<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
-----------------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE EXCHANGE ACT OF 1934
Commission file number 333-38157
FIRST WAVE MARINE, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0461352
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2102 BROADWAY
HOUSTON, TEXAS 77012
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 847-4600
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes [ X ] No
Number of shares of common stock outstanding as of May 12, 2000: 11,756,955.
===============================================================================
<PAGE> 2
FIRST WAVE MARINE, INC.
INDEX TO FORM 10-Q
FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 2000
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 2000 and December 31, 1999 1
Consolidated Statements of Operations for the Three Month
Period Ended March 31, 2000 and 1999 2
Consolidated Statement of Cash Flows for the Three Month
Period Ended March 31, 2000 and 1999 3
Notes to Unaudited Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
Item 3. Quantitative and Qualitative Disclosures about Market Risk 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
</TABLE>
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
----------- --------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 592 $ 8,379
Accounts receivable, less allowance of $178 in 2000 and $160 in 1999 20,300 12,691
Inventories 1,060 1,042
Costs and estimated earnings in excess of billings on uncompleted contracts 4,707 5,096
Prepaids and other 693 1,112
Income tax receivable 1,746 1,841
Deferred income taxes 851 755
----------- --------------
Total current assets 29,949 30,916
Property and equipment, net 71,931 72,675
Financing costs, net 3,641 3,765
Goodwill and other intangibles, net 14,570 14,702
Shareholder lines of credit 840 783
Deposits and other 351 274
----------- --------------
$ 121,282 $ 123,115
=========== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Outstanding checks in excess of bank balance $ 1,875 $ ---
Accounts payable 4,989 4,834
Accrued liabilities 8,553 8,073
Billings in excess of costs and estimated earnings on uncompleted contracts --- 235
Accrued interest payable 2,276 4,611
Current portion of long-term debt 842 894
Notes payable and short-term borrowings 648 182
----------- ------------
Total current liabilities 19,183 18,829
Long-term obligations 6,999 7,205
Subordinated debt 6,328 6,328
Senior notes 90,000 90,000
Deferred income taxes 1,999 2,234
Other liabilities 1,547 1,510
Commitments and contingencies --- ---
Stockholders' equity (deficit):
Preferred stock, $.01 par value, 2,000 shares authorized, no shares issued --- ---
Common stock, $.01 par value, 21,000 shares authorized, 11,757 shares issued
and outstanding at March 31, 2000 and December 31, 1999 118 118
Additional paid-in capital 3,490 3,490
Retained earnings (deficit) (8,382) (6,599)
----------- ------------
Total stockholders' equity (deficit) (4,774) (2,991)
----------- ------------
$ 121,282 $ 123,115
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE> 4
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
2000 1999
------------- -----------
Revenues:
Repair and upgrade $ 21,223 $ 21,182
New construction 5,676 3,419
Environmental services 1,020 1,300
------------- -----------
27,919 25,901
Cost of revenues 24,771 21,720
------------- -----------
Gross profit 3,148 4,181
General and administrative expenses 2,463 2,588
------------- -----------
Income from operations 685 1,593
Interest expense - net 2,757 2,528
------------- -----------
Income (loss) before income taxes (2,072) (935)
Income tax expense (benefit) (289) (299)
------------- -----------
Net income (loss) $ (1,783) $ (636)
============= ===========
Basic and diluted earnings (loss) per share:
Net income (loss) $ (0.15) $ (0.05)
============= ===========
Weighted-average shares:
Basic and diluted 11,757 11,757
============= ===========
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31,
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,783) $ (636)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,634 1,541
Accretion of discounts on investments held-to-maturity --- (33)
Provision for doubtful accounts 18 8
Deferred income tax provision (331) (33)
Change in assets and liabilities:
Accounts receivable (7,627) (5,203)
Inventories (18) (157)
Costs and estimated earnings in excess of billings on uncompleted contract 389 789
Other assets 419 (612)
Income tax receivable 95 (274)
Deposits and other (134) (66)
Accounts payable 155 132
Accrued liabilities 479 628
Billings in excess of costs and estimated earnings on uncompleted contract (235) 697
Accrued interest payable (2,961) (2,475)
Other liabilities 664 235
------------ -----------
Net cash used in operating activities (9,236) (5,459)
------------ -----------
Cash flows from investing activities:
Acquisition of property and equipment (634) (1,869)
Proceeds from maturity of investments held-to-maturity --- 6,274
Proceeds from sales of investments available-for-sale --- 2,077
------------ -----------
Net cash (used in) provided by investing activities (634) 6,482
------------ -----------
Cash flows from financing activities:
Outstanding checks in excess of bank balance 1,875 ---
Payments on long-term debt and notes payable (262) (7)
Net borrowings (repayments) on revolving line of credit 470 ---
------------ -----------
Net cash provided by (used in) financing activities 2,083 (7)
------------ -----------
Net (decrease) increase in cash and cash equivalents (7,787) 1,016
Cash and cash equivalents at beginning of period 8,379 1,654
------------ -----------
Cash and cash equivalents at end of period $ 592 $ 2,670
============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
FIRST WAVE MARINE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Note 1 In the opinion of management the accompanying unaudited
consolidated financial statements reflect all adjustments
necessary to present fairly the financial position of First Wave
Marine, Inc. ("First Wave" or the "Company") as of March 31,
2000 and the results of operations and cash flows for the three
month periods ended March 31, 2000 and 1999. All such
adjustments are of a normal recurring nature. These interim
financial statements should be read in conjunction with the
audited financial statements and related notes included in the
Company's Annual Report on Form 10-K for the year ended December
31, 1999.
