<PAGE> 1
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Period Ended September 30, 1998
-------------------
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition Period From ___________ to ___________
Commission file number 0-29416
UNIFAB International, Inc.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Louisiana 72-1382998
- - ---------------------------------------- ------------------------------
(State or other jurisdiction or (I.R.S. Employer
incorporation or organization) Identification No.)
5007 Port Road
New Iberia, LA 70562
- - ----------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
(318) 367-8291
- - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
- - --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
Common Stock, $0.01 Par Value ---- 5,950,155 shares outstanding as of November
12, 1998.
<PAGE> 2
UNIFAB INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets-- September 30,
1998 and March 31, 1998.................................... 1
Condensed Consolidated Statements of Income -- Three
Months Ended September 30, 1998 and 1997; Six Months
Ended September 30, 1998 and 1997.......................... 2
Condensed Consolidated Statement of Shareholders' Equity
-- Six Months Ended September 30, 1998..................... 3
Condensed Consolidated Statements of Cash Flows -- Six
Months Ended September 30, 1998 and 1997................... 4
Notes to Consolidated Financial Statements -- September
30, 1998................................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 8
PART II. OTHER INFORMATION
Item 5. Other Information............................................. 10
Item 6. Exhibits and Reports on Form 8-K.............................. 10
</TABLE>
<PAGE> 3
UNIFAB INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 MARCH 31
1998 1998
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ........................... $ 2,130,932 $ 8,482,196
Accounts receivable ................................. 25,659,391 26,031,271
Costs and estimated earnings in excess of billings on
uncompleted contracts ............................ 8,129,898 2,064,295
Prepaid expenses .................................... 594,748 987,520
Other assets ........................................ 1,835,622 638,942
------------ ------------
Total current assets ........................ 38,350,591 38,204,224
Property, plant and equipment, net .................. 19,506,843 13,333,207
Cost in excess of net assets acquired, net of
accumulated amortization of $467,013 and
$144,128
10,367,337 6,774,019
Other assets ........................................ 2,157,667 1,932,149
------------ ------------
Total assets ................................ $ 70,382,438 $ 60,243,599
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 9,607,310 $ 6,859,447
Notes Payable ....................................... 5,117,177 11,454,005
Billings in excess of costs and estimated earnings on
uncompleted contracts ............................ 3,325,253 2,951,249
Accrued liabilities ................................. 2,983,459 1,349,663
Payroll and related liabilities ..................... 1,339,346 1,956,876
Current portion of long-term debt ................... 1,454,526 --
Income tax payable .................................. 512,123 754,970
------------ ------------
Total current liabilities ................... 24,339,194 25,326,210
Deferred income taxes ................................. 1,222,661 991,725
Long-term debt ........................................ 5,650,000 --
Other noncurrent liabilities .......................... 622,301 1,237,673
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized, no shares outstanding ................. -- --
Common stock, $0.01 par value, 20,000,000 shares
authorized, 5,950,155 and 5,867,655 shares
outstanding ........................................ 59,502 58,677
Additional paid-in capital .......................... 25,032,942 23,973,392
Currency translation adjustment ..................... (48,953) --
Retained earnings ................................... 13,504,791 8,655,922
------------ ------------
Total shareholders' equity .................. 38,548,282 32,687,991
------------ ------------
Total liabilities and shareholders' equity .. $ 70,382,438 $ 60,243,599
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
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UNIFAB INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30 SIX MONTHS ENDED SEPTEMBER 30
-------------------------------- --------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue................................. $ 31,585,118 $ 26,523,025 $ 60,257,790 $ 60,263,505
Cost of revenue ........................ 25,212,424 22,364,389 48,104,110 51,287,122
------------ ------------ ------------ ------------
Gross profit ........................... 6,372,694 4,158,636 12,153,680 8,976,383
Selling, General and Administrative
expense .............................. 2,441,246 1,680,128 4,761,571 3,297,889
------------ ------------ ------------ ------------
Income from operations ................. 3,931,448 2,478,508 7,392,109 5,678,494
Other income (expense):
Interest expense ..................... (300,864) (297,585) (461,582) (556,514)
Interest income ...................... 31,942 69,598 156,446 102,531
Other income (expense) ............... (283,938) (283,938)
------------ ------------ ------------ ------------
Income before income taxes ............. 3,378,588 2,250,521 6,803,035 5,224,511
Income tax provisions .................. 1,214,858 697,371 1,954,166 1,357,289
------------ ------------ ------------ ------------
Net income ............................. 2,163,730 $ 1,553,150 $ 4,848,869 $ 3,867,222
============ ============ ============ ============
Basic and diluted earnings per share ... $ 0.36 $ 0.35 $ 0.82 $ 0.88
============ ============ ============ ============
Basic and diluted earnings per share
weighted average shares .............. 5,930,600 4,434,823 5,901,706 4,377,228
============ ============ ============ ============
Pro forma data:
Income before income taxes,
as reported above..................... $ 3,378,588 $ 2,250,521 $ 6,803,035 $ 5,224,511
Current tax provision................... 689,858 697,371 1,429,166 1,357,289
Pro forma provision for
income taxes related to
S Corporation operations.............. 461,855 89,354 904,815 517,367
------------ ------------ ------------ ------------
Pro forma net income.................... $ 2,226,875 $ 1,463,796 $ 4,469,054 $ 3,349,855
============ ============ ============ ============
Pro forma basic and
diluted earnings per
share................................. $ 0.38 $ 0.33 $ 0.76 $ 0.77
============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
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UNIFAB INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CURRENCY
----------------------------- PAID-IN TRANSLATION RETAINED
SHARES AMOUNT CAPITAL ADJUSTMENT EARNINGS TOTAL
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998 ... 5,867,655 $ 58,677 $ 23,973,392 $ -- $ 8,655,922 $ 32,687,991
Exercise of stock options .. 3,500 35 62,965 -- -- 63,000
Acquisition of LATOKA ...... 79,000 790 996,585 -- -- 997,375
Translation adjustment ..... -- -- -- (48,953) -- (48,953)
Net income ................ -- -- -- -- 4,848,869 4,848,869
------------ ------------ ------------ ------------ ------------ ------------
Balance at September 30, 1998 5,950,155 $ 59,502 $ 25,032,942 $ (48,953) $ 13,504,791 $ 38,548,282
============ ============ ============ ============ ============ ============
</TABLE>
See notes to condensed consolidated financial statements.
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UNIFAB INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Cash from operations .......................... $ 2,243,793 $ 9,481,805
Investing activities:
Purchases of equipment ...................... (7,134,535) (1,408,890)
------------ ------------
(7,134,535) (1,408,890)
Financing activities:
Net proceeds from initial public offering ... -- 25,037,001
Payment for surrender of shareholder rights . -- (6,300,000)
Dividends paid .............................. -- (3,622,189)
Exercise of stock options ................... 63,000 --
Net change in borrowings .................... (1,523,522) (3,340,000)
------------ ------------
(1,460,522) 11,774,812
Net change in cash and cash equivalents ..... $ (6,351,264) $ 19,847,727
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
Page 6
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UNIFAB INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
1. DESCRIPTION OF BUSINESS
UNIFAB International, Inc. (the Company) fabricates and assembles jackets,
decks, topside facilities, quarters buildings, drilling rigs and equipment for
installation and use offshore in the production, processing and storage of oil
and gas. Through a wholly-owned subsidiary, Allen Process Systems, LLC, the
Company designs and manufactures specialized process systems such as oil and gas
separation systems, gas dehydration and treatment systems, and oil dehydration
and desalting systems, and other production equipment related to the development
and production of oil and gas reserves. The Company's main fabrication
facilities are located in the Port of Iberia at New Iberia, Louisiana. Through a
wholly-owned subsidiary, UNIFAB International West, LLC, the Company provides
repair, refurbishment and conversion services for oil and gas drilling rigs and
industrial maintenance services. Through a wholly-owned subsidiary, Allen
Process Systems, Ltd., headquartered in Wimbledon, England, the Company provides
engineering and project management services primarily in Europe and the Middle
East.
The operating cycle of the Company's contracts is typically less than one
year, although some large contracts may exceed one year's duration. Assets and
liabilities have been classified as current and noncurrent under the operating
cycle concept, whereby all contract-related items are regarded as current
regardless of whether cash will be received within a 12-month period. At
September 30, 1998, it was anticipated that substantially all contracts in
progress, and receivables associated therewith, would be completed and collected
within a 12-month period.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of the Company and its subsidiaries, all of which are
wholly-owned. Significant intercompany accounts and transactions have been
eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments, consisting
only of normal recurring adjustments, considered necessary for a fair
presentation have been included. Operating results for the three- and six-month
periods ended September 30, 1998 are not necessarily indicative of the results
that may be expected for the fiscal year ending March 31, 1999.
These financial statements should be read in conjunction with the financial
statements and footnotes thereto for the year ended March 31, 1998 included in
the Company's Annual Report on Form 10-K.
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3. BUSINESS COMBINATIONS
On July 24, 1998 the Company acquired all of the outstanding common stock of
Allen Tank, Inc. ("Allen Tank") for 819,000 shares of the Company's common
stock, plus $400,000 in cash and $800,000 in notes paid to a dissenting
shareholder. Allen Tank, (which has been converted to a limited liability
company and renamed Allen Process Systems, LLC, is located in New Iberia,
Louisiana on property near the Company's Port of Iberia facilities. Allen
Process Systems, LLC designs and manufactures specialized process systems
related to the development of oil and gas reserves. This business combination
has been accounted for as a pooling-of-interests and, accordingly, the
consolidated financial statements for periods prior to the combination have been
restated to include the accounts and results of operations of Allen Tank.
Operating results prior to the combination of the separate companies and the
combined amounts presented in the consolidated financial statements are
summarized below:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
September 30, September 30,
1998 1997 1998 1997
------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Revenues:
UNIFAB 18,953,953 17,947,922 38,570,945 33,451,075
Allen Tank 12,631,165 8,575,815 21,686,845 26,812,430
---------- ---------- ---------- ----------
Combined 31,585,118 26,523,025 60,257,790 60,263,505
========== ========== ========== ==========
Net Income:
UNIFAB 928,623 1,297,541 2,398,286 2,441,589
Allen Tank 1,390,478 255,609 1,954,166 1,425,633
---------- ---------- ---------- ----------
Combined 2,163,730 1,553,150 4,848,869 3,867,222
========== ========== ========== ==========
</TABLE>
Adjustments to conform Allen Tank's accounting policies to those of UNIFAB and
to apply pooling-of-interests accounting reduced net income of the combined
entity for the above periods by $137,845 and $187,970, for the three- and six-
month periods ended September 30, 1998, respectively, and by $142,600 and
$518,050 for the three-and six- month periods ended September 30, 1997,
respectively. The adjustments to conform accounting policies relate to the
accrual of performance incentives for interim reporting periods.
Prior to the combination Allen Tank's fiscal year end was December 31. UNIFAB's
fiscal year end is March 31. In applying pooling-of-interests accounting, the
September 30, 1998 UNIFAB statement of income was combined with the Allen Tank
statements of income for the quarter ended September 30, 1998 and the
twelve-week period ended June 13, 1998. The September 30, 1997 UNIFAB statement
of income was combined with the Allen Tank statement of income for the 28-week
period ended October 4, 1997. Retained earnings of the combined entities were
adjusted by approximately $675,000 as of the beginning of UNIFAB's fiscal 1998
year to include the unaudited net earnings of Allen Tank, including adjustments
to conform accounting policies to those of UNIFAB, for the period December 28,
1997 to March 21, 1998. During this period Allen Tank's revenues were
$8,986,700.
Merger expenses of approximately $275,000 include legal, investment banking and
accounting fees related to the business combination and are classified as "other
expense" in the Consolidated Statements of Income.
The Company also acquired LATOKA Engineering, Ltd. for 79,000 shares of UNIFAB
common stock.
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Prior to the acquisition, Allen Tank was taxed as an S Corporation. Upon the
acquisition, S Corporation status was terminated and the corporation was subject
to federal and state income taxes. In conjunction with the termination of S
Corporation status, Allen Tank distributed $1.5 million to its shareholders in
the form of notes. This distribution, which was consistent with prior
distributions to the Allen Tank shareholders, represented the tax liability of
those shareholders for S Corporation earnings through the date of the
acquisition and termination of S Corporation status. The remaining undistributed
earnings at the date of acquisition were accounted for as additional capital at
the beginning of fiscal year March 31, 1998.
The balance sheet of the Company as of September 30, 1998 includes a current
deferred income tax liability of approximately $742,000 and a non-current
deferred income tax asset of approximately $217,000 to reflect deferred income
taxes recorded as of the date of acquisition as a result of the termination of
the S Corporation status of Allen Tank.
4. PRO FORMA EARNINGS PER SHARE
Pro forma earnings per share for the three and six month periods ended
September 30, 1998 and 1997 consists of the Company's historical income,
adjusted to reflect income taxes as if the Allen Tank had operated as a C
Corporation for all periods. This calculation excludes the charge of $525,000
related to the cumulative deferred income taxes resulting from the conversion to
a C Corporation on July 24, 1998, as described in Note 3, above. The basic and
diluted earnings per share calculation includes shares issued in the acquisition
of Allen Tank transaction, giving effect to the issuance at the beginning of the
periods presented.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis of financial condition and results of
operations should be read in conjunction with the unaudited condensed
consolidated financial statements and the related disclosures included elsewhere
herein and Management's Discussion and Analysis of Financial Condition and
Results of Operations included as part of the Company's Annual Report on Form
10-K.
RESULTS OF OPERATIONS
Revenue for the three months ended September 30, 1998 increased 19% to
$31.6 million from the $26.5 generated in the three months ended September 30,
1997. For the six-month periods ended September 30, 1998 and 1997, revenue was
$60.3 million. The increase in the quarter was primarily due to revenue
recognized on engineering, design and manufacture of specialized process
systems, which vary in size, complexity and types of materials used, all of
which impact the revenue volume. Additionally, revenues increased from plant
maintenance and international project management businesses acquired in 1998. At
September 30, 1998 backlog was approximately $32.6 million.
Cost of revenue for the three months ended September 30, 1998 increased
13% or $2.8 million to $25.2 million from $22.4 million in the three months
ended September 30, 1997. For the six-month period ended September 30, 1998,
cost of revenue of $48.1 million was $3.2 million or 6% lower than for the same
period in 1997. Cost of revenue consists of costs associated with the
fabrication process, including direct costs (such as direct labor costs and raw
materials) and indirect costs (such as supervisory labor, utilities, welding
supplies and equipment costs) that can be specifically allocated to projects.
These costs decreased as a percentage of revenues to 79.8% in the three- and
six-month periods ended September 30, 1998 from 84.3% and 85.1% for the same
periods in 1997. The decrease in cost as a percentage of revenues is a result of
the make up of projects including the type of material called for on process
systems, such as stainless steel, cladding or duplex stainless steel content,
the extent of design and engineering
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required and the mix between fixed-price and time-and-material contracts.
