<PAGE>
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
OR
[ ] 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 0-22303
GULF ISLAND FABRICATION, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-1147390
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
583 THOMPSON ROAD,
HOUMA, LOUISIANA 70363
(Address of principal executive offices) (Zip Code)
(504) 872-2100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
___ ___
The number of shares of the Registrant's common stock, no par value per
share, outstanding at May 10, 2000 was 11,659,500.
<PAGE>
GULF ISLAND FABRICATION, INC.
I N D E X
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
at March 31, 2000 (unaudited) and December 31, 1999 3
Consolidated Statements of Income
for the Three Months Ended March 31, 2000
and 1999 (unaudited) 4
Consolidated Statement of Changes in Shareholders' Equity
for the Three Months Ended March 31, 2000 (unaudited) 5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 2000
and 1999 (unaudited) 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-10
PART II OTHER INFORMATION
Item 1. Legal Preceedings 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT INDEX E-1
2
<PAGE>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
2000 1999
-------------- ---------------
(in thousands)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,765 $ 4,535
Short-term investments 11,419 11,215
Contracts receivable, net 25,327 22,739
Contract retainage 2,003 3,251
Costs and estimated earnings in excess of billings
on uncompleted contracts 3,414 3,438
Prepaid expenses 852 749
Inventory 1,120 1,227
---------- ---------
Total current assets 48,900 47,154
Property, plant and equipment, net 42,681 43,664
Excess of cost over fair value of net assets acquired
less accumulated amortization of $ 621,575 and $ 553,025 at
March 31, 2000 and December 31, 1999, respectively 3,496 3,565
Other assets 769 666
---------- ---------
Total assets $ 95,846 $ 95,049
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 2,262 $ 4,167
Billings in excess of costs and estimated
earnings on uncompleted contracts 7,709 6,473
Accrued employee costs 1,530 1,790
Accrued expenses 2,031 1,475
Income taxes payable 1,292 1,462
---------- ---------
Total current liabilities 14,824 15,367
Deferred income taxes 3,296 3,064
---------- ---------
Total liabilities 18,120 18,431
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares
authorized, no shares issued and outstanding -- --
Common stock, no par value, 20,000,000 shares
authorized, 11,638,600 and 11,638,400 shares issued and
outstanding at March 31, 2000 and December 31, 1999, respectively 4,162 4,162
Additional paid-in capital 35,327 35,326
Retained earnings 38,237 37,130
---------- ---------
Total shareholders' equity 77,726 76,618
---------- ---------
Total liabilities and shareholders' equity $ 95,846 $ 95,049
=========== ==========
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended March 31,
2000 1999
------------- ------------
(in thousands, except per share data)
<S> <C> <C>
Revenue $ 31,741 $ 30,329
Cost of revenue 29,193 26,103
------------- ------------
Gross profit 2,548 4,226
General and administrative expenses 1,124 1,282
------------- ------------
Operating income 1,424 2,944
Other expense (income):
Interest expense 18 21
Interest income (319) (101)
Other - net 57 (49)
------------- ------------
(244) (129)
------------- ------------
Income before income taxes 1,668 3,073
Income taxes 561 1,148
------------- ------------
Net income $ 1,107 $ 1,925
============= ============
Per share data:
Basic earnings per share $ 0.10 $ 0.17
============= ============
Diluted earnings per share $ 0.09 $ 0.17
============= ============
Weighted-average shares 11,638 11,638
Effect of dilutive securities: employee stock option 67 18
------------- ------------
Adjusted weighted-average shares 11,705 11,656
============= ============
The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Additional Total
Common Stock Paid-In Retained Shareholders'
Shares Amount Capital Earnings Equity
-------------- ---------- ------------- -------------- ---------------
(in thousands, except share data)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 2000 11,638,400 $ 4,162 $ 35,326 $ 37,130 $ 76,618
Exercise of stock options 200 - 1 - 1
Net income - - - 1,107 1,107
-------------- ---------- ------------- -------------- ---------------
Balance at March 31, 2000 11,638,600 $ 4,162 $ 35,327 $ 38,237 $ 77,726
============== ========== ============= ============== ===============
The accompanying notes are an integral part of these statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended
March 31,
2000 1999
------------ ------------
(in thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,107 $ 1,925
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,155 1,133
Amortization 69 68
Deferred income taxes 232 378
Changes in operating assets and liabilities:
Contracts receivable (2,588) 13,335
Contract retainage 1,248 2,508
Costs and estimated earnings in excess of billings
on uncompleted contracts 24 338
Income taxes payable (170) 718
Prepaid expenses, inventory and other assets 4 75
Accounts payable (1,905) (2,971)
Billings in excess of costs and estimated earnings
on uncompleted contracts 1,236 (2,999)
Accrued employee costs (260) (1,187)
Accrued expenses 556 608
------------ ------------
Net cash provided by operating activities 708 13,929
Cash flows from investing activities:
Capital expenditures, net (172) (1,490)
Purchase of short-term investments (204) -
Other (103) 111
------------ ------------
Net cash used in investing activities (479) (1,379)
Cash flows from financing activities:
Principal payments on notes payable - (3,000)
Proceeds from exercise of stock options 1 -
------------ ------------
Net cash provided by (used in) financing activities 1 (3,000)
------------ ------------
Net increase in cash and cash equivalents 230 9,550
Cash and cash equivalents at beginning of period 4,535 2,808
------------ ------------
Cash and cash equivalents at end of period $ 4,765 $ 12,358
============ ============
Supplemental cash flow information:
Interest paid $ 17 $ 31
============ ============
Income taxes paid $ 500 $ 25
============ ============
The accompanying notes are an integral part of these statements.
</TABLE>
6
<PAGE>
GULF ISLAND FABRICATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE THREE MONTH
PERIODS ENDED MARCH 31, 2000 AND 1999
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING PRINCIPLES
Gulf Island Fabrication, Inc. (the "Company"), together with its
subsidiaries, is a leading fabricator of offshore drilling and production
platforms and other specialized structures used in the development and
production of offshore oil and gas reserves. Structures and equipment fabricated
by the Company include jackets and deck sections of fixed production platforms;
hull and deck sections of floating production platforms (such as tension leg
platforms); piles; wellhead protectors; subsea templates; and various
production, compressor and utility modules; and offshore living quarters. The
Company, located in Houma, Louisiana, also provides services such as offshore
interconnect pipe hook-up; inshore marine construction; manufacture and repair
of pressure vessels; and steel warehousing and sales. Gulf Island Fabrication,
Inc.'s principal markets are concentrated in the offshore regions of the Gulf
of Mexico. The consolidated financial statements include the accounts of Gulf
Island Fabrication Inc. and its subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
The information presented at March 31, 2000 and for the three months ended
March 31, 2000 and 1999, is unaudited. In the opinion of the Company's
management, the accompanying unaudited financial statements contain all
adjustments (consisting of normal recurring adjustments) that the Company
considers necessary for the fair presentation of the Company's financial
position at March 31, 2000 and the results of its operations for the three
months ended March 31, 2000 and 1999, and its cash flows for the three months
ended March 31, 2000 and 1999. The results of operations for the three months
ended March 31, 2000 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2000.
In the opinion of management, the financial statements included herein 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 accounting principles generally accepted in the United
States for complete financial statements. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended December 31, 1999.
NOTE 2 - NOTES PAYABLE
Effective January 1, 2000, the Company's existing bank credit facility was
amended and restated. The credit facility provides for a revolving line of
credit (the "Revolver") of up to $20.0 million that bears interest equal to, at
the Company's option,
7
<PAGE>
GULF ISLAND FABRICATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)
the prime lending rate established by Bank One Corporation or LIBOR plus 1.5%.
The Revolver matures December 31, 2001 and is secured by a mortgage on the
Company's real estate, equipment and fixtures. The Company pays a fee quarterly
of three-sixteenths of one percent per annum on the weighted-average unused
portion of the line of credit. The Company is required to maintain certain
covenants, including balance sheet and cash flow ratios. At March 31, 2000, the
Company was in compliance in all material respects with these covenants and had
no outstanding borrowings under the Revolver.
NOTE 3 - CONTINGENCIES
The Louisiana Department of Environmental Quality ( the "LDEQ") has
required the Company to update its reports and modify its state air permit with
respect to emissions from chemicals that are components of the steel and paint
used by Gulf Island, L.L.C. in its fabrication operations, and Gulf Island
L.L.C. has done so. The LDEQ has advised the Company that it is considering the
assessment of a penalty for exceeding permitted limits and inaccurate reporting.
Gulf Island, L.L.C. does not believe that any actions of the LDEQ in this matter
will be material to its financial position or require any changes to its
operations other than the monitoring of the content of certain purchased
materials, the cost of which is expected to be negligible.
The Company is one of four defendants in a lawsuit in which the plaintiff
claims that the Company improperly installed certain attachments to a jacket
that it had fabricated for the plaintiff. The plaintiff, which has recovered
most of its out-of-pocket losses from its own insurer, seeks to recover from the
four defendants the remainder of its claimed out-of-pocket losses (approximately
$1 million) and approximately $65 million for economic losses which it alleges
resulted from the delay in oil and gas production that was caused by these
events. The trial court has issued rulings and is expected to issue additional
rulings, all of which could be appealed by the plaintiff, the effect of which
would be to prevent plaintiff's recovery of any damages from defendants,
including the Company. In connection with the additional rulings of the court,
the parties have entered into agreements that eliminate the possibility of
plaintiff's recovery of any out-of-pocket damages and preserve for appeal only
those questions bearing on plaintiff's recovery of its economic losses from
delay in production. The Company continues to defend the case vigorously,
leaving open the possibility of reasonable settlement. After consultation with
legal counsel, the Company does not expect that the ultimate resolution of this
matter will have a material adverse effect on the financial position or results
of operations of the Company, although no assurances can be given as to the
ultimate outcome of the claims.
The Company is subject to other claims arising primarily in the normal conduct
of its business. While the outcome of such claims cannot be determined,
management does not expect that resolution of these matters will have a material
adverse effect on the financial position or results of operations of the
Company.
8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
The Company's revenue for the three-month period ended March 31, 2000 was
$31.7 million, an increase of 4.7%, compared to $30.3 million in revenue for the
three-month period ended March 31, 1999. Revenue increased slightly as a result
of the mix of contracts in progress for the first quarter of 2000 compared to
the first quarter of 1999.
The expected recovery in the oil and gas industry did not materialize and
continues to suppress margins on contracts. For the three-month period ended
March 31, 2000, gross profit was $2.5 million (8.0% of revenue) compared to
$4.2 million (13.9% of revenue) of gross profit for the three-month period ended
March 31, 1999.
The Company's general and administrative expenses were $1.1 million for the
three-month period ended March 31, 2000. This compares to $1.3 million for the
three-month period ended March 31, 1999. This decrease of approximately $200,000
was primarily the result of a general decrease in costs related to reduced
production levels, mainly payroll and related costs. In an effort to control
general and administrative costs, the Company implemented an overall 5%
reduction in hourly and salary wages effective May 31, 1999 and June 1, 1999,
respectively. These reductions remain in force throughout the first quarter of
2000, but because of the implementation dates the reductions were not reflected
in the operating results of the first quarter 1999.
The Company had net interest income of $301,000 for the three-month period
ended March 31, 2000 compared to $80,000 for the three-month period ended March
31, 1999. The current reduced production levels generate more available cash for
investment purposes.
For the period ended March 31, 2000 other represented $57,000 of expenses,
while other represented $ 49,000 of income for the period ended March 31, 1999.
These expense and income items consist primarily of the Company's share of the
MinDOC, LLC activities to design and market the MinDOC floating platform concept
for deepwater drilling and production.
LIQUIDITY AND CAPITAL RESOURCES
Historically the Company has funded its business activities through funds
generated from operations and borrowings under its revolving line of credit. Net
cash provided by operations was $708,000 for the three months ended March 31,
2000 which contributed to a 7.2% increase in working capital to $34.1 million.
Net cash used in investing activities for the three months ended March 31, 2000
was $479,000, of which $204,000 related to the purchase of short-term
investments, $172,000 was for miscellaneous equipment purchases and facility
improvements and $103,000 of other expenditures related to MinDOC, LLC.
The Company's Revolver currently provides for a revolving line of credit of
up to $20.0 million, that bears interest equal to, at the Company's option, the
prime lending rate established by Bank One Corporation or LIBOR plus 1.5%. The
Revolver matures December 31, 2001 and
9
<PAGE>
is secured by a mortgage on the Company's real estate, equipment and fixtures.
The Company pays a fee quarterly of three-sixteenths of one percent per annum on
the weighted-average unused portion of the line of credit. The Company is
required to maintain certain covenants, including balance sheet and cash flow
ratios. At March 31, 2000, the Company was in compliance in all material
respects with these covenants and had no outstanding borrowings under the
Revolver.
Capital expenditures for the remaining nine months of 2000 are estimated to
be approximately $3.8 million, including improvements to the facilities and
various other fabrication equipment. Management believes that its available
funds, cash generated by operating activities and funds available under the
Revolver will be sufficient to fund these capital expenditures and its working
capital needs. The Company may, however, expand its operations through future
acquisitions that may require additional equity or debt financing.
YEAR 2000 ISSUES
In prior years, the Company discussed the nature and progress of its plans
to become Year 2000 ready. In late 1999, the Company completed its remediation
and testing of systems. As a result of those planning and implementation
efforts, the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believes those
systems successfully responded to the Year 2000 date change. The Company
expensed approximately $77,000 during 1998 in connection with remediating its
systems. The Company is not aware of any material problems resulting from Year
2000 issues, either with its products, its internal systems, or the products and
services of third parties. The Company will continue to monitor its mission
critical computer applications and those of its suppliers and vendors throughout
the year 2000 to ensure that any latent Year 2000 matters that may arise are
addressed promptly.
