earlier of (i) written notice thereof
having been given by the Agent to Borrowers and (ii) such Default
otherwise becoming known to the chief executive officer, president
or chief financial officer of a Borrower; provided, that no such
notice or cure period shall be applicable concerning a failure of
the covenants under (x) Sections 5.05 and 5.08 or Article 6 of this
Agreement, (y) Section 3.13 in each of the LM Fleet Mortgage and the
HOS Fleet Mortgage, (z) Section 4.1 of each of the HOS Security
Agreement, the LM Security Agreement; or
(d) Involuntary Bankruptcy or Receivership Proceedings. A
receiver, conservator, liquidator or trustee of a Borrower,
Guarantor or a Guarantor Subsidiary, or of any of their respective
properties is appointed by order or decree of any court or agency or
supervisory authority having jurisdiction; or an order for relief is
entered against a Borrower, Guarantor or a Guarantor Subsidiary
under the Federal Bankruptcy Code; or a Borrower, Guarantor or a
Guarantor Subsidiary is adjudicated bankrupt or insolvent; or any
material portion of the properties of a Borrower, Guarantor or a
Guarantor Subsidiary is sequestered by court order and such order
remains in effect for more than thirty (30) days after such party
obtains knowledge thereof; or a petition is filed against a
Borrower, Guarantor or a Guarantor Subsidiary under any
reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or receivership law of any jurisdiction,
whether now or hereafter in effect, and such petition is not
dismissed within thirty (30) days; or
41
(e) Voluntary Petitions. A Borrower, Guarantor or a Guarantor
Subsidiary files a case under the Federal Bankruptcy Code or seeks
relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any case or petition against it
under any such law; or a Borrower, Guarantor or a Guarantor
Subsidiary makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee or
liquidator of a Borrower, Guarantor or a Guarantor Subsidiary or of
all or any part of their respective properties; or
(f) Invalidity of Loan Documents. (i) Any material provision
of the Loan Documents shall for any reason cease to be valid and
binding on a Borrower, Guarantor or a Guarantor Subsidiary after the
Closing Date, or a Borrower, Guarantor or a Guarantor Subsidiary or
any third party shall so state in writing, and (ii) such invalidity
or the effect of such invalidity is not cured to the Agent's
satisfaction within thirty (30) days after the earliest to occur of
(x) notice from the Agent concerning its belief that a material
provision is no longer valid and binding, (y) any written statement
of a Borrower, Guarantor, or a Guarantor Subsidiary or any third
party that a material provision is not valid and binding, or (z) the
chief executive officer, president or chief financial officer of a
Borrower, Guarantor or a Guarantor Subsidiary otherwise becomes
aware that any material provision is not valid and binding; or
(g) Attachment. A writ or warrant of attachment or any similar
process (in any such instance, a "writ") shall be issued by any
court against all or any material portion of the respective
properties of a Borrower, Guarantor or a Guarantor Subsidiary and
such writ is not released or bonded within thirty (30) days after
its entry; or
(h) Other Debt to Other Lenders. A Borrower, Guarantor or a
Guarantor Subsidiary defaults in the payment of any amounts due to
any Person in connection with any Debt in excess of $5,000,000.00 in
aggregate principal amount (other than the Indenture Obligations),
or defaults in the observance or performance of any of the covenants
or agreements contained in any credit agreements, indentures, notes,
leases, contracts, collateral or other documents relating to a
contract involving in excess of $5,000,000.00 to which either
Borrower, Guarantor or a Guarantor Subsidiary is a party under which
any such Debt was created or is governed, and any grace period
applicable to any such default has elapsed without cure or waiver;
or
(i) Undischarged Judgments. Judgment for the payment of money
in excess of $1,000,000.00 (which is not covered by insurance) is
rendered by any court or other governmental body against either
Borrower, Guarantor or a Guarantor Subsidiary and such Borrower,
Guarantor or such Guarantor Subsidiary does not discharge the same
or provide for its discharge in accordance with its terms, or
procure a stay of execution thereof within thirty (30) days from the
date of entry thereof, and within said period of thirty (30) days
from the date of entry thereof or such longer period during which
execution of such judgment shall have been stayed, appeal therefrom
and cause the execution thereof to be stayed during such appeal
while providing such reserves therefor as may be required under
generally accepted accounting principles; or
(j) Construction Contracts. Any default occurs under any
construction contract for the construction of a vessel for HOS or LM
and any grace period available to a Borrower
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or the applicable contractor for any such default has elapsed
without cure or waiver and such default results in termination of
the contract for the construction of such vessel or payment
obligation owed by a Borrower as a result of such default in excess
of $5,000,000; or
(k) Citizenship. Either Borrower ceases to be a citizen of the
United States of America within the meaning of Title 46, Section 802
of the United States Code; or
(l) Vessel Loss. There occurs a total loss of a Vessel, actual
or constructive, or a compromised or arranged or otherwise agreed
constructive loss of a Vessel, not fully covered by insurance
(subject to permitted deductibles) and such Vessel is not replaced
as Collateral with another vessel or vessels of the Required Banks'
choosing in their sole and absolute discretion (as though additional
Collateral were required under Section 5.17 hereof and in accordance
with the requirements of such section) within thirty (30) days after
such loss; or
(m) Minimum Guarantor Net Worth. Guarantor (on a consolidated
basis with its Subsidiaries consistent with its audited financial
statements as of December 31, 2000) fails to maintain a net worth of
at least 90% of Guarantor's net worth at December 31, 2000 (on a
consolidated basis with its Subsidiaries) as of the last day of each
quarter, commencing September 30, 2001, increased annually at the
end of each calendar year by seventy-five (75%) percent of
Guarantor's net income (on a consolidated basis with its
Subsidiaries consistent with its audited financial statements for
the period ended December 31, 2000) for such year and one hundred
(100%) percent of all equity contributed to Guarantor during such
