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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
[X] Annual Report Pursuant To Section 13 or 15(d) of The Securities Exchange
Act of 1934
For the fiscal year ended March 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from _________ to ___________
Commission File Number 2-56600
Global Industries, Ltd.
(Exact name of registrant as specified in its Charter)
LOUISIANA 72-1212563
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation of organization)
107 Global Circle
P.O. Box 31936, Lafayette, Louisiana 70593-1936
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (318) 989-0000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($0.01 par value)
(Title of Class)
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 [ ]
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. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of May 31, 1997 was $652,763,000 based on the last reported
sales price of the Common Stock on May 31, 1997, as reported on the NASDAQ\NMS.
The number of shares of the registrant's Common Stock outstanding as of May
31, 1997 was 45,384,404.
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DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders to be held on August 6, 1997 are incorporated by reference into
Part III hereof.
GLOBAL INDUSTRIES, LTD.
INDEX - FORM 10-K
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PART I
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Item 1 Business 3
Item 2 Properties 14
Item 3 Legal Proceedings 18
Item 4 Submission of Matters to a Vote of Security Holders 18
PART II
Item 5 Market for the Registrant's Common Equity and Related Shareholder Matters 20
Item 6 Selected Financial Data 21
Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 22
Results of Operations 23
Liquidity and Capital Resources 25
Item 8 Financial Statements and Supplementary Data 27
Global Industries, Ltd. and Consolidated Subsidiaries:
Independent Auditors' Report 27
Consolidated Balance Sheets - March 31, 1997 and 1996 28
Consolidated Statements of Operations - Three Years Ended March 31, 1997 29
Consolidated Statements of Shareholders' Equity - Three Years Ended March 31, 1997 30
Consolidated Statements of Cash Flows - Three Years Ended March 31, 1997 31
Notes to Consolidated Financial Statements 32
Item 9 Changes In and Disagreements With Accountants on Accounting and Financial Disclosure 45
PART III
Item 10 Directors and Executive Officers of the Registrant 45
Item 11 Executive Compensation 45
Item 12 Security Ownership of Certain Beneficial Owners and Management 45
Item 13 Certain Relationships and Related Transactions 45
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PART IV
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Item 14 Exhibits, Financial Statement Schedules, and Reports on Form 8-K 46
Signatures 50
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PART I
ITEM 1. BUSINESS
Global Industries, Ltd. provides construction services, including pipeline
construction, platform installation and removal, and diving services, to the
offshore oil and gas industry in the United States Gulf of Mexico (the "Gulf of
Mexico") and in select international areas. The Company has the largest number
of offshore construction vessels currently available in the Gulf of Mexico and
its worldwide fleet includes fifteen barges that have various combinations of
pipelay, pipebury and derrick capabilities. The Company's fleet includes 35
manned vessels which were available for service at the beginning of fiscal
1997, eight vessels purchased during the fiscal year and three vessels whose
construction was completed during the fiscal year. During fiscal 1997, the
Company completed construction of a SWATH (Small Water Plane Area Twin Hull)
vessel, named the Pioneer at a cost of $25.8 million, and two large liftboats,
at a total cost of $12.1 million. Construction also began on the upgrade of
the Hercules, including addition of dynamic positioning and pipelay
capabilities, with an estimated cost of $70 million. Unless the context herein
indicates otherwise, all references to the "Company" or "Global" refer to
Global Industries, Ltd. and its subsidiaries.
The Company began as a provider of diving services to the offshore oil and gas
industry over 20 years ago and has used selective acquisitions, new
construction and upgrades to expand its operations. Global has generated
substantial growth during the last five years through acquisitions, including
the following acquisitions in fiscal 1997: Norman Offshore Pipelines, Inc. a
pipeline construction company operating in the United States, which included
two shallow water pipelay vessels; Divcon International Pty Ltd.'s diving and
remotely operated vehicles ("ROV") assets in Southeast Asia; a 49% interest in
a Mexican marine construction contractor, CCC Fabricaciones y Construcciones,
S.A. de C.V. ("CCC"); and two large combination pipelay and derrick barges.
Through the combination of these acquisitions and internal growth, the Company
has increased its revenues from $16.6 million in fiscal 1990 to $229.1 million
in fiscal 1997, while improving its net income from $1.4 million to $33.9
million over the same period.
The Company and Dresser Industries have signed a definitive agreement to
purchase selected assets of Sub Sea International, Inc., a subsidiary of
Dresser Industries, for $102 million, payable in cash at closing. The assets
to be acquired include pipelay, diving and liftboat assets in the United
States, and diving and ROV assets in the Middle East, the Far East and Asia
Pacific regions. The transaction is expected to be consummated during the
second quarter of fiscal 1998, assuming, that the Company receives regulatory
approval and that all of the conditions are met, including expiration or
termination of requisite waiting periods. As was expected, the parties have
received a "second request" seeking additional information under the
Hart-Scott-Rodino Antitrust Improvements Act. Global expects to substantially
comply with the request prior to the end of June 1997.
DESCRIPTION OF OPERATIONS
OFFSHORE MARINE CONSTRUCTION SERVICES
The Company is equipped to provide offshore marine construction services over
the full life of an oil
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and gas property, from installation of platforms and pipelines, through
inspection and repairs, and ultimately to abandonment and site restoration.
The Company categorizes offshore marine construction projects into three
classes: ultra-deep water (over 1,000 feet of water), deepwater (200 feet to
1,000 feet) and shallow water. In recent years the Company has generally
focused on projects in deepwater, which require larger barges with greater
lifting capacity, more sophisticated technology and experienced personnel, and
which generally provide greater operating margins than shallow water projects.
With nine barges in the Gulf of Mexico that are capable of operating in
deepwater, the Company believes it has more deepwater capability than any of
its competitors. Capital expenditure programs for fiscal 1994 through fiscal
1997 have included investments to develop the Company's ability to compete in
water depths over 1,000 feet.
PIPELINE SERVICES
The Company has laid pipelines with a diameter of up to 24 inches and has
installed smaller diameter pipelines in water depths up to 5,300 feet. The
Company installed approximately 518 miles of pipe of various sizes in various
water depths in fiscal 1997, including 51 miles offshore West Africa.
The Company is capable of installing pipe by either the conventional or the
reel method of pipelaying. With the conventional method, 40-foot segments of
pipe are welded together, coated and tested on the deck of the pipelay barge.
Each segment is then connected to the prior segment and is submerged in the
water as the barge is moved forward 40 feet by its anchor winches or tug boats.
The process is then repeated. Using the conventional pipelay method, the
Company's barges can install approximately 200 feet per hour of small diameter
pipe in shallow water under good weather conditions. Larger diameter pipe,
deeper water and less favorable weather conditions all reduce the speed of
pipeline installation.
With the reel method, the Company performs the welding, testing and coating
onshore, and then spools the pipe onto a pipe reel in one continuous length.
Once the reel barge is in position, the pipe is unspooled onto the ocean floor
as the barge is moved forward. The Company's dedicated reel pipelay barge, the
Chickasaw, is capable of spooling as much as 45 miles of 4.5-inch pipe or 3.8
miles of 12.75-inch pipe in one continuous length. Concrete coated pipe or
pipe with a diameter greater than 12.75-inches cannot be installed using the
Chickasaw's reel. Global has successfully operated the Chickasaw since 1987.
The Company believes that its reel method pipelay capability often provides it
with a competitive advantage because of its faster installation rates and
reduced labor expense when compared to the conventional pipelay method. The
Chickasaw can install small diameter pipe in shallow water at rates averaging
2,000 feet per hour. The Chickasaw's faster lay rate is even more significant
during the winter months, when pipelay operations must be suspended frequently
because of adverse weather conditions. The Chickasaw's faster installation
rate allows much more progress, or even completion of a project, with fewer
costly weather delays. The reel method reduces labor costs by permitting much
of the welding, x-raying, coating and testing to be accomplished onshore, where
labor costs are generally lower than comparable labor costs offshore. This
method also enables the Company to perform a substantial portion of its work
onshore, a more stable and safer work environment.
To expand the Company's pipelay capabilities into water depths to 6,000 feet,
the Chickasaw was upgraded in March and April 1994 at a cost of approximately
$9.0 million by adding dynamic positioning equipment, increasing pipe tension
capacity and installing a new pipelay stinger designed to place the pipeline
into a near vertical position as it is reeled off the barge. With this
upgrade, the Chickasaw is now capable of laying up to 10-inch diameter pipe in
water depths up to 3,000 feet and up to 4-inch diameter pipe in water depths up
to 6,000 feet. In April and May of 1997, the Chickasaw successfully laid
pipelines to a subsea development in 5,300 feet of water. The current upgrade
of the Hercules includes a reel system similar in design to the Chickasaw's,
but with much greater capacity. Current engineering indicates that when
completed, the Hercules reel will be capable of spooling 83 miles of 6 5/8"
diameter pipe, 23 miles of 12 3/4" diameter pipe, or 11 miles of 18" diameter
pipe.
In addition to its pipelay services, the Company believes that it has the
equipment and expertise necessary for its customer's to comply with regulations
of the United States Department of Interior Minerals Management Service ("MMS")
that require all offshore oil and gas pipelines greater than 8.75 inches
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in diameter located in water depths of 200 feet or less to be buried three feet
below the sea floor. Regulations also require that these pipelines be
periodically inspected, repaired and, if necessary, reburied. Inspection
requires extensive diving services, and rebury requires either hand-jetting by
divers or use of one of the Company's large jet sleds and a bury barge. With
the acquisition of Norman Offshore Pipelines, Inc. in fiscal 1997, the Company
obtained the Mudbug technology and patents. The Mudbug is used to
simultaneously lay and bury pipelines, a significant competitive advantage over
the conventional method which requires a second trip over the pipeline with the
barge to bury the pipe.
DERRICK SERVICES
All 16 of the Company's barges are equipped with cranes designed to lift and
place platforms, structures or equipment into position for installation. In
addition, they can be used to disassemble and remove platforms and prepare them
for salvage or refurbishment. During fiscal 1997, the Company performed
derrick services in the Gulf of Mexico and offshore West Africa. The Company
expects demand for Gulf of Mexico abandonment services to increase as more
platforms are removed due to MMS regulations relating to the abandonment of
wells and removal of platforms. At the end of 1996, there were approximately
3,837 platforms in Federal waters of the Gulf of Mexico.
In May 1995, Global and Halliburton Energy Services signed an alliance
agreement to offer a total package of abandonment services to oil and gas
operators in the Gulf of Mexico. The alliance, named Total Abandonment
Services ("TAS"), performs all facets of the abandonment process, including
engineering, project management, wellbore plug and abandonment, structure
removal and site clearance.
DIVING SERVICES
Demand for diving services covers the full life of an offshore oil and gas
property, including supporting exploration and drilling, installing pipelines
for production and transportation, periodic inspection, repair and maintenance
of fixed platforms and pipelines and, ultimately, salvage and site clearance.
The Company's pipelay and derrick operations create large captive demand for
deepwater diving services, for which divers are more highly compensated, and
which enables the Company to attract and retain qualified and experienced
divers. In fiscal 1997, approximately 54% of the Company's diving services were
performed for subsidiaries of the Company compared to 51% in fiscal 1996.
The MMS requires that all offshore structures have extensive and detailed
inspections for corrosion, metal thickness and structural damage every five
years. As the age of the offshore infrastructure increases, the Company
anticipates that demand for inspections and repairs will increase. MMS
regulations require platforms to be promptly removed once production ceases and
that the site be restored to meet stringent standards.