Gross profit for the three months ended September 30, 1998 increased to
$6.4 million and for the six months ended September 30, 1998 increased to $12.2
million from $4.2 million and $9.0 million in the corresponding periods in 1997
mainly due to improved margins on fixed-price contracts and a favorable mix of
services and materials on the Company's time and materials contracts. While the
downturn in oil and natural gas prices has not yet affected the Company's
financial results, reductions in capital budgets announced by the major oil
companies could result in fewer projects. As competition for those projects
increases, the Company's margins could be affected.
Selling, general and administrative expense increased to 2.4 million in
the three months ended September 30, 1998 from $1.7 million in the same period
in 1997, and was $4.8 million in the six months ended September 30, 1998
compared to $3.3 million in the same period in 1997. This increase is due to
increases in regulatory, reporting and other costs associated with being a
corporation with publicly traded securities, the additional general and
administrative costs associated with the acquired Lake Charles facility and
London operations, and costs associated with the Company's safety program.
Other income (expense) includes interest income and expense, which
fluctuate with the weighted average amount of funds invested or borrowed over
the period. Other expense also includes approximately $275,000 in costs
associated with the acquisition of Allen Tank, Inc. on July 24, 1998, which was
accounted for as a pooling of interests.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has funded its business activities through
funds generated from its operations and borrowings under its credit facility.
Net cash provided by operations was $6.5 million for the six months ended
September 30, 1998. During the same period the Company had capital expenditures
of $1.3 million, including improvements to facilities and equipment which will
increase the productivity of the labor force, add a product line of rolled goods
and increase the load out capacity of the fabrication facility located at the
Port of Iberia.
On July 27, 1998, the Company amended and restated its unsecured credit
facility (the "Second Restated Credit Facility") with a commercial lender, which
provides for up to $10.0 million in borrowings for general corporate purposes
and for letters of credit up to $10.0 million under a revolving credit facility.
Borrowings under the revolving credit facility bear interest at the prime
lending rate established by Chase Manhattan Bank, N.A. or LIBOR plus 2.0%, at
the Company's option. The fee for issued letters of credit is 7/8 of 1% per
annum on the principal amount of the letter of credit. The unused commitment fee
is 3/8 of 1% per annum. The revolving credit facility matures August 31, 2000.
At September 30, 1998, the Company had letters of credit of $9.9 million in the
aggregate and borrowings outstanding of $360,000 under the revolving credit
facility. The Second Restated Credit Facility also provides for replacement of
several letters of credit under a non-revolving credit facility. At September
30, 1998, the Company had outstanding letters of credit in the amount of
$168,000 under this non-revolving credit facility. The non-revolving letter of
credit facility is reduced upon the expiration of each letter of credit, the
last of which is scheduled to expire in January 2000.
The Second Restated Credit Facility provides for a $7,000,000 term loan
facility with quarterly principle payments of $350,000 plus interest commencing
September 30, 1998. Amounts outstanding under the term loan facility bear
interest under the same terms described above for borrowings under the revolving
credit facility.
The Company has a (pound)500,000 revolving credit facility and a
(pound)1,000,000 non-revolving term credit facility with a commercial lender in
London, England. These facilities bear interest at 1.0% over the lender's base
rate (8.5% at September 30, 1998), and are secured by a letter of credit issued
under the
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Company's Second Restated Credit Facility described above. The non-revolving
term credit facility calls for quarterly payments of (pound)50,000. Amounts
outstanding under the revolving and non-revolving credit facilities were
(pound)472,950 and (pound)850,000, respectively, at September 30, 1998.
On July 24, 1998, the Company completed the acquisition of Allen Tank,
Inc. for 819,000 shares of UNIFAB common stock, $400,000 in cash and notes of
$800,000. The Company used available funds in the acquisition.
Management believes that its available funds, cash generated by
operating activities and funds available under its revolving credit facility
will be sufficient to fund any capital expenditures and working capital needs.
The Company may expand its operations through acquisitions in the future, which
may require additional equity or debt financing.
IMPACT OF THE YEAR 2000
The Company has assessed and continues to assess the impact of the year 2000
on its reporting systems and operations. The year 2000 issue is the result of
computer programs being written using two digits rather than four to define the
applicable year. Any of the Company's computer programs that have date sensitive
software may recognize a date using "00" as the year 1900 rather than 2000. This
could potentially result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in other similar normal
business operations. Although the Company is still assessing the impact of the
year 2000 issue on its information technology systems, at this time the Company
believes the impact will not be material to the Company's financial position or
results of operations.
The Company has not yet communicated with all of its significant customers,
suppliers and vendors to ensure that they have appropriate plans to address year
2000 issues where they may otherwise impact the operations of the Company.
However, the Company does not have any significant customers, suppliers or
vendors that directly interface with the Company's information technology
systems. There is no guarantee that the systems of other companies on which the
Company relies will be converted timely and will not have an adverse effect on
the Company.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Certain statements included in this report and in oral statements made from time
to time by management of the Company that are not statements of historical fact
are forward-looking statements. In this report, forward-looking statements are
included primarily in the section entitled "Management's Discussion and Analysis
of Financial Condition and Results of Operation." The words "expect," "believe,"
"anticipate," "project," "plan," "estimate," "predict," and similar expressions
often identify forward-looking statements. All such statements are subject to
factors that could cause actual results and outcomes to differ materially from
the results and outcomes predicted in the statements and investors are cautioned
not to place undue reliance upon them.
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PART II
ITEM 5. OTHER INFORMATION
On November 12, 1998 The Company announced its second quarter fiscal 1999
earnings and related matters. The press release making this announcement is
attached hereto as Exhibit 99.1.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
-------- -----------
10.1 Second Amended and Restated Credit
Agreement between the Company and Hibernia
National Bank Dated July 27, 1998.
27.1 Financial Data Schedule
99.1 Press release issued by the Company on
November 12, 1998 announcing its earnings
and related matters for the second quarter
fiscal year ending March 31, 1999.
(b) Reports on Form 8-K
The Company filed a current report on Form 8-K under Items 2. and
7. dated July 24, 1998. Pursuant to Item 7., the Company included
pro forma statements of income for the year ended March 31, 1998
and for the three months ended June 30, 1998 and a pro forma
balance sheet as of June 30, 1998.
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIFAB International, Inc.
---------------------------------------
Date November 13, 1998 /s/ Peter J. Roman
----------------------- ----------------------------------------
Peter J. Roman
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- - ------- -----------
<S> <C>
10.1 Second Amended and Restated Credit Agreement between the
Company and Hibernia National Bank Dated July 27, 1998.
27.1 Financial Data Schedule
99.1 Press release issued by the Company on November 12, 1998
announcing its earnings and related matters for the
second quarter fiscal year ending March 31, 1999.
</TABLE>
<PAGE> 1
EXHIBIT 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
BETWEEN
UNIFAB INTERNATIONAL, INC.
UNIVERSAL FABRICATORS L.L.C.
PIM, L.L.C.
ALLEN TANK, L.L.C.
AND
LATOKA USA, INC.
AS "BORROWERS"
AND
HIBERNIA NATIONAL BANK,
AS "BANK"
DATED JULY 27, 1998
<PAGE> 2
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Terms Defined Above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.1 Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.2 Revolving Credit Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Revolving Credit Facility Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Borrowing Procedure Under the Revolving Credit Facility. . . . . . . . . . . . . . . . . . . 9
(c) Terms and Conditions Governing Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . 9
(d) Note Evidencing Revolving Credit Borrowings. . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Revolving Credit Facility Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3 Non-Revolving LC Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Non-Revolving LC Facility Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Non-Revolving LC Facility Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.4 Term Loan Facility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Term Loan Facility Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Term Loan Facility Principal Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Term Loan Facility Termination Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(d) Use of Proceeds of Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5 Interest and Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(a) Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(b) Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Undisbursed Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Default Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Method of Calculating Interest and Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Interest Rate Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(g) Inability to determine LIBO Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(h) LIBO Rate indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.6 Payments, Prepayments, and Reduction or Termination of the Revolving Credit Facility. . . . . 13
(a) Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Payments Without Deduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Reduction of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.7 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.8 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.1 Conditions to Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Completion of Initial Public Offering of UNIFAB International. . . . . . . . . . . . . . . . 14
(b) Loan Documentation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Resolutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(e) Governmental Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Financial Statement Certification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Certification of Chief Financial Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(h) Certificate of Chief Executive Officer. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Certificate of Incumbency and Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(j) Attorney Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(k) Payment of Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(l) Pledge of Latoka Ltd. Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(m) Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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Section 3.2 Conditions to Each Advance and/or Letter of Credit. . . . . . . . . . . . . . . . . . . . . . 15
(a) Continuation of Representations and Warranties. . . . . . . . . . . . . . . . . . . . . . . . 15
(b) No Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Maximum Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BORROWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.1 Corporate Existence; Compliance With Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Executive Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.4 Corporate Power; Authorization; Enforceable Obligations. . . . . . . . . . . . . . . . . . . 16
Section 4.5 Financials and Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Borrowers' Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.7 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.8 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.9 Use of Proceeds; Margin Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.10 Compliance with ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.11 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.12 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.13 Operation of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.14 Rights in Properties; Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.15 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.16 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.17 Registered Office; Principal Place of Business; . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.18 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.19 Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.20 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Employment Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.21 Corporate Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.22 Taxpayer I.D. Numbers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.23 Continuing Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE V
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.1 Financial Statements and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Maintenance of, Existence and Conduct of Business. . . . . . . . . . . . . . . . . . . . . . 19
Section 5.3 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.4 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.5 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.6 Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.8 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.9 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.10 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.11 Supplemental Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.12 Employee Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.13 SEC Filings; Certain Other Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.14 Compliance with Leases; Additional Mortgages. . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.15 Borrowers Funding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.16 Deposit Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.1 Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.2 Investments; Loans and Advances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.3 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.4 Employee Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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Section 6.5 Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.6 Maintenance of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.7 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.8 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.9 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.10 Sales of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.11 Cancellation of Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.12 Hedging Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.13 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.14 Ownership of Borrowers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.1 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.2 Other Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.3 Other Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.4 Insolvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.5 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.6 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 7.7 Representation or Warranty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.1 Bank's Reliance, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.2 Financial Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.3 Delay. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.8 LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.9 Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.10 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.11 Execution in Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.12 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.13 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Exhibit "A" Form of Application for Letter of Credit
Exhibit "B" Form of Revolving Credit Promissory Note
Exhibit "C" Form of Term Note
SCHEDULES:
Schedule 2.2(a) List of Whitney Letters of Credit
Schedule 4.2 List of Borrowers' Executive Offices and Place of Business and Locations
Schedule 4.6 Litigation
Schedule 4.17 Business Locations
Schedule 5.8 List of Insurance Coverage
Schedule 6.3 List of Exiting Indebtedness
Schedule 6.9 List of Exiting Liens
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT ("SECOND RESTATED
AGREEMENT"), is dated effective as of July 27, 1998, between UNIFAB
INTERNATIONAL, INC., a Louisiana corporation ("UNIFAB INTERNATIONAL"),
UNIVERSAL FABRICATORS L.L.C., a Louisiana limited liability company ("UNIFAB"),
PIM, L.L.C., a Louisiana limited liability company ("PIM"), ALLEN TANK, L.L.C.,
a Louisiana limited liability company ("ALLEN TANK") and LATOKA USA, INC., a
corporation organized under the laws of the State of Louisiana ("LATOKA USA")
(collectively "BORROWERS"), and HIBERNIA NATIONAL BANK, a national banking
association ("BANK").
W I T N E S E T H:
WHEREAS, Pursuant to a Credit Agreement dated September 22, 1997 by
and between UNIVERSAL FABRICATORS INCORPORATED, a Delaware corporation, UNIFAB
International, as a guarantor, and Bank ("Agreement"), Bank extended credit to
UNIVERSAL FABRICATORS INCORPORATED as Borrower in the form of a revolving
credit facility in the maximum principal amount of Twenty Million and no/100
($20,000,000.00) Dollars to provide for (i) TEN MILLION AND NO/100
($10,000,000.00) DOLLARS for general corporate purposes, and (ii) Ten Million
and no/100 ($10,000,000.00) Dollars for the issuance of certain standby letters
of credit, including performance and retainage letters of credit ("Revolving
Credit Facility"), and
WHEREAS, Bank issued certain performance and retainage letters of
credit for the benefit of Universal Fabricators Incorporated in the form of a
non-revolving letter of credit facility, not to exceed the aggregate principal
amount of SEVEN MILLION TWENTY FOUR THOUSAND FOUR HUNDRED TWENTY EIGHT AND
50/100 ($7,024,428.50) DOLLARS ("Non-Revolving LC Facility"), and
WHEREAS, UNIFAB International formed UNIFAB. UNIVERSAL FABRICATORS
INCORPORATED, as a wholly owned subsidiary of UNIFAB International, was
thereafter merged into UNIFAB with UNIVERSAL FABRICATORS INCORPORATED
transferring its assets to UNIFAB, and
WHEREAS, UNIFAB International acquired PIM as a wholly owned
subsidiary and in connection therewith restructured the Agreement to add PIM as
a borrower, convert UNIFAB International from a guarantor to a borrower, and
substituted UNIFAB as a borrower in lieu of UNIVERSAL FABRICATORS INCORPORATED.
WHEREAS, UNIFAB International acquired ALLEN TANK and LATOKA USA as
wholly owned subsidiaries and in connection therewith desires to restructure
the Agreement to (i) add ALLEN TANK and LATOKA USA as borrowers, and (ii)
provide a term loan facility in the amount of SEVEN MILLION AND NO/ONE-HUNDRED
($7,000,000.00) DOLLARS ("Term Loan Facility").
WHEREAS, Borrowers and Bank desire to amend and supplement the
Agreement in order to revise various Letter of Credit terms and conditions,
include the Term Loan Facility, obtain a security interest in the stock of
LATOKA USA, which is wholly owned by UNIFAB International, and to reflect the
changes in the identity of Borrowers.
WHEREAS, this Second Restated Agreement is intended to confirm and
evidence (i) the amendment and restatement and continuation (but not payment)
of the existing obligations of the Borrowers under the Loan Documents.
NOW THEREFORE, for and in consideration of the premises and the mutual
undertakings herein expressed, and upon the mutual promises and benefits
received or to be received by each of them, Borrowers and Bank do consent and
agree that the respective obligations of Bank and Borrowers pursuant to this
Second Restated Agreement and any commitments previously issued are set forth
herein in their entirety and any obligations by Bank to extend funds to
Borrowers are set forth in their entirety herein, and Borrowers and Bank hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 TERMS DEFINED ABOVE. As used in this Second Restated
Agreement, the terms "Second Restated Agreement", "Agreement", "Borrowers",
"Bank", "Revolving Credit Facility", "Non-Revolving LC Facility" and "Term Loan
Facility" shall have the meanings indicated above.