year (disregarding, however, for the year 2001 the equity
contributed to the Guarantor in connection with the repurchase by
the Guarantor of the Warrants). For the purposes of this section,
"net worth" shall mean the sum of common stock, preferred stock,
capital surplus and retained earnings; or
(n) Minimum Guarantor Fixed Charge Coverage Ratio. Guarantor
(on a consolidated basis with its Subsidiaries) as of the last day
of each fiscal quarter fails to maintain a ratio of (i) EBITDA minus
expenditures for the maintenance and recertification of assets
(including drydocking, but excluding discretionary items such as
vessel upgrades) incurred and paid during the applicable period of
calculation of EBITDA, to (ii) Fixed Charges incurred, whether or
not paid, during the applicable period of calculation of EBITDA, of
greater than or equal to 1.30:1.00; or
(o) Guarantor Capital Expenditures. Guarantor and its
Subsidiaries, on a consolidated basis, create, incur, assume or
otherwise become liable for capital expenditures (y) aggregating
more than $40,000,000 in any fiscal year as to capital expenditures
incurred and otherwise permitted under Section 6.05 hereof other
than capital expenditures covered under the next following clause
(z), or (z) aggregating more than $25,000,000 in any fiscal year as
to capital expenditures otherwise permitted under Section 6.05
hereof for the acquisition of vessel(s), barge(s) or other capital
assets that are not all or substantially all of the seller's assets
or applicable operating division; provided, that excluded from the
foregoing limitations in clauses (y) and (z) shall be (i)
expenditures for the construction of vessels under construction on
the Closing Date, and (ii) acquisitions or construction of vessels
that the Agent and the Required Banks may from time to time consent
in writing are not to be counted under this subsection (provided,
further, that nothing herein shall imply or be deemed to imply that
they would agree to any such consent); or
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(p) Maximum Guarantor Leverage Ratio. (w) Guarantor (on a
consolidated basis with its Subsidiaries) as of December 31, 2001
fails to maintain a Leverage Ratio of less than or equal to 5.5:1.0,
or (x) from January 1, 2002 through June 30, 2002, Guarantor (on a
consolidated basis with its Subsidiaries) as of the last day of each
fiscal quarter fails to maintain a Leverage Ratio of less than or
equal to 5:0:1:0, or (y) from July 1, 2002 through December 31,
2002, Guarantor (on a consolidated basis with its Subsidiaries) as
of the last day of each fiscal quarter fails to maintain a Leverage
Ratio of less than or equal to 4.75:1.00, or (z) from and after
January 1, 2003, Guarantor (on a consolidated basis with its
Subsidiaries) as of the last day of each fiscal quarter fails to
maintain a Leverage Ratio of less than or equal to 4.5:1.0; or
(q) Change in Control. There occurs a Change in Control; or
(r) Indenture Obligations. There occurs an "Event of Default"
as defined in any of the Indenture Documents; provided, that a cure
or waiver of such "Event of Default" under the Indenture Documents
will automatically cure an Event of Default under this subsection
8.01(r).
Section 8.02 Remedies. (a) Upon the happening of any Event of Default
specified in Section 8.01 (other than subsections 8.01(d) or 8.01(e) thereof,
(i) all obligations, if any, of the Agent or the Banks to make Advances to
Borrowers shall immediately cease and terminate; and (ii) the Agent may, and at
the written direction of the Required Banks shall (to the extent so directed),
by written notice to Borrowers declare the entire principal amount of all
Obligations then outstanding, including interest accrued thereon, to be
immediately due and payable without presentment, demand, protest, notice of
protest or dishonor or other notice of default of any kind, all of which are
hereby expressly waived by Borrowers.
(b) Upon the happening of any Event of Default specified in
subsections 8.01(d) or 8.01(e) hereof, (i) all obligations, if any, of the Agent
or the Banks to make Advances to Borrowers shall immediately cease and
terminate; and (ii) the entire principal amount of all Obligations then
outstanding, including interest accrued thereon, shall, without notice or action
by the Agent, be immediately due and payable without presentment, demand,
protest, notice of protest or dishonor or other notice of default of any kind,
all of which are hereby expressly waived by Borrowers.
(c) In addition to the foregoing, upon the happening of any of the
events described in subsections (a) and (b) above, the Agent may, and at the
written direction of the Required Banks shall (to the extent so directed),
exercise any of the rights or remedies provided in the Collateral Documents and
other Loan Documents or avail itself of any rights or remedies provided by
applicable law.
Section 8.03 Set-Off. Upon the occurrence of any Event of Default, Agent
and Banks shall have the right to set-off any funds of either Borrower in the
possession of Agent or Banks against any Debt then due by Borrowers to the Agent
or the Banks. Borrowers agree that any holder of a participation in any Note may
exercise any and all rights of counter-claim, set-off, banker's lien and other
liens with respect to any and all monies owing by Borrowers to such holder as
fully as if such holder of a participation were a holder of a note in the amount
of such participation.
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ARTICLE 9
THE AGENT
Section 9.01 Appointment and Authorization. (a) Each Bank appoints and
authorizes the Agent to receive all payments of principal, interest, fees and
other amounts payable by the Borrowers under this Agreement and to remit same
that is payable to the Banks immediately to the Banks, to disburse the Advances
from the Banks, and to take such action and to exercise such powers under this
Agreement, the Notes, the Collateral Documents and the other Loan Documents as
are delegated to the Agent by the Banks from time to time. The Agent shall
promptly distribute to the Banks upon receipt, by the close of business on the
next Business Day following receipt by the Agent, all payments and prepayments
of principal, interest, fees and other amounts paid by the Borrowers under this
Agreement that is payable to the Banks, in proportion to the Banks' Commitments
or as otherwise set forth herein (such as under Section 2.17 hereof). Similarly,
the Banks shall be obligated to fund Advances in proportion to their Borrowing
Base Credit Commitments. The Agent may resign at any time by written notice to
the Banks; the successor Agent shall be selected by the Required Banks from
among the remaining Banks.