Note 2 The consolidated financial statements include the accounts of
First Wave and its wholly-owned subsidiaries. All material
intercompany transactions are eliminated in consolidation.
Note 3 The results of operations for the three month period ended March
31, 2000 are not necessarily indicative of the results to be
expected for the entire year.
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report on Form 10-Q contains "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, as amended. All statements other than statements of
historical facts, included in this Form 10-Q, including
statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations," as well as
statements as may be made by management, orally or in writing
related thereto, are forward-looking statements. Forward-looking
statements generally are accompanied by words such as
"anticipate", "believe", "estimate", "expect" or similar
statements. Such forward-looking statements are subject to
certain risks, uncertainties and assumptions, including (i)
risks of reduced levels of demand for the Company's services
resulting from reduced levels of capital expenditures of the
Company's customers in the offshore drilling rig, offshore
support vessel, offshore barge, ship and inland marine
industries, (ii) risks related to the expansion of operations,
(iii) operating risks relating to conversion and repair of
drilling rigs, offshore support vessels, offshore barges, ships
and inland marine vessels, (iv) contract bidding risks, (v)
risks related to dependence on significant customers, and (vi)
risks related to the highly leveraged posture of the Company.
Additionally, the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 should be consulted for an expanded
discussion of risk factors. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those
anticipated, estimated or projected. Although the Company
believes that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such
expectations will prove to have been correct.
The following discussion of the Company's financial condition,
results of operations, liquidity and capital resources should be
read in conjunction with the Company's Consolidated Financial
Statements and the Notes to the Consolidated Financial
Statements included elsewhere in this report.
GENERAL
The Company's business is primarily derived from providing
repair and upgrade services to inland and offshore marine
vessels, including barges, boats, drilling rigs and ships. To a
lesser extent the Company engages in new construction of such
inland and offshore marine vessels.
First Wave currently operates three shipyards in the Houston,
Texas area (Brady Island, Greens Bayou and Pasadena) and three
in the Galveston, Texas area (East Pelican Island, West Pelican
Island and Galveston Island). The Company also provides related
environmental services, including cleaning, degassing and
wastewater treatment. The Company currently employs
approximately 1,000 employees at its six shipyards.
RESULTS OF OPERATIONS
Comparison of the three months ended March 31, 2000 to the three
months ended March 31, 1999.
Revenues increased 8% to $27.9 million in the 2000 period,
compared with $25.9 million in the 1999 period, primarily due to
the increase in new construction revenue which was partially
off-set by a reduction in environmental services revenue.
Cost of revenues rose 14% to $24.8 million in the 2000 period
from $21.7 million in the 1999 period, due to the additional
revenue generated.
Gross profit decreased 25% to $3.1 million in the 2000 period
from $4.2 million in the 1999 period, primarily due to the
increase in lower-margin barge new construction work. In
addition, the inland boat and barge repair market has
experienced consolidation over the past several years, resulting
in reduced rates and decreased demand in the market for boat and
barge repair services.
