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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[MARK ONE]
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD ______ TO ______
COMMISSION FILE NO.: 000-23225
TRANSCOASTAL MARINE SERVICES, INC.
(Exact name of Registrant as specified in its charter.)
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DELAWARE 72-1353528
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2925 BRIARPARK, SUITE 930 77042
HOUSTON, TEXAS (Zip code)
(Address of principal executive offices)
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(713) 784-7429
(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act: NONE.
Securities Registered Pursuant to Section 12(g) of the Act:
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NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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Common Stock, par value $.001 per share Nasdaq National Market
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Indicate by check mark whether the registrant has (1) 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) been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 16, 1999, there were 10,448,441 shares of common stock, par
value of $.001 per share, of the Registrant issued and outstanding, 5,739,550 of
which, having an aggregate market value of $37,280,037, based on the closing
price per share of the common stock of the Registrant reported on the Nasdaq
National Market on that date, were held by non-affiliates of the Registrant. For
purposes of the above statement only, all directors and executive officers of
the Registrant are assumed to be affiliates.
DOCUMENTS INCORPORATED BY REFERENCE:
The Company's proxy statement in connection with the Annual Meeting is
incorporated by reference into Part III of this Form 10-K.
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TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business.................................................... 1
Item 2. Properties.................................................. 6
Item 3. Legal Proceedings........................................... 9
Item 4. Submission of Matters to a Vote of Security Holders......... 9
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters......................................... 10
Item 6. Selected Financial Data..................................... 11
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 12
Item 7a. Quantitative and Qualitative Disclosures about Market
Risk........................................................ 17
Item 8. Financial Statements and Supplementary Data................. 18
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 41
PART III
Item 10. Directors and Executive Officers of the Registrant.......... 41
Item 11. Executive Compensation...................................... 41
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 41
Item 13. Certain Relationships and Related Transactions.............. 41
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K......................................................... 41
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PART I
ITEM 1. BUSINESS.
GENERAL
TransCoastal Marine Services, Inc. ("TCMS") is a marine construction
company with worldwide operations onshore, in the transition zone and offshore
(up to 800 feet). The Company has two operating groups: the Pipeline and Marine
Group and the Fabrication and Offshore Group. The Pipeline and Marine Group
performs pipeline installation and repair worldwide utilizing a fleet of company
owned vessels. This group also provides construction support services, including
hydrostatic testing and commissioning of pipelines. The Fabrication and Offshore
Group fabricates, refurbishes and installs production platforms, offshore
drilling rigs, barges and performs other related fabrication services.
The Company currently conducts operations from port facilities and
fabrication yards strategically positioned along the U.S. Gulf Coast. In order
to conduct its international activities, the Company currently has offices in
West Africa, Venezuela and Mexico. The Company's principal executive offices are
located at 2925 Briarpark Drive, Suite 930, Houston, Texas 77042, and its
telephone number is (713) 784-7429.
PIPELINE AND MARINE GROUP
The efficient development of an offshore oil and gas field frequently
involves the addition or extension of an infrastructure of gathering lines and
trunklines (large diameter pipelines). The Pipeline and Marine Group performs
pipeline installation and repair onshore, in the transition zone and in water
depths up to 800 feet utilizing a fleet of company-owned vessels and equipment.
This group also conducts onshore and offshore hydrostatic testing and
commissioning of pipelines for oil and gas producers and pipeline construction
companies. During hydrostatic testing, water is pumped into a newly installed or
existing pipeline to increase the internal pressure beyond the designed capacity
of the pipeline in order to test its structural integrity. Pipeline
commissioning involves final preparation of a completed and successfully tested
pipeline for operation in accordance with applicable regulatory standards. In
connection with its hydrostatic testing and commissioning services, the Pipeline
and Marine Group also performs pipeline cleaning, drying and dehydration
services. This group also manufactures amphibious undercarriages for marine
construction equipment used in transition zone waters.
Prior to 1998, the Pipeline and Marine Group's traditional market was the
water region along the U.S. Gulf Coast. During 1998, this group expanded its
activities into international offshore markets including West Africa, the
Caribbean and Mexico. The Company believes it is the only company providing
pipeline installation and repair services and hydrostatic testing and
commissioning services from water depths of 800 feet through the transition zone
and to onshore gathering and processing facilities in the markets it serves.
The Company's fleet includes: (i) four anchor barges and three multipurpose
vessels (used in both pipeline installation and repair and hydrostatic testing,
commissioning and related operations), primarily operated in water depths beyond
20 feet, and (ii) 15 spud barges and ancillary equipment, operated in water
depths of up to 20 feet. The Company also owns specialized equipment for
offshore pipeline jetting (a specialized pipeline burying technique) and testing
services, marine dredging and trench digging. See Item 2. Properties for a
listing of the Company's significant vessels and equipment.
FABRICATION AND OFFSHORE GROUP
The Company's Fabrication and Offshore Group fabricates and refurbishes (i)
structural components of fixed platforms for use in the offshore development and
production of oil and gas and (ii) structural components, primarily deck
structures, for offshore drilling rigs and barge drilling rigs. These services
are contracted for by customers with worldwide exploration and production
operations.
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INDUSTRY OVERVIEW
The market for offshore pipeline installation and related services and for
fabrication services is primarily dependent on the levels of oil and gas
exploration, development and production activities and pipeline capacity
utilization in the markets in which the Company is active.
MATERIALS
The principal materials used by the Company in its business are carbon and
alloy steel in various forms, welding supplies, fuel oil, gasoline and paint,
which are currently available in adequate supply from many sources. The Company
does not depend on any single supplier or source. Pipe used in the Company's
pipeline construction operations is generally provided by the Company's
customers.
SAFETY AND QUALITY ASSURANCE
The safety and health of the Company's employees is a high priority for the
Company's management. The Company maintains a stringent safety assurance program
to reduce the possibility of accidents. Additionally, the Company has
established guidelines to ensure compliance with all applicable state and
federal safety regulations, and provides ongoing training and safety education.
The Company has a comprehensive drug-testing program and conducts periodic
employee health screenings.
The Company's operations are conducted in compliance with the applicable
standards of the American Petroleum Institute, the American Welding Society and
the American Society of Mechanical Engineers, as well as customer
specifications. Training programs have been instituted to upgrade the skills of
the Company's personnel and maintain high-quality standards. Management believes
these programs enhance the quality of its services and reduce the total cost of
work performed.
CUSTOMERS AND CONTRACTS
The Company's primary customers are major and independent oil and gas
exploration and production companies, drilling contractors, hydrocarbon
transportation companies and other marine construction companies. The level of
construction services required by any one customer depends on the amount of that
customer's capital expenditure budget allocated to marine construction in any
single year. Consequently, customers that account for a significant portion of
revenue in one fiscal year may represent an immaterial portion of revenue in
subsequent fiscal years. The five most significant customers of the Company on a
combined basis during fiscal 1998 (in alphabetical order) were Chevron, Mallard
Bay Drilling, Shell, Transcontinental Gas Pipeline Corporation, and Transocean
Offshore. The Company had only one customer that represented more than 10
percent of its revenues in fiscal 1998. While the Company is not dependent on
any one customer, the loss of one of its significant customers could, at least
on a short-term basis, have an adverse effect on the Company's results of
operations.
The Company's contracts are typically of short duration, being completed in
one to nine months. A substantial number of the Company's projects are performed
on a fixed-price basis, although some projects are performed on an
alliance/partnering or cost-plus basis. Under a fixed-price contract, the
Company receives the price fixed in the contract, subject to adjustment only for
change orders placed by the customer. As a result, the Company is responsible
for all cost overruns under items included in fixed-price contracts. Under a
typical alliance/partnering arrangement, the Company and the customer agree in
advance to a target price that includes specified levels of labor and material
costs and profit margins. If the project is completed at less than the cost
levels targeted in the contract, the contract price is reduced by a portion of
the savings. If the completed cost is greater than the targeted costs, the
contract price is increased, but generally to the target price plus the actual
incremental cost of material and direct labor. Accordingly, under an
alliance/partnering arrangement, the Company has some protection against cost
overruns but must share a portion of any cost savings with the customer. Under
cost-plus arrangements, the Company receives a specified fee in excess of its
direct labor and material cost and therefore is protected against cost overruns.
Revenue, costs, and gross profit realized on a contract will often vary from the
estimated amounts on which such contracts were originally based due to a variety
of reasons including: changes in the availability and cost of labor and
material;
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variations in productivity from the original estimates; and errors in estimates
or bidding. These variations and the risks inherent in the marine construction
industry may result in revenue and gross profit that differ from those
originally estimated. This can result in reduced profitability or losses on
projects. Depending on the size of a project, variations from estimated contract
performance can have a significant impact on the Company's operating results for
any particular fiscal quarter or year.
COMPETITION
The marine construction services business is highly competitive and in
recent years has been characterized by over-capacity, which has resulted in
substantial pressure on pricing and operating margins. The Company expects the
over-capacity in the industry to reoccur from time to time in the future.
Contracts for marine construction services are usually awarded on a competitive
bid basis. In selecting a contractor the Company believes customers consider,
among other things, the availability and technical capabilities of equipment,
personnel, efficiency, condition of equipment, safety record and reputation.
However, price is currently a primary factor in determining which qualified
contractor with available equipment is awarded a contract. Some of the Company's
competitors are larger and have financial and other resources that are greater
than those of the Company.
The Company generally focuses on projects from the transition zone to 800
feet of water. In the U.S. Gulf of Mexico waters, several companies with one or
more derrick or pipe laying barges compete with the Company for transition zone
and shallow water projects. The Company believes that it is the largest
transition zone marine construction services company with focus on the U.S. Gulf
Coast. Internationally, where the company competes for projects from the
transition zone to 800 feet of water, the Company believes that Global
Industries, Ltd., Horizon Offshore, Inc. and J. Ray McDermott, S.A., and several
other international contractors are its primary competitors.
In its Fabrication and Offshore Group, the Company has numerous
competitors. Some of these competitors are larger and have financial and other
resources that are greater than those of the Company.
BACKLOG
As of December 31, 1998, the Company's unfilled contracts and backlog
orders (including verbal orders) amounted to approximately $46.8 million;
however, the Company does not consider its backlog amounts to be a reliable
indicator of future revenue because most of the Company's projects are awarded
and performed within a relatively short period of time. The Company's backlog
fluctuates significantly based on the timing of contract awards and varying
levels of operating activity throughout the year. The Company is generally able
to complete its projects within a 12-month period.
FLUCTUATIONS IN OPERATING RESULTS
The Company's operating results may fluctuate significantly from quarter to
quarter or year to year because of a number of factors, including: the demand
for oil and gas, seasonal fluctuations in the demand for marine construction
services (particularly during the winter months), acquisitions, and competitive
factors. Accordingly, quarterly comparisons of the Company's revenue and
operating results should not be relied upon as an indication of future
performance. Additionally, the results of any quarterly period may not be
indicative of results to be expected for a full year. The Company recognizes
most of its contract revenue on a percentage-of-completion basis. Contract price
and cost estimates are reviewed periodically as the work progresses, and
adjustments proportionate to the percentage of completion are reflected in
income in the period when the facts giving rise to a revised estimate become
known. To the extent that these adjustments result in a reduction or elimination
of previously reported profits with respect to a project, the Company would
recognize a charge against current earnings, which could be material. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business -- Customers and Contracts".
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GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS
General
Many aspects of the Company's operations are subject to governmental
regulation, including regulation by the U.S. Coast Guard, the National
Transportation Safety Board, the U.S. Customs Service and the Occupational
Safety and Health Administration, as well as by private industry organizations
such as the American Bureau of Shipping. The Coast Guard and the National
Transportation Safety Board set safety standards and are authorized to
investigate vessel accidents and recommend improved safety standards relating to
vessels. The Occupational Safety and Health Administration performs similar
functions with respect to the Company's onshore facilities and operations. In
addition, the Company depends on the demand for its services from the oil and
gas industry and, therefore, the Company's business is affected by the laws and
regulations, as well as changing taxes and governmental policies, relating to
the oil and gas industry generally.
Certain of the Company's barges and vessels are subject to safety and
classification standards imposing requirements for periodic inspections and the
maintenance of certain certificates and insurance coverage, generally depending
on the type, size and service performed by the barge or vessel. In addition, in
order for a vessel to engage in the U.S. Coastwise Trade (providing
transportation services between the states), the vessel must have been built in
the United States. All the Company's barges and vessels are eligible for service
in the U.S. Coastwise Trade, except for the M/V Discovery, a Panamanian flagged
vessel. As a multi-purpose construction vessel providing non-transportation
services to the offshore oil and gas industry, the Company believes the market
for the services performed by the M/V Discovery is not materially limited by its
Panamanian registration.
The Company is required by various governmental and quasi-governmental
agencies to obtain certain permits, licenses and certificates with respect to
its operations. The Company believes that it has obtained all permits, licenses
and certificates necessary to the conduct of its business.
In addition to governmental regulation, various private industry
organizations, such as the American Petroleum Institute, the American Society of
Mechanical Engineers and the American Welding Society, promulgate technical
standards that must be adhered to during the course of the Company's fabrication
operations.
Environmental
The operations of the Company are also affected by numerous federal, state
and local laws and regulations relating to protection of the environment. The
requirements of these laws and regulations have become more complex, stringent
and expensive in recent years, and may, in certain circumstances, impose strict
liability, rendering a company liable for environmental damages and remediation
costs without regard to negligence or fault on the part of such party. Aside
from possible liability for damages and costs associated with releases of
hazardous materials including oil into the environment, such laws and
regulations may expose the Company to liability for the conduct of or conditions
caused by others or acts of the Company that were in compliance with all
applicable laws at the time such acts were performed. Sanctions for
noncompliance with these laws and regulations may include revocation of permits,
corrective action orders, administrative or civil penalties, and criminal
prosecution. The Company is not aware of any noncompliance with applicable
environmental laws and regulations that would likely have a material adverse
effect on the Company's business or financial conditions, and the Company does
not currently anticipate any material adverse effect on its business or
consolidated financial position as a result of future compliance with existing
environmental laws and regulations controlling the discharge of materials into
the environment or otherwise relating to the protection of the environment.
However, it is possible that changes in the environmental laws and regulations
and enforcement policies thereunder, or claims for damages to persons, property,
natural resources or the environment could result in substantial costs and
liabilities to the Company. Thus, there can be no assurance that the Company
will not incur significant environmental compliance costs in the future. The
Company's insurance policies provide liability coverage for sudden and
accidental occurrences of pollution, and cleanup and containment of the
foregoing in amounts the Company believes are comparable to policy limits
carried by other construction contractors in the offshore industry.
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The Oil Pollution Act of 1990 ("OPA"), as amended, and regulations
promulgated pursuant thereto impose a variety of regulations on "responsible
parties" related to the prevention of oil spills and liability for damages
resulting from such spills. A "responsible party" includes the owner or operator
of an onshore facility, pipeline, or vessel, or the lessee or permittee of the
area in which an offshore facility is located. The OPA assigns liability to each
responsible party for oil removal costs and a variety of public and private
damages. Vessels subject to OPA other than tank vessels are subject to liability
limits of the greater of $500,000 or $600 per gross ton. A party cannot take
advantage of liability limits if the spill was caused by gross negligence or
willful misconduct or resulted from violation of a federal safety, construction,
or operating regulation. If the party fails to report a spill or to cooperate
fully in the cleanup, the liability limits likewise do not apply. Few defenses
exist to the liability imposed under OPA. The OPA also imposes ongoing
requirements on a responsible party including preparation of an oil spill
contingency plan and proof of financial responsibility (to cover at least some
costs in a potential spill) for vessels in excess of 300 gross tons. The Company
believes that it currently has in place appropriate spill contingency plans and
has established adequate proof of financial responsibility for its vessels.
The Outer Continental Shelf Lands Act ("OCSLA") provides the federal
government with broad discretion in regulating the release of offshore resources
of oil and gas production. Because the Company's operations rely on offshore oil
and gas exploration and production, if the government were to exercise its
authority under OCSLA to restrict the availability of offshore oil and gas
leases, such an action could have a material adverse effect on the Company's
financial condition and the results of operations.
The Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 ("CERCLA"), as amended, and comparable state laws impose liability for
releases of hazardous substances into the environment. CERCLA currently exempts
crude oil from the definition of hazardous substances for purposes of the
statute, but the Company's operations may involve the use or handling of other
materials that may be classified as hazardous substances. CERCLA assigns strict
liability to each responsible party for all response and remediation costs, as
well as natural resource damages. Few defenses exist to the liability imposed by
CERCLA. The Company believes that it is in compliance with CERCLA and currently
is not aware of any events that, if brought to the attention of regulatory
authorities, would lead to the imposition of CERCLA liability against the
Company.
Health and Safety
The Company's operations are also governed by laws and regulations relating
to workplace and worker health, primarily the Occupational Safety and Health Act
and the regulations promulgated thereunder. In addition, various other
governmental and quasi-governmental agencies require the Company to obtain
certain permits, licenses and certificates from time to time with respect to its
operations. The Company believes it has all material permits, licenses and
certificates necessary to the conduct of its existing business.
Certain employees of the Company are covered by provisions of the Jones
Act, the Death on the High Seas Act and general maritime law, which laws operate
to make the liability limits established by state workers' compensation laws
inapplicable to these employees and, instead, permit them or their
representatives to pursue actions against the Company for damages or job-related
injuries, with generally no limitations on the Company's potential liability.
The Company's ownership and operation of vessels can give rise to large and
varied liability risks, such as risks of collisions with other vessels or
structures, sinking, spills, fires and other marine casualties, which can result
in significant claims for damages against both the Company and third parties
for, among other things, personal injury, death, property and natural resource
damage, pollution and loss of business.
RISK MANAGEMENT
The Company's operations are subject to inherent risks of offshore and
inland marine activity, including hazards such as vessels capsizing, sinking,
grounding, colliding and sustaining damage from severe weather conditions. These
hazards can cause personal injury or loss of life, severe damage to and
destruction of property and equipment, pollution or environmental damage and
suspension of operations. The Company
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maintains such insurance protection as it deems prudent, including hull
insurance. However, certain risks are either not insurable or insurance is
available only at rates that the Company considers to be economically
infeasible. There can be no assurance that insurance carried by the Company will
be sufficient or effective under all circumstances or against all hazards to
which the Company may be subject. A successful claim for which the Company is
not fully insured could have a material adverse effect on the Company. Moreover,
no assurance can be given that the Company will be able to maintain adequate
insurance in the future at rates it considers reasonable.
INTELLECTUAL PROPERTY
Although the Company's intellectual property rights are, in the aggregate,
important to the Company's business, the Company believes its technical
knowledge and experience, reputation and customer relationships are more
important to its competitive position than any patents, licenses, trademarks or
other intellectual property rights.
EMPLOYEES
The size of the Company's work force, other than its clerical and
administrative personnel, is variable and depends on the Company's workload at
any particular time. As of February 28, 1999, the Company had approximately 950
employees. In addition, many workers are hired on a contract basis and are
available to the Company on short notice. None of the Company's employees are
covered by a collective bargaining agreement.
FORWARD-LOOKING STATEMENTS
The Annual Report on Form 10-K includes certain statements that may be
deemed to be "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical facts,
included in this Annual Report on Form 10-K that relate to business plans or
strategies, projected or anticipated benefits or other consequences of such
plans or strategies, projected or anticipated benefits from acquisitions made by
or to be made by the Company, or projections involving anticipated revenues,
earnings, or other aspects of operating results are forward-looking statements.
The Company cautions readers that such statements are not guarantees of future
performance or events and are subject to a number of factors that may tend to
influence the accuracy of the statements and the projections upon which the
statements are based. As noted elsewhere in this report, all phases of the
Company's operations are subject to a number of uncertainties, risks and other
influences, many of which are outside the control of the Company, and any one of
which, or a combination of which, could materially affect the results of the
Company's operations and whether forward-looking statements made by the Company
ultimately prove to be accurate.
ITEM 2. PROPERTIES.
MARINE VESSELS AND EQUIPMENT
The Company's fleet includes three multi-purpose vessels, four anchor
barges and 15 spud barges. During February 1998, the Company expanded its oil
and gas pipeline installation capabilities with the acquisition of the LB 207, a
Vanuatu flagged pipe laying barge (now renamed the Vermilion Bay). The Vermilion
Bay is currently working in the Bay of Campeche in the Gulf of Mexico. The
Company further expanded its oil and gas pipeline installation capabilities in
April 1998, with the acquisition of the BB 356 (now named the Atchafalaya Bay),
a United States flagged barge to be used as a dedicated pipe bury barge. The
Atchafalaya Bay is currently being refurbished at the Company's offshore support
facility in New Orleans and is expected to be available for service by April
1999.
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The following table describes the Company's principal marine vessels and
construction equipment:
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DIMENSIONS
NAME TYPE (FEET) FUNCTION
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M/V Discovery.......... Multi-purpose 270 X 42 X 19 Hydrostatic testing,
Construction Ship pipeline jetting,
(Panamanian flagged) diving support, coring
support; 8 point
mooring system; dynamic
positioning system;
accommodations for 54
persons
M/V Sea Level 21....... Multi-purpose 165 X 40 X 12 Hydrostatic testing,
Construction Ship (U.S. diving support, coring
flagged) support; 4 point
mooring system;
accommodations for 28
persons
M/V Sand Queen......... Multi-purpose Utility 96 X 24 X 7 Hydrostatic testing and
Vessel (U.S. flagged) diving support;
accommodations for 19
persons
Atchafalaya Bay........ Anchor Barge (U.S. 256.5 X 72 X 16 Pipe burying (2"-48"
flagged) diameter pipe) in 10'
to 300' water depths; 8
point mooring system;
accommodations for 80
persons
Vermilion Bay.......... Anchor Barge (Vanuatu 350 X 60 X 22.5 Pipe laying (2"-48"
flagged) diameter pipe) in 10'
to 300' water depths; 8
point mooring system;
accommodations for 211
persons
BH-400................. Anchor Barge (U.S. 260 X 72 X 16 Pipe laying (2"-36"
flagged) diameter pipe) in 10'
to 300' water depths; 8
point mooring system;
accommodations for 90
persons
BH-300................. Anchor Barge 185 X 45 X 9 Pipe laying (2"-36"
diameter pipe) in 5' to
40' water depths; 4
point mooring system
and spuds
BH-203................. Spud/Utility Barge 90 X 26 X 5 Pipeline repair;
pipeline burial in 4'
to 25' water depths
BH-202................. Spud/Bury Barge 100 X 32 X 5 Pipeline jetting;
dredging in 5' to 25'
water depths
BH-200................. Spud/Bury Barge 120 X 30 X 7 Pipeline jetting;
dredging in 5' to 25'
water depths
BH-105................. Spud/Anchor Barge 150 X 40 X 8 Pipe laying (2"-20"
diameter pipe),
dredging; pile driving
in 5' to 100' water
depths
</TABLE>
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DIMENSIONS
NAME TYPE (FEET) FUNCTION
---- ---- ---------- --------
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BH-104................. Spud Barge 110 X 34 X 6 Pipe laying (2"-20"
diameter pipe);
dredging; pile driving
in 4' to 25' water
depths
BH 103................. Spud Barge 120 X 38 X 8 Pipe laying (2"-20"
diameter pipe);
dredging; pile driving
in 4' to 25' water
depths
BH 101................. Spud Barge 120 X 36 X 7 Pipe laying (2"-20"
diameter pipe);
dredging; pile driving
in 4' to 25' water
depths
BH 100................. Spud Barge 110 X 34 X 6.5 Pipe laying (2"-20"
diameter pipe);
dredging; pile driving
in 4' to 25' water
depths
Woodson Marsh Pipelay Three Interconnected 140 X 38 X 7 Pipe laying (2"-48"
Spread............... Spud Barges 140 X 36 X 7 diameter pipe) in 1' to
140 X 36 X 7 40' water depths
</TABLE>
FACILITIES
Administration. The Company owns administrative buildings in Lafayette and
Belle Chasse, Louisiana, and leases office space in New Iberia, Louisiana and in
Houston, Texas.
Pipeline and Marine Group. This Group's marine construction activities are
supported by five onshore bases which provide administrative functions for
projects and dock space for the Company's floating equipment with the ability to
supply the vessels with provisions and fuel, and to perform maintenance and
repairs to vessels and equipment. The facility located in Belle Chasse,
Louisiana is owned by the Company. The facilities and dock frontage at New
Orleans and Delcambre, Louisiana are leased, with remaining lease terms ranging
from month-to-month to 15 years. The Company also has a leased office in Mexico
to support its operations there.
Fabrication and Offshore Group. The Company's fabrication operations are
primarily conducted from three locations in Louisiana, one in New Iberia and
three in the greater New Orleans area. The New Iberia fabrication facility
includes approximately 14 acres of leased land and a 23,200 square foot
fabrication shop that is supplied with automatic welding, heavy fabrication and
material handling equipment. This fabrication yard, with waterfront docking and
direct, deep channel access to the Gulf of Mexico, has specially designed
concrete reinforcements and approximately 700 linear feet of water frontage. The
Company has improved the fabrication yard to provide it with the ability to load
out structures weighing up to 5,000 tons. The fabrication yard also has a rail
spur which provides it direct access to rail transportation.
During the first quarter of 1998, the Company significantly expanded its
fabrication operations through two separate lease transactions. Long-term lease
rights were secured to a shipyard in New Orleans capable of servicing deep-water
drilling rigs, jack-ups, semi-submersibles and drill ships in January 1998. This
29-acre yard is located at the intersection of the Intracoastal Waterway and the
Michoud Canal. A 32-foot water depth is maintained at the site, which has no
height or width restrictions and a maximum 3,000 feet of bulkhead dock space.
During February 1998, the Company signed a long-term lease for a manufacturing
facility located on an 18-acre site on the Inner Harbor Navigation Canal in
eastern New Orleans. The site has 1,400 feet of waterfront and includes a
covered, 68,000 square foot fabrication shop with eave height exceeding 40 feet
and overhead crane capacity totaling 75 tons with a hook height of 28 feet. With
the acquisition of Dickson in the third quarter of 1998, the Company acquired a
10-acre fabrication yard with 900 feet of water
8
<PAGE> 11
frontage on the Mississippi River Gulf Outlet. The Company can fabricate
structures as large as 6,500 tons at this location.
The Company also owns a 18,000 square foot fabrication facility situated on
approximately two acres of land in Lafayette, Louisiana, and a 20,000 square
foot fabrication facility with a 2,000 square foot warehouse on approximately
3.5 acres of land in Belle Chasse, Louisiana. The fabrication facility in Belle
Chasse, Louisiana also includes 8,000 square feet of office space.
Planned Restructuring of Facilities. In December 1998, the Company
finalized a consolidation plan to reduce its overall facilities to provide for
more efficient and lower cost operations. This plan provides for the sale of
owned properties in Lafayette and Belle Chasse, Louisiana, as well as subleasing
selected leased properties and cancelling certain leases which are on month to
month status.
ITEM 3. LEGAL PROCEEDINGS.
During 1998, the Company was involved in two class action lawsuits for
unspecified personal injury and property damages arising from events in October
1991 and January 1992 during the course of a pipeline installation project for a
third party gas transmission company. One of the class actions, involving
approximately 9,840 class members, entitled Rivera v. United Gas Pipeline Co.,
No. 28738, was instituted against Woodson Construction Company, Inc. on October
29, 1991 in the 40th Judicial District Court, Parish of St. John the Baptist,
State of Louisiana. This lawsuit was settled during 1998. The Company's
contribution towards the settlement was approximately $50,000. The contribution
by the Company to the settlement was expensed in 1998. The second class action
lawsuit, involving approximately 7,858 class members, entitled Husseiney v.
United Gas Pipeline Co., No. 29089, was instituted on January 27, 1992 against
Woodson Construction Company, Inc. in the 40th Judicial District Court, Parish
of St. John the Baptist, State of Louisiana. Subsequent to year-end, this
lawsuit was also settled. The Company's contribution towards the settlement was
approximately $600,000. The contribution by the Company to the settlement was
expensed in 1998.
The Company is involved in various lawsuits arising in the ordinary course
of business, some of which involve substantial claims for damages. While the
outcome of these lawsuits cannot be predicted with certainty, management
believes these matters will not have a material adverse effect on the
consolidated financial position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
9
<PAGE> 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Since October 30, 1997, the common stock of the Company (the "Common
Stock") has been listed for trading on the Nasdaq National Market under the
symbol "TCMS." The following table sets forth the range of high and low sale
prices for the Common Stock for the periods indicated:
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1997
Fourth quarter (from October 30)...................... $28 7/8 $13
1998
First quarter......................................... $14 1/2 $ 8 13/16
Second quarter........................................ $13 $ 5 1/2
Third quarter......................................... $ 7 $ 4 1/4
Fourth quarter........................................ $ 5 7/8 $ 2 5/8
1999
First quarter (through March 25, 1999)................ $ 4 $ 2
</TABLE>
At March 25, 1999, there were approximately 2,200 stockholders of record of
the Company's Common Stock. On March 16, 1999, the last reported sale price of
the Common Stock on the Nasdaq National Market was $3 9/16 per share.
DIVIDENDS
TCMS currently intends to retain its earnings, if any, to finance the
expansion of its business and for general corporate purposes, including future
acquisitions. The Company does not anticipate paying any cash dividends on its
Common Stock for the foreseeable future. Any future dividends will be at the
discretion of the Board of Directors, after taking into account various factors,
including, among other things: the Company's financial condition, results of
operations, cash flows from operations, current and anticipated cash needs and
expansion plans, the income tax laws then in effect, the requirements of
Delaware law, the restrictions currently imposed by the Credit Agreement and any
restrictions that may be imposed by the Company's future credit arrangements.
See Item 7 "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
SALE OF UNREGISTERED SECURITIES
The following information relates to securities of the Company issued or
sold by the Company during the past two years which were not registered under
the Securities Act:
(i) 2,142,441 shares of Common Stock were issued to the Founding
Companies on closing of the Acquisitions and the initial public offering
(the "Offering"). Shareholders of the Founding Companies have certain
registration rights with respect to 1,975,775 shares of Common Stock
received by them in the Acquisitions, and
(ii) 1,256,000 shares of Common Stock which were issued to founders of
TCMS and certain of its executive officers and consultants in conjunction
with the Offering, and
(iii) 1,300,000 shares of Common Stock were issued to the stockholders
of Dickson on closing of the acquisition on September 1, 1998. The former
Dickson stockholders have certain registration rights with respect to
1,300,000 shares of Common Stock received by them in the acquisitions of
Dickson by TransCoastal.
All of the aforementioned shares, as well as: (1) an aggregate of 50,000
shares issuable pursuant to a warrant (the "MG Warrant") issued by TCMS to
McFarland, Grossman & Company, Inc. ("MGCO"), a financial advisory firm that
assisted the Company in connection with the Acquisitions and in arranging the
10
<PAGE> 13
Credit Agreement, and (2) an aggregate of 175,000 shares issuable pursuant to a
warrant (the "Lender Warrant") issued by TCMS to Joint Energy Development
Investments, Limited Partnership, an affiliate of Enron Capital & Trade
Resources Corp., in connection with the Credit Agreement, may be resold publicly
only following their effective registration under the Securities Act or pursuant
to an exemption from the registration requirements of that act, such as Rule 144
thereunder.
ITEM 6. SELECTED FINANCIAL DATA.
In accordance with the applicable accounting rules of the Securities and
Exchange Commission (the "Commission"), Woodson Construction Company
(collectively with three affiliated companies, "Woodson"), one of the Founding
Companies, was identified as the "accounting acquiror" for financial statement
presentation purposes. Consequently, the Company's historical financial
statements for periods ended on or before October 31, 1997, the effective date
of the acquisitions of the Founding Companies for accounting purposes, are the
consolidated historical financial statements of Woodson. As used in this
discussion, the "Company" means (i) Woodson prior to October 31, 1997 and (ii)
TCMS and its consolidated subsidiaries on that date and thereafter. The
following selected historical financial information has been derived from the
audited financial statements of the Company for each of the years presented. The
summary financial information below should be read in conjunction with the
historical financial statements and notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1994 1995 1996 1997 1998(3)
------- ------- ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF OPERATIONS:
Revenues............................. $ 7,786 $18,075 $17,933 $ 57,517 $188,878
Cost of revenues..................... 5,874 12,716 13,561 46,507 152,750
Selling, general and administrative
expenses.......................... 3,011 2,672 2,968 6,309(1) 14,528
Depreciation and amortization........ 728 574 562 2,102 9,828
Restructuring charges................ -- -- -- -- 2,418
------- ------- ------- -------- --------
Operating income (loss).............. (1,827) 2,113 842 2,599 9,354
Interest income (expense), net....... (81) (84) 51 (530) (4,376)
Other income (expense), net.......... 96 69 357 475 (662)
------- ------- ------- -------- --------
Income (loss) before income taxes.... (1,812) 2,098 1,250 2,544 4,316
Provision for income taxes........... -- 839(2) 500(2) 1,194(2) 1,511
------- ------- ------- -------- --------
Net income (loss)............ $(1,812) $ 1,259 $ 750 $ 1,350 $ 2,805
======= ======= ======= ======== ========
BALANCE SHEET DATA:
Working capital...................... $ 1,402 $ 4,628 $ 3,803 $ 3,439 $ 15,516
Total assets......................... 6,997 9,007 9,157 171,817 236,597
Total debt, including current
portion........................... 755 19 679 15,991 61,114
Stockholders' equity................. $ 5,609 $ 7,616 $ 7,718 $115,145 $120,228
</TABLE>
- ---------------
(1) Includes a $2.2 million non-cash compensation charge related to the issuance
of shares of Common Stock to management of the Company.
(2) Represents pro forma provision for income taxes. See Note 2 to the
consolidated financial statements.
(3) 1998 Statement of Operations data includes the operating results of Dickson
from the date of acquisition, September 1, 1998, through December 31, 1998.
11
<PAGE> 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the
consolidated financial statements and related notes thereto and "Selected
Financial Data" appearing elsewhere in this Annual Report on Form 10-K. The
following information contains forward-looking statements. For a discussion of
certain limitations inherent in such statements, see
"Business -- Forward-Looking Statements".
INTRODUCTION
The Company's revenues are primarily derived from providing services
related to pipeline installation and repair, hydrostatic testing and
commissioning of pipelines, and fabrication and refurbishment of components for
oil and gas production platforms and drilling rigs.
The majority of the Company's services are provided under fixed-priced
contracts and are generally completed within one year. These contracts are
usually accounted for using the percentage-of-completion method of accounting.
Under this method, the percentage-of-completion is determined by comparing
contract costs incurred to date with total estimated contract costs. Any
significant revision in cost and income estimates is reflected in the accounting
period in which the facts that require the revision become known. Income is
recognized by applying the percentage completed to the projected total income
for each contract in progress. Cost of revenues consists of direct material,
labor and subcontracting costs and indirect costs related to contract
performance, such as indirect labor, supplies and tools. Selling, general and
administrative expenses consist primarily of compensation of sales and
administrative employees, fees for professional services and other general
office expenses.
The marine construction industry along the U.S. Gulf Coast is highly
seasonal as a result of weather conditions, the availability of daylight hours
and the timing of capital expenditures by oil and gas companies. Historically,
the Company has performed a substantial portion of its pipeline construction
support services during the period from March through November and, therefore, a
disproportionate portion of these contract revenues, gross profit and net income
generally has been earned during the second and third quarters of the calendar
year. Because of this seasonality, the Company's future full year results are
not likely to be a direct multiple of any particular quarter or combination of
quarters.
Additionally, the Company's results of operations will also be affected by
the level of oil and gas exploration and development activity maintained by oil
and gas companies in the Gulf of Mexico. The level of exploration and
development activity is related to several factors, including trends of oil and
gas prices, exploration and production companies' expectations of future oil and
gas prices, and changes in technology which reduce costs and improve expected
returns on investment.
Certain risks are inherent under contracts that are priced on a fixed-price
basis. The revenues, costs and gross profit realized on a contract will often
vary from the estimated amounts for various reasons including changes in the
availability and cost of labor and material and variations in productivity from
the original estimates and errors in estimates or bidding. These variations and
the risks inherent in the marine construction industry may result in revenues
and gross profits different from those originally estimated and can result in
reduced profitability or losses on projects.
In accordance with the applicable accounting rules of the Commission,
Woodson was identified as the "accounting acquiror" for financial statement
presentation purposes. Consequently, the Company's historical financial
statements for periods ended on or before October 31, 1997, the effective date
of the acquisitions of the Founding Companies for accounting purposes, are the
consolidated historical financial statements of Woodson. As used in this
discussion, the "Company" means (i) Woodson prior to October 31, 1997 and (ii)
TCMS and its consolidated subsidiaries on that date and thereafter.
RESULTS OF OPERATIONS -- THE COMPANY
Revenues, costs of revenues and selling, general and administrative expense
levels were significantly higher for the year ended December 31, 1998 as
compared to the year ended December 31, 1997. The operating results for 1997 are
the results of operations of Woodson for the entire year and the other Founding
12
<PAGE> 15
Companies for the final two months of 1997. The Company's operating results for
1998 including all the Founding Companies' results for the entire year and the
Dickson operating results for the last four months during the period.
The following table sets forth certain selected financial data of the
Company and that data as a percentage of the Company's revenues for the periods
indicated (dollars in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1996 1997 1998
---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Revenues......................... $17,933 100.0% $57,517 100.0% $188,878 100.0%
Cost of revenues................. 13,561 75.6% 46,507 80.9% 152,750 80.9%
Selling, general and
administrative expenses........ 2,968 16.6% 6,309 11.0% 14,528 7.7%
Depreciation and amortization.... 562 3.1% 2,102 3.6% 9,828 5.2%
Restructuring charges............ -- -- -- -- 2,418 1.3%
Operating income................. 842 4.7% 2,599 4.5% 9,354 4.9%
Interest income (expense), net... 51 0.3% (530) (0.9)% (4,376) (2.3)%
Other income (expense), net...... 357 2.0% 475 0.8% (662) (0.3)%
------- ------ ------- ----- -------- -----
Income before income taxes....... 1,250 7.0% 2,544 4.4% 4,316 2.3%
Provision for income taxes(1).... 500 2.8% 1,194 2.1% 1,511 0.8%
------- ------ ------- ----- -------- -----
Net income............. $ 750 4.2% $ 1,350 2.3% $ 2,805 1.5%
======= ====== ======= ===== ======== =====
</TABLE>
- ---------------
(1) The provision for income taxes for the years ended December 31, 1996 and
1997 represents pro forma provisions for income taxes. See Note 2 to the
consolidated financial statements.
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997
Revenues. Revenues increased $131.4 million, or 228.4%, from $57.5 million
for the year ended December 31, 1997 to $188.9 million for the year ended
December 31, 1998. The Pipeline and Marine Group's revenues increased $58.2
million, or 109.4%, from $53.2 million for the year ended December 31, 1997 to
$111.4 million for the year ended December 31, 1998. The inclusion of the
Founding Companies' operations (other than Woodson) for the entire year of 1998
versus the last two months of 1997 accounted for $52.2 million of the increase
in revenues. The Fabrication and Offshore Group's revenues increased $73.1
million, or 1690.0%, from $4.3 million for the year ended December 31, 1997 to
$77.4 million for the year ended December 31, 1998. The acquisition of Dickson
in September 1998 accounted for $42.9 million of the increase in revenues for
the year. The inclusion of a Founding Company's operations for the entire year
of 1998 versus the last two months of 1997 accounted for an additional $9.5
million of the increase in revenues for 1998. The remaining increase in revenues
of $20.7 million was the result of the Fabrication and Offshore Group obtaining
larger projects than it had historically been able to obtain due to its expanded
resources and capabilities as a result of the TCMS merger and initial public
offering.
Cost of revenues. Cost of revenues increased $106.2 million, or 228.4%,
from $46.5 million for the year ended December 31, 1997 to $152.7 million for
the year ended December 31, 1998. The Pipeline and Marine Group's cost of
revenues increased $42.4 million, or 97.4%, from $43.5 million for the year
ended December 31, 1997 to $85.9 million for the year ended December 31, 1998.
The inclusion of the Founding Companies' operations (other than Woodson) for the
entire year of 1998 versus the last two months of 1997 accounted for $35.3
million of the increase in costs of revenues. Costs of revenues as a percentage
of revenues decreased from 81.8% of revenues in 1997 to 77.1% of revenues in
1998. This improvement in gross profit percentage in 1998 as compared to 1997
was primarily due to three factors. In 1998, the Company experienced: (a) higher
utilization of equipment, (b) a higher percentage of work performed offshore
which were higher margin projects, and (c) a greater percentage of revenues
being generated from projects outside the United States which were also at
higher margins. The Fabrication and Offshore Group's cost of revenues increased
$63.8 million, or 2104.0%, from $3.0 million for the year ended December 31,
1997 to $66.8 million for the year ended December 31, 1998. The acquisition of
Dickson in September 1998 accounted for
13
<PAGE> 16
$38.1 million of the increase in costs of revenues in 1998 as compared to 1997.
The inclusion of a Founding Company's operations for the entire year of 1998
versus the last two months of 1997 accounted for $7.4 million of the increase in
costs of revenues. The balance of the increase in costs of revenues was
consistent with the increase in revenues experienced by the Fabrication and
Offshore Group. Costs of revenues as a percentage of revenues for the
Fabrication and Offshore Group increased from 70.1% of revenues in 1997 to 86.3%
of revenues in 1998. This decrease in gross profit percentage in 1998 as
compared to 1997 was primarily due to a significant percentage of the Dickson
revenues being generated from time and material projects which have lower
margins as the Company assumes less financial risk in completing the projects.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $8.2 million, or 130.3%, for the year ended
December 31, 1998 compared to the 1997 period. As a percentage of revenues,
selling, general and administrative expenses (exclusive of the non-cash
compensation charge related to the issuance of shares of Common Stock to
management of the Company) were 7.1% during 1997, as compared to 7.7% during
1998. The percentage increase was primarily due to short-term expenses incurred
during the initial consolidation of the Founding Companies and the integration
of Dickson into the Company.
Depreciation and amortization. Depreciation and amortization expenses
increased $7.7 million, or 367.6%, from $2.1 million for the year ended December
31, 1997 to $9.8 million for the year ended December 31, 1998. The increase was
due to: (1) additional depreciation on $36.0 million of equipment placed in
service during 1998, (2) a full year's depreciation on the equipment owned by
the Founding Companies and amortization of goodwill recorded under the purchase
method of accounting as compared to two months of depreciation and amortization
in 1997, and (3) the additional depreciation and amortization of goodwill
associated with the acquisition of Dickson effective September 1, 1998.
Restructuring charges. During the fourth quarter of 1998 the Company
recorded a special charge in the amount of $2.4 million. The components of the
charge consisted of: (1) $1.8 million severance costs related to former officers
and employees terminated as a result of the Company's headcount reduction
initiative and (2) $0.6 million for the sale of facilities resulting from the
planned consolidation of certain operating facilities.
Interest income (expense), net. Interest expense, net of interest income
totaled $4.4 million during the year ended December 31, 1998, as compared to net
interest expense of $0.5 million during 1997. The significant increase was due
to higher average debt levels in 1998 compared to 1997. See "Liquidity and
Capital Resources -- The Company" below for discussion of credit agreement and
related financings.
Other income (expense), net. During 1998 other income (expense), net
consisted primarily of expenses incurred associated with the settlement of
outstanding litigation. During 1997 other income (expense), net consisted
primarily of gains recognized on the sale of available-for-sale securities.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Revenues. Revenues increased $39.6 million, or 220.7%, from $17.9 million
for the year ended December 31, 1996 to $57.5 million for the year ended
December 31, 1997. The Pipeline and Marine Group's revenues increased $35.3
million, or 196.6%, from $17.9 million for the year ended December 31, 1996 to
$53.2 million for the year ended December 31, 1997. The inclusion of the
Founding Companies', other than Woodson, operations for the last two months of
1997 accounted for $9.8 million of the increase in revenues. The balance of the
increase in 1997 revenues was primarily attributable to higher pipeline
construction revenues resulting from improved market activity in 1997. The
inclusion of a Founding Company's operations for the last two months of 1997
accounted for the $4.3 million in revenues for the Fabrication and Offshore
Group for 1997.
Cost of revenues. Cost of revenues increased $32.9 million, or 242.9%, from
$13.6 million for the year ended December 31, 1996 to $152.7 million for the
year ended December 31, 1997. The Pipeline and Marine Group's cost of revenues
increased $29.9 million, or 221.0%, from $13.6 million for the year ended
December 31, 1996 to $43.6 million for the year ended December 31, 1997. The
inclusion of the Founding Companies', other than Woodson, operations for the
last two months of 1997 accounted for $7.8 million of the increase in costs of
revenues. The balance of the increase in costs of revenues for the group was
consistent with
14
<PAGE> 17
the increase in revenues. As a percentage of revenues, costs of revenues
increased from 75.6% of revenues in 1996 to 81.8% of revenues in 1997. This
increase was due primarily to lower margins achieved during 1997 on projects
that were considerably larger in size and scope than in 1996. The inclusion of a
Founding Company's operations for the last two months of 1997 accounts for the
$3.0 million in costs of revenues for the Fabrication and Offshore Group for
1997.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $3.3 million, or 112.6%, for the year ended
December 31, 1997 compared to the 1996 period. The single largest component of
the increase was a $2.2 million non-cash compensation charge reflected during
the fourth quarter of 1997 related to the issuance of shares of Common Stock to
management of the Company. As a percentage of revenues, selling, general and
administrative expenses (exclusive of the non-cash compensation charge) were
7.1% during 1997, compared to 16.6% during 1996. The percentage decrease was
primarily due to the significant increase in revenues without a commensurate
increase in overhead expenses.
Depreciation and amortization. Depreciation and amortization expenses
increased $1.5 million, or 274.0%, from $0.6 million for the year ended December
31, 1996 to $2.1 million for the year ended December 31, 1997. The increase was
due to: (1) additional property, plant and equipment placed in service during
late 1996 and early 1997, and (2) the acquisition of equipment owned by the
Founding Companies effective November 4, 1997 under the purchase method of
accounting.
Interest income (expense), net. Interest expense, net of interest income
totaled $0.5 million during the year ended December 31, 1997, as compared to net
interest income of $0.05 million during 1996. The significant increase was due
to: (1) higher average debt levels resulting from drawdowns on the corporate
revolver after the completion of the Offering, and (2) amortization of debt
issuance costs related to the credit agreement, Lender Warrant, and MGCO
Warrant. See "Liquidity and Capital Resources -- The Company" below for
discussion of credit agreement and related financings.
Other income, net. During 1996 and 1997, other income, net consisted
primarily of gains recognized on the sale of available-for-sale securities.
LIQUIDITY AND CAPITAL RESOURCES -- THE COMPANY
The Company's working capital improved by $12.1 million during 1998;
increasing to $15.5 million at December 31, 1998 from $3.4 million at December
31, 1997. Net cash provided by operating activities during the year ended
December 31, 1998 was $5.9 million. Net cash used in investing activities during
the twelve months ended December 31, 1998 was $45.1 million. Capital
expenditures accounted for $36.1 million of the cash used in investing
activities during the period and included $23.1 million related to the purchases
and refurbishment of the LB-207 pipe lay barge and the BB-356 bury barge,
renamed the Vermilion Bay and Atchafalaya Bay, respectively. Other investing
activities which required the use of cash were the Dickson acquisition ($5.8
million) and the final distributions to the Woodson stockholders ($3.2 million).
Net cash consumed by investing activities were funded through additional
borrowings on the revolving credit facility. During 1998 the net revolver and
term loan borrowings were $46 million resulting in an outstanding revolver and
term loan balance of $56 million at December 31, 1998. Additional borrowing
capacity under the Company's revolver and term loan facility at December 31,
1998 totaled $4.0 million.
In January 1999, the Company entered into a "New Credit Facility" with
financial institutions, replacing the existing Credit Agreement with an
aggregate credit facility of $70 million. The New Credit Facility is a $10
million increase in borrowing capacity over the credit facility in place at
December 31, 1998. The New Credit Facility is divided into three credit
agreements: (a) a three-year revolving credit agreement ("New Revolving
Facility") for up to $15.0 million; (b) a seven-year term credit agreement ("New
Term Loan") for $35.0 million; and (c) a five-year subordinated debt agreement
("Subordinated Debt") of $20.0 million. See Note 6 to the Audited Financial
Statement.
At December 31, 1998, the Company had commitments of $2.0 million for the
purchase or construction of capital equipment. Under the terms of the Stock
Purchase and Merger Agreement for the Dickson acquisition, the Company is
contingently liable for a cash payment of $7.3 million and the issuance of
15
<PAGE> 18
400,000 shares of its common stock in the fourth quarter of 1999 if Dickson were
to achieve certain financial goals by August 31, 1999. The Company is currently
negotiating the early settlement of the Dickson earn-out. The terms under
negotiation provide for a reduction in the cash payment and the issuance of
preferred stock and the issuance of additional common stock subject to the
approval of the Company's stockholders. The Company plans to fund these capital
expenditures and purchase commitments through cash flow from operations and
additional borrowings under the New Credit Facility.
The Company intends to continue pursuing attractive corporate and asset
acquisition opportunities. The timing, size or success of any acquisition effort
and the associated potential capital commitments are unpredictable. The Company
expects to fund future acquisitions through the issuance of additional equity as
well as through a combination of working capital, cash flow from operations and
borrowings under the New Credit Facility.
The Company is, from time to time, exposed to various contingencies arising
in the ordinary course of business, including, among others, legal actions
arising from accidents and other events resulting from the operational risks
inherent in the marine construction business. There can be no assurance that
these contingencies that may arise in the future will not have a material
adverse effect on the Company's business, financial condition, results of
operations and liquidity.
YEAR 2000
The Company is currently working to resolve the potential impact of the
Year 2000 on the processing of date-sensitive data by the Company's computerized
information systems and equipment. The Year 2000 may be critical to these
systems as many computer programs were written and equipment manufactured using
two digits rather than four to define the applicable year. As a result, any of
the Company's computer applications or equipment that have date-sensitive
programs may recognize a date using "00" as the year 1900 rather than the Year
2000. This could result in system failures in the fabrication area that could
cause serious production-related issues. In addition, miscalculations or system
failures could result in a temporary inability to process transactions, issue
invoices, remit payments, communicate with financial institutions and other
entities electronically and update internal accounting systems. If not corrected
in a timely manner, such business disruptions could be detrimental to the
continuing operations of the Company.
The Company has initiated a program to prepare its computer systems and
applications for the Year 2000. Based on present information, management
believes that while many of the systems are already Year 2000 compliant, other
systems will require modification or replacement with new programs. The Company
will utilize both internal and external resources to reprogram, replace and test
software for Year 2000 compliance.
Beyond the computer hardware and software systems, the Company has a
variety of operating equipment that may be impacted by the Year 2000 issue. This
equipment may have embedded microchips that use time and dates. The time and
date functions may control the equipment, provide time and date stamps of
records or data generated by the equipment, or may schedule events or actions.
The Company is currently inventorying its equipment, and with the manufacturer's
assistance, a plan is being developed to modify and test every date-related
function.
The Company plans to complete the Year 2000 conversion tasks in advance of
the end of 1999. The total project costs are presently estimated not to exceed
$750,000, to be funded through working capital, and will be expensed as incurred
unless new software and computer hardware is purchased in which case certain
costs will be capitalized.
The Company is taking steps to identify Year 2000 compliance issues that
may be created by key customers, suppliers, other service providers, and
financial institutions with which the Company does business. The loss of any key
customer or the inability of any of the Company's key vendors to provide its
goods or services to the Company would have a negative impact on the Company's
operations until those entities return to normal operations.
16
<PAGE> 19
The anticipated future costs of the Year 2000 conversion project and the
date on which the Company anticipates project completion are based on
management's best estimates, which were derived using numerous assumptions of
future events including the continued availability of certain resources, third
party modification plans and other factors. There can be no guarantee that these
estimates will be achieved and actual results could vary significantly from
current estimates.
The Company will be developing a written contingency plan by early 1999 to
address the issues that could arise should the Company or any of its significant
suppliers, customers, service providers or financial institutions not be
prepared to accommodate Year 2000 issues timely. The Company believes that in an
emergency situation it could revert to the use of manual systems that do not
rely on computers. Through these manual systems, the Company could perform the
minimum functions required to maintain the flow of goods and services and
provide a minimum level of information reporting to maintain a level of control
over the business cycle. Should the Company have to utilize manual systems, it
is uncertain that it could maintain current levels of operations and this could
have a material adverse impact on the business. The Company intends to maintain
constant surveillance on Year 2000 issues and will adapt its plans as required.
INFLATION
Inflation has not had a material impact on the Company's results of
operations for the last three years.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, the Company is exposed to market risk,
primarily from changes in interest rates. The Company continually monitors
exposure to market risk and develops appropriate strategies to manage this risk.
Accordingly, the Company may enter into certain derivative financial instruments
such as interest rate swap agreements. The Company does not use derivative
financial instruments for trading or to speculate on changes in interest rates.
Interest Rate Exposure
The Company's exposure to market risk for changes in interest rates relates
primarily to the Company's long-term debt. At December 31, 1998, $56.0 million
of the Company's indebtedness was subject to variable interest rates with a
weighted average effective interest rate of 8.7% for the year then ended. The
detrimental effect of a hypothetical 100 basis point increase in interest rates
would be to reduce income before taxes by $0.6 million. At December 31, 1998,
the fair value of the Company's fixed rate debt is approximately $56.0 million
based upon discounted future cash flows using current market prices.
Foreign Currency Exposure
The Company believes its exposure to foreign currency fluctuations is
minimal in that contracts for work performed in or to be delivered to countries
outside the United States ("Foreign Contracts") are primarily denominated in
U.S. dollars. It is Company policy to limit the portion of any Foreign Contracts
denominated in local currency to that portion of the total revenue required to
be spent in country to complete the project. The Company's operations outside
the United States currently are in Latin America and West Africa and all current
Foreign Contracts are denominated in U.S. dollars.
17
<PAGE> 20
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Public Accountants.................... 19
Consolidated Balance Sheets................................. 20
Consolidated Statements of Operations and Comprehensive
Income.................................................... 21
Consolidated Statements of Stockholders' Equity............. 22
Consolidated Statements of Cash Flows....................... 23
Notes to Consolidated Financial Statements.................. 24
</TABLE>
18
<PAGE> 21
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To TransCoastal Marine Services, Inc.:
We have audited the accompanying consolidated balance sheets of
TransCoastal Marine Services, Inc. (a Delaware corporation) and subsidiaries as
of December 31, 1997 and 1998, and the related consolidated statements of
operations and comprehensive income, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of TransCoastal
Marine Services, Inc. and subsidiaries as of December 31, 1997 and 1998, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
February 26, 1999
19
<PAGE> 22
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................. $ 2,416 $ 9,020
Contracts and accounts receivable, net of allowance of $0
and $1,182, respectively............................... 19,214 31,470
Costs and estimated earnings in excess of billings on
uncompleted contracts.................................. 3,272 6,629
Other current assets...................................... 2,964 7,941
-------- --------
Total current assets.............................. 27,866 55,060
PROPERTY AND EQUIPMENT, net................................. 66,907 96,135
GOODWILL, net of amortization of $275 and $2,195
respectively.............................................. 70,757 80,430
OTHER NONCURRENT ASSETS..................................... 6,287 4,972
-------- --------
Total assets...................................... $171,817 $236,597
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 2,520 $ 6,018
Accounts payable.......................................... 12,105 16,949
Accrued expenses.......................................... 7,860 9,836
Billings in excess of costs and estimated earnings on
uncompleted contracts.................................. 1,651 6,741
Deferred income taxes payable............................. 291 --
-------- --------
Total current liabilities......................... 24,427 39,544
LONG-TERM DEBT, net of current maturities................... 13,471 35,096
SUBORDINATED DEBT........................................... -- 20,000
DEFERRED INCOME TAXES....................................... 18,774 21,729
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 2,000,000 shares
authorized, none issued and outstanding................ -- --
Common stock, $.001 par value, 20,000,000 shares
authorized, 8,898,441 and 10,198,441 shares issued and
outstanding at December 31, 1997 and 1998,
respectively........................................... 9 10
Restricted common stock, $.001 par value, 3,000,000 shares
authorized, 250,000 shares issued and outstanding at
December 31, 1997 and 1998............................. -- --
Additional paid-in capital................................ 128,375 133,899
Accumulated deficit....................................... (13,277) (13,699)
Accumulated other comprehensive income.................... 38 18
-------- --------
Total stockholders' equity........................ 115,145 120,228
-------- --------
Total liabilities and stockholders' equity........ $171,817 $236,597
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
20
<PAGE> 23
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
REVENUES.................................................... $17,933 $57,517 $188,878
COSTS AND EXPENSES:
Cost of revenues.......................................... 13,561 46,507 152,750
Selling, general and administrative....................... 2,968 6,309 14,528
Depreciation and amortization............................. 562 2,102 9,828
Restructuring charges..................................... -- -- 2,418
------- ------- --------
Operating income.................................. 842 2,599 9,354
OTHER INCOME(EXPENSE), net:
Interest income(expense), net............................. 51 (530) (4,376)
Other income(expense), net................................ 357 475 (662)
------- ------- --------
INCOME BEFORE INCOME TAXES.................................. 1,250 2,544 4,316
PROVISION FOR INCOME TAXES.................................. 91 527 1,511
------- ------- --------
NET INCOME.................................................. $ 1,159 $ 2,017 $ 2,805
======= ======= ========
OTHER COMPREHENSIVE INCOME, net of tax:
Unrealized gains on securities:
Unrealized holding gains (losses) arising during the
period net of tax (benefit) of $138, $187 and
$(11)................................................ $ 208 $ 281 $ (20)
Less: reclassification adjustments for (gains) loss
included in net income, net of tax (benefit) of $0,
$187 and ($15)....................................... -- (28) 26
------- ------- --------
COMPREHENSIVE INCOME...................................... $ 1,367 $ 2,298 $ 2,811
======= ======= ========
EARNINGS PER SHARE:
Basic..................................................... $ -- $ -- $ 0.29
Diluted................................................... $ -- $ -- $ 0.29
PRO FORMA INFORMATION(UNAUDITED)(Note 2):
Income before income taxes................................ $ 1,250 $ 2,544 $ --
Pro forma income taxes.................................... 500 1,194 --
------- ------- --------
Pro forma net income...................................... $ 750 $ 1,350 $ --
======= ======= ========
PRO FORMA EARNINGS PER SHARE(UNAUDITED):
Basic..................................................... $ 0.44 $ 0.40 $ --
Diluted................................................... $ 0.44 $ 0.40 $ --
NUMBER OF SHARES USED IN PER SHARE COMPUTATIONS:
Basic..................................................... 1,722 3,363 9,583
Diluted................................................... 1,722 3,393 9,583
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
21
<PAGE> 24
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
RESTRICTED ACCUMULATED
COMMON STOCK COMMON STOCK ADDITIONAL RETAINED OTHER
------------------- ---------------- PAID-IN EARNINGS COMPREHENSIVE
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) INCOME (LOSS) TOTAL
---------- ------ ------- ------ ---------- --------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995......... 1,031,331 $ 1 -- $-- $ 122 $ 7,382 $ 111 $ 7,616
Founder shares..................... 975,000 1 -- -- -- -- -- 1
Dividends.......................... -- -- -- -- -- (1,266) -- (1,266)
Net income......................... -- -- -- -- -- 1,159 -- 1,159
Change in valuation allowance for
net unrealized gain on
available-for-sale securities.... -- -- -- -- -- -- 208 208
---------- --- ------- --- -------- -------- ----- --------
Balance at December 31, 1996......... 2,006,331 2 -- -- 122 7,275 319 7,718
Issuance of common shares to
management....................... 275,000 -- -- -- 2,200 -- -- 2,200
Issuance of common shares to
consultants...................... 6,000 -- -- -- 44 -- -- 44
Initial Public Offering, net of
offering costs................... 5,750,000 6 -- -- 94,733 -- -- 94,739
Share exchange (Note 7)............ (250,000) -- 250,000 --
Acquisitions of Founding
Companies........................ 1,111,110 1 -- -- 15,999 -- -- 16,000
Revaluation of Founders' shares in
connection with acquisitions
(Note 3)......................... -- -- -- -- 14,039 -- -- 14,039
Issuance of MGCO Warrant and Lender
Warrant.......................... -- -- -- -- 1,238 -- -- 1,238
Dividends.......................... -- -- -- -- -- (2,733) -- (2,733)
Distributions to Woodson
stockholders..................... -- -- -- -- -- (19,836) -- (19,836)
Net income......................... -- -- -- -- -- 2,017 -- 2,017
Change in valuation allowance for
net unrealized loss on
available-for-sale securities.... -- -- -- -- -- -- (281) (281)
---------- --- ------- --- -------- -------- ----- --------
Balance at December 31, 1997......... 8,898,441 9 250,000 -- 128,375 (13,277) 38 115,145
Acquisition of Dickson............. 1,300,000 1 -- -- 5,524 -- -- 5,525
Distributions to Woodson
stockholders..................... -- -- -- -- -- (3,227) -- (3,227)
Net income......................... -- -- -- -- -- 2,805 -- --
Change in valuation allowance for
net unrealized loss on
available-for-sale securities.... -- -- -- -- -- -- (20) (20)
---------- --- ------- --- -------- -------- ----- --------
Balance at December 31, 1998......... 10,198,441 $10 250,000 $-- $133,899 $(13,699) $ 18 $120,228
========== === ======= === ======== ======== ===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
22
<PAGE> 25
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................ $ 1,159 $ 2,017 $ 2,805
Adjustments to reconcile net income to net cash provided
by operating activities --
Depreciation and amortization........................... 562 2,102 9,828
Gain on sale of property and equipment.................. (340) -- --
Gain on sale of investments............................. -- (281) (26)
Allowance for doubtful accounts......................... -- -- 1,182
Compensation expense on stock issuance to senior
management............................................. -- 2,200 --
Deferred income taxes................................... 91 (139) 1,219
Amortization of debt issuance cost...................... -- -- 1,553
Other................................................... (36) 448 560
Changes in operating assets and liabilities --
(Increase) decrease in --
Contracts and accounts receivable, net................ 1,796 (17,796) (9,187)
Costs and estimated earnings in excess of billings on
uncompleted contracts................................ 45 (3,272) (1,301)
Other current assets.................................. 7 (1,729) (1,223)
Other noncurrent assets............................... (15) (446) (1,206)
Increase (decrease) in --
Accounts payable and accrued expenses................. 388 19,205 (1,107)
Billings in excess of costs and estimated earnings on
uncompleted contracts................................ (1,000) 1,651 2,186
Other current liabilities............................. -- 291 --
Deferred income taxes................................. -- 1,510 596
------- -------- --------
Net cash provided by operating activities........... 2,657 5,761 5,879
------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property and equipment.............. 427 -- 677
Capital expenditures...................................... (1,801) (6,759) (36,084)
Purchase of investments and annuity contract.............. (93) (3,000) --
Proceeds from sale of investments......................... 113 1,472 76
Cash paid for acquisitions including related costs, net of
cash acquired of $1,726 and $4,676 in 1997 and 1998,
respectively............................................ -- (67,341) (5,840)
Distribution to Woodson stockholders...................... -- (19,836) (3,227)
Other..................................................... (392) (696) --
------- -------- --------
Net cash used in investing activities............... (1,746) (96,160) (45,123)
------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on Credit Agreement............................ -- 10,000 46,000
Proceeds from notes payable............................... 615 -- 2,464
Principal payments on notes payable....................... (445) (229) (1,682)
Proceeds from issuance of notes payable to stockholders... 450 -- --
Principal payments on notes payable to stockholders....... -- (450) --
Borrowings on long-term debt.............................. -- 3,432 --
Principal payments on long-term debt...................... -- (441) (1,659)
Payment of dividends to stockholders...................... (1,266) (2,733) --
Issuance of Common Stock to consultants................... -- 44 --
Issuance of Common Stock, net of offering costs........... -- 94,739 --
Debt issuance costs....................................... -- (2,052) --
Principal payments on debt assumed in Acquisitions........ -- (10,612) --
------- -------- --------
Net cash provided by (used in) financing
activities.......................................... (646) 91,698 45,123
------- -------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 265 1,299 6,604
CASH AND CASH EQUIVALENTS, beginning of year................ 852 1,117 2,416
------- -------- --------
CASH AND CASH EQUIVALENTS, end of year...................... $ 1,117 $ 2,416 $ 9,020
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
23
<PAGE> 26
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
TransCoastal Marine Services, Inc. ("TCMS") was organized in April 1996, to
create a fully integrated marine construction company focusing on transition
zone and shallow water regions of the U.S. Gulf Coast. On November 4, 1997, TCMS
acquired, simultaneously with the closing of its initial public offering (the
"Offering"), four privately owned marine construction businesses (the "Founding
Companies") and certain real properties used in the businesses of the Founding
Companies in exchange for consideration consisting of cash, common stock of TCMS
(the "Common Stock") and debt assumption. Unless otherwise indicated, all
references herein to the "Company" include the Founding Companies, and
references to "TCMS" mean TransCoastal Marine Services, Inc., prior to the
consummation of the acquisitions of the Founding Companies.
The Woodson Companies ("Woodson"), one of the Founding Companies, was
identified as the "accounting acquiror" for financial statement presentation
purposes. The acquisitions of the remaining Founding Companies were accounted
for using the purchase method of accounting, with the results of operations
included from October 31, 1997, the effective closing date of the acquisitions
for accounting purposes. The allocation of purchase price to the assets acquired
and liabilities assumed was assigned and recorded based on fair value of the
assets acquired and liabilities assumed.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
Use of Estimates
The Company's financial statements are prepared in accordance with
generally accepted accounting principles ("GAAP"). Financial statements prepared
in accordance with GAAP require the use of management estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Additionally, management estimates affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents excluding certain
restricted amounts.
Property and Equipment
Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets ranging from 3 years to 31.5 years. Leasehold
improvements are capitalized and amortized over the shorter of the lives of the
leases or the estimated useful lives of the assets.
Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated.
24
<PAGE> 27
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Goodwill
Goodwill represents the excess of the aggregate purchase price paid by the
Company over the fair market value of the net tangible assets acquired. Goodwill
is being amortized on a straight-line basis over 40 years, which represents
management's estimation of the related benefit to be derived from the acquired
businesses. Under Accounting Principles Board ("ABP") Opinion No. 17 and SFAS
No. 121, the Company periodically evaluates whether events and circumstances
after the acquisition date indicate that the remaining balance of goodwill may
not be recoverable. If factors indicate that goodwill should be evaluated for
possible impairment, the Company would compare estimated undiscounted future
cash flow from the related operations to the carrying amount of goodwill. If the
carrying amount of goodwill was greater than undiscounted future cash flow, an
impairment loss would be recognized. Any impairment loss would be computed as
the excess of the carrying amount of goodwill over the estimated fair value of
the goodwill (calculated based on discounting estimated future cash flows).
Accumulated amortization of goodwill was $0.3 million and $2.2 million as of
December 31, 1997 and 1998, respectively.
Dry-dock Costs
Dry-dock costs are third-party costs associated with scheduled maintenance
on the Company's marine construction vessels. Costs incurred in connection with
dry-docking are capitalized and amortized over the period to the next scheduled
dry-docking.
Mobilization Costs
Mobilization costs incurred on moving marine vessels and associated
equipment to their contractual locations to commence operations are capitalized
and amortized over the contract term.
Debt Issuance Costs
Debt issuance costs are included in other noncurrent assets and are
amortized to interest expense over the scheduled maturity of the debt. As of
December 31, 1997 and 1998, debt issuance costs, net of accumulated
amortization, were $3.1 million and $1.5 million, respectively.
Revenue Recognition
Revenues from construction contracts, which are typically less than twelve
months in duration, are recognized on the percentage-of-completion method. Under
this method, the percentage of completion is determined by comparing contract
costs incurred to date with total estimated contract costs. Income is recognized
by applying the percentage complete to the projected total income for each
contract in progress. Contract costs include all direct material, labor and
subcontract costs and those indirect costs related to contract performance, such
as indirect labor, supplies and tools. Revisions in cost and income estimates
are reflected in the accounting period in which the facts requiring revision
become known. In addition, anticipated losses to be incurred on contracts in
progress are charged to income in the period such losses are determined. With
regard to pipeline testing services performed, the Company recognizes revenues
on an as-billed basis, with an accrual made at each period end for unbilled
revenue.
Fair Value of Financial Instruments
The Company considers the fair value of all financial instruments to not be
materially different from their carrying values at each year-end based on
management's estimate of the Company's ability to borrow funds under terms and
conditions similar to those applicable to the Company's existing debt.
25
<PAGE> 28
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, the Company recognizes deferred tax liabilities and assets
for the expected future tax consequences of events that have been recognized
differently in the financial statements or tax returns. Under this method,
deferred tax liabilities and assets are determined based on the differences
between the financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates and laws in effect in the years in which the
differences are expected to reverse. Deferred tax assets are evaluated for
realization based on a more-likely-than-not criteria in determining if a
valuation allowance should be provided. Income tax expense is the tax payable
for the year and the change during the year in deferred tax assets and
liabilities.
Two of the three companies comprising the Woodson Companies elected to be
taxed as S Corporations for federal and state income tax purposes whereby
shareholders are liable for individual federal and state income taxes on their
allocated portions of the applicable entity's taxable income. Upon the closing
of the Offering, the S Corporation status was changed to that of a C
Corporation. Accordingly, the historical financial statements as they relate to
the period prior to the Offering do not include provisions for income taxes
relating to those entities.
Pro forma net income for 1996 and 1997 consists of the historical net
income of the Company, including two S Corporations, adjusted for income taxes
that would have been recorded had each company operated as a C Corporation.
Concentrations of Credit and Business Risk
The Company's customers are primarily major and independent oil and gas
exploration and production companies, drilling contractors, hydrocarbon
transportation companies and other marine construction companies, which
potentially expose the Company to concentrations of credit risk. The Company
performs ongoing credit evaluation of its customers and requires posting of
collateral when deemed appropriate. The Company provides allowances for possible
credit losses when necessary. Additionally, the Company's results of operations
will also be affected by the level of oil and gas exploration and development
activity maintained by oil and gas companies in the Gulf of Mexico. The level of
exploration and development activity is related to several factors, including
trends of oil and gas prices, exploration and production companies' expectations
of future oil and gas prices, and changes in technology which reduce costs and
improve expected returns on investment. Although the Company is directly
affected by the financial stability of the oilfield services industry,
management does not believe significant credit risk exists at December 31, 1998.
Earnings Per Share
Basic earnings per share (EPS) excludes dilution and is computed by
dividing net income by the weighted average number of common shares outstanding
for the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock.
26
<PAGE> 29
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes weighted average shares outstanding for each
of the periods presented (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Shares issued in the acquisition of Woodson........... 1,031 1,031 1,031
Shares issued in the formation of TCMS................ 691 975 975
Shares issued to Founding Companies' stockholders..... -- 185 1,111
Shares sold to certain employees...................... -- 209 275
Shares issued to consultants.......................... -- 4 6
Shares issued in acquisition of Dickson............... -- -- 435
Shares sold in the Offering........................... -- 959 5,750
----- ----- -----
Weighted average shares outstanding for basic earnings
per share calculation............................... 1,722 3,363 9,583
===== ===== =====
</TABLE>
The calculation of diluted earnings per share is similar to basic earnings
per share except that the denominator includes dilutive common stock equivalents
such as stock options and warrants. Weighted average shares outstanding for
calculation of diluted earnings per share totaled 1,722,000, 3,393,000, and
9,583,000 for 1996, 1997 and 1998, respectively. Weighted average diluted shares
outstanding at December 31, 1997 included 30,000 shares related to a warrant
issued to a financial advisory firm that provided services in conjunction with
the Acquisitions (see Note 3).
Reclassifications
The accompanying consolidated financial statements for prior years contain
certain reclassifications to conform with current year presentation.
3. BUSINESS COMBINATIONS
On November 4, 1997, TCMS acquired in separate transactions (collectively,
the "Acquisitions"), simultaneously with the closing of the Offering, the
Founding Companies and certain real properties used in the businesses of the
Founding Companies. The Acquisitions have been accounted for under the purchase
method of accounting. The aggregate consideration paid for the Acquisitions was
$85.7 million in cash, issuance of $3.0 million in 8% notes payable over a
ten-year term ending in 2007, and 2,142,441 shares of Common Stock. Funding of
the cash portion of the consideration was provided by funds raised through the
Offering. The purchase price allocations resulted in goodwill recognized of
$71.5 million representing the excess of purchase price over fair value of the
net assets acquired. The goodwill allocation includes $14.0 million of excess
purchase price attributable to the 975,000 shares of Common Stock issued to the
founders of TCMS during 1996 which were revalued to a fair market value of
$14.40 per share.
On September 1, 1998, TCMS consummated the acquisition of Dickson GMP
International, Inc. and four affiliated companies ("Dickson") for $10 million in
cash and 1,300,000 shares of Common Stock of the Company. Under the terms of the
agreement, the Company is obligated to pay to the former Dickson shareholders up
to an additional $7.3 million in cash and 400,000 shares of Common Stock if
certain financial targets are achieved by the Dickson entities by September 1,
1999. The accompanying consolidated balance sheet at December 31, 1998 includes
allocations of the respective purchase prices and is subject to final
adjustment. The purchase price allocations resulted in goodwill recognized of
$11.5 million representing the excess of purchase price over fair value of the
net assets acquired. The purchase price allocation is preliminary in nature,
pending the ultimate resolution of contingencies related to the achievement of
financial targets by the Dickson entities and the contemplated sale by the
Company of certain assets acquired in the acquisition of
27
<PAGE> 30
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Dickson. Estimates have been made, and included in the purchase price
allocation, regarding the difference between the expected proceeds from the
sales and the fair market values of the related assets. To the extent the actual
amounts differ from these estimates, the net assets and goodwill amounts
recorded will be adjusted accordingly.
Set forth below are unaudited pro forma combined revenues and income data
reflecting the pro forma effect of the acquisitions of the Founding Companies
and Dickson on the Company's results from operations for the years ended
December 31, 1997 and 1998. The unaudited pro forma data presented below
consists of the income statement data from operations as presented in these
consolidated financial statements plus the Founding Companies for the ten months
ended October 31, 1997 and Dickson income statement data from operations for the
year ended December 31, 1997 and the eight months ended August 31, 1998 (in
thousands, except per share amounts). These pro forma results are not
necessarily indicative of the results which would actually have occurred if the
acquisitions of the Founding Companies and Dickson had taken place at the
beginning of the periods presented, nor are they necessarily indicative of
future results.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1998
---------- ----------
(UNAUDITED)
<S> <C> <C>
Revenues................................................ $164,229 $218,698
Net income.............................................. $ 6,245 $ 3,233
Diluted earnings per share.............................. $ 0.60 $ 0.31
</TABLE>
4. RESTRUCTURING OF OPERATIONS
In December 1998, under direction of the Company's new chief executive
officer appointed in November 1998, the Company's management undertook a
comprehensive review of its operations, properties and lease commitments and
personnel. As a result of this review, the Company recorded a special charge in
the amount of $2.4 million. The components of the charge consist of: (a) $1.8
million severance costs related to former officers and employees terminated as a
result of the Company's headcount reduction initiative and (b) $0.6 million for
the sale of facilities resulting from the planned consolidation of certain
operating facilities. These actions will be completed in 1999. This charge
reduced net income by $1.6 million, net of tax, or $0.16 per share.
At December 31, 1998, the net realizable value of the land, buildings, and
improvements held for sale totaled $3.4 million, and has been included in other
current assets in the accompanying 1998 balance sheet. Additionally, accrued
liabilities totaling approximately $1.3 million as of December 31, 1998, have
been recorded for severance and other costs related to the change in the
Company's operating plan. These amounts are preliminary in nature pending the
ultimate sale of identified facilities.
5. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
Contracts and accounts receivable consisted of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Completed contracts, net of allowance..................... $ 3,141 $14,720
Contracts in progress -- Current.......................... 7,941 13,531
Retainage due within one year............................. 4,569 2,889
Accounts receivable....................................... 3,563 330
------- -------
$19,214 $31,470
======= =======
</TABLE>
28
<PAGE> 31
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information with respect to uncompleted contracts is as follows (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1997 1998
-------- --------
<S> <C> <C>
Costs incurred on uncompleted fixed costs contracts..... $ 46,506 $ 19,209
Estimated profit earned to date......................... 11,831 7,842
-------- --------
58,337 27,051
Less -- Billings to date................................ (56,716) (25,915)
-------- --------
1,621 1,136
Unbilled costs and earnings on time and materials
contracts............................................. -- 4,078
Billings in excess of costs and earnings on time and
materials contracts................................... -- (5,326)
-------- --------
$ 1,621 $ (112)
======== ========
</TABLE>
The above amounts are included in the accompanying balance sheets under the
following captions (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Costs and estimated earnings in excess of billings on
uncompleted contracts................................... $ 3,272 $ 6,629
Billings in excess of costs and estimated earnings on
uncompleted contracts................................... (1,651) (6,741)
------- -------
$ 1,621 $ (112)
======= =======
</TABLE>
Other current assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1998
------ ------
<S> <C> <C>
Land and buildings held for sale............................ $ -- $3,401
Prepaid insurance........................................... 2,366 2,487
Other....................................................... 598 2,053
------ ------
$2,964 $7,941
====== ======
</TABLE>
Property and equipment consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- --------
<S> <C> <C>
Land..................................................... $ 1,098 $ 202
Marine vessels and transportation equipment.............. 39,404 63,021
Buildings and improvements............................... 4,269 5,985
Furniture and fixtures................................... 637 1,351
Machinery and equipment.................................. 28,974 38,940
Construction in progress................................. -- 439
------- --------
74,382 109,938
Less: Accumulated depreciation and amortization.......... (7,475) (13,803)
------- --------
$66,907 $ 96,135
======= ========
</TABLE>
29
<PAGE> 32
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Other noncurrent assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1998
------ ------
<S> <C> <C>
Restricted annuity investment collateralizing note
payable................................................... $2,950 $2,650
Debt issuance costs, net.................................... 3,032 1,513
Other....................................................... 305 809
------ ------
$6,287 $4,972
====== ======
</TABLE>
Accrued expenses consisted of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1997 1998
------ ------
<S> <C> <C>
Purchase price obligations.................................. $2,887 $ --
Accrued accounts payable.................................... 1,623 4,052
Federal and state income tax payable........................ 1,138 701
Payroll, payroll taxes and employee benefits................ 990 1,454
Restructuring accrual....................................... -- 1,295
Retainage payable........................................... 653 844
Litigation.................................................. -- 900
State sales tax............................................. 311 390
Other....................................................... 258 200
------ ------
$7,860 $9,836
====== ======
</TABLE>
6. SUMMARY OF FINANCING ARRANGEMENTS
Long-term debt at December 31, 1997 and 1998 consisted of the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1997 1998
------- -------
<S> <C> <C>
Credit Agreement (see below)................................ $10,000 $56,000
Note payable to a Founding Company, interest at 8%, due over
ten-year term ending in 2007, secured by insurance
annuity................................................... 2,950 2,650
Various notes to finance companies payable in aggregate
monthly installments of $402,000, including interest at
6.98% to 9%, maturing through April, 2002, secured by
equipment, land and buildings............................. 1,682 2,165
Note payable to a bank, including interest at 10.1%, paid in
1998...................................................... 632 --
Capital lease payable, paid in 1998......................... 616 --
Other notes, varying interest rates, paid in 1998........... 111 --
------- -------
15,991 61,114
Less -- Current maturities.................................. (2,520) (6,018)
------- -------
$13,471 $55,096
======= =======
</TABLE>
Credit Agreement
On October 28, 1997, TCMS entered into a credit agreement ("Credit
Agreement") with Joint Energy Development Investments, Limited Partnership, an
affiliate of Enron Capital & Trade Resources Corp. (the "Lender"). The Credit
Agreement provides for borrowings up to $75.0 million, with the initial
borrowing availability being $50.0 million. In August 1998, the availability
under the Credit Agreement was increased to
30
<PAGE> 33
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
$60.0 million with the remaining $15.0 million being made available from time to
time and in such amounts as the Lender shall determine at its sole discretion.
The Credit Agreement is divided into two facilities: (a) a $60.0 million senior
secured revolving credit facility (the "Revolving Credit Facility"), of which
$40.0 million comprises part of the current availability, and (b) $15.0 million
of senior subordinated term loan facility (the "Term Loan Facility"), of which
$10.0 million comprises the remainder of the current available borrowing
capacity.
Borrowings under the Credit Agreement incurred interest at an average
interest rate of 8.75% and 8.79% during 1997 and 1998, respectively. Interest
under both facilities is payable quarterly. During 1997, borrowings were made
only under the Revolving Credit Facility and were based upon the Base Rate
option. During 1998, borrowings were made under both the Revolving Credit
Facility and the Term Loan Facility and were based upon the Base Rate option.
Commitment fees on the daily average unused commitment under the Revolving
Credit Facility and the Term Loan Facility is payable quarterly at a rate per
annum of .375% and .5%, respectively. Borrowings under the Credit Agreement are
secured by liens on substantially all of the Company's assets (including
accounts receivable and after-acquired property) and a pledge of the capital
stock of the Founding Companies and each of the Company's remaining
subsidiaries.
The Credit Agreement requires the Company to comply with various loan
covenants, including (a) maintenance of certain financial ratios, (b)
restrictions on additional indebtedness and (c) restrictions on liens,
guarantees, advances and dividends. The Company did not borrow under the Term
Loan Facility during 1997; the balance outstanding under the Revolving Credit
Facility totaled $10.0 million at December 31, 1997. Borrowings under the Term
Loan Facility and the Revolving Credit Facility at December 31, 1998 were $16.0
million and $40.0 million, respectively.
The Credit Agreement, as amended, matures in January 2000, with all
outstanding principal and accrued and unpaid interest under the Credit Agreement
due and payable on that date. In connection with the Credit Agreement, the
Company issued to the Lender a warrant to acquire 175,000 shares of Common Stock
at an exercise price equal to the initial per share price to the public in the
Offering of $18.00. The consideration for that warrant was $1,750 and the
warrant is exercisable for five years from its date of issuance. Upon issuance,
the warrant was valued at $1.1 million based on fair market value as determined
by management.
Refinancing Subsequent to Year End
In January 1999, the Company entered into a "New Credit Facility" with
financial institutions, replacing the existing Credit Agreement with an
aggregate credit facility of $70 million. The New Credit Facility is divided
into three credit agreements: (a) a three year revolving credit agreement ("New
Revolving Facility") for up to $15.0 million; (b) a seven year term credit
agreement ("New Term Loan") for $35.0 million, and (c) a five year subordinated
debt agreement ("Subordinated Debt") of $20.0 million.
Borrowings under the New Revolving Facility bear interest on a sliding
scale of 175 to 275 basis points over either the Base Rate or LIBOR, depending
upon the ratio of senior funded debt to the Company's earnings before interest,
taxes, depreciation, and amortization (EBITDA). The choice of using the Base
Rate or the LIBOR rate is at the option of the Company. The Base Rate is defined
as the higher of the federal funds rate plus 50 basis points or the prime rate.
Interest is payable monthly. The borrowing capacity under the New Revolving
Facility is calculated using a borrowing base that includes accounts receivable
and inventory. Borrowings under the New Term Loan Facility bear interest at
LIBOR plus 250 basis points. Principal and interest is due quarterly beginning
April 1, 1999. The first four quarterly principal payments are $875,000 with
remaining quarterly principal payments to maturity of $1,312,500. Accordingly,
$3.5 million of the borrowings under the Credit Agreement at December 31, 1998
have been classified as current maturities of long-term debt in the accompanying
balance sheet. Borrowings under the Subordinated Debt bear interest on a sliding
scale of 275 to 575 basis points over the Prime Rate depending upon the ratio of
senior funded debt to the Company's earnings before EBITDA. The Prime Rate is
defined as the higher of the federal funds
31
<PAGE> 34
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
rate plus 50 basis points or the prime rate. Interest is payable quarterly
beginning March 31, 1999 with principal due upon maturity on the fifth
anniversary of the subordinated debt agreement.
Commitment fees on the daily average unused commitment under the New
Revolving Facility are payable monthly at an annual rate ranging from 0.25% to
.375%. Borrowings under the New Credit Facility are secured by liens on
substantially all of the Company's assets (including accounts receivable and
after-acquired property) and a pledge of the capital stock of the Founding
Companies and each of the Company's remaining subsidiaries. The New Credit
Facility requires the Company to comply with various loan covenants, including
(a) maintenance of certain financial ratios, (b) restrictions on additional
indebtedness and (c) restrictions on liens, guarantees, advances and dividends.
In connection with the Subordinated Debt, the Company issued to the Lender a
warrant to acquire 233,000 shares of Common Stock at an exercise price of $3.12
per share and cancelled the warrant to acquire 175,000 shares of Common Stock
issued in conjunction with the original Credit Agreement. The warrant is
exercisable for five years from its date of issuance. Upon issuance, the warrant
was valued at $382,000 based on fair market value as determined by management.
Annual maturities of long-term debt at December 31, 1998 after giving
consideration to the repayment terms of the New Credit Facility are as follows
(in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
<S> <C>
1999.............................................. $ 6,018
2000.............................................. 5,724
2001.............................................. 5,607
2002.............................................. 6,565
2003.............................................. 5,550
Thereafter........................................ 31,650
-------
$61,114
=======
</TABLE>
7. STOCKHOLDERS' EQUITY
Common Stock
On November 4, 1997, TCMS completed the Offering, which involved the
issuance of 5,750,000 shares of Common Stock at a price of $18.00 per share
(before deducting underwriting discounts and commissions), including 750,000
shares pursuant to an over-allotment option granted by the Company to the
underwriters in connection with the Offering. The net proceeds to TCMS after
deducting underwriter discounts and commissions totaled $94.7 million.
In August 1997, TCMS effected a 1,000-for-one stock split of the
outstanding shares of Common Stock. In addition, TCMS increased the number of
authorized shares of Common Stock to 20,000,000 and authorized 3,000,000 shares
of restricted common stock ("Restricted Common Stock"). The effect of the stock
split has been retroactively reflected in the accompanying financial statements
and related notes thereto.
In March and April 1997, 175,000 shares and 100,000 shares of Common Stock,
respectively, were sold to management at $.001 per share. TCMS recorded a
non-recurring, non-cash compensation charge of $2.2 million effective with the
closing of the Offering, representing the difference between the amount paid for
the shares and the estimated fair value of the shares on the date of sale of
such Common Stock.
In April 1997, TCMS issued 3,000 shares of Common Stock to a consultant for
services performed in connection with the Offering. The $12,200 difference
between the amount paid and the estimated fair market value of the shares on the
date of issue was recorded as deferred offering costs in the second quarter of
1997. In July 1997, an additional 3,000 shares of Common Stock were issued with
the same terms to another consultant for services performed in connection with
the Offering. An additional $32,000 was recorded as
32
<PAGE> 35
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
deferred offering costs in the third quarter of 1997. Such costs were charged to
additional paid in capital upon consummation of the Offering.
In September 1998, the Company issued 1,300,000 shares of Common Stock to
the former stockholders of Dickson as partial consideration for all the
outstanding stock of Dickson. The Company valued the shares at $5.5 million or
$4.25 per share, which was the quoted closing price of the day preceding the
closing of the acquisition.
Restricted Common Stock
Shares of Restricted Common Stock have no voting rights. Shares of
Restricted Common Stock are convertible into shares of Common Stock on a
share-for-share basis (a) in the event of certain ownership changes, (b) 18
months after the Offering or (c) in the event of approval by a majority of
holders of the Common Stock.
Effective November 4, 1997, the Company executed and delivered an agreement
whereby certain shareholders exchanged an aggregate of 250,000 shares of their
registered Common Stock for Restricted Common Stock effective with the closing
of the Offering.
Dividends and Distributions to Woodson Stockholders
Dividends recorded in the consolidated statements of stockholders' equity
and cash flows represent amounts paid to Woodson stockholders prior to the
Offering.
Distributions to Woodson stockholders recorded in the consolidated
statements of stockholders' equity and cash flows represent the cash portion of
the purchase price paid to the Woodson stockholders for the acquisition of
Woodson.
Stock Options
In August 1997, the Board of Directors and the stockholders of TCMS
approved the 1997 Stock Option Plan (the "Plan"). The Plan provides for the
granting of stock options to directors, executive officers, certain other
employees and certain non-employee consultants of the Company. The Plan, which
was amended during 1998 to permit up to 950,000 shares of Common Stock to be
issued, terminates in August 2007. In general, the terms of the option awards
(including vesting schedules) are established by the Compensation Committee of
the Company's Board of Directors.
In December 1998, the Board of Directors approved the Transcoastal Marine
Services, Inc. 1998 Stock Option Plan (the "1998 Plan"). The 1998 Plan provides
for granting of stock options to the Chairman and CEO and the Executive Vice
President necessary to fulfill the Company's obligations under their respective
employment agreements. The 1998 Plan terminates in November 2001. In general,
the 1998 Plan provides that the terms of the option awards (including vesting
schedules) are established by the Compensation Committee of the Company's Board
of Directors.
33
<PAGE> 36
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes activity under the Plan for the years ended
December 31, 1997 and 1998:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
SHARES PRICE
--------- --------
<S> <C> <C>
Outstanding at December 31, 1996............................ -- $ --
Granted................................................... 444,325 $18.00
Exercised................................................. -- --
Canceled/expired.......................................... (16,167) $18.00
---------
Outstanding at December 31, 1997............................ 428,158 $18.00
Granted................................................... 1,262,500 $ 4.02
Exercised................................................. -- --
Canceled/expired.......................................... (128,753) $16.09
---------
Outstanding at December 31, 1998............................ 1,561,905 $ 5.82
=========
Weighted average fair market value of options granted during
1998...................................................... -- $ 2.30
</TABLE>
The following table summarizes the information about stock options
outstanding at December 31, 1998:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE WEIGHTED
RANGE OF OUTSTANDING AT REMAINING AVERAGE
EXERCISE PRICES DECEMBER 31, 1998 CONTRACTUAL LIFE EXERCISE PRICE
- --------------- ----------------- ---------------- --------------
<S> <C> <C> <C>
$3.25............................ 1,240,267 9.8 $ 3.25
$9.75 & $11.00................... 101,500 9.3 $10.78
$18.00........................... 220,138 8.7 $10.00
---------
1,561,905 9.6 $ 5.82
=========
</TABLE>
At December 31, 1997 and 1998, exercisable option shares were 0 and
458,908, respectively. Unexercised options expire during the years 2007 and
2008.
SFAS No. 123, "Accounting for Stock-Based Compensation", allows entities to
choose between a fair value-based method of accounting for employee stock
options or similar equity instruments and the current intrinsic, value-based
method of accounting prescribed by Accounting Principles Board ("APB") Opinion
No. 25. Entities electing to remain with the accounting in APB Opinion No. 25
must make pro forma disclosures of net income and earnings per share as if the
fair value method of accounting had been applied. TCMS has elected to account
for the issuance of stock options pursuant to APB Opinion No. 25. Therefore,
there is no effect on the Company's financial position and results of operations
as a result of this pronouncement.
The following pro forma summary of the Company's consolidated results of
operations have been prepared as if the fair value based method of accounting
for stock based compensation as required by SFAS No. 123 had been applied (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1997 1998
-------- --------
<S> <C> <C>
Net income, as adjusted for pro forma income taxes in
1997 (see Note 2)..................................... $1,350 $1,127
Pro forma net income attributable to common
stockholders.......................................... $1,192 $1,127
Earnings per Share ("EPS"):.............................
Diluted EPS as reported............................... $ 0.40 $ 0.12
Diluted EPS pro forma................................. $ 0.35 $ 0.12
</TABLE>
34
<PAGE> 37
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Fair value of the options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions for 1997 and 1998.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------
1997 1998
---- ----
<S> <C> <C>
Risk-free interest rate..................................... 5.9% 5.0%
Dividend yield.............................................. -- --
Volatility factor........................................... 47.0% 44.0%
Weighted average expected life.............................. 9.5years 7.7 year
</TABLE>
Common Stock Warrants
During the first quarter of 1997, TCMS entered into an advisory agreement
with an investment banking firm, which was amended in June 1997 to provide for
the sale of a warrant to acquire 50,000 shares of Common Stock (see Note 10).
Additionally, in connection with the Credit Agreement, the Company issued to its
primary lender a warrant to acquire 175,000 shares of Common Stock at an
exercise price equal to the initial per share price to the public in the
Offering of $18.00 (See Note 6 for cancellation of warrant in 1999). As of
December 31, 1997 and 1998, no warrants had been exercised. These warrants were
valued at approximately $1.2 million and are being amortized over the two-year
term of the Credit Agreement.
8. LEASES
The Company leases facilities under noncancellable operating leases. The
following represents future minimum rental payments under noncancellable
operating leases (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
------------------------
<S> <C>
1999............................................... $ 668
2000............................................... 527
2001............................................... 344
2002............................................... 245
2003............................................... 88
Thereafter......................................... 77
------
$1,949
======
</TABLE>
Rental expense for the years ended December 31, 1996, 1997 and 1998 was
approximately $142,000, $163,000 and $1,173,000, respectively. Included in these
amounts are rent expenses and commissions paid to related parties of
approximately $142,000, $90,000, and $8,000, respectively.
9. INCOME TAXES
Federal and state income tax provisions (benefits) are as follows (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1997 1998
----- ------ -------
<S> <C> <C> <C>
Federal
Current............................................. $-- $ 583 $ 59
Deferred............................................ 91 (164) 1,219
State
Current............................................. -- 83 233
Deferred............................................ -- 25 --
--- ----- ------
$91 $ 527 $1,511
=== ===== ======
</TABLE>
35
<PAGE> 38
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Actual income tax expense differs from income tax expense computed by
applying the U.S. federal statutory corporate tax rate of 34% to income before
income tax as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1996 1997 1998
------ ------ -------
<S> <C> <C> <C>
Income tax expense at the statutory rate............ $ 425 $ 865 $1,467
Increase (decrease) resulting from:
State income taxes, net of related federal tax
effect......................................... 7 71 43
Woodson S Corp. income............................ (346) (667) --
Nondeductible goodwill............................ -- 94 256
Other............................................. 5 164 (255)
----- ----- ------
$ 91 $ 527 $1,511
===== ===== ======
</TABLE>
Deferred income tax provisions result from temporary differences in the
recognition of revenues and expenses for financial reporting purposes and for
tax purposes. The tax effects of these temporary differences representing
deferred assets and liabilities result principally from the following (in
thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1997 1998
-------- --------
<S> <C> <C>
Deferred tax assets:
Current.............................................. $ 197 $ --
Long-term............................................ -- 57
-------- --------
Total........................................ 197 57
-------- --------
Deferred tax liabilities:
Current.............................................. 488 --
Long-term............................................ 18,774 21,786
-------- --------
Total........................................ 19,262 21,786
-------- --------
Net deferred income tax liabilities.......... $(19,065) $(21,729)
======== ========
</TABLE>
10. COMMITMENTS AND CONTINGENCIES
Litigation
During 1998, the Company was involved in two class action lawsuits for
unspecified personal injury and property damages arising from events in October,
1991 and January, 1992 during the course of a pipeline installation project for
a third party gas transmission company. One of the class actions, involving
approximately 9,840 class members, entitled Rivera v. United Gas Pipeline Co.,
No. 28738, was instituted against Woodson Construction Company, Inc. on October
29, 1991 in the 40th Judicial District Court, Parish of St. John the Baptist,
State of Louisiana. This lawsuit was settled during 1998. The Company's
contribution towards the settlement was approximately $50,000. The contribution
by the Company to the settlement was expensed in 1998. The second class action
lawsuit, involving approximately 7,858 class members, entitled Husseiney v.
United Gas Pipeline Co., No. 29089, was instituted on January 27, 1992 against
Woodson Construction Company, Inc. in the 40th Judicial District Court, Parish
of St. John the Baptist, State of Louisiana. Subsequent to year-end, this
lawsuit was also settled. The Company's contribution towards the settlement was
approximately $600,000. The contribution by the Company to the settlement was
expensed in 1998.
The Company is involved in various other lawsuits arising in the ordinary
course of business, some of which involve substantial claims for damages. While
the outcome of these other lawsuits cannot be predicted
36
<PAGE> 39
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
with certainty, management believes these other matters will not have a material
adverse effect on the consolidated financial position or results of operations
of the Company.
Advisory Agreement
In February 1997, TCMS entered into an advisory agreement with a financial
advisory firm ("the firm") for a period of six months in connection with the
Acquisitions and related financings. Under the terms of the agreement between
the Company and the firm, as amended on June 25, 1997, TCMS paid the firm an
initial financial advisory fee of $15,000 plus monthly fees aggregating $30,000,
and reimbursed the firm for its out-of-pocket expenses relating to the services
provided. TCMS also issued a warrant to the firm for $100 in cash. The warrant
provides for the purchase of up to 50,000 shares of Common Stock, at a per share
exercise price equal to $8.00. The warrant may be exercised in whole or, from
time to time, in part, at any time during the five-year period beginning six
months after the Offering closes. In connection with the warrant, TCMS granted
certain registration rights to the firm.
The firm received a $400,000 success fee upon the closing of the
Acquisitions and an $800,000 senior debt placement fee upon the closing of the
Credit Agreement. The firm is entitled to receive a private placement fee equal
to five percent of the amount of any private placement made by the Company
within two years of August 12, 1997 with any capital source introduced to the
Company by the firm, together with a warrant to purchase an amount equal to 10%
of the securities issued in any such private placement.
Consulting Agreements
During February 1997, TCMS entered into a consulting and financial advisory
agreement (the "Consulting Agreement") with a promoter of TCMS ("J&D"). The
Consulting Agreement provided for a monthly fee of $12,500 through the closing
of the Offering and was to provide for a monthly consulting fee and
non-qualified stock options under the 1997 Stock Option Plan. Shortly after the
Offering, the Consulting Agreement was terminated in exchange for the payment to
J&D of approximately $.8 million. In connection with the Consulting Agreement, a
total of 36,667 options were issued to J&D. The options expired concurrent with
the termination of the Consulting Agreement.
In April 1997, TCMS entered into consulting services agreements with
certain officers of the Company. Pursuant to these agreements, the officers
provided executive services in connection with the formation of TCMS and the
closing of the Offering. Expenses related to these contract services totaled
$64,000 through the closing of the Offering, at which time these agreements
terminated.
Employment Agreements
In August 1997, TCMS entered into employment agreements with three officers
of the Company. The term of the agreements extends three years following the
closing of the Offering. The three officers have terminated their employment
with the Company and severance due them under their employment and severance
agreements has been accrued at year-end. Additionally, the Company offered
employment agreements to certain members of management and key operating
personnel of the Founding Companies on similar terms and conditions to existing
agreements. New members of the management team have executed employment
agreements that extend through November 2001. Certain officers of the Company
were granted options to acquire an aggregate of 1,050,000 shares of the
Company's common stock at the fair market value on the date of grant in lieu of
cash compensation. Options for 183,000 shares were exercisable immediately, with
options to acquire 500,000 shares vesting over a twelve-month period and options
to acquire 367,000 shares vesting over two years.
37
<PAGE> 40
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
11. EMPLOYEE BENEFIT PLANS
Woodson had an employee profit sharing plan (the "Plan") which provided for
contributions of up to 10 percent of the annual compensation of each
participant. The Plan includes employees of at least 21 years of age with one
year of completed service. Participants who became eligible after January 1,
1990 remain non-vested until the completion of five years of service, at which
time the participants become 100 percent vested. Woodson has obtained a
favorable tax determination letter from the Internal Revenue Service with
respect to the Plan. Woodson made Plan contributions of $26,000 and $59,000 for
the years ended December 31, 1996 and 1997, respectively.
Subsequent to December 31, 1997, the Plan was merged into the TCMS 401(K)
Plan, which was established effective January 1, 1998, for the benefit of its
employees. The Company has agreed to fund 50% per dollar of contribution by an
eligible employee, up to contributions totaling 6% of the employee's annual
salary. Employees of the Founding Companies were eligible to commence
participation in the TCMS 401(K) Plan at either January 1 or March 1, 1998,
dependent upon the termination date of their specific benefit plan. The Company
has requested but not yet received a determination letter. The Company made
contributions to the TCMS 401(K) Plan of $359,000 in 1998.
12. SALES TO MAJOR CUSTOMERS
The customer base for the Company is primarily concentrated in the oil and
gas industry. The revenues earned from each customer vary from year to year
based on the contracts awarded. Sales to customers comprising 10% or more of the
Company's total revenues are summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Customer A....................................... 10.1% -- --
Customer B....................................... 55.0% -- --
Customer C....................................... -- 34.5% --
Customer D....................................... -- 32.2% --
Customer E....................................... -- -- 21.2%
</TABLE>
13. SEGMENTS INFORMATION
Operating Segments
The Company has two primary operating segments the Pipeline & Marine Group
and the Fabrication & Offshore Group. The Pipeline & Marine Group's operations
focus on the construction, burial and testing of pipelines on land, through the
transition zone out to 800 feet of waters. The Fabrication & Offshore Group's
primary operations focus on the fabrication of shallow water barges, drilling
rigs and oil and gas production platforms. The two segments are managed
separately because each business requires different technology and marketing
strategies. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies except that certain
corporate expenses such as amortization of goodwill as well as interest expense,
interest income and income taxes are not allocated between the segments in the
Company's evaluation of segment profit or loss.
38
<PAGE> 41
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following shows segment information for the reportable segments for the
three years in the period ended December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- -------- --------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Pipeline & Marine........................... $17,933 $ 53,193 $110,880
Fabrication & Offshore...................... -- 4,324 77,401
Other....................................... -- -- 597
------- -------- --------
$17,933 $ 57,517 $188,878
======= ======== ========
Net income:
Pipeline & Marine........................... $ 750 $ 4,867 $ 4,961
Fabrication & Offshore...................... -- 831 2,875
Other....................................... -- (4,348) (5,031)
------- -------- --------
$ 750 $ 1,350 $ 2,805
======= ======== ========
Identifiable assets:
Pipeline & Marine........................... $ 9,157 $ 87,181 $113,551
Fabrication & Offshore...................... -- 7,946 40,747
Other....................................... -- 76,690 82,299
------- -------- --------
$ 9,157 $171,817 $236,597
======= ======== ========
Depreciation and amortization:
Pipeline & Marine........................... $ 562 $ 1,979 $ 7,715
Fabrication & Offshore...................... -- 57 1,755
Other....................................... -- 66 358
------- -------- --------
$ 562 $ 2,102 $ 9,828
======= ======== ========
Capital expenditures:
Pipeline & Marine........................... $ 1,801 $ 6,759 $ 28,598
Fabrication & Offshore...................... -- -- 6,784
Other....................................... -- -- 702
------- -------- --------
$ 1,801 $ 6,759 $ 36,084
======= ======== ========
Export sales -- United States:
To Venezuela................................ $ -- $ -- $ 24,234
To all other................................ -- -- 2,127
------- -------- --------
$ -- $ -- $ 26,361
======= ======== ========
</TABLE>
The Company operates principally in two geographic segments: the United
States and Venezuela. Revenues derived from sales generated in Venezuela and
export sales to Venezuela represent approximately 12.8% of total revenues for
the year ended December 31, 1998. Prior to 1998, export sales or revenue
generated in foreign countries was not significant to the Company's operations.
In 1996, the Company had no foreign source revenues and approximately 4.3% of
its revenues in 1997 were generated outside the United States. Other foreign
revenue is derived from contracts performed for customers primarily in Mexico
and Trinidad.
The Company's foreign operations and sales to foreign locations are subject
to local government regulations and to uncertainties of economics and political
conditions of those areas. In addition, because of the impact of local laws, the
Company also conducts some of its foreign projects pursuant to arrangements in
39
<PAGE> 42
TRANSCOASTAL MARINE SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
which local entities participate in the project. Revisions to project revenues
or costs, including those arising from changes or revisions to foreign
regulatory requirements and revisions to arrangements with local entities, are
recognized in the period in which the revisions are determined.
The following shows geographic segment information for the three years in
the period ended December 31, 1998 (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
----------------------------
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
Sales to unaffiliated customers:
United States................................ $17,933 $55,017 $139,212
Venezuela.................................... -- -- 24,234
Other Foreign................................ -- 2,500 25,432
------- ------- --------
$17,933 $57,517 $188,878
======= ======= ========
Identifiable long-lived assets:
United States................................ $ 2,956 $66,907 $ 99,536
Venezuela.................................... -- -- --
Other Foreign................................ -- -- --
------- ------- --------
$ 2,956 $66,907 $ 99,536
======= ======= ========
</TABLE>
14. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Supplemental cash flow information for each of the three years in the
period ended December 31, 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1997 1998
---- ------- ------
<S> <C> <C> <C>
Cash Paid For:
Interest.......................................... $109 $ 370 $3,620
Income taxes...................................... -- 420 629
Non-cash Investing and Financing Activities:
Assumption of long-term debt in connection with
acquisitions................................... $ -- $10,612 $ 617
</TABLE>
40
<PAGE> 43
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
For the information called for by Items 10, 11, 12, and 13, reference is
made to the Company's definitive proxy statement for its 1999 Annual Meeting of
Stockholders, which will be filed with the Securities and Exchange Commission
(the "Commission") within 120 days after December 31, 1998, and which is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
3.1 -- Amended and Restated Certificate of Incorporation of
TCMS. (Incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
3.2 -- Bylaws of TCMS. (Incorporated by reference to Exhibit 3.2
of the Company's Registration Statement on Form S-1)
(File #333-34603).
4.1 -- Form of Certificate representing Common Stock.
(Incorporated by Reference to Exhibit 4.1 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
4.2 -- Form of Share Exchange Agreement among TCMS, J&D Capital
Investments, L.C., James B. Thompson and Beldon E. Fox,
Jr. (Incorporated by reference to Exhibit 4.2 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
4.3 -- Form of Secured Promissory Note to be issued in the
acquisition of RFCNI. (Incorporated by reference to
Exhibit 4.3 of the Company's Registration Statement on
Form S-1) (File #333-34603).
10.1 -- TCMS 1997 Stock Option Plan. (Incorporated by reference
to Exhibit 10.1 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.2 -- Employment Agreement dated as of August 6, 1997, between
TCMS and Bill E. Stallworth. (Incorporated by reference
to Exhibit 10.2 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.3 -- Employment Agreement dated as of August 6, 1997, between
TCMS and Thad Smith. (Incorporated by reference to
Exhibit 10.3 of the Company's Registration Statement on
Form S-1) (File #333-34603).
10.4 -- Employment Agreement dated as of August 6, 1997, between
TCMS and Johnnie W. Domingue. (Incorporated by reference
to Exhibit 10.4 of the Company's Registration Statement
on Form S-1) (File #333-34603).
</TABLE>
41
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.5 -- Stock Repurchase Agreement dated as of March 24, 1997,
between TCMS and Bill E. Stallworth. (Incorporated by
reference to Exhibit 10.5 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.6 -- Stock Repurchase Agreement dated as of April 25, 1997,
between TCMS and Thad Smith. (Incorporated by reference
to Exhibit 10.6 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.7 -- Stock Repurchase Agreement dated as of March 24, 1997,
between TCMS and Johnnie W. Domingue. (Incorporated by
reference to Exhibit 10.7 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.8 -- Form of Employment Agreement between HBH, Inc. and H.
Daniel Hughes II. (Incorporated by reference to Exhibit
10.8 of the Company's Registration Statement on Form S-1)
(File #333-34603).
10.9 -- Form of Employment Agreement between CSI Hydrostatic
Testers, Inc. and Daniel N. Hargett, Sr. (Incorporated by
reference to Exhibit 10.9 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.10 -- Agreement for Consulting Services dated April 14, 1997,
between TCMS and Stallworth, Frankhouser & Associates, as
amended August 6, 1997. (Incorporated by reference to
Exhibit 10.10 of the Company's Registration Statement on
Form S-1) (File #333-34603).
10.11 -- Employment Letter dated April 21, 1997, between TCMS and
Johnnie W. Domingue, as amended August 6, 1997.
(Incorporated by reference to Exhibit 10.11 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.12 -- Form of warrant issued to McFarland, Grossman & Company,
Inc. (Incorporated by reference to Exhibit 10.12 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.13 -- Purchase and Sale Agreement dated as of August 28, 1997,
by and among TCMS, Laine Construction Company, Inc.,
Paula Woodson, Linda Woodson and Cheryl Woodson.
(Incorporated by reference to Exhibit 10.13 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.14 -- Agreement and Plan of Merger dated as of August 28, 1997,
by and Among TCMS, Woodson Acquisition Corp., Woodson
Construction Company, Inc. and Louis Woodson.
(Incorporated by reference to Exhibit 10.14 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.15 -- Agreement and Plan of Merger dated August 28, 1997, by
and among TCMS, Kori Acquisition Corp., Kori Corporation,
Paula Woodson, Linda Woodson and Cheryl Woodson.
(Incorporated by reference to Exhibit 10.15 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.16 -- Agreement and Plan of Merger dated as of August 28, 1997,
by and among TCMS, Enviro Acquisition Corp.,
Envirosystems, Inc., Paula Woodson, Linda Woodson and
Cheryl Woodson. (Incorporated by reference to Exhibit
10.16 of the Company's Registration Statement on Form
S-1) (File #333-34603).
10.17 -- Purchase and Sale Agreement dated as of August 28, 1997,
among TCMS, CSI Hydrostatic Testers, Inc., Hargett
Mooring and Marine, Inc., Daniel N. Hargett, Sr., Yvette
Hargett and Richard Hargett. (Incorporated by reference
to Exhibit 10.17 of the Company's Registration Statement
on Form S-1) (File #333-34603).