(b) Each Bank appoints and authorizes the Agent to hold this
Agreement, the Collateral Documents and all other Loan Documents (except for the
Notes and Hedging Agreements, which will be held by the respective Banks party
thereto), and to take such action and exercise such powers under this Agreement,
the Notes, the Collateral Documents and the other Loan Documents as are
delegated to the Agent by the Banks from time to time. Any requests by the
Borrowers for consent by the Banks or waiver or amendment of provisions of this
Agreement shall be delivered by the Borrowers to the Agent, but favorable action
on such requests shall require the approval of the Required Banks or all of the
Banks, as the case may be.
(c) Each Bank appoints and authorizes the Agent to supervise the
syndication of the Loans to a group of financial institutions identified by the
Agent in consultation with the Borrowers in accordance with the provisions of
Section 9.06 hereof.
Section 9.02 Agent's Reliance. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it under or in connection with this Agreement, the Notes,
the Collateral Documents or the other Loan Documents, except for its or their
own gross negligence or willful misconduct. Without limiting the generality of
the foregoing, the Agent: (i) may treat the payee of any of the Notes as the
holder thereof until the Agent receives written notice of the assignment or
transfer thereof, signed by such payee and in form satisfactory to the Agent;
(ii) may consult with legal counsel (including counsel for the Borrowers),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Bank and shall not be responsible to any
Bank for any statements, warranties or representations made in or in connection
with this Agreement, the Notes, the Collateral Documents and the other Loan
Documents; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement, the Notes, the Collateral Documents or the other Loan Documents, or
to inspect any property (including the books and records) of the Borrowers; (v)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, the Notes,
the Collateral Documents or the other Loan Documents; and (vi) shall incur no
liability under or in respect to this Agreement, the Notes, the Collateral
Documents or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by facsimile, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
45
Section 9.03 Acts by Agent after Default, etc. In the event that the Agent
shall have been notified in writing by any of the Borrowers or the Banks of any
Default or Event of Default (or in the event that the officer of the Agent
responsible for the Borrowers' account obtains actual knowledge of a Default or
an Event of Default), the Agent (a) shall immediately notify the Banks; (b)
shall take such action and assert such rights under this Agreement as it is
expressly required to do pursuant to the terms of this Agreement with the
consent of the Required Banks; (c) may take such other actions and assert such
other rights as it deems advisable, in its discretion, for the protection of the
interests of the Banks pursuant to applicable laws with the consent of the
Required Banks; and (d) shall inform all the Banks of the taking of action or
assertion of rights pursuant to this Section. Each Bank agrees with the Agent
and the other Banks that the decisions and determinations of the Required Banks
in enforcing this Agreement, the Notes, the Collateral Documents and other
applicable Loan Documents and guiding the Agent in those matters shall be
binding upon all the Banks, including without limitation authorizing the Agent
at the pro rata expense of all the Banks (to the extent not reimbursed by the
Borrowers) to retain attorneys to seek judgment on this Agreement, the Notes,
the Collateral Documents and other applicable Loan Documents. Each Bank agrees
with the other Banks that it will not, without the consent of the other Banks,
separately seek to institute any legal action with respect to the Credit Loan
against the Borrowers, the Guarantor or any other party executing documents in
favor of the Agent or the Banks; provided, that a Bank party to a Hedging
Agreement or Hedging Arrangement shall be entitled to enforce the applicable
Borrower's payment obligations thereunder.
Section 9.04 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to herein and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent 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 Agreement, the Notes, the Collateral Documents and the other Loan
Documents.
Section 9.05 Agent. The Agent shall have the same rights and powers under
this Agreement, the Notes, the Collateral Documents and the other Loan Documents
as any other Bank and may exercise the same as though it were not the Agent; and
the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include
Agent in its individual capacity. The Agent may accept deposits from, lend money
to, act as trustee under indentures of, and generally engage in any kind of
business with Borrowers as if the Agent were not the Agent and without any duty
to account therefor to the Banks.