SECTION 1.2 DEFINED TERMS. As used in this Second Restated
Agreement, the following terms shall have the following meanings, unless the
context otherwise requires:
1
<PAGE> 6
"ACQUISITION" means any transaction or series of transactions by which
a Person acquires, either directly or through an Affiliate, subsidiary or
otherwise, (a) any or all of the stock or other securities of any class, or
ownership interest, of any other Person other than Affiliates of Borrowers or
(b) a substantial portion of the assets, or a division or line of business of
any other Person other than Affiliates of Borrowers.
"ADVANCE(S)" shall mean any disbursement to Borrowers of the loan
proceeds under the Notes, any disbursement by Bank to any beneficiary under any
Letter of Credit, as a result of any draw by such beneficiary under such Letter
of Credit, and all or any portion of such disbursement so long as same remains
outstanding and unpaid.
"AFFILIATE" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with such Person; (b) that directly
or indirectly beneficially owns or holds twenty percent (20%) or more of any
class of voting stock of or of partnership interests of such person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause direction of the management and policies of a Person, whether through
the ownership of voting securities, of partnership interests, by contract, or
otherwise.
"AVAILABLE COMMITMENT" shall mean, at any particular time, an amount
equal to the excess, if any, of (a) the amount of the Commitment over (b) the
sum of (i) the aggregate unpaid principal amount at such time of the Advances
plus (ii) the aggregate undrawn, available amount at such time of all Letters
of Credit then outstanding, plus (iii) the then aggregate amount of all unpaid
outstanding obligations of Borrowers to reimburse Bank with respect to any
drawing under a Letter of Credit.
"AVAILABLE NON-REVOLVING LC FUNDS" means, at any particular time, the
remaining undrawn aggregate principal amount available for draw or draft by
beneficiaries on all Letters of Credit issued by Bank.
"BORROWING DATE" means any Business Day specified in a notice pursuant
to Section 2.2(b) as a date on which Borrowers request Bank to make Advances
hereunder.
"BUSINESS DAY" means any day other than a Saturday or Sunday or other
day when national banks located in the City of New Orleans are required or
permitted to be closed.
"CAPITALIZED LEASES" means capital leases and subleases, as defined in
the Financial Accounting Standards Board Statement of Financial Accounting
Standard No. 13, dated November 1976, as amended.
"CAPITAL EXPENDITURES" has the definition attributed to it under GAAP.
"CAPITAL STOCK" shall mean any and all shares of capital stock of a
corporation and any and all equivalent ownership interests in a Person (other
than a corporation).
"CASH EQUIVALENTS" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States Government or any agency or
instrumentality thereof having maturities of not more than one year from the
date of acquisition, (ii) time deposits and certificates of deposits, having
maturities of not more than one years from the date of acquisition, of Bank or
any other domestic commercial bank which has, or the holding company of which
has, a commercial paper rating meeting the requirements specified in clause
(iv) below, (iii) repurchase obligations with a term of not more than 270 days
for underlying securities of the types described in clauses (i) and (ii)
entered into with any bank meeting the qualifications specified in clause (ii)
above, (iv) commercial paper rated at least A-1 or the equivalent thereof by
Standard Poor's Corporation or P-1 or the equivalent thereof by Moody's
Investors Service, Inc. and in either case maturing within one year after the
date of acquisition and (v) investments in money market funds registered under
the Investment Company Act of 1940, as amended, which have net assets of at
least $200,000,000 and at least eighty-five percent (85%) of whose assets
consist of securities and other obligations of the type described in clauses
(i) through (iv) above.
"CHARGES" shall mean all Federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC)
taxes at the time due and payable or levies, assessments, charges, liens,
claims or encumbrances upon or relating to (i) the Loan Documents, (ii) the
Obligations, (iii) Borrowers' employees, payroll, income or gross receipts,
(iv) Borrowers' ownership or use of any of their assets, or (v) any other
aspect of Borrowers' business.
"CLOSING DATE" means the date as of which this Second Restated
Agreement is executed by the parties hereto.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
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<PAGE> 7
"CODE AFFILIATE" means each trade or business (whether or not
incorporated) which together with any Borrower is treated as a "single
employer" under subsection (b), (c), (m) or (o) of Section 414 of the Code.
"COMMITMENT" means, for the period from the Effective Date hereof to
and including the Termination Date, Bank's commitment to extend Loans to
Borrowers pursuant to the terms of this Second Restated Agreement.
"DEBT" means: (a) all obligations of Borrowers for borrowed money,
(b) all obligations of Borrowers evidenced by bonds, notes, debentures or other
similar instruments, (c) all obligations of Borrowers to pay the deferred
purchase price of property or services, except trade accounts payable by
Borrowers arising in the ordinary course of business which are not past due by
more than sixty (60) days unless such trade accounts payable are being
contested in good faith by appropriate proceedings, (d) all obligations of
Borrowers under any Capitalized Leases, (e) all obligations of Borrowers under
guaranties, endorsements (other than for collection or deposit in the ordinary
course of business), assumptions or other contingent obligations, in respect
of, or to purchase or otherwise acquire, any obligation or indebtedness of
Borrowers or any other obligations, contingent or otherwise, (f) all
obligations secured by a Lien (except trade accounts payable by Borrowers
arising in the ordinary course of business which are not past due by more than
sixty (60) days unless such trade accounts payable are being contested in good
faith by appropriate proceedings secured by a vendor's lien) existing on
property owned by Borrowers whether or not the obligations secured thereby have
been assumed by Borrowers or are non-recourse to the credit of Borrowers, (g)
all reimbursement obligations of Borrowers relating to letters of credit,
bankers' acceptances and similar instruments but excluding performance bonds,
and (h) all liabilities of Borrowers in respect of unfunded vested benefits
under any Plan; provided, however, the term "Debt" shall not include money
borrowed by Borrowers to pay premiums on insurance policies obtained by
Borrowers in the ordinary course of Borrowers' business.
"DEFAULT" means any of the events specified in Article VII of this
Second Restated Agreement, provided that any requirement for the giving of
notice, the lapse of time, or both, or any other condition, has been satisfied.
"DEFAULT RATE" means the per annum rate of interest equal to three
percent (3%) in excess of the LIBO Rate or the Prime Rate in effect on the date
an Event of Default occurs.
"EBIT" means, with respect to any Person for any period, consolidated
net income of such Person for such period, plus (i) Interest Expense for such
Person for such period, and (ii) tax expense for such period for taxes which
have been provided for by such Person for such period, to the extent that any
of the same are deducted from net revenues in determining such Person's
consolidated net income for such period.
"EFFECTIVE DATE" shall mean (i) with respect to UNIFAB International
and UNIFAB, September 24, 1997, the day of the completion of the Initial Public
Offering ("IPO") of UNIFAB International, at which time a minimum net proceeds
to UNIFAB International of $12,000,000.00 was contributed to Universal
Fabricators Incorporated, (ii) with respect to PIM, April 1, 1998, and (iii)
with respect to Allen Tank and Latoka USA, July ___, 1998.
"ENVIRONMENTAL LAWS" means any and all federal, state and local laws,
regulations, ordinances, orders and requirements pertaining to health, safety
or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42
U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq.,
the Clean Water ct. 33 U.S.C. Section 1251 et seq., the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq., the Louisiana Environmental
Quality Act, La. R.S. 30:2001, et seq., and all similar laws, regulations and
requirements of any governmental authority or agency having jurisdiction over
Borrowers, or any of the property or assets of Borrowers, as such laws,
regulations and requirements may be amended or supplemented from time to time.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings, and
interpretations adopted by the Internal Revenue Service or the Department of
Labor thereunder.
"ERISA AFFILIATE" means each trade or business (whether or not
incorporated) which together with any Borrower would be deemed to be a "single
employer" within the meaning of Section 4001 of ERISA.
"EVENT OF DEFAULT" means the occurrence of any event described in
Article VII hereof or the occurrence of any other event which with the lapse of
time, or lapse of time and notice to Borrowers would constitute an Event of
Default.
"FUNDED INDEBTEDNESS" means principal plus accrued but unpaid interest
for borrowed money.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances
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<PAGE> 8
as of the date in question. Accounting principles are applied on a "consistent
basis" when the accounting principles observed in a current period are
comparable in all material respects to those accounting principles applied in a
preceding period.
"GOVERNMENTAL AUTHORITY" means any state, nation or government or any
political subdivision thereof or any agency, department or branch thereof.
"HAZARDOUS SUBSTANCE" has the meaning specified in any applicable
Environmental Law and means any substance, product, waste, pollutant, material,
chemical, contaminant, constituent or other material which is or becomes
listed, regulated or addressed under any Environmental Law, including, without
limitation, asbestos, petroleum and polychlorinated biphenyls.
"INDEBTEDNESS" shall mean as to Borrowers all liabilities, obligations
and indebtedness of any and every kind and nature, including, without
limitation, all liabilities and all obligations to trade creditors, whether now
or hereafter owing, arising, due or payable, and howsoever evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise excluding any minority interest in Borrowers and deferred
taxes of Borrowers. Without in any way limiting the generality of the
foregoing, Indebtedness shall specifically include the following without
duplication:
(a) amounts outstanding under this Second Restated
Agreement, including, without limitation, amounts outstanding under
the Note, any Letter of Credit Agreement, and/or the Non-Revolving LC
Facility;
(b) all obligations or liabilities of any Person that are
secured by any Lien upon property owned by Borrowers or any of their
Subsidiaries, even though Borrowers shall not have assumed or become
liable for the payment thereof;
(c) all obligations or liabilities created or arising under
any lease or conditional sale or other title retention agreement with
respect to property used or acquired by Borrowers, even though the
rights and remedies of the lessor, seller or Bank thereunder are
limited to repossession of such property;
(d) all Charges.
"INITIAL CLOSING DATE" means September 24, 1998.
"INTEREST COVERAGE" means the ratio of EBIT to Interest Expense.
"INTEREST EXPENSE" means with respect to any Person for any period,
interest expense for such Person for such period, determined in accordance with
GAAP.
"INTEREST PERIOD" means with respect to any LIBO Rate Advance:
(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such LIBO
Rate Advance and ending one, two, or three months thereafter,
as selected by Borrowers in its notice to Bank of borrowing or
notice of conversion, as the case may be, given with respect
thereto; and
(ii) thereafter, each period commencing on the day immediately
following the last day of the preceding interest Period
applicable to such LIBO Rate Advance and ending one, two or
three months thereafter, as selected by Borrowers by notice to
Bank not less than two (2) Business Days prior to the last day
of the then current Interest Period with respect thereto; and
provided, that:
(x) if any Interest Period would otherwise end on a day
which is not a Business Day, that Interest Period shall
be extended to the next succeeding 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 Business Day;
(y) any Interest Period which, with respect to a LIBO Rate
Advance under the Revolving Credit Facility, would
otherwise extend beyond the Termination Date shall end
on the Termination Date; and
(z) any Interest Period that begins on the last Business
Day of a calendar month (or on 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 Business Day of a calendar month.
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<PAGE> 9
"LETTERS OF CREDIT" shall mean the irrevocable stand-by letters of
credit, including performance and retainage letters of credit issued by Bank
under either the Revolving Credit Facility or the Non-Revolving LC Facility, to
support payment and performance obligations of Borrowers incurred by Borrowers
in the ordinary course of business, each in such form as may be approved by
Bank.
"LIBOR" means with respect to each Interest Period pertaining to a LIBO
Rate Advance, the rate per annum at which Dollar deposits are offered to prime
banks in the London interbank market on telerate, at approximately 11:00 a.m.,
London time, two (2) Business Days before the first day of such Interest
Period, in an amount comparable to the principal amount of the Advance which
shall be made by Bank during such Interest Period, for a period equal to such
Interest Period.
"LIBOR RATE" means with respect to each day during an Interest Period
for a Libor Rate Advance, an interest rate per annum equal to the sum of (a)
two percent (2%) plus (b) LIBOR.
"LIBOR RATE ADVANCE" means an Advance which bears interest at the
Libor Rate.
"LIEN" means any lien, judgment, mortgage, deed of trust, security
interest, tax lien, financing statement, pledge, charge, hypothecation,
assignment, preference, priority or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of law or
otherwise; provided, however, that the term "Lien" shall exclude any statutory
mechanic's or laborer's lien arising in the ordinary course of the business of
Borrowers and its Subsidiaries which is cancelled or bonded within sixty (60)
days of its recordation.
"LOANS" mean collectively the Revolving Credit Facility, the
Non-Revolving LC Facility and the Term Loan Facility.
"LOAN DOCUMENTS" means, collectively, the Agreement, the First
Restated Agreement, the Second Restated Agreement, the Note, the Term Note and
any and all other documents, instruments and agreements executed in connection
with the Advances, and the Non-Revolving LC Facility as the foregoing may be
modified, supplemented and/or amended from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, operations, property or financial or other condition of Borrowers, or
on the ability of Borrowers to perform their obligations under the Loan
Documents.
"MAXIMUM NON-REVOLVING LC FACILITY LOAN AMOUNT" shall mean an amount
equal to $7,024,428.50 as reduced in accordance with Section 2.3(a). As of the
Effective Date of the Second Amended and Restated Credit Agreement the Maximum
Non-Revolving LC Facility Loan Amount is equal to $2,187,547.60.
"MAXIMUM REVOLVING CREDIT FACILITY LOAN AMOUNT" shall mean, at any
particular time, an amount equal to $20,000,000.00.
"NET WORTH" means the sum of the common stock, additional paid-in
capital and retained earnings accounts of Borrowers as shown, in conformity
with GAAP, on its balance sheet at the time of such determination, less the
amount of any treasury stock shown thereon, less any dividends paid, and less
the amount of any intangible assets (such as patents, trademarks, copyrights or
goodwill) shown thereon.
"NON-REVOLVING LC FACILITY TERMINATION DATE" shall be January 3, 2000.
"NOTE(S)" shall mean collectively, the Revolving Credit Note and the
Term Note.
"OBLIGATIONS" means all obligations, indebtedness and liabilities of
Borrowers to Bank, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint,
several, or joint and several, including, without limitation, the obligations,
indebtedness, and liabilities of Borrowers under this Second Restated
Agreement, the First Restated Agreement, the Agreement, the Note and the other
Loan Documents, and all interest accruing thereon and all attorneys' fees and
other expenses incurred in the enforcement or collection thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"PERMITTED INVESTMENT" means:
(a) Acquisitions;
(b) Capital Expenditures;
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<PAGE> 10
(c) the acquisition of current assets or liabilities arising from
the sale or lease of goods, the rendition of services or the extension
of credit in the ordinary course of business of the Borrowers
including, without limitation, investments in accounts, contract
rights, chattel paper (as defined in the UCC) and notes receivable;
(d) Cash Equivalent Investments;
(e) advances to officers, shareholders, and employees of
Borrowers; provided that such advances shall not exceed the aggregate
amount of $100,000 at any one time outstanding for all such officers,
shareholders and employees;
(f) Investments, loans, or advances by each Borrower to another
Borrower,
(g) joint ventures; and
(h) other investments, loans or advances permitted by the Loan
Documents.