</TABLE>
42
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.18 -- Purchase and Sale Agreement dated as of August 20, 1997,
by and among TCMS, HBH, Inc. and the Succession of
Herbert D. Hughes. (Incorporated by reference to Exhibit
10.18 of the Company's Registration Statement on Form
S-1) (File #333-34603).
10.19 -- Agreement and Plan of Merger dated as of August 27, 1997,
by and Among TCMS, RNI Acquisition Corp., The Red Fox
Companies of New Iberia, Inc. and The Beldon E. Fox, Sr.
Grandchildren's Trust No. 1. (Incorporated by reference
to Exhibit 10.19 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.20 -- Form of Agreement to Purchase and Sell dated as of August
28, 1997, by and among TCMS and Linda Woodson, Cheryl
Woodson and Paula Woodson. (Incorporated by reference to
Exhibit 10.20 of the Company's Registration Statement on
Form S-1) (File #333-34603).
10.21 -- Agreement to Purchase and Sell dated as of August 20,
1997, by and between TCMS and the Succession of Herbert
D. Hughes. (Incorporated by reference to Exhibit 10.21 of
the Company's Registration Statement on Form S-1) (File
#333-34603).
10.22 -- Leasehold Purchase Agreement dated as of August 11, 1997,
by and between TCMS and The Beldon E. Fox, Sr.
Grandchildren's Trust No. 1. (Incorporated by reference
to Exhibit 10.22 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.23 -- Amendment and Restated Consulting and Financial Advisory
Services Agreement dated September 24, 1997, between TCMS
and J&D Capital Investments, L.C. (Incorporated by
reference to Exhibit 10.23 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.24 -- Form of Senior Revolving Credit Agreement by and among
TCMS and Joint Energy Development Investments, Limited
Partnership, and the Lenders Signatory thereto.
(Incorporated by reference to Exhibit 10.24 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.25 -- Form of Subordinated Credit Agreement by and among TCMS
and Joint Energy Development Investments, Limited
Partnership, and the Lenders Signatory thereto.
(Incorporated by reference to Exhibit 10.25 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.26 -- Form of Warrant Agreement by and between TCMS and Joint
Energy Development Investments, Limited Partnership.
(Incorporated by reference to Exhibit 10.26 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.27 -- Lease Agreement by and between Red Fox Companies of New
Iberia, Inc., a division of TransCoastal Marine Services,
Inc., and Delta Terminal, Inc. for approximately 29.311
acres of land for a fabrication facility. (Incorporated
by reference to Exhibit 10.27 of the Company's Annual
Report for fiscal year ended December 31, 1997 filed on
Form 10-K)
10.28 -- Lease Agreement by and between Red Fox Companies of New
Iberia, Inc., a division of Transcoastal Marine Services,
Inc., and the Board of Commissioners of the Port of New
Orleans for approximately 15.7 Acres of land including
approximately 68,000 square feet of fabricating building
space and 2,600 square feet of office space.
(Incorporated by reference to Exhibit 10.27 of the
Company's Annual Report for fiscal year ended December
31, 1997 filed on Form 10-K)
</TABLE>
43
<PAGE> 46
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.29 -- Form of Subordinated Credit Agreement by and among the
Company and Joint Energy Development Investments II
Limited Partnership, and the Lender's Signatory thereto.
10.30 -- Form of Credit Agreement by and among the Company and
Heller Financial Leasing, Inc. and the Lender's Signatory
thereto.
10.31 -- Form of Senior Revolving Credit Agreement by and among
the Company and Bank One Texas, National Association, and
the Lender's Signatory thereto.
10.32 -- Employment Agreement dated December 14, 1998 between the
Company and Nathan M. Avery
10.33 -- Employment Agreement dated December 14, 1998 between the
Company and Pamela L. Reiland
10.34 -- Stock Purchase and Merger Agreement between the Company
and Dickson GMP International, Inc. and affiliates
(Incorporated by reference to Exhibit 10.3 of the
Company's 8-K filed on September 15, 1998).
10.35 -- First Amendment to Stock Purchase and Merger Agreement
between the Company and Dickson GMP International, Inc.
and affiliates (Incorporated by reference to Exhibit 10.4
of the Company's 8-K filed on September 15, 1998).
10.36 -- Transcoastal Marine Services, Inc. 1998 Stock Option Plan
21.1 -- List of Subsidiaries of the Company. (Incorporated by
reference to Exhibit 21.1 of the Company's Registration
Statement on Form S-1) (File #333-34603).
27.1 -- Financial Data Schedule.
</TABLE>
(b) Financial Statement Schedules
All schedules are omitted because they are not applicable or because the
required information is contained in the Financial Statements or Notes thereto.
(c) Reports on Form 8-K.
Filed on September 15, 1998 in connection with the acquisition of Dickson
GMP International, Inc. and affiliates.
44
<PAGE> 47
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.
TRANSCOASTAL MARINE SERVICES, INC.
By: /s/ PAMELA L. REILAND
----------------------------------
Pamela L. Reiland
Executive Vice President
March 31, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Annual Report on Form 10-K has been signed by the following persons on behalf of
the registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ NATHAN M. AVERY Chairman of the Board of Directors and Chief
- ----------------------------------------------------- Executive Officer (Principal Executive
Nathan M. Avery Officer)
/s/ PAMELA L. REILAND Principal Financial Officer
- -----------------------------------------------------
Pamela L. Reiland
/s/ WARREN L. WILLIAMS Principal Accounting Officer
- -----------------------------------------------------
Warren L. Williams
/s/ JEAN SAVOY Director
- -----------------------------------------------------
Jean Savoy
/s/ PATRICK B. COLLINS Director
- -----------------------------------------------------
Patrick B. Collins
/s/ BELDON E. FOX, JR. Director
- -----------------------------------------------------
Beldon E. Fox, Jr.
/s/ FRED E. GALLANDER Director
- -----------------------------------------------------
Fred E. Gallander
/s/ D. GLENN RICHARDSON Director
- -----------------------------------------------------
D. Glenn Richardson
</TABLE>
45
<PAGE> 48
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
DESCRIPTION
-----------
<C> <S>
3.1 -- Amended and Restated Certificate of Incorporation of
TCMS. (Incorporated by reference to Exhibit 3.1 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
3.2 -- Bylaws of TCMS. (Incorporated by reference to Exhibit 3.2
of the Company's Registration Statement on Form S-1)
(File #333-34603).
4.1 -- Form of Certificate representing Common Stock.
(Incorporated by Reference to Exhibit 4.1 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
4.2 -- Form of Share Exchange Agreement among TCMS, J&D Capital
Investments, L.C., James B. Thompson and Beldon E. Fox,
Jr. (Incorporated by reference to Exhibit 4.2 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
4.3 -- Form of Secured Promissory Note to be issued in the
acquisition of RFCNI. (Incorporated by reference to
Exhibit 4.3 of the Company's Registration Statement on
Form S-1) (File #333-34603).
10.1 -- TCMS 1997 Stock Option Plan. (Incorporated by reference
to Exhibit 10.1 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.2 -- Employment Agreement dated as of August 6, 1997, between
TCMS and Bill E. Stallworth. (Incorporated by reference
to Exhibit 10.2 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.3 -- Employment Agreement dated as of August 6, 1997, between
TCMS and Thad Smith. (Incorporated by reference to
Exhibit 10.3 of the Company's Registration Statement on
Form S-1) (File #333-34603).
10.4 -- Employment Agreement dated as of August 6, 1997, between
TCMS and Johnnie W. Domingue. (Incorporated by reference
to Exhibit 10.4 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.5 -- Stock Repurchase Agreement dated as of March 24, 1997,
between TCMS and Bill E. Stallworth. (Incorporated by
reference to Exhibit 10.5 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.6 -- Stock Repurchase Agreement dated as of April 25, 1997,
between TCMS and Thad Smith. (Incorporated by reference
to Exhibit 10.6 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.7 -- Stock Repurchase Agreement dated as of March 24, 1997,
between TCMS and Johnnie W. Domingue. (Incorporated by
reference to Exhibit 10.7 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.8 -- Form of Employment Agreement between HBH, Inc. and H.
Daniel Hughes II. (Incorporated by reference to Exhibit
10.8 of the Company's Registration Statement on Form S-1)
(File #333-34603).
10.9 -- Form of Employment Agreement between CSI Hydrostatic
Testers, Inc. and Daniel N. Hargett, Sr. (Incorporated by
reference to Exhibit 10.9 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.10 -- Agreement for Consulting Services dated April 14, 1997,
between TCMS and Stallworth, Frankhouser & Associates, as
amended August 6, 1997. (Incorporated by reference to
Exhibit 10.10 of the Company's Registration Statement on
Form S-1) (File #333-34603).
</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>
DESCRIPTION
-----------
<C> <S>
10.11 -- Employment Letter dated April 21, 1997, between TCMS and
Johnnie W. Domingue, as amended August 6, 1997.
(Incorporated by reference to Exhibit 10.11 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.12 -- Form of warrant issued to McFarland, Grossman & Company,
Inc. (Incorporated by reference to Exhibit 10.12 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.13 -- Purchase and Sale Agreement dated as of August 28, 1997,
by and among TCMS, Laine Construction Company, Inc.,
Paula Woodson, Linda Woodson and Cheryl Woodson.
(Incorporated by reference to Exhibit 10.13 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.14 -- Agreement and Plan of Merger dated as of August 28, 1997,
by and Among TCMS, Woodson Acquisition Corp., Woodson
Construction Company, Inc. and Louis Woodson.
(Incorporated by reference to Exhibit 10.14 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.15 -- Agreement and Plan of Merger dated August 28, 1997, by
and among TCMS, Kori Acquisition Corp., Kori Corporation,
Paula Woodson, Linda Woodson and Cheryl Woodson.
(Incorporated by reference to Exhibit 10.15 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.16 -- Agreement and Plan of Merger dated as of August 28, 1997,
by and among TCMS, Enviro Acquisition Corp.,
Envirosystems, Inc., Paula Woodson, Linda Woodson and
Cheryl Woodson. (Incorporated by reference to Exhibit
10.16 of the Company's Registration Statement on Form
S-1) (File #333-34603).
10.17 -- Purchase and Sale Agreement dated as of August 28, 1997,
among TCMS, CSI Hydrostatic Testers, Inc., Hargett
Mooring and Marine, Inc., Daniel N. Hargett, Sr., Yvette
Hargett and Richard Hargett. (Incorporated by reference
to Exhibit 10.17 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.18 -- Purchase and Sale Agreement dated as of August 20, 1997,
by and among TCMS, HBH, Inc. and the Succession of
Herbert D. Hughes. (Incorporated by reference to Exhibit
10.18 of the Company's Registration Statement on Form
S-1) (File #333-34603).
10.19 -- Agreement and Plan of Merger dated as of August 27, 1997,
by and Among TCMS, RNI Acquisition Corp., The Red Fox
Companies of New Iberia, Inc. and The Beldon E. Fox, Sr.
Grandchildren's Trust No. 1. (Incorporated by reference
to Exhibit 10.19 of the Company's Registration Statement
on Form S-1) (File #333-34603).
10.20 -- Form of Agreement to Purchase and Sell dated as of August
28, 1997, by and among TCMS and Linda Woodson, Cheryl
Woodson and Paula Woodson. (Incorporated by reference to
Exhibit 10.20 of the Company's Registration Statement on
Form S-1) (File #333-34603).
10.21 -- Agreement to Purchase and Sell dated as of August 20,
1997, by and between TCMS and the Succession of Herbert
D. Hughes. (Incorporated by reference to Exhibit 10.21 of
the Company's Registration Statement on Form S-1) (File
#333-34603).
10.22 -- Leasehold Purchase Agreement dated as of August 11, 1997,
by and between TCMS and The Beldon E. Fox, Sr.
Grandchildren's Trust No. 1. (Incorporated by reference
to Exhibit 10.22 of the Company's Registration Statement
on Form S-1) (File #333-34603).
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
DESCRIPTION
-----------
<C> <S>
10.23 -- Amendment and Restated Consulting and Financial Advisory
Services Agreement dated September 24, 1997, between TCMS
and J&D Capital Investments, L.C. (Incorporated by
reference to Exhibit 10.23 of the Company's Registration
Statement on Form S-1) (File #333-34603).
10.24 -- Form of Senior Revolving Credit Agreement by and among
TCMS and Joint Energy Development Investments, Limited
Partnership, and the Lenders Signatory thereto.
(Incorporated by reference to Exhibit 10.24 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.25 -- Form of Subordinated Credit Agreement by and among TCMS
and Joint Energy Development Investments, Limited
Partnership, and the Lenders Signatory thereto.
(Incorporated by reference to Exhibit 10.25 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.26 -- Form of Warrant Agreement by and between TCMS and Joint
Energy Development Investments, Limited Partnership.
(Incorporated by reference to Exhibit 10.26 of the
Company's Registration Statement on Form S-1) (File
#333-34603).
10.27 -- Lease Agreement by and between Red Fox Companies of New
Iberia, Inc., a division of TransCoastal Marine Services,
Inc., and Delta Terminal, Inc. for approximately 29.311
acres of land for a fabrication facility. (Incorporated
by reference to Exhibit 10.27 of the Company's Annual
Report for fiscal year ended December 31, 1997 filed on
Form 10-K)
10.28 -- Lease Agreement by and between Red Fox Companies of New
Iberia, Inc., a division of Transcoastal Marine Services,
Inc., and the Board of Commissioners of the Port of New
Orleans for approximately 15.7 Acres of land including
approximately 68,000 square feet of fabricating building
space and 2,600 square feet of office space.
(Incorporated by reference to Exhibit 10.27 of the
Company's Annual Report for fiscal year ended December
31, 1997 filed on Form 10-K)
10.29 -- Form of Subordinated Credit Agreement by and among the
Company and Joint Energy Development Investments II
Limited Partnership, and the Lender's Signatory thereto.
10.30 -- Form of Credit Agreement by and among the Company and
Heller Financial Leasing, Inc. and the Lender's Signatory
thereto.
10.31 -- Form of Senior Revolving Credit Agreement by and among
the Company and Bank One Texas, National Association, and
the Lender's Signatory thereto.
10.32 -- Employment Agreement dated December 14, 1998 between the
Company and Nathan M. Avery
10.33 -- Employment Agreement dated December 14, 1998 between the
Company and Pamela L. Reiland
10.34 -- Stock Purchase and Merger Agreement between the Company
and Dickson GMP International, Inc. and affiliates
(Incorporated by reference to Exhibit 10.3 of the
Company's 8-K filed on September 15, 1998).
10.35 -- First Amendment to Stock Purchase and Merger Agreement
between the Company and Dickson GMP International, Inc.
and affiliates (Incorporated by reference to Exhibit 10.4
of the Company's 8-K filed on September 15, 1998).
10.36 -- Transcoastal Marine Services, Inc. 1998 Stock Option Plan
21.1 -- List of Subsidiaries of the Company. (Incorporated by
reference to Exhibit 21.1 of the Company's Registration
Statement on Form S-1) (File #333-34603).
27.1 -- Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 10.29
********************************************************************************
TRANSCOASTAL MARINE SERVICES, INC.
SUBORDINATED CREDIT AGREEMENT
Dated as of January 13, 1999
$20,000,000
JOINT ENERGY DEVELOPMENT INVESTMENTS II LIMITED PARTNERSHIP
********************************************************************************
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
ARTICLE I
DEFINITIONS .........................................................1
Section 1.1 Definitions ...........................................1
Section 1.2 Other Definitional Provisions ........................14
Section 1.3 Computation of Time Periods ..........................14
ARTICLE II
LOAN ...............................................................14
Section 2.1 Loan .................................................14
Section 2.2 Note .................................................14
Section 2.3 Repayment of Loan ....................................14
Section 2.4 Interest .............................................14
ARTICLE III
PAYMENTS ...........................................................15
Section 3.1 Method of Payment ....................................15
Section 3.2 Prepayment ...........................................15
Section 3.3 Taxes ................................................16
Section 3.4 Computation of Interest ..............................17
ARTICLE IV
SECURITY INSTRUMENTS ...............................................17
Section 4.1 Security Instruments .................................17
Section 4.2 Setoff ...............................................18
ARTICLE V
CONDITIONS PRECEDENT ...............................................19
Section 5.1 Restatement ..........................................19
ARTICLE VI
REPRESENTATIONS AND WARRANTIES .....................................20
Section 6.1 Corporate Existence ..................................20
Section 6.2 Financial Statements .................................21
Section 6.3 Corporate Action; No Breach ..........................21
Section 6.4 Operation of Business ................................21
Section 6.5 Litigation and Judgments .............................21
Section 6.6 Rights in Properties; Liens ..........................22
Section 6.7 Enforceability .......................................22
Section 6.8 Approvals ............................................22
Section 6.9 Debt .................................................22
Section 6.10 Taxes ................................................23
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C> <C>
Section 6.11 Use of Proceeds; Margin Securities ...................23
Section 6.12 ERISA ................................................23
Section 6.13 Disclosure ...........................................23
Section 6.14 Subsidiaries .........................................23
Section 6.15 Agreements ...........................................23
Section 6.16 Compliance with Laws .................................23
Section 6.17 Inventory ............................................24
Section 6.18 Investment Company Act ...............................24
Section 6.19 Public Utility Holding Company Act ...................24
Section 6.20 Environmental Matters ................................24
Section 6.21 Year 2000 Compliance .................................25
Section 6.22 Insurance ............................................26
Section 6.23 Hedging Agreements ...................................26
Section 6.24 Restriction on Liens .................................26
Section 6.25 Material Debt Agreements .............................26
ARTICLE VII
POSITIVE COVENANTS .................................................27
Section 7.1 Reporting Requirements ................................27
Section 7.2 Maintenance of Existence; Conduct of Business .........29
Section 7.3 Maintenance of Properties .............................29
Section 7.4 Taxes and Claims ......................................30
Section 7.5 Insurance .............................................30
Section 7.6 Inspection Rights .....................................30
Section 7.7 Keeping Books and Records .............................30
Section 7.8 Compliance with Laws ..................................30
Section 7.9 Compliance with Agreements ............................30
Section 7.10 Further Assurances ....................................30
Section 7.11 ERISA .................................................31
Section 7.12 Year 2000 Compliant ...................................31
Section 7.13 Subsidiary Guaranties and Pledge of Assets ............31
Section 7.14 Opinions of Counsel ...................................31
ARTICLE VIII
NEGATIVE COVENANTS .................................................32
Section 8.1 Debt ...................................................32
Section 8.2 Limitation on Liens ....................................32
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C> <C>
Section 8.3 Mergers, Acquisitions, Etc. ...........................33
Section 8.4 Restricted Payments ...................................33
Section 8.5 Investments ...........................................34
Section 8.6 Limitation on Issuance of Capital Stock ...............34
Section 8.7 Transactions With Affiliates ..........................34
Section 8.8 Disposition of Assets .................................34
Section 8.9 Sale and Leaseback ....................................35
Section 8.10 Nature of Business ....................................35
Section 8.11 Environmental Protection ..............................35
Section 8.12 Accounting ............................................35
Section 8.13 Compliance with ERISA .................................35
Section 8.14 Proceeds of Note ......................................35
Section 8.15 Negative Pledge Agreements ............................35
ARTICLE IX
FINANCIAL COVENANTS ................................................36
Section 9.1 Consolidated Tangible Net Worth .......................36
Section 9.2 Capital Expenditures ..................................36
Section 9.3 Funded Debt to Capitalization .........................36
Section 9.4 Fixed Charge Coverage Ratio ...........................36
Section 9.5 Funded Debt to EBITDA Coverage Ratio ..................36
ARTICLE X
DEFAULT ............................................................37
Section 10.1 Events of Default .....................................37
Section 10.2 Remedies ..............................................39
Section 10.3 Performance by the Lender .............................40
ARTICLE XI
MISCELLANEOUS ......................................................40
Section 11.1 Expenses ..............................................40
Section 11.2 Indemnification .......................................40
Section 11.3 Limitation of Liability ...............................41
Section 11.4 No Duty ...............................................41
Section 11.5 No Fiduciary Relationship .............................41
Section 11.6 Equitable Relief ......................................41
Section 11.7 No Waiver; Cumulative Remedies ........................41
</TABLE>
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<PAGE> 5
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C> <C> <C>
Section 11.8 Successors and Assigns ................................42
Section 11.9 Survival ..............................................42
Section 11.10 ENTIRE AGREEMENT .....................................43
Section 11.11 Amendments, Etc. .....................................43
Section 11.12 Maximum Interest Rate ................................43
Section 11.13 Notices ..............................................43
Section 11.14 Governing Law; Venue; Service of Process .............44
Section 11.15 Counterparts .........................................44
Section 11.16 Severability .........................................44
Section 11.17 Headings .............................................44
Section 11.18 Construction .........................................44
Section 11.19 Independence of Covenants ............................44
Section 11.20 JURY WAIVER ..........................................45
Section 11.21 Arbitration ..........................................45
Section 11.22 Confidentiality ......................................45
</TABLE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Exhibit
- ------- ----------------------
<S> <C>
"A" List of Existing Security Instruments
</TABLE>
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<PAGE> 6
INDEX TO SCHEDULES
<TABLE>
<CAPTION>
Schedule Description of Schedule
- -------- -----------------------
<S> <C>
6.5 Litigation
6.6(d) Rights in Properties; Liens
6.9 Debt
6.10 Taxes
6.14 Subsidiaries
6.20 Environmental Matters
6.22 Insurance
6.23 Hedging Agreements
6.25 Material Debt Agreements
8.2 Liens
</TABLE>
-V-
<PAGE> 7
SUBORDINATED CREDIT AGREEMENT
THIS SUBORDINATED CREDIT AGREEMENT, dated as of January 13,1999, is
among TRANSCOASTAL MARINE SERVICES, INC., a Delaware corporation (the
"Borrower"), the Obligated Parties (as defined below) that are party hereto, and
JOINT ENERGY DEVELOPMENT INVESTMENTS II LIMITED PARTNERSHIP (the "Lender").
RECITALS
Reference is made to that certain (i) Senior Revolving Credit Agreement
dated October 28, 1997, between the Borrower and the Joint Energy Development
Investments Limited Partnership as agent and sole lender thereunder and (ii)
Subordinated Revolving Credit Agreement dated October 28, 1997, between the
Borrower and the Joint Energy Development Investments Limited Partnership as
agent and sole lender thereunder (both of the foregoing agreements as the same
have been amended and modified, the "Prior Credit Agreements"). In connection
with the Prior Credit Agreements, the following promissory notes were executed
by the Borrower (i) $60,000,000 Note dated October 28, 1997, made by the
Borrower and payable to Joint Energy Development Investments Limited Partnership
and (ii) $20,000,000 Amended and Restated Note dated August 31, 1998, made by
the Borrower and payable to the Lender, such note amended and restated the
$15,000,000 Note dated October 27, 1997 (each of the foregoing promissory notes
as the same have been amended and modified, the "Prior Notes"). Joint Energy
Development Investments Limited Partnership has assigned all of its rights and
interests as agent and sole lender under the Prior Credit Agreements, the Prior
Notes, and the documents and instruments executed in connection therewith to the
Lender.
In connection with the restructuring of the Borrower's capitalization,
the Borrower and the Lender have agreed, subject to the conditions herein, to
amend, restate and consolidate, the indebtedness and other obligations of the
Borrower owed in connection with the Prior Credit Agreements and the Prior Notes
("Prior Obligations") into this Agreement, the Note (as defined below), and the
other Loan Documents (as defined below).
Therefore, in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms have
the following meanings (such meanings to be equally applicable to, both the
singular and the plural forms of the terms defined):
"Adjusted Base Rate" at any time shall mean a fluctuating interest
rate per annum as shall be in effect from time to time equal to the sum
of the Base Rate and the Applicable Margin as each may fluctuate from
time to time.
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<PAGE> 8
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or
is controlled by, or is under common control with, such Person; (b) that
directly or indirectly beneficially owns or holds 10% or more of any
class of voting stock of such Person; or (c) 10% or more of the voting
stock of which is directly or indirectly beneficially owned or held by
the Person in question. The term "control" means the possession,
directly or indirectly, of the power to direct or cause direction of the
management and policies of a Person, whether through the ownership of
voting securities, by contract, or otherwise; provided, however, in no
event shall the Lender be deemed an Affiliate of any Obligated Party or
any of their Subsidiaries.
"Agreement" means this Subordinated Credit Agreement, as the same
may be amended, supplemented or modified from time to time.
"Applicable Margin" means, for any day, the amount indicated in
the table and text set forth below:
<TABLE>
<CAPTION>
=====================================================
Ratio of Applicable Margin
Funded Debt to for Base
EBITDA Rate Advances
-------------- -----------------
=====================================================
<S> <C>
Less than or equal to 0.50 to 2.75%
1.00
-----------------------------------------------------
Greater than 0.50 to 1.00, but 3.75%
less than or equal to 1.50 to
1.00
-----------------------------------------------------
Greater than 1.50 to 1.00, but 4.75%
less than or equal to 2.50 to 1.00
Greater than 2.50 to 1.00 5.75%
=====================================================
</TABLE>
The ratio shall be deemed to be greater than 2.50 to 1.00 for the period
beginning on the date of this Agreement until the first recalculation of
such ratio as set forth below (and therefore the Applicable Margin shall
begin at 5.75%). The Applicable Margin shall be based upon the ratio of
the Funded Debt to EBITDA of the Borrower and its Subsidiaries, on a
consolidated basis, for the most recently ended Rolling Period as of the
date of its determination and shall be redetermined semi-annually based
the most recent financial statements dated as of the end of March or
September and delivered to the Lender pursuant to this Agreement. If
such statements are delivered when required hereunder, any adjustment to
the Applicable Margin shall become effective on the 45th day following
the last day of the applicable fiscal quarter ending in March or
September, provided that the Borrower shall request in writing,
simultaneously with its submission of such financial statements, any
decrease in the Applicable Margin which is justified by a change in the
foregoing ratio. The Lender shall provide the Borrower with prompt
written notice of any increase in the Applicable Margin resulting from a
change in the foregoing ratio; provided that if the Lender
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<PAGE> 9
fails to provide such notice, any increase in the Applicable Margin
shall not be affected by such failure. If such financial statements are
not delivered when required hereunder, the Applicable Margin shall
increase to the maximum percentage amount set forth in the table above
from the date such financial statements were due until three days after
such financial statements are received by the Lender.
"Assignment" means that certain Partial Assignment of Notes,
Liens, Security Interests and Loan Documents dated January 13, 1999
executed by the Lender in favor of the Senior Lenders.
"Bailment Agreement" means that certain Bailment Agreement dated
January 13, 1999 among Borrower, Lender, and the Senior Lenders.
"Base Rate" at any time shall mean a fluctuating interest rate per
annum as shall be in effect from time to time which shall at all times
be equal to the higher of (a) the Federal Funds Rate as in effect from
time to time plus 1/2 of 1% per annum and (b) the Prime Rate as in
effect from time to time.
"Borrower" has the meaning specified in the introductory paragraph
of this Agreement.
"Business Day" means any day of the year except Saturday, Sunday
and any day on which commercial banks are authorized or required to
close in Houston, Texas or New York, New York.
"Business Opportunities Letter Agreement" means the letter
agreement relating to business opportunities dated January 13, 1999
between Lender, Borrower and the other Obligated Parties party thereto.
"Capitalization" means the sum of Funded Debt plus Net Worth.
"Capital Lease Obligations" means, as to any Person, the
capitalized amount, determined in accordance with GAAP, of the
obligations of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real and/or personal
property, which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under GAAP.
"CLOSING" shall mean the consummation of the transactions
contemplated by this Agreement on the date first indicated above.
"CMLTD" means any contractual principal installment due and
payable within one year or less from the time of the calculation thereof
on Debt that by its terms is payable more than one year from the date of
origination thereof or which is renewable at the option of the obligor
beyond one year from such date of origination.
-3-
<PAGE> 10
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor Federal tax code and the regulations,
promulgated and rulings issued thereunder, and any reference to any
statutory provision of the Code shall be deemed to be a reference to any
successor provision or provisions.
"Collateral" means any and all Property subject to Liens created
by the Security Instruments.
"Consolidated" and "Consolidating" refer to the consolidation of
the accounts of the Borrower and its Subsidiaries in accordance with
GAAP.
"Consolidated Net Income" means with respect to the Borrower and
its Consolidated Subsidiaries, for any period, the aggregate of the net
income (or loss) of the Borrower and its Consolidated Subsidiaries after
allowances for taxes for such period, determined on a consolidated basis
in accordance with GAAP; provided that there shall be excluded from such
net income (to the extent otherwise included therein) the following: (i)
the net income of any Person in which the Borrower or any Consolidated
Subsidiary has an interest (which interest does not cause the net income
of such other Person to be consolidated with the net income of the
Borrower and its Consolidated Subsidiaries in accordance with GAAP),
except to the extent of the amount of dividends or distributions
actually paid in such period by such other Person to the Borrower or to
a Consolidated Subsidiary, as the case may be; (ii) the net income (but
not loss) of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument or Government Requirement applicable to such Consolidated
Subsidiary, or is otherwise restricted or prohibited in each case
determined in accordance with GAAP; (iii) the net income (or loss) of
any Person acquired in a pooling-of-interests transaction for any period
prior to the date of such transaction; (iv) any extraordinary gains or
losses, including gains or losses attributable to Property sales not in
the ordinary course of business (net of fees and expenses relating to
the transaction giving rise thereto); and (v) the cumulative effect of a
change in accounting principles and any gains or losses attributable to
writeups or writedowns of assets.
"Consolidated Subsidiaries" means each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with the
financial statements of the Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means, at any particular time,
all amounts which, in conformity with GAAP, would be included as
stockholders' equity on a Consolidated balance sheet of the Borrower and
its Subsidiaries; provided, however, there shall be excluded therefrom:
(a) any amount at which shares of capital stock of the Borrower appear
as an asset on the Borrower's balance sheet, (b) goodwill, including any
amounts, however designated, that represent the excess of the purchase
price paid for assets or stock
-4-
<PAGE> 11
over the value assigned thereto, (c) patents, trademarks, trade names,
and copyrights, (d) deferred expenses (except deferred expenses incurred
in the ordinary course of business) and (e) all other assets which are
properly classified as intangible assets.
"Debt" of any Person means at any time (without duplication) and
whether direct or contingent: (a) obligations for borrowed money which
(i) are evidenced by bonds, notes, debentures, loan agreements, credit
agreements or similar instruments or agreements and (ii) are or should
be shown on a balance sheet as debt in accordance with GAAP, (b)
obligations to pay the deferred purchase price of property or services,
(c) Capital Lease Obligations, (d) Debt or other obligations of others
guaranteed, (e) obligations secured by a Lien existing on property owned
by such Person, whether or not the obligations secured thereby have been
assumed by such Person or are non-recourse to the credit of such Person,
(f) reimbursement obligations (whether contingent or otherwise) in
respect of letters of credit, bankers' acceptances, surety or other
bonds and similar instruments, (g) liabilities in respect of unfunded
vested benefits under any Plan; (h) Guarantees, and (i) Swap
Transactions; provided, however, that Debt shall not include (A)
obligations under performance bonds, performance guarantees, surety
bonds, appeal bonds, security deposits or similar obligations to the
extent incurred in the ordinary course of business; (B) any trade
payables, other current liabilities and deferred credits (in each case,
other than with respect to borrowed money) incurred in the ordinary
course of business which are not overdue by more than 90 days unless
either (y) such trade payables, current liabilities or deferred credits
are being contested in good faith by appropriate proceedings for which
adequate reserves have been made in accordance with GAAP (collectively,
the "Contested Amounts"), or (z) the aggregate amount of such overdue
trade payables, current liabilities and deferred credits (other than
Contested Amounts) exceeds $500,000, in which case such excess
constitutes "Debt"; or (iii) debt arising from agreements of the
Borrowers providing for indemnification, adjustments, or holdback of
purchase price or similar obligations, in each case assumed in
connection with the acquisition or disposition of any assets, business
or subsidiary otherwise permitted hereunder.
"Default" means an Event of Default or the occurrence of an event
or condition which with notice or lapse of time or both would become an
Event of Default.
"Default Rate" means the lesser of (a) the sum of the Adjusted
Base Rate in effect from day to day plus 4% and (b) the Maximum Rate.
"Dickson Payment" shall have the meaning specified in Section
9.1.
"Dollars" and "$" means lawful money of the United States of
America.
"EBITDA" means, for any period, the sum of Consolidated Net Income
for such period plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, taxes,
depreciation, depletion and amortization, minus all non-cash income
(provided that no adjustments shall be made for non-cash items required
-5-
<PAGE> 12
pursuant to accrual based GAAP accounting) added to Consolidated Net
Income in such period.
"Environmental Laws" means any and all applicable foreign,
Federal, state, and local laws, regulations, statutes, ordinances,
rules, orders, decisions, decrees, judgments, permits, licenses,
authorizations and requirements pertaining to health, safety, or the
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Section 6901 et seq., the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., the Clean Air Act, 42 U.S.C.
Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq
and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., as
such laws, regulations, statutes, ordinances, rules, orders, decisions,
decrees, judgments, permits, licenses, authorizations and requirements
may be amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages, costs,
and expenses (including, without limitation, all reasonable fees,
disbursements and expenses of counsel, expert and consulting fees and
costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand, by
any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental
Authority or other Person, arising from environmental, health or safety
conditions or the Release or threatened Release of a Hazardous Material
into the environment, resulting from the past, present, or future
operations of such Person or its Subsidiaries.
"Equity Documents" means the Warrant Certificate A-1 dated as of
January 13, 1999 issued by the Borrower in favor of the Lender and the
Registration Rights Agreement dated as of January 13, 1999 between the
Lender and the Borrower, as such documents, from time to time, may be
amended, modified, restated or supplemented.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute of similar
import, and the regulations and published interpretations thereunder, as
in effect from time to time.
"ERISA Affiliate" means any corporation or trade or business
(whether or not incorporated) which is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code)
as any Obligated Party or is under common control (within the meaning of
Section 414(c) of the Code) with any Obligated Party.
"Event of Default" has the meaning specified in Section 10.1.
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<PAGE> 13
"Fee Letter" means the structuring fee letter dated January 13,
1999 made by the Borrower in favor of ECT Securities Limited
Partnership, as the same may be amended and modified from time to time.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight federal funds transactions
with a member of the Federal Reserve System arranged by federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, provided that (i) if
the date for which such rate is to be determined is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (ii) if such rate is not so published
for any day, the Federal Funds Rate for such day shall be the average
rate charged to the Lender on such day on such transactions as
determined by the Lender.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any Federal agency or authority of the United
States of America from time to time succeeding to its function.
"Financial Transaction" means any Swap Transaction that is
intended primarily as a borrowing of funds.
"Fixed Charge Coverage Ratio" means all EBITDA plus all Operating
Lease expenses less cash taxes, less cash dividends, divided by the sum
of interest expense plus Operating Lease expenses plus contractual
principal reductions required during the period of calculation
(including the principal component of Capital Lease Obligation payments)
plus the greater of (i) non-discretionary capital expenditures made
during the period of calculation and (ii) $4,000,000. This ratio shall
be calculated on a cumulative quarterly basis beginning January 1, 1999
until such time as four quarters have been reached at December 31, 1999,
at which time the covenant shall be calculated on a Rolling Period
basis. The first covenant test for the Fixed Charge Coverage Ratio will
be determined as of March 31, 1999.
"Foreign Subsidiaries" means any Subsidiary of the Borrower which
is organized under the laws of a jurisdiction other than any state of
the United States of America.
"Funded Debt" means any Debt that by its terms is payable more
than one year from the date of origination thereof or which is renewable
at the option of the obligor one year from such date of origination
including any Debt which is included under the definition of CMLTD.
"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
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<PAGE> 14
the date in question. Accounting principles are applied on a "consistent
basis" when the accounting principles applied in a current period are
comparable in all material respects to those accounting principles
applied in a preceding period.
"Governmental Authority" means any nation or government, any state
or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government.
"Government Requirements" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law),
including, without limitation, Environmental Laws, energy regulations
and occupational, safety and health standards or controls, of any
Governmental Authority.
"Guarantor" means individually and/or collectively, any Person who
executes a Guaranty Agreement.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership arrangements,
by agreement to keep-well, to purchase assets, goods, securities or
services, to take-or-pay, or to maintain financial statement conditions
or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation of the payment
thereof or to protect the obligee against loss in respect thereof (in
whole or in part), provided that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding
meaning.
"Guaranty Agreements" means, individually and/or collectively,
the Guaranty Agreements executed in connection with the Prior Credit
Agreements and all future Guarantees executed in the future by any other
Person for the benefit of Lender, relating to the Obligations, as any of
them, from time to time, may be amended, modified, restated or
supplemented.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Hedging Agreements" means any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange
or protection agreements or any option with respect to any such
transaction.
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"Indebtedness" shall have the same meaning as the term
"Obligations".
"Insufficiency" means, with respect to any Plan, the amount, if
any, but which the present value of the accrued benefits under such Plan
exceeds the fair market value of the assets of such Plan allocable to
such benefits, provided that with respect to any offset arrangement
between any Plans, the assets of the Plans attributable to such offset
arrangement shall be aggregated in determining whether an Insufficiency
exists for the Plan to which the offset applies.
"Lender" has the meaning specified in the first paragraph of this
Agreement.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or title
retention agreement), whether arising by contract, operation of law, or
otherwise.
"Loan Documents" means this Agreement, the Note, the Fee Letter,
the Security Instruments, the Equity Documents, the Business Opportunity
Letter Agreement, the Bailment Agreement, and all other promissory
notes, security agreements, deeds of trust, vessel mortgages,
assignments, guaranties, and other instruments, documents, and
agreements executed and delivered pursuant to or in connection with this
Agreement, the Equity Documents or the Prior Credit Agreements, as such
instruments, documents, and agreements may be amended, modified,
renewed, extended, or supplemented from time to time.
"Maintenance Capital Expenditures" means all the non-discretionary
capital expenditures required by Obligated Parties and their
Subsidiaries to maintain their current level of business operations, but
not less than $4,000,000 during any Rolling Period.
"Material Adverse Effect" means a material adverse effect on any
Obligated Party's or any Subsidiary's ability (considered as a whole) to
meet its obligations to the Lender under the Loan Documents or a
material adverse effect (considered as a whole) on the business,
operations, assets or financial condition of any Obligated Party or any
of the Subsidiaries considered as a whole.
"Maturity Date" shall mean January 2, 2004.
"Maximum Rate" means the maximum rate of interest under applicable
law that the Lender may charge the Borrower. The Maximum Rate shall be
calculated in a manner that takes into account any and all fees,
payments, and other charges in respect of the Loan Documents that
constitute interest under applicable law. Each change in any interest
rate provided for herein based upon the Maximum Rate resulting from a
change in the Maximum
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Rate shall take effect without notice to the Borrower at the time of
such change in the Maximum Rate.
"Multi-employer Plan" means a Multi-employer plan defined as such
in Section 4001(a)(3) of ERISA to which any Obligated Party or any
ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan, other
than a Multi-employer Plan, subject to Title IV of ERISA to which any
Obligated Party or any ERISA Affiliate, and more than one employer other
than any Obligated Party or an ERISA Affiliate, is making or accruing an
obligation to make contributions or, in the event that any such plan has
been terminated, to which any Obligated Party or any ERISA Affiliate
made or accrued an obligation to make contributions during any of the
five plan years preceding the date of termination of such plan.
"Net Worth" means, at any particular time, all amounts which, in
conformity with GAAP, would be included as stockholder's equity on a
consolidated balance sheet of Borrower and its Subsidiaries.
"Note" means the Amended, Restated and Consolidated Note dated
January 13, 1999 made by the Borrower payable to the order of the Lender
and all extensions, renewals, amendments, rearrangements, increases,
modifications, and/or all substitutions therefor.
"Obligated Party" means the Borrower, each Guarantor or any other
Person who is or becomes party to any agreement that guarantees or
secures payment and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of the Obligated Parties (or any of them) to the Lender
arising pursuant to any of the Loan Documents, now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and
several, including, without limitation, the obligations, indebtedness,
and liabilities of the Obligated Parties (or any of them) under this
Agreement and the other Loan Documents whether direct or contingent, and
all interest accruing on all of the above and all attorneys' fees and
other expenses incurred in the enforcement or collection thereof.
"Operating Lease" means any lease (other than a lease constituting
a Capital Lease Obligation) of real or personal property.
"Other Taxes" has the meaning specified in Section 3.3(b).
"Payment Date" means each Quarterly Date.
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"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, firm or other entity, or a
government of any political subdivision or agency, department or
instrumentality thereof.
"Plan" means any employee benefit plan (other than a
Multi-employer Plan) which is (or, in the event that any such plan has
been terminated within five years after a transaction described in
Section 4069 of ERISA, was) maintained for employees of the Obligated
Parties or any ERISA Affiliate and is covered by Title IV of ERISA.
"PMSI Property" means any Property of the Obligated Parties or any
Subsidiary (a) now owned which is encumbered by a Permitted Lien in
respect of the financing thereof other than Permitted Liens in favor of
the Senior Lenders, or (b) hereafter acquired and encumbered by Liens
permitted under Section 8.2(vii).
"Prime Rate" means the rate of interest from time to time set out
in the Wall Street Journal under "Money Rates" as the Prime Rate (being
the base rate on corporate loans posted by at least 75% of the nation's
largest banks) or, if not so published, any substantially comparable
Prime Rate quoted in the Wall Street Journal, but if no such rate is
posted then the rate of interest from time to time announced publicly by
The Chase Manhattan Bank at the principal office in New York, New York
as its prime commercial lending rate. Such rate is a general reference
rate of interest, it being understood that many of the bank's or banks'
commercial or other loans are priced in relation to such rate, that it
is not necessarily the lowest or best rate actually charged to any
customer and that any such banks may make various commercial or other
loans at rates of interest having no relationship to such rate.
"Property" means any interest in any kind of property or asset,
whether real, personal, movable, immovable, mixed, or tangible or
intangible.
"Quarterly Date" means the last day of each March, June,
September, and December, in each year, the first of which shall be
December 31, 1998; provided, however, that if any such day is not a
Business Day, such Quarterly Date shall be the next succeeding Business
Day.
"Release" means, as to any Person, any material release, spill,
emission, leaking, pumping, injection, deposit, disposal, disbursement,
leaching, or migration of Hazardous Materials into the indoor or outdoor
environment or into or out of property owned by such Person, including,
without limitation, the movement of Hazardous Materials through or in
the air, soil, surface water, ground water, or property.
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<PAGE> 18
"Remedial Action" means all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or
minimize the further Release of Hazardous Materials so that they do not
migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment, or (c) perform pre-remedial studies
and investigations and post-remedial monitoring and care.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President or any Executive Vice President or Senior Vice
President of such Person and, with respect to financial matters, the
term "Responsible Officer" shall mean the Chief Financial Officer,
Executive Vice President, Chief Financial Officer, or the Director of
Finance of such Person. Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of the
Parent.
"RICO" means the Racketeer Influenced and Corrupt Organization Act
of 1970, as amended from time to time.
"Rolling Period" shall mean each four-quarter period, ending on
the last day of each March, June, September and December.
"Senior Lenders" means (i) Bank One, Texas, National Association
and Heller Financial Leasing, Inc., in their capacity as lenders under
the Senior Loan Documents and (ii) such lenders' successors and assigns.
"Senior Loan Documents" means (i) the $15,000,000 Credit Agreement
among Bank One, Texas, National Association, the Borrower, and the
Subsidiaries party thereto, (ii) the $35,000,000 Credit Agreement among
Heller Financial Leasing, Inc., the Borrower, and the Subsidiaries party
thereto, and (iii) all promissory notes, security agreements, deeds of
trust, vessel mortgages, assignments, guaranties, and other instruments,
documents, and agreements executed and delivered pursuant to or in
connection therewith, as such instruments, documents, and agreements may
be amended, modified, renewed, extended, or supplemented from time to
time.
"Security Instruments" shall mean the Guaranty Agreements, the
agreements or instruments described or referred to in EXHIBIT A which
were executed in connection with the Prior Credit Agreements, and any
and all other agreements or instruments now or hereafter executed and
delivered by the Borrower, any Obligated Party or any other Person
(other than Assignments, participation or similar agreements between any
Lender and any other lender or creditor with respect to any Indebtedness
pursuant to this Agreement) in connection with, or as security for the
payment or performance of the Prior Credit Agreements, the Prior Notes,
the Note, or this Agreement, as such agreements may be amended,
supplemented or restated from time to time.
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"Subordination Agreement" means that certain Subordination and
Intercreditor Agreement dated January 13, 1999, among the Lender, Heller
Financial Leasing, Inc, Bank One, Texas, National Association, and the
Obligated Parties party thereto as the same may be amended,
supplemented, or modified from time to time.
"Subsidiary" shall mean, for any Person, any Person of which at
least a majority of the outstanding shares of stock or other equity
interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors or manager of such Person
(irrespective of whether or not at the time stock or other interests of
any other class or classes of such Person shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such Person or one or
more of its Subsidiaries or by such Person and one or more of its
Subsidiaries. Unless otherwise indicated, a reference to a Subsidiary in
any Loan Document is to a Subsidiary of the Borrower.
"Taxes" has the meaning specified in Section 3.3(a).
"Termination Event" means (a) the occurrence with respect to any
Plan or Multi-employer Plan of a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event, "
not subject to the provision for 30-day notice to the PBGC, or an
event described in Section 4062(e) of ERISA, or (b) the withdrawal by
any Obligated Party or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a "substantial employer," as such
term is defined in Section 4001(a)(2) of ERISA, or the incurrence of
liability by any Obligated Party or any ERISA Affiliate under Section
4064 of ERISA upon the termination of a Multiple Employer Plan or (c)
the distribution of a notice of intent to terminate a Plan pursuant to
Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of ERISA,
or (e) any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan.
"UCC" means the Uniform Commercial Code as in effect in the State
of New York.
"Warrant Shares" shall mean the shares of common stock, par value
$.001, of the Borrower issued to the Lender upon exercise of the
Warrants.
"Warrants" means the warrants to purchase the common stock of the
Borrower issued to the Lender pursuant to the Equity Documents.
"Withdrawal Liability" has the meaning specified for such term in
Part I of Subtitle E of Title V of ERISA.
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"Year 2000 Compliant" shall mean, in regard to any entity, that
all software, hardware, firmware, equipment, fixtures, goods or systems
utilized by or material to the business operations or financial
condition of such entity, will properly perform date-sensitive functions
before, during and after the year 2000.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein," and
"hereunder" and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Unless otherwise specified, all Article and Section references pertain to this
Agreement. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. Terms used herein that are defined in the
UCC, unless otherwise defined herein, shall have the meanings specified in the
UCC. The term "including" means "including, without limitation."
SECTION 1.3 COMPUTATION OF TIME PERIODS. In the computation of periods of time
from a specified date to a later specified date, the word "from" means "from and
including" and the words "until" and "to" each means "to but excluding." Unless
otherwise indicated, all references to a particular time are references to New
York, New York time.
ARTICLE II
LOAN
SECTION 2.1 LOAN. Subject to the terms and conditions contained herein, the
outstanding loans made pursuant to the Prior Credit Agreements and further
evidenced by the Prior Notes are hereby consolidated into a single loan ("Loan")
in the principal amount of $20,000,000.
Section 2.2 NOTE. The obligation of the Borrower to repay the Loan to the
Lender (including interest thereon) shall be evidenced by the Note.
SECTION 2.3 REPAYMENT OF LOAN. The Borrower shall repay the unpaid principal
amount of the Loan on the Maturity Date.
SECTION 2.4 INTEREST.
(a) The unpaid principal amount of the Loan shall bear interest at a
varying rate per annum equal from day to day to the lesser of (a) the Maximum
Rate or (b) the Adjusted Base Rate. If at any time the Adjusted Base Rate shall
exceed the Maximum Rate, thereby causing the interest accruing on the Loan to be
limited to the Maximum Rate, then any subsequent reduction in the Adjusted Base
Rate for such Advance shall not reduce the rate of interest on the Loan below
the Maximum Rate until the aggregate amount of interest accrued on the Loan
equals the aggregate amount of interest which would have accrued on the Loan if
the Adjusted Base Rate had at all times been in effect. Accrued and unpaid
interest on the Loan shall be due and payable (i) on March 31, 1999, (ii) each
Payment Date thereafter, and (iii) on the Maturity Date.
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(b) Notwithstanding the foregoing, any outstanding principal of the
Loan and (to the fullest extent permitted by law) any other amount payable by
the Borrower or any Obligated Party under this Agreement or any other Loan
Document that is not paid in full when due (whether at stated maturity, by
acceleration, or otherwise), and without taking into account any applicable
grace or cure period) shall bear interest at the Default Rate for the period
from and including the due date thereof to but excluding the date the same is
paid in full. Interest payable at the Default Rate shall be payable from time to
time on demand.
ARTICLE III
PAYMENTS
SECTION 3.1 METHOD OF PAYMENT. All payments of principal, interest, and other
amounts to be made by the Borrower under this Agreement and the other Loan
Documents shall be made to the Lender at such account in the state of New York
as the Lender shall specify by notice to the Borrower from time to time in
Dollars and in immediately available funds, without setoff, deduction, or
counterclaim, not later than 12:00 P.M. New York time on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day). The
Borrower shall, at the time of making each such payment, specify to the Lender
the sums payable by the Borrower under this Agreement and the other Loan
Documents to which such payment is to be applied (and in the event that the
Borrower fails to so specify, or if a Default has occurred and is continuing,
the Lender may apply such payment to the Obligations in such order and manner as
it may elect in its sole discretion). Whenever any payment under this Agreement
or any other Loan Document shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of the
payment of interest. Unless otherwise agreed to, in writing, or otherwise
required by applicable law, payments will be applied first to accrued, unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs, late charges and other charges and fees, provided, however, upon
delinquency or other default, Lender reserves the right to apply payments among
principal, interest, late charges, collection costs and other charges at its
discretion.
SECTION 3.2 PREPAYMENT.
(a) Except as provided in Section 3.2(c), the Borrower shall have no
right to prepay the Loan on or before December 31, 1999. After December 31,
1999 (or in connection with the prepayment permitted under Section 3.2(c)
below), the Borrower may, upon at least three (3) Business Days' prior notice to
the Lender prepay the Loan in whole at any time or from time to time in part
without premium or penalty but with accrued interest to the date of prepayment
on the amount so prepaid. The Borrower shall pay all accrued interest on the
principal amount prepaid with such prepayment and, on demand, shall reimburse
Lender and hold Lender harmless from all losses and expenses incurred by Lender
as a result of such prepayment, including, without limitation, any losses and
expenses arising from any Hedging Agreements entered into by the Lender in
connection with the Loan. Lender's determination of the amount of such
reimbursement shall constitute prima facie evidence that such determination is
accurate and correct. Each partial prepayment shall be in
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the principal amount of $1,000,000 or an integral multiple thereof. All notices
under this section shall be irrevocable and shall be given not later than 12:00
P.M. New York time on the day which is not less than the number of Business Days
specified above for such notice.
(b) After the Debt under the Senior Documents has been repaid in full
and the Senior Lenders' commitments thereunder have been terminated, if at any
time any Obligated Party or any Subsidiary sells any of its material assets or
issues any other Debt, 100% of the net proceeds received shall be applied as a
mandatory prepayment on the Note immediately (and in any event within three
Business Days) upon receipt of such proceeds; provided that to the extent such
net proceeds result from the sale of assets securing purchase money indebtedness
permitted under Section 8.1, such net proceeds may be used to repay such
purchase money indebtedness.
(C) On or before March 31, 1999, the Borrower may make a single
prepayment of the Loan in the principal amount of $5,000,000 in accordance with
the terms of this Agreement ("Early Prepayment"). If the Borrower pays to the
Lender the Early Prepayment in accordance with this Agreement and the Early
Prepayment has been approved in writing by the Senior Lenders, (1) the number of
unexercised Warrants shall be reduced by 58,000 and (2) the Applicable Margin
when the Funded Debt to EBITDA ratio is greater than 2.50 to 1.00 shall reduce
to 5.25%. If on or before March 31, 1999, the Borrower has not paid to the
Lender the Early Prepayment in accordance with the foregoing, the Borrower shall
pay to the Lender a structuring fee in the amount of $ 100,000, such fee to be
due and payable on March 31, 1999. The Lender agrees not to exercise more than
175,000 Warrants on or before March 31, 1999.
SECTION 3.3 TAXES.
(a) All payments by the Obligated Parties of principal of and interest
on the Loan and of all fees and other amounts payable under any Loan Document
are payable without deduction for or on account of any present or future taxes,
levies, imposts, deductions, charges, fees, duties or withholdings, and all
liabilities with respect thereto, excluding in the case of the Lender the
following: (i) taxes imposed on such Person's income, and franchise taxes
imposed on it, by the jurisdiction order which such Person is organized or any
political subdivision thereof and, in the case of the Lender, taxes imposed on
its income, and franchise taxes imposed on it, by the jurisdiction of the Lender
or any political subdivision thereof; (ii) income taxes imposed by the United
States of America; and (iii) any taxes imposed by the United States of America
by means of withholding at the source if and to the extent that such taxes shall
be in effect and shall be applicable, on the date hereof, to payments to be made
to the Lender (all such non-excluded taxes, levies, imposes, deductions,
changes, fees, duties, withholdings and liabilities being hereinafter referred
to as "Taxes"). Except for Taxes of the Lender enumerated in clauses (i)-(iii)
above, if any Obligated Party is required by law to deduct any Taxes from or in
respect of any sum payable hereunder or under the Note to the Lender, the
Obligated Parties shall pay additional interest or shall make additional
payments in such amounts so that every net payment of principal of and interest
on the affected Advances and of all other amounts payable by it under any Loan
Document, after withholding or deduction for or on account of any such Taxes
will not be less than the amount
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<PAGE> 23
provided for herein or therein. The Obligated Parties shall furnish promptly to
the Lender official receipts evidencing any such withholding or reduction.
(b) The Obligated Parties agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Note or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Note (the "Other Taxes").
(c) The Obligated Parties, to the fullest extent permitted by law,
will indemnify the Lender for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 3.3) paid by the Lender (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto except as a result of the gross negligence or willful misconduct of the
Lender, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days from the date the
Lender (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by or at the
discretion of the Obligated Parties, the Obligated Parties will furnish to the
Lender, at its address referred to herein, the original or a certified copy of a
receipt evidencing payment thereof. Should the Lender ever receive any refund,
credit or deduction from any taxing authority to which the Lender would not be
entitled but for the payment by the Obligated Parties of Taxes as required by
this Section 3.3 (it being understood that the decision as to whether or not to
claim, and if claimed, as to the amount of any such refund, credit or deduction
shall be made by the Lender in its sole discretion), the Lender, as the case may
be, thereupon shall repay to the Obligated Parties an amount with respect to
such refund, credit or deduction equal to any net reduction in Taxes actually
obtained by the Lender, as the case may be, and determined by such the Lender,
as the case may be, to be attributable to such refund, credit or deduction.
SECTION 3.4 COMPUTATION OF INTEREST. Interest on the Loan and all other
amounts payable by the Borrower hereunder shall be computed by applying the
ratio of the annual interest rate over a year of 360 days, multiplied by the
outstanding principal balance, multiplied by the actual number of days the
principal balance is outstanding unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be.
ARTICLE IV
SECURITY INSTRUMENTS
SECTION 4.1 SECURITY INSTRUMENTS.
(a) Each of the Obligated Parties hereby expressly (i) acknowledges
the terms of this Agreement, (ii) ratifies and affirms its obligations under the
Security Instruments to which it is a party, (iii) acknowledges, renews and
extends its continued liability the Security Instruments to which it is a party
and agrees that such Security Instruments remain in full force and effect and
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secure the Obligations. In connection with the Security Instruments executed in
connection with the Prior Credit Agreements ("Existing Security Instruments"),
the Lender consents to the creation of the Liens in favor of the Senior Lenders
pursuant to the Senior Loan Documents, the actions of the Borrower taken in
connection with the granting of such Liens, in favor of the Senior Lender, and
the superior priority of such Liens in favor of the Senior Lenders does not
constitute a breach of the Obligated Parties' obligations thereunder. The
representations and warranties contained in the Existing Security Instruments
are also hereby amended to be consistent with the foregoing consent.
(b) On or before February 15, 1999, each of the Obligated Parties
agrees to execute such (i) amendments to the Existing Security Agreements, (ii)
new Security Instruments (including new Guaranty Agreements), and (iii) such
further documents and instruments, including without limitation, Uniform
Commercial Code financing statements, as the Lender, in its reasonable
discretion, deems necessary or desirable to evidence and perfect its Liens in or
upon the Property of the Obligated Parties subject to the Existing Security
Instruments. In connection with the foregoing, the Obligated Parties shall also
deliver to the Lender opinions of counsel in form and substance satisfactory to
the Lender regarding the enforceability of the foregoing amendments and Security
Instruments, the perfection of the Liens created thereunder, and such other
matters as the Lender may reasonably require. The Obligated Parties shall take
such actions as the Lender shall reasonably request in connection with the
Lender's due diligence in connection with the foregoing.
(c) Subject to the provisions of the Subordination Agreement, the
Obligated Parties will cause the Security Instruments to cover substantially all
of their Property and the Property of their Subsidiaries, other than the PMSI
Property and Property owned by Dickson Nigeria, Ltd., a company organized under
the laws of Nigeria and Servicios y Construcciones Petroleras Ventura, C.A., a
company organized under the laws of Venezuela (the "Existing Foreign
Subsidiaries") and when and, if any Obligated Party or any Subsidiary (other
than Existing Foreign Subsidiaries) acquires additional Properties, including
additional Subsidiaries to the extent permitted hereunder, within thirty (30)
days of such acquisition such Person shall grant or cause such Subsidiaries to
execute and deliver Security Instruments and such other Loan Documents as the
Lender may request in form and substance satisfactory to the Lender covering
substantially all of such newly acquired Properties together with such
resolutions, certificates and opinions regarding the authorization and binding
effect of such Security Instruments and Loan Documents as the Lender may
reasonably require. Notwithstanding the provisions of this Section 4.1(c) to
the contrary, the Obligated Parties shall only be required to grant Liens to the
Lender upon 65% of the capital stock issued by Foreign Subsidiaries.
SECTION 4.2 SETOFF. If an Event of Default shall have occurred and is
continuing, the Lender is hereby authorized at any time and from time to time,
without notice to the Obligated Parties (any such notice being hereby expressly
waived by the Obligated Parties), to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the
account of the Obligated Parties against any and all of the obligations of the
Obligated Parties now or hereafter existing under this Agreement, the Note, or
any other Loan Document, irrespective of whether or not the Lender shall have
made any demand under this Agreement or the Note or such other Loan Document and
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although such obligations may be unmatured. The Lender agrees promptly to
notify the applicable Obligated Party after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights and remedies of the Lender hereunder are
in addition to other rights and remedies (including, without limitation, other
rights of setoff) which the Lender may have.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.1 RESTATEMENT. This Agreement shall become effective and the Prior
Credit Agreements shall be amended, restated, and consolidated as provided in
this Agreement on the date the following conditions precedent are met:
(a) Documents. The Lender shall have completed its due diligence,
which due diligence shall have been satisfactory to Lender in Lender's
reasonable discretion and the Lender shall have received all of the following,
each dated (unless otherwise indicated) the date hereof, in form and substance
satisfactory to the Lender:
(i) Resolutions. Resolutions of the Board of Directors of each of
the Obligated Parties party hereto certified by such Person's Secretary or an
Assistant Secretary which authorize the execution, delivery, and performance by
such Person of this Agreement and the other Loan Documents to which such Person
is a party;
(ii) Incumbency Certificate. A certificate of incumbency for each
of the each of the Obligated Parties party hereto certified by the Secretary or
an Assistant Secretary of such Person certifying the names of the officers of
such Person authorized to sign this Agreement and each of the other Loan
Documents to which such Person is to be a party (including the certificates
contemplated herein) together with specimen signatures of such officers;
(iii) Articles of Incorporation. The articles of incorporation (or
other applicable organizational documents) of each of the Obligated Parties
party hereto certified by the Secretary of State of the state of incorporation
(or organization) of such Person;
(iv) Bylaws. The bylaws (as applicable) of each of the Obligated
Parties party hereto certified by the Secretary or an Assistant Secretary of
such Person;
(v) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation (or organization) of each of
the Obligated Parties party hereto as to the existence and good standing of such
Person
(vi) Note. The Note executed by the Borrower;
(vii) Fee Letter. The Fee Letter executed by the Borrower;
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(viii) Equity Documents. The Warrant Certificate and the
Registration Rights Agreement executed by the Borrower;
(ix) Subordination Agreement. The Subordination Agreement executed
by all parties thereto;
(x) Miscellaneous Documents. The Bailment Agreement, the Business
Opportunities Letter Agreement and such other miscellaneous documentation as
required by Lender executed by all the parties thereto.
(xi) Senior Loan Documents. Copies of the credit agreements
executed in connection with the Senior Loan Documents;
(xii) Opinions of Counsels. Favorable opinions of Vinson & Elkins
LLP and Allyson Fox Pharr in form and substance satisfactory to the Lender; and
(b) No Default. No Default shall have occurred and be continuing;
(c) Representations and Warranties. All of the representations and
warranties contained in Article VI hereof and in the other Loan Documents (as
amended hereby) shall be true and correct in all material respects;
(d) Material Adverse Effect. No Material Adverse Effect shall have
occurred.
(e) Repayment of Prior Notes. The Senior Lenders shall have paid to
the Lender in connection with the Assignment $38,000,000 of the principal amount
owed under the Prior Notes and all accrued but unpaid interest owed thereon.
(f) Payment of Fees. The Borrower shall have paid the fees owed under
the Fee Letter.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, each Obligated Party
represents and warrants to the Lender that:
SECTION 6.1 CORPORATE EXISTENCE. Each Obligated Party and each Subsidiary (a)
is a corporation duly incorporated, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation or organization, as
applicable; (b) has all requisite corporate power and authority to own its
assets and carry on its business as now being or as proposed to be conducted;
and (c) is qualified to do business in all jurisdictions in which the nature of
its business makes such qualification necessary and where failure to be so
qualified would have a Material
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Adverse Effect. Each Obligated Party has the corporate power and authority to
execute, deliver, and perform its obligations under this Agreement and the other
Loan Documents to which it is or may become a party.
SECTION 6.2 FINANCIAL STATEMENTS. The Borrower has delivered to the Lender
audited Consolidated financial statements of the Borrower and its Consolidated
Subsidiaries as at and for the fiscal year ended December 31, 1997, and
unaudited Consolidated financial statements of Borrower and its Consolidated
Subsidiaries for the ten-month period ended October 31, 1998 subject to normal
year end adjustments with respect to the unaudited interim statements and the
absence of notes in the interim statements. Such financial statements are true
and correct in all material respects, have been prepared in accordance with
GAAP, and fairly present, on a Consolidated basis, the financial condition of
the Borrower and its Subsidiaries as of the respective dates indicated therein
and the results of operations for the respective periods indicated therein.
Neither the Borrower nor any of its Subsidiaries has any material contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments,
or unrealized or anticipated losses from any unfavorable commitments except as
referred to or reflected in such financial statements or otherwise disclosed in
writing to Lender. As of the date of this Agreement, there has been no material
adverse change in the business, condition (financial or otherwise), operations,
or properties of any of the Obligated Parties or any of their Subsidiaries taken
as a whole since the effective date of the most recent financial statements
referred to in this Section.
SECTION 6.3 CORPORATE ACTION; NO BREACH. The execution, delivery, and
performance by the Obligated Parties of this Agreement and the other Loan
Documents to which the Obligated Parties are or may become a party and
compliance with the terms and provisions hereof and thereof have been duly
authorized by all requisite corporate action on the part of the Obligated
Parties and do not and will not (a) violate or conflict with, or result in a
breach of, or require any consent under (i) the articles of incorporation or
other organizational documents, as applicable, or bylaws of the Obligated
Parties or any of their Subsidiaries, (ii) any applicable law, rule, or
regulation or any order, writ, injunction, or decree of any Governmental
Authority or arbitrator, or (iii) any material agreement or instrument to which
the Obligated Parties or any of their Subsidiaries is a party or by which any of
them or any of their property is bound or subject, which in the case of (ii) or
(iii) would leave a Material Adverse Effect or (b) constitute a default under
any such agreement or instrument, or result in the creation or imposition of any
Lien (except as provided in Article V) upon any of the assets of the Obligated
Parties or any of their Subsidiaries.
SECTION 6.4 OPERATION OF BUSINESS. The Obligated Parties and each of their
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, except where the failure to possess the same could not
reasonably be expected to have a Material Adverse Effect.
SECTION 6.5 LITIGATION AND JUDGMENTS. Except as disclosed on SCHEDULE 6.5,
there is no action, suit, investigation, or proceeding before or by any
Governmental Authority or arbitrator pending, or to the knowledge of the
Obligated Parties, threatened against or affecting any Obligated
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Party or any Subsidiary, that would, if adversely determined, have a Material
Adverse Effect. There are no outstanding judgments against any Obligated Party
or any Subsidiary.
SECTION 6.6 RIGHTS IN PROPERTIES; LIENS.
(a) The Obligated Parties and each Subsidiary have good and
indefeasible title to or valid leasehold interests in their respective
properties and assets, real and personal, including the properties, assets, and
leasehold interests reflected in the financial statements described in Section
6.2, and none of the properties, assets, or leasehold interests of any Obligated
Party or any Subsidiary is subject to any Lien, except as permitted by Section
8.2.
(b) All leases and agreements necessary for the conduct of the
business of the Obligated Parties and their Subsidiaries are valid and
subsisting, in full force and effect and there exists no default or event which
with the giving of notice or the passage of time or both would give rise to a
default under any such lease or leases, which could reasonably be expected to
have a Material Adverse Effect.
(c) The rights, Collateral and other Property presently owned, leased
or licensed by the Obligated Parties and their Subsidiaries including, without
limitation, all easements and rights of way, include all rights, Collateral and
other Property necessary to permit the Obligated Parties and their Subsidiaries
to conduct their business in all material respects in the same manner as its
business has been conducted prior to the date hereof.
(d) Except as set forth on Schedule 6.6(d), all of the Property and
Collateral of the Obligated Parties and their Subsidiaries which are reasonably
necessary for the operation of their businesses are in good working condition
reasonable wear and tear excepted and are maintained in accordance with prudent
business standards.
SECTION 6.7 ENFORCEABILITY. This Agreement constitutes, and the other Loan
Documents to which any Obligated Party is party, when delivered, shall
constitute the legal, valid, and binding obligations of such Obligated Party,
enforceable against such Obligated Party in accordance with their respective
terms, except as limited bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditors' rights.
SECTION 6.8 APPROVALS. No authorization, approval, or consent of, and no
filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by any of the
Obligated Parties of this Agreement and the other Loan Documents to which any of
the Obligated Parties is or may become a party or for the validity or
enforceability thereof.
SECTION 6.9 DEBT. The Obligated Parties and their Subsidiaries have no Debt,
except as disclosed on SCHEDULE 6.9.
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SECTION 6.10 TAXES. The Obligated Parties and each Subsidiary have filed all
tax returns (Federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid
all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable. Except as set forth in
SCHEDULE 6.10, the Obligated Parties know of no pending investigation of any
Obligated Party or any Subsidiary by any taxing authority or of any pending but
unassessed tax liability of any Obligated Party or any Subsidiary the assessment
of which could reasonably be expected to have a Material Adverse Effect.
SECTION 6.11 USE OF PROCEEDS; MARGIN SECURITIES. The proceeds of the Loan shall
be used for general corporate working capital. Neither any Obligated Party nor
any Subsidiary is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T, U, or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of the
Loan will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock.
SECTION 6.12 ERISA. Each Obligated Party and each Subsidiary are in compliance
in all material respects with all applicable provisions of ERISA. No Termination
Event has occurred or is reasonably expected to occur with respect to any Plan.
Neither any Obligated Party nor any ERISA Affiliate has received any
notification (or has knowledge of any reason to expect) that any Multi-employer
Plan is in reorganization or has been terminated, within the meaning of Title IV
of ERISA.
SECTION 6.13 DISCLOSURE. No statement, information, report, representation, or
warranty made by any Obligated Party in this Agreement or in any other Loan
Document or furnished to the Lender in connection with this Agreement or any
transaction contemplated hereby contains any untrue statement of a material fact
or omits to state any material fact necessary to make the statements herein or
therein not misleading.
SECTION 6.14 SUBSIDIARIES. The Obligated Parties have no Subsidiaries other
than those listed on SCHEDULE 6.14, AND SCHEDULE 6.14 sets forth the
jurisdiction of incorporation of each Subsidiary and the percentage of each
Obligated Party's ownership of the outstanding voting stock of each Subsidiary.
All of the outstanding capital stock of each Subsidiary has been validly issued,
is fully paid, and is nonassessable.
SECTION 6.15 AGREEMENTS. Neither any Obligated Party nor any Subsidiary is in
default in any respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in (a) any agreement or
instrument material to its business to which it is a party where such default
would have a Material Adverse Effect or (b) this Agreement.
SECTION 6.16 COMPLIANCE WITH LAWS. Neither any Obligated Party nor any
Subsidiary is in violation in any material respect of any law, rule, regulation,
order, or decree of any Governmental Authority or arbitrator.
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SECTION 6.17 INVENTORY. All inventory of each Obligated Party has been and will
hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as amended
(29 U.S.C. Sections 201-219), and the regulations promulgated thereunder.
SECTION 6.18 INVESTMENT COMPANY ACT. Neither any Obligated Party nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 6.19 PUBLIC UTILITY HOLDING COMPANY ACT. Neither any Obligated Party
nor any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
SECTION 6.20 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 6.20:
(a) Each Obligated Party, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all Environmental
Laws applicable to such Persons, except where the failure to be in compliance
would not reasonably be expected to have a Material Adverse Effect. No Obligated
Party is aware of, nor has any Obligated Party received notice of, any past,
present, or future conditions, events, activities, practices, or incidents which
would interfere with or prevent the compliance or continued compliance of the
Obligated Party and the Subsidiaries with all Environmental Laws applicable to
such Persons, except where the failure to be in compliance would not reasonably
be expected to have a Material Adverse Effect;
(b) Each Obligated Party and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under Environmental
Laws applicable to such Persons, and all such permits are in good standing and
each Obligated Party and its Subsidiaries are in compliance with all of the
terms and conditions of such permits except where the failure to obtain or be in
compliance could not reasonably be expected to have a Material Adverse Effect;
(c) No Hazardous Materials exist on or within or have been used,
generated, stored, transported, disposed of on, or Released from any of the
properties or assets of any Obligated Party or any Subsidiary except in
compliance with all Environmental Laws applicable to such Persons. The use which
the Obligated Parties and their Subsidiaries make and intend to make of their
respective properties and assets will not result in the use, generation,
storage, transportation, accumulation, disposal, or Release of any Hazardous
Material on, in, or from any of their properties or assets in violation of any
Environmental Law applicable to such Persons;
(d) Neither any Obligated Party nor any of their Subsidiaries nor any
of their respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any applicable Governmental Authority or
other Person or subject to any judicial or docketed administrative proceeding
with respect to (i) failure to comply with applicable Environmental Laws, (ii)
Remedial Action, or (iii) any Environmental Liabilities arising from a Release
or threatened Release;
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(e) There are no conditions or circumstances associated with the
currently or previously owned or leased properties or operations of the
Obligated Parties or any of their Subsidiaries that could reasonably be expected
to give rise to any Environmental Liabilities that could reasonably be expected
to have a Material Adverse Effect;
(f) Neither any Obligated Party nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., regulations
thereunder or any comparable provision of state law. The Obligated Parties and
their Subsidiaries are in compliance with all applicable financial
responsibility requirements of all applicable Environmental Laws except where
the failure to be in compliance could reasonably be expected to have a Material
Adverse Effect;
(g) Neither any Obligated Party nor any of its Subsidiaries has filed
or failed to file any notice required under applicable Environmental Law
reporting a Release; and
(h) No Lien arising under any Environmental Law has attached to any
property or revenues of any Obligated Party or its Subsidiaries.
SECTION 6.21 YEAR 2000 COMPLIANCE.
(a) To the Borrower's knowledge after due inquiry, all devices,
systems, machinery, information technology, computer software and hardware, and
other date sensitive technology (jointly and severally the "Systems") used by
Obligated Parties to carry on their businesses as presently conducted and as
contemplated to be conducted in the future are Year 2000 Compliant or will be
Year 2000 Compliant within a period of time calculated to result in no material
disruption of any of Obligated Parties' business operations. For purposes of
these provisions, "Year 2000 Compliant" means that such Systems are designed to
be used prior to, during and after the Gregorian calendar year 2000 A.D. and
will operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century.
(b) Obligated Parties have: (1) undertaken a detailed inventory,
review, and assessment of all areas within their businesses and operations that
could be adversely affected by the failure of Obligated Parties to be Year 2000
Compliant on a timely basis; (2) developed a detailed plan and time line for
becoming Year 2000 Compliant on a timely basis, and (3) to date, implemented
that plan in accordance with that timetable in all material respects.
(c) Obligated Parties have made written inquiry of each of its key
suppliers, vendors, and customers, and is undertaking to obtain in writing
confirmations from all such Persons as to whether such Persons have initiated
programs to become Year 2000 Compliant and on the basis of such confirmations,
Obligated Parties reasonably believe that all such Persons will be or become so
compliant. For purposes hereof, "key suppliers, vendors, and customers" refers
to those suppliers, vendors, and customers of Obligated Parties whose business
failure would, with reasonable probability, result in a material adverse change
in the business, properties, condition (financial or
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otherwise), or prospects of any of the Obligated Parties. For purposes of this
paragraph, Lender confirms to Obligated Parties that Lender has initiated its
own corporate-wide Year 2000 program with respect to its lending activities.
(d) The fair market value of all real and personal property pledged to
the Lender as Collateral to secure the Advances hereunder is not and shall not
be less than currently anticipated or subject to substantial deterioration in
value because of the failure of such Collateral to be Year 2000 Compliant.
SECTION 6.22 INSURANCE. SCHEDULE 6.22 contains an accurate and complete
description of all material policies of fire, liability, workmen's compensation
and other forms of insurance owned or held by the Obligated Parties and each
Subsidiary. All such policies are in full force and effect, all premiums with
respect thereto covering all periods up to and including the date of the closing
have been paid, and no notice of cancellation or termination has been received
with respect to any such policy. Such policies are sufficient for compliance
with all requirements of law and of all agreements to which the Obligated
Parties or any Subsidiary is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as are
usually insured against in the same general area by companies engaged in the
same or a similar business for the assets and operations of the Obligated
Parties and each Subsidiary; will remain in full force and effect through the
respective dates set forth in SCHEDULE 6.22 without the payment of additional
premiums; and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. None of the
Obligated Parties nor any Subsidiary has been refused any insurance with respect
to its Property or operations, nor has its coverage been limited below usual and
customary policy limits, by an insurance carrier to which it has applied for any
such insurance or with which it has carried insurance during the last three
years.
SECTION 6.23 HEDGING AGREEMENTS. SCHEDULE 6.23 sets forth, as of the date
hereof, a true and complete list of all Hedging Agreements, Financing
Transactions and Swap Transactions (including commodity price swap agreements,
forward agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities) of the Obligated
Parties and each Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net
mark to market value thereof, all credit support agreements relating thereto
(including any margin required or supplied), and the counterparty to each such
agreement.
SECTION 6.24 RESTRICTION ON LIENS. Except as set forth on SCHEDULE 6.24 and in
the Senior Loan Documents, none of the Obligated Parties nor any of the
Subsidiaries is a party to any agreement or arrangement (other than this
Agreement and the other Loan Documents), or subject to any order, judgment, writ
or decree, which either restricts or purports to restrict its ability to grant
Liens to other Persons on or in respect of their respective Property or
Collateral.
SECTION 6.25 MATERIAL DEBT AGREEMENTS. Set forth on SCHEDULE 8.2 hereto is a
complete and correct list of all material agreements, leases, indentures,
purchase agreements, obligations in respect
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of letters of credit, guarantees, joint venture agreements, and other
instruments in effect or to be in effect following the date hereof (other than
Hedging Agreements) providing for, evidencing or otherwise relating to any Debt
of any of the Obligated Parties or any of the Subsidiaries, and all obligations
of any of the Obligated Parties or any of the Subsidiaries to issuers of surety
or appeal bonds issued for account of any of the Obligated Parties or any such
Subsidiary, and such list correctly sets forth the names of the debtor or lessee
and creditor or lessor with respect to the Debt or lease obligations outstanding
or to be outstanding and the property subject to any Lien securing such Debt or
lease obligation.
ARTICLE VII
POSITIVE COVENANTS
Each of the Obligated Parties covenants and agrees that, as long as the
Obligations or any part thereof are outstanding, each of the Obligated Parties
will perform and observe the following positive covenants:
SECTION 7.1 REPORTING REQUIREMENTS. The Borrower will furnish to the Lender:
(a) Annual Financial Statements. As soon as available and in any event
within 90 days after the end of each fiscal year of the Borrower, the audited
consolidated and unaudited consolidating statements of income, stockholders'
equity, changes in financial position and cash flow of the Borrower and its
Consolidated Subsidiaries for such fiscal year, and the related audited
consolidated and unaudited consolidating balance sheets of the Borrower and its
Consolidated Subsidiaries as at the end of such fiscal year, and setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, and accompanied by the related unqualified opinion of independent
public accountants of recognized national standing acceptable to the Lender
which opinion shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of operations of
the Borrower and its Consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in accordance
with GAAP except for such changes in such principles with which the independent
public accountants shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception, and, in addition thereto, as
soon as available in any event within sixty (60) after the end of each fiscal
year of the Borrower, pro forma projections in form and substance satisfactory
to the Lender for the ensuing five (5) year period on a year-by-year basis,
including, without limitation, the consolidated and consolidating statements of
income and cash flow of the Borrower and its Consolidated Subsidiaries for such
periods, and the related consolidated and consolidating balance sheets of the
Borrower and its Consolidated Subsidiaries for such period, and the estimated
capital expenditures for such periods.
(b) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the end of each of the first three fiscal quarterly
periods of each fiscal year of the Borrower, consolidated and consolidating
statements of income, stockholders' equity, changes in financial position and
cash flow of the Borrower and its Consolidated Subsidiaries for such period and
for the period from the beginning of the respective fiscal year to the end of
such period, and the
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related consolidated and consolidating balance sheets as at the end of such
period, and setting forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding fiscal year, accompanied
by the certificate of a Responsible Officer, which certificate shall state that
said financial statements fairly present the consolidated and consolidating
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries in accordance with GAAP, as at the end of, and for,
such period (subject to normal year-end audit adjustments);
(c) Certificate of Compliance and No Default. Concurrently with the
delivery of each of the financial statements referred to in Sections 7.1(a)
and 7. 1 (b), a certificate of a Responsible Officer (i) stating that a review
of the activities of the Obligated Parties has been made under his supervision
with a view to determining whether the Obligated Parties have fulfilled all of
their obligations under this Agreement, the other Loan Documents, and the Note;
(ii) stating that the Obligated Parties have fulfilled their obligations under
such instruments and that all representations and warranties made herein
continue to be true and correct in all material respects (or specifying the
nature of any change); (iii) to the extent requested from time-to-time by the
Lender, specifically affirming compliance of the Obligated Parties with any
of their representations or obligations under such instruments; (iv) containing
or accompanied by such financial or other details, information and material as
the Lender may reasonably request to evidence such compliance; (v) stating that
to the best of such officer's knowledge, no Default has occurred and is
continuing, or if a Default has occurred and is continuing, a statement as
to the nature thereof and the action that is proposed to be taken with respect
thereto, and (vi) showing in reasonable detail the calculations demonstrating
compliance with Article IX;
(d) Management Letters. Promptly upon receipt thereof, a copy of any
management letter or written report submitted to any Obligated Party or any
Subsidiary by independent certified public accountants.
(e) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting any Obligated Party or any Subsidiary which, if
determined adversely to any Obligated Party or such Subsidiary, could have a
Material Adverse Effect;
(f) Notice of Default. As soon as possible and in any event within
five Business Days after the occurrence of each Default, a written notice
setting forth the details of such Default and the action the Obligated
Parties have taken and propose to take with respect thereto;
(g) ERISA Reports. As soon as possible and in any event (i) within
five (5) Business Days after any Obligated Party or any ERISA Affiliate knows or
has reason to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Plan has occurred and (B)
within five (5) Business Days after any Obligated Party or any ERISA Affiliate
knows or has reason to know that any other Termination Event with respect to any
Plan, has occurred or is reasonably expected to occur, a statement of the chief
financial officer of the applicable Obligated Party describing such Termination
Event and the action, if any, which such Obligated Party or such ERISA Affiliate
has taken and proposes to take with respect thereto;
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(ii) promptly and in any event within five (5) Business Days after receipt
thereof by any Obligated Party or any ERISA Affiliate, copies of each notice
received by such Obligated Party or any ERISA Affiliate from the PBGC stating
its intention to terminate any Plan or to have a trustee appointed to administer
any Plan; and (iii) promptly and in any event within five (5) Business Days
after receipt thereof by any Obligated Party or any ERISA Affiliate from the
sponsor of a Multi-employer Plan, a copy of each notice received by such
Obligated Party or any ERISA Affiliate;
(h) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any material statement or report famished to any other party pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be famished to the Lender pursuant to any other clause of
this Section;
(i) Notice of Material Adverse Change. As soon as possible and in any
event within five days after the occurrence thereof, written notice of any
matter that could have a Material Adverse Effect;
(j) Proxy Statements, Etc. Promptly upon its becoming available, one
copy of each financial statement, report, notice or final proxy statement sent
by any Obligated Party to stockholders generally and of each regular or periodic
report, registration statement or prospectus filed by any Obligated Party or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency, and of any order issued by any Governmental
Authority in any proceeding to which any Obligated Party is a party. For
purposes of these provisions, "Governmental Authority" shall mean any government
(or any political subdivision or jurisdiction thereof), court, bureau, agency or
other governmental entity having or asserting jurisdiction over any Obligated
Party or any of its business, operations or properties;
(k) General Information. Promptly, such other information concerning
any Obligated Party or any Subsidiary as the Lender may from time to time
reasonably request; and
(l) Back Log and Variance Report. As soon as available, and in any
event within thirty (30) days after the end of each calendar month, a back log
report in form and detail satisfactory to the Lender showing all items back
logged of the Obligated Parties and the Subsidiaries divided into domestic and
international categories and an analysis report in form and detail satisfactory
to the Lender showing variances from Borrower's most recent annual budget.
SECTION 7.2 MAINTENANCE OF EXISTENCE, CONDUCT OF BUSINESS. The Obligated
Parties will preserve and maintain, and will cause each Subsidiary to preserve
and maintain, its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Obligated Parties will
conduct, and will cause each Subsidiary to conduct, its business in an orderly
and efficient manner in accordance with good business practices.
SECTION 7.3 Maintenance of Properties. The Obligated Parties will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible
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and intangible) necessary or useful in the proper conduct of its business in
good working order and condition, reasonable wear and tear excepted.
SECTION 7.4 TAXES AND CLAIMS. The Obligated Parties will pay or discharge, and
will cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental charges
imposed on it or its income or profits or any of its property, and (b) all
lawful claims for labor, material, and supplies, which, if unpaid, might become
a Lien upon any of its property; provided, however, that neither any Obligated
Party nor any Subsidiary shall be required to pay or discharge any tax, levy,
assessment, or governmental charge which is being contested in good faith by
appropriate proceedings diligently pursued, and for which adequate reserves have
been established in accordance with GAAP.
SECTION 7.5 INSURANCE. Each Obligated Party will maintain, and will cause each
of the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by corporations engaged in similar businesses and owning similar
properties in the same general areas in which the Obligated Parties and the
Subsidiaries operate, provided that in any event each Obligated Party will
maintain and cause each Subsidiary to maintain workmen's compensation insurance,
property insurance, comprehensive general liability insurance, products
liability insurance, and business interruption insurance reasonably satisfactory
to the Lender. Each insurance policy covering Collateral shall name the Lender
as loss payee and additional insured and shall provide that such policy will not
be canceled or reduced without 30 days' prior written notice to the Lender.
SECTION 7.6 INSPECTION RIGHTS. During normal business hours, from time and
from time to time, the Obligated Parties will permit, and will cause each
Subsidiary to permit, representatives of the Lender to examine, copy, and make
extracts from its books and records, to visit and inspect its properties, and to
discuss its business, operations, and financial condition with its Responsible
Officers, and independent certified public accountants.
SECTION 7.7 KEEPING BOOKS AND RECORDS. Each Obligated Party will maintain, and
will cause each Subsidiary to maintain, proper books of record and account
entries in conformity with GAAP.
SECTION 7.8 COMPLIANCE WITH LAWS. Each Obligated Party will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator including, without limitation, all applicable Environmental Laws.
SECTION 7.9 COMPLIANCE WITH AGREEMENTS. Each Obligated Party will comply, and
will cause each Subsidiary to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its properties
or business.
SECTION 7.10 FURTHER ASSURANCES. Each Obligated Party will, and will cause each
Subsidiary to, execute and deliver such further agreements and instruments and
take such further action as may
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be requested by the Lender to carry out the provisions and purposes of this
Agreement and the other Loan Documents and to create, preserve, and perfect the
Liens of Lender in the Collateral.
SECTION 7.11 ERISA. Each Obligated Party will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
SECTION 7.12 YEAR 2000 COMPLIANT. The Obligated Parties covenant and agree with
the Lender that, while any of the Obligations are outstanding, the Obligated
Parties will:
(a) Furnish such additional information, statements and other reports
with respect to Obligated Parties' activities, course of action and progress
towards becoming Year 2000 Compliant as the Lender may request from time to
time.
(b) In the event of any change in circumstances that causes or will
likely cause any of the Obligated Parties' representations and warranties with
respect to its being or becoming Year 2000 Compliant to no longer be true
(hereinafter, referred to as a "Change in Circumstances") then the Obligated
Parties shall promptly, and in any event within ten (10) days of receipt of
information regarding a Change in Circumstances, provide the Lender with written
notice (the "Notice") that describes in reasonable detail the Change in
Circumstances and how such Change in Circumstances caused or will likely cause
the Obligated Parties' representations and warranties with respect to being or
becoming Year 2000 Compliant to no longer be true. The Obligated Parties shall,
within ten (10) days of a request, also provide the Lender with any additional
information the Lender requests of the Obligated Parties in connection with the
Notice and/or a Change in Circumstances.
(c) Upon reasonable notice, give any representative of the Lender
access during all reasonable business hours to, and permit such representative
to examine, copy or make excerpts from, any and all books, records and documents
in the possession of the Obligated Parties and relating to their affairs, and to
inspect any of the properties and Systems of the Obligated Parties, and to
project test the Systems to determine if they are Year 2000 Compliant in an
integrated environment, all at the sole cost and expense of the Obligated
Parties.
SECTION 7.13 SUBSIDIARY GUARANTIES AND PLEDGE OF ASSETS. Within thirty (30)
days after the acquisition or formation of any Subsidiary of any of the
Obligated Parties permitted under the terms of this Agreement, the Obligated
Parties shall cause such new Subsidiary to execute and deliver to Lender a
Guaranty Agreement and Security Instruments pledging such assets to the Lender
as may be designated by Lender (except where such action would be inconsistent
with the Subordination Agreement) together with such resolutions, certificates
and opinions regarding the authorization and binding effect of such Guaranty
Agreement and such Security Instruments as the Lender may reasonably require.
SECTION 7.14 OPINIONS OF COUNSEL. Within thirty (30) days after the Closing,
opinions from Vinson & Elkins, LLP shall be delivered to the Lender containing
the opinions of Allyson Fox Pharr, general counsel to the Borrower, delivered at
Closing.
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ARTICLE VIII
NEGATIVE COVENANTS
Each Obligated Party covenants and agrees that, as long as the Obligations or
any part thereof are outstanding, each of the Obligated Parties will perform and
observe the following negative covenants:
SECTION 8.1 DEBT. No Obligated Party will incur, create, assume, or permit to
exist, or will permit any Subsidiary to incur, create, assume, or permit to
exist, any Debt, except:
(i) Debt to the Lender pursuant to the Loan Documents;
(ii) Existing Debt described on SCHEDULE 6.9;
(iii) The $35,000,000 Debt evidenced by the Senior Loan Documents
in favor of Heller Financial Leasing, Inc. and $15,000,000 Debt
evidenced by the Senior Loan Documents in favor of Bank One, Texas,
National Association;
(iv) Non-speculative Swap Transactions (other than Financing
Transactions) pursuant to Hedging Agreements with Bank One, Texas,
National Association or its Affiliates; and
(v) Additional Debt in an aggregate outstanding amount not to
exceed $10,000,000 in the form of (i) Debt in favor of the Senior
Lenders or (ii) purchase money obligations incurred in the ordinary
course of business.
SECTION 8.2 LIMITATION ON LIENS. No Obligated Party will incur, create,
assume, or permit to exist, or will permit any Subsidiary to incur, create,
assume, or permit to exist, any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except:
(i) Liens disclosed on SCHEDULE 8.2;
(ii) Liens in favor of the Lender;
(iii) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do
not (individually or in the aggregate) materially affect the value of
the assets encumbered thereby or materially impair the ability of any
Obligated Party or the Subsidiaries to use such assets in their
respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(iv) Liens for taxes, assessments, or other governmental charges
which are not delinquent or which are being contested in good faith and
for which adequate reserves have been established;
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(v) Liens of mechanics, materialmen, warehousemen, carriers, or
other similar statutory Liens securing obligations that are not yet due
and are incurred in the ordinary course of business;
(vi) Liens resulting from good faith deposits to secure payments
of workmen's compensation or other social security programs or to secure
the performance of tenders, statutory obligations, surety and appeal
bonds, bids, contracts (other than for payment of Debt), or leases made
in the ordinary course of business; and
(vii) Liens securing purchase money obligations permitted under
Section 8.1(v) provided such Liens are placed within thirty (30) days
of the incurrence of such Debt.
SECTION 8.3 MERGERS, ACQUISITIONS, ETC. None of the Obligated parties, nor any
Subsidiary will merge into or with or consolidate with any other Person, or
sell, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its Property or assets to any other
Person, or wind-up, dissolve, or liquidate itself; provided, however, if (i) the
Borrower gives at least thirty (30) days' prior written notice to the Lender and
(ii) no Default or Event of Default has occurred or is continuing or will result
from the action proposed to be taken, and (iii) the Lender's Lien on the
Collateral would not be adversely affected, then any Subsidiary of the Borrower
may merge or consolidate with the Borrower or with any other Subsidiary of the
Borrower or sell, lease, or otherwise dispose of (at fair market value) all or
any substantial part of its Property or assets to the Borrower or to any other
Subsidiary of the Borrower. The Obligated Parties will not, and will not permit
any Subsidiary to, purchase or otherwise acquire all or any part of the business
or assets of any Person or any shares or other evidence of beneficial ownership
of any Person except that the Borrower will be permitted to acquire entities in
the same industry provided that (x) the Borrower gives at least thirty (30)
days' prior written notice to the Lender, (y) no Default or Event of Default has
occurred or is continuing or will result from the action proposed to be taken,
and (z) the pro forma effect of which will not cause a Default or an Event of
Default. Notwithstanding the foregoing, any and all cash or debt assumption
acquisitions of the Obligated Parties that aggregate more than $5,000,000 from
the date hereof will require the prior written consent of the Lender.
SECTION 8.4 RESTRICTED PAYMENTS. The Borrower will not declare or pay any
dividends or make any other payment or distribution (whether in cash, property,
or obligations) on account of its capital stock, or redeem, purchase, retire, or
otherwise acquire any of its capital stock, or return any capital to its
stockholders, or make any distribution of its assets to its stockholders, or
permit any of its Subsidiaries to purchase or otherwise acquire any capital
stock of any Obligated Party or another Subsidiary, or set apart any money for a
sinking or other analogous fund for any dividend or other distribution on its
capital stock or for any redemption, purchase, retirement, or other acquisition
of any of its capital stock, provided that, so long as no Default or Event of
Default has occurred and is continuing (or result therefrom) the Borrower may
declare and deliver dividends solely in the form of stock.
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SECTION 8.5 INVESTMENTS. No Obligated Party will make or will permit any
Subsidiary to make, any advance, loan, extension of credit, or capital
contribution to or investment in, or purchase or own, or permit any Subsidiary
to purchase or own, any stock, bonds, notes, debentures, or other securities of,
any Person, except:
(i) readily marketable direct obligations of the United States of
America or any agency thereof with maturities of one year or less from
the date of acquisition;
(ii) fully insured certificates of deposit with maturities of one
year or less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus in
excess of $50,000,000;
(iii) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest rating categories
of Standard and Poor's Corporation or Moody's Investors Service, Inc.;
(iv) acquisitions permitted under Section 8.3.
(v) employee loans, advances, and expenses in the ordinary course
of business not to exceed $50,000 for any one Person or $500,000 in the
aggregate outstanding at any time.
SECTION 8.6 LIMITATION ON ISSUANCE OF CAPITAL STOCK. No Obligated Party
(other than Borrower) will, at any time issue, sell, assign, or otherwise,
dispose, or will permit any of their Subsidiaries to, at any time issue, sell,
assign, or otherwise dispose of (a) any of its capital stock, (b) any securities
exchangeable for or convertible into or carrying any rights to acquire any of
its capital stock, or (c) any option, warrant, or other right to acquire any of
its capital stock.
SECTION 8.7 TRANSACTIONS WITH AFFILIATES. No Obligated Party will enter into,
and no Obligated Party will permit any Subsidiary to enter into, any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate of any Obligated
Party or such Subsidiary, except in the ordinary course of and pursuant to the
reasonable requirements of such Obligated Party's or such Subsidiary's business
and upon fair and reasonable terms no less favorable to such Obligated Party or
such Subsidiary than would be obtained in a comparable arm's-length transaction
with a Person not an Affiliate of any such Obligated Party or such Subsidiary.
SECTION 8.8 DISPOSITION OF ASSETS. No Obligated Party will sell, lease,
assign, transfer, or otherwise dispose of any of their Property, or permit any
Subsidiary to do so with any of its Property, except dispositions of inventory
in the ordinary course of business and dispositions of Property that does not
exceed $2,000,000 in the aggregate provided that: (a) such dispositions do not
cover any Collateral in excess of $100,000 in the aggregate in any calendar
year; and (b) such dispositions do not cover any of the Vessels.
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SECTION 8.9 SALE AND LEASEBACK. No Obligated Party will enter into, or will
permit any Subsidiary to enter into, any arrangement with any Person pursuant to
which it leases from such Person real or personal property that has been or is
to be sold or transferred, directly or indirectly, by it to such Person.
SECTION 8.10 NATURE OF BUSINESS. No Obligated Party will engage in, or will not
permit any Subsidiary to engage in any business other than the businesses in
which they are engaged on the date hereof.
SECTION 8.11 ENVIRONMENTAL PROTECTION. No Obligated Party will, or will permit
any of their Subsidiaries to, (a) except as disclosed in Schedule 6.20, use (or
permit any tenant to use) any of their respective properties or assets for the
handling, processing, storage, transportation, or disposal of any Hazardous
Material, (b) generate any Hazardous Material, (c) conduct any activity that is
likely to cause a Release or threatened Release of any Hazardous Material, or
(d) otherwise conduct any activity or use any of their respective properties or
assets in any manner that is likely to violate any Environmental Law or create
any Environmental Liabilities for which any of the Obligated Parties or any of
their Subsidiaries would be responsible.
SECTION 8.12 ACCOUNTING. No Obligated Party will, or will permit any of their
Subsidiaries to, change its fiscal year or make any change (a) in accounting
treatment or reporting practices, except as required by GAAP and disclosed to
the Lender, or (b) in tax reporting treatment, except as required by law and
disclosed to the Lender.
SECTION 8.13 COMPLIANCE WITH ERISA. No Obligated Party shall or shall permit
any Subsidiary to (a) terminate, or permit any ERISA Affiliate to terminate, any
Plan, or (b) permit circumstances which give rise to a Termination Event
described in Clause (b), (d) or (e) of the definition of Termination Event with
respect to a Plan.
SECTION 8.14 PROCEEDS OF NOTE. Neither the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause any
of the Loan Documents to violate Regulation G, U, or X, or any other regulation
of the Board of Governors of the Federal Reserve System, or to violate Section 7
of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.
SECTION 8.15 NEGATIVE PLEDGE AGREEMENTS. Neither any Obligated Party nor any
Subsidiary will create, incur, assume or suffer to exist any contract,
agreement, or understanding (other than this Agreement, the Loan Documents, the
Senior Loan Documents) which in any way prohibits or restricts the granting,
conveying, creation, or imposition of any Lien on any of its Property or
restricts any Subsidiary from paying dividends to the Borrower, or which
requires the consent of or notice to other Persons in connection therewith.
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ARTICLE IX
FINANCIAL COVENANTS
Each Obligated Party covenants and agrees that, as long as the Obligations or
any part thereof are outstanding, each Obligated Party will perform and observe
the following financial covenants:
SECTION 9.1 CONSOLIDATED TANGIBLE NET WORTH. The Borrower and its Subsidiaries
will at all times maintain Consolidated Tangible Net Worth in an amount not less
than $37,000,000, except as may be adjusted below, increasing annually by 90% of
annual positive Consolidated Net Income beginning for the twelve month period
ending December 31, 1999, and increasing by (a) 100% of the proceeds of any
equity issued by Obligated Parties or Subsidiaries including, without
limitation, a secondary offering and (b) the value of the net tangible assets
acquired by issuing Obligated Parties' stock in the acquisition of another
entity. For fiscal year 1999 only, the required increase will be 90% of the net
amount of the actual reported fiscal year 1999 positive Consolidated Net Income
minus the Borrower's cash payment of up to $7,300,000 payable to the sellers of
Dickson GMP International, Inc., (the "Dickson Payment") but only if such amount
is positive. If the amount derived by calculating the difference in the fiscal
1999 positive Consolidated Net Income and the Dickson Payment is negative, the
minimum Consolidated Tangible Net Worth shall be the greater of (a) $35,000,000,
or (b) $40,000,000 less (1) the Dickson Payment; plus (2) fiscal 1999 positive
Consolidated Net Income; and (3) less $1,000,000. In years subsequent to 1999,
such adjusted minimum Consolidated Tangible Net Worth shall be increased
annually by 90% of annual positive Consolidated Net Income and by (a) 100% of
the proceeds of any equity issued by Obligated Parties, including, without
limitation, a secondary offering and (b) the value of the net tangible assets
acquired by issuing Obligated Parties' stock in the acquisition of another
entity.
SECTION 9.2 CAPITAL EXPENDITURES. The Obligated Parties will not permit the
aggregate capital expenditures of the Obligated Parties and the Subsidiaries to
exceed $7,000,000 during any fiscal year.
SECTION 9.3 FUNDED DEBT TO CAPITALIZATION. The Obligated Parties will not
permit the Borrower's ratio of Funded Debt to Capitalization, on a Consolidated
basis, to exceed 0.40 to 1.00 at any time.
SECTION 9.4 FIXED CHARGE COVERAGE RATIO. The Borrower and its Subsidiaries on
a Consolidated basis will at all times maintain a Fixed Charge Coverage Ratio
that exceeds 1.10 to 1.00. This ratio shall be calculated on a cumulative
quarterly basis beginning January 1, 1999, until such time as four quarters have
been reached on December 31, 1999. Thereafter, the ratio will be calculated on a
Rolling Period basis. The first test will be calculated at March 31, 1999.
SECTION 9.5 FUNDED DEBT TO EBITDA COVERAGE RATIO. The Borrower will not permit
the Borrower's ratio of Funded Debt to EBITDA, on a Consolidated basis (EBITDA
being determined on a Rolling Period basis) to be greater than the ratio and for
the times indicated below:
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<TABLE>
<CAPTION>
TIME PERIOD RATIO
----------- -----
<S> <C> <C>
12/01/1998 - 12/31/1999 3.50:1.0
01/01/2000 - 12/31/2000 3.15:1.0
01/01/2001 and thereafter 2.80:1.0
</TABLE>
Upon the consummation of an acquisition not prohibited hereunder (including
historic acquisitions consummated within 12 months from the date hereof), the
calculation of EBITDA shall include, pro forma, the historical consolidated
EBITDA for the Borrower and its Consolidated Subsidiaries for the relevant
period prior to the Borrower's acquisition of such Subsidiaries.
ARTICLE X
DEFAULT
SECTION 10.1 EVENTS OF DEFAULT. Each of the following shall be deemed an "Event
of Default":
(a) (i) The Borrower shall fail to repay the outstanding principal
amount of the Loan on the Maturity Date, or (ii) any Obligated Party shall fail
to pay any other Obligation within five (5) days of when such is due.
(b) Any representation or warranty made or deemed made by any
Obligated Party (or any of their respective officers) in any Loan Document or in
any certificate, report, notice, or financial statement furnished at any time
in connection with this Agreement shall be false, misleading, or erroneous in
any material respect when made or deemed to have been made.
(c) Any Obligated Party shall fail to perform, observe, or comply with
any covenant, agreement, or term contained in Section 7.1, Section 7.5, Article
VIII or Article IX of this Agreement; or the Borrower or any Obligated Party
shall fail to perform, observe, or comply with any other covenant, agreement, or
term contained in this Agreement or any other Loan Document (other than
covenants to pay the Obligations) and such failure shall continue for a period
of thirty (30) days after the earlier of (i) the applicable Obligated Party's
knowledge of such failure or (ii) the notice thereof to the Borrower by the
Lender.
(d) Any Obligated Party or any Subsidiary shall commence a voluntary
proceeding seeking liquidation, reorganization, or other relief with respect to
itself or its debts under any bankruptcy, insolvency, or other similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or a substantial part of
its property or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it or shall make a general assignment for the
benefit of creditors or shall generally fail to pay its debts as they become due
or shall take any corporate action to authorize any of the foregoing.
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(e) An involuntary proceeding shall be commenced against any Obligated
Party or any Subsidiary seeking liquidation, reorganization, or other relief
with respect to it or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official for it or a
substantial part of its property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of 30 days.
(f) Any Obligated Party or any Subsidiary shall fail to discharge
within a period of 30 days after the commencement thereof any attachment,
sequestration, or similar proceeding or proceedings involving an aggregate
amount in excess of $1,000,000 against any of its assets or properties.
(g) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate shall be rendered by a court or courts against
any Obligated Party or any Subsidiary and the same shall not be discharged (or
provision shall not be made for such discharge), or a stay of execution thereof
shall not be procured, within 30 days from the date of entry thereof and the
relevant Obligated Party or the relevant Subsidiary shall not, within said
period of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal.
(h) Any Obligated Party or any Subsidiary shall fail to pay when due
any principal of or interest on any Debt (other than the Obligations),
including, without limitation, Debt under the Senior Loan Documents or the
maturity of any such Debt shall have been accelerated, or any such Debt shall
have been required to be prepaid prior to the stated maturity thereof, or any
event shall have occurred that permits (or, with the giving of notice or lapse
of time or both, would permit) any holder or holders of such Debt or any Person
acting on behalf of such holder or holders to accelerate the maturity thereof or
require any such prepayment.
(i) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Obligated Party
or any Subsidiary or any of their respective shareholders, or any Obligated
Party shall deny that it has any further liability or obligation under any of
the Loan Documents, or any lien or security interest created by the Loan
Documents shall for any reason cease to be a valid, perfected security interest
in and lien upon any of the Collateral purported to be covered thereby, subject
only to Liens permitted under Section 8.2.
(j) Any Termination Event as defined in clause (b), (d) or (e) of the
definition thereof with respect to a Plan shall have occurred and, five days
after notice thereof shall have been given to any Obligated Party by the Lender,
(i) such Termination Event shall still exist.
(k) Any Obligated Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multi-employer Plan that it has incurred Withdrawal
Liability to such Multi-employer Plan.
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(l) Any Obligated Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multi-employer Plan that such Multi-employer Plan
is in reorganization or is being terminated, within the meaning of Title IV of
ERISA.
(m) Any Obligated Party or any of its Subsidiaries, or any of their
properties, revenues, or assets, shall become the subject of an order of
forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the
same shall not have been discharged (or provisions shall not be made for such
discharge) within 30 days from the date of entry thereof.
(n) Any Person or Persons constituting a group (as such term is used
in Rule 13d-5 under the Securities Exchange Act of 1934 as in effect on the date
hereof) shall, in the aggregate, directly or indirectly, control or own
(beneficially or otherwise) more than 30% (by number of shares) of the issued
and outstanding voting stock of the Borrower.
(0) Nathan Avery or a reasonable substitute thereof shall cease to be
active in the senior management of the Borrower.
(p) Any "Event of Default" shall exist under any of the Senior Loan
Documents.
SECTION 10.2 REMEDIES. If any Event of Default shall occur and be continuing,
the Lender may do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and accrued and
unpaid interest on the Note and all other obligations of any of the Obligated
Parties under the Loan Documents immediately due and payable, and the same shall
thereupon become immediately due and payable, all without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest, or other formalities of any kind, all of which are hereby
expressly waived by the Obligated Parties.
(b) Judgment. Reduce any claim to judgment.
(c) Foreclosure. Foreclose or otherwise enforce any Lien granted to
the Lender to secure payment and performance of the Obligations in accordance
with the terms of the Loan Documents.
(d) Rights. Exercise any and all rights and remedies afforded by the
laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under Section
10.1(d) or 10.1(e), the outstanding principal of and accrued and unpaid interest
on the Note and all other obligations of the Obligated Parties under the Loan
Documents shall thereupon become immediately due and payable without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Obligated Parties.
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SECTION 10.3 PERFORMANCE BY THE LENDER. If any Obligated Party shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Lender may perform or attempt to perform such covenant or
agreement on behalf of the Obligated Parties. In such event, the Borrower shall,
at the request of the Lender, promptly pay any amount expended by the Lender in
connection with such performance or attempted performance, together with
interest thereon at the Default Rate from and including the date of such
expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that the Lender shall not
have any liability or responsibility for the performance of any obligation of
any Obligated Party under this Agreement or any of the other Loan Documents.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 EXPENSES. The Obligated Parties hereby agree, jointly and
severally, to pay on demand: (a) all reasonable costs and expenses of the Lender
in connection with the preparation, negotiation, execution, and delivery of this
Agreement and the other Loan Documents and any and all amendments,
modifications, renewals, extensions, and supplements thereof and thereto,
including, without limitation, the fees and expenses of legal counsel for the
Lender, (b) all costs and expenses of the Lender in connection with any Default
and the enforcement of this Agreement or any other Loan Document, including,
without limitation, the fees and expenses of legal counsel for the Lender, (c)
all transfer, stamp, documentary, or other similar taxes, assessments, or
charges levied by any Governmental Authority in respect of this Agreement or any
of the other Loan Documents, (d) all costs, expenses, assessments, and other
charges incurred in connection with any filing, registration, recording, or
perfection of any security interest or Lien contemplated by this Agreement or
any other Loan Document, and (e) all other reasonable costs and expenses
incurred by the Lender in connection with this Agreement or any other Loan
Document, including, without limitation, all costs, expenses, and other charges
incurred in connection with obtaining any mortgagee title insurance policy,
survey, audit, or appraisal in respect of the Collateral.
SECTION 11.2 INDEMNIFICATION. The Obligated Parties, jointly and severally,
shall indemnify the Lender and each Affiliate thereof and their respective
officers, directors, employees, attorneys, and agents from, and hold each of
them harmless against, any and all losses, liabilities, claims, damages,
penalties, judgments, disbursements, costs, and expenses (including attorneys'
fees) to which any of them may become subject which directly or indirectly arise
from or relate to (a) the negotiation, execution, delivery, performance,
administration, or enforcement of any of the Loan Documents, (b) any of the
transactions contemplated by the Loan Documents, (c) any breach by any Obligated
Party of any representation, warranty, covenant, or other agreement contained in
any of the Loan Documents, (d) the presence, Release, threatened Release,
disposal, removal, or cleanup of any Hazardous Material located on, about,
within, or affecting any of the properties or assets of any Obligated Party or
any Subsidiary, or (e) any investigation, litigation, or other proceeding,
including, without limitation, any threatened investigation, litigation, or
other proceeding relating to any of the foregoing. WITHOUT LIMITING ANY
PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE
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<PAGE> 47
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING ATTORNEYS FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR
CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
SECTION 11.3 LIMITATION OF LIABILITY. None of the Lender or any Affiliate,
officer, director, employee, attorney, or agent thereof shall have any liability
with respect to, and any Obligated Party hereby waives, releases, and agrees not
to sue any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by any Obligated Party in connection
with, arising out of, or in any way related to, this Agreement or any of the
other Loan Documents, or any of the transactions contemplated by this Agreement
or any of the other Loan Documents, except for gross negligence or willful
misconduct in which event damages will be limited to actual damages. Each
Obligated Party hereby waives, releases, and agrees not to sue the Lender or any
of its Affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents.
SECTION 11.4 NO DUTY. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Lender shall have the right
to act exclusively in the interest of the Lender and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to any Obligated Party or any of the Obligated
Parties' shareholders or any other Person.
SECTION 11.5 NO FIDUCIARY RELATIONSHIP. The relationship between each
Obligated Party and the Lender is solely that of debtor and creditor, and the
Lender has no fiduciary or other special relationship with any Obligated Party,
and no term or condition of any of the Loan Documents shall be construed so as
to deem the relationship between any Obligated Party and the Lender to be other
than that of debtor and creditor.