Section 9.06 Assignments and Participations. (a) No Bank may assign to any
other Person any portion of its interests, rights and obligations under this
Agreement (including, without limitation, any portion of its Commitment or the
Credit Loan at the time owing to it and Note held by it) unless each of the
following conditions is or has been satisfied: (i) the Agent has given its prior
written consent (which consent will not be unreasonably withheld), (ii) so long
as there is not then existing an Event of Default, the Borrowers have given
their prior written consent (which consent will not be unreasonably withheld),
(iii) each such assignment is of a constant, and not a varying, percentage of
all the assigning Bank's rights and obligations under this Agreement, (iv) the
assignment is for a Commitment of $5,000,000.00 or more, (v) the parties to such
assignment have executed and delivered to the Agent an Assignment and
Acceptance, substantially in the form of Exhibit C hereto (the "Assignment and
Acceptance"), together with the Note subject to such assignment, one or more
signature pages to this Agreement containing the signature of the assignee, and
(following the Effective Date, as defined in the applicable Assignment and
Acceptance) payment by the assignee to the Agent for its own account of an
assignment administration fee in the amount of $3,500.00, (vi) either the
assignor or assignee shall have paid the Agent's and any Bank's costs and
expenses (including without limitation attorneys fees and expenses) in
connection with the assignment if, in accordance with Section 5.07 hereof, such
costs and expenses are not to be borne by Borrowers, (vii) the
46
Agent shall have delivered to the Borrowers a fully executed copy of such
Assignment and Acceptance, and (viii) the assignee is (A) a state or national
commercial bank or other financial institution located in the United States or
(B) a bank or other financial institution organized under a jurisdiction other
than the United States, provided that such foreign bank or other financial
institution has provided the Agent and the Borrowers with forms prescribed by
the Internal Revenue Service certifying as to such Bank's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to such Bank hereunder, and provided further that such
foreign bank or other financial institution shall not transfer its interests,
rights and obligations under this Agreement to any affiliate of such foreign
bank or other financial institution unless such affiliate provides the Agent and
the Borrowers with the aforesaid tax forms; provided, that with respect to
clause (ii) above, the Borrowers' consent also shall not be required as to an
assignment by a Bank of all of its Commitment if such assignment is part of a
sale or assignment of all or substantially all of either that Bank's assets or
its marine transactions portfolio and the acquiring Person is a bank or
financial institution not affiliated with any company engaged in marine
transportation and is not a creditor of the Borrowers or the Guarantor with
respect to other Debts. Upon satisfaction of each of the foregoing conditions
and upon acceptance and notation by the Agent, 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, (x) 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, and (y)
the assigning Bank shall, to the extent provided in such assignment, be released
from its obligations under this Agreement. Notwithstanding the foregoing, the
restrictions contained above in this subsection 9.06(a) shall not apply to
assignments to any Federal Reserve Bank, and the conditions set forth in clauses
(i) and (ii) above shall not apply to assignments by any Bank to any Person
which controls, is controlled by, or is under common control with, or is
otherwise substantially affiliated with that Bank.
(b) Upon its receipt of an Assignment and Acceptance executed by the
parties to such assignment together with the Note subject to such assignment and
the written consent of the Agent and the Borrowers to such assignment, the Agent
shall give prompt notice thereof to the Borrowers and the Banks. Within five (5)
Business Days after receipt of such notice, the Borrowers at their own expense,
shall execute and deliver to the Agent, in exchange for the surrendered Note, a
new Note to the order of such assignee(s) in an amount equal to the amount
assumed by such 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 be in an aggregate principal
amount equal to the aggregate principal amounts of the surrendered Note, shall
be dated the effective date of such Assignment and Acceptance and shall
otherwise be in the form of the assigned Note. The surrendered Note shall be
canceled and returned to the Borrowers. The Agent shall have the right to
substitute a revised Schedule 1 hereto to reflect the respective Commitments
(and Borrowing Base Credit Commitments) following each such assignment.
(c) Each Bank, without the consent of the Agent, the other Banks or
the Borrowers, may sell participations to one or more banks or other financial
institutions not affiliated with any company engaged in marine transportation
and not a creditor of the Borrowers or the Guarantor with respect to other Debts
(and such bank or banks or financial institution or financial institutions shall
be bound by the terms of this Agreement, including without limitation this
Section 9.06) in all or a portion of the Credit Loan (including its Commitment)
under this Agreement; provided, that the selling Bank shall retain the sole
right and responsibility to enforce the obligations of the Borrowers relating to
the Credit Loan and that the only rights granted to the participant pursuant to
such participation arrangements with respect to waivers, amendments or
modifications of this Agreement shall be the right to approve waivers,
amendments, or modifications which require the consent of all of the Banks as
provided in Section 10.12 hereof.
47
Section 9.07 Indemnification of the Agent. The Banks ratably (computed by
reference to each Bank's respective Commitment) shall indemnify the Agent, its
respective affiliates and the respective shareholders, directors, officers,
employees, agents and counsel of the foregoing (each an "Agent Indemnitee") and
hold each Agent Indemnitee harmless from and against any and all claims (whether
groundless or otherwise), liabilities, losses, damages, costs and expenses of
any kind, including, without limitation, (i) the reasonable fees and
disbursements of counsel for which the Agent has not been reimbursed by the
Borrowers and (ii) any expenses for which the Agent has not been reimbursed by
the Borrowers as required by this Agreement, which may be incurred by such Agent
Indemnitee arising out of or related to this Agreement or the transactions
contemplated hereby, or the Agent's actions taken hereunder; provided, that (x)
no Agent Indemnitee shall have the right to be indemnified hereunder for such
Agent Indemnitee's own gross negligence or willful misconduct, as determined by
a court of competent jurisdiction, or to the extent that such claim relates to
the breach by such Agent Indemnitee of its obligations under this Agreement, and
(y) insofar as the Agent may also be a Bank, the foregoing indemnification in
favor of the Agent shall not apply to claims, liabilities, losses, damages,
costs and expenses incurred in its capacity as a Bank. The foregoing shall
survive the termination of this Agreement.
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48
ARTICLE 10
MISCELLANEOUS
Section 10.01 Notices. Any notice or demand which, by provision of this
Agreement, is required or permitted to be given or served by one party to or on
another shall be deemed to have been sufficiently given and served for all
purposes (if mailed) three calendar days after being deposited, postage prepaid,
in the United States mail, registered or certified mail, or (if delivered by
express courier) one calendar day after being delivered to such courier, or (if
delivered in person) the same day as delivery, in each case addressed (until
another address or addresses are given in writing) as follows:
If to Borrowers:
Hornbeck Offshore Services, LLC
414 North Causeway Boulevard
Mandeville, LA 70448
Attn: Mr. Christian G. Vaccari
and
LEEVAC Marine, LLC
414 North Causeway Boulevard
Mandeville, LA 70448
Attn: Mr. Christian G. Vaccari
If to Agent:
Hibernia National Bank, as Agent
313 Carondelet Street
New Orleans, LA 70130
Attn: Mr. Gary Culbertson
If to Banks:
At the addresses set forth on Schedule 1 hereto.