FORWARD-LOOKING STATEMENTS
Statements under "Year 2000 Issues" as to the Company's beliefs and
expectations, statements in the last paragraph under "Results of Operations" and
other statements in this report and the exhibits hereto that are not statements
of historical fact are forward-looking statements. These statements involve
risks and uncertainties that include, among others, the timing and extent of
changes in the prices of crude oil and natural gas; the timing of new projects
and the Company's ability to obtain them; competitive factors in the heavy
marine fabrication industry; the Company's ability to successfully complete the
testing, production and marketing of the MinDOC and other deep water production
systems and to develop and provide financing for such systems that are
acceptable to its customers; and the accuracy of the Company's assessment of its
exposure to Year 2000 issues and the adequacy of the steps it has taken to
address those issues. Changes in these factors could result in changes in the
Company's performance and could cause the actual results to differ materially
from those expressed in the forward-looking statements.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDING
The Louisiana Department of Environmental Quality ( the "LDEQ") has
required the Company to update its reports and modify its state air permit with
respect to emissions from chemicals that are components of the steel and paint
used by Gulf Island, L.L.C. in its fabrication operations, and Gulf Island
L.L.C. has done so. The LDEQ has advised the Company that it is considering the
assessment of a penalty for exceeding permitted limits and inaccurate reporting.
Gulf Island, L.L.C. does not believe that any actions of the LDEQ in this matter
will be material to its financial position or require any changes to its
operations other than the monitoring of the content of certain purchased
materials, the cost of which is expected to be negligible.
The Company is one of four defendants in a lawsuit in which the plaintiff
claims that the Company improperly installed certain attachments to a jacket
that it had fabricated for the plaintiff. The plaintiff, which has recovered
most of its out-of-pocket losses from its own insurer, seeks to recover from the
four defendants the remainder of its claimed out-of-pocket losses (approximately
$1 million) and approximately $65 million for economic losses which it alleges
resulted from the delay in oil and gas production that was caused by these
events. The trial court has issued rulings and is expected to issue additional
rulings, all of which could be appealed by the plaintiff, the effect of which
would be to prevent plaintiff's recovery of any damages from defendants,
including the Company. In connection with the additional rulings of the court,
the parties have entered into agreements that eliminate the possibility of
plaintiff's recovery of any out-of-pocket damages and preserve for appeal only
those questions bearing on plaintiff's recovery of its economic losses from
delay in production. The Company continues to defend the case vigorously,
leaving open the possibility of reasonable settlement. After consultation with
legal counsel, the Company does not expect that the ultimate resolution of this
matter will have a material adverse effect on the financial position or results
of operations of the Company, although no assurances can be given as to the
ultimate outcome of the claims.
The Company is subject to other claims arising primarily in the normal conduct
of its business. While the outcome of such claims cannot be determined,
management does not expect that resolution of these matters will have a material
adverse effect on the financial position or results of operations of the
Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) An annual meeting of the registrant's stockholders was held on
April 27, 2000.
11
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(c) The following matters were voted upon with the results indicated
below:
(1) Election of the following nominees for directors.
Kerry J. Chauvin
Number of Votes Cast For - 10,980,082
Number of Votes Cast Against or Withheld - 157,724
Number of Abstentions - None
Number of Broker Non-Votes - None
Alden J. ("Doc") Laborde
Number of Votes Cast For - 10,980,082
Number of Votes Cast Against or Withheld - 157,724
Number of Abstentions - None
Number of Broker Non-Votes - None
Huey J. Wilson
Number of Votes Cast For - 10,980,082
Number of Votes Cast Against or Withheld - 157,724
Number of Abstentions - None
Number of Broker Non-Votes - None
(2) Ratification of appointment of Ernst & Young LLP as independent
auditors.
Number of Votes Cast For - 11,127,362
Number of Votes Cast Against or Withheld - 7,684
Number of Abstentions - 2,760
Number of Broker Non-Votes - None
ITEM 5. OTHER INFORMATION
On April 27, 2000 the Company announced its 2000 first quarter 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.
10.1 Eighth Amended and Restated Revolving Credit Agreement among
the Company and Bank One, Louisiana, N.A. and Whitney
National Bank ("the Revolver").
27.1 Financial Data Schedule.
99.1 Press release issued by the Company on April 27, 2000
announcing its 2000 first quarter earnings and related
matters.
(b) The Company filed no reports on Form 8-K during the quarter for
which this report is filed.
12
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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.
GULF ISLAND FABRICATION, INC.
/s/ Joseph P. Gallagher, III
By:__________________________
Joseph P. Gallagher, III
Vice President - Finance,
Chief Financial Officer
and Treasurer
(Principal Financial Officer
and Duly Authorized Officer)
Date: May 10, 2000
13
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GULF ISLAND FABRICATION, INC.
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------- ----------------------
10.1 Eighth Amended and Restated Revolving Credit Agreement among the
Company and Bank One, Louisiana, N.A. and Whitney National Bank,
dated January 1, 2000 ("the Revolver").
27.1 Financial Data Schedule.
99.1 Press release issued by the Company on April 27, 2000
announcing its 2000 first quarter earnings and related matters.
E-1
<PAGE>
EXHIBIT 10.1
EIGHTH AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT
Among
GULF ISLAND FABRICATION, INC.,
AS BORROWER,
GULF ISLAND, L.L.C.,
DOLPHIN SERVICES, INC.,
VANGUARD OCEAN SERVICES, L.L.C.,
SOUTHPORT, INC.,
AS EXISTING SUBSIDIARIES,
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION,
AND
WHITNEY NATIONAL BANK,
AS BANKS,
AND
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION
AS AGENT
Dated effective as of January 1, 2000
<PAGE>
EIGHTH AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT
THIS EIGHTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (the
"Agreement"), dated effective as of the 1st day of January, 2000, by and among
GULF ISLAND FABRICATION, INC., a Louisiana corporation ("Borrower"), GULF
ISLAND, L.L.C., a Louisiana limited liability company ("Gulf Island
Subsidiary"), DOLPHIN SERVICES, INC., a Louisiana corporation ("Dolphin"),
SOUTHPORT, INC., a Louisiana corporation ("Southport"), VANGUARD OCEAN SERVICES,
L.L.C., a Louisiana limited liability company ("VOS" and together with Gulf
Island Subsidiary, Dolphin, and Southport, each an "Existing Subsidiary" and,
collectively, the "Existing Subsidiaries"), WHITNEY NATIONAL BANK, a national
banking association ("Whitney"), BANK ONE, LOUISIANA, N.A., a national banking
association, in its individual capacity ("Bank One") (each of Whitney and Bank
One being sometimes referred to individually as a "Bank" and collectively as the
"Banks"), and BANK ONE, LOUISIANA, N.A., a national banking association, in its
capacity as agent for Banks as set forth hereinafter (the "Agent").
RECITALS:
A. Borrower, Dolphin, Southport, Banks, and Agent entered into that
certain Seventh Amended and Restated Revolving Credit and Term Loan Agreement,
dated effective as of August 21, 1998 (the "Credit Agreement") which amended and
restated the then existing credit arrangements among Borrower, Dolphin,
Southport, Banks and Agent. Borrower, Dolphin, Southport, Banks, and Agent
entered into that certain First Amendment to Seventh Amended and Restated
Revolving Credit Agreement dated effective as of June 23, 1999 (the "First
Amendment").
1
<PAGE>
B. Since the date of the First Amendment, Borrower has created Gulf Island
Subsidiary and VOS as new Subsidiaries.
C. Contemporaneously herewith and with the consent of Banks and Agent,
Borrower has contributed substantially all of its corporeal operating assets to
Gulf Island Subsidiary.
D. Borrower, Banks and Agent desire to amend and restate their existing
credit arrangements in order, among other reasons, to acknowledge Borrower's
transfer of its operating assets to Gulf Island Subsidiary, to permit Borrower
to begin to implement its business plan for VOS, and to add Gulf Island
Subsidiary and VOS as parties to the Credit Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements and undertakings herein contained, Borrower, the Existing
Subsidiaries, Banks and Agent hereby agree as follows:
Section 1. Relation to Prior Credit Arrangements. Subject to the terms
and conditions hereof, each Bank severally agrees that Borrower's obligations as
evidenced by the Credit Agreement, as amended by the First Amendment (as so
amended, the "Prior Credit Agreement") and the notes issued thereunder
(together with all other notes previously issued to evidence the Revolving
Credit Facility, the "Prior Notes") shall be modified and restated in their
entirety on the terms and conditions set forth herein. To the extent there is
any conflict between the Prior Credit Agreement and this Agreement or the Prior
Notes and the Notes, the provisions of this Agreement and the Notes shall
govern. To the extent this Agreement or the Notes is or are silent on any
matter or provision contained in the Prior Credit Agreement or the Prior Notes,
such matter or provision of the Prior Credit Agreement or the Prior Notes shall
be deemed to be revoked. Borrower,
2
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the Existing Subsidiaries and Banks acknowledge and agree that (i) the
modification and restatement of the Obligations under the terms and conditions
set forth herein do not constitute a payment, prepayment or novation of the
Obligations evidenced by the Prior Credit Agreement and the Prior Notes and (ii)
the Obligations continue to be secured by the Existing Security with the
original rank and priority thereof.
1.1 Revolving Credit Facility. Banks shall make available to Borrower a
revolving line of credit (the "Revolving Credit Facility") in the maximum
principal amount of TWENTY MILLION AND NO/100 DOLLARS ($20,000,000) (as modified
pursuant to Section 4.4 below, the "Revolving Commitment"), which Revolving
Credit Facility may be drawn upon by Borrower on any Business Day of Banks
during the period from the date hereof until and including December 31, 2001, or
such earlier date as may be fixed by Borrower on at least one (1) Business Day's
telephonic notice to Agent, to be confirmed in writing by Borrower, in the form
of the issuance by Banks on behalf of and for the account of Borrower or one of
its Subsidiaries, other than the Excluded Subsidiaries, of irrevocable stand-by
letters of credit in the form provided for by, and containing such terms and
conditions as are acceptable to Banks and in such amounts as Borrower may from
time to time request (each such letter of credit, as well as any letters of
credit issued pursuant to and in accordance with the Prior Credit Agreement or
any predecessor agreement which remain outstanding on the date hereof, being
hereinafter referred to individually as a "Letter of Credit" and collectively as
the "Letters of Credit") or in the form of actual fundings to Borrower by Banks
in such amounts as Borrower may from time to time request (each such funding, as
well as the aggregate amount of the Prior Notes previously funded by Banks and
outstanding on the date hereof, being
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hereinafter referred to individually as an "Advance" and collectively as the
"Advances"), so long as (a) the aggregate principal amount of all Letters of
Credit outstanding at any one time does not exceed the LC Commitment and (b) the
aggregate principal amount of all Letters of Credit and of all Advances
outstanding at any one time does not exceed the Revolving Commitment. The
Revolving Commitment available to Borrower and its Subsidiaries, other than the
Excluded Subsidiaries, from time to time under the Revolving Credit Facility
shall be reduced by the aggregate of the face amount of any outstanding Letters
of Credit and of all unpaid Advances made by Banks to Borrower pursuant to this
Agreement and the remaining amount of the Revolving Commitment shall constitute
the "Unused Commitment". Any draws made under the Letters of Credit by the
beneficiaries thereof shall constitute Advances as defined in this Agreement. If
a draw is made under a Letter of Credit issued for the account of a Subsidiary,
Borrower shall immediately reimburse Banks for the full amount of such draw. 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 Borrower to reimburse Banks for draws under the Letters of Credit. No
Subsidiary shall be entitled to actual fundings by Banks under the Revolving
Commitment, and all Letters of Credit issued on behalf of Subsidiaries shall
only be issued at Borrower's request. The Excluded Subsidiaries shall not be
entitled to have Letters of Credit issued in their names.
1.2 Borrowing Procedure Under the. Agent shall receive at least one (1)
Revolving Credit Facility Business Day's prior telephonic notice from Borrower
(to be confirmed in writing by Borrower) of each proposed Letter of Credit and
of each LIBO Rate Advance to be issued under the Revolving Credit Facility. If
notice is received by
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Agent by 1:00 p.m., New Orleans time, Borrower may obtain a Prime Rate Advance
under the Revolving Credit Facility on the same Business Day Borrower requests
such Prime Rate Advance by telephonic notice (to be subsequently confirmed in
writing by Borrower). If all conditions precedent to the issuance of any such
Letter of Credit or any such Advance have been met, Agent will, without any
further consent or approval from Banks, or either one of them, on the date
requested make each Letter of Credit or Advance available to Borrower at Agent's
office at 201 St. Charles Avenue, New Orleans, Louisiana 70170, and each Letter
of Credit or Advance shall be shared equally by Banks.
1.3 Terms and Conditions Governing. The terms and conditions governing the
Letters of Credit issuance of Letters of Credit by Banks on behalf of and for
the account of Borrower and its Subsidiaries, other than the Excluded
Subsidiaries (which shall not be entitled to have Letters of Credit in their
names), shall be provided for by Agent 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 Borrower and
Agent at the time of Borrower's request to Agent for the issuance thereof. All
such Applications for Letters of Credit to be issued on behalf of a Subsidiary
shall be executed by an authorized officer of such Subsidiary, as applicant, and
shall also be executed by an authorized officer of Borrower, in Borrower's
capacity as guarantor. Upon Agent's issuance of a Letter of Credit, one-half
(1/2) of the amount of such Letter of Credit shall automatically be deemed to
have been provided by Whitney, and, without the necessity of further
documentation transferring an interest in the Letter of Credit to
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Whitney, Whitney shall possess a one-half ( 1/2) interest in all rights and
obligations accruing to and incurred by Agent with respect to such Letter of
Credit. Whitney shall record its one-half ( 1/2) share of any draws on the
Letter of Credit on the schedule attached to its Revolving Note as provided in
Section 2.1 below.