"PERMITTED LIENS" shall mean (a) Liens for taxes, assessments or
governmental charges or levies of the same shall not at the time be delinquent
or thereafter can be paid without penalty, or are being contested in good faith
and by appropriate proceedings; (b) Liens imposed by law, such as carriers',
warehousemen's and mechanics' liens and other similar liens arising in the
ordinary course of business which secure payment of obligations not more than
sixty (60) days past due; (c) Liens arising out of pledges or deposits under
workmen's compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation; (d) utility
easements, building restrictions and such other encumbrances or charges against
real property as are of a nature generally existing with respect to properties
of a similar character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the business of
Borrowers; (e) lessors' interests under financing leases; (f) Liens on assets
of Borrowers not covered by the Loan Documents which liens secure obligations
of Borrowers in the ordinary course of business which in the aggregate for all
such obligations of Borrowers do not exceed $250,000; and (g) the Liens created
pursuant to the Loan Documents or other Liens in favor of Bank.
"PERSON" means an individual, partnership, limited liability company,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"PLAN" shall mean an employee pension benefit plan as defined in
Section 3(2) and 3(37) of ERISA, maintained by Borrowers maintained by, or to
which contributions are made by, Borrowers, or for Borrowers' employees.
"PRIME RATE" means that rate of interest announced publicly by Chase
Manhattan Bank, N.A., in New York, New York from time to time as its prime or
base rate. Each change in the interest rate shall take effect on the effective
date of the change in the Prime Rate.
"PRIME RATE ADVANCES" shall mean an Advance which has interest at Prime
Rate.
"RESTRICTED PAYMENT" shall mean any payment on account of the
purchase, redemption or other retirement of a Borrower's Stock.
"REVOLVING CREDIT ADVANCE" shall have the meaning ascribed to it in
Section 2.2(a).
"REVOLVING CREDIT FACILITY TERMINATION DATE" shall be August 31, 2000.
"REVOLVING CREDIT NOTE" shall mean the amended and restated note dated
of even date hereof in the maximum amount of $20,000,000.00 with a maturity
date of August 31, 2000.
"SOLID WASTE" has the meaning specified in any applicable
Environmental Law.
"SUBSIDIARY" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"TANGIBLE NET WORTH" means, at a particular time, the amount, if any,
by which (a) the sum of all amounts which would be included under shareholders'
or members' equity on a consolidated basis of any Person, determined in
accordance with GAAP as of such date, less receivables of loans made to
Affiliates, exceeds (b) intangibles.
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<PAGE> 11
"TERMINATION DATE" means (i) with respect to the Revolving Credit
Facility - August 31, 2000, (ii) with respect to the Non-Revolving LC Facility
- - - November 20, 1998, (iii) with respect to the Term Loan Facility - August 31,
2000.
"TERM LOAN" shall mean the loan to Borrowers in the amount of
$7,000,000.00, with a maturity of August 31, 2000.
"TERM NOTE" shall be the note given by Borrowers in favor of Bank, in
the amount of $7,000,000.00, dated of even date hereof, with a maturity of
August 31, 2000.
"TOTAL DEBT" means the sum of Funded Indebtedness of Borrowers plus all
obligations of Borrowers under any Capital Leases.
"UNUSED COMMITMENT" shall be have the meaning ascribed to it in
Section 2.2(a).
"UNUSED COMMITMENT FEE" shall be 3/8% of one (1%) percent per annum of
the Unused Commitment.
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<PAGE> 12
SECTION 1.3 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Second Restated Agreement shall have
the defined meanings set forth in Section 1.2 hereof or the preamble of this
Second Restated Agreement when used in any certificate or other documents made
or delivered pursuant hereto, unless otherwise specified therein.
(b) As used herein and in any certificate or other documents made
or delivered pursuant hereto, accounting terms not defined in Section 1.1 and
accounting terms partly defined in Section 1.2 relating to Borrowers or their
Subsidiaries, to the extent not defined, shall have the respective meanings
given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Second Restated Agreement shall refer to this
Second Restated Agreement as a whole and not to any particular provision of
this Second Restated Agreement, and "section," "Section," "Exhibit" and
"Schedule" references are to this Second Restated Agreement and the Sections,
Exhibits and Schedules to this Agreement unless otherwise specified.
(d) The terms "Accounts," "Chattel Paper," "Contract Rights,"
"Deposit Accounts," "Documents," "General Intangibles," "Instruments,"
"Inventory," "Equipment," and "Fixtures" shall have the meanings as defined in
Article 9 of the Louisiana Commercial Laws (La. R.S. 10:9-101, et seq.).
ARTICLE II
AMOUNT AND TERMS OF CREDIT
SECTION 2.1 LOANS. Subject to the terms and conditions of this
Second Restated Agreement, and relying on the representations and warranties
contained in this Second Restated Agreement, and provided no Event of Default
exists, Bank agrees to make, and Borrowers agree to accept the Revolving Credit
Facility, the Non-Revolving LC Facility, and the Term Loan Facility
(collectively the "Loans"), in the aggregate principal amount at any one time
outstanding not to exceed Twenty Million and no/100 ($20,000,000.00) with
respect to the Revolving Credit Facility, Two Million One Hundred Eighty Seven
Thousand Five Hundred Forty Seven and 60/100 ($2,187,547.60) Dollars with
respect to the Non-Revolving LC Facility, and Seven Million and NO/100
($7,000,000.00) Dollars with respect to the Term Loan Facility. Prior to the
Termination Date, Borrowers may utilize the Revolving Credit Facility by
borrowing, repaying or prepaying, and re- borrowing such Revolving Credit
Facility in whole or in part, all in accordance with the terms and conditions
hereof.
SECTION 2.2 REVOLVING CREDIT FACILITY.
(a) REVOLVING CREDIT FACILITY TERMS. Upon and subject to the
terms and conditions hereof, Bank agrees to make available, at any time from
time to time, on any Business Day until the Revolving Credit Facility
Termination Date, and upon the request of Borrowers therefor, advances (each, a
"Revolving Credit Advance"), and Letters of Credit in an aggregate principal
amount which shall not at any given time exceed the Maximum Revolving Credit
Facility Loan Amount. Borrowers may (i) borrow, repay and reborrow under the
Revolving Credit Facility, a principal amount not to exceed TEN MILLION AND
NO/100 ($10,000,000.00) DOLLARS for general corporate purposes, and (ii)
request the issuance of up to Ten Million and No/100 ($10,000,000.00) Dollars
of Letters of Credit, for (x) performance and retainage letters of credit, (y)
Letters of Credit to the Whitney National Bank ("Whitney") to cover the
outstanding Letters of Credit issued by Whitney for the account of Allen Tank
and Latoka Ltd., listed on Schedule 2.2(a), ("Whitney L/C(s)") during the
duration of the term of the Whitney L/C(s), and (z) the issuance of a maximum
of THREE MILLION AND NO/100 ($3,000,000.00) DOLLARS of financial Letters of
Credit in favor of Midland Bank Plc ("Midland") as security for Midland's line
of credit to Latoka Ltd. Notwithstanding the aforesaid, during the period
commencing July 27, 1998 thru July 31, 1998, the maximum Letters of Credit
which may be issued may not exceed $12,200,000.00, after which date the maximum
limit will be $10,000,000.00. Borrowers may only use a maximum of $5,000,000
of the Available Commitment under the Revolving Credit Facility for
Acquisitions and Capital Expenditures. Each Revolving Credit Advance may be
drawn upon by Borrowers on any Business Day during the period from the
Effective Date until August 31, 2000, or such earlier date as may be fixed by
Borrowers. The amount of the Revolving Credit Facility available to Borrowers
from time to time under the Revolving Credit Facility shall be reduced by the
aggregate of the face amount of any outstanding undrawn Letters of Credit
issued under the Revolving Credit Facility and by all unpaid Advances made by
Bank to Borrowers pursuant to this Second Restated Agreement and the remaining
amount of the Revolving Credit Facility shall constitute the "Unused
Commitment." Any draws made under the Letters of Credit by the beneficiaries
thereof shall constitute Advances as defined in this Second Restated Agreement.
The Unused Commitment available under the Revolving Credit Facility shall be
restored but simultaneously reduced by the amount of any Advances which are
made to Borrowers to reimburse Bank for draws under the Letters of Credit.
(b) BORROWING PROCEDURE UNDER THE REVOLVING CREDIT FACILITY.
Borrowers shall give at least two (2) Business Day's prior telephonic notice
(to be confirmed in writing) of each proposed Letter of Credit and of each
Advance to be issued under the Revolving Credit Facility. If all conditions
precedent to the issuance of any such Letter
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<PAGE> 13
of Credit or any such Advance have been met, Bank will on the date requested
("Borrowing Date") make each Letter of Credit or Advance available to Borrowers
at Bank's office at 313 Carondelet Street, New Orleans, Louisiana 70130.
(c) TERMS AND CONDITIONS GOVERNING LETTERS OF CREDIT. The terms
and conditions governing the issuance of Letters of Credit by Bank on behalf of
and for the account of Borrowers shall be provided for by Bank in its standard
form of Application for Stand-By Letter of Credit, a copy of which is attached
hereto as Exhibit "A", with appropriate insertions and such additional terms
and conditions governing the issuance of specific Letters of Credit as may be
agreed upon by Borrowers and Bank at the time of a Borrower's request to Bank
for the issuance thereof. Letters of Credit may be issued at any time prior to
the Revolving Credit Facility Termination Date. Each Letter of Credit shall
have a maturity date no later than August 31, 2001.
(d) NOTE EVIDENCING REVOLVING CREDIT BORROWINGS. The Revolving
Credit Facility shall be evidenced by a promissory note of Borrowers payable to
the order of Bank in the original principal amount of TWENTY MILLION AND NO/100
DOLLARS ($20,000,000.00) in the form set forth as Exhibit "B" to this Second
Restated Agreement (the note, together with any and all renewals,
modifications, extensions, amendments, supplements and/or substitutions
therefor being referred to as the "Revolving Credit Note"), with appropriate
insertions, shall be dated the date hereof and shall be payable in full on
August 31, 2000. All Revolving Credit Advances made by Bank to Borrowers and
all payments of principal shall be recorded by Bank on a schedule attached to
the Revolving Credit Note or computer records, and shall constitute prima facie
evidence of the accuracy of the information therein recorded. Bank's failure
to record or to record correctly such Revolving Credit Advances shall in no way
affect Borrowers' obligation to repay same.
(e) REVOLVING CREDIT FACILITY MATURITY DATE. The Revolving Credit
Facility Maturity Date shall be August 31, 2000 at which time the entire
principal balance and all accrued interest owed under the Revolving Credit
Facility shall be due and payable in full.
SECTION 2.3 NON-REVOLVING LC FACILITY.
(a) NON-REVOLVING LC FACILITY TERMS. At the Initial Closing, Bank
issued for the account of Universal y Fabricators Incorporated, performance and
retainage Letters of Credit to substitute and replace Letters of Credit which
were issued for the account of McDermott International, Inc. on behalf of
Universal Fabricators Incorporated (the "MII Letters of Credit"), not to exceed
the Maximum Non-Revolving LC Facility Loan Amount. The amount of the
Non-Revolving LC Facility is to be permanently reduced as follows:
(i) Letters of Credit maturing July 31, 1998 shall reduce the
Non-Revolving LC Facility by $1,655,383.60,
(ii) Letter of Credit maturing November 20, 1998 shall reduce the
Non-Revolving LC Facility by $532,164.00,
(b) NON-REVOLVING LC FACILITY MATURITY DATE. The Non-Revolving LC
Facility Maturity Date shall be January 3, 2000 at which time Borrowers shall
reimburse Bank for all principal amounts drawn under each outstanding Letter of
Credit, including interest thereon.
SECTION 2.4 TERM LOAN FACILITY.
(a) TERM LOAN FACILITY TERMS. Upon and subject to the terms and
conditions hereof, Bank agrees to make a Term Loan to the Borrowers on the
Closing Date, in the maximum principal amount equal to the sum of SEVEN MILLION
AND NO/100 ($7,000,000.00) DOLLARS ("Term Loan"). The Term Loan shall be
evidenced by the Term Note to be executed in favor of Bank and delivered by
Borrowers to Bank on the Closing Date, the form of which is attached hereto and
made a part hereof as Exhibit "C".
(b) TERM LOAN FACILITY PRINCIPAL REPAYMENT. Payments on account
of principal of the Term Note shall be quarterly installment payments based on
a five year level principal amortization commencing September 30, 1998 and one
final payment on the Termination Date consisting of the unpaid principal
balance due and all accrued interest. Borrowers' quarterly payment on account
of principal on the Term Loan shall be the sum of $350,000.00. Term Borrowers
may, by giving not less than two (2) prior Business Day's notice, prepay their
Term Loan in whole or in part at any time without penalty or premium, except as
contemplated by Section 2.5(h), if applicable. Any prepayments shall be in an
amount not less than $500,000.00 or any whole multiple of $100,000.00 in excess
thereof and shall be applied pro rata to the remaining scheduled installments
of principal. Accrued and unpaid interest on the amount prepaid shall be due
and payable on the date of prepayment.
(c) TERM LOAN FACILITY TERMINATION DATE. The Term Loan Facility
shall mature on the Termination Date at which time all the principal and
interest thereon shall be due and payable in full.
(d) USE OF PROCEEDS OF TERM LOAN. Borrowers shall use the
proceeds of the Term Loan to refinance the existing debt of Allen Tank.
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SECTION 2.5 INTEREST AND FEES.
(a) INTEREST. In the absence of an Event of Default, the unpaid
principal of the Loans shall bear interest on all funds advanced from the date
of disbursement by Bank to the date repaid by Borrowers, at a floating rate
equal to either the Prime Rate, adjusted daily, or the Libor Rate, or some
combination thereof, as specified in Section 2.5(f) below. Accrued interest
under Prime Rate Advances will be due and payable quarterly in arrears on the
last day of each March, June, September and December commencing September 30,
1997. Accrued interest under the Libor Rate Advances will be due and payable
at the end of each Interest Period. Interest after the Termination Date of the
Loans, for any reason whatsoever, shall be increased to the Default Rate and
shall be payable on demand.
(b) LETTER OF CREDIT FEE. Upon the issuance of a Letter of Credit
by Bank on behalf of and for the account of Borrowers, (i) if the Letter of
Credit is a performance or payment Letter of Credit, a fee of seven-eighths
(7/8) of one percent (1%) per annum on the principal amount of such Letter of
Credit or (ii) if the Letter of Credit is a financial Letter of Credit, a fee
of one and three-fourths (1 3/4%) per annum on the principal amount of such
Letter of Credit which shall be payable annually by Borrowers for the number of
days such Letter of Credit is to remain outstanding. The first payment shall be
due on the date of issuance and subsequent payments shall be due on the
anniversary date of the issuance of the Letter of Credit for as long as the
Letter of Credit remains outstanding.