Section 10.02 Invalidity. In the event that any one or more of the
provisions contained in this Agreement, the Notes, the Collateral Documents or
the other Loan Documents shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, the Notes, the
Collateral Documents or the other Loan Documents.
Section 10.03 Successors and Assigns. All covenants and agreements by or
on behalf of the Borrowers, the Agent or the Banks contained in the Loan
Documents shall bind their respective successors and assigns and shall inure to
the benefit of the Agent, the Banks and the Borrowers and their respective
successors and assigns.
Section 10.04 Renewal, Extension or Rearrangement. All provisions of this
Agreement relating to the Notes shall apply with equal force and effect to each
and all promissory notes or security instruments
49
hereinafter executed which in whole or in part represent a renewal, extension
for any period, increase or rearrangement of any part of the Notes.
Section 10.05 Waivers. No course of dealing on the part of the Agent, any
Bank, their respective officers, employees, consultants or agents, nor any
failure or delay by the Agent or any Bank with respect to exercising any of
their rights, powers or privileges under this Agreement, the Notes, the
Collateral Documents or the other Loan Documents shall operate as a waiver
thereof.
Section 10.06 Cumulative Rights. The rights and remedies of Agent and
Banks under this Agreement, the Notes, the Collateral Documents or the other
Loan Documents shall be cumulative, and the exercise or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
Section 10.07 Singular or Plural. Words used herein in the singular, where
the context so permits, shall be deemed to include the plural or vice versa. The
definitions of words in the singular herein shall apply to such words when used
in the plural where the context so permits and vice versa.
SECTION 10.08 CONSTRUCTION. THIS AGREEMENT IS, AND THE NOTES WILL BE,
CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE UNITED STATES OF AMERICA AND THE INTERNAL LAWS OF THE STATE OF
LOUISIANA.
Section 10.09 Titles of Articles, Sections and Subsections. All titles or
headings to articles, sections, subsections or other divisions of this Agreement
or the exhibits hereto are only for the convenience of the parties and shall not
be construed to have any effect or meaning with respect to the other content of
such articles, sections, subsections or other divisions, such other content
being controlling as to the agreement between the parties hereto.
Section 10.10 Limitation of Liability. The Loan Documents are executed by
officers of the Agent and the Banks, and by acceptance of the Credit Line,
Borrowers agree that for the payment of any claim or the performance of any
obligations hereunder resulting from any default by the Agent or any of the
Banks, resort shall be had solely to the assets and property of the defaulting
Agent or Bank, and no shareholder, officer, employee or agent of the defaulting
Agent or Bank shall be personally liable therefor.
Section 10.11 Relationship Between the Parties. The relationship between
the Agent and the Banks, on the one hand, and Borrowers on the other, shall be
solely that of lender and borrower, and such relationship shall not, under any
circumstances whatsoever, be construed to be a joint venture, joint adventure or
partnership. Neither the Agent nor any Bank has any fiduciary obligation to
either Borrower, Guarantor or any Subsidiary with respect to this Agreement or
the transactions contemplated hereby.
Section 10.12 Amendment; Waiver. No amendment or waiver of any provision
of this Agreement or any other Loan Document (other than Hedging Agreements and
Hedging Arrangements) or consent to any departure therefrom by Borrowers or the
Banks shall be effective unless the same shall be in writing and signed by
Borrowers, the Agent and the Required Banks; provided, that without the written
consent of all of the Banks, no amendment or waiver to this Agreement or any
other Loan Document (other than Hedging Agreements and Hedging Arrangements)
shall (i) change the scheduled payment dates or maturity of the Credit Loan, or
(ii) change the principal of or the rate or time of payment of interest or any
premium payable with respect to any Note, or (iii) increase the Commitments, or
(iv) release any of the Borrowers, or affect the time, amount or allocation of
any required prepayments, or (v) effect the release or substitution of any
Collateral (except as contemplated by Section 5.17) or any guarantor of the
Obligations or subordinate the
50
rights of the Agent and the Banks with respect to Collateral, or (vi) reduce the
proportion of the Required Banks required with respect to any consent, or (vii)
change the application of payments under Sections 2.09 and 2.17 hereof, or
(viii) change the definition of Required Banks or amend this Section 10.12, or
(ix) increase or decrease the Borrowing Base. In addition, but subject to those
amendments that require the approval of all Banks, if a Borrower or the
Guarantor incurs from time to time additional Debt (other than Obligations) in
excess of $20,000,000 not in existence on the Closing Date, then the Required
Banks shall be entitled to require such amendments to this Agreement and the
other Loan Documents as they deem to be reasonably appropriate in light of the
terms and conditions of such Debt; provided, that (A) absent there being any
Default or Event of Default and absent any circumstances in connection with the
incurrence of such Debt that would require a waiver or amendment of the terms
and conditions of this Agreement, for example at Section 6.05 hereof (although
nothing herein implies or should be deemed to imply that the Agents or the Banks
would agree to any waiver or amendment) and (B) the Leverage Ratio would not
have been violated on the last day of the fiscal quarter preceding the
incurrence of such Debt had such Debt been incurred on such date, then the
Required Banks shall not be entitled to require amendments to the definitions of
Applicable Margin, EBITDA and Net Debt hereunder and Sections 2.09, 5.07, 5.17,
6.05, 6.08, 8.01(n), 8.01(o) and 8.01(p) hereof. Banks not party to a Hedging
Agreement or Hedging Arrangement shall not be entitled to consent to any
amendments or other modifications thereto of waivers thereof. Bank Affiliates
shall not be entitled to consent to any amendments or other modifications to, or
waivers of the Loan Documents, other than their applicable Hedging Agreements as
Hedging Arrangements.