SECTION 11.6 EQUITABLE RELIEF. Each Obligated Party recognizes that in the
event any Obligated Party fails to pay, perform, observe, or discharge any or
all of the Obligations, any remedy at law may prove to be inadequate relief to
the Lender. Each Obligated Party therefore agrees that the Lender, if the Lender
so requests, shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.
SECTION 11.7 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power, or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
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SECTION 11.8 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Obligated
Parties may not assign or transfer any of their rights or obligations hereunder
without the prior written consent of the Lender. The Lender may sell, without
notice to or consent of any Obligated Party, participations to one or more banks
or other institutions in or to all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, all or a portion of the Loan owing to it); provided, however, that
(i) the Lender's obligations under this Agreement and the other Loan Documents
shall remain unchanged, (ii) the Lender shall remain solely responsible to the
Obligated Parties for the performance of such obligations, (iii) the Lender
shall remain the holder of its Note for all purposes of this Agreement, (iv) the
Obligated Parties shall continue to deal solely and directly with such Lender in
connection with the Obligated Parties rights and obligations under this
Agreement and the other Loan Documents, and (v) the Lender shall not sell a
participation that conveys to the participant the right to vote or give or
withhold consents under this Agreement or any other Loan Document, other than
the right to vote upon or consent to (A) any reduction of the principal amount
of, or interest to be paid on, the Loan, (C) any reduction of any fee or other
amount payable to the Lender under any Loan Document, or (D) any postponement of
any date for the payment of any amount payable in respect of the Loan.
(b) The Lender may, without notice to or consent of any Obligated
Party, sell, assign or transfer to any one or more Persons or entities, all or
any part of the Loan or all or any part of the Loan Documents and each such
assignee or transferee shall have the right to enforce the Loan and such Loan
Documents as fully as the Lender, provided that the Lender shall continue to
have the unimpaired right to enforce the provisions of the Loan Documents and
the Loan that it has not sold, assigned or transferred.
(c) In connection with and prior to and after any such sale, transfer,
assignment or participation, the Lender may disclose and furnish to any
prospective or actual purchaser, transferee, assignee or participant, any and
all reports, financial statements and other information obtained by the Lender
at any time and from time to time in connection with the Loan, the Loan
Documents or otherwise. The Obligated Parties shall fully cooperate with the
Lender in connection with any such assignment and shall execute and deliver such
consents and acceptances to any such assignment as the Lender shall reasonably
request that are necessary or desirable to effect any such assignment.
SECTION 11.9 SURVIVAL. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Lender or any closing shall affect the representations and
warranties or the right of the Lender to rely upon them. Without prejudice to
the survival of any other obligation of the Obligated Parties hereunder, the
obligations of the Obligated Parties under Sections 11.1 and 11.2 shall survive
repayment of the Note.
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SECTION 11.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN
DOCUMENTS REFERRED TO HEREIN EMBODY. THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
SECTION 11.11 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement, the Notes, or any other Loan Document to which any Obligated Party is
a party, nor any consent to any departure by any Obligated Party therefrom,
shall in any event be effective unless the same shall be agreed or consented to
by the Lender and the Obligated Parties, and each such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
SECTION 11.12 MAXIMUM INTEREST RATE. No provision of this Agreement or of any
other Loan Document shall require the payment or the collection of interest in
excess of the maximum amount permitted by applicable law. If any excess of
interest in such respect is hereby provided for, or shall be adjudicated to be
so provided, in any Loan Document or otherwise in connection with this loan
transaction, the provisions of this Section shall govern and prevail and neither
the Borrower nor the sureties, guarantors, successors, or assigns of any of the
Borrower shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event the Lender ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness evidenced by the Note; and, if the
principal of the Note has been paid in full, any remaining excess shall
forthwith be paid to the Borrower. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrower and the Lender shall, to
the extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the indebtedness evidenced by the
Note so that interest for the entire term does not exceed the Maximum Rate.
SECTION 11.13 NOTICES. All notices and other communications provided for in this
Agreement and the other Loan Documents to which any Obligated Party is a party
shall be given or made by telex, telegraph, telecopy, cable, or in writing and
telexed, telecopied, telegraphed, cabled, mailed by certified mail return
receipt requested, or delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof; or, as to any
party at such other address as shall be designated by such party in a notice to
each other party given in accordance with this Section. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telex or telecopy, subject to telephone
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confirmation of receipt, or delivered to the telegraph or cable office, subject
to telephone confirmation of receipt, or when personally delivered or, in the
case of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid; provided, however, notices to the Lender pursuant to
Article II shall not be effective until received by the Lender.
SECTION 11.14 GOVERNING LAW; VENUE; SERVICE OF PROCESS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
(other than the conflict of laws rules thereof) and the applicable laws of the
United States of America. Any action or proceeding against any Obligated Party
under or in connection with any of the Loan Documents may be brought in any
state or Federal court in the State of New York. Each Obligated Party hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and
(b) waives any objection it may now or hereafter have as to the venue of any
such action or proceeding brought in any such court or that any such court is
an inconvenient forum. Each Obligated Party agrees that service of process upon
it may be made by certified or registered mail, return receipt requested, at
its address specified or determined in accordance with the provisions of
Section 11.13. Nothing herein or in any of the other Loan Documents shall
affect the right of the Lender to serve process in any other manner permitted
by law or shall limit the right of the Lender to bring any action or proceeding
against any Obligated Party or with respect to any of its property in courts in
other jurisdictions. Any action or proceeding by any Obligated Party against
the Lender shall be brought only in a court located in the State of New York.
SECTION 11.15 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 11.16 SEVERABILITY. Any provision of this Agreement held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
SECTION 11.17 HEADINGS. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
SECTION 11.18 CONSTRUCTION. The Obligated Parties and the Lender acknowledge
that each of them has had the benefit of legal counsel of its own choice and has
been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by the parties hereto.
SECTION 11.19 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or such condition exists.
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SECTION 11.20 JURY WAIVER. THE OBLIGATED PARTIES AND THE LENDER (BY THEIR
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG ANY
OBLIGATED PARTY AND THE LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS
AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY RELATIONSHIP BETWEEN THE
LENDER AND ANY OBLIGATED PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE
LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
SECTION 11.21 ARBITRATION. The Lender and each Obligated Party agree that upon
the written demand of either party, whether made before or after the institution
of any legal proceedings, but prior to the rendering of any judgment in that
proceeding, all disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this Agreement, or any of
the Loan Documents or otherwise, including, without limitation, contract
disputes and tort claims, shall be resolved by binding arbitration pursuant to
the Commercial Rules of the American Arbitration Association ("AAA"). Any
arbitration proceeding held pursuant to this arbitration provision shall be
conducted in Houston Texas or at any other place selected by mutual agreement of
the parties. No act to take or dispose of any Collateral shall constitute a
waiver of this arbitration agreement or be prohibited by this arbitration
agreement. This arbitration provision shall not limit the right of either party
during any dispute, claim or controversy to seek, use, and employ ancillary, or
preliminary rights and/or remedies, judicial or otherwise, for the purposes of
realizing upon, preserving, protecting, foreclosing upon or proceeding under
forcible entry and detainer for possession of, any real or personal property,
and any such action shall not be deemed an election of remedies. Such remedies
include, without limitation, obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of trust or mortgage,
obtaining a writ of attachment or imposition of a receivership, or exercising
any rights relating to personal property, including exercising the right of
set-off, or taking or disposing of such property with or without judicial
process pursuant to the Uniform Commercial Code. Any disputes, claims or
controversies concerning the lawfulness or reasonableness of an act, or exercise
of any right or remedy concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the Collateral,
shall also be arbitrated; provided, however, that no arbitrator shall have the
right or the power to enjoin or restrain any act of either party. Judgment upon
any award rendered by any arbitrator may be entered in any court having
jurisdiction. The statute of limitations, estoppel, waiver, laches and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of any action for these
purposes. The Federal Arbitration Act (Title 9 of the United States Code) shall
apply to the construction, interpretation, and enforcement of this arbitration
provision.
SECTION 11.22 CONFIDENTIALITY. In the event that any of the Obligated Parties
provides to the Lender written confidential information belonging to such
Obligated Party and if such Obligated Party shall in writing clearly denominate
such information as "confidential," the Lender shall
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<PAGE> 52
thereafter maintain such information in confidence in accordance with the
standards of care and diligence that such utilizes in maintaining its own
confidential information. This obligation of confidence shall not apply to such
portions of the information which (i) are in the public domain, (ii) hereafter
become part of the public domain without the Lender breaching its obligation of
confidence to such Obligated Party, (iii) are previously known by the Lender
from some source other than such Obligated Party, (iv) are hereafter developed
by the Lender without using the Obligated Party's information, (v) are hereafter
obtained by or available to the Lender from a third party who the Lender is not
aware owes no obligation of confidence to such Obligated Party with respect to
such information or through any other means other than through disclosure by
such Obligated Party, (vi) are disclosed with such Obligated Party's consent,
(vii) must be disclosed either pursuant to any Governmental Requirement or to
Persons regulating the activities of the Lender, or (viii) as may be required by
law or regulation or order of any Governmental Authority in any judicial,
arbitration, or governmental proceeding. Further, the Lender may disclose any
such information to the Senior Lenders' and the Lender's employees,
representatives, lenders, counsel, and affiliates, and each of their respective
employees, representatives, lenders, counsel, and affiliates, or any assignee or
participant (including prospective assignees and participants) in the Loan that
agrees to be bound by the confidentiality provision set forth herein. This
obligation of confidence shall cease two years from the date the information was
furnished. Each Obligated Party waives any and all other rights it may have to
confidentiality as against the Lender arising by contract, agreement, statute,
or law except as expressly stated in this Section 11.22.
THE OBLIGATIONS EVIDENCED BY THIS AGREEMENT AND THE LOAN DOCUMENTS ARE
SUBORDINATED TO THE PRIOR PAYMENT IN FULL OF THE SENIOR CREDIT DEBT AND THE
SENIOR TERM DEBT (AS EACH SUCH TERM IS DEFINED IN THE SUBORDINATION AGREEMENT)
TO THE EXTENT PROVIDED IN THE SUBORDINATION AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
LENDER:
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED PARTNERSHIP
By: Enron Capital Management II Limited
Partnership, its general partner
By: Enron Capital II Corp., its general
partner
By: /s/ W. CRAIG CHILDERS
-----------------------------
Name: W. Craig Childers
---------------------------
Title: Managing Director
--------------------------
Address for Notices:
1400 Smith Street
Houston, Texas 77002
Fax No.: (713) 646-4039
Telephone No.: (713)85')-1939
Attention: Donna W. Lowry
<PAGE> 54
BORROWER/OBLIGATED PARTY:
TRANSCOASTAL MARINE SERVICES, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
OBLIGATED PARTIES:
DICKSON MARINE, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
VENTURA RESOURCES, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
WOODSON CONSTRUCTION COMPANY, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
ENVIRO SYSYTEMS, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
<PAGE> 55
KORI CORPORATION
By: /s/ PAMELA L. REILAND
--------------------------------
Pamela L. Reiland
Authorized Officer
C.S.I. HYDROSTATIC TESTERS, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
HARGETT MOORING AND MARINE, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
HBH, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
TRANCOASTAL MARINE SERVICES OF LA, INC.
(f/k/a RED FOX INTERNATIONAL, INC.)
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
DICKSON GMP INTERNATIONAL, INC. (f/k/a
TRANSCOASTAL ACQUISITON, INC.)
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
<PAGE> 56
THE RED FOX COMPANIES OF NEW IBERIA, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
TRANSCOASTAL VESSELS, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
TRANSCOASTAL VENTURES, INC.
By: /s/ PAMELA L. REILAND
-------------------------------
Pamela L. Reiland
Authorized Officer
Address for Notice (for Borrower and
other all Obligated Parties):
2925 Briarpark
Suite 930
Houston, Texas 77042
Fax No.: (713) 781-6364
Telephone No.: (713) 787-1384
Attention: Pamela L. Reiland
<PAGE> 57
EXHIBIT A
LIST OF SECURITY INSTRUMENTS
I. October 28, 1997 - Senior Security Instruments
1. First Preferred Morgages
a. Lafayette Parish
b. Plaquemines Parish
c. Iberia Parish
2. Stock Pledge Agreement - Borrower
3. Stock Pledge Agreement - CSI
4. Undated Stock Powers and Stock Certificates
a. Woodson
b. Laine
c. KORI
d. Envirosystem
e. Red Fox Companies
f. CSI
g. Hargett Companies
h. HBH
i. Red Fox International
j. Blue Water Hydro
5. First Priority Security Agreement
a. Woodson
b. Laine
c. KORI
d. Envirosystem
e. Red Fox Companies
f. CSI
g. Hargett Companies
h. HBH
i. Red Fox International
j. Blue Water Hydro
<PAGE> 58
6. UCC Financing Statements (First Priority)
a. Woodson
b. Laine
c. KORI
d. Envirosystem
e. Red Fox Companies
f. CSI
g. Hargett Companies
h. HBH
i. Red Fox International
j. Blue Water Hydro
7. First Preferred Naval Mortgage - Hargett
8. First Preferred Fleet Mortgage
a. HBH, Inc.
b. Hargett Mooring & Marine
c. C.S.I. Hydrostatic Testers, Inc.
9. Assignments of Insurance
a. HBH, Inc.
b. Hargett Mooring & Marine
c. C.S.I. Hydrostatic Testers, Inc.
II. October 28, 1997 - Subordinated Security Instruments
1. Subordinated Mortgages of Real Property
a. Lafayette Parish
b. Plaquemines Parish
c. Iberia Parish
2. Bailment Agreement - Borrower
3. Bailment Agreement - CSI
4. Second Priority Security Agreement
a. Woodson
b. Laine
c. KORI
d. Envirosystem
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<PAGE> 59
e. Red Fox
f. CSI
g. Hargett
h. HBH
i. Red Fox International
j. Blue Water Hydro
5. UCC Financing Statement
a. Woodson
b. Laine
c. KORI
d. Envirosystem
e. Red Fox
f. CSI
g. Hargett
h. HBH
i. Red Fox International
j. Blue Water Hydro
6. Second Preferred Naval Mortgages - Hargett
7. Second Preferred Naval Mortgage - HBH, Inc.
8. Subordinated Assignments of Insurance
a. HBH, Inc.
b. Hargett Mooring & Marine
c. C.S.I. Hydrostatic Testing, Inc.
III. February 10, 1998 - Senior and Subordinated Security Instruments
1. Amendment to Security Agreement, dated as of February 10, 1998, among
TransCoastal Marine Services and Joint Energy Development Investments
II Limited Partnership.
2. Irrevocable Stock Power Certificate.
3. Security Agreement (First Priority - Subsidiary) between TransCoastal
Vessels, Inc. and Joint Energy Development Investments II Limited
Partnership, as Agent, dated as of February 10, 1998.
4. Financing Statement.
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<PAGE> 60
5. Security Agreement (Subordinated - Subsidiary) between TransCoastal
Vessels, Inc. and Joint Energy Development Investments II Limited
Partnership, as Agent, dated as of February 10, 1998.
6. Financing Statement.
7. First Preferred Fleet Mortgage, dated as of February 10, 1998, by
TransCoastal Vessels, Inc., in favor of Joint Energy Development
Investments II Limited Partnership.
8. Assignment of Insurances by TransCoastal Vessels, Inc., for the
benefit of Joint Energy Development Investments II Limited
Partnership, dated as of February 10, 1998.
9. Lien Releases by Joint Energy Development Investments II Limited
Partnership of certain property with respect to property of Hargett
Enterprises, L.L.C., dated as of June 29, 1998.
IV. August 31, 1998 - Senior Security Instruments
1. Pledge and Security Agreement (Stock, Bonds, and Other Securities)
2. First Supplement to Security Agreement
3. Financing Statement Change (Amendment)
4. First Supplement to Pledge and Security Agreement.
5. Security Agreement (Subordinated - Subsidiary)
6. Financing Statement (SUBSA.TC2)
7. Financing Statement (SA2.TCA)
8. Financing Statement (SASTK.TC2)
9. Irrevocable Stock Power - TCM
10. Irrevocable Stock Power - TCA
11. Security Agreement (Stock and Other Securities)
12. Security Agreement (First Priority - Subsidiary)
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<PAGE> 61
SCHEDULE 6.5
LITIGATION
Sirpi Alusteel Construction, Ltd. v. Dickson GMP International
This case involves a contractual dispute in which Dickson has filed a cross
claim that if successful would eliminate any damages alleged by Sirpi and in
addition would result in a monetary judgement in favor of Dickson. We have been
told by counsel for Dickson that maximum exposure in this case is approximately
$95,000.00 (NINETY-FIVE THOUSAND AND NO/00 DOLLARS).
Dr. Abdo Husseiny, et al v. United Gas Pipeline Company, et al.
This is a class action lawsuit filed in 1994 as a result of a gas leak in St.
John the Baptist Parish in Louisiana. Approximately 7858 plaintiffs have joined
the class and are seeking damages ranging from $500.00 to $2500.00 each. The
liability portion of the case was tried to the bench. The court found Woodson
75% at fault and assessed punitive damages on a one to one ratio. Punitive
damages are uninsured. The case was appealed to the Fifth Circuit Court of
Appeals and writs were denied. We are currently negotiating with our underwriter
to approach the plaintiff with a settlement offer in which the entire case
(including punitives) would be settled within policy limits with Woodson
offering a cash contribution to the settlement. Such cash contribution would not
have a material impact on the operations of the Company. If we do not reach a
settlement, this case would begin trial in March of 1999. For the court to hear
all 7858 cases, trial could potentially extend for three to seven years.
<PAGE> 62
SCHEDULE 6.6(d)
RIGHTS IN PROPERTIES; LIENS
ALL OF THE PROPERTY AND COLLATERAL OF THE BORROWERS AND THEIR SUBSIDIARIES
WHICH ARE REASONABLY NECESSARY FOR THE OPERATION OF THEIR BUSINESS ARE IN GOOD
WORKING CONDITION AND ARE MAINTAINED IN ACCORDANCE WITH PRUDENT BUSINESS
STANDARDS WITH THE FOLLOWING EXCEPTION;
The Atchafalaya Bay is currently out of class and in process of being
refurbished. The Company's intention is to spend an additional $2,000,000 by
March 31, 1999, to bring the vessel into class and ready to be a first class
Jetting Barge.
<PAGE> 63
SCHEDULE 6.9
DEBT AND LIENS
The Borrowers and their Subsidiaries have no Debt as defined in the Credit
Agreement, except as disclosed below:
<TABLE>
<CAPTION>
LENDER COLLATERAL/LIEN
------ ---------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE - Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE - Unsecured
Transcoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3. BANKONE - TransCoastal Marine Accounts Receivables and Certain
Services, Inc. Equipment
$15,000,000 REVOLVER IN PLACE AT
CLOSING
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment
CORP. - TransCoastal Marine Services, and Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5. HELLER FINANCIAL, INC.- TransCoastal First lien on Certain Marine Vessels
Marine Services, Inc. and other Non-marine Equipment
$35,000,000 TERM LOAN IN PLACE AT
CLOSING
6. WOODSON FAMILY - Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL - Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL - Dickson GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL - DICKSON GMP
Dickson GMP $46,853 OUTSTANDING AT 990 CFM Air Compressor
11-30-98
</TABLE>
<PAGE> 64
SCHEDULES 6.10
TAXES
The Borrowers and their Subsidiaries have the following pending federal and
state tax investigations underway:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
ENTITY AND YEARS UNDER INVESTIGATION TYPE OF TAX AND TAXING AUTHORITY
=================================================================================
<S> <C> <C>
1. CSI - Years ending May 31, 1996 Federal Income Tax-I.R.S.
and 1997
2. Red Fox of New Iberia, Inc. - Years
ending December 31, 1996, 1997, 1998 Sales Tax-State of Louisiana
3. HBH, Inc. - Years ending December
31, 1995 and 1996 Sales Tax-State of Louisiana
4. Dickson GMP Limited, Inc. - Years
ending December 31, 1994, 1995, and
1996 Sales Tax-State of Louisiana
---------------------------------------------------------------------------------
</TABLE>
<PAGE> 65
SCHEDULE 6.14
SUBSIDIARIES
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION % OWNERSHIP
- ---- ---------------------- -----------
<S> <C> <C>
TransCoastal Marine Services of LA, Inc. Louisiana 100%
The Red Fox Companies of New Iberia, Inc. Louisiana 100%
Woodson Construction Company Louisiana 100%
Hargett Mooring & Marine, Inc. Louisiana 100%
EnviroSystems, Inc. Louisiana 100%
Kori Corporation Louisiana 100%
Laine Construction Company, Inc. Louisiana 100%
(merged into Woodson Construction
Company on December 31, 1998 and will
cease to exist)
Hargett Investments, L.L.C. Louisiana 100%
(merged into TransCoastal Marine Services
of LA, Inc., on December 31, 1998 and will
cease to exist)
HBH, Inc. Louisiana 100%
CSI Hydrostatic Testers, Inc. Delaware 100%
TransCoastal Vessels, Inc. Delaware 100%
TransCoastal Ventures, Inc. Delaware 100%
TransMar,LLC Delaware 60%
Dickson GMP International, Inc. Louisiana 100%
Dickson Marine, Inc. Louisiana 100%
Dickson Nigeria, Ltd. Nigeria 100%
Servicios y Construcciones Petroleras
Ventura, C.A. Venezuela 100%
Ventura Resources, Inc. Louisiana 100%
</TABLE>
<PAGE> 66
SCHEDULE 6.20
ENVIRONMENTAL MATTERS
(a) None known
(b) None known
(c) Hazardous Waste such as: spent paint and solvents are stored in specific
areas for transportation to approved disposal facilities. TCMS Senior
Environmental Specialist has inspected the disposal facility for compliance
with regulations and permits.
(d) None known
(e) None known
(f) None known
(g) None known
(h) None known
<PAGE> 67
SCHEDULE 6.22
INSURANCE COVERAGE
Please see attached.
<PAGE> 68
TRANSCOASTAL MARINE SERVICES, INC.
COMPREHENSIVE GENERAL LIABILITY
LIMITS OF LIABILITY: $1,000,000 PER OCCURRENCE
$2,000,000 GENERAL AGGREGATE
$2,000,000 PRODUCTS/COMPLETED OPS AGGREGATE
$1,000,000 FIRE LEGAL LIABILITY
$ 5,000 MEDICAL PAYMENTS PER PERSON
PREMIUM BASIS: ESTIMATED GROSS RECEIPTS: $167,300,000.
RATE/DEDUCTIBLE OPTIONS:
<TABLE>
<CAPTION>
DEDUCTIBLE STOP LOSS RATE PREMIUM TAX TOTAL
- ---------- --------- ---- ------- --- -----
<S> <C> <C> <C> <C> <C>
$25,000 $125,000 .1804% $301,809 $15,090.45 $316,899.45
$25,000 $250,000 .165% $276,045 $13,802.25 $289,847.25
$25,000 $NIL .150% $250,950 $12,547.50 $263,497.50
$50,000 $300,000 .135% $225,855 $11,292.75 $237,147.75
$50,000 $NIL .120% $200,760 $10,038.00 $210,798.00
</TABLE>
COVERAGE INCLUDES: ACTIONS OVER
FULL OCCURRENCE FORM, INCLUDING PRODUCTS/COMPLETED OPERATIONS
BROAD FORM GENERAL LIABILITY, ISO DEFINITION OF INSURED CONTRACT
BROAD FORM NAMED INSURED
INSURED OPERATIONS: "ALL OPERATIONS OF NAMED INSURED & SUBSIDIARIES"
NO EXCLUSION FOR PUNITIVE DAMAGES
"PER PROJECT" AND "PER LOCATION" ENDORSEMENT AVAILABLE AS REQUESTED
DEFENSE IS IN ADDITION TO POLICY LIMITS
XCU HAZARDS; UGR&E; BLOWOUT & CRATERING
WORLDWIDE TERRITORY (FOR SUITS BROUGHT WITHIN THE U.S.)
SEEPAGE & POLLUTION - TIME ELEMENT - 7-DAY DISCOVERY, 30-DAY REPORTING
BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED & 60-DAY N.O.C.
PRIMARY INSURANCE CLAUSE AS REQUIRED BY CONTRACT
IN REM, GULF OF MEXICO, AND NON-OWNED WATERCRAFT EXTENSIONS
ALL OWNED BOATS 26' & UNDER (INCLUDING DEBRIS REMOVAL)
NO EXCLUSION UNDER CONTRACTUAL FOR WORK WITHIN 50' OF RAILROADS
CROSS SUITS
LIMITED EMPLOYEE BENEFITS LIABILITY - $1,000,000 AGGREGATE
CARE, CUSTODY, CONTROL EXCLUSION DELETED
DELETE THE "DAMAGE TO YOUR WORK" EXCLUSION (WORK MUST HAVE BEEN DELIVERED TO THE
BUYER, AND THE ASSURED MUST BE LEGALLY LIABLE TO PAY). THIS ADDITIONAL
COVERAGE HAS A SEPARATE $25,000 DEDUCTIBLE PER CLAIM.
FELLOW EMPLOYEE EXCLUSION DELETED
UNINTENTIONAL ERROR/FAILURE TO DISCLOSE CLAUSE
SHIPREPAIRERS LEGAL LIABILITY
ENVIROSYSTEMS: RETRO DATE OF 6/30/94
REMOVE PROFESSIONAL EXCLUSION FOR TRANSMAR ONLY, SUBJECT TO $50,000 DED.
EXCLUDING: P&I, PCB'S, ASBESTOS, E&O, D&O, LEASED EMPLOYEES, FORMALDEHYDE,
NUCLEAR, EMPLOYMENT PRACTICES.
SECURITY: STEADFAST INSURANCE COMPANY
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
13
<PAGE> 69
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL AUTO COVERAGE
LIABILITY :$1,000,000 COMBINED SINGLE LIMIT
MEDICAL PAYMENTS :$5,000
UNINSURED MOTORISTS :$1,000,000
HIRED AND NON-OWNED :$1,000,000 COMBINED SINGLE LIMIT
COMPREHENSIVE :SEE BELOW
COLLISION :SEE BELOW
- --------------------------------------------------------------------------------
DESCRIPTION OF VEHICLES: PER SCHEDULE PROVIDED BY INSURED
AUTO LIABILITY RATING BASE: POWER UNITS - 125.
$5,000 DEDUCTIBLE ON LIABILITY.
COMPOSITE RATE AT $516.32.
AUTO PHYSICAL DAMAGE: $500 DEDUCTIBLE COMPREHENSIVE &
$500 COLLISION FOR ALL LIGHT TRUCKS
AND PRIVATE PASSENGER UNITS, MODEL
YEAR 1994 AND NEWER. $5,000 DEDUCTIBLE
COMPREHENSIVE AND COLLISION FOR ALL
OTHER UNITS. RATING BASE: 75 UNITS.
COMPOSITE RATE AT $270.
PREMIUM: $74,515.00 LIABILITY/MED PAY/U.M.
$20,249.00 PHYSICAL DAMAGE
$94,764.00 TOTAL
COVERAGES INCLUDE: SYMBOL 1 ON LIABILITY - ALL AUTOS
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
BLANKET PRIMARY INS CLAUSE
60-DAY NOTICE OF CANCELLATION
HIRED/NON-OWNED COVERAGES, INCLUDING PHYSICAL DAMAGE
ON RENTAL CARS ($35,000 PD LIMIT)
BROAD FORM NAMED INSURED
FELLOW EMPLOYEE COVERAGE
MCS-90 & STATE FILINGS AVAILABLE AS REQUIRED
LIMITED POLLUTION - VEHICLE OVERTURN OR COLLISION
CA9948 - BROADENED POLLUTION
UNINTENTIONAL FAILURE TO DISCLOSE
EMPLOYEES AS ADDITIONAL INSUREDS
SECURITY: ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS 10/12/98
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
15
<PAGE> 70
TRANSCOASTAL MARINE SERVICES, INC.
HULL AND PROTECTION & INDEMNITY
I. HULL & MACHINERY: TOTAL VALUE OF $74,772,000 PER ATTACHED SCHEDULE
INCLUDING COLLISION & TOWERS
BREAKDOWN: WOODSON $ 2,039,500
HBH, INC. $ 24,865,000
CSI HYDRO. $ 24,195,000
RED FOX $ 972,500
TRANSCOASTAL $ 22,700,000
SPUD UNITS $ 665,000
DEDUCTIBLE: $5,000 FOR ALL VESSELS, EXCEPT:
$50,000 FOR ALL VESSELS VALUED OVER $1,000,000
- -------------------------------------------------------------------------------
II. PROTECTION & INDEMNITY: $1,000,000 LIMIT PER OCCURRENCE
INCLUDING EXCESS TOWERS & COLLISION
SP-23 FORM
DEDUCTIBLE: $10,000
- -------------------------------------------------------------------------------
PREMIUM: WOODSON: $ 40,142 HULL $ 30,240 P&I
HBH, INC.: $226,619 HULL $ 73,440 P&I
CSI: $195,423 HULL $ 12,960 P&I
RED FOX: $ 20,663 HULL $ 21,600 P&I
TRANSCOASTAL: $177,980 HULL $ 13,770 P&I
-------- --------
TOTAL: $660,827 HULL $152,010 P&I
PREMIUM TOTAL: $812,837.00
HULL DEDUCTIBLE OPTIONS: $50,000 DEDUCTIBLE - 10% PREMIUM CREDIT
$100,000 DEDUCTIBLE - 15% PREMIUM CREDIT
SECURITY: MOAC/BOSTON OLD COLONY (BEST RATING: A-:XIV) 10/15/98
16
<PAGE> 71
HULL AND PROTECTION & INDEMNITY - TERMS & CONDITIONS
INCLUDES: AGREED VALUE ON HULL AMOUNTS
PARTS REMOVED CLAUSE
AFFILIATED COMPANIES CLAUSE
BLANKET ADD'L INSURED & WAIVER OF SUBROGATION, 60-DAY N.O.C.
BLANKET PRIMARY INSURANCE CLAUSE
AUTOMATIC ACQUISITION CLAUSE FOR PURCHASE OR CHARTER
PRIVILEGE TO CHARTER CLAUSE
CROSS LIABILITY CLAUSE.
CONTRACTUAL LIABILITY
SEEPAGE & POLLUTION (B.I. & CARGO), EXCLUDING O.P.A., CERCLA
INCHMAREE EXTENDED TO PROVIDE COVERAGE FOR NEGLIGENCE OF
CHARTERS AND/OR REPAIRERS, ALSO EXTENDED TO PROVIDE
COVERAGE FOR CONTACT WITH AIRCRAFT.
BLOWOUT & CRATERING
DELIBERATE DAMAGE (POLLUTION) INCLUDING EQUIPMENT, GEAR,
MACHINERY DAMAGE
BURIAL EXPENSES CLAUSE
IN REM/IN PERSONAM LIABILITY
CARGO LEGAL LIABILITY
VESSEL IN DISTRESS CLAUSE
SISTERSHIP CLAUSE
TANKERMANS CLAUSE
DELETE THE EXCEPTIONS "OTHER THAN AN ASSURED, AND "AS OWNER
OF VESSEL" AS REQUIRED BY CONTRACT
SUE & LABOR PROVISIONS NOT TO APPLY TO ADDITIONAL INSURED IF
REQUIRED IN CONTRACT
REPAIRS & ALTERATIONS CLAUSE
TOWAGE EXCLUSIONS DELETED
BOOM COVERAGE ENDORSEMENT, OVERWEIGHT EXCLUSION DELETED
BROAD FORM NAMED INSURED ENDORSEMENT
STRIKES, RIOTS & CIVIL COMMOTIONS, & MALICIOUS DAMAGE CLAUSES
EXTENDED ADVENTURES & PERILS CLAUSE
EACH VESSEL DEEMED TO BE SEPARATELY INSURED
LEASED EQUIPMENT CLAUSE
SUBJECT TO AMERICAN HULL INS. SYNDICATE LINER NEGLIGENCE
CLAUSE
VOLUNTARY REMOVAL OF WRECK/DEBRIS
NO EXCLUSION FOR PUNITIVE DAMAGES
THIS INSURANCE AUTOMATICALLY EXTENDS TO COVER ANY VESSELS AND/OR CRAFT
OF A SIMILAR AGE & NATURE TO THAT INSURED HEREUNDER, WHICH HAVE BEEN
PURCHASED, LEASED, RENTED, TIME OR BAREBOAT CHARTERED BY INSURED
SUBJECT TO ADVICE TO UNDERWRITERS, AT TERMS AND RATES TO BE AGREED.
POLICY WILL PROVIDE LIABILITY COVERAGE FOR INSURED COMPANIES, EXCESS OF
THE $500,000 LIMIT CARRIED BY McDONOUGH MARINE, UP TO $1,000,000
COMBINED TOTAL LIMITS. INSURED COMPANIES TO BE NAMED & WAIVED BY
McDONOUGH MARINE. COVERAGE APPLIES ONLY TO RENTED BARGES.
17
<PAGE> 72
TRANSCOASTAL MARINE SERVICES, INC.
CHARTERERS' LEGAL LIABILITY
WHARFINGERS LIABILITY
LIMIT OF LIABILITY: $ 1,000,000
DEDUCTIBLE: $25,000
RATE: FLAT, NO ADJUSTMENT
PREMIUM: $15,000
NOTE: COVERAGE IS PROVIDED FOR BOTH DOMESTIC AND FOREIGN OPERATIONS. FOR
FOREIGN LIABILITY, UNDERWRITERS REQUIRE A COPY OF THE HULL/P&I POLICY
SERVING AS PRIMARY COVERAGE FOR TWO LIFTBOATS CHARTERED BY DICKSON GMP
INT'L LOCATED OFFSHORE NIGERIA
SECURITY: MOAC/BOSTON OLD COLONY
10/8/98
18
<PAGE> 73
TRANSCOASTAL MARINE SERVICES, INC.
WATER QUALITY INSURANCE SYNDICATE
VESSEL POLLUTION COVERAGES
LIMITS OF LIABILITY:
OIL POLLUTION ACT OF 1990 - TO $5,000,000 PER VESSEL OR STATUTORY
LIMIT
CERCLA ($300 PER GROSS TON - $500,000 LIMIT)
SCHEDULE OF VESSELS: SEE ATTACHED
BLANKET WAIVER OF SUBROGATION AND ADDITIONAL INSURED.
SPUD PARGE BUYBACK ENDORSEMENT B
FOREIGN TRADE CLEAN-UP ENDORSEMENT - MEXICO & TRINIDAD
LIMITED OPA '90 CIVIL PENALTY CLAUSE - $500 DEDUCTIBLE/ACCIDENT
ANNUAL PREMIUM $ 38,001.77 OPA/CERCLA
1,140.05 CIVIL PENALTY
-----------
$ 39,141.82
10/22/98
19
<PAGE> 74
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL UMBRELLA
LIMIT OPTIONS: $ 50,000,000 EXCESS OF ALL UNDERLYING COVERAGES
PREMIUM: $ 400,000
TERMS & CONDITIONS: $100,000 S.I.R.
FOLLOWS FORM OF UNDERLYING COVERAGES
EXCLUDES PUNITIVE DAMAGES
DROP DOWN ENDORSEMENT, REMOVING REQUIREMENT TO MAKE
REASONABLE EFFORT TO REINSTATE EXHAUSTED LIMITS
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
BLANKET 60-DAY NOTICE OF CANCELLATION
REMOVAL OF EXCLUSION FOR TREBLE & MULTIPLE DAMAGES
UNDERLYING COVERAGES AND LIMITS: DOMESTIC & FOREIGN
EMPLOYERS LIABILITY $1,000,000/1,000,000/1,000,000
MARITIME EMPLOYERS LIABILITY $1,000,000/1,000,000
GENERAL LIAB./SHIPREPAIRERS $1,000,000/2,000,000/2,000,000
AUTOMOBILE LIABILITY $1,000,000 C.S.L.
PROTECTION & INDEMNITY $1,000,000
CHARTERERS/WHARFINGERS $1,000,000
VESSEL POLLUTION/WQIS $5,000,000
SECURITY: RELIANCE NATIONAL INSURANCE COMPANY (A-XIII) 10/8/98
BOSTON OLD COLONY/MOAC (A-XIV)
ZURICH INSURANCE COMPANY, U.S. BRANCH
20
<PAGE> 75
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL PROPERTY
SPECIAL "ALL RISK" FORM, EXCLUDING QUAKE
BLANKET LIMITS, AGREED AMOUNT ENDORSEMENT (SUBJECT TO SURVEY AT
INSUROR'S EXPENSE TO DETERMINE ACCEPTABILITY OF LIMITS)
$250,000 SUBLIMIT ON FLOOD
$5,000 DEDUCTIBLE / $10,000 FOR FLOOD
INCLUDES BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED, 60-DAY NOC
60% COINSURANCE LOSS OF RENTS
$10,000 AUTOMATIC COVERAGE FOR POLLUTION CLEAN-UP
TOTAL ALL VALUES, PER SCHEDULE: $5,174,500 REAL PROPERTY
$1,761,850 CONTENTS/PERSONAL PROPERTY
$ 162,950 DICKSON EDP EQUIPMENT
$ 284,000 LOSS OF RENTS
$ 250,000 VALUABLE PAPERS
$ 250,000 FLOOD SUBLIMIT
----------
TOTAL $7,883,300
ADJUSTABLE RATE: .28 PER $100 OF VALUE
ADDITIONAL COVERAGES: ORDINANCE OR LAW $1,000,000
BLANKET EXTRA EXPENSE $1,000,000
PREMIUM: BUILDINGS, CONTENTS, ETC. $22,073.00
ORDINANCE/EXTRA EXPENSE $ 7,000.00 FLAT
TOTAL ----------
$29,073.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/9/98
21
<PAGE> 76
TRANSCOASTAL MARINE SERVICES, INC.
BUILDER'S RISK COVERAGE
LIMIT OF LIABILITY: $5,000,000 PER DISASTER
$1,000,000 TRANSIT COVERAGE
$2,000,000 FLOOD & QUAKE
$2,000,000 TRENCHING SUBLIMIT
DEDUCTIBLE: $25,000 ANY ONE JOB, INCLUDING FLOOD & QUAKE
$5,000 TRANSIT
TERMS & CONDITIONS: QUARTERLY REPORTING OF INSTALLATION RECEIPTS TO
INCLUDE VALUE OF CUSTOMERS' PIPE
MOAC REQUIRES ADVANCE NOTICE OF ANY JOB OVER
$2,000,000 IN SIZE TO BE COVERED HEREUNDER
BLANKET WAIVERS OF SUBROGATION
RATE: A) .10% - LAND
B) .20% - WATER
MINIMUM & DEPOSIT PREMIUM: $10,000.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
22
<PAGE> 77
TRANSCOASTAL MARINE SERVICES, INC.
HULL BUILDER'S RISK COVERAGE
LIMIT OF LIABILITY: $3,000,000
RATE: .08 PER MONTH ON COMPLETED VALUES
DEDUCTIBLE PER ACCIDENT: 1%
REPORTING: MONTHLY
MINIMUM & DEPOSIT PREMIUM: $2,500.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
23
<PAGE> 78
TRANSCOASTAL MARINE SERVICES, INC.
TRANSIT COVERAGE
LIMITS: $500,000 ON EQUIPMENT OF OTHERS BEING TRANSPORTED ABOARD
INSURED'S OWNED/OPERATED WATERCRAFT
COVERAGES: ALL RISK, INCLUDING THEFT
WATERCRAFT EXCLUSIONS DELETED
DEDUCTIBLE: $5,000
PREMIUM: $5,000.00 FLAT
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
24
<PAGE> 79
TRANSCOASTAL MARINE SERVICES, INC.
CONTRACTORS EQUIPMENT COVERAGE
LIMITS OF LIABILITY: $15,004,844 OWNED EQUIPMENT (PER SCHEDULE)
$ 2,000,000 RENTAL EQUIPMENT
$ 1,000,000 LIFT LIABILITY, OVERWEIGHT EXCL.
DELETED
$ 250,000 FLOOD SUBLIMIT
DEDUCTIBLE: 2% OF VALUES, MINIMUM $1,000 AND MAXIMUM $10,000
$25,000 ON BOOM FOR RED FOX CRANE VALUED $650,000
$25,000 ON BOOM FOR HBH RENTAL CRANE VALUED $695,000
$5,000 ON RENTAL EQUIPMENT
$10,000 ON DOMESTIC & $25,000 ON FOREIGN LIFT LIABILITY
$10,000 ON FLOOD
RATES: .58% OF VALUE ON OWNED EQUIPMENT
.78% OF COST OF HIRE ON RENTAL EQUIPMENT
1.00% WITH BOOM & OVERWEIGHT COVERAGE
TERMS & CONDITIONS: WATERBORNE COVERAGE PROVIDED
ANNUAL ADJUSTMENT ON RENTAL EQUIPMENT
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
WORLDWIDE COVERAGE
60-DAY NOTICE OF CANCELLATION
BLANKET LIMITS, AGREED AMOUNT ENDORSEMENT
(SUBJECT TO SURVEY AT COMPANY EXPENSE)
PREMIUM: $87,028.00 OWNED EQUIPMENT
$5,000.00 M&D ON RENTAL EQUIPMENT
$15,000.00 FLAT ON LIFT LIABILITY
-----------
TOTAL $107,028.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
25
<PAGE> 80
TRANSCOASTAL MARINE SERVICES, INC.
AIRCRAFT LIABILITY AND HULL PHYSICAL DAMAGE
AIRCRAFT INSURED: 1981 CESSNA 185 SEAPLANE, #N6860N
LOCATION: BELLE CHASSE, LA
PILOT INFORMATION: DENNIS SISUNG, OR ANY PILOT WITH 1,000 HOURS
TOTAL TIME, 350 HOURS IN SEAPLANE, AND 50 IN MAKE & MODEL.
LIMITS: $5,000,000 CSL LIABILITY
$1,000,000 SUBLIMIT PER PASSENGER
$120,000 HULL VALUE
DEDUCTIBLE: $250 NOT-IN-MOTION
$12,000 IN MOTION
INCLUDES: BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED, AND
60-DAY NOTICE OF CANCELLATION
PREMIUM: $6,549.00 PREMIUM (25% MINIMUM EARNED)
$ 250.00 POLICY FEE
---------
$6,799.00 TOTAL
SECURITY: U.S. SPECIALITY (A-:VIII) RANGER (A-:VIII) 10/8/98
26
<PAGE> 81
ENVIROSYSTEMS, INC. - POLLUTION & PROFESSIONAL
(GENERAL LIABILITY IS PROVIDED WITHIN THE STEADFAST
QUOTATION FOR TRANSCOASTAL)
COVERAGE FORM: CLAIMS-MADE
RETROACTIVE DATE: 7/26/93 ON POLLUTION/PROFESSIONAL
LIMIT: POLLUTION/PROFESSIONAL: $1,000,,000 OCCURRENCE/$2,000,000
AGGREGATE
DEDUCTIBLE: POLLUTION/PROFESSIONAL: $25,000
COVERAGES: ZURICH'S PROFESSIONAL ENVIRONMENTAL CONSULTANTS POLICY.
PROFESSIONAL LIABILITY; CONTRACTORS ENVIRONMENTAL IMPAIRMENT
DEFENSE FOR POLLUTION/PROFESSIONAL IS WITHIN POLICY LIMITS
ACTIONS OVER (POLLUTION LIABILITY ONLY)
CIRCUMSTANCE REPORTING WITH NO SUNSET CLAUSE
WORLDWIDE TERRITORY
BROAD FORM CONTRACTUAL INCLUDING VICARIOUS LIABILITY
BLANKET ADDITIONAL INSURED (POLLUTION LIABILITY ONLY)
SPECIFIC WAIVER OF SUBROGATION
60-DAY NOTICE OF CANCELLATION
MUTUAL PRIOR AGREEMENT ON SELECTION OF CLAIMS COUNSEL
CLEAN-UP COSTS
COMPLETE RADIOACTIVE COVERAGE, SUBJECT TO NUCLEAR EXCLUSION
FULL ASBESTOS COVERAGE
MEDIATION CREDIT
NO EXCLUSION FOR SUPERFUND
NO EXCLUSIONS FOR UNDERGROUND STORAGE TANK WORK
PRIMARY INSURANCE WORDING AS REQUIRED BY CONTRACT.
POLICY PROVIDES COVERAGE FOR WORK SUBBED OUT FROM TRANSCOASTAL
COMPANIES
COVERAGE EXCLUSIONS:
FRAUDULENT/INTENTIONAL ACTS
NON-COMPLIANCE WITH STATUTES, ETC.
CROSS LIABILITY
DISCRIMINATION
PATENT/COPYRIGHT INFRINGEMENT
EXPRESS WARRANTIES/GUARANTEES
PUNITIVE DAMAGES
WATERCRAFT/AIRCRAFT
WAR, CIVIL UNREST
PRODUCTS LIABILITY
PROPERTY DAMAGE TO THE NAMED INSURED'S WORK
PROFESSIONAL LIABILITY FOR FAULTY WORKMANSHIP/CONSTRUCTION
EXCLUDING: ANY LOSS AS A RESULT OF SERVICES OR OPERATIONS PERFORMED
AT SITES OWNED/OPERATED BY TRANSCOASTAL COMPANIES
27
<PAGE> 82
RATES: POLLUTION/PROFESSIONAL: FLAT
ESTIMATED RECEIPTS: $1,000,000
PREMIUM: POLLUTION/PROFESSIONAL: $ 7,500.00 (FLAT, NO MINIMUM EARNED)
$ 375.00 (TAX)
----------
$ 7,875.00 (TOTAL)
SUBJECT TO: COMPLETED & SIGNED APPLICATION
AVAILABLE: SUPPLEMENTAL REPORTING PERIOD, ADDITIONAL CHARGE TO BE
NEGOTIATED.
SECURITY: STEADFAST INSURANCE COMPANY 10/14/98
(ZURICH-AMERICAN INSURANCE GROUP)
28
<PAGE> 83
TRANSCOASTAL MARINE SERVICES, INC.
WORKERS' COMPENSATION COVERAGE
(ALL ENTITIES EXCEPT RED FOX)
COVERAGE A - WORKERS' COMPENSATION: Provides coverage for the statutory
obligation of an employer to provide benefits for employees as required by the
applicable state law or USL&H Act.
COVERAGE B - EMPLOYERS LIABILITY: Protects the insured against liability
imposed by law for injury to employees in the course of employment that is not
compensable under the Worker's Compensation section.
EMPLOYERS LIABILITY LIMIT OF LIABILITY : $1,000,000
MARITIME EMPLOYERS LIABILITY: $1,000,000
- -------------------------------------------------------------------------------
DEDUCTIBLE AND RATE OPTIONS - APPLICABLE TO STATE ACT, USL&H, & JONES ACT:
(RATES APPLY PER $100 OF PAYROLL)
97/98 LOSSES
DEDUCTIBLE RATE PAYROLL PREMIUM W/IN DEDUCT.
---------- ---- ------- ------- ------------
$ 25,000 2.1813 $30,000,000 $654,390 $236,339
$ 50,000 1.8746 $30,000,000 $562,380 $344,839
$100,000 1.597 $30,000,000 $479,100 $441,574
$150,000 1.5007 $30,000,000 $450,210 $451,374
$250,000 1.3997 $30,000,000 $419,910 $451,374
OPTION: $25,000 DEDUCTIBLE ANY ONE ACCIDENT, WITH $475,000 AGGREGATE
STOP LOSS (ADJUSTED AT 1.58% OF W.C. PAYROLL)
RATE: 2.35% OF PAYROLL = $705,029 PREMIUM
EXCROW REQUIRED FOR CLAIMS PAYMENTS IS EQUIVALENT OF THREE DEDUCTIBLES.
LETTER OF CREDIT REQUIRED CAN BE NEGOTIATED - BOTTOM END IS $100,000,
MAXIMUM OF $500,000.
ADDITIONAL COVERAGES:
- --------------------
BLANKET WAIVER OF SUBROGATION
BLANKET ALTERNATE EMPLOYER/BORROWED SERVANT
60-DAY NOTICE OF CANCELATION
USL&H, GULF OF MEXICO AND OUTER CONTINENTAL SHELF ACT ENDORSEMENTS
PAYROLL REPORTED FOR STATES OF LA, TX, CA, AL, MS
OTHER STATES ENDORSEMENT
COVERAGE FOR DOMESTIC EMPLOYEES WORKING TEMPORARILY ABROAD
VOLUNTARY COMPENSATION, FOREIGN VOLUNTARY COMPENSATION
JONES ACT, INCLUDING: IN REM, TWM&C. DEATH ON THE HIGH SEAS
NO EXCLUSION FOR PUNITIVE DAMAGES
NO EXCLUSION FOR OCCUPATIONAL DISEASE
STOP-GAP EMPLOYERS LIABILITY
SECURITY: ZURICH INSURANCE COMPANY, J.S. BRANCH 10/23/98
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
9
<PAGE> 84
TRANSCOASTAL MARINE SERVICES, INC.
WORKERS' COMPENSATION COVERAGE
THE RED FOX COMPANIES OF NEW IBERIA
COVERAGE A - WORKERS' COMPENSATION: Provides coverage for the statutory
obligation of an employer to provide benefits for employees as required by the
applicable state law or USL&H Act.
COVERAGE B - EMPLOYERS LIABILITY: Protects the insured against liability
imposed by law for injury to employees in the course of employment that is not
compensable under the Worker's Compensation section.
EMPLOYERS LIABILITY LIMIT OF LIABILITY: $1,000,000
MARITIME EMPLOYERS LIABILITY: $25,000
- --------------------------------------------------------------------------------
DEDUCTIBLE: NIL - FIRST DOLLAR
PREMIUM DEVELOPMENT:
<TABLE>
<CAPTION>
CLASSIFICATION CODE PAYROLL RATE PREMIUM
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
IRON WORKS 3040 $5,506,000 4.3814 $241,240
SHIPREPAIR/CONVERSION 6872F $4,848,000 6.7314 326,338
SALESPERSONS 8742 $ 247,000 .4403 1,088
CLERICAL 8810 $1,270,000 .2125 2,699
INCREASED EMPLOYERS LIABILITY LIMITS 2.8% 15,998
MARITIME MINIMUM PREMIUM 4,000
EXPENSE CONSTANT 150
--------
TOTAL ESTIMATED ANNUAL PREMIUM $591,513
DEPOSIT PREMIUM: $ 30,000
LESS CURRENT DEPOSIT: -$ 20,000
ADDITIONAL DEPOSIT DUE: $ 10,000
</TABLE>
ADDITIONAL COVERAGES:
BLANKET WAIVER OF SUBROGATION
BLANKET ALTERNATE EMPLOYER
30-DAY NOTICE OF CANCELLATION
USL&H, GULF OF MEXICO AND OUTER CONTINENTAL SHELF ACT ENDORSEMENTS
LIMITED OTHER STATES ENDORSEMENT
COVERAGE FOR DOMESTIC EMPLOYEES WORKING TEMPORARILY ABROAD
JONES ACT, INCLUDING: IN REM, TWM&C, DEATH ON THE HIGH SEAS
NO EXCLUSION FOR OCCUPATIONAL DISEASE
CANNOT PROVIDE VOLUNTARY COMPENSATION & STOP GAP ENDORSEMENTS
SECURITY: LOUISIANA WORKERS' COMPENSATION CORP. (B++:VIII) 10/8/98
10
<PAGE> 85
SCHEDULE 6.23
HEDGING TRANSACTIONS
NONE
<PAGE> 86
SCHEDULE 6.25
MATERIAL DEBT AND AGREEMENTS
The Borrowers and their Subsidiaries have the following material Debt
Agreements:
<TABLE>
<CAPTION>
LENDER COLLATERAL/LIEN
------ ---------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE - Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE - Unsecured
Transcoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3. BANKONE - TransCoastal Marine Accounts Receivables and Certain
Services, Inc. Equipment
$15,000,000 REVOLVER IN PLACE AT
CLOSING
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment
CORP. - TransCoastal Marine Services, and Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5. HELLER FINANCIAL, INC.- TransCoastal First lien on Certain Marine Vessels
Marine Services, Inc. and other Non-marine Equipment
$35,000,000 TERM LOAN IN PLACE AT
CLOSING
6. WOODSON FAMILY - Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL - Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL - Dickson GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL - DICKSON GMP
Dickson GMP $46,853 OUTSTANDING AT 990 CFM Air Compressor
11-30-98
</TABLE>
<PAGE> 87
SCHEDULE 8.2
DEBT AGREEMENTS AND LIENS
The Borrowers and their Subsidiaries have the following material Debt
Agreements:
<TABLE>
<CAPTION>
LENDER COLLATERAL/LIEN
------ ---------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE - Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE - Unsecured
Transcoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3. BANKONE - TransCoastal Marine Accounts Receivables and Certain
Services, Inc. Equipment
$15,000,000 REVOLVER IN PLACE AT
CLOSING
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment and
CORP. - TransCoastal Marine Services, Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5. HELLER FINANCIAL, INC.-TransCoastal First lien on Certain Marine Vessels and
Marine Services, Inc. other Non-marine Equipment
$35,000,000 TERM LOAN IN PLACE AT
CLOSING
6. WOODSON FAMILY - Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL - Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL - Dickson GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL - DICKSON GMP
Dickson GMP $46,853 OUTSTANDING AT 990 CFM Air Compressor
11-30-98
</TABLE>
<PAGE> 1
EXHIBIT 10.30
*******************************************************************************
TRANSCOASTAL MARINE SERVICES, INC.
and
Its Subsidiaries Parties Hereto
CREDIT AGREEMENT
Dated as of January 13, 1999
$35,000,000
*******************************************************************************
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions .............................................................................................1
Section 1.1 Definitions ...............................................................................1
Section 1.2 Other Definitions Provisions .............................................................12
Section 1.3 Computation of Time Periods ..............................................................12
ARTICLE II
Term Loan ..............................................................................................13
Section 2.1 Term Loan ................................................................................13
Section 2.2 Note .....................................................................................13
Section 2.3 Interest .................................................................................13
Section 2.4 Repayment of Principal and Accrued Interest on the Term Loan .............................13
Section 2.5 Additional Interest on the Term Loan .....................................................14
Section 2.6 Use of Proceeds ..........................................................................14
Section 2.7 Commitment Fee ...........................................................................14
Section 2.8 Co-Borrowers; Joint and Several Liability ................................................14
ARTICLE III
Payments ...............................................................................................18
Section 3.1 Method of Payment ........................................................................18
Section 3.2 Prepayment ...............................................................................19
Section 3.3 Taxes ....................................................................................19
Section 3.4 Computation of Interest ..................................................................20
ARTICLE IV
Yield Protection and Illegality ........................................................................20
Section 4.1 Increased Costs ..........................................................................20
Section 4.2 Capital Adequacy .........................................................................21
ARTICLE V
Security ...............................................................................................21
Section 5.1 Collateral ...............................................................................21
Section 5.2 Setoff ...................................................................................22
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VI
Conditions Precedent ...................................................................................23
Section 6.1 Term Loan ................................................................................23
ARTICLE VII
Representations and Warranties .........................................................................25
Section 7.1 Corporate Existence ......................................................................25
Section 7.2 Financial Statements .....................................................................25
Section 7.3 Corporate Action; No Breach ..............................................................26
Section 7.4 Operation of Business ....................................................................26
Section 7.5 Litigation and Judgments .................................................................26
Section 7.6 Rights in Properties; Liens ..............................................................26
Section 7.7 Enforceability ...........................................................................27
Section 7.8 Approvals ................................................................................27
Section 7.9 Debt .....................................................................................27
Section 7.10 Taxes ....................................................................................27
Section 7.11 Use of Proceeds; Margin Securities .......................................................27
Section 7.12 ERISA ....................................................................................27
Section 7.13 Disclosure ...............................................................................27
Section 7.14 Subsidiaries .............................................................................28
Section 7.15 Agreements ...............................................................................28
Section 7.16 Compliance with Laws .....................................................................28
Section 7.17 Inventory ................................................................................28
Section 7.18 Investment Company Act ...................................................................28
Section 7.19 Public Utility Holding Company Act .......................................................28
Section 7.20 Environmental Matters ....................................................................28
Section 7.21 Year 2000 Compliance .....................................................................29
Section 7.22 Insurance ................................................................................30
Section 7.23 Hedging Agreements .......................................................................31
Section 7.24 Restriction on Liens .....................................................................31
Section 7.25 Material Debt Agreements .................................................................31
ARTICLE VIII
Positive Covenants ......................................................................................31
Section 8.1 Reporting Requirements ...................................................................31
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
-----
<S> <C>
Section 8.2 Maintenance of Existence; Conduct of Business ............................................34
Section 8.3 Maintenance of Properties ................................................................34
Section 8.4 Taxes and Claims .........................................................................34
Section 8.5 Insurance ................................................................................34
Section 8.6 Inspection Rights ........................................................................35
Section 8.7 Keeping Books and Records ................................................................35
Section 8.8 Compliance with Laws .....................................................................35
Section 8.9 Compliance with Agreements ...............................................................35
Section 8.10 Further Assurances .......................................................................35
Section 8.11 ERISA ....................................................................................35
Section 8.12 Year 2000 Compliant ......................................................................36
Section 8.13 Mortgaged Property .......................................................................36
Section 8.14 Subsidiary Guaranties and Pledge of Assets ...............................................36
Section 8.15 Post Closing Matters .....................................................................37
ARTICLE IX
Negative Covenants .....................................................................................37
Section 9.1 Debt .....................................................................................37
Section 9.2 Limitation on Liens ......................................................................37
Section 9.3 Mergers, Acquisitions, Etc ...............................................................38
Section 9.4 Restricted Payments ......................................................................38
Section 9.5 Investments ..............................................................................39
Section 9.6 Limitation on Issuance of Capital Stock ..................................................39
Section 9.7 Transactions With Affiliates .............................................................39
Section 9.8 Disposition of Assets ....................................................................39
Section 9.9 Sale and Leaseback .......................................................................40
Section 9.10 Prepayment of Debt .......................................................................40
Section 9.11 Nature of Business .......................................................................40
Section 9.12 Environmental Protection .................................................................40
Section 9.13 Accounting ...............................................................................40
Section 9.14 Compliance with ERISA ....................................................................40
Section 9.15 Proceeds of Note .........................................................................40
Section 9.16 Negative Pledge Agreements ...............................................................41
Section 9.17 Hedging Agreements .......................................................................41
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE X
Financial Covenants ....................................................................................41
Section 10.1 Consolidated Tangible Net Worth ..........................................................41
Section 10.2 Capital Expenditures .....................................................................41
Section 10.3 Total Funded Debt to Capitalization ......................................................42
Section 10.4 Fixed Charge Coverage Ratio ..............................................................42
Section 10.5 Senior Funded Debt to EBITDA Coverage Ratio ..............................................42
ARTICLE XI
Default ................................................................................................42
Section 11.1 Events of Default ........................................................................42
Section 11.2 Remedies .................................................................................44
Section 11.3 Performance by the Lender ................................................................45
ARTICLE XII
Miscellaneous ..........................................................................................45
Section 12.1 Expenses .................................................................................45
Section 12.2 Indemnification ..........................................................................46
Section 12.3 Limitation of Liability ..................................................................46
Section 12.4 No Duty ..................................................................................46
Section 12.5 No Fiduciary Relationship ................................................................46
Section 12.6 Equitable Relief .........................................................................46
Section 12.7 No Waiver; Cumulative Remedies ...........................................................47
Section 12.8 Successors and Assigns ...................................................................47
Section 12.9 Survival .................................................................................48
Section 12.10 ENTIRE AGREEMENT .........................................................................48
Section 12.11 Amendments, Etc . ........................................................................48
Section 12.12 Maximum Interest Rate ....................................................................48
Section 12.13 Notices ..................................................................................49
Section 12.14 LAW AND JURISDICTION .....................................................................49
Section 12.15 Counterparts .............................................................................50
Section 12.16 Severability .............................................................................50
Section 12.17 Headings .................................................................................50
Section 12.18 Non-Application of Chapter 346 of Texas Finance Code .....................................50
Section 12.19 Construction .............................................................................50
</TABLE>
iv
<PAGE> 6
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 12.20 Independence of Covenants ...............................................................50
Section 12.21 JURY WAIVER .............................................................................51
Section 12.22 Confidentiality .........................................................................51
</TABLE>
v
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 13,1999, is among
TRANSCOASTAL MARINE SERVICES, INC., a Delaware corporation and each of the
Subsidiaries of TransCoastal which is party hereto (each individually, a
"Borrower", and collectively, the "Borrowers"), and HELLER FINANCIAL LEASING,
INC., a Delaware corporation ("Lender").
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following
terms have the following meanings (such meanings to be equally applicable to,
both the singular and the plural forms of the terms defined):
"Acts of Mortgage" means those certain Acts of Mortgage,
Assignment of Production, Security Agreement and Financing Statements
of each Borrower owning Real Property, in favor of the Lender, dated
as of even date herewith, as the same may be amended, supplemented or
modified from time to time.
"Advance" means the advance of the Term Loan in a single
advance by the Lender to the Borrowers pursuant to Article II.
"Affiliate" means, as to any Person, any other Person (a)
that directly or indirectly, through one or more intermediaries,
controls or is controlled by, or is under common control with, such
Person; (b) that directly or indirectly beneficially owns or holds 10%
or more of any class of voting stock of such Person; or (c) 10% or
more of the voting stock of which is directly or indirectly
beneficially owned or held by the Person in question. The term
"control" means the possession, directly or indirectly, of the power
to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the
Lender be deemed an Affiliate of any Borrower or any of their
Subsidiaries.
"Agreement" means this Credit Agreement, as the same may be
amended, supplemented or modified from time to time.
"Assignment" means that certain Assignment of Notes, Liens,
Security Interests and Loan Documents of Subordinated Lender in favor
of the Lender and Bank One, dated as of even date herewith.
"Bank One" means Bank One, Texas, National Association.
"Bank One Loan Documents" means that certain Credit Agreement
dated of even date herewith among Bank One and the Borrowers and the
other "Loan Documents" as therein defined, as the same may be amended
or modified from time to time.
<PAGE> 8
"Borrower" and "Borrowers" have the meaning specified in the
introductory paragraph of this Agreement.
"Business Day" means any day of the year except Saturday,
Sunday and any day on which commercial banks are authorized or
required to close in Chicago, Illinois, or Houston, Texas and which is
also a day on which dealings are carried out in the London interbank
Eurodollar market.
"Capitalization" means the sum of Total Funded Debt plus Net
Worth.
"Capital Lease Obligations" means, as to any Person, the
capitalized amount, determined in accordance with GAAP, of the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or
personal property, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person
under GAAP.
"CMLTD" means any contractual principal installment due and
payable within one year or less from the time of the calculation
thereof on Debt that by its terms is payable more than one year from
the date of origination thereof or which is renewable at the option of
the obligor beyond one year from such date of origination.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor Federal tax code and the
regulations, promulgated and rulings issued thereunder, and any
reference to any statutory provision of the Code shall be deemed to be
a reference to any successor provision or provisions.
"Collateral" has the meaning specified in Section 5.1.
"Commitment" means the obligation of the Lender to make the
Term Loan to Borrowers in a single Advance in the aggregate principal
amount of $35,000,000.
"Consolidated" and "Consolidating" refer to the consolidation
of the accounts of the TransCoastal and its Subsidiaries in accordance
with GAAP.
"Consolidated Net Income" means with respect to TransCoastal
and its Consolidated Subsidiaries, for any period, the aggregate of
the net income (or loss) of TransCoastal and its Consolidated
Subsidiaries after allowances for taxes for such period, determined on
a consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise
included therein) the following: (i) the net income of any Person in
which TransCoastal or any of its Consolidated Subsidiary has an
interest (which interest does not cause the net income of such other
Person to be consolidated with the net income of TransCoastal and its
Consolidated Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in
such period by such other Person to TransCoastal or to one of its
Consolidated Subsidiaries, as the case may be; (ii) the net income
(but not loss) of any Consolidated Subsidiary to the extent that
2
<PAGE> 9
the declaration or payment of dividends or similar distributions or
transfers or loans by that Consolidated Subsidiary is not at the time
permitted by operation of the terms of its charter or any agreement,
instrument or Governmental Requirement applicable to such Consolidated
Subsidiary, or is otherwise restricted or prohibited in each case
determined in accordance with GAAP; (iii) the net income (or loss) of
any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction; (iv) any extraordinary
gains or losses, including gains or losses attributable to Property
sales not in the ordinary course of business (net of fees and expenses
relating to such transaction); and (v) the cumulative effect of a
change in accounting principles and any gains or losses attributable
to writeups or writedowns of assets.
"Consolidated Subsidiaries" means each Subsidiary of
TransCoastal (whether now existing or hereafter created or acquired)
the financial statements of which shall be (or should have been)
consolidated with the financial statements of TransCoastal in
accordance with GAAP.
"Consolidated Tangible Net Worth" means, at any particular
time, all amounts which, in conformity with GAAP, would be included
as stockholders' equity on a Consolidated balance sheet of
TransCoastal and its Subsidiaries; provided, however, there shall be
added thereto the Subordinated Debt and there shall be excluded
therefrom: (a) any amount at which shares of capital stock of
TransCoastal appear as an asset on TransCoastal's balance sheet, (b)
goodwill, including any amounts, however designated, that represent
the excess of the purchase price paid for assets or stock over the
value assigned thereto, (c) patents, trademarks, trade names, and
copyrights, (d) deferred expenses (except deferred expenses incurred
in the ordinary course of business), and (e) all other assets which
are properly classified as intangible assets.
"Debt" of any Person means at any time (without duplication)
and whether direct or contingent: (a) obligations for borrowed money
which (i) are evidenced by bonds," notes, debentures, loan agreements,
credit agreements or similar instruments or agreements and (ii) are or
should be shown on a balance sheet as debt in accordance with GAAP,
(b) obligations to pay the deferred purchase price of property or
services, (c) Capital Lease Obligations, (d) Debt or other
obligations of others guaranteed, (e) obligations secured by a Lien
existing on property owned by such Person, whether or not the
obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person, (f) reimbursement
obligations (whether contingent or otherwise) in respect of letters of
credit, bankers' acceptances, surety or other bonds and similar
instruments, (g) liabilities in respect of unfunded vested benefits
under any Plan, (h) Guarantees, and (i) Swap Transactions; provided,
however, that Debt shall not include (i) obligations under performance
bonds, performance guarantees, surety bonds, appeal bonds, security
deposits or similar obligations to the extent incurred in the ordinary
course of business, (ii) any trade payables and other current
liabilities and deferred credits (in each case other than with respect
to borrowed money) incurred in the ordinary course of business which
are not overdue by more than 90 days unless either (y) such trade
payables, current liabilities or deferred credits are being contested
in good faith by appropriate proceedings for which
3
<PAGE> 10
adequate reserves have been made in accordance with GAAP
(collectively, the "Contested Amounts") or (z) the aggregate amount of
such overdue trade payables, current liabilities and deferred credits
(other than Contested Amounts) exceeds $500,000, in which case such
excess constitutes "debt"; or (iii) debt arising from agreements of
the Borrowers providing for indemnification adjustments, or hold back
of purchase price or similar obligations, in each case assumed in
connection with the acquisition or disposition of any assets, business
or subsidiary otherwise permitted hereunder.
"Default" means an Event of Default or the occurrence of an
event or condition which with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means the lesser of (a) the sum of the
Interest Rate in effect from day to day plus 4.0%, and (b) the Maximum
Rate.
"Dickson Payment" has the meaning specified in Section 10.1.
"Dollars" and "$" mean lawful money of the United States of
America.
"EBITDA" means, for any period, the sum of Consolidated Net
Income for such period plus the following expenses or charges to the
extent deducted from Consolidated Net Income in such period: interest,
taxes, depreciation, depletion and amortization, minus all non-cash
income (provided that no adjustments shall be made for non-cash items
required pursuant to accrual-based GAAP accounting) added to
Consolidated Net Income in such period.
"Environmental Laws" means any and all applicable foreign,
Federal, state, and local laws, regulations, statutes, ordinances,
rules, orders, decisions, decrees, judgments, permits, licenses,
authorizations and requirements pertaining to health, safety, or the
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. Section 6901 et seq., the Occupational Safety
and Health Act, 29 U.S.C. Section 65l et seq., the Clean Air Act, 42
U.S.C. Section 740l et seq., the Clean Water Act, 33 U.S.C. Section
1251 et seq., and the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq., as such laws, regulations, statutes, ordinances, rules,
orders, decisions, decrees, judgments, permits, licenses,
authorizations and requirements may be amended or supplemented from
time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting
fees and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim
or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute,
including any Environmental Law, permit, order or agreement with any
Governmental Authority or other Person, arising from
4
<PAGE> 11
environmental, health or safety conditions or the Release or
threatened Release of a Hazardous Material into the environment,
resulting from the past, present, or future operations of such Person
or its Subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of
similar import, and the regulations and published interpretations
thereunder, as in effect from time to time.
"ERISA Affiliate" means any corporation or trade or business
(whether or not incorporated) which is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the
Code) as any Borrower or is under common control (within the meaning
of Section 414(c) of the Code) with any Borrower.
"Eurocurrency Liabilities" has the meaning prescribed to
such term in Regulation D of the Federal Reserve Board, as in effect
from time to time.
"Event of Default" has the meaning specified in Section 11.1.
"Excluded Equipment" means the equipment, machinery and
vessels described on Schedule 1.
"Financing Transaction" means any Swap Transaction that is
intended primarily as a borrowing of funds.
"Fixed Charge Coverage" means all EBITDA plus all Operating
Lease expenses less cash taxes, less cash dividends divided by the sum
of interest expense plus Operating Lease expenses plus contractual
principal reductions required during the period of calculation
(including the principal component of Capital Lease Obligation
payments), plus nondiscretionary capital expenditures (not less than
$4,000,000 per annum). This ratio shall be calculated on a cumulative
quarterly basis beginning January 1, 1999, until such time as four
quarters have been reached at December 31, 1999, at which time the
covenant shall be calculated on a Rolling Period basis. The first
covenant test for the Fixed Charge Coverage Ratio will be determined
as of March 31, 1999.
"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 applied in a current period are comparable in all material
respects to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
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<PAGE> 12
"Government Requirement" means any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or
other directive or requirement (whether or not having the force of
law), including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls,
of any Governmental Authority.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit
in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor" means, individually and/or collectively, any
Person who executes a Guaranty.
"Guaranty" means, individually and/or collectively, the
guaranty and/or guaranties executed and/or to be executed from time to
time in the future by any and all Subsidiaries of TransCoastal, any of
the Borrowers, or any of their Subsidiaries, in each case, acquired or
created after the date hereof, for the benefit of the Lender, relating
to the Obligations, in form satisfactory to Lender, as any of such
guaranties, from time to time, may be amended, modified, restated or
supplemented.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Hedging Agreements" means any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange
or protection agreements or any option with respect to any such
transaction.
"Increased Costs" has the meaning specified in Section 4.1.
"Insufficiency" means, with respect to any Plan, the amount,
if any, but which the present value of the accrued benefits under such
Plan exceeds the fair market value of the assets of such Plan
allocable to such benefits, provided that with respect to any offset
arrangement between any Plans, the assets of the Plans attributable to
such offset
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<PAGE> 13
arrangement shall be aggregated in determining whether an
Insufficiency exists for the Plan to which the offset applies.
"Insurance Assignment" means each Assignment of Insurances of
each Borrower owning a Vessel which is covered by a Vessel Mortgage in
favor of the Lender, as the same may be amended, supplemented or
modified from time to time.
"Intercreditor Agreement" means that certain Intercreditor
Agreement dated as of even date of herewith by and among Borrowers,
Lender, and Bank One, as the same may be amended, supplemented, or
modified from time to time.
"Interest Period" means each calendar quarter ending on the
day immediately preceding the next scheduled Payment Date.
"Interest Rate" has the meaning specified in Section 2.3.
"Lender" has the meaning specified in the first paragraph of
this Agreement, and shall include any financial institution which
becomes a Lender pursuant to Section 12.8.
"LIBOR Rate" means the interest rate per annum determined by
the Lender and equal to the interest rate per annum based on the rates
at which Dollar deposits with a six-month period are displayed on the
"LIBOR" page of the Reuters Monitor Money Rates Service ("Reuters") at
or about 11:00 A.M. (London time) two Business Days prior to the first
day of such Interest Period; provided, that if two or more such rates
appear on such page, the rate will be the arithmetic average of such
displayed rates will be used; provided further, that if there are
fewer than two offered rates or Reuters ceases to provide LIBOR
quotations, such rate shall be the average rate of interest determined
by the Lender at which deposits in Dollars are offered for six-month
periods by Bankers Trust Company and The Chase Manhattan Bank (or
their respective successors) to banks with combined capital and surplus
in excess of $500,000,000 in the London interbank market as of
11:00 A.M. (London time) on the applicable interest rate determination
date.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement and all promissory
notes, security agreements, deeds of trust, acts of mortgage, vessel
mortgages, assignments, guaranties, and other instruments, documents,
and agreements executed and delivered pursuant to or in connection
with this Agreement, as such instruments, documents, and agreements
may be amended, modified, renewed, extended, or supplemented from time
to time.
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<PAGE> 14
"Maintenance Capital Expenditures" means all
non-discretionary capital expenditures required by Borrowers and their
Subsidiaries to maintain their current level of business operations,
but not less than $4,000,000 during any Rolling Period.
"Material Adverse Effect" means a material adverse effect on
any Borrower's or any Subsidiary's ability (considered as a whole) to
meet its obligations to the Lender under the Loan Documents or a
material adverse effect (considered as a whole) on the business,
operations, assets or financial condition of any of the Borrowers or
any of the Subsidiaries considered as a whole.
"Maturity Date" means 11:00 A.M. Chicago, Illinois time on
January 1, 2006, or such earlier date and time on which the
Commitments terminate as provided in this Agreement.
"Maximum Rate" means, at any time and with respect to the
Lender, the maximum rate of interest under applicable law that the
Lender may charge the Borrowers. The Maximum Rate shall be calculated
in a manner that takes into account any and all fees, payments, and
other charges in respect of the Loan Documents that constitute
interest under applicable law. Each change in any interest rate
provided for herein based upon the Maximum Rate resulting from a
change in the Maximum Rate shall take effect without notice to the
Borrowers at the time of such change in the Maximum Rate. For purposes
of determining the Maximum Rate under Texas law, the applicable rate
ceiling shall be the indicated rate ceiling described in, and computed
in accordance with, Chapter 303 of the Texas Finance Code.
"Multi-employer Plan" means a Multi-employer plan defined as
such in Section 4001(a)(3) of ERISA to which any Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions,
or has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan,
other than a Multiemployer Plan, subject to Title IV of ERISA to which
any Borrower or any ERISA Affiliate, and more than one employer other
than any Borrower or an ERISA Affiliate, is making or accruing an
obligation to make contributions or, in the event that any such plan
has been terminated, to which any Borrower or any ERISA Affiliate made
or accrued an obligation to make contributions during any of the five
plan years preceding the date of termination of such plan.
"Net Worth" means, at any particular time, all amounts which,
in conformity with GAAP, would be included as stockholder's equity on
a consolidated balance sheet of TransCoastal and its Subsidiaries.
"Note" means the promissory note of the Borrowers dated of
even date herewith and payable to the order of the Lender, the
original principal amount of $35,000,000, and all extensions,
renewals, amendments, rearrangements, increases, and/or modifications
thereof, and/or all substitutions therefor.
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<PAGE> 15
"Obligated Party" means any Guarantor or any other Person
who is or becomes party to any agreement that guarantees or secures
payment and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrowers to the Lender, or any of them, arising
pursuant to any of the Loan Documents, now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and
several, including, without limitation, the obligations,
indebtedness, and liabilities of the Borrowers under this Agreement and
the other Loan Documents, and all interest accruing thereon and all
attorneys' fees and other expenses incurred in the enforcement or
collection thereof.
"Operating Lease" means any lease (other than a lease
constituting a Capital Lease Obligation) of real or personal property.
"Other Taxes" has the meaning specified in Section 3.4(b).
"Payment Date" means the first day of each January, April,
July and October, in each year, the first of which shall be April 1,
1999.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, firm or other entity, or a
government of any political subdivision or agency, department or
instrumentality thereof.
"Plan" means any employee benefit plan (other than a
Multi-employer Plan) which is (or, in the event that any such plan has
been terminated within five years after a transaction described in
Section 4069 of ERISA, was) maintained for employees of the Borrowers
or any ERISA Affiliate and is covered by Title IV of ERISA.
"PMSI Property" means any Property of the Borrowers or any
Subsidiary (a) now owned which is encumbered by a Permitted Lien in
respect of the financing thereof other than in favor of Bank One or
the Subordinated Lender or (b) hereafter acquired and encumbered by
Liens permitted under Section 9.2(g).
"Prepayment Make-Whole Amount" means (a) 3% of any amount
prepaid during the one year period ending the first anniversary date
of the making of the Term Loan, (b) 2% of any amount prepaid during
the two year period beginning on the day immediately after the first
anniversary date of the making of the Term Loan and ending on the
third anniversary date of the making of the Term Loan, and, (c) 1% of
any amount prepaid thereafter.
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<PAGE> 16
"Principal Office" means the principal office of the Lender,
presently located at 500 West Monroe Street, Suite 1600, Chicago,
Illinois 60661.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Real Property" the real property and related improvements
and fixtures described and/or located on the real property described
on Schedule 2.
"Release" means, as to any Person, any material release,
spill, emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of property owned by such
Person, including, without limitation, the movement of Hazardous
Materials through or in the air, soil, surface water, ground water, or
property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor
or outdoor environment, (b) prevent the Release or threat of Release
or minimize the further Release of Hazardous Materials so that they do
not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, or (c) perform
pre-remedial studies and investigations and post-remedial monitoring
and care.
"Responsible Officer" means, as to any Person, the Chief
Executive Officer, the President or any Executive Vice President or
Senior Vice President of such Person and, with respect to financial
matters, the term "Responsible Officer" shall mean the Chief Executive
Officer, Executive Vice President, Chief Financial Officer, or the
Director of Finance of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a Responsible
Officer of TransCoastal.
"RICO" means the Racketeer Influenced and Corrupt
Organization Act of 1970, as amended from time to time.
"Rolling Period" shall mean each four-quarter period, ending
on the last day of each March, June, September and December.
"Security Agreement" means the Security Agreement of the
Borrowers for the benefit of the Lender, dated as of even date
herewith, together with all Security Agreements of any Subsidiary
formed or acquired after the date hereof, as the same may be amended,
supplemented, or modified from time to time.
"Senior Funded Debt" means all obligations for borrowed money
from the Lender and Bank One, Capital Lease Obligations, letters of
credit, Guarantees and Guaranties.
"Subordinated Debt" means all Debt of any or all of Borrowers
which is subordinated pursuant to a subordination agreement on terms
satisfactory to the Lender, in Lender's sole
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<PAGE> 17
discretion, including, without limitation, the Debt as in effect
(without amendment) as of the date hereof to Subordinated Lender
subject to the Subordination Agreement.
"Subordinated Lender" means the Joint Energy Development
Investments II Limited Partnership II, a Delaware limited partnership.
"Subordinated Liens" means all Liens in favor of Subordinated
Lender that are permitted under and covered by the Subordination
Agreement.
"Subordinated Loan Documents" mean the loan documents in
favor of and/or payable to the Subordinated Lender (and any successor
and/or assign(s)) which are subject to the Subordination Agreement.
"Subordination Agreement" means that certain Subordination
and Intercreditor Agreement dated as of even date herewith, among the
Lender, Bank One, the Borrowers and Subordinated Lender, as the same
may be amended, supplemented, or modified from time to time.
"Subsidiary" means any corporation of which at least a
majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled
by any Borrower or one or more of the Subsidiaries or by any Borrower
and one or more of the Subsidiaries.
"Swap Transaction" means any interest rate, currency or
commodity swap, collar or cap or other similar derivatives-related
transaction.
"Taxes" has the meaning specified in Section 3.3(a).
"Term Loan" means the loan to the Borrowers by the Lender in
original principal amount of the Commitment.
"Termination Event" means (a) the occurrence with respect to
any Plan or Multiemployer Plan of a "reportable event," as such term
is described in Section 4043 of ERISA (other than a "reportable event,"
not subject to the provision for 30-day notice to the PBGC), or an
event described in Section 4062(e) of ERISA, or (b) the withdrawal by
any Borrower or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a "substantial employer," as such
term is defined in Section 4001(a)(2) of ERISA, or the incurrence of
liability by any Borrower or any ERISA Affiliate under Section 4064 of
ERISA upon the termination of a Multiple Employer Plan or (c) the
distribution of a notice of intent to terminate a Plan pursuant to
Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as
a termination under Section 4041 of ERISA, or (d) the institution to
proceedings to terminate a Plan by the PBGC under Section 4042 of
ERISA, or (e) any other
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<PAGE> 18
event or condition which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"Total Funded Debt" means any Debt that by its terms is
payable more than one year from the date of origination thereof or
which is renewable at the option of the obligor beyond one year from
such date or origination.
"TransCoastal" means TransCoastal Marine Services, Inc., a
Delaware corporation.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas.
"Vessel Mortgage" means each ship, fleet and/or naval
mortgage of Borrower owning a Vessel in favor of the Lender, dated as
of the date hereof, and all subsequent ship, fleet and/or naval
mortgage hereafter executed and delivered by any Borrower or any
Subsidiary pursuant to the terms hereof, as the same may be amended,
supplemented or modified from time to time.
"Vessels" means all vessels now owned or hereafter acquired
by any Borrower or any Subsidiary (other than the Excluded
Equipment), including, without limitation, the vessels listed on
Schedule 3.
"Withdrawal Liability" has the meaning specified for such
term in Part I of Subtitle E of Title V of ERISA.
"Year 2000 Compliant" shall mean, in regard to any entity,
that all software, hardware, firmware, equipment, fixtures, goods or
systems utilized by or material to the business operations or
financial condition of such entity, will properly perform
date-sensitive functions before, during and after the year 2000.
Section 1.2 Other Definitional Provisions. The words "hereof,"
"herein," and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all Article and
Section references pertain to this Agreement. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC. The term "including" means "including,
without limitation."
Section 1.3 Computation of Time Periods. In the computation of periods
of time from a specified date to a later specified date, the word "from" means
"from and including" and the words "until" and "to" each means "to but
excluding." Unless otherwise indicated, all references to a particular time are
references to Chicago, Illinois time.
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ARTICLE II
Term Loan
Section 2.1 Term Loan. Subject to the terms and conditions of this
Agreement, the Lender agrees to make the Term Loan to the Borrowers in one
Advance in an aggregate principal amount equal to the amount of the Lender's
Commitment.
Section 2.2 Note. The obligation of the Borrowers to repay the Term
Loan and interest thereon shall be evidenced by the Note executed jointly and
severally by the Borrowers, payable to the order of the Lender, in the original
principal amount of the Lender's Commitment as originally in effect, and dated
the date hereof.
Section 2.3 Interest. The unpaid principal amount of the Term Loan
shall bear interest at a varying rate per annum equal from day to day to the
lesser of (a) the Maximum Rate, or (b) the sum of the LIBOR Rate, plus 2.5%
(the "Interest Rate"). If at any time the Interest Rate for the Term Loan shall
exceed the Maximum Rate, thereby causing the interest accruing on the Term Loan
to be limited to the Maximum Rate, then any subsequent reduction in the
Interest Rate for the Term Loan shall not reduce the rate of interest on the
Term Loan below the Maximum Rate until the aggregate amount of interest accrued
on the Term Loan equals the aggregate amount of interest which would have
accrued on the Term Loan if the Interest Rate had at all times been in effect.
Section 2.4 Repayment of Principal and Accrued Interest on the Term
Loan. The Borrowers jointly and severally agree to repay the unpaid principal
amount of the Term Loan and accrued and unpaid interest thereon as follows:
(a) four installments in the principal amount of $875,000
each, plus accrued and unpaid interest on the Term Loan, shall be due and
payable in the year 1999, the first installment of which shall be due and
payable on April 1, 1999, with subsequent installments to be due and payable on
each subsequent Payment Date until and including January 1, 2000; and
thereafter
(b) 23 subsequent installments in the principal amount of
$1,312,500 each, plus accrued and unpaid interest on the Term Loan shall be due
and payable thereafter, the first installment of which shall be due and payable
on April 1, 2000, with subsequent installments to be due and payable on each
subsequent Payment Date until and including October 1, 2005; and thereafter
(c) a final installment in the entire remaining outstanding
principal amount of the Term Loan, plus accrued and unpaid interest thereon,
shall be due and payable in full on the Maturity Date.
Notwithstanding the foregoing, any outstanding principal of the Term Loan and
(to the fullest extent permitted by law) any other amount payable by the
Borrowers under this Agreement or any other Loan Document that is not paid in
full when due (whether at stated maturity, by acceleration, or otherwise, and
without taking into account any applicable grace or cure periods) shall bear
interest
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<PAGE> 20
at the Default Rate for the period from and including the due date thereof to
but excluding the date the same is paid in full. Interest payable at the Default
Rate shall be payable from time to time on demand. In addition to the
foregoing, if any outstanding principal of the Term Loan and (to the fullest
extent permitted by law) any other amount payable by Borrowers under this
Agreement or any other Loan Documents is not paid in full within 10 days after
the date when due (whether at stated maturity, by acceleration, or otherwise,
and without taking into account any applicable grace or cure periods),
Borrowers jointly and severally agree to pay, upon demand by the Lender
therefor, a late payment fee in the amount of 5% of such amount not paid within
10 days of the date when due.
Section 2.5 Additional Interest on the Term Loan. If the Lender is
required under regulations of the Federal Reserve Board to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, and if as a result thereof there is an increase in the cost to the
Lender of agreeing to make or making, funding or maintaining the Term Loan,
then the Borrowers shall from time to time, upon demand by the Lender, pay to
the Lender additional amounts as additional interest sufficient to compensate
the Lender for such increased cost. A certificate as to the basis for such
increased cost, in reasonable detail and specifying the amount requested
submitted to the Borrowers by the Lender shall be conclusive and binding absent
manifest error.
Section 2.6 Use of Proceeds. The proceeds of the Term Loan shall be
used by the Borrowers to refinance $35,000,000 of senior indebtedness currently
outstanding to Subordinated Lender.
Section 2.7 Commitment Fee. The Borrowers have paid to the Lender a
commitment fee equal to $175,000.
Section 2.8 Co-Borrowers; Joint and Several Liability.
(a) Each Borrower acknowledges and agrees that it has
determined independently that, in light of the conduct of the business of
Borrowers as an integrated operation and a common enterprise that requires
financing on a basis permitting the availability of credit to each Borrower, it
will benefit specifically, directly and materially from the advances of credit
contemplated by the Lender's financing and that the value of the consideration
it is receiving from the Term Loan made hereunder is reasonably worth at least
the sum at which it is taken by such Borrower.
(b) It is expressly agreed and understood by each Borrower
that the Lender shall have no responsibility to inquire in the apportionment,
allocation, or disposition of the Term Loan to Borrowers. The Term Loan is to
be made for the collective account of Borrowers.
(c) Each Borrower hereby jointly, severally, irrevocably, and
unconditionally guarantees to the Lender the full and prompt payment of each of
the Obligations under the Loan Documents by each other Borrower and the
performance by each other Borrower of such Borrower's Obligations hereunder and
thereunder and shall fully and promptly perform all of the Obligations and
agrees, as a primary obligation, to indemnify the Lender on demand for and
against any loss
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<PAGE> 21
incurred by the Lender as a result of any voidable, unenforceable, or
ineffective provision herein or in any of the Loan Documents, for any reason
whatsoever, whether or not known to the Lender, or any Person, the amount of
such loss being in the amount to which the Lender would otherwise have been
entitled to recover from borrowers. This is a guaranty of payment and of
performance and not of collection.
(d) Each Borrower consents and agrees that the Lender may, at
any time and from time to time, without notice or demand, except as otherwise
required herein, whether before or after any actual or purported termination,
repudiation or revocation of any of the Loan Documents, including this
Agreement, by any one or more Borrowers, and without affecting the
enforceability or continuing effectiveness hereof as to each Borrower, agree
with one or more Borrowers or any other Person to: (i) supplement, restate,
compromise, modify, amend, increase, decrease, extend, discharge, renew,
accelerate, or otherwise change the time for payment or the terms of the
Obligations or any part thereof, including any increase or decrease of the
rate(s) of interest thereon; (ii) supplement, restate, modify, amend, increase,
decrease or waive, or enter into or give any agreement, approval, or consent
with respect to, the Obligations or any part thereof, or any of the Loan
Documents or any additional security or guarantees, or any condition, covenant,
default, remedy, right, representation or term thereof or thereunder; (iii)
accept new or additional instruments, documents or agreements in exchange for
or relative to any of the Loan Documents or the Obligations or any part
thereof, (iv) accept partial payments on the Obligations; (v) receive and hold
additional security or guarantees for the Obligations or any part thereof; (vi)
release, reconvey, terminate, waive, abandon, fail to perfect, subordinate,
exchange, substitute, transfer or enforce any security or guarantees, and apply
any security and direct the order or manner of the sale thereof as the Lender
in its sole and absolute discretion may determine; (vii) release any Person
from any personal liability with respect to the Obligations or any part
thereof; (viii) settle, discharge, release on terms satisfactory to the Lender
or by operation of applicable laws or otherwise liquidate or enforce any
Obligations and any security therefor or guaranty thereof in any manner,
consent to the transfer of any security and bid and purchase at any sale; (ix)
consent to the merger, change, or any other restructuring or termination of the
corporate existence of any Borrower and correspondingly restructure the
Obligations, and any such merger, change, restructuring or termination shall
not affect the liability of any Borrower or the continuing effectiveness
hereof, or the enforceability hereof with respect to all or any part of the
Obligations, or (x) take or refrain from taking any other action as the Lender,
in its sole and absolute discretion, may elect, or any or some of the
foregoing.
(e) The Lender may enforce this Agreement independently as to
each Borrower and independently of any other remedy or security the Lender at
any time may have or hold in connection with the Obligations or the Loan
Documents, or both, and it shall not be necessary for the Lender to marshal
assets in favor of any Borrower or any other Person or to proceed upon or
against or exhaust any security or remedy before proceeding to enforce this
Agreement. Each Borrower expressly waives any right to require the Lender to
marshal assets in favor of any Borrower, or any other Person or to proceed
against any other Borrower or any collateral provided by any Person, and agrees
that the Lender may proceed against one or more Borrowers or any Collateral in
such order as it shall determine in its sole and absolute discretion.
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<PAGE> 22
(f) If any Borrower makes a payment in respect of the
Obligations, it shall have the rights of contribution and reimbursement set
forth below against the other Borrowers, and shall be indemnified as set forth
below; provided that no Borrower shall enforce its rights to any payment by
exercising its rights of contribution, reimbursement or indemnification unless
and until all the obligations shall have been paid in full. Each Borrower
waives any right of subrogation, contribution, reimbursement, and other rights
of indemnity it may have against any Obligated Party.
(g) If any Borrower makes a payment in respect of the
Obligations that is greater than its Pro Rata Percentage (hereinafter defined)
of the Obligations, calculated as of the date such payment is made, the
Borrower making such payment shall have the right to receive from each of the
other Borrowers, and the other Borrowers jointly and severally agree to pay to
such Borrower, when permitted by paragraph (f) above, an amount such that the
net payments made by the Borrowers in respect of the Obligations shall be
shared among the Borrowers pro rata in proportion to their respective Pro Rata
Percentages of the Obligations. The Borrowers hereby jointly and severally
indemnify each of the other Borrowers and jointly and severally agree to hold
each of them harmless from and against any and all amounts which any such
Borrower shall ever be required to pay in respect of the Obligations in excess
of such Borrower's respective Pro Rata Percentage of the Obligations.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of any Borrower that shall accrue
pursuant to this Agreement shall be paid nor shall it be deemed owed pursuant
to this Agreement or any Loan Documents unless and until all of the Obligations
shall be paid in full. As used herein, the term "Pro Rata Percentage" shall
mean, for each Borrower, the percentage derived by dividing (a) the amount by
which the fair saleable value of its assets on December 30, 1998, exceeds its
liabilities (such excess for each Borrower, its "Net Worth"), by (b) the Net
Worth of all of the Borrowers.
(h) The Lender may file a separate action or actions against
any Borrower, whether such action is brought or prosecuted with respect to any
security or against any other Person, or whether any other Person is joined in
any such action or actions. Each Borrower agrees that the Lender and any
Responsible Officer of any Borrower may deal with each other in connection with
the Obligations or otherwise, or alter any contracts or agreements now or
hereafter existing between any of them, in any manner whatsoever, all without
in any way altering or affecting the continuing efficacy of this Agreement.
(i) The Lender's rights hereunder shall be reinstated and
revived, and the enforceability of this Agreement shall continue, with respect
to any amount at any time paid on account of the Obligations that thereafter
shall be required to be restored or returned by the Lender, all as though such
amount had not been paid. The rights of the Lender created or granted herein
and the enforceability of this Agreement at all times shall remain effective to
cover the full amount to all the Obligations even though the Obligations,
including any part thereof or any other security or guaranty therefor, may be
or hereafter may become invalid or otherwise unenforceable as against any
Obligated Party or any Borrower and whether or not any Obligated Party or any
other Borrower shall have any personal liability with respect thereto.
(j) To the maximum extent permitted by applicable law, each
Borrower expressly waives any and all defenses now or hereafter arising or
asserted by reason of (i) any disability or
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other defense of any other Borrower with respect to the Obligations, (ii) the
unenforceability or invalidity of any security or guaranty for the Obligations
or the lack of perfection or continuing perfection or failure of priority of
any security for the Obligations, (iii) the cessation for any cause whatsoever
of the liability of any other Borrower (other than by reason of the full
payment and performance of all Obligations), (iv) any failure of the Lender to
marshal assets in favor of any Borrower or any other Person, (v) any failure of
the Lender to give notice of sale or other disposition of Collateral to any
Borrower or any other Person, or any defect in any notice that may be given in
connection with any sale or disposition of Collateral, (vi) any failure of the
Lender to comply with applicable law in connection with the sale or other
disposition of any Collateral or other security for any Obligation, including
any failure of the Lender to conduct a commercially reasonable sale or other
disposition of any Collateral or other security for any Obligation, (vii) any
act or omission of the Lender or others that directly or indirectly results in
or aids the discharge or release of any Borrower any other Obligated Party, or
the Obligations or any security or guaranty therefor by operation of law or
otherwise, (viii) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more
burdensome than that of the principal or which reduces a surety's or
guarantor's obligation in proportion to the principal obligation, (ix) any
failure of the Lender to file or enforce a claim in any bankruptcy or other
proceeding with respect to any Person, (x) the election by the Lender of the
application or non-application of Section 1111(b)(2) of the Federal
Bankruptcy Code, (xi) any extension of credit or the grant of any lien under
Section 364 of the Federal Bankruptcy Code, (xii) any use of cash collateral
under Section 363 of the Federal Bankruptcy Code, (xiii) any agreement or
stipulation with respect to the provision of adequate protection in any
bankruptcy proceeding of any Person, (xiv) the avoidance of any lien in favor
of the Lender for any reason, or (xv) any action taken by the Lender that is
authorized by this Agreement or any Loan Document. Until such time, if any, as
all of the Obligations have been paid and performed in full and no portion of
any commitment of the Lender to any Borrower under any Loan Document remains in
effect, no Borrower shall have any right of subrogation, contribution,
reimbursement or indemnity, and each Borrower expressly waives any right to
enforce any remedy that the Lender may now have or hereafter may have against
any other Person, and waives the benefit of, or any right to participate in,
any Collateral now or hereafter held by the Lender. Each Borrower expressly
waives all presentments, demands for payment or performance, notices of
nonpayment, notices of intent to accelerate, notices of acceleration and
notices of nonperformance, protests, notices of protest, notices of dishonor
and all other notices or demands of any kind or nature whatsoever with respect
to the Obligations, and all notices of acceptance of this Agreement or of the
existence, creation or incurring of new or additional Obligations.
(k) To the fullest extent permitted by applicable law, each
Borrower expressly waives any suretyship defenses to the enforcement of this
Agreement or any rights of the Lender created or granted hereby or to the
recovery by any such Person including any other Obligated Party, against any
Borrower, or any other Person liable therefor of any deficiency after a
judicial or nonjudicial foreclosure or sale, even though such a foreclosure or
sale may impair the subrogation rights of Borrowers and may preclude Borrowers
from obtaining reimbursement or contribution from the other Borrowers. Each
Borrower expressly waives any defenses or benefits that may be derived pursuant
to or from Rule 31 of the Texas Rules of Civil Procedure, Section 17.001 of the
Civil Practice and Remedies Code and Chapter 34 of the Texas Business and
Commerce Code, as
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amended, or comparable provisions of the laws of any other jurisdiction, and
all other suretyship defenses it otherwise might or would have under Texas law
or other applicable law.
(l) Each Borrower warrants and agrees that each of the
waivers and consents set forth in this Section 2.8 are made after consultation
with legal counsel and with full knowledge of their significance and
consequences, with the understanding that events giving rise to any defense or
right waived may diminish, destroy or otherwise adversely affect rights which
such Borrower otherwise may have against the other Borrowers, the Lender or
others, or against Collateral, and that, under the circumstances, the waivers
and consents herein given are reasonable and not contrary to public policy or
law. If any of the waivers or consents herein are determined to be contrary to
any applicable law or public policy, such waivers and consents shall be
effective to the maximum extent permitted by law.
(m) Each Borrower represents and warrants to the Lender that
(i) such Borrower has established adequate means of obtaining from the other
Borrowers on a continuing basis financial and other information pertaining to
the business, operations, and condition (financial and otherwise) of the other
Borrowers, and their property, and (ii) such Borrower now is and hereafter will
be familiar with the business, operations and condition (financial and
otherwise) of the other Borrowers, and their property. Each Borrower hereby
waives and relinquishes any duty on the part of the Lender to disclose to such
Borrower any matter, fact or thing relating to the business, operations or
condition (financial or otherwise) of the other Borrowers, or the property of
the other Borrowers, whether now or hereafter known by the Lender during the
term of this Agreement.
ARTICLE III
Payments
Section 3.1 Method of Payment. All payments of principal, interest,
and other amounts to be made by the Borrowers under this Agreement and the
other Loan Documents shall be made to the Lender at such places as the Lender
may designate in Dollars and in immediately available funds, without setoff,
deduction, or counterclaim, not later than 11:00 A.M. on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day). The
Borrowers shall, at the time of making each such payment, specify to the Lender
the sums payable by the Borrowers under this Agreement and the other Loan
Documents to which such payment is to be applied (and in the event that the
Borrowers fail to so specify, or if a Default has occurred and is continuing,
the Lender may apply such payment to the Obligations in such order and manner
as it may elect in its sole discretion). Whenever any payment under this
Agreement or any other Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of the payment of interest and letter of credit and facility fees,
as the case may be. Unless otherwise agreed to in writing or otherwise required
by applicable law, payments will be applied first to any unpaid collection
costs, late charges and other charges and fees, then to accrued, unpaid
interest, and any remaining amount to principal, provided, however, upon
delinquency or
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other default, the Lender reserves the right to apply payments among principal,
interest, late charges, collection costs and other charges and fees at its sole
discretion.
Section 3.2 Prepayment. (a) The Borrowers may, upon at least thirty
days prior notice to the lender, prepay the term loan in whole on any Payment
Date or from time to time in part on any Payment Date, in each case with
accrued interest to the date of prepayment on the amount so prepaid, plus the
applicable Prepayment Make-Whole Amount, provided that each partial prepayment
shall be in the principal amount of $1,000,000 or an integral multiple thereof.
All notices under this Section shall be irrevocable and shall be given not
later than 11:00 A.M. on the day which is not less than the number of days
specified above for such notice.
(b) Prepayment Make-Whole Amounts are (i) payable as
liquidated damages, (ii) are a reasonable pre-estimate of the losses, costs and
expenses that the Lender would incur for any prepayment to which such
Prepayment Make-Whole Amount pertains, (iii) are not a penalty, (iv) will not
require claim for, or proof of, actual damages, and (v) the Lender's
determination thereof shall constitute prima facie evidence that such
determination is accurate and correct.
(c) if at any time any of the Borrowers or any Subsidiary
sells or otherwise disposes any of its fixed assets securing the Obligations or
issues or incurs any other Debt, the Borrower or Subsidiary involved shall
immediately (and in any event with three Business Days) notify the Lender in
writing of such event and pursuant to this Section 3.2(c), the Lender shall
have 30 days to direct the Borrowers that: (i) 100% of the proceeds received
shall be applied as a mandatory prepayment on the Note immediately (and in any
event within three Business Days) after receipt of notice of the Lender's
direction; or (h) the Lender has decided that no mandatory prepayment is
required as a result thereof. Nothing in this Section 3.2(c) shall be construed
as approval for any disposition of Collateral, which is expressly prohibited by
Section 9.8.
Section 3.3 Taxes.
(a) All payments by the Borrowers of principal of and
interest on the Term Loan and of all fees and other amounts payable under any
Loan Document are payable without deduction for or on account of any present or
future taxes, levies, imposts, deductions, charges, fees, duties or
withholdings, and all liabilities with respect thereto, excluding in the case
of the Lender the following: (i) taxes imposed on such person's income, and
franchise taxes imposed on it, by the jurisdiction order which such person is
organized or any political subdivision thereof and, in the case of the Lender,
taxes imposed on its income, and franchise taxes imposed on it; (ii) income
taxes imposed by the United States of America; and (iii) any taxes imposed by
the United States of America by means of withholding at the source if and to
the extent that such taxes shall be in effect and shall be applicable, on the
date hereof, to payments to be made to the Lender (all such nonexcluded taxes,
levies, imposes, deductions, changes, fees, duties, withholdings and
liabilities being hereinafter referred to as "Taxes"). If any Borrower is
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Note to the Lender, the Borrowers shall pay additional
interest or shall make additional payments in such amounts so that every net
payment of principal of and interest on the affected Term Loan and of all other
amounts payable by it under any
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Loan Document, after withholding or deduction for or on account of any such
Taxes will not be less than the amount provided for herein or therein.
(b) Borrowers agree to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Note or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Note (the "Other Taxes").
(c) The Borrowers, to the fullest extent permitted by law,
will indemnify the Lender for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 3.3) paid by the Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto
except as a result of the gross negligence or willful misconduct of the Lender,
whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be made within 30 days from the date the Lender
makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by
or at the discretion of the Borrowers, the Borrowers will furnish to the
Lender, at its address referred to herein, the original or a certified copy of
a receipt evidencing payment thereof. Should the Lender ever receive any
refund, credit or deduction from any taxing authority to which the Lender would
not be entitled but for the payment by the Borrowers of Taxes as required by
this Section 3.3 (it being understood that the decision as to whether or not to
claim, and if claimed, as to the amount of any such refund, credit or deduction
shall be made by the Lender in its sole discretion), the Lender thereupon shall
repay to the Borrowers an amount with respect to such refund, credit or
deduction equal to any net reduction in Taxes actually obtained by the Lender
and determined by the Lender to be attributable to such refund, credit or
deduction.
Section 3.4 Computation of Interest. Interest on the Term Loan and all
other amounts payable by the Borrowers hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the
first day but excluding the last day) unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be.
ARTICLE IV
Yield Protection and Illegality
Section 4.1 Increased Costs. The Borrowers shall, jointly and
severally, pay to the Lender from time to time, within 15 days following demand
by the Lender such additional amounts as the Lender may determine to be
necessary to compensate it for any increased costs incurred by it which it
determines are attributable to its making or maintaining of the Term Loan
hereunder or any reduction in any amount receivable by the Lender hereunder in
respect of the Term Loan or such obligation other than increased costs
described in Section 2.5 or in Section 4.2 (such increases in costs and
reductions in amounts receivable being herein called "Increased Costs"),
resulting from either (i) the introduction of or any change in or in the
interpretation of any law or regulation by any
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Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or (ii) the compliance with any
guideline or request from any Governmental Authority, central bank or
comparable agency (whether or not having the force of law).
The Lender will furnish the Borrowers with a certificate, in
reasonable detail, setting forth the basis and the amount of such Increased
Costs of the Lender. The Borrowers shall reimburse the Lender for such
increased cost in accordance with this Section 4.1.
Section 4.2 Capital Adequacy. If after the date hereof, the Lender
shall have determined that the adoption or implementation of any applicable
law, rule, or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any central bank,
comparable agency, or other Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Lender (or its
lending office or parent) with any guideline, request, or directive regarding
capital adequacy (whether or not having the force of law) of any central bank,
comparable agency, or other Governmental Authority (except to the extent such
request or directive arises as a result of the individual credit-worthiness of
the Lender), has the effect of increasing the amount of capital required or
expected to be maintained as a result of its Commitment hereunder, or has or
would have, the effect of reducing the rate of return on the Lender's (or its
parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which the Lender (or its
parent) could have achieved but for such adoption, implementation, change or
compliance (taking into consideration the Lender's policies with respect to
capital adequacy) by an amount deemed by the Lender to be material, then from
time to time, within 10 Business Days after demand by the Lender, the Borrowers
shall, jointly and severally, pay to the Lender such additional amount or
amounts as will compensate the Lender (or its parent) for such reduction. A
certificate of the Lender, in reasonable detail, claiming compensation under
this Section and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive, absent manifest errors, although the failure
to give any such notice shall not diminish any of the Borrowers' obligations to
pay such additional amounts, and, the Borrowers shall, jointly and severally,
pay such additional amounts as provided herein. In determining such amount or
amounts, the Lender may use any reasonable averaging and attribution methods.
ARTICLE V
Security
Section 5.1 Collateral. To secure full and complete payment and
performance of the Obligations, the Borrowers shall execute and deliver or
cause to be executed and delivered the documents described below covering the
property and collateral described in this Section 5.1 (which, together with any
other property and collateral which may now or hereafter secure the Obligations
or any part thereof, is sometimes herein called the "Collateral"):
(a) The Borrowers shall grant to the Lender a first priority
security interest in all of their respective equipment and machinery (other
than the Excluded Equipment and PMSI
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Property), Vessels, fixtures, inventory, chattel paper, documents, instruments,
a collateral assignment of and accounts arising out of the charter or other
lease and/or rental of any Vessel, and general intangibles, whether now owned
or hereafter acquired, and all products and proceeds thereof, pursuant to the
security agreement.
(b) The Borrowers owning an interest in the Vessels (other
than PMSI Property) shall grant to the Lender a first priority mortgage on the
Vessels and all of such Vessels' engines, machinery, boats, tackle, outfit,
spare gear, fuel, consumable or other stores, belongings and appurtenances,
whether on board or shore and whether now owned or hereafter acquired, and all
insurance policies and proceeds related thereto, pursuant to the Vessel
Mortgages or the Security Agreement, as applicable and the Insurance
Assignments, respectively.
(c) The applicable Borrowers owning an interest in the Real
Property (other than PMSI Property) shall grant to the Lender a first priority
mortgage, lien and security interest in the Real Property and all present and
future rents, leases, and profits relating to the Real Property pursuant to the
Acts of Mortgage.
(d) The applicable Borrowers shall grant to the Lender a
first priority lien on and security interest in all spare parts or replacement
parts, now owned or hereafter acquired, for all vessels, including, but not
limited to, propellers, engines, pumps, generators, drive shafts,
transmissions, winches, cranes, and other equipment which is held by any
Borrower whether or not affixed to a vessel, for the purpose of becoming a
fixture, part, component or addition to any of such vessels to replace a
component that breaks down, wears out or is to be replaced pursuant to the
Security Agreement.
(e) The Borrowers and the Subsidiaries shall execute and
cause to be executed such further documents and instruments, including without
limitation, Uniform Commercial Code financing statements, as the Lender, in its
reasonable discretion, deems necessary or desirable to evidence and perfect its
liens on and security interests in the Collateral, including, without
limitation, with respect to Collateral (other than PMSI Property) acquired
after the date hereof by any Borrower or any Subsidiary created or acquired
after the date hereof.
(f) The Borrowers authorize the Lender to deliver a copy of
the Security Agreement and/or the addendum thereto with respect to the
assignment of charters, bareboat charters, hires, leases and/or rentals of
Vessels ("Charters") to any such charter party from time to time in Lender's
sole discretion. In addition, the Borrowers shall include language in each such
Charter reasonably acceptable to the Lender that such Charter is assignable to
the Lender.
Section 5.2 Setoff. If an Event of Default shall have occurred and is
continuing, the Lender is hereby authorized at any time and from time to time,
without notice to the Borrowers (any such notice being hereby expressly waived
by the Borrowers), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Lender to or for the credit or the
account of the Borrowers against any and all of the obligations of any of the
Borrowers now or hereafter existing under this Agreement, the Note, or any
other Loan Document, irrespective of whether or not the Lender shall
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have made any demand under this Agreement or the Note or such other Loan
Document and although such obligations may be unmatured. The Lender agrees
promptly to notify the Borrowers after any such setoff and application,
provided that the failure to give such notice shall not affect the validity of
such setoff and application. The rights and remedies of the Lender hereunder
are in addition to other rights and remedies (including, without limitation,
other rights of setoff) which the Lender may have.