The gross profit margin decreased to 11% in the 2000 period from
16% in the 1999 period, due to the increase in lower margin new
construction revenue, and the decrease in higher margin inland
boat and barge repair revenue.
5
<PAGE> 8
General and administrative expenses decreased slightly to $2.5
million in the 2000 period from $2.6 million in the 1999 period.
General and administrative expenses as a percentage of revenues
for the 2000 period represented 9% of total revenues, as
compared to 10% for the 1999 period.
During late 1999, the Company undertook a study of its cost
classification system. The study included an account by account
analysis as well as a review of industry practices. Based on the
results of the study, reclassifications have been made between
general and administrative expenses and cost of revenues for all
periods presented.
Net interest expense rose to $2.7 million in the 2000 period
from $2.5 million in the 1999 period primarily due to the
interest incurred on the Company's new credit facility entered
into October 1999, which includes a $4.0 million term loan.
During the 2000 period, the Company recognized an income tax
benefit of approximately 14%, as compared to an income tax
benefit during the prior period of approximately 32%. The
benefit recognized in the current period reflects the expected
tax rate to be applicable for the full fiscal year of 2000.
INFLATION AND CHANGING PRICES
The Company does not believe that general price inflation has
had a significant impact on the Company's results of operations
during the periods presented. To the extent that the effects of
inflation are not offset by improvements in manufacturing and
purchasing efficiency and labor productivity, the Company
generally has been able to take such effects into account in
pricing its contracts with customers. There can be no assurance,
however, that inflation will not have a material effect on the
Company's business in the future.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ongoing liquidity requirements arise primarily
from its need to service debt, fund working capital, and make
capital improvements to its facilities.
Under its indenture entered into in 1998 in connection with the
Senior Notes offering, the Company is permitted to borrow up to
the greater of $20 million or 85% of its accounts receivable plus
up to an additional $5 million. In October 1999, the Company
entered into a $20 million revolving credit and term loan
facility (the "Facility") that matures on October 14, 2003. The
revolving portion of the Facility, initially $16 million, is
secured by accounts receivable of all but one of the Company's
subsidiaries. It bears interest at 0.50% per annum in excess of
The Wall Street Journal prime rate. The term portion of the
Facility ("Term Loan"), $4 million (the Company has approximately
$1 million of other debt), is secured by certain dry-docks and
real estate. The Term Loan bears interest at 1.00% per annum in
excess of The Wall Street Journal prime rate. The Term Loan
requires monthly principal payments of $56,000, with the unpaid
balance due at the maturity of the Facility. The Facility
required that cumulative net losses of the Company as defined in
the agreement after October 1, 1999 not exceed $3.0 million. The
Company is required to pay a fee of 0.25% per annum on the unused
portion of the total Facility, based on a minimum total loan
amount of $5 million, and certain other administrative costs.
In April 2000, the Company entered into an amendment to the
Facility. The amendment provided for a 200 basis point
adjustment to the Facility interest rates in exchange for an
increase to $4.5 million of the cumulative net loss covenant
commencing January 1, 2000. The increased interest rates will be
reduced back to the original Facility rates upon the Company
reporting a positive net income. The rates will adjust quarterly
thereafter, remaining at the original rates for each quarter the
Company reports a positive net income. The Company is engaged in
discussions with the lender regarding additional changes to this
Facility to add to the revolving portion of the Facility the
receivables of the remaining subsidiary not originally included.
The Company had outstanding borrowings on the revolving portion
of the Facility of approximately $470,000 at March 31, 2000.
6
<PAGE> 9
Net cash used in operating activities for the three month
periods ended March 31, 2000 and 1999 was $9.2 million and $5.5
million, respectively. The decrease in cash generated from
operations is primarily due to the increase in accounts
receivable and the increase in net loss for the period.
Net cash (used in) provided by investing activities was
($634,000) and $6.5 million for the three month periods ended
March 31, 2000 and 1999, respectively. During the 2000 period,
cash used in investing activities was used for capital
expenditures. During the 1999 period, cash provided by investing
activities was generated by sales and maturities of investments
which were partially off-set by asset additions.
Net cash provided by (used in) financing activities was $2.1
million and ($7,000) for the three month periods ended March 31,
2000 and 1999, respectively. The increase in cash provided by
financial activities is primarily due to the increase in
outstanding checks in excess of bank balance and net borrowings
on the Company's line of credit.