For diving projects involving long-duration deepwater and ultra deep dives to
1,500 feet, the Company uses saturation diving systems which maintain an
environment for the divers at the subsea water pressure at which they are
working until the job is completed. Saturation diving permits divers to make
repeated dives without decompressing, which reduces the time necessary to
complete the job and reduces the divers' exposure to the risks associated with
frequent decompression. Two of the Company's largest saturation diving systems
are capable of maintaining an environment simulating subsea water pressures to
1,500 feet. The Company has recorded the deepest wet working dive in the Gulf
of Mexico at 1,075 feet.
The Company believes it has been a leader in the development of many underwater
welding techniques and has more qualified diver/welders in the Gulf of Mexico
than any of its competitors. Welded repairs are made by two methods, dry
hyperbaric welding and wet welding. In dry hyperbaric welding, a customized,
watertight enclosure is engineered and fabricated to fit the specific
requirements of the structural joint or pipeline requiring repairs. The
enclosure is lowered into the water, attached to the structure and then the
water is evacuated, allowing divers to enter the chamber and to perform dry
welding repairs. Wet welding is accomplished while divers are in the water,
using specialized welding rods. Wet welding is less costly because it
eliminates the need to construct an expensive, customized, single- use
enclosure, but historically often resulted in repairs of unacceptable quality.
The Company believes it has been a leader in improving wet welding techniques
and it has satisfied the technical specifications for customers' wet welded
repairs in water depths to 325 feet. The Company's Research and Development
Center is an important part
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of a research and development consortium led by the Company and the Colorado
School of Mines that conducts research on underwater welding techniques for
major offshore oil and gas operators. The Research and Development Center
includes a hyperbaric facility capable of simulating wet or dry welding
environments for water depths of up to 1,200 feet, where the specific metals
and water depths are simulated so that the welds can be performed and tested to
assure compliance with the customer's technical specifications.
The Company provides diving services to nuclear power plants, which include
inspecting and repairing underwater equipment either during plant turnarounds
or while the plants are operating. While revenues to date from such services
have not been significant, the Company believes its opportunities in this area
are expanding as nuclear power plants age and require more frequent repair.
LIFTBOATS
Liftboats, also called "jackup boats", are self-propelled, self-elevating work
platforms complete with legs, cranes and living accommodations. Once on
location, a liftboat hydraulically lowers its legs until they are seated on the
ocean floor and then "jacks up" until the work platform is elevated above the
wave action. Once positioned, the stability, open deck area, crane capacity,
and relatively low cost of operation makes liftboats ideal work platforms for a
wide range of offshore support services. In addition, the capability to
reposition at a work site, or to move to another location within a short time
adds to their versatility. While the Company continues to time charter the
liftboats to the offshore service industry, it is also using the liftboats in
its pipeline construction and repair, platform installation, inspection,
maintenance, removal, and diving services. The Company completed construction
of two new liftboats during fiscal 1997.
OTHER RELATED SERVICES
Through a subsidiary the Company transports principally oilfield equipment and
pipe for the Company and for outside customers. The subsidiary has intrastate
hauling licenses for Texas and Louisiana, as well as interstate licenses
covering 48 states from the Interstate Commerce Commission. In fiscal 1997,
approximately 54% of this subsidiary's revenues were derived from work
performed for outside customers.
The Company expanded its related services capabilities when it acquired the
assets and on going business of the Red Adair Company, a wild well control and
firefighting firm, in December 1993. The Red Adair Company continues to provide
emergency firefighting response by coordinating well control services with its
extensive firefighting assets. The equipment, as well as customized fire loops
built for Global's barges and liftboats, is centralized at the Company's Houma
facility. Internationally, the Cheyenne, currently working offshore West
Africa, is equipped with three 6,000 gallon per minute Red Adair firefighting
pumps.
In November 1995 Global acquired ROV Technologies, Inc., a leading consulting
firm specializing in remote underwater intervention and ROV technology. ROV
technology is essential to operations in water depths exceeding 1,500 feet, the
limit for divers and associated saturation systems. ROV technology is also
used to support subsea production systems, a growing alternative to fixed and
floating platforms. ROV Technologies provides outside consulting services to
Global's customers and supports various internal engineering requirements,
including design and project management for the ROV system for the Pioneer.
CUSTOMERS
The Company's customers are primarily oil and gas producers and pipeline
companies operating in the Gulf of Mexico and in select international areas.
During fiscal 1997, the Company provided offshore marine construction services
to approximately 150 customers. The Company's revenues are not dependent on
any one customer. Its largest single customer in any of the three fiscal years
ended March 31, 1997, accounted for 20% of revenues. The level of construction
services required by any particular customer depends on the size of that
customer's capital expenditure budget devoted to construction plans in a
particular year. Consequently, customers that account for a significant
portion of revenues in one fiscal year may represent an immaterial portion of
revenues in subsequent fiscal years. The Company's contracts are typically of
short duration, being completed in one to five months.
COMPETITION
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The offshore marine construction industry is highly competitive. Contracts for
work in the Gulf of Mexico are typically awarded on a competitive bid basis
with customers usually requesting bids on projects one to three months prior to
commencement. However, for projects in water depths greater than 1,000 feet,
particularly subsea development projects and "turnkey" bids (where the Company
is responsible for the project from engineering through hook-up), the elapsed
time from bid request to commencement of work may exceed one year. The
Company's professional marketing staff contacts offshore operators known to
have projects scheduled to insure that the Company has an opportunity to bid
for the projects. Most contracts are awarded on a fixed-price basis, but the
Company also performs work on a cost-plus or day- rate basis, or on a
combination of such bases. During fiscal 1997 the Company commenced several
turnkey projects offshore West Africa which included fabrication and
installation of platforms and pipelines. The Company attempts to minimize
unexpected costs by excluding from its contract price the costs of unexpected
difficulties and the costs of weather related delays during the winter months.
Competition for work in the Gulf of Mexico has historically been based on the
location and type of equipment available, ability to deploy such equipment, the
quality of service, safety and price. In recent years, price has been the most
important factor in obtaining contracts; however, the ability to deploy
improved equipment and techniques, to attract and retain skilled personnel, and
to demonstrate a good safety record have also been important competitive
factors.
Competition for deepwater and ultra-deep water projects in the Gulf of Mexico
is limited primarily to the Company and three competitors, J. Ray McDermott,
S.A., Allseas Marine Contractors, S.A, International, and Sub Sea
International, Inc., a subsidiary of Dresser Industries. With increasing
frequency, international competitors including HeereMac Offshore Installation
Contractors, a joint venture of HeereMac and J. Ray McDermott, and Saipem and
European Marine Contractors, Ltd., a joint venture of Saipem and Brown & Root,
bid and compete for projects in the Gulf of Mexico. The Company's competitors
for shallow water projects include many small companies, some operating only
one barge, who often compete based solely on price.
Competition for diving or ROV projects in the Gulf of Mexico and Asia Pacific
regions usually involves the Company, six main competitors and a number of
smaller competitors. To compete more effectively, the Company has carefully
developed its reputation as a quality diving and ROV contractor and has taken a
leading role in developing industry-wide diving safety standards.
Competition offshore West Africa includes McDermott/ETPM West and SAIBOS.
McDermott/ETPM is a joint venture between the French contractor, ETPM, and the
U.S. based J. Ray McDermott. SAIBOS is a joint venture between the French
contractor, Bouygues, and the Italian company, Saipem. Smaller, shallow water
and inland swamp and marsh projects may also attract additional West African
based competitors and the very large projects may attract, North Sea and
worldwide competitors.
BACKLOG
As of May 31, 1997, the Company's backlog of construction contracts supported
by written agreements amounted to approximately $51.9 million, compared to the
Company's backlog at May 31, 1996, of $81.2 million. The Company does not
include in its backlog amounts relating to long term vessel charter agreements,
primarily the Shawnee charter to CCC, or any portion of contracts to be
performed by CCC, an unconsolidated subsidiary. Management expects all of its
backlog to be performed within twelve months. The Company does not consider
its relative backlog amounts to be a reliable indicator of future revenues.
Most of the Company's projects in the past several years were awarded and
performed within a relatively short period of time. However, as the Company
moves into deeper waters and into international areas larger backlog amounts
are expected because these projects have longer lead time and earlier awards.
GOVERNMENT REGULATION
Many aspects of the offshore marine construction industry are subject to
extensive governmental regulation. In the United States the Company is subject
to the jurisdiction of the United States Coast Guard, the National
Transportation Safety Board and the Customs Service, as well as private
industry organizations such as the American Bureau of Shipping. The Coast
Guard and the National Transportation Safety Board
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set safety standards and are authorized to investigate vessel accidents and
recommend improved safety standards, and the Customs Service is authorized to
inspect vessels at will.
The Company is required by various governmental and quasi-governmental agencies
to obtain certain permits, licenses and certificates with respect to its
operations. The kinds of permits, licenses and certificates required in the
operations of the Company depend upon a number of factors. The Company
believes that it has obtained or can obtain all permits, licenses and
certificates necessary to the conduct of its business.
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 laws and
regulations, as well as changing taxes and policies relating to the oil and gas
industry generally. In particular, the exploration and development of oil and
gas properties located on the Outer Continental Shelf of the United States is
regulated primarily by the MMS.
The operations of the Company also are affected by numerous federal, state and
local laws and regulations relating to protection of the environment, including
the Outer Continental Shelf Lands Act, the Federal Water Pollution Control Act
of 1972 and the Oil Pollution Act of 1990. The technical requirements of these
laws and regulations are becoming increasingly complex and stringent, and
compliance is becoming increasingly difficult and expensive. However, the
Company does not believe that compliance with current environmental laws and
regulations is likely to have a material adverse effect on the Company's
business or financial statements. Certain environmental laws provide for
"strict liability" for remediation of spills and releases of hazardous
substances and some provide liability for damages to natural resources or
threats to public health and safety. Sanctions for noncompliance may include
revocation of permits, corrective action orders, administrative or civil
penalties, and criminal prosecution. The Company's compliance with these laws
and regulations has entailed certain changes in operating procedures and
approximately $100,000 in expenditures in fiscal 1997. It is possible that
changes in the environmental laws 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. The
Company's insurance policies provide liability coverage for sudden and
accidental occurrences of pollution and/or clean-up and containment of the
foregoing in amounts which the Company believes are comparable to policy limits
carried in the marine construction industry.
Because the Company engages in certain activities that may constitute
"coastwise trade" within the meaning of federal maritime regulations, it is
also subject to regulation by the United States Maritime Administration
(MARAD), Coast Guard and Customs Services. Under these regulations, only
vessels owned by United States citizens that are built and registered under the
laws of the United States may engage in "coastwise trade." Furthermore, the
foregoing citizenship requirements must be met in order for the Company to
continue to qualify for financing guaranteed by MARAD, which currently exists
with respect to certain of its vessels. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -Liquidity and
Capital Resources." Certain provisions of the Company's Articles of
Incorporation are intended to aid in compliance with the foregoing requirements
regarding ownership by persons other than United States citizens.
FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING STATEMENTS
In the normal course of its business, the Company, in an effort to help keep
its shareholders and the public informed about the Company's operations, may
from time to time issue or make certain statements, either in writing or
orally, that are or contain forward-looking statements, as that term is defined
in the U.S. federal securities laws. Generally, these statements 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. The words "expect," "believe," "anticipate," "project," "estimate,"
and similar expressions are intended to identify 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, including but not limited to those discussed below. 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
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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.