ARTICLE VI
Conditions Precedent
Section 6.1 Term Loan. The obligation of the Lender to make the Term
Loan is subject to the condition precedent that the Lender shall have completed
its due diligence, which due diligence shall have been satisfactory to the
Lender in its reasonable discretion and the Lender shall have received on or
before the day of such Advance all of the following, each dated (unless
otherwise indicated) the date hereof, in form and substance satisfactory to the
Lender:
(a) Resolutions. Resolutions of the Board of Directors of the
Borrowers certified by such Person's Secretary or an Assistant Secretary which
authorize the execution, delivery, and performance by such Person of this
Agreement and the other Loan Documents to which any Borrower is to be a party;
(b) Incumbency Certificate. A certificate of incumbency for
each of the Borrowers certified by the Secretary or an Assistant Secretary of
such Person certifying the names of the officers of such Person authorized to
sign this Agreement and each of the other Loan Documents to which such Person
is to be a party (including the certificates contemplated herein) together with
specimen signatures of such officers;
(c) Articles of Incorporation. The articles of incorporation
of each of the Borrowers certified by the Secretary of State of the state of
incorporation of such Person and dated a date acceptable to the Lender;
(d) Bylaws. The bylaws of each of the Borrowers certified by
the Secretary or an Assistant Secretary of such Person;
(e) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation of each of the
Borrowers as to the existence and good standing of such Person, each dated
within 30 days prior to the date of the Term Loan;
(f) Note. The Note executed by the Borrowers;
(g) Vessel Mortgages. The Vessel Mortgages (and any related
powers of attorney and applications in connection therewith) required by the
Lender to be executed by the Borrowers owning a Vessel;
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(h) Security Agreement. The Security Agreement executed by
the Borrowers;
(i) Acts of Mortgage. The Acts of Mortgage executed by the
Borrowers owning Real Property;
(j) Insurance Assignments. The Insurance Assignments executed
by the Borrowers owning a Vessel covered by a Vessel Mortgage;
(k) Financing Statements. Uniform Commercial Code financing
statements executed by the Borrowers and covering the Collateral;
(l) Intercreditor Agreement. The Intercreditor Agreement
executed by each Person which is to be a party thereto;
(m) Subordination Agreement. The Subordination Agreement
executed by each Person which is to be a party thereto;
(n) Assignments. The Assignment (and the related assignments
and UCC-3's to be filed of record) executed by the Subordinated Lender;
(o) Insurance Policies. Copies of all insurance policies
required by Section 8.5, together with loss payable endorsements in favor of
the Lender with respect to all insurance policies covering Collateral;
(p) UCC Searches. The results of a Uniform Commercial Code
searches showing all financing statements and other documents or instruments on
file against the applicable Borrowers in the offices of the Secretary of State
of Texas, Louisiana, California, Alabama and Mississippi, such searches to be
as of a date no more than 30 days prior to the date of the Term Loan;
(q) Opinions of Counsels. Favorable opinions of
TransCoastal's general counsel and Vinson & Elkins and Phelps Dunbar, L.L.P.,
special legal counsel to the Borrowers, acceptable to the Lender in its sole
discretion;
(r) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including attorneys' fees) referred to in Section 12.1, to the
extent incurred, shall have been paid in full by the Borrowers;
(s) Vessels. Lender shall have been furnished evidence of
proper perfection of each Vessel Mortgage, all Vessels owned by the Borrowers,
and that such Vessel Mortgages are first priority, and, in each case, are
subject only to such Liens as are acceptable to the Lender in its sole
discretion.
(t) No Default. No Default shall have occurred and be
continuing, or would result from such Advance;
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(u) Representations and Warranties. All of the
representations and warranties contained in Article VII hereof and in the other
Loan Documents shall be true and correct in all material respects on and as of
the date of such Advance with the same force and effect as if such
representations and warranties had been made on and as of such date;
(v) No Material Adverse Change. No Material Adverse Effect
shall have occurred since October 31, 1998; and
(w) Additional Documentation. The Lender shall have received
such additional approvals, opinions, or documents as the Lender or its legal
counsel, Winstead Sechrest & Minick P.C., may reasonably request.
ARTICLE VII
Representations and Warranties
To induce the Lender to enter into this Agreement, each Borrower
represents and warrants to the Lender that:
Section 7.1 Corporate Existence. Each Borrower and each Subsidiary (a)
is a corporation duly incorporated, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation or organization, as
applicable; (b) has all requisite corporate power and authority to own its
assets and carry on its business as now being or as proposed to be conducted;
and (c) is qualified to do business in all jurisdictions in which the nature of
its business makes such qualification necessary and where failure to be so
qualified would have a Material Adverse Effect. Each Borrower has the corporate
power and authority to execute, deliver, and perform its obligations under this
Agreement and the other Loan Documents to which it is or may become a party.
Section 7.2 Financial Statements. TransCoastal has delivered to the
Lender audited Consolidated financial statements of TransCoastal and its
Consolidated Subsidiaries as at and for the fiscal year ended December 31,
1997, and unaudited Consolidated financial statements of TransCoastal and its
Consolidated Subsidiaries for the ten-month period ended October 31, 1998,
subject to normal year-end adjustments with respect to the unaudited interim
financial statements and the absence of notes in the interim statements. Such
financial statements are true and correct in all material respects, have been
prepared in accordance with GAAP, and fairly and accurately present, on a
Consolidated basis, the financial condition of TransCoastal and its
Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. Neither TransCoastal
nor any of its Subsidiaries has any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments, or unrealized
or anticipated losses from any unfavorable commitments except as referred to or
reflected in such financial statements or otherwise disclosed in writing to the
Lender. As of the date of this Agreement there has been no material adverse
change in the business, condition (financial or otherwise), operations, or
properties of TransCoastal or any of its Subsidiaries taken as a whole since
the effective date of the most recent financial statements referred to in this
Section.
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Section 7.3 Corporate Action, No Breach. The execution, delivery, and
performance by the Borrowers of this Agreement and the other Loan Documents to
which the Borrowers are or may become a party and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate action on the part of the Borrowers and do not and will not (a)
violate or conflict with, or result in a breach of, or require any consent
under (i) the articles of incorporation or other organizational documents, as
applicable, or bylaws of the Borrowers or any of their Subsidiaries, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree
of any Governmental Authority or arbitrator, or (iii) any material agreement or
instrument to which the Borrowers or any of their Subsidiaries is a party or by
which any of them or any of their property is bound or subject, which in the
case of (ii) or (iii) could reasonably be expected to have a Material Adverse
Effect, or (b) constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien (except as provided in Article
V) upon any of the assets of the Borrowers or any of their Subsidiaries.
Section 7.4 Operation of Business. The Borrowers and each of their
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, except where the failure to possess the same could not
reasonably be expected to have a Material Adverse Effect.
Section 7.5 Litigation and Judgments. Except as disclosed on Schedule
7.5, there is no action, suit, investigation, or proceeding before or by any
Governmental Authority or arbitrator pending, or to the knowledge of the
Borrowers, threatened against or affecting any Borrower or any Subsidiary, that
would, if adversely determined, have a Material Adverse Effect. There are no
outstanding judgments against any Borrower or any Subsidiary.
Section 7.6 Rights in Properties; Liens. (a) The Borrowers and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets, and leasehold interests reflected in the financial
statements described in Section 7.2, and none of the properties, assets, or
leasehold interests of any Borrower or any Subsidiary is subject to any Lien,
except as permitted by Section 9.2.
(b) All leases and agreements necessary for the conduct of
the business of the Borrowers and their Subsidiaries are valid and subsisting,
in full force and effect and there exists no default or event which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to have a
Material Adverse Effect.
(c) The rights, Collateral and other Property presently
owned, leased or licensed by the Borrowers and their Subsidiaries including,
without limitation, all easements and rights of way, include all rights,
Collateral and other Property necessary to permit the Borrowers and their
Subsidiaries to conduct their business in all material respects in the same
manner as its business has been conducted prior to the date hereof.
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(d) Except as set forth on Schedule 7.6, all of the Property
and Collateral of the Borrowers, and their Subsidiaries which are reasonably
necessary for the operation of their businesses are in good working condition,
reasonable wear and tear excepted, and are maintained in accordance with
prudent business standards.
Section 7.7 Enforceability. This Agreement constitutes, and the other
Loan Documents to which any Borrower is party, when delivered, shall constitute
the legal, valid, and binding obligations of such Borrower, enforceable against
such Borrower in accordance with their respective terms, except as limited by
bankruptcy, insolvency, or other laws of general application relating to the
enforcement of creditors' rights.
Section 7.8 Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by any of the
Borrowers of this Agreement and the other Loan Documents to which any of the
Borrowers is or may become a party or for the validity or enforceability
thereof.
Section 7.9 Debt. The Borrowers and their Subsidiaries have no Debt,
except as disclosed on Schedule 7.9.
Section 7.10 Taxes. The Borrowers and each Subsidiary have filed all
tax returns (Federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid
all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable. Except as set forth in
Schedule 7.10, the Borrowers know of no pending investigation of any Borrower
or any Subsidiary by any taxing authority or of any pending but unassessed tax
liability of any Borrower or any Subsidiary, the assessment of which could
reasonably be expected to have a Material Adverse Effect.
Section 7.11 Use of Proceeds; Margin Securities. The proceeds of the
Note shall be used to repay $35,000,000 of debt currently outstanding to
Subordinated Lender. Neither any Borrower nor any Subsidiary is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulations G, T, U, or X of the Board of Governors of the
Federal Reserve System), and no part of the proceeds of any Advance will be
used to purchase or carry any margin stock or to extend credit to others for
the purpose of purchasing or carrying margin stock.
Section 7.12 ERISA. Each Borrower and each Subsidiary are in
compliance in all material respects with all applicable provisions of ERISA. No
Termination Event has occurred or, to the knowledge of TransCoastal, is
reasonably expected to occur with respect to any Plan. Neither any Borrower nor
any ERISA Affiliate has received any notification (or has knowledge of any
reason to expect) that any Multi-employer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA.
Section 7.13 Disclosure. No statement, information, report,
representation, or warranty made by any Borrower in this Agreement or in any
other Loan Document or furnished to the Lender in connection with this Agreement
or any transaction contemplated hereby contains any untrue
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statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading.
Section 7.14 Subsidiaries. TransCoastal and the other Borrowers have
no Subsidiaries other than those listed on Schedule 7.14, and Schedule 7.14
sets forth the jurisdiction of incorporation of each Subsidiary and the
percentage of each Borrower's ownership of the outstanding voting stock of each
Subsidiary. All of the outstanding capital stock of each Subsidiary has been
validly issued, is fully paid, and is nonassessable.
Section 7.15 Agreements. Neither any Borrower nor any Subsidiary is in
default in any respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in this Agreement or any
agreement or instrument material to its business to which it is a party.
Section 7.16 Compliance with Laws. Neither any Borrower nor any
Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.
Section 7.17 Inventory. All inventory of each Borrower has been and
will hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as
amended (29 U.S.C. Sections. 201-219), and the regulations promulgated
thereunder.
Section 7.18 Investment Company Act. Neither any Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 7.19 Public Utility Holding Company Act. Neither any Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or a "public
utility" within the meaning of the Public, Utility Holding Company Act of 1935,
as amended.
Section 7.20 Environmental Matters. Except as disclosed on Schedule
7.20:
(a) Each Borrower, each Subsidiary, and all of their
respective properties, assets, and operations are in full compliance with all
Environmental Laws applicable to such Person, except where the failure to be in
compliance would not reasonably be expected to have a Material Adverse Effect.
No Borrower is aware of, nor has any Borrower received notice of, any past,
present, or future conditions, events, activities, practices, or incidents
which would interfere with or prevent the compliance or continued compliance of
the Borrower and the Subsidiaries with all Environmental Laws applicable to
such Person, except where the failure to be in compliance would not reasonably
be expected to have a Material Adverse Effect;
(b) Each Borrower and each Subsidiary have obtained all
permits, licenses, and authorizations that are required under applicable
Environmental Laws, and all such permits are in good standing and each Borrower
and its Subsidiaries are in compliance with all of the terms and
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conditions of such permits, except where the failure to obtain or be in
compliance could not reasonably be expected to have a Material Adverse Effect;
(c) No Hazardous Materials exist on, or within or have been
used, generated, stored, transported, disposed of on, or released from any of
the properties or assets of any Borrower or any Subsidiary, except in
compliance with all Environmental Laws applicable to such Person. The use which
the Borrowers and their Subsidiaries make and intend to make of their
respective properties and assets will not result in the use, generation,
storage, transportation, accumulation, disposal, or Release of any Hazardous
Material on, in, or from any of their properties or assets in violation of any
Environmental Law applicable to such Person;
(d) Neither any Borrower nor any of their Subsidiaries nor
any of their respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any Governmental Authority or other
Person or subject to any judicial or docketed administrative proceeding with
respect to (i) failure to comply with Environmental Laws, (ii) Remedial Action,
or (iii) any Environmental Liabilities arising from a Release or threatened
Release;
(e) There are no conditions or circumstances associated with
the currently or previously owned or leased properties or operations of the
Borrowers or any of their Subsidiaries that could reasonably be expected to
give rise to any Environmental Liabilities that in the aggregate could
reasonably be expected to have a Material Adverse Effect;
(f) Neither any Borrower nor any of its Subsidiaries is a
treatment, storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., regulations
thereunder or any comparable provision of state law. The Borrowers and their
Subsidiaries are in compliance with all applicable financial responsibility
requirements of all Environmental Laws, except where the failure to be in
compliance could not reasonably be expected to have a Material Adverse Effect;
(g) Neither any Borrower nor any of its Subsidiaries has
filed or failed to file any notice required under applicable Environmental Law
reporting a Release; and
(h) No Lien arising under any Environmental Law has attached
to any property or revenues of any Borrower or its Subsidiaries.
Section 7.21 Year 2000 Compliance. As of the date hereof, as of the
date of any renewal, extension, amendment, rearrangement, increase, and/or
modification of this Agreement, and at all times this Agreement is
outstanding:
(a) To TransCoastal's knowledge, after due inquiry, all
devices, systems. machinery, information technology, computer software and
hardware, and other date sensitive technology (jointly and severally the
"Systems") used by Borrowers to carry on their businesses as presently
conducted and as contemplated to be conducted in the future are Year 2000
Compliant or will be Year 2000 Compliant within a period of time calculated to
result in no material disruption
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of any of Borrowers' business operations. For purposes of these provisions,
"Year 2000 Compliant" means that such Systems are designed to be used prior to,
during and after the Gregorian calendar year 2000 A.D. and will operate during
each such time period without error relating to date data, specifically
including any error relating to, or the product of, date data which represents
or references different centuries or more than one century.
(b) Borrowers have: (1) undertaken a detailed inventory,
review, and assessment of all areas within their businesses and operations that
could be adversely affected by the failure of Borrowers to be Year 2000
Compliant on a timely basis; (2) developed a detailed plan and time line for
becoming Year 2000 Compliant on a timely basis, and (3) to date, implemented
that plan in accordance with that timetable in all material respects.
(c) Borrowers have made written inquiry of each of its key
suppliers, vendors, and customers, and is undertaking to obtain in writing
confirmations from all such persons as to whether such persons have initiated
programs to become Year 2000 Compliant and on the basis of such confirmations,
Borrowers reasonably believe that all such persons will be or become so
compliant. For purposes hereof, "key suppliers, vendors, and customers" refers
to those suppliers, vendors, and customers of Borrowers whose business failure
would, with reasonable probability, result in a material adverse change in the
business, properties, condition (financial or otherwise), or prospects of any
of the Borrowers.
(d) The fair market value of all real and personal property
pledged to the Lender as Collateral to secure the Term Loan hereunder is not
and shall not be less than currently anticipated or subject to substantial
deterioration in value because of the failure of such Collateral to be Year
2000 Compliant.
Section 7.22 Insurance. Schedule 7.22 contains an accurate and
complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by the Borrowers and
each Subsidiary. All such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date of the
closing have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all agreements to which the
Borrowers or any Subsidiary is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as
are usually insured against in the same general area by companies engaged in
the same or a similar business for the assets and operations of the Borrowers
and each Subsidiary; will remain in full force and effect through the
respective dates set forth in Schedule 7.22 without the payment of additional
premiums; and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. Schedule 7.22
identifies all material risks, if any, which the Borrowers and the Subsidiaries
and their respective Board of Directors or officers have designated as being
self insured. None of the Borrowers nor any Subsidiary has been refused any
insurance with respect to its Property or operations, nor has its coverage been
limited below usual and customary policy limits, by an insurance carrier to
which it has applied for any such insurance or with which it has carried
insurance during the last three years.
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Section 7.23 Hedging Agreements. Schedule 7.23 sets forth, as of the
date hereof, a true and complete list of all Hedging Agreements (including
commodity price swap agreements, forward agreements or contracts of sale which
provide for prepayment for deferred shipment or delivery of oil, gas or other
commodities), Financing Transactions and Swap Transactions of the Borrowers and
each Subsidiary, the material terms thereof (including the type, term,
effective date, termination date and notional amounts or volumes), the net mark
to market value thereof, all credit support agreements relating thereto
(including any margin required or supplied), and the counterparty to each such
agreement.
Section 7.24 Restriction on Liens. Except as set forth on Schedule
9.2, none of the Borrowers nor any of the Subsidiaries is a party to any
agreement or arrangement (other than this Agreement and the other Loan
Documents, the Bank One Loan Documents and the Subordinated Loan Documents), or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to other Persons on or in
respect of their respective Property or Collateral.
Section 7.25 Material Debt Agreements. Set forth on Schedule 7.25
hereto is a complete and correct list of all material agreements, leases,
indentures, purchase agreements, obligations in respect of letters of credit,
guarantees, joint venture agreements, and other instruments in effect or to be
in effect following the date hereof (other than Hedging Agreements) providing
for, evidencing, or otherwise relating to any Debt of any of the Borrowers or
any of the Subsidiaries, and all obligations of any of the Borrowers or any of
the Subsidiaries to issuers of surety or appeal bonds issued for account of any
of the Borrowers or any such Subsidiary, and such list correctly sets forth the
names of the debtor or lessee and creditor or lessor with respect to the Debt
or lease obligations outstanding or to be outstanding and the property subject
to any Lien securing such Debt or lease obligation.
ARTICLE VIII
Positive Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding, the Borrowers will perform and observe the
following positive covenants:
Section 8.1 Reporting Requirements. The Borrowers will furnish to the
Lender:
(a) Annual Financial Statements. As soon as available and in
any event within 90 days after the end of each fiscal year of TransCoastal, the
audited consolidated and unaudited consolidating statements of income,
stockholders' equity, changes in financial position and cash flow of
TransCoastal and its Consolidated Subsidiaries for such fiscal year, and the
related audited consolidated and unaudited consolidating balance sheets of
TransCoastal and its Consolidated Subsidiaries as at the end of such fiscal
year, and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related
unqualified opinion of independent public accountants of recognized national
standing acceptable to the Lender
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which opinion shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of operations of
TransCoastal and its Consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in accordance
with GAAP except for such changes in such principles with which the independent
public accountants shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception; and, in addition thereto,
if required by the Lender, as soon as available, and in any event within 60
days after the end of each fiscal year of TransCoastal, pro forma projections
in form and substance satisfactory to the Lender for the ensuing five year
period on a year-by-year basis, including, without limitation, the consolidated
and consolidating statements of income and cash flow of TransCoastal and its
Consolidated Subsidiaries for such periods, and the related consolidated and
consolidating balance sheets of TransCoastal and its Consolidated Subsidiaries
for such period, and the estimated capital expenditures for such periods;
(b) Quarterly Financial Statements. As soon as available and
in any event within 60 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of TransCoastal, consolidated and
consolidating statements of income, stockholders' equity, changes in financial
position and cash flow of TransCoastal and its Consolidated Subsidiaries for
such period and for the period from the beginning of the respective fiscal year
to the end of such period, and the related consolidated and consolidating
balance sheets as at the end of such period, and setting forth in each case in
comparative form the corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by the certificate of a Responsible Officer,
which certificate shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of operations of
TransCoastal and its Consolidated Subsidiaries in accordance with GAAP, as at
the end of, and for, such period (subject to normal year-end audit
adjustments).
(c) Certificate of Compliance and No Default. Concurrently
with the delivery of each of the financial statements referred to in Sections
8.1(a) and 8.1(b), a certificate of a Responsible Officer (i) stating that a
review of the activities of the Borrowers has been made under his supervision
with a view to determining whether the Borrowers have fulfilled all of their
obligations under this Agreement, the other Loan Documents, and the Note; (ii)
stating that the Borrowers have fulfilled their obligations under such
instruments and that all representations and warranties made herein continue to
be true and correct in all material respects (or specifying the nature of any
change); (iii) to the extent requested from time to time by the Lender,
specifically affirming compliance of the Borrowers with any of their
representations or obligations under such instruments; (iv) containing or
accompanied by such financial or other details, information and material as the
Lender may reasonably request to evidence such compliance; (v) stating that to
the best of such officer's knowledge, no Default has occurred and is
continuing, or if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that is proposed to be taken with respect
thereto; and (vi) showing in reasonable detail the calculations demonstrating
compliance with Article X;
(d) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to any Borrower or any
Subsidiary by independent certified public accountants;
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(e) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any Governmental
Authority or arbitrator affecting any Borrower or any Subsidiary which, if
determined adversely to any Borrower or such Subsidiary, could have a Material
Adverse Effect;
(f) Notice of Default. As soon as possible and in any event
within five Business Days after the occurrence of each Default, a written
notice setting forth the details of such Default and the action that the
Borrowers have taken and propose to take with respect thereto;
(g) ERISA Reports. As soon as possible and in any event (i)
within five Business Days after any Borrower or any ERISA Affiliate knows or
has reason to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Plan, has occurred and (B)
within five Business Days after any Borrower or any ERISA Affiliate knows or
has reason to know that any other Termination Event with respect to any Plan,
has occurred or is reasonably expected to occur, a statement of the chief
financial officer of the applicable Borrower describing such Termination Event
and the action, if any, which such Borrower or such ERISA Affiliate has taken
and proposes to take with respect thereto; (ii) promptly and in any event
within five Business Days after receipt thereof by any Borrower or any ERISA
Affiliate, copies of each notice received by such Borrower or any ERISA
Affiliate from the PBGC stating its intention to terminate any Plan or to have
a trustee appointed to administer any Plan; and (iii) promptly and in any event
within five Business Days after receipt thereof by any Borrower or any ERISA
Affiliate from the sponsor of a Multi-employer Plan, a copy of each notice
received by such Borrower or any ERISA Affiliate;
(h) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any material statement or report furnished to any other
party pursuant to the terms of any indenture, loan, or credit or similar
agreement and not otherwise required to be furnished to the Lender pursuant to
any other clause of this Section;
(i) Notice of Material Adverse Change. As soon as possible
and in any event within five days after the occurrence thereof, written notice
of any matter that could have a Material Adverse Effect;
(j) Proxy Statements, Etc. Promptly upon its becoming
available, one copy of each financial statement, report, notice or final proxy
statement sent by any Borrower or any Subsidiary to its stockholders generally
and one copy of each regular, periodic or special report, registration
statement, or prospectus filed by any Borrower or any Subsidiary with any
securities exchange or the Securities and Exchange Commission or any successor
agency, and of any order issued by any Governmental Authority in any proceeding
to which any Borrower is a party. For purposes of this subsection (j),
"Governmental Authority" shall mean any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental entity having or asserting jurisdiction over any Borrower or any
of its business, operations or properties;
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(k) Purchase Money Purchases. Promptly, and in any event
within five days after the consummation thereof, written notice of all Debt
incurred under Section 9.1(c), if such aggregate Debt incurred under such
Section during any calendar year is in excess of $1,000,000;
(l) Charter Hire of Vessels. Promptly, and in any event at
least five days prior to any charter, hire, rental or lease of any Vessel
("Charter") provide written notice of all the material details of such Charter
including, without limitation the Vessel, the Charter party including contact
details, the duration and the payment terms; and
(m) General Information. Promptly, such other information
concerning any Borrower or any Subsidiary as the Lender may from time to time
reasonably request.
Section 8.2 Maintenance of Existence; Conduct of Business. The
Borrowers will preserve and maintain, and will cause each Subsidiary to preserve
and maintain, its corporate existence and all of its leases, privileges,
licenses, permits, franchises, qualifications, and rights that are necessary or
desirable in the ordinary conduct of its business. The Borrowers will conduct,
and will cause each Subsidiary to conduct, its business in an orderly and
efficient manner in accordance with good business practices.
Section 8.3 Maintenance of Properties. The Borrowers will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition, reasonable
wear and tear excepted.
Section 8.4 Taxes and Claims. The Borrowers will pay or discharge,
and will cause each Subsidiary to pay or discharge, at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its property, and (b)
all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that neither any
Borrower nor any Subsidiary shall be required to pay or discharge any tax,
levy, assessment, or governmental charge which is being contested in good faith
by appropriate proceedings diligently pursued, and for which adequate reserves
have been established in accordance with GAAP.
Section 8.5 Insurance. Each Borrower will maintain, and will cause
each of the Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies in such amounts and covering such risks as is
usually carried by corporations engaged in similar businesses and owning
similar properties in the same general areas in which the Borrowers and the
Subsidiaries operate, provided that in any event each Borrower will maintain
and cause each Subsidiary to maintain (a) with respect to all Vessels, hull and
machinery increased value, pollution liability, Protection and Indemnity Risks
(as hereinafter defined) and when a Vessel is laid up, port risk insurance, and
War Risks (as hereinafter defined) protection and indemnity (or its equivalent)
insurance, and (b) generally and with respect to all other Collateral, as
applicable, workmen's compensation insurance, property insurance, comprehensive
general liability insurance, products liability insurance, and business
interruption insurance in each case, satisfactory to the Lender in its sole
discretion; provided, however, War Risks protection and indemnity (or its
equivalent) insurance
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shall be required only when a Vessel is outside of the territorial waters of
the United States ("US Waters") when the Lender, in its sole discretion, which
may be exercised at any time and from time to time, waives such insurance
coverage in writing. Notwithstanding the foregoing, unless the Lender
determines in its reasonable discretion that there has been a material adverse
development in the political climate in Mexico, no War Risk protection and
indemnity (or its equivalent insurance) shall be required in the territorial
waters of Mexico. The Borrowers shall give the Lender at least 10 days advance
written notice of the departure of any Vessel from US Waters and the relocation
from one foreign jurisdiction to another foreign jurisdiction in each case
stating the destination and the projected duration of stay and deliver to the
Lender a certificate of insurance evidencing such coverage. As used herein,
"Protection and Indemnity Risks" means the usual risks covered by protection
and indemnity associations of international repute including the proportion not
recoverable in case of collision under the ordinary running down clause and
"War Risks" means the risk of mines, confiscation risk, political risk and all
risks excluded from the standard form of English maritime policy by the free of
capture and seizure clause. Each insurance policy covering Collateral shall
name the Lender as loss payee and additional insured and shall provide that
such policy will not be canceled or reduced without 30 days' prior written
notice to the Lender.
Section 8.6 Inspection Rights. During normal business hours, the
Borrowers will permit, and will cause each Subsidiary to permit,
representatives of the Lender to examine, copy, and make extracts from its
books and records, to visit and inspect its properties, including without
limitation, the Collateral, and to discuss its business, operations, and
financial condition with Responsible Officers and independent certified public
accountants.
Section 8.7 Keeping Books and Records. Each Borrower will maintain,
and will cause each Subsidiary to maintain, proper books of record and account
entries in conformity with GAAP.
Section 8.8 Compliance with Laws. Each Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator including, without limitation, all applicable Environmental Laws.
Section 8.9 Compliance with Agreements. Each Borrower will comply, and
will cause each Subsidiary to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its
properties or business.
Section 8.10 Further Assurances. Each Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and instruments
and take such further action as may be reasonably requested by the Lender to
carry out the provisions and purposes of this Agreement and the other Loan
Documents and to create, preserve, and perfect the Liens of the Lender in the
Collateral.
Section 8.11 ERISA. Each Borrower will comply, and will cause each
Subsidiary (other than Subsidiaries organized in jurisdictions outside of the
United States and its territories) to comply, with all minimum funding
requirements, and all other material requirements, of ERISA, if applicable, so
as not to give rise to any liability thereunder.
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Section 8.12 Year 2000 Compliant. Borrowers covenant and agree with
the Lender that, while any of the Obligations are outstanding, Borrowers will:
(a) Furnish such additional information, statements and other
reports with respect to Borrowers' activities, course of action and progress
towards becoming Year 2000 Compliant as the Lender may request from time to
time.
(b) In the event of any change in circumstances that causes
or will likely cause any of Borrowers' representations and warranties with
respect to its being or becoming Year 2000 Compliant to no longer be true
(hereinafter, referred to as a "Change in Circumstances") then Borrowers shall
promptly, and in any event within ten days of receipt of information regarding
a Change in Circumstances, provide the Lender with written notice (the
"Notice") that describes in reasonable detail the Change in Circumstances and
how such Change in Circumstances caused or will likely cause Borrowers'
representations and warranties with respect to being or becoming Year 2000
Compliant to no longer be true. Borrowers shall, within five days of a request,
also provide the Lender with any additional information the Lender requests of
Borrowers in connection with the Notice and/or a Change in Circumstances.
(c) Upon reasonable notice, give any representative of the
Lender access during all reasonable business hours to, and permit such
representative to examine, copy or make excerpts from, any and all books,
records and documents in the possession of Borrowers and relating to their
affairs, and to inspect any of the properties and Systems of Borrowers, and to
project test the Systems to determine if they are Year 2000 Compliant in an
integrated environment, all at the sole cost and expense of the Lender.
Section 8.13 Mortgaged Property. The Borrowers will cause the Loan
Documents delivered on the date hereof to cover substantially all of their
Property and the Property of their Subsidiaries (in each case other than the
"Bank One Exclusive Collateral," as defined in the Intercreditor Agreement, the
PMSI Property and Property owned by Dickson Nigeria, Ltd., a company organized
under the laws of Nigeria and Servicios y Construcciones Petroleras Ventura,
C.A., a company organized under the laws of Venezuela (the "Existing Foreign
Subsidiaries")) and when and if any Borrower or any Subsidiary (other than the
Existing Foreign Subsidiaries) acquires additional properties, including
additional Subsidiaries (without affecting the restrictions herein contained
regarding additional Subsidiaries), it shall grant or cause such Subsidiaries
to grant liens and security interests in favor of the Lender by the execution
of Loan Documents required by the Lender in form and substance satisfactory to
the Lender covering all of such newly acquired Properties.
Section 8.14 Subsidiary Guaranties and Pledge of Assets. Within 30
days after the acquisition or formation of any Subsidiary of any of the
Borrowers, the Borrowers shall cause such new Subsidiary to execute and deliver
to the Lender such Guaranty and other Loan Documents as may be designated by
the Lender not inconsistent with the Intercreditor Agreement, together with
such resolutions, certificates and opinions regarding the authorization and
binding effect of such Guaranty and such Loan Documents as the Lender may
reasonably require.
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Section 8.15 Post Closing Matters. Upon the request of the Lender the
Borrowers will promptly, and in any event within 90 days of the Lender's
written request therefor, (a) provide at the Borrowers' expense, and in each
case satisfactory to the Lender in its sole discretion, the following with
respect to each Real Property (other than PMSI Property): (i) survey, (ii)
title commitment, (iii) appraisal, (iv) environmental assessments and (v)
mortgage title policy, and (b) use their best efforts to obtain at the
Borrowers' expense satisfactory landlord waivers for each leased facility of
any Borrower.
ARTICLE IX
Negative Covenants
Each Borrower covenants and agrees that, as long as the Obligations
or any part thereof are outstanding, the Borrowers will perform and observe the
following negative covenants:
Section 9.1 Debt. The Borrowers will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume,
or permit to exist, any Debt, except:
(a) Debt to the Lender pursuant to the Loan Documents;
(b) Existing Debt described on Schedule 7.9;
(c) Purchase money obligations incurred in the ordinary
course of business not to exceed an aggregate amount for all Borrowers and
their Subsidiaries of $5,000,000 in the aggregate at any time;
(d) The $15,000,000 Debt evidenced by the Bank One Loan
Documents (which may be increased to as much as $25,000,000 so long as such
increase is permitted under the terms of the Subordination Agreement);
(e) Swap Transactions (other than Financing Transactions)
pursuant to Hedging Agreements with Bank One or its Affiliates; and
(f) The Subordinated Debt evidenced by the Subordinated Loan
Documents (as in existence as of the date hereof with such amendments only as
agreed to in writing by the Lender) in favor of Subordinated Lender not in
excess of $20,000,000.
Section 9.2 Limitation on Liens. The Borrowers will not incur, create,
assume, or permit to exist, and will not permit any Subsidiary to incur,
create, assume, or permit to exist, any Lien upon any of its property, assets,
or revenues, whether now owned or hereafter acquired, except:
(a) Liens disclosed on Schedule 9.2;
(b) Liens in favor of the Lender;
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(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do not
(individually or in the aggregate) materially affect the value of the assets
encumbered thereby or materially impair the ability of any Borrower or the
Subsidiaries to use such assets in their respective businesses, and none of
which is violated in any material respect by existing or proposed structures or
land use;
(d) Liens for taxes, assessments, or other governmental
charges which are not delinquent or which are being contested in good faith and
for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
or other similar statutory Liens securing obligations that are not yet due and
are incurred in the ordinary course of business;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or to
secure the performance of tenders, statutory obligations, surety and appeal
bonds, bids, contracts (other than for payment of Debt), or leases made in the
ordinary course of business; and
(g) Liens to secure purchase money indebtedness permitted
under Section 9.1(c) provided such Liens are placed within 30 days of the
incurrence of such debt.
Section 9.3 Mergers, Acquisitions, Etc. None of TransCoastal, any other
Borrower nor any Subsidiary will merge into or with or consolidate with any
other Person, or sell, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
Property or assets to any other Person, or wind-up, dissolve, or liquidate
itself; provided, however, if (i) TransCoastal gives at least 30 days' prior
written notice to the Lender, (ii) no Default or Event of Default has occurred
or is continuing or will result from the action proposed to be taken and
(iii) the Lender's Lien on the Collateral would not be adversely affected, then
any Subsidiary of TransCoastal may merge or consolidate with TransCoastal or
with any other Subsidiary of TransCoastal or sell, lease, or otherwise dispose
of (at fair market value) all or any substantial part of its Property or assets
to TransCoastal or to any other Subsidiary of TransCoastal. The Borrowers will
not, and will not permit any Subsidiary to, purchase or otherwise acquire all
or any part of the business or assets of any Person or any shares or other
evidence of beneficial ownership of any Person except that TransCoastal will be
permitted to acquire entities in the same industry provided that (x)
TransCoastal gives at least 30 days' prior written notice to the Lender, (y) no
Default or Event of Default has occurred or is continuing or will result from
the action proposed to be taken, and (z) the pro forma effect of which will
not cause a Default or an Event of Default. Notwithstanding the foregoing, any
single cash or debt assumption acquisition in excess of $5,000,000 or
acquisitions in the aggregate in excess of $5,000,000 in any fiscal year of
TransCoastal, will require the prior written consent of the Lender.
Section 9.4 Restricted Payments. TransCoastal will not declare or pay
any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital stock, or redeem, purchase,
retire, or otherwise acquire any of its capital stock, or return any
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capital to its stockholders, or make any distribution of its assets to its
stockholders, or permit any of its Subsidiaries to purchase or otherwise
acquire any capital stock of TransCoastal or another Subsidiary, or set apart
any money for a sinking or other analogous fund for any dividend or other
distribution on its capital stock or for any redemption, purchase, retirement,
or other acquisition of any of its capital stock, provided that, so long as no
Default or Event of Default has occurred and is continuing (or result
therefrom) TransCoastal may declare and deliver dividends solely in the form of
stock.
Section 9.5 Investments. The Borrowers will not make, and will not
permit any Subsidiary to make, any advance, loan, extension of credit, or
capital contribution to or investment in, or purchase or own, or permit any
Subsidiary to purchase or own, any stock, bonds, notes, debentures, or other
securities of, any Person, except:
(a) readily marketable direct obligations of the United
States of America or any agency thereof with maturities of one year or less
from the date of acquisition;
(b) fully insured certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial bank
operating in the United States of America having capital and surplus in excess
of $50,000,000;
(c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest rating categories of
Standard and Poor's Corporation or Moody's Investors Service, Inc.;
(d) acquisitions permitted under Section 9.3; and
(e) employee loans, advances or expenses in the ordinary
course of business not to exceed $50,000 per person or $500,000 in the
aggregate outstanding at any time.
Section 9.6 Limitation on Issuance of Capital Stock. The Borrowers
(other than TransCoastal) will not, and will not permit any of their
Subsidiaries to, at any time issue, sell, assign, or otherwise dispose of (a)
any of its capital stock, (b) any securities exchangeable for or convertible
into or carrying any rights to acquire any of its capital stock, or (c) any
option, warrant, or other right to acquire any of its capital stock.
Section 9.7 Transactions With Affiliates. No Borrower will enter
into, and no Borrower will permit any Subsidiary to enter into, any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate of any Borrower
or such Subsidiary, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to such Borrower or such
Subsidiary than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate of any such Borrower or such Subsidiary.
Section 9.8 Disposition of Assets. The Borrowers will not sell, lease,
assign, transfer, or otherwise dispose of any of their Property, or permit any
Subsidiary to do so with any of its Property.
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except dispositions of inventory in the ordinary course of business and
dispositions of Property that does not exceed $2,000,000 in the aggregate,
provided (a) that such dispositions do not involve any Collateral in excess of
$100,000 in gross proceeds in the aggregate in any calendar year, and (b) such
dispositions do not cover any of the vessels.
Section 9.9 Sale and Leaseback. The Borrowers will not enter into, and
will not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
Section 9.10 Prepayment of Debt. The Borrowers will not prepay, and
will not permit any Subsidiary to prepay, any Debt, except the Obligations in
compliance with the provisions of Article III hereof.
Section 9.11 Nature of Business. The Borrowers will not, and will not
permit any Subsidiary to, engage in any business other than the businesses in
which they are engaged on the date hereof.
Section 9.12 Environmental Protection. The Borrowers will not, and
will not permit any of their Subsidiaries to, (a) use (or permit any tenant to
use) any of their respective properties or assets for the handling, processing,
storage, transportation, or disposal of any Hazardous Material, (b) generate
any Hazardous Material, (c) conduct any activity that is likely to cause a
Release or threatened Release of any Hazardous Material, or (d) otherwise
conduct any activity or use any of their respective properties or assets in any
manner that is likely to violate any Environmental Law or create any
Environmental Liabilities for which any of the Borrowers or any of their
Subsidiaries would be responsible.
Section 9.13 Accounting. The Borrowers will not, and will not permit
any of their Subsidiaries to, change its fiscal year or make any change (a)
in accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Lender, or (b) in tax reporting treatment, except as required
by law and disclosed to the Lender.
Section 9.14 Compliance with ERISA. The Borrowers will not, and will
not permit any of their Subsidiaries (other than any Subsidiary which is
organized outside of the United States or its territories) to, (a) terminate,
or permit any ERISA Affiliate to terminate, any Plan, or (b) permit
circumstances which give rise to a Termination Event described in Clause (b),
(d) or (e) of the definition of Termination Event with respect to a Plan.
Section 9.15 Proceeds of Note. The Borrowers will not permit the
proceeds of the Note to be used for any purpose other than those permitted by
Section 7.11. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any or the Loan
Documents to violate Regulation G, U, or X, or any other regulation of the
Board of Governors of the Federal Reserve System, or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.
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SECTION 9.16 Negative Pledge Agreements. Neither any Borrower nor any
Subsidiary will create, incur, assume or suffer to exist any contract,
agreement, or understanding (other than this Agreement, the Loan Documents, the
Bank One Loan Documents and the Subordinated Loan Documents as such
Subordinated Loan Documents exist (without amendment not approved in writing by
the Lender) as of the date hereof) which in any way prohibits or restricts the
granting, conveying, creation, or imposition of any Lien on any of its Property
or restricts any Subsidiary from paying dividends to TransCoastal or which
requires the consent of or notice to other Persons in connection therewith.
Section 9.17 Hedging Agreements. Neither any Borrower nor any
Subsidiary will enter into any Swap Transaction or any Hedging Agreement with
any Person other than Bank One or any of its Affiliates. Notwithstanding the
foregoing, neither any Borrower nor any Subsidiary will enter into any
Financing Transaction without written approval of the Lender.
ARTICLE X
Financial Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding, each Borrower will perform and observe the
following financial covenants:
Section 10.1 Consolidated Tangible Net Worth. TransCoastal and its
Subsidiaries will at all times maintain Consolidated Tangible Net Worth in an
amount not less than $57,000,000, except as may be adjusted below, increasing
annually by 90% of annual Consolidated Net Income (not reduced by losses)
beginning for the 12-month period ending December 31, 1999, and increasing by
(a) 100% of the amount of any equity issued by TransCoastal including, without
limitation, a secondary offering, and (b) the value of the net tangible assets
acquired by issuing TransCoastal's stock in the acquisition of another entity.
For fiscal year 1999 only, the required increase, will be 90% of the net amount
of the actual reported fiscal year 1999 Consolidated Net Income minus
TransCoastal's cash payment of up to $7,300,000 payable to the sellers of
Dickson GMP International, Inc. (the "Dickson Payment"), but only if such
amount is positive. If the amount derived by calculating the difference in the
fiscal 1999 Consolidated Net Income and the Dickson Payment is negative, the
minimum Consolidated Tangible Net Worth shall be the greater of: (a)
$55,000,000, or (b) $60,000,000 less (1) the Dickson Payment plus (2) fiscal
1999 Consolidated Net Income less (3) $1,000,000. In years subsequent to 1999,
such adjusted minimum Consolidated Tangible Net Worth shall be increased
annually by 90% of annual Consolidated Net Income (not reduced by losses) and
by (a) 100% of the amount of any equity issued by TransCoastal, including,
without limitation, a secondary offering, and (b) the value of the net tangible
assets acquired by issuing TransCoastal's stock in the acquisition of another
entity.
Section 10.2 Capital Expenditures. The Borrowers will not permit the
aggregate capital expenditures of the Borrowers and the Subsidiaries to exceed
$7,000,000 during any fiscal year.
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Section 10.3 Total Funded Debt to Capitalization. TransCoastal will
not permit its ratio of Total Funded Debt to Capitalization, on a Consolidated
basis, to exceed 0.40 at any time.
Section 10.4 Fixed Charge Coverage Ratio. TransCoastal and its
Subsidiaries on a Consolidated basis will at all times maintain a Fixed Charge
Coverage Ratio that exceeds 1.10 to 1.00. This ratio shall be calculated on a
cumulative quarterly basis beginning January 1, 1999, until such time as four
quarters have been reached on December 31, 1999. Thereafter, the ratio will be
calculated on a Rolling Period basis. The first test will be calculated on
March 31, 1999.
Section 10.5 Senior Funded Debt to EBITDA Coverage Ratio. The
Borrowers will not permit TransCoastal's ratio of Senior Funded Debt to EBITDA,
on a Consolidated basis (EBITDA being determined on a Rolling Period basis) to
be greater than the ratio for the times indicated below:
<TABLE>
<CAPTION>
Time Period Ratio
<S> <C>
12/01/1998 - 12/31/1999 2.50:1.0
01/01/2000 - 12/31/2000 2.25:1.0
01/01/2001 and thereafter 2.00:1.0
</TABLE>
Upon the consummation of an acquisition not prohibited hereunder (including
historic acquisitions consummated within 12 months from the date hereof), the
calculation of EBITDA shall include, pro forma, the historical consolidated
EBITDA for TransCoastal and its Consolidated Subsidiaries for the relevant
period prior to TransCoastal's acquisition of such Subsidiaries.
ARTICLE XI
Default
Section 11. 1 Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) Any principal amount of the Obligations or any part
thereof shall not have been paid when due or any other Obligations or any part
thereof shall not have been paid within five days when such is due.
(b) Any representation or warranty made or deemed made by any
Borrower or any Obligated Party (or any of their respective officers) in any
Loan Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to have
been made.
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(c) Any Borrower shall fail to perform, observe, or comply
with any covenant, agreement, or term contained in Section 8.1 or 8.5, Article
IX, or Article X of this Agreement; or any Borrower or any Obligated Party
shall fail to perform, observe, or comply with any other covenant, agreement,
or term contained in this Agreement or any other Loan Document (other than
covenants to pay the Obligations) and such failure shall continue for a period
of 30 days.
(d) Any Borrower, any Subsidiary, or any Obligated Party
shall commence a voluntary proceeding seeking liquidation, reorganization, or
other relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian, or other similar
official of it or a substantial part of its property or shall consent to any
such relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it or shall make a
general assignment for the benefit of creditors or shall generally fail to pay
its debts as they become due or shall take any corporate action to authorize
any of the foregoing.
(e) An involuntary proceeding shall be commenced against any
Borrower, any Subsidiary, or any Obligated Party seeking liquidation,
reorganization, or other relief with respect to it or its debts under any
bankruptcy, insolvency, or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official for it or a substantial part of its property, and such
involuntary proceeding shall remain undismissed and unstayed for a period of 30
days.
(f) Any Borrower, any Subsidiary, or any Obligated Party
shall fail to discharge within a period of 30 days after the commencement
thereof any attachment, sequestration, or similar proceeding or proceedings
involving an aggregate amount in excess of $1,000,000 against any of its
assets or properties.
(g) A final judgment or judgments for the payment of money in
excess of $1,000,000 in the aggregate shall be rendered by a court or courts
against any Borrower, any of its Subsidiaries, or any Obligated Party and the
same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within 30
days from the date of entry thereof and the relevant Borrower or the relevant
Subsidiary or Obligated Party shall not, within said period of 30 days, or such
longer period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal.
(h) Any Borrower, any Subsidiary, or any Obligated Party
shall fail to pay when due any principal of or interest on any Debt (other
than the Obligations), including, without limitation, Debt under the Bank One
Loan Documents and/or the Subordinated Loan Documents) or the maturity of any
such Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any event shall
have occurred that permits (or, with the giving of notice or lapse of time or
both, would permit) any holder or holders of such Debt or any Person acting on
behalf of such holder or holders to accelerate the maturity thereof or require
any such prepayment.
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(i) This Agreement or any other Loan Document shall cease to
be in full force and effect or shall be declared null and void or the validity
or enforceability thereof shall be contested or challenged by any Borrower, any
Subsidiary, any Obligated Party or any of their respective shareholders, or any
borrower or any obligated party shall deny that it has any further liability or
obligation under any of the Loan Documents, or any lien or security interest
created by the Loan Documents shall for any reason cease to be a valid, first
priority perfected security interest in and lien upon any of the Collateral
purported to be covered thereby.
(j) Any Termination Event as defined in clause (b), (d) or
(e) of the definition thereof with respect to a Plan shall have occurred and,
five days after notice thereof shall have been given to any Borrower by the
Lender, (i) such Termination Event shall still exist.
(l) Any Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multi-employer Plan that it has incurred
Withdrawal Liability to such Multi-employer Plan.
(1) Any Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multi-employer Plan that such Multi-employer Plan
is in reorganization or is being terminated, within the meaning of Title IV of
ERISA.
(m) Any Borrower or any of its Subsidiaries, or any of their
properties, revenues, or assets, shall become the subject of an order of
forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the
same shall not have been discharged (or provisions shall not be made for such
discharge) within 30 days from the date of entry thereof.
(n) Any Person or Persons constituting a group (as such term
is used in Rule 13d-5 under the Securities Exchange Act of 1934 as in effect on
the date hereof) shall, in the aggregate, directly or indirectly, control or
own (beneficially or otherwise) more than 30% (by number of shares) of the
issued and outstanding voting stock of TransCoastal.
(o) Nathan Avery or a reasonable substitute thereof shall
cease to be active in the senior management of TransCoastal.
Section 11.2 Remedies. If any Event of Default shall occur and be
continuing, the Lender may do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and
accrued and unpaid interest on the Note and all other obligations of any of the
Borrowers under the Loan Documents immediately due and payable, and the same
shall thereupon become immediately due and payable, all without notice, demand,
presentment, notice of dishonor, notice of acceleration, notice of intent to
accelerate, protest, or other formalities of any kind, all of which are hereby
expressly waived by the Borrowers.
(b) Judgment. Reduce any claim to judgment.
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(c) Foreclosure. Foreclose or otherwise enforce any Lien
granted to the Lender to secure payment and performance of the Obligations in
accordance with the terms of the Loan Documents.
(d) Rights. Exercise any and all rights and remedies afforded
by the laws of the State of Illinois or any other jurisdiction, by any of the
Loan Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Section 11.1(d) or 11.1(e), the outstanding principal of and accrued and
unpaid interest on the Note and all other obligations of the Borrowers under
the Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Borrowers.
Section 11.3 Performance by the Lender. If any Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Lender may perform or attempt to perform such covenant or
agreement on behalf of the Borrowers. In such event, the Borrowers shall, at
the request of the Lender, promptly pay any amount expended by the Lender in
connection with such performance or attempted performance to the Lender at the
Principal Office, together with interest thereon at the Default Rate from and
including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Lender shall not have any liability or responsibility for the
performance of any obligation of any Borrower under this Agreement or any of
the other Loan Documents.
ARTICLE XII
Miscellaneous
Section 12.1 Expenses. The Borrowers hereby agree, jointly and
severally, to pay on demand: (a) all reasonable costs and expenses of the
Lender in connection with the preparation, negotiation, execution, and delivery
of this Agreement and the other Loan Documents and any and all amendments,
modifications, renewals, extensions, and supplements thereof and thereto,
including, without limitation, the fees and expenses of legal counsel for the
Lender and Lender's due diligence activities, (b) all costs and expenses of
the Lender in connection with any Default and the enforcement of this Agreement
or any other Loan Document, including, without limitation, the fees and
expenses of legal counsel for the Lender, (c) all transfer, stamp,
documentary, or other similar taxes, assessments, or charges levied by any
Governmental Authority in respect of this Agreement or any of the other Loan
Documents, (d) all costs, expenses, assessments, and other charges incurred in
connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by this Agreement or any other Loan
Document, and (e) all other reasonable costs and expenses incurred by the
Lender in connection with this Agreement or any other Loan Document, including,
without limitation, all costs, expenses, and other charges incurred in
connection with obtaining any mortgagee title insurance policy, survey, audit,
or appraisal in respect of the Collateral.
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Section 12.2 Indemnification. The Borrowers, jointly and severally,
shall indemnify the Lender and each Affiliate thereof and their respective
officers, directors, employees, attorneys, and agents from, and hold each of
them harmless against, any and all losses, liabilities, claims, damages,
penalties, judgments, disbursements, costs, and expenses (including attorneys'
fees) to which any of them may become subject which directly or indirectly
arise from or relate to (a) the negotiation, execution, delivery, performance,
administration, or enforcement of any of the Loan Documents, (b) any of the
transactions contemplated by the Loan Documents, (c) any breach by any Borrower
of any representation, warranty, covenant, or other agreement contained in any
of the Loan Documents, (d) the presence, Release, threatened Release, disposal,
removal, or cleanup of any Hazardous Material located on, about, within, or
affecting any of the properties or assets of any Borrower or any Subsidiary, or
(e) any investigation, litigation, or other proceeding, including, without
limitation, any threatened investigation, litigation, or other proceeding
relating to any of the foregoing. Without limiting any provision of this
Agreement or of any other Loan Document, it is the express intention of the
parties hereto that each Person to be indemnified under this Section shall be
indemnified from and held harmless against any and all losses, liabilities,
claims, damages, penalties, judgments, disbursements, costs, and expenses
(including attorneys' fees) arising out of or resulting from the sole or
contributory negligence of such Person.
Section 12.3 Limitation of Liability. None of the Lender or any
Affiliate, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and any Borrower hereby waives, releases, and
agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by any Borrower in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents, except for gross negligence or
willful misconduct in which event damages will be limited to actual damages.
Each Borrower hereby waives, releases, and agrees not to sue the Lender or any
of its Affiliates, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or
any of the transactions contemplated by this Agreement or any of the other Loan
Documents.
Section 12.4 No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Lender shall have
the right to act exclusively in the interest of the Lender and shall have no
duty of disclosure, duty of loyalty, duty of care, or other duty or obligation
of any type or nature whatsoever to any Borrower or any of the Borrowers'
shareholders or any other Person.
Section 12.5 No Fiduciary Relationship. The relationship between each
Borrower and the Lender is solely that of debtor and creditor, and the Lender
has no fiduciary or other special relationship with any Borrower, and no term
or condition of any of the Loan Documents shall be construed so as to deem the
relationship between any Borrower and the Lender to be other than that of
debtor and creditor.
Section 12.6 Equitable Relief. Each Borrower recognizes that in the
event any Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may
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prove to be inadequate relief to the Lender. Each Borrower therefore agrees
that the Lender, if the Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
Section 12.7 No Waiver, Cumulative Remedies. No failure on the part of
the Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement and the other Loan Documents
are cumulative and not exclusive of any rights and remedies provided by law.
Section 12.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. The
Borrowers may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of the Lender. The Lender may sell
without notice to or consent of any Borrower participations to one or more
banks or other institutions in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of the Term Loan owing to it); provided,
however, that (i) the Lender's obligations under this Agreement and the other
Loan Documents shall remain unchanged, (ii) the Lender shall remain solely
responsible to the Borrowers for the performance of such obligations, (iii) the
Lender shall remain the holder of its Note for all purposes of this Agreement,
(iv) the Borrowers shall continue to deal solely and directly with the Lender
in connection with the Lender's rights and obligations under this Agreement and
the other Loan Documents, and (v) the Lender shall not sell a participation
that conveys to the participant the right to vote or give or withhold consents
under this Agreement or any other Loan Document, other than the right to vote
upon or consent to (A) any reduction of the principal amount of, or interest to
be paid on, the Term Loan of the Lender, (B) any reduction of any commitment
fee or other amount payable to the Lender under any Loan Document, or (C) any
postponement of any date for the payment of any amount payable in respect of
the Term Loan to the Lender.
(b) The Lender may, without notice to or consent of any
Borrower, sell, assign or transfer to any one or more persons or entities, all
or any part of the Term Loan or all or any part of the Loan Documents and each
such assignee or transferee shall have the right to enforce the Term Loan, and
such Loan documents as fully as the Lender, provided that the Lender shall
continue to have the unimpaired right to enforce the provisions of the Loan
Documents and the Term Loan that it has not sold, assigned or transferred.
(c) In connection with and prior to and after any such sale,
transfer, assignment or participation, the Lender may disclose and furnish to
any prospective or actual purchaser, transferee, assignee or participant, any
and all reports, financial statements and other information obtained by the
Lender at any time and from time to time in connection with the Term Loan, the
Loan Documents or otherwise. The Borrowers shall fully cooperate with the
Lender in connection with any such assignment and shall execute and deliver
such consents and acceptances to any such
47
<PAGE> 54
assignment as the Lender shall reasonably request that are necessary or
desirable to effect any such assignment.
Section 12.9 Survival. All representations and warranties made in
this agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Lender or any closing shall affect the representations and
warranties or the right of the Lender to rely upon them. Without prejudice to
the survival of any other obligation of the Borrowers hereunder, the
obligations of the Borrowers under Article IV and Sections 12.1 and 12.2 shall
survive repayment of the Note and termination of the Commitments.
Section 12. 10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTE, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
Section 12.11 Amendments, Etc. No amendment or waiver of any
provision of this Agreement, the Notes, or any other Loan Document to which any
Borrower is a party, nor any consent to any departure by any Borrower
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Lender and the Borrowers, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
Section 12.12 Maximum Interest Rate.
(a) The collateral covered in the Vessel Mortgage and the
Obligations covered by this Agreement, the Note and other Loan Documents is or
will be secured by a "Preferred Mortgage" on the United States-flagged Vessels
within the meaning of Section 31322 of 46 U.S.C. 131301-31343 (1994), as amended
(the "Ship Mortgage Act"), and the regulations promulgated thereunder. If, for
any reason, the provisions of Section 31322 of the Ship Mortgage Act shall be
found not to exempt any and all interest and other charges contracted for,
charged, taken, received or reserved in connection with the Obligations covered
by this Agreement, the Note, and other Loan Documents from any limitations
otherwise applicable, then the provisions of Section 12.12(b) shall apply, but
otherwise the provisions of Section 31322 of the Ship Mortgage Act shall be
applicable.
(b) No provision of this Agreement or of any other Loan
Document shall require the payment or the collection of interest in excess of
the maximum amount permitted by applicable law. If any excess of interest in
such respect is hereby provided for, or shall be adjudicated to be so provided,
in any Loan Document or otherwise in connection with this loan transaction, the
provisions of this Section shall govern and prevail and neither any of the
Borrowers nor the sureties, guarantors, successors, or assigns of any of the
Borrowers shall be obligated to pay the excess
48
<PAGE> 55
amount of such interest or any other excess sum paid for the use, forbearance,
or detention of sums loaned pursuant hereto. In the event the Lender ever
receives, collects, or applies as interest any such sum, such amount which
would be in excess of the maximum amount permitted by applicable law shall be
applied as a payment and reduction of the principal of the indebtedness
evidenced by the Note; and, if the principal of the Note has been paid in full,
any remaining excess shall forthwith be paid to the Borrowers. In determining
whether or not the interest paid or payable exceeds the Maximum Rate, the
Borrowers and the Lender shall, to the extent permitted by applicable law, (a)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest, (b) exclude voluntary prepayments and the effects thereof,
and (c) amortize, prorate, allocate, and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
indebtedness evidenced by the Note so that interest for the entire term does
not exceed the Maximum Rate.
Section 12.13 Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents to which any Borrower is a
party shall be given or made by telex, telegraph, telecopy, cable, or in
writing and telexed, telecopied, telegraphed, cabled, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party at such other address as shall be designated by such party
in a notice to each other party given in accordance with this Section. Except
as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telex or telecopy, subject
to telephone confirmation of receipt, or delivered to the telegraph or cable
office, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid; provided, however, notices to the
Lender pursuant to Article II shall not be effective until received by the
Lender.
Section 12.14 LAW AND JURISDICTION.
THIS AGREEMENT AND THE LOAN DOCUMENTS PROVIDED FOR HEREIN
(INCLUDING, BUT NOT LIMITED TO THE VALIDITY AND ENFORCEABILITY HEREOF
AND THEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF ILLINOIS, OTHER THAN CONFLICT OF LAWS THEREOF
ANY LEGAL ACTION OR PROCEEDING AGAINST ANY OF THE BORROWERS WITH
RESPECT TO THIS AGREEMENT OR ANY LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF ILLINOIS. THE U.S. FEDERAL COURTS IN SUCH
STATE, SITTING IN THE COUNTY OF COOK, OR IN THE COURTS OF ANY OTHER
JURISDICTION WHERE SUCH ACTION OR PROCEEDING MAY BE PROPERLY BROUGHT,
AND THE BORROWERS HEREBY IRREVOCABLY ACCEPT THE JURISDICTION OF SUCH
COURTS FOR THE PURPOSE OF ANY ACTION OR PROCEEDING. EACH OF THE
BORROWERS DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, 208 SOUTH
LASALLE STREET, CHICAGO, ILLINOIS 60604 TO RECEIVE ON THEIR BEHALF,
SERVICE OF ALL PROCESS IN ANY PROCEEDING IN ANY SUCH COURT, SUCH
SERVICE BEING HEREBY ACKNOWLEDGED BY EACH CREDIT PARTY TO BE EFFECTING
AND BINDING SERVICE IN EVERY RESPECT. A copy
49
<PAGE> 56
of such service of process shall be mailed by U.S. registered or
certified mail postage prepaid to the party to be served at its
address designated in Section 12.13 hereof except that unless
otherwise required by law, any failure to mail such copy shall not
affect the validity of service of process. The Borrowers agree that a
final judgment in any action or proceeding shall be conclusive and may
be enforced in any other jurisdiction by suit on the judgment or in
any other manner provided by law. Nothing in this Section 12.14 shall
affect the right of the Lender to serve legal process in any other
manner permitted by law or affect the right of the Lender to bring any
action or proceeding against any Borrower or its Properties in the
courts of any other jurisdiction. To the extent that any Borrower has
or hereafter may acquire any immunity from jurisdiction of any court
or from any legal process (whether through service of notice,
attachment prior to judgment, attachment in aid of execution,
execution or otherwise) with respect to either itself or its Property,
such Borrower hereby irrevocably waives such immunity in respect of
its obligations under this Agreement and the other Loan Documents to
the extent permitted by law. To the extent permitted by law each of
the Borrowers hereby irrevocably waives any objection that it may now
or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any loan
Document brought in any state or federal court located within the
County of Cook, State of Illinois, and hereby further irrevocably
waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum.
Section 12.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.16 Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 12.17 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 12.18 Non-Application of Chapter 346 of Texas Finance Code.
The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to this Agreement or any of
the other Loan Documents or to the transactions contemplated hereby.
Section 12.19 Construction. The Borrowers and the Lender acknowledge
that each of them has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by the parties hereto.
Section 12.20 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the
50
<PAGE> 57
limitations of, another covenant shall not avoid the occurrence of a Default if
such action is taken or such condition exists.
Section 12.21 JURY WAIVER. THE BORROWERS AND THE LENDER (BY THEIR
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG ANY
BORROWER AND THE LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT,
ANY OF THE OTHER LOAN DOCUMENTS, OR ANY RELATIONSHIP BETWEEN THE LENDER AND ANY
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO PROVIDE THE
FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
Section 12.22 Confidentiality. In the event that any of the Borrowers
provides to the Lender written confidential information belonging to such
Borrower, if such Borrower shall denominate such information in writing as
"confidential", the Lender shall thereafter maintain such information in
confidence in accordance with the standards of care and diligence that it
utilizes in maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information which (i) are in
the public domain, (ii) hereafter become part of the public domain without the
Lender breaching its obligation of confidence to such Borrower, (iii) are
previously known by the Lender from some source other than such Borrower, (iv)
are hereafter developed by the Lender without using the Borrower's information,
(v) are hereafter obtained by or made available to the Lender from a third
party who the Lender is not aware owes an obligation of confidence to such
Borrower with respect to such information or through any other means other than
through disclosure by such Borrower, (vi) are disclosed with such Borrower's
consent, (vii) must be disclosed either pursuant to any Governmental
Requirement or to Persons regulating the activities of the Lender, or (viii) as
may be required by law or regulation or order of any Governmental Authority in
any judicial, arbitration or governmental proceeding. Further, the Lender may
disclose any such information to Bank One, the Subordinated Lender, its
independent certified public accountants, and/or any legal counsel employed by
such Person in connection with this Agreement or any other Loan Document,
including without limitation, the enforcement or exercise of all rights and
remedies thereunder, or any assignee or participant (including prospective
assignees and participants) in the Term Loan; provided, however, that the
Lender shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation
to maintain the confidentiality of such information as is imposed upon the
Lender hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three years from the date the
information was furnished, unless such Borrower requests in writing at least 30
days prior to the expiration of such three year period, to maintain the
confidentiality of such information for an additional three year period. Each
Borrower waives any and all other rights it may have to confidentiality as
against the lender arising by contract, agreement, statute or law except as
expressly stated in this Section 12.22.
51
<PAGE> 58
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]
[SIGNATURE PAGES TO FOLLOW.]
<PAGE> 59
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWERS:
TRANSCOASTAL MARINE SERVICES, INC.;
DICKSON MARINE, INC.;
VENTURA RESOURCES, INC.;
WOODSON CONSTRUCTION COMPANY, INC.;
ENVIROSYSTEMS, INC.;
KORI CORPORATION;
C.S.I. HYDROSTATIC TESTERS, INC.;
HARGETT MOORING AND MARINE, INC.;
HBH, INC.;
TRANSCOASTAL MARINE SERVICES OF LA, INC.;
DICKSON GMP INTERNATIONAL, INC.;
THE RED FOX COMPANIES OF NEW IBERIA, INC.;
TRANSCOASTAL VESSELS, INC.;
By: /a/ PAMELA L. REILAND
--------------------------------------------
Pamela L. Reiland
Authorized Officer for each Borrower
1. Address for Notices (all Borrowers):
2925 Briarpark Drive, Suite 930
Houston, Texas 77042
Fax No.: (713) 781-6364
Telephone No.: (713) 787-1384
Attention: President
<PAGE> 60
LENDER:
HELLER FINANCIAL LEASING, INC.
By: /s/ B. FORREST TAYLOR
------------------------------------
B. Forrest Taylor
Vice President
2. Address for Notices:
500 West Monroe Street
Chicago, Illinois 60661
Fax No.: (312) 441-7519
Telephone No.: (312) 441-6719
Attention: Region Credit Manager
<PAGE> 61
INDEX TO SCHEDULES
Schedule Description of Schedule
1 Excluded Equipment
2 Real Property
3 Vessels
7.5 Litigation and Judgments
7.6 Property Condition Disclosure
7.9 Debt
7.10 Tax Disclosure
7.14 List of Subsidiaries
7.20 Environmental Matters
7.22 Insurance
7.23 Hedging Agreements
7.25 Material Agreements
9.2 Disclosed Liens
1
<PAGE> 62
SCHEDULE 1
TO
CREDIT AGREEMENT
List of Excluded Assets
(as more fully described in attachment hereto)
<TABLE>
<CAPTION>
===================================================================================================
ASSET NAME TYPE DESCRIPTION
===================================================================================================
<S> <C> <C>
Drydock Drydock 3,400 ton; Dimensions of 236' x 100' with 85' between wing walls
- ---------------------------------------------------------------------------------------------------
Jetting Jet Pumps, Etc. TCMS Equipment #10697, EMD Engine Model #16-567-03A with Bingham
Equipment 8' x 10' 4-stage Jet Pump and Lufkin Gear Box Model #N1460C;
(Mexican site) jet sleds and pipe; located on Cable 1 Vessel
- ---------------------------------------------------------------------------------------------------
Jetting Jet Pumps, Etc. 3 single stage pumps; 5 5-stage pumps; EMD Engine Model #16-567-
Equipment D3A with Bingham 8' x 10' 4-stage Jet Pump with Lufkin Gear Box
(Lafayette site) Model #N1604C; jet sleds and pipe
- ---------------------------------------------------------------------------------------------------
BH 103 Spud Barge American flag; dimensions of 120' x 39' x 8'; built by Conrad
Industries, Inc. in Morgan City, LA in 1991
- ---------------------------------------------------------------------------------------------------
BH 101 Spud Barge American flag; dimensions of 120' x 36' x 7'; built in Houma,
LA in 1979
- ---------------------------------------------------------------------------------------------------
BH 100 Spud Barge American flag; dimensions of 110' x 34' x 6'
- ---------------------------------------------------------------------------------------------------
Rowe 14 Crane Barge American flag; dimensions of 110' x 34' x 7.3'; approximately
20 years old
- ---------------------------------------------------------------------------------------------------
Barge Construction American flag; dimensions of 250' x 50' x 12; built by Nashville
Barge Bridge Company in Nashville, TN in 1953
- ---------------------------------------------------------------------------------------------------
#7101 Spud Barge American flag; dimensions of 136' x 35' x 7.6'; built by
Nashville Bridge Company in Nashville, TN in 1966
- ---------------------------------------------------------------------------------------------------
#7102 Spud Barge American flag; dimensions of 136' x 35' x 7.6'; built by Nashville
Bridge Company in Nashville, TN in 1966
- ---------------------------------------------------------------------------------------------------
Barge Office Barge American flag; dimensions of 208' x 26' x 5'; built by Nashville
Bridge Company in Nashville, TN (forward vessel in 1941, hull no.
579 and after vessel in 1955, hull no. 1134)
- ---------------------------------------------------------------------------------------------------
TCMS 612 Spud Barge American flag; dimensions of 140' x 39' x 9'
- ---------------------------------------------------------------------------------------------------
BH 7 Deck Barge American flag; dimensions of 120' x 20' x 7'; built by Alexander
Shipyard
- ---------------------------------------------------------------------------------------------------
Missy Ann Tug Boat American flag; dimensions of 48' x 16.7' x 5.8'; built in Houma,
LA in 1975
- ---------------------------------------------------------------------------------------------------
Danny Boy II Tug Boat American flag; dimensions of 36.5' x 14' x 4.7'; built in Harvey,
LA in 1969
- ---------------------------------------------------------------------------------------------------
BH 201 Spud Barge American flag; dimensions of 90' x 23' x 5'
- ---------------------------------------------------------------------------------------------------
MMVII Spud Barge American flag; dimensions of 120' x 32' x 7'; approximately 25
years old
===================================================================================================
</TABLE>
<PAGE> 63
[BACHRACH, WOOD, PETERS AND ASSOCIATES, INC. LETTERHEAD]
DECEMBER 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 7, 1998
SURVEY REPORT NO. 9812-1225
3400 TON DRYDOCK
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on December
7, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for the account
of Bank One, Texas, NA, survey the 3400 ton drydock (Transcoastal Marine
Services, Inc.- reported owners) while subject drydock was lying afloat at the
facilities of Red Fox on Industrial Canal in New Orleans, Louisiana, in order to
ascertain the general condition and in order to estimate her present day fair
market value and orderly liquidation value as of December 7, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
Note: For reporting purposes, the end of the drydock with the male notch
assembly is considered to be the bow.
The drydock was built of all welded steel construction by securing four (4)
smaller drydock sections into one (1) larger unit with an overall dimension of
236'x 100' with 85' between the wing walls and a combined capacity of 3,400
tons.
Original thickness of all plating appears to be 3/8".
Deck fittings consists of various single and double bitts, as well as padeyes
ranged across the forward and after ends of the main deck.
HULL SECTIONS:
The hull sections are arranged as follows:
<PAGE> 64
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
First Section:
The forward section is a 39'x 100' section with two (2) 16'x 7.5' x 15' wing
walls ranged along both port and starboard sides. Extending forward of the bow
is a fabricated steel male notch assembly which measures 19'x 60' with a 48"
cast steel kevel location in way of the center line. Each wing wall has its
upper perimeter contained by cable handrails.
Atop the port wing wall was the following:
One (1) 6" double bitt.
Two (2) valve handles.
Two (2) 6" vents.
One (1) manual securing winch.
One (1) covered shack.
Two (2) U.S. Motors, Model F407A, 15 HP electric motors each rated at 1765 RPM
which power two (2) low lift pumps of unknown capacity.
Atop the starboard wing wall was the following:
One (1) 6" diameter double bitt.
One (1) manually operated winch.
Two (2) 6' vents.
Three (3) Valve handles.
One (1) electrical panel/operators station which has a surrounding steel shack.
Two (2) U.S. Motors, model F407A, 15 HP electric motors each rated at 1765 RPM
which power two (2) low lift pumps of unknown capacity.
Second Section:
The second section is a 70'x 100' section with one (1) 70'x 7.5' x 16' wing wall
section ranged along both port and starboard side. Each wing wall has its upper
ranged along both port and starboard side. Each wing wall has its upper
perimeter contained by round bar handrail system.
Atop the port wing wall is the following:
Two (2) 12" double bitts ranged along the outboard edge.
Two (2) mercury vapor lights.
Two (2) 4" vents.
One (1) 12" vent.
One (1) valve handle.
One (1) manually operated winch.
Five (5) 10" single bitts.
<PAGE> 65
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
SECOND SECTION: (continued)
One (1) 50 HP electric motor which powers a Fairbanks Morse deepwell pump of
unknown capacity.
Atop the starboard wing wall is the following:
Two (2) 12" double bitts ranged along the outboard edge.
Two (2) valves.
One (1) 12" vent.
Two (2) 4" vents.
Two (2) mercury vapor lights.
One (1) manually operated winch.
One (1) 10" D ring.
Seven (7) 6" single bitts.
One (1) electrical panel covered by a steel top.
One (1) 50 HP electric motor which powers a Fairbanks Morse deepwell pump of
unknown capacity.
Third Section:
The third section is a 70' x 100' section with one (1) 70' x 7.5' x 18' wing
wall section ranged along both port and starboard sides. Each wing wall has its
upper perimeter contained by round bar handrail system.
Atop the port wing wall is the following:
Two (2) 12" double bitts ranged along the outboard edge.
One (1) mercury vapor light.
Two (2) manually operated winches.
One (1) 12" vent.
Two (2) 4" vents.
One (1) valve handle.
Six (6) single bitts.
One (1) cover shack.
One (1) 50 HP electric motor which powers a Fairbank Morse deepwell pump of
unknown capacity.
Atop the starboard wing well is the following:
Two (2) 12" double bitts ranged along the outboard edge.
Two (2) valve handles.
Two (2) 4" vents.
<PAGE> 66
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
Third Section: (continued)
One (1) 12" vent.
One (1) manually operated winch.
Nine (9) 6" single bitts.
One (1) mercury vapor light.
One (1) 50 HP electric motor which powers a Fairbanks Morse deepwell pump of
unknown capacity.
Fourth Section:
The fourth section is a 56' x 100' section with two (2) 16' x 7.5' x 15' wing
wall section ranged along both port and starboard sides. Each wing wall has its
upper perimeter contained by pipe handrail system.
Atop the port wing wall is the following:
Two (2) 6" double bitts ranged along the inboard edge.
One (1) 8" D ring.
Four (4) 8" vents.
Four (4) valve handles.
One (1) electric winch complete with a 5 HP motor.
Two (2) mercury vapor lights.
One (1) 30 lb. fire extinguisher.
One (1) 30" ring buoy.
One (1) 15 HP electric motor which powers a Fairbank Morse deepwell pump of
unknown capacity.
Atop the starboard wing wall is the following:
One (1) 6" double bitt located aft.
One (1) 8" double bitt located inboard.
Four (4) valve handles.
Four (4) 8" vents.
Nine (9) 6" single bitts.
One (1) electric winch without a motor.
One (1) manually operated winch.
Two (2) mercury vapor lights.
One (1) electrical panel/operator station covered by a steel roof.
One (1) 30" ring buoy.
<PAGE> 67
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
Fourth Section: (continued)
One (1) 15 HP electric motor which powers a Fairbank Morse deepwell pump of
unknown capacity.
EXTERNAL CONDITION:
Note: Only an external survey could be performed due to the lower hull
compartments containing ballast water.
The drydock was sighted afloat with a 250' vessel hauled out.
The deck was partially covered with 6" to 1' of blasting sand. Where sighted,
deck plating was lightly washboarded with random indents of 0 to 1".
The wing walls contain light distortion with random indents of 0 to 1".
External coating was recently applied over 90% of the vessel and appears to
be in excellent condition.
Electrical wiring, where sighted, appears to be in excellent condition.
VALUATION:
Estimated present day fair market value
as of December 7, 1998.................................$ 2,750,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably, and assuming the price
is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale where title is passed from seller to buyer
under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider
their own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 68
SURVEY REPORT NO. 9812-1225
VALUATION: (continued)
<TABLE>
<S> <C>
Estimated orderly liquidation value
as of December 7, 1998................................... $ 2,400,000.00
</TABLE>
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
Reportedly, all wasted external hull plating has been cropped and renewed as
found necessary.
Reportedly, internal hull compartments had all wasted structural members
cropped and renewed as found necessary with additional internals added to
reinforce the deck.
Reportedly, all internal and external anodes have recently been renewed.
Reportedly, all lower hull compartments have been cleaned and recoated with
Texaco Compound H.
All machinery and equipment on the drydock appears to be in good condition and
well coated.
This drydock, as described herein, is in satisfactory condition for its
intended service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject drydock
is either expressed or implied.
The drydock was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems, or
opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned drydock and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed and submitted without prejudice to rights and/or interests
of whom it may concern.
<PAGE> 69
SURVEY REPORT NO. 9812-1225
SURVEYOR'S NOTES: (continued)
Attending Surveyor:
Kevin A. Jacomine
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
KAJ:ktb
Distribution:
(2) Reports & (2) invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 70
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 08, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1227
TRANSCOASTAL MARINE SERVICES, INC. JETTING EQUIPMENT
MEXICO
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on December
4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for the account
of Bank One, Texas, NA, survey Jetting Equipment temporarily on board the barge
"Cable I", and reportedly owned by Transcoastal Marine Services, Inc. while the
Cable I lay afloat and anchored approximately 5 miles northeast of Ciudad Del
Carmen, Campeche, Mexico in order to ascertain the general condition of the
equipment and in order to estimate its present day fair market value and orderly
liquidation values as of December 4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL DESCRIPTION AND CONDITION:
One steel, state of the art, jetting sled with adjustable legs capable of
operating at pressures of 500 psi and a volume of 3600 gallons per minute and
capable of burying pipe 12" to 36" in diameter to a depth of as much as 16 feet
below mud line. This equipment was found in excellent condition.
One skid mounted "A" frame approximately 50 feet long and constructed with steel
30" "I" beam legs and two 30" "I" beam cross beams. The "A" frame is fit with a
36" diameter x 20 foot long hose roller, has an 80 ton capacity and can be
raised and lowered utilizing built-in hydraulic rams. The unit is capable of
being moved from vessel to vessel as a unit. The unit was found to be in
excellent condition.
One skid mounted 3 cylinder General Motors, model 3-53, diesel engine drives a
Vickers vane pump for operating the hydraulic rams of the "A" frame. The engine
is electric starter and radiator cooled and appeared in very good condition.
<PAGE> 71
SURVEY REPORT NO. 9812-1227
GENERAL DESCRIPTION AND CONDITION:
One Continental skid mounted model TMD 27, 4 cylinder diesel engine drives a
Parker model PFV 125B1711FNI vane pump to power a large diameter hose reel. The
engine is electric starting and radiator cooled and appears in new condition.
One skid mounted hydraulic powered 12 foot diameter steel hose reel which is
remotely powered from a hydraulic pressure source. The reel is fit with 300
feet of 8" diameter 1000 psi water hose. The hose reel is additionally fit
with 300 feet of 6" diameter high pressure air supply hose. The hose reel was
built by Marine Project Development Limited of Hull in Great Britain and the
hose reel unit and hoses appeared in very good condition.
2,600 feet of 1/2" high pressure hydraulic hose for the sensor units used for
positioning a jetting sled. The hoses appeared in good condition.
One steel water manifold for a jet pumping system constructed of 8" diameter
pipe and 8" valves which can be arranged to operate two high pressure water
pumps. This unit appeared in very good condition.
One skid mounted Viking, 50 ton line pull, 48" diameter single drum which driven
by a Hagglunds hydraulic motor through a Hagglund reduction gear. The drum is
fit with 4,000 feet of 1" steel cable. The unit and cable appeared in excellent
condition.
One skid mounted, Deutz 6 cylinder, turbocharged diesel engine driving a 12"
Gorman-Rupp 7,000 gallon per minute water supply pump which can deliver at 40
psi. The engine is electric starting and air cooled and appeared in nearly new
condition.
Two frame mounted Gardner-Denver 750 cubic feet per minute at 125 psi, air
compressors are each driven by General Motors 6 cylinder model 6-71 diesel
engine. Each engine is electric starting and radiator cooled. Each engine was
reportedly recently overhauled and each unit appeared in good condition.
One skid mounted 16 cylinder EMD model 16-645E5, turbocharged, 3,000 brake horse
power diesel engine drives a Lufkin 4 to 1 increase gear and a Bingham model
MSB 5/4 8 x 10 x 12.5, 3,000 gallon per minute at 1,000 psi, high pressure water
pump. The engine is air starting and heat exchanger cooled. The Lufkin gears
are reportedly new and appear in excellent condition. The Bingham pump appears
in excellent condition and is reportedly operative. The main engine appears in
excellent condition and was reportedly last overhauled 900 operating hours ago.
One Rasmussen Equipment Company skid mounted, double drum Skagit, model RB-90
winch is driven by General Motors 8 cylinder model V-8-71 diesel engine through
a Twin Disc torque converter and a system of gears and chains. The engine is
electric starting and radiator cooled. The engine is fit with a takeoff for
running its own winch controls. The
<PAGE> 72
SURVEY REPORT NO. 9812-1227
GENERAL DESCRIPTION AND CONDITION:
engine appears in excellent condition and it reportedly nearly new. The winch
appears in excellent condition.
VALUATION:
Estimated present day fair market value of above described equipment as
sighted December 04, 1998.................................$ 1,300,000.00
Fair Market Value:
A sum of money that equipment should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value of above described equipment as sighted
of December 04, 1998.......................................$ 1,000,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
This survey represents the good faith opinion of the surveyor and does not
make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to the condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The undersigned Marine Surveyor has no present or contemplated future
interest in the aforementioned vessel and/or its equipment, and
compensation for services has been arranged for on an independent fee
basis and is in no way contingent upon the values reported herein.
<PAGE> 73
SURVEY REPORT NO. 9812-1227
SURVEYOR'S NOTES: (continued)
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
[SEAL]
JMS:maw
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 74
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 8, 1998
SURVEY REPORT NO. 9812-1226
JETTING EQUIPMENT
(LAFAYETTE SITE)
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 8, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One Texas, NA, survey miscellaneous jetting equipment
(Transcoastal Marine Services, Inc. reported owners) while the equipment was
located at the facility of CSI in Lafayette, Louisiana, in order to ascertain
the general condition of the equipment and in order to estimate its present day
fair market value and orderly liquidation values of December 8, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL DESCRIPTION AND CONDITION:
The following equipment was sighted in Lafayette, Louisiana. All appeared to be
in good condition and reportedly operative.
SINGLE STAGE PUMPS:
Unit No. FP-8, Goulds single stage pump, powered by a GM 8V-71 diesel engine
(see photo No. 1).
Unit No. FP-11, Carver, model ETN-20-50, single stage 10"x8" pump powered by a
GM 8V-71 diesel engine (see photo No. 2).
Unit No. FP-13, Carver, model ETN-20-50, single stage 10"x8" pump powered by GM
8V-71 diesel engine (see photo No. 3).
<PAGE> 75
SURVEY REPORT NO. 9812-1226
GENERAL DESCRIPTION AND CONDITION: (continued)
4-STAGE PUMPS:
Unit No. HFP-97, Bingham, model MSB 5/4, 4-stage (destaged from 5-stage) 8 x 10
x 12.5 pump, powered by a 16 cylinder EMD, model 16-567-D3A, turbocharged, 1,800
brake horse power diesel engine, which drives a Lufkin, model N1604C, 3.977 to 1
gear box. The engine is air starting and heat exchanger cooled. The Lufkin gears
are reportedly new and appear in excellent condition. The Bingham pump appears
in excellent condition and is reportedly operative. The main engine appears in
excellent condition (see photos Nos. 4 and 5).
5-STAGE PUMPS:
Unit No. HFP-1, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
12V-92 diesel engine (see photo No. 6).
Unit No. HFP-2, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
16V-71 diesel engine (see photo No.7).
Unit No. HFP-3, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
16V-71 diesel engine (see photo No.8).
Unit No. HFP-4, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
16V-71 diesel engine (see photo No.9).
Unit No. HFP-98, Carver, model 1500B-5, 5-stage 8" x 6" pump powered by a GM
16V-71 turbocharged diesel engine (see photo No. 10).
Unit No. HR-3, a skid mounted hydraulic powered 8-foot diameter steel hose
reel, which has an onboard diesel powered hydraulic pressure source. The reel
is designed to hold 4* diameter high pressure air supply hose, but without any
hose at the time of survey (see photo No. 12).
HOSE REELS:
Unit No. HR-1, a skid mounted hydraulic powered 10-foot diameter steel hose
reel, which is remotely powered from a hydraulic pressure source. The reel is
fit with 300 feet of 5" diameter 1000 psi water hose. The hose reel is
additionally fit with 300 feet of 3" diameter high pressure air supply hose
(see photo No. 11).
Unit No. HR-3, a skid mounted hydraulic powered 8-foot diameter steel hose reel,
which has an onboard diesel powered hydraulic pressure source. The reel is
designed to hold diameter high pressure air supply hose, but without any hose at
the time of survey (see photo No. 12).
JET SLEDS:
Unit No. JS-1, a small jetting sled designed to accept a 6" high pressure water
line and a to 3" high pressure air supply line, capable of burying pipe up to
6" in diameter to a depth 4 feet below the mud line (see photo No. 13).
<PAGE> 76
SURVEY REPORT NO. 9812-1226
GENERAL DESCRIPTION AND CONDITION: (continued)
JET SLEDS: (CONTINUED)
Unit No. JS-2, a medium sized jetting sled, designed to accept a 6" high
pressure water line and a 2" to 3" high pressure air supply line. Unit No. JS-2
could not be visually sighted due to it being currently used at job sight in
New Orleans, Louisiana.
MISCELLANEOUS EQUIPMENT:
300 feet of 8" diameter 1000 psi jet hose is being stored at the CSI Facility,
which is designed to reel onto Unit No. HR-2, which is currently in use in
Mexico. This hose is in almost new condition and was recently purchased for a
reported amount of $50,000.00
VALUATION:
Estimated present day fair market value of above described
equipment as sighted December 8, 1998............................. $ 935.000.00
FAIR MARKET VALUE:
A sum of money that equipment should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably, and assuming the price is
not affected by undue stimulus. Implicit in this definition is the
consummation of a sale where title is passed from seller to buyer under
condition whereby:
1. The buyer and seller typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value of above described equipment
as sighted of December 08, 1998................................... $ 840,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is
basis.
SURVEYOR'S NOTES:
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal
<PAGE> 77
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 2, 1998
SURVEY REPORT NO. 9811-1221
SPUD BARGE "BH 100"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 2, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the spud barge "BH 100" (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in a laden condition and moored in
Venice, Louisiana, in order to ascertain the general condition and in order to
estimate her present day fair market value and orderly liquidation value as of
December 2, 1998.
NOTE: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Builder and date of
construction was unknown at the time of survey.
Dimensions are: Length - 110', breadth - 34', depth - 6'.
The vessel has a flush deck, a square raked bow, a square raked stern, and a
total of six (6) compartments consisting of one (1) bow rake compartment, four
(4) main body compartments, and one (1) stern rake compartment.
Access to each hull compartment is made through a manhole fitted with a center
bolt secured cover on a 4" high coaming. The No. 2 starboard main hull
compartment is used as a supply room.
The hull is fitted with two (2) strakes of formed plate rub rail which extends
from the bow to the stern on both port and starboard sides.
<PAGE> 78
SURVEY REPORT NO. 9812-1221
GENERAL CONSTRUCTION PARTICULARS: (continued)
Deck fittings consists of the following:
One (1) 8" diameter cast steel double bitt is located near amidships.
Two (2) 30" cast steel kevels are ranged along both port and starboard sides.
One (1) 24" cast steel kevel is located on both port and starboard sides of
the bow.
One (1) 22" x 22" spudwell fitted atop a 36" coaming, is located on each
port and starboard sides near amidships. Starboard and port spudwell
each contain one (1) 18" x 18" x 40' spud.
One (1) 2-tier handrail, constructed of approximately 6" diameter pipe, is
located across the stern and on both port and starboard sides, extending
forward to spudwells.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents:
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) cutting torch set up.
One (1) triple drum winch powered by a General Motors 4-71 diesel engine.
One (1) American Amhoist, model 7750, 75 ton pedestal crane located on the
bow center line.
One (1) Miller portable welding machine
One (1) 2" pump
One (1) 2" Teel electric pump.
One (1) 40' long set of pile driving leads with 4,000 lb. drive hammer and
follow block.
One (1) 19' x 4' x 18" work pontoon.
TANK CAPACITIES:
Tank capacities are as follows:
Gas Tank...................200 gallons.
Diesel Tank................175 gallons.
QUARTERS BUILDING:
On the deck is one (1) quarter building, located from the stern, extending
forward to amidships. Arrangements are as follows:
<PAGE> 79
SURVEY REPORT NO. 98112-1221
QUARTERS BUILDING: (continued)
Forward to port is a closet.
Aft to port is a crew's quarters with two (2) bunk beds and one (1) Fedders
window air-conditioning unit.
Aft to starboard is one (1) head containing three(3) sinks, two (2) showers,
two (2)commodes, and one (1) Sharp window air conditioning unit.
Aft to port is a storage closet.
Aft to port is a crew's quarters with five (5) triple bunks and one (1) Roper
and one (1) Sharp window air-conditioning units.
Aft to starboard is the galley/mess area which contains the following equipment
and/or furniture:
One (1) stove and oven.
One (1) Whirlpool refrigerator/freezer.
One (1) Amana refrigerator/freezer.
One (1) double stainless steel sink.
One (1) Sharp microwave.
One (1) Samsung TV.
One (1) JVC - VCR.
One (1) Standard Horizon VHF.
One (1) Pitney Bowes fax machine.
One (1) Scottsman ice maker.
One (1) cellular phone.
One (1) large chest-type Kenmore freezer.
Two (2) Carrier window air-conditioning units.
One (1) Roper window air-conditioning unit.
Atop the quarters is the following:
One (1) 30 KW generator powered by a Detroit Diesel 4-71 engine.
One (1) 15' flat boat with a 25 HP Evinrude outboard motor.
NO.2 STARBOARD MAIN HULL COMPARTMENT:
This compartment is used as a supply room and contains the following:
Two (2) fresh water pumps.
One (1) Red Fox, model Hustler, serial No.2940, sewer treatment plant.
<PAGE> 80
SURVEY REPORT NO. 9812-1221
EXTERNAL CONDITION:
External coating of coal tar epoxy is in good condition.
Barge does not appear to have any significant corrosion, wastage, or major
indents.
INTERNAL CONDITION:
Internals are in good condition and appear to have a fair coating of Texaco
Compound H.
No significant damage or corrosion was sighted.
VALUATION:
Estimated present day fair market value
as of December 2, 1998.....................................$ 350,000.00
Fair Market Value:
A sum of money that a vessel should bring in competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of December 2, 1998.........................................$ 275,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
<PAGE> 81
SURVEY REPORT NO. 9812-1221
SURVEYOR'S NOTES: (continued)
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition of seaworthiness; value, or marketability of subject
vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical
systems, or opening up any of those places ordinarily closed or concealed.
Therefore,deficiencies may exist other than those conditions noted in this
report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for services
has been arranged for on an independent fee basis and is in no way contingent
upon the value reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Wade R. Olsen
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
--------------------------------------
Anthony C. Peters,
Principal Surveyor.
WRO:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(Surveyor's Notes Continued Next Page)
<PAGE> 82
SURVEY REPORT NO. 9812-1221
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 83
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1211
CRANE BARGE "ROWE 14"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the steel crane barge "ROWE 14" (an
undocumented vessel of approximately 250 gross tons; Transcoastal Marine
Services, Inc. - reported owners The Woodson Companies - operators) while
subject vessel was lying afloat and moored at the facilities of the Woodson
companies at Delcambre, Louisiana, in order to ascertain the general condition
and in order to estimate her present day fair market value and orderly
liquidation value as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Date and circumstance of
construction were unknown at the time of survey; however, the vessel appears to
be approximately twenty (20) years old.
Overall Dimensions are: Length - 110', breadth - 34', depth - 7.3'.
The vessel was designed for crane service, has a flush deck, square raked bow,
square transom stern, one (1) bow rake compartment, one (1) stern transom
compartment and thirteen (13) main hull compartments.
Access to each hull compartment is made via an 18" flush deck manhole with a
center bolt cover.
<PAGE> 84
SURVEY REPORT NO. 9811-1211
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel is fit with one (1) course of rub rail fender constructed of 18" x
3/8" formed plate which is located 2' below deck elevation and extends from bow
around the stern on both port and starboard sides, and is filled with concrete.
DECK FITTINGS:
Deck fittings are comprised of the following:
One (1) each approximately 6" double bitts located at each corner.
Two (2) each approximately 36" kevels are ranged down port and starboard sides.
One (1) each closed chocks located aft on both port and starboard sides.
The bow deck is fit with a single tier 36" high cargo railing constructed of 6"
diameter pipe with stanchions located on 12' centers.
Bottom, side and deck plating are estimated to have been 3/8" original
thickness.
The vessel is framed longitudinally and stiffened transversely. Longitudinal
bottom frames are 5" x 3" x 5/16" angle spaced on 25" centers. Longitudinal
side frames are 4" x 3" x 1/4" angle spaced on 24" centers. The vessel is
stiffened transversely with transverse trusses spaced on 7' centers. Top and
bottom chords are constructed of 10" channels and outboard chords are
constructed of 5" channels.
SPUD SYSTEM:
The vessel is fit with three (3) internal spudwells. Two (2) are located near
mid-length on port and starboard sides, and one (1) is located on forward
center line. The mid-length port and starboard spudwells are 22" square and the
forward center line spudwell is 33" square.
The vessel is fit with two (2) approximately 40' long 17" and 17" steel spuds,
and one (1) approximately 60' long 17" x 17" square steel spud.
Spuds are raised and lowered utilizing a three drum, single gypsy head spud
winch of unknown manufacturer driving. Spud winch is driven by a General
Motors, 4-cylinder, model 4-71 diesel engine through a torque converter and a
system of sprockets and gears.
DRAGLINE EQUIPMENT:
The vessel is designed for dredging utilizing a deck crawler crane with a
three-yard drag [ILLEGIBLE] bucket. The stern deck is fit with an approximately
20' x 20' x 12" high timber mat to distribute the crane load. Secured on the
timber mat is a crawler type crane.
<PAGE> 85
SURVEY REPORT NO. 9811-1211
DRAGLINE EQUIPMENT: (continued)
The crane is a Bucyrus-Erie, model 71-B, series T, crawler crane in a dragline
configuration 100 with a 100' boom with a reported 70 tons of lifting capacity.
A General Motors, 12-cylinder, model V-12-71 diesel engine drives multiple
drums through a torque converter and a system of sprockets and chains.
DECKHOUSE ARRANGEMENT:
Located forward is a single level crew berthing area house which is constructed
of steel and is fit with portholes and designed watertight doors. The interior
is fit with overhead paneling, painted bulkheads, and linoleum floors.
Arrangements is as follows:
Forward, on the port side is a bunkroom with one (1) single double bunk, one
(1) General Electric 17 cu. ft. combination refrigerator/freezer, one (1)
clothes closet with a head and toilet, sink, and built in shower stall.
Forward, on the starboard side, is a bunkroom with three (3) double built in
wooden bunks and wooden storage closets.
A second bunkroom is located on the port side and contains two (2) double built
in wooden bunks and one (1) wooden clothes locker.
Located aft of the bunkroom on the port side is a head with one (1) double
built in shower stall, a toilet, and two (2) wooden storage lockers.
Located aft on the starboard side is a galley which contains a one hundred
(100) gallon electric water heater, a 4-element electric stove and oven, a
double stainless steel sink, and one (1) approximately 30 cu.ft. chest type
freezer, a mess table, and wooden dish racks and cabinets.
AUXILIARY EQUIPMENT:
In the lower hull is an auxiliary and storage room which contains one (1) 5 HP
electric motor driving a 2" fuel oil transfer pump and a fractional HP electric
motor driving a fresh water pressure set.
Located forward on the starboard side at main deck elevation of the house is a
generator room. The generator room contains one (1) 6-cylinder Cummins engine
driving a 75 KW/AC. The engine is electric starting and radiator cooled.
CERTIFICATES/DOCUMENTS:
No certification was on board the vessel at the time of survey.
<PAGE> 86
SURVEY REPORT NO. 9811-1211
CONDITION:
The vessel was sighted afloat. Reportedly, the vessel was last hauled out during
May 1995. Poor housekeeping prevails. Poor preventative maintenance prevails.
Deck fittings appear in satisfactory condition.
The deck is open in way of hull vents for each compartment on both the port and
starboard sides. The vessel is not ready for service and is in need of cleaning
and major maintenance prior to human habitation.
The rub rail is heavily flattened at scattered locations and across the stern
and is fractured away from side plating forward on the port side. The main deck
bow cargo rail is broken away at two (2) locations and is heavily distorted at
the bow. Poor housekeeping prevails and the interior of the house is in poor
condition with all surfaces dirty and in need of maintenance.
Spudwells, where visible, show moderate wastage. Spuds, where visible, appear in
satisfactory condition. The spud winch appears in satisfactory condition. The
spud winch engine is reported in satisfactory condition but was not test
operated at time of survey.
The crane deck mats shows moderate dry rot. Crane securing is poor with heavy
wastage of connections. The crane tracks are heavily corroded and obviously
lack maintenance. The crane appears in good condition and undamaged and
reportedly major maintenance was performed in 1997. The crane appears disused
and lacks preventative maintenance. The forward windshield of the operators cab
is broken out and glass debris is on deck. An annual inspection for a 28,000
lb. capacity was completed May 26, 1998. The engine exhaust insulation is
adrift.
Crew berthing house doors are in poor condition and at several locations show
generous use of silicon caulking to cover waste holes. The interior of the
house is in disarray, dirty, and unkempt. Deterioration and unhealthy
conditions are at nearly every location. The port forward bunkroom is in
disarray. The associated head is in disarray with plumbing suspect. The after
head is in disarray and suffering the affects of disuse.
The forward starboard bunkroom is in poor condition with silicone caulk being
used for bulkhead cable runs. The forward spudwell is visible in a closet in
the house and is wasted through at a location 1' above main deck elevation and
this has been repaired with silicone caulk. Crew area wiring is in disarray and
circuits are open at scattered locations. The after bunkroom is being used for
storage and is in disarray.
The galley is unusable in its present condition.
Fire fighting equipment is in poor condition.
Life saving equipment is in poor condition.
<PAGE> 87
SURVEY REPORT NO. 9811-1211
CONDITION: (continued)
The main generator appears to have been last maintained 3,000 hours ago and is
in need of preventative maintenance. Wiring in the generator room is improper
and open and the room is suffering from disuse.
The lower hull storage area is in poor condition and is unkempt.
Fuel oil transfer pump piping is in poor condition. The fresh water pressure set
appears inoperative and some wiring is open.
The hull exterior coating appears in satisfactory condition with moderate
pitting throughout. The interior of the hull is uncoated and in the lower
portion shows moderate rust scale and some internal members are wasted through
and fractured.
VALUATION:
Estimated present day fair market value
as of November 30, 1998.....................................$300,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably, and assuming the price is
not affected by undue stimulus. Implicit in this definition is the
consummation of a sale where title is passed from seller to buyer under
condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of November 30, 1998....................................$200,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is
basis.
<PAGE> 88
SURVEY REPORT NO. 9811-1211
SURVEYOR'S NOTES:
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel is
either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting se trials, testing or tying out machinery or electrical systems, or
opening up any of those place ordinarily closed or concealed. Therefore,
deficiencies may exist other than those condition noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in th aforementioned vessel and/or its equipment, and compensation for services
has bee arranged for on an independent fee basis and is in no way contingent
upon the value reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD PETERS & ASSOCIATES, INC
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
SJB:smk
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
<PAGE> 89
SURVEY REPORT NO. 9811-1211
DISTRIBUTION: (continued)
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 90
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1223
CONSTRUCTION BARGE
250'x50'x12'
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on December
4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for the
account of Bank One, Texas, NA, survey the 250' construction barge (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners) while
subject vessel was lying afloat in an unladen condition and moored at the
facilities of Red Fox on Industrial Canal in New Orleans, Louisiana, in order to
ascertain the general condition and in order to estimate her present day fair
market value and orderly liquidation value as of December 4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Nashville Bridge
Company in Nashville, Tennessee during 1953.
Dimensions are: Length - 250', breadth - 50', depth - 12'.
The vessel has a cambered deck with a dead rise in way of the bow rake and No. 1
main compartments, a spoon raked bow, a transom stern, and a total of ten (10)
compartments consisting of one (1) bow rake compartment, eight (8) main body
compartments, and one (1) stern transom compartment.
Access to each hull compartment is made through a 21"x16" oval deck type
manhole on 3-1/2" raised coaming fitted with a 4-dog secured cover.
<PAGE> 91
SURVEY REPORT NO. 9812-1223
GENERAL CONSTRUCTION PARTICULARS: (continued)
The hull is fitted with two (2) strakes of 9" split pipe rub rail, located at
4-1/2' and 10' elevations which extend from the bow to the stern on both port
and starboard sides. A 7" x 3/4" rub bar is located 1' below the deck on both
port and starboard sides. Additionally, twenty-two (22) large truck tires
suspended by heavy chain from double padeyes are ranged along the port side.
Forward half of the deck is fitted with a 1-1/4" diameter 2-tier pipe handrail.
After half of the deck is fitted with a 2-tier handrail fabricated of 3" x 3"
angle and 1/4" wire rope.
Deck fittings consists of the following:
One (1) 48" cast steel kevels is located on bow and stern center line.
Five (5) 48" cast steel kevels are ranged along both the starboard side.
Two (2) 48" cast steel kevels are ranged along the port side.
Three (3) 36" cast steel kevels are ranged along the port side.
One (1) 60" cast steel kevel is on port side.
One (1) 10" button bitt is located on the port side forward.
One (1) 8" single bitt is located to both port and starboard of amidship.
One (1) 12" double steel bitt is located at each corner of the stern.
Two (2) 10" button bitts, two (2) 12" button bitts, and one (1) 10" roller
button bitt are located at the port stern corner.
Three (3) 10" button bitts and two (2) 12" button bitts are located at the
starboard stern corner.
Two (2) 24" diameter spudwells fitted atop 5" coamings are located on the
starboard side. Each contains one (1) 42' spud.
Two (2) 16" x 16" spudwells fitted atop 8" coamings are located on the
starboard side. Each contains one (1) 16" diameter x 42' spud.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) hand operated single drum winch.
One (1) American, model No. 9720, serial No. 658720, 90 ton crane is mounted on
a 16' x 15' x 14' pedestal.
<PAGE> 92
SURVEY REPORT NO. 9812-1223
DECK ARRANGEMENT:
Deck consists of three(3) construction decks, one (1) pedestal crane, and a
metal storage building.
Arrangement is as follows:
Forward to starboard is a 15' x 40' x 10' metal storage building. In the after
end of the building, a stairway leads down to additional storage in No. 1 port
and starboard main compartments. Access to the port main compartment is through
a 5' x 7' opening in the longitudinal bulkhead. Building does not use
watertight doors.
Aft on center line is a 10' x 40" diameter boom rest fitted with gusset plates.
Aft is a 36' x 50' x 12" cement deck. Atop the Cement deck is a 36' x 20' x 16"
construction fabricated of 9" channel and 4" x 3" angle.
Aft is a 36' x 40' x 26" steel construction deck fabricated of 16" I-beam and
3" x 3" angle.
Aft is the pedestal crane.
At the stern is a 60' x 40' x 26" steel construction deck fabricated of 15"
channel, 16" I-beam, and 4" x 3" angle.
ELECTRICAL:
The vessel is wired with a combination of basket weave metal armored type
cable, galvanized flexible conduit, and PVC insulated cable. Lighting system is
110 volt AC. Overload protection is via circuit breakers. Electricity is
provided by shore power.
EXTERNAL CONDITION:
External coating of coal tar epoxy is in excellent condition in way of sides,
transom, and bow rake.
Deck coating is in fair condition.
Starboard side plating contains washboarding and numerous indents of 0 to 3".
Starboard rub rail appears recently renewed in most areas.
Reportedly, bottom plating has its anodes renewed.
Port side plating contains washboarding and large diameter indents of 0 to 5".
<PAGE> 93
SURVEY REPORT NO. 9812-1223
EXTERNAL CONDITION: (condition)
All tires and chains have recently been renewed on the port side.
Transom plating set in and washboarded 0 to 5" over its full breadth and width.
Side plating, gunwale, and deck contain numerous doublers throughout.
Most wire rope handrails have wires adrift with three (3) 10' sections missing
wires and posts.
Pipe handrail is in good condition.
Deck plating contains washboarding of 0 to 2" in a few areas.
After work deck is uncoated and in good condition.
All other work decks are recently coated and in good condition.
Crane pedestal is in like-new condition.
All deck fittings and manholes have been recently coated with yellow epoxy.
Numerous manholes have their coamings cropped off and covers replaced with
steel plating not fitted with gaskets.
INTERNAL CONDITION:
Internals are in fair condition with a coating of silver paint in way of the
upper 10', mostly intact. Lower 2' displays mild to moderate corrosion.
Numerous internal stiffeners were distorted to conform to external distortion.
VALUATION:
Estimated present day fair market value
as of December 4, 1998.......................................$ 300,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit of this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
<PAGE> 94
SURVEY REPORT NO. 9812-1223
VALUATION: (continued)
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of December 4, 1998.......................................$200,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
<PAGE> 95
SURVEY REPORT NO. 9812-1223
SURVEYOR'S NOTES: (continued)
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 96
[BACHRACH, WOOD, PETERS, & ASSOCIATES, INC. LETTERHEAD]
December 07, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1213
SPUD BARGE "7101"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on November
30, 1998, at the request of Ms. Karen S. Shouse, and on behalf of and for the
account of Bank One, Texas, NA, survey the undocumented steel Spud Barge "7101",
the Ex-NBC 1857, a vessel of approximately 315 gross tons; reported owners
Transcoastal Marine Services, Inc. - operators The Woodson Companies - while
subject vessel lay afloat and moored in an unladened condition at the facilities
of The Woodson Companies at Delcambre, Louisiana, in order to ascertain the
general condition of the vessel and in order to estimate her present day fair
market value and orderly liquidation values as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Nashville Bridge
Company at Nashville, Tennessee, during 1966.
Overall dimensions are: Length - 136', breadth - 35', depth - 7'6".
This vessel is designed for crane service, has a flush deck, a square raked
bow, a square raked stern, three (3) bow rake compartments, four (4) main body
compartments, and one (1) stern rake compartment.
Access to each hull compartment is made via an 18" flush deck manhole with
a center bolt cover.
The vessel is not fit with rub rail fenders.
<PAGE> 97
SURVEY REPORT NO. 9811-1213
GENERAL CONSTRUCTION PARTICULARS: (continued)
The hull of the vessel is constructed with a 3/4" thick headlog, 3/4" rake
knuckles, 1/2" thick deck, 3/8" thick sides and bottom plating, 3/8" rake bottom
plating and 5/16" thick bulkheads. The vessel is longitudinally framed and
transversely stiffened. Longitudinal deck beams approximately 5" channels spaced
on 11" centers. Longitudinal side frames are 5" x 3" x 5/16" inch angles spaced
on 25" centers. Longitudinal bottom frames are 5" x 3" x 3/8" angles spaced on
23" centers.
The hull is stiffened transversely with transverse trusses spaced on 72"
centers. Top and bottom cords are 15" "I" beams. Outboard cords 14" "I" beams.
Trusses are stiffened with 12" "I" beam verticals spaced on 4 ft. centers and
with inboard and outboard diagonals of 5" "I" beams. Bulkheads are stiffened
with 5" x 5/16" flatbars spaced on 24" centers.
Deck fittings consist of:
One (1) each approximately 6" double bitts located on each barge corner and
three (3) each approximately 42" kevels ranged down both port and starboard
sides.
The vessel is fitted with one (1) each approximately 6" diameter x 6" high
compartment pump-out pipes with caps located in way of the port and starboard
bow rake compartments.
The vessel is fitted with approximately 6" high steel pollution barrier fit with
2 1/2" drains with plugs which is constructed of approximately drains with plugs
which is constructed of approximately 1/4" thick steel and extends around the
entire periphery of the deck edge.
Port and starboard sides are each fit with an approximately 44" high two tier
safety hand rail constructed of 4" diameter pipe stanchions and two courses of
3/8" wire cable.
Forward and aft on the starboard side are a total of two (2) internal spud
wells. Each spud well is fit with sheaves and fairlead blocks to the spud winch
which is located forward on the starboard side. The spud winch is skid mounted,
double drum, double gypsy head Conmaco winch driven by General Motors,
4-cylinder model 4-71 diesel engine. The engine is electric starting and
radiator cooled. The winch is additionally fit with a 12 volt battery and
approximately 50 gallon capacity diesel oil tank.
The vessel is fit with a total of two (2) approximately 40 ft. long, 21" x 21"
square steel spuds.
The area over the spud winch is fit with a 20 ft. x 8 ft. x 12 ft. steel
platform constructed of 6" diameter pipe stanchions and 8" "H" beam frames. The
top of the platform is fit with a 36" high two tier pipe safety hand rail.
The starboard side #1 main body compartment is fit with a steel access trunk
with a weather tight steel door.
<PAGE> 98
SURVEY REPORT NO. 9811-1213
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel has on board two (2) 30" ring buoys with throw lines and water lights
and one (1) 15 lb. portable CO(2) fire extinguisher which was last date tagged
during January 1998.
CERTIFICATES/DOCUMENTS:
No documents were on board the vessel at time of survey.
CONDITION:
The vessel was sighted afloat. Reportedly the vessel was last hauled out during
July, 1998. Head log plating is devoid of indents. Bow rake bottom plating was
inaccessible at time of survey, however, an internal examination showed no major
upsets at any location. Starboard side plating and rake knuckle and deck edge
show minor indents of 0 to 2" in the forward 12 ft. portion. Starboard side
plating is generally wavy to a depth of 0 to 1" throughout with very occasional
major indents of 0 to 2". Stern log plating is devoid of indents. Stern rake
bottom plating is devoid of upsets. Port side plating showed numerous minor
indents of 0 to 1" at random locations. No noteworthy damage was found
internally. No noteworthy wastage was sighted at any location and the vessel is
well coated internally and externally. The pollution barrier is open at some
locations. Hand rails have been partially dismantled. The spud winch appears in
excellent condition and was reportedly recently rebuilt. The date of rebuilding
was unknown at the time of survey and the spud winch was not test operated at
time of survey.
VALUATION:
Estimated present day fair market value
as of November 30, 1998........................................ $285,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 99
SURVEY REPORT NO. 9811-1213
VALUATION: (continued)
Estimated orderly liquidation value
as of November 30, 1998.........................................$255,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to the condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
<PAGE> 100
SURVEY REPORT NO. 9811-1213
SURVEYOR'S NOTES: (continued)
JMS:maw
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 101
[BACHRACH, WOOD, PETERS, & ASSOCIATES, INC. LETTERHEAD]
December 8, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1214
SPUD BARGE "7102"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, and on behalf of and
for the account of Bank One, Texas, NA, survey the undocumented steel Spud
Barge "7102", the ex-"NBC 1856, a vessel of approximately 315 gross tons;
reported owners Transcoastal Marine Services, Inc. - operators The Woodson
Companies - while subject vessel lay afloat and moored in an unladened
condition at the facilities of The Woodson Companies at Delcambre, Louisiana,
in order to ascertain the general condition of the vessel and in order to
estimate her present day fair market value and orderly liquidation values as of
November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Nashville Bridge
Company at Nashville, Tennessee, during 1966.