The Company has budgeted for the remainder of 2000 approximately
$4.5 million for planned capital projects at its facilities. The
Company currently has no formal commitments for these projects.
Management believes that with the cash generated from operations
and borrowings under the Company's line of credit, the Company
will have sufficient resources available to meet its anticipated
requirements for capital expenditures, working capital needs and
debt service for the remainder of fiscal year 2000. If capital
requirements or revenue vary materially from our current
expectations or if unforeseen circumstances occur, we may
require additional equity sooner than we anticipated.
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate risk in connection with
its variable rate debt instruments. The Company does not enter
into market risk sensitive instruments for trading purposes. The
information below summarizes the Company's interest rate risk
associated with its principal variable rate debt instruments
outstanding at March 31, 2000, and should be read in conjunction
with the audited financial statements and related notes included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999. Borrowings under the Company's Revolving
Credit and Term Loan Facilities bear interest at variable rates
equal to the prime rate as quoted in The Wall Street Journal
plus the applicable margin. Because The Wall Street Journal rate
may increase or decrease at any time, the Company is exposed to
market risk as a result of the impact that changes in this rate
may have on the interest rate applicable to borrowings under the
Revolving Credit and Term Loan Facilities. Increases in the
interest rate applicable to borrowings under the Revolving
Credit and Term Loan Facilities would result in increased
interest expense and a reduction in the Company's net income and
after tax cash flow. At March 31, 2000, there was approximately
$3.8 million indebtedness outstanding under the term portion and
approximately $0.5 million indebtedness outstanding under the
revolving portion of the Revolving Credit and Term Loan
Facilities, or approximately 4% of the Company's outstanding
long-term debt obligations on that date, bearing interest at
variable rates.
The Company attempts to mitigate the interest rate risk
resulting from its variable interest rate long-term debt
instruments by also issuing fixed rate long-term debt
instruments and maintaining a balance over time between the
amount of variable rate and fixed rate indebtedness. In the
event of an increase in interest rates, the Company may take
further actions to mitigate its exposure. The Company cannot
guarantee, however, that actions that it may take to mitigate
this risk will be feasible or that if these actions are taken,
that they will be effective.
7
<PAGE> 10
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 11, 1999, one of the Company's subsidiaries, Newpark
Shipbuilding--Brady Island, Inc. ("Newpark-Brady"), received an Information
from the State of Texas charging Newpark-Brady with a one count water pollution
misdemeanor, for allegedly discharging industrial waste from a barge in
violation of Texas Water Code Section 26.121(a)(1) on or about July 30, 1997.
In February 2000, Newpark-Brady plead nolo contendere to a reduced charge of
Texas Water Section 26.2121(g), a strict liability misdemeanor, related to
sandblasting activities on July 30, 1997. Newpark-Brady paid a $10,000 fine and
made a $90,000 contribution to the City of Houston Supplemental Environmental
Projects Fund.
On August 13, 1998, one of the Company's subsidiaries,
Newpark-Brady, was the subject of a search warrant executed by a multi-agency
environmental task force. The government's search warrant was primarily
directed at the facility's wastewater treatment plant. The Board of Directors
of the Company authorized outside legal counsel to conduct an internal
corporate investigation of the matters raised by the agencies in their
investigation. In addition, the Company promptly undertook aggressive measures
to assure environmental compliance. In December 1998, the internal
investigation concluded that no officer or director of Newpark-Brady or the
Company participated in or had knowledge of any non-compliance or wrong doing.
In 1999, the Board adopted a Compliance and Ethics Code with a third party
anonymous hotline to further strengthen the Company's legal compliance in all
areas, including environmental. This Code was implemented in all facilities in
February 2000.
In March 2000, to settle all issues relating to the task force's
investigation, Newpark-Brady negotiated agreements with both the Federal and
State governments. Newpark-Brady agreed with the Harris County District
Attorney's office to plead nolo contendere to two State Informations as
follows: (i) a misdemeanor for a permit discharge violation of the Texas Water
Code based on the sampling and conduct of a Newpark-Brady employee on February
16, 1998, and (ii) a misdemeanor for failure to notify or report based on
February 18, 1998 conduct of the same employee. In late March 2000,
Newpark-Brady made these pleas and paid a $100,000 fine for each violation
charged. Newpark-Brady further agreed with the U.S. Attorney's Office to plead
guilty to a one-count federal Information. The federal Information charges a
misdemeanor violation of the Clean Water Act citing Newpark-Brady's negligent
failure to take samples that were representative of the volume and nature of
discharges from its wastewater treatment plant. The federal plea was also
entered in late March 2000; in connection therewith, Newpark-Brady paid a
$25,000 fine. In addition, Newpark-Brady separately agreed to contribute over a
period of approximately eighteen months, $550,000 to the Galveston Bay
Foundation and $425,000 to the Coastal Conservation Association of Texas to be
used in projects benefiting the local environment.