The following discussion outlines certain factors that could affect the
Company's consolidated results of operations for fiscal 1998 and beyond and
cause them to differ materially from those that may be set forth in
forward-looking statements made by or on behalf of the Company.
No Assurance of Successful Management and Maintenance of Growth
The Company has experienced rapid growth, largely through acquisitions. The
Company's future financial results and prospects depend in large part on its
ability to successfully manage and improve the operating efficiencies and
productivity of these acquired operations. In particular, whether the
anticipated benefits of acquired operations are ultimately achieved will depend
on a number of factors, including the ability of combined companies to achieve
administrative cost savings, general economies of scale, and the ability of the
Company, generally, to capitalize on its combined asset base and strategic
position. Moreover, the ability of Global to continue to grow will depend on a
number of factors, including competition, availability of attractive
acquisition opportunities, ability to obtain and retain necessary personnel,
availability of working capital and ability to maintain margins.
Dependence on Activity in the Oil and Gas Industry
The demand for the Company's construction services depends on the condition of
the oil and gas industry, and particularly the capital expenditures of oil and
gas companies in the Gulf of Mexico. These capital expenditures are influenced
by prevailing oil and gas prices, expectations about future prices, the cost of
exploring for, producing and delivering oil and gas, the sale and expiration
dates of offshore leases in the United States and overseas, the discovery rate
of new oil and gas reserves in offshore areas, local and international
political and economic conditions, and the ability of oil and gas companies to
access or to generate capital. In recent years, oil and natural gas prices and
the level of offshore drilling and exploration activity have been extremely
volatile. A prolonged decline in such activity could have a material adverse
effect on the Company's revenues and profitability.
Operating Risks
Offshore construction involves a high degree of operational risk and is
increasingly dependent on large, expensive, special purpose vessels and
equipment. Hazards, such as vessels capsizing, sinking, grounding, colliding
and sustaining damage from severe weather conditions are inherent in offshore
operations. 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. Litigation arising from such an
occurrence may result in the Company being named as a defendant in lawsuits
asserting large claims. The Company maintains such insurance protection as it
deems prudent, including hull insurance on its vessels. There can be no
assurance that any such insurance 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 that it considers reasonable. See "Business-Insurance and Litigation."
International Operations
International operations accounted for approximately 23% and 39% of the
Company's revenues and operating income, respectively, during fiscal 1996 and
approximately 25% and 33%, respectively, during fiscal 1997. With the CCC and
Divcon Acquisitions and the possible relocation of certain vessels to
international markets, the percentage of the Company's revenues and operating
income that is derived from international operations may increase. The
Company's international operations are subject to a number of risks inherent in
any business operating in foreign countries, including political, social and
economic instability, potential vessel seizure, nationalization of assets,
currency restrictions and exchange rate fluctuations, nullification,
modification or renegotiate of contracts, import-export quotas and other forms
of public and governmental regulation, all of which are beyond the control of
the Company. Historically, the Company's operations have
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not been affected materially by such conditions or events, but as the Company's
international operations expand, the exposure to these risks will also
increase. Additionally, the ability of the Company to compete in international
markets may be adversely affected by foreign governmental regulations that
favor or require the awarding of contracts to local contractors, or by
regulations requiring foreign contractors to employ citizens of, or purchase
supplies from, a particular jurisdiction. Furthermore, the Company's foreign
subsidiaries may face governmentally imposed restrictions from time to time on
their ability to transfer funds to the Company. No predictions can be made as
to what foreign governmental regulations applicable to the Company's
operations may be enacted in the future. Although it is impossible to predict
the nature and the likelihood of any events of these types, if such an event
should occur, it could have a material adverse effect on the Company's
financial condition and results of operations.
Dependence on Significant Customers and Vessels
As construction activity moves into deeper water in the Gulf of Mexico,
construction projects tend to be larger and more complex than shallow water
projects. As a result, the Company's revenues and profits are increasingly
dependent on a smaller number of contracts with fewer customers and on its
large barges, including the Chickasaw and the Hercules. In each of the last
three fiscal years, one customer has accounted for 12% or more of the Company's
revenues, and the Company has derived an average of 12% of its annual revenues
from pipeline construction services employing the Chickasaw. While the Company
currently insures its vessels, including the Chickasaw and the Hercules,
against property loss due to a catastrophic marine disaster, mechanical failure
or collision, the loss of the Chickasaw, the Hercules or another of the
Company's large barges as a result of such an event, or the loss of a
significant customer due to a sustained decline in deepwater pipelay
activities, or competitive factors, could result in a substantial loss of
revenues, increased costs and other liabilities and could have material adverse
effect on the Company's operating performance.
Risks of Acquisition Strategy
The Company's growth strategy has emphasized the acquisition of other offshore
marine construction businesses and assets. There can be no assurance, however,
that the Company will be able to continue to identify attractive acquisition
opportunities, obtain financing for acquisitions on satisfactory terms or
acquire identified targets. In addition, no assurance can be given that the
Company will be successful in integrating acquired businesses into its existing
operations, and such integration may result in unforeseen operational
difficulties or require a disproportionate amount of management's attention.
Future acquisitions may result in the incurrence of additional indebtedness or
the issuance of Common Stock. Furthermore, there can be no assurance that
competition for acquisition opportunities in the industry will not escalate,
thereby increasing the cost to the Company of making further acquisitions or
causing the Company to refrain from making further acquisitions.
Pioneer Litigation; Vessel Construction
On December 14, 1995, Aker Gulf Marine filed suit against Global in the U.S.
District court, Western District of Louisiana, Lafayette Division, seeking $8.2
million in additional costs believed by it to be owed because of change orders
during construction of the Pioneer, and $5.0 million for disruption,
acceleration, and delay damages. Global does not believe that Aker Gulf
Marine's claims are valid and intends to vigorously defend against them and
recover all amounts that it is legally entitled to recover. Global does not
believe that the ultimate resolution of the claims will have a material adverse
impact on Global's financial statements but the suit did result in delays in
completion of the vessel and increased expenditures for completion of the
vessel. Under an agreement reached with Aker Gulf Marine, Global has been
given clear title to the Pioneer in exchange for a cash payment of $3.2 million
and the posting of a $4.5 million bond in favor of Aker Gulf Marine. Such
amounts and the release of the vessel are without prejudice to each company's
rights to pursue claims against the other in the pending litigation or
otherwise. See "Item 3 Legal Proceedings". Delays in completion of vessels are
not uncommon and vessel construction involves various other risks including
increases in costs due to unforeseen circumstances or changes in governmental
regulations and contract disputes with the contractor. To the extent that the
Company's strategy relies upon the construction of new vessels and significant
modifications of existing vessels, implementation of that strategy will be
subject to such risks.
11
<PAGE> 12
Seasonality
Although the Company continues to expand its international operations, 73% of
the Company's revenues in fiscal 1997 were derived from work performed in the
Gulf of Mexico. The offshore construction industry in the Gulf of Mexico is
highly seasonal as a result of weather conditions and the timing of capital
expenditures by oil and gas companies. Historically, a substantial portion of
the Company's services has been performed during the period from June through
November. As a result, a disproportionate amount of the Company's contract
revenue, gross profit and net income has historically been earned during the
second (July through September) and third (October through December) quarters
of its fiscal year. Because of seasonality, full year results are not likely
to be a direct multiple of any particular quarter or combination of quarters.
For example, weighted average revenues earned, gross profit and net income
contributed during the second and third quarters of each of the past three
fiscal years were 57%, 63% and 65%, respectively. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
Contract Bidding Risks
Due to the nature of the offshore construction industry, substantially all of
the Company's projects are performed on a fixed-price basis. The revenue,
costs and gross profit realized on a contract will often vary from the
estimated amount because of changes in offshore job conditions and variations
in labor and equipment productivity from the original estimates. In addition,
during the summer construction season, the Company typically bears the risk of
delays caused by adverse weather conditions. These variations and the risks
inherent in the marine construction industry may result in reduced
profitability or losses on projects.
Percentage-of Completion Accounting
Most of the Company's contracts are completed within 30 days of being awarded;
however, because the Company's revenues are recognized on a
percentage-of-completion basis, based on the ratio of costs incurred to the
total estimated costs at completion, revenues and gross profits for a project
may be adjusted in subsequent reporting periods from those originally reported
in prior periods. To the extent that these adjustments result in a reduction
or elimination of previously reported profits, the Company would recognize a
charge against current earnings that may be significant depending on the size
of the project or the adjustment. See "Management's discussion and Analysis of
Financial Conditions and Results of Operations - Results of Operations" and the
Consolidated financial Statements and Notes thereto included elsewhere herein.
Dependence on Key Personnel
The Company's success depends on the continued active participation of William
J. Dore', the Company's founder, Chairman of the Board, President and Chief
Executive Officer, and certain of the Company's other officers and key
operating personnel. The loss of the services of any one of these persons
could have a material adverse effect on the Company. See "Executive Officers
of Registrant."
Substantial Control by Principal Shareholder
William J. Dore', Chairman of the Board, President and Chief Executive Officer,
beneficially owns approximately 34.3% of the outstanding Common Stock. As a
result, Mr. Dore' is able to exercise substantial influence on the outcome of
certain matters requiring a shareholder vote, including the election of
directors. This may have the effect of delaying, deferring or preventing a
change in control of the Company.
Competition
The Company's business is highly competitive. Offshore construction companies
operating in the Gulf of Mexico compete intensely for available projects.
Contracts for the Company's services are generally awarded on a competitive bid
basis, and while customers may consider, among other things, the availability
and capabilities of equipment, and the reputation and experience of the
contractor, intense price competition is a primary
12
<PAGE> 13
factor in determining which qualified contractor is awarded the job. As the
Company increases the portion of its operations conducted in deeper waters and
internationally, it will encounter additional competitors, many of whom have
greater experience than the Company in such markets. Several of the Company's
competitors and potential competitors are larger and have greater financial and
other resources than the Company. In addition, increased activity levels in
the Gulf of Mexico may attract additional competitors on equipment to the Gulf
of Mexico market.
Regulatory and Environmental Matters
The Company's vessels and operations are subject to and affected by various
types of governmental regulation, including numerous federal, state and local
environmental protection laws and regulations, which are becoming increasingly
complex, stringent and expensive. Significant fines and penalties may be
imposed for non-compliance, and certain environmental laws impose joint and
several "strict liability" for remediation of spills and releases of oil and
hazardous substances rendering a person liable for environmental damage,
without regard to negligence or fault on the part of such person. Such laws
and regulations may expose the Company to liability for the conduct of or
conditions caused by others, or for acts of the Company that were in compliance
with all applicable laws at the time such acts were performed. The Company does
not believe that compliance with current environmental laws or regulations is
likely to have a material adverse effect on the Company's business or financial
condition.
Limitation on Foreign Ownership
The Company's Articles of Incorporation contain limitations on the percentage
of outstanding Common Stock and other classes of voting securities that can be
owned by persons who are not United States citizens within the meaning of
certain statutes relating to the ownership of United States flagged vessels.
At present, applying the statutory requirements, the Articles of Incorporation
would prohibit more than 23% of the outstanding Common Stock from being owned
by persons other than United States citizens. The restrictions imposed by the
Company's Articles of Incorporation may at times preclude United States
citizens from transferring their Common Stock to persons other than United
States citizens. This may restrict the available market for resale of shares
of Common Stock and for the issuance of shares by the Company.