(c) UNDISBURSED COMMITMENT FEE. A fee on the average daily amount
of the Unused Commitment, during the period for which payment is made, of
three-eighths (3/8) of one percent (1%) per annum shall be payable by Borrowers
quarterly in arrears on the last day of each March, June, September and
December commencing December 31, 1997, and continuing until maturity.
(d) DEFAULT RATE. If an Event of Default shall occur in the
payment on or before the due date of any principal or interest due hereunder or
under any of the other Loan Documents, including, without limitation, the
Notes, Borrowers will pay interest then (retroactively) from the date of the
Event of Default on such payment up to the date of the actual payment (as well
after as before judgment) at the Default Rate, without regard to whether there
has been an acceleration of the payment of principal. Such interest at the
Default Rate shall be payable on demand.
(e) METHOD OF CALCULATING INTEREST AND FEES. Interest at the
Prime Rate and any fee shall be computed on the basis of a year consisting of
365 days and paid for actual days elapsed, and interest at the Libor Rate shall
be computed on the basis of a year consisting of 360 days.
(f) INTEREST RATE OPTIONS. Until an Event of Default occurs,
Borrowers shall have the following interest rate options:
(i) Advances to Borrowers may from time to time be (i) Libor Rate
Advances, (ii) Prime Rate Advances, or (iii) any combination
thereof, as requested by Borrowers, with respect to Advances
and notices to Bank in accordance with paragraphs (ii), (iii),
(iv) and (v) below; provided that no Advance shall be made to
Borrowers as a Libor Rate Advance under the Revolving Credit
Facility after the day that is one month prior to the
Revolving Credit Facility Termination Date. For purposes of
this paragraph, (i), an Advance shall be deemed "made" upon an
initial borrowing by Borrowers under paragraphs (ii) below,
any conversion of such Advance under paragraph (iii) below,
and upon any continuation of such Advance under paragraph (iv)
below.
(ii) With respect to the funding of the Term Loan or any new
Revolving Credit Advance, Borrowers shall provide Bank with
telephonic notice of its intended borrowing, which notice must
be received by Bank prior to 10:00 a.m., New Orleans time, at
least two (2) Business Days prior to the requested Borrowing
Date, which notice shall specify (x) the amount to be
borrowed, (y) the requested Borrowing Date, (z) whether the
borrowing is to be of Libor Rate Advances or Prime Rate
Advances or a combination thereof, (aa) the respective amounts
of each such type of Advance, and (bb) if the borrowing is to
be entirely or partly of Libor Rate Advances, the respective
lengths of the Interest Periods therefor.
(iii) Borrowers may elect from time to time to convert any of its
Libor Rate Advances to Prime Rate Advances by giving Bank
telephonic notice of such election, which notice must be
received by Bank prior to 10:00 a.m., New Orleans time, at
least two (2) Business Days prior to the requested conversion;
provided that any such conversion, of Libor Rate Advances
shall only be made on the last day of an Interest Period with
respect thereto. Borrowers may elect from time to time to
convert any of its Prime Rate Advances to Libor Rate Advances
by giving Bank telephonic notice of such election, which
notice must be received by Bank prior to 10:00 a.m., New
Orleans time, at least two (2) Business Days prior to the
requested conversion. Any such notice of conversion to Libor
Rate Advances shall specify the length of the initial Interest
Period thereof and the amount of the Prime Rate Advance to be
converted. All or any part of
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Borrowers' outstanding Libor Rate Advances or Prime Rate
Advances may be converted as provided herein; provided that
(i) no Prime Rate Advance may be converted into a Libor Rate
Advance when any Event of Default has occurred and is
continuing, (ii) partial conversions of Prime Rate Advances to
Libor Rate Advances shall be in an aggregate principal amount
of $500,000 or a whole multiple of $100,00 in excess thereof,
(iii) partial conversions of Libor Rate Advances to Prime Rate
Advances shall be in an aggregate principal amount of $500,000
or a whole multiple of $100,000 in excess thereof, and (iv) no
Prime Rate Advance under the Revolving Credit Facility may be
converted into a Libor Rate Advance after the date that is one
month prior to the Revolving Credit Facility Termination Date.
(iv) Any Libor Rate Advances may be continued as such upon the
expiration of an Interest Period with respect thereto by
Borrowers giving Bank telephonic notice, which notice must be
received by Bank prior to 10:00 a.m., New Orleans time, at
least two (2) Business Days prior to the requested
continuation; provided, that (a) no Libor Rate Advance may be
continued as such when any Event of Default has occurred and
is continuing, (b) no Libor Rate Advances under the Revolving
Credit Facility may be continued as such after the date which
is one month prior to the Revolving Credit Facility
Termination Date, and (c) any such continuation shall be made
only if, after giving effect thereto, paragraph (v) shall not
be contravened. If Borrowers shall fail to give such notice
or if such continuation is not permitted, then Borrowers shall
be deemed to have requested that the Libor Rate Advance be
converted automatically to a Prime Rate Advance on the last
day of the then current Interest Period with respect thereto.
(v) All borrowings, conversions and continuations of Advances
hereunder by Borrowers and all selections of Interest Periods
hereunder by Borrowers shall be in such amounts and be made
pursuant to such elections so that, after giving effect
thereto, the aggregate principal amount of the Advances to
Borrowers constituting each Libor Rate tranche (i.e., Libor
Rate Advances made on the same day and having the same
Interest Period) shall be equal to $500,000 or a whole
multiple of $100,000 in excess thereof. If Borrowers have no
Prime Rate Advances outstanding, Borrowers may have a maximum
of five (5) Libor Rate tranches in aggregate in effect at any
one time, and, if Borrowers have Prime Rate Advances
outstanding, Borrowers may have a maximum of four (4) Libor
Rate tranches in aggregate in effect at any one time.
(vi) Each determination of an interest rate by Bank pursuant to any
provision of this Second Restated Agreement shall be
conclusive and binding on Borrowers in the absence of manifest
error. Bank shall, at the request of Borrowers, deliver to
Borrowers a statement showing the quotations used by Bank in
determining the Libor Rate.
(vii) If prior to the first day of any Interest Period, Bank shall
have determined (which determination shall be conclusive and
binding upon Borrowers) that either:
(a) adequate and reasonable means do not exist for
ascertaining the Libor Rate for such Interest Period; or
(b) the interest rate determined for such Interest Period
does not adequately and fairly reflect the cost to Bank of
making, maintaining or funding its Libor Rate Advances during
such Interest Period, in either case with respect to (i)
proposed Advances that Borrowers have requested be made as
Libor Rate Advances, (ii) Libor Rate Advances that will result
from the requested conversion of Prime Rate Advances into
Libor Rate Advances, or (iii) the continuation of Libor Rate
Advances beyond the expiration of the then current Interest
Period with respect thereto; then Bank shall give telephonic
notice thereof to Borrowers as soon as practicable thereafter.
Unless Borrowers notify Bank upon receipt of such notice that
it wishes to rescind or modify its request, Bank shall arrange
that (x) any affected Libor Rate Advances requested by
Borrowers shall be made as Prime Rate Advances, (y) any Prime
Rate Advances to Borrowers that were to have been converted to
Libor Rate Advances shall be continued as, or converted to,
Prime Rate Advances, and (z) all outstanding Libor Rate
Advances to Borrowers shall be converted, on the last day of
the then current Interest Period with respect thereto, to
Prime Rate Advances. Until such notice has been withdrawn by
Bank, no further Libor Rate Advances shall be made to
Borrowers, nor shall Borrowers have the right to convert Prime
Rate Advances to Libor Rate Advances.
(g) INABILITY TO DETERMINE LIBOR RATE. If Agent is unable to
determine the Libor Rate for a Type of Libor Rate Advances comprising any
requested borrowing and Agent gives telephonic or telecopy notice thereof to
the Borrowers as soon as practicable, the right of the Borrowers to select
Libor Rate Advances of that type for such Borrowing or for any subsequent
borrowing and the obligation of the Banks to make such Libor Rate Advances of
that type shall be suspended until Agent shall notify the Borrower and the
Banks that the circumstances causing such suspension no longer exist, and each
Advance comprising such borrowing shall be a Base Rate Advance.
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(h) LIBOR RATE INDEMNITY. Borrowers agree to indemnify Bank and
to hold Bank harmless from any loss or expense which Bank may sustain or incur
as a consequence of (a) the making by Borrowers of a prepayment (whether
mandatory or optional) or any other payment of a Libor Rate Advance on a day
which is not the last day of the Interest Period with respect thereto, and/or
(b) the conversion, whether voluntary or involuntary, of a Libor Rate Advance
into a Prime Rate Advance pursuant to Section, 2.5(g), or otherwise on a day
which is not the last day of an Interest Period with respect thereto,
including, without limitation, in each case any such loss or expense arising
from the reemployment of funds obtained by it to maintain its Libor Rate
Advances hereunder or from fees payable to terminate the deposits from which
such funds were obtained. This covenant shall survive the termination of this
Second Restated Agreement and the payment of the Advances and all other
obligations hereunder.
SECTION 2.6 PAYMENTS, PREPAYMENTS, AND REDUCTION OR TERMINATION OF
THE REVOLVING CREDIT FACILITY.
(a) METHOD OF PAYMENT. All payments of principal, interest and
other amounts to be made by Borrowers under the this Second Restated Agreement,
the Notes or other Loan Documents shall be made to Bank, for the account of
Bank, at 313 Carondelet Street, New Orleans, Louisiana 70130 (or at such other
address as Bank may notify Borrowers in writing), in immediately available
funds, without setoff, deduction or counterclaim, not later than 2:00 p.m. (New
Orleans, Louisiana time) on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day) and, in the case of payments of
principal under the Revolving Credit Facility, in an amount of at least
$100,000.00, or an integral multiple thereof. Borrowers shall, at the time of
making each such payment, specify to Bank the sums payable by Borrowers under
this Second Restated Agreement, the Notes or other Loan Documents to which such
payment is to be applied. Notwithstanding the foregoing sentence, unless and
until an Event of Default shall have occurred and be continuing (in which event
such payments shall be applied by Bank in their sole discretion), all payments
received by Bank shall be applied first to the payment of all amounts (except
principal and interest) at the time due and unpaid hereunder or under any of
the other Loan Documents, then to interest hereon or thereon accrued to the
date of payment and finally to the unpaid principal hereunder or thereunder.
Whenever any payment under this Second Restated Agreement, the Notes or any
other Loan Document shall be stated to be due on a day that is not a Business
Day, such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of the
payment of interest.
(b) PAYMENTS WITHOUT DEDUCTION. Borrowers shall pay principal,
interest and other amounts under, and in accordance with the terms of, this
Second Restated Agreement, the Notes and the other Loan Documents free and
clear of and without deduction for any and all present and future taxes,
levies, imposts, deductions, charges, withholdings and all other liabilities
whatsoever.
(c) REDUCTION OF CREDIT. Borrowers may from time to time, upon at
least three (3) Business Day's prior telephonic notice (confirmed in writing)
to Bank, permanently reduce the amount of the Commitment, provided that at no
time may the Commitment be reduced by Borrowers to an amount less than the sum
of the outstanding principal of all Advances and the undrawn amount of Letters
of Credit. Any such reduction of the Commitment shall be in an amount of
$100,000.00 or an integral multiple thereof.
SECTION 2.7 INDEMNITY. Borrowers shall indemnify and hold Bank
harmless from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including, without limitation,
reasonable attorneys' fees and disbursements, including those incurred upon any
appeal) which may be instituted or asserted against or incurred by Bank as the
result of its having entered into any of the Loan Documents or extended credit
hereunder; provided, however, that Borrowers shall not be liable for such
indemnification to such indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from such
indemnified Person's gross negligence or willful misconduct.
SECTION 2.8 ACCESS. Bank and any of its officers, employees and/or
agents shall have the right, exercisable as frequently as Bank reasonably
determines to be appropriate, during normal business hours (or at such other
times as may reasonably be requested by Bank), to inspect the properties and
facilities of Borrowers and to inspect, audit and make extracts from all of
Borrowers' records, files and books of account. Borrowers shall deliver any
document or instrument reasonably necessary for Bank to obtain records from any
service bureau maintaining records for Borrowers, and shall maintain duplicate
records or supporting documentation on media, including, without limitation,
computer tapes and discs owned by Borrowers. Borrowers shall instruct their
banking and other financial institutions to make available to Bank such
information and records as Bank may reasonably request.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1 CONDITIONS TO LOANS. Notwithstanding any other
provision of this Second Restated Agreement and without affecting in any manner
the rights of Bank hereunder, unless and until the hereinbelow set forth
conditions
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are satisfied and there shall have been delivered to Bank, evidence in form and
substance satisfactory to Bank, Borrowers shall have no rights to obtain any
Advances or Letters of Credit pursuant to this Second Restated Agreement, and
Bank shall not be obligated to make the funding of the Loans hereunder, the
conditions being the receipt by Bank of the following:
(a) COMPLETION OF INITIAL PUBLIC OFFERING OF UNIFAB INTERNATIONAL.
The Effective Date of the Agreement was September 24, 1997 which was the day of
the completion of the Initial Public Offering ("IPO") of UNIFAB International,
and the receipt by UNIFAB International of the of minimum net proceeds of
$12,000,000.00 by UNIFAB International.
(b) LOAN DOCUMENTATION. The Loan Documents (and all documents
related thereto), each prepared to the satisfaction of counsel for Bank, duly
executed by authorized officers of Borrowers;
(c) NOTES. Borrowers' duly executed Notes payable to the order of
Bank.
(d) RESOLUTIONS. Resolutions of the boards of directors of
Borrowers, certified by the Secretaries or Assistant Secretaries of Borrowers,
as of the Effective Date of the Second Restated Agreement, to be duly adopted
and in full force and effect on such date, authorizing (i) the consummation of
each of the transactions contemplated by the Loan Documents and (ii) specific
officers to execute and deliver this Second Restated Agreement and the other
Loan Documents.
(e) GOVERNMENTAL CERTIFICATES. Governmental certificates, dated
the most recent practicable date prior to the date hereof, showing that each
Borrower is organized and in good standing in the jurisdiction of their
organization and are qualified as a foreign corporation and in good standing in
all other jurisdictions in which they are qualified to transact business.
(f) FINANCIAL STATEMENT CERTIFICATION. The financial statements
referred to in Section 4.5, each certified by the chief financial officer of
each Borrower.
(g) CERTIFICATION OF CHIEF FINANCIAL OFFICER. Certificates of
either the chief financial officer or the chief executive officer of each
Borrower, satisfactory in form and substance to Bank, stating that, as of the
Closing Date, to the best of their knowledge, no Material Adverse Effect has
occurred to the business, operations, prospects, properties or financial or
other condition of Borrowers taken as a whole since June 30, 1997.