ITEM 2-5. NOT APPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit
Number Description
------- -----------
* 10.1 First Amendment to Loan and Security Agreement
between First Wave Marine, Inc., Newpark
Shipbuilding-Galveston Island, Inc., Newpark
Shipbuilding-Pelican Island, Inc., Newpark
Shipbuilding-Greens Bayou, Inc. and Newpark
Shipbuilding-Pasadena, Inc., as Borrowers, and
Banc of America Commercial Finance Corporation,
as Lender, dated April 11, 2000.
* 27.1 Financial Data Schedule.
* Filed herewith
(b) Reports on Form 8-K
None
8
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
FIRST WAVE MARINE, INC.
May 12, 2000 By: /s/ Frank R. Pierce
----------------------
Frank R. Pierce
Senior Vice President and
Chief Financial Officer
May 12, 2000 By: /s/ Dale E. Schexnayder
--------------------------
Dale E. Schexnayder
Corporate Controller
9
<PAGE> 12
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
* 10.1 First Amendment to Loan and Security Agreement
between First Wave Marine, Inc., Newpark
Shipbuilding-Galveston Island, Inc., Newpark
Shipbuilding-Pelican Island, Inc., Newpark
Shipbuilding-Greens Bayou, Inc. and Newpark
Shipbuilding-Pasadena, Inc., as Borrowers, and
Banc of America Commercial Finance Corporation,
as Lender, dated April 11, 2000.
* 27.1 Financial Data Schedule.
* Filed herewith
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "AMENDMENT")
is made and entered into as of April ___, 2000, by and among BANC OF AMERICA
COMMERCIAL FINANCE CORPORATION, THROUGH ITS COMMERCIAL FUNDING DIVISION
("LENDER") and FIRST WAVE MARINE, INC., a Delaware corporation ("FIRST WAVE"),
NEWPARK SHIPBUILDING - GALVESTON ISLAND, INC., a Texas corporation ("NEWPARK
GALVESTON"), NEWPARK SHIPBUILDING - PELICAN ISLAND, INC., a Texas corporation
("NEWPARK PELICAN ISLAND"), NEWPARK SHIPBUILDING - GREENS BAYOU, INC., a Texas
corporation ("NEWPARK GREENS BAYOU"), and NEWPARK SHIPBUILDING - PASADENA, INC.,
a Texas corporation ("NEWPARK PASADENA"), (First Wave, Newpark Galveston,
Newpark Pelican Island, Newpark Greens Bayou and Newpark Pasadena being referred
to individually, collectively, and jointly and severally, as "BORROWER".
RECITALS
A. Borrower and Lender have entered into that certain Loan and Security
Agreement, dated October 14, 1999 (as amended, the "AGREEMENT").
B. Borrower and Lender desire to amend the Agreement set forth herein.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
1.01 Capitalized terms used in this Amendment are defined in the
Agreement, as amended hereby, unless otherwise stated.
ARTICLE II
AMENDMENTS
2.01 AMENDMENT TO SECTION 1. Effective as of the date hereof, Section
1.17A is hereby added to the Loan Agreement to provide as follows:
"1.17A `Net Income Factor' shall mean: (a) if the net income
of Borrower and its Subsidiaries (inclusive of Newpark Shipbuilding -
Brady Island, Inc. ("BRADY")) for any quarter as shown on the most
recent financial statements furnished pursuant to Section 5.13(c)(ii)
and (iii) hereof is greater than $0, then zero percent (0.00%) and (b)
if the net income of Borrower and its Subsidiaries
1
<PAGE> 2
(inclusive of Brady) for any quarter as shown on the most recent
financial statements furnished pursuant to Section 5.13(c)(ii) and
(iii) hereof is less than or equal to $0, then two percent (2.00%)."