Overall dimensions are: Length - 136', breadth - 35', depth - 7'6".
This vessel is designed for crane service, has a flush deck, a square raked
bow, a square raked stern, three (3) bow rake compartments, four (4) main body
compartments, and one (1) stern rake compartment.
Access to each hull compartment is made via made an 18" flush deck manhole with
a center bolt cover.
The vessel is not fit with rub rail fenders.
<PAGE> 102
SURVEY REPORT NO. 9811-1124
GENERAL CONSTRUCTION PARTICULARS: (continued)
The hull of the vessel is constructed with a 3/4" thick headlog, 3/4" rake
knuckles, 1/2" thick deck, 3/8" thick sides and bottom plating, 3/8" rake
bottom plating and 5/16" thick bulkheads. The vessel is longitudinally framed
and transversely stiffened. Longitudinal deck beams approximately 5" channels
spaced on 11" centers. Longitudinal side frames are 5" x 3" x 5/16" inch angles
spaced on 25" centers. Longitudinal bottom frames are 5" x 3" x 3/8" angles
spaced on 23" centers.
The hull is stiffened transversely with transverse trusses spaced on 72"
centers. Top and bottom cords are 15" "I" beams. Outboard cords 14" "I" beams.
Trusses are stiffened with 12" "I" beam verticals spaced on 4 ft. centers and
with inboard and outboard diagonals of 5" "I" beams. Bulkheads are stiffened
with 5" x 5/16" flatbars spaced on 24" centers. Deck fittings consist of:
One(1) each approximately 6" double bitts located on each barge corner and
three(3) each approximately 42" kevels ranged down both port and starboard
sides.
The vessel is fitted with one(1) each approximately 6" diameter x 6" high
compartment pump-out pipes with caps located in way of the port and starboard
bow rake compartments.
The vessel is fitted with approximately 6" high steel pollution barrier fit with
2 1/2" drains with plugs which is constructed of approximately 1/4" thick steel
and extends around the entire periphery of the deck edge.
Port and starboard sides are each fit with an approximately 44" high two tier
safety hand rail constructed of 4" diameter pipe stanchions and two courses of
3/8" wire cable.
Forward and aft on the starboard side are a total of two (2) internal spud
wells. Each spud well is fit with sheaves and fairlead blocks to the spud winch
which is located forward on the starboard side. The spud winch is a skid
mounted, triple drum, double gypsy head Conmaco winch driven by General Motors,
4-cylinder model 4-71 diesel engine with a local control station. The engine is
electric starting and radiator cooled. The winch is additionally fit with a 12
volt battery and approximately 50 gallon capacity diesel oil tank.
The vessel is fit with a total of two (2) approximately 40 ft. long, 21" x 21"
square steel spuds.
The area over the spud winch is fit with a 20 ft. x 8 ft. x 12 ft. steel
platform constructed of 6" diameter pipe stanchions and 8" "H" beam frames. The
top of the platform is fit with a 36" high two tier pipe safety hand rail.
The starboard side #1 main body compartment is fit with a steel access trunk
with a weather tight steel door.
<PAGE> 103
SURVEY REPORT NO. 9811-1124
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel has on board two (2) 30" ring buoys with throw lines and water lights
and one (1) 15 lb. portable CO(2) fire extinguisher which was last date tagged
during January 1998.
CERTIFICATES/DOCUMENTS:
No documents were on board the vessel at time of survey.
CONDITION:
The vessel was sighted afloat. Reportedly the vessel was last hauled out
during July, 1998. Head log plating is devoid of notable indents. Bow rake
bottom plating is devoid of indents. Starboard side plating shows numerous
minor indents of 0-1" throughout. Starboard side plating is set in 0-4" over an
area of 15' X full depth of vessel, near mid-length. Sternlog plating is devoid
of major indents. Stern rake bottom plating is devoid of indents. Port side
plating shows numerous minor indents of 0-1" at scattered locations and several
sharp minor indents of 0-3". Port bow rake knuckle plating and port side
plating set in 0-6" over 6' x 2' located in way of the port bow double bitts.
No noteworthy damage was found internally. No noteworthy wastage was sighted
at any location and the vessel is well coated internally and externally. The
pollution barrier is open at some locations. Hand rails have been partially
dismantled. The spud winch appears in excellent condition and was reportedly
recently rebuilt. The date of rebuilding was unknown at the time of survey and
the spud winch was not test operated at time of survey.
VALUATION:
Estimated present day fair market value
as of November 30, 1998........................................ $280,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 104
SURVEY REPORT NO. 9811-1124
VALUATION: (continued)
Estimated orderly liquidation value
as of November 30, 1998.........................................$250,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to the condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JMS:maw
<PAGE> 105
Distribution: (continued from previous page)
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 106
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1224
OFFICE BARGE
208' x 26' x 5'
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the 208' office barge (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in an unladen condition and moored at the
facilities of Red Fox on Industrial Canal in New Orleans, Louisiana, in order
to ascertain the general condition and in order to estimate her present day
fair market value and orderly liquidation value as of December 4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessels were built of all welded steel construction by Nashville Bridge
Company in Nashville, Tennessee. The forward vessel was built in 1941, hull No.
579. The after vessel was built in 1955, hull No. 1134.
Overall dimensions are: Length - 208', breadth - 26', depth - 5'.
The vessel consists of two (2) barges bolted together stern to stern. Forward
vessel has a flush deck, a square raked bow, a square raked stern, and a total
of five (5) compartments consisting of one (1) bow rake compartment, three (3)
main body compartments, and one (1) stern rake compartment. The after vessel
has a flush deck, a square raked bow, a transom stern and a total of three (3)
compartments consisting of one (1) port main compartment and two (2) starboard
main compartments.
<PAGE> 107
SURVEY REPORT NO. 9812-1224
GENERAL CONSTRUCTION PARTICULARS: (continued)
Access to each hull compartment is made through various design 18" to 20"
diameter deck type manholes.
Forward hull is fitted with one (1) strake of 15" formed plate rub rail,
located just below the deck which extends from the bow to the stern on both port
and starboard sides. After hull is fitted with a 7" x 3/4" rub bar located just
below the deck which extends from the bow to the stern on the port side.
Starboard side has no fender system.
Port deck gunnel is fitted with a 3" diameter 1-tier pipe guardrail with 3"
diameter vertical stanchions 9" high which extend from the bow to the stern.
Deck fittings consists of the following:
Eleven (11) 7" diameter steel H bitts are ranged along the port side.
One (1) 36" cast steel kevel is located on the stern center line.
One (1) 48" cast steel kevel is located at the starboard stern corner.
Three (3) 14" diameter spudwells are surface mounted to the starboard side.
Each contains one (1) spud.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
DECK EQUIPMENT:
Deck equipment consists of the following:
Three (3) Nabrico 40 single drum electric winches.
One (1) Woods 20 cubic foot freezer.
One (1) Oasis water fountain.
Three (1) 5' x 46" x 30 Knaack toolboxes.
DECK ARRANGEMENTS:
Deck contains two (2) single level steel buildings located on the forward barge
and one (1) two level steel building located on the after barge.
Arrangement is as follows:
At the bow is one (1) 18' x 7'6" building used for storage of personnel
equipment and as as break area.
<PAGE> 108
SURVEY REPORT NO. 9812-1224
DECK ARRANGEMENTS:
Aft is a 40' x 18' building containing a pipe fabrication shop. In the center
is a 4' x 15' steel work table. At various locations in the building are
stations for connections to air, oxygen, argon, propane, and water. All
connections are color coded. All gases and water are supplied from shore. Pipe
shop also contains fourteen (14) 2000 lb. jack stands and one (1) 6" vice.
Aft is a breezeway. A trolley system consisting of a 8" I-beam suspended
overhead is used for loading equipment from the starboard side to a tool room
located aft.
Aft is a 40' x 18' building used as a company tool room. This building contains
the following:
Drop lights. Torches. Life jackets.
Hand tools. Grinders. Safety Equipment.
Circular saws. Ladders. Fire extinguishers.
Come-alongs. Bilge pumps. Welding equipment.
Paint brushes. Battery chargers. Welding rods.
Nuts, bolts, and washers.
Aft is a 70' x 21' building used for storage of electrical and welding
equipment. This building contains eight (8) Thermal ARC electric welding
machines, one (1) General Electric refrigerator, two (2) 1-3/4" diameter
pneumatic pumps, and various extension cords, high pressure hoses, and rope.
Second level in the after building is used for office space that measures 35' x
50'. Equipment in the office area consists of the following:
One (1) Ricoh, model FT4727, copy machine.
One (1) Hotpoint refrigerator.
One (1) Panasonic fax machine/copier.
Six (6) Kenwood VHF marine hand held radios with chargers.
Four (4) Standard VHF marine hand held radios with chargers.
One (1) Daytron microwave oven.
One (1) Magic Chef toaster oven.
One (1) Mr. Coffee coffeemaker.
At the after end of the building is a head with five (5) commodes.
ELECTRICAL:
Vessel is wired with basketweave metal armored type cable. Lighting system is
110 volt AC. Overload protection is via circuit breakers. Electricity is
provided by shore power.
<PAGE> 109
SURVEY REPORT NO. 9812-1224
EXTERNAL CONDITION:
External coating of coal tar epoxy is in good condition.
Deck coating of red epoxy is in good condition.
Perimeter of the deck and the deck fittings are well coated with yellow epoxy.
All buildings are fabricated of 1/4" plate and their internal and external
coating is in good condition.
Barge contains light washboarding and few indents of 0 to 1" throughout.
Reportedly, bottom plating has had its anodes recently renewed.
INTERNAL CONDITION:
Internals are in good to fair condition, with no coating evident and light
corrosion throughout.
No significant damage was sighted.
VALUATION:
Estimated present day fair market value
as of December 4, 1998..................................$210,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 110
SURVEY REPORT NO. 9812-1224
VALUATION: (continued)
Estimated orderly liquidation value
as of December 4, 1998...................................$140,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
<PAGE> 111
SURVEY REPORT NO. 9812-1224
SURVEYOR'S NOTES: (continued)
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 112
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1222
SPUD BARGE "TCMS 612"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One Texas, NA, survey the spud barge "TCMS 612" (an
undocumented vessel, of 401 gross and net tons; Transcoastal Marine Services,
Inc. - reported owners) while subject vessel was lying afloat in a laden
condition and moored at the facilities of Coastal Machinery in Belle Chasse,
Louisiana, in order to ascertain the general condition and in order to estimate
her present day fair market value and orderly liquidation value as of December
4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Builder and date of
construction was unknown at time of survey.
Dimensions are: Length - 140', breadth - 39', depth - 9'.
The vessel has a flush deck, a square raked bow, a square raked stern, and a
total of eight (8) compartments consisting of two (2) bow rake compartments,
four (4) main body compartments, and two (2) stern rake compartments.
Access to each hull compartment is made through both flush deck type 18"
diameter manholes fitted with a center bolt secured covers.
The hull is fitted with two (2) strakes of formed plate rub rail located at the
3' and [ILLEGIBLE] elevations which extend from the bow to the stern on both
port and starboard sides [ILLEGIBLE] interim vertical strakes at strategic
locations.
<PAGE> 113
SURVEY REPORT NO. 9812-1222
GENERAL CONSTRUCTION PARTICULARS: (continued)
Approximately 60% of the deck is laid out with timbers.
Deck fittings consists of the following:
One (1) 10" diameter cast steel double bitt is located in way of each corner of
the barge hull.
Two (2) 36" cast steel kevels are located on the starboard side.
Three (3) 36" cast steel kevels are located on the port side.
Two (2) 21" diameter spudwells fitted atop an 18" coamings, are located forward
and aft on the starboard side. Each contains one (1) 40' spud.
Two (2) davits for spuds, each approximately 40' high.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
EXTERNAL CONDITION:
External coating of coal tar epoxy is in good condition.
Barge does not appear to have any significant corrosion or wastage.
Hull contains random washboarding and indents of 0 to 1-1/2".
Deck plating contains random washboarding and indents of 0 to 1-1/2" where
sighted.
Reportedly, bilge knuckles have been renewed on both port and starboard sides
for the full length.
Reportedly, 8' of bottom plating has been renewed.
Reportedly, bow and stern rake compartments have been cleaned and recoated.
Reportedly, anodes have been renewed.
INTERNAL CONDITION:
Internals are in good condition and appear to have a fair coating of Texaco
Compound H.
No significant damage or corrosion was sighted.
<PAGE> 114
SURVEY REPORT NO. 9812-1222
VALUATION:
ESTIMATED PRESENT DAY FAIR MARKET VALUE
AS OF DECEMBER 4, 1998.........................................$ 200,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time allowed for exposure in the open market.
ESTIMATED ORDERLY LIQUIDATION VALUE
AS OF DECEMBER 4, 1998.........................................$ 160,000.000
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
<PAGE> 115
SURVEY REPORT NO. 9812-1222
SURVEYOR'S NOTES: (continued)
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Wade R. Oslen
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
/s/ ANTHONY C. PETERS [SEAL]
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
WRO:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 116
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1216
SPUD BARGE "BH 201"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the spud barge "BH 201" (an inland,
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in an unladen condition and moored at the
facilities of H.B.H., Inc. in Harvey, Louisiana, in order to ascertain the
general condition and in order to estimate her present day fair market value
and orderly liquidation value as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Builder and date of
construction was unknown at time of survey.
Dimensions are: Length - 90', breadth - 23', depth - 5'.
The vessel is two (2) 90' x 8'6" x 5' independent floats connected by means of
two (2) 10' x 6' x 9'6" A-frames fabricated of 16" I-beams, located forward
and aft. Each float has a flush deck, square raked bow, a square raked stern,
and a total of four (4) compartments consisting of one (1) bow rake
compartment, two (2) main body compartments, and one (1) stern rake compartment.
Access to each hull compartment is made through a 18" diameter flush deck type
manhole fitted with a center bolt secured cover.
<PAGE> 117
SURVEY REPORT NO. 9811-1216
GENERAL CONSTRUCTION PARTICULARS:
Deck fittings are comprised of the following:
Three (3) 24" cast-steel kevels are ranged along both port and starboard sides.
Two (2) 12" high securing pads are located on both port and starboard sides of
the bow welded to an estimated 8' x 3' doubler.
One (1) 6' x 5' doubler is located on both port and starboard sides just abaft
the forward hoist, each is fitted with one (1) hinge.
One (1) 7' stanchion is located to port on the bow.
Two (2) 12" x 12" spudwells with 30" raised coaming, one (1) located forward on
the starboard side and one (1) located aft on the port side. Each spudwell
has one 30 spud.
Two (2) 8" high retainers each estimated at 18' x 5' are located on the port
half of the deck.
Two (2) 8" high retainers estimated at 15' x 5' are located on the port half of
the deck.
One (1) 8" high retainer estimated at 12' x 5' is located aft on the starboard
side.
Two (2) 30" stanchions fabricated of 6" diameter pipe are located on both port
and starboard sides.
Located aft is a 23' x 18' x 7' building constructed of 4-1/2" pipe with a
corrugated steel roof.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
EXTERNAL CONDITION:
General:
External coating of coal tar appears in good condition.
Barge does not appear to have any significant corrosion or wastage.
Bow Rake:
Bow rake plating could not be sighted due to the moored position of the barge
at the time of survey.
Stern Rake:
Stern rake plating could not be sighted due to the moored position of the barge
at the time of survey.
<PAGE> 118
SURVEY REPORT NO. 9811-1216
EXTERNAL CONDITION: (continued)
Headlog:
Headlog plating contains scattered indents of 0 to 1".
Starboard Side:
Side plating contains scattered indents of 0 to 1".
Sternlog:
Sternlog plating contains scattered indents of 0 to 1".
Port Side:
Side plating contains scattered indents of 0 to 1".
Deck:
Deck plating does not appear to have any significant damage.
Roof of metal building is in poor condition.
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) triple drum spud winch, powered by a Detroit Diesel 2-71 radiator
cooled.
One (1) Detroit Diesel 2-71, radiator cooled, powering the hydraulic unit.
One (1) single drum winch is located atop the A-frame.
INTERNAL CONDITION:
Interior was void of coating with light rust prevalent.
No significant damage or corrosion was sighted.
<PAGE> 119
SURVEY REPORT NO. 9811-1216
VALUATION:
Estimated present day fair market value
as of November 30, 1998.................................$70,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of November 5, 1998..................................$55,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
<PAGE> 120
SURVEY REPORT NO. 9811-1216
SURVEYOR'S NOTES: (continued)
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 121
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 08, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1212
SPUD BARGE "MM VII"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, and on behalf of and
for the account of Bank One, Texas, NA, survey the undocumented steel Spud
Barge "MM VII", an undocumented vessel of approximately 300 gross tons,
previously assigned the official number 613041; reported owners Transcoastal
Marine Services, Inc. - operators The Woodson Companies - while subject vessel
lay afloat and moored in an unladened condition at the facilities of The
Woodson Companies at Delcambre, Louisiana, in order to ascertain the general
condition of the vessel and in order to estimate her present day fair market
value and orderly liquidation values as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Date and circumstances
of construction were unknown at time of survey. However, the vessel appears to
be approximately 25 years old.
Overall dimensions are: Length - 120', breadth - 36', depth - 7'3".
This vessel is a typical inland deck cargo barge, converted for use as a spud
barge and has a flush deck, a square raked bow, a square raked stern, one (1)
bow rake compartment, four (4) main body hull compartments, and one (1) stern
rake compartment.
The vessel is not fit with rub rail fenders.
<PAGE> 122
SURVEY REPORT NO. 9811-1212
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel is not fit with skegs.
Access to each hull compartment is made via 24" diameter flush deck manhole
with a center bolt cover.
Head log and stern log plating are estimated to be 3/4" original thickness.
Rake knuckle plating is estimated to have been 1/2" original thickness. Bottom
side and deck plating is estimated to have been 3/8" original thickness.
Bulkheads are estimated to have been 5/16" original thickness. The vessel is
framed longitudinally and stiffened transversely. Longitudinal deck beams are 5"
channel spaced on 18" centers. Longitudinal side frames are 4" channel spaced
on 18" centers. Longitudinal bottom frames are 5" channel spaced on 22"
centers. Bulk heads are stiffened vertically with 3" x 2 1/2" angle spaced on
28" centers.
The vessel is stiffened transversely with transverse trusses spaced on 7 foot
centers. All top, bottom and outboard cords are 8" channels. Trusses are
additionally stiffened with 4" x 4" x 1/4" angle vertically spaced on 5 foot
centers and two 4" x 3 1/2" x 1/4" angle diagonals in way of each truss.
The deck fittings consist of one (1) each, approximately 7" double bitts
located on each corner, two (2) each approximately 30" kevels ranged on both
port and starboard sides and one (1) each approximately 7" single bitts located
near mid-length on both port and starboard side.
The vessel is fit with an approximately 6" high steel pollution barrier which
extends around the entire peripheral of the vessel and is fit with drains with
threaded plugs.
The vessel is fit with the remnants of a safety handrail system along both port
and starboard sides.
The vessel is fit with one (1) each approximately 24" square internal spud
wells located fore and aft on the starboard side. Each spud well is fit with
fair lead sheaves to the spud winch which is located forward on the starboard
side. The spud winch is a skid mounted double drum winch of unknown
manufacturer driven by a General Motors 3 cylinder model 3-71 diesel engine
through a power takeoff and a system of shafts and chains. The spud winch is
fit with a local control station and is complete with an approximately 30
gallon fuel oil reserve tank and a 12 volt heavy duty marine battery.
The vessel is fit with two (2) each approximately 18" square by 40 foot long
steel spuds [ILLEGIBLE] the spud wells.
The area over the spud winch is fit with an approximately 15' x 8' x 8'
platform constructed of 4" diameter pipe stanchions and 4" H beam frames.
<PAGE> 123
SURVEY REPORT NO. 9811-1212
GENERAL CONSTRUCTION PARTICULARS: (continued)
The starboard number one main body compartment is fit with a steel access trunk
with a weather tight steel door and stairs leading to the lower hull.
CERTIFICATES/DOCUMENTS:
No documents were on board the vessel at time of survey.
CONDITION:
The vessel was sighted afloat. Reportedly the vessel was last hauled out
during April, 1990. The exterior coating of the vessel is good with only very
occasional light rust patches. The interior of the vessels coating is fair and
approximately 60% effective. Head log plating is heavily distorted on
centerline and shows minor indents throughout. Rake bottom plating is devoid of
major indents. Starboard side plating and rake knuckle set in 0 to 3" over an
area of 8 feet by full depth of vessel in way of the bow double bits. Starboard
side plating shows washboarding and is wavy 0 to 1" throughout with very
occasional major indents of 0 to 2" at scattered locations. Stern log shows
light scattered indents at random locations. Stern rake bottom plating is
devoid of major indents. Port side plating is set in 0 to 3" over 12 feet by
full depth of the vessel extending from the stern forward. Port side plating is
set in 0 to 3" over an area of 12 feet by full depth of the vessel in way of
the bow rake compartment. Remainder of the port side plating shows minor
indents of 0 to 1" throughout and is lightly to moderately pitted and shows
major wastage throughout.
The deck is heavily pitted and wasted throughout with areas of greater than 50%
wastage obvious. The deck shows numerous minor indents due to thin plating.
Bulkheads are obvious. Frames are obvious. Many longitudinal deck beams are
crushed in way of the trusses. The entire deck in way of the stern rake
compartment is set down from 0 to 3" with internals heavily distorted to
conform. The spud wells appear nearly new and in satisfactory condition. The
winch and winch engine appear in satisfactory condition. The stern double
bitts are set inboard in way of the deck distortion. The pollution barrier is
open at scattered locations. The safety hand rails on port and starboard sides
are incomplete. The winch engine was not test operated at time of survey.
VALUATION:
Estimated present day fair market value
as of November 30, 1998....................................$50,000.00
<PAGE> 124
SURVEY REPORT NO. 9811-1212
VALUATION: (continued)
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of November 30, 1998...................................$45,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is
basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
<PAGE> 125
SURVEY REPORT NO. 9811-1212
SURVEYOR'S NOTES: (continued)
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JMS:maw
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 126
SCHEDULE 2
TO
CREDIT AGREEMENT
<TABLE>
<CAPTION>
OWNER: ADDRESS:
<S> <C> <C>
PROPERTY #1 TransCoastal Marine Services of LA, Inc. 2701 Engineers Road
Belle Chase, LA 70037
PROPERTY #2 TransCoastal Marine Services of LA, Inc. 183-185 South Beadle Road
Lafayette, LA 70508
PROPERTY #3 C.S.I Hydrostatic Testers, Inc. 103 and 108 Pinehurst Street
Lafayette, LA 70508
PROPERTY #4 TransCoastal Marine Services of LA, Inc. 2205 West Pinhook
Lafayette, LA 70708
107 Pinehurst
Lafayette, LA 70508
PROPERTY #5 TransCoastal Marine Services of LA, Inc. 4506 South Lewis Street
(Port of Iberia Leasehold Interest) New Iberia, LA 70560
PROPERTY #6 TransCoastal Marine Services, Inc. 756 Peters Road
Harvey, LA
</TABLE>
All property listed above is described more fully in Attachment A to this
Schedule 2 attached hereto, and includes all buildings, improvements, fixtures
and other personal property attached thereto.
<PAGE> 127
ATTACHMENT A TO SCHEDULE 2
(PROPERTY DESCRIPTIONS)
PROPERTY #1:
Acquired by purchase from Hughes Lands, Inc., per act passed before Stewart F.
Peck, Notary Public, dated October 27, 1983, recorded October 28, 1983,
registered in COB 580, folio 473.
A certain tract of land, containing 14.217 acres, situated in and being a part
of Section 91, Township 14 South, Range 24 East, West of the Mississippi River,
Plaquemines Parish, Louisiana, and being more fully described as follows,
to-wit:
Commence at the intersection of the northwesterly right of way line of the Gulf
Intracoastal Waterway-Alternate Route with northeasterly line of Lots 1, 3, 5,
7, etc. of Concord Canal Subdivision - Bayou Barataria Section and run
N53 degrees 44'04"E, along the said northwesterly right of way line of the Gulf
Intracoastal Waterway-Alternate Route, for a distance of 307.12 feet, to the
point of beginning of the tract herein described located 270 feet northeasterly
from and perpendicular to the said northeasterly line of Lots 1, 3, 5, 7, etc.
of Concord Canal Subdivision - Bayou Barataria Section;
Run thence N64 degrees 43'40"W, for a distance of 182.00 feet, to a point;
Run thence S53 degrees 44'04", for a distance of 216.12 feet, to a point;
Run thence N64 degrees 43'40"W, for a distance of 469.06 feet, to a point
located N25 degrees 25'20"E, at a distance of 80.00 feet, from a Grate Bar
having coordinate values of X = 2,407,918.45 and Y = 428,147.52, which Grate Bar
marks the most northerly corner of Lot 1 of said Concord Canal Subdivision -
Bayou Barataria Section;
Run thence N64 degrees 25'40"W, for a distance of 20.00 feet, to a point;
Run thence N53 degrees 44'04"E, for a distance of 835.85 feet, to a point;
Run thence S36 degrees 15'56"E, for a distance of 590.00 feet, to a point;
Run thence N53 degrees 44'04"E, for a distance of 300.00 feet, to a point;
Run thence S36 degrees 15'56"E, for a distance of 425.00 feet, to a point in the
center-line of the Gull Intracoastal Waterway-Alternate Route;
Run thence S53 degrees 44'04"W, along the center-line of the Gulf Intracoastal
Waterway-Alternate Route for a distance of 600.00 feet, to a point;
Run thence N36 degrees 15'56"W, for a distance of 425.00 feet, to the point of
beginning.
<PAGE> 128
The tract hereinabove described is bounded northwesterly by the right of way for
Engineers Road, northeasterly by property owned by Power Enterprises, Inc. or
assigns and by property owned by Hero Lands Company or assigns, southeasterly by
property owned by Hero Lands Company or assigns and southwesterly by the right
of way for Concord Road and by property owned by Hero Lands Company or assigns
and is subject to a 60-foot wide road and rail servitude in favor of Hero Lands
Company which lies southeasterly from and contiguous to the said right of way
for Engineers Road and is subject to a 425-foot wide servitude in favor of the
United States of America for the Gulf Intracoastal Waterway-Alternate Route
which lies northwesterly from and contiguous to the southeasterly boundary as
hereinabove described. All as more fully shown on map or survey by Hugh B.
McCurdy, Jr., dated July 23, 1981, as amended on March 24, 1982, whereon the
hereinabove described tract is the area encompassed by connecting the letters
H-J-K-A-B-C-D-E-F-G-H. Survey data refers to the State Plane Coordinate System.
LESS AND EXCEPT THE FOLLOWING DESCRIBED PROPERTY:
A certain tract of land situated in and being a part of Section 91, Township 14
South, Range 24 East, West of the Mississippi River, Plaquemines Parish,
Louisiana, and being more fully described as follows, to-wit:
Commence at the intersection of the northwesterly right of way line of the Gulf
Intracoastal Waterway-Alternate Route northeasterly line of Lots 1, 3, 5, 7,
etc. of Concord Canal Subdivision-Bayou Barataria Section and run North 53
degrees 44 minutes 04 seconds East, along Intracoastal Waterway-Alternate Route,
for a distance of 607.12 feet to the Point of Beginning of the tract herein
described:
Run thence North 53 degrees 44 minutes 04 seconds East, for a distance of 300.00
feet to a point;
Run thence South 36 degrees 15 minutes 56 seconds East, for a distance of 71.30
feet, to a point;
Run thence South 52 degrees 11 minutes 41 seconds West, for a distance of
304.82 feet to a point;
Run thence North 35 degrees 45 minutes 40 seconds West, for a distance of 79.50
feet, to a point;
Run thence North 35 degrees 27 minutes 33 seconds West, for a distance of 82.21
feet to a point;
Run thence North 53 degrees 44 minutes 40 seconds East, for a distance of 2.85
feet to a point;
Run thence South 36 degrees 15 minutes 56 seconds East, for a distance of 82.20
feet to a Point of Beginning.
The tract hereinabove described is bounded northwesterly by property owned by
Power Enterprises, Inc., northeasterly by property owned by Power Enterprises,
Inc., and by property owned by Hero Lands Company or assigns, southeasterly by
property formerly owned by Hughes Lands, Inc., and southwesterly by property
formerly owned by Hughes Lands, Inc. All as more fully shown on the map of
survey by Hugh B. McCurdy, Jr., dated May 22, 1986. Survey data refers to the
State Plane Coordinate System.
Municipal Address: 2701 Engineers Road, Belle Chase, LA 70037
<PAGE> 129
PROPERTY #2:
Acquired by purchase from Louis Woodson and Georgia Zeringue Woodson, per act
passed before Paul J. Breaux, Notary Public, dated December 20, 1979, filed
December 27, 1979, as File No. 79-32625, Lafayette Parish, Louisiana.
THAT CERTAIN TRACT OR PARCEL OF LAND, situated in Sections 55 and 51, Township
10 South, Range 4 East, in the Parish of Lafayette, Louisiana, containing 14.973
acres, and more particularly described as follows:
Commencing at an iron rod marking the intersection of the eastern right-of-way
of South Beadle Road with the Northwestern property line being the Point of
Beginning:
thence North 54 degrees 58'57" East, a distance of 1265.77 feet to an iron rod;
thence South 36 degrees 14'13" East, a distance of 514.28 feet to an iron rod;
thence South 54 degrees 55'15" West, a distance of 1267.87 feet to an iron rod;
thence North 36 degrees 00'00" West, a distance of 515.61 feet to the Point of
Beginning.
Municipal address: 183-185 South Beadle Road, Lafayette, Louisiana 70508.
PROPERTY #3:
Tract A:
Acquired by Chemical Service, Inc., by purchase from D. H. Deboisblanc, per act
passed before Lucien C. Bertrand, Jr., Notary Public, dated June 7, 1955, filed
July 7, 1955, registered under File No. 320689, Lafayette Parish, Louisiana; and
further acquired by Amendment to Articles of Incorporation changing the name
of Chemical Service, Inc., to C.S.I. Hydrostatic Testers Inc., a Delaware
corporation, registered under File No. 353903, Lafayette Parish, Louisiana.
Tract B:
Acquired by Act of Exchange between C.S.I. Hydrostatic Testers, Inc. and Alfred
B. Leonpacher, per act passed before (illegible), Notary Public, dated April 25,
1980, filed July 9, 1973, as File No. 608872, Lafayette Parish, Louisiana.
Said Tracts A and B being a tract of 2.507 acres, and more particularly
described as follows:
Commencing at an iron rod marking the intersection of the western right-of-way
of Pinehurst Street with the northeastern property line being the Point of
Beginning:
thence South 43 degrees 09'36" West, a distance of 207.12 feet to an iron rod;
thence South 45 degrees 54'57" East, a distance of 3.89 feet to an iron rod;
thence South 39 degrees South 39 degrees 49'13" West, a distance of 299.50 to an
iron rod; thence North 46 degrees 26'42" West, a distance of 188.01 feet to a
fence corner; thence North 39 degrees 20'05" East, a distance of 260.77 feet;
thence North 41 degrees 27'33" East a distance of 40.72 feet to a fence corner;
thence North 46 degrees 42"56" West a distance of 79.90 feet to an iron pipe;
thence North 39 degrees 25'48" East, a distance of 4.37 feet to the beginning of
a curve tangent to said line; thence
<PAGE> 130
northeasterly a distance of 157.04 feet along the curve concave to the
southeast, having a radius of 364.83 feet and a central angle of 24 degrees
39'45"; thence North 64 degrees 05'33" East tangent to said curve, a distance of
52.42 feet; thence South 45 degrees 55'17" East, a distance of 223.47 feet to
the Point of Beginning.
Municipal address: 308 Pinehurst Street, Lafayette, Louisiana 70508.
PROPERTY #4:
Acquired by purchase from Yvette Bonin, Wife of/and Daniel N. Hargett, Sr., per
act passed before (illegible), Notary Public, dated July 3, 1996, filed July 15,
1996, registered as File No. 96-025759, Lafayette Parish, Louisiana.
Tract A:
A certain parcel of land located in Sections 46 and 50, Township 10 South, Range
4 East, within the City of Lafayette, Lafayette Parish, Louisiana, and being
more particularly described as follows:
Beginning at the southeast corner of the intersection of Pinhook Road (La. Hwy
182) and Pinehurst Street, being the northern most point of the right-of-way
flare; thence North 39 degrees 33 minutes 44 seconds East a distance of 235.06
feet; thence South 46 degrees 50 minutes 52 seconds East a distance of 186.99
feet; thence South 39 degrees 15 minutes 34 seconds West a distance of 253.99
feet; thence North 46 degrees 53 minutes 14 seconds West a distance of 170.56
feet; thence North 01 degrees 53 minutes 14 seconds West a distance of 26.78
feet back to the Point of Beginning, being more particularly shown on that
certain certificate of survey by Montagnet and Dominque, Inc. dated April 12,
1996.
Tract B:
A certain parcel of land located in Sections 50 and 46 Township 109 South,
Range 4 East, Lafayette Parish, Louisiana, and being more particularly described
as follows:
Beginning at the southeastern corner of the intersection of Pinhook Road (LA HWY
182) and Pinehurst Street; Being the northern point of the right-of way flare;
thence North 39 degrees 33 minutes 44 seconds East a distance of 235.06 feet to
the Point of Beginning; thence North 39 degrees 33 minutes 44 seconds East a
distance of 84.54 feet; thence South 46 degrees 49 minutes 32 seconds East a
distance of 186-54 feet; thence South 39 degrees 15 minutes 34 seconds West a
distance of 84.49 feet; thence North 46 degrees 50 minutes 52 seconds West a
distance of 186.99 feet to the Point of Beginning, being more particularly shown
on that certain certificate of survey by Montagnet and Dominque, Inc. dated
April 12, 1996.
Municipal Address: Tract A - 2205 West Pinhook, Lafayette, Louisiana 70508
Tract B - 107 Pinehurst, Lafayette, Louisiana 70508
<PAGE> 131
PROPERTY #5
Acquired leasehold interest per Lease by and between Port of Iberia District,
and Beldon E. Fox, Sr., recorded July 31, 1987, in COB 930, folio 760, Entry No.
87-7302, Iberia Parish; and further acquired by Assignment of Lease by Beldon E.
Fox, Sr., to The Beldon E. Fox, Sr. Grandchildren's Trust No. 1, dated March 11,
1997, recorded July 13, 1997, in COB 1141, folio 426, Entry No. 97-6296, Iberia
Parish, Louisiana.
The entire Lease and all of tenant's rights, interests and obligations contained
in the Lease dated July 21, 1987 regarding the following described property, to
wit:
Tract A:
Part of lot 10 at the Port of Iberia located in Section 3, Township 13 South,
Range 6 East, Iberia Parish, Louisiana, containing and measuring 469.1 feet on
the west side of Lewis Street (Parish Road No. 605), being irregular in shape
and being bounded on the North by Lot 9 and part of Lot 10, on the south by Lot
11, on the East by Lewis Street (Parish Road 605) and on the West by Commercial
Canal, being part of Lot 10 as shown in part on plat of K B. Marie, Land
Surveyor, dated October 12, 1978, a copy of which is attached to that certain
Lease dated July 21, 1987 and is recorded under Entry No. 87-7302 of the records
of the Clerk of Court's office for the Parish of Iberia, Louisiana.
Subject to that certain five foot utilities easement running along the entire
Eastern boundary of the subject property parallel and adjacent to Lewis Street
(Parish Road 605) as more particularly shown on plat of R. B. Marie, Land
Surveyor, dated October 12, 1978.
Tract B:
Part of Lot 10 at the Port of Iberia located in Section 3, Township 13 South,
Range 6 East, Iberia Parish, Louisiana, being bounded on the North by Lot 8,
South by the remainder of Lot 10, East by Lot 9 and Wet by Commercial Canal as
shown on plat of R. B. Marie, Land Surveyor, dated January 30, 1979, a copy of
which is attached to that certain Lease dated July 21, 1987 and is recorded
under Entry No. 87-7302 of the records of the Clerk of Court's Office for the
Parish of Iberia, Louisiana.
Municipal address: 4506 South Lewis Street, New Iberia, Louisiana 70560
PROPERTY #6
(TO BE PROVIDED BY BORROWER POST-CLOSING)
<PAGE> 132
SCHEDULE 3
to
CREDIT AGREEMENT
SUMMARY INFO - TRANSCOASTAL
<TABLE>
<CAPTION>
===============================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
TCMS Official
Equip # Name Type Flag Number Description Owner
- -------------------------------------------------------------------------------------------------------------------------------
70001 Vermillion Bay Pipelay Barge Vanuatu 634 350'x60'x22.5' all welded steel TransCoastal
construction pipelay barge Vessels, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
30001 BH400 Lay Bury USA 1035377 260'x72'x16' all welded steel HBH, Inc.
Barge construction pipelay/bury barge
- --------------------------------------------------------------------------------------------------------------------------------
16001 M/V Discovery Multi-purpose Panamanian 12543-82- 243'x42'x19' all welded steel Hargett
D construction multi-purpose Mooring and
offshore utility supply vessel Marine, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
70002 Atchafalaya Bay Bury Barge US 528068 256'x72'x16' all welded steel TransCoastal
construction pipeline bury barge Vessels, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
16002 M/V Sealevel No. Multi-Purpose US 616274 155'x40'x11.5' all steel welded Hargett
21 construction offshore utility/dive Mooring and
support vessel Marine, Inc.
- --------------------------------------------------------------------------------------------------------------------------------
40012 BH300 Lay Bury US 642150 185'x45'x9' all welded steel HBH, Inc.
Barge construction pipelay/bury barge
- --------------------------------------------------------------------------------------------------------------------------------
16003 M/V Sand Queen Utility Boat US 586067 85'x24'x7' all welded steel C.S.I.
construction offshore utility Hydrostatic
supply vessel Testers, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
40005 BH105 Spud Barge US 558253 150'x40'x9' all welded steel HBH, Inc.
construction spud barge
- ---------------------------------------------------------------------------------------------------------------------------------
20116 #116 Spud/Lay Undocumented 140'x38'x7' all welded steel
Barge construction spud barge
- ---------------------------------------------------------------------------------------------------------------------------------
20118 #118 Spud/Lay Undocumented 140'x38'x7' all welded steel
Barge construction spud barge
- ---------------------------------------------------------------------------------------------------------------------------------
40006 BH200 Spud Barge Undocumented 523759 110'x30'x7' all welded steel
construction spud barge
- ---------------------------------------------------------------------------------------------------------------------------------
40008 BH202 Spud Barge US 651251 110'x32'x6' all welded steel HBH, Inc.
construction spud barge
- ---------------------------------------------------------------------------------------------------------------------------------
40004 BH104 Spud Barge Undocumented 110'x34'x6' all welded steel
construction spud barge
- ---------------------------------------------------------------------------------------------------------------------------------
20119 #119 Spud/Lay Undocumented 140'x38'x7' all welded steel
Barge construction spud barge
- ---------------------------------------------------------------------------------------------------------------------------------
40009 BH203 Spud Barge Undocumented 90'x25'x5' all welded steel
construction spud barge
=================================================================================================================================
</TABLE>
<PAGE> 133
SCHEDULE 7.5
LITIGATION
Sirpi Alusteel Construction, Ltd. v. Dickson GMP International
This case involves a contractual dispute in which Dickson has filed a cross
claim that if successful would eliminate any damages alleged by Sirpi and in
addition would result in a monetary judgement in favor of Dickson. We have been
told by counsel for Dickson that maximum exposure in this case is approximately
$95,000.00 (NINETY-FIVE THOUSAND AND NO/00 DOLLARS).
Dr. Abdo Husseiny, et al v. United Gas Pipeline Company, et al.
This is a class action lawsuit filed in 1994 as a result of a gas leak in St.
John the Baptist Parish in Louisiana. Approximately 7858 plaintiffs have joined
the class and are seeking damages ranging from $500.00 to $2500.00 each. The
liability portion of the case was tried to the bench. The court found Woodson
75% at fault and assessed punitive damages on a one to one ratio. Punitive
damages are uninsured. The case was appealed to the Fifth Circuit Court of
Appeals and writs were denied. We are currently negotiating with our underwriter
to approach the plaintiff with a settlement offer in which the entire case
(including punitives) would be settled within policy limits with Woodson
offering a cash contribution to the settlement. Such cash contribution would not
have a material impact on the operations of the Company. If we do not reach a
settlement, this case would begin trial in March of 1999. For the court to hear
all 7858 cases, trial could potentially extend for three to seven years.
<PAGE> 134
SCHEDULE 7.6(d)
RIGHTS IN PROPERTIES; LIENS
ALL OF THE PROPERTY AND COLLATERAL OF THE BORROWERS AND THEIR SUBSIDIARIES
WHICH ARE REASONABLY NECESSARY FOR THE OPERATION OF THEIR BUSINESS ARE IN GOOD
WORKING CONDITION AND ARE MAINTAINED IN ACCORDANCE WITH PRUDENT BUSINESS
STANDARDS WITH THE FOLLOWING EXCEPTION:
The Atchafalaya Bay is currently out of class and in process of being
refurbished. The Company's intention is to spend an additional $2,000,000 by
March 31, 1999, to bring the vessel into class and ready to be a first class
Jetting Barge.
<PAGE> 135
SCHEDULE 7.9
DEBT AND LIENS
The Borrowers and their Subsidiaries have no Debt as defined in the Credit
Agreement, except as disclosed below:
<TABLE>
<CAPTION>
LENDER COLLATERAL/LIEN
------ ---------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE - Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE - Unsecured
Transcoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3. BANKONE - TransCoastal Marine Accounts Receivables and Certain
Services, Inc. Equipment
$15,000,000 REVOLVER IN PLACE AT
CLOSING
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment and
CORP. - TransCoastal Marine Services, in Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5.
(Intentionally Deleted)
6. WOODSON FAMILY - Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL - Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL - Dickson GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL - DICKSON GMP
Dickson GMP $46,853 OUTSTANDING AT 990 CFM Air Compressor
11-30-98
</TABLE>
<PAGE> 136
SCHEDULES 7.10
TAXES
The Borrowers and their Subsidiaries have the following pending federal and
state tax investigations underway:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
ENTITY AND YEARS UNDER INVESTIGATION TYPE OF TAX AND TAXING AUTHORITY
=================================================================================
<S> <C> <C>
1. CSI - Years ending May 31, 1996 Federal Income Tax-I.R.S.
and 1997
2. Red Fox of New Iberia, Inc. - Years
ending December 31, 1996, 1997, 1998 Sales Tax-State of Louisiana
3. HBH, Inc. - Years ending December
31, 1995 and 1996 Sales Tax-State of Louisiana
4. Dickson GMP Limited, Inc. - Years
ending December 31, 1994, 1995, and
1996 Sales Tax-State of Louisiana
---------------------------------------------------------------------------------
</TABLE>
<PAGE> 137
SCHEDULE 7.12
ERISA
NONE
<PAGE> 138
SCHEDULE 7.14
SUBSIDIARIES
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION % OWNERSHIP
- ---- ---------------------- -----------
<S> <C> <C>
TransCoastal Marine Services of LA, Inc. Louisiana 100%
The Red Fox Companies of New Iberia, Inc. Louisiana 100%
Woodson Construction Company Louisiana 100%
Hargett Mooring & Marine, Inc. Louisiana 100%
EnviroSystems, Inc. Louisiana 100%
Kori Corporation Louisiana 100%
CSI Hydrostatic Testers, Inc. Delaware 100%
TransCoastal Vessels, Inc. Delaware 100%
TransCoastal Ventures, Inc. Delaware 100%
TransMar, LLC Delaware 60%
Dickson GMP International, Inc. Louisiana 100%
Dickson Marine, Inc. Louisiana 100%
Dickson Nigeria, Ltd. Nigeria 100%
Servicios y Construcciones Petroleras
Ventura, C.A. Venezuela 100%
Ventura Resources, Inc. Louisiana 100%
</TABLE>
<PAGE> 139
SCHEDULE 7.20
ENVIRONMENTAL MATTERS
(a) None known
(b) None known
(c) Hazardous Waste such as: spent paint and solvents are stored in specific
areas for transportation to approved disposal facilities. TCMS Senior
Environmental Specialist has inspected the disposal facility for compliance
with regulations and permits.
(d) None known
(e) None known
(f) None known
(g) None known
(h) None known
<PAGE> 140
SCHEDULE 7.22
INSURANCE COVERAGE
Please see attached.
<PAGE> 141
TRANSCOASTAL MARINE SERVICES, INC.
COMPREHENSIVE GENERAL LIABILITY
LIMITS OF LIABILITY: $1,000,000 PER OCCURRENCE
$2,000,000 GENERAL AGGREGATE
$2,000,000 PRODUCTS/COMPLETED OPS AGGREGATE
$1,000,000 FIRE LEGAL LIABILITY
$ 5,000 MEDICAL PAYMENTS PER PERSON
PREMIUM BASIS: ESTIMATED GROSS RECEIPTS: $167,300,000.
RATE/DEDUCTIBLE OPTIONS:
<TABLE>
<CAPTION>
DEDUCTIBLE STOP LOSS RATE PREMUIM TAX TOTAL
- ---------- --------- ---- -------- --- -----
<S> <C> <C> <C> <C> <C>
$25,000 $125,000 .1804% $301,809 $15,090.45 $316,899.45
$25,000 $250,000 .165% $276,045 $13,802.25 $289,847.25
$25,000 $NIL .150% $250,950 $12,547.50 $263,497.50
$50,000 $300,000 .135% $225,855 $11,292.75 $237,147.75
$50,000 $NIL .120% $200,760 $10,038.00 $210,798.00
</TABLE>
COVERAGE INCLUDES: ACTIONS OVER
FULL OCCURRENCE FORM, INCLUDING PRODUCTS/COMPLETED OPERATIONS
BROAD FORM GENERAL LIABILITY, ISO DEFINITION OF INSURED CONTRACT
BROAD FORM NAMED INSURED
INSURED OPERATIONS: "ALL OPERATIONS OF NAMED INSURED & SUBSIDIARIES"
NO EXCLUSION FOR PUNITIVE DAMAGES
"PER PROJECT" AND "PER LOCATION" ENDORSEMENT AVAILABLE AS REQUESTED
DEFENSE IS IN ADDITION TO POLICY LIMITS
XCU HAZARDS; UGR&E; BLOWOUT & CRATERING
WORLDWIDE TERRITORY (FOR SUITS BROUGHT WITHIN THE U.S.)
SEEPAGE & POLLUTION - TIME ELEMENT - 7-DAY DISCOVERY, 30-DAY REPORTING
BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED & 60-DAY N.O.C.
PRIMARY INSURANCE CLAUSE AS REQUIRED BY CONTRACT
IN REM, GULF OF MEXICO, AND NON-OWNED WATERCRAFT EXTENSIONS
ALL OWNED BOATS 26' & UNDER (INCLUDING DEBRIS REMOVAL)
NO EXCLUSION UNDER CONTRACTUAL FOR WORK WITHIN 50' OF RAILROADS
CROSS SUITS
LIMITED EMPLOYEE BENEFITS LIABILITY - $1,000,000 AGGREGATE
CARE, CUSTODY, CONTROL EXCLUSION DELETED
DELETE THE "DAMAGE TO YOUR WORK" EXCLUSION (WORK MUST HAVE BEEN DELIVERED TO THE
BUYER, AND THE ASSURED MUST BE LEGALLY LIABLE TO PAY). THIS ADDITIONAL
COVERAGE HAS A SEPARATE $25,000 DEDUCTIBLE PER CLAIM.
FELLOW EMPLOYEE EXCLUSION DELETED
UNINTENTIONAL ERROR/FAILURE TO DISCLOSE CLAUSE
SHIPREPAIRERS LEGAL LIABILITY
ENVIROSYSTEMS: RETRO DATE OF 6/30/94
REMOVE PROFESSIONAL EXCLUSION FOR TRANSMAR ONLY, SUBJECT TO $50,000 DED.
EXCLUDING: P&I, PCB'S, ASBESTOS, E&O, D&O, LEASED EMPLOYEES, FORMALDEHYDE,
NUCLEAR, EMPLOYMENT PRACTICES.
SECURITY: STEADFAST INSURANCE COMPANY
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
13
<PAGE> 142
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL AUTO COVERAGE
<TABLE>
<S> <C>
LIABILITY :$1,000,000. COMBINED SINGLE LIMIT
MEDICAL PAYMENTS :$5,000
UNINSURED MOTORISTS: :$1,000,000
HIRED AND NON-OWNED :$1,000,000. COMBINED SINGLE LIMIT
COMPREHENSIVE :SEE BELOW
COLLISION :SEE BELOW
- --------------------------------------------------------------------------------
</TABLE>
DESCRIPTION OF VEHICLES: PER SCHEDULE PROVIDED BY INSURED
AUTO LIABILITY RATING BASE: POWER UNITS - 125.
$5,000 DEDUCTIBLE ON LIABILITY.
COMPOSITE RATED $516.32.
AUTO PHYSICAL DAMAGE: $500 DEDUCTIBLE COMPREHENSIVE &
$500 COLLISION FOR ALL LIGHT TRUCKS
AND PRIVATE PASSENGER UNITS, MODEL YEAR 1994
AND NEWER. $5,000 DEDUCTIBLE COMPREHENSIVE
AND COLLISION FOR ALL OTHER UNITS. RATING
BASE: 75 UNITS. COMPOSITE RATED AT $270.
PREMIUM: $74,515.00 LIABILITY/MED PAY/U.M.
$20,249.00 PHYSICAL DAMAGE
----------
$94,764.00 TOTAL
COVERAGES INCLUDE: SYMBOL 1 ON LIABILITY - ALL AUTOS
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
BLANKET PRIMARY INS CLAUSE
60-DAY NOTICE OF CANCELLATION
HIRED/NON-OWNED COVERAGES, INCLUDING PHYSICAL DAMAGE
ON RENTAL CARS ($35,000 PD LIMIT)
BROAD FORM NAMED INSURED
FELLOW EMPLOYEE COVERAGE
MSC-90 & STATE FILINGS AVAILABLE AS REQUIRED
LIMITED POLLUTION - VEHICLE OVERTURN OR COLLISION
CA9948 - BROADENED POLLUTION
UNINTENTIONAL FAILURE TO DISCLOSE
EMPLOYEES AS ADDITIONAL INSUREDS
SECURITY: ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS 10/12/98
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
<PAGE> 143
TRANSCOASTAL MARINE SERVICES, INC.
HULL AND PROTECTION & INDEMNITY
I. HULL & MACHINERY: TOTAL VALUE OF $74,772,000 PER ATTACHED SCHEDULE
INCLUDING COLLISION & TOWERS
BREAKDOWN: WOODSON $2,039,500
HBH, INC. $24,865,000
CSI HYDRO. $24,195,000
RED FOX $972,500
TRANSCOASTAL $22,700,000
SPUD UNITS $665,000
DEDUCTIBLE: $5,000 FOR ALL VESSELS, EXCEPT:
$50,000 FOR ALL VESSELS VALUED OVER $1,000,000
- -------------------------------------------------------------------------------
II. PROTECTION & INDEMNITY: $1,000,000 LIMIT PER OCCURRENCE
INCLUDING EXCESS TOWERS & COLLISION
SP-23 FORM
DEDUCTIBLE: $10,000
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PREMIUM: WOODSON: $ 40,142 HULL $30,240 P&I
HBH, INC.: $226,619 HULL $73,440 P&I
CSI: $195,423 HULL $12,960 P&I
RED FOX: $ 20,663 HULL $21,600 P&I
TRANSCOASTAL: $177,980 HULL $13,770 P&I
-------- -------
TOTALS: $660,827 HULL $152,010 P&I
PREMIUM TOTAL: $812,837.00
</TABLE>
HULL DEDUCTIBLE OPTIONS: $50,000 DEDUCTIBLE - 10% PREMIUM CREDIT
$100,000 DEDUCTIBLE - 15% PREMIUM CREDIT
SECURITY: MOAC/BOSTON OLD COLONY (BEST RATING: A-:XIV) 10/15/98
16
<PAGE> 144
HULL AND PROTECTION & INDEMNITY - TERMS & CONDITIONS
INCLUDES: AGREED VALUE ON HULL AMOUNTS
PARTS REMOVED CLAUSE
AFFILIATED COMPANIES CLAUSE
BLANKET ADD'L INSURED & WAIVER OF SUBROGATION, 60-DAY N.O.C.
BLANKET PRIMARY INSURANCE CLAUSE
AUTOMATIC ACQUISITION CLAUSE FOR PURCHASE OR CHARTER
PRIVILEGE TO CHARTER CLAUSE
CROSS LIABILITY CLAUSE
CONTRACTUAL LIABILITY
SEEPAGE & POLLUTION (B.I. & CARGO), EXCLUDING O.P.A., CERCLA
INCHMAREE EXTENDED TO PROVIDE COVERAGE FOR NEGLIGENCE OF
CHARTERS AND/OR REPAIRERS; ALSO EXTENDED TO PROVIDE
COVERAGE FOR CONTACT WITH AIRCRAFT
BLOWOUT & CRATER
DELIBERATE DAMAGE (POLLUTION) INCLUDING EQUIPMENT, GEAR,
MACHINERY DAMAGE
BURIAL EXPENSES CLAUSE
IN REM/IN PERSONAM LIABILITY
CARGO LEGAL LIABILITY
VESSEL IN DISTRESS CLAUSE
SISTERSHIP CLAUSE
TANKERMANS CLAUSE
DELETE THE EXCEPTIONS "OTHER THAN AN ASSURED, AND "AS OWNER
OF VESSEL" AS REQUIRED BY CONTRACT
SUE & LABOR PROVISIONS NOT TO APPLY TO ADDITIONAL INSURED IF
REQUIRED IN CONTRACT
REPAIRS & ALTERATIONS CLAUSE
TOWAGE EXCLUSIONS DELETED
BOOM COVERAGE ENDORSEMENT, OVERWEIGHT EXCLUSION DELETED
BROAD FORM NAMED INSURED ENDORSEMENT
STRIKES, RIOTS & CIVIL COMMOTIONS, & MALICIOUS DAMAGE CLAUSES
EXTENDED ADVENTURES & PERILS CLAUSE
EACH VESSEL DEEMED TO BE SEPARATELY INSURED
LEASED EQUIPMENT CLAUSE
SUBJECT TO AMERICAN HULL INS. SYNDICATE LINER NEGLIGENCE
CLAUSE
VOLUNTARY REMOVAL OF WRECK/DEBRIS
NO EXCLUSION FOR PUNITIVE DAMAGES
THIS INSURANCE AUTOMATICALLY EXTENDS TO COVER ANY VESSELS AND/OR CRAFT OF A
SIMILAR AGE & NATURE TO THAT INSURED HEREUNDER, WHICH HAVE BEEN PURCHASED,
LEASED, RENTED, TIME OR BAREBOAT CHARTERED BY INSURED SUBJECT TO ADVICE TO
UNDERWRITERS, AT TERMS AND RATES TO BE AGREED.
POLICY WILL PROVIDE LIABILITY COVERAGE FOR INSURED COMPANIES, EXCESS OF THE
$500,000 LIMIT CARRIED BY McDONOUGH MARINE, UP TO $1,000,000 COMBINED TOTAL
LIMITS. INSURED COMPANIES TO BE NAMED & WAIVED BY McDONOUGH MARINE. COVERAGE
APPLIES ONLY TO RENTED BARGES.
17
<PAGE> 145
TRANSCOASTAL MARINE SERVICES, INC.
CHARTERERS' LEGAL LIABILITY
WHARFINGERS LIABILITY
LIMIT OF LIABILITY: $1,000,000
DEDUCTIBLE: $25,000
RATE: FLAT, NO ADJUSTMENT
PREMIUM: $15,000
NOTE: COVERAGE IS PROVIDED FOR BOTH DOMESTIC AND FOREIGN OPERATIONS. FOR
FOREIGN LIABILITY, UNDERWRITERS REQUIRE A COPY OF THE HULL/P&I POLICY
SERVING AS PRIMARY COVERAGE FOR TWO LIFEBOATS CHARTERED BY DICKSON GMP
INT'L, LOCATED OFFSHORE NIGERIA.
SECURITY: MOAC/BOSTON OLD COLONY 10/8/98
18
<PAGE> 146
TRANSCOASTAL MARINE SERVICES, INC.
WATER QUALITY INSURANCE SYNDICATE
VESSEL POLLUTION COVERAGE
LIMITS OF LIABILITY:
OIL POLLUTION ACT OF 1990 - TO $5,000,000 PER VESSEL OR STATUTORY
LIMIT
CERCLA ($300 PER GROSS TON - $500,000 LIMIT)
SCHEDULE OF VESSELS: SEE ATTACHED
BLANKET WAIVER OF SUBROGATION AND ADDITIONAL INSURED.
SPUD PARGE BUYBACK ENDORSEMENT B
FOREIGN TRADE CLEAN-UP ENDORSEMENT - MEXICO & TRINIDAD
LIMITED OPA '90 CIVIL PENALTY CLAUSE - $500 DEDUCTIBLE/ACCIDENT
ANNUAL PREMIUM: $38,001.77 OPA/CERCLA
1,140.05 CIVIL PENALTY
----------
$39,141.82 10/22/98
19
<PAGE> 147
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL UMBRELLA
LIMIT OPTIONS: $ 50,000,000 EXCESS OF ALL UNDERLYING COVERAGES
PREMIUM: $400,000
TERMS & CONDITIONS: $100,000 S.I.R.
FOLLOWS FORM OF UNDERLYING COVERAGES
EXCLUDES PUNITIVE DAMAGES
DROP DOWN ENDORSEMENT, REMOVING REQUIREMENT TO MAKE
REASONABLE EFFORT TO REINSTATE EXHAUSTED LIMITS
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
BLANKET 60-DAY NOTICE OF CANCELLATION
REMOVAL OF EXCLUSION FOR TREBLE & MULTIPLE DAMAGES
UNDERLYING COVERAGES AND LIMITS: DOMESTIC & FOREIGN
EMPLOYERS LIABILITY $1,000,000/1,000,000/1,000,000
MARITIME EMPLOYERS LIABILITY $1,000,000/1,000,000
GENERAL LIAB./SHIPREPAIRERS $1,000,000/2,000,000/2,000,000
AUTOMOBILE LIABILITY $1,000,000 C.S.L.
PROTECTION & INDEMNITY $1,000,000
CHARTERERS/WHARFINGERS $1,000,000
VESSEL POLLUTION/WQIS $5,000,000
SECURITY: RELIANCE NATIONAL INSURANCE COMPANY (A-:XIII) 10/8/98
BOSTON OLD COLONY/MOAC (A-XIV)
ZURICH INSURANCE COMPANY, U.S. BRANCH
20
<PAGE> 148
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL PROPERTY
SPECIAL "ALL RISK" FORM, EXCLUDING QUAKE
BLANKET LIMITS, AGREED AMOUNT ENDORSEMENT (SUBJECT TO SURVEY AT
INSUROR'S EXPENSE TO DETERMINE ACCEPTABILITY OF LIMITS)
$250,000 SUBLIMIT ON FLOOD
$5,000 DEDUCTIBLE / $10,000 FOR FLOOD
INCLUDES BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED, 60-DAY NOC
60% COINSURANCE LOSS OF RENTS
$10,000 AUTOMATIC COVERAGE FOR POLLUTION CLEAN-UP
TOTAL ALL VALUES, PER SCHEDULE: $5,174,500 REAL PROPERTY
$1,761,850 CONTENTS/PERSONAL PROPERTY
$ 162,950 DICKSON EDP EQUIPMENT
$ 284,000 LOSS OF RENTS
$ 250,000 VALUABLE PAPERS
$ 250,000 FLOOD SUBLIMIT
----------
TOTAL $7,883,300
ADJUSTABLE RATE: .28 PER $100 OF VALUE
ADDITIONAL COVERAGES: ORDINANCE OR LAW $1,000,000
BLANKET EXTRA EXPENSE $1,000,000
PREMIUM: BUILDINGS, CONTENTS, ETC. $22,073.00
ORDINANCE/EXTRA EXPENSE $ 7,000.00 FLAT
TOTAL ----------
$29,073.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/9/98
21
<PAGE> 149
TRANSCOASTAL MARINE SERVICES, INC.
BUILDER'S RISK COVERAGE
LIMIT OF LIABILITY: $5,000,000 PER DISASTER
$1,000,000 TRANSIT COVERAGE
$2,000,000 FLOOD & QUAKE
$2,000,000 TRENCHING SUBLIMIT
DEDUCTIBLE: $25,000 ANY ONE JOB, INCLUDING FLOOD & QUAKE
$5,000 TRANSIT
TERMS & CONDITIONS: QUARTERLY REPORTING OF INSTALLATION RECEIPTS TO
INCLUDE VALUE OF CUSTOMERS' PIPE
MOAC REQUIRES ADVANCE NOTICE OF ANY JOB OVER
$2,000,000 IN SIZE TO BE COVERED HEREUNDER
BLANKET WAIVERS OF SUBROGATION
RATE: A) .10% - LAND
B) .20% - WATER
MINIMUM & DEPOSIT PREMIUM: $10,000.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
22
<PAGE> 150
TRANSCOASTAL MARINE SERVICES, INC.
HULL BUILDER'S RISK COVERAGE
LIMIT OF LIABILITY: $3,000,000
RATE: .08 PER MONTH ON COMPLETED VALUES
DEDUCTIBLE PER ACCIDENT: 1%
REPORTING: MONTHLY
MINIMUM & DEPOSIT PREMIUM: $2,600.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
23
<PAGE> 151
TRANSCOASTAL MARINE SERVICES, INC.
TRANSIT COVERAGE
LIMITS: $500,000 ON EQUIPMENT OF OTHERS BEING TRANSPORTED ABOARD
INSURED'S OWNED/OPERATED WATERCRAFT
COVERAGES: ALL RISK, INCLUDING THEFT
WATERCRAFT EXCLUSIONS DELETED
DEDUCTIBLE: $5,000
PREMIUM: $5,000.00 FLAT
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
24
<PAGE> 152
TRANSCOASTAL MARINE SERVICES, INC.
CONTRACTORS EQUIPMENT COVERAGE
LIMITS OF LIABILITY: $15,004,844 OWNED EQUIPMENT (PER SCHEDULE)
$2,000,000 RENTAL EQUIPMENT
$1,000,000 LIFT LIABILITY, OVERWEIGHT EXCL.
DELETED
$250,000 FLOOD SUBLIMIT
DEDUCTIBLE: 2% OF VALUES, MINIMUM $1,000 AND MAXIMUM $10,000
$25,000 ON BOOM FOR RED FOX CRANE VALUED $650,000
$25,000 ON BOOM FOR HBH RENTAL CRANE VALUED $695,000
$5,000 ON RENTAL EQUIPMENT
$10,000 ON DOMESTIC & $25,000 ON FOREIGN LIFT LIABILITY
$10,000 ON FLOOD
RATES: .58% OF VALUE ON OWNED EQUIPMENT
.78% OF COST OF HIRE ON RENTAL EQUIPMENT
1.00% WITH BOOM & OVERWEIGHT COVERAGE
TERMS & CONDITIONS: WATERBORNE COVERAGE PROVIDED
ANNUAL ADJUSTMENT ON RENTAL EQUIPMENT
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
WORLDWIDE COVERAGE
60-DAY NOTICE OF CANCELLATION
BLANKET LIMITS, AGREED AMOUNT ENDORSEMENT
(SUBJECT TO SURVEY AT COMPANY EXPENSE)
PREMIUM: $87,028.00 OWNED EQUIPMENT
$5,000.00 M&D ON RENTAL EQUIPMENT
$15,000.00 FLAT ON LIFT LIABILITY
-----------
TOTAL $107,028.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
25
<PAGE> 153
TRANSCOASTAL MARINE SERVICES, INC.
AIRCRAFT LIABILITY AND HULL PHYSICAL DAMAGE
AIRCRAFT INSURED: 1981 CESSNA 185 SEAPLANE, #N6860N
LOCATION: BELLE CHASSE, LA
PILOT INFORMATION: DENNIS SISUNG, OR ANY PILOT WITH 1,000 HOURS
TOTAL TIME, 350 HOURS IN SEAPLANE, AND 50 IN MAKE & MODEL.
LIMITS: $5,000,000 CSL LIABILITY
$1,000,000 SUBLIMIT PER PASSENGER
$120,000 HULL VALUE
DEDUCTIBLE: $250 NOT-IN-MOTION
$12,000 IN MOTION
INCLUDES: BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED, AND
60-DAY NOTICE OF CANCELLATION
PREMIUM: $6,549.00 PREMIUM (25% MINIMUM EARNED)
$ 250.00 POLICY FEE
---------
$6,799.00 TOTAL
SECURITY: U.S. SPECIALITY (A+:VIII) RANGER (A-:VIII) 10/8/98
26
<PAGE> 154
ENVIROSYSTEMS, INC. - POLLUTION & PROFESSIONAL
(GENERAL LIABILITY IS PROVIDED WITHIN THE STEADFAST
QUOTATION FOR TRANSCOASTAL)
COVERAGE FORM: CLAIMS-MADE
RETROACTIVE DATE: 7/26/93 ON POLLUTION/PROFESSIONAL
LIMIT: POLLUTION/PROFESSIONAL: $1,000,,000 OCCURRENCE/$2,000,000
AGGREGATE
DEDUCTIBLE: POLLUTION/PROFESSIONAL: $25,000
COVERAGES: ZURICH'S PROFESSIONAL ENVIRONMENTAL CONSULTANTS POLICY.
PROFESSIONAL LIABILITY; CONTRACTORS ENVIRONMENTAL IMPAIRMENT
DEFENSE FOR POLLUTION/PROFESSIONAL IS WITHIN POLICY LIMITS
ACTIONS OVER (POLLUTION LIABILITY ONLY)
CIRCUMSTANCE REPORTING WITH NO SUNSET CLAUSE
WORLDWIDE TERRITORY
BROAD FORM CONTRACTUAL INCLUDING VICARIOUS LIABILITY
BLANKET ADDITIONAL INSURED (POLLUTION LIABILITY ONLY)
SPECIFIC WAIVER OF SUBROGATION
60-DAY NOTICE OF CANCELLATION
MUTUAL PRIOR AGREEMENT ON SELECTION OF CLAIMS COUNSEL
CLEAN-UP COSTS
COMPLETE RADIOACTIVE COVERAGE, SUBJECT TO NUCLEAR EXCLUSION
FULL ASBESTOS COVERAGE
MEDIATION CREDIT
NO EXCLUSION FOR SUPERFUND
NO EXCLUSIONS FOR UNDERGROUND STORAGE TANK WORK
PRIMARY INSURANCE WORDING AS REQUIRED BY CONTRACT.
POLICY PROVIDES COVERAGE FOR WORK SUBBED OUT FROM TRANSCOASTAL
COMPANIES
COVERAGE EXCLUSIONS:
FRAUDULENT/INTENTIONAL ACTS
NON-COMPLIANCE WITH STATUTES, ETC.
CROSS LIABILITY
DISCRIMINATION
PATENT/COPYRIGHT INFRINGEMENT
EXPRESS WARRANTIES/GUARANTEES
PUNITIVE DAMAGES
WATERCRAFT/AIRCRAFT
WAR, CIVIL UNREST
PRODUCTS LIABILITY
PROPERTY DAMAGE TO THE NAMED INSURED'S WORK
PROFESSIONAL LIABILITY FOR FAULTY WORKMANSHIP/CONSTRUCTION
EXCLUDING: ANY LOSS AS A RESULT OF SERVICES OR OPERATIONS PERFORMED
AT SITES OWNED/OPERATED BY TRANSCOASTAL COMPANIES
27
<PAGE> 155
RATES: POLLUTION/PROFESSIONAL: FLAT
ESTIMATED RECEIPTS: $1,000,000
PREMIUM: POLLUTION/PROFESSIONAL: $ 7,500.00 (FLAT, NO MINIMUM EARNED)
$ 375.00 (TAX)
----------
$ 7,875.00 (TOTAL)
SUBJECT TO: COMPLETED & SIGNED APPLICATION
AVAILABLE: SUPPLEMENTAL REPORTING PERIOD, ADDITIONAL CHARGE TO BE
NEGOTIATED.
SECURITY: STEADFAST INSURANCE COMPANY 10/14/98
(ZURICH-AMERICAN INSURANCE GROUP)
28
<PAGE> 156
TRANSCOASTAL MARINE SERVICES, INC.
WORKERS' COMPENSATION COVERAGE
(ALL ENTITIES EXCEPT RED FOX)
COVERAGE A - WORKERS' COMPENSATION: Provides coverage for the statutory
obligation of an employer to provide benefits for employees as required by the
applicable state law or USL&H Act.
COVERAGE B - EMPLOYERS LIABILITY: Protects the insured against liability
imposed by law for injury to employees in the course of employment that is not
compensable under the Worker's Compensation section.
EMPLOYERS LIABILITY LIMIT OF LIABILITY : $1,000,000
MARITIME EMPLOYERS LIABILITY: $1,000,000
- -------------------------------------------------------------------------------
DEDUCTIBLE AND RATE OPTIONS - APPLICABLE TO STATE ACT, USL&H, & JONES ACT:
(RATES APPLY PER $100 OF PAYROLL)
97/98 LOSSES
DEDUCTIBLE RATE PAYROLL PREMIUM W/IN DEDUCT.
---------- ---- ------- ------- ------------
$ 25,000 2.1813 $30,000,000 $654,390 $236,339
$ 50,000 1.8746 $30,000,000 $562,380 $344,839
$100,000 1.597 $30,000,000 $479,100 $441,574
$150,000 1.5007 $30,000,000 $450,210 $451,374
$250,000 1.3997 $30,000,000 $419,910 $451,374
OPTION: $25,000 DEDUCTIBLE ANY ONE ACCIDENT, WITH $475,000 AGGREGATE
STOP LOSS (ADJUSTED AT 1.58% OF W.C. PAYROLL)
RATE: 2.35% OF PAYROLL = $705,029 PREMIUM
EXCROW REQUIRED FOR CLAIMS PAYMENTS IS EQUIVALENT OF THREE DEDUCTIBLES.
LETTER OF CREDIT REQUIRED CAN BE NEGOTIATED - BOTTOM END IS $100,000,
MAXIMUM OF $500,000.
ADDITIONAL COVERAGES:
- --------------------
BLANKET WAIVER OF SUBROGATION
BLANKET ALTERNATE EMPLOYER/BORROWED SERVANT
60-DAY NOTICE OF CANCELATION
USL&H, GULF OF MEXICO AND OUTER CONTINENTAL SHELF ACT ENDORSEMENTS
PAYROLL REPORTED FOR STATES OF LA, TX, CA, AL, MS
OTHER STATES ENDORSEMENT
COVERAGE FOR DOMESTIC EMPLOYEES WORKING TEMPORARILY ABROAD
VOLUNTARY COMPENSATION, FOREIGN VOLUNTARY COMPENSATION
JONES ACT, INCLUDING: IN REM, TWM&C. DEATH ON THE HIGH SEAS
NO EXCLUSION FOR PUNITIVE DAMAGES
NO EXCLUSION FOR OCCUPATIONAL DISEASE
STOP-GAP EMPLOYERS LIABILITY
SECURITY: ZURICH INSURANCE COMPANY, J.S. BRANCH 10/23/98
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
9
<PAGE> 157
TRANSCOASTAL MARINE SERVICES, INC.
WORKERS' COMPENSATION COVERAGE
THE RED FOX COMPANIES OF NEW IBERIA
COVERAGE A - WORKERS' COMPENSATION: Provides coverage for the statutory
obligation of an employer to provide benefits for employees as required by the
applicable state law or USL&H Act.
COVERAGE B - EMPLOYERS LIABILITY: Protects the insured against liability
imposed by law for injury to employees in the course of employment that is not
compensable under the Worker's Compensation section.
EMPLOYERS LIABILITY LIMIT OF LIABILITY: $1,000,000
MARITIME EMPLOYERS LIABILITY: $25,000
- --------------------------------------------------------------------------------
DEDUCTIBLE: NIL - FIRST DOLLAR
PREMIUM DEVELOPMENT:
<TABLE>
<CAPTION>
CLASSIFICATION CODE PAYROLL RATE PREMIUM
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
IRON WORKS 3040 $5,506,000 4.3814 $241,240
SHIPREPAIR/CONVERSION 6872F $4,848,000 6.7314 326,338
SALESPERSONS 8742 $ 247,000 .4403 1,088
CLERICAL 8810 $1,270,000 .2125 2,699
INCREASED EMPLOYERS LIABILITY LIMITS 2.8% 15,998
MARITIME MINIMUM PREMIUM 4,000
EXPENSE CONSTANT 150
--------
TOTAL ESTIMATED ANNUAL PREMIUM $591,513
DEPOSIT PREMIUM: $ 30,000
LESS CURRENT DEPOSIT: -$ 20,000
ADDITIONAL DEPOSIT DUE: $ 10,000
</TABLE>
ADDITIONAL COVERAGES:
BLANKET WAIVER OF SUBROGATION
BLANKET ALTERNATE EMPLOYER
30-DAY NOTICE OF CANCELLATION
USL&H, GULF OF MEXICO AND OUTER CONTINENTAL SHELF ACT ENDORSEMENTS
LIMITED OTHER STATES ENDORSEMENT
COVERAGE FOR DOMESTIC EMPLOYEES WORKING TEMPORARILY ABROAD
JONES ACT, INCLUDING: IN REM, TWM&C, DEATH ON THE HIGH SEAS
NO EXCLUSION FOR OCCUPATIONAL DISEASE
CANNOT PROVIDE VOLUNTARY COMPENSATION & STOP GAP ENDORSEMENTS
SECURITY: LOUISIANA WORKERS' COMPENSATION CORP. (B++:VIII) 10/8/98
10
<PAGE> 158
SCHEDULE 7.23
HEDGING TRANSACTIONS
NONE
<PAGE> 159
SCHEDULE 7.25
MATERIAL DEBT AGREEMENTS
The Borrowers and their Subsidiaries have the following material Debt
Agreements:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
LENDER COLLATERAL/LIEN
- -----------------------------------------------------------------------------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE-Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE- Unsecured
TransCoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3. BANKONE-TransCoastal Marine Accounts Receivables and Certain
Services, Inc. Equipment
$15,000,000 REVOLVER IN PLACE AT
CLOSING
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment and
CORP.-TransCoastal Marine Services, Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5.
(INTENTIONALLY DELETED)
6. WOODSON FAMILY-Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL-Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL-DICKSON GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL-DICKSON GMP 990 CFM Air Compressor
Dickson GMP $46,853 OUTSTANDING AT
11-30-98
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE> 160
SCHEDULE 9.2
DEBT AGREEMENTS AND LIENS
The Borrowers and their Subsidiaries have the following material Debt
Agreements:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
LENDER COLLATERAL/LIEN
- -----------------------------------------------------------------------------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE-Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE- Unsecured
TransCoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3. BANKONE-TransCoastal Marine Accounts Receivables and Certain
Services, Inc. Equipment
$15,000,000 REVOLVER IN PLACE AT
CLOSING
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment and
CORP.-TransCoastal Marine Services, Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5.
(INTENTIONALLY DELETED)
6. WOODSON FAMILY-Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL-Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL-DICKSON GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL-DICKSON GMP 990 CFM Air Compressor
Dickson GMP $46,853 OUTSTANDING AT
11-30-98
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.31
********************************************************************************
TRANSCOASTAL MARINE SERVICES, INC.
CREDIT AGREEMENT
Dated as of January 13, 1999
$15,000,000
BANK ONE, TEXAS, NATIONAL ASSOCIATION
*******************************************************************************
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Definitions...............................................................................................1
Section 1.1 Definitions .................................................................................1
Section 1.2 Other Definitional Provisions ..............................................................18
Section 1.3 Computation of Time Periods ................................................................19
ARTICLE II
Advances/Letters of Credit ..............................................................................19
Section 2.1 Commitment ................................................................................19
Section 2.2 Note ......................................................................................19
Section 2.3 Repayment of Advances .....................................................................19
Section 2.4 Interest ..................................................................................19
Section 2.5 Additional Interest on LIBOR Advances .....................................................20
Section 2.6 Borrowing Procedure .......................................................................20
Section 2.7 Conversions and Continuations .............................................................20
Section 2.8 Use of Proceeds ...........................................................................21
Section 2.9 Fees ......................................................................................21
Section 2.10 Reduction or Termination of Commitments ...................................................22
Section 2.11 Letter of Credit Commitment ...............................................................22
Section 2.12 Issuance, Amendment and Renewal of Letters of Credit ......................................22
Section 2.13 Drawings and Reimbursements ...............................................................24
Section 2.14 Role of the Lender in Letter of Credit Transactions .......................................25
Section 2.15 Obligations Absolute ......................................................................25
Section 2.16 Cash Collateral Pledge ....................................................................26
Section 2.17 Letter of Credit Fees .....................................................................27
Section 2.18 Uniform Customs and Practice ..............................................................27
Section 2.19 Co-Borrowers; Joint and Several Liability .................................................27
ARTICLE III
Payments ................................................................................................31
Section 3.1 Method of Payment .........................................................................31
Section 3.2 Prepayment ................................................................................31
Section 3.3 Taxes......................................................................................32
Section 3.4 Computation of Interest ...................................................................34
ARTICLE IV
Yield Protection and Illegality .........................................................................34
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(Continued)
<TABLE>
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Section 4.1 Increased Costs .........................................................................34
Section 4.2 Limitation on Types of Advances .........................................................34
Section 4.3 Illegality ..............................................................................35
Section 4.4 Treatment of Affected Advances ..........................................................35
Section 4.5 Compensation ............................................................................35
Section 4.6 Capital Adequacy ........................................................................36
ARTICLE V
Security ..............................................................................................36
Section 5.1 Collateral ..............................................................................36
Section 5.2 Setoff ..................................................................................37
ARTICLE VI
Conditions Precedent ..................................................................................38
Section 6.1 Initial Advance .........................................................................38
Section 6.2 All Advances and Letters of Credit ......................................................39
ARTICLE VII
Representations and Warranties .........................................................................40
Section 7.1 Corporate Existence .....................................................................40
Section 7.2 Financial Statements ....................................................................40
Section 7.3 Corporate Action; No Breach .............................................................41
Section 7.4 Operation of Business ...................................................................41
Section 7.5 Litigation and Judgments ................................................................41
Section 7.6 Rights in Properties; Liens .............................................................41
Section 7.7 Enforceability ..........................................................................42
Section 7.8 Approvals ...............................................................................42
Section 7.9 Debt ....................................................................................42
Section 7.10 Taxes ...................................................................................42
Section 7.11 Use of Proceeds; Margin Securities ......................................................42
Section 7.12 ERISA ...................................................................................43
Section 7.13 Disclosure ..............................................................................43
Section 7.14 Subsidiaries ............................................................................43
Section 7.15 Agreements ..............................................................................43
</TABLE>
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(Continued)
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Section 7.16 Compliance with Laws .....................................................................43
Section 7.17 Inventory ................................................................................43
Section 7.18 Investment Company Act ...................................................................43
Section 7.19 Public Utility Holding Company Act .......................................................43
Section 7.20 Environmental Matters ....................................................................44
Section 7.21 Year 2000 Compliance .....................................................................45
Section 7.22 Insurance ................................................................................46
Section 7.23 Hedging Agreements .......................................................................46
Section 7.24 Restriction on Liens .....................................................................46
Section 7.25 Material Debt Agreements .................................................................46
ARTICLE VIII
Positive Covenants .....................................................................................47
Section 8.1 Reporting Requirements ...................................................................47
Section 8.2 Maintenance of Existence; Conduct of Business ............................................50
Section 8.3 Maintenance of Properties ................................................................50
Section 8.4 Taxes and Claims .........................................................................50
Section 8.5 Insurance ................................................................................50
Section 8.6 Inspection Rights ........................................................................50
Section 8.7 Keeping Books and Records ................................................................50
Section 8.8 Compliance with Laws .....................................................................51
Section 8.9 Compliance with Agreements ...............................................................51
Section 8.10 Further Assurances .......................................................................51
Section 8.11 ERISA ....................................................................................51
Section 8.12 Year 2000 Compliant ......................................................................51
Section 8.13 Subsidiary Guaranties and Pledge of Assets ...............................................52
Section 8.14 Post Closing Matters .....................................................................52
ARTICLE IX
Negative Covenants .....................................................................................52
Section 9.1 Debt .....................................................................................52
Section 9.2 Limitation on Liens ......................................................................53
Section 9.3 Mergers, Acquisitions, Etc ...............................................................53
Section 9.4 Restricted Payments ......................................................................54
Section 9.5 Investments ..............................................................................54
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(Continued)
<TABLE>
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Section 9.6 Limitation on Issuance of Capital Stock .................................................54
Section 9.7 Transactions With Affiliates ............................................................54
Section 9.8 Disposition of Assets ...................................................................55
Section 9.9 Sale and Leaseback ......................................................................55
Section 9.10 Prepayment of Debt ......................................................................55
Section 9.11 Nature of Business ......................................................................55
Section 9.12 Environmental Protection ................................................................55
Section 9.13 Accounting ..............................................................................55
Section 9.14 Compliance with ERISA ...................................................................55
Section 9.15 Proceeds of Note ........................................................................56
Section 9.16 Negative Pledge Agreements ..............................................................56
Section 9.17 Hedging Agreements ......................................................................56
ARTICLE X
Financial Covenants ...................................................................................56
Section 10.1 Consolidated Tangible Net Worth .........................................................56
Section 10.2 Capital Expenditures ....................................................................57
Section 10.3 Total Funded Debt to Capitalization .....................................................57
Section 10.4 Fixed Charge Coverage Ratio .............................................................57
Section 10.5 Senior Funded Debt to EBITDA Coverage Ratio .............................................57
ARTICLE XI
Default ...............................................................................................57
Section 11.1 Events of Default .......................................................................57
Section 11.2 Remedies ................................................................................59
Section 11.3 Performance by the Lender ...............................................................60
ARTICLE XII
Miscellaneous .........................................................................................60
Section 12.1 Expenses ................................................................................60
Section 12.2 Indemnification .........................................................................61
Section 12.3 Limitation of Liability .................................................................61
Section 12.4 No Duty .................................................................................61
Section 12.5 No Fiduciary Relationship ...............................................................62
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Section 12.6 Equitable Relief ........................................................................62
Section 12.7 No Waiver; Cumulative Remedies ..........................................................62
Section 12.8 Successors and Assigns ..................................................................62
Section 12.9 Survival ................................................................................63
Section 12.10 ENTIRE AGREEMENT ........................................................................63
Section 12.11 Amendments, Etc . .......................................................................63
Section 12.12 Maximum Interest Rate ...................................................................63
Section 12.13 Notices .................................................................................64
Section 12.14 Governing Law; Venue; Service of Process ................................................64
Section 12.15 Counterparts ............................................................................65
Section 12.16 Severability ............................................................................65
Section 12.17 Headings ................................................................................65
Section 12.18 Non-Application of Chapter 346 of Texas Finance Code ....................................65
Section 12.19 Construction ............................................................................65
Section 12.20 Independence of Covenants ...............................................................65
Section 12.21 JURY WAIVER .............................................................................65
Section 12.22 Arbitration .............................................................................66
Section 12.23 Confidentiality .........................................................................66
</TABLE>
-v-
<PAGE> 7
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of January 13,1999, is among
TRANSCOASTAL MARINE SERVICES, INC., a Delaware corporation (the "Parent") and
each of the Subsidiaries which is a party hereto (each individually, a
"BORROWER", and collectively, the "BORROWERS"), and BANK ONE, TEXAS, NATIONAL
ASSOCIATION (the "Lender").
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Agreement, the following terms
have the following meanings (such meanings to be equally applicable to, both the
singular and the plural forms of the terms defined):
"Accounts" means all accounts receivable of the Borrowers and
their Subsidiaries, or any of them.
"Advance" means an advance of funds by the Lender to any of
Borrowers pursuant to Article II.
"Advance Request Form" means a certificate, in substantially the
form of EXHIBIT "A," properly completed and signed by any Borrower
requesting an Advance.
"Affected Advances" shall have the meaning specified in Section
4.4.
"Affected Type" shall have the meaning specified in Section 4.4.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or
is controlled by, or is under common control with, such Person; (b)
that directly or indirectly beneficially owns or holds 10% or more of
any class of voting stock of such Person; or (c) 10% or more of the
voting stock of which is directly or indirectly beneficially owned or
held by the Person in question. The term "control" means the
possession, directly or indirectly, of the power to direct or cause
direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise;
provided, however, in no event shall the Lender be deemed an Affiliate
of any Borrower or any of their Subsidiaries.
"Agreement" means this Credit Agreement, as the same may be
amended, supplemented or modified from time to time.
"Applicable Base Rate Margin" means, for any day, with respect to
Base Rate Advances, the marginal interest rate over the Base Rate that
is applicable when any Applicable Rate based on the Base Rate is
determined under this Agreement.
<PAGE> 8
"Applicable Lending Office" means the Domestic Lending Office of
Lender in the case of an Alternate Base Rate Advance, and Lender's
Eurodollar Lending Office in the case of a LIBOR Advance, or such other
lending offices as such Lender may from time to time specify to the
borrowers.
"Applicable LIBOR Margin" means, for any day, with respect to
LIBOR Advances, the marginal interest rate over the LIBOR Rate that is
applicable when any Applicable Rate based on the LIBOR Rate is
determined under this Agreement.
"Applicable Margin" means, for any day, (a) with respect to LIBOR
Advances, the marginal interest rate over the LIBOR Rate that is
applicable when any Applicable Rate based on the LIBOR Rate is
determined under this Agreement, and (b) with respect to Base Rate
Advances, the marginal interest rate over the Base Rate that is
applicable when any Applicable Rate based on the Base Rate is
determined under this Agreement. Absent an increase in the ratio of
Senior Funded Debt to EBITDA, the Applicable Margin shall not be less
than the LIBOR Rate plus 2.50% from the date hereof through June 30,
1999. Beginning July 1, 1999, the Applicable Margin is subject to
adjustment (upwards or downwards, as appropriate), as indicated in the
table and text set forth below:
<TABLE>
<CAPTION>
RATIO OF COMMITMENT APPLICABLE MARGIN APPLICABLE MARGIN
SENIOR FUNDED DEBT TO FEE FOR LIBOR RATE FOR BASE
EBITDA (UNUSED) ADVANCES RATE ADVANCES
================================ ========== ================ =================
<S> <C> <C>
Less than or equal to 1.50 to 0.25% 1.75% 0.00%
1.00
Greater than 1.50 to 1.00, but 0.25% 2.00% 0.00%
less than or equal to 1.75 to
1.00
Greater than 1.75 to 1.00, but 0.25% 2.25% 0.25%
less than or equal to 2.00 to
1.00
Greater than 2.00 to 1.00 but .375% 2.50% 0.50%
less than or equal to 2.25 to
1.00
Greater than 2.25 to 1.00 but 0.50% 2.75% 0.50%
less than or equal to 2.50 to
1.00
</TABLE>
On June 30, 1999, and on each calendar quarter end thereafter, the
Applicable Margin shall be adjusted to reflect the Applicable Margin
which is the Applicable Margin prescribed above for the ratio of the
Senior Funded Debt to EBITDA of the Parent and its Subsidiaries, on a
consolidated basis, for the most recently ended Rolling Period
demonstrated by the most recently delivered Compliance Certificate.
After each adjustment of the Applicable Margin in accordance herewith,
the new Applicable Margin shall apply to all Advances made or
outstanding thereafter until the next calendar quarter end that another
Applicable Margin is
2
<PAGE> 9
applicable. Upon the request of the Lender, the Borrowers must
demonstrate to the reasonable satisfaction of the Administrative Lender
the required applicable ratio in order to obtain an adjustment to a
lower Applicable Margin. If the Borrowers fail to furnish to the Lender
any Compliance Certificate by the date required by this Agreement, then
the maximum Applicable Margin shall apply at all times after such date
for all Advances made or outstanding after such date until the
Borrowers furnish the required Compliance Certificate to the Lender.
"Applicable Rate" means: (a) during the period that an Advance is
a Base Rate Advance, the Base Rate plus the Applicable Base Rate
Margin; and (b) during the period that an Advance is a LIBOR Advance,
the LIBOR Rate plus the Applicable LIBOR Margin.
"Assignment" means that certain Assignment of Notes, Liens,
Security Interests and Loan Documents of Subordinated Lender in favor
of the Lender and Heller of even date herewith.
"Base Rate" at any time shall mean a fluctuating interest rate
per annum as shall be in effect from time to time which shall at all
times be equal to the higher of (a) the Federal Funds Rate as in effect
from time to time plus 1/2 of 1% per annum and (b) the Prime Rate as in
effect from time to time.
"Base Rate Advances" means Advances that bear interest at rates
based upon the Base Rate.
"Borrower" and "Borrowers" have the meaning specified in the
introductory paragraph of this Agreement.
"Borrowing" means a borrowing hereunder of the same Type made on
the same day by the Lender.
"Borrowing Base" means, at any time, an amount equal to the
lesser of (a) the sum of (x) 80% of Eligible Accounts, plus (y) 50% of
Eligible Inventory (but not to exceed $2,000,000.00), or (b)
$15,000,000, as the same may be reduced pursuant to Section 2.10 or
terminated pursuant to Sections 2.10 or 11.2.
"Borrowing Base Report" means a report described in Section
8.1 (1).
"Business Day" means (a) any day of the year except Saturday,
Sunday and any day on which commercial banks are authorized or required
to close in Houston, Texas, and, (b) if the applicable Business Day
relates to any LIBOR Advances, any day which is a Business Day
described in clause (a) above and which is also a day on which dealings
are carried out in the London interbank Eurodollar market.
"Capitalization" means the sum of Total Funded Debt plus Net
Worth.
3
<PAGE> 10
"Capital Lease Obligations" means, as to any Person, the
capitalized amount, determined in accordance with GAAP, of the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or
personal property, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person
under GAAP.
"Cash Collateral" means Dollars or marketable securities
acceptable to the Lender in its sole discretion that have been Cash
Collateralized for the benefit of the Lender.
"Cash Collateralize" means to pledge and deposit as collateral
for the Obligations pursuant to documentation in form and substance
satisfactory to the Lender (which documents are hereby consented to by
the Lender).
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor Federal tax code and the regulations,
promulgated and rulings issued thereunder, and any reference to any
statutory provision of the Code shall be deemed to be a reference to
any successor provision or provisions.
"Collateral" has the meaning specified in Section 5.1.
"Commitment" means obligation of the Lender to make Advances and
issue Letters of Credit hereunder in an aggregate principal amount at
any one time outstanding up to but not exceeding the lesser of: (a)
the Borrowing Base, or (b) $15,000,000, as the same may be reduced
pursuant to Section 2.10 or terminated pursuant to Sections 2.10 or
11.2.
"Compliance Certificate" means the Certificate of Compliance and
No Default described or referred to in Section 8.1(c).
"Consolidated" and "Consolidating" refer to the consolidation of
the accounts of the Parent and its Subsidiaries in accordance with
GAAP.
"Consolidated Net Income" means with respect to the Parent and
its Consolidated Subsidiaries, for any period, the aggregate of the
net income (or loss) of the Parent and its Consolidated Subsidiaries
after allowances for taxes for such period, determined on a
consolidated basis in accordance with GAAP; provided that there shall
be excluded from such net income (to the extent otherwise included
therein) the following: (i) the net income of any Person in which the
Parent or any Consolidated Subsidiary has an interest (which interest
does not cause the net income of such other Person to be consolidated
with the net income of the Parent and its Consolidated Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends
or distributions actually paid in such period by such other Person to
the Parent or to a Consolidated Subsidiary, as the case may be; (ii)
the net income (but not loss) of any Consolidated Subsidiary to the
extent that the declaration or payment of dividends or similar
distributions or transfers or loans by that Consolidated Subsidiary is
not at the time permitted by operation of the terms of its charter or
any agreement, instrument or Governmental Requirement applicable to
such Consolidated
4
<PAGE> 11
Subsidiary, or is otherwise restricted or prohibited in each case
determined in accordance with GAAP; (iii) the net income (or loss) of
any Person acquired in a pooling-of-interests transaction for any
period prior to the date of such transaction; (iv) any extraordinary
gains or losses, including gains or losses attributable to Property
sales not in the ordinary course of business (net of fees and expenses
relating to such transaction); and (v) the cumulative effect of a
change in accounting principles and any gains or losses attributable
to writeups or writedowns of assets.
"Consolidated Subsidiaries" means each Subsidiary of the Parent
(whether now existing or hereafter created or acquired) the financial
statements of which shall be (or should have been) consolidated with
the financial statements of the Parent in accordance with GAAP.
"Consolidated Tangible Net Worth" means, at any particular
time, all amounts which, in conformity with GAAP, would be included as
stockholders' equity on a Consolidated balance sheet of the Parent and
its Subsidiaries; provided, however, there shall be added thereto the
Subordinated Debt and there shall be excluded therefrom: (a) any
amount at which shares of capital stock of the Parent appear as an
asset on the Parent's balance sheet, (b) goodwill, including any
amounts, however designated, that represent the excess of the purchase
price paid for assets or stock over the value assigned thereto, (c)
patents, trademarks, trade names, and copyrights, (d) deferred
expenses (except deferred expenses incurred in the ordinary course of
business), and (e) all other assets which are properly classified as
intangible assets.
"Continue," "Continuation," and "Continued" shall refer to the
continuation pursuant to Section 2.7 of a LIBOR Advance as a LIBOR
Advance from one Interest Period to the next Interest Period.
"Convert," "Conversion," and "Converted" shall refer to a
conversion pursuant to Section 2.7 or Article IV of one Type of
Advance into another Type of Advance.
"Debt" of any Person means at any time (without duplication) and
whether direct or contingent: (a) obligations for borrowed money which
(i) are evidenced by bonds, notes, debentures, loan agreements, credit
agreements or similar instruments or agreements and (ii) are or should
be shown on a balance sheet as debt in accordance with GAAP, (b)
obligations to pay the deferred purchase price of property or
services, (c) Capital Lease Obligations, (d) Debt or other obligations
of others guaranteed, (e) obligations secured by a Lien existing on
property owned by such Person, whether or not the obligations secured
thereby have been assumed by such Person or are non-recourse to the
credit of such Person, (f) reimbursement obligations (whether
contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments, (g)
liabilities in respect of unfunded vested benefits under any Plan; (h)
Guarantees, and (i) Swap Transactions; provided, however, that Debt
shall not include (i) obligations under performance bonds, performance
guarantees, surety bonds, appeal bonds, security deposits or similar
obligations to the extent incurred in the ordinary course of business;
(ii) any trade
5
<PAGE> 12
payables, other current liabilities and deferred credits (in each
case, other than with respect to borrowed money) incurred in the
ordinary course of business which are not overdue by more than 90 days
unless either (y) such trade payables, current liabilities or deferred
credits are being contested in good faith by appropriate proceedings
for which adequate reserves have been made in accordance with GAAP
(collectively, the "Contested Amounts"), or (z) the aggregate amount
of such overdue trade payables, current liabilities and deferred
credits (other than Contested Amounts) exceeds $500,000, in which case
such excess constitutes "Debt"; or (iii) debt arising from agreements
of the Borrowers providing for indemnification, adjustments, or
holdback of purchase price or similar obligations, in each case
assumed in connection with the acquisition or disposition of any
assets, business or subsidiary otherwise permitted hereunder.
"Default" means an Event of Default or the occurrence of an
event or condition which with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means the lesser of (a) the sum of the Base Rate
in effect from day to day plus 4%, and (b) the Maximum Rate.
"Dickson Payment" shall have the meaning specified in Section
10.1.
"Dollars" and "$" means lawful money of the United States of
America.
"Domestic Lending Office" means Bank One, Texas, National
Association, 910 Travis, Suite 700, Houston, Texas 77002, or such
other office of Lender as Lender may from time to time specify to the
Borrowers.
"EBITDA" means, for any period, the sum of Consolidated Net
Income for such period plus the following expenses or charges to the
extent deducted from Consolidated Net Income in such period: interest,
taxes, depreciation, depletion and amortization, minus all non-cash
income (provided that no adjustments shall be made for non-cash items
required pursuant to accrual based GAAP accounting) added to
Consolidated Net Income in such period.
"Eligible Accounts" means, at any time, all Accounts created in
the ordinary course of business that are acceptable to the Lender
using its reasonable business judgment, in which the Lender has a
perfected first priority security interest (and subject only to such
Liens that are acceptable to the Lender) and which satisfy the
following conditions:
(a) The account complies with all applicable laws, rules, and
regulations, including, without limitation, usury laws, the Federal
Truth in Lending Act, and Regulation Z of the Board of Governors of
the Federal Reserve System;
(b) The account has been billed and has not been outstanding
for more than 90 days past the original date of invoice;
6
<PAGE> 13
(c) The account was created in connection with (i) the sale
of goods by any Borrower or any domestic Subsidiary in the ordinary
course of business and such sale has been consummated and such goods
have been shipped and delivered and received by the account debtor, or
(ii) the performance of services by such Borrower or Subsidiary in the
ordinary course of business and the portion of such services billed by
such Borrower and its Subsidiaries have been completed and accepted by
the account debtor;
(d) The account arises from an enforceable contract, the
performance of which has been completed by any Borrower or any
Subsidiary for the portion billed;
(e) The account does not include any progress billings for
which billings the services have not been completed and accepted by
the account debtor;
(f) The account does not arise from the sale of any good that
is on a bill-and-hold, guaranteed sale, sale-or-return, sale on
approval, consignment, or any other repurchase or return basis;
(g) A Borrower or any Subsidiary has good and indefeasible
title to the account and the account is not subject to any Lien except
Liens in favor of the Lender and subordinated Liens satisfactory to
Lender in favor of Subordinated Lender;
(h) The account does not arise out of a contract with or order
from an account debtor that prohibits or makes void or unenforceable
the grant of a security interest by a Borrower or any Subsidiary to
the Lender in and to such account;
(i) The account is not subject to any setoff, counterclaim,
defense, dispute, recoupment, or adjustment other than normal
discounts for prompt payment or contra accounts as set forth below;
(j) The account debtor is not insolvent or the subject of any
bankruptcy or Insolvency Proceeding and has not made an assignment for
the benefit of creditors, suspended normal business operations,
dissolved, liquidated, terminated its existence, ceased to pay its
debts as they become due, or suffered a receiver or trustee to be
appointed for any of its assets or affairs;
(k) The account is not evidenced by chattel paper or an
instrument;
(l) The account debtor has not returned or refused to retain,
or otherwise notified a Borrower or any Subsidiary of any dispute
concerning, or claimed nonconformity of, any of the goods from the
sale of which the account arose;
(m) The account is not owed by an employee or Affiliate of
any Borrower or any Subsidiary;
7
<PAGE> 14
(n) The account is payable in Dollars by the account debtor
(except with respect to foreign accounts that are otherwise Eligible
Accounts and are covered by a currency hedge agreement);
(o) The account shall be ineligible if the account debtor is
domiciled in any country other than the United States of America,
unless (x) billed to foreign subsidiaries of U.S. companies
satisfactory to Lender (and not to exceed $2,000,000 in the
aggregate), (y) insured satisfactory to Lender, or (z) supported by a
letter of credit satisfactory to Lender;
(p) All accounts owed by any account debtor shall be
ineligible if more than 15% of the aggregate balances then outstanding
on accounts owed by such account debtor and its subsidiaries to the
Borrowers and the Subsidiaries on a consolidated basis have been
outstanding for more than 90 days past the dates of their original
invoices; notwithstanding the above, however, an exception to this
provision is allowed for Royal Dutch/Shell Group, The Williams
Companies, Inc., and Chevron Corporation and/or their subsidiaries for
which ineligible accounts will be calculated based on specific
contracts rather than client totals;
(q) If the aggregate balances then outstanding on accounts
owed by any account debtor and its subsidiaries to the Borrowers and
the Subsidiaries on a consolidated basis constitute more than 25% of
the total accounts receivable of the Borrowers and the Subsidiaries on
a consolidated basis, then the portion of the accounts owed by such
account debtor in excess of the 25% concentration limit shall be
ineligible;
(r) The account shall be ineligible if the account debtor is
the United States of America or any department, agency, or
instrumentality thereof subject to the Federal Assignment of Claims
Act of 1940, as amended ("FACA"), and the FACA shall not have been
complied with; and
(s) The account is net of billings in excess of costs,
retainage, and bonded jobs.
The amount of the Eligible Accounts owed by an account debtor
to a Borrower or any Subsidiary shall be reduced by the amount of all
"contra accounts," past due credits and other obligations which are
owed by such Borrower or any Subsidiary to such account debtor.
"Eligible Assignee" means any commercial bank, savings and
loan association, savings bank, finance company, insurance company,
pension fund, mutual fund, or other financial institution (whether a
corporation, partnership, or other entity) acceptable to the Lender.
"Eligible Inventory" means at any time all inventory of work
in process then owned by any of the Borrowers and held for sale or
disposition in the ordinary course of business,
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<PAGE> 15
in which the Lender has a perfected, first priority security interest
(and subject only to such Liens that are acceptable to the Lender)
valued at the lower of cost or market.
"Environmental Laws" means any and all applicable foreign,
Federal, state, and local laws, regulations, statutes, ordinances,
rules, orders, decisions, decrees, judgments, permits, licenses,
authorizations and requirements pertaining to health, safety, or the
environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Section 6901 et seq., the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., the Clean Air Act, 42 U.S.C.
Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq., as such laws, regulations, statutes, ordinances, rules, orders,
decisions, decrees, judgments, permits, licenses, authorizations and
requirements may be amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand, by
any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental
Authority or other Person, arising from environmental, health or safety
conditions or the Release or threatened Release of a Hazardous Material
into the environment, resulting from the past, present, or future
operations of such Person or its subsidiaries.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute of
similar import, and the regulations and published interpretations
thereunder, as in effect from time to time.
"ERISA Affiliate" means any corporation or trade or business
(whether or not incorporated) which is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the
Code) as any Borrower or is under common control (within the meaning of
Section 414(c) of the Code) with any Borrower.
"Eurocurrency Liabilities" has the meaning prescribed to such
term in Regulation D of the Federal Reserve Board, as in effect from
time to time.
"Eurodollar Lending Office" means Bank One, Texas, National
Association, 910 Travis, Suite 700, Houston, Texas 77002, or such
other office of Lender as Lender may from time to time specify to the
Borrower.
"Event of Default" has the meaning specified in Section 11.1.
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<PAGE> 16
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, provided that (a) if
the day for which such rate is to be determined is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the
next succeeding Business Day, and (b) if such rate is not so published
on such next succeeding Business Day, the Federal Funds Rate for any
day shall be the average of quotations for such day on such
transactions received by the Lender from three Federal Funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any Federal agency or authority of the
United States of America from time to time succeeding to its function.
"Financing Transaction" means any Swap Transaction that is
intended primarily as a borrowing of funds.
"Fixed Charge Coverage" means all EBITDA plus all Operating
Lease expenses less cash taxes, less cash dividends, divided by the
sum of interest expense plus Operating Lease expenses plus contractual
principal reductions required during the period of calculation
(including the principal component of Capital Lease Obligation
payments) plus non-discretionary capital expenditures (not less than
$4,000,000 per annum). This ratio shall be calculated on a cumulative
quarterly basis beginning January 1, 1999 until such time as four
quarters have been reached at December 31, 1999, at which time the
covenant shall be calculated on a Rolling Period basis. The first
covenant test for the Fixed Charge Coverage ratio will be determined as
of March 31, 1999.
"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 applied
in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Government Requirement" means any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or
other directive or requirement (whether or not having the force of
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<PAGE> 17
law), including, without limitation, Environmental Laws, energy
regulations and occupational, safety and health standards or controls,
of any Governmental Authority.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit in
the ordinary course of business. The term "Guarantee" used as a verb
has a corresponding meaning.
"Guarantor" means, individually and/or collectively, any
Person who executes a Guaranty.
"Guaranty" means, individually and/or collectively, the
guaranty and/or guaranties executed and/or to be executed from time to
time in the future by any and all Subsidiaries of the Parent, any of
the Borrowers, or any of their Subsidiaries, in each case, acquired or
created after the date hereof, for the benefit of Lender, relating to
the Obligations in form satisfactory to Lender, as any of such
guaranties, from time to time, may be amended, modified, restated or
supplemented.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Hedging Agreements" means any commodity, interest rate or
currency swap, cap, floor, collar, forward agreement or other exchange
or protection agreements or any option with respect to any such
transaction.
"Heller" means HELLER FINANCIAL LEASING, INC., a Delaware
corporation.
"Heller Loan Documents" means that certain $35,000,000
promissory note executed by Borrowers payable to the order of Heller of
even date herewith in the original principal amount of $35,000,000 and
all documents executed in connection with or security for payment of
said $35,000,000 note, and whether now or hereafter executed.
"Honor Date" has the meaning specified in Section 2.13(a).
"Increased Costs" has the meaning specified in Section 4.1.
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<PAGE> 18
"Insolvency Proceeding" means any insolvency proceeding of the
types described in Sections 11.1(d) or (e).
"Insufficiency" means, with respect to any Plan, the amount,
if any, but which the present value of the accrued benefits under such
Plan exceeds the fair market value of the assets of such Plan allocable
to such benefits, provided that with respect to any offset arrangement
between any Plans, the assets of the Plans attributable to such offset
arrangement shall be aggregated in determining whether an Insufficiency
exists for the Plan to which the offset applies.
"Insurance Assignment" means the Assignment of Insurances of
HBH, Inc., a Louisiana corporation ("HBH") in favor of the Lender of
even date herewith, as the same may be amended, supplemented or
modified from time to time.
"Intercreditor Agreement" means that certain Intercreditor
Agreement of even date herewith by and among Borrowers, Heller and
Lender, as the same may be amended, supplemented, or modified from time
to time.
"Interest Period" means with respect to any LIBOR Advances,
each period commencing on the date such Advances are made or Converted
from Advances of another Type or, in the case of each subsequent,
successive Interest Period applicable to a LIBOR Advance, the last day
of the next preceding Interest Period with respect to such Advance, and
ending on the numerically corresponding day in the first, third or
sixth calendar month thereafter, as the Borrowers may select as
provided in Section 2.6 or 2.7 hereof, except that each such Interest
Period which commences on the last Business Day of a calendar month (or
on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (a) each Interest Period
which would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, in the case of an Interest
Period for LIBOR Advances if such succeeding Business Day falls in the
next succeeding calendar month, on the next preceding Business Day);
(b) any Interest Period which would otherwise extend beyond the
Termination Date shall end on the Termination Date; (c) no more than
five (5) Interest Periods for LIBOR Advances shall be in effect at the
same time; and (d) no Interest Period for LIBOR Advances shall have a
duration of less than one month and, if the Interest Period for any
LIBOR Advances would otherwise be a shorter period, such Advances shall
not be available hereunder.
"Lender" has the meaning specified in the first paragraph of
this Agreement, and shall include any financial institution which
becomes a Lender pursuant to Section 12.8.
"Letter of Credit" means any standby letter of credit issued
by the Lender for the account of any of the Borrowers pursuant to
Section 2.11.
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"Letter of Credit Commitment" means the commitment of the
Lender to issue Letters of Credit from the time issued or outstanding
under Section 2.11, in an aggregate amount not to exceed on any date
the amount of $4,000,000; provided that the Letter of Credit Commitment
is a part of the combined Commitments, rather than a separate
commitment.
"Letter of Credit Liabilities" means, at any time, the
aggregate face amount of all outstanding Letters of Credit.
"Letter of Credit Request Form" means an Advance Request Form
properly completed and signed by the applicable Borrower requesting
issuance of a Letter of Credit.
"LIBOR Advances" means Advances the interest rates on which
are determined on the basis of the LIBOR Rate.
"LIBOR Rate" means, for any LIBOR Advance for any Interest
Period therefor, the offered rate (rounded upwards, if necessary, to
the nearest 1/16 of 1%) for U.S. Dollar deposits of not less than
$1,000,000.00 for a period of time equal to each Interest Period as of
11:00 A.M. City of London, England time two London Business Days prior
to the first date of each Interest Period of the Notes as shown on the
display designated as "British Bankers Assoc. Interest Settlement
Rates" on the Telerate System ("TELERATE"), page 3750 or Page 3740, or
such other page or pages as may replace such pages on Telerate for the
purpose of displaying such rate. Provided, however, that if such rate
is not available on Telerate then such offered rate shall be otherwise
independently determined by Lender from an alternate, substantially
similar independent source available to Lender or shall be calculated
by Lender by a substantially similar methodology as that theretofore
used to determine such offered rate in Telerate. "LONDON BUSINESS DAY"
means any day other than a Saturday, Sunday or a day on which banking
institutions are generally authorized or obligated by law or executive
order to close in the City of London, England. Each change in the rate
to be charged on the Notes will become effective without notice on the
commencement of each Interest Period based upon the Index then in
effect. If the Reference Lender is not participating in any LIBOR
Advances during any Interest Period therefor (pursuant to Section 4.4
or for any other reason), the LIBOR Rate for such Advances for such
Interest Period shall be determined by reference to the amount of the
Advances which the Reference Lender would have made had it been
participating in such Advances.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement and all promissory
notes, security agreements, deeds of trust, vessel mortgages,
assignments, guaranties, and other instruments, documents, and
agreements executed and delivered pursuant to or in connection with
this Agreement, as such instruments, documents, and agreements may be
amended, modified, renewed, extended, or supplemented from time to
time.