Section 10.13 Entire Agreement. This Agreement and the other Loan
Documents supersede all prior written or oral understandings with respect to the
transactions contemplated hereby and thereby. Borrowers are not relying upon any
representation by the Agent, any of the Banks or any representative thereof, and
no representation has been made, that the Agent or any Bank will, at the time of
an Event of Default or Default, or at any other time, waive, negotiate, discuss
or take or refrain from taking any action with respect to any such Event of
Default or Default.
Section 10.14 Time of the Essence. Time shall be deemed of the essence
with respect to the performance of all of the terms, provisions and conditions
on the part of Borrowers, the Agent and the Banks to be performed hereunder.
Section 10.15 Counterparts. This Agreement may be executed in multiple
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof; each counterpart shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 10.16 Interest. It is the intention of the parties hereto to
conform strictly to applicable usury laws as presently in effect. Accordingly,
notwithstanding the designation of Louisiana law pursuant to Section 10.08
hereof, if the transactions contemplated hereby are held by a final judgment of
a court of competent jurisdiction to be usurious under applicable law (including
the laws of the United States of America or any state other than Louisiana),
then, in that event, notwithstanding anything to the contrary in this Agreement,
the Notes, the Collateral Documents or the other Loan Documents, the parties
hereto agree as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law that is contracted for, charged or
received under the Loan Documents shall under no circumstances exceed the
maximum amount of interest allowed by applicable law, and any excess shall be
credited on the Obligations (or, if the Obligations shall have been paid in
full, refunded to Borrowers for division between themselves as they deem
appropriate), and (ii) in the event that the maturity of the Obligations is
accelerated by reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the event of any
prepayment, then such consideration that constitutes interest may never include
more than the maximum amount allowed by applicable law, and excess interest, if
any, provided for in this
51
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited on the
Obligations (or, if the Obligations shall have been paid in full, refunded to
Borrowers for division between themselves as they deem appropriate).
SECTION 10.17 NO THIRD PARTY BENEFICIARY. THERE SHALL BE NO THIRD PARTY
BENEFICIARY OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION BANK AFFILIATES,
GUARANTOR, INDENTURE NOTEHOLDERS AND THE INDENTURE TRUSTEE.
SECTION 10.18 SOLIDARY LIABILITY. EACH BORROWER ACKNOWLEDGES AND AGREES
THAT IT IS SOLIDARILY (JOINTLY AND SEVERALLY) LIABLE WITH THE OTHER BORROWER FOR
THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS FROM TIME TO TIME OWING HEREUNDER
AND UNDER THE OTHER LOAN DOCUMENTS EXECUTED BY EITHER OR BOTH OF THE BORROWERS.
SECTION 10.19 WAIVERS OF JURY TRIAL. BORROWERS, THE AGENT AND THE BANKS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
Section 10.20 Bank Affiliates. No Bank Affiliate party to any Hedging
Agreement with Borrowers shall have any rights under this Agreement or the other
Loan Documents (other than its Hedging Agreement), except with respect to its
rights under, but subject to the terms and conditions of, Section 2.17 hereof to
receive proceeds of Collateral or as a result of the Agent's exercise of other
rights and remedies under the Loan Documents. No Bank Affiliate shall be a third
party beneficiary in any respect whatsoever of any of the terms and conditions
of this Agreement (including without limitation as to any amendments to or
waivers of Section 2.17) or the other Loan Documents.
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52
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed on the date first above written.
HORNBECK OFFSHORE SERVICES, LLC
By: /s/ CHRISTIAN G. VACCARI
------------------------------------
Name: Christian G. Vaccari
Title: Chief Executive Officer
LEEVAC MARINE, LLC
By: /s/ CHRISTIAN G. VACCARI
------------------------------------
Name: Christian G. Vaccari
Title: Chief Executive Officer
HIBERNIA NATIONAL BANK, as Agent
By: /s/ GARY CULBERTSON
------------------------------------
Name: Gary Culbertson
Title: Vice President
HIBERNIA NATIONAL BANK, as a Bank
By: /s/ GARY CULBERTSON
------------------------------------
Name: Gary Culbertson
Title: Vice President
ACCEPTED AND AGREED TO:
HORNBECK-LEEVAC MARINE
SERVICES, INC.
By: /s/ CHRISTIAN G. VACCARI
-----------------------------------
Name: Christian G. Vaccari
Title: Chief Executive Officer
LIST OF SCHEDULES
1 Commitments of the Banks
4.07 Investments and Guaranties
4.08 Liabilities and Litigation
4.13 Compliance with the Law
LIST OF EXHIBITS
A Form of Credit Note
B Form of Draw Request Certificate (Section 2.02)
C Form of Assignment and Acceptance (Section 9.06(a))
SCHEDULE 1
COMMITMENTS OF THE BANKS
Borrowing Base
Credit Commitment Credit
Name and Address of Bank of Bank Commitment of Bank
- ------------------------ ----------------- ------------------
Hibernia National Bank $50,000,000.00 $25,000,000.00
313 Carondelet Street
New Orleans, LA 70130
Attn: Mr. Gary Culbertson
SCHEDULE 4.07
INVESTMENTS AND GUARANTIES
None.
SCHEDULE 4.08
LIABILITIES AND LITIGATION
LM is party to an environmental clean-up matter regarding SBA Shipyards,
Inc., Jennings, Louisiana. The matter involves remediation resulting from work
performed by SBA Shipyards, Inc. for approximately 20 companies (former
customers of SBA Shipyards, Inc.). LM's Participation Allocation is estimated to
be 2.2%.
SCHEDULE 4.13
COMPLIANCE WITH THE LAW
None.