1.4 Liability of Subsidiaries. Although Borrower shall be the sole entity
to receive actual fundings under the Revolving Credit Commitment, Borrower and
each of its Subsidiaries, other than the Excluded Subsidiaries, shall be liable
in solido to the Banks for all Advances made by Banks to Borrower under this
Agreement and for all obligations with respect to Letters of Credit issued under
the Revolving Credit Commitment. Each Subsidiary other than the Excluded
Subsidiaries shall execute and deliver the Continuing Subsidiary Guaranty to the
Agent on behalf of the Banks in the form attached as Exhibit "B" (the
"Guaranty"). Borrower shall promptly notify Agent of Borrower's creation or
acquisition of any new Subsidiary after the effective date of this Agreement and
shall cause such new Subsidiary to sign a continuing guaranty and such
documentation as Agent requests to make such new Subsidiary a party to this
Agreement. Until such new Subsidiary signs the requested documentation, Banks
shall not issue any Letters of Credit on behalf of such new Subsidiary.
1.5 Obligations Absolute. Although Borrower and its Subsidiaries, other
than the Excluded Subsidiaries, are liable in solido for the payment and
performance of all Obligations pursuant to Section 1.4, the obligations of each
Subsidiary, other than the Excluded Subsidiaries, shall, with respect to all
Obligations under this Agreement other than the repayment of any draws under
Letters of Credit issued in such Subsidiary's name, be deemed those of a
guarantor, and the Obligations of Borrower shall, with
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respect to the repayment of draws on Letters of Credit issued in a Subsidiary's
name, likewise be deemed those of a guarantor. Each party's liability for the
Obligations, whether as a primary obligor or as a guarantor, is, however,
absolute and shall not be affected by, modified or impaired upon the happening
from time to time of any event, including, without limitation, any of the
following, whether or not such event shall occur with notice to, or the consent
of, the party affected: (i) the waiver, surrender, compromise, settlement,
discharge, release or termination of any portion of the Obligations, (ii) the
bankruptcy, other insolvency, dissolution or liquidation of any other party
liable on the Obligations, (iii) the discharge or release of any other party
liable on the Obligations from its liability to pay or perform such Obligations
(whether with Banks' consent or otherwise), (iv) the release of any Collateral
securing the Obligations, (v) Banks' taking or failing to take any action
referred to in any Loan Document, or any other documents executed in connection
therewith or evidencing any other portion of the Obligations or (vi) any
failure, omission, delay or lack of diligence on the part of Banks in the
enforcement, assertion or exercise of any right, power or remedy conferred on
Banks in any Loan Document, or any other documents executed in connection
therewith or evidencing any portion of the Obligations, or the inability of
Banks to enforce any provision of any such documents or Obligations for any
other reason, or any other act or omission on the part of Banks.
Section 2. Notes Evidencing Borrowings.
2.1 Notes. The Advances (including, without limitation, the outstanding
indebtedness of Borrower to Banks under the Prior Notes which, as provided in
Section 1.1, shall be deemed an "Advance" hereunder) shall be evidenced by two
(2) promissory
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notes of Borrower payable to the order of Bank One and Whitney, respectively,
each in the original principal amount of TEN MILLION AND NO/100 DOLLARS
($10,000,000) and in the forms set forth as Exhibits "C" and "D" to this
Agreement (each such note, together with any and all renewals, modifications,
extensions, amendments, supplements and/or substitutions therefor, being
sometimes referred to herein individually as a "Note" and collectively as the
"Notes"), with appropriate insertions, each of which shall be dated the date
hereof and shall be payable in full on December 31, 2001. All Advances made by
Banks to Borrower pursuant to this Agreement and all payments of principal shall
be recorded by Banks on the schedule attached to each Note, but Banks' failure
to record or to record correctly such Advances shall in no way affect Borrower's
obligation to repay same.
2.2 No Novation. The execution and delivery of the Notes shall not
constitute a payment, prepayment or novation of the obligations of Borrower
heretofore evidenced by the Prior Notes, but does constitute a renewal and
restatement of the Prior Notes in their entirety.
I. Section 3. Interest and Fees.
3.1 Interest -- Revolving Credit Facility. In the absence of an Event of
Default, the unpaid principal of the Notes shall bear interest until paid at the
Prime Rate, adjusted daily, or the LIBO Rate, or some combination thereof, as
specified in Section 3.6 below. Interest prior to maturity shall be payable
quarterly in arrears on the last day of each March, June, September and December
commencing March 31, 2000, and continuing until maturity. Interest after
maturity of the Notes for any reason whatsoever shall be increased to the Prime
Rate plus three percent (3%) and shall be payable
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on demand. Upon the issuance of a Letter of Credit by Agent on behalf of and for
the account of Borrower or one of its Subsidiaries, a fee of one percent (1%)
per annum on the principal amount of such Letter of Credit shall be payable by
Borrower for the number of days such Letter of Credit is to remain outstanding.
A fee on the Unused Commitment of three-sixteenths (3/16) of one percent (1%)
per annum shall be payable by Borrower quarterly in arrears on the last day of
each March, June, September and December commencing March 31, 2000, and
continuing until maturity.
3.2 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, Borrower
will pay interest thereon (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 Prime Rate plus three percent (3%) (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.
3.3 Prime Rate. "Prime Rate" means a rate per annum equal to the prime rate
of interest announced from time to time by the Agent or its parent (which is not
necessarily the lowest rate charged to any customer), changing when and as said
Prime Rate changes.
3.4 Origination Fee. No origination fee shall be payable by Borrower.
3.5 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
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actual days elapsed, and interest at the LIBO Rate shall be computed on the
basis of a year consisting of 360 days.
3.6 Interest Rate Options. Until an Event of Default occurs, Borrower shall
have the following interest rate options:
(a) Advances to Borrower under the Revolving Credit Facility may from
time to time be (i) LIBO Rate Advances, (ii) Prime Rate Advances, or (iii)
any combination thereof, as determined by Borrower with respect to its
Advances and noticed to Agent in accordance with paragraphs (b), (c), and
(d) below; provided that no Advance shall be made to Borrower as a LIBO
Rate Advance under the Revolving Credit Facility after the day that is one
month prior to the Termination Date. For purposes of this paragraph (a), an
Advance shall be deemed "made" upon an initial borrowing by Borrower under
paragraph (b) below, any conversion of such Advance under paragraph (c)
below, and upon any continuation of such Advance under paragraph (d) below.
(b) With respect to any new Advance, Borrower shall provide Agent with
telephonic notice of its intended borrowing, which notice for LIBO Rate
Advances must be received by Agent prior to 10:00 A.M., New Orleans time,
at least one (1) Business Day prior to the requested Borrowing Date and for
Prime Rate Advances must be received by Agent prior to 1:00 p.m., New
Orleans time, on the Business Day for which the Prime Rate Advance is
requested, and which notice shall specify (i) the amount to be borrowed,
(ii) the requested Borrowing Date, (iii) whether the borrowing is to be of
LIBO Rate Advances or Prime Rate Advances or a combination thereof, (iv)
the respective amounts of each such type
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of Advance, and (v) if the borrowing is to be entirely or partly of LIBO
Rate Advances, the respective lengths of the Interest Periods therefor.
(c) Borrower may elect from time to time to convert any of its LIBO
Rate Advances to Prime Rate Advances by giving Agent telephonic notice of
such election, which notice must be received by Agent prior to 10:00 A.M.,
New Orleans time, at least one (1) Business Day prior to the requested
conversion; provided that any such conversion, of LIBO Rate Advances shall
only be made on the last day of an Interest Period with respect thereto.
Borrower may elect from time to time to convert any of its Prime Rate
Advances to LIBO Rate Advances by giving Agent telephonic notice of such
election, which notice must be received by Agent prior to 10:00 A.M., New
Orleans time, at least one (1) Business Day prior to the requested
conversion. Any such notice of conversion to LIBO 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 Borrower's
outstanding LIBO Rate Advances and Prime Rate Advances may be converted as
provided herein; provided that (i) no Prime Rate Advance may be converted
into a LIBO Rate Advance when any Event of Default has occurred and is
continuing, (ii) partial conversions of Prime Rate Advances to LIBO Rate
Advances shall be in an aggregate principal amount of $500,000 or a whole
multiple of $100,000 in excess thereof, (iii) partial conversions of LIBO
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, (iv)
no Prime Rate Advance under the Revolving Credit Facility may be converted
into a LIBO Rate Advance after the date that is one month prior to the
Termination Date, and (v) any such conversion may only be made if, after
giving effect thereto, paragraph (e) shall not have been contravened.
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(d) Any LIBO Rate Advances may be continued as such upon the
expiration of an Interest Period with respect thereto by Borrower giving
Agent telephonic notice, which notice must be received by Agent prior to
10:00 A.M., New Orleans time, at least one (1) Business Day prior to the
requested continuation; provided, that (i) no LIBO Rate Advance may be
continued as such when any Event of Default has occurred and is continuing,
(ii) no LIBO Rate Advances under the Revolving Credit Facility may be
continued as such after the date which is one month prior to the
Termination Date, and (iii) any such continuation shall be made only if,
after giving effect thereto, paragraph (e) shall not be contravened. If
Borrower shall fail to give such notice or if such continuation is not
permitted, then Borrower shall be deemed to have requested that the LIBO
Rate Advance be converted automatically to a Prime Rate Advance on the last
day of the then current Interest Period with respect thereto.
(e) All borrowings, conversions and continuations of Advances
hereunder by Borrower and all selections of Interest Periods hereunder by
Borrower 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 Borrower constituting each LIBO Rate tranche (i.e., LIBO 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
Borrower has no Prime Rate Advances outstanding, Borrower may have a
maximum of five (5) LIBO Rate tranches in aggregate in effect at any one
time, and, if Borrower has Prime Rate Advances outstanding, Borrower may
have a maximum of four (4) LIBO Rate tranches in aggregate in effect at any
one time.
(f) Each determination of an interest rate by Agent pursuant to any
provision of this Agreement shall be conclusive and binding on Borrower in
the absence of manifest error. Agent shall, at the request of Borrower,
deliver to
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Borrower a statement showing the quotations used by Agent in determining
the LIBO Rate.
(g) If prior to the first day of any Interest Period, Agent shall have
determined (which determination shall be conclusive and binding upon
Borrower) that either:
(i) adequate and reasonable means do not exist for ascertaining the
LIBO Rate for such Interest Period; or
(ii) the interest rate determined for such Interest Period does not
adequately and fairly reflect the cost to Banks (as conclusively
certified by Agent) of making, maintaining or funding their LIBO
Rate Advances during such Interest Period, in either case with
respect to (i) proposed Advances that Borrower has requested be
made as LIBO Rate Advances, (ii) LIBO Rate Advances that will
result from the requested conversion of Prime Rate Advances into
LIBO Rate Advances, or (iii) the continuation of LIBO Rate
Advances beyond the expiration of the then current Interest
Period with respect thereto;
Agent shall give telephonic notice thereof to Borrower as soon as
practicable thereafter. Unless Borrower notifies Agent upon receipt of
such notice that it wishes to rescind or modify its request, Agent shall
arrange that (x) any affected LIBO Rate Advances requested by Borrower
shall be made as Prime Rate Advances, (y) any Prime Rate Advances to
Borrower that were to have been converted to LIBO Rate Advances shall be
continued as, or converted to, Prime Rate Advances, and (z) all outstanding
LIBO Rate Advances to Borrower 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 Agent, no further LIBO Rate
Advances shall be made to Borrower, nor shall Borrower have the right to
convert Prime Rate Advances to LIBO Rate Advances.
(h) Notwithstanding any other provision in this Agreement, if the
adoption of or any change in any law or regulation or in the interpretation
or application thereof (whether or not having the force of law) shall make
it unlawful
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or impossible for Bank to make, maintain or fund LIBO Rate Advances as
contemplated by this Agreement: (a) the commitment of Banks hereunder to
make LIBO Rate Advances, continue LIBO Rate Advances as such and convert
Prime Rate Advances to LIBO Rate Advances shall forthwith be cancelled; (b)
the Advances then outstanding as LIBO Rate Advances, if any, shall be
converted automatically to Prime Rate Advances on the respective last days
of the then current Interest Periods with respect to such Advances or
within such earlier period as required by law; and (c) Borrower shall pay
Banks such amounts, if any, as may be required pursuant to paragraph (i)
below.
(i) Borrower agrees to indemnify Banks and to hold Banks harmless from
any loss or expense which Banks may sustain or incur as a consequence of
(a) the making by Borrower of a prepayment (whether mandatory or optional)
or any other payment of a LIBO 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 LIBO Rate Advance into a Prime Rate
Advance pursuant to this Section 3.6 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 LIBO 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
Agreement and the payment of the Advances and all other obligations
hereunder.
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Section 4. Payments, Prepayments, and Reduction or Termination of the
Revolving Credit Facility.
4.1 Method of Payment. All payments of principal, interest and other
amounts to be made by Borrower under this Agreement or any of the Notes or other
Loan Documents shall be made to Agent for the account of Banks at Agent's office
at 201 St. Charles Avenue, New Orleans, Louisiana 70170 (or at such other
address as Agent or either of Banks may notify Borrower 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, or an integral multiple thereof. Borrower shall, at
the time of making each such payment, specify to Agent the sums payable by
Borrower under this 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 Agent as Banks in their sole discretion shall
determine), all payments received by Agent 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 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
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such case be included in the computation of the payment of interest. Upon
receipt of each such payment, Agent shall make prompt payment within three (3)
Business Days to each Bank in like funds of all amounts received by Agent for
the account of such Bank.