2.02 AMENDMENT TO SECTION 2.1. Effective as of the date hereof, the
second sentence of Section 2.1 is hereby amended in its entirety to provide as
follows:
"Changes in the Interest Rate shall be effective as of the
date of any change in the Prime Rate or the Monday preceding any change
in the Net Income Factor, as applicable."
2.03 AMENDMENT TO SCHEDULE A. Effective as of the date hereof, Schedule
A to the Agreement is hereby amended as follows:
(a) Section 3 of Schedule A is hereby amended by deleting said
Section in its entirety and inserting the following in lieu thereof:
"3. Interest Rates:
(a) Revolving Loans: sum of (a) Net Income
Factor; (b) 0.50%; and
(c) the Prime Rate
(b) Term Loan: sum of (a) Net Income
Factor; (b) 1.0%; and
(c) the Prime Rate"
(b) Section 8(a) of Schedule A is hereby amended by deleting
said Section in its entirety and inserting the following in lieu
thereof:
"(a) Maximum Cumulative From and after January 1,
Net Loss: 2000 until the Maturity
Date, Cumulative Net Losses
of the Borrower (inclusive
of Brady) less amounts
contributed as equity to the
capital of Borrower and
Brady, shall not exceed
$4,500,000. As used herein
"Cumulative Net Losses"
shall mean: (a) net income
(or net loss, as applicable)
of Borrower and Brady plus
(b) depreciation and
amortization, less (c) debt
service and any non-financed
capital expenditures plus
(d) accrued interest
attributable to the
subordinated note payable to
Newpark Shipholding L.P. due
September 3, 2003, and plus
(e) the amount of any tax
refund made to Borrower and
Brady."
2
<PAGE> 3
ARTICLE III
CONDITIONS PRECEDENT
3.01 CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment
is subject to the satisfaction of the following conditions precedent, unless
specifically waived in writing by Lender:
(a) Lender shall have received (i) this Amendment, duly
executed by each Borrower, and (ii) such additional documents,
instruments and information as Lender or its legal counsel may request;
(b) The representations and warranties contained herein, in
the Agreement and in the other Loan Documents, as each is amended
hereby, shall be true and correct as of the date hereof, as if made on
the date hereof;
(c) No Event of Default shall have occurred and be continuing,
unless such Event of Default has been specifically disclosed in writing
by Borrower to Lender; and
(d) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel.
ARTICLE IV
RATIFICATIONS, REPRESENTATIONS AND WARRANTIES
4.01 RATIFICATIONS. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and the other Loan Documents, and, except as expressly
modified and superseded by this Amendment, the terms and provisions of the
Agreement and the other Loan Documents are ratified and confirmed and shall
continue in full force and effect. Borrower and Lender agree that the Agreement
and the other Loan Documents, as amended hereby, shall continue to be legal,
valid, binding and enforceable in accordance with their respective terms.
4.02 REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Lender that (a) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of Borrower and will not violate the Certificate of Incorporation of
Borrower; (b) the representations and warranties contained in the Agreement, as
amended hereby, and any other Loan Document are true and correct on and as of
the date hereof and on and as of the date of execution hereof as though made on
and as of each such date; (c) no Event of Default under the Agreement, as
amended hereby, has occurred and is continuing; and (d) Borrower is in full
compliance with all covenants and agreements contained in the Agreement and the
other Loan Documents, as amended hereby.
3
<PAGE> 4
ARTICLE V
MISCELLANEOUS PROVISIONS
5.01 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties made in the Agreement or any other Loan Documents, including,
without limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Lender or any closing shall affect the
representations and warranties or the right of Lender to rely upon them.
5.02 REFERENCE TO AGREEMENT. Each of the Agreement and the other Loan
Documents, and any and all other Loan Documents, documents or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement, as amended hereby, are hereby amended so that any
reference in the Agreement and such other Loan Documents to the Agreement shall
mean a reference to the Agreement as amended hereby.
5.03 EXPENSES OF LENDER. As provided in the Agreement, Borrower agrees
to pay on demand all costs and expenses incurred by Lender in connection with
the preparation, negotiation and execution of this Amendment and the other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto, including, without limitation, the costs and fees of
Lender's legal counsel, and all costs and expenses incurred by Lender in
connection with the enforcement or preservation of any rights under the
Agreement, as amended hereby, or any other Loan Documents, including, without,
limitation, the costs and fees of Lender's legal counsel.