PATENTS
The Company owns or is the licensee of a number of patents in the United States
and Great Britain. The Company relies on a combination of patents and trade
secrets to protect its proprietary technologies. In the 1987 acquisition of
Sea-Con Services, Inc. pipelaying assets, the Company acquired the patents to
certain pipe burying technology and an exclusive license to certain wet welding
technology. Patents under which the Company is a non-exclusive licensee
protect certain features of the Chickasaw, and the Company's portable reels.
In the fiscal 1997 acquisition of Norman Offshore Pipelines, Inc. the Company
acquired the patents to certain pipe burying technology, called the Mudbug
which permits pipelay and bury to complete in a single pass. The licenses
continue until the expiration of the underlying patents, which will occur at
various times to 2007, with most expiring in 1998 or later. In addition, the
Company has developed certain proprietary underwater welding techniques and
materials.
The Company believes that its customer relationships, reputation, technical
knowledge, experience and quality equipment are more important to its
competitive position than its patents and licenses. The Company's business is
not materially dependent on any one or more of its licenses or patents,
although the loss of license or patent protection for the Company's reel barge,
its seaplow or its pipeburying technology could have a material adverse effect
on the Company's Competitive position.
EMPLOYEES
The Company's work force varies based on the Company's workload at any
particular time. During fiscal 1997 the number of Company employees ranged from
a low of 901 to a high of 1,128, and as of May 31, 1997, the Company had 1,223
employees. None of the Company's employees are covered by a collective
13
<PAGE> 14
bargaining agreement. The Company believes that its relationship with its
employees is satisfactory. In addition, many workers are hired on a contract
basis and are available to the Company on short notice.
ITEM 2. PROPERTIES
The Company owns a fleet of 16 construction barges, 18 liftboats and eight dive
support vessels. Fifteen of the Company's construction barges (including the
Hercules currently being upgraded to include pipelay capability) are designed
to perform more than one type of construction project which enables these
combination barges to sustain a higher utilization rate. A listing of the
Company's significant vessels along with a brief description of the
capabilities of each is presented on pages 17.
During fiscal 1997 the Company completed construction of a semi-submersible
SWATH design dive support vessel, named the Pioneer, at a cost of approximately
$25.8 million. Aker Gulf Marine, which was the original shipyard for the
construction of the Pioneer, has filed suit against the Company seeking an
additional $13.2 million in connection with the construction of the vessel.
Global is vigorously defending against the claims but they may result in
increased expenditures for completion of the Pioneer. See "Item 3 Legal
Proceedings" for additional information. The Pioneer is a twin-hulled, semi
submersible vessel that provides support services in water depths to 8,000
feet. Use of the Pioneer design reduces weather sensitivity, allowing the
vessel to continue operating in up to 12-foot seas and remain on site in up to
20-foot seas. The vessel is able to install, maintain and service subsea
completions, has saturation diving capabilities, and is equipped for
abandonment operations, pipeline installations and other services beyond the
capabilities of conventional dive support vessels. The Pioneer began
operations in the Gulf of Mexico during the third quarter of fiscal 1997.
The Company acquired the Hercules, a 400-foot barge with a 2,000 ton crane
capable of performing revolving lifts up to approximately 1,600 tons, for $10.9
million in late November, 1995. The Company began an upgrade of the Hercules
into a combination heavy lift and deepwater pipelay vessel in November 1996, at
an estimated cost of $70 million, with completion scheduled for August 1997.
During fiscal 1997 the Company acquired the DB-15 and DB-21 (now renamed the
Shawnee and Comanche, respectively) both 400-foot barges with derrick and
pipelay capabilities, as part of the CCC acquisition. The Comanche is located
in West Africa and the Shawnee is chartered to CCC as that company's main
construction vessel. The Company also acquired the Delta 1 and the Pipeliner V
as part of the acquisition of Norman Offshore Pipelines Inc. during fiscal
1997.
The Company operates eighteen liftboats, sixteen acquired in 1994 and two
constructed in fiscal 1997. Liftboats are self-propelled, self-elevating
vessels which can efficiently support offshore construction and other services,
including dive support and salvage operations in water depths up to 180 feet.
In addition to the dedicated pipelay reel on the Chickasaw, which has a
capacity ranging from 45 miles of 4.5-inch diameter pipe to 3.8 miles of
12.75-inch diameter pipe, the Company owns four portable pipelay reels, which
can be mounted on the deck of its barges for pipelay by the reel method or used
as additional capacity on the Chickasaw. The upgrade of the Hercules includes a
reel system similar in design to the Chickasaw's, but with much greater
capacity. Based upon current engineering, when completed, the Hercules reel
will be capable of spooling up to 83 miles of 6" diameter pipe, 23 miles of 12"
diameter pipe, or 8 miles of 18" pipe. The Company owns and operates two bury
plows, which are capable of burying pipe up to 18 inches in diameter, and four
jetting sleds, which are capable of burying pipe up to 36 inches in diameter,
and three Mudbugs, for burying pipe simultaneous with the pipeline
installation.
All of the Company's barges and vessels are owned by the Company, and seven are
subject to ship mortgages. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources." Under governmental regulations, the Company's insurance policies
and certain of the Company's financing arrangements, the Company is required to
maintain its barges and vessels in accordance with standards of seaworthiness
and safety set by government regulations or classification organizations. The
Company maintains its fleet to the standards for seaworthiness, safety and
health set by the American Bureau of Shipping.
14
<PAGE> 15
The Company also owns thirteen saturation diving systems, ten of which are
currently operational. Of the operational units, one is installed on the Sea
Lion (previously Global Diver 210) dive support vessel and another is installed
in the New Iberia Research and Development Center and used to support welding
research as well as offshore operations. The Company's saturation systems
range in capacity from four to fourteen divers. Two of the saturation systems
are capable of supporting dives as deep as 1,500 feet. Each saturation system
consists of a diving bell for transporting the divers to the sea floor, and
pressurized living quarters. The systems have surface controls for measuring
and mixing the specialized gasses that the divers breathe, and connecting
hatches for entering the diving bell and providing meals and supplies to the
divers.
The Company also owns 17 firefighting water pumps and other related
firefighting and well control equipment.
In the normal course of its operations, the Company also leases or charters
other vessels, such as tugboats, cargo barges, utility boats and dive support
vessels.
The Company's corporate headquarters are located in Lafayette, Louisiana, in an
office building of approximately 27,800 square feet owned by the Company. In
addition, the Company has a training facility of approximately 4,000 square
feet on approximately 25 acres of land just south of Lafayette, which are
leased through December 1998 from the Company's principal shareholder, Mr.
William J. Dore'. The lease also includes an office building of approximately
10,000 square feet and a storage facility of approximately 7,000 square feet.
The Company leases approximately 65 acres of land on the Houma Navigational
Channel near Houma, Louisiana, which serves as the headquarters for the
Company's pipeline and derrick services and includes a facility for welding,
coating, testing and handling of 1,700-foot lengths of pipe for spooling the
Chickasaw. The lease for this facility expires in 2002 and the Company has a
purchase option on the property.
The Company also leases approximately 32 acres in Amelia, Louisiana, which
serves as the operations facility for the Company's derrick operations. The
facility has bulkheaded water frontage for the Company's derrick barges. The
lease for this facility expires in April 1999.
The Company's diving, special services, and transportation operations are
headquartered on approximately 15 acres at the Port of Iberia, near New Iberia,
Louisiana, owned by the Company. Additional bulkheads, work shops, storage
space and offices were added during fiscal 1996 to this facility which provides
direct access to the Gulf of Mexico for the Company's liftboat and dive support
vessels. The New Iberia location includes the Company's Research and
Development Center, which houses a hyperbaric welding facility and a conference
and training facility.
The Company also leases offices in Houston, Texas and New Orleans, Louisiana
and leases other offices and facilities for support of its operations in West
Africa and Southeast Asia. The Company purchased land near Carlyss, Louisiana
during fiscal 1997 and is currently conducting an engineering and design phase
for construction of a new deepwater pipebase for the Hercules and other
operations.
15
<PAGE> 16
Global Industries, Ltd.
Listing of Barges and Vessels
As of March 31, 1997
<TABLE>
<CAPTION>
Pipelay
Derrick -----------------
------- Maximum Maximum
Maximum Pipe Water Calendar Living
Length Lift Diameter Depth Year Quarter
Vessel Type (Feet) (Tons) (Inches) (Feet) Acquired Capacity
Construction Barges: -------------------- ------ ------- -------- ------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Comanche(1) Pipelay/derrick 400 1,000 48.00 1,500 1996 223
Shawnee(2) Pipelay/derrick 400 860 48.00 1,500 1996 272
Hercules(3) Derrick 400 2,000 -- -- 1995 191
Cheyenne Pipelay/bury/derrick 350 800 36.00 1,500 1992 190
DB-3 Derrick 350 800 -- -- 1992 100
Cherokee Pipelay/derrick 350 925 36.00 1,500 1990 183
Sara Maria(4) Derrick/accommodation 350 550 -- -- 1996 100
Mohawk Pipelay/bury/derrick 320 600 48.00 700 1996 200
Chickasaw Pipelay reel/derrick 275 160 12.75 6,000 1990 70
Delta 1(5) Pipelay/bury/derrick 270 25 14.00 200 1996 70
Tonkawa Derrick/bury 250 175 -- 400 1990 73
Sea Constructor Pipelay/bury/derrick 250 200 24.00 400 1987 75
Navajo Pipelay/derrick 240 150 10.00 600 1992 129
G/P 37 Pipelay/bury/derrick 188 140 16.00 300 1981 58
Pipeliner V (5) Pipelay/bury/derrick 180 25 14.00 200 1996 60
G/P 35 Pipelay/bury/derrick 164 100 16.00 200 1978 46
MAD II Pipelay/bury/derrick 135 45 22.00 50 1975 33
SWATH Vessel:
Pioneer Multi-task 200 50 -- -- 1996 57
</TABLE>
16
<PAGE> 17
(1) Formerly, DB-21.
(2) Formerly, DB-15, currently chartered to CCC.
(3) Currently being equipped for conventional pipelay. Completion scheduled
for the summer of 1997.
(4) Owned and operated by CCC.
(5) Acquired as part of the Norman Offshore Pipelines Inc., acquisition in July
1996.
17
<PAGE> 18
ITEM 3. LEGAL PROCEEDINGS
The Company's operations are subject to the inherent risks of offshore marine
activity including accidents resulting in the loss of life or property,
environmental mishaps, mechanical failures and collisions. The Company insures
against these risks at levels consistent with industry standards. The Company
believes its insurance should protect it against, among other things, the cost
of replacing the total or constructive total loss of its vessels. The Company
also carries workers' compensation, maritime employer's liability, general
liability and other insurance customary in its business. All insurance is
carried at levels of coverage and deductibles that the Company considers
financially prudent.
The Company's services are provided in hazardous environments where accidents
involving catastrophic damage or loss of life could result, and litigation
arising from such an event may result in the Company being named a defendant in
lawsuits asserting large claims. To date, the Company has only been involved
in one such catastrophic occurrence when a platform owned by a customer
exploded while the Company was doing underwater construction work. The
settlements related to the accident totaled more than $23.0 million, but the
Company's uninsured expenditure on the settlements was insignificant. Although
there can be no assurance that the amount of insurance carried by Global is
sufficient to protect it fully in all events, management believes that its
insurance protection is adequate for the Company's business operations. A
successful liability claim for which the Company is underinsured or uninsured
could have a material adverse effect on the Company.