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"Maintenance Capital Expenditures" means all non-discretionary
capital expenditures required by Borrowers and their Subsidiaries to
maintain their current level of business operations, but not less than
$4,000,000 during any Rolling Period.
"Material Adverse Effect" means a material adverse effect on
any Borrower's and Subsidiary's ability considered as a whole to meet
its obligations to the Lender under the Loan Documents or a material
adverse effect on the business, operations, assets considered as a
whole or financial condition of any of the Borrowers or any of the
Subsidiaries considered as a whole.
"Maximum Rate" means, at any time and with respect to any
Lender, the maximum rate of interest under applicable law that such
Lender may charge the Borrowers. The Maximum Rate shall be calculated
in a manner that takes into account any and all fees, payments, and
other charges in respect of the Loan Documents that constitute interest
under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the
Maximum Rate shall take effect without notice to the Borrowers at the
time of such change in the Maximum Rate. For purposes of determining
the Maximum Rate under Texas law, the applicable rate ceiling shall be
the indicated rate ceiling described in, and computed in accordance
with Chapter 303 of the Texas Finance Code.
"Monthly Date" means the last day of each calendar month in
each year, the first of which shall be January 31, 1999; provided,
however, that if any such day is not a Business Day, such Monthly Date
shall be the next succeeding Business Day.
"Multi-employer Plan" means a Multi-employer plan defined as
such in Section 4001(a)(3) of ERISA to which any Borrower or any ERISA
Affiliate is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means an employee benefit plan, other
than a Multiemployer Plan, subject to Title IV of ERISA to which any
Borrower or any ERISA Affiliate, and more than one employer other than
any Borrower or an ERISA Affiliate, is making or accruing an obligation
to make contributions or, in the event that any such plan has been
terminated, to which any Borrower or any ERISA Affiliate made or
accrued an obligation to make contributions during any of the five plan
years preceding the date of termination of such plan.
"Net Worth" means, at any particular time, all amounts which,
in conformity with GAAP, would be included as stockholder's equity on a
consolidated balance sheet of Parent and its Subsidiaries.
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<PAGE> 21
"Obligated Party" means any Guarantor or any other Person who
is or becomes party to any agreement that guarantees or secures payment
and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrowers to the Lender, or any of them, arising
pursuant to any of the Loan Documents, now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and
several, including, without limitation, the obligations, indebtedness,
and liabilities of the Borrowers, or any of them, under this Agreement
and the other Loan Documents, obligations under Hedging Agreements of
the Borrowers and/or any of the Borrowers' Subsidiaries with the Lender
and/or any Affiliate of Lender and/or any of them, whether direct or
contingent, and all interest accruing on all of the above and all
attorneys' fees and other expenses incurred in the enforcement or
collection thereof.
"Operating Lease" means any lease (other than a lease
constituting a Capital Lease Obligation) of real or personal property.
"Other Taxes" has the meaning specified in Section 3.3(b).
"Payment Date" means the Monthly Date.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Parent" means TransCoastal Marine Services, Inc., a Delaware
corporation.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, firm or other entity, or a
government of any political subdivision or agency, department or
instrumentality thereof.
"Plan" means any employee benefit plan (other than a
Multi-employer Plan) which is (or, in the event that any such plan has
been terminated within five years after a transaction described in
Section 4069 of ERISA, was) maintained for employees of the Borrowers
or any ERISA Affiliate and is covered by Title IV of ERISA.
"PMSI Property" means any Property of the Borrowers or any
Subsidiary (a) now owned which is encumbered by a Permitted Lien in
respect of the financing thereof other than in favor of Heller or the
Subordinated Lender, or (b) hereafter acquired and encumbered by Liens
permitted under Section 9.2(g).
"Prime Rate" means, at any time, the rate of interest per
annum then most recently established by Bank One, Texas, N.A., as its
prime rate, which rate is not necessarily the
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<PAGE> 22
lowest or best rate that Bank One, Texas, N.A. may at any time and from
time to time charge its customers.
"Principal Office" means the principal office of the Lender,
presently located at 910 Travis Street, 7th Floor, Houston, Harris
County, Texas 77002.
"Property" means any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Release" means, as to any Person, any material release,
spill, emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of property owned by such
Person, including, without limitation, the movement of Hazardous
Materials through or in the air, soil, surface water, ground water, or
property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor
or outdoor environment, (b) prevent the Release or threat of Release or
minimize the further Release of Hazardous Materials so that they do not
migrate or endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment, or (c) perform pre-remedial studies
and investigations and post-remedial monitoring and care.
"Responsible Officer" means, as to any Person, the Chief
Executive Officer, the President or any Executive Vice President or
Senior Vice President of such Person and, with respect to financial
matters, the term "Responsible Officer" shall mean the Chief Executive
Officer, Executive Vice President, Chief Financial Officer, or the
Director of Finance of such Person. Unless otherwise specified, all
references to a Responsible Officer herein shall mean a Responsible
Officer of the Parent.
"Revolving Credit Loan" means the Advances made or to be made
and the Letters of Credit issued and to be issued by the Lender to or
for the benefit of all or any of the Borrowers pursuant to the terms of
this Agreement.
"RICO" means the Racketeer Influenced and Corrupt Organization
Act of 1970, as amended from time to time.
"Rolling Period" shall mean each four-quarter period, ending
on the last day of each March, June, September and December.
"Security Agreement" means the Security Agreements of the
Borrowers and all their Subsidiaries in favor of the Lender, of even
date herewith, as the same may be amended, supplemented, or modified.
"Security Agreement (Pledge)" means the Security Agreement
(Pledge) of the Borrowers owning stock or other equity interests in a
Subsidiary in favor of the Lender, of
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<PAGE> 23
even date herewith, as the same may be amended, supplemented or
modified from time to time.
"Senior Funded Debt" means all obligations of any and/or all
of the Borrowers and their Subsidiaries for borrowed money from Lender
and Heller, Capital Lease Obligations, Letters of Credit, Guarantees,
and Guaranties.
"Ship Mortgage Act" means 46 U.S.C. Sections 31301-31343
(1994), as amended.
"Specific Fixed Collateral" means the undocumented Vessels
and other related fixed assets pertaining to both documented and
undocumented Vessels described on SCHEDULE "1".
"Subordinated Debt" means all Debt of any or all of Borrowers
which is subordinated pursuant to a subordination agreement on terms
satisfactory to the Lender, in Lender's sole discretion, including,
without limitation, the Debt as in effect (without amendment) as of the
date hereof, to Subordinated Lender subject to the Subordination
Agreement.
"Subordinated Lender" means the Joint Energy Development
Investments II Limited Partnership, a Delaware limited partnership.
"Subordinated Liens" means all Liens in favor of Subordinated
Lender that secure Subordinated Debt which are permitted under and
covered by the Subordination Agreement.
"Subordinated Loan Documents" means the loan documents in
favor of and/or payable to the Subordinated Lender (and any
successor(s) and/or assign(s)) which are subject to the Subordination
Agreement.
"Subordination Agreement" means that certain Subordination and
Intercreditor Agreement among the Lender, Heller, and Subordinated
Lender, of even date herewith, as the same may be amended,
supplemented, or modified from time to time.
"Subsidiary" means any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by any Borrower, the
Parent, or one or more of the Subsidiaries or by any Borrower, the
Parent, and one or more of the Subsidiaries.
"Swap Transaction" means any interest rate, currency or
commodity swap, collar or cap or other similar derivatives-related
transaction.
"Taxes" has the meaning specified in Section 3.3(a).
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"Termination Date" means 11:00 A.M. Houston, Texas time on
January 12, 2002, or such earlier date and time on which the
Commitments terminate as provided in this Agreement.
"Termination Event" means (a) the occurrence with respect to
any Plan or Multiemployer Plan of a "reportable event," as such term is
described in Section 4043 of ERISA (other than a "reportable event,"
not subject to the provision for 30-day notice to the PBGC), or an
event described in Section 4062(e) of ERISA, or (b) the withdrawal by
any Borrower or any ERISA Affiliate from a Multiple Employer Plan
during a plan year in which it was a "substantial employer," as such
term is defined in Section 4001(a)(2) of ERISA, or the incurrence of
liability by any Borrower or any ERISA Affiliate under Section 4064 of
ERISA upon the termination of a Multiple Employer Plan or (c) the
distribution of a notice of intent to terminate a Plan pursuant to
Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, or (d) the institution of
proceedings to terminate a Plan by the PBGC under Section 4042 of
ERISA, or (e) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan.
"Total Funded Debt" means any Debt that by its terms is
payable more than one year from the date of origination thereof or
which is renewable at the option of the obligor beyond one year from
such date of origination.
"Type" means any type of Advance (i.e., Base Rate Advance or
LIBOR Advance).
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas.
"Vessels" means the vessels described on SCHEDULE "2".
"Vessel Mortgage" means the First Preferred Fleet Mortgage of
HBH in favor of the Lender covering the U.S. flagged and documented
Vessels "Missy Ann", "BH-7", "BH-103", "BH-101", and "Danny Boy II," of
even date herewith, as the same may be amended, supplemented or
modified from time to time.
"Withdrawal Liability" has the meaning specified for such term
in Part I of Subtitle E of Title V of ERISA.
"Year 2000 Compliant" shall mean, in regard to any entity,
that all software, hardware, firmware, equipment, fixtures, goods or
systems utilized by or material to the business operations or financial
condition of such entity, will properly perform date-sensitive
functions before, during and after the year 2000.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS. The words "hereof,"
"herein," and "hereunder" and words of similar import referring to this
Agreement refer to this Agreement as a whole and not to any particular provision
of this Agreement. Unless otherwise specified, all Article and Section
references pertain to this Agreement. All accounting terms not specifically
defined
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<PAGE> 25
herein shall be construed in accordance with GAAP. Terms used herein that are
defined in the UCC, unless otherwise defined herein, shall have the meanings
specified in the UCC. The term "including" means "including, without
limitation."
SECTION 1.3 COMPUTATION OF TIME PERIODS. In the computation of periods
of time from a specified date to a later specified date, the word "from" means
"from and including" and the words "until" and "to" each means "to but
excluding." Unless otherwise indicated, all references to a particular time are
references to Houston, Texas time.
ARTICLE II
ADVANCES/LETTERS OF CREDIT
SECTION 2.1 COMMITMENT. Subject to the terms and conditions of this
Agreement, the Lender agrees to make one or more Advances to the Borrowers from
time to time from the date hereof to and including the Termination Date in an
aggregate principal amount at any time outstanding up to but not exceeding the
amount of the Commitment as then in effect provided that the aggregate amount
of all Advances outstanding shall not exceed the Commitment minus the sum of
the outstanding Letter of Credit Liabilities. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the
Borrowers may borrow, repay, and reborrow hereunder the amount of the
Commitment by means of Base Rate Advances and LIBOR Advances and, until the
Termination Date, the Borrowers may Convert Advances of one Type into Advances
of another Type. Advances of each Type made by each Lender shall be made and
maintained at such Lender's Applicable Lending Office for Advances of such
Type.
SECTION 2.2 NOTE. The obligation of the Borrowers to repay the Lender
for Advances made by the Lender and interest thereon shall be evidenced by a
Note executed jointly and severally by the Borrowers, payable to the order of
the Lender, in the original principal amount of the Commitment as originally in
effect, and dated the date hereof.
SECTION 2.3 REPAYMENT OF ADVANCES. The Borrowers shall repay the
unpaid principal amount of all Advances on the Termination Date.
SECTION 2.4 INTEREST. The unpaid principal amount of the Advances
shall bear interest at a varying rate per annum equal from day to day to the
lesser of (a) the Maximum Rate, or (b) the Applicable Rate. If at any time the
Applicable Rate for any Advance shall exceed the Maximum Rate, thereby causing
the interest accruing on such Advance to be limited to the Maximum Rate, then
any subsequent reduction in the Applicable Rate for such Advance shall not
reduce the rate of interest on such Advance below the Maximum Rate until the
aggregate amount of interest accrued on such Advance equals the aggregate
amount of interest which would have accrued on such Advance if the Applicable
Rate had at all times been in effect. Accrued and unpaid interest on the
Advances shall be due and payable as follows:
(i) in the case of Base Rate Advances or LIBOR Advances, on
each Payment Date and on the Termination Date; and
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(ii) contemporaneously with the payment or prepayment of
any Advance or the Conversion of any Advance to an Advance of another Type (but
only on the principal amount so paid, prepaid, or Converted).
Notwithstanding the foregoing, the Borrowers will pay to the Lender, interest
at the Default Rate on any principal of any Advance made by Lender, and (to the
fullest extent permitted by law) on any other amount payable by the Borrowers
hereunder, under any Loan Document, or under the Note, for the period
commencing on the date of an Event of Default until the same is paid in full or
all Events of Default are cured or waived.
SECTION 2.5 ADDITIONAL INTEREST ON LIBOR ADVANCES. If any Lender is
required under regulations of the Federal Reserve Board to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, and if as a result thereof there is an increase in the cost to the
Lender of agreeing to make or making, funding or maintaining LIBOR Advances,
then the Borrowers shall from time to time, upon demand by such Lender, pay to
the Lender for the account of the Lender additional amounts as additional
interest sufficient to compensate the Lender for such increased cost. A
certificate as to the basis for such increased cost, in reasonable detail and
specifying the amount requested submitted to the Borrowers and the Lender by
such Lender shall be conclusive and binding absent manifest error.
SECTION 2.6 BORROWING PROCEDURE. Any Borrower shall give the Lender
notice by means of an Advance Request Form of each requested Advance at least
one (1) Business Days before the requested date of each Base Rate Advance, and
at least three (3) Business Days before the requested date of each LIBOR
Advance, specifying: (a) the requested date of such Advance (which shall be a
Business Day), (b) the amount of such Advance, (c) the Type of the Advance, and
(d) in the case of a LIBOR Advance, the duration of the Interest Period for
such Advance. The Lender at its option may accept telephonic requests for
Advances, provided that such acceptance shall not constitute a waiver of the
Lender's right to delivery of an Advance Request Form in connection with
subsequent Advances. Any telephonic request for an Advance by any Borrower
shall be promptly confirmed by submission of a properly completed Advance
Request Form to the Lender. Each Advance shall be in a minimum principal amount
of $1,000,000 or an integral multiple thereof. The aggregate principal amount
of LIBOR Advances having the same Interest Period shall be at least equal to
$1,000,000. Subject to fulfillment of all the applicable terms and conditions
of this Agreement, the Lender will make each Advance available to the
applicable Borrower by depositing the same, in immediately available funds, in
an account of the applicable Borrower (designated by the applicable Borrower)
maintained with the Lender at the Principal Office. All notices under this
Section shall be irrevocable and shall be given not later than 11:00 A.M. on
the day which is not less than the number of Business Days specified above for
such notice. Each Advance request shall be irrevocable and binding on the
Borrowers.
SECTION 2.7 CONVERSIONS AND CONTINUATIONS.
(a) The Borrowers shall have the right from time to time to
Convert all or part of an Advance of one Type into an Advance of another Type
or to Continue LIBOR Advances by giving the Lender written notice at least one
(1) Business Days before Conversion into a Base Rate
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Advance, and at least three (3) Business Days before Conversion into or
Continuation of a LIBOR Advance, specifying: (i) the Conversion or Continuation
date, (ii) the amount of the Advance to be Converted or Continued, (iii) in the
case of Conversions, the Type of Advance to be Converted into, and (iv) in the
case of a Continuation of or Conversion into a LIBOR Advance, the duration of
the Interest Period applicable thereto; provided that (A) LIBOR Advances may
only be Converted on the last day of the Interest Period, and (B) except for
Conversions into Base Rate Advances, no Conversions shall be made while a
Default has occurred and is continuing. All notices under this Section shall be
irrevocable and shall be given not later than 11:00 A.M. on the day which is
not less than the number of Business Days specified above for such notice.
(b) If the Borrowers shall fail to give the Lender the notice
as specified above for Continuation or Conversion of a LIBOR Advance prior to
the end of the Interest Period with respect thereto, such LIBOR Advance shall
be Converted automatically into a Base Rate Advance on the last day of the then
current Interest Period for such LIBOR Advance.
(c) If the aggregate unpaid principal amount of Advances
comprising any Borrowing of LIBOR Advances shall be reduced, by payment or
prepayment or otherwise, to less than $1,000,000, such Advances shall
automatically Convert, on the last day of the then existing Interest Period for
such Advances, to Base Rate Advances, unless the Borrowers have selected to
continue such Advances as LIBOR Advances by selecting a new Interest Period
therefor in accordance with the provisions contained in the definition of
"Interest Period" in Section 1.1 commencing on such day and the sum of the
outstanding principal amount of such Advances plus the outstanding principal
amount of each other Borrowing that is being Converted into or Continued as,
LIBOR Advances on such day with the same Interest Period as such Advances is at
least $1,000,000.
SECTION 2.8 USE OF PROCEEDS. The proceeds of Advances shall be used by
the Borrowers for working capital in the ordinary course of business and to
support the issuance of Letters of Credit issued in the ordinary course of
business.
SECTION 2.9 FEES.
(a) The Borrowers jointly and severally agree to pay to the
Lender a commitment fee on the daily average unused amount of the Commitment
for the period from and including the date of this Agreement to and including
the Termination Date, at the percentage rate per annum in the "Commitment Fee
(unused)" column of the chart in the Definition of Applicable Margin
corresponding to the applicable "Ratio of Senior Funded Debt" to EBITDA column
in said chart, based on a 365-day year and the actual number of days elapsed.
Accrued commitment fee shall be payable in arrears on each Quarterly Payment
Date and on the Termination Date.
(b) The Borrowers agree to pay to the Lender a facility fee
of $75,000.00 contemporaneously with the execution of this Agreement.
(c) The Borrowers jointly and severally agree that if a
payment is ten (10) or more days late, Borrowers will pay five percent (5.0%)
of the regularly scheduled payment or $25.00,
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whichever is greater, up to the maximum amount of $1,500.00 per late charge,
but in no event shall such late payment fee exceed the Maximum Rate.
SECTION 2.10 REDUCTION OR TERMINATION OF COMMITMENTS. The Borrowers
shall have the right to terminate in whole or reduce in part the unused portion
of the Commitments upon at least three (3) Business Days' prior notice (which
notice shall be irrevocable) to the Lender specifying the effective date
thereof, whether a termination or reduction is being made, and the amount of
any partial reduction, provided that each partial reduction shall be in the
amount of $3,000,000 or an integral multiple thereof and the Borrowers shall,
jointly and severally, simultaneously prepay the amount by which the unpaid
principal amount of the Advances exceeds the Commitments (after giving effect
to such notice) plus accrued and unpaid interest on the principal amount so
prepaid. The Commitments may not be reinstated after they have been terminated
or reduced. If at any time the sum of the outstanding principal balance under
the Note exceeds the Borrowing Base or the Commitment, then the Borrowers shall
immediately (and in any event within three Business Days) prepay the amount of
such excess for application toward the reduction of outstanding principal
balance of the Note. Such prepayment shall be made together with the payment of
accrued interest upon the amount prepaid.
SECTION 2.11 LETTER OF CREDIT COMMITMENT. Subject to the terms and
conditions of this Agreement, the Lender agrees to issue one or more Letters of
Credit for the account of the Borrowers from time to time from the date hereof
to and including the Termination Date and to honor drafts under the Letters of
Credit; provided, however, that the Lender shall not be obligated to issue any
Letter of Credit if as of the date of issuance of such Letter of Credit (the
"Issuance Date"), the outstanding Letter of Credit Liabilities (taking into
account such proposed Letter of Credit) exceeds the lesser of (i) the Letter of
Credit Commitment, or (ii) an amount equal to the Commitment minus the sum of
the outstanding Advances. Each Letter of Credit shall have an expiration date
not to exceed the Termination Date, shall be payable in Dollars, shall have a
minimum face amount of $50,000, must support a transaction that is entered into
in the ordinary course of the applicable Borrower's business, must otherwise be
reasonably satisfactory in form and substance to the Lender, and shall be
issued pursuant to such documents and instruments (including, without
limitation, the Lender's standard application for issuance of letters of credit
as then in effect) as the Lender may require. No Letter of Credit shall require
any payment by the Lender to the beneficiary thereunder pursuant to a drawing
prior to the one (1) Business Day following presentment of a draft and any
related documents to the Lender.
SECTION 2.12 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT.
(a) Each Letter of Credit shall be issued upon the irrevocable written
request of a Borrower received by the Lender at least five (5) Business Days
(or such shorter time as the Lender may agree in a particular instance in its
sole discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be sent by electronic transfer or
facsimile, confirmed immediately in an original writing, in the form of a
Letter of Credit Request Form, and shall specify in form and detail
satisfactory to the Lender: (i) the proposed date of issuance of the Letter of
Credit (which shall be a Business Day); (ii) the face amount of the Letter of
Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and
address of the beneficiary thereof; (v) the
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conditions permitting a drawing or drawings thereunder; (vi) the form of the
Letter of Credit; (vii) whether such Letter of Credit shall permit a single
drawing or multiple drawings; and (viii) such other matters as the Lender may
reasonably require.
(b) At least one Business Day prior to the Issuance of any Letter of
Credit, the Borrower will confirm with the Lender (by telephone or in writing)
that the Lender has received a copy of the Letter of Credit Request from the
Borrowers and, if not, the Borrower will provide the Lender with a copy
thereof. Unless the Lender has received notice on or before the Business Day
immediately preceding the date the Lender is to Issue a requested Letter of
Credit from the Borrower (i) directing the Lender not to issue such Letter of
Credit because such Issuance is not then permitted under Section 2.11; or (ii)
that one or more conditions specified in Article VI, are not then satisfied;
then, subject to the terms and conditions hereof, the Lender shall, on the
requested date, issue a Letter of Credit for the account of the applicable
Borrower in accordance with the Lender's usual and customary business
practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Termination Date, the Lender will, upon the written request of a
Borrower received by the Lender at least five (5) Business Days (or such
shorter time as the Lender may agree in a particular instance in its sole
discretion) prior to the proposed date of amendment, amend any Letter of Credit
issued by it. Each such request for amendment of a Letter of Credit shall be
made by electronic transfer or facsimile, confirmed immediately in an original
writing or by electronic transfer, made in the form of a Letter of Credit
Request Form and shall specify in form and detail satisfactory to the Lender:
(i) the Letter of Credit to be amended; (ii) the proposed date of amendment of
the Letter of Credit (which shall be a Business Day); (iii) the nature of the
proposed amendment; and (iv) such other matters as the Lender may require. The
Lender shall be under no obligation to amend any Letter of Credit if: (A) the
Lender would have no obligation at such time to issue such Letter of Credit in
its amended form under the terms of this Agreement; or (B) the beneficiary of
any such Letter of Credit does not accept the proposed amendment to the Letter
of Credit.
(d) While a Letter of Credit is outstanding and prior to the
Termination Date, at the option of the Borrowers and upon the written request
of the Borrowers received by the Lender at least five (5) days (or such shorter
time as the Lender may agree in a particular instance in its sole discretion)
prior to the proposed date of notification of renewal, the Lender shall be
entitled to authorize the automatic renewal of any Letter of Credit issued by
it. Each such request for renewal of a Letter of Credit shall be made by
electronic transfer or facsimile, confirmed immediately in an original writing
or by electronic transfer, in the form of a Letter of Credit Request Form, and
shall specify in form and detail reasonably satisfactory to the Lender: (i) the
Letter of Credit to be renewed; (ii) the proposed date of notification of
renewal of the Letter of Credit (which shall be a Business Day); (iii) the
revised expiry date of the Letter of Credit; and (iv) such other matters as the
Lender may reasonably require. Notwithstanding any other provision to the
contrary, the Lender shall be under no obligation to renew any Letter of Credit
if: (A) the Lender would have no obligation at such time to issue or amend such
Letter of Credit in its renewed form under the terms of this Agreement, (B) the
beneficiary of any such Letter of Credit does not accept the proposed renewal
of the Letter of Credit, (C) if the Letter of Credit would be extended past the
Termination Date, or (D) if any of the conditions of Section 6.2 have not been
satisfied. If any outstanding Letter
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of Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the Lender that such Letter of Credit
shall not be renewed, and if at the time of renewal the Lender would be
entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this Section 2.12(d) upon the request of the Borrowers but the
Lender shall not have received any Letter of Credit Request Form from the
Borrowers with respect to such renewal or other written direction by the
Borrowers with respect thereto, the Lender shall nonetheless be permitted to
allow such Letter of Credit to renew, and the Borrowers hereby authorize such
renewal, and, accordingly, the Lender shall be deemed to have received a Letter
of Credit Request Form from the Borrowers requesting such renewal.
(e) This Agreement shall control in the event of any conflict with any
Letter of Credit related document (other than any Letter of Credit).
(f) The Borrower will also deliver to the Lender, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
SECTION 2.13 DRAWINGS AND REIMBURSEMENTS.
(a) In the event of any request for a drawing under a Letter of Credit
by the beneficiary or transferee thereof, the Lender will promptly notify the
Borrowers. Any notice given by the Lender pursuant to this Section 2.13(a) may
be oral if immediately confirmed in writing (including by facsimile); provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice. The Borrowers shall reimburse
the Lender prior to 12 Noon A.M., on each date that any amount is paid by the
Lender under any Letter of Credit (each such date, an "HONOR DATE"), in an
amount equal to the amount so paid by the Lender. In the event the Borrowers
fail to reimburse the Lender for the full amount of any drawing under any
Letter of Credit by 12 Noon A.M. on the Honor Date, the Borrowers shall be
deemed to have requested that Base Rate Advances be made by the Lender to be
disbursed on the Honor Date under such Letter of Credit, subject to the amount
of the unutilized portion of the Commitment and subject to the conditions set
forth in Section 6.2.
(b) With respect to any unreimbursed drawing that is not converted
into Advances consisting of Base Rate Advances to the Borrowers in whole or in
part, because of the Borrowers' failure to satisfy the conditions set forth in
Section 6.2 or for any other reason, the Borrowers shall be deemed to have
incurred from the Lender a Letter of Credit Advance (herein so called) in the
amount of such drawing, which Letter of Credit Advance shall be due and payable
on demand (together with interest) and shall bear interest at a rate per annum
equal to the Default Rate for the period from and including the date of such
drawing to but excluding the date of the Letter of Credit Advance, together
with all accrued, unpaid interest thereon, until paid in full.
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SECTION 2.14 ROLE OF THE LENDER IN LETTER OF CREDIT TRANSACTIONS.
(a) Lender and the Borrowers agree that, in paying any drawing under a
Letter of Credit, the Lender shall not have any responsibility to obtain any
document (other than any sight draft and certificates expressly required by the
Letter of Credit) or to ascertain or inquire as to the validity or accuracy of
any such document or the authority of the Person executing or delivering any
such document.
(b) No Lender-related Person nor any of the respective correspondents,
participants or assignees of the Lender shall be liable for: (i) any action
taken or omitted in the absence of gross negligence or willful misconduct; or
(ii) the due execution, effectiveness, validity or enforceability of any Letter
of Credit related document.
(c) The Borrowers hereby assume all risks of the acts or omissions of
any beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Borrowers' pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Lender-related Person, nor any of the respective correspondents, participants
or assignees of the Lender, shall be liable or responsible for any of the
matters described in clauses (a) through (g) of Section 2.16; provided,
however, anything in such clauses to the contrary notwithstanding, that the
Borrowers may have a claim against the Lender, and the Lender may be liable to
the Borrowers, to the extent, but only to the extent, of any direct, as opposed
to consequential or exemplary, damages suffered by the Borrowers which the
Borrowers prove were caused by the Lender's willful misconduct or gross
negligence or the Lender's willful failure to pay under any Letter of Credit
after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit. In furtherance and not in limitation of the foregoing: (i) the Lender
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) the Lender shall not be responsible for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason.
SECTION 2.15 OBLIGATIONS ABSOLUTE. The Obligations of the Borrowers
under this Agreement and any Letter of Credit related document to reimburse the
Lender for a drawing under a Letter of Credit, and to repay any Letter of
Credit Advance and any drawing under a Letter of Credit converted into an
Advance, shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other Letter of
Credit related document under all circumstances, including the following:
(a) any lack of validity or enforceability of this Agreement or any
Letter of Credit related document or any provision thereof,
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations of any or all of the Borrowers in
respect of any Letter of Credit or any other
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amendment or waiver of or any consent to departure from all or any of the Letter
of Credit related document;
(c) the existence of any claim, set-off, defense or other right that
any Borrower may have at any time against any beneficiary or any transferee of
any Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Lender or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
Letter of Credit related documents or any unrelated transaction;
(d) any draft, demand, certificate or other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect; or any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit;
(e) any payment by the Lender under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by the Lender under any
Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with
any Insolvency Proceeding;
(f) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of any Borrower in respect of any
Letter of Credit; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, any Borrower or
a Guarantor, except for errors and omissions caused by an Lender's gross
negligence or willful misconduct.
SECTION 2.16 CASH COLLATERAL PLEDGE. Upon (a) the request of the
Lender, (i) if the Lender has honored any full or partial drawing request on
any Letter of Credit and such drawing has resulted in a Letter of Credit
Advance hereunder, or (ii) if, as of the Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or wholly undrawn,
or (b) the occurrence of the circumstances described in Section 3.2(b)
requiring any Borrower to Cash Collateralize Letters of Credit, then, the
Borrowers shall immediately Cash Collateralize the Letter of Credit Liabilities
in an amount equal to such Letter of Credit Liabilities. The Borrowers hereby
grant the Lender, for the benefit of the Lender, a security interest in all
such Cash Collateral. Cash Collateral shall be maintained in blocked,
interest-bearing deposit accounts at the Lender. The Borrowers agree to enter
into documentation evidencing such security interest in the Cash Collateral, in
form and substance satisfactory to Lender in Lender's reasonable discretion.
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SECTION 2.17 LETTER OF CREDIT FEES.
(a) The Borrowers shall pay to the Lender a floating letter of credit
fee with respect to the Letters of Credit equal to the greater of (i) $2,500 or
(ii) the Applicable LIBOR Margin (provided, however, if not available pursuant
to the terms hereof, then 2.75%) per annum upon the face amount of outstanding
Letters of Credit, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon Letters of Credit outstanding
for that quarter as calculated by the Lender. Such letter of credit fees shall
be due and payable quarterly in arrears on the last Business Day of each
calendar quarter during which Letters of Credit are outstanding, commencing on
the first such date to occur after the date hereof, through the Termination
Date, with the final payment to be made on the Termination Date (or such later
expiration date).
(b) The Borrowers shall pay to the Lender from time to time on demand
the normal and customary issuance, presentation, amendment and other customary
processing fees, and other standard costs and charges, of the Lender relating
to letters of credit as from time to time in effect.
SECTION 2.18 UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and
Practice for Documentary Credits as published by the International Chamber of
Commerce most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to the
Letters of Credit.
SECTION 2.19 CO-BORROWERS; JOINT AND SEVERAL LIABILITY.
(a) Each Borrower acknowledges and agrees that it has determined
independently that, in light of the conduct of the business of Borrowers as an
integrated operation and a common enterprise that requires financing on a basis
permitting the availability of credit to each Borrower, it will benefit
specifically, directly and materially from the advances of credit contemplated
by the Lender's financing and that the value of the consideration it is
receiving from the Term Loan made hereunder is reasonably worth at least the
sum at which it is taken by such Borrower.
(b) It is expressly agreed and understood by each Borrower that the
Lender shall have no responsibility to inquire into the apportionment,
allocation, or disposition of the Advances made to Borrowers. All Advances are
to be made for the collective account of Borrowers.
(c) Each Borrower hereby jointly, severally, irrevocably, and
unconditionally guarantees to the Lender the full and prompt payment of each of
the obligations under the Loan Documents by each other Borrower and the
performance by each other Borrower of such Borrower's obligations hereunder and
thereunder and shall fully and promptly perform all of the Obligations and
agrees, as a primary obligation, to indemnify the Lender on demand for and
against any loss incurred by the Lender as a result of any voidable,
unenforceable, or ineffective provision herein or in any of the Loan Documents,
for any reason whatsoever, whether or not known to the Lender, or any Person,
the amount of such loss being in the amount to which the Lender would otherwise
have been entitled to recover from Borrowers. This is a guaranty of payment and
of performance and not of collection.
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(d) Each Borrower consents and agrees that the Lender may, at any time
and from time to time, without notice or demand, except as otherwise required
herein, whether before or after any actual or purported termination,
repudiation or revocation of any of the Loan Documents, including this
Agreement, by any one or more Borrowers, and without affecting the
enforceability or continuing effectiveness hereof as to each Borrower, agree
with one or more Borrowers or any other Person, to: (i) supplement, restate,
compromise, modify, amend, increase, decrease, extend, discharge, renew,
accelerate, or otherwise change the time for payment or the terms of the
Obligations or any part thereof, including any increase or decrease of the
rate(s) of interest thereon; (ii) supplement, restate, modify, amend, increase,
decrease or waive, or enter into or give any agreement, approval, or consent
with respect to, the Obligations or any part thereof, or any of the Loan
Documents or any additional security or guarantees, or any condition, covenant,
default, remedy, right, representation or term thereof or thereunder; (iii)
accept new or additional instruments, documents or agreements in exchange for
or relative to any of the Loan Documents or the Obligations or any part
thereof; (iv) accept partial payments on the Obligations; (v) receive and hold
additional security or guarantees for the Obligations or any part thereof;
(vi) release, reconvey, terminate, waive, abandon, fail to perfect,
subordinate, exchange, substitute, transfer or enforce any security or
guarantees, and apply any security and direct the order or manner of the sale
thereof as the Lender in its sole and absolute discretion may determine; (vii)
release any Person from any personal liability with respect to the Obligations
or any part thereof; (viii) settle, discharge, release on terms satisfactory
to the Lender or by operation of applicable laws or otherwise liquidate or
enforce any Obligations and any security therefor or guaranty thereof in any
manner, consent to the transfer of any security and bid and purchase at any
sale; (ix) consent to the merger, change or any other restructuring or
termination of the corporate existence of any Borrower and correspondingly
restructure the Obligations, and any such merger, change, restructuring or
termination shall not affect the liability of any Borrower or the continuing
effectiveness hereof, or the enforceability hereof with respect to all or any
part of the Obligations, or (x) take or refrain from taking any other action as
the Lender, in its sole and absolute discretion, may elect, or any or some of
the foregoing.
(e) The Lender may enforce this Agreement independently as to each
Borrower and Guarantor and independently of any other remedy or security the
Lender at any time may have or hold in connection with the Obligations or the
Loan Documents, or both, and it shall not be necessary for the Lender to
marshal assets in favor of any Borrower or any other Person, or to proceed upon
or against or exhaust any security or remedy before proceeding to enforce this
Agreement. Each Borrower and Guarantor expressly waives any right to require
the Lender to marshal assets in favor of any Borrower, any Guarantor or any
other Person, or to proceed against any Guarantor, any other Borrower or any
collateral provided by any Person, and agrees that the Lender may proceed
against any Guarantor, one or more Borrowers or any Collateral in such order as
it shall determine in its sole and absolute discretion.
(f) If any Borrower makes a payment in respect of the Obligations, it
shall have the rights of contribution and reimbursement set forth below
against the other Borrowers, and shall be indemnified as set forth below;
provided that no Borrower shall enforce its rights to any payment by exercising
its rights of contribution, reimbursement or indemnification unless and until
all the Obligations shall have been paid in fall. Each Borrower waives any
right of subrogation, contribution, reimbursement, and other rights of
indemnity it may have against any Obligated Party.
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(g) If any Borrower makes a payment in respect of the Obligations that
is greater than its Pro Rata Percentage (hereinafter defined) of the
Obligations, calculated as of the date such payment is made, the Borrower
making such payment shall have the right to receive from each of the other
Borrowers, and the other Borrowers jointly and severally agree to pay to such
Borrower, when permitted by paragraph (f) above, an amount such that the net
payments made by the Borrowers in respect of the Obligations shall be shared
among the Borrowers pro rata in proportion to their respective Pro Rata
Percentages of the Obligations. The Borrowers hereby jointly and severally
indemnify each of the other Borrowers and jointly and severally agree to hold
each of them harmless from and against any and all amounts which any such
Borrower shall ever be required to pay in respect of the Obligations in excess
of such Borrower's respective Pro Rata Percentage of the Obligations.
Notwithstanding anything to the contrary contained in this paragraph or in this
Agreement, no liability or obligation of any Borrower that shall accrue
pursuant to this Agreement shall be paid nor shall it be deemed owed pursuant
to this Agreement or any Loan Documents unless and until all of the Obligations
shall be paid in full. As used herein, the term "PRO RATA PERCENTAGE" shall
mean, for each Borrower, the percentage derived by dividing (a) the amount by
which the fair saleable value of its assets on December 30, 1998, exceeds its
liabilities (such excess for each Borrower, its "Net Worth"), by (b) the Net
Worth of all of the Borrowers.
(h) The Lender may file a separate action or actions against any
Borrower, whether such action is brought or prosecuted with respect to any
security or against any other Person, or whether any other Person is joined in
any such action or actions. Each Borrower agrees that the Lender and any
Responsible Officer of any Borrower may deal with each other in connection with
the Obligations or otherwise, or alter any contracts or agreements now or
hereafter existing between any of them, in any manner whatsoever, all without
in any way altering or affecting the continuing efficacy of this Agreement.
(i) The Lender's rights hereunder shall be reinstated and revived, and
the enforceability of this Agreement shall continue, with respect to any amount
at any time paid on account of the Obligations that thereafter shall be
required to be restored or returned by the Lender, all as though such amount
had not been paid. The rights of the Lender created or granted herein and the
enforceability of this Agreement at all times shall remain effective to cover
the full amount of all the Obligations even though the Obligations, including
any part thereof or any other security or guaranty therefor, may be or
hereafter may become invalid or otherwise unenforceable as against any
Obligated Party or any Borrower and whether or not any Obligated Party or any
other Borrower shall have any personal liability with respect thereto.
(j) To the maximum extent permitted by applicable law, each Borrower
expressly waives any and all defenses now or hereafter arising or asserted by
reason of (i) any disability or other defense of any other Borrower with
respect to the Obligations, (ii) the unenforceability or invalidity of any
security or guaranty for the Obligations or the lack of perfection or
continuing perfection or failure of priority of any security for the
Obligations, (iii) the cessation for any cause whatsoever of the liability of
any other Borrower (other than by reason of the full payment and performance of
all Obligations), (iv) any failure of the Lender to marshal assets in favor of
any Borrower or any other Person, (v) any failure of the Lender to give notice
of sale or other disposition of Collateral to any Borrower or any other Person,
or any defect in any notice that may be given in connection with any
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sale or disposition of Collateral, (vi) any failure of the Lender to comply with
applicable law in connection with the sale or other disposition of any
Collateral or other security for any Obligation, including any failure of the
Lender to conduct a commercially reasonable sale or other disposition of any
Collateral or other security for any Obligation, (vii) any act or omission of
the Lender or others that directly or indirectly results in or aids the
discharge or release of any Borrower, any other Obligated Party, or the
Obligations or any security or guaranty therefor by operation of law or
otherwise, (viii) any law which provides that the obligation of a surety or
guarantor must neither be larger in amount nor in other respects more burdensome
than that of the principal or which reduces a surety's or guarantor's obligation
in proportion to the principal obligation, (ix) any failure of the Lender to
file or enforce a claim in any bankruptcy or other proceeding with respect to
any Person, (x) the election by the Lender of the application or non-application
of Section 1 111(b)(2) of the Federal Bankruptcy Code, (xi) any extension of
credit or the grant of any lien under Section 364 of the Federal Bankruptcy
Code, (xii) any use of cash collateral under Section 363 of the Federal
Bankruptcy Code, (xiii) any agreement or stipulation with respect to the
provision of adequate protection in any bankruptcy proceeding of any Person,
(xiv) the avoidance of any lien in favor of the Lender for any reason, or (xv)
any action taken by the Lender that is authorized by this Agreement or any Loan
Document. Until such time, if any, as all of the Obligations have been paid and
performed in full and no portion of any commitment of the Lender to any Borrower
under any Loan Document remains in effect, no Borrower shall have any right of
subrogation, contribution, reimbursement or indemnity, and each Borrower
expressly waives any right to enforce any remedy that the Lender may now have or
hereafter may have against any other Person, and waives the benefit of, or any
right to participate in, any Collateral now or hereafter held by the Lender.
Each Borrower expressly waives all presentments, demands for payment or
performance, notices of nonpayment, notices of intent to accelerate, notices of
acceleration and notices of nonperformance, protests, notices of protest,
notices of dishonor and all other notices or demands of any kind or nature
whatsoever with respect to the Obligations, and all notices of acceptance of
this Agreement or of the existence, creation or incurring of new or additional
Obligations.
(k) To the fullest extent permitted by applicable law, each Borrower
expressly waives any suretyship defenses to the enforcement of this Agreement
or any rights of the Lender created or granted hereby or to the recovery by any
such Person including any Guarantor, against any Borrower, or any other Person
liable therefor of any deficiency after a judicial or nonjudicial foreclosure
or sale, even though such a foreclosure or sale may impair the subrogation
rights of Borrowers and may preclude Borrowers from obtaining reimbursement or
contribution from the other Borrowers. Each Borrower expressly waives any
defenses or benefits that may be derived pursuant to or from Rule 31 of the
Texas Rules of Civil Procedure, Section 17.001 of the Civil Practice and
Remedies Code and Chapter 34 of the Texas Business and Commerce Code, as
amended, or comparable provisions of the laws of any other jurisdiction, and
all other suretyship defenses it otherwise might or would have under Texas law
or other applicable law.
(l) Each Borrower warrants and agrees that each of the waivers and
consents set forth in this Section 2.19 are made after consultation with legal
counsel and with full knowledge of their significance and consequences, with
the understanding that events giving rise to any defense or right waived may
diminish, destroy or otherwise adversely affect rights which such Borrower
otherwise may have against the other Borrowers, the Lender or others, or
against Collateral, and that, under
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the circumstances, the waivers and consents herein given are reasonable and not
contrary to public policy or law. If any of the waivers or consents herein are
determined to be contrary to any applicable law or public policy, such waivers
and consents shall be effective to the maximum extent permitted by law.
(m) Each Borrower represents and warrants to the Lender that (i) such
Borrower has established adequate means of obtaining from the other Borrowers
on a continuing basis financial and other information pertaining to the
business, operations, and condition (financial and otherwise) of the other
Borrowers, and their property, and (ii) such Borrower now is and hereafter will
be familiar with the business, operations and condition (financial and
otherwise) of the other Borrowers, and their property. Each Borrower hereby
waives and relinquishes any duty on the part of the Lender to disclose to such
Borrower any matter, fact or thing relating to the business, operations or
condition (financial or otherwise) of the other Borrowers, or the property of
the other Borrowers, whether now or hereafter known by the Lender during the
term of this Agreement.
ARTICLE III
PAYMENTS
SECTION 3.1 METHOD OF PAYMENT. All payments of principal, interest,
and other amounts to be made by the Borrowers under this Agreement and the
other Loan Documents shall be made to the Lender at 910 Travis, Houston, Texas,
77002, in Dollars and in immediately available funds, without setoff,
deduction, or counterclaim, not later than 11:00 A.M. on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day). The
Borrowers shall, at the time of making each such payment, specify to the Lender
the sums payable by the Borrowers under this Agreement and the other Loan
Documents to which such payment is to be applied (and in the event that the
Borrowers fail to so specify, or if a Default has occurred and is continuing,
the Lender, may apply such payment to the Obligations in such order and manner
as it may elect in its sole discretion). Whenever any payment under this
Agreement or any other Loan Document shall be stated to be due on a day that is
not a Business Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of the payment of interest and letter of credit and facility fees,
as the case may be. Unless otherwise agreed to, in writing, or otherwise
required by applicable law, payments will be applied first to accrued, unpaid
interest, then to principal, and any remaining amount to any unpaid collection
costs, late charges and other charges and fees, provided, however, upon
delinquency or other default, Lender reserves the right to apply payments among
principal, interest, late charges, collection costs and other charges and fees
at its discretion.
SECTION 3.2 PREPAYMENT. (a) The Borrowers may, upon at least one
Business Days' prior notice to the Lender in the case of Base Rate Advances,
and at least three (3 ) Business Days' prior notice to the Lender in the case
of LIBOR Advances, prepay the Advances in whole at any time or from time to
time in part without premium or penalty but with accrued interest to the date
of prepayment on the amount so prepaid, provided that (i) LIBOR Advances may be
prepaid only on the last day of the Interest Period for such Advances and in
the event that Borrower makes a
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prepayment other than on the last day of an Interest Period, Borrowers shall
pay all accrued interest on the principal amount prepaid with such prepayment
and, on demand, shall reimburse Lender and hold Lender harmless from all losses
and expenses incurred by Lender as a result of such prepayment, including,
without limitation, any losses and expenses arising from the liquidation or
reemployment of deposits acquired to fund or maintain the principal amount
prepaid. Such reimbursement shall be calculated as though Lender funded the
principal amount prepaid through the purchase of U.S. Dollar deposits in the
London, England interbank market having a maturity corresponding to such
Interest Period and bearing an interest rate equal to the LIBOR Rate for such
Interest Period, whether in fact that is the case or not. Lender's
determination of the amount of such reimbursement shall constitute prima facie
evidence that such determination is accurate and correct; and (ii) each partial
prepayment shall be in the principal amount of $1,000,000 or an integral
multiple thereof. All notices under this Section shall be irrevocable and shall
be given not later than 11:00 A.M. on the day which is not less than the number
of Business Days specified above for such notice.
(b) If on any date the Letter of Credit Liabilities exceed the Letter
of Credit Commitment, the Borrowers shall Cash Collateralize on such date the
outstanding Letters of Credit in an amount equal to the excess of the maximum
amount then available to be drawn under the Letters of Credit over the
aggregate Letter of Credit Commitment. If on any date after giving effect to
any Cash Collateral pledged on such date pursuant to the preceding sentence,
(i) the aggregate amount of Advances then outstanding, plus the amount of
Letter of Credit Liabilities exceeds (ii) the Commitment, the Borrowers shall
immediately (and in any event within three (3) days) upon notice or demand,
prepay the outstanding principal amount of Advances by an amount equal to the
applicable excess.
(c) If at any time any of the Borrowers or any Subsidiary sells or
otherwise disposes of any of its Specific Fixed Collateral securing the
Obligations, the Borrower or Subsidiary involved shall immediately (and in any
event within three (3) Business Days) notify the Lender in writing of said
event (and that the notice is pursuant to Section 3.2(c)) and pursuant to this
Section 3.2(c) the Lender shall have thirty (30) days to direct the Borrowers
(at Lender's election) that: (i) 100% of the net proceeds received shall be
applied as a mandatory prepayment on the Note immediately (and in any event
within three (3) Business Days) after receipt of notice of the Lender's
direction; (ii) the Lender has reduced the Commitment by the amount of said net
proceeds; or (iii) the Lender has decided that no mandatory prepayment or
Commitment reduction is required as a result thereof. Nothing in this Section
3.2(c) shall be construed as approval for any disposition of Collateral which
is expressly prohibited by Section 9.8.
SECTION 3.3 TAXES.
(a) All payments by the Borrowers of principal of and interest on the
Advances and of all fees and other amounts payable under any Loan Document are
payable without deduction for or on account of any present or future taxes,
levies, imposts, deductions, charges, fees, duties or withholdings, and all
liabilities with respect thereto, excluding in the case of the Lender the
following: (i) taxes imposed on such person's income, and franchise taxes
imposed on it, by the jurisdiction order which such person is organized or any
political subdivision thereof and, in the case
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of the Lender, taxes imposed on its income, and franchise taxes imposed on it,
by the jurisdiction of the Lender's Applicable Lending Office or any political
subdivision thereof; (ii) income taxes imposed by the United States of America;
and (iii) any taxes imposed by the United States of America by means of
withholding at the source if and to the extent that such taxes shall be in
effect and shall be applicable, on the date hereof, to payments to be made to
the Lender (all such non-excluded taxes, levies, imposes, deductions, changes,
fees, duties, withholdings and liabilities being hereinafter referred to as
"Taxes"). Except for excluded taxes enumerated above, if any Borrower is
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Note to the Lender, the Borrowers shall pay additional
interest or shall make additional payments in such amounts so that every net
payment of principal of and interest on the affected Advances and of all other
amounts payable by it under any Loan Document, after withholding or deduction
for or on account of any such Taxes will not be less than the amount provided
for herein or therein.
(b) Borrowers agree to pay any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
the Notes (the "Other Taxes").
(c) The Borrowers, to the fullest extent permitted by law, will
indemnify the Lender for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 3.3) paid by the Lender and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto except as a
result of the gross negligence or willful misconduct of the Lender, whether or
not such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Lender makes
written demand therefor.
(d) Within 30 days after the date of any payment of Taxes by or at the
discretion of the Borrowers, the Borrowers will furnish to the Lender, at its
address referred to herein, the original or a certified copy of a receipt
evidencing payment thereof. Should the Lender ever receive any refund, credit
or deduction from any taxing authority to which the Lender would not be
entitled but for the payment by the Borrowers of Taxes as required by this
Section 3.3 (it being understood that the decision as to whether or not to
claim, and if claimed, as to the amount of any such refund, credit or deduction
shall be made by the Lender in its sole discretion), the Lender thereupon shall
repay to the Borrowers an amount with respect to such refund, credit or
deduction equal to any net reduction in Taxes actually obtained by the Lender
and determined by the Lender to be attributable to such refund, credit or
deduction.
(e) The Lender shall use reasonable efforts (consistent with its
internal policies and legal and regulatory restrictions) to select a
jurisdiction for its Applicable Lending Office or change the jurisdiction of
its Applicable Lending Office, as the case may be, so as to avoid the
imposition of any Taxes or Other Taxes or to eliminate the amount of any such
additional amounts which may thereafter accrue; provided that no such selection
or change of the jurisdiction for its Applicable Lending Office shall be made
if, in the reasonable judgment of the Lender, such selection or change would be
disadvantageous to the Lender.
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SECTION 3.4 COMPUTATION OF INTEREST. Interest on the LIBOR Advances
hereunder shall be computed by applying the ratio of the annual interest rate
over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding
unless such calculation would result in a usurious rate, in which case interest
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be. All other payments of interest hereunder shall be computed on the per annum
basis of a year of 365 or 366 days, as the case may be, and for the actual
number of days (including the first day but excluding the last day) elapsed.
ARTICLE IV
YIELD PROTECTION AND ILLEGALITY
SECTION 4.1 INCREASED COSTS. The Borrowers shall, jointly and
severally, pay to the Lender from time to time, within 15 days following demand
by the Lender such additional amounts as the Lender may determine to be
necessary to compensate it for any increased costs incurred by the Lender
determines are attributable to its making or maintaining of any LIBOR Advances
hereunder or its obligation to make any of such LIBOR Advances hereunder, or
any reduction in any amount receivable by the Lender hereunder in respect of
any such LIBOR Advances or such obligation other than increased costs described
in Section 2.5 or in Section 4.6 (such increases in costs and reductions in
amounts receivable being herein called "Increased Costs"), resulting from
either (i) the introduction of or any change in or in the interpretation of any
law or regulation by any Governmental Authority, central bank or comparable
agency charged with the interpretation or administration thereof, or (ii) the
compliance with any guideline or request from any Governmental Authority,
central bank or comparable agency (whether or not having the force of law). The
Lender will furnish the Borrowers with a certificate, in reasonable detail,
setting forth the basis and the amount of such Increased Costs of the Lender.
The Borrowers shall reimburse the Lender for such increased cost in accordance
with this Section 4.1.
SECTION 4.2 LIMITATION ON TYPES OF ADVANCES. Anything herein to the
contrary notwithstanding, if with respect to any LIBOR Advances for any
Interest Period therefor:
(a) The Lender determines (which determination shall be conclusive)
that quotations of interest rates for the relevant deposits referred to in the
definition of "LIBOR Rate" in Section 1.1 are not being provided in the
relative amounts or for the relative maturities for purposes of determining the
rate of interest for such Advances as provided in this Agreement; or
(b) The Lender determines (which determination shall be conclusive)
that the relevant rates of interest referred to in the definition of "LIBOR
Rate" in Section 1.1 on the basis of which the rate of interest for such
Advances for such Interest Period is to be determined do not accurately reflect
the cost to the Lender of making or maintaining such Advances for such Interest
Period;
then the Lender shall give the Borrowers prompt notice thereof specifying the
relevant Type of Advances and the relevant amounts or periods, and so long as
such condition remains in effect, the Lender shall be under no obligation to
make additional Advances of such Type or to Convert
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Advances of any other Type into Advances of such Type and the Borrowers shall,
on the last day(s) of the then current Interest Period(s) for the outstanding
Advances of the affected Type, either prepay such Advances or Convert such
Advances into another Type of Advance in accordance with the terms of this
Agreement.
SECTION 4.3. ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Lender or its
Eurodollar Lending Office to (a) honor its obligation to make LIBOR Advances
hereunder or (b) maintain LIBOR Advances hereunder, then the Lender shall
promptly notify the Borrowers thereof and the Lender's obligation to make or
maintain LIBOR Advances and to Convert other Types of Advances into LIBOR
Advances hereunder shall be suspended until such time as the Lender may again
make and maintain LIBOR Advances (in which case the provisions of Section 4.4
shall be applicable).
SECTION 4.4 TREATMENT OF AFFECTED ADVANCES. If the Advances of the
Lender of a particular Type (Advances of such Type being hereinafter called
"Affected Advances" and such Type being herein called the "Affected Type") are
to be Converted pursuant to Section 4.1 or 4.3, the Lender's Affected Advances
shall be automatically Converted into Base Rate Advances on the last day(s) of
the then current Interest Period(s) for the Affected Advances (or, in the case
of a Conversion required by Section 4.1(b) or 4.3, on such earlier date as
the Lender may specify to the Borrowers) and, unless and until the Lender gives
notice as provided below that the circumstances specified in Section 4.1 or 4.3
hereof which gave rise to such Conversion no longer exist:
(a) To the extent that the Lender's Affected Advances have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to the Lender's Affected Advances shall be applied instead to its Base
Rate Advances; and
(b) All Advances which would otherwise be made or Continued by the
Lender as Advances of the Affected Type shall be made as or Converted into Base
Rate Advances and all Advances of the Lender which would otherwise be Converted
into Advances of the Affected Type shall be Converted instead into (or shall
remain as) Base Rate Advances.
SECTION 4.5 COMPENSATION. The Borrowers shall, jointly and severally,
pay to the Lender, upon the request of the Lender, such amount or amounts as
shall be sufficient (in the reasonable opinion of the Lender) to compensate it
for any loss, cost, or expense incurred by it as a result of:
(a) Any payment, prepayment or Conversion of a LIBOR Advance for any
reason (including, without limitation, the acceleration of the outstanding
Advances pursuant to Section 11.2) on a date other than the last day of an
Interest Period for such Advance; or
(b) Any failure by the Borrowers for any reason (including, without
limitation, the failure of any conditions precedent specified in Article VI to
be satisfied) to borrow, Convert, or prepay a LIBOR Advance on the date for
such borrowing, Conversion, or prepayment, specified in the relevant notice of
borrowing, prepayment, or Conversion under this Agreement.
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Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so paid or Converted
or not borrowed for the period from the date of such payment, Conversion, or
failure to borrow to the last day of the Interest Period for such Advance (or,
in the case of a failure to borrow, the Interest Period for such Advance which
would have commenced on the date specified for such borrowing) at the
applicable rate of interest for such Advance provided for herein over (ii) the
interest component of the amount the Lender would have bid in the London
interbank market for Dollar deposits of leading banks and amounts comparable to
such principal amount and with maturities comparable to such period.
SECTION 4.6 CAPITAL ADEQUACY. If after the date hereof, the Lender
shall have determined that the adoption or implementation of any applicable
law, rule, or regulation regarding capital adequacy, or any change therein, or
any change in the interpretation or administration thereof by any central bank,
comparable agency, or other Governmental Authority charged with the
interpretation or administration thereof, or compliance by the Lender (or its
lending office or parent) with any guideline, request, or directive regarding
capital adequacy (whether or not having the force of law) of any central bank,
comparable agency, or other Governmental Authority (except to the extent such
request or directive arises as a result of the individual credit-worthiness of
the Lender), has the effect of increasing the amount of capital required or
expected to be maintained as a result of its Commitment hereunder, or has or
would have, the effect of reducing the rate of return on the Lender's (or its
parent's) capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which the Lender (or its
parent) could have achieved but for such adoption, implementation, change or
compliance (taking into consideration the Lender's policies with respect to
capital adequacy) by an amount deemed by the Lender to be material, then from
time to time, within 10 Business Days after demand by the Lender, the Borrowers
shall, jointly and severally, pay to the Lender such additional amount or
amounts as will compensate the Lender (or its parent) for such reduction. A
certificate of the Lender, in reasonable detail, claiming compensation under
this Section and setting forth the additional amount or amounts to be paid to
it hereunder shall be conclusive, absent manifest errors, although the failure
to give any such notice shall not diminish any of the Borrowers' obligations to
pay such additional amounts, and, the Borrowers shall, jointly and severally,
pay such additional amounts as provided herein. In determining such amount or
amounts, the Lender may use any reasonable averaging and attribution methods.
ARTICLE V
SECURITY
SECTION 5.1 COLLATERAL. To secure full and complete payment and
performance of the Obligations, the Borrowers shall execute and deliver or
cause to be executed and delivered the documents described below covering the
property and collateral described in this Section 5.1 (which, together with any
other property and collateral which may now or hereafter secure the Obligations
or any part thereof, is sometimes herein called the "Collateral"):
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(a) HBH shall grant to the Lender a first priority mortgage on the
documented Vessels and all of such Vessels' engines, machinery, boats, tackle,
outfit, spare gear, fuel, consumable or other stores, belongings and
appurtenances, and whether now owned or hereafter acquired, and all insurance
policies and proceeds related thereto, pursuant to the Vessel Mortgages and the
Insurance Assignments, respectively.
(b) The Borrowers owning stock or other ownership interests in
Subsidiaries shall grant to the Lender and Heller a first priority pledge of
and security interest in all such stock and ownership interests in such
Subsidiaries (limited to a 65% interest with respect to Subsidiaries organized
in a foreign jurisdiction) and all products and proceeds thereof, pursuant to
the Security Agreement (Pledge).
(c) The Borrowers shall grant to the Lender a first priority security
interest in all of its now owned and hereafter acquired inventory, goods and
merchandise, wherever located in the United States, in each case which are held
for rent, lease or resale, including, without limitation, all raw materials,
finished goods, or parts inventory, or other inventory and work-in-process
which is sold or delivered to customers under construction contracts for
pipeline work, fabrication work, sale or rental/lease products manufactured by
any Borrower or otherwise sold/leased in the normal course of business, and all
documents of title or other documents representing them, and all proceeds and
products thereof (including, but not limited to, all proceeds of insurance with
respect thereto, including the proceeds of any casualty insurance), and any
lists, information and records prepared or kept in relation to the foregoing,
Accounts, accounts receivable (subject to the provisions of the Intercreditor
Agreement), Specific Fixed Collateral and all chattel paper, documents,
instruments, and general intangibles arising out of or pertaining to the
tangible and intangible collateral described in subsections (a) and (b) above
and this subsection (c), whether now owned or hereafter acquired, and all
products and proceeds thereof, pursuant to the Security Agreement.
(d) The Borrowers shall execute and cause to be executed such further
documents and instruments, including without limitation, Uniform Commercial Code
financing statements, as the Lender, in its reasonable discretion, deems
necessary or desirable to evidence and perfect its liens and security interests
in the Collateral.
SECTION 5.2 SETOFF. If an Event of Default shall have occurred and is
continuing, the Lender is hereby authorized at any time and from time to time,
without notice to the Borrowers (any such notice being hereby expressly waived
by the Borrowers), to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by the Lender to or for the credit or the
account of any of the Borrowers against any and all of the obligations of the
Borrowers now or hereafter existing under this Agreement, the Note, or any
other Loan Document, irrespective of whether or not the Lender or such Lender
shall have made any demand under this Agreement or the Note or such other Loan
Document and although such obligations may be unmatured. The Lender agrees
promptly to notify the Borrowers (with a copy to the Lender) after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application. The rights and remedies of
each Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which the Lender may have.
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ARTICLE VI
CONDITIONS PRECEDENT
SECTION, 6.1 INITIAL ADVANCE. The obligation of the Lender to make its
initial Advance and to issue any initial Letter of Credit is subject to the
condition precedent that the Lender shall have completed its due diligence,
which due diligence shall have been satisfactory to Lender in Lender's
reasonable discretion and the Lender shall have received on or before the day
of such Advance all of the following, each dated (unless otherwise indicated)
the date hereof, in form and substance satisfactory to the Lender:
(a) Resolutions. Resolutions of the Board of Directors of the
Borrowers and the Guarantors certified by such Person's Secretary or an
Assistant Secretary which authorize the execution, delivery, and performance by
such Person of this Agreement and the other Loan Documents to which any
Borrower or Subsidiary is to be a party;
(b) Incumbency Certificate. A certificate of incumbency for each of the
Borrowers and the Guarantors certified by the Secretary or an Assistant
Secretary of such Person certifying the names of the officers of such Person
authorized to sign this Agreement and each of the other Loan Documents to which
the Borrower or Subsidiary is to be a party (including the certificates
contemplated herein) together with specimen signatures of such officers;
(c) Articles of Incorporation. The articles of incorporation (or other
applicable organizational documents) of each of the Borrowers and the
Guarantors certified by the Secretary of State of the state of incorporation
(or organization) of such Person and dated within 30 days prior to the date of
the initial advance;
(d) Bylaws. The bylaws (as applicable) of each of the Borrowers and
the Guarantors certified by the Secretary or an Assistant Secretary of such
Person;
(e) Governmental Certificates. Certificates of the appropriate
government officials of the state of incorporation (or organization) of each of
the Borrowers and the Guarantors as to the existence and good standing of such
Person, each dated within 30 days prior to the date of the initial Advance;
(f) Note. The Note executed by the Borrowers;
(g) Vessel Mortgages. A Vessel Mortgage executed by each Borrower
owning a Vessel;
(h) Security Agreement. The Security Agreement executed by the
Borrowers;
(i) Assignments of Insurances. Assignments of Insurances executed by
each Borrower owning a Vessel;
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(j) Pledge Agreement. The Pledge Agreement executed by each Borrower
owning stock in a Subsidiary;
(k) Financing Statements. Uniform Commercial Code financing statements
executed by the Borrowers and covering the Collateral;
(l) Landlord and Mortgagee Waivers. Landlord and mortgagee waivers
executed by the landlords and mortgagees required by Lender;
(m) Intercreditor Agreement. The Intercreditor Agreement executed by
each Person which is to be a party thereto;
(n) Subordination Agreement. The Subordination Agreement executed by
each Person which is to be a party thereto;
(o) Assignment. The Assignment executed by the Subordinated Lender;
(p) Insurance Policies. Copies of all insurance policies required by
Section 8.5, together with loss payable endorsements in favor of the Lender with
respect to all insurance policies covering Collateral;
(q) UCC Searches. The results of Uniform Commercial Code searches
showing all financing statements and other documents or instruments on file
against the Borrowers in the offices of the Secretary of State of Texas,
Louisiana, California, Alabama, and Mississippi, such searches to be as of a
date no more than 30 days prior to the date of the initial Advance;
(r) Opinions of Counsels. Favorable opinions of Vinson & Elkins, Phelps
Dunbar L.L.C., and such other legal counsel to the Borrowers and the Guarantors
as required and approved by the Lender, as to all such matters as the Lender and
the Lender's counsel, Winstead Sechrest & Minick P.C., may reasonably request;
(s) Attorneys' Fees and Expenses. Evidence that the costs and
expenses (including attorneys' fees) referred to in Section 12.1, to the
extent incurred, shall have been paid in full by the Borrowers;
(t) Preferred Mortgages. The Lender shall have been furnished evidence
of proper perfection of the Vessel Mortgage on the Vessels and that such Vessel
Mortgage is a priority and subject only to such Liens as are acceptable to the
Lender in its sole discretion.
SECTION 6.2 ALL ADVANCES AND LETTERS OF CREDIT. Unless waived in
writing by the Lender, the obligation of the Lender to make any Advance
(including the initial Advance) and the Lender to issue, amend, or renew any
Letter of Credit (including any initial Letter of Credit) is subject to the
following additional conditions precedent:
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(a) Advance Request Form/Letter of Credit Request Form. Unless waived
in writing by the Lender, the Lender shall have received, in connection with any
requested Advance in accordance with Section 2.6, an Advance Request Form, dated
the date of such Advance, executed by an authorized officer of the Borrowers,
and the Lender shall have received, in connection with any requested Letter of
Credit, a Letter of Credit Request Form, in accordance with Section 2.12,
executed by an authorized officer of the Borrowers;
(b) No Default. No Default shall have occurred and be continuing, or
would result from such Advance;
(c) Representations and Warranties. All of the representations and
warranties contained in Article VII hereof and in the other Loan Documents shall
be true and correct in all material respects on and as of the date of such
Advance with the same force and effect as if such representations and warranties
had been made on and as of such date;
(d) No Material Adverse Change. No Material Adverse Effect shall have
occurred since October 31, 1998.
(e) Guaranties. The Lender shall have received a guaranty executed by
each guarantor that is required to execute such guaranty, together with all Loan
Documents, all as contemplated and required by Section 8.13.
(f) Additional Documentation. The Lender shall have received such
additional approvals, opinions, or documents as the Lender or its legal counsel,
Winstead Sechrest & Minick P.C., may reasonably request.
ARTICLE VII
REPRESENTATIONS and WARRANTIES
To induce the Lender to enter into this Agreement, each Borrower
represents and warrants to the Lender that:
SECTION 7.1 CORPORATE EXISTENCE. Each Borrower and each Subsidiary (a)
is a corporation duly incorporated, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation or organization, as
applicable; (b) has all requisite corporate power and authority to own its
assets and carry on its business as now being or as proposed to be conducted;
and (c) is qualified to do business in all jurisdictions in which the nature of
its business makes such qualification necessary and where failure to be so
qualified would have a Material Adverse Effect. Each Borrower has the corporate
power and authority to execute, deliver, and perform its obligations under this
Agreement and the other Loan Documents to which it is or may become a party.
SECTION 7.2 FINANCIAL STATEMENTS. The Parent has delivered to the
Lender audited Consolidated financial statements of the Parent and its
Consolidated Subsidiaries as at and for the
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fiscal year ended December 31,1997, and unaudited Consolidated financial
statements of Parent and its Consolidated Subsidiaries for the ten-month period
ended October 31, 1998 subject to normal year end adjustments with respect to
the unaudited interim statements and the absence of notes in the interim
statements. Such financial statements are true and correct in all material
respects, have been prepared in accordance with GAAP, and fairly present, on a
Consolidated basis, the financial condition of the Borrower and its
Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. Neither Parent nor any
of its Subsidiaries has any material contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments, or unrealized or anticipated
losses from any unfavorable commitments except as referred to or reflected in
such financial statements or otherwise disclosed in writing to Lender. As of
the date of this Agreement, there has been no material adverse change in the
business, condition (financial or otherwise), operations, or properties of
Borrowers and their Subsidiaries taken as a whole since the effective date of
the most recent financial statements referred to in this Section.
SECTION 7.3 CORPORATE ACTION: NO BREACH. The execution, delivery, and
performance by the Borrowers of this Agreement and the other Loan Documents to
which the Borrowers are or may become a party and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate action on the part of the Borrowers and do not and will not (a)
violate or conflict with, or result in a breach of, or require any consent
under (i) the articles of incorporation or other organizational documents, as
applicable, or bylaws of the Borrowers or any of their Subsidiaries, (ii) any
applicable law, rule, or regulation or any order, writ, injunction, or decree
of any Governmental Authority or arbitrator, or (iii) any material agreement or
instrument to which the Borrowers or any of their Subsidiaries is a party or by
which any of them or any of their property is bound or subject, which in the
case of (ii) or (iii) could reasonably be expected to have a Material Adverse
Effect or (b) constitute a default under any such agreement or instrument, or
result in the creation or imposition of any Lien (except as provided in Article
V) upon any of assets of the Borrowers or any of their Subsidiaries.
SECTION 7.4 OPERATION OF BUSINESS. The Borrowers and each of their
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and trade names, or rights thereto, necessary to conduct their
respective businesses substantially as now conducted and as presently proposed
to be conducted, except where the failure to possess the same could not
reasonably be expected to have a Material Adverse Effect.
SECTION 7.5 LITIGATION AND JUDGMENTS. Except as disclosed on SCHEDULE
7.5, there is no action, suit, investigation, or proceeding before or by any
Governmental Authority or arbitrator pending, or to the knowledge of the
Borrowers, threatened against or affecting any Borrower or any Subsidiary, that
would, if adversely determined, have a Material Adverse Effect. There are no
outstanding judgments against any Borrower or any Subsidiary.
SECTION 7.6 RIGHTS IN PROPERTIES: LIENS. (a) The Borrowers and each
Subsidiary have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets, and leasehold interests reflected in the financial
statements described in Section 7.2, and none of the properties, assets, or
leasehold interests of any Borrower or any Subsidiary is subject to any Lien,
except as permitted by Section 9.2.
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(b) All leases and agreements necessary for the conduct of the business
of the Borrowers and their Subsidiaries are valid and subsisting, in full force
and effect and there exists no default or event which with the giving of notice
or the passage of time or both would give rise to a default under any such lease
or leases, which could reasonably be expected to have a Material Adverse Effect.
(c) The rights, Collateral and other Property presently owned, leased
or licensed by the Borrowers and their Subsidiaries including, without
limitation, all easements and rights of way, include all rights, Collateral and
other Property necessary to permit the Borrowers and their Subsidiaries to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the date hereof.
(d) Except as set forth on SCHEDULE 7.6(d) all of the Property and
Collateral of the Borrowers and their Subsidiaries which are reasonably
necessary for the operation of their businesses are in good working condition
reasonable wear and tear excepted and are maintained in accordance with prudent
business standards.
SECTION 7.7 ENFORCEABILITY. This Agreement constitutes, and the other
Loan Documents to which any Borrower is party, when delivered, shall constitute
the legal, valid, and binding obligations of such Borrower, enforceable against
such Borrower in accordance with their respective terms, except as limited by
bankruptcy, insolvency, or other laws of general application relating to the
enforcement of creditors' rights.
SECTION 7.8 APPROVALS. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is
or will be necessary for the execution, delivery, or performance by any of the
Borrowers of this Agreement and the other Loan Documents to which any of the
Borrowers is or may become a party or for the validity or enforceability
thereof.
SECTION 7.9 DEBT. The Borrowers and their Subsidiaries have no Debt,
except as disclosed on SCHEDULE 7.9.
SECTION 7.10 Taxes. The Borrowers and each Subsidiary have filed all
tax returns (Federal, state, and local) required to be filed, including all
income, franchise, employment, property, and sales tax returns, and have paid
all of their respective liabilities for taxes, assessments, governmental
charges, and other levies that are due and payable. Except as set forth in
SCHEDULE 7.10, the Borrowers know of no pending investigation of any Borrower or
any Subsidiary by any taxing authority or of any pending but unassessed tax
liability of any Borrower or any Subsidiary the assessment of which could
reasonably be expected to have a Material Adverse Effect.
SECTION 7.11 USE OF PROCEEDS; MARGIN SECURITIES. The proceeds of the
Note shall be used for general corporate working capital and to support the
issuance of Letters of Credit issued in the ordinary course of business. Neither
any Borrower nor any Subsidiary is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, T, U,
or X of the Board of Governors of the Federal Reserve System), and no part of
the proceeds of any Advance will be used to purchase
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or carry any margin stock or to extend credit to others for the purpose of
purchasing or carrying margin stock. The Borrowers jointly and severally
represent and warrant that no portion of any Advance or loan made hereunder
shall be used directly or indirectly to purchase ineligible securities, as
defined by applicable regulations of the Federal Reserve Board, underwritten by
any affiliate of Bank One Corporation during the underwriting period and for 30
days thereafter.
SECTION 7.12 ERISA. Each Borrower and each domestic Subsidiary is in
compliance in all material respects with all applicable provisions of ERISA. No
Termination Event has occurred or, to the knowledge of Parent, is reasonably
expected to occur with respect to any Plan. Neither any Borrower nor any ERISA
Affiliate has received any notification (or has knowledge of any reason to
expect) that any Multi-employer Plan is in reorganization or has been
terminated, within the meaning of Title IV of ERISA.
SECTION 7.13 DISCLOSURE. No statement, information, report,
representation, or warranty made by any Borrower in this Agreement or in any
other Loan Document or furnished to the Lender in connection with this Agreement
or any transaction contemplated hereby contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading.
SECTION 7.14 SUBSIDIARIES. The Borrowers have no Subsidiaries other
than those listed on SCHEDULE 7.14, and SCHEDULE 7.14 sets forth the
jurisdiction of incorporation of each Subsidiary and the percentage of each
Borrower's ownership of the outstanding voting stock of each Subsidiary. All of
the outstanding capital stock of each Subsidiary has been validly issued, is
fully paid, and is nonassessable.
SECTION 7.15 AGREEMENTS. Neither any Borrower nor any Subsidiary is in
default in any respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in this Agreement or any
agreement or instrument material to its business to which it is a party.
SECTION 7.16 COMPLIANCE WITH LAWS. Neither any Borrower nor any
Subsidiary is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.
SECTION 7.17 INVENTORY. All inventory of each Borrower has been and
will hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as amended
(29 U.S.C. Sections 201-219), and the regulations promulgated thereunder.
SECTION 7.18 INVESTMENT COMPANY ACT. Neither any Borrower nor any
Subsidiary is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 7.19 PUBLIC UTILITY HOLDING COMPANY ACT. Neither any Borrower
nor any Subsidiary is a "holding company" or a "subsidiary company" of a
"holding company" or an
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"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
SECTION 7.20 ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE
7.20:
(a) Each Borrower, each Subsidiary, and all of their respective
properties, assets, and operations are in full compliance with all
Environmental Laws applicable to such Person, except where the failure to be in
compliance would not reasonably be expected to have a Material Adverse Effect.
No Borrower is aware of, nor has any Borrower received notice of, any past,
present, or future conditions, events, activities, practices, or incidents
which would interfere with or prevent the compliance or continued compliance of
the Borrower and the Subsidiaries with all Environmental Laws applicable to
such Person, except where the failure to be in compliance would not reasonably
be expected to have a Material Adverse Effect;
(b) Each Borrower and each Subsidiary have obtained all permits,
licenses, and authorizations that are required under applicable Environmental
Laws, and all such permits are in good standing and each Borrower and its
Subsidiaries are in compliance with all of the terms and conditions of such
permits, except where the failure to obtain or be in compliance could not
reasonably be expected to have a Material Adverse Effect;
(c) No Hazardous Materials exist on, or within or have been used,
generated, stored, transported, disposed of on, or Released from any of the
properties or assets of any Borrower or any Subsidiary, except in compliance
with all Environmental Laws applicable to such Person. The use which the
Borrowers and their Subsidiaries make and intend to make of their respective
properties and assets will not result in the use, generation, storage,
transportation, accumulation, disposal, or Release of any Hazardous Material
on, in, or from any of their properties or assets in violation of any
Environmental Law applicable to such Person;
(d) Neither any Borrower nor any of their Subsidiaries nor any of
their respective currently or previously owned or leased properties or
operations is subject to any outstanding or, to the best of its knowledge,
threatened order from or agreement with any applicable Governmental Authority
or other Person or subject to any judicial or docketed administrative
proceeding with respect to (i) failure to comply with applicable Environmental
Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities arising from
a Release or threatened Release;
(e) There are no conditions or circumstances associated with the
currently or previously owned or leased properties or operations of the
Borrowers or any of their Subsidiaries that could reasonably be expected to
give rise to any Environmental Liabilities that in the aggregate could
reasonably be expected to have a Material Adverse Effect;
(f) Neither any Borrower nor any of its Subsidiaries is a treatment,
storage, or disposal facility requiring a permit under the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., regulations
thereunder or any comparable provision of state law. The Borrowers and their
Subsidiaries are in compliance with all applicable financial responsibility
requirements of all
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applicable Environmental Laws, except where the failure to be in compliance
could reasonably be expected to have a Material Adverse Effect;
(g) Neither any Borrower nor any of its Subsidiaries has filed or
failed to file any notice required under applicable Environmental Law reporting
a Release; and
(h) No Lien arising under any Environmental Law has attached to any
property or revenues of any Borrower or its Subsidiaries.
SECTION 7.21 YEAR 2000 COMPLIANCE. As of the date of any request for
an Advance or issuance of a Letter of Credit under this Agreement, as of the
date of any renewal, extension, amendment, rearrangement, increase, and/or
modification of this Agreement, and at all times this Agreement or the Lender's
commitment to make Advances or issue Letters of Credit under this Agreement is
outstanding:
(a) To Parent's knowledge after due inquiry, all devices, systems,
machinery, information technology, computer software and hardware, and other
date sensitive technology jointly and severally the "Systems") used by
Borrowers to carry on their businesses as presently conducted and as
contemplated to be conducted in the future are Year 2000 Compliant or will
be Year 2000 Compliant within a period of time calculated to result in no
material disruption of any of Borrowers' business operations. For purposes
of these provisions, "Year 2000 Compliant" means that such Systems are
designed to be used prior to, during and after the Gregorian calendar year
2000 A.D. and will operate during each such time period without error
relating to date data, specifically including any error relating to, or the
product of, date data which represents or references different centuries or
more than one century.
(b) Borrowers have: (1) undertaken a detailed inventory, review, and
assessment of all areas within their businesses and operations that could be
adversely affected by the failure of Borrowers to be Year 2000 Compliant on
a timely basis; (2) developed a detailed plan and time line for becoming
Year 2000 Compliant on a timely basis, and (3) to date, implemented that
plan in accordance with that timetable in all material respects.
(c) Borrowers have made written inquiry of each of its key suppliers,
vendors, and customers, and is undertaking to obtain in writing
confirmations from all such persons as to whether such persons have
initiated programs to become Year 2000 Compliant and on the basis of such
confirmations, Borrowers reasonably believe that all such persons will be or
become so compliant. For purposes hereof, "key suppliers, vendors, and
customers" refers to those suppliers, vendors, and customers of Borrowers
whose business failure would, with reasonable probability, result in a
material adverse change in the business, properties, condition (financial or
otherwise), or prospects of any of the Borrowers. For purposes of this
paragraph, Lender confirms to Borrowers that Lender has initiated its own
corporate-wide Year 2000 program with respect to its lending activities.
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(d) The fair market value of all real and personal property pledged to
the Lender as Collateral to secure the Advances hereunder is not and shall
not be less than currently anticipated or subject to substantial
deterioration in value because of the failure of such Collateral to be Year
2000 Compliant.
SECTION 7.22 INSURANCE. Schedule 7.22 contains an accurate and
complete description of all material policies of fire, liability, workmen's
compensation and other forms of insurance owned or held by the Borrowers and
each Subsidiary. All such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the date of the
closing have been paid, and no notice of cancellation or termination has been
received with respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all agreements to which the
Borrowers or any Subsidiary is a party; are valid, outstanding and enforceable
policies; provide adequate insurance coverage in at least such amounts and
against at least such risks (but including in any event public liability) as
are usually insured against in the same general area by companies engaged in
the same or a similar business for the assets and operations of the Borrowers
and each Subsidiary; will remain in full force and effect through the
respective dates set forth in SCHEDULE 7.22 without the payment of additional
premiums; and will not in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated by this Agreement. None of the
Borrowers nor any Subsidiary has been refused any insurance with respect to its
Property or operations, nor has its coverage been limited below usual and
customary policy limits, by an insurance carrier to which it has applied for
any such insurance or with which it has carried insurance during the last three
years.
SECTION 7.23 HEDGING AGREEMENTS. SCHEDULE 7.23 sets forth, as of the
date hereof, a true and complete list of all Hedging Agreements, Financing
Transactions and Swap Transactions (including commodity price swap agreements,
forward agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities) of the
Borrowers and each Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the
net mark to market value thereof, all credit support agreements relating
thereto (including any margin required or supplied), and the counterparty to
each such agreement.
SECTION 7.24 RESTRICTION ON LIENS. Except as set forth on SCHEDULE
9.2, in the Subordinated Loan Documents, and in the Heller Loan Documents, none
of the Borrowers nor any of the Subsidiaries is a party to any agreement or
arrangement (other than this Agreement and the other Loan Documents), or
subject to any order, judgment, writ or decree, which either restricts or
purports to restrict its ability to grant Liens to other Persons on or in
respect of their respective Property or Collateral.
SECTION 7.25 MATERIAL DEBT AGREEMENTS. Set forth on SCHEDULE 7.25
hereto is a complete and correct list of all material agreements, leases,
indentures, purchase agreements, obligations in respect of letters of credit,
guarantees, joint venture agreements, and other instruments in effect or to be
in effect following the date hereof (other than Hedging Agreements) providing
for, evidencing, or otherwise relating to any Debt of any of the Borrowers or
any of the Subsidiaries, and all obligations of any of the Borrowers or any of
the Subsidiaries to issuers of surety or appeal bonds
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issued for account of any of the Borrowers or any such Subsidiary, and such
list correctly sets forth the names of the debtor or lessee and creditor or
lessor with respect to the Debt or lease obligations outstanding or to be
outstanding and the property subject to any Lien securing such Debt or lease
obligation.
ARTICLE VIII
POSITIVE COVENANTS
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or Lender has any Commitment hereunder, the
Borrowers will perform and observe the following positive covenants:
SECTION 8.1 REPORTING REQUIREMENTS. The Borrowers will furnish to the
Lender:
(a) Annual Financial Statements. As soon as available and in any event
within 90 days after the end of each fiscal year of the Parent, the audited
consolidated and unaudited consolidating statements of income, stockholders'
equity, changes in financial position and cash flow of the Parent and its
Consolidated Subsidiaries for such fiscal year, and the related audited
consolidated and unaudited consolidating balance sheets of the Parent and its
Consolidated Subsidiaries as at the end of such fiscal year, and setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, and accompanied by the related unqualified opinion of independent
public accountants of recognized national standing acceptable to the Lender
which opinion shall state that said financial statements fairly present the
consolidated and consolidating financial condition and results of operations of
the Parent and its Consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in accordance
with GAAP except for such changes in such principles with which the independent
public accountants shall have concurred and such opinion shall not contain a
"going concern" or like qualification or exception; and, in addition thereto,
as soon as available in any event within sixty (60) after the end of each
fiscal year of the Parent, pro forma projections in form and substance
satisfactory to the Lender for the ensuing five (5) year period on a
year-by-year basis, including, without limitation, the consolidated and
consolidating statements of income and cash flow of the Parent and its
Consolidated Subsidiaries for such periods, and the related consolidated and
consolidating balance sheets of the Parent and its Consolidated Subsidiaries
for such period, and the estimated capital expenditures for such periods.
(b) Quarterly Financial Statements. As soon as available and in any
event within 45 days after the end of each of the first three fiscal quarterly
periods of each fiscal year of the Parent, consolidated and consolidating
statements of income, stockholders' equity, changes in financial position and
cash flow of the Parent and its Consolidated Subsidiaries for such period and
for the period from the beginning of the respective fiscal year to the end of
such period, and the related consolidated and consolidating balance sheets as
at the end of such period, and setting forth in each case in comparative form
the corresponding figures for the corresponding period in the preceding fiscal
year, accompanied by the certificate of a Responsible Officer, which
certificate shall state that said financial statements fairly present the
consolidated and consolidating financial condition and
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results of operations of the Parent and its Consolidated Subsidiaries in
accordance with GAAP, as at the end of, and for, such period (subject to normal
year-end audit adjustments);
(c) Certificate of Compliance and No Default. Concurrently with the
delivery of each of the financial statements referred to in Sections 8.1(a)
and 8.1(b), a certificate of a Responsible Officer (i) stating that a review
of the activities of the Borrowers has been made under his supervision with a
view to determining whether the Borrowers have fulfilled all of their
obligations under this Agreement, the other Loan Documents, and the Note; (ii)
stating that the Borrowers have fulfilled their obligations under such
instruments and that all representations and warranties made herein continue to
be true and correct in all material respects (or specifying the nature of any
change); (iii) to the extent requested from time-to-time by the Lender,
specifically affirming compliance of the Borrowers with any of their
representations or obligations under such instruments; (iv) containing or
accompanied by such financial or other details, information and material as the
Lender may reasonably request to evidence such compliance; (v) stating that to
the best of such officer's knowledge, no Default has occurred and is
continuing, or if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that is proposed to be taken with
respect thereto, and (vi) showing in reasonable detail the calculations
demonstrating compliance with Article X;
(d) Management Letters. Promptly upon receipt thereof, a copy of any
management letter or written report submitted to any Borrower or any Subsidiary
by independent certified public accountants;
(e) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits, and proceedings before any Governmental Authority
or arbitrator affecting any Borrower or any Subsidiary which, if determined
adversely to any Borrower or such Subsidiary, could have a Material Adverse
Effect;
(f) Notice of Default. As soon as possible and in any event within
five Business bays after the occurrence of each Default, a written notice
setting forth the details of such Default and the action that the Borrowers
have taken and propose to take with respect thereto;
(g) ERISA Reports. As soon as possible and in any event (i) within
five (5) Business Days after any Borrower or any ERISA Affiliate knows or has
reason to know that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Plan has occurred and
(B) within five (5) Business Days after any Borrower or any ERISA Affiliate
knows or has reason to know that any other Termination Event with respect to
any Plan, has occurred or is reasonably expected to occur, a statement of the
chief financial officer of the applicable Borrower describing such Termination
Event and the action, if any, which such Borrower or such ERISA Affiliate has
taken and proposes to take with respect thereto; (ii) promptly and in any event
within five (5) Business Days after receipt thereof by any Borrower or any
ERISA Affiliate, copies of each notice received by such Borrower or any ERISA
Affiliate from the PBGC stating its intention to terminate any Plan or to have
a trustee appointed to administer any Plan; and (iii) promptly and in any event
within five (5) Business Days after receipt thereof by any Borrower or any
ERISA
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'
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by such Borrower or any ERISA Affiliate;
(h) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any material statement or report furnished to any other party pursuant
to the terms of any indenture, loan, or credit or similar agreement and not
otherwise required to be furnished to the Lender pursuant to any other clause of
this Section;
(i) Notice of Material Adverse Change. As soon as possible and in any
event within five days after the occurrence thereof, written notice of any
matter that could have a Material Adverse Effect;
(j) Proxy Statements, Etc. Promptly upon its becoming available, one
copy of each financial statement, report, notice, or final proxy statement sent
by any Borrower to stockholders generally and of each regular or periodic
report, registration statement or prospectus filed by any Borrower or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency, and of any order issued by any Governmental
Authority in any proceeding to which any Borrower is a party. For purposes
of these provisions, "GOVERNMENTAL AUTHORITY" shall mean any government (or any
political subdivision or jurisdiction thereof), court, bureau, agency or other
governmental entity having or asserting jurisdiction over any Borrower or any
of its business, operations or properties;
(k) General Information. Promptly, such other information concerning
any Borrower or any Subsidiary as the Lender may from time to time reasonably
request;
(l) Borrowing Base Report. As soon as available, and in any event
within 30 days after the end of each calendar month, a Borrowing Base Report,
in substantially the form of EXHIBIT "B" hereto, certified by the Responsible
Officer of the Borrowers;
(m) Accounts Receivable Aging Reports. As soon as available, and in
any event within thirty (30) days after the end of each calendar month, an
accounts receivable aging report in form and detail satisfactory to the Lender
showing all accounts receivable of the Borrowers and the Subsidiaries divided
into domestic and international categories and aged in thirty-day intervals;
and
(n) Back Log Report. As soon as available, and in any event within
thirty (30) days after the end of each calendar month, a Back Log Report in
form and detail satisfactory to the Lender showing all items back logged of the
Borrowers and the Subsidiaries divided into domestic and international
categories.
(o) Jobs in Progress Report. As soon as available, and in any event
within thirty (30) days after the end of each calendar month, a Job in Progress
Report in form and detail satisfactory to the Lender showing all jobs in
progress of the Borrowers and the Subsidiaries divided into domestic and
international categories.
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SECTION 8.2 MAINTENANCE OF EXISTENCE; CONDUCT OF BUSINESS. The
Borrowers will preserve and maintain, and will cause each Subsidiary to
preserve and maintain, its corporate existence and all of its leases,
privileges, licenses, permits, franchises, qualifications, and rights that are
necessary or desirable in the ordinary conduct of its business. The Borrowers
will conduct, and will cause each Subsidiary to conduct, its business in an
orderly and efficient manner in accordance with good business practices.
SECTION 8.3 MAINTENANCE OF PROPERTIES. The Borrowers will maintain,
keep, and preserve, and cause each Subsidiary to maintain, keep, and preserve,
all of its properties (tangible and intangible) necessary or useful in the
proper conduct of its business in good working order and condition, reasonable
wear and tear excepted.
SECTION 8.4 TAXES AND CLAIMS. The Borrowers will pay or discharge, and
will cause each Subsidiary to pay or discharge, at or before maturity or before
becoming delinquent (a) all taxes, levies, assessments, and governmental
charges imposed on it or its income or profits or any of its property, and (b)
all lawful claims for labor, material, and supplies, which, if unpaid, might
become a Lien upon any of its property; provided, however, that neither any
Borrower nor any Subsidiary shall be required to pay or discharge any tax,
levy, assessment, or governmental charge which is being contested in good faith
by appropriate proceedings diligently pursued, and for which adequate reserves
have been established in accordance with GAAP.
SECTION 8.5 INSURANCE. Each Borrower will maintain, and will cause
each of the Subsidiaries to maintain, insurance with financially sound and
reputable insurance companies in such amounts and covering such risks as is
usually carried by corporations engaged in similar businesses and owning
similar properties in the same general areas in which the Borrowers and the
Subsidiaries operate, provided that in any event each Borrower will maintain
and cause each Subsidiary to maintain workmen's compensation insurance,
property insurance, comprehensive general liability insurance, products
liability insurance, and business interruption insurance reasonably
satisfactory to the Lender. Notwithstanding the foregoing, each Borrower shall
maintain insurance on all Collateral in amounts, containing terms, and issued
by insurance companies satisfactory to Lender. Each insurance policy covering
Specific Fixed Collateral, all Vessels, and all inventory owned by all and/or
any of the Borrowers shall name the Lender as loss payee and additional insured
and shall provide that such policy will not be canceled or reduced without 30
days' prior written notice to the Lender.
SECTION 8.6 INSPECTION RIGHTS. During normal business hours, from time
to time, the Borrowers will permit, and will cause each Subsidiary to permit,
representatives of the Lender to examine, copy, and make extracts from its
books and records, to visit and inspect its properties, and to discuss its
business, operations, and financial condition with its Responsible Officers and
independent certified public accountants.
SECTION 8.7 KEEPING BOOKS AND RECORDS. Each Borrower will maintain,
and will cause each Subsidiary to maintain, proper books of record and account
entries in conformity with GAAP.
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SECTION 8.8 COMPLIANCE WITH LAWS. Each Borrower will comply, and will
cause each Subsidiary to comply, in all material respects with all applicable
laws, rules, regulations, orders, and decrees of any Governmental Authority or
arbitrator including, without limitation, all applicable Environmental Laws.
SECTION 8.9 COMPLIANCE WITH AGREEMENTS. Each Borrower will comply, and
will cause each Subsidiary to comply, in all material respects with all
agreements, contracts, and instruments binding on it or affecting its
properties or business.
SECTION 8.10 FURTHER ASSURANCES. Each Borrower will, and will cause
each Subsidiary to, execute and deliver such further agreements and instruments
and take such further action as may be reasonably requested by the Lender to
carry out the provisions and purposes of this Agreement and the other Loan
Documents and to create, preserve, and perfect the Liens of Lender in the
Collateral.
SECTION 8.11 ERISA. Each Borrower will comply, and will cause each
Subsidiary (other than Subsidiaries organized in jurisdictions outside of the
United States and its territories) to comply, with all minimum funding
requirements, and all other material requirements, of ERISA, if applicable, so
as not to give rise to any liability thereunder.
SECTION 8.12 YEAR 2000 COMPLIANT. Borrowers covenant and agree with
the Lender that, while any of the Obligations are outstanding or Lender has any
Commitment hereunder, Borrowers will:
(a) Furnish such additional information, statements and other reports
with respect to Borrowers' activities, course of action and progress towards
becoming Year 2000 Compliant as the Lender may request from time to time.
(b) In the event of any change in circumstances that causes or will
likely cause any of Borrowers' representations and warranties with respect to
its being or becoming Year 2000 Compliant to no longer be true (hereinafter,
referred to as a "Change in Circumstances") then Borrowers shall promptly, and
in any event within ten (10) days of receipt of information regarding a Change
in Circumstances, provide the Lender with written notice (the "Notice") that
describes in reasonable detail the Change in Circumstances and how such Change
in Circumstances caused or will likely cause Borrowers' representations and
warranties with respect to being or becoming Year 2000 Compliant to no longer
be true. Borrowers shall, within ten (10) days of a request, also provide the
Lender with any additional information the Lender requests of Borrowers in
connection with the Notice and/or a Change in Circumstances.
(c) Upon reasonable notice, give any representative of the Lender
access during all reasonable business hours to, and permit such representative
to examine, copy or make excerpts from, any and all books, records and
documents in the possession of Borrowers and relating to their affairs, and to
inspect any of the properties and Systems of Borrowers, and to project test the
Systems to determine if they are Year 2000 Compliant in an integrated
environment, all at the sole cost and expense of the Lender.
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SECTION 8.13 SUBSIDIARY GUARANTIES AND PLEDGE OF ASSETS. Within
thirty (30) days after the acquisition or formation of any Subsidiary of any of
the Borrowers permitted under the terms of this Agreement, the Borrowers shall
cause such new Subsidiary to execute and deliver to Lender a Guaranty, and Loan
Documents pledging Bank One Accounts, Bank One Inventory and Bank One Stock (as
each such term is defined in the Intercreditor Agreement) to the Lender as may
be designated by Lender not inconsistent with the Intercreditor Agreement;
together with such resolutions, certificates and opinions regarding the
authorization and binding effect of such Guaranty and such Loan Documents as
the Lender may reasonably require.
SECTION 8.14 POST CLOSING MATTERS. The Borrowers will promptly, and in
any event within 90 days from the date hereof provide at the Borrowers'
expense, and in each case satisfactory to the Lender in its sole discretion:
(a) with respect to Specific Fixed Collateral and all inventory owned
by any and/or all of the Borrowers:
(i) landlord and mortgagee subordinations and waivers covering
all applicable real estate; and
(ii) vessel owner and vessel mortgagee subordinations and waivers
covering all applicable vessels;
(b) amendments and supplements to the Pledge Agreement referred to in
Section 6.1(j) and the Bailment Agreement of even date herewith executed in
connection with said Pledge Agreement together with all stock certificates of
all stock (except for stock of foreign Subsidiaries which shall only consist of
65% of each such foreign Subsidiary's stock) owned by each Borrower owning
stock in a Subsidiary, together with all stock certificates, stock powers, and
financing statements and financing statement amendments related thereto; and
(c) a favorable opinion of Phelps Dunbar L.L.C.
ARTICLE IX
NEGATIVE COVENANTS
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or Lender has any Commitment hereunder, the
Borrowers will perform and observe the following negative covenants:
SECTION 9.1 DEBT. The Borrowers will not incur, create, assume, or
permit to exist, and will not permit any Subsidiary to incur, create, assume,
or permit to exist, any Debt, except:
(a) Debt to the Lender pursuant to the Loan Documents;
(b) Existing Debt described on SCHEDULE 7.9;
(c) Purchase money obligations incurred in the ordinary course of
business not to exceed an aggregate amount for all Borrowers and their
Subsidiaries of $5,000,000 in the aggregate at any time;
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(d) The $35,000,000 Debt evidenced by the Heller Loan Documents;
(e) Swap Transactions (other than Financing Transactions) pursuant to
hedging Agreements with Lender or its affiliates; and
(f) Subordinated Debt in favor of the Subordinated Lender not to exceed
$20,000,000.
SECTION 9.2 LIMITATION ON LIENS. The Borrowers will not incur,
create, assume, or permit to exist, and will not permit any Subsidiary to
incur, create, assume, or permit to exist, any Lien upon any of its property,
assets, or revenues, whether now owned or hereafter acquired, except:
(a) Liens disclosed on SCHEDULE 9.2;
(b) Liens in favor of the Lender;
(c) Encumbrances consisting of minor easements, zoning restrictions, or
other restrictions on the use of real property that do not (individually or in
the aggregate) materially affect the value of the assets encumbered thereby or
materially impair the ability of any Borrower or the Subsidiaries to use such
assets in their respective businesses, and none of which is violated in any
material respect by existing or proposed structures or land use;
(d) Liens for taxes, assessments, or other governmental charges which
are not delinquent or which are being contested in good faith and for which
adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers, or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business;
(f) Liens resulting from good faith deposits to secure payments of
workmen's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
contracts (other than for payment of Debt), or leases made in the ordinary
course of business; and
(g) Liens to secure purchase money indebtedness permitted under 9.1(c)
provided such Liens are placed within 30 days of the incurrence of such debt.
SECTION 9.3 MERGERS, ACQUISITIONS, ETC. None of Parent, any other
Borrower, nor any Subsidiary will merge into or with or consolidate with any
other Person, or sell, lease or otherwise dispose of (whether in one transaction
or in a series of transactions) all or substantially all of its Property or
assets to any other Person, or wind-up, dissolve, or liquidate itself; provided,
however. if (i) the Parent gives at least thirty (30) days' prior written notice
to the Lender and (ii) no Default or Event of Default has occurred or is
continuing or will result from the action proposed to be taken, and (iii) the
Lender's Lien on the Collateral would not be adversely affected, then any
Subsidiary of the Parent may merge or consolidate with the Parent or with any
other Subsidiary of the Parent or sell, lease, or otherwise dispose of (at fair
market value) all or any substantial part of its Property or assets to the
Parent or to any other Subsidiary of the Parent. The Borrowers will not, and
will not permit any Subsidiary to, purchase or otherwise acquire all or any part
of the business or assets of any Person or any shares or other evidence of
beneficial ownership of any Person except that the Parent will be permitted to
acquire entities in the same industry provided that (x) the Parent gives at
least thirty (30) days' prior written notice to the Lender, (y) no Default or
Event of Default has occurred or is continuing or will result from the action
proposed to be taken, and (z) the pro forma
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effect of which will not cause a Default or an Event of Default. Notwithstanding
the foregoing, any or all cash or debt assumption acquisitions that aggregate
more than $5,000,000 from the date hereof will require the prior written consent
of the Lender.
SECTION 9.4 RESTRICTED PAYMENTS. The Parent will not declare or pay
any dividends or make any other payment or distribution (whether in cash,
property, or obligations) on account of its capital stock, or redeem, purchase,
retire, or otherwise acquire any of its capital stock, or return any capital to
its stockholders, or make any distribution of its assets to its stockholders,
or permit any of its Subsidiaries to purchase or otherwise acquire any capital
stock of any Borrower or another Subsidiary, or set apart any money for a
sinking or other analogous fund for any dividend or other distribution on its
capital stock or for any redemption, purchase, retirement, or other acquisition
of any of its capital stock, provided that, so long as no Default or Event of
Default has occurred and is continuing (or result therefrom) Parent may declare
and deliver dividends solely in the form of stock.
SECTION 9.5 INVESTMENTS. The Borrowers will not make, and will not
permit any Subsidiary to make, any advance, loan, extension of credit, or
capital contribution to or investment in, or purchase or own, or permit any
Subsidiary to purchase or own, any stock, bonds, notes, debentures, or other
securities of, any Person, except:
(a) readily marketable direct obligations of the United States of
America or any agency thereof with maturities of one year or less from the date
of acquisition;
(b) fully insured certificates of deposit with maturities of one year
or less from the date of acquisition issued by any commercial bank operating in
the United States of America having capital and surplus in excess of
$50,000,000;
(c) commercial paper of a domestic issuer if at the time of purchase
such paper is rated in one of the two highest rating categories of Standard
and Poor's Corporation or Moody's Investors Service, Inc.;
(d) acquisitions permitted under Section 9.3; and
(e) employee loans, advances, and expenses in the ordinary course of
business not to exceed $50,000 per person or $500,000 in the aggregate
outstanding at any time.
SECTION 9.6 LIMITATION ON ISSUANCE OF CAPITAL STOCK. The Borrowers
(other than Parent) will not, and will not permit any of their Subsidiaries to,
at any time issue, sell, assign, or otherwise dispose of (a) any of its capital
stock, (b) any securities exchangeable for or convertible into or carrying any
rights to acquire any of its capital stock, or (c) any option, warrant, or
other right to acquire any of its capital stock.
SECTION 9.7 TRANSACTIONS WITH AFFILIATES. No Borrower will enter into,
and no Borrower will permit any Subsidiary to enter into, any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of any Borrower or
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such Subsidiary, except in the ordinary course of and pursuant to the reasonable
requirements of such Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to such Borrower or such Subsidiary than
would be obtained in a comparable arm's-length transaction with a Person not an
Affiliate of any such Borrower or such Subsidiary.
SECTION 9.8 DISPOSITION OF ASSETS. The Borrowers will not sell, lease,
assign, transfer, or otherwise dispose of any of their Property, or permit any
Subsidiary to do so with any of its Property, except dispositions of inventory
in the ordinary course of business and dispositions of Property that does not
exceed $2,000,000 in the aggregate provided: (a) such dispositions do not cover
any Collateral in excess of $100,000 in gross proceeds in the aggregate in any
calendar year; and (b) such dispositions do not cover any of the Vessels.
SECTION 9.9 SALE AND LEASEBACK. The Borrowers will not enter into, and
will not permit any Subsidiary to enter into, any arrangement with any Person
pursuant to which it leases from such Person real or personal property that has
been or is to be sold or transferred, directly or indirectly, by it to such
Person.
SECTION 9.10 PREPAYMENT OF DEBT. The Borrowers will not prepay, and
will not permit any Subsidiary to prepay, any Debt, except the Obligations in
compliance with the provisions of Article III hereof.
SECTION 9.11 NATURE OF BUSINESS. The Borrowers will not, and will not
permit any Subsidiary to, engage in any business other than the businesses in
which they are engaged on the date hereof.
SECTION 9.12 ENVIRONMENTAL PROTECTION. The Borrowers will not, and
will not permit any of their Subsidiaries to, (a) use (or permit any tenant to
use) any of their respective properties or assets for the handling, processing,
storage, transportation, or disposal of any Hazardous Material, (b) generate
any Hazardous Material, (c) conduct any activity that is likely to cause a
Release or threatened Release of any Hazardous Material, or (d) otherwise
conduct any activity or use any of their respective properties or assets in any
manner that is likely to violate any applicable Environmental Law or create any
Environmental Liabilities for which any of the Borrowers or any of their
Subsidiaries would be responsible.
SECTION 9.13 ACCOUNTING. The Borrowers will not, and will not permit
any of their Subsidiaries to, change its fiscal year or make any change (a) in
accounting treatment or reporting practices, except as required by GAAP and
disclosed to the Lender, or (b) in tax reporting treatment, except as required
by law and disclosed to the Lender.
SECTION 9.14 COMPLIANCE WITH ERISA. The Borrowers (other than any
Subsidiary which is organized outside of the United States or its territories)
will not and will not permit any of their Subsidiaries to (a) terminate, or
permit any ERISA Affiliate to terminate, any Plan, or (b) permit circumstances
which give rise to a Termination Event described in Clause (b), (d) or (e) of
the definition of Termination Event with respect to a Plan.
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SECTION 9.15 PROCEEDS OF NOTE. The Borrowers will not permit the
proceeds of the Note to be used for any purpose other than those permitted by
Section 7.11. Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulation G, U, or X, or any other regulation of the
Board of Governors of the Federal Reserve System, or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.
SECTION 9.16 NEGATIVE PLEDGE AGREEMENTS. Neither any Borrower nor any
Subsidiary will create, incur, assume or suffer to exist any contract,
agreement, or understanding (other than this Agreement, the Loan Documents, the
Heller Loan Documents, and the Subordinated Liens and Subordinated Credit
Agreement) which in any way prohibits or restricts the granting, conveying,
creation, or imposition of any Lien on any of its Property or restricts any
Subsidiary from paying dividends to the Parent, or which requires the consent
of or notice to other Persons in connection therewith.
SECTION 9.17 HEDGING AGREEMENTS. Neither any Borrower nor any
Subsidiary will enter into any Hedging Agreement without the prior written
approval of the Lender.
ARTICLE X
FINANCIAL COVENANTS
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or Lender has any Commitment hereunder, each
Borrower will perform and observe the following financial covenants:
SECTION 10.1 CONSOLIDATED TANGIBLE NET WORTH. The Parent and its
Subsidiaries will at all times maintain Consolidated Tangible Net Worth in an
amount not less than $57,000,000, except as may be adjusted below, increasing
annually by 90% of annual Consolidated Net Income (not reduced by losses)
beginning for the twelve month period ending December 31, 1999, and increasing
by (a) 100% of the amount of any equity issued by Parent, including, without
limitation, a secondary offering and (b) the value of the net tangible assets
acquired by issuing Parent's stock in the acquisition of another entity.
For fiscal year 1999 only, the required increase will be 90% of the
net amount of the actual reported fiscal year 1999 Consolidated Net Income
minus the Parent's cash payment of up to $7,300,000 payable to the sellers of
Dickson GMP International, Inc. (the "Dickson Payment"), but only if such
amount is positive. If the amount derived by calculating the difference in the
fiscal 1999 Consolidated Net Income and the Dickson Payment is negative, the
minimum Consolidated Tangible Net Worth shall be the greater of: (a)
$55,000,000, or (b) $60,000,000 less (1) the Dickson Payment; plus (2) fiscal
1999 Consolidated Net Income; less (3) $1,000,000. In years subsequent to 1999,
such adjusted minimum Consolidated Tangible Net Worth shall be increased
annually by 90% of annual Consolidated Net Income (not reduced by losses) and
by (a) 100% of the amount of any
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equity issued by Parent, including, without limitation, a secondary offering
and (b) the value of the net tangible assets acquired by issuing Parent's stock
in the acquisition of another entity.
SECTION 10.2 CAPITAL EXPENDITURES. The Borrowers will not permit the
aggregate capital expenditures of the Borrowers and the Subsidiaries to exceed
$7,000,000 during any fiscal year.
SECTION 10.3 TOTAL FUNDED DEBT TO CAPITALIZATION. The Borrowers will
not permit the Parent's ratio of Total Funded Debt to Capitalization, on a
Consolidated basis, to exceed 0.40 at any time.
SECTION 10.4 FIXED CHARGE COVERAGE RATIO. The Parent and its
Subsidiaries on a Consolidated basis will at all times maintain a Fixed Charge
Coverage Ratio that exceeds 1.10 to 1.00. This ratio shall be calculated on a
cumulative quarterly basis beginning January 1, 1999, until such time as four
quarters have been reached on December 31, 1999. Thereafter, the ratio will be
calculated on a Rolling Period basis. The first test will be calculated at
March 31, 1999.
SECTION 10.5 SENIOR FUNDED DEBT TO EBITDA COVERAGE RATIO. The
Borrowers will not permit the ratio of Senior Funded Debt to EBITDA, on a
Consolidated basis (EBITDA being determined on a Rolling Period basis) to be
greater than the ratio for the times indicated below:
<TABLE>
<CAPTION>
TIME PERIOD RATIO
<S> <C>
12/01/1998 - 12/31/1999 2.50:1.0
01/01/2000 - 12/31/2000 2.25:1.0
01/01/2001 and thereafter 2.00:1.0
</TABLE>
Upon the consummation of an acquisition not prohibited hereunder (including
historic acquisitions consummated within 12 months from the date hereof), the
calculation of EBITDA shall include, pro forma, the historical consolidated
EBITDA for the Parent and its Consolidated Subsidiaries for the relevant period
prior to the Parent's acquisition of such Subsidiaries.
ARTICLE XI
DEFAULT
SECTION 11.1 EVENTS OF DEFAULT. Each of the following shall be deemed
an "Event of Default":
(a) The Obligations or any part thereof shall not have been paid within
five (5) days of when such is due.
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(b) Any representation or warranty made or deemed made by any Borrower
or any Obligated Party (or any of their respective officers) in any Loan
Document or in any certificate, report, notice, or financial statement
furnished at any time in connection with this Agreement shall be false,
misleading, or erroneous in any material respect when made or deemed to have
been made.
(c) Any Borrower shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in Section 8.1 or 8.5, Article IX, or
Article X of this Agreement; or any Borrower or any Obligated Party shall fail
to perform, observe, or comply with any other covenant, agreement, or term
contained in this Agreement or any other Loan Document (other than covenants to
pay the Obligations) and such failure shall continue for a period of thirty
(30) days.
(d) Any Borrower, any Subsidiary, or any Obligated Party shall
commence a voluntary proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it or shall make a general assignment for
the benefit of creditors or shall generally fail to pay its debts as they
become due or shall take any corporate action to authorize any of the
foregoing.
(e) An involuntary proceeding shall be commenced against any Borrower,
any Subsidiary, or any Obligated Party seeking liquidation, reorganization, or
other relief with respect to it or its debts under any bankruptcy, insolvency,
or other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official for it or a
substantial part of its property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of 30 days.