4.2 Sharing of Payments. Banks shall share equally all payments made
pursuant to this Agreement and the benefits of and from the Collateral and all
proceeds from the sale thereof. If either Bank shall receive at any time any
payment hereunder, or interest thereon, or receive any Collateral (or proceeds
thereof) in respect thereof (whether voluntarily or involuntarily, by setoff or
otherwise), or interest in any of the foregoing, in a greater proportion than
the other Bank (such Bank receiving the greater proportion being referred to
herein as the "Benefitted Bank"), such Benefitted Bank shall purchase for cash
from the other Bank such portion of such other Bank's Notes or Letters of
Credit, or shall provide such other Bank with the benefit of any such Collateral
or the proceeds thereof, as the case may be, as shall be necessary to cause such
Benefitted Bank to share the excess payment or benefits of such Collateral or
proceeds equally with the other Bank; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
Benefitted Bank, such purchases shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery. Borrower agrees that each
Bank so purchasing a portion of another Bank's Notes or Letters of Credit, as
the case may be, may exercise all rights of payment (including, without
limitation, rights of setoff) with respect to such portion as fully as if such
Bank were the direct holder of such portion.
4.3 Payments Without Deduction. Borrower shall pay principal, interest and
other amounts under, and in accordance with the terms of, this Agreement, the
Notes and
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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.
4.4 Reduction of Credit. Subject to Section 3.6(i) above, Borrower may from
time to time, upon at least three (3) Business Day's prior telephonic notice
(confirmed in writing) to Agent, permanently reduce the amount of the maximum
Revolving Commitment available under the Revolving Credit Facility, but only
upon payment of the outstanding principal amount of each Note in excess of one-
half (1/2) of the then reduced amount of the maximum Revolving Commitment
available under the Revolving Credit Facility. Any such reduction of the
Revolving Commitment shall be in an amount of $100,000 or an integral multiple
thereof. Subject to Section 3.6(i) above, Borrower may at any time on like
notice terminate the entire Revolving Commitment available under the Revolving
Credit Facility upon payment in full of the Notes and other liabilities of
Borrower relating to the Revolving Credit Facility.
Section 5. Representations and Warranties of Borrower.
Borrower represents and warrants to Banks and Agent that:
5.1 Corporate Existence. Each of Borrower and its Subsidiaries is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of the state of its incorporation or organization;
and each of Borrower and its Subsidiaries has all necessary corporate or limited
liability company power and authority to acquire, own and hold the property and
all other properties it purports to own and hold and to carry on its business as
now conducted.
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5.2 Authorization; Validity. Each of Borrower and its Subsidiaries is
and/or has been duly authorized to execute and deliver this Agreement and all
other Loan Documents to which such Borrower or Subsidiary is a party and to
perform its obligations under this Agreement and all other Loan Documents to
which such Borrower or Subsidiary is a party. Borrower is duly authorized and
will continue to be duly authorized to borrow money hereunder. Upon receipt of
Borrower's approval, each Subsidiary, other than the Excluded Subsidiaries, is
duly authorized and will continue to be duly authorized to request the issuance
of Letters of Credit. Each of this Agreement and the other Loan Documents to
which Borrower or one of its Subsidiaries is a party, as executed and delivered,
constitutes the legal, valid and binding obligation of Borrower and/or such
Subsidiary, enforceable in accordance with the respective terms thereof.
5.3 No Conflicts. The execution and delivery of the Loan Documents and the
performance by each of Borrower and its Subsidiaries of its obligations
thereunder do not and will not conflict with any provision of law or of the
articles of incorporation or organization, by-laws, or operating agreement, as
the case may be, of Borrower or such Subsidiary or of any agreement binding upon
Borrower or such Subsidiary, as the case may be.
5.4 Financial Statements. Borrower's audited financial statement as of
December 31, 1998, a copy of which has been furnished to Banks, has been
prepared in conformity with GAAP applied on a basis consistent with that of the
preceding fiscal year and period, presents fairly the financial condition of
Borrower as of such date and the results of its operations for the periods then
ended. Borrower's unaudited financial statement as of September 30, 1999, a copy
of which has been previously furnished to
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Banks has been prepared in conformity with GAAP and presents fairly the
financial condition of Borrower as of such date and the results of its
operations for the periods then ended. Since December 31, 1998, there has been
no material adverse change in Borrower's financial condition. Since December 31,
1998, there has been no material adverse change in the financial condition of
any of Borrower's Subsidiaries.
5.5 Litigation. To the best of Borrower's knowledge, after due inquiry, no
litigation or governmental proceedings are pending or threatened against
Borrower or any of its Subsidiaries, the results of which might materially
affect Borrower's or such Subsidiary's financial condition or operations, except
those referred to in a schedule furnished contemporaneously herewith and
attached hereto as Schedule 1. Other than any liability incident to such
litigation or proceedings or provided for or disclosed in the financial
statements referred to in Section 5.4, Borrower does not have any material
contingent liabilities. No Subsidiary has any material contingent liability
other than those imposed by the Collateral Documents.
5.6 Liens. None of the assets of Borrower or any of its Subsidiaries with a
net book value of greater than $250,000 is subject to any Lien, except for the
Liens created pursuant to the Collateral Documents and Permitted Liens.
5.7 Subsidiaries. Other than the Excluded Subsidiaries, Borrower has no
Subsidiaries which are not parties to this Agreement.
5.8 Purpose. The proceeds of the Revolving Credit Facility shall be used by
Borrower for general corporate purposes.
5.9 Use of Proceeds; Margin. Borrower is not engaged in the business of
purchasing or selling margin stock Securities (as defined in Regulation U of the
Board of
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Governors of the Federal Reserve System) or extending credit to others for the
purpose of purchasing or carrying margin stock and, notwithstanding Section 5.8
hereof, 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.
5.10 Compliance with ERISA. Each of Borrower and its Subsidiaries is in
compliance with all statutes and governmental rules and regulations applicable
to it, including, without limitation, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). No condition exists or event or transaction
has occurred in connection with any plan, as defined in Sections 3(3) and 3(37)
of ERISA, maintained by Borrower or any of its Subsidiaries (any such plan being
hereinafter called the "Plan"), which could result in Borrower's or such
Subsidiary's incurring any material liability, fine or penalty. No Reportable
Event (as defined in ERISA) has occurred with respect to any such Plan. Neither
Borrower nor any of its Subsidiaries has withdrawn from any such Plan or
initiated steps to do so and no steps have been taken to terminate any such
Plan.
5.11 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 Borrower or any of its Subsidiaries of the Loan Documents is
required.
5.12 Tax Returns. Each of Borrower and its Subsidiaries has filed all tax
returns which are required to be filed by any jurisdiction, and has paid all
taxes which have become due pursuant to said returns or pursuant to any
assessments.
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5.13 Operation of Business. Each of Borrower and its Subsidiaries 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 neither Borrower nor any of its
Subsidiaries is in violation of any valid rights of others with respect to any
of the foregoing.
5.14 Rights in Properties; Liens. Each of Borrower and its Subsidiaries has
good and indefeasible title to its properties and assets, real and personal,
including the properties and assets reflected in the financial statements
described in Section 5.4 hereof, and none of the properties, assets or leasehold
interests of Borrower or any Subsidiary is subject to any Lien, except as
permitted by Section 6.11 hereof.
5.15 Debt. Borrower has no Debt, except as disclosed in the financial
statements described in Section 5.4 hereof and as otherwise permitted by this
Agreement. No Subsidiary of Borrower has any Debt except as owed to Borrower or
as otherwise permitted by Section 6.12 of this Agreement.
5.16 Disclosure. No statement, information, report, representation or
warranty made by Borrower or any of its Subsidiaries in this Agreement or in any
of the other Loan Documents or furnished by Borrower or any of its Subsidiaries
to Banks or Agent in connection with the negotiation or preparation of this
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 Borrower or to any of its
Subsidiaries that has not been disclosed in writing to Banks which has a
material adverse effect, or which might in the future have a material
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adverse effect, on the business, assets, financial condition or operations of
Borrower, any of its Subsidiaries or on the Collateral.
5.17 Registered Office; Principal. The principal place of business, chief
executive office and registered office Place of Business; Location of Borrower
and the place where Borrower keeps its books and records and all of Collateral
Collateral owed by Borrower is in Terrebonne Parish, Louisiana. The principal
place of business, chief executive office and registered office of Gulf Island
Subsidiary and the place where Gulf Island Subsidiary keeps its books and
records and all Collateral owned by Gulf Island Subsidiary is located on the
Real Property. The principal place of business, chief executive office and
registered office of Dolphin Services and the place where Dolphin Services keeps
its books and records and all Collateral owned by Dolphin Services and
encumbered by the Collateral Documents is located in Terrebonne Parish,
Louisiana (with the exception of certain such Collateral which is, from time to
time and in the ordinary course of Dolphin Services' business, temporarily
located at job sites outside of Terrebonne Parish). Borrower has always
maintained its registered office in either Terrebonne or East Baton Rouge
Parish, Louisiana, and each of Dolphin Services and Gulf Island Subsidiary has
always maintained its registered office in Terrebonne Parish, Louisiana. No
Person other than Borrower, Dolphin Services, Gulf Island Subsidiary, Agent and
Banks has possession of any of the Collateral.
5.18 Investment Company Act. Neither Borrower nor any of its Subsidiaries
is an "Investment Company" within the meaning of the Investment Company Act of
1940, as amended.
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5.19 Other Agreements. With the exception of (i) construction contracts
entered into by Borrower or one of its Subsidiaries in the ordinary course of
Borrower's or such Subsidiary's business, and (ii) loan agreements, bond
indentures, promissory notes, and similar agreements and documents relating
solely to Permitted Debt incurred by VOS and solely binding upon VOS, neither
Borrower nor any of its Subsidiaries is a party 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 could have a material adverse effect on
the business, properties, assets, operations or conditions, financial or
otherwise, of Borrower or such Subsidiary, or the ability of Borrower or such
Subsidiary to pay and perform its obligations under the Loan Documents to which
it is a party. Neither Borrower nor any of its Subsidiaries is in default in
any respect in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument
material to its business to which it is a party.
5.20 Compliance with Law. Each of Borrower and its Subsidiaries is in
compliance with all laws, rules, regulations, orders and decrees which are
applicable to Borrower, its Subsidiaries or any of their respective properties.
Without limiting the generality of the foregoing:
(a) Employment Matters. Each of Borrower and its Subsidiaries is 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. (S)(S) 201-219), and the regulations promulgated
thereunder.
(b) Environmental Matters.
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(i) Except as provided on Schedule II, Each of Borrower and its
Subsidiaries and all of their respective properties, assets
and operations are in full compliance with all Environmental
Laws. Neither Borrower nor any of its Subsidiaries is
aware of or has 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 Borrower or any of its
Subsidiaries with all Environmental Laws.
(ii) Once Borrower transfers all permits, licenses, and
authorizations relating to the Real Property to Gulf Island
Subsidiary, each of Borrower and its Subsidiaries has
obtained all permits, licenses and authorizations and has
filed all plans which are required under Environmental Laws
in order to conduct its business and/or own its properties
and assets including without limitation all Louisiana air
emission permits required under any Environmental Law in
order to conduct Borrower's or such Subsidiary's business
and/or own its assets or properties.
(iii) Each of Borrower and its Subsidiaries has on file an SPCC
Plan as required under applicable Environmental Laws in
connection with Borrower's or any Subsidiary's storage of
petroleum on the Real Property.
(iv) 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 Borrower or any of its Subsidiaries except in
compliance with Environmental Laws.
(v) There is no action, suit, proceeding, investigation or
inquiry before any court, administrative agency or other
governmental authority pending or, to the knowledge of
Borrower or any of its Subsidiaries, threatened against
Borrower or any of its Subsidiaries relating in any way to
any Environmental Law. Neither Borrower nor any of its
Subsidiaries has (A) been notified of any liability
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for remedial action under any Environmental Law, (B)
received any request for information by any governmental
authority with respect to the condition, use or operation of
any of its properties or assets, or (C) received any notice
from any governmental authority or other Person with respect
to any violation of or liability under any Environmental
Law.
5.21 Corporate Name. The exact corporate name of Borrower as it appears in
its articles of incorporation is as set forth in the introduction of this
Agreement and, with the exception of doing business under the name GIFI, Inc.,
Borrower has never done any business in any location under any other name. The
exact limited liability company name of Gulf Island Subsidiary as it appears in
its articles of organization is as set forth in the recitals of this Agreement,
and Gulf Island Subsidiary has never done any business in any location in any
other name. The exact corporate name of Dolphin Services as it appears in its
articles of incorporation is as set forth in the recitals of this Agreement, and
Dolphin Services has never done any business in any location under any other
name.
5.22 Collateral. The Collateral Documents create in favor of Banks, and/or
Agent for the benefit of Banks, valid, enforceable and perfected Liens on the
properties described therein, which Liens secure the payment and performance of
the obligations of Borrower and its Subsidiaries to Banks described in the
Collateral Documents, and which Liens are superior to the rights of all third
Persons, whether now existing or hereafter arising.
Section 6. Borrower's Covenants.