The Company is involved in various routine legal proceedings primarily
involving claims for personal injury under the General Maritime Laws of the
United States and Jones Act as a result of alleged negligence. The Company
believes that the outcome of all such proceedings, even if determined
adversely, would not have a material adverse effect on its business or
financial statements.
On December 14, 1995, Aker Gulf Marine filed suit against Global in the U.S.
District Court, Western District of Louisiana, Lafayette Division, seeking $8.2
million in additional costs believed by it to be owed because of change orders
during construction of the PIONEER, and $5.0 million for disruption,
acceleration, and delay damages. Global does not believe that Aker Gulf
Marine's claims are valid, intends to vigorously defend against them, intends
to recover all amounts which it is legally entitled to recover and does not
believe that the ultimate resolution of the claims will have a material adverse
impact on Global's financial statements. Under an agreement reached with Aker
Gulf Marine, Global took possession of the PIONEER on August, 1996 and moved it
to Global's facility in Amelia, Louisiana where construction and equipping of
the vessel was completed. Sea trials were successfully completed in November,
1996 and the vessel is currently deployed in the Gulf of Mexico. Under the
terms of the agreement, Global has been given clear title to the PIONEER in
exchange for a cash payment of $3.2 million and the posting of a $4.5 million
bond in favor of Aker Gulf Marine. Such amounts and the release of the vessel
are without prejudice to each company's rights to pursue claims against the
other in the pending litigation or otherwise.
In connection with the Company's proposed acquisition of certain of the assets
of Sub Sea International, Inc. the Company has received a "Second Request"
seeking additional information from Global and Sub Sea International, Inc.
under the Hart-Scott Rodino Antitrust Improvements Act. Global expects to
substantially comply with that request prior to the end of June, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
18
<PAGE> 19
ITEM (Unnumbered). EXECUTIVE OFFICERS OF THE REGISTRANT
(Provided pursuant to General Instruction G)
All executive officers named below, in accordance with the By-Laws, are elected
annually and hold office until a successor has been duly elected and qualified.
The executive officers of the Company as of June 1, 1997, follow:
NAME AGE POSITION
---- --- --------
William J. Dore' 54 Chairman of the Board of Directors, President
and Chief Executive Officer
Michael J. Pollock 51 Vice President, Chief Financial Officer and
Director
Michael J. McCann 50 Vice President, Chief Administrative Officer
Mr. William J. Dore', the Company's founder, has been Chairman of the Board of
Directors, President and Chief Executive Officer since 1973. Mr. Dore' has
over twenty-five years of experience in the diving and marine construction
industry and is a past President of the Association of Diving Contractors and
serves on the executive committee of the Board of Directors of the National
Ocean Industry Association.
Mr. Pollock was named Vice President, Chief Financial Officer and Treasurer in
April 1996. He joined the Company in 1990 as Treasurer and Chief Financial
Officer and was named Vice President, Chief Administrative Officer and a
Director in December 1992. From 1982 until September 1990, Mr. Pollock
practiced public accounting. Mr. Pollock is a Certified Public Accountant and
has twenty-seven years of experience in the accounting and auditing field,
including eight years as a practicing CPA.
Mr. McCann joined the Company in July 1996 as Vice President and Chief
Administrative Officer. He is responsible for overseeing a wide range of
administrative areas, including risk management, legal issues, environmental,
Management Information Systems, internal audits, procurement and purchasing.
Prior to joining Global, he served 18 years with Sub Sea International where he
was most recently the CFO/Controller.
19
<PAGE> 20
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The following table presents for the periods indicated, the high and
low sales prices per share of the Company's Common Stock (adjusted to give
retroactive effect for the two-for-one stock splits effective January 24, 1996
and August 28, 1996).
HIGH LOW
---- ---
FISCAL YEAR 1997
First quarter $17.000 $10.500
Second quarter 18.250 12.250
Third quarter 20.750 15.250
Fourth quarter 25.875 17.250
FISCAL YEAR 1996
First quarter $ 6.625 $ 5.375
Second quarter 6.813 4.813
Third quarter 7.688 5.625
Fourth quarter 10.875 6.875
As of May 31, 1997, there were approximately 490 holders of record of Common
Stock.
The Company has never paid cash dividends on its Common Stock and does not
intend to pay cash dividends in the foreseeable future. The Company currently
intends to retain earnings, if any, for the future operation and growth of its
business. Certain of the Company's financing arrangements restrict the payment
of cash dividends under certain circumstances. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."
20
<PAGE> 21
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented below for the five fiscal years ended
March 31, 1997, should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Consolidated
Financial Statements and Notes to Consolidated Financial Statements included
elsewhere in this Annual Report.
Year Ended March 31,
----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- -------- --------- ---------
(in thousands, except per share data)
Revenues $229,142 $148,376 $122,704 $80,646 $66,018
Gross profit 63,253 41,015 38,072 24,227 23,829
Net income (1) 33,932 20,993 19,355 10,735 9,643
Net income per share (1)(2) 0.84 0.54 0.53 0.34 0.39
Total assets (3) 422,687 202,526 160,228 80,392 62,802
Working capital (3) 103,727 34,264 54,557 23,160 24,372
Long-term debt, total (3) 43,213 22,192 22,822 2,182 2,394
- ----------------
(1) Effective April 1, 1993, the Company adopted SFAS No. 109, Accounting for
Income Taxes, resulting in an increase in net income of $400,000 ($0.01 per
share).
(2) For fiscal years prior to 1994, these amounts are restated to give effect
to the issuance of shares in the Company's reorganization into a holding
company structure effective January 31, 1993. Weighted average shares of
Common Stock outstanding were 40,450,842 for fiscal 1997, 38,534,156 for
fiscal 1996, 35,935,424 for fiscal 1995, 31,165,860 for fiscal 1994, and
24,458,768 for fiscal 1993. These amounts are adjusted to give effect to
the two-for-one stock splits effected January 24, 1996 and August 28, 1996.
(3) As of the end of the period.
21
<PAGE> 22
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the Company's financial condition, results of
operations, liquidity and capital resources should be read in conjunction with
the Consolidated Financial Statements and the Notes to Consolidated Financial
Statements included elsewhere in this Annual Report.
Although the Company has been expanding its international operations, 77% of
the Company's revenues in fiscal 1996 and 73% in fiscal 1997 were derived from
work performed in the Gulf of Mexico. The offshore marine construction industry
in the Gulf of Mexico is highly seasonal as a result of weather conditions and
the timing of capital expenditures by oil and gas companies. Historically, a
substantial portion of the Company's services has been performed during the
period from June through November. As a result, a disproportionate portion of
the Company's revenues, gross profit and net income generally is earned during
the second (July through September) and third (October through December)
quarters of its fiscal year. Because of seasonality, full year results are not
likely to be a direct multiple of any particular quarter or combination of
quarters. The following table documents the seasonal nature of the Company's
operations by presenting the percentage of annual revenues, gross profit and
net income contributed during each fiscal quarter for the past three fiscal
years and the three year weighted average for such periods.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Fiscal 1997 22% 31% 25% 22%
Fiscal 1996 21 31 22 26
Fiscal 1995 24 35 30 11
Three year average 22 32 25 21
GROSS PROFIT:
Fiscal 1997 20% 34% 24% 22%
Fiscal 1996 21 38 23 18
Fiscal 1995 24 44 30 2
Three year average 21 38 25 16
NET INCOME:
Fiscal 1997 19% 37% 24% 20%
Fiscal 1996 20 39 20 21
Fiscal 1995 22 46 31 1
Three year average 20 40 25 15
</TABLE>
The Company expanded its operations offshore West Africa during the first half
of fiscal 1996. Strong demand for the Company's offshore construction services
in this market during the fourth quarter of fiscal 1996 and 1997 resulted in
the fourth quarter of fiscal 1996 and 1997 making a significantly greater
contribution to fiscal 1996 and 1997 revenues, gross profit and net income than
historically, which had a significant impact on the three year weighted
averages shown above.
22
<PAGE> 23
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, statement of
operations data expressed as a percentage of revenues.
FISCAL
--------------------------------
1997 1996 1995
------ ------ ------
Revenues ............................... 100.0% 100.0% 100.0%
Cost of revenues ....................... (72.4) (72.4) (69.0)
Gross profit ........................... 27.6 27.6 31.0
Selling, general and administrative
expenses ............................. (6.6) (8.2) (7.8)
Interest expense ....................... (0.6) (0.1) (0.1)
Other income (expense) ................. 0.7 1.0 1.9
Income before income taxes ............. 21.1 20.3 25.0
Provision for income taxes ............. (6.3) (6.2) (9.3)
Net income ............................. 14.8 14.1 15.7
The Company's results of operations reflect the level of offshore construction
activity in the Gulf of Mexico for all years and offshore West Africa during
fiscal 1996 and 1997, and in Asia Pacific for the last quarter of fiscal 1997,
and the Company's ability to win jobs through competitive bidding and manage
won jobs to successful completion. The level of offshore construction activity
is principally determined by three factors: first, the oil and gas industry's
ability to economically justify placing discoveries of oil and gas reserves on
production; second, the oil and gas industry's need to clear all structures
from the lease once the oil and gas reserves have been depleted; and third,
weather events such as major hurricanes.
FISCAL 1997 COMPARED TO FISCAL 1996
REVENUES. Revenues for fiscal 1997 of $229.1 million were 54% higher than
fiscal 1996 revenues of $148.4 million, with strong contributions from
international operations, diving, liftboats, derrick services and coastal
pipelay. Revenues from West Africa improved to $57.4 million, up from $33.6
million in 9 months of fiscal 1996. In the Gulf of Mexico, pipeline
construction activity increased from the prior year, and, largely due to the
addition of coastal pipeline services and the Norman Offshore Pipelines, Inc.
acquisition, barge days employed improved 55%, from 1,150 days in fiscal 1996
to 1,783 days in fiscal 1997. Competition continued to intensify as additional
barges relocated to and competed for pipeline installation projects. Liftboat
and DSV days employed in fiscal 1997 of 5,332 days were significantly higher
than the 4,076 days employed in fiscal 1996, as a result of increased activity
and the addition of two DSV's and two liftboats during the year. Diver days
employed improved 118%, from 10,982 days in fiscal 1996 to 23,936 days in
fiscal 1997, as higher activity was combined with additional days resulting
from the Norman and Divcon acquisitions.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization, including
amortization of drydocking costs, for fiscal 1997 was $17.7 million compared to
the $11.1 million recorded in fiscal 1996. The increase of 59% was principally
attributable to depreciation on the CHEYENNE and the HERCULES (both of which
are depreciated on a units-of-production basis), and higher dry-dock
amortization amounts.
23
<PAGE> 24
GROSS PROFIT. Gross profit, the excess of revenues over the cost of revenues,
including depreciation and amortization charges, for fiscal 1997 of $63.3
million was 54% higher than the $41.0 million reported for fiscal 1996.
Expressed as a percentage of revenues, gross profit in fiscal 1997 of 27.6%
was the same as that reported in fiscal 1996, as improved margins from higher
activity levels were offset by the cost burden of building the operating
infrastructure to support additions to the operating fleet and by lower margins
on fabrication and procurement portions of turnkey contracts in West Africa.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. While selling, general and
administrative expenses for fiscal 1997 of $15.1 million were 24% higher than
the $12.2 million reported in fiscal 1996, as a percentage of revenues it
decreased to 6.6% from 8.2%. Most of the increase in selling, general and
administrative expense was attributable to staff additions made to support
expanding operations. Fiscal 1997 operating results include a $3.6 million
provision relating to the Company's incentive compensation and employee
retirement plan, the same as in fiscal 1996. Of the fiscal 1997 and fiscal
1996 provisions, $2.5 million was charged to cost of revenues and $1.1 million
included in selling, general and administrative expenses.