(h) CERTIFICATE OF CHIEF EXECUTIVE OFFICER. A certificate of
either the chief executive officer or chief financial officer of each Borrower,
satisfactory in form and substance to Bank, stating (i) that all of the
representations and warranties contained herein or in any of the Loan Documents
are correct on and as of the Closing Date, as though made on and-as of such
date, and no event has occurred and is continuing, or would result from the
Advances, which constitutes or would constitute a Default or an Event of
Default, (ii) that Bank has a copy of each agreement or plan or, if not
available, a summary thereof, providing for employment, severance, deferred
payments, bonus payments or accruals, profit sharing arrangements, stock option
or stock appreciation rights, incentive payments, pension or employment benefit
contributions or similar payments or arrangements for the benefit of Borrowers'
management personnel, which has been approved by Bank.
(i) CERTIFICATE OF INCUMBENCY AND SIGNATURES. Certificates of the
Secretary or an Assistant Secretary of each Borrower, dated the Closing Date,
as to the incumbency and signatures of the officers of each Borrower executing
this Second Restated Agreement, the Notes, any of the Loan Documents and other
ancillary agreements and any other certificate or other document to be
delivered pursuant hereto or thereto, together with evidence of the incumbency
of such Secretary or Assistant Secretary.
(j) ATTORNEY OPINION. The opinion of Jones, Walker, Waechter,
Poitevent, Carrere & Denegre, L.L.P., counsel to Borrowers, addressed to Bank,
that (a) the status of each Borrower is as set forth in the preamble and that
they are duly organized, validly existing and in good standing under the laws
of the State of their creation and qualified and in good standing in the State
of Louisiana; (b) Borrowers have full power to execute, deliver and perform its
obligations under this Second Restated Agreement, the Notes and the Loan
Documents to which they are a party; (c) such actions have been duly authorized
by all necessary required action, and are not in conflict with any provision of
law or of the charter, by-laws or operating agreement of each Borrower, as may
be the case, nor to the best of counsel's knowledge, in conflict with any
agreement binding upon Borrowers; and (e) this Second Restated Agreement, the
Notes, and the Loan Documents are the legal and binding obligations of
Borrowers enforceable in accordance with their respective terms, except as
enforcement may be limited by applicable bankruptcy, reorganization, moratorium
or similar laws.
(k) PAYMENT OF FEES AND EXPENSES. Payment by Borrowers of all
reasonable fees and expenses of Bank's counsel.
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(l) PLEDGE AND RECEIPT OF LATOKA USA STOCK. A pledge by UNIFAB
International, the sole shareholder of Latoka USA, of 100% of the Capital Stock
of Latoka USA, as security for the Loans.
(m) CORPORATE/ORGANIZATION DOCUMENTS OF BORROWERS. Copies of the
Articles of Incorporation and By-laws for each corporate Borrower and Articles
of Organization and operating agreements for each limited liability company
Borrower.
(n) ADDITIONAL INFORMATION. Such additional information and
materials as Bank may reasonably request, including, without limitation, copies
of any debt agreements, security agreements and other material contracts.
SECTION 3.2 CONDITIONS TO EACH ADVANCE AND/OR LETTER OF CREDIT. It
shall be a further condition to and funding of an Advance and/or issuance of a
Letter of Credit that the following statements shall be true on the date of
each such funding or issuance:
(a) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of Borrowers contained herein or in any of the
Loan Documents shall be correct on and as of the date of each such Advance
and/or issuance of a Letter of Credit as though made on and as of such date,
except to the extent that any such representation or warranty expressly relates
to an earlier date and for changes therein permitted and contemplated by this
Second Restated Agreement.
(b) NO EVENT OF DEFAULT. No event shall have occurred and be
continuing, or would result from the funding of any Advance and/or issuance of
a Letter of Credit, which constitutes or would constitute a Default or an Event
of Default.
(c) MAXIMUM ADVANCES. The aggregate unpaid principal amount of
the Revolving Credit Facility after giving effect to funding such Advance or
the issuance of such Letter of Credit, shall not exceed the Maximum Revolving
Credit Facility Loan Amount or the Term Loan amount.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BORROWERS
Borrowers represent and warrant to Bank that:
SECTION 4.1 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each
Borrower (i) is duly organized, validly existing and in good standing under the
laws of the state of their creation; (ii) if organized in corporate form (x)
are duly qualified as foreign corporations and in good standing under the laws
of each jurisdiction where the failure to be so qualified would have a Material
Adverse Effect, (y) have the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate their
properties, to lease the property they operate under lease, and to conduct
their business as now, heretofore and proposed to be conducted, (z) are in
compliance with their certificate or articles of incorporation and by-laws, (z)
are in compliance with their certificate or articles of incorporation and
by-laws ; (iii) if organized as a limited liability company, (x) have the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate their properties, to lease the
property they operate under lease, and to conduct their business as now,
heretofore and proposed to be conducted, (z) are in compliance with their
certificate or articles of incorporation and operating agreements; (iv) have
all licenses, permits, consents or approvals from or by, and have made all
filings with, and have given all notices to, all governmental authorities
having jurisdiction, to the extent required for such ownership, operation and
conduct; (v) are in compliance with all applicable provisions of law where the
failure to comply would have a Materially Adverse Effect on the business,
operations, prospects, assets or financial or other condition of Borrowers, and
each Borrower's ability to pay the obligations in accordance with the terms
thereof.
SECTION 4.2 EXECUTIVE OFFICES. The current locations of Borrowers'
executive offices and principal place of business are set forth on Schedule 4.2
hereto.
SECTION 4.3 SUBSIDIARIES. No Borrower has Subsidiaries other than
(i) UNIFAB International, which has as its only subsidiaries, UNIFAB, PIM,
Allen Tank and Latoka USA and (ii) Latoka USA which has as its only subsidiary,
Latoka Ltd.
SECTION 4.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE
OBLIGATIONS. The execution, delivery and performance by Borrowers of the Loan
Documents, and all instruments and documents to be delivered by Borrowers, to
the extent they are parties thereto, hereunder and thereunder: (i) are within
Borrowers' powers; (ii) have been duly authorized by all necessary or proper
corporate action; (iii) are not in contravention of any provision of Borrowers'
respective certificates or articles of incorporation, by-Laws, or operating
agreement; (iv) will not violate any material law
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or regulation, or any order or decree of any court or governmental
instrumentality; (v) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which Borrowers are a party or by which Borrowers or any of their
property are bound which conflict, breach, termination, default or acceleration
would have a Material Adverse Effect; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Borrowers, and (vii) do not
require the consent or approval of any governmental body, agency, authority or
any other Person. At or prior to the Closing Date, each of the Loan Documents
shall have been duly executed and delivered for the benefit of or on behalf of
each Borrower, as the case may be, and shall then constitute a legal, valid and
binding obligation of each Borrower, to the extent they are parties thereto,
enforceable against them in accordance with its terms except as may be limited
by applicable bankruptcy laws and general principles of equity.
SECTION 4.5 FINANCIALS AND PROJECTIONS.
(a) BORROWERS' FINANCIALS The consolidated audited financial
statement of UNIFAB International, as of March 31, 1998, a copy of which was
furnished to Bank, was prepared in conformity with GAAP applied on a basis
consistent with that of the preceding fiscal year and period, presented fairly
the financial condition of UNIFAB International and its subsidiaries on a
consolidated and consolidating basis, as of such date and the results of its
operations for the periods then ended. Allen Tank's audited financial
statement as of December 31, 1997, a copy of which was furnished to Bank, was
prepared in conformity with GAAP and presented fairly the financial condition
of Allen Tank as of such date and the results of its operations for the periods
then ended. Since March 31, 1998 to the date hereof, there has been no
material adverse change in Borrowers financial condition.
SECTION 4.6 LITIGATION. To the best of Borrowers' knowledge, after
due inquiry, no litigation or governmental proceedings are pending or
threatened against Borrowers, the results of which might materially affect
Borrowers' financial condition or operations, except those referred to in a
schedule furnished contemporaneously herewith and attached hereto as Schedule
4.6.
SECTION 4.7 LIENS. None of the assets of Borrowers are subject to
any Lien except the Permitted Liens.
SECTION 4.8 PURPOSE. (a) The proceeds of the Revolving Credit
Facility shall be used by Borrowers for general corporate purposes including
acquisitions and capital expenditures and for the issuance of certain Standby
Letters of Credit, including performance and retainage letters of credit, (b)
the proceeds of Non-Revolving LC Facility were used for the reissuance for the
account of Universal Fabricators Incorporated of certain performance and
retainage Letters of Credit issued for the account of McDermott International,
Inc. on behalf of Universal Fabricators Incorporated, and (c) the proceeds of
the Term Loan Facility shall be used for the refinancing of the existing Allen
Tank debt.
SECTION 4.9 USE OF PROCEEDS; MARGIN SECURITIES. Borrowers are not
engaged in the business of purchasing or selling margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System) or
extending credit to others for the purpose of purchasing or carrying margin
stock and no part of the proceeds of any borrowing hereunder will be used to
purchase or carry any margin stock or for any other purpose which would violate
any of the margin regulations of such Board of Governors.
SECTION 4.10 COMPLIANCE WITH ERISA. Borrowers are in compliance
with all statutes and governmental rules and regulations applicable to it,
including, without limitation, ERISA. No condition exists or event or
transaction has occurred in connection with any Plan, which could result in
Borrowers' incurring any material liability, fine or penalty. No Reportable
Event (as defined in ERISA) has occurred with respect to any such Plan.
Borrowers has not withdrawn from any such Plan or initiated steps to do so and
no steps have been taken to terminate any such Plan.
SECTION 4.11 CONSENTS. No consent, approval or authorization of, or
registration or declaration with, any federal or state governmental authority
or other regulatory agent for the validity of the execution and delivery or for
the performance by Borrowers of the Loan Documents is required.
SECTION 4.12 TAXES. All Federal, state, local, foreign, and
franchise tax returns, reports and statements required to be filed by each
Borrower have been filed with the appropriate governmental agencies in all
jurisdictions in which such returns, reports and statements are required to be
filed, and all Charges and other impositions shown thereon to be due and
payable have been timely paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for nonpayment thereof, or
any such fine, penalty, interest, late charge or loss has been paid, or has
reserved reasonable amounts for such Charges, fines, interest, loss, late
charges and/or interest upon the books of such company as the case may be.
Each Borrower has paid when due and payable all requisite Charges on its
income, business, property or operations, including income taxes, franchise
taxes, real and personal property taxes, inventory and merchandise taxes,
capital stock taxes, sales and use taxes, value added taxes, excise taxes,
transfer taxes, employee income withholding, social security and unemployment
taxes, and interest and penalties thereon, or has reserved reasonable amounts
for such taxes, interest and/or penalties upon the books of such company, as
the case
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may be. Proper and accurate amounts have been withheld by each Borrower from
its employees for all periods in full and complete compliance with the tax,
social security and unemployment withholding provisions of applicable Federal,
state, local and foreign law and such withholdings have been paid to the
respective governmental agencies.
SECTION 4.13 OPERATION OF BUSINESS. Each Borrower possesses all
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
or rights thereto, to conduct its business substantially as now conducted and
as presently proposed to be conducted, and each Borrower is not in violation of
any valid rights of others with respect to any of the foregoing.
SECTION 4.14 RIGHTS IN PROPERTIES; LIENS. Each Borrower has good
and indefeasible title to its properties and assets, real and personal,
including the properties and assets reflected in the financial statements, and
none of the properties, assets or leasehold interests of Borrowers are subject
to any Lien, except for Permitted Liens.
SECTION 4.15 DEBT. Borrowers have no Debt, except as disclosed in
the financial statements described in Section 4.5 hereof and as otherwise
permitted by this Second Restated Agreement.
SECTION 4.16 DISCLOSURE. No statement, information, report,
representation or warranty made by Borrowers in this Second Restated Agreement
or in any of the other Loan Documents or furnished by Borrowers to Bank in
connection with the negotiation or preparation of this Second Restated
Agreement, or any amendment hereto, contains any untrue statement of a material
fact or omits to state any material fact necessary to make the statements
herein or therein not misleading. There is no fact known to Borrowers that has
not been disclosed in writing to Bank which has a Material Adverse Effect, or
which might in the future have a Material Adverse Effect, on the business,
assets, financial condition or operations of Borrowers.
SECTION 4.17 REGISTERED OFFICE; PRINCIPAL PLACE OF BUSINESS; The
principal place of business, chief executive office and registered office of
each Borrower and the place where each Borrower keeps its books and records are
set forth on Schedule 4.17. Borrowers have never done any business from any
location other than as set forth on Schedule 4.17.
SECTION 4.18 INVESTMENT COMPANY ACT. No Borrower is an "Investment
Company" within the meaning of the Investment Company Act of 1940, as amended.
SECTION 4.19 OTHER AGREEMENTS. Borrowers are not parties to any
indenture, loan or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter of corporate restriction which would
violate the terms of this Second Restated Agreement. Borrowers are not in
default in any respect in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any agreement or
instrument which would reasonably have a Material Adverse Effect.
SECTION 4.20 COMPLIANCE WITH LAW. Borrowers are in compliance with
all laws, rules, regulations, orders and decrees which are applicable to
Borrowers, or any of their respective properties. Without limiting the
generality of the foregoing:
(a) EMPLOYMENT MATTERS. Borrowers are in full compliance with all
applicable laws, rules, regulations and governmental standards regarding
employment, including, without limitation, the minimum wage and overtime
provisions of the Fair Labor Standards Act, as amended (29 U.S.C. Sections
201-219), and the regulations promulgated thereunder, the non-compliance of
which would reasonably have had a Material Adverse Effect.
(b) ENVIRONMENTAL MATTERS.
(i) Borrowers and all of their respective properties,
assets and operations are in compliance with all Environmental Laws, the
non-compliance of which would reasonably have had a Material Adverse Effect.
Borrowers are not aware of or have not received notice of, any past, present or
future conditions, events, activities, practices or incidents which may
interfere with or prevent the compliance or continued compliance of Borrowers
with all Environmental Laws.
(ii) Borrowers have obtained, or are in the process of
obtaining, all permits, licenses and authorizations and have filed all plans
which are required under Environmental Laws in order to conduct their business
and/or own their properties and assets including, without limitation, all
Louisiana air emission permits required under any Environmental Law in order to
conduct Borrowers' business and/or own their assets or properties.
(iii) No Hazardous Substances or Solid Wastes exist on, about
or within or have been used, generated, stored, transported, disposed of on, or
released from any of the properties or assets of Borrowers except in
substantial compliance with Environmental Laws.
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SECTION 4.21 CORPORATE NAME. The exact corporate name of each
Borrower as it appears in its articles of incorporation is as set forth in the
introduction of this Second Restated Agreement.
SECTION 4.22 TAXPAYER I.D. NUMBERS. The Federal Taxpayer
Identification Number of each Borrower is: (a) UNIFAB International, Inc.,
72-1382998, (b) Universal Fabricators, L.L.C., 72-1224769, (c) PIM, L.L.C.,
72-1411461, (d) Allen Tank, L.L.C. ______________, and (e) Latoka USA, Inc.