From the date of this Agreement and thereafter until the expiration or
termination of the Revolving Commitment, and until the Notes and other
liabilities of Borrower
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hereunder are paid in full and all other obligations and liabilities under the
Loan Documents are performed and paid in full, Borrower agrees that it will:
6.1 Financial Statements. Furnish to Agent:
(a) promptly after the sending or filing thereof, copies of all
reports which Borrower 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 Borrower files with the Securities and Exchange
Commission or any national securities exchange;
(b) together with all Forms 10-K, 10-Q and 8-K, a certificate of the
president or chief financial officer of Borrower, in the form of Exhibit
"E" hereto, to the effect that no Event of Default with respect to
Borrower, or event which might mature into an Event of Default with respect
to Borrower, has occurred and is continuing;
(c) forthwith upon the occurrence of an Event of Default, a
certificate of the president or chief financial officer of Borrower
specifying the nature and the period of existence thereof and what action
Borrower proposes to take with respect thereto;
(d) written notice of any and all litigation affecting Borrower or any
of its Subsidiaries, directly or indirectly; provided, however, this
requirement shall not apply to litigation involving Borrower or one of its
Subsidiaries and any other party if such litigation involves, in the
aggregate, less than $500,000; and
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(e) from time to time, such other information as Banks may reasonably
request.
6.2 Access. Permit access, and cause its Subsidiaries to permit access, by
Banks and Agent to the books and records and other property of Borrower and its
Subsidiaries during normal business hours and upon reasonable notice and permit,
and cause its Subsidiaries to permit, Banks to make copies of said books and
records.
6.3 Insurance. Maintain, and cause its Subsidiaries to maintain, with
financially sound and reputable insurance companies workmen's compensation
insurance, liability insurance and insurance on Borrower's and its Subsidiaries'
property, assets and business at least to such extent and against such hazards
and liabilities as is commonly maintained by similar companies and, in addition
to the foregoing insurance, such insurance as may be required in the Collateral
Documents. In the case of property (whether owned by Borrower or by one of its
Subsidiaries) on which Banks or Agent has a Lien, Borrower shall provide, and
shall cause its Subsidiaries to provide, Agent with duplicate originals or
certified copies of such policies of insurance naming Banks as additional loss
payees and as additional insureds as their interests may appear and providing
that such policies will not be canceled without thirty (30) days' prior written
notice to Banks.
6.4 Repair. Maintain, preserve and keep, and cause its Subsidiaries to
maintain, preserve, and keep, Borrower's and such Subsidiaries' properties in
good repair, working order and condition, and make, and cause its Subsidiaries
to make, necessary and proper repairs, renewals and replacements so that
Borrower's and its
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Subsidiaries' business carried on in connection therewith may be properly
conducted at all times.
6.5 Taxes. Pay or discharge, and cause its Subsidiaries to pay and
discharge, at or before maturity or before becoming delinquent (a) all taxes,
levies, assessments and governmental charges imposed on Borrower or any of its
Subsidiaries or its income or profits or any of its property, and (b) all lawful
claims for labor, materials and supplies which, if unpaid, might become a Lien
upon any of Borrower's property or the property of any of its Subsidiaries;
provided, however, that neither Borrower nor any Subsidiary shall be required to
pay or discharge any tax, levy, assessment or governmental charge which is being
contested in good faith by appropriate proceedings diligently pursued.
6.6 Corporate and Limited Liability Company Existence. Maintain its
corporate existence in good standing and cause its Subsidiaries to maintain
their respective corporate existences and limited liability company in good
standing.
6.7 Merger. Without the prior written consent of Banks, not, and cause each
of its Subsidiaries not to:
(a) be a party to any merger or consolidation (other than a merger of
one or more of the Subsidiaries into another Subsidiary or a merger of one
or more of the Subsidiaries into Borrower, in either event followed by
notice to Banks of the merger delivered within ten (10) days after the
merger becomes effective);
(b) except in the normal course of its business, sell, transfer,
convey, or lease all or any substantial part of Borrower's or a
Subsidiary's assets;
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(c) sell or assign, except in the normal course of Borrower's business
or the business of one of its Subsidiaries, with or without recourse, any
accounts receivable or chattel paper.
Agent and Banks hereby acknowledge that Borrower, with the consent of Agent and
Banks, has transferred substantially all of its operating assets to Gulf Island
Subsidiary on the date of this Agreement and such transfer does not violate
Section 6.7(b).
6.8 Compliance. Comply, and cause its Subsidiaries to comply, with all
statutes, laws, ordinances, orders, rules and regulations applicable to Borrower
or such Subsidiary, including, without limitation, all Environmental Laws and
ERISA; provided, however, Borrower and its Subsidiaries shall be deemed to be in
compliance with this requirement for such time as Borrower or one of its
Subsidiaries may be contesting, in good faith and with diligence by appropriate
proceedings, any alleged violation of any statute, rule or regulation. Borrower
shall not permit, and shall cause each of its Subsidiaries not to permit, any
condition to exist in connection with any Plan which might constitute grounds
for the PBGC to institute proceedings to have such Plan terminated or a trustee
appointed to administer such Plan, and Borrower shall not engage in, or permit
to exist or occur, and shall cause its Subsidiaries not to engage in or permit
to occur or exist, any other condition, event or transaction with respect to,
any such Plan which could result in Borrower or one of its Subsidiaries
incurring any material liability, fine or penalty.
Without limiting the generality of the foregoing, Borrower shall comply,
and shall cause each of its Subsidiaries to comply, fully with and maintain in
effect any and all environmental permits and licenses required under any
Environmental Law in order to
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conduct Borrower's or such Subsidiary's business. To the extent such permits are
required but have not been obtained, or to the extent such existing permits must
be modified or renewed, Borrower shall make, and shall cause its Subsidiaries to
make, timely application for and obtain all such permits, modifications or
renewals thereof, as the case may be, including, but not limited to, necessary
federal and/or state water discharge, air emission and waste management permits.
As often as Banks or Agent may require, Borrower shall submit to Agent
written progress reports addressing the status of environmental permits and
plans required of Borrower or any of its Subsidiaries, including pending permit
applications.
Anything contained herein to the contrary notwithstanding, Borrower shall
not use, or permit any of its Subsidiaries to use, any of the properties of
Borrower or of one of Borrower's Subsidiaries or allow such properties to be
used for the storage, treatment or disposal of Solid Waste or Hazardous
Substances except in the ordinary course of Borrower's or such Subsidiary's
business and in compliance with the terms of any applicable Environmental Law or
permit.
6.9 Use of Proceeds. Not use or permit any proceeds of the Advances to
be used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of "purchasing or carrying any margin stock" within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System,
as amended from time to time, and furnish to Banks, upon either of their
requests, a statement in conformity with the requirements of Federal Reserve
Form U-1 referred to in Regulation U of the Board of Governors of the Federal
Reserve System.
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6.10 Financial Covenants. Maintain, on a consolidated basis with all of
its Subsidiaries,
(a) a ratio of current assets to current liabilities, as determined
in accordance with GAAP, in excess of 1.50 to 1.00;
(b) a minimum Net Worth of SEVENTY MILLION AND NO/100 DOLLARS
($70,000,000) plus (1) fifty percent (50%) of the net income of Borrower
and its Subsidiaries on a consolidated basis, as determined in accordance
with GAAP, accruing after September 30, 1999 and (2) one hundred percent
(100%) of the proceeds of any future public equity offering by Borrower,
net of any fees, commissions, expenses and other costs incurred by Borrower
in connection with such public equity offering;
(c) a ratio of Debt (other than Permitted Debt owed by VOS) to Net
Worth no greater than .50 to 1.00; and
(d) a ratio of EBIT to Interest Expense of at least 4.00 to 1.00,
such ratio to be determined as of the end of each fiscal quarter by giving
effect to such fiscal quarter and the three (3) immediately preceding
fiscal quarters; provided that there shall be no Event of Default under
this Section 6.10(d) unless Borrower fails to meet the ratio described in
this Section 6.10(d) for three (3) successive fiscal quarters.
6.11 Liens. Not create, incur, or suffer to exist, and not permit any
of Borrower's Subsidiaries to create, incur or suffer to exist, any Lien on any
of Borrower's property or on the property of Borrower's Subsidiaries except
Permitted Liens.
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6.12 Debt. Not create or permit to exist, and not allow any of
Borrower's Subsidiaries to create or permit to exist, any Debt without the
prior written consent of Banks, if, as a result thereof, exclusive of (i) the
Debt contemplated by this Agreement, (ii) Permitted Debt incurred by VOS, and
(iii) Debt owed by a Subsidiary to Borrower, the aggregate amount of Debt of
Borrower and its Subsidiaries would exceed the sum of $1,000,000.
6.13 Shareholder or Employee Loans. Not make, and not permit any
Subsidiary to make, advances or loans to employees of Borrower or any Subsidiary
or shareholders of Borrower which exceed the aggregate amount of $100,000.
6.14 Change in Business. Carry on and conduct, and cause its
Subsidiaries to carry on and conduct, the business of Borrower and each of its
Subsidiaries in substantially the same manner and in substantially the same
fields of enterprise as such businesses are presently conducted; provided,
however, that the foregoing shall not prevent (i) Borrower or one of its
Subsidiaries from engaging in new and additional activities as long as said
activities are in substantially the same fields of enterprise as are currently
being engaged in by Borrower and the Existing Subsidiaries or (ii) VOS from
engaging in a business to construct, own, lease, or sell floating offshore
petroleum exploration and production platforms.
6.15 Compliance with Agreements. Comply with, and cause each of its
Subsidiaries to comply with, all indentures, mortgages, deeds of trust and other
agreements binding on Borrower or any Subsidiary or affecting its properties or
business.
6.16 Further Assurances. Execute and deliver, and cause its
Subsidiaries to execute and deliver, such further documentation as may be
requested by Banks or Agent
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to carry out the provisions and purposes of this Agreement and the other Loan
Documents and to preserve and perfect the Liens of Banks or Agent for the
benefit of Banks, as the case may be, in the Collateral.
6.17 Disposition of Assets. Not sell, lease, assign, transfer or
otherwise dispose of, and shall cause each of its Subsidiaries not to sell,
lease, assign, transfer or otherwise dispose of, any of its assets, except
dispositions of inventory, equipment, and scrap in the ordinary course of
business and as otherwise provided in this Agreement.
6.18 Change Tax I.D. Number. Not change, and cause Dolphin Services and
Gulf Island Subsidiary not to change, its Federal Taxpayer Identification Number
without giving Agent at least sixty (60) days' prior written notice.
6.19 Indemnity. Indemnify, defend and hold Agent and Banks and their
respective directors, officers, agents, attorneys and employees harmless from
and against all claims, demands, causes of action, liabilities, losses, costs
and expenses (including, without limitation, costs of suit, reasonable legal
fees and fees of expert witnesses) arising from or in connection with (a) the
presence in, on or under any property of Borrower or of any Subsidiary of
Borrower (including, without limitation, the Real Property) of any Hazardous
Substance or Solid Waste, or any releases or discharges (as the terms "release"
and "discharge" are defined under any applicable Environmental Law) of any
Hazardous Substance or Solid Waste on, under or from such property, (b) any
activity carried on or undertaken on or off such property of Borrower or of any
of its Subsidiaries, whether prior to or during the term of this Agreement, and
whether by Borrower, any of its Subsidiaries or any predecessor in title to
Borrower's or such Subsidiary's property or any officers, employees, agents,
contractors or subcontractors of
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Borrower, any Subsidiary of Borrower or any predecessor in title to the property
of Borrower or such Subsidiary, or any third persons at any time occupying or
present on such property, in connection with the handling, use, generation,
manufacture, treatment, removal, storage, decontamination, clean-up,
transportation or disposal of any Hazardous Substance or Solid Waste at any time
located or present on or under any of the aforedescribed property, or (c) any
breach of any representation, warranty or covenant under the terms of this
Agreement. The foregoing indemnity shall further apply to any residual
contamination on or under any or all of the aforedescribed property, or
affecting any natural resources, and to any contamination of any property or
natural resources arising in connection with the use, handling, storage,
transportation or disposal of any Hazardous Substance or Solid Waste, and
irrespective of whether any of such activities were or will be undertaken in
accordance with applicable laws, regulations, codes and ordinances. The
indemnity described in this Section shall survive the termination of this
Agreement for any reason whatsoever.
6.20 Real Property. Not create a Lien on any of the Real Property, or
permit any Subsidiary to create a Lien on any of the Real Property, in favor of,
or, except as permitted in Section 6.7 with respect to Borrower's conveyance of
the Real Property to Gulf Island Subsidiary, otherwise convey, or permit a
Subsidiary to convey, any portion of the Real Property to any Person without the
prior written consent of Banks.
6.21 Restricted Investments. Not make Investments in the Excluded
Subsidiaries exceeding $3,000,000 in the aggregate for all such Investments, as
determined on a cumulative basis from the date of organization of the first of
the Excluded Subsidiaries to be organized.
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Section 7. Conditions Precedent to Extensions of Credit.
The obligation of Banks to extend credit to Borrower under this Agreement
is subject to the satisfaction of the conditions precedent, in addition to the
applicable conditions precedent set forth in Section 8 below with respect to
Advances and/or Letters of Credit, that Borrower shall have delivered, or caused
to be delivered, to Banks in form and substance satisfactory to Banks:
7.1 Borrower's Resolutions. Copies, duly certified by the secretary or
assistant secretary of Borrower, of (a) the resolutions of Borrower's Board of
Directors authorizing the borrowings hereunder and the execution and delivery of
all of the Loan Documents to which Borrower is a party, (b) all documents
evidencing other necessary corporate action and (c) all approvals or consents,
if any, with respect to the Loan Documents.