INTEREST EXPENSE AND OTHER INCOME AND EXPENSE. Interest expense was $1.4
million net of capitalized interest in fiscal 1997, compared to $0.2 million in
fiscal 1996. Other income in fiscal 1997 of $1.7 million was comparable to the
$1.5 million reported in fiscal 1996. The changes in interest expense and
interest income occurred as heavy capital expenditures in fiscal 1997 reduced
the surplus funds available for short-term investments during part of the year,
while the net proceeds of an equity offering completed in February 1997 added
to surplus funds available for the remainder of the year.
NET INCOME. Net income for fiscal 1997 of $33.9 million was 61% higher than
the $21.0 million recorded for fiscal 1996, while net income per share of $0.84
increased 56% from fiscal 1996 net income per share of $0.54, as average
shares outstanding increased 5%. The Company's effective tax rate for fiscal
1997 remains substantially consistent with fiscal 1996.
FISCAL 1996 COMPARED TO FISCAL 1995
REVENUES. Revenues for fiscal 1996 of $148.4 million were 20.9% higher than
fiscal 1995 revenues of $122.7 million, as revenues contributed from
international expansion of offshore construction services, a full year of
operations of the liftboats and turnkey project revenues more than offset the
decline in Gulf of Mexico pipeline construction activity. Early in fiscal
1996, the Company converted the DB-2 derrick barge into a combination
pipelay/derrick barge, now named the CHEYENNE, and entered the offshore West
Africa construction area. This commitment produced positive results as 146 (or
12.7%) of the 1,150 total barge days worked in fiscal 1996 were offshore West
Africa. In the Gulf of Mexico, pipeline construction activity declined from
the prior year and competition intensified as additional barges relocated to
and competed in this area. As a result, barge days employed in the Gulf of
Mexico market declined 14.8%, from 1,178 days in fiscal 1995 to 1,004 days in
fiscal 1996. Liftboat and DSV days employed in fiscal 1996 of 4,076 days were
significantly higher than the 1,448 days employed in fiscal 1995, as a result
of inclusion of a full year of operation of the sixteen liftboats acquired
effective December 31, 1994. Diver days employed declined only 7.2%, from
11,840 days in fiscal 1995 to 10,982 days in fiscal 1996.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization, including
amortization of drydocking costs, for fiscal 1996 was $11.1 million compared to
the $7.4 million recorded in fiscal 1995. The increase of 50.0% was
principally the result of increased depreciation attributable to capital
expenditures to acquire the sixteen liftboats, conversion of the DB-2 into the
combination barge CHEYENNE, and increased use of the upgraded CHICKASAW in the
dynamic positioning mode of operation and the converted SEA LION (previously
called Global Diver 210), partially offset by less barge days employed in the
Gulf of Mexico.
GROSS PROFIT. Gross profit, the excess of revenues over the cost of revenues,
including depreciation and amortization charges, for fiscal 1996 of $41.0
million was 7.6% higher than the $38.1 million reported for fiscal 1995.
Expressed as a percentage of revenues, gross profit in fiscal 1996 of 27.6%
was lower than the 31.0% reported in fiscal 1995, largely because of the
competitive Gulf of Mexico offshore construction and the cost burden of
building the operating infrastructure to support additions to the operating
fleet (the heavy lift barge HERCULES in late November 1995 and the combination
barge MOHAWK and the PIONEER, in the second
24
<PAGE> 25
and third quarters of fiscal 1997, respectively).
SELLING, GENERAL AND ADMINISTRATIVE. While selling, general and administrative
expenses for fiscal 1996 of $12.2 million were 28.4% higher than the $9.5
million reported in fiscal 1995, as a percentage of revenues it increased only
to 8.2% from 7.8%. Most of the increase in selling, general and administrative
expense was attributable to staff additions made to support expanding
international operations and scheduled equipment additions to the operating
fleet. Fiscal 1996 operating results include a $3.6 million provision relating
to the Company's incentive compensation and employee retirement plan compared
with a provision in fiscal 1995 of $3.8 million. Of the 1996 provision, $2.5
million was charged to cost of revenues and $1.1 million included in selling,
general and administrative expenses. The fiscal 1995 provision was charged
$2.7 million to cost of revenues and $1.1 million to selling, general and
administrative expenses.
INTEREST EXPENSE AND OTHER INCOME AND EXPENSE. Interest expense was $0.2
million in both fiscal 1996 and 1995. Other income and expense in fiscal 1996
of $1.5 million was lower than the $2.4 million reported in fiscal 1995 because
heavy capital expenditures in fiscal 1996 reduced the surplus funds available
for short-term investments and the prior year included an $0.8 million gain
from the sale of non-essential land and buildings at the Port of Iberia, New
Iberia, Louisiana.
NET INCOME. Net income for fiscal 1996 of $21.0 million was 8.2% higher than
the $19.4 million recorded for fiscal 1995, while net income per share of $1.09
increased 1.9% from fiscal 1995 net income per share of $1.07 as average
shares outstanding increased 7.2%. The Company's effective tax rate declined
from 37.0% in fiscal 1995 to 30.3% in fiscal 1996 as international earnings
were burdened with a lower tax rate than that experienced by the remainder of
the Company's operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operations generated cash flow of $64.3 million during fiscal
1997. Cash from operations, together with $155.9 million provided by financing
activities, funded investing activities of $161.7 million. Investing
activities consisted principally of capital expenditures, the Norman Offshore
Acquisition, the CCC Acquisition and advances, the Divcon Acquisition,
dry-docking costs, and the placement of the 1996 MARAD-guaranteed Title XI bond
proceeds in escrow, offset by the release from escrow of the 1994
MARAD-guaranteed Title XI bond proceeds. Funds provided by financing activities
principally represent net cash realized from the February 1997 equity offering
and proceeds from the sale of Title XI bonds. Working capital increased $69.4
million during fiscal 1997 from $34.3 million at March 31, 1996, to $103.7
million at March 31, 1997.
Capital expenditures during fiscal 1997 included the costs of construction of
two liftboats, a launch barge and a cargo barge, and continued construction of
the PIONEER. In August 1996, the Company reached an agreement with Aker Gulf
Marine, and took possession of the PIONEER. The vessel was relocated to the
Company's facility in Amelia, Louisiana where the construction and equipping of
the vessel was completed. The PIONEER successfully completed sea trials and
began operation in November 1996. Under the terms of the agreement, the
Company has received clear title to the PIONEER in exchange for a $3.2 million
cash payment and the posting of a $4.5 million bond in favor of Aker Gulf
Marine. Such amounts and the release of the vessel are without prejudice to
each company's rights to pursue claims against the other in pending litigation
or otherwise. The Company estimates the fully equipped cost of the PIONEER to
be $25.8 million. In September 1994, the Company sold $20.9 million of Title
XI bonds in connection with financing the cost of constructing and outfitting
the PIONEER.
The Company estimates that the cost to complete capital expenditure projects in
progress at March 31, 1997 will be approximately $118.0 million with $92.0
million to be incurred during fiscal 1998 and the remainder during fiscal 1999.
The addition of conventional pipelay capability and dynamic positioning to the
HERCULES is now scheduled for completion during the summer of 1997 at a
completion cost of approximately $35.0 million, which is in addition to the
approximately $35.0 million previously spent.
Long-term debt outstanding at March 31, 1997, included $41.5 million of Title
XI bonds. Included in this amount are $20.3 million of bonds which the
Company issued during August 1996 to finance the construction of two liftboats,
a launch barge and a cargo barge. The Company's outstanding Title XI
25
<PAGE> 26
bonds mature in 2003, 2005, 2020, and 2022. The bonds carry interest rates of
9.15%, 8.75%, 8.30% and 7.25% per annum, respectively, and require aggregate
semi-annual payments of $0.5 million, plus interest, until January 1998 when
aggregate semi-annual payments will be $0.9 million. The agreements pursuant
to which the Title XI bonds were issued contain certain covenants, including
the maintenance of minimum working capital and net worth requirements, which,
if not met, result in additional covenants that restrict the operations of the
Company and its ability to pay cash dividends. The Company is currently in
compliance with these covenants.
In July 1996, the Company completed the Norman Offshore acquisition. In
addition, the Company completed the CCC and Divcon acquisitions in December
1996. The purchase price for each of these three transactions was primarily
funded by cash generated from operations and borrowings under the Company's
Credit Facility.
The Company and Dresser Industries have signed a definitive agreement to
purchase selected assets of Sub Sea International, Inc., a subsidiary of
Dresser Industries, for $102 million, payable in cash at closing. The assets
to be acquired include pipelay, diving and liftboat assets in the United
States, and diving and ROV assets in the Middle East, the Far East and Asia
Pacific regions. The transaction is expected to be consummated during the
second quarter of fiscal 1998, assuming, that the Company receives regulatory
approval and that all of the conditions are met, including expiration or
termination of requisite waiting periods. As was expected, the parties have
received a "second request" seeking additional information under the
Hart-Scott-Rodino Antitrust Improvements Act. Global expects to substantially
comply with the request prior to the end of June 1997.
Effective April 17, 1997, the Company obtained an $85.0 million Revolving Line
of Credit Agreement ("Loan Agreement") with a syndicate of commercial banks to
replace its previous credit facility. The revolving credit facility of the Loan
Agreement is available until June 30, 2000, at which time the amount available
is reduced to zero over two years. Interest accrues at the 30 day LIBOR Rate
(5.7% at May 31, 1997), plus a factor of from 0.75% to 1.75%, depending on
certain financial ratios, and is payable monthly. Continuing access to the
Revolving Line of Credit is conditioned upon the Company remaining in
compliance with the covenants of the Loan Agreement, including the maintenance
of certain financial ratios. At May 31, 1997, no amounts were outstanding
under the Loan Agreement and the Company was in compliance with the covenants
contained therein.
Funds available under the Company's Credit Facility and Title XI bonds,
combined with available cash, and cash generated from operations, are expected
to be sufficient to fund the Company's operations, scheduled debt retirement,
planned capital expenditures and acquisitions for the foreseeable future.
26
<PAGE> 27
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
of Global Industries, Ltd.