(f) Any Borrower, any Subsidiary, or any Obligated Party shall fail to
discharge within a period of 30 days after the commencement thereof any
attachment, sequestration, or similar proceeding or proceedings involving an
aggregate amount in excess of $1,000,000 against any of its assets or
properties.
(g) A final judgment or judgments for the payment of money in excess
of $1,000,000 in the aggregate shall be rendered by a court or courts against
any Borrower, any of its Subsidiaries, or any Obligated Party and the same
shall not be discharged (or provision shall not be made for such discharge), or
a stay of execution thereof shall not be procured, within 30 days from the date
of entry thereof and the relevant Borrower or the relevant Subsidiary or
Obligated Party shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal.
(h) Any Borrower, any Subsidiary, or any Obligated Party shall fail to
pay when due any principal of or interest on any Debt (other than the
Obligations), including, without limitation, Debt under the Heller Loan
documents and/or the Subordinated Loan Documents or the maturity of any such
Debt shall have been accelerated, or any such Debt shall have been required to
be prepaid prior to the stated maturity thereof, or any event shall have
occurred that permits (or, with the giving of
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notice or lapse of time or both, would permit) any holder or holders of such
Debt or any Person acting on behalf of such holder or holders to accelerate the
maturity thereof or require any such prepayment.
(i) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Borrower, any
Subsidiary, any Obligated Party or any of their respective shareholders, or any
Borrower or any Obligated Party shall deny that it has any further liability or
obligation under any of the Loan Documents, or any lien or security interest
created by the Loan Documents shall for any reason cease to be a valid, first
priority perfected security interest in and lien upon any of the Collateral
purported to be covered thereby.
(j) Any Termination Event as defined in clause (b), (d) or (e) of the
definition thereof with respect to a Plan shall have occurred and, five days
after notice thereof shall have been given to any Borrower by the Lender, (i)
such Termination Event shall still exist.
(k) Any Borrower or any ERISA Affiliate shall have been notified by
the sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability
to such Multiemployer Plan.
(l) Any Borrower or any ERISA Affiliate shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA.
(m) Any Borrower or any of its Subsidiaries, or any of their
properties, revenues, or assets, shall become the subject of an order of
forfeiture, seizure, or divestiture (whether under RICO or otherwise) and the
same shall not have been discharged (or provisions shall not be made for such
discharge) within 30 days from the date of entry thereof.
(n) Any Person or Persons constituting a group (as such term is used in
Rule 13d-5 under the Securities Exchange Act of 1934 as in effect on the date
hereof) shall, in the aggregate, directly or indirectly, control or own
(beneficially or otherwise) more than 30% (by number of shares) of the issued
and outstanding voting stock of the Parent.
(o) Nathan Avery or a reasonable substitute thereof shall cease to be
active in the senior management of the Parent.
SECTION 11.2 REMEDIES. If any Event of Default shall occur and be
continuing, the Lender may do any one or more of the following:
(a) Acceleration. Declare an amount equal to the maximum
aggregate amount that is or at any time may become available for drawing by the
beneficiary under any outstanding Letters of Credit (whether or not any
beneficiary shall have presented, or shall be entitled at such time to present,
the drafts or other documents required to draw under such Letters of Credit) to
be immediately due and payable, and declare all outstanding principal of and
accrued and unpaid interest on the Note and all other obligations of any of the
Borrowers under the Loan Documents
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I
<PAGE> 66
immediately due and payable, and the same shall thereupon become immediately
due and payable, all without notice, demand, presentment, notice of dishonor,
notice of acceleration, notice of intent to accelerate, protest, or other
formalities of any kind, all of which are hereby expressly waived by the
Borrowers.
(b) Termination of Commitments. Terminate the Commitments
without notice to the Borrowers.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to the Lender to secure payment and performance of the Obligations in
accordance with the terms of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded
by the laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity, or otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Section 11.1(d) or 11.1(e), the Commitment of the Lender shall
automatically terminate, and the outstanding principal of and accrued and
unpaid interest on the Note and all other obligations of the Borrowers under
the Loan Documents shall thereupon become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of acceleration, notice
of intent to accelerate, protest, or other formalities of any kind, all of
which are hereby expressly waived by the Borrowers.
SECTION 11.3 PERFORMANCE BY THE LENDER. If any Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Lender may perform or attempt to perform such covenant or
agreement on behalf of the Borrowers. In such event, the Borrowers shall, at
the request of the Lender, promptly pay any amount expended by the Lender in
connection with such performance or attempted performance to the Lender at the
Principal Office, together with interest thereon at the Default Rate from and
including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that the Lender shall not have any liability or responsibility for the
performance of any obligation of any Borrower under this Agreement or any of
the other Loan Documents.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1 EXPENSES. The Borrowers hereby agree, jointly and
severally, to pay on demand: (a) all reasonable costs and expenses of the
Lender in connection with the preparation, negotiation, execution, and delivery
of this Agreement and the other Loan Documents and any and all amendments,
modifications, renewals, extensions, and supplements thereof and thereto,
including, without limitation, the fees and expenses of legal counsel for the
Lender, (b) all costs and expenses of the Lender in connection with any Default
and the enforcement of this Agreement or
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<PAGE> 67
any other Loan Document, including, without limitation, the fees and expenses
of legal counsel for the Lender, (c) all transfer, stamp, documentary, or other
similar taxes, assessments, or charges levied by any Governmental Authority in
respect of this Agreement or any of the other Loan Documents, (d) all costs,
expenses, assessments, and other charges incurred in connection with any
filing, registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and (e) all other
reasonable costs and expenses incurred by the Lender in connection with this
Agreement or any other Loan Document, including, without limitation, all costs,
expenses, and other charges incurred in connection with obtaining any mortgagee
title insurance policy, survey, audit, or appraisal in respect of the
Collateral.
SECTION 12.2 INDEMNIFICATION. The Borrowers, jointly and severally,
shall indemnify the Lender and each Affiliate thereof and their respective
officers, directors, employees, attorneys, and agents from, and hold each of
them harmless against, any and all losses, liabilities, claims, damages,
penalties, judgments, disbursements, costs, and expenses (including attorneys'
fees) to which any of them may become subject which directly or indirectly
arise from or relate to (a) the negotiation, execution, delivery, performance,
administration, or enforcement of any of the Loan Documents, (b) any of the
transactions contemplated by the Loan Documents, (c) any breach by any Borrower
of any representation, warranty, covenant, or other agreement contained in any
of the Loan Documents, (d) the presence, Release, threatened Release, disposal,
removal, or cleanup of any Hazardous Material located on, about, within, or
affecting any of the properties or assets of any Borrower or any Subsidiary, or
(e) any investigation, litigation, or other proceeding, including, without
limitation, any threatened investigation, litigation, or other proceeding
relating to any of the foregoing. Without limiting any provision of this
Agreement or of any other Loan Document, it is the express intention of the
parties hereto that each Person to be indemnified under this Section shall be
indemnified from and held harmless against any and all losses, liabilities,
claims, damages, penalties, judgments, disbursements, costs, and expenses
(including attorneys' fees) arising out of or resulting from the sole or
contributory negligence of such Person.
SECTION 12.3 LIMITATION OF LIABILITY. None of the Lender or any
subsidiary, officer, director, employee, attorney, or agent thereof shall have
any liability with respect to, and any Borrower hereby waives, releases, and
agrees not to sue any of them upon, any claim for any special, indirect,
incidental, or consequential damages suffered or incurred by any Borrower in
connection with, arising out of, or in any way related to, this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents, except for gross negligence or
willful misconduct in which event damages will be limited to actual damages.
Each Borrower hereby waives, releases, and agrees not to sue the Lender or any
of its subsidiaries, officers, directors, employees, attorneys, or agents for
punitive damages in respect of any claim in connection with, arising out of, or
in any way related to, this Agreement or any of the other Loan Documents, or any
of the transactions contemplated by this Agreement or any of the other Loan
Documents.
SECTION 12.4 NO DUTY. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Lender shall have the
right to act exclusively in the interest of the Lender and shall have no duty of
disclosure, duty of loyalty, duty of care, or other duty or
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obligation of any type or nature whatsoever to any Borrower or any of the
Borrowers' shareholders or any other Person.
SECTION 12.5 NO FIDUCIARY RELATIONSHIP. The relationship between each
Borrower and the Lender is solely that of debtor and creditor, and the Lender
has no fiduciary or other special relationship with any Borrower, and no term
or condition of any of the Loan Documents shall be construed so as to deem the
relationship between any Borrower and the Lender to be other than that of
debtor and creditor.
SECTION 12.6 EQUITABLE RELIEF. Each Borrower recognizes that in the
event any Borrower fails to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may prove to be inadequate relief to the
Lender. Each Borrower therefore agrees that the Lender, if the Lender so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
SECTION 12.7 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement and the other Loan Documents
are cumulative and not exclusive of any rights and remedies provided by law.
SECTION 12.8 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The
Borrowers may not assign or transfer any of their rights or obligations
hereunder without the prior written consent of the Lender. The Lender may,
sell, without notice to or consent of any Borrower, participations to one or
more banks or other institutions in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, all or a portion of the Revolving Credit Loan owing to it)
provided that such participation shall not result in additional costs to
Borrowers; provided, however, that (i) the Lender's obligations under this
Agreement and the other Loan Documents (including, without limitation, its
Commitment) shall remain unchanged, (ii) the Lender shall remain solely
responsible to the Borrowers for the performance of such obligations, (iii) the
Lender shall remain the holder of its Note for all purposes of this Agreement,
(iv) the Borrowers shall continue to deal solely and directly with the Lender
in connection with the Lender's rights and obligations under this Agreement and
the other Loan Documents, and (v) the Lender shall not sell a participation
that conveys to the participant the right to vote or give or withhold consents
under this Agreement or any other Loan Document, other than the right to vote
upon or consent to (A) any increase of the Lender's Commitment, (B) any
reduction of the principal amount of, or interest to be paid on, the Advances
of the Lender, (C) any reduction of any commitment fee or other amount payable
to the Lender under any Loan Document, or (D) any postponement of any date for
the payment of any amount payable in respect of the Advances of the Lender.
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<PAGE> 69
(b) The Lender may, without notice to or consent of any Borrower,
sell, assign or transfer to any one or more persons or entities, all or any
part of the Revolving Credit Loan or all or any part of the Loan Documents and
each such assignee or transferee shall have the right to enforce the Revolving
Credit Loan, and such Loan Documents as fully as the Lender, provided that the
Lender shall continue to have the unimpaired right to enforce the provisions of
the Loan Documents and the Revolving Credit Loan that it has not sold, assigned
or transferred.
(c) In connection with and prior to and after any such sale, transfer,
assignment or participation, the Lender may disclose and furnish to any
prospective or actual purchaser, transferee, assignee or participant, any and
all reports, financial statements and other information obtained by the Lender
at any time and from time to time in connection with the Revolving Credit Loan,
the Loan Documents or otherwise. The Borrowers shall fully cooperate with the
Lender in connection with any such assignment and shall execute and deliver
such consents and acceptances to any such assignment as the Lender shall
reasonably request that are necessary or desirable to effect any such
assignment.
SECTION 12.9 SURVIVAL. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Lender or any closing shall affect the representations and
warranties or the right of the Lender to rely upon them. Without prejudice to
the survival of any other obligation of the Borrowers hereunder, the
obligations of the Borrowers under Article IV and Sections 12.1 and 12.2 shall
survive repayment of the Note and termination of the Commitments.
SECTION 12.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE
PARTIES HERETO.
SECTION 12.11 AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement, the Notes, or any other Loan Document to which any
Borrower is a party, nor any consent to any departure by any Borrower
therefrom, shall in any event be effective unless the same shall be agreed or
consented to by the Lender and the Borrowers, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 12.12 MAXIMUM INTEREST RATE.
(a) The Collateral covered in the Vessel Mortgage and the Obligations
covered by this Agreement, the Note and other Loan Documents is or will be
secured by a "Preferred Mortgage" on the Vessels within the meaning of Section
31322 of the Ship Mortgage Act, and the regulations
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<PAGE> 70
promulgated thereunder. If, for any reason, the provisions of Section 31322 of
the Ship Mortgage Act shall be found not to exempt any and all interest and
other charges contracted for, charged, taken, received or reserved in connection
with the Obligations covered by this Agreement, the Note, and other Loan
Documents from any limitations otherwise applicable, then the provisions of
Section 12.12(b) shall apply, but otherwise the provisions of Section 31322 of
the Ship Mortgage Act shall be applicable.
(b) No provision of this Agreement or of any other Loan Document shall
require the payment or the collection of interest in excess of the maximum
amount permitted by applicable law. If any excess of interest in such respect
is hereby provided for, or shall be adjudicated to be so provided, in any Loan
Document or otherwise in connection with this loan transaction, the provisions
of this Section shall govern and prevail and neither any of the Borrowers nor
the sureties, guarantors, successors, or assigns of any of the Borrowers shall
be obligated to pay the excess amount of such interest or any other excess sum
paid for the use, forbearance, or detention of sums loaned pursuant hereto. In
the event the Lender ever receives, collects, or applies as interest any such
sum, such amount which would be in excess of the maximum amount permitted by
applicable law shall be applied as a payment and reduction of the principal of
the indebtedness evidenced by the Note; and, if the principal of the Note has
been paid in full, any remaining excess shall forthwith be paid to the
Borrowers. In determining whether or not the interest paid or payable exceeds
the Maximum Rate, the Borrowers and the Lender shall, to the extent permitted
by applicable law, (a) characterize any non-principal payment as an expense,
fee, or premium rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) amortize, prorate, allocate, and spread in equal
or unequal parts the total amount of interest throughout the entire
contemplated term of the indebtedness evidenced by the Note so that interest
for the entire term does not exceed the Maximum Rate.
SECTION 12.13 NOTICES. All notices and other communications provided
for in this Agreement and the other Loan Documents to which any Borrower is a
party shall be given or made by telex, telegraph, telecopy, cable, or in
writing and telexed, telecopied, telegraphed, cabled, mailed by certified mail
return receipt requested, or delivered to the intended recipient at the
"Address for Notices" specified below its name on the signature pages hereof;
or, as to any party at such other address as shall be designated by such party
in a notice to each other party given in accordance with this Section. Except
as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telex or telecopy, subject
to telephone confirmation of receipt, or delivered to the telegraph or cable
office, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid; provided, however, notices to the
Lender pursuant to Article II shall not be effective until received by the
Lender.
SECTION 12.14 GOVERNING LAW; VENUE; SERVICE OF PROCESS. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Texas and the applicable laws of the United States of America. This Agreement
has been entered into in Harris County, Texas, and it shall be performable for
all purposes in Harris County, Texas. Any action or proceeding against any
Borrower under or in connection with any of the Loan Documents may be brought
in any state or Federal court in Harris County, Texas. Each Borrower hereby
irrevocably (a) submits to the nonexclusive jurisdiction of such courts, and
(b) waives any objection it may now or hereafter have
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as to the venue of any such action or proceeding brought in any such court or
that any such court is an inconvenient forum. Each Borrower agrees that service
of process upon it may be made by certified or registered mail, return receipt
requested, at its address specified or determined in accordance with the
provisions of Section 12-13. Nothing herein or in any of the other Loan
Documents shall affect the right of the Lender to serve process in any other
manner permitted by law or shall limit the right of the Lender to bring any
action or proceeding against any Borrower or with respect to any of its
property in courts in other jurisdictions. Any action or proceeding by any
Borrower against the Lender shall be brought only in a court located in Harris
County, Texas.
SECTION 12.15 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 12.16 SEVERABILITY. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
SECTION 12.17 HEADINGS. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
SECTION 12.18 NON-APPLICATION OF CHARTER 346 OF TEXAS FINANCE CODE.
The provisions of Chapter 346 of the Texas Finance Code are specifically
declared by the parties hereto not to be applicable to this Agreement or any of
the other Loan Documents or to the transactions contemplated hereby.
SECTION 12.19 CONSTRUCTION. The Borrowers and the Lender acknowledge
that each of them has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Agreement and the other Loan
Documents with its legal counsel and that this Agreement and the other Loan
Documents shall be construed as if jointly drafted by the parties hereto.
SECTION 12.20 INDEPENDENCE OF COVENANTS. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken or such
condition exists.
SECTION 12.21 JURY WAIVER. THE BORROWERS AND THE LENDER (BY THEIR
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG ANY
BORROWER AND THE LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT,
ANY OF THE OTHER LOAN DOCUMENTS, OR ANY RELATIONSHIP BETWEEN THE LENDER AND ANY
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO THE LENDER TO PROVIDE THE
FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
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SECTION 12.22 ARBITRATION. The Lender and each Borrower agree that
upon the written demand of either party, whether made before or after the
institution of any legal proceedings, but prior to the rendering of any
judgment in that proceeding, all disputes, claims and controversies between
them, whether individual, joint, or class in nature, arising from this
Agreement, or any of the Loan Documents or otherwise, including, without
limitation, contract disputes and tort claims, shall be resolved by binding
arbitration pursuant to the Commercial Rules of the American Arbitration
Association ("AAA"). Any arbitration proceeding held pursuant to this
arbitration provision shall be conducted in Houston, Texas having an AAA
regional office, or at any other place selected by mutual agreement of the
parties. No act to take or dispose of any Collateral shall constitute a waiver
of this arbitration agreement or be prohibited by this arbitration agreement.
This arbitration provision shall not limit the right of either party during any
dispute, claim or controversy to seek, use, and employ ancillary, or
preliminary rights and/or remedies, judicial or otherwise, for the purposes
of realizing upon, preserving, protecting, foreclosing upon or proceeding under
forcible entry and detainer for possession of, any real or personal property,
and any such action shall not be deemed an election of remedies. Such remedies
include, without limitation, obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of trust or
mortgage, obtaining a writ of attachment or imposition of a receivership, or
exercising any rights relating to personal property, including exercising the
right of set-off, or taking or disposing of such property with or without
judicial process pursuant to the Uniform Commercial Code. Any disputes, claims
or controversies concerning the lawfulness or reasonableness of an act, or
exercise of any right or remedy concerning any Collateral, including any claim
to rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated; provided, however, that no arbitrator
shall have the right or the power to enjoin or restrain any act of either
party. Judgment upon any award rendered by any arbitrator may be entered in any
court having jurisdiction. The statute of limitations, estoppel, waiver, laches
and similar doctrines which would otherwise be applicable in an action brought
by a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement of
any action for these purposes. The Federal Arbitration Act (Title 9 of the
United States Code) shall apply to the construction, interpretation, and
enforcement of this arbitration provision.
SECTION 12.23 CONFIDENTIALITY. In the event that any of the Borrowers
provides to the Lender written confidential information belonging to such
Borrower, if such Borrower shall denominate such information in writing as
"confidential", the Lender shall thereafter maintain such information in
confidence in accordance with the standards of care and diligence that such
utilizes in maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information which (i) are in
the public domain, (ii) hereafter become part of the public domain without the
Lender breaching its obligation of confidence to such Borrower, (iii) are
previously known by the Lender from some source other than such Borrower, (iv)
are hereafter developed by the Lender without using the Borrower's information,
(v) are hereafter obtained by or made available to the Lender from a third
party who the Lender is not aware owes any obligation of confidence to such
Borrower with respect to such information or through any other means other than
through disclosure by such Borrower, (vi) are disclosed with such Borrower's
consent, (vii) must be disclosed either pursuant to any Governmental
Requirement or to Persons regulating the activities of the Lender, or (viii) as
may be required by law or regulation or order of any Governmental Authority in
any judicial, arbitration, or governmental proceeding. Further, the
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Lender may disclose any such information to its independent certified public
accountants and/or any legal counsel, Heller, the Subordinated Lender, any
independent certified public accountants, and/or legal counsel employed by such
Person in connection with this Agreement or any other Loan Document, including
without limitation, the enforcement or exercise of all rights and remedies
thereunder, or any assignee or participant (including prospective assignees and
participants) in the Revolving Credit Loan; provided, however, that the Lender
shall receive a confidentiality agreement from the Person to whom such
information is disclosed such that said Person shall have the same obligation
to maintain the confidentiality of such information as is imposed upon the
Lender hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease three years from the date the
information was furnished, unless such Borrower requests in writing at least
30 days prior to the expiration of such three year period, to maintain the
confidentiality of such information for an additional three year period. Each
Borrower waives any and all other rights it may have to confidentiality as
against the Lender arising by contract, agreement, statute, or law except as
expressly stated in this Section 12.23.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWERS:
TRANSCOASTAL MARINE SERVICES, INC.;
DICKSON MARINE, INC.;
VENTURA RESOURCES, INC.;
WOODSON CONSTRUCTION COMPANY, INC.;
ENVIRO SYSTEMS, INC.;
KORI CORPORATION;
C.S.I. HYDROSTATIC TESTERS, INC.;
HARGETT MOORING AND MARINE, INC.;
HBH, INC.;
TRANSCOASTAL MARINE SERVICES OF LA, INC.;
DICKSON GMP INTERNATIONAL, INC.;
THE RED FOX COMPANIES OF IBERIA, INC.; and
TRANSCOASTAL VESSELS, INC.
By: /s/ PAMELA L. REILAND
-----------------------------------------
Pamela L. Reiland
Authorized Officer for all Borrowers
Address for Notices (all Borrowers):
2925 Briarpark, Suite 930
Houston, Texas 77042
Fax No.: (713) 781-6364
Telephone No.: (713) 787-1384
Attention: President
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LENDER:
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By: /s/ KAREN S. SHOUSE
------------------------------------
Karen S. Shouse
Vice President
Address for Notices:
Bank One, Texas, National Association
910 Travis, Suite 2400
Houston, Texas 77024
Fax No.: 713/751-6199
Telephone No.: 713/751-3640
Attention: Karen S. Shouse
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Section
- ------- ---------------------- -------
<S> <C> <C>
"A" Advance Request Form 1.1
"B" Borrowing Base Report 8.1(1)
</TABLE>
INDEX TO SCHEDULES
<TABLE>
<CAPTION>
Schedule Description of Schedule Section
- -------- ------------------------ -------
<S> <C> <C>
1 Specific Fixed Collateral 1.1
2 Vessels 1.1
7.5 Litigation and Judgments 7.5
7.6(d) Rights in Properties; Liens 7.6(d)
7.9 Debt 7.9
7.10 Taxes 7.10
7.14 Subsidiaries 7.14
7.20 Environmental Matters 7.20
7.22 Insurance 7.22
7.23 Hedging Agreements 7.23
7.25 Material Debt Agreements 7.25
9.2 Liens 9.2
</TABLE>
1
<PAGE> 76
EXHIBIT "A"
ADVANCE REQUEST FORM
AS OF MONTH ENDING:
-------------,-------
<TABLE>
<S> <C> <C>
GROSS ACCOUNTS RECEIVABLE
$
-----------------
LESS:
Accounts Receivable > 90 days $
----------------
Retainage
----------------
Bonded Jobs
----------------
Ineligible Foreign Accounts Receivable
----------------
Other Ineligible Accounts Receivable
---------------- -----------------
Eligible Accounts Receivable
-----------------
LESS:
Billings in excess of cost on Eligible Accounts
Receivable
-----------------
ELIGIBLE ACCOUNTS RECEIVABLE, NET OF BILLINGS
IN EXCESS OF COSTS
-----------------
ADVANCE RATE ON ACCOUNTS RECEIVABLE 80%
AVAILABILITY ON ACCOUNTS RECEIVABLE (a)
--------------
ELIGIBLE INVENTORY BALANCE
-----------------
ADVANCE RATE ON INVENTORY 50%
AVAILABILITY ON INVENTORY (b)
--------------
TOTAL AVAILABILITY ON REVOLVER (a + b)
LOAN BALANCE AT ______________ -----------------
-----------------
EXCESS AVAILABILITY OVER LOAN BALANCE $
=================
AMOUNT OF ADVANCE REQUEST $
-----------------
AMOUNT OF LETTER OF CREDIT REQUEST $
-----------------
</TABLE>
<PAGE> 77
EXHIBIT "B"
BORROWING BASE REPORT FORM
AS OF MONTH ENDING:
-------------,-------
<TABLE>
<S> <C> <C>
GROSS ACCOUNTS RECEIVABLE
$
-----------------
LESS:
Accounts Receivable > 90 days $
----------------
Retainage
----------------
Bonded Jobs
----------------
Ineligible Foreign Accounts Receivable
----------------
Other Ineligible Accounts Receivable
---------------- -----------------
Eligible Accounts Receivable
-----------------
LESS:
Billings in excess of cost on Eligible Accounts
Receivable
-----------------
ELIGIBLE ACCOUNTS RECEIVABLE, NET OF BILLINGS
IN EXCESS OF COSTS
-----------------
ADVANCE RATE ON ACCOUNTS RECEIVABLE 80%
AVAILABILITY ON ACCOUNTS RECEIVABLE (a)
--------------
ELIGIBLE INVENTORY BALANCE
-----------------
ADVANCE RATE ON INVENTORY 50%
AVAILABILITY ON INVENTORY (b)
--------------
TOTAL AVAILABILITY ON REVOLVER (a + b)
LOAN BALANCE AT ______________________ -----------------
-----------------
EXCESS AVAILABILITY OVER LOAN BALANCE $
=================
AMOUNT OF ADVANCE REQUEST $
-----------------
AMOUNT OF LETTER OF CREDIT REQUEST $
-----------------
</TABLE>
<PAGE> 78
SCHEDULE 1
LIST OF EQUIPMENT
(more fully described in Schedule "1" Attachment 1
attached hereto)
<TABLE>
<CAPTION>
ASSET NAME TYPE DESCRIPTION
===========================================================================================================
<S> <C> <C>
Drydock Drydock 3,400 ton; Dimensions of 236' x 100' with 85' between wing walls
- -----------------------------------------------------------------------------------------------------------
Jetting Jet Pumps, Etc. TCMS Equipment #10697, EMD Engine Model #16-567-03A with
Equipment Bingham 8' x 10' 4-stage Jet Pump and Lufkin Gear Box Model
(Mexican site) #N1460C; jet sleds and pipe; located on Cable 1 Vessel
- -----------------------------------------------------------------------------------------------------------
Jetting Jet Pumps, Etc. 3 single stage pumps; 5 5-stage pumps; EMD Engine Model
Equipment #16-567-D3A with Bingham 8' x 10' 4-stage Jet Pump with Lufkin Gear
(Lafayette site) Box Model #N1604C; jet sleds and pipe
- -----------------------------------------------------------------------------------------------------------
BH 100 Spud Barge American flag; dimensions of 110' x 34' x 6'
- -----------------------------------------------------------------------------------------------------------
Rowe 14 Crane Barge American flag; dimensions of 110' x 34' x 7.3'; approximately
20 years old
- -----------------------------------------------------------------------------------------------------------
Barge Construction American flag; dimensions of 250' x 50' x 12'; built by
Barge Nashville Bridge Company in Nashville, TN in 1953
- -----------------------------------------------------------------------------------------------------------
#7101 Spud Barge American flag; dimensions of 136' x 35' x 7.6'; built by
Nashville Bridge Company in Nashville, TN in 1966
- -----------------------------------------------------------------------------------------------------------
#7102 Spud Barge American flag; dimensions of 136' x 35' x 7.6'; built by
Nashville Bridge Company in Nashville, TN in 1966
- -----------------------------------------------------------------------------------------------------------
Barge Office Barge American flag; dimensions of 208' x 26' x 5'; built by
Nashville Bridge Company in Nashville, TN (forward vessel
in 1941, hull no. 579 and after vessel in 1955, hull no. H 34)
- -----------------------------------------------------------------------------------------------------------
TCMS 612 Spud Barge American flag; dimensions of 140' x 39' x 9'
- -----------------------------------------------------------------------------------------------------------
BH 201 Spud Barge American flag; dimensions of 90' x 23' x 5'
- -----------------------------------------------------------------------------------------------------------
MMVII Spud Barge American flag; dimensions of 120' x 32' x 7';
approximately 25 years old
===========================================================================================================
</TABLE>
<PAGE> 79
[BACHRACH, WOOD, PETERS AND ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 7, 1998
SURVEY REPORT NO. 9812-1225
3400 TON DRYDOCK
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on December
7, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for the account
of Bank One, Texas, NA, survey the 3400 ton drydock (Transcoastal Marine
Services, Inc.- reported owners) while subject drydock was lying afloat at the
facilities of Red Fox on Industrial Canal in New Orleans, Louisiana, in order to
ascertain the general condition and in order to estimate her present day fair
market value and orderly liquidation value as of December 7, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
Note: For reporting purposes, the end of the drydock with the male notch
assembly is considered to be the bow.
The drydock was built of all welded steel construction by securing four (4)
smaller drydock sections into one (1) larger unit with an overall dimension of
236'x 100' with 85' between the wing walls and a combined capacity of 3,400
tons.
Original thickness of all plating appears to be 3/8".
Deck fittings consists of various single and double bitts, as well as padeyes
ranged across the forward and after ends of the main deck.
HULL SECTIONS:
The hull sections are arranged as follows:
<PAGE> 80
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
First Section:
The forward section is a 39' x 100' section with two (2) 16' x 7.5' x 15' wing
walls ranged along both port and starboard sides. Extending forward of the bow
is a fabricated steel male notch assembly which measures 19'x 60' with a 48"
cast steel kevel location in way of the center line. Each wing wall has its
upper perimeter contained by cable handrails.
Atop the port wing wall was the following:
One (1) 6" double bitt.
Two (2) valve handles.
Two (2) 6" vents.
One (1) manual securing winch.
One (1) covered shack.
Two (2) U.S. Motors, Model F407A, 15 HP electric motors each rated at 1765 RPM
which power two (2) low lift pumps of unknown capacity.
Atop the starboard wing wall was the following:
One (1) 6" diameter double bitt.
One (1) manually operated winch.
Two (2) 6' vents.
Three (3) Valve handles.
One (1) electrical panel/operators station which has a surrounding steel shack.
Two (2) U.S. Motors, model F407A, 15 HP electric motors each rated at 1765 RPM
which power two (2) low lift pumps of unknown capacity.
Second Section:
The second section is a 70' x 100' section with one (1) 70' x 7.5' x 16' wing
wall section ranged along both port and starboard side. Each wing wall has its
upper ranged along both port and starboard side. Each wing wall has its upper
perimeter contained by round bar handrail system.
Atop the port wing wall is the following:
Two (2) 12" double bitts ranged along the outboard edge.
Two (2) mercury vapor lights.
Two (2) 4" vents.
One (1) 12" vent.
One (1) valve handle.
One (1) manually operated winch.
Five (5) 10" single bitts.
<PAGE> 81
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
SECOND SECTION: (continued)
One (1) 50 HP electric motor which powers a Fairbanks Morse deepwell pump of
unknown capacity.
Atop the starboard wing wall is the following:
Two (2) 12" double bitts ranged along the outboard edge.
Two (2) valves.
One (1) 12" vent.
Two (2) 4" vents.
Two (2) mercury vapor lights.
One (1) manually operated winch.
One (1) 10" D ring.
Seven (7) 6" single bitts.
One (1) electrical panel covered by a steel top.
One (1) 50 HP electric motor which powers a Fairbanks Morse deepwell pump of
unknown capacity.
Third Section:
The third section is a 70' x 100' section with one (1) 70' x 7.5' x 16' wing
wall section ranged along both port and starboard sides. Each wing wall has its
upper perimeter contained by round bar handrail system.
Atop the port wing wall is the following:
Two (2) 12" double bitts ranged along the outboard edge.
One (1) mercury vapor light.
Two (2) manually operated winches.
One (1) 12" vent.
Two (2) 4" vents.
One (1) valve handle.
Six (6) single bitts.
One (1) cover shack.
One (1) 50 HP electric motor which powers a Fairbank Morse deepwell pump of
unknown capacity.
Atop the starboard wing well is the following:
Two (2) 12" double bitts ranged along the outboard edge.
Two (2) valve handles.
Two (2) 4" vents.
<PAGE> 82
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
Third Section: (continued)
One (1) 12" vent.
One (1) manually operated winch.
Nine (9) 6" single bitts.
One (1) mercury vapor light.
One (1) 50 HP electric motor which powers a Fairbanks Morse deepwell pump of
unknown capacity.
Fourth Section:
The fourth section is a 56' x 100' section with two (2) 16' x 7.5' x 15' wing
wall section ranged along both port and starboard sides. Each wing wall has its
upper perimeter contained by pipe handrail system.
Atop the port wing wall is the following:
Two (2) 6" double bitts ranged along the inboard edge.
One (1) 8" D ring.
Four (4) 8" vents.
Four (4) valve handles.
One (1) electric winch complete with a 5 HP motor.
Two (2) mercury vapor lights.
One (1) 30 lb. fire extinguisher.
One (1) 30" ring buoy.
One (1) 15 HP electric motor which powers a Fairbank Morse deepwell pump of
unknown capacity.
Atop the starboard wing wall is the following:
One (1) 6" double bitt located aft.
One (1) 8" double bitt located inboard.
Four (4) valve handles.
Four (4) 8" vents.
Nine (9) 6" single bitts.
One (1) electric winch without a motor.
One (1) manually operated winch.
Two (2) mercury vapor lights.
One (1) electrical panel/operator station covered by a steel roof.
One (1) 30" ring buoy.
<PAGE> 83
SURVEY REPORT NO. 9812-1225
HULL SECTIONS: (continued)
Fourth Section: (continued)
One (1) 15 HP electric motor which powers a Fairbank Morse deepwell pump of
unknown capacity.
EXTERNAL CONDITION:
Note: Only an external survey could be performed due to the lower hull
compartments containing ballast water.
The drydock was sighted afloat with a 250' vessel hauled out.
The deck was partially covered with 6" to 1' of blasting sand. Where sighted,
deck plating was lightly washboarded with random indents of 0 to 1".
The wing walls contain light distortion with random indents of 0 to 1".
External coating was recently applied over 90% of the vessel and appears to
be in excellent condition.
Electrical wiring, where sighted, appears to be in excellent condition.
VALUATION:
Estimated present day fair market value
as of December 7, 1998.................................$ 2,750,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably, and assuming the price
is not affected by undue stimulus. Implicit in this definition is the
consummation of a sale where title is passed from seller to buyer
under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider
their own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 84
SURVEY REPORT NO. 9812-1225
VALUATION: (continued)
<TABLE>
<S> <C>
Estimated orderly liquidation value
as of December 7, 1998........................................... $ 2,400,000.00
</TABLE>
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
Reportedly, all wasted external hull plating has been cropped and renewed as
found necessary.
Reportedly, internal hull compartments had all wasted structural members
cropped and renewed as found necessary with additional internals added to
reinforce the deck.
Reportedly, all internal and external anodes have recently been renewed.
Reportedly, all lower hull compartments have been cleaned and recoated with
Texaco Compound H.
All machinery and equipment on the drydock appears to be in good condition and
well coated.
This drydock, as described herein, is in satisfactory condition for its
intended service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject drydock
is either expressed or implied.
The drydock was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems, or
opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned drydock and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed and submitted without prejudice to rights and/or interests
of whom it may concern.
<PAGE> 85
SURVEY REPORT NO. 9812-1225
SURVEYOR'S NOTES: (continued)
Attending Surveyor:
Kevin A. Jacomine
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
KAJ:ktb
Distribution:
(2) Reports & (2) invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 86
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 08, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1227
TRANSCOASTAL MARINE SERVICES, INC. JETTING EQUIPMENT
MEXICO
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on December
4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for the account
of Bank One, Texas, NA, survey Jetting Equipment temporarily on board the barge
"Cable I", and reportedly owned by Transcoastal Marine Services, Inc. while the
Cable I lay afloat and anchored approximately 5 miles northeast of Ciudad Del
Carmen, Campeche, Mexico in order to ascertain the general condition of the
equipment and in order to estimate its present day fair market value and orderly
liquidation values as of December 4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL DESCRIPTION AND CONDITION:
One steel, state of the art, jetting sled with adjustable legs capable of
operating at pressures of 500 psi and a volume of 3600 gallons per minute and
capable of burying pipe 12" to 36" in diameter to a depth of as much as 16 feet
below mud line. This equipment was found in excellent condition.
One skid mounted "A" frame approximately 50 feet long and constructed with steel
30" "I" beam legs and two 30" "I" beam cross beams. The "A" frame is fit with a
36" diameter x 20 foot long hose roller, has an 80 ton capacity and can be
raised and lowered utilizing built-in hydraulic rams. The unit is capable of
being moved from vessel to vessel as a unit. The unit was found to be in
excellent condition.
One skid mounted 3 cylinder General Motors, model 3-53, diesel engine drives a
Vickers vane pump for operating the hydraulic rams of the "A" frame. The engine
is electric starter and radiator cooled and appeared in very good condition.
<PAGE> 87
SURVEY REPORT NO. 9812-1227
GENERAL DESCRIPTION AND CONDITION:
One Continental skid mounted model TMD 27, 4 cylinder diesel engine drives a
Parker model PFV 125B1711FNI vane pump to power a large diameter hose reel. The
engine is electric starting and radiator cooled and appears in new condition.
One skid mounted hydraulic powered 12 foot diameter steel hose reel which is
remotely powered from a hydraulic pressure source. The reel is fit with 300
feet of 8" diameter 1000 psi water hose. The hose reel is additionally fit
with 300 feet of 6" diameter high pressure air supply hose. The hose reel was
built by Marine Project Development Limited of Hull in Great Britain and the
hose reel unit and hoses appeared in very good condition.
2,600 feet of 1/2" high pressure hydraulic hose for the sensor units used for
positioning a jetting sled. The hoses appeared in good condition.
One steel water manifold for a jet pumping system constructed of 8" diameter
pipe and 8" valves which can be arranged to operate two high pressure water
pumps. This unit appeared in very good condition.
One skid mounted Viking, 50 ton line pull, 48" diameter single drum which driven
by a Hagglunds hydraulic motor through a Hagglund reduction gear. The drum is
fit with 4,000 feet of 1" steel cable. The unit and cable appeared in excellent
condition.
One skid mounted, Deutz 6 cylinder, turbocharged diesel engine driving a 12"
Gorman-Rupp 7,000 gallon per minute water supply pump which can deliver at 40
psi. The engine is electric starting and air cooled and appeared in nearly new
condition.
Two frame mounted Gardner-Denver 750 cubic feet per minute at 125 psi, air
compressors are each driven by General Motors 6 cylinder model 6-71 diesel
engine. Each engine is electric starting and radiator cooled. Each engine was
reportedly recently overhauled and each unit appeared in good condition.
One skid mounted 16 cylinder EMD model 16-645E5, turbocharged, 3,000 brake horse
power diesel engine drives a Lufkin 4 to 1 increase gear and a Bingham model
MSB 5/4 8 x 10 x 12.5, 3,000 gallon per minute at 1,000 psi, high pressure water
pump. The engine is air starting and heat exchanger cooled. The Lufkin gears
are reportedly new and appear in excellent condition. The Bingham pump appears
in excellent condition and is reportedly operative. The main engine appears in
excellent condition and was reportedly last overhauled 900 operating hours ago.
One Rasmussen Equipment Company skid mounted, double drum Skagit, model RB-90
winch is driven by General Motors 8 cylinder model V-8-71 diesel engine through
a Twin Disc torque converter and a system of gears and chains. The engine is
electric starting and radiator cooled. The engine is fit with a takeoff for
running its own winch controls. The
<PAGE> 88
SURVEY REPORT NO. 9812-1227
GENERAL DESCRIPTION AND CONDITION:
engine appears in excellent condition and it reportedly nearly new. The winch
appears in excellent condition.
VALUATION:
Estimated present day fair market value of above described equipment as
sighted December 04, 1998.................................$ 1,300,000.00
Fair Market Value:
A sum of money that equipment should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value of above described equipment as sighted
of December 04, 1998.......................................$ 1,000,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
This survey represents the good faith opinion of the surveyor and does not
make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to the condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The undersigned Marine Surveyor has no present or contemplated future
interest in the aforementioned vessel and/or its equipment, and
compensation for services has been arranged for on an independent fee
basis and is in no way contingent upon the values reported herein.
<PAGE> 89
SURVEY REPORT NO. 9812-1227
SURVEYOR'S NOTES: (continued)
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
[SEAL]
JMS:maw
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 90
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 8, 1998
SURVEY REPORT NO. 9812-1226
JETTING EQUIPMENT
(LAFAYETTE SITE)
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 8, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One Texas, NA, survey miscellaneous jetting equipment
(Transcoastal Marine Services, Inc. reported owners) while the equipment was
located at the facility of CSI in Lafayette, Louisiana, in order to ascertain
the general condition of the equipment and in order to estimate its present day
fair market value and orderly liquidation values of December 8, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL DESCRIPTION AND CONDITION:
The following equipment was sighted in Lafayette, Louisiana. All appeared to be
in good condition and reportedly operative.
SINGLE STAGE PUMPS:
Unit No. FP-8, Goulds single stage pump, powered by a GM 8V-71 diesel engine
(see photo No. 1).
Unit No. FP-11, Carver, model ETN-20-50, single stage 10"x8" pump powered by a
GM 8V-71 diesel engine (see photo No. 2).
Unit No. FP-13, Carver, model ETN-20-50, single stage 10"x8" pump powered by GM
8V-71 diesel engine (see photo No. 3).
<PAGE> 91
SURVEY REPORT NO. 9812-1226
GENERAL DESCRIPTION AND CONDITION: (continued)
4-STAGE PUMPS:
Unit No. HFP-97, Bingham, model MSB 5/4, 4-stage (destaged from 5-stage) 8 x 10
x 12.5 pump, powered by a 16 cylinder EMD, model 16-567-D3A, turbocharged, 1,800
brake horse power diesel engine, which drives a Lufkin, model N1604C, 3.977 to 1
gear box. The engine is air starting and heat exchanger cooled. The Lufkin gears
are reportedly new and appear in excellent condition. The Bingham pump appears
in excellent condition and is reportedly operative. The main engine appears in
excellent condition (see photos Nos. 4 and 5).
5-STAGE PUMPS:
Unit No. HFP-1, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
12V-92 diesel engine (see photo No. 6).
Unit No. HFP-2, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
16V-71 diesel engine (see photo No. 7).
Unit No. HFP-3, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
16V-71 diesel engine (see photo No. 8).
Unit No. HFP-4, Carver, model 1500 N5, 5-stage 8" x 6" pump powered by a GM
16V-71 diesel engine (see photo No. 9).
Unit No. HFP-98, Carver, model 1500B-5, 5-stage 8" x 6" pump powered by a GM
16V-71 turbocharged diesel engine (see photo No. 10).
Unit No. HR-3, a skid mounted hydraulic powered 8-foot diameter steel hose
reel, which has an onboard diesel powered hydraulic pressure source. The reel
is designed to hold 4* diameter high pressure air supply hose, but without any
hose at the time of survey (see photo No. 12).
HOSE REELS:
Unit No. HR-1, a skid mounted hydraulic powered 10-foot diameter steel hose
reel, which is remotely powered from a hydraulic pressure source. The reel is
fit with 300 feet of 5" diameter 1000 psi water hose. The hose reel is
additionally fit with 300 feet of 3" diameter high pressure air supply hose
(see photo No. 11).
Unit No. HR-3, a skid mounted hydraulic powered 8-foot diameter steel hose reel,
which has an onboard diesel powered hydraulic pressure source. The reel is
designed to hold diameter high pressure air supply hose, but without any hose at
the time of survey (see photo No. 12).
JET SLEDS:
Unit No. JS-1, a small jetting sled designed to accept a 6" high pressure water
line and [ILLEGIBLE] to 3" high pressure air supply line, capable of burying
pipe up to 6" in diameter to a depth of 4 feet below the mud line (see photo No.
13).
<PAGE> 92
SURVEY REPORT NO. 9812-1226
GENERAL DESCRIPTION AND CONDITION: (continued)
JET SLEDS: (CONTINUED)
Unit No. JS-2, a medium sized jetting sled, designed to accept a 6" high
pressure water line and a 2" to 3" high pressure air supply line. Unit No. JS-2
could not be visually sighted due to it being currently used at job sight in
New Orleans, Louisiana.
MISCELLANEOUS EQUIPMENT:
300 feet of 8" diameter 1000 psi jet hose is being stored at the CSI Facility,
which is designed to reel onto Unit No. HR-2, which is currently in use in
Mexico. This hose is in almost new condition and was recently purchased for a
reported amount of $50,000.00
VALUATION:
Estimated present day fair market value of above described
equipment as sighted December 8, 1998............................. $ 935,000.00
FAIR MARKET VALUE:
A sum of money that equipment should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably, and assuming the price is
not affected by undue stimulus. Implicit in this definition is the
consummation of a sale where title is passed from seller to buyer under
condition whereby:
1. The buyer and seller typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value of above described equipment
as sighted of December 08, 1998................................... $ 840,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is
basis.
SURVEYOR'S NOTES:
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal
<PAGE> 93
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 2, 1998
SURVEY REPORT NO. 9811-1221
SPUD BARGE "BH 100"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 2, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the spud barge "BH 100" (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in a laden condition and moored in
Venice, Louisiana, in order to ascertain the general condition and in order to
estimate her present day fair market value and orderly liquidation value as of
December 2, 1998.
NOTE: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Builder and date of
construction was unknown at the time of survey.
Dimensions are: Length - 110', breadth - 34', depth - 6'.
The vessel has a flush deck, a square raked bow, a square raked stern, and a
total of six (6) compartments consisting of one (1) bow rake compartment, four
(4) main body compartments, and one (1) stern rake compartment.
Access to each hull compartment is made through a manhole fitted with a center
bolt secured cover on a 4" high coaming. The No. 2 starboard main hull
compartment is used as a supply room.
The hull is fitted with two (2) strakes of formed plate rub rail which extends
from the bow to the stern on both port and starboard sides.
<PAGE> 94
SURVEY REPORT NO. 9812-1221
GENERAL CONSTRUCTION PARTICULARS: (continued)
Deck fittings consists of the following:
One (1) 8" diameter cast steel double bitt is located near amidships.
Two (2) 30" cast steel kevels are ranged along both port and starboard sides.
One (1) 24" cast steel kevel is located on both port and starboard sides of
the bow.
One (1) 22" x 22" spudwell fitted atop a 36" coaming, is located on each
port and starboard sides near amidships. Starboard and port spudwell
each contain one (1) 18" x 18" x 40' spud.
One (1) 2-tier handrail, constructed of approximately 6" diameter pipe, is
located across the stern and on both port and starboard sides, extending
forward to spudwells.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents:
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) cutting torch set up.
One (1) triple drum winch powered by a General Motors 4-71 diesel engine.
One (1) American Amhoist, model 7750, 75 ton pedestal crane located on the
bow center line.
One (1) Miller portable welding machine
One (1) 2" pump
One (1) 2" Teel electric pump.
One (1) 40' long set of pile driving leads with 4,000 lb. drive hammer and
follow block.
One (1) 19' x 4' x 18" work pontoon.
TANK CAPACITIES:
Tank capacities are as follows:
Gas Tank...................200 gallons.
Diesel Tank................175 gallons.
QUARTERS BUILDING:
On the deck is one (1) quarter building, located from the stern, extending
forward to amidships. Arrangements are as follows:
<PAGE> 95
SURVEY REPORT NO. 98112-1221
QUARTERS BUILDING: (continued)
Forward to port is a closet.
Aft to port is a crew's quarters with two (2) bunk beds and one (1) Fedders
window air-conditioning unit.
Aft to starboard is one (1) head containing three(3) sinks, two (2) showers,
two (2)commodes, and one (1) Sharp window air conditioning unit.
Aft to port is a storage closet.
Aft to port is a crew's quarters with five (5) triple bunks and one (1) Roper
and one (1) Sharp window air-conditioning units.
Aft to starboard is the galley/mess area which contains the following equipment
and/or furniture:
One (1) stove and oven.
One (1) Whirlpool refrigerator/freezer.
One (1) Amana refrigerator/freezer.
One (1) double stainless steel sink.
One (1) Sharp microwave.
One (1) Samsung TV.
One (1) JVC - VCR.
One (1) Standard Horizon VHF.
One (1) Pitney Bowes fax machine.
One (1) Scottsman ice maker.
One (1) cellular phone.
One (1) large chest-type Kenmore freezer.
Two (2) Carrier window air-conditioning units.
One (1) Roper window air-conditioning unit.
Atop the quarters is the following:
One (1) 30 KW generator powered by a Detroit Diesel 4-71 engine.
One (1) 15' flat boat with a 25 HP Evinrude outboard motor.
NO. 2 STARBOARD MAIN HULL COMPARTMENT:
This compartment is used as a supply room and contains the following:
Two (2) fresh water pumps.
One (1) Red Fox, model Hustler, serial No. 2940, sewer treatment plant.
<PAGE> 96
SURVEY REPORT NO. 9812-1221
EXTERNAL CONDITION:
External coating of coal tar epoxy is in good condition.
Barge does not appear to have any significant corrosion, wastage, or major
indents.
INTERNAL CONDITION:
Internals are in good condition and appear to have a fair coating of Texaco
Compound H.
No significant damage or corrosion was sighted.
VALUATION:
Estimated present day fair market value
as of December 2, 1998.....................................$ 350,000.00
Fair Market Value:
A sum of money that a vessel should bring in competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of December 2, 1998.........................................$ 275,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
<PAGE> 97
SURVEY REPORT NO. 9812-1221
SURVEYOR'S NOTES: (continued)
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition of seaworthiness; value, or marketability of subject
vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical
systems, or opening up any of those places ordinarily closed or concealed.
Therefore,deficiencies may exist other than those conditions noted in this
report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for services
has been arranged for on an independent fee basis and is in no way contingent
upon the value reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Wade R. Olsen
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
--------------------------------------
Anthony C. Peters,
Principal Surveyor.
WRO:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(Surveyor's Notes Continued Next Page)
<PAGE> 98
SURVEY REPORT NO. 9812-1221
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 99
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1211
CRANE BARGE "ROWE 14"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the steel crane barge "ROWE 14" (an
undocumented vessel of approximately 250 gross tons; Transcoastal Marine
Services, Inc. - reported owners The Woodson Companies - operators) while
subject vessel was lying afloat and moored at the facilities of the Woodson
companies at Delcambre, Louisiana, in order to ascertain the general condition
and in order to estimate her present day fair market value and orderly
liquidation value as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Date and circumstance of
construction were unknown at the time of survey; however, the vessel appears to
be approximately twenty (20) years old.
Overall Dimensions are: Length - 110', breadth - 34', depth - 7.3'.
The vessel was designed for crane service, has a flush deck, square raked bow,
square transom stern, one (1) bow rake compartment, one (1) stern transom
compartment and thirteen (13) main hull compartments.
Access to each hull compartment is made via an 18" flush deck manhole with a
center bolt cover.
<PAGE> 100
SURVEY REPORT NO. 9811-1211
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel is fit with one (1) course of rub rail fender constructed of 18" x
3/8" formed plate which is located 2' below deck elevation and extends from bow
around the stern on both port and starboard sides, and is filled with concrete.
DECK FITTINGS:
Deck fittings are comprised of the following:
One (1) each approximately 6" double bitts located at each corner.
Two (2) each approximately 36" kevels are ranged down port and starboard sides.
One (1) each closed chocks located aft on both port and starboard sides.
The bow deck is fit with a single tier 36" high cargo railing constructed of 6"
diameter pipe with stanchions located on 12' centers.
Bottom, side and deck plating are estimated to have been 3/8" original
thickness.
The vessel is framed longitudinally and stiffened transversely. Longitudinal
bottom frames are 5" x 3" x 5/16" angle spaced on 25" centers. Longitudinal
side frames are 4" x 3" x 1/4" angle spaced on 24" centers. The vessel is
stiffened transversely with transverse trusses spaced on 7' centers. Top and
bottom chords are constructed of 10" channels and outboard chords are
constructed of 5" channels.
SPUD SYSTEM:
The vessel is fit with three (3) internal spudwells. Two (2) are located near
mid-length on port and starboard sides, and one (1) is located on forward
center line. The mid-length port and starboard spudwells are 22" square and the
forward center line spudwell is 33" square.
The vessel is fit with two (2) approximately 40' long 17" and 17" steel spuds,
and one (1) approximately 60' long 17" x 17" square steel spud.
Spuds are raised and lowered utilizing a three drum, single gypsy head spud
winch of unknown manufacturer driving. Spud winch is driven by a General
Motors, 4-cylinder, model 4-71 diesel engine through a torque converter and a
system of sprockets and gears.
DRAGLINE EQUIPMENT:
The vessel is designed for dredging utilizing a deck crawler crane with a
three-yard drag [ILLEGIBLE] bucket. The stern deck is fit with an approximately
20' x 20' x 12" high timber mat to distribute the crane load. Secured on the
timber mat is a crawler type crane.
<PAGE> 101
SURVEY REPORT NO. 9811-1211
DRAGLINE EQUIPMENT: (continued)
The crane is a Bucyrus-Erie, model 71-B, series T, crawler crane in a dragline
configuration 100 with a 100' boom with a reported 70 tons of lifting capacity.
A General Motors, 12-cylinder, model V-12-71 diesel engine drives multiple
drums through a torque converter and a system of sprockets and chains.
DECKHOUSE ARRANGEMENT:
Located forward is a single level crew berthing area house which is constructed
of steel and is fit with portholes and designed watertight doors. The interior
is fit with overhead paneling, painted bulkheads, and linoleum floors.
Arrangements is as follows:
Forward, on the port side is a bunkroom with one (1) single double bunk, one
(1) General Electric 17 cu. ft. combination refrigerator/freezer, one (1)
clothes closet with a head and toilet, sink, and built in shower stall.
Forward, on the starboard side, is a bunkroom with three (3) double built in
wooden bunks and wooden storage closets.
A second bunkroom is located on the port side and contains two (2) double built
in wooden bunks and one (1) wooden clothes locker.
Located aft of the bunkroom on the port side is a head with one (1) double
built in shower stall, a toilet, and two (2) wooden storage lockers.
Located aft on the starboard side is a galley which contains a one hundred
(100) gallon electric water heater, a 4-element electric stove and oven, a
double stainless steel sink, and one (1) approximately 30 cu.ft. chest type
freezer, a mess table, and wooden dish racks and cabinets.
AUXILIARY EQUIPMENT:
In the lower hull is an auxiliary and storage room which contains one (1) 5 HP
electric motor driving a 2" fuel oil transfer pump and a fractional HP electric
motor driving a fresh water pressure set.
Located forward on the starboard side at main deck elevation of the house is a
generator room. The generator room contains one (1) 6-cylinder Cummins engine
driving a 75 KW/AC. The engine is electric starting and radiator cooled.
CERTIFICATES/DOCUMENTS:
No certification was on board the vessel at the time of survey.
<PAGE> 102
SURVEY REPORT NO. 9811-1211
CONDITION:
The vessel was sighted afloat. Reportedly, the vessel was last hauled out during
May 1995. Poor housekeeping prevails. Poor preventative maintenance prevails.
Deck fittings appear in satisfactory condition.
The deck is open in way of hull vents for each compartment on both the port and
starboard sides. The vessel is not ready for service and is in need of cleaning
and major maintenance prior to human habitation.
The rub rail is heavily flattened at scattered locations and across the stern
and is fractured away from side plating forward on the port side. The main deck
bow cargo rail is broken away at two (2) locations and is heavily distorted at
the bow. Poor housekeeping prevails and the interior of the house is in poor
condition with all surfaces dirty and in need of maintenance.
Spudwells, where visible, show moderate wastage. Spuds, where visible, appear in
satisfactory condition. The spud winch appears in satisfactory condition. The
spud winch engine is reported in satisfactory condition but was not test
operated at time of survey.
The crane deck mats shows moderate dry rot. Crane securing is poor with heavy
wastage of connections. The crane tracks are heavily corroded and obviously
lack maintenance. The crane appears in good condition and undamaged and
reportedly major maintenance was performed in 1997. The crane appears disused
and lacks preventative maintenance. The forward windshield of the operators cab
is broken out and glass debris is on deck. An annual inspection for a 28,000
lb. capacity was completed May 26, 1998. The engine exhaust insulation is
adrift.
Crew berthing house doors are in poor condition and at several locations show
generous use of silicon caulking to cover waste holes. The interior of the
house is in disarray, dirty, and unkempt. Deterioration and unhealthy
conditions are at nearly every location. The port forward bunkroom is in
disarray. The associated head is in disarray with plumbing suspect. The after
head is in disarray and suffering the affects of disuse.
The forward starboard bunkroom is in poor condition with silicone caulk being
used for bulkhead cable runs. The forward spudwell is visible in a closet in
the house and is wasted through at a location 1' above main deck elevation and
this has been repaired with silicone caulk. Crew area wiring is in disarray and
circuits are open at scattered locations. The after bunkroom is being used for
storage and is in disarray.
The galley is unusable in its present condition.
Fire fighting equipment is in poor condition.
Life saving equipment is in poor condition.
<PAGE> 103
SURVEY REPORT NO. 9811-1211
CONDITION: (continued)
The main generator appears to have been last maintained 3,000 hours ago and is
in need of preventative maintenance. Wiring in the generator room is improper
and open and the room is suffering from disuse.
The lower hull storage area is in poor condition and is unkempt.
Fuel oil transfer pump piping is in poor condition. The fresh water pressure set
appears inoperative and some wiring is open.
The hull exterior coating appears in satisfactory condition with moderate
pitting throughout. The interior of the hull is uncoated and in the lower
portion shows moderate rust scale and some internal members are wasted through
and fractured.
VALUATION:
Estimated present day fair market value
as of November 30, 1998.....................................$300,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open
market under all conditions requisite to a fair sale, the buyer and
seller, each acting prudently, knowledgeably, and assuming the price is
not affected by undue stimulus. Implicit in this definition is the
consummation of a sale where title is passed from seller to buyer under
condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of November 30, 1998....................................$200,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is
basis.
<PAGE> 104
SURVEY REPORT NO. 9811-1211
SURVEYOR'S NOTES:
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel is
either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or tying out machinery or electrical systems, or
opening up any of those place ordinarily closed or concealed. Therefore,
deficiencies may exist other than those condition noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in th aforementioned vessel and/or its equipment, and compensation for services
has bee arranged for on an independent fee basis and is in no way contingent
upon the value reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD PETERS & ASSOCIATES, INC
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
SJB:smk
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
<PAGE> 105
SURVEY REPORT NO. 9811-1211
DISTRIBUTION: (continued)
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 106
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1223
CONSTRUCTION BARGE
250'x50'x12'
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on December
4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for the
account of Bank One, Texas, NA, survey the 250' construction barge (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners) while
subject vessel was lying afloat in an unladen condition and moored at the
facilities of Red Fox on Industrial Canal in New Orleans, Louisiana, in order to
ascertain the general condition and in order to estimate her present day fair
market value and orderly liquidation value as of December 4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Nashville Bridge
Company in Nashville, Tennessee during 1953.
Dimensions are: Length - 250', breadth - 50', depth - 12'.
The vessel has a cambered deck with a dead rise in way of the bow rake and No. 1
main compartments, a spoon raked bow, a transom stern, and a total of ten (10)
compartments consisting of one (1) bow rake compartment, eight (8) main body
compartments, and one (1) stern transom compartment.
Access to each hull compartment is made through a 21"x16" oval deck type
manhole on 3-1/2" raised coaming fitted with a 4-dog secured cover.
<PAGE> 107
SURVEY REPORT NO. 9812-1223
GENERAL CONSTRUCTION PARTICULARS: (continued)
The hull is fitted with two (2) strakes of 9" split pipe rub rail, located at
4-1/2' and 10' elevations which extend from the bow to the stern on both port
and starboard sides. A 7" x 3/4" rub bar is located 1' below the deck on both
port and starboard sides. Additionally, twenty-two (22) large truck tires
suspended by heavy chain from double padeyes are ranged along the port side.
Forward half of the deck is fitted with a 1-1/4" diameter 2-tier pipe handrail.
After half of the deck is fitted with a 2-tier handrail fabricated of 3" x 3"
angle and 1/4" wire rope.
Deck fittings consists of the following:
One (1) 48" cast steel kevels is located on bow and stern center line.
Five (5) 48" cast steel kevels are ranged along both the starboard side.
Two (2) 48" cast steel kevels are ranged along the port side.
Three (3) 36" cast steel kevels are ranged along the port side.
One (1) 60" cast steel kevel is on port side.
One (1) 10" button bitt is located on the port side forward.
One (1) 8" single bitt is located to both port and starboard of amidship.
One (1) 12" double steel bitt is located at each corner of the stern.
Two (2) 10" button bitts, two (2) 12" button bitts, and one (1) 10" roller
button bitt are located at the port stern corner.
Three (3) 10" button bitts and two (2) 12" button bitts are located at the
starboard stern corner.
Two (2) 24" diameter spudwells fitted atop 5" coamings are located on the
starboard side. Each contains one (1) 42' spud.
Two (2) 16" x 16" spudwells fitted atop 8" coamings are located on the
starboard side. Each contains one (1) 16" diameter x 42' spud.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) hand operated single drum winch.
One (1) American, model No. 9720, serial No. 658720, 90 ton crane is mounted on
a 16' x 15' x 14' pedestal.
<PAGE> 108
SURVEY REPORT NO. 9812-1223
DECK ARRANGEMENT:
Deck consists of three(3) construction decks, one (1) pedestal crane, and a
metal storage building.
Arrangement is as follows:
Forward to starboard is a 15' x 40' x 10' metal storage building. In the after
end of the building, a stairway leads down to additional storage in No. 1 port
and starboard main compartments. Access to the port main compartment is through
a 5' x 7' opening in the longitudinal bulkhead. Building does not use
watertight doors.
Aft on center line is a 10' x 40" diameter boom rest fitted with gusset plates.
Aft is a 36' x 50' x 12" cement deck. Atop the Cement deck is a 36' x 20' x 16"
construction fabricated of 9" channel and 4" x 3" angle.
Aft is a 36' x 40' x 26" steel construction deck fabricated of 16" I-beam and
3" x 3" angle.
Aft is the pedestal crane.
At the stern is a 60' x 40' x 26" steel construction deck fabricated of 15"
channel, 16" I-beam, and 4" x 3" angle.
ELECTRICAL:
The vessel is wired with a combination of basket weave metal armored type
cable, galvanized flexible conduit, and PVC insulated cable. Lighting system is
110 volt AC. Overload protection is via circuit breakers. Electricity is
provided by shore power.
EXTERNAL CONDITION:
External coating of coal tar epoxy is in excellent condition in way of sides,
transom, and bow rake.
Deck coating is in fair condition.
Starboard side plating contains washboarding and numerous indents of 0 to 3".
Starboard rub rail appears recently renewed in most areas.
Reportedly, bottom plating has its anodes renewed.
Port side plating contains washboarding and large diameter indents of 0 to 5".
<PAGE> 109
SURVEY REPORT NO. 9812-1223
EXTERNAL CONDITION: (condition)
All tires and chains have recently been renewed on the port side.
Transom plating set in and washboarded 0 to 5" over its full breadth and width.
Side plating, gunwale, and deck contain numerous doublers throughout.
Most wire rope handrails have wires adrift with three (3) 10' sections missing
wires and posts.
Pipe handrail is in good condition.
Deck plating contains washboarding of 0 to 2" in a few areas.
After work deck is uncoated and in good condition.
All other work decks are recently coated and in good condition.
Crane pedestal is in like-new condition.
All deck fittings and manholes have been recently coated with yellow epoxy.
Numerous manholes have their coamings cropped off and covers replaced with
steel plating not fitted with gaskets.
INTERNAL CONDITION:
Internals are in fair condition with a coating of silver paint in way of the
upper 10', mostly intact. Lower 2' displays mild to moderate corrosion.
Numerous internal stiffeners were distorted to conform to external distortion.
VALUATION:
Estimated present day fair market value
as of December 4, 1998.......................................$ 300,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit of this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
<PAGE> 110
SURVEY REPORT NO. 9812-1223
VALUATION: (continued)
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of December 4, 1998.......................................$200,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
<PAGE> 111
SURVEY REPORT NO. 9812-1223
SURVEYOR'S NOTES: (continued)
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 112
[BACHRACH, WOOD, PETERS, & ASSOCIATES, INC. LETTERHEAD]
December 07, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1213
SPUD BARGE "7101"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on November
30, 1998, at the request of Ms. Karen S. Shouse, and on behalf of and for the
account of Bank One, Texas, NA, survey the undocumented steel Spud Barge "7101",
the Ex-NBC 1857, a vessel of approximately 315 gross tons; reported owners
Transcoastal Marine Services, Inc. - operators The Woodson Companies - while
subject vessel lay afloat and moored in an unladened condition at the facilities
of The Woodson Companies at Delcambre, Louisiana, in order to ascertain the
general condition of the vessel and in order to estimate her present day fair
market value and orderly liquidation values as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Nashville Bridge
Company at Nashville, Tennessee, during 1966.
Overall dimensions are: Length - 136', breadth - 35', depth - 7'6".
This vessel is designed for crane service, has a flush deck, a square raked
bow, a square raked stern, three (3) bow rake compartments, four (4) main body
compartments, and one (1) stern rake compartment.
Access to each hull compartment is made via an 18" flush deck manhole with
a center bolt cover.
The vessel is not fit with rub rail fenders.
<PAGE> 113
SURVEY REPORT NO. 9811-1213
GENERAL CONSTRUCTION PARTICULARS: (continued)
The hull of the vessel is constructed with a 3/4" thick headlog, 3/4" rake
knuckles, 1/2" thick deck, 3/8" thick sides and bottom plating, 3/8" rake bottom
plating and 5/16" thick bulkheads. The vessel is longitudinally framed and
transversely stiffened. Longitudinal deck beams approximately 5" channels spaced
on 11" centers. Longitudinal side frames are 5" x 3" x 5/16" inch angles spaced
on 25" centers. Longitudinal bottom frames are 5" x 3" x 3/8" angles spaced on
23" centers.
The hull is stiffened transversely with transverse trusses spaced on 72"
centers. Top and bottom cords are 15" "I" beams. Outboard cords 14" "I" beams.
Trusses are stiffened with 12" "I" beam verticals spaced on 4 ft. centers and
with inboard and outboard diagonals of 5" "I" beams. Bulkheads are stiffened
with 5" x 5/16" flatbars spaced on 24" centers.
Deck fittings consist of:
One (1) each approximately 6" double bitts located on each barge corner and
three (3) each approximately 42" kevels ranged down both port and starboard
sides.
The vessel is fitted with one (1) each approximately 6" diameter x 6" high
compartment pump-out pipes with caps located in way of the port and starboard
bow rake compartments.
The vessel is fitted with approximately 6" high steel pollution barrier fit with
2 1/2" drains with plugs which is constructed of approximately drains with plugs
which is constructed of approximately 1/4" thick steel and extends around the
entire periphery of the deck edge.
Port and starboard sides are each fit with an approximately 44" high two tier
safety hand rail constructed of 4" diameter pipe stanchions and two courses of
3/8" wire cable.
Forward and aft on the starboard side are a total of two (2) internal spud
wells. Each spud well is fit with sheaves and fairlead blocks to the spud winch
which is located forward on the starboard side. The spud winch is skid mounted,
double drum, double gypsy head Conmaco winch driven by General Motors,
4-cylinder model 4-71 diesel engine. The engine is electric starting and
radiator cooled. The winch is additionally fit with a 12 volt battery and
approximately 50 gallon capacity diesel oil tank.
The vessel is fit with a total of two (2) approximately 40 ft. long, 21" x 21"
square steel spuds.
The area over the spud winch is fit with a 20 ft. x 8 ft. x 12 ft. steel
platform constructed of 6" diameter pipe stanchions and 8" "H" beam frames. The
top of the platform is fit with a 36" high two tier pipe safety hand rail.
The starboard side #1 main body compartment is fit with a steel access trunk
with a weather tight steel door.
<PAGE> 114
SURVEY REPORT NO. 9811-1213
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel has on board two (2) 30" ring buoys with throw lines and water lights
and one (1) 15 lb. portable CO(2) fire extinguisher which was last date tagged
during January 1998.
CERTIFICATES/DOCUMENTS:
No documents were on board the vessel at time of survey.
CONDITION:
The vessel was sighted afloat. Reportedly the vessel was last hauled out during
July, 1998. Head log plating is devoid of indents. Bow rake bottom plating was
inaccessible at time of survey, however, an internal examination showed no major
upsets at any location. Starboard side plating and rake knuckle and deck edge
show minor indents of 0 to 2" in the forward 12 ft. portion. Starboard side
plating is generally wavy to a depth of 0 to 1" throughout with very occasional
major indents of 0 to 2". Stern log plating is devoid of indents. Stern rake
bottom plating is devoid of upsets. Port side plating showed numerous minor
indents of 0 to 1" at random locations. No noteworthy damage was found
internally. No noteworthy wastage was sighted at any location and the vessel is
well coated internally and externally. The pollution barrier is open at some
locations. Hand rails have been partially dismantled. The spud winch appears in
excellent condition and was reportedly recently rebuilt. The date of rebuilding
was unknown at the time of survey and the spud winch was not test operated at
time of survey.
VALUATION:
Estimated present day fair market value
as of November 30, 1998........................................ $285,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 115
SURVEY REPORT NO. 9811-1213
VALUATION: (continued)
Estimated orderly liquidation value
as of November 30, 1998.........................................$255,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to the condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
<PAGE> 116
SURVEY REPORT NO. 9811-1213
SURVEYOR'S NOTES: (continued)
JMS:maw
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 117
[BACHRACH, WOOD, PETERS, & ASSOCIATES, INC. LETTERHEAD]
December 8, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1214
SPUD BARGE "7102"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, and on behalf of and
for the account of Bank One, Texas, NA, survey the undocumented steel Spud
Barge "7102", the ex-"NBC 1856, a vessel of approximately 315 gross tons;
reported owners Transcoastal Marine Services, Inc. - operators The Woodson
Companies - while subject vessel lay afloat and moored in an unladened
condition at the facilities of The Woodson Companies at Delcambre, Louisiana,
in order to ascertain the general condition of the vessel and in order to
estimate her present day fair market value and orderly liquidation values as of
November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Nashville Bridge
Company at Nashville, Tennessee, during 1966.
Overall dimensions are: Length - 136', breadth - 35', depth - 7'6".
This vessel is designed for crane service, has a flush deck, a square raked
bow, a square raked stern, three (3) bow rake compartments, four (4) main body
compartments, and one (1) stern rake compartment.
Access to each hull compartment is made via made an 18" flush deck manhole with
a center to a cover.
The vessel is not fit with rub rail fenders.
<PAGE> 118
SURVEY REPORT NO. 9811-1124
GENERAL CONSTRUCTION PARTICULARS: (continued)
The hull of the vessel is constructed with a 3/4" thick headlog, 3/4" rake
knuckles, 1/2" thick deck, 3/8" thick sides and bottom plating, 3/8" rake
bottom plating and 5/16" thick bulkheads. The vessel is longitudinally framed
and transversely stiffened. Longitudinal deck beams approximately 5" channels
spaced on 11" centers. Longitudinal side frames are 5" x 3" x 5/16" inch angles
spaced on 25" centers. Longitudinal bottom frames are 5" x 3" x 3/8" angles
spaced on 23" centers.
The hull is stiffened transversely with transverse trusses spaced on 72"
centers. Top and bottom cords are 15" "I" beams. Outboard cords 14" "I" beams.
Trusses are stiffened with 12" "I" beam verticals spaced on 4 ft. centers and
with inboard and outboard diagonals of 5" "I" beams. Bulkheads are stiffened
with 5" x 5/16" flatbars spaced on 24" centers. Deck fittings consist of:
One(1) each approximately 6" double bitts located on each barge corner and
three(3) each approximately 42" kevels ranged down both port and starboard
sides.
The vessel is fitted with one (1) each approximately 6" diameter x 6" high
compartment pump-out pipes with caps located in way of the port and starboard
bow rake compartments.
The vessel is fitted with approximately 6" high steel pollution barrier fit with
2 1/2" drains with plugs which is constructed of approximately 1/4" thick steel
and extends around the entire periphery of the deck edge.
Port and starboard sides are each fit with an approximately 44" high two tier
safety hand rail constructed of 4" diameter pipe stanchions and two courses of
3/8" wire cable.
Forward and aft on the starboard side are a total of two (2) internal spud
wells. Each spud well is fit with sheaves and fairlead blocks to the spud winch
which is located forward on the starboard side. The spud winch is a skid
mounted, triple drum, double gypsy head Conmaco winch driven by General Motors,
4-cylinder model 4-71 diesel engine with a local control station. The engine is
electric starting and radiator cooled. The winch is additionally fit with a 12
volt battery and approximately 50 gallon capacity diesel oil tank.
The vessel is fit with a total of two (2) approximately 40 ft. long, 21" x 21"
square steel spuds.
The area over the spud winch is fit with a 20 ft. x 8 ft. x 12 ft. steel
platform constructed of 6" diameter pipe stanchions and 8" "H" beam frames. The
top of the platform is fit with a 36" high two tier pipe safety hand rail.
The starboard side #1 main body compartment is fit with a steel access trunk
with a weather tight steel door.
<PAGE> 119
SURVEY REPORT NO. 9811-1124
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel has on board two (2) 30" ring buoys with throw lines and water lights
and one (1) 15 lb. portable CO(2) fire extinguisher which was last date tagged
during January 1998.
CERTIFICATES/DOCUMENTS:
No documents were on board the vessel at time of survey.
CONDITION:
The vessel was sighted afloat. Reportedly the vessel was last hauled out
during July, 1998. Head log plating is devoid of notable indents. Bow rake
bottom plating is devoid of indents. Starboard side plating shows numerous
minor indents of 0-1" throughout. Starboard side plating is set in 0-4" over an
area of 15' X full depth of vessel, near mid-length. Sternlog plating is devoid
of major indents. Stern rake bottom plating is devoid of indents. Port side
plating shows numerous minor indents of 0-1" at scattered locations and several
sharp minor indents of 0-3". Port bow rake knuckle plating and port side
plating set in 0-6" over 6' x 2' located in way of the port bow double bitts.
No noteworthy damage was found internally. No noteworthy wastage was sighted
at any location and the vessel is well coated internally and externally. The
pollution barrier is open at some locations. Hand rails have been partially
dismantled. The spud winch appears in excellent condition and was reportedly
recently rebuilt. The date of rebuilding was unknown at the time of survey and
the spud winch was not test operated at time of survey.
VALUATION:
Estimated present day fair market value
as of November 30, 1998........................................ $280,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 120
SURVEY REPORT NO. 9811-1124
VALUATION: (continued)
Estimated orderly liquidation value
as of November 30, 1998.........................................$250,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to the condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JMS:maw
<PAGE> 121
Distribution: (continued from previous page)
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 122
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1224
OFFICE BARGE
208' x 26' x 5'
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the 208' office barge (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in an unladen condition and moored at the
facilities of Red Fox on Industrial Canal in New Orleans, Louisiana, in order
to ascertain the general condition and in order to estimate her present day
fair market value and orderly liquidation value as of December 4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessels were built of all welded steel construction by Nashville Bridge
Company in Nashville, Tennessee. The forward vessel was built in 1941, hull No.
579. The after vessel was built in 1955, hull No. 1134.
Overall dimensions are: Length - 208', breadth - 26', depth - 5'.
The vessel consists of two (2) barges bolted together stern to stern. Forward
vessel has a flush deck, a square raked bow, a square raked stern, and a total
of five (5) compartments consisting of one (1) bow rake compartment, three (3)
main body compartments, and one (1) stern rake compartment. The after vessel
has a flush deck, a square raked bow, a transom stern and a total of three (3)
compartments consisting of one (1) port main compartment and two (2) starboard
main compartments.
<PAGE> 123
SURVEY REPORT NO. 9812-1224
GENERAL CONSTRUCTION PARTICULARS: (continued)
Access to each hull compartment is made through various design 18" to 20"
diameter deck type manholes.
Forward hull is fitted with one (1) strake of 15" formed plate rub rail,
located just below the deck which extends from the bow to the stern on both port
and starboard sides. After hull is fitted with a 7" x 3/4" rub bar located just
below the deck which extends from the bow to the stern on the port side.
Starboard side has no fender system.
Port deck gunnel is fitted with a 3" diameter 1-tier pipe guardrail with 3"
diameter vertical stanchions 9" high which extend from the bow to the stern.
Deck fittings consists of the following:
Eleven (11) 7" diameter steel H bitts are ranged along the port side.
One (1) 36" cast steel kevel is located on the stern center line.
One (1) 48" cast steel kevel is located at the starboard stern corner.
Three (3) 14" diameter spudwells are surface mounted to the starboard side.
Each contains one (1) spud.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
DECK EQUIPMENT:
Deck equipment consists of the following:
Three (3) Nabrico 40 single drum electric winches.
One (1) Woods 20 cubic foot freezer.
One (1) Oasis water fountain.
Three (1) 5' x 46" x 30 Knaack toolboxes.
DECK ARRANGEMENTS:
Deck contains two (2) single level steel buildings located on the forward barge
and one (1) two level steel building located on the after barge.
Arrangement is as follows:
At the bow is one (1) 18' x 7'6" building used for storage of personnel
equipment and as a break area.
<PAGE> 124
SURVEY REPORT NO. 9812-1224
DECK ARRANGEMENTS:
Aft is a 40' x 18' building containing a pipe fabrication shop. In the center
is a 4' x 15' steel work table. At various locations in the building are
stations for connections to air, oxygen, argon, propane, and water. All
connections are color coded. All gases and water are supplied from shore. Pipe
shop also contains fourteen (14) 2000 lb. jack stands and one (1) 6" vice.
Aft is a breezeway. A trolley system consisting of a 8" I-beam suspended
overhead is used for loading equipment from the starboard side to a tool room
located aft.
Aft is a 40' x 18' building used as a company tool room. This building contains
the following:
Drop lights. Torches. Life jackets.
Hand tools. Grinders. Safety Equipment.
Circular saws. Ladders. Fire extinguishers.
Come-alongs. Bilge pumps. Welding equipment.
Paint brushes. Battery chargers. Welding rods.
Nuts, bolts, and washers.
Aft is a 70' x 21' building used for storage of electrical and welding
equipment. This building contains eight (8) Thermal ARC electric welding
machines, one (1) General Electric refrigerator, two (2) 1-3/4" diameter
pneumatic pumps, and various extension cords, high pressure hoses, and rope.
Second level in the after building is used for office space that measures 35' x
50'. Equipment in the office area consists of the following:
One (1) Ricoh, model FT4727, copy machine.
One (1) Hotpoint refrigerator.
One (1) Panasonic fax machine/copier.
Six (6) Kenwood VHF marine hand held radios with chargers.
Four (4) Standard VHF marine hand held radios with chargers.
One (1) Daytron microwave oven.
One (1) Magic Chef toaster oven.
One (1) Mr. Coffee coffeemaker.
At the after end of the building is a head with five (5) commodes.
ELECTRICAL:
Vessel is wired with basketweave metal armored type cable. Lighting system is
110 volt AC. Overload protection is via circuit breakers. Electricity is
provided by shore power.
<PAGE> 125
SURVEY REPORT NO. 9812-1224
EXTERNAL CONDITION:
External coating of coal tar epoxy is in good condition.
Deck coating of red epoxy is in good condition.
Perimeter of the deck and the deck fittings are well coated with yellow epoxy.
All buildings are fabricated of 1/4" plate and their internal and external
coating is in good condition.
Barge contains light washboarding and few indents of 0 to 1" throughout.
Reportedly, bottom plating has had its anodes recently renewed.
INTERNAL CONDITION:
Internals are in good to fair condition, with no coating evident and light
corrosion throughout.
No significant damage was sighted.
VALUATION:
Estimated present day fair market value
as of December 4, 1998..................................$210,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 126
SURVEY REPORT NO. 9812-1224
VALUATION: (continued)
Estimated orderly liquidation value
as of December 4, 1998...................................$140,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
<PAGE> 127
SURVEY REPORT NO. 9812-1224
SURVEYOR'S NOTES: (continued)
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 128
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 4, 1998
SURVEY REPORT NO. 9812-1222
SPUD BARGE "TCMS 612"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 4, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One Texas, NA, survey the spud barge "TCMS 612" (an
undocumented vessel, of 401 gross and net tons; Transcoastal Marine Services,
Inc. - reported owners) while subject vessel was lying afloat in a laden
condition and moored at the facilities of Coastal Machinery in Belle Chasse,
Louisiana, in order to ascertain the general condition and in order to estimate
her present day fair market value and orderly liquidation value as of December
4, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Builder and date of
construction was unknown at time of survey.
Dimensions are: Length - 140', breadth - 39', depth - 9'.
The vessel has a flush deck, a square raked bow, a square raked stern, and a
total of eight (8) compartments consisting of two (2) bow rake compartments,
four (4) main body compartments, and two (2) stern rake compartments.
Access to each hull compartment is made through both flush deck type 18"
diameter manholes fitted with a center bolt secured covers.
The hull is fitted with two (2) strakes of formed plate rub rail located at the
3' and [ILLEGIBLE] elevations which extend from the bow to the stern on both
port and starboard sides [ILLEGIBLE] interim vertical strakes at strategic
locations.
<PAGE> 129
SURVEY REPORT NO. 9812-1222
GENERAL CONSTRUCTION PARTICULARS: (continued)
Approximately 60% of the deck is laid out with timbers.
Deck fittings consists of the following:
One (1) 10" diameter cast steel double bitt is located in way of each corner of
the barge hull.
Two (2) 36" cast steel kevels are located on the starboard side.
Three (3) 36" cast steel kevels are located on the port side.
Two (2) 21" diameter spudwells fitted atop an 18" coamings, are located forward
and aft on the starboard side. Each contains one (1) 40' spud.
Two (2) davits for spuds, each approximately 40' high.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
EXTERNAL CONDITION:
External coating of coal tar epoxy is in good condition.
Barge does not appear to have any significant corrosion or wastage.
Hull contains random washboarding and indents of 0 to 1-1/2".
Deck plating contains random washboarding and indents of 0 to 1-1/2" where
sighted.
Reportedly, bilge knuckles have been renewed on both port and starboard sides
for the full length.
Reportedly, 8' of bottom plating has been renewed.
Reportedly, bow and stern rake compartments have been cleaned and recoated.
Reportedly, anodes have been renewed.
INTERNAL CONDITION:
Internals are in good condition and appear to have a fair coating of Texaco
Compound H.
No significant damage or corrosion was sighted.
<PAGE> 130
SURVEY REPORT NO. 9812-1222
VALUATION:
ESTIMATED PRESENT DAY FAIR MARKET VALUE
AS OF DECEMBER 4, 1998.........................................$ 200,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time allowed for exposure in the open market.
ESTIMATED ORDERLY LIQUIDATION VALUE
AS OF DECEMBER 4, 1998.........................................$ 160,000.000
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
<PAGE> 131
SURVEY REPORT NO. 9812-1222
SURVEYOR'S NOTES: (continued)
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Wade R. Oslen
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
/s/ ANTHONY C. PETERS [SEAL]
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
WRO:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 132
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1216
SPUD BARGE "BH 201"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the spud barge "BH 201" (an inland,
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in an unladen condition and moored at the
facilities of H.B.H., Inc. in Harvey, Louisiana, in order to ascertain the
general condition and in order to estimate her present day fair market value
and orderly liquidation value as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Builder and date of
construction was unknown at time of survey.
Dimensions are: Length - 90', breadth - 23', depth - 5'.
The vessel is two (2) 90' x 8'6" x 5' independent floats connected by means of
two (2) 10' x 6' x 9'6" A-frames fabricated of 16" I-beams, located forward
and aft. Each float has a flush deck, square raked bow, a square raked stern,
and a total of four (4) compartments consisting of one (1) bow rake
compartment, two (2) main body compartments, and one (1) stern rake compartment.
Access to each hull compartment is made through a 18" diameter flush deck type
manhole fitted with a center bolt secured cover.
<PAGE> 133
SURVEY REPORT NO. 9811-1216
GENERAL CONSTRUCTION PARTICULARS:
Deck fittings are comprised of the following:
Three (3) 24" cast-steel kevels are ranged along both port and starboard sides.
Two (2) 12" high securing pads are located on both port and starboard sides of
the bow welded to an estimated 8' x 3' doubler.
One (1) 6' x 5' doubler is located on both port and starboard sides just abaft
the forward hoist, each is fitted with one (1) hinge.
One (1) 7' stanchion is located to port on the bow.
Two (2) 12" x 12" spudwells with 30" raised coaming, one (1) located forward on
the starboard side and one (1) located aft on the port side. Each spudwell
has one 30 spud.
Two (2) 8" high retainers each estimated at 18' x 5' are located on the port
half of the deck.
Two (2) 8" high retainers estimated at 15' x 5' are located on the port half of
the deck.
One (1) 8" high retainer estimated at 12' x 5' is located aft on the starboard
side.
Two (2) 30" stanchions fabricated of 6" diameter pipe are located on both port
and starboard sides.
Located aft is a 23' x 18' x 7' building constructed of 4-1/2" pipe with a
corrugated steel roof.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents.
EXTERNAL CONDITION:
General:
External coating of coal tar appears in good condition.
Barge does not appear to have any significant corrosion or wastage.
Bow Rake:
Bow rake plating could not be sighted due to the moored position of the barge
at the time of survey.
Stern Rake:
Stern rake plating could not be sighted due to the moored position of the barge
at the time of survey.
<PAGE> 134
SURVEY REPORT NO. 9811-1216
EXTERNAL CONDITION: (continued)
Headlog:
Headlog plating contains scattered indents of 0 to 1".
Starboard Side:
Side plating contains scattered indents of 0 to 1".
Sternlog:
Sternlog plating contains scattered indents of 0 to 1".
Port Side:
Side plating contains scattered indents of 0 to 1".
Deck:
Deck plating does not appear to have any significant damage.
Roof of metal building is in poor condition.
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) triple drum spud winch, powered by a Detroit Diesel 2-71 radiator
cooled.
One (1) Detroit Diesel 2-71, radiator cooled, powering the hydraulic unit.
One (1) single drum winch is located atop the A-frame.
INTERNAL CONDITION:
Interior was void of coating with light rust prevalent.
No significant damage or corrosion was sighted.
<PAGE> 135
SURVEY REPORT NO. 9811-1216
VALUATION:
Estimated present day fair market value
as of November 30, 1998.................................$70,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of November 5, 1998..................................$55,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
<PAGE> 136
SURVEY REPORT NO. 9811-1216
SURVEYOR'S NOTES: (continued)
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 137
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 08, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1212
SPUD BARGE "MM VII"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, and on behalf of and
for the account of Bank One, Texas, NA, survey the undocumented steel Spud
Barge "MM VII", an undocumented vessel of approximately 300 gross tons,
previously assigned the official number 613041; reported owners Transcoastal
Marine Services, Inc. - operators The Woodson Companies - while subject vessel
lay afloat and moored in an unladened condition at the facilities of The
Woodson Companies at Delcambre, Louisiana, in order to ascertain the general
condition of the vessel and in order to estimate her present day fair market
value and orderly liquidation values as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction. Date and circumstances
of construction were unknown at time of survey. However, the vessel appears to
be approximately 25 years old.
Overall dimensions are: Length - 120', breadth - 36', depth - 7'3".
This vessel is a typical inland deck cargo barge, converted for use as a spud
barge and has a flush deck, a square raked bow, a square raked stern, one (1)
bow rake compartment, four (4) main body hull compartments, and one (1) stern
rake compartment.
The vessel is not fit with rub rail fenders.
<PAGE> 138
SURVEY REPORT NO. 9811-1212
GENERAL CONSTRUCTION PARTICULARS: (continued)
The vessel is not fit with skegs.
Access to each hull compartment is made via 24" diameter flush deck manhole
with a center bolt cover.
Head log and stern log plating are estimated to be 3/4" original thickness.
Rake knuckle plating is estimated to have been 1/2" original thickness. Bottom
side and deck plating is estimated to have been 3/8" original thickness.
Bulkheads are estimated to have been 5/16" original thickness. The vessel is
framed longitudinally and stiffened transversely. Longitudinal deck beams are 5"
channel spaced on 18" centers. Longitudinal side frames are 4" channel spaced
on 18" centers. Longitudinal bottom frames are 5" channel spaced on 22"
centers. Bulk heads are stiffened vertically with 3" x 2 1/2" angle spaced on
28" centers.
The vessel is stiffened transversely with transverse trusses spaced on 7 foot
centers. All top, bottom and outboard cords are 8" channels. Trusses are
additionally stiffened with 4" x 4" x 1/4" angle vertically spaced on 5 foot
centers and two 4" x 3 1/2" x 1/4" angle diagonals in way of each truss.
The deck fittings consist of one (1) each, approximately 7" double bitts
located on each corner, two (2) each approximately 30" kevels ranged on both
port and starboard sides and one (1) each approximately 7" single bitts located
near mid-length on both port and starboard side.
The vessel is fit with an approximately 6" high steel pollution barrier which
extends around the entire peripheral of the vessel and is fit with drains with
threaded plugs.
The vessel is fit with the remnants of a safety handrail system along both port
and starboard sides.
The vessel is fit with one (1) each approximately 24" square internal spud
wells located fore and aft on the starboard side. Each spud well is fit with
fair lead sheaves to the spud winch which is located forward on the starboard
side. The spud winch is a skid mounted double drum winch of unknown
manufacturer driven by a General Motors 3 cylinder model 3-71 diesel engine
through a power takeoff and a system of shafts and chains. The spud winch is
fit with a local control station and is complete with an approximately 30
gallon fuel oil reserve tank and a 12 volt heavy duty marine battery.
The vessel is fit with two (2) each approximately 18" square by 40 foot long
steel spuds fit in the spud wells.
The area over the spud winch is fit with an approximately 15' x 8' x 8'
platform constructed of 4" diameter pipe stanchions and 4" H beam frames.
<PAGE> 139
SURVEY REPORT NO. 9811-1212
GENERAL CONSTRUCTION PARTICULARS: (continued)
The starboard number one main body compartment is fit with a steel access trunk
with a weather tight steel door and stairs leading to the lower hull.
CERTIFICATES/DOCUMENTS:
No documents were on board the vessel at time of survey.
CONDITION:
The vessel was sighted afloat. Reportedly the vessel was last hauled out
during April, 1990. The exterior coating of the vessel is good with only very
occasional light rust patches. The interior of the vessels coating is fair and
approximately 60% effective. Head log plating is heavily distorted on
centerline and shows minor indents throughout. Rake bottom plating is devoid of
major indents. Starboard side plating and rake knuckle set in 0 to 3" over an
area of 8 feet by full depth of vessel in way of the bow double bits. Starboard
side plating shows washboarding and is wavy 0 to 1" throughout with very
occasional major indents of 0 to 2" at scattered locations. Stern log shows
light scattered indents at random locations. Stern rake bottom plating is
devoid of major indents. Port side plating is set in 0 to 3" over 12 feet by
full depth of the vessel extending from the stern forward. Port side plating is
set in 0 to 3" over an area of 12 feet by full depth of the vessel in way of
the bow rake compartment. Remainder of the port side plating shows minor
indents of 0 to 1" throughout and is lightly to moderately pitted and shows
major wastage throughout.
The deck is heavily pitted and wasted throughout with areas of greater than 50%
wastage obvious. The deck shows numerous minor indents due to thin plating.
Bulkheads are obvious. Frames are obvious. Many longitudinal deck beams are
crushed in way of the trusses. The entire deck in way of the stern rake
compartment is set down from 0 to 3" with internals heavily distorted to
conform. The spud wells appear nearly new and in satisfactory condition. The
winch and winch engine appear in satisfactory condition. The stern double
bitts are set inboard in way of the deck distortion. The pollution barrier is
open at scattered locations. The safety hand rails on port and starboard sides
are incomplete. The winch engine was not test operated at time of survey.
VALUATION:
Estimated present day fair market value
as of November 30, 1998....................................$50,000.00
<PAGE> 140
SURVEY REPORT NO. 9811-1212
VALUATION: (continued)
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of November 30, 1998...................................$45,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find
a purchaser(s), the seller being compelled to sell on an is-where is
basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This survey represents the good faith opinion of the surveyor only and does not
make any representations of fact. It was performed for insurance underwriting
and/or appraisal purposes only, and no warranty of correctness of this surveyor
as to the condition, seaworthiness, value, or marketability of subject vessel
is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
<PAGE> 141
SURVEY REPORT NO. 9811-1212
SURVEYOR'S NOTES: (continued)
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom may concern.
Attending Surveyor:
John M. Swanson
BACHRACH, WOOD, PETERS & ASSOCIATES, INC
[SEAL]
/s/ ANTHONY C. PETERS
-----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JMS:maw
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 142
SCHEDULE 2
LIST OF EQUIPMENT
(more fully described in Schedule "2" Attachment 1
attached hereto)
<TABLE>
<CAPTION>
================================================================================
ASSET NAME TYPE DESCRIPTION
================================================================================
<S> <C> <C>
BH 103 Spud Barge American flag; dimensions of 120'x39'x8'; built
by Conrad Industries, Inc. in Morgan City, LA in
1991
- --------------------------------------------------------------------------------
BH 101 Spud Barge American flag; dimensions of 120'x 36'x7'; built
in Houma, LA in 1979
- --------------------------------------------------------------------------------
BH 7 Deck Barge American flag; dimensions of 120'x 30' x7'; built
by Alexander Shipyard
- --------------------------------------------------------------------------------
Missy Ann Tug Boat American flag; dimensions of 48'x 16.7'x5.8';
built in Houma, LA in 1975
- --------------------------------------------------------------------------------
Danny Boy II Tug Boat American flag; dimensions of 36.5'x 14'x 4.7';
built in Harvey, LA in 1969
================================================================================
</TABLE>
<PAGE> 143
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 1, 1998
SURVEY REPORT NO. 9812-1219
SPUD BARGE "BH 103"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 1, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the spud barge "BH 103" (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in a laden condition and moored on Lake
Pontchartrain in New Orleans, Louisiana, in order to ascertain the general
condition and in order to estimate her present day fair market value and
orderly liquidation value as of December 1, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Conrad Industries,
Inc. in Morgan City, Louisiana during 1991.
Dimensions are: Length - 120', breadth - 39', depth - 8'.
The vessel has a flush deck, a square raked bow, a square raked stern, and a
total of eight (8) compartments consisting of one (1) bow rake compartment, six
(6) main body compartments, and one (1) stern rake compartment.
Access to each hull compartment is made through a raised deck type manhole
fitted with a center bolt secured cover, except for the No. 3 starboard main
compartment which is used for storage and is accessible via a enclosed type
ladderwell.
The hull is fitted with two (2) strakes of formed plate rub rail which extends
from the bow to the stern on both port and starboard sides.
<PAGE> 144
SURVEY REPORT NO. 9810-1219
GENERAL CONSTRUCTION PARTICULARS: (continued)
A 2-tier handrail, constructed of 5" horizontal and 8" vertical pipe, extends
around the stern and extends 60' forward on both port and starboard sides.
Deck fittings consists of the following:
One (1) 16" towing button is located on port and starboard sides of the bow.
One (1) 8" diameter cast steel double bitt is located on port and starboard
sides of the stern.
Two (2) 30" cast steel kevels are ranged along both port and starboard sides.
One (1) 24"x24" spudwell fitted atop a 36" coaming, is located on each port and
starboard and on the stern center line. Each contains one (1) 40' spud.
Located aft on the deck is a 33' x 40' deckhouse constructed of wooden siding
with a corrugated steel roof.
Extending forward 20' of the deckhouse is a steel shelter constructed of 16"
diameter pipe and steel plate.
The No. 3 starboard main compartment is used for a below deck storage and tool
room and contains one (1) Red Fox sewage treatment plant.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificate and/or documents:
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) American, model 9720, 100 ton crane/dragline mounted atop a turret and
welded to the deck on the center line forward.
One (1) Conmaco triple drum winch powered by a General Motors 4-71 diesel
engine.
One (1) Lincoln welding machine powered by a General Motors diesel engine,
labeled H.B.H. 407.
One (1) Hawco claw type bucket.
One (1) Conmaco 4000 lb. pile driving hammer.
Equipment on top of the steel shelter consists of the following:
One (1) Hawco claw type bucket.
One (1) Hendrix drag type bucket.
One (1) 40' pile driving leads located in a bracket constructed along the port
side of the deckhouse roof.
<PAGE> 145
SURVEY REPORT NO. 9812-1219
DECK EQUIPMENT: (continued)
One (1) 17' aluminum boat with an Evinrude 25 HP outboard motor.
One (1) 50 KW generator powered by a General Motors 4-71 diesel engine.
Two (2) fuel tanks of unknown capacity.
DECKHOUSE:
The deckhouse has two (2) doors, forward and aft, with sleeping quarters for
nineteen (19) persons, a galley/mess area, and a washroom.
Interior of the deckhouse is furbished with prefinished wood paneling and wood
trim.
Arrangements are as follows:
Forward to starboard is a restroom with two (2) toilets, two (2) shower stalls,
and three (3) sinks.
Forward to port is a closet.
Aft to port is an office with one (1) desk, one (1) TV, and two (2) double
bunks.
Aft to starboard is the galley/mess area which contains the following:
One (1) large double stainless steel sink.
One (1) stainless steel stove/oven.
One (1) double fryer.
One (1) Sharp microwave.
One (1) Scotsman ice maker.
Two (2) refrigerator/freezers.
Two (1) upright freezers.
Two (2) coffee makers.
Three (3) stools.
One (1) 15'x 5' table with fixed benches.
One (1) color TV.
Aft to port is a closet for dry stores.
Aft to port is a large bunkroom containing five (5) triple bunks and lockers.
Aft to port is two (2) closets for dry stores.
Cooling is effected through eight (8) window mounted air-conditioning units.
<PAGE> 146
SURVEY REPORT NO. 9812-1219
ELECTRICAL:
Interior wiring is basket weave and circuit breakers and industrial/marine type
incandescent/fluorescent.
TANK CAPACITIES:
Below deck tank capacities are as follows:
Two (2) fuel oil tanks..............2,513.28 USG each.
Two (2) fresh water tanks...........6,283 USG each.
One (1) fresh water tank............13,643 USG.
EXTERNAL CONDITION:
External coating of coal tar epoxy is in excellent condition.
Barge does not appear to have any significant corrosion, wastage, or major
indents.
INTERNAL CONDITION:
Internals are in good condition and appear to have a good coating of epoxy.
No significant damage or corrosion was sighted.
VALUATION:
ESTIMATED PRESENT DAY FAIR MARKET VALUE
AS OF DECEMBER 1, 1998...................................$575,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit [ILLEGIBLE] this definition is the consummation
of a sale where title is passed from seller to buyer under condition
whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
<PAGE> 147
SURVEY REPORT NO. 9812-1219
VALUATION:(continued)
Estimated orderly liquidation value
as of December 1, 1998.........................................$500,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to be condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for an independent fee basis and is no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Tom Payne
BACHRACH, WOOD, PETER & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
<PAGE> 148
SURVEY REPORT NO. 9812-1219
SURVEYOR'S NOTES: (continued)
TP:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 149
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1215
SPUD BARGE "BH 101"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
November 30, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the spud barge "BH 101" (613616
official number, of 258 gross and net tons; Transcoastal Marine Services, Inc.
- - reported owners) while subject vessel was lying afloat in a laden condition
and moored at the facilities of H.B.H., Inc. in Harvey, Louisiana, in order to
ascertain the general condition and in order to estimate her present day fair
market value and orderly liquidation value as of November 30, 1998.
Note: All sizes, measurements, distances, et cetera, mentioned herein are
approximate, unless otherwise specified.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction in Houma, Louisiana during
1979.
Dimensions are: Length - 120', breadth - 36', depth - 7'.
The vessel has a flush deck, a square raked bow, a square raked stern, and a
total of six (6) compartments consisting of one (1) bow rake compartment, four
(4) main body compartments, and one (1) stern rake compartment.
Access to each hull compartment is made through a 4" raised deck type manhole
fitted with a center bolt secured cover.
The hull is fitted with two (2) strakes of 11" formed plate rub rail which
extends from the bow to the stern on both port and starboard sides.
<PAGE> 150
SURVEY REPORT NO. 9811-1215
GENERAL CONSTRUCTION PARTICULARS: (continued)
Port, starboard, and bow deck gunnels are fitted with a 38" coaming for the
full length with freeing ports at random locations.
Deck fitting consists of the following:
One (1) 8" diameter cast steel double bitt is located in way of each stern
corner.
Two (2) 36" cast steel kevels are ranged along both port and starboard sides.
One (1) 24" cast steel kevel is located on both port and starboard sides of the
bow.
One (1) 24" cast steel kevel is located to both port and starboard of the stern
center line.
One (1) 16'x30' crane mat is located just forward of amidships.
One (1) 18"x18" spudwell fitted atop a 36" coaming, is located on each port and
starboard and on the stern center line. Spudwells each contain one (1) 40'
spud.
Two (2) heavy tow pads are located forward on both port and starboard sides.
CERTIFICATES/DOCUMENTS:
The vessel has on board the following certificates and/or documents:
United States Coast Guard Certificate of Documentation which is valid until 31
May 1999.
DECK EQUIPMENT:
Deck equipment consists of the following:
One (1) American, model No. 120B, triple drum winch powered by a General Motors
4-71 diesel engine, through a Twin Disc, SP111HP1, drive.
One (1) American, model No. 9225, 125-ton pedestal mounted crane.
One (1) 40 KW Delco AC generator powered by a Detroit Diesel 4-71 engine.
One (1) 5 yard rehandling clam bucket.
One (1) 4 yard round nose digging bucket.
EXTERNAL CONDITION:
External coating of coal tar epoxy is in excellent condition.
Deck perimeter and deck fittings coating of yellow epoxy is in excellent
condition.
Barge does not appear to have any significant corrosion, wastage, or major
indents.
LIVING QUARTERS:
Located on deck is one (1) 27'x40' wooden building, having sleeping quarters
for nineteen (19) persons.
<PAGE> 151
SURVEY REPORT NO. 9811-1215
LIVING QUARTERS: (continued)
Forward to starboard is the head containing two (2) shower stalls, two (2)
toilets, and three (3) sinks.
Forward to port are four (4) bunks and just to aft are fifteen (15) bunks.
Aft is the galley with the kitchen located forward and one (1) table with two
(2) built-in benches located aft.
In the building is the following equipment and/or machinery:
Two (2) Kenmore refrigerators.
One (1) Vulcan electric range.
One (1) Sharp carousel microwave.
One (1) Scotsman ice machine.
One (1) White-Westinghouse freezer.
One (1) Samsung, model FX505, fax machine.
Five (5) Whirlpool window air-conditioning units.
Two (3) Kenmore window air-conditioning units.
INTERNAL CONDITION:
Internals are in good condition and appear to have a good coating of Texaco
compound H.
No significant damage or corrosion was sighted.
VALUATION:
Estimated present day fair market value
as of November 30, 1998........................................ $425,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
<PAGE> 152
SURVEY REPORT NO. 9811-1215
VALUATION:(continued)
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of November 30, 1998.........................................$350,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to be condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is no way
contingent upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
<PAGE> 153
SURVEY REPORT NO. 9811-1215
SURVEYOR'S NOTES: (continued)
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 154
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection-Ascertain
General Condition and
Fair Market Value
as of
December 1, 1998
SURVEY REPORT NO. 9812-1218
BARGE "BH 7"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 1, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the deck barge "BH 7" (an
undocumented vessel; Transcoastal Marine Services, Inc. - reported owners)
while subject vessel was lying afloat in a laden condition and moored on Lake
Pontchartrain in New Orleans, Louisiana, in order to ascertain the general
condition and in order to estimate her present day fair market value and
orderly liquidation value as of December 1, 1998.
NOTE: ALL SIZES, MEASUREMENTS, DISTANCES, ET CETERA, MENTIONED HEREIN ARE
APPROXIMATE, UNLESS OTHERWISE SPECIFIED.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction by Alexander Shipyard.
Date of construction was unknown at the time of survey.
Dimensions are: Length-120', breadth-30', depth-7'.
The vessel has a flush deck, a square raked bow, a square raked stern, and a
total of six (6) compartments consisting of one (1) bow rake compartment, four
(4) main body compartments, and one (1) stern rake compartment.
Access to each hull compartment is made through a flush deck type manhold
fitted with a center bolt secured cover.
The hull is fitted with one (1) longitudinal strake of 16" formed plate rub
rail which extends from the bow to the stern on both port and starboard sides.
<PAGE> 155
SURVEY REPORT NO. 9812-1218
A 30" bin-wall extends from the bow to the stern on both port and starboard
sides. A 30" removable bin-wall extends across the bow and stern.
Deck fittings consists of the following:
One (1) 10" double bitt on each corner of the barge hull.
Two (2) 36" kevels are ranged along both port and starboard sides.
CERTIFICATES/DOCUMENTS:
Subject vessel does not require regulatory bodies, certificates and/or
documents:
EXTERNAL CONDITION:
Bin-wall external coating is in fair to good condition.
Bin-wall internal coating is in fair to poor condition.
Deck plating inside bin-wall lightly washboarded with indents of 0 to 1" at
random locations.
Deck plating outside bin-wall appears free of any notable indents.
Coaming caps show numerous mild to moderate indents.
Bin-wall vertical stiffeners are in good condition with the coating in fair to
good condition.
Removable bin-wall contains moderate to heavy distortion with the coating in
poor condition.
Rub rail contains indents of 0 to 1" at random.
INTERNAL CONDITION:
An internal inspection was not done due to the barge being loaded with water to
a freeboard of approximately 20" at the time of the survey.
VALUATION:
Estimated present day fair market value
as of December 1, 1998....................................$125,000.00
<PAGE> 156
SURVEY REPORT NO. 9812-1218
VALUATION: (continued)
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of December 1, 1998.........................................$100,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the barge appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to be condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for on an independent fee basis and is in no way
contingent upon the values reported herein.
<PAGE> 157
SURVEY REPORT NO. 9812-1218
SURVEYOR'S NOTES: (continued)
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Tom Payne
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
TP:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 158
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
December 2, 1998
SURVEY REPORT NO. 9812-1220
M/V "MISSY ANN"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on
December 2, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for
the account of Bank One, Texas, NA, survey the M/V "MISSY ANN" (570690 official
number; Home Port - New Orleans, Louisiana; of 35 gross and 24 net tons;
Transcoastal Marine Services, Inc. - reported owners), while subject vessel was
afloat and moored in Venice, Louisiana, in order to ascertain the general
condition and in order to estimate her present day fair market value and
orderly liquidation value as of December 2, 1998.
NOTE: ALL SIZES, MEASUREMENTS, DISTANCES, ET CETERA, MENTIONED HEREIN ARE
APPROXIMATE, UNLESS OTHERWISE SPECIFIED.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction in Houma, Louisiana
during 1975.
Overall dimension: Length-48', breadth-16.7', depth-5.8'.
The vessel is a typical twin screw, single engine, tugboat with a model bow, a
transom stern, a flush deck, and a steel double level superstructure, which is
used primarily inshore.
The hull is protected by means of two (2) strakes of rub rail fenders
constructed of 10" formed plate. Additionally, the entire perimeter of the hull
is protected by tires suspended by chains. The bow is additionally protected by
rubber padding.
Bulwarks approximately 18" high extend around the entire perimeter of the
vessel.
Access to lower hull spaces is made via flush deck manholes with center bolt
covers.
<PAGE> 159
[BACHRACH, WOOD, PETERS & ASSOCIATES, INC LETTERHEAD]
SURVEY REPORT NO. 9810-1220
GENERAL CONSTRUCTION PARTICULARS: (continued)
Deck fittings consist of the following:
Two (2) 5" double bitts are located forward and aft on both port and starboard
sides.
One (1) 12" H-bitt is located on the center line at the stern.
Two (2) BB, serves as BB 40 make up winches on the bow each with a 5 ton
capacity.
One (1) 8" single bitt on the bow center line.
One (1) winch is located on bow center line.
A 3-tier handrail and stair system extends from the center line to
approximately 15' abaft the bow around both port and starboard side of the
pilothouse.
CERTIFICATES/DOCUMENTS:
Subject vessel has aboard the following certificates and/or documents:
United States Coast Guard Certificate of Documentation which is valid until 31
August 1999, documenting vessel for coastwise use.
SAFETY AND FIRE FIGHTING EQUIPMENT:
Lifesaving and fire equipment consists of the following:
Two (2) 30" ring buoys fitted with water lights.
An adequate complement of life preserves for the crew on board.
Four (4) ABC dry chemical fire extinguishers.
One (1) fire ax.
TANK CAPACITIES:
Diesel fuel oil..................... 3,500 gallons.
Water............................... 2,000 gallons.
PILOTHOUSE LEVEL:
The pilothouse is located on the upper level. Located atop the pilothouse are
the following
One (1) mast with navigation lights.
Two (2) VHF antennas.
One (1) spotlight.
One (1) horn.
Running lights.
<PAGE> 160
SURVEY REPORT NO. 9810-1220
PILOTHOUSE LEVEL: (continued)
The pilothouse contains the following equipment and/or furniture:
One (1) steering wheel.
Main engine controls.
Main engine gauges.
One (1) Standard Horizon Eclipse VHF radio transceiver.
One (1) Furuno, serial No. 864-4019 radar with a 48 mile range.
One (1) Sitex, model WR77, VHF radio.
Main engine emergency shut-downs.
Navigation light switch panel.
One (1) pilot stool.
One (1) Phillips TV.
One (1) compass.
One (1) bunk bed.
One (1) Kenmore window mounted air-conditioning unit.
Abaft the pilothouse is an open-type steering station which contains one (1)
steering wheel and main engine controls.
MAIN DECK:
Main deck is located below the pilothouse level and is accessible through one
(1) watertight door.