7.2 Subsidiaries' Resolutions. Copies, duly certified by the secretary
or assistant secretary of each Subsidiary (other than the Excluded
Subsidiaries), of (a) the resolutions of such Subsidiary's Board of Directors,
managers, or members as the case may be, authorizing the borrowings hereunder
and the execution and delivery of all of the Loan Documents to which such
Subsidiary is a party, (b) all documents evidencing other necessary corporate or
limited liability company action and (c) all approvals or consents, if any, with
respect to the Loan Documents.
7.3 Notes. The duly authorized Notes executed by Borrower and payable
to the order of Banks.
7.4 Guaranty. The duly authorized Guaranty executed by each of the
Existing Subsidiaries.
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7.5 Gulf Island Subsidiary. The duly authorized Gulf Island Subsidiary
Mortgage executed by Gulf Island Mortgage Subsidiary and any other public
filings requested by Agent to evidence the Gulf Island Subsidiary Mortgage.
7.6 Gulf Island Subsidiary. The duly authorized Gulf Island Subsidiary
Security Agreement executed by Gulf Security Agreement Island Subsidiary and
Borrower, together with a UCC-1 financing statement to file in connection with
the Gulf Island Subsidiary Security Agreement.
7.7 Opinion. The opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P., counsel to Banks and Agent, addressed to Banks and
Agent, to the effect that (a) Borrower and the Existing Subsidiaries are
corporations or limited liability companies duly organized, validly existing and
in good standing under the laws of the State of Louisiana; (b) Borrower has full
power to execute, deliver and perform its obligations under this Agreement, the
Notes and the Collateral Documents to which it is a party; (c) each of the
Existing Subsidiaries has full power to execute, deliver and perform its
obligations under this Agreement and the Collateral Documents to which each is a
party; (d) such actions have been duly authorized by all necessary corporate or
limited liability company action, and are not in conflict with any provision of
law or of the articles of incorporation or organization, by-laws, or operating
agreement, as the case may be, of Borrower or the Existing Subsidiaries; (e)
this Agreement and the Notes are the legal and binding obligations of Borrower
enforceable in accordance with their respective terms, except as enforcement may
be limited by applicable bankruptcy, reorganization, moratorium or similar laws;
and (f) the Guaranty is the legal and binding obligation of the Existing
Subsidiaries enforceable in accordance with its terms, except as
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its enforcement may be limited by applicable bankruptcy reorganization,
moratorium, or similar laws.
Section 8. Additional Conditions Precedent to Advances and/or Letters
of Credit
The obligation of Banks to make any Advance and/or issue any Letter of
Credit under the Revolving Credit Facility is subject to, in addition to the
satisfaction of all other conditions precedent applicable to the Revolving
Credit Facility and set forth in Section 7 above, the satisfaction of each of
the following conditions precedent:
8.1 Default. Before and after giving effect to such Advance and/or
Letter of Credit, no Event of Default shall have occurred and be continuing.
8.2 Warranties. Before and after giving effect to such Advance and/or
Letter of Credit, the representations and warranties in Section 5 hereof shall
be true and correct as though made on the date of such Advance and/or Letter of
Credit except for such changes as are specifically permitted hereunder.
Section 9. Events of Default.
The following events shall constitute Events of Default hereunder and under
the Revolving Credit Facility, individually and collectively, and under all
other Loan Documents:
9.1 Payment. Default in the payment of principal on any one or more of
the Notes when due, or default in the payment of any interest on any one or more
of 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 Borrower from Banks or Agent;
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9.2 Other Indebtedness. Any other indebtedness of Borrower to Banks is
not paid at maturity or becomes due and payable prior to its expressed maturity
by reason of any default by Borrower 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 Borrower from Banks or
Agent;
9.3 Other Default. Any default of any other obligation of Borrower or
any Subsidiary to Banks under the terms of any note or notes, mortgage,
indenture, loan agreement or security document of Borrower or any Subsidiary to
Banks, including, without limitation, any of the Loan Documents, which default
shall continue for a period of thirty (30) days following written notice thereof
to Borrower from Banks or Agent, it being expressly understood and agreed that a
default under any note, mortgage, indenture, loan agreement or security document
of Borrower or any Subsidiary in favor of Banks, 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 Banks or
Agent, including, without limitation, the Loan Documents;
9.4 Insolvency. Borrower or any Subsidiary of 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 Borrower, such Subsidiary or any property of Borrower or of such
Subsidiary; or, in the absence of such application, consent or acquiescence, a
trustee or receiver is appointed for Borrower, for any Subsidiary of Borrower or
for a substantial part of any property of either Borrower or of any of its
Subsidiaries and is not discharged within thirty (30) days; or any bankruptcy,
reorganization, debt arrangement, or other proceeding under any bankruptcy or
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insolvency law, or any dissolution or liquidation proceeding is instituted by or
against Borrower or any of Borrower's Subsidiaries, and if instituted against
Borrower or one of Borrower's Subsidiaries, it is consented to or acquiesced in
by Borrower or such Subsidiary, or remains for thirty (30) days undismissed; or
any warrant of attachment is issued against any substantial portion of the
property of Borrower or of any Subsidiary of Borrower which is not released
within thirty (30) days of service;
9.5 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 Borrower, 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;
9.6 Agreements. Default in the performance of any of Borrower's or any
Subsidiary's covenants and/or agreements set forth in this 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 9), which default shall continue
for a period of thirty (30) days after written notice thereof to Borrower from
Banks or Agent;
9.7 Representation or Warranty. Any representation or warranty made by
Borrower or by any Subsidiary of Borrower herein or any Loan Document is untrue
in any material respect, or any schedule, statement, report, notice or writing
furnished by Borrower or any Subsidiary to Banks is untrue in any material
respect on the date as of
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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 Borrower from
Banks or Agent;
9.8 Cross-Default. Borrower or any Subsidiary of Borrower shall be in
default under any Debt owed by Borrower or such Subsidiary to a party other than
Banks, and such party shall commence exercising its remedies against Borrower or
such Subsidiary, under law or by contract, with respect to such Debt; and
9.9 Judgments and Attachments. Any property of Borrower or any of its
Subsidiaries shall become subject to a judgment which is not bonded or paid
prior to the expiration of the period following which the judgment creditor may
commence exercising its remedies with respect to such judgment, or any material
asset of Borrower or any of its Subsidiaries becomes subject to a writ of
attachment or other form of judicial seizure which is not released within 10
days.
9.10 Remedies. Upon the occurrence of any Event of Default, Banks, or
Agent upon the direction of Banks, in addition to all of the remedies conferred
upon Agent and/or Banks under law, in equity or under any of the Loan Documents,
may declare the Revolving Commitment to be terminated and the Notes to be due
and payable, whereupon the Revolving Commitment 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 9.4 occurs, the Revolving
Commitment shall immediately terminate, and the Notes shall become immediately
due and payable without declaration or notice of any kind.
Section 10. Agent.
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10.1 Authorization and Action. Each Bank hereby appoints and authorizes
Agent to execute the Collateral Documents on behalf of each such Bank and to
take such action as Agent on such Bank's behalf, and to exercise such powers
under the Loan Documents, as are delegated to Agent by the terms thereof,
together with such other powers as are reasonably incidental thereto, including,
without limitation, the enforcement of the Loan Documents in accordance with the
terms thereof (including, without limitation, the collection of the Notes), and
Agent hereby accepts such appointment. As to any matters not expressly provided
for by the Loan Documents (including, without limitation, enforcement or
collection of the Notes), Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of Banks and such instructions shall be binding upon Banks;
provided, however, that Agent shall not be required to take any action which
exposes Agent to personal liability or which is contrary to any of the Loan
Documents or applicable law. Agent shall not consent to any amendment of this
Agreement or any of the other Loan Documents (and no amendment by Banks shall be
effective without consent of Agent), the effect of which would be to increase
the amount of the Obligations or extend the maturity of any obligation, reduce
the bases on which any interest is computed, release any Collateral, waive any
provision regarding covenants or obligations of Borrower or the Subsidiaries or
Events of Default, without the express written consent of all Banks.
10.2 Agent's Reliance, Etc . Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted to
be taken by it or
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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, Agent: (i) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to Agent; (ii) may consult
with legal counsel (including counsel for Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (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 Borrower or to inspect the property
(including the books and records) of Borrower; (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.
10.3 Bank One and Affiliates. With respect to the Note payable to the
order of Bank One and the portion of the Revolving Commitment applicable to Bank
One, Bank One shall have the same rights and powers under the Loan Documents as
the other Bank and may exercise the same as though it were not Agent; and the
term "Bank" or "Banks"
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shall, unless otherwise expressly indicated, include Bank One in its individual
capacity. Without limiting the generality of the foregoing, Bank One and its
affiliates may accept deposits from, and generally engage in any kind of
business with, Borrower, and any person, firm or corporation who may do business
with or own securities of Borrower, all as if Bank One were not Agent and
without any duty to account therefor to Banks.
10.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon Agent or any other Bank and based on the
financial statements furnished by Borrower and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Bank also acknowledges that it
will, independently and without reliance upon Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
the Loan Documents. Each Bank acknowledges that a copy of this Agreement has
been made available to it and each Bank acknowledges that it is satisfied with
the form and substance of this Agreement.
10.5 Indemnification. Banks agree to indemnify and hold Agent harmless
(to the extent not reimbursed by Borrower), ratably according to the respective
principal amounts of the Notes then held by each of them (or if no Notes are at
the time outstanding, ratably according to the respective amounts of their
commitments hereunder), from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Agent in any way relating to or arising out of any of
the Loan Documents or any action taken or omitted by Agent
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under any of the Loan Documents (including, without limitation, attorneys' fees
and other costs associated with defending Agent against any of the foregoing),
provided that no Bank shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent's gross negligence or wilful
misconduct. Without limitation of the foregoing, each Bank agrees to reimburse
Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including attorneys' fees) incurred by Agent in connection with the
preparation, execution, administration, or enforcement of, or the preservation
of any rights under, the Loan Documents, to the extent that Agent is not
reimbursed for such expenses by Borrower.
10.6 Successor Agent. Agent may resign at any time by giving written
notice thereof to Banks and Borrower and may be removed at any time with or
without cause by Banks by notice to Borrower. Upon any such resignation or
removal, Banks shall have the right to appoint a successor agent by notice to
Borrower. If no successor agent shall have been so appointed by Banks, and
shall have accepted such appointment, within thirty (30) days after Agent's
giving of notice of its resignation, then Agent may, on behalf of Banks, appoint
a successor agent, by notice to Borrower and Banks, which successor agent shall
be a commercial bank organized under the laws of the United States of America or
any state thereof having a combined capital and surplus of at least $5,000,000.
Upon the acceptance of any appointment as Agent by a successor agent, such
successor agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of Agent, and Agent shall be discharged
from its duties and obligations under the Loan Documents. After Agent's
resignation or removal hereunder
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as Agent, the provisions of this Section 10 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
10.7 Benefits of Section. None of the provisions of this Section shall
inure to the benefit of Borrower or any Person other than Banks; consequently,
neither Borrower nor any other Person shall be entitled to rely upon, or to
raise as a defense, in any manner whatsoever, the failure of any Bank to comply
with such provisions.
10.8 Change in Specified Percentage. No Bank shall assign outright its
entire interest in the Revolving Credit Facility or the Revolving Commitment or
make any participation without the consent of the other Bank and Agent.
Section 11. General.
11.1 Definitions. As used in this Agreement, terms used herein with
initial capital letters shall have the following meanings, unless defined
elsewhere in this Agreement or unless the context clearly indicates otherwise:
"Advance" has the meaning ascribed to the term in Section 1.1 of this
Agreement.
"Agent" means Bank One.
"Agreement" means this Eighth Amended and Restated Revolving Credit
Agreement, as it may be further amended, restated, modified and/or
supplemented from time to time in the future.
"Bank" and "Banks" have the meanings ascribed to the terms on the
first page hereof.
"Bank One LIBO Rate" means, for each Interest Period, the
applicable London interbank offered rate for deposits in United States
Dollars appearing on Dow Jones Markets (Telerate) Page 3750 or 3740, as the
case may be, as of 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period and having maturity equal to such
Interest Period; provided, however, that if Dow Jones Markets (Telerate)
Page 3750 or 3740, as the case may be, is not available for any reason, the
applicable Bank One LIBO Rate for the relevant Interest Period shall
instead be the applicable London interbank offered rate for
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deposits in United States Dollars appearing on Reuters Screen FRBD as of
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period and having a maturity equal to such Interest Period. The
Bank One LIBO Rate determined by Agent with respect to a particular
Interest Period shall be fixed at such rate for the duration of such
Interest Period.
"Benefitted Bank" has the meaning ascribed to the term in Section 4.2
hereof.
"Borrower" has the meaning provided on the first page hereof.
"Borrowing Date" means any Business Day specified in a notice
pursuant to Section 3.6 as a date on which Borrower requests Banks to make
Advances hereunder.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a legal holiday for commercial banks in the State of
Louisiana.
"Capitalized Construction Interest" means, with respect to each
floating offshore petroleum exploration and production platform constructed
by VOS, interest expense accrued by VOS on any construction loan incurred
by VOS to build such platform; provided that to qualify construction loan
interest as Capitalized Construction Interest, VOS must (i) capitalize the
construction loan interest on its books and (ii) reasonably anticipate
recouping the construction loan interest within 36 months of the first
accrual of any construction loan interest relating to such platform through
VOS's sale of long-term bonds qualifying as Permitted Debt.
"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.
"Collateral" means all property described in and subject to the
Collateral Documents and any and all other property hereafter made subject
to a Lien to secure the payment and performance of the Obligations.
"Collateral Documents" means the documents listed on Exhibit "F"
annexed hereto and any and all other documents, instruments and agreements
delivered to Agent or Banks to secure the Obligations and/or any other
obligations described in this Agreement, as the foregoing may be amended,
modified or supplemented from time to time.