_______________.
SECTION 4.23 CONTINUING REPRESENTATIONS AND WARRANTIES. Each
request by Borrowers for an Advance shall constitute a representation and
warranty by Borrowers as of the date of such request for an Advance that all
representations and warranties made herein are correct on and as of such
Borrowing Date as if made on and as of such date, except to the extent that any
such representation or warranty expressly relates to an earlier date and for
changes therein permitted and contemplated by this Second Restated Agreement.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Notes and other liabilities of Borrowers hereunder are paid
in full and all other obligations and liabilities under the Loan Documents are
performed and paid in full, Borrowers agree that they will:
SECTION 5.1 FINANCIAL STATEMENTS AND RECORDS. Borrowers shall
furnish to Bank:
(a) promptly after the sending or filing thereof, copies of all
reports which each Borrower, as the case may require, sends to any of its
public security holders, and copies of all Forms 10-K, 10-Q and 8-K, Schedules
13E-4 (including all exhibits filed therewith) and registration statements, and
any other filings or statements that a Borrower files with the Securities and
Exchange Commission or any national securities exchange;
(b) within ninety-five (95) days after the end of each fiscal
year, a copy of UNIFAB International's annual audited consolidated financial
statements, audited by independent certified public accountants of nationally
recognized standing selected by the Borrowers and reasonably satisfactory to
Bank, prepared in conformity with GAAP, and unaudited consolidating financial
statements, to include financial statements of each Borrower (describing
assets, liabilities, and results of operations for each Borrower);
(c) as soon as available, but in any event within fifty (50) days
after the end of each fiscal quarter, a copy of the unaudited consolidated and
consolidating quarterly financial statements of UNIFAB International to include
each Borrower's financial statements, prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the period reflected
therein;
(d) as soon as available, but in any event within thirty (30) days
after the end of each month a monthly aging of accounts receivable certified by
the chief executive officer or the chief financial officer of UNIFAB
International, reflecting accounts receivable according to payor mix in the
following categories: 0-30 days; 31-60 days; 61-90 days; 91 days and over of
Borrowers' accounts receivable;
(e) as soon as available, but in any event within fifty (50) days
after the end of each fiscal quarter for the first three quarterly periods of
each fiscal year, a compliance certificate, in form acceptable to Bank, setting
forth the calculations of all financial covenants and certifying as to the
accuracy of all calculations and each Borrower's compliance with all financial
covenants, which certificate is to be submitted with copies of any 10-Q filing
of a Borrower, and within ninety-five (95) days after the end of each fiscal
year, a compliance certificate with the 10- K filing of UNIFAB International,
as required;
(f) Borrowers shall provide to Bank, within 14 Business Days after
request, such other information respecting Borrowers' business, financial
condition or prospects as Bank may, from time to time, reasonably request.
(g) Each Borrower authorizes Bank to communicate directly with its
independent certified public accountants, with notice to such Borrower, and
authorize those accountants to disclose to Bank any and all financial
statements and other supporting financial documents and schedules including
copies of any management letter with respect to the business, financial
condition and other affairs of such Borrower.
(h) Each Borrower shall permit access by Bank to the books and
records and other property of such Borrower during normal business hours and
upon reasonable notice and permit Bank to make copies of said books and
records.
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SECTION 5.2 MAINTENANCE OF, EXISTENCE AND CONDUCT OF BUSINESS.
Borrowers shall:
(a) do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, rights and franchises;
Borrowers shall notify Bank immediately if there is a change in any Borrowers'
structure;
(b) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder,
(c) at all times maintain, preserve and protect all of its
trademarks and trade names, and preserve all the remainder of its property in
use or useful in the conduct of its business and keep the same in good repair,
working order and condition (taking into consideration ordinary wear and tear)
and from time to time make or cause to be made, all needful and proper repairs,
renewals and replacements, betterments and improvements thereto consistent with
industry practices, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times; and
(d) transact business and invoice all accounts in such names as
Borrowers may from time use in conducting their businesses.
SECTION 5.3 PAYMENT OF OBLIGATIONS.
(a) Borrowers shall (i) pay and discharge or cause to be paid and
discharged all their Indebtedness, including, without limitation, all the
Obligations, as and when due and payable, subject to the restrictions set forth
in this Second Restated Agreement, and (ii) pay and discharge or cause to be
paid and discharged promptly all (x) Charges imposed upon it, its income and
profits, or any of its property (real, personal or mixed), and (y) lawful
claims for labor, materials, supplies and services or otherwise before any
thereof shall become in default.
(b) Borrowers may in good faith contest, by proper legal actions
or proceedings, the validity or amount of any contested Indebtedness, Charges
or claims, provided that at the time of commencement of any such action or
proceeding, and during the pendency thereof (i) no Default or Event of Default
shall have occurred; (ii) adequate reserves with respect thereto are maintained
on the books of Borrowers, in accordance with GAAP; (iii) such contest operates
to suspend collection of the contested Charges or claims and is maintained and
prosecuted with diligence;(iv) Borrowers shall promptly pay or discharge such
contested Charges and all additional charges, interest, penalties and expenses,
if any, and shall deliver to Bank evidence acceptable to Bank of such
compliance, payment or discharge, if such contest is terminated or discontinued
adversely to Borrowers; and (v) Bank has not advised Borrowers in writing that
Bank reasonably believes that nonpayment or non-discharge thereof would have a
Material Adverse Effect.
(c) Notwithstanding anything to the contrary contained in Section
5.3(b) above, Borrowers shall have the right to pay the Charges or claims
described in Section 5.3(a)(ii) and in good faith contest by proper legal
actions or proceedings, the validity or amount of such Charges or claims.
SECTION 5.4 FINANCIAL COVENANTS. Borrowers agree as follows:
(a) Borrowers on a consolidated basis shall maintain at all times,
such maintenance to be evidenced at the end of any fiscal quarter of Borrowers;
(i) a ratio of current assets to current liabilities of no
less than 1.5 to 1.0.
(ii) a Tangible Net Worth of not less than $22,500,000.00
plus (x) 70% of the cumulative net income of Borrowers
for all quarters ending after March 31, 1998 in which
net income for such quarter was positive, and (y) 100%
of the proceeds to any Borrower of any future public
equity offering by the Borrower, net of any related
fees, commissions, expenses and other costs.
(iii) a ratio of Total Debt to Tangible Net Worth no greater
than 0.5 to 1.0.
(iv) an Interest Coverage ratio of no less than 4.0 to 1.0,
such ratio to be determined at the end of each fiscal
quarter based on such fiscal quarter and the three
immediately preceding fiscal quarters.
(b) Notwithstanding that Borrowers will be filing and reporting
financial statements on a consolidated basis, each Borrower shall separately
maintain a positive Net Worth which positive Net Worth shall be set forth in
the Compliance Certificate required in Section 5.1 (e).
SECTION 5.5 FEES. Borrowers shall pay to Bank, on demand, any and
all fees, costs or expenses arising out of or in connection with the forwarding
to Borrowers or any other Person on behalf of Borrowers by Bank of proceeds of
the Advances.
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<PAGE> 23
SECTION 5.6 BOOKS AND RECORDS. Borrowers shall keep adequate
records and books of account with respect to its business activities, in which
proper entries, reflecting all of their financial transactions, are made in
accordance with GAAP and on a basis consistent with the Financials referred to
in Section 4 hereof.
SECTION 5.7 LITIGATION. Borrowers shall notify Bank in writing,
promptly upon learning thereof, of any litigation commenced against Borrowers,
and of the institution against either of them of any suit or administrative
proceeding that could be expected to have a Material Adverse Effect.
SECTION 5.8 INSURANCE. Schedule 5.8 lists all insurance of any
nature maintained by Borrowers as well as a summary of the terms of such
insurance. Borrowers shall maintain insurance coverages, without limitation,
fire, theft, burglary, public liability, property damage, product liability,
workers' compensation, and insurance on all property and assets, all in amounts
customary for the industry and under policies issued by insurers reasonably
satisfactory to Bank. Borrowers shall pay all insurance premiums payable by
it.
SECTION 5.9 COMPLIANCE WITH LAW. Borrowers shall comply with all
federal, state and local laws and regulations applicable to it, including,
without limitation, ERISA, those regarding the collection, payment and deposit
of employees, income, unemployment and Social Security Taxes and those relating
to environmental matters where the failure to comply could be expected to have
a Material Adverse Effect.
SECTION 5.10 AGREEMENTS. Borrowers shall perform, within all
required time periods (after giving effect to any applicable grace periods),
all of their obligations and enforce all of their rights under each agreement
to which they are a party, including, without limitation, any leases to which
any such company is a party, where the failure to perform and enforce would
have a Material Adverse Effect. Borrowers shall not terminate or modify, in
any manner adverse to any such company any provision of any agreement to which
it is a party which termination or modification could have a Material Adverse
Effect.
SECTION 5.11 SUPPLEMENTAL DISCLOSURE. From time to time as may be
necessary (in the event that such information is not otherwise delivered by
Borrowers to Bank pursuant to this Second Restated Agreement), so long as there
are Obligations outstanding hereunder, Borrowers will supplement or amend each
Schedule with respect to any matter hereafter arising which, if existing or
occurring at the date of this Second Restated Agreement, would have been
required to be set forth or described in such Schedule or which is necessary to
correct any information in such Schedule which has been rendered inaccurate
thereby.
SECTION 5.12 EMPLOYEE PLANS. Borrowers shall fulfill its
obligations under the minimum funding standards of ERISA and the Code, with
respect to each Plan, and Borrowers shall not take any action that would result
in the termination of a Plan by the PBGC.
SECTION 5.13 SEC FILINGS; CERTAIN OTHER NOTICES. Borrowers shall
furnish to Bank (i) promptly after the filing thereof with the Securities and
Exchange Commission, a copy of each report, notice or other filing, if any, by
Borrowers with the Securities and Exchange Commission, and (ii) a copy of each
written communication received by Borrowers from or delivered by Borrowers to
the Securities and Exchange Commission.
SECTION 5.14 COMPLIANCE WITH LEASES; ADDITIONAL MORTGAGES.
Borrowers shall comply with all of their obligations under all leases for, or
hereafter entered into by it with respect to, real property.
SECTION 5.15 BORROWERS FUNDING. In the event a Borrower receives
notice from Bank that there are insufficient funds in a Borrower's account to
(i) make required principal and interest payments due under the Loans, or (ii)
pay checks presented for payment, one of the other Borrowers shall immediately
advance on the date of said notice, sufficient funds to Bank to remedy each and
every shortage or reduce the Revolving Credit Facility to the Maximum Revolving
Credit Facility Loan Amount. Funds advanced by a Borrower to another Borrower
shall be considered a contribution of capital to that Borrower.
SECTION 5.16 DEPOSIT ACCOUNTS. Borrowers shall maintain all of
their deposit accounts with Bank. Borrowers shall direct their account debtors
to make their payments to deposit accounts with Bank, and shall deposit the
proceeds of all of their accounts receivables and all funds advanced in
connection with the Agreement in accordance with this Second Restated
Agreement. Borrowers will immediately, upon receipt, deposit all monies,
checks, notes, drafts and all other payments which come into the possession or
under the control of Borrowers (or any of its shareholders, directors,
officers, employees, agents or those Persons acting for or in concert with
Borrowers), (a) to Bank or (b) in the account designated by Bank.
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ARTICLE VI
NEGATIVE COVENANTS
Borrowers covenant and agree that, without the Bank's prior written
consent:
SECTION 6.1 MERGERS, ETC. Borrowers shall not directly or
indirectly, by operation of law or otherwise, merge with, consolidate with, or
otherwise combine with, any Person nor form any Subsidiary.
SECTION 6.2 INVESTMENTS; LOANS AND ADVANCES. Except for Permitted
Investments and as otherwise permitted by Section 6.3 or 6.4 hereof, Borrowers
shall not make any investment in, or make or accrue loans or advances of money
to any Person, through the direct or indirect holding of securities or
otherwise.
SECTION 6.3 INDEBTEDNESS. Except as otherwise expressly permitted
by this Second Restated Agreement, Borrowers shall not create, incur, assume or
permit to exist any Debt, whether recourse or nonrecourse, and whether superior
or junior, resulting from borrowings, loans, advances or the granting of
credit, whether secured or unsecured, except (a) Indebtedness secured by Liens
permitted under Section 6.9 hereof, (b) trade credit or other contractual
obligations incurred to acquire goods, supplies, services, including, without
limitation, obligations incurred to employees for compensation for services
rendered in the ordinary course of business, or merchandise on terms similar to
those granted to purchasers in similar lines of business as Borrowers as of the
date hereof and incurred in the ordinary and normal course of business, (d)
lease payment obligations under leases which Borrowers are not prohibited from
entering into under the Loan Documents, (e) all deferred taxes, (f) all
unfunded, pension fund and other employee benefit plan obligations and
liabilities but only to the extent they are permitted to remain unfunded under
applicable law, and (g) indebtedness existing on the date hereof listed on
Schedule 6.3 hereof or consented to by Bank. Notwithstanding the above,
Borrowers shall not incur any additional Debt subsequent to the Closing Date,
other than (i) the Obligations and (ii) Debt not to exceed $1,000,000.
SECTION 6.4 EMPLOYEE LOANS. Borrowers shall not make or accrue any
loans or other advances of money to any employee or shareholder of Borrowers in
excess at any time of $100,000 in the aggregate for all such loans.
SECTION 6.5 CAPITAL STRUCTURE. Borrowers, exclusive of UNIFAB
International, shall not issue or agree to issue any of their respective
authorized but not outstanding shares of Stock (including treasury shares).
SECTION 6.6 MAINTENANCE OF BUSINESS. Borrowers shall not engage in
any business other than the business currently engaged in by Borrowers or a
business incidental thereto or reasonably related thereto.
SECTION 6.7 TRANSACTIONS WITH AFFILIATES.
(a) Borrowers shall not enter into or be a party to any
transaction with any Affiliate of Borrowers, except as otherwise provided
herein or in the ordinary course of and pursuant to the reasonable requirements
of Borrowers' or Affiliate's business and upon fair and reasonable terms that
are fully disclosed to Bank and are no less favorable to Borrowers than would
obtain in a comparable arm's length transaction with a Person not an Affiliate
of Borrowers.
SECTION 6.8 GUARANTIES. Borrowers shall not make, issue, or become
liable on any guaranty, except (a) guaranties in favor of Bank, (b)
endorsements of instruments for deposit, and (c) other guaranties of Debt,
incurred in the ordinary course of business, not exceeding $1,000,000 at any
time in the aggregate for Borrowers.
SECTION 6.9 LIENS. Borrowers shall not create or permit any Lien
on any of its properties or assets except:
(a) presently existing or hereinafter created Liens which have
been disclosed to Bank on Schedule 6.9; and
(b) Permitted Liens.