We have audited the accompanying consolidated balance sheets of Global
Industries, Ltd. and subsidiaries as of March 31, 1997 and 1996, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended March 31, 1997. 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, such consolidated financial statements present fairly, in all
material respects, the financial position of Global Industries, Ltd. and
subsidiaries at March 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended March 31,
1997, in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
June 6, 1997
(June 24, 1997 as to Note 13)
27
<PAGE> 28
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31,
---------------------------------
1997 1996
--------- --------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 63,981 $ 5,430
Escrowed funds (Note 1) 19,112 16,189
Receivables 51,762 39,610
Advances to unconsolidated affiliate (Note 12) 13,913 --
Prepaid expenses and other 2,874 3,825
--------- --------
Total current assets 151,642 65,054
--------- --------
ESCROWED FUNDS (Note 1) 1,447 4,768
--------- --------
PROPERTY AND EQUIPMENT, net (Notes 2, 3 and 6) 243,915 126,295
--------- --------
OTHER ASSETS:
Deferred charges, net (Note 1) 6,469 5,453
Investment in and advances to unconsolidated
affiliate (Note 12) 15,071 --
Other 4,143 956
--------- --------
Total other assets 25,683 6,409
--------- --------
TOTAL $ 422,687 $202,526
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 3) $ 2,266 $ 1,048
Accounts payable 29,828 19,364
Accrued liabilities 9,453 4,020
Accrued profit-sharing (Note 5) 3,566 3,465
Insurance payable 2,802 2,893
--------- --------
Total current liabilities 47,915 30,790
--------- --------
LONG-TERM DEBT (Note 3) 40,947 21,144
--------- --------
DEFERRED INCOME TAXES (Note 4) 21,598 14,898
--------- --------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 6)
SHAREHOLDERS' EQUITY (NOTE 7):
Preferred stock -- --
Common stock, issued and outstanding, 45,278,375
shares in 1997 and 37,872,078 shares in 1996 454 378
Additional paid-in capital 201,331 58,806
Retained earnings 110,442 76,510
--------- --------
Total shareholders' equity 312,227 135,694
--------- --------
TOTAL $ 422,687 $202,526
========= ========
</TABLE>
See notes to consolidated financial statements.
28
<PAGE> 29
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
REVENUES (NOTE 8) $229,142 $148,376 $122,704
COST OF REVENUES 165,889 107,361 84,632
-------- -------- --------
GROSS PROFIT 63,253 41,015 38,072
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 15,080 12,233 9,549
-------- -------- --------
OPERATING INCOME 48,173 28,782 28,523
-------- -------- --------
OTHER INCOME (EXPENSE):
Interest Expense (1,358) (170) (183)
Other 1,660 1,516 2,383
-------- -------- --------
302 1,346 2,200
-------- -------- --------
INCOME BEFORE INCOME TAXES 48,475 30,128 30,723
PROVISION FOR INCOME TAXES (NOTE 4) 14,543 9,135 11,368
-------- -------- --------
NET INCOME $ 33,932 $ 20,993 $ 19,355
-------- -------- --------
NET INCOME PER SHARE (NOTE 1) $ 0.84 $ 0.54 $ 0.53
-------- -------- --------
</TABLE>
See notes to consolidated financial statements.
29
<PAGE> 30
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
---------------------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT APRIL 1, 1994 30,860,900 $ 309 $ 27,095 $ 36,214 $ 63,618
Net income -- -- -- 19,355 19,355
Amortization of unearned stock
compensation -- -- 324 -- 324
Restricted stock forfeitures, net (19,800) -- -- -- --
Non-employee director awards 2,400 -- 13 -- 13
Issuance of stock option awards -- -- 117 -- 117
Unearned stock compensation -- -- (117) -- (117)
Exercise of stock options 36,536 -- 113 -- 113
Sale of common stock, net of
underwriting discounts and
commissions of $1,967 6,900,000 69 30,791 (52) 30,808
Offering costs associated with sale
of common stock -- -- (170) -- (170)
----------- ----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1995 37,780,036 378 58,166 55,517 114,061
Net income -- -- -- 20,993 20,993
Amortization of unearned stock
compensation -- -- 318 -- 318
Restricted stock issues, net 532 -- -- -- --
Non-employee director awards 4,000 -- 20 -- 20
Issuance of stock option awards -- -- 71 -- 71
Unearned stock compensation -- -- (71) -- (71)
Exercise of stock options 87,510 -- 302 -- 302
----------- ----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1996 37,872,078 378 58,806 76,510 135,694
Net income -- -- -- 33,932 33,932
Amortization of unearned stock
compensation -- -- 281 -- 281
Restricted stock issues, net 3,478 -- -- -- --
Non-employee director awards 3,378 -- 50 -- 50
Issuance of stock option awards -- -- 73 -- 73
Unearned stock compensation -- -- (73) -- (73)
Exercise of stock options 399,441 6 1,446 -- 1,452
Tax effect of exercise of stock
options -- -- 1,300 -- 1,300
Sale of common stock net of
underwriting discounts and
commissions of $7,350 7,000,000 70 139,580 -- 139,650
Offering costs associated with sale
of common stock -- -- (132) -- (132)
----------- ----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1997 45,278,375 $ 454 $ 201,331 $ 110,442 $ 312,227
=========== =========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
30
<PAGE> 31
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------
1997 1996 1995
--------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 33,932 $ 20,993 $ 19,355
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 18,003 11,422 7,808
(Gain) loss on sale of property and equipment (11) 66 (731)
Deferred income taxes 6,700 3,926 5,080
Other 69 21 --
Changes in operating assets and liabilities (net
of acquisitions):
Receivables (7,800) (27,079) (2,568)
Prepaid expenses and other 1,549 (2,767) 338
Accounts payable and accrued liabilities 11,753 16,616 1,821
Accrued profit-sharing 101 753 1,852
--------- -------- --------
Net cash provided by operating activities 64,296 23,951 32,955
--------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments, net -- 45,840 (26,003)
Proceeds from sale of equipment 16 323 1,154
Decrease (increase) in escrowed funds, net 398 498 (21,455)
Acquisition of businesses, net of cash acquired (5,990) -- --
Acquisition of equity interest in and advances (25,784) -- --
to unconsolidated affiliate
Additions to property and equipment (124,868) (63,758) (33,700)
Additions to deferred charges (4,277) (5,524) (655)
Other (1,146) 864 (886)
--------- -------- --------
Net cash used in investing activities (161,651) (21,757) (81,545)
--------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (2,193) (630) (212)
Proceeds from long-term debt 20,328 -- 20,852
Payment of short-term borrowings (3,200) -- --
Proceeds from sale of common stock, net 140,971 302 30,638
--------- -------- --------
Net cash provided by (used in)
financing activities 155,906 (328) 51,278
--------- -------- --------
CASH:
INCREASE (DECREASE) 58,551 1,866 2,688
BEGINNING OF YEAR 5,430 3,564 876
--------- -------- --------
END OF YEAR $ 63,981 $ 5,430 $ 3,564
========= ======== ========
</TABLE>
See notes to consolidated financial statements.
31
<PAGE> 32
GLOBAL INDUSTRIES, LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION - Global Industries, Ltd. (the
"Company") provides construction services, including pipeline construction,
platform installation and removal, construction support and diving services,
primarily to the offshore oil and gas industry in the United States Gulf of
Mexico and in selective international areas. Most work is performed on a
fixed-price basis, but the Company also performs services on a cost-plus or
day-rate basis, or on a combination of such bases. The Company's contracts are
typically of short duration, being completed in one to five months.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of the Company and its wholly owned subsidiaries. All
significant intercompany balances and transactions have been eliminated.
Effective December 23, 1996, the Company acquired a 49% ownership interest in
CCC Fabricaciones y Construcciones, S.A. de C.V. ("CCC") (see Note 12) which
is accounted for by the equity method.
CASH - Cash includes cash on hand, demand deposits, repurchase
agreements having maturities less than three months, and money market funds
with banks.
INVESTMENTS - The Company's investments in U.S. Treasury Bills with
maturities of less than one year are classified as securities held to maturity
and, accordingly, are reported at amortized cost, which approximates fair
value.
32
<PAGE> 33
ESCROWED FUNDS - Escrowed funds totaling $20.6 million and $20.9
million, respectively, at March 31, 1997 and 1996 include net proceeds realized
from the sale of U.S. Government Guaranteed Financing Bonds which were
deposited into an escrow account with MARAD and invested in U.S. Treasury
Bills. The escrowed funds are available for reimbursement to the Company for a
portion of the cash invested in constructing certain vessels, upon completion
and delivery of the vessels. At March 31, 1997 and 1996, the Company estimated
$19.1 million and $16.2 million of the cash invested in constructing the
vessels was currently reimbursable from the escrowed funds upon completion of
the vessels.
PROPERTY AND EQUIPMENT - Property and equipment is generally stated at
cost. Expenditures for property and equipment and items which substantially
increase the useful lives of existing assets are capitalized at cost and
depreciated. Routine expenditures for repairs and maintenance are expensed as
incurred. Except for certain barges which are depreciated on the
units-of-production method over estimated barge operating days, depreciation is
provided utilizing the straight-line method over the estimated useful lives of
the assets. Amortization of leasehold improvements is provided utilizing the
straight-line method over the estimated useful lives of the assets or the lives
of the leases, whichever is shorter. Leasehold improvements relating to leases
from the Company's principal shareholder are amortized over their expected
useful lives (and beyond the term of lease) because it is expected that the
leases will be renewed.
The periods used in determining straight-line depreciation and
amortization follow:
<TABLE>
<S> <C>
Marine barges, vessels and related equipment 10 - 25 years
Machinery and equipment 5 - 12 years
Furniture and fixtures 5 - 12 years
Buildings 15 - 30 years
Leasehold improvements 5 - 15 years
</TABLE>
Depreciation and amortization expense of property and equipment
approximated $14.4 million, $9.7 million and $6.5 million for the three years
ended March 31, 1997, respectively.
DEFERRED CHARGES - Deferred charges consist principally of
33
<PAGE> 34
drydocking costs which are capitalized at cost and amortized on the
straight-line method through the date of the next scheduled drydocking.
Amortization expense approximated $3.3 million, $1.4 million and $0.9 million
for the three years ended March 31, 1997, respectively.
CONTRACTS IN PROGRESS AND REVENUE RECOGNITION - Revenues from
construction contracts, which are typically of short duration, are recognized
on the percentage-of-completion method, measured by relating the actual cost of
work performed to date to the current estimated total cost of the respective
contract. Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as indirect labor,
supplies and repairs. Provisions for estimated losses, if any, on uncompleted
contracts are made in the period in which such losses are determined. Selling,
general and administrative costs are charged to expense as incurred.
STOCK-BASED COMPENSATION - Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation", ("SFAS 123") encourages,
but does not require, companies to record compensation cost for stock-based
employee compensation plans at fair value. The Company has chosen to continue
to account for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," ("APB 25") and related interpretations and has adopted
the disclosure-only provisions of SFAS 123. Accordingly, compensation cost for
restricted stock awards and stock options is measured as the excess, if any, of
the quoted market price of the Company's stock at the date of the grant over
the amount an employee must pay to acquire the stock. See Note 7.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying value of the
Company's financial instruments, including cash, short-term investments,
receivables, payables, and certain accrued liabilities approximate fair market
value due to their short-term nature. The fair value of the Company's
long-term debt at March 31, 1997 and 1996 based upon available market
information, approximated $43.2 million and $23.0 million, respectively.
CONCENTRATION OF CREDIT RISK - The Company's customers are primarily
major oil companies, independent oil and gas producers, and transportation
companies operating in the Gulf of Mexico and selected international areas.
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.
NET INCOME PER SHARE - Net income per share is computed by dividing
net income by the weighted average number of common shares outstanding adjusted
to give effect to the assumed exercise of dilutive stock options less the
number of treasury shares assumed to be purchased from the proceeds. The
weighted average number of common shares outstanding has been adjusted to give
retroactive effect to the two-for-one common stock split which became effective
in August, 1996. The weighted average number of shares used in the computation
was 40,450,842 for 1997, 38,534,156 for 1996 and 35,935,424 for 1995.