"Credit Agreement" has the meaning ascribed in the recital
paragraphs of this Agreement.
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"Debt" means: (a) all obligations of Borrower or of any of
Borrower's Subsidiaries for borrowed money, (b) all obligations of Borrower
or of any of Borrower's Subsidiaries evidenced by bonds, notes, debentures
or other similar instruments, (c) all obligations of Borrower or of any of
Borrower's Subsidiaries to pay the deferred purchase price of property or
services, except trade accounts payable by Borrower or by any of Borrower's
Subsidiaries 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 Borrower or of any of Borrower's Subsidiaries under any
Capitalized Leases, (e) all obligations of Borrower or of any of Borrower's
Subsidiaries 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 purchaser or otherwise
acquire, any obligation or indebtedness of Borrower or of any of Borrower's
Subsidiaries, or any other obligations, contingent or otherwise, (f) all
obligations secured by a Lien (except trade accounts payable by Borrower or
by any of Borrower's Subsidiaries 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
Borrower or by any of Borrower's Subsidiaries, whether or not the
obligations secured thereby have been assumed by Borrower or by any of
Borrower's Subsidiaries or are non-recourse to the credit of Borrower or of
any of Borrower's Subsidiaries, (g) all reimbursement obligations of
Borrower or of any of Borrower's Subsidiaries, other than performance bonds
of Borrower or of any of Borrower's Subsidiaries (whether contingent or
otherwise), relating to letters of credit, bankers' acceptances and similar
instruments, and (h) all liabilities of Borrower or of any of Borrower's
Subsidiaries in respect of unfunded vested benefits under any Plan;
provided, however, the term "Debt" shall not include money borrowed by
Borrower or by any of Borrower's Subsidiaries to pay premiums on insurance
policies obtained by Borrower or by any of Borrower's Subsidiaries in the
ordinary course of Borrower's or of any of Borrower's Subsidiaries'
business and shall further not include any type of obligation of a
Subsidiary to Borrower.
"Default Rate" has the meaning provided in Section 3.2 hereof.
"Dolphin" has the meaning provided on the first page hereof.
"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.
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"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.
(S) 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42
U.S.C. (S) 6901 et seq., the Clean Air Act, 42 U.S.C. (S) 7401 et seq., the
Clean Water Act, 33 U.S.C. (S) 1251 et seq., the Toxic Substances Control
Act, 15 U.S.C. (S) 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 Borrower, any of its Subsidiaries or any of the property or assets of
Borrower or of any of its Subsidiaries, as such laws, regulations and
requirements may be amended or supplemented from time to time.
"Event of Default" means the occurrence of any event described in
Section 9 hereof or the occurrence of any other event which with the lapse
of time, or lapse of time and notice to Borrower would constitute an Event
of Default.
"Excluded Subsidiaries" means MINDOC, L.L.C., Southport L.L.C., GIFI
Properties, L.L.C., Deep Ocean Services, L.L.C., and all foreign sales
corporations (as such term is defined in Section 922(a) of the United
States Internal Revenue Code) owned by Borrower or one of its Subsidiaries.
"Existing Security" means all security previously granted by
Borrower or by one of its Subsidiaries to Banks pursuant to the Collateral
Documents and other Loan Documents.
"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 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.
"Gulf Island Subsidiary" has the meaning provided in the preamble of
this Agreement.
"Gulf Island Subsidiary Mortgage" means that certain Mortgage to
Secure Future Advances by Gulf Island Subsidiary, as mortgagor, in favor of
Agent, as mortgagee, encumbering the Real Property, in the form attached as
Exhibit "G."
"Gulf Island Subsidiary Security Agreement" means that certain
Security Agreement between Gulf Island Subsidiary, as debtor, and Agent, as
secured party, in the form attached as Exhibit "H".
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"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.
"Interest Expense" means with respect to any period, Borrower's
consolidated interest expense for such period, determined in accordance
with GAAP but excluding Capitalized Construction Interest.
"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 Borrower in its notice to Agent 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 next preceding Interest Period
applicable to such LIBO Rate Advance and ending one, two or
three months thereafter, as selected by Borrower by notice to
Agent not less than one (1) Business Day 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 a day for which there is no
numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last
Business Day of a calendar month.
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"Investment" means all investments in other Persons in the form of
loans, advances or capital contributions of cash or other assets, purchases
of capital stock or other securities, and guaranties of such Person's
Debts.
"LC Commitment" means the lesser of (a) TEN MILLION AND NO/100
DOLLARS ($10,000,000) or (b) the Revolving Commitment at the time in
question.
"Letters of Credit" has the meaning ascribed to the term in
Section 1.1 hereof.
"LIBO Rate" means with respect to each day during an Interest Period
for a LIBO Rate Advance, an interest rate per annum equal to the sum of (a)
one and one-half percent (1.50%) plus (b) the Bank One LIBO Rate.
"LIBO Rate Advance" means an Advance made under the Revolving Credit
Facility which bears interest at the LIBO 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.
"Loan Documents" means, collectively, this Agreement, the Notes, the
Collateral Documents, the Assignment and Assumption Agreement, and any and
all other documents, instruments and agreements executed in connection with
the Advances or the Letters of Credit, as the foregoing may be modified,
supplemented and/or amended from time to time.
"Net Worth" means the sum of the common stock, additional paid-in
capital and retained earnings accounts of Borrower and its Subsidiaries on
a consolidated basis, 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.
"Notes" has the meaning ascribed to the term in Section 2.1 of this
Agreement.
"Obligations" means all obligations, indebtedness and liabilities of
Borrower or its Subsidiaries to Agent and/or either or both of Banks, 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 Borrower or its Subsidiaries under this
Agreement, the Notes, the Letters of Credit and the other Loan Documents,
and all interest accruing thereon and all attorneys' fees and other
expenses incurred in the enforcement or collection thereof.
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"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Permitted Debt" means Debt owed by VOS to the United States Maritime
Administration or which is guaranteed by the United States Maritime
Administration and which Debt is (i) non-recourse to Borrower or any of its
other Subsidiaries other than VOS and (ii) secured by Liens only on VOS's
assets.
"Permitted Liens" means:
(i) those for taxes, assessments or governmental charges or levies
if 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;
(ii) those 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;
(iii) those 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;
(iv) 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 Borrower or of any of Borrower's
Subsidiaries;
(v) lessors' interests under financing leases;
(vi) liens on assets of Borrower and its Subsidiaries not covered
by the Loan Documents which liens secure obligations of
Borrower or its Subsidiaries in the ordinary course of
business which in the aggregate for all such obligations of
Borrower and its Subsidiaries do not exceed $250,000;
(vii) liens encumbering only VOS's assets and which only secure
Permitted Debt; and
(viii) the Liens created pursuant to the Loan Documents.
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"Person" means any individual, corporation, business, trust,
association, company, partnership, joint venture, governmental authority or
other entity.
"Plan" has the meaning ascribed to the term in Section 5.10
hereof.
"Prime Rate" has the meaning ascribed to the term in Section 3.3
hereof.
"Prime Rate Advance" means an Advance made under the Revolving
Credit Facility which bears interest at the Prime Rate.
"Prior Credit Agreement" has the meaning provided in Section 1.1
hereof.
"Prior Notes" has the meaning provided in Section 1.
"Real Property" means the property described on Exhibit "I"
hereto, whether owned by Borrower or by one of its Subsidiaries.
"Revolving Commitment" means TWENTY MILLION AND NO/100 DOLLARS
($20,000,000), as such amount may be reduced by Borrower in accordance with
Section 4.4 of this Agreement.
"Revolving Credit Facility" has the meaning ascribed to the term
in Section 1.1 of this Agreement.
"Solid Waste" has the meaning specified in any applicable
Environmental Law.
"Southport" has the meaning provided on the first page hereof.
"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.
"Termination Date" means December 31, 2001.
"UCC" means the Uniform Commercial Code, as in effect from time
to time in each state where any of the Collateral is located or otherwise
has a situs; provided, however, if the Uniform Commercial Code in no
particular state is ascertainable or applicable, UCC shall mean the Uniform
Commercial Code, as in effect from time to time in the State of Louisiana.
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"Unused Commitment" has the meaning ascribed to the term in
Section 1.1 hereof.
"Whitney" has the meaning ascribed to the term in the recitals to
this Agreement.
All definitions contained in this Agreement are equally applicable to the
singular and plural forms of the terms defined. The words "hereof," "herein" and
"hereunder" and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all Section references pertain to this Agreement.
11.2 Financial Terms. Unless otherwise defined or the context otherwise
requires, all financial and accounting terms shall be defined under GAAP.
11.3 Delay. No delay on the part of Banks, Agent or any holder of any
one or more of the Notes, 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.
11.4 Notices. All notices, statements, requests and demands given
to or made under any party hereto in accordance with the provisions of this
Agreement shall be deemed to have been given or made when deposited in the mail,
postage pre-paid, registered or certified mail return receipt requested
addressed:
If to Banks:
Bank One, Louisiana, N.A.
201 St. Charles Avenue, 29th Floor
New Orleans, Louisiana 70170
Attention: Mr. J. Charles Freel, Jr.
First Vice President
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and
Whitney National Bank
228 St. Charles Avenue
New Orleans, Louisiana 70130
Attention: Mr. Harry C. Stahel
Senior Vice President
With a copy to:
F. Rivers Lelong, Jr., Esq.
Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P.
Place St. Charles
201 St. Charles Avenue
New Orleans, Louisiana 70170
If to Agent:
Bank One, Louisiana, N.A.
201 St. Charles Avenue, 29th Floor
New Orleans, Louisiana 70170
Attention: Mr. J. Charles Freel, Jr.
First Vice President
With a copy to:
F. Rivers Lelong, Jr., Esq.
Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P.
Place St. Charles
201 St. Charles Avenue
New Orleans, Louisiana 70170
If to Borrower or any of its Subsidiaries:
Gulf Island Fabrication, Inc.
583 Thompson Road
Houma, Louisiana 70363
Attention: Kerry J. Chauvin, President
or
Gulf Island Fabrication, Inc.
P.O. Box 310
Houma, Louisiana 70361
Attention: Kerry J. Chauvin, President
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With respect to notices to Borrower, such notices shall, if sent by
overnight courier or other means requiring a street address, be sent to the
first address provided above. If such notices are sent by means not requiring a
street address, such notices shall be sent to the second address provided above.
11.5 Expenses. Whether or not the Advances are made, Borrower agrees to
reimburse Banks and Agent, upon demand, for all expenses (including reasonable
attorneys' fees and legal expenses incurred by Banks and/or Agent) incurred by
Banks and/or Agent in the preparation, negotiation and/or execution of the Loan
Documents, and in enforcing the obligations of Borrower hereunder or under any
of the other Loan Documents, and to pay, and save Banks and Agent harmless from
all liability for, any stamp or other taxes which may be payable with respect to
the execution or delivery of this Agreement, the execution, delivery or issuance
of the Notes, and/or the execution, delivery and recordation of the other Loan
Documents, which obligations of Borrower shall survive any termination of this
Agreement.
11.6 Severability. Any provision of this 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.
11.7 Counterparts. This Agreement may be executed in as 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.
55
<PAGE>
11.8 Law. The Loan Documents, and each of them, shall be contracts
made under and governed by the laws of the State of Louisiana.
11.9 Successors. This Agreement shall be binding upon Borrower,
its Existing Subsidiaries, Banks, Agent and their respective successors and
assigns, and shall inure to the benefit of Borrower, its Existing Subsidiaries,
Banks and the successors and assigns of Banks and Agent. Borrower and its
Subsidiaries shall not assign their rights, obligations or duties hereunder or
under any of the Loan Documents without the prior written consent of Banks.
Banks shall give Borrower written notice of any assignment of its interests
hereunder to any other Person, upon which assignment Borrower and its Existing
Subsidiaries shall perform all of their respective obligations under the Loan
Documents in favor of Banks' assignee(s) as though such assignee(s) were
originally a party or parties to this Agreement.
11.10 Amendments. No amendment or waiver of any provision of this
Agreement or consent to any departure therefrom by Borrower, its Existing
Subsidiaries, Banks or Agent shall be effective unless the same shall be in
writing and signed by Borrower, its Existing Subsidiaries, Banks and Agent and,
in the case of a waiver or consent, such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
11.11 Entire Agreement. This Agreement constitutes the entire
agreement among the parties and supersedes any and all prior agreements with
respect to the transactions contemplated hereby.
11.12 Conflicts. This Agreement is in addition to and supplements
the provisions of the other Loan Documents. To the extent that the provisions
of this
56
<PAGE>
Agreement are in conflict with, and not merely in addition to, the provisions of
the other Collateral Documents, the provisions of this Agreement shall govern.
11.13 Reaffirmation of Collateral Documents. Borrower and each of
the Existing Subsidiaries hereby reaffirms its obligations under each of the
Collateral Documents to which it is a party and agrees and confirms that all
such Collateral Documents continue to secure all Obligations under this
Agreement.
11.14 VOS Name Change. Following the effective date of this
Agreement, VOS shall change its name to Gulf Island MinDOC Company, L.L.C.
IN WITNESS WHEREOF, the parties hereto and intervenors herein have
caused this Agreement to be executed by their respective officers thereunto duly
authorized effective as of the date first written above.
BORROWER:
GULF ISLAND FABRICATION, INC.
By: /s/Kerry J. Chauvin
_______________________________
Kerry J. Chauvin, President
EXISTING SUBSIDIARIES:
GULF ISLAND, L.L.C.
By: /s/William A. Downey
_______________________________
William A. Downey, President
DOLPHIN SERVICES, INC.
By: /s/James Stewart
_______________________________
James Stewart, President
57
<PAGE>
SOUTHPORT, INC.