EXHIBIT A
[FORM OF CREDIT NOTE ATTACHED]
CREDIT NOTE
$_________ [Date]
Maturity Date: December 31, 2004 New Orleans, Louisiana
FOR VALUE RECEIVED, the undersigned HORNBECK OFFSHORE SERVICES, LLC, a
Delaware limited liability company, and LEEVAC MARINE, LLC, a Delaware limited
liability company (collectively, the "Borrowers"), hereby promise to pay to the
order of _____________________________ (the "Lender") at the office of Hibernia
National Bank (herein called the "Agent"), 313 Carondelet Street, New Orleans,
Louisiana 70130, the principal sum of ________________________________ and
00/100 ($_____________.00) Dollars, or so much thereof as may be advanced
pursuant to the Credit Agreement dated as of December 31, 2001 among the
Borrowers, the banks and other financial institutions from time to time party
thereto and the Agent, as same may be amended from time to time (herein called
the "Credit Agreement"), whichever is less.
The credit advice resulting from the deposit of the proceeds of any
disbursement hereunder in the Borrowers' account with the Agent, or the Agent's
copy of any cashier's check representing all or any part of the proceeds of the
disbursements shall be deemed prima facie evidence of the Borrowers'
indebtedness to the Bank on the Credit Line.
The unpaid principal of this Note shall bear interest at one (or both) of
the following interest rates, at the Borrowers' option from time to time: (i)
Prime Rate plus the Applicable Margin or (ii) Floating Rate plus the Applicable
Margin, as more particularly set forth in the Credit Agreement. The Borrowers
shall select the interest rate applicable to each Advance or other portion of
the Credit Loan outstanding (or such interest rate shall otherwise be
determined) in accordance with the provisions of the Credit Agreement. Interest
after maturity of this Note for any reason whatsoever shall be increased to the
Prime Rate plus the Applicable Margin plus 3% per annum and shall be payable on
demand. Interest shall be computed as set forth in the Credit Agreement.
The Borrowers may or shall from time to time prepay the principal of this
Note, and reborrow, in whole or in part, in accordance with the Credit
Agreement. Any prepayment of the principal of this Note shall include accrued
interest to the date of prepayment on the principal amount being prepaid and any
applicable premium or fee.
Interest on Advances accruing interest based on the Prime Rate interest
option shall be payable monthly in arrears on the last day of each month
beginning December 31, 2001 and on any conversion thereof to accrue interest
based on the Floating Rate interest option. Interest on Advances accruing
interest based on the Floating Rate interest option shall be payable on the last
day of each Interest Period (30, 60, 90 or 180 days), and in the case of 180 day
Interest Periods, also at the end of the first 90 days thereof. The outstanding
principal on this Note shall be payable in full at maturity of this Note on the
Maturity Date.
This Note is a Credit Note issued pursuant to and is entitled to the
benefit of the Credit Agreement. Reference is made to the Credit Agreement for
provisions for the acceleration of the maturity hereof on the occurrence of
certain events specified therein, the definition of capitalized terms not
otherwise defined herein, and for all other pertinent purposes.
All payments and prepayments made by the Borrowers hereunder shall be made
to the Agent in lawful money of the United States, in immediately available
funds, before 11:00 a.m. (central time) on the
date that such payment is required, or otherwise is, to be made. Any payment
received and accepted by the Agent after such time shall be considered for all
purposes (including the calculation of interest, to the extent permitted by law)
as having been made on the next following Business Day. Whenever any payment to
be made hereunder falls on a day other than a Business Day, unless otherwise
provided in the Credit Agreement, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the calculation of interest.
The Borrowers expressly waive demand and presentment for payment, notice
of nonpayment, protest, notice of protest, notice of dishonor, bringing of suit,
diligence in taking any action to collect amounts called for hereunder and in
the handling of property at any time existing as security in connection
herewith, and shall be directly and primarily liable for the payment of all sums
owing and to be owing hereon, regardless of and without any notice, diligence,
act or omission as or with respect to the collection of any amount called for
hereunder or in connection with any right, lien, interest or property at any and
all times had or existing as security for any amount called for hereunder.
If any Event of Default occurs, the Agent and the Lender shall have all of
the rights and remedies (including acceleration of the maturity date of this
Note) available to them pursuant to the Credit Agreement or applicable law.
If an Event of Default occurs and this Note is placed in the hands of an
attorney for collection, or suit is filed hereon, or proceedings are had in
bankruptcy, probate, receivership or other judicial proceedings for the
establishment or collection of any amount called for hereunder, or any amount
payable or to be payable hereunder is collected through any such proceedings,
the Borrowers agree to pay to the Agent and the Lender a reasonable amount as
attorney's fees.
Irrespective of the Borrower or Borrowers who directly or indirectly
receive the amounts funded on Advances, each of the Borrowers shall be liable
jointly and severally and solidarily to the Lender for all amounts outstanding
from time to time under this Note.
This Note shall be governed by and construed in accordance with the laws
of the State of Louisiana.
IN WITNESS WHEREOF, the Borrowers have executed and delivered this Note on
the day first written above.
HORNBECK OFFSHORE SERVICES, LLC
By:_____________________________________
Name: Christian G. Vaccari
Title: Chief Executive Officer
LEEVAC MARINE, LLC
By:_____________________________________
Name: Christian G. Vaccari
Title: Chief Executive Officer
EXHIBIT B
[FORM OF DRAW REQUEST CERTIFICATE]
[SEE SECTION 2.02]
____________, 200__
Hibernia National Bank, as Agent
313 Carondelet Street
New Orleans, LA 70130
Re: Draw Request
Ladies and Gentlemen:
Reference is hereby made to the Credit Agreement dated as of December 31,
2001 (as amended, modified and supplemented from time to time, the "Credit
Agreement") among Hornbeck Offshore Services, LLC ("HOS"), LEEVAC Marine, LLC
("LM"; HOS and LM are collectively, "Borrowers"), Hibernia National Bank, as
Agent ("Agent") and the Banks a party thereto ("Banks"). Capitalized terms used
herein without definition shall have the respective meanings ascribed thereto in
the Credit Agreement.