SECTION 6.10 SALES OF ASSETS. Borrowers shall not sell, transfer,
convey or otherwise dispose of any assets or properties or engage in any
sale-leaseback or similar transaction involving any of such assets; provided,
however, that the foregoing shall not prohibit:
(a) the sale of surplus or obsolete equipment and fixtures;
(b) transfers resulting from any casualty or condemnation of
assets or properties; and
(c) sales in the ordinary course of business not to exceed
$250,000.00 in any 12 month period.
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SECTION 6.11 CANCELLATION OF INDEBTEDNESS. Borrowers shall not
cancel any claim or debt owing to them, except for reasonable consideration or
in the ordinary course of business.
SECTION 6.12 HEDGING TRANSACTIONS. Borrowers shall not engage in
any speculative transactions involving commodity options or futures contracts,
including, without limitation, any speculative interest rate hedging or similar
transaction.
SECTION 6.13 RESTRICTED PAYMENTS. Borrowers shall not make any
Restricted Payments during the existence of the Loans without the consent of
the Bank.
SECTION 6.14 OWNERSHIP OF BORROWERS. No Borrower shall not sell,
transfer, convey or assign any of its interest in another Borrower, without
prior written consent of Bank.
ARTICLE VII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
The following events shall constitute Events of Default hereunder and
under the Loans, individually and collectively, and under all other Loan
Documents:
SECTION 7.1 PAYMENT. Default in the payment of principal on the
Notes when due, or default in the payment of any interest on the Notes or any
expense or fee hereunder or under any of the other Loan Documents, which
default shall continue for a period of five (5) days following written notice
thereof to Borrowers from Bank;
SECTION 7.2 OTHER INDEBTEDNESS. Any other Indebtedness of
Borrowers is not paid at maturity or becomes due and payable prior to its
expressed maturity by reason of any default by Borrowers in the performance or
observance of any Obligation or condition thereunder which default shall
continue for a period of thirty (30) days following written notice thereof to
Borrowers from Bank;
SECTION 7.3 OTHER DEFAULT. Any default of any other obligation
of Borrowers under the terms of any note or notes, mortgage, indenture, loan
agreement or security document of Borrowers, including, without limitation, any
of the Loan Documents, which default shall continue for a period of thirty (30)
days following written notice thereof to Borrowers from Bank, it being
expressly understood and agreed that a default under any note, mortgage,
indenture, loan agreement or security document of Borrowers, including, without
limitation, any of the Loan Documents, shall constitute a default under all
other notes, mortgages, indentures, loan agreements and security documents held
by Bank, including, without limitation, the Loan Documents;
SECTION 7.4 INSOLVENCY. Any Borrower becomes insolvent or admits
in writing its inability to pay its debts as they mature or applies for,
consents to, or acquiesces in the appointment of a trustee or receiver for a
Borrower, or any property of the Borrower or, in the absence of such
application, consented to or acquiesced in by Borrower, a trustee or receiver
is appointed for Borrower, or for a substantial part of any property of any
Borrower and is not discharged within thirty (30) days; or any bankruptcy,
reorganization, debt arrangement, or other proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation proceeding is instituted by
or against a Borrower and if instituted against a Borrower, it is consented to
or acquiesced in by Borrowers, or remains for thirty (30) days undismissed; or
any warrant of attachment is issued against any substantial portion of the
property of a Borrower which is not released within thirty (30) days of
service;
SECTION 7.5 ERISA. The PBGC applies to a United States District
Court for the appointment of a trustee to administer any Plan adopted,
established or maintained by Borrowers, or for a decree adjudicating that any
such Plan must be terminated; a trustee is appointed pursuant to ERISA to
administer any such Plan; any action is taken to terminate any such Plan or any
such Plan is permitted or caused to be terminated if, at the time such action
is taken or such termination of such Plan occurs, the Plan's "vested
liabilities," as defined in Section 3 (25) of ERISA, exceed the then value of
its assets at the time of such termination;
SECTION 7.6 AGREEMENTS. Default in the performance of any of
Borrowers' covenants and/or agreements set forth in this Second Restated
Agreement and/or any of the other Loan Documents (and not constituting an Event
of Default under any of the preceding subsections of this Section 7, which
default shall continue for a period of thirty (30) days after written notice
thereof to Borrowers from Bank;
SECTION 7.7 REPRESENTATION OR WARRANTY. Any representation or
warranty made by Borrowers is untrue in any material respect, or any schedule,
statement, report, notice or writing furnished by Borrowers to Bank is untrue
in any material respect on the date as of which the facts set forth are stated
or certified which default shall continue for a period of thirty (30) days
after written notice thereof to Borrowers from Bank.
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<PAGE> 26
Upon the occurrence of any Event of Default, Bank, in addition to all
of the remedies conferred upon Bank under law, in equity or under any of the
Loan Documents, may declare the Second Restated Agreement and the Loans to be
terminated and the Notes to be due and payable, whereupon the Revolving Credit
Facility, the Non-Revolving LC Facility and the Term Loan Facility shall
immediately terminate, and the Notes shall become immediately due and payable,
without notice of any kind, except that if an event described in Section 7.4
occurs, the Loans shall immediately terminate, and the Notes shall become
immediately due and payable without declaration or notice of any kind.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 BANK'S RELIANCE, ETC. Neither Bank nor any of its
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with any of the
Loan Documents except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, Bank: (i)
may treat the payee of any note as the holder thereof until Bank receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to Bank; (ii) may consult with legal counsel (including
counsel for Borrowers), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (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 any of the 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 any of the Loan
Documents on the part of Borrowers or to inspect the property (including the
books and records) of Borrowers; (v) shall not be responsible to any Bank for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of any of the Loan Documents or any other instruments or document
furnished pursuant hereto; and (vi) shall incur no liability under or in
respect of any of the Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telegram, cable or
telex) believed by it to be genuine and signed by the proper party or parties.
SECTION 8.2 FINANCIAL TERMS. Unless otherwise defined or the
context otherwise requires, all financial and accounting terms shall be defined
under GAAP.
SECTION 8.3 DELAY. No delay on the part of Bank in the exercise
of any power or right shall operate as a waiver thereof, nor shall any single
or partial exercise of any power or right preclude other or further exercise
thereof, or the exercise of any other power or right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.4 NOTICES. All notices, statements, requests and
demands given to or made under any party hereto in accordance with the
provisions of this Second Restated Agreement shall be deemed to have been given
or made when deposited in the mail, postage prepaid, registered or certified
mail return receipt requested addressed:
If to Bank:
Hibernia National Bank
313 Carondelet Street, Suite 1300
New Orleans, LA 70130
Attention: Byron Kives or Bruce Ross
with a copy to:
Chaffe, McCall, Phillips, Toler & Sarpy, L.L.P.
1100 Poydras Street, Suite 2300
New Orleans, LA 70163-2300
Attention: Kathleen S. Plemer, Esq.
If to Borrowers:
c/o UNIFAB International, Inc.
5007 Port Road
New Iberia, LA 70562
Attention: Dailey J. Berard
Pete Roman, Chief Financial Officer
with a copy to:
Jones, Walker, Waechter, Poitevent, Carrere & Denegre
201 St. Charles Ave.
New Orleans, Louisiana 70170-5100
Attention: Carl C. Hanemann, Esq.
22
<PAGE> 27
SECTION 8.5 EXPENSES. Whether or not Advances are made,
Borrowers agrees to reimburse Bank upon demand, for all expenses (including
reasonable attorneys' fees and legal expenses incurred by Bank) incurred by
Bank in the preparation, negotiation and /or execution of the Loan Documents,
and in enforcing the obligations of Borrowers hereunder or under any of the
other Loan Documents, and to pay, and save Bank harmless from all liability
for, any stamp or other taxes which may be payable with respect to the
execution or delivery of this Second Restated Agreement, the execution,
delivery or issuance of the Notes, and/or the execution, delivery and
recordation of the other Loan Documents, which obligations of Borrowers shall
survive any termination of this Second Restated Agreement.
SECTION 8.6 SEVERABILITY. Any provision of this Second Restated
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
SECTION 8.7 COUNTERPARTS. This Second Restated Agreement may be
executed in an many counterparts as may be deemed necessary or convenient, and
by the different parties hereto on separate counterparts, each of which, when
so executed, shall be deemed an original but all such counterparts shall
constitute but one and the same instrument.
SECTION 8.8 LAW. THE LOAN DOCUMENTS, AND EACH OF THEM, SHALL BE
CONTRACTS MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF LOUISIANA.
SECTION 8.9 SUCCESSORS. This Second Restated Agreement shall be
binding upon Borrowers, Bank, and their respective successors and assigns, and
shall inure to the benefit of Borrowers, Bank and their successors and assigns.
Borrowers shall not assign their rights, obligations or duties hereunder or
under any of the Loan Documents without the prior written consent of Bank.
Bank shall give Borrowers written notice of any assignment of its interests
hereunder to any other Person, upon which assignment Borrowers shall perform
all of its respective obligations under the Loan Documents in favor of Bank'
assignee(s) as though such assignee(s) were originally a party or parties to
this Second Restated Agreement.
SECTION 8.10 AMENDMENTS. No amendment or waiver of any provision
of this Second Restated Agreement or consent to any departure therefrom by
Borrowers or Bank shall be effective unless the same shall be in writing and
signed by Borrowers or Bank, and, in the case of a waiver or consent, such
waiver or consent shall be effective only in the specific instance and or the
specific purpose for which given.
SECTION 8.11 EXECUTION IN COUNTERPARTS. This Second Restated
Agreement may be executed in any number of counterparts with the same effect as
if the signatures thereto and hereto were upon the same instrument.
SECTION 8.12 ENTIRE AGREEMENT. This Second Restated Agreement
constitutes the entire agreement between the parties and supersedes any and all
prior agreements with respect to the transactions contemplated hereby.
SECTION 8.13 CONFLICTS. This Second Restated Agreement is in
addition to and supplements the provisions of the other Loan Documents. To the
extent that the provisions of this Second Restated Agreement are in conflict
with, and not merely in addition to, the provisions of the other Loan
Documents, the provisions of this Second Restated Agreements shall govern.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Restated Agreement to be executed by their respective officers thereunto duly
authorized effective as of the date first written above.
BANK: BORROWERS:
UNIFAB INTERNATIONAL, INC.
BY: /s/ PETER J. ROMAN
- - -------------------------------- ---------------------------------
BY: BYRON KIVES PETER J. ROMAN
ITS: Assistant Vice President ITS: Chief Financial Officer
UNIVERSAL FABRICATORS L.L.C.
BY: UNIFAB INTERNATIONAL, INC.,
BY: /s/ PETER J. ROMAN
---------------------------------
PETER J. ROMAN
ITS: Chief Financial Officer
PIM, L.L.C.
BY: UNIFAB INTERNATIONAL, INC.
BY: /s/ PETER J. ROMAN
---------------------------------
PETER J. ROMAN
ITS: Chief Financial Officer
ALLEN TANK, L.L.C.
BY: UNIFAB INTERNATIONAL, INC.
BY: /s/ PETER J. ROMAN
---------------------------------
PETER J. ROMAN
ITS: Chief Financial Officer
LATOKA USA, INC.
BY: /s/ PETER J. ROMAN
---------------------------------
PETER J. ROMAN
ITS: Chief Financial Officer
23
<PAGE> 28
SCHEDULE 2.2(A)
LIST OF WHITNEY LETTERS OF CREDIT
24
<PAGE> 29
SCHEDULE 4.2
LIST OF BORROWERS' EXECUTIVE OFFICES AND PLACE OF BUSINESS AND LOCATIONS
25
<PAGE> 30
SCHEDULE 4.6
LITIGATION
26
<PAGE> 31
SCHEDULE 4.17
BUSINESS LOCATIONS
27
<PAGE> 32
SCHEDULE 5.8
LIST OF INSURANCE COVERAGE
28
<PAGE> 33
SCHEDULE 6.3
LIST OF EXITING INDEBTEDNESS
29
<PAGE> 34
SCHEDULE 6.9
LIST OF EXITING LIENS
30
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNIFAB
INTERNATIONAL, INC.'S SEPTEMBER 30, 1998 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,130,932
<SECURITIES> 0
<RECEIVABLES> 25,659,391
<ALLOWANCES> 0
<INVENTORY> 8,129,898
<CURRENT-ASSETS> 38,350,591
<PP&E> 27,852,566
<DEPRECIATION> 8,345,723
<TOTAL-ASSETS> 70,382,438
<CURRENT-LIABILITIES> 25,244,009
<BONDS> 0
0
0
<COMMON> 59,502
<OTHER-SE> 37,583,965
<TOTAL-LIABILITY-AND-EQUITY> 70,382,438
<SALES> 31,585,118
<TOTAL-REVENUES> 31,585,118
<CGS> 25,212,423
<TOTAL-COSTS> 25,212,423
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 300,864
<INCOME-PRETAX> 3,378,588
<INCOME-TAX> 1,676,713
<INCOME-CONTINUING> 1,676,713
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,676,713
<EPS-PRIMARY> 0.38
<EPS-DILUTED> 0.38
</TABLE>
<PAGE> 1
Exhibit 99.1
NEWS RELEASE
For further information contact:
Dailey J. Berard Pete Roman
Chief Executive Officer Chief Financial Officer
(318) 367-8291 (318) 373-5506
================================================================================
FOR IMMEDIATE RELEASE
NOVEMBER 12, 1998
UNIFAB INTERNATIONAL, INC.
REPORTS SECOND QUARTER
New Iberia, LA - UNIFAB International, Inc. (NASDAQ: UFAB) today reported net
income of $1.7 million ($.38 per share) on revenue of $31.6 million for its
second quarter ended September 30, 1998, compared to net income of $1.5 million
($.33 per share) on revenues of $26.5 million for the second quarter ended
September 30, 1997.
Net income for the six months ended September 30, 1998 was $3.9 million ($.76
per share) on revenue of $60.3 million, compared to net income of $3.3 million
($.77 per share) on revenues of $60.3 million for the six months ended September
30, 1997. Net income for the periods ended September 30, 1998 include
acquisition expenses of $275,000 and an adjustment for deferred income taxes of
$525,000 associated with the acquisition of Allen Tank, Inc., which has been
accounted for as a pooling of interests.
Dailey J. Berard, UNIFAB International, Inc.'s President, CEO, and Chairman of
the Board noted, "The UNIFAB family of companies has grown significantly in the
last year and we continue to seek growth opportunities. The addition of Allen
Process Systems has significantly enhanced our product and service capabilities.
The development of our deep water facility in Lake Charles, Louisiana is
progressing as expected."
UNIFAB International, Inc. is an industry leader in the custom fabrication of
topsides facilities, equipment modules and other structures used in the
development and production of oil and gas reserves. In addition, the Company
designs and manufactures specialized process systems, refurbishes and retrofits
existing jackets and decks, provides repair, refurbishment and conversion
services for oil and gas drilling rigs and performs offshore piping hook-up and
platform maintenance services. Dailey Berard serves as a commissioner on a
number of committees and task forces that are working to improve training and
education of the workforce in Louisiana.