5.04 SEVERABILITY. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
5.05 SUCCESSORS AND ASSIGNS. This Amendment is binding upon and shall
inure to the benefit of Lender and Borrower and their respective successors and
assigns, except that Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of Lender.
5.06 COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
5.07 EFFECT OF WAIVER. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant or condition by
Borrower shall be deemed a consent to or waiver of any other breach of the same
or any other covenant, condition or duty.
5.08 HEADINGS. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
4
<PAGE> 5
5.09 APPLICABLE LAW. THIS AMENDMENT AND ALL OTHER LOAN DOCUMENTS
EXECUTED PURSUANT HERETO SHALL BE DEEMED TO HAVE BEEN NEGOTIATED, EXECUTED AND
DELIVERED, AND SHALL BE DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT
THE CONFLICT OF LAW RULES) OF THE STATE OF NEW YORK.
5.10 FINAL AGREEMENT. THE AGREEMENT AND THE OTHER LOAN DOCUMENTS, EACH
AS AMENDED HEREBY, REPRESENT THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT
TO THE SUBJECT MATTER HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION OF THIS
AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BORROWER AND
LENDER.
5.11 RELEASE. BORROWER HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE,
COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE
WHATSOEVER THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS
LIABILITY TO REPAY THE "OBLIGATIONS" OR TO SEEK AFFIRMATIVE RELIEF OR DAMAGES OF
ANY KIND OR NATURE FROM LENDER. BORROWER HEREBY VOLUNTARILY AND KNOWINGLY
RELEASES AND FOREVER DISCHARGES LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS,
AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND LIABILITIES WHATSOEVER,
KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED,
CONTINGENT, OR CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH THE BORROWER MAY NOW OR
HEREAFTER HAVE AGAINST LENDER, ITS PREDECESSORS, OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH
CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY "LOANS," INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE AGREEMENT OR OTHER LOAN DOCUMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AMENDMENT.
[The Remainder of this Page Intentionally Left Blank]
5
<PAGE> 6
IN WITNESS WHEREOF, this Amendment has been executed and is effective
as of the date first above-written.
LENDER:
BANC OF AMERICA COMMERCIAL
FINANCE CORPORATION, THROUGH
ITS COMMERCIAL FUNDING DIVISION
By: /s/ Josoph A. Naccarato
---------------------------------
Name: Josoph A. Naccarato
Title: Vice President
BORROWER:
FIRST WAVE MARINE, INC., a Delaware
corporation
By: /s/ Frank R. Pierce
-------------------------------
Its Authorized Signatory
NEWPARK SHIPBUILDING -
GALVESTON ISLAND, INC., a Texas
corporation
By: /s/ Suzanne B. Kean
-------------------------------
Its Authorized Signatory
NEWPARK SHIPBUILDING -
PELICAN ISLAND, INC., a Texas
corporation
By: /s/ Suzanne B. Kean
-------------------------------
Its Authorized Signatory
6
<PAGE> 7
NEWPARK SHIPBUILDING -
GREENS BAYOU, INC., a Texas
corporation
By: /s/ Suzanne B. Kean
-------------------------------
Its Authorized Signatory
NEWPARK SHIPBUILDING -
PASADENA, INC., a Texas
corporation
By: /s/ Suzanne B. Kean
-------------------------------
Its Authorized Signatory
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER
ENDED MARCH 31, 2000
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 592
<SECURITIES> 0
<RECEIVABLES> 20,300
<ALLOWANCES> 178
<INVENTORY> 1,060
<CURRENT-ASSETS> 29,949
<PP&E> 84,160
<DEPRECIATION> 12,229
<TOTAL-ASSETS> 121,282
<CURRENT-LIABILITIES> 19,183
<BONDS> 90,000
0
0
<COMMON> 111
<OTHER-SE> (4,892)
<TOTAL-LIABILITY-AND-EQUITY> 121,282
<SALES> 27,919
<TOTAL-REVENUES> 27,919
<CGS> 24,771
<TOTAL-COSTS> 24,771
<OTHER-EXPENSES> 2,463
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,757
<INCOME-PRETAX> (2,072)
<INCOME-TAX> (289)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,783)
<EPS-BASIC> (0.15)
<EPS-DILUTED> (0.15)
</TABLE>