Pursuant to, and subject to the terms and conditions of, Section 2.02 and
Article 7 of the Credit Agreement, Borrowers hereby request that the Banks make
an Advance to Borrowers in the amount of __________________ and ___/100 Dollars
($______________) on _________, 200__ in accordance with the terms and
conditions of the Credit Agreement.
The Advance shall accrue interest based on the Prime Rate interest
option, or the Floating Rate interest option, with an initial Interest
Period of ____ days.
Borrowers hereby represent and warrant to the Agent and the Banks, and
covenant, acknowledge and agree with the Agent and the Banks that:
(a) the aforementioned request for an Advance is with respect to:
(i) [ENVELOPE ICON] Working capital, in the amount of $_________,
(ii) [ENVELOPE ICON] An acquisition (see attached for details), in
the amount of $_______________.
(b) the Borrowing Base is $___________. After giving effect to the Advance
requested hereby, the principal amount of the Credit Line outstanding will be
$___________.
(c) the representations and warranties in the Credit Agreement are true
and correct and no Default or Event of Default exists under the Credit
Agreement,
(d) attached hereto are all other materials (if any) required to be
delivered to Agent in connection with this Draw Request Certificate, and
(e) Borrowers are and shall continue to be solidarily (jointly and
severally) liable for the Advance requested hereunder and all other Obligations.
The undersigned hereby represent and warrant to Agent that they have all
requisite power and authority to execute and deliver this Draw Request
Certificate to the Agent.
Very truly yours,
HORNBECK OFFSHORE SERVICES, LLC
By:_________________
Name:
Title:
By:_________________
Name:
Title:
LEEVAC MARINE, LLC
By:_________________
Name:
Title:
By:_________________
Name:
Title:
Exhibit B - Page 2
EXHIBIT C
FORM OF ASSIGNMENT AND ACCEPTANCE
Dated _____________, 200_
Reference is made to the Credit Agreement dated as of December 31, 2001,
as the same may be amended, modified or supplemented from time to time (as so
amended, modified or supplemented from time to time, the "Agreement"), among
Hornbeck Offshore Services, LLC and LEEVAC Marine, LLC, as Borrowers, Hibernia
National Bank, as Agent and the banks party thereto (the "Banks"). Capitalized
terms which are used herein without definition and which are defined in the
Agreement shall have the same meanings herein as in the Agreement.
___________________ (the "Assignor") and _____________________ (the
"Assignee") agree as follows:
1. Assignment. The Assignor hereby sells and assigns to the Assignee, and
the Assignee hereby purchases and assumes from the Assignor, as of the Effective
Date (as hereinafter defined) a ___% interest in and to all the Assignor's
rights and obligations under the Agreement (including, without limitation, its
Commitment, the Credit Loan currently owing to it and the Note held by it).
2. Concerning the Assignor. The Assignor (i) represents that as of the
date hereof, its Commitment percentage (without giving effect to assignments
thereof which have not yet become effective) is ___%, and the outstanding
balance of its Credit Loan (unreduced by any assignments thereof which have not
yet become effective) is $______________; (ii) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Agreement or any other instrument or document furnished pursuant thereto,
other than that it is the legal and beneficial owner of the interest being
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Borrowers or the performance or
observance by the Borrowers of any of its obligations under the Agreement, the
Notes, the Collateral Documents or any other Loan Document or any other
instrument or document furnished pursuant thereto; and (iv) attaches the Note
delivered to it under the Agreement and requests that the Borrowers exchange
such Note for new Notes payable to each of the Assignor and the Assignee as
follows:
Notes Payable to
the Order of: Amount of Note
----------------- ---------------
[Name of Assignor] [Note ($ )]
[Name of Assignee] [Note ($ )]
3. Concerning the Assignee. The Assignee (i) represents and warrants that
it is legally authorized to enter into this Assignment and Acceptance; (ii)
confirms that it has received a copy of the Agreement, together with copies of
the financial statements referred to therein and the most recent financial
statements delivered pursuant thereto and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Assignor, the Agent or any other
Banks 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 the Agreement; (iv) appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under the Agreement
and the Notes as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; and (iv) agrees that it will
perform in accordance with their terms all the obligations which the Agreement,
the Notes, the Collateral Documents and the other Loan Documents require are to
be performed by it as a Bank.
4. Effective Date. The effective date for this Assignment and Acceptance
shall be __________________ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for
acceptance.
5. Obligations. Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of a Bank thereunder, and (ii) the Assignor shall, to the extent
provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Agreement, other than confidentiality
requirements.
6. Payments. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of the interest
assigned hereby (including payments of principal, interest and other amounts) to
the Assignee. The Assignor and Assignee shall make all appropriate adjustments
in payments for periods prior to the Effective Date or with respect to the
making of this assignment directly between themselves.
[NAME OF ASSIGNOR]
By:
Name:
Title:
[NAME OF ASSIGNEE]
By:
Name:
Title:
Exhibit C - Page 2
Each of the undersigned hereby consents to the assignment contemplated by
this Assignment and Acceptance.
HORNBECK OFFSHORE SERVICES, LLC
By:
Name:
Title:
LEEVAC MARINE, LLC
By:
Name:
Title:
HIBERNIA NATIONAL BANK, as Agent
By:
Name:
Title:
Exhibit C - Page 3