Located forward is the galley which contains the following equipment:
One (1) Kenmore stove.
One (1) Kenmore refrigerator/freezer.
One (1) double stainless steel sink.
One (1) box fan.
Access to the engine room is via two (2) watertight door.
ELECTRICAL:
Electrical system is 110-volt run by a generator powered by a Detroit Diesel
2-71, keel cooled.
MACHINERY:
The vessel is twin screw. Propulsion machinery consists of one (1) Detroit
Diesel V8 engine, driving two (2) 3 blade stainless steel propellers through
Twin Disc, model MG5 marine reverse/reduction gears with 4:1 ratio. Engine is
keel cooled.
<PAGE> 161
SURVEY REPORT NO. 9812-1220
CONDITION:
The hull coating is in good condition with minor indents and scratches.
Vessel is in good condition.
VALUATION:
Estimated present day fair market value
as of December 2, 1998........................................ $ 95,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
Estimated orderly liquidation value
as of December 2, 1998.........................................$ 75,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the vessel appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to be condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
<PAGE> 162
SURVEY REPORT NO. 9812-1220
SURVEYOR'S NOTES: (continued)
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for
services has been arranged for an independent fee basis and is no way
contingent upon the values reported herein.
survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Wade R. Olsen
BACHRACH, WOOD, PETER & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
WRO:rtb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 163
[BACHRACH, WOOD, PETERS, & ASSOCIATES, INC. LETTERHEAD]
December 11, 1998
Inspection - Ascertain
General Condition and
Fair Market Value
as of
November 30, 1998
SURVEY REPORT NO. 9811-1217
M/V "DANNY BOY II"
THIS IS TO CERTIFY that the undernamed attending Marine Surveyor did on November
30, 1998, at the request of Ms. Karen S. Shouse, on behalf of and for the
account of Bank One, Texas, NA, survey the M/V "DANNY BOY II" (519558 official
number; of 21 gross and 14 net tons; Transcoastal Marine Services, Inc. -
reported owners), while subject vessel was afloat and moored at the facilities
of H.B.H., Inc. in Harvey, Louisiana, in order to ascertain the general
condition and in order to estimate her present day fair market value and
orderly liquidation value as of November 30, 1998.
NOTE: ALL SIZES, MEASUREMENTS, DISTANCES, ET CETERA, MENTIONED HEREIN ARE
APPROXIMATE, UNLESS OTHERWISE SPECIFIED.
GENERAL CONSTRUCTION PARTICULARS:
The vessel was built of all welded steel construction in Harvey, Louisiana
during 1969.
Registered dimensions: Length - 36.5', breadth - 14.0', depth - 4.7'.
The vessel is a typical inshore fleet push boat with a square raked bow
with 5' push knees, a transom stern, a flush deck, and a steel double level
superstructure located amidship.
The hull is protected by means of one (1) rub rail fender constructed of
11" double formed plate. The bow and bow corners have heavy duty rubber
bumpers. Thirty-seven (37) tires, suspended by chain, are located on the
stern, and port and starboard sides.
The vessel is framed transversely and stiffened longitudinally.
Bulwarks approximately 12" high are located around the entire perimeter of
the vessel.
<PAGE> 164
SURVEY REPORT NO. 9811-1217
GENERAL CONSTRUCTION PARTICULARS: (continued)
Deck fittings consist of the following:
Two (2) 5" H-bitts are located on each port and starboard sides and one (1) on
bow center line.
One (1) 9" H-bitt is located on the center line at the stern.
Two (2) BeeBee spur gear make up winches are located on the bow.
A 1-tier handrail and stair system extends from the forward deck to the
pilothouse with a 2-tier handrail around the pilothouse.
Lower level of superstructure is not used.
CERTIFICATES/DOCUMENTS:
Subject vessel has aboard the following certificates and/or documents:
A Federal Communications Commission License which is valid until 18 September
2006.
United States Coast Guard Certificate of Documentation which is valid until May
1999.
SAFETY AND FIRE FIGHTING EQUIPMENT:
Lifesaving and fire equipment consists of the following:
Two (2) 30" ring buoys.
Two (2) Type III, ABC dry chemical fire extinguishers.
TANK CAPACITIES:
Diesel fuel oil ............... 1,000 gallons.
Access to lower hull spaces is made via 4" raised deck manholes with center
bolt covers.
PILOTHOUSE LEVEL:
The pilothouse is located on the upper level. Located atop the pilothouse is
the following:
One (1) mast with navigation lights.
Two (2) VHF antennas.
One (1) spotlight.
One (1) horn.
<PAGE> 165
SURVEY REPORT NO. 9811-1217
PILOTHOUSE LEVEL: (continued)
The pilothouse contains the following equipment and/or furniture:
One (1) steering wheel.
Main engine controls.
Main engine gauges.
Two (2) Standard Horizon VHF radio transceivers.
Main engine emergency shut-downs.
Navigation light switch panel.
One (1) pilot stool.
One (1) Motorola Company radio.
One (1) SiTex, model T-170, radar.
One (1) General Electric 9" TV.
One (1) bed.
One (1) Whirlpool window air-conditioning unit.
One (1) Kenmore refrigerator.
ELECTRICAL
Electrical system is 12-volt powered by two(2) main engine driven alternators
and six (6) 12-volt batteries.
MACHINERY:
The vessel is single screw. Propulsion machinery consists of one (1) Detroit
Diesel 8-71 engine rated at 400 HP. Engine is keel cooled.
Located on deck is one (1) Lima Magna Plus, model 281FSL1501, 120-volt AC
generator, 31 amp, powered by a Kuboto, model D590, 6-cylinder F1 diesel engine.
CONDITION:
Hull coating of coal tar epoxy is in good condition.
Side plating contains few indents of 0 to 1".
Rub rail is in good condition.
Handrail is in good condition.
Pilothouse is well coated with white paint with no noted indents.
Deck is well coated with red paint.
<PAGE> 166
SURVEY REPORT NO. 9811-1217
VALUATION:
ESTIMATED PRESENT DAY FAIR MARKET VALUE
AS OF NOVEMBER 30, 1998........................................ $ 75,000.00
Fair Market Value:
A sum of money that a vessel should bring in a competitive and open market
under all conditions requisite to a fair sale, the buyer and seller, each
acting prudently, knowledgeably, and assuming the price is not affected by
undue stimulus. Implicit in this definition is the consummation of a sale
where title is passed from seller to buyer under condition whereby:
1. The buyer and seller are typically motivated.
2. Both parties are well informed and acting in what they consider their
own best interest.
3. A reasonable time is allowed for exposure in the open market.
ESTIMATED ORDERLY LIQUIDATION VALUE
AS OF NOVEMBER 30, 1998.........................................$ 60,000.00
The estimated gross amount expressed in terms of money which could be
typically realized from a sale, given a reasonable period of time to find a
purchaser(s), the seller being compelled to sell on an is-where is basis.
SURVEYOR'S NOTES:
All machinery and equipment aboard the vessel appears to be in good condition
and well coated.
This vessel, as described herein, is in satisfactory condition for its intended
service.
This survey represents the good faith opinion of the surveyor only and does
not make any representations of fact. It was performed for insurance
underwriting and/or appraisal purposes only, and no warranty of
correctness of this surveyor as to the condition, seaworthiness, value, or
marketability of subject vessel is either expressed or implied.
The vessel was sighted afloat, without testing for tightness, hull gauging,
conducting sea trials, testing or trying out machinery or electrical systems,
or opening up any of those places ordinarily closed or concealed. Therefore,
deficiencies may exist other than those conditions noted in this report.
<PAGE> 167
SURVEY REPORT NO. 9811-1217
SURVEYOR'S NOTES: (continued)
The undersigned Marine Surveyor has no present or contemplated future interest
in the aforementioned vessel and/or its equipment, and compensation for services
has been arranged for on an independent fee basis and is in no way contingent
upon the values reported herein.
Survey made, signed, and submitted without prejudice to rights and/or interests
of whom it may concern.
Attending Surveyor:
Joseph L. Aveton
BACHRACH, WOOD, PETERS & ASSOCIATES, INC.
[SEAL]
/s/ ANTHONY C. PETERS
----------------------------------------
Anthony C. Peters,
Principal Surveyor.
JLA:ktb
Distribution:
(2) Reports & (2) Invoices:
Bank One, Texas, NA
Attention: Ms. Karen S. Shouse
910 Travis Street, 7th Floor
TX-2 4260
Houston, Texas 77002
(1) Report:
Transcoastal Marine Services, Inc.
Attention: Mr. John Nowlin
183 Beadle Road
Lafayette, Louisiana 70508
<PAGE> 168
SCHEDULE 7.5
LITIGATION
Sirpi Alusteel Construction, Ltd. v. Dickson GMP International
This case involves a contractual dispute in which Dickson has filed a cross
claim that if successful would eliminate any damages alleged by Sirpi and in
addition would result in a monetary judgement in favor of Dickson. We have been
told by counsel for Dickson that maximum exposure in this case is approximately
$95,000.00 (NINETY-FIVE THOUSAND AND NO/00 DOLLARS).
Dr. Abdo Husseiny, et al v. United Gas Pipeline Company, et al.
This is a class action lawsuit filed in 1994 as a result of a gas leak in St.
John the Baptist Parish in Louisiana. Approximately 7858 plaintiffs have joined
the class and are seeking damages ranging from $500.00 to $2500.00 each. The
liability portion of the case was tried to the bench. The court found Woodson
75% at fault and assessed punitive damages on a one to one ratio. Punitive
damages are uninsured. The case was appealed to the Fifth Circuit Court of
Appeals and writs were denied. We are currently negotiating with our underwriter
to approach the plaintiff with a settlement offer in which the entire case
(including punitives) would be settled within policy limits with Woodson
offering a cash contribution to the settlement. Such cash contribution would not
have a material impact on the operations of the Company. If we do not reach a
settlement, this case would begin trial in March of 1999. For the court to hear
all 7858 cases, trial could potentially extend for three to seven years.
<PAGE> 169
SCHEDULE 7.6(d)
RIGHTS IN PROPERTIES; LIENS
ALL OF THE PROPERTY AND COLLATERAL OF THE BORROWERS AND THEIR SUBSIDIARIES
WHICH ARE REASONABLY NECESSARY FOR THE OPERATION OF THEIR BUSINESSES ARE IN GOOD
WORKING CONDITION AND ARE MAINTAINED IN ACCORDANCE WITH PRUDENT BUSINESS
STANDARDS WITH THE FOLLOWING EXCEPTION:
The Atchafalaya Bay is currently out of class and in process of being
refurbished. The Company's intention is to spend an additional $2,000,000 by
March 31, 1999, to bring the vessel into class and ready to be a first class
Jetting Barge.
<PAGE> 170
SCHEDULE 7.9
DEBT AND LIENS
The Borrowers and their Subsidiaries have no Debt as defined in the Credit
Agreement, except as disclosed below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
LENDER COLLATERAL/LIEN
- -----------------------------------------------------------------------------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE-Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE- Unsecured
TransCoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3.
(Intentionally Deleted)
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment and
CORP.-TransCoastal Marine Services, Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5. HELLER FINANCIAL, INC.-TransCoastal First lien on Certain Marine Vessels and
Marine Services, Inc. other Non-marine Equipment
$35,000,000 TERM LOAN IN PLACE AT
CLOSING
6. WOODSON FAMILY-Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL-Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL-DICKSON GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL-DICKSON GMP 990 CFM Air Compressor
Dickson GMP $46,853 OUTSTANDING AT
11-30-98
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE> 171
SCHEDULES 7.10
TAXES
The Borrowers and their Subsidiaries have the following pending federal and
state tax investigations underway:
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
ENTITY AND YEARS UNDER INVESTIGATION TYPE OF TAX AND TAXING AUTHORITY
=================================================================================
<S> <C> <C>
1. CSI - Years ending May 31, 1996 Federal Income Tax-I.R.S.
and 1997
2. Red Fox of New Iberia, Inc. - Years
ending December 31, 1996, 1997, 1998 Sales Tax-State of Louisiana
3. HBH, Inc. - Years ending December
31, 1995 and 1996 Sales Tax-State of Louisiana
4. Dickson GMP Limited, Inc. - Years
ending December 31, 1994, 1995, and
1996 Sales Tax-State of Louisiana
---------------------------------------------------------------------------------
</TABLE>
<PAGE> 172
SCHEDULE 7.14
SUBSIDIARIES
<TABLE>
<CAPTION>
NAME STATE OF INCORPORATION % OWNERSHIP
- ---- ---------------------- -----------
<S> <C> <C>
TransCoastal Marine Services of LA, Inc. Louisiana 100%
The Red Fox Companies of New Iberia, Inc. Louisiana 100%
Woodson Construction Company Louisiana 100%
Hargett Mooring & Marine, Inc. Louisiana 100%
EnviroSystems, Inc. Louisiana 100%
Kori Corporation Louisiana 100%
CSI Hydrostatic Testers, Inc. Delaware 100%
TransCoastal Vessels, Inc. Delaware 100%
TransCoastal Ventures, Inc. Delaware 100%
TransMar, LLC Delaware 60%
Dickson GMP International, Inc. Louisiana 100%
Dickson Marine, Inc. Louisiana 100%
Dickson Nigeria, Ltd. Nigeria 100%
Servicios y Construcciones Petroleras
Ventura, C.A. Venezuela 100%
Ventura Resources, Inc. Louisiana 100%
</TABLE>
<PAGE> 173
SCHEDULE 7.20
ENVIRONMENTAL MATTERS
(a) None known
(b) None known
(c) Hazardous Waste such as: spent paint and solvents are stored in specific
areas for transportation to approved disposal facilities. TCMS Senior
Environmental Specialist has inspected the disposal facility for compliance
with regulations and permits.
(d) None known
(e) None known
(f) None known
(g) None known
(h) None known
<PAGE> 174
SCHEDULE 7.22
INSURANCE COVERAGE
PLease see attached.
<PAGE> 175
TRANSCOASTAL MARINE SERVICES, INC.
COMPREHENSIVE GENERAL LIABILITY
LIMITS OF LIABILITY: $1,000,000 PER OCCURRENCE
$2,000,000 GENERAL AGGREGATE
$2,000,000 PRODUCTS/COMPLETED OPS AGGREGATE
$1,000,000 FIRE LEGAL LIABILITY
$ 5,000 MEDICAL PAYMENTS PER PERSON
PREMIUM BASIS: ESTIMATED GROSS RECEIPTS: $167,300,000.
RATE/DEDUCTIBLE OPTIONS:
<TABLE>
<CAPTION>
DEDUCTIBLE STOP LOSS RATE PREMIUM TAX TOTAL
- ---------- --------- ---- ------- --- -----
<S> <C> <C> <C> <C> <C>
$25,000 $125,000 .1804% $301,809 $15,090.45 $316,899.45
$25,000 $250,000 .165% $276,045 $13,802.25 $289,847.25
$25,000 $NIL .150% $250,950 $12,547.50 $263,497.50
$50,000 $300,000 .135% $225,855 $11,292.75 $237,147.75
$50,000 $NIL .120% $200,760 $10,038.00 $210,798.00
</TABLE>
COVERAGE INCLUDES: ACTIONS OVER
FULL OCCURRENCE FORM, INCLUDING PRODUCTS/COMPLETED OPERATIONS
BROAD FORM GENERAL LIABILITY, ISO DEFINITION OF INSURED CONTRACT
BROAD FORM NAMED INSURED
INSURED OPERATIONS: "ALL OPERATIONS OF NAMED INSURED & SUBSIDIARIES"
NO EXCLUSION FOR PUNITIVE DAMAGES
"PER PROJECT" AND "PER LOCATION" ENDORSEMENT AVAILABLE AS REQUESTED
DEFENSE IS IN ADDITION TO POLICY LIMITS
XCU HAZARDS; UGR&E; BLOWOUT & CRATERING
WORLDWIDE TERRITORY (FOR SUITS BROUGHT WITHIN THE U.S.)
SEEPAGE & POLLUTION - TIME ELEMENT - 7-DAY DISCOVERY, 30-DAY REPORTING
BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED & 60-DAY N.O.C.
PRIMARY INSURANCE CLAUSE AS REQUIRED BY CONTRACT
IN REM, GULF OF MEXICO, AND NON-OWNED WATERCRAFT EXTENSIONS
ALL OWNED BOATS 26' & UNDER (INCLUDING DEBRIS REMOVAL)
NO EXCLUSION UNDER CONTRACTUAL FOR WORK WITHIN 50' OF RAILROADS
CROSS SUITS
LIMITED EMPLOYEE BENEFITS LIABILITY - $1,000,000 AGGREGATE
CARE, CUSTODY, CONTROL EXCLUSION DELETED
DELETE THE "DAMAGE TO YOUR WORK" EXCLUSION (WORK MUST HAVE BEEN DELIVERED TO THE
BUYER, AND THE ASSURED MUST BE LEGALLY LIABLE TO PAY). THIS ADDITIONAL
COVERAGE HAS A SEPARATE $25,000 DEDUCTIBLE PER CLAIM.
FELLOW EMPLOYEE EXCLUSION DELETED
UNINTENTIONAL ERROR/FAILURE TO DISCLOSE CLAUSE
SHIPREPAIRERS LEGAL LIABILITY
ENVIROSYSTEMS: RETRO DATE OF 6/30/94
REMOVE PROFESSIONAL EXCLUSION FOR TRANSMAR ONLY, SUBJECT TO $50,000 DED.
EXCLUDING: P&I, PCB'S, ASBESTOS, E&O, D&O, LEASED EMPLOYEES, FORMALDEHYDE,
NUCLEAR, EMPLOYMENT PRACTICES.
SECURITY: STEADFAST INSURANCE COMPANY
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
13
<PAGE> 176
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL AUTO COVERAGE
LIABILITY :$1,000,000 COMBINED SINGLE LIMIT
MEDICAL PAYMENTS :$5,000
UNINSURED MOTORISTS :$1,000,000
HIRED AND NON-OWNED :$1,000,000 COMBINED SINGLE LIMIT
COMPREHENSIVE :SEE BELOW
COLLISION :SEE BELOW
- --------------------------------------------------------------------------------
DESCRIPTION OF VEHICLES: PER SCHEDULE PROVIDED BY INSURED
AUTO LIABILITY RATING BASE: POWER UNITS - 125.
$5,000 DEDUCTIBLE ON LIABILITY.
COMPOSITE RATE AT $516.32.
AUTO PHYSICAL DAMAGE: $500 DEDUCTIBLE COMPREHENSIVE &
$500 COLLISION FOR ALL LIGHT TRUCKS
AND PRIVATE PASSENGER UNITS, MODEL
YEAR 1994 AND NEWER. $5,000 DEDUCTIBLE
COMPREHENSIVE AND COLLISION FOR ALL
OTHER UNITS. RATING BASE: 75 UNITS.
COMPOSITE RATE AT $270.
PREMIUM: $74,515.00 LIABILITY/MED PAY/U.M.
$20,249.00 PHYSICAL DAMAGE
----------
$94,764.00 TOTAL
COVERAGES INCLUDE: SYMBOL 1 ON LIABILITY - ALL AUTOS
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
BLANKET PRIMARY INS CLAUSE
60-DAY NOTICE OF CANCELLATION
HIRED/NON-OWNED COVERAGES, INCLUDING PHYSICAL DAMAGE
ON RENTAL CARS ($35,000 PD LIMIT)
BROAD FORM NAMED INSURED
FELLOW EMPLOYEE COVERAGE
MCS-90 & STATE FILINGS AVAILABLE AS REQUIRED
LIMITED POLLUTION - VEHICLE OVERTURN OR COLLISION
CA9948 - BROADENED POLLUTION
UNINTENTIONAL FAILURE TO DISCLOSE
EMPLOYEES AS ADDITIONAL INSUREDS
SECURITY: ZURICH AMERICAN INSURANCE COMPANY OF ILLINOIS 10/12/98
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
15
<PAGE> 177
TRANSCOASTAL MARINE SERVICES, INC.
HULL AND PROTECTION & INDEMNITY
I. HULL & MACHINERY: TOTAL VALUE OF $74,772,000 PER ATTACHED SCHEDULE
INCLUDING COLLISION & TOWERS
BREAKDOWN: WOODSON $ 2,039,500
HBH, INC. $ 24,865,000
CSI HYDRO. $ 24,195,000
RED FOX $ 972,500
TRANSCOASTAL $ 22,700,000
SPUD UNITS $ 665,000
DEDUCTIBLE: $5,000 FOR ALL VESSELS, EXCEPT:
$50,000 FOR ALL VESSELS VALUED OVER $1,000,000
- -------------------------------------------------------------------------------
II. PROTECTION & INDEMNITY: $1,000,000 LIMIT PER OCCURRENCE
INCLUDING EXCESS TOWERS & COLLISION
SP-23 FORM
DEDUCTIBLE: $10,000
- -------------------------------------------------------------------------------
PREMIUM: WOODSON: $ 40,142 HULL $ 30,240 P&I
HBH, INC.: $226,619 HULL $ 73,440 P&I
CSI: $195,423 HULL $ 12,960 P&I
RED FOX: $ 20,663 HULL $ 21,600 P&I
TRANSCOASTAL: $177,980 HULL $ 13,770 P&I
-------- --------
TOTAL: $660,827 HULL $152,010 P&I
PREMIUM TOTAL: $812,837.00
HULL DEDUCTIBLE OPTIONS: $50,000 DEDUCTIBLE - 10% PREMIUM CREDIT
$100,000 DEDUCTIBLE - 15% PREMIUM CREDIT
SECURITY: MOAC/BOSTON OLD COLONY (BEST RATING: A-:XIV) 10/15/98
16
<PAGE> 178
HULL AND PROTECTION & INDEMNITY - TERMS & CONDITIONS
INCLUDES: AGREED VALUE ON HULL AMOUNTS
PARTS REMOVED CLAUSE
AFFILIATED COMPANIES CLAUSE
BLANKET ADD'L INSURED & WAIVER OF SUBROGATION, 60-DAY N.O.C.
BLANKET PRIMARY INSURANCE CLAUSE
AUTOMATIC ACQUISITION CLAUSE FOR PURCHASE OR CHARTER
PRIVILEGE TO CHARTER CLAUSE
CROSS LIABILITY CLAUSE.
CONTRACTUAL LIABILITY
SEEPAGE & POLLUTION (B.I. & CARGO), EXCLUDING O.P.A., CERCLA
INCHMAREE EXTENDED TO PROVIDE COVERAGE FOR NEGLIGENCE OF
CHARTERS AND/OR REPAIRERS, ALSO EXTENDED TO PROVIDE
COVERAGE FOR CONTACT WITH AIRCRAFT.
BLOWOUT & CRATERING
DELIBERATE DAMAGE (POLLUTION) INCLUDING EQUIPMENT, GEAR,
MACHINERY DAMAGE
BURIAL EXPENSES CLAUSE
IN REM/IN PERSONAM LIABILITY
CARGO LEGAL LIABILITY
VESSEL IN DISTRESS CLAUSE
SISTERSHIP CLAUSE
TANKERMANS CLAUSE
DELETE THE EXCEPTIONS "OTHER THAN AN ASSURED, AND "AS OWNER
OF VESSEL" AS REQUIRED BY CONTRACT
SUE & LABOR PROVISIONS NOT TO APPLY TO ADDITIONAL INSURED IF
REQUIRED IN CONTRACT
REPAIRS & ALTERATIONS CLAUSE
TOWAGE EXCLUSIONS DELETED
BOOM COVERAGE ENDORSEMENT, OVERWEIGHT EXCLUSION DELETED
BROAD FORM NAMED INSURED ENDORSEMENT
STRIKES, RIOTS & CIVIL COMMOTIONS, & MALICIOUS DAMAGE CLAUSES
EXTENDED ADVENTURES & PERILS CLAUSE
EACH VESSEL DEEMED TO BE SEPARATELY INSURED
LEASED EQUIPMENT CLAUSE
SUBJECT TO AMERICAN HULL INS. SYNDICATE LINER NEGLIGENCE
CLAUSE
VOLUNTARY REMOVAL OF WRECK/DEBRIS
NO EXCLUSION FOR PUNITIVE DAMAGES
THIS INSURANCE AUTOMATICALLY EXTENDS TO COVER ANY VESSELS AND/OR CRAFT
OF A SIMILAR AGE & NATURE TO THAT INSURED HEREUNDER, WHICH HAVE BEEN
PURCHASED, LEASED, RENTED, TIME OR BAREBOAT CHARTERED BY INSURED
SUBJECT TO ADVICE TO UNDERWRITERS, AT TERMS AND RATES TO BE AGREED.
POLICY WILL PROVIDE LIABILITY COVERAGE FOR INSURED COMPANIES, EXCESS OF
THE $500,000 LIMIT CARRIED BY McDONOUGH MARINE, UP TO $1,000,000
COMBINED TOTAL LIMITS. INSURED COMPANIES TO BE NAMED & WAIVED BY
McDONOUGH MARINE. COVERAGE APPLIES ONLY TO RENTED BARGES.
17
<PAGE> 179
TRANSCOASTAL MARINE SERVICES, INC.
CHARTERERS' LEGAL LIABILITY
WHARFINGERS LIABILITY
LIMIT OF LIABILITY: $ 1,000,000
DEDUCTIBLE: $25,000
RATE: FLAT, NO ADJUSTMENT
PREMIUM: $15,000
NOTE: COVERAGE IS PROVIDED FOR BOTH DOMESTIC AND FOREIGN OPERATIONS. FOR
FOREIGN LIABILITY, UNDERWRITERS REQUIRE A COPY OF THE HULL/P&I POLICY
SERVING AS PRIMARY COVERAGE FOR TWO LIFTBOATS CHARTERED BY DICKSON GMP
INT'L LOCATED OFFSHORE NIGERIA
SECURITY: MOAC/BOSTON OLD COLONY
10/8/98
18
<PAGE> 180
TRANSCOASTAL MARINE SERVICES, INC.
WATER QUALITY INSURANCE SYNDICATE
VESSEL POLLUTION COVERAGES
LIMITS OF LIABILITY:
OIL POLLUTION ACT OF 1990 - TO $5,000,000 PER VESSEL OR STATUTORY
LIMIT
CERCLA ($300 PER GROSS TON - $500,000 LIMIT)
SCHEDULE OF VESSELS: SEE ATTACHED
BLANKET WAIVER OF SUBROGATION AND ADDITIONAL INSURED.
SPUD PARGE BUYBACK ENDORSEMENT B
FOREIGN TRADE CLEAN-UP ENDORSEMENT - MEXICO & TRINIDAD
LIMITED OPA '90 CIVIL PENALTY CLAUSE - $500 DEDUCTIBLE/ACCIDENT
ANNUAL PREMIUM $ 38,001.77 OPA/CERCLA
1,140.05 CIVIL PENALTY
-----------
$ 39,141.82
10/22/98
19
<PAGE> 181
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL UMBRELLA
LIMIT OPTIONS: $ 50,000,000 EXCESS OF ALL UNDERLYING COVERAGES
PREMIUM: $ 400,000
TERMS & CONDITIONS: $100,000 S.I.R.
FOLLOWS FORM OF UNDERLYING COVERAGES
EXCLUDES PUNITIVE DAMAGES
DROP DOWN ENDORSEMENT, REMOVING REQUIREMENT TO MAKE
REASONABLE EFFORT TO REINSTATE EXHAUSTED LIMITS
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
BLANKET 60-DAY NOTICE OF CANCELLATION
REMOVAL OF EXCLUSION FOR TREBLE & MULTIPLE DAMAGES
UNDERLYING COVERAGES AND LIMITS: DOMESTIC & FOREIGN
EMPLOYERS LIABILITY $1,000,000/1,000,000/1,000,000
MARITIME EMPLOYERS LIABILITY $1,000,000/1,000,000
GENERAL LIAB./SHIPREPAIRERS $1,000,000/2,000,000/2,000,000
AUTOMOBILE LIABILITY $1,000,000 C.S.L.
PROTECTION & INDEMNITY $1,000,000
CHARTERERS/WHARFINGERS $1,000,000
VESSEL POLLUTION/WQIS $5,000,000
SECURITY: RELIANCE NATIONAL INSURANCE COMPANY (A-XIII) 10/8/98
BOSTON OLD COLONY/MOAC (A-XIV)
ZURICH INSURANCE COMPANY, U.S. BRANCH
20
<PAGE> 182
TRANSCOASTAL MARINE SERVICES, INC.
COMMERCIAL PROPERTY
SPECIAL "ALL RISK" FORM, EXCLUDING QUAKE
BLANKET LIMITS, AGREED AMOUNT ENDORSEMENT (SUBJECT TO SURVEY AT
INSUROR'S EXPENSE TO DETERMINE ACCEPTABILITY OF LIMITS)
$250,000 SUBLIMIT ON FLOOD
$5,000 DEDUCTIBLE / $10,000 FOR FLOOD
INCLUDES BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED, 60-DAY NOC
60% COINSURANCE LOSS OF RENTS
$10,000 AUTOMATIC COVERAGE FOR POLLUTION CLEAN-UP
TOTAL ALL VALUES, PER SCHEDULE: $5,174,500 REAL PROPERTY
$1,761,850 CONTENTS/PERSONAL PROPERTY
$ 162,950 DICKSON EDP EQUIPMENT
$ 284,000 LOSS OF RENTS
$ 250,000 VALUABLE PAPERS
$ 250,000 FLOOD SUBLIMIT
----------
TOTAL $7,883,300
ADJUSTABLE RATE: .28 PER $100 OF VALUE
ADDITIONAL COVERAGES: ORDINANCE OR LAW $1,000,000
BLANKET EXTRA EXPENSE $1,000,000
PREMIUM: BUILDINGS, CONTENTS, ETC. $22,073.00
ORDINANCE/EXTRA EXPENSE $ 7,000.00 FLAT
TOTAL ----------
$29,073.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/9/98
21
<PAGE> 183
TRANSCOASTAL MARINE SERVICES, INC.
BUILDER'S RISK COVERAGE
LIMIT OF LIABILITY: $5,000,000 PER DISASTER
$1,000,000 TRANSIT COVERAGE
$2,000,000 FLOOD & QUAKE
$2,000,000 TRENCHING SUBLIMIT
DEDUCTIBLE: $25,000 ANY ONE JOB, INCLUDING FLOOD & QUAKE
$5,000 TRANSIT
TERMS & CONDITIONS: QUARTERLY REPORTING OF INSTALLATION RECEIPTS TO
INCLUDE VALUE OF CUSTOMERS' PIPE
MOAC REQUIRES ADVANCE NOTICE OF ANY JOB OVER
$2,000,000 IN SIZE TO BE COVERED HEREUNDER
BLANKET WAIVERS OF SUBROGATION
RATE: A) .10% - LAND
B) .20% - WATER
MINIMUM & DEPOSIT PREMIUM: $10,000.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
22
<PAGE> 184
TRANSCOASTAL MARINE SERVICES, INC.
HULL BUILDER'S RISK COVERAGE
LIMIT OF LIABILITY: $3,000,000
RATE: .08 PER MONTH ON COMPLETED VALUES
DEDUCTIBLE PER ACCIDENT: 1%
REPORTING: MONTHLY
MINIMUM & DEPOSIT PREMIUM: $2,600.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
23
<PAGE> 185
TRANSCOASTAL MARINE SERVICES, INC.
TRANSIT COVERAGE
LIMITS: $500,000 ON EQUIPMENT OF OTHERS BEING TRANSPORTED ABOARD
INSURED'S OWNED/OPERATED WATERCRAFT
COVERAGES: ALL RISK, INCLUDING THEFT
WATERCRAFT EXCLUSIONS DELETED
DEDUCTIBLE: $5,000
PREMIUM: $5,000.00 FLAT
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
24
<PAGE> 186
TRANSCOASTAL MARINE SERVICES, INC.
CONTRACTORS EQUIPMENT COVERAGE
LIMITS OF LIABILITY: $15,004,844 OWNED EQUIPMENT (PER SCHEDULE)
$2,000,000 RENTAL EQUIPMENT
$1,000,000 LIFT LIABILITY, OVERWEIGHT EXCL.
DELETED
$250,000 FLOOD SUBLIMIT
DEDUCTIBLE: 2% OF VALUES, MINIMUM $1,000 AND MAXIMUM $10,000
$25,000 ON BOOM FOR RED FOX CRANE VALUED $650,000
$25,000 ON BOOM FOR HBH RENTAL CRANE VALUED $695,000
$5,000 ON RENTAL EQUIPMENT
$10,000 ON DOMESTIC & $25,000 ON FOREIGN LIFT LIABILITY
$10,000 ON FLOOD
RATES: .58% OF VALUE ON OWNED EQUIPMENT
.78% OF COST OF HIRE ON RENTAL EQUIPMENT
1.00% WITH BOOM & OVERWEIGHT COVERAGE
TERMS & CONDITIONS: WATERBORNE COVERAGE PROVIDED
ANNUAL ADJUSTMENT ON RENTAL EQUIPMENT
BLANKET WAIVER OF SUBROGATION
BLANKET ADDITIONAL INSURED
WORLDWIDE COVERAGE
60-DAY NOTICE OF CANCELLATION
BLANKET LIMITS, AGREED AMOUNT ENDORSEMENT
(SUBJECT TO SURVEY AT COMPANY EXPENSE)
PREMIUM: $87,028.00 OWNED EQUIPMENT
$5,000.00 M&D ON RENTAL EQUIPMENT
$15,000.00 FLAT ON LIFT LIABILITY
-----------
TOTAL $107,028.00
SECURITY: MOAC/BOSTON OLD COLONY (A-:XIV) 10/8/98
25
<PAGE> 187
TRANSCOASTAL MARINE SERVICES, INC.
AIRCRAFT LIABILITY AND HULL PHYSICAL DAMAGE
AIRCRAFT INSURED: 1981 CESSNA 185 SEAPLANE, #N6860N
LOCATION: BELLE CHASSE, LA
PILOT INFORMATION: DENNIS SISUNG, OR ANY PILOT WITH 1,000 HOURS
TOTAL TIME, 350 HOURS IN SEAPLANE, AND 50 IN MAKE & MODEL.
LIMITS: $5,000,000 CSL LIABILITY
$1,000,000 SUBLIMIT PER PASSENGER
$120,000 HULL VALUE
DEDUCTIBLE: $250 NOT-IN-MOTION
$12,000 IN MOTION
INCLUDES: BLANKET WAIVER OF SUBROGATION, ADDITIONAL INSURED, AND
60-DAY NOTICE OF CANCELLATION
PREMIUM: $6,549.00 PREMIUM (25% MINIMUM EARNED)
$ 250.00 POLICY FEE
---------
$6,799.00 TOTAL
SECURITY: U.S. SPECIALITY (A+:VIII) RANGER (A-:VIII) 10/8/98
26
<PAGE> 188
ENVIROSYSTEMS, INC. - POLLUTION & PROFESSIONAL
(GENERAL LIABILITY IS PROVIDED WITHIN THE STEADFAST
QUOTATION FOR TRANSCOASTAL)
COVERAGE FORM: CLAIMS-MADE
RETROACTIVE DATE: 7/26/93 ON POLLUTION/PROFESSIONAL
LIMIT: POLLUTION/PROFESSIONAL: $1,000,,000 OCCURRENCE/$2,000,000
AGGREGATE
DEDUCTIBLE: POLLUTION/PROFESSIONAL: $25,000
COVERAGES: ZURICH'S PROFESSIONAL ENVIRONMENTAL CONSULTANTS POLICY.
PROFESSIONAL LIABILITY; CONTRACTORS ENVIRONMENTAL IMPAIRMENT
DEFENSE FOR POLLUTION/PROFESSIONAL IS WITHIN POLICY LIMITS
ACTIONS OVER (POLLUTION LIABILITY ONLY)
CIRCUMSTANCE REPORTING WITH NO SUNSET CLAUSE
WORLDWIDE TERRITORY
BROAD FORM CONTRACTUAL INCLUDING VICARIOUS LIABILITY
BLANKET ADDITIONAL INSURED (POLLUTION LIABILITY ONLY)
SPECIFIC WAIVER OF SUBROGATION
60-DAY NOTICE OF CANCELLATION
MUTUAL PRIOR AGREEMENT ON SELECTION OF CLAIMS COUNSEL
CLEAN-UP COSTS
COMPLETE RADIOACTIVE COVERAGE, SUBJECT TO NUCLEAR EXCLUSION
FULL ASBESTOS COVERAGE
MEDIATION CREDIT
NO EXCLUSION FOR SUPERFUND
NO EXCLUSIONS FOR UNDERGROUND STORAGE TANK WORK
PRIMARY INSURANCE WORDING AS REQUIRED BY CONTRACT.
POLICY PROVIDES COVERAGE FOR WORK SUBBED OUT FROM TRANSCOASTAL
COMPANIES
COVERAGE EXCLUSIONS:
FRAUDULENT/INTENTIONAL ACTS
NON-COMPLIANCE WITH STATUTES, ETC.
CROSS LIABILITY
DISCRIMINATION
PATENT/COPYRIGHT INFRINGEMENT
EXPRESS WARRANTIES/GUARANTEES
PUNITIVE DAMAGES
WATERCRAFT/AIRCRAFT
WAR, CIVIL UNREST
PRODUCTS LIABILITY
PROPERTY DAMAGE TO THE NAMED INSURED'S WORK
PROFESSIONAL LIABILITY FOR FAULTY WORKMANSHIP/CONSTRUCTION
EXCLUDING: ANY LOSS AS A RESULT OF SERVICES OR OPERATIONS PERFORMED
AT SITES OWNED/OPERATED BY TRANSCOASTAL COMPANIES
27
<PAGE> 189
RATES: POLLUTION/PROFESSIONAL: FLAT
ESTIMATED RECEIPTS: $1,000,000
PREMIUM: POLLUTION/PROFESSIONAL: $ 7,500.00 (FLAT, NO MINIMUM EARNED)
$ 375.00 (TAX)
----------
$ 7,875.00 (TOTAL)
SUBJECT TO: COMPLETED & SIGNED APPLICATION
AVAILABLE: SUPPLEMENTAL REPORTING PERIOD, ADDITIONAL CHARGE TO BE
NEGOTIATED.
SECURITY: STEADFAST INSURANCE COMPANY 10/14/98
(ZURICH-AMERICAN INSURANCE GROUP)
28
<PAGE> 190
TRANSCOASTAL MARINE SERVICES, INC.
WORKERS' COMPENSATION COVERAGE
(ALL ENTITIES EXCEPT RED FOX)
COVERAGE A - WORKERS' COMPENSATION: Provides coverage for the statutory
obligation of an employer to provide benefits for employees as required by the
applicable state law or USL&H Act.
COVERAGE B - EMPLOYERS LIABILITY: Protects the insured against liability
imposed by law for injury to employees in the course of employment that is not
compensable under the Worker's Compensation section.
EMPLOYERS LIABILITY LIMIT OF LIABILITY : $1,000,000
----------
MARITIME EMPLOYERS LIABILITY: $1,000,000
----------
- -------------------------------------------------------------------------------
DEDUCTIBLE AND RATE OPTIONS - APPLICABLE TO STATE ACT, USL&H, & JONES ACT:
(RATES APPLY PER $100 OF PAYROLL)
97/98 LOSSES
DEDUCTIBLE RATE PAYROLL PREMIUM W/IN DEDUCT.
---------- ---- ------- ------- ------------
$ 25,000 2.1813 $30,000,000 $654,390 $236,339
$ 50,000 1.8746 $30,000,000 $562,380 $344,839
$100,000 1.597 $30,000,000 $479,100 $441,574
$150,000 1.5007 $30,000,000 $450,210 $451,374
$250,000 1.3997 $30,000,000 $419,910 $451,374
OPTION: $25,000 DEDUCTIBLE ANY ONE ACCIDENT, WITH $475,000 AGGREGATE
STOP LOSS (ADJUSTED AT 1.58% OF W.C. PAYROLL)
RATE: 2.35% OF PAYROLL = $705,029 PREMIUM
EXCROW REQUIRED FOR CLAIMS PAYMENTS IS EQUIVALENT OF THREE DEDUCTIBLES.
LETTER OF CREDIT REQUIRED CAN BE NEGOTIATED - BOTTOM END IS $100,000,
MAXIMUM OF $500,000.
ADDITIONAL COVERAGES:
- --------------------
BLANKET WAIVER OF SUBROGATION
BLANKET ALTERNATE EMPLOYER/BORROWED SERVANT
60-DAY NOTICE OF CANCELATION
USL&H, GULF OF MEXICO AND OUTER CONTINENTAL SHELF ACT ENDORSEMENTS
PAYROLL REPORTED FOR STATES OF LA, TX, CA, AL, MS
OTHER STATES ENDORSEMENT
COVERAGE FOR DOMESTIC EMPLOYEES WORKING TEMPORARILY ABROAD
VOLUNTARY COMPENSATION, FOREIGN VOLUNTARY COMPENSATION
JONES ACT, INCLUDING: IN REM, TWM&C. DEATH ON THE HIGH SEAS
NO EXCLUSION FOR PUNITIVE DAMAGES
NO EXCLUSION FOR OCCUPATIONAL DISEASE
STOP-GAP EMPLOYERS LIABILITY
SECURITY: ZURICH INSURANCE COMPANY, J.S. BRANCH 10/23/98
ZURICH-AMERICAN INSURANCE GROUP (BEST RATING A+:XIV)
9
<PAGE> 191
TRANSCOASTAL MARINE SERVICES, INC.
WORKERS' COMPENSATION COVERAGE
THE RED FOX COMPANIES OF NEW IBERIA
COVERAGE A - WORKERS' COMPENSATION: Provides coverage for the statutory
obligation of an employer to provide benefits for employees as required by the
applicable state law or USL&H Act.
COVERAGE B - EMPLOYERS LIABILITY: Protects the insured against liability
imposed by law for injury to employees in the course of employment that is not
compensable under the Worker's Compensation section.
EMPLOYERS LIABILITY LIMIT OF LIABILITY: $1,000,000
MARITIME EMPLOYERS LIABILITY: $25,000
- --------------------------------------------------------------------------------
DEDUCTIBLE: NIL - FIRST DOLLAR
PREMIUM DEVELOPMENT:
<TABLE>
<CAPTION>
CLASSIFICATION CODE PAYROLL RATE PREMIUM
- --------------------------------------------------------------------
<S> <C> <C> <C> <C>
IRON WORKS 3040 $5,506,000 4.3814 $241,240
SHIPREPAIR/CONVERSION 6872F $4,848,000 6.7314 326,338
SALESPERSONS 8742 $ 247,000 .4403 1,088
CLERICAL 8810 $1,270,000 .2125 2,699
INCREASED EMPLOYERS LIABILITY LIMITS 2.8% 15,998
MARITIME MINIMUM PREMIUM 4,000
EXPENSE CONSTANT 150
--------
TOTAL ESTIMATED ANNUAL PREMIUM $591,513
DEPOSIT PREMIUM: $ 30,000
LESS CURRENT DEPOSIT: -$ 20,000
ADDITIONAL DEPOSIT DUE: $ 10,000
</TABLE>
ADDITIONAL COVERAGES:
BLANKET WAIVER OF SUBROGATION
BLANKET ALTERNATE EMPLOYER
30-DAY NOTICE OF CANCELLATION
USL&H, GULF OF MEXICO AND OUTER CONTINENTAL SHELF ACT ENDORSEMENTS
LIMITED OTHER STATES ENDORSEMENT
COVERAGE FOR DOMESTIC EMPLOYEES WORKING TEMPORARILY ABROAD
JONES ACT, INCLUDING: IN REM, TWM&C, DEATH ON THE HIGH SEAS
NO EXCLUSION FOR OCCUPATIONAL DISEASE
CANNOT PROVIDE VOLUNTARY COMPENSATION & STOP GAP ENDORSEMENTS
SECURITY: LOUISIANA WORKERS' COMPENSATION CORP. (B++:VIII) 10/8/98
10
<PAGE> 192
SCHEDULE 7.23
HEDGING TRANSACTIONS
NONE
<PAGE> 193
SCHEDULE 7.25
MATERIAL DEBT AGREEMENTS
The Borrowers and their Subsidiaries have the following material Debt
Agreements:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
LENDER COLLATERAL/LIEN
- -----------------------------------------------------------------------------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE-Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE- Unsecured
TransCoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3.
(Intentionally Deleted)
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment and
CORP.-TransCoastal Marine Services, Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5. HELLER FINANCIAL, INC.-TransCoastal First lien on Certain Marine Vessels and
Marine Services, Inc. other Non-marine Equipment
$35,000,000 TERM LOAN IN PLACE AT
CLOSING
6. WOODSON FAMILY-Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL-Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL-DICKSON GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL-DICKSON GMP 990 CFM Air Compressor
Dickson GMP $46,853 OUTSTANDING AT
11-30-98
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE> 194
SCHEDULE 9.2
DEBT AGREEMENTS AND LIENS
The Borrowers and their Subsidiaries have the following material Debt
Agreements:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
LENDER COLLATERAL/LIEN
- -----------------------------------------------------------------------------------
<S> <C>
1. MR. & MRS. MARCUS DICKSON 3 1/2 acres of land @
MORTGAGE-Dickson GMP 4001 Woodland Highway
$313,786 OUTSTANDING AT 11-30-98 New Orleans, LA
2. TRANSAMERICA INSURANCE FINANCE- Unsecured
TransCoastal Marine Services, Inc.
$2,042,730 OUTSTANDING AT 11-30-98
3.
(Intentionally Deleted)
4. ENRON CAPITAL & TRADE RESOURCES Subordinated lien on all Equipment and
CORP.-TransCoastal Marine Services, Accounts Receivables
Inc.
$20,000,000 SUBORDINATED DEBT IN
PLACE AT CLOSING
5. HELLER FINANCIAL, INC.-TransCoastal First lien on Certain Marine Vessels and
Marine Services, Inc. other Non-marine Equipment
$35,000,000 TERM LOAN IN PLACE AT
CLOSING
6. WOODSON FAMILY-Woodson Company Unsecured
$1,091,907 OUTSTANDING AT 11-30-98
7. NEW COURT FINANCIAL-Dickson GMP Forklift
$73,513 OUTSTANDING AT 11-30-98
8. NEW COURT FINANCIAL-DICKSON GMP Forklift
$75,298 OUTSTANDING AT 11-30-98
9. LCA FINANCIAL-DICKSON GMP 990 CFM Air Compressor
Dickson GMP $46,853 OUTSTANDING AT
11-30-98
- -----------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.32
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), entered into on December
14, 1998, but effective as of November 16, 1998, by and between TRANSCOASTAL
MARINE SERVICES, INC. (the "Company"), and NATHAN M. AVERY (the "Executive"),
WITNESSETH:
WHEREAS, the Company desires to secure the experience, abilities and
service of the Executive by employing the Executive upon the terms and
conditions specified herein; and
WHEREAS, the Executive is willing to enter into this Agreement upon
the terms and conditions specified herein;
NOW, THEREFORE, in consideration of the premises, the terms and
provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Employment. The Company hereby employs the Executive, and
the Executive hereby accepts such employment, all upon the terms and conditions
set forth herein.
SECTION 2. Term. Subject to the terms and conditions of this
Agreement, the Executive shall be employed by the Company commencing on
November 16, 1998 (the "Effective Date") and terminating on November 15, 2001
(the "Term") unless sooner terminated pursuant to Section 5 of this Agreement.
SECTION 3. Duties and Responsibilities.
A. Capacity. The Executive shall serve in the capacity of Chairman of
the Board of Directors and Chief Executive Officer of the Company. The
Executive shall perform the duties ordinarily expected of a Chairman and Chief
Executive Officer and shall also perform such other duties consistent therewith
as the Board of Directors of the Company (the "Board") shall, from time to
time, reasonably determine.
B. Full-Time Duties. The Executive shall devote his full business
time, attention and energies to the business of the Company. Notwithstanding
anything herein to the contrary, the Executive shall be allowed to (a) manage
the Executive's personal investments and affairs, and (b) (i) serve on boards
or committees of civic or charitable organizations or trade associations, (ii)
serve on the board of directors of any corporation or as an advisory director
of any corporation and (iii) continue to act as Chairman of the Board and Chief
Executive Officer of Galveston-Houston
-1-
<PAGE> 2
Company and its subsidiaries; provided that such activities do not materially
interfere with the proper performance of his duties and responsibilities
specified in Section 3.A.
SECTION 4. Compensation.
A. Base Salary. During the first 12 months of the Term, the Executive
shall be paid equity compensation pursuant to Section 4.C.2. in lieu of salary.
During the final 24 months of the Term, the Executive shall receive a salary
(the "Base Salary") of at least $300,000 per annum, provided that the Executive
may elect, prior to each of the final two 12-month periods of the Term, to
receive additional equity compensation in lieu of the Base Salary as provided
in Section 4.C.3. The Base Salary shall be payable by the Company in accordance
with the general payroll practices of the Company in effect from time to time.
During the term of this Agreement, the Base Salary shall be reviewed prior to
the beginning of each fiscal year of the Company for increase in the discretion
of the Board.
B. Annual Incentive Bonus. The Executive shall be eligible for an
annual bonus payable in the January following the completion of each fiscal
year, commencing in January 2000. The annual bonus payable in January 2000
shall be $200,000. In subsequent years, the Executive shall be eligible for a
bonus at a target level of 80% of Base Salary (including amounts converted to
equity compensation pursuant to Section 4.C.3.). The Executive's bonus will be
determined by the Board in a manner consistent with the Company's established
cash performance bonus program based on Company and individual performance and
shall be prorated appropriately for partial fiscal years' service.
C. Equity Compensation.
1. Initial Option Award. As of the execution of this
Agreement, the Executive shall be granted an option (the "Initial
Option") to purchase 500,000 shares of the common stock of the
Company, par value $.001 per share ("Common Stock"), at an exercise
price per share equal to the fair market value per share of Common
Stock on the date of grant. The Initial Option shall be immediately
exercisable with respect to 1/3 of the shares of Common Stock subject
thereto, and, unless accelerated pursuant to another provision of this
Agreement, the remainder will become exercisable in cumulative 1/3
increments on the first and second anniversaries of the Effective
Date, such that the Initial Option will become 100% exercisable on the
second anniversary of the Effective Date. The Initial Option shall
have a 10 year term. The Initial Option shall be granted pursuant to
the 1997 Stock Option Plan, or other plan having substantially similar
terms and benefits, including having a Registration Statement on Form
S-8 filed with the Securities and Exchange Commission (the "Option
Plan"). The Initial Option is
-2-
<PAGE> 3
intended to be an "incentive stock option" within Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), to the maximum
extent possible. The Initial Option will be evidenced by an option
agreement between the Company and the Executive.
2. 1998 Award in Lieu of Salary. As of the execution of this
Agreement, in lieu of salary for the first 12 months of the Term, the
Executive will be granted an option (the "1998 Option") to purchase
500,000 shares of Common Stock at an exercise price equal to the fair
market value on the date of grant. Unless accelerated pursuant to
another provision of this Agreement, the 1998 Option will become
exercisable in cumulative monthly increments of 1/12 on the 16th day
of each calendar month beginning with the month after the Effective
Date, such that the 1998 Option will be 100% exercisable on the first
anniversary of the Effective Date. The 1998 Option shall have a term
of 10 years. The 1998 Option shall be granted pursuant to the Option
Plan. The terms of the 1998 Option will be evidenced by an option
agreement between the Company and the Executive.
3. Substitute Option Awards in Lieu of Salary. As provided in
Section 4.A., the Executive may elect to receive his Base Salary for
the last 24 months of the Term in the form of options (the "Substitute
Options") to purchase shares of Common Stock. The election to receive
the Base Salary in the form of Substitute Options may be made
separately with respect to each of the last two 12-month periods of
the Term, and must be made prior to the first day of each 12-month
period (i.e., not later than November 15, 1999, and November 15, 2000,
respectively). The Substitute Option will be granted as of the first
day of the respective 12-month period. The exercise price of the
Substitute Option shall be the fair market value of a share of Common
Stock on the first day of the respective 12-month period. The number
of shares subject to the Substitute Option shall be a number such that
the aggregate exercise price of the option equals 5 times the
Executive's Base Salary in effect as of the first day of the 12-month
period. Unless accelerated pursuant to another provision of this
Agreement, the Substitute Option will become exercisable in cumulative
monthly increments of 1/12 on the 16th day of each calendar month
beginning with the month after the date of grant, such that the
Substitute Option will be 100% exercisable on the first anniversary of
the date of grant, The Substitute Option shall have a term of 10
years. The Substitute Option shall be granted pursuant to the Option
Plan. The terms of the
-3-
<PAGE> 4
Substitute Option will be evidenced by an option agreement between the
Company and the Executive.
4. Other Awards During Term. During the term of this
Agreement, the Executive shall be eligible for grants of stock
options, restricted stock, stock appreciation rights and other
incentive awards under and in accordance with the Company's Option
Plan or any comparable or successor plans that may be adopted by the
Company at the sole discretion of the Board of Directors.
D. Executive Deferred Compensation. The Executive will be eligible to
participate in all aspects of the Company's deferred compensation plan or
program on terms at least as favorable as other top executives of the Company.
E. Retirement Plans. The Executive will be eligible to participate in
the Company's qualified or nonqualified retirement plan, or any similar plan,
subject to satisfying the eligibility requirements of such plans.
F. Health, Life and Disability Coverage. The Executive will have the
right to be covered under the Company's group health, group life insurance,
accidental death and dismemberment, travel accident, long-term disability and
short-term disability plans under terms generally applicable to other similarly
situated employees of the Company.
G. Time Off With Pay. The Executive shall be immediately credited with
20 days of accrued paid time off as of the Effective Date. In addition, the
Executive will accrue at least 4 weeks vacation per year of service.
H. Other Benefits.
1. The Executive shall be entitled to receive prompt
reimbursement by the Company for all reasonable, out-of-pocket
expenses incurred by him in performing services under this Agreement
upon the submission by the Executive of such accounts and records as
may be required under Company policy.
2. The Executive shall be entitled to reimbursement for
attorneys' fees and expenses incurred in the course of negotiating the
terms of this Agreement.
3. In addition to any other benefits in this Section 4, the
Executive shall be entitled to participate in all employee benefit
plans and programs made available to the Company's senior executives
or to its
-4-
<PAGE> 5
employees generally, as such plans or programs may be in effect from time to
time, whether funded or unfunded.
SECTION 5. Termination of Employment.
Notwithstanding the provisions of Section 2, the Executive's
employment hereunder may terminate under any of the following conditions:
A. Death. The Executive's employment under this Agreement shall
terminate automatically upon his death.
B. Disability. The Executive's employment under this Agreement may be
terminated due to his Disability. "Disability" shall mean the Executive's
complete inability to substantially perform his duties for any period of at
least 120 consecutive days due to physical or mental incapacity. The date of
termination due to Disability shall be the date the Executive elects to
terminate service due to Disability or, if earlier, the date the Board
determines that the Executive has met the definition of Disability.
C. Termination by Company Without Cause. The Company may terminate the
Executive's employment hereunder without Cause (as hereinafter defined) on 30
days' prior written notice to the Executive.
D. Termination by Company for Cause. The Executive's employment
hereunder may be terminated for Cause by the Company. For purposes of this
Agreement, "Cause" means:
1 . the Executive is convicted of a misdemeanor involving
moral turpitude or a felony, and the conviction is final and
nonappealable; or
2. the Executive's serious, willful gross misconduct or
willful gross neglect of duties.
Any termination of the Executive's employment by the Company for Cause
under Section 5.D.2. shall be authorized by a vote of at least a majority of
the non-employee members of the Board. The Executive shall be given notice by
the Board specifying in detail the particular act or failure to act on which
the Board is relying in proposing to terminate him for Cause under 5.D.2. and
offering the Executive an opportunity, on a date at least 5 days after receipt
of such notice, to have a hearing, with counsel, before a majority of the
non-employee members of the Board, including each of the members of the Board
who authorized the termination for Cause.
-5-
<PAGE> 6
E. Termination by Executive for Good Reason. The Executive may
terminate his employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" for termination shall exist if, without the consent of
the Executive, any of the following events occur:
1 . a reduction in the Executive's Base Salary, or the
elimination or reduction of a benefit under any employee benefit plan
or program of the Company or any subsidiary in which he participates;
provided, however, that Good Reason for termination shall not exist in
the case of a benefit reduction or elimination generally applicable to
all executives of the Company, unless the benefit reduction or
elimination affects the Executive's compensation under Section 4.A.,
4.B., 4.C.l., 4.C.2. or 4.C.3.;
2. the loss of any of the Executive's titles or positions as
described in Section 3;
3. a significant diminution in the Executive's duties and
responsibilities or the assignment to the Executive of duties and
responsibilities inconsistent with his positions;
4. the relocation of the Company's principal office, or the
Executive's own office location as assigned to him by the Company, to
a location more than 50 miles from the present location of the
Company's principal office;
5. a Change of Control of the Company;
6. the failure of the Company to obtain the unconditional
assumption in writing or by operation of law of the Company's
obligations to the Executive under this Agreement by any successor
prior to or at the time of a reorganization, merger, consolidation,
disposition of all or substantially all of the assets of the Company
or similar transaction; or
7. a breach by the Company of this Agreement, which breach
continues for more than 30 days following written notice given by the
Executive to the Company.
F. Termination by Executive Without Good Reason. The Executive may
terminate his employment hereunder at any time on 30 days' written notice to
the Company.
-6-
<PAGE> 7
SECTION 6. Change of Control.
A. Upon the Executive's termination of employment for any reason
following a Change of Control, as defined below, any restrictions on any stock
option, restricted stock, stock appreciation right, unit or other equity-based
incentive provided under the Option Plan or any other plan of the Company (a
"Stock Plan") shall lapse immediately, all options shall become fully and
immediately exercisable, and, notwithstanding any provision of Section 7, the
Executive shall have the full, original term specified for each award in which
to exercise all rights under such Stock Plans.
B. A Change of Control means the occurrence of any of the following
events: (i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than a previously wholly-owned subsidiary of the Company), (ii)
the Company sells, leases or exchanges all or substantially all of its assets
to any other person or entity (other than a wholly-owned subsidiary of the
Company), (iii) the Company is to be dissolved and liquidated, (iv) any person
or entity, including a "group" as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), acquires or
gains ownership or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of the Company's voting stock (based
upon voting power), or (v) as a result of or in connection with a contested
election of directors, the persons who were directors of the Company before
such election, together with their nominees, shall cease to constitute a
majority of the Board.
C. Upon a Change of Control (i) during the Term and prior to
termination of employment or (ii) within 6 months of Executive's termination of
employment if such termination is prior to the end of the Term and by the
Company without Cause or by the Executive for Good Reason, in addition to
compensation due and owing, or awards accelerated, under any other section of
this Agreement,
1. the Executive shall be paid, on the date of the closing
of the transaction which constitutes a Change of Control, a lump sum
cash payment in an amount equal to 1% of the total consideration
received by the stockholders of the Company as a result of the
transaction which constitutes the Change of Control; and
2. the Executive may elect, prior to the closing of the
transaction which constitutes a Change of Control, to receive,
promptly after the closing of such transaction, a lump sum cash
payment in exchange for cancellation of all outstanding options as of
the date of the Change of Control in an amount for each share of
Common Stock subject to the Executive's options outstanding as of the
Change of Control equal to two times the difference between (i) the
highest price per share of Common Stock paid by any person
-7-
<PAGE> 8
involved in the Change of Control and (ii) the exercise price
associated with each such option.
SECTION 7. Payments Upon Termination.
A. Upon termination of the Executive's employment for any reason prior
to the expiration of the Term, the Company shall be obligated to pay, and the
Executive shall be entitled to receive:
1 . all accrued and unpaid Base Salary under Section 4.A. to
the date of termination;
2. any unpaid bonus under Section 4.B. for the fiscal year
ending prior to the date of termination;
3. all accrued but unused or unpaid time off with pay under
Section 4.G.;
4. all incurred but unreimbursed expenses for which the
Executive is entitled to reimbursement under Section 4.H.; and
5. any benefits to which he is entitled under the terms of
any applicable employee pension or benefit plan or program, or
applicable law.
Unless otherwise provided below, all options granted to the Executive
shall remain exercisable, to the extent exercisable as of the date of
termination, for a period of 6 months following the date of termination.
B. Upon termination of the Executive's employment upon the death of
Executive pursuant to Section 5.A., the Company shall be obligated to pay, and
the Executive shall be entitled to receive:
1 . all of the amounts and benefits described in Section
7.A.;
2. a bonus award for the fiscal year in which his termination
due to death occurs, in an amount equal to the greater of (a) the
highest annual bonus under Section 4.B. awarded to the Executive in a
prior year or (b) the target bonus for the fiscal year in which
termination occurs, prorated for the number of days of the year that
elapsed prior to his termination of employment;
-8-
<PAGE> 9
3. the medical benefits payable under Section 4.F., which
shall be provided to the Executive's spouse for life; and
4. any death benefit payable under a plan or policy provided
by the Company.
Upon a termination due to death, any restrictions on any stock option,
restricted stock, stock appreciation right, unit or other equity-based
incentive provided under a Stock Plan shall lapse immediately, all options
shall become fully and immediately exercisable, and the estate of the Executive
shall have a period of one year from the date of termination in which to
exercise all rights under such Stock Plans.
C. Upon termination of the Executive's employment upon the Disability
of the Executive pursuant to Section 5.B., the Company shall be obligated to
pay, and the Executive shall be entitled to receive:
1. all of the amounts and benefits described in 7.A.;
2. the Base Salary, at the rate in effect immediately prior
to the date of his termination of employment due to Disability for a
period of one year following such termination, but reduced to reflect
the amount of any option granted in lieu of salary pursuant to Section
4.C.2. or 4.C.3. for such period and offset by any payments the
Executive receives under the Company's long-term disability plan and
any supplements thereto, whether funded or unfunded, which is adopted
by the Company for the Executive's benefit;
3. a bonus award for the fiscal year in which his termination
due to Disability occurs, in an amount equal to the greater of (a) the
highest annual bonus under Section 4.B. awarded to the Executive in a
prior year or (b) the target bonus for the fiscal year in which
termination occurs, prorated for the number of days of the year that
elapsed prior to his termination of employment;
4. the medical benefits payable under Section 4.F., which
shall be provided to the Executive and his spouse for life;
5. long-term disability payments, payable at least monthly,
beginning one year after the Executive's termination of employment due
to Disability and continuing until the earliest to occur of the
termination of his Disability, his death or his attainment of age 65,
in an amount equal to 60% of his Base Salary, at the rate in effect
immediately prior to the date of his termination of
-9-
<PAGE> 10
employment due to Disability, reduced by any long-term disability
payments he receives from any disability plan or programs sponsored by
the Company (but not by any retirement benefits that commence due to
his termination of employment); and
6. commencing with the first month following the month in
which the Executive is terminated, payments to which the Executive is
entitled under any plans or programs of the Company providing
long-term disability or retirement benefits.
Upon a termination due to Disability, any restrictions on any stock
option, restricted stock, stock appreciation right, unit or other equity-based
incentive provided under a Stock Plan shall lapse immediately, all options
shall become fully and immediately exercisable, and the Executive shall have a
period of one year from the date of termination in which to exercise all rights
under such Stock Plans.
In the event a Change of Control occurs after the Executive's
termination of employment due to Disability, the Executive shall be entitled to
a lump-sum payment of the aggregate amounts specified under clauses 1., 2., 3.,
5. and 6. of this Section 7.C. that have not been paid to the Executive,
payable within 5 days after the Change of Control, and all other benefits
payable pursuant to this Section 7.C. shall continue to be paid in accordance
with the terms hereof.
Payments under Section 7.C., with the exception of amounts due
pursuant to Section 7.C.l., are conditioned on the execution by the Executive
of a release of all employment-related claims; provided, however, that such
release shall be contingent upon the Company's satisfaction of all terms and
conditions of this Agreement.
D. Upon termination of the Executive's employment: (i) by the Company
without Cause pursuant to Section 5.C.; or (ii) by the Executive for Good
Reason pursuant to Section 5.E., the Company shall be obligated to pay, and the
Executive shall be entitled to receive:
1. all of the amounts and benefits described in Section
7.A.;
2. a lump sum payment, within 10 days of termination, equal
to the unpaid Base Salary for the remaining Term as if there had been
no termination, reduced to reflect the amount of any option granted in
lieu of salary pursuant to Section 4.C.2. or 4.C.3. for such period;
3. a lump sum payment, within 10 days of termination, equal
to the annual bonuses for the remainder of the Term (including a pro
rated bonus for any partial year), calculated as the greater of (a)
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<PAGE> 11
the highest annual bonus awarded under Section 4.B. to the Executive
during any prior year and (b) the target bonus for the fiscal year in
which termination of Employment occurs;
4. continued participation in all employee benefit programs
of the Company for the remainder of the Term as if no termination of
employment had occurred; and
5. the medical benefits described in Section 4.F., which
shall be provided to the Executive and his spouse for life.
In addition to the benefits mentioned above, upon a termination by the
Company without Cause or by the Executive with Good Reason, any restrictions on
any stock option, restricted stock, stock appreciation right, unit or other
equity-based incentive provided under a Stock Plan shall lapse immediately, all
options shall become immediately and fully exercisable and the Executive shall
have the full, original term specified for each award in which to exercise all
rights under such Stock Plans. The Executive shall also be entitled to full
vesting of his interest under the Company's retirement plans. Any benefit due
to the Executive as a result of the previous sentence which may not be paid
under the Company's qualified retirement plans is to be paid by the Company.
Payments under Section 7.D., with the exception of amounts due
pursuant to Section 7.D.1., are conditioned on the execution by the Executive
of a release of all employment-related claims; provided, however, that such
release shall be contingent upon the Company's satisfaction of all terms and
conditions of this Agreement.
E. Certain Additional Payments by the Company.
1 . Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment, benefit or distribution by the Company to or for the benefit
of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise,
but determined without regard to any additional payments required
under this Section 7.E.) (a "Payment") would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties
are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed
with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax
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<PAGE> 12
imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
2. All determinations required to be made under this Section
7.E., including whether and when a Gross-Up Payment is required and
the amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by the Company's
independent auditors (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive
within 15 business days after the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by
the Company. The determination of tax liability made by the Accounting
Firm shall be subject to review by the Executive's tax advisor, and,
if the Executive's tax advisor does not agree with the determination
reached by the Accounting Firm, then the Accounting Firm and the
Executive's tax advisor shall jointly designate a nationally
recognized public accounting firm which shall make the determination.
All fees and expenses of the accountants and tax advisors retained by
both the Executive and the Company shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section
7.E., shall be paid by the Company to the Executive within five days
after the receipt of the determination. Any determination by such
jointly designated public accounting firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination hereunder, it is possible that Gross-Up Payments will
not have been made by the Company that should have been made
("Underpayment"), or that excessive Gross-Up Payments will be made
that should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Executive thereafter is required to make a payment of any Excise Tax,
any such Underpayment shall be promptly paid by the Company to or for
the benefit of the Executive. In the event that there is determined to
be an Overpayment, any such Overpayment shall be promptly paid by the
Executive to the Company.
F. In the event of any termination of employment under this Section 7,
the Executive shall be under no obligation to seek other employment, and there
shall be no offset against amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent employment or
self-employment that he may obtain.
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SECTION 8. Indemnification. The Company agrees to indemnify the
Executive to the fullest extent permitted by applicable law consistent with
the Company's Certificate of Incorporation and By-Laws in effect as of the date
hereof with respect to any acts or non-acts he may have committed during the
period during which he was an officer, director and/or employee of the Company
or any subsidiary thereof, or of any other entity of which he served as an
officer, director or employee at the request of the Company.
SECTION 9. Amendment: Waiver. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by
each of the parties hereto, and compliance with the terms and provisions hereof
may be waived only by a written instrument executed by each party entitled to
the benefits thereof. No failure or delay on the part of any party in
exercising any right, power or privilege granted hereunder shall constitute a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege granted hereunder.
SECTION 10. Entire Agreement. Except as contemplated herein, this
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes any and all prior written or oral
agreements, arrangements or understandings between the Company and the
Executive.
SECTION 11. Notices. All notices or communications hereunder shall be
in writing, addressed as follows or to any address subsequently provided to the
other party:
To the Company:
TransCoastal Marine Services, Inc.
Attention: Chief Legal Officer
2925 Briarpark Drive, Suite 930
Houston, TX 77042
To the Executive:
Nathan M. Avery
4900 Woodway, 12th Floor
Houston, TX 77056
All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery or overnight courier, upon receipt,
(ii) if sent by telecopy or facsimile transmission, upon confirmation of
receipt by the sender of such transmission or (iii) if sent by registered or
certified mail, on the fifth day after the day on which such notice is mailed.
SECTION 12. Severability. In the event that any term or provision of
this Agreement is found to be invalid, illegal or unenforceable, the validity,
legality and enforceability
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of the remaining terms and provisions hereof shall not be in any way affected
or impaired thereby, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained therein.
SECTION 13. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns (it being understood and agreed that, except as
expressly provided herein, nothing contained in this Agreement is intended to
confer upon any other person or entity any rights, benefits or remedies of any
kind or character whatsoever). No rights or obligations of the Company under
this Agreement may be assigned or transferred by the Company except that such
rights or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in
the preceding sentence, it shall take whatever action it legally can in order
to cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder.
SECTION 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (except that no
effect shall be given to any conflicts of law principles thereof that would
require the application of the laws of another jurisdiction).
SECTION 15. Costs. It is the intent of the Company that Executive not
be required to incur legal fees and the related expenses associated with the
interpretation, enforcement or defense of Executive's rights under this
Agreement by litigation or otherwise because the cost and expense thereof would
detract from the benefits intended to be extended to Executive hereunder.
Accordingly, if it should appear to Executive that the Company has failed to
comply with any of its obligations under this Agreement or in the event that
the Company or any other person takes or threatens to take any action to
declare this Agreement void or unenforceable, or institutes any litigation or
other action or proceeding designed to deny, or to recover from, the Executive
the benefits provided or intended to be provided to Executive hereunder, the
Company irrevocably authorizes the Executive from time to time to retain
counsel of Executive's choice, at the expense of the Company as hereafter
provided, to advise and represent Executive in connection with any such
interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Without respect to whether
Executive prevails, in whole or in part, in connection with any of the
foregoing, the Company will pay and be solely financially responsible for any
and all attorneys' fees and reasonable related expenses incurred by Executive in
connection with any of the foregoing except to the extent that a final judgment
no longer subject to appeal finds that a claim or defense asserted by Executive
was frivolous. In such a case, the portion of such fees and expenses incurred
by Executive as a result
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of such frivolous claim or defense shall become Executive's sole responsibility
and any funds advanced by the Company shall be repaid.
SECTION 16. Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
SECTION 17. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date set forth above.
TRANSCOSTAL MARINE SERVICES, INC.
By: /s/ [ILLEGIBLE]
-------------------------------------
EXECUTIVE
/s/ NATHAN M. AVERY
----------------------------------------
Nathan M. Avery
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EXHIBIT 10.33
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement"), entered into on December
14, 1998, but effective as of November 16, 1998, by and between TRANSCOASTAL
MARINE SERVICES, INC. (the "Company"), and PAMELA L. REILAND (the "Executive"),
WITNESSETH:
WHEREAS, the Company desires to secure the experience, abilities and
service of the Executive by employing the Executive upon the terms and
conditions specified herein; and
WHEREAS, the Executive is willing to enter into this Agreement upon
the terms and conditions specified herein;
NOW, THEREFORE, in consideration of the premises, the terms and
provisions set forth herein, the mutual benefits to be gained by the
performance thereof and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Employment. The Company hereby employs the Executive, and
the Executive hereby accepts such employment, all upon the terms and conditions
set forth herein.
SECTION 2. Term. Subject to the terms and conditions of this
Agreement, the Executive shall be employed by the Company commencing on
November 16, 1998 (the "Effective Date") and terminating on November 15, 2001
(the "Term") unless sooner terminated pursuant to Section 5 of this Agreement.
SECTION 3. Duties and Responsibilities.
A. Capacity. The Executive shall serve in the capacity of Executive
Vice President of the Company. The Executive shall perform the duties
ordinarily expected of an Executive Vice President and shall also perform such
other duties consistent therewith as the Chief Executive Officer and the Board
of Directors of the Company (the "Board") shall, from time to time, reasonably
determine.
B. Full-Time Duties. The Executive shall devote her full business
time, attention and energies to the business of the Company. Notwithstanding
anything herein to the contrary, the Executive shall be allowed to (a) manage
the Executive's personal investments and affairs, and (b) (i) serve on boards
or committees of civic or charitable organizations or trade associations, and
(ii) serve on the board of directors of any corporation or as an advisory
director of any corporation;
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provided that such activities do not materially interfere with the proper
performance of her duties and responsibilities specified in Section 3.A.
SECTION 4. Compensation.
A. Base Salary. During the Term, the Executive shall receive a
salary (the "Base Salary") of at least $100,000 per annum. The Base Salary
shall be payable by the Company in accordance with the general payroll
practices of the Company in effect from time to time. During the term of this
Agreement, the Base Salary shall be reviewed prior to the beginning of each
fiscal year of the Company for increase in the discretion of the Board.
B. Annual Incentive Bonus. The Executive shall be eligible for an
annual bonus payable in the January following the completion of each fiscal
year, commencing in January 2000. The annual bonus payable in January 2000
shall be the greater of (i) $50,000 or (ii) 50% of Base Salary, provided that
the Executive may elect to receive equity compensation pursuant to Section
4.C.2. in lieu of a cash bonus. In subsequent years, the Executive shall be
eligible for a bonus at a target level of 50% of Base Salary, provided that the
Executive may elect to receive equity compensation pursuant to Section 4.C.2.
in lieu of a cash bonus. The Executive's bonus will be determined by the Board
in a manner consistent with the Company's established cash performance bonus
program based on Company and individual performance and shall be prorated
appropriately for partial fiscal years' service.
C. Equity Compensation.
1. Initial Option Award. As of the execution of this Agreement,
the Executive shall be granted an option (the "Initial Option") to
purchase 50,000 shares of the common stock of the Company, par value
$.001 per share ("Common Stock"), at an exercise price equal to the
fair market value per share of Common Stock on the date of grant. The
Initial Option shall be immediately exercisable with respect to 1/3 of
the shares of Common Stock subject thereto, and, unless accelerated
pursuant to another provision of this Agreement, the remainder will
become exercisable in cumulative 1/3 increments on the first and
second anniversaries of the Effective Date, such that the Initial
Option will become 100% exercisable on the second anniversary of the
Effective Date. The Initial Option shall have a 10 year term. The
Initial Option shall be granted pursuant to the 1997 Stock Option
Plan, or other plan having substantially similar terms and benefits,
including having a Registration Statement on Form S-8 filed with the
Securities and Exchange Commission (the "Option Plan"). The Initial
Option is intended to be an "incentive stock option" within Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), to
the
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maximum extent possible. The Initial Option will be evidenced by an
option agreement between the Company and the Executive.
2. Substitute Option Awards in Lieu of Bonus. As provided in
Section 4.A., the Executive may elect to receive her annual bonuses in
the form of options (the "Substitute Options") to purchase shares of
Common Stock. The election to receive the bonuses in the form of
Substitute Options may be made separately with respect to each bonus
payment, and must be made prior to the date such bonus is payable. The
Substitute Option, if elected, will be granted as of the date the cash
bonus would otherwise be payable to the Executive. The exercise price
of the Substitute Option shall be the fair market value of a share of
Common Stock on the first day of the respective 12-month period. The
number of shares subject to the Substitute Option shall be calculated
such that the aggregate exercise price of the option equals 5 times
the Executive's cash bonus otherwise payable. Unless accelerated
pursuant to another provision of this Agreement, the Substitute Option
for the first bonus payable during the Term will become exercisable in
cumulative monthly increments of 1/12 on the 16th day of each
calendar month beginning with the month after the date of grant, such
that the Substitute Option will be 100% exercisable on the first
anniversary of the date of grant. Any Substitute Option for subsequent
bonuses payable during the Term will be immediately exercisable in
full as of the date of grant. The Substitute Option shall have a term
of 5 years. The Substitute Option shall be granted pursuant to the
Option Plan. The terms of the Substitute Option will be evidenced by
an option agreement between the Company and the Executive.
3. Other Awards During Term. During the term of this Agreement, the
Executive shall be eligible for grants of stock options, restricted
stock, stock appreciation rights and other incentive awards under and
in accordance with the Company's Option Plan or any comparable or
successor plans that may be adopted by the Company at the sole
discretion of the Board of Directors. All such incentive awards shall
take into account the Executive's positions, duties and
responsibilities at the Company.
D. Executive Deferred Compensation. The Executive will be eligible to
participate in all aspects of the Company's deferred compensation plan or
program on terms at least as favorable as other top executives of the Company.
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E. Retirement Plans. The Executive will be eligible to participate in
the Company's qualified or nonqualified retirement plan, or any similar plan,
subject to satisfying the eligibility requirements of such plans.
F. Health, Life and Disability Coverage. The Executive will be covered
under the Company's group health, group life insurance, accidental death and
dismemberment, travel accident, long-term disability and short-term disability
plans under terms generally applicable to other similarly situated employees
of the Company.
G. Time Off With Pay. The Executive shall be immediately credited with
20 days of accrued paid time off as of the Effective Date. In addition, the
Executive will accrue at least 4 weeks vacation per year of service.
H. Other Benefits.
1. The Executive shall be entitled to receive prompt reimbursement
by the Company for all reasonable, out-of-pocket expenses incurred by
her in performing services under this Agreement upon the submission by
the Executive of such accounts and records as may be required under
Company policy.
2. The Executive shall be entitled to reimbursement for attorneys'
fees and expenses incurred in the course of negotiating the terms of
this Agreement.
3. In addition to any other benefits in this Section 4, the
Executive shall be entitled to participate in all employee benefit
plans and programs made available to the Company's senior executives
or to its employees generally, as such plans or programs may be in
effect from time to time, whether funded or unfunded.
SECTION 5. Termination of Employment.
Notwithstanding the provisions of Section 2, the Executive's
employment hereunder may terminate under any of the following conditions:
A. Death. The Executive's employment under this Agreement shall
terminate automatically upon her death.
B. Disability. The Executive's employment under this Agreement may be
terminated due to her Disability. "Disability" shall mean the Executive's
complete inability to substantially perform her duties for any period of at
least 120 consecutive days due to physical or mental incapacity. The date of
termination due to Disability shall be the date the Executive elects
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to terminate service due to Disability or, if earlier, the date the Board
determines that the Executive has met the definition of Disability.
C. Termination by Company Without Cause. The Company may terminate the
Executive's employment hereunder without Cause (as hereinafter defined) on 30
days' prior written notice to the Executive.
D. Termination by Company for Cause. The Executive's employment
hereunder may be terminated for Cause by the Company. For purposes of this
Agreement, "Cause" means:
1. the Executive is convicted of a misdemeanor involving moral
turpitude or a felony, and the conviction is final and nonappealable;
or
2. the Executive's serious, willful gross misconduct or willful
gross neglect of duties.
Any termination of the Executive's employment by the Company for Cause
under Section 5.D.2. shall be authorized by a vote of at least a majority of
the non-employee members of the Board. The Executive shall be given notice by
the Board specifying in detail the particular act or failure to act on which
the Board is relying in proposing to terminate her for Cause under 5.D.2. and
offering the Executive an opportunity, on a date at least 5 days after receipt
of such notice, to have a hearing, with counsel, before a majority of the
non-employee members of the Board, including each of the members of the Board
who authorized the termination for Cause.
E. Termination by Executive for Good Reason. The Executive may
terminate her employment hereunder for "Good Reason." For purposes of this
Section 5.E., "Good Reason" for termination shall exist if, without the consent
of the Executive, any of the following events occur:
1. a reduction in the Executive's Base Salary, or the elimination
or reduction of a benefit under any employee benefit plan or program
of the Company or any subsidiary in which she participates; provided,
however, that Good Reason for termination shall not exist in the case
of a benefit reduction or elimination generally applicable to all
executives of the Company, unless the benefit reduction or elimination
affects Executive's compensation under Section 4.A., 4.B., 4.C.l.,
4.C.2. or 4.C.3.
2. the loss of any of the Executive's titles or positions as
described in Section 3;
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3. a significant diminution in the Executive's duties and
responsibilities or the assignment to the Executive of duties and
responsibilities inconsistent with her positions;
4. the relocation of the Company's principal office, or the
Executive's own office location as assigned to her by the Company, to
a location more than 50 miles from the present location of the
Company's principal office;
5. a Change of Control of the Company;
6. the failure of the Company to obtain the unconditional
assumption in writing or by operation of law of the Company's
obligations to the Executive under this Agreement by any successor
prior to or at the time of a reorganization, merger, consolidation,
disposition of all or substantially all of the assets of the Company
or similar transaction; or
7. a breach by the Company of this Agreement, which breach
continues for more than 30 days following written notice given by the
Executive to the Company.
F. Termination by Executive Without Good Reason. The Executive may
terminate her employment hereunder at any time on 30 days' written notice to
the Company.
SECTION 6. Change of Control.
A. Upon the Executive's termination of employment for any reason
following a Change of Control, as defined below, any restrictions on any stock
option, restricted stock, stock appreciation right, unit or other equity-based
incentive provided under the Option Plan or any other plan of the Company (a
"Stock Plan") shall lapse immediately, all options shall become fully and
immediately exercisable, and, notwithstanding any provision of Section 7, the
Executive shall have the full, original term specified for each award in which
to exercise all rights under such Stock Plans.
B. A Change of Control means the occurrence of any of the following
events: (i) the Company shall not be the surviving entity in any merger,
consolidation or other reorganization (or survives only as a subsidiary of an
entity other than a previously wholly-owned subsidiary of the Company), (ii)
the Company sells, leases or exchanges all or substantially all of its assets
to any other person or entity (other than a wholly-owned subsidiary of the
Company), (iii) the Company is to be dissolved and liquidated, (iv) any person
or entity, including a "group" as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), acquires or gains
ownership or control (including, without limitation, power to vote) of more
than 50% of the outstanding shares of the Company's voting stock (based upon
voting power), or (v) as a result of
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or in connection with a contested election of directors, the persons who were
directors of the Company before such election, together with their nominees,
shall cease to constitute a majority of the Board.
C. Upon a Change of Control (i) during the Term and prior to
termination of employment or (ii) within 6 months of Executive's termination of
employment if such termination is prior to the end of the Term and by the
Company without Cause or by the Executive for Good Reason, in addition to
compensation due and owing, or awards accelerated, under any other section of
this Agreement, the Executive may elect, prior to the closing of the
transaction which constitutes a Change of Control, to receive, promptly after
the closing of such transaction, a lump sum cash payment in exchange for
cancellation of all outstanding options as of the date of the Change of Control
in an amount for each share of Common Stock subject to the Executive's options
outstanding as of the Change of Control equal to two times the difference
between (i) the highest price per share of Common Stock paid by any person
involved in the Change of Control and (ii) the exercise price associated with
each such option.
SECTION 7. Payments Upon Termination.
A. Upon termination of the Executive's employment for any reason prior
to the expiration of the Term, the Company shall be obligated to pay, and the
Executive shall be entitled to receive:
1. all accrued and unpaid Base Salary under Section 4.A. to the
date of termination;
2. any unpaid bonus under Section 4.B. for the fiscal year ending
prior to the date of termination;
3. all accrued but unused or unpaid time off with pay under Section
4.G.;
4. all incurred but unreimbursed expenses for which the Executive
is entitled to reimbursement under Section 4.H.; and
5. any benefits to which she is entitled under the terms of any
applicable employee pension or benefit plan or program, or applicable
law.
Unless otherwise provided below, all options granted to the Executive
shall remain exercisable, to the extent exercisable as of the date of
termination, for a period of 6 months following the date of termination.
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B. Upon termination of the Executive's employment upon the death of
Executive pursuant to Section 5.A., the Company shall be obligated to pay, and
the Executive shall be entitled to receive:
1. all of the amounts and benefits described in Section 7.A.;
2. a bonus award for the fiscal year in which her termination due
to death occurs, in an amount equal to the greater of (a) the highest
annual bonus under Section 4.B. awarded to the Executive in a prior
year or (b) the target bonus for the fiscal year in which termination
occurs, prorated for the number of days of the year that elapsed prior
to her termination of employment;
3. the medical benefits payable under Section 4.F., which shall be
payable to the Executive's spouse for life; and
4. any death benefit payable under a plan or policy provided by the
Company.
Upon a termination due to death, any restrictions on any stock option,
restricted stock, stock appreciation right, unit or other equity-based
incentive provided under a Stock Plan shall lapse immediately, all options
shall become fully and immediately exercisable, and the estate of the Executive
shall have a period of one year from the date of termination in which to
exercise all rights under such Stock Plans.
C. Upon termination of the Executive's employment upon the Disability
of the Executive pursuant to Section 5.B., the Company shall be obligated to
pay, and the Executive shall be entitled to receive:
1. all of the amounts and benefits described in 7.A.;
2. the Base Salary, at the rate in effect immediately prior to the
date of her termination of employment due to Disability, for a period
of one year following such termination, offset by any payments the
Executive receives under the Company's long-term disability plan and
any supplements thereto, whether funded or unfunded, which is adopted
by the Company for the Executive's benefit;
3. a bonus award for the fiscal year in which her termination due
to Disability occurs, in an amount equal to the greater of (a) the
highest annual bonus under Section 4.B. awarded to the
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Executive in a prior year or (b) the target bonus for the fiscal year
in which termination occurs, prorated for the number of days of the
year that elapsed prior to her termination of employment;
4. the medical benefits payable under Section 4.F., which shall be
provided to the Executive and her spouse for life;
5. long-term disability payments, payable at least monthly,
beginning one year after the Executive's termination of employment
due to Disability and continuing until the earliest to occur of the
termination of her Disability, her death or her attainment of age 65,
in an amount equal to 60% of her Base Salary, at the rate in effect
immediately prior to the date of her termination of employment due to
Disability, reduced by any long-term disability payments she receives
from any disability plan or programs sponsored by the Company (but not
by any retirement benefits that commence due to her termination of
employment); and
6. commencing with the first month following the month in which the
Executive is terminated, payments to which the Executive is entitled
under any plans or programs of the Company providing long-term
disability or retirement benefits.
Upon a termination due to Disability, any restrictions on any stock
option, restricted stock, stock appreciation right, unit or other equity-based
incentive provided under a Stock Plan shall lapse immediately, all options
shall become fully and immediately exercisable, and the Executive shall have a
period of one year from the date of termination in which to exercise all rights
under such Stock Plans.
In the event a Change of Control occurs after the Executive's
termination of employment due to Disability, the Executive shall be entitled to
a lump-sum payment of the aggregate amounts specified under clauses 1., 2., 3.,
5. and 6. of this Section 7.C. that have not been paid to the Executive,
payable within 5 days after the Change of Control, and all other benefits
payable pursuant to this Section 7.C. shall continue to be paid in accordance
with the terms hereof.
Payments under Section 7.C., with the exception of amounts due
pursuant to Section 7.C.1., are conditioned on the execution by the Executive
of a release of all employment-related claims; provided, however, that such
release shall be contingent upon the Company's satisfaction of all terms and
conditions of this Agreement.
D. Upon termination of the Executive's employment: (i) by the Company
without Cause pursuant to Section 5.C.; or (ii) by the Executive for Good
Reason pursuant to Section 5.E, the Company shall be obligated to pay, and the
Executive shall be entitled to receive:
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1. all of the amounts and benefits described in Section 7.A.;
2. a lump sum payment, within 10 days of termination, equal to the
unpaid Base Salary for the remaining Term, as if there had been no
termination;
3. a lump sum payment, within 10 days of termination, equal to the
annual bonuses for the remainder of the Term (including a pro rated
bonus for any partial year), calculated as the greater of (a) the
highest annual bonus awarded under Section 4.B. to the Executive
during any prior year and (b) the target bonus for the fiscal year in
which termination of Employment occurs;
4. continued participation in all employee benefit programs of the
Company for the remainder of the Term as if no termination of
employment had occurred; and
5. the medical benefits described in Section 4.F., which shall be
provided to the Executive and her spouse for life.
In addition to the benefits mentioned above, upon a termination by the
Company without Cause or by the Executive with Good Reason, any restrictions on
any stock option, restricted stock, stock appreciation right, unit or other
equity-based incentive provided under a Stock Plan shall lapse immediately, all
options shall become immediately and fully exercisable and the Executive shall
have the full, original term specified for each award in which to exercise all
rights under such Stock Plans. The Executive shall also be entitled to full
vesting of her interest under the Company's retirement plans. Any benefit due
to the Executive as a result of the previous sentence which may not be paid
under the Company's qualified retirement plans is to be paid by the Company.
Payments under Section 7.D., with the exception of amounts due
pursuant to Section 7.D.1., are conditioned on the execution by the Executive
of a release of all employment-related claims; provided, however, that such
release shall be contingent upon the Company's satisfaction of all terms and
conditions of this Agreement.
E. Certain Additional Payments by the Company.
1. Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment, benefit or
distribution by the Company to or for the benefit of the Executive
(whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise, but determined without
regard to any additional payments required under this
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Section 7.E.) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred
by the Executive with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
2. All determinations required to be made under this Section 7.E.,
including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by the Company's
independent auditors (the "Accounting Firm") which shall provide
detailed supporting calculations both to the Company and the Executive
within 15 business days after the receipt of notice from the Executive
that there has been a Payment, or such earlier time as is requested by
the Company. The determination of tax liability made by the
Accounting Firm shall be subject to review by the Executive's tax
advisor, and, if the Executive's tax advisor does not agree with the
determination reached by the Accounting Firm, then the Accounting Firm
and the Executive's tax advisor shall jointly designate a nationally
recognized public accounting firm which shall make the determination.
All fees and expenses of the accountants and tax advisors retained by
both the Executive and the Company shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this Section
7.E., shall be paid by the Company to the Executive within five days
after the receipt of the determination. Any determination by such
jointly designated public accounting firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination hereunder, it is possible that Gross-Up Payments will
not have been made by the Company that should have been made
("Underpayment"), or that excessive Gross-Up Payments will be made
that should not have been made ("Overpayment"), consistent with the
calculations required to be made hereunder. In the event that the
Executive thereafter is required to make a payment of any Excise
-11-
<PAGE> 12
Tax, any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive. In the event that there is
determined to be an Overpayment, any such Overpayment shall be
promptly paid by the Executive to the Company.
F. In the event of any termination of employment under this Section 7,
the Executive shall be under no obligation to seek other employment, and there
shall be no offset against amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent employment or
self-employment that she may obtain.
SECTION 8. Indemnification. The Company agrees to indemnify the
Executive to the fullest extent permitted by applicable law consistent with the
Company's Certificate of Incorporation and By-Laws in effect as of the date
hereof with respect to any acts or non-acts she may have committed during the
period during which she was an officer, director and/or employee of the
Company or any subsidiary thereof, or of any other entity of which she served
as an officer, director or employee at the request of the Company.
SECTION 9. Amendment; Waiver. The terms and provisions of this
Agreement may be modified or amended only by a written instrument executed by
each of the parties hereto, and compliance with the terms and provisions hereof
may be waived only by a written instrument executed by each party entitled to
the benefits thereof. No failure or delay on the part of any party in
exercising any right, power or privilege granted hereunder shall constitute a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or the
exercise of any other right, power or privilege granted hereunder.
SECTION 10. Entire Agreement. Except as contemplated herein, this
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes any and all prior written or oral
agreements, arrangements or understandings between the Company and the
Executive.
SECTION 11. Notices. All notices or communications hereunder shall be
in writing, addressed as follows or to any address subsequently provided to the
other party:
To the Company:
TransCoastal Marine Services, Inc.
Attention: Chief Legal Officer
2925 Briarpark Drive, Suite 930
Houston, TX 77042
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<PAGE> 13
To the Executive:
Pamela L. Reiland
2926 Briarpark Drive, Suite 930
Houston, TX 77042
All such notices shall be conclusively deemed to be received and shall be
effective, (i) if sent by hand delivery or overnight courier, upon receipt,
(ii) if sent by telecopy or facsimile transmission, upon confirmation of
receipt by the sender of such transmission or (iii) if sent by registered or
certified mail, on the fifth day after the day on which such notice is mailed.
SECTION 12. Severability In the event that any term or provision of
this Agreement is found to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining terms and provisions hereof shall
not be in any way affected or impaired thereby, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained therein.
SECTION 13. Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors
and assigns (it being understood and agreed that, except as expressly provided
herein, nothing contained in this Agreement is intended to confer upon any
other person or entity any rights, benefits or remedies of any kind or
character whatsoever). No rights or obligations of the Company under this
Agreement may be assigned or transferred by the Company except that such rights
or obligations may be assigned or transferred pursuant to a merger or
consolidation in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company, provided
that the assignee or transferee is the successor to all or substantially all of
the assets of the Company and such assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained in this
Agreement, either contractually or as a matter of law. The Company further
agrees that, in the event of a sale of assets or liquidation as described in
the preceding sentence, it shall take whatever action it legally can in order
to cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder.
SECTION 14. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (except that no
effect shall be given to any conflicts of law principles thereof that would
require the application of the laws of another jurisdiction).
SECTION 15. Costs. It is the intent of the Company that Executive not
be required to incur legal fees and the related expenses associated with the
interpretation, enforcement or defense of Executive's rights under this
Agreement by litigation or otherwise because the cost and expense thereof would
detract from the benefits intended to be extended to Executive hereunder.
Accordingly, if it should appear to Executive that the Company has failed to
comply with any of its obligations under this Agreement or in the event that
the Company or any other person takes or threatens to take any action to
declare this Agreement void or unenforceable, or institutes any
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<PAGE> 14
litigation or other action or proceeding designed to deny, or to recover from,
the Executive the benefits provided or intended to be provided to Executive
hereunder, the Company irrevocably authorizes the Executive from time to time
to retain counsel of Executive's choice, at the expense of the Company as
hereafter provided, to advise and represent Executive in connection with any
such interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation or other legal action, whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between the Company and such counsel, the
Company irrevocably consents to Executive entering into an attorney-client
relationship with such counsel, and in that connection the Company and
Executive agree that a confidential relationship will exist between Executive
and such counsel. Without respect to whether Executive prevails, in whole or in
part, in connection with any of the foregoing, the Company will pay and be
solely financially responsible for any and all attorneys' fees and reasonable
related expenses incurred by Executive in connection with any of the foregoing
except to the extent that a final judgment no longer subject to appeal finds
that a claim or defense asserted by Executive was frivolous. In such a case,
the portion of such fees and expenses incurred by Executive as a result of such
frivolous claim or defense shall become Executive's sole responsibility and any
funds advanced by the Company shall be repaid.
SECTION 16. Headings. The headings of the sections contained in this
Agreement are for convenience only and shall not be deemed to control or affect
the meaning or construction of any provision of this Agreement.
SECTION 17. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement
effective as of the date set forth above.
TRANSCOASTAL MARINE SERVICES, INC.
By: /s/ [ILLEGIBLE]
-------------------------------
EXECUTIVE
/s/ PAMELA L. REILAND
-----------------------------------
Pamela L. Reiland
-14-
<PAGE> 1
EXHIBIT 10.36
TRANSCOASTAL MARINE SERVICES, INC.
1998 STOCK OPTION PLAN
ARTICLE I
GENERAL PROVISIONS
1.1 PURPOSE.
The purposes of the TransCoastal Marine Services, Inc. 1998 Stock
Option Plan (the "Plan") are to advance the best interest of TransCoastal Marine
Services, Inc. (the "Company") and to attract, retain, and motivate certain key
management employees of the Company (the "Participants"), and provide such
persons with additional incentive to further the business, promote the long-term
financial success and increase shareholder value of the Company by increasing
their proprietary interest in the success of the Company. Pursuant to the Plan,
the Company may grant stock options ("Options") that are not intended to be
qualified pursuant to Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
1.2 GENERAL.
The terms and provisions of this Article I shall be applicable Options,
unless the context herein clearly indicates to the contrary.
1.3 ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Board of Directors (the "Board")
of the Company. The Board may designate and appoint a committee (the
"Committee") which shall be constituted so as to permit the Plan to comply with
SEC Rule 16b-3. All references to the Board shall also include the Committee, if
one is appointed. The members of the Committee shall serve at the pleasure of
the Board. The Board shall have the power where consistent with the general
purpose and intent of the Plan to (i) modify the requirements of the Plan to
conform with the law or to meet special circumstances not anticipated or covered
in the Plan, (ii) establish policies and (iii) adopt rules and regulations and
prescribe forms for carrying out the purposes and provisions of the Plan,
including the form of any stock option agreements ("Option Agreements"). Unless
otherwise provided in the Plan, the Board shall have the authority to interpret
and construe the Plan and determine all questions arising under the Plan and any
agreement made pursuant to the Plan. Any interpretation, decision or
determination made by the Board shall be final, binding and conclusive. A
majority of the Board shall constitute a quorum and an act of the majority of
the members present at any meeting at which a quorum is present shall be the act
of the Board.
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<PAGE> 2
1.4 STOCK SUBJECT TO THE PLAN.
Shares of stock ("Stock") covered by Options shall consist of that
number of shares of the Common Stock at $.001 par value per share of the Company
as are necessary to fulfill the Company's obligations under those certain
Employment Agreements effective as of November 16, 1998, by and between the
Company and each of Nathan M. Avery and Pamela L. Reiland (respectively, the
"Avery Employment Agreement" and the "Reiland Employment Agreement"). Either
authorized and unissued shares or treasury shares may be delivered pursuant to
the Plan. If any option for shares of Stock granted to a Participant lapses, or
is otherwise terminated, the Board may grant Options for such shares of Stock to
other Participants.
1.5 PARTICIPATION IN THE PLAN.
Participation in the Plan shall be limited to Nathan M. Avery and
Pamela L. Reiland. Options shall be granted from time to time to Mr. Avery and
Ms. Reiland in accordance with the terms of the Avery Employment Agreement and
the Reiland Employment Agreement, respectively.
1.6 DETERMINATION OF FAIR MARKET VALUE.
As used in the Plan, "fair market value" shall mean on any particular
day (i) if the Stock is listed or admitted for trading on any national
securities exchange or the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System, the last sale price, or if
no sale occurred, the mean between the closing high bid and low asked quotations
for such date of the Stock on the principal securities exchange on which shares
of Stock are listed, (ii) if Stock is not traded on any national securities
exchange but is quoted on the National Association of Securities Dealers, Inc.
Automated Operations System, or any similar system of automated dissemination of
quotations or securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of the Stock on such system, (iii) if
neither clause (i) nor (ii) is applicable, the mean between the high bid and low
asked quotations for the Stock as reported by the National Quotation Bureau
Incorporated if at least two securities dealers have inserted both bid and asked
quotations for shares of the Stock on at least five (5) of the ten (10)
preceding days, or (iv) if none of the conditions set forth above is met, the
fair market value of shares of Stock as determined by the Board. Provided, for
purposes of determining "fair market value" of the Stock, such value shall be
determined without regard to any restriction other than a restriction which will
never lapse. In no event shall the fair market value of the Stock be less than
its par value.
1.7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
The aggregate number of shares of Stock under Options granted under the
Plan, the Option Price, and the total number of shares of Stock which may be
purchased by a Participant upon exercise of an Option shall be adjusted by the
Board to reflect approximately any recapitalization, stock split, merger,
consolidation, reorganization, combination, liquidation, stock dividend or
similar transaction involving the Company.
-2-
<PAGE> 3
1.8 AMENDMENT AND TERMINATION OF THE PLAN.
The Plan shall terminate at midnight, November 15, 2001, but prior
thereto, may be altered, changed, modified, amended or terminated by written
amendment approved by the Board. Except as provided in this Article I, no
amendment, modification or termination of the Plan shall in any manner adversely
affect any Option previously granted under the Plan without the consent of the
affected Participant.
1.9 EFFECTIVE DATE.
The Plan shall be effective as of November 16, 1998.
1.10 SECURITIES LAW REQUIREMENTS.
(a) Legality of Issuance. No Stock shall be issued upon the exercise of
any Option unless and until the Board has determined that:
(i) The Company and the Participant have taken all actions
required to register the Stock under the Securities Act of 1933, as
amended (the "Act"), or to perfect an exemption from registration
requirements of the Act, or to determine that the registration
requirements of the Act do not apply to such exercise;
(ii) Any applicable listing requirement of any stock exchange
on which the Stock is listed has been satisfied; and
(iii) Any other applicable provision of state, federal or
foreign law has been satisfied.
(b) Restrictions on Transfer; Representations of Participant; Legends.
Regardless of whether the offering and sale of Stock under the Plan have been
registered under the Act or have been registered or qualified under the
securities laws of any state, the Company may impose restrictions and/or
prohibitions upon the sale, pledge, or other transfer of such Stock (including
the placement of appropriate legends on stock certificates) if, in the judgment
of the Company and its counsel, such restrictions and/or prohibitions are
necessary or desirable to achieve compliance with the provisions of the Act, the
securities laws of any state, or any other law or rule, including rules of
accounting. If the offering and/or sale of Stock under the Plan is not
registered under the Act and the Company determines that the registration
requirements of the Act apply but an exemption is available which requires an
investment representation or other representation, the Participant shall be
required, as a condition to acquiring such Stock, to represent that such Stock
is being acquired for investment, and not with a view to the sale or
distribution thereof, except in compliance with the Act, and to make such other
representations as are deemed necessary or appropriate by the Company and its
counsel. Stock certificates evidencing Stock acquired pursuant to an
unregistered transaction to which the Act applies shall bear a restrictive
legend as may be required or deemed advisable under the Plan or the provisions
of any applicable law.
Any determination by the Company and its counsel in connection with any
of the matters set forth in this Section 1.10 shall be conclusive and binding on
all persons.
-3-
<PAGE> 4
(c) Registration or Qualification of Securities. The Company may, but
shall not be obligated to, register or qualify the offering or sale of Stock
under the Act or any other applicable law.
(d) Exchange of Certificates. If, in the opinion of the Company and
its counsel, any legend placed on a stock certificate representing shares of
Stock issued pursuant to the Plan is no longer required, the Participant or the
holder of such certificate shall be entitled to exchange such certificate for a
certificate representing the same number of shares of Stock but lacking such
legend.
1.11 SEPARATE CERTIFICATE.
Separate certificates representing the Stock to be delivered to a
Participant upon the exercise of any Option will be issued to such Participant.
1.12 PAYMENT FOR STOCK.
Payment for shares of Stock purchased under this Plan shall be made in
full and in cash or check made payable to the Company. However, the Board in its
discretion may allow payment for shares of Stock purchased under this Plan to be
made in Stock or a combination of cash and Stock. Further, the Option Agreement
may provide for a "cashless exercise" of stock options pursuant to procedures
established by the Board. In the event that Stock is utilized in consideration
for the purchase of Stock upon the exercise of an Option, then such Stock shall
be valued at the "fair market value" as defined in Section 1.6 of the Plan.
1.13 GRANTS OF OPTIONS AND OPTION AGREEMENT.
Each Option granted under this Plan shall be evidenced by a written
Option Agreement effective on the date of grant and executed by the Company and
the Participant. Each Option granted hereunder shall contain such terms,
restrictions and conditions as the Board may determine, which terms restrictions
and conditions may or may not be the same in each case.
1.14 USE OF PROCEEDS.
The proceeds received by the Company from the sale of Stock pursuant to
the exercise of Options granted under the Plan shall be added to the Company's
general funds and used for general corporate purposes.
1.15 NON-TRANSFERABILITY OF OPTIONS.
Except as otherwise herein provided, any Option granted shall not be
transferable otherwise than by will or the laws of descent and distribution and
only the Participant may exercise the Option during his lifetime. Specifically
(but without limiting the generality of the foregoing), the Option may not be
assigned, transferred (except as provided above), pledged or hypothecated in any
way, shall not be assignable by operation of law, and shall not be subject to
execution, attachment, or similar process. Any attempted assignment, transfer,
pledge, hypothecation, or other disposition of the Option contrary to the
provisions hereof shall be null and void and without effect.
-4-
<PAGE> 5
1.16 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT.
No transfer of an Option by the Participant by will or the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice and such other evidence as
the Board may deem necessary to establish the validity of the transfer and the
acceptance by the successor to the Option of the terms and conditions of such
Option.
1.17 CHANGES IN EMPLOYMENT.
So long as the Participant shall continue to be an employee of the
Company, any Option granted to him shall not be affected by any change of duty
or position.
1.18 STOCKHOLDER RIGHTS.
No Participant shall have a right as a stockholder with respect to any
shares of Stock subject to an Option prior to the purchase of such shares of
Stock by exercise of the Option.
1.19 CHANGE OF CONTROL.
(a) In the event of a Change of Control (as hereinafter defined), the
Board, in its discretion may act to effect one or more of the following
alternatives with respect to outstanding Options, which may vary among
individual Participants and which may vary among Options held by any individual
Participant: (i) determine a limited period of time on or before a specified
date (before or after such Change of Control) after which specified date all
unexercised Options and all rights of Participants thereunder shall terminate,
(2) require the mandatory surrender to the Company by selected Participants of
some or all of the outstanding Options held by such Participants (irrespective
of whether such Options are then exercisable under the provisions of the Plan)
as of a date, before or after such Change of Control, specified by the Board, in
which event the Board shall thereupon cancel such Options and the Company shall
pay to each Participant an amount of cash per share equal to the excess, if any,
of the Change of Control value of the shares subject to such Option over the
exercise price(s) under such Options for such shares, (3) make such adjustments
to Options then outstanding as the Board deems appropriate to reflect such
Change of Control (provided, however, that the Board may determine in its sole
discretion that no adjustment is necessary to Options then outstanding) or (4)
provide that thereafter upon any exercise of an Option theretofore granted the
Participant shall be entitled to purchase under such Option, in lieu of the
number of shares of Stock then covered by such Option the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the Participant would have been entitled pursuant to the terms of
the agreement of merger, consolidation or sale of assets and dissolution if,
immediately prior to such merger, consolidation or sale of assets and
dissolution the Participant has been the Participant of record of the number of
shares of Stock then covered by such Option. The provisions contained in this
paragraph shall not terminate any rights of the Participant to further payments
pursuant to any other agreement with the Company following a Change of Control.
Further, the provisions contained in this Paragraph shall not diminish any
rights of the Participant with respect to Options granted under the Plan
pursuant to the Avery Employment Agreement or the Reiland Employment Agreement,
as applicable.
-5-
<PAGE> 6
(b) For purposes of the Plan, "Change of Control" means the occurrence
of any of the following events: (i) the Company shall not be the surviving
entity in any merger, consolidation or other reorganization (or survives only as
a subsidiary of an entity other than a previously wholly-owned subsidiary of the
Company); (ii) the Company sells, leases or exchanges all or substantially all
of its assets to any other person or entity (other than a wholly-owned
subsidiary of the Company); (iii) the Company is to be dissolved and liquidated;
(iv) any person or entity, including a "group" as contemplated by Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
acquires or gains ownership or control (including, without limitation, power to
vote) of more than 50% of the outstanding shares of the Company's voting stock
(based upon voting power); or (v) as a result of or in connection with a
contested election of directors, the persons who were directors of the Company
before such election, together with their nominees, shall cease to constitute a
majority of the Board.
ARTICLE II
TERMS OF STOCK OPTIONS AND EXERCISE
2.1 GENERAL TERMS.
(a) Grants and Terms of Stock Options. Stock Options shall be granted
by the Board on the following terms and conditions: Each Option shall have a
term of ten (10) years and shall not be exercisable after the expiration of such
term. Each Option shall be evidenced by an Option Agreement in such form and
containing such provisions not inconsistent with the provisions of the Plan as
the Board shall approve. Each Option Agreement shall specify the effect of
termination of employment on the exercisability of Options.
(b) Option Price. The option price ("Option Price") for shares of Stock
subject to Options shall be determined by the Board pursuant to the terms of the
Avery Employment Agreement and the Reiland Employment Agreement, as applicable,
but in no event shall such Option Price be less than 85% of the fair market
value of the Stock on the date of grant.
(c) Number of Options Granted. The Board shall determine the number of
Options which are to be granted to each Participant pursuant to the terms of the
Avery Employment Agreement and the Reiland Employment Agreement, as applicable.
The granting of an Option under the Plan shall not affect any outstanding Option
previously granted to a Participant under the Plan.
(d) Notice to Exercise Option. Upon exercise of an Option, a
Participant shall give written notice to the Secretary of the Company, or other
officer designated by the Board at the Company's principal office in Houston,
Texas. No Stock shall be issued to any Participant until the Company receives
full payment for the Stock purchased, if applicable, and any required state and
federal withholding taxes.
-6-
<PAGE> 7
ARTICLE III
MISCELLANEOUS
3.1 NO RIGHT TO A GRANT.
Neither the adoption of the Plan by the Company nor any action of the
Board or the Committee shall be deemed to give a Participant any right to be
granted an Option or any of the rights hereunder except as may be evidenced by
an Option Agreement.
3.2 NO EMPLOYMENT RIGHTS CONFERRED.
Nothing in the Plan or in any Option Agreement which relates to the
Plan shall confer upon any Participant any right to continue as an employee of
the Company, or interfere in any way with the right of the Company to terminate
his employment at any time.
3.3 RULE 16B-3.
It is intended that the Plan and any grant of options made to a person
subject to Section 16 of the 1934 Act meet all of the requirements of Rule
16b-3. If any provision of the Plan or any such grant would disqualify the Plan
or such grant under, or would otherwise not comply with, Rule 16b-3, such
provision or grant shall be construed or deemed amended to conform to Rule
16b-3.
3.4 GOVERNING LAW.
This Plan shall be construed in accordance with the laws of the state
of Delaware.
-7-
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