In February 1997, the Financial Accounting Standards board issued
Statement of Financial Accounting Standards No. 128,
34
<PAGE> 35
"Earnings per Share" ("SFAS 128") which changes the method of calculating
earnings per share ("EPS"). SFAS 128 requires the presentation of "basic" EPS
and "diluted" EPS on the face of the statement of operations. Basic EPS is
computed by dividing the net income available to common shareholders by the
weighted-average shares of outstanding common stock. The calculation of
diluted EPS is similar to basic EPS except that the denominator includes
dilutive common stock equivalents such as stock options and warrants. The
statement is effective for financial statements for periods ending after
December 15, 1997. The Company will adopt SFAS 128 in the third quarter of
fiscal 1998, as early adoption is not permitted. When adopted, it will require
restatement of prior years' EPS. Had the provisions of SFAS 128 been in effect
as of March 31, 1997, the Company would have reported basic EPS of $0.87 and
diluted EPS of $0.84 for the year ended March 31, 1997.
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make 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 and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
2. PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1997 and 1996 is summarized as
follows:
<TABLE>
<CAPTION>
MARCH 31,
--------------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Marine barges and vessels $205,024 $98,105
Machinery and equipment 29,484 17,796
Transportation equipment 2,610 2,305
Furniture and fixtures 2,952 2,109
Buildings and leasehold improvements 6,586 3,763
Land 8,022 980
Construction in progress 41,877 39,522
-------- --------
296,555 164,580
Less accumulated depreciation and amortization (52,640) (38,285)
-------- --------
Property and equipment - net $243,915 $126,295
======== ========
</TABLE>
Interest costs for the construction of certain long-term assets are
capitalized and amortized over the related assets' estimated useful lives.
Interest costs incurred during fiscal 1997, 1996 and 1995 amounted to $3.9
million, $1.9 million, and $1.1
35
<PAGE> 36
million, respectively, of which $2.6 million, $1.7 million, and $0.9 million,
respectively, were capitalized.
3. FINANCING ARRANGEMENTS
Long-term debt at March 31, 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
MARCH 31,
-------------------------
1997 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
United States Government Guaranteed Ship
Financing Bonds, 1994 Series dated September
27, 1994, payable in 49 semi-annual installments
commencing January 15, 1996 of $418,000 with
final installment of $370,000, plus interest at
8.30%, maturing July 15, 2020, collateralized by
escrowed funds and the PIONEER vessel
and related equipment with a net
book value of $25.8 million at March 31, 1997 $19,598 $20,434
United States Government Guaranteed Ship
Financing Bonds, 1996 Series dated August
15, 1996, payable in 49 semi-annual installments
commencing January 15, 1998, of $407,000 with
final installment of $385,000, plus interest at
7.25%, maturing July 15, 2022, collateralized by
escrowed funds and four vessels under
construction and related equipment with a net
book value of $23.5 million at March 31, 1997 20,328 --
Other obligations 3,287 1,758
------- -------
43,213 22,192
Less current maturities 2,266 1,048
------- -------
Long-term debt, less current maturities $40,947 $21,144
======= =======
</TABLE>
36
<PAGE> 37
Annual maturities of long-term debt for each of the five fiscal years
following March 31, 1997 and in total thereafter follow (in thousands):
<TABLE>
<S> <C>
1998 $ 2,266
1999 2,273
2000 2,194
2001 2,231
2002 1,867
Thereafter 32,382
---------
Total $ 43,213
=========
</TABLE>
In accordance with the United States Government Guaranteed Ship
Financing Bond agreements, the Company is required to comply with certain
covenants, including the maintenance of minimum working capital and net worth
requirements, which if not met, result in additional covenants including
restrictions on the payment of dividends. The Company is currently in
compliance with these covenants.
At March 31, 1997 and 1996 the Company had a $50.0 million revolving
line of credit ("Credit Agreement") with a commercial bank. The Credit
Agreement, as amended provided for a maximum draw at any one time of $25.0
million for general corporate purposes and $40.0 million for construction or
renovation of vessels, provided that the aggregate outstanding principal amount
shall never exceed $50.0 million. The revolving credit facility was available
until January 1, 1998. Interest accrued at the LIBOR Rate plus 1.25% and 1.8%
at March 31, 1997 and 1996 respectively (6.80% and 7.14% at the respective
dates). At March 31, 1997 and 1996, no amounts were outstanding under the
Credit Agreement and the Company was in compliance with the covenants contained
therein.
Effective April 17, 1997, the Company entered into a restated credit
agreement ("Restated Credit Agreement") with a syndicate of commercial banks
which replaced its previous credit facility. The terms of the Restated Credit
Agreement provide a maximum available line of credit of $85.0 million through
June 30, 2000, at which time the amount available is reduced to zero over two
years. Borrowings under the facility are unsecured, bear interest at
fluctuating rates, and are payable on July 30, 2002. Continuing access to the
line of credit is conditioned upon the Company remaining in compliance with the
covenants of the Restated Credit Agreement, including covenants relating to the
maintenance of certain financial ratios, limitations on the incurrence of new
indebtedness, and the payment of dividends.
37
<PAGE> 38
GUARANTEES - The Company has guaranteed certain indebtedness and
commitments of an affiliate (see Note 12) approximating $51.3 million at March
31, 1997.
4. INCOME TAXES
The Company has provided for income taxes as follows:
<TABLE>
<CAPTION>
MARCH 31,
------------------------------
1997 1996 1995
------- ------ -------
(IN THOUSANDS)
<S> <C> <C> <C>
U.S. Federal and State:
Current $ 6,189 $3,309 $ 6,288
Deferred 6,700 3,926 5,080
Foreign:
Current 1,654 1,900 --
------- ------ -------
Total $14,543 $9,135 $11,368
======= ====== =======
</TABLE>
State income taxes included above are not significant for any of the
years presented.
Income before income taxes consisted of the following:
<TABLE>
<CAPTION>
MARCH 31,
-------------------------------
1997 1996 1995
------- ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
United States $34,417 $18,847 $30,723
Foreign 14,058 11,281 --
------- ------- -------
Total $48,475 $30,128 $30,723
======= ======= =======
</TABLE>
The provision for income taxes varies from the Federal statutory
income tax rate due to the following:
<TABLE>
<CAPTION>
MARCH 31,
-----------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Taxes at Federal statutory
rate of 35% $ 16,966 $ 10,545 $10,753
Foreign income taxes at
different rates (3,266) (2,048) --
Other 843 638 615
-------- -------- -------
Total $ 14,543 $ 9,135 $11,368
======== ======== =======
</TABLE>
38
<PAGE> 39
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. The
tax effects of significant items comprising the Company's net deferred tax
balance as of March 31, 1997 and 1996, are as follows:
<TABLE>
<CAPTION>
FISCAL
----------------------
1997 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
DEFERRED TAX LIABILITIES:
Excess book over tax basis of
property and equipment $ 20,567 $ 16,655
Deferred charges 1,598 372
Other 474 111
DEFERRED TAX ASSETS:
Reserves not currently deductible (1,041) (1,399)
Tax credit carry forwards -- (841)
-------- --------
NET DEFERRED TAX LIABILITY $ 21,598 $ 14,898
======== ========
</TABLE>
5. EMPLOYEE BENEFITS
The Company sponsors a defined contribution profit-sharing and 401(k)
plan that covers all employees who meet certain eligibility requirements.
Company contributions to the plan are made at the discretion of the Board of
Directors and may not exceed 15% of the annual compensation of each
participant. Retirement plan expense was $2.1 million, $1.6 million and $1.4
million, respectively, for the three fiscal years ended March 31, 1997.
In addition, the Company has an incentive compensation plan which
rewards employees when the Company's financial results meet or exceed budgets.
For fiscal 1997, 1996 and 1995, the Company recorded incentive compensation
expense of $1.5 million (distributable to 1,037 employees), $2.0 million
(distributed to 711 employees), and $2.4 million (distributed to 716
employees), respectively.
6. COMMITMENTS AND CONTINGENCIES
LEASES - The Company leases real property and equipment in the normal
course of business under varying operating leases, including leases with its
principal shareholder and chief executive officer. Rent expense for the years
ended March 31, 1997, 1996 and 1995, was $723,000, $660,000 and $448,000,
respectively, (of which $47,000, $47,000 and $40,000, respectively, was
related party rental expense). The lease agreements, which include both
non-cancelable and month-to-month terms, generally provide for
39
<PAGE> 40
fixed monthly rentals and, for certain real estate leases, renewal and purchase
options.
Minimum rental commitments under leases having an initial or remaining
non-cancelable term in excess of one year for each of the five years following
March 31, 1997 and in total thereafter follow (in thousands):
<TABLE>
<S> <C>
1998 . . . . . . . . . . . . . . . . . . . . . . . . $ 782
1999 . . . . . . . . . . . . . . . . . . . . . . . . 823
2000 . . . . . . . . . . . . . . . . . . . . . . . . 726
2001 . . . . . . . . . . . . . . . . . . . . . . . . 703
2002 . . . . . . . . . . . . . . . . . . . . . . . . 645
Thereafter . . . . . . . . . . . . . . . . . . . . . 509
----------
Total . . . . . . . . . . . . . . . . . . . . . $ 4,188
==========
</TABLE>
The Company holds an option to purchase the property which accounts
for approximately 41% of the total lease commitments.
LITIGATION - The Company is a party in legal proceedings and potential
claims arising in the ordinary course of its business. Management does not
believe these matters will materially effect the Company's consolidated
financial statements.
On December 14, 1995, a shipyard filed suit against the Company
seeking $8.2 million in additional costs believed by it to be owed because of
change orders during construction of the PIONEER, and $5.0 million for
disruption, acceleration, and delay damages. The Company does not believe that
the shipyard's claims are valid and intends to vigorously defend the suit and
recover all amounts which it is legally entitled to recover. Management does
not believe that the ultimate resolution of the claims will have a material
adverse impact on the Company's consolidated financial statements.
CONSTRUCTION AND PURCHASES IN PROGRESS - The Company estimates that
the cost to complete capital expenditure projects in progress at March 31, 1997
approximated $118.0 million.
7. SHAREHOLDERS' EQUITY
AUTHORIZED STOCK - At March 31, 1996, the Company had authorized
5,000,000 shares of $0.01 par value Preferred Stock and 25,000,000 shares of
$0.01 par value Common Stock. Effective August 7, 1996 the Company amended its
Articles of Incorporation to increase the authorized number of shares of
Preferred Stock and Common Stock to 30,000,000 and 150,000,000 shares,
respectively.
RESTRICTED STOCK AWARDS - The Company's Restricted Stock Plan provides
for awards of shares of restricted stock to employees approved by a committee
of the Board of Directors. As of March 31, 1997, 1996 and 1995, 356,000 shares
of Common Stock, adjusted for the two-for-one common stock splits, have been
reserved for issuance under the plan, of which 297,310, 294,232 and 293,700
have been granted and are outstanding at March 31, 1997, 1996 and 1995,
respectively. Shares granted under the plan vest 33 1/3% on the third, fourth
and fifth anniversary date of grant. During fiscal 1997 and 1996, 272
employees vested in 79,142 shares and 286 employees vested in 84,356 shares,
respectively. At March 31, 1997, restricted stock awards were held by
approximately 281 employees.
The fair market value of shares awarded under the plan is recorded as
unearned stock compensation and included in the accompanying financial
statements as a charge against Additional Paid-in Capital. The unearned stock
compensation is amortized over the vesting period of the awards and amounted to
approximately $171,000, $228,000 and $214,000 for fiscal 1997, 1996 and 1995,
respectively.
40
<PAGE> 41
STOCK OPTION PLAN - The 1992 Stock