By: /s/Kirk Meche
_______________________________
Kirk Meche, President
VANGUARD OCEAN SERVICES, L.L.C.
By: /s/Kerry J. Chauvin
_______________________________
Kerry J. Chauvin, President
BANKS:
BANK ONE, LOUISIANA, N.A.
By: /s/J. Charles Freel, Jr.
_______________________________
J. Charles Freel, Jr.
First Vice President
WHITNEY NATIONAL BANK
By: /s/Harry C. Stahel
_______________________________
Harry C. Stahel
Senior Vice President
AGENT:
BANK ONE, LOUISIANA, N.A.
By: /s/J. Charles Freel, Jr.
_______________________________
J. Charles Freel, Jr.
First Vice President
58
<PAGE>
EXHIBITS
--------
A. Bank One's form of Application for Stand-By Letter of Credit
B. Form of Continuing Subsidiary Guaranty
C. $10,000,000 Revolving Promissory Note made payable to the order of Bank One
D. $10,000,000 Revolving Promissory Note made payable to the order of Whitney
E. Borrower's Default and Warranty Certificate
F. List of Collateral Documents
G. Gulf Island Subsidiary Mortgage
H. Gulf Island Subsidiary Security Agreement
I. Description of Real Property
SCHEDULES
---------
Schedule I - Litigation Pending Against Borrower
A. Case No. H-94-3547, AGIP Petroleum, Inc. vs. Gulf Island Fabrication, Inc.,
et al; In the U.S. District Court of Texas, Houston Division.
B. Case No. 125786 (Civil Action) Alvin Sawyer vs. Gulf Island Fabrication,
Inc.; In the 32nd Judicial District Court for the Parish of Terrebonne,
State of Louisiana.
C. Case No. 534,897, Stephen G. Benton, Jr. vs. Southport, Inc. consolidated
with Gulf Island Fabrication, Inc.; In the 24th Judicial District Court,
Division "D," Jefferson Parish, State of Louisiana.
D. Case No. 125186 (Civil Action) Robbie Sauce vs. Dolphin Services, Inc.; In
the 32nd Judicial District Court for Parish of Terrebonne, State of
Louisiana.
Schedule II - Environmental Citations
A. Gulf Island Fabrication, Inc. - Received Notice of Violation on 3/16/99
from LADEQ for permit violations. Presently waiting on determination from
enforcement. Gulf Island Fabrication, Inc. Title V permit application
submitted to LADEQ in January 2000.
B. Southport, Inc. - On 11/17/99, notified LADEQ that it exceeded permitted
limits. Permit modification was submitted to LADEQ in December of 1999.
Currently anticipate a new permit to be issued in February of 2000.
59
<PAGE>
EXHIBIT "I"
TRACT ONE:
- ---------
Owner: Gulf Island, L.L.C.
ALL OF THAT CERTAIN TRACT OR PARCEL OF LAND, together with all of the buildings
and improvements thereon, and all of the rights, ways, privileges, servitudes,
appurtenances and advantages thereunto belonging or in anywise appertaining,
situated in the Parish of Terrebonne, State of Louisiana, in Sections 1 and 15,
T18S, R17E, and according to survey of T. Baker Smith & Son, Inc., dated
September 19, 1991, said property measures as follows, to-wit:
Commencing at the intersection of the centerline of Thompson Road with the
centerline of Grand Caillou Road (La. Hwy. 57); thence, S 81(degrees)
03'50" W a distance of 4831.76 feet to the point of beginning;
Thence, S 8(degrees)56'10" E a distance of 1300.00 feet to a point;
Thence, S 8l(degrees)03'5O" W a distance of 1779.09 feet to a point;
Thence, S 8(degrees)56'10" E a distance of 650.00 feet to a point;
Thence, S 81(degrees)03'50" W a distance of 2323.21 feet to the centerline
of the Houma Navigation Canal right-of-way;
Thence, N 7(degrees)45'19" E on and along said centerline a distance of
187.31 feet to a point;
Thence, N 5(degrees)31"22" E on and along said centerline a distance of
485.97 feet to a point;
Thence, N 5(degrees)33'33" E on and along said centerline a distance of
404.43 feet to a point;
Thence, N 1(degrees)18'58" E on and along said centerline a distance of
889-50 feet to a point;
Thence, N 0(degrees)58'37" W on and along said centerline a distance of
33.43 feet to a point;
Thence, N 8l(degrees)03'50" E on and along the centerline of Thompson
Road a distance of 3662.99 feet to the point of beginning, containing
146.243 acres.
Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes,
60
<PAGE>
prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.
TRACT TWO:
- ---------
Owner: Gulf Island, L.L.C.
ALL OF THAT CERTAIN TRACT OR PARCEL OF LAND, together with all of the buildings
and improvements located thereon and all of the rights, ways, privileges,
servitudes, appurtenances and advantages thereunto belonging or in any way
appertaining, situated in the Parish of Terrebonne, State of Louisiana, in
Sections 11, 47 and 48, T17S-Rl7E and Sections 15 and 17, T18S-Rl7E of said
Parish, all as more fully shown on a plat and survey entitled "Gulf Island
Fabrication, Inc.. - Survey of A 437.014 Acre Tract Located in Sections 11, 47
and 48, T17S-Rl7E and Sections 15 and 17, T18S-Rl7E, Terrebonne Parish,
Louisiana" dated September 19, 1991 prepared by T. Baker Smith & Son, Inc., and
according to which plat and survey said property measures as follows, to-wit:
Commencing at the northwest corner being the intersection of the northerly
property line and the easterly right-of-way line of Louisiana State Highway 315,
proceed N 84(degrees)23'47" E a distance of 3335.89 feet to a point;
Thence along a curve to the right having a delta of 5(degrees)l6'27"
with chord bearing S 24(degrees)03'28" E a distance of 1046.89 feet to
a point;
Thence S 19(degrees)07'32" E a distance of 469.15 feet to a point;
Thence S 15(degrees)01'40"E a distance of 1078.97 feet to a point;
Thence S 13(degrees)24'38"E a distance of 791.67 feet to a point;
Thence S 07(degrees)35'11"E a distance of 813.04 feet to a point;
Thence S 08(degrees)20'28"E a distance of 59.49 feet to a point;
Thence S 03(degrees)06'15"E a distance of 889.93 feet to a point;
Thence S 00(degrees)52'48"E a distance of 369.78 feet to a point;
Thence N 80(degrees)43'28"W a distance of 1567.06 feet to a point;
Thence N 82(degrees)32'28" W a distance of 2563.86 feet to a point;
61
<PAGE>
Thence N 05(degrees)44'37" W a distance of 4445.67 feet to the point of
beginning of a 437.014 acre tract.
Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes, prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.
TRACT THREE:
- -----------
Owner: Dolphin Services, Inc. as successor to Dolphin Sales & Rentals, Inc.
Commencing at a point S 81(degrees)03' 50" W, a distance of 3,360.00 feet from
the intersection of the centerline of La. State Highway No. 57 with the
centerline of Thompson Road; said point being the southeast corner of the tract
being conveyed and being on the centerline of Thompson Road, and also being the
point of beginning;
Thence S 81(degrees)03' 50" W, along the centerline of Thompson Road, a distance
of 330.00 feet to a point;
Thence N 8(degrees)56' 10" W, a distance of 1,320.00 feet to a point in the
centerline of Munson Slip;
Thence N 81(degrees)03' 50" E, along said centerline, a distance of 330.00 feet
to a point;
Thence S 8(degrees)56' 10" E, a distance of 1,320.00 feet from the point of
beginning and containing an area of 10.000 acres, more or less, all as more
fully shown on a map prepared by Southern Surveyors, dated May 4, 1976, and
titled "Plat of Survey Showing a Proposed Purchase from Walter Land Company
located in Section 12, T17S, R17E, and Section 1, T18S, R17E, Terrebonne Parish,
Louisiana".
Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes, prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.
TRACT FOUR:
- ----------
Owner: Dolphin Services, Inc.
62
<PAGE>
A certain lot or parcel of ground, together with all buildings and improvements
thereon, located in Section 12, Township 17 South, Range 17 East, and Section 1,
Township 18 South, Range 17 East, Terrebonne Parish, Louisiana, being Lot 27 of
Houma-Terrebonne Industrial Park as shown on a plat of survey of Robert C. Reed,
Registered Land Surveyor, dated March 22, 1972, revised July 11, 1973, said plat
attached to document dated February 17, 1975, and registered in COB 608, folio
670, Entry No. 482726, and said Lot 27 being more particularly described as
follows, to-wit:
Commencing at a point S 81(degrees)03'50" W, a distance of 1,150 feet from the
intersection of the centerline of Roland Road with the centerline of Thompson
Road; said point being the southeasterly corner of Lot 27 and also being the
point of beginning.
Thence S 81(degrees)03'50" W along the centerline of Thompson Road, a distance
of 330.00 feet to a point on the property line between Lots 27 and 26;
Thence N 8(degrees)56'10" W along said property line, a distance of 1,320.00
feet to a point in the centerline of Munson Slip;
Thence N 81(degrees)03'50" E, along the centerline of Munson Slip, a distance of
330.00 feet to a point on the property line between Lots 27 and 28 of said
Houma-Terrebonne Industrial Park;
Thence S 8(degrees)56'10" E, along said line between Lots 27 and 28, a distance
of 1,320.00 feet to the point of beginning, containing an area of 10.100 acres,
more or less. Said Lot 27 is shown on a plat prepared by Euclid Engineering Co.,
Inc. dated November 13, 1978.
Together with all the buildings and improvements now or hereafter situated on
the aforedescribed property and appurtenances, rights, ways, privileges,
servitudes, prescriptions, natural increases, accessions and advantages now or
hereafter belonging or in anywise appertaining thereto, including, without
limitation, all component parts of the aforedescribed property, and all
component parts of any building or other construction located on the
aforedescribed property, now or hereafter forming a part of or attached to the
aforedescribed property or used in connection therewith.
63
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from consolidated
fincial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,765
<SECURITIES> 11,419
<RECEIVABLES> 27,330
<ALLOWANCES> 0
<INVENTORY> 1,120
<CURRENT-ASSETS> 48,900
<PP&E> 69,927
<DEPRECIATION> 27,246
<TOTAL-ASSETS> 95,846
<CURRENT-LIABILITIES> 14,824
<BONDS> 0
0
0
<COMMON> 4,162
<OTHER-SE> 73,564
<TOTAL-LIABILITY-AND-EQUITY> 95,846
<SALES> 31,741
<TOTAL-REVENUES> 31,741
<CGS> 29,193
<TOTAL-COSTS> 30,317
<OTHER-EXPENSES> (262)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18
<INCOME-PRETAX> 1,668
<INCOME-TAX> 561
<INCOME-CONTINUING> 1,107
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,107
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.09
</TABLE>
<PAGE>
NEWS RELEASE
Exhibit 99.1
For further information contact:
Kerry J. Chauvin Joseph "Duke" Gallagher
Chief Executive Officer Chief Financial Officer
(504) 872-2100 (504) 872-2100
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
THURSDAY, APRIL 27, 2000
GULF ISLAND FABRICATION, INC.
REPORTS FIRST QUARTER EARNINGS
Houma, LA - Gulf Island Fabrication, Inc. (NASDAQ: GIFI) today reported net
income of $1.1 million ($.09 diluted EPS) on revenue of $31.7 million for its
first quarter ended March 31, 2000, compared to net income of $1.9 million ($.17
diluted EPS) on revenue of $30.3 million for the first quarter ended March 31,
1999.
At March 31, 2000, the company had a revenue backlog of $29.5 million and a
labor backlog of approximately 526 thousand man-hours remaining to work.
SELECTED BALANCE SHEET INFORMATION
(in thousands)
March 31, December 31,
2000 1999
__________ ____________
Cash and short-term investments $ 16,184 $ 15,750
Total current assets 48,900 47,154
Property, plant and equipment, at cost, net 42,681 43,664
Total assets 95,846 95,049
Total current liabilities 14,824 15,367
Debt -- --
Shareholders' equity 77,726 76,618
Total liabilities and shareholders' equity 95,846 95,049
Gulf Island Fabrication, Inc., based in Houma, Louisiana, is a leading
fabricator of offshore drilling and production platforms, offshore living
quarters and other specialized structures used in the development and production
of offshore oil and gas reserves. The Company also offers offshore interconnect
pipe hook-up, inshore marine construction, manufacture and repair of pressure
vessels, steel warehousing and sales.
<PAGE>
Exhibit 99.1
GULF ISLAND FABRICATION, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
<S> <C> <C>
2000 1999
----------- -----------
Revenue $ 31,741 $ 30,329
Cost of revenue 29,193 26,103
----------- -----------
Gross profit 2,548 4,226
General and administrative expenses 1,124 1,282
----------- -----------
Operating income 1,424 2,944
Other expense (income):
Interest expense 18 21
Interest income (319) (101)
Other - net 57 (49)
----------- -----------
(244) (129)
----------- -----------
Income before income taxes 1,668 3,073
Income taxes 561 1,148
----------- -----------
Net income $ 1,107 $ 1,925
=========== ===========
Per share data:
Basic earnings per share $ 0.10 $ 0.17
=========== ===========
Diluted earnings per share(1) $ 0.09 $ 0.17
=========== ===========
Weighted-average shares 11,638 11,638
=========== ===========
Adjusted weighted-average shares(1) 11,705 11,656
=========== ===========
Depreciation and amortization
included in expense above $ 1,224 $ 1,201
=========== ===========
(1) The calculation of diluted earnings per share assumes that all stock options are exercised and that
the assumed proceeds are used to purchase shares at the average market price for the period.
</TABLE>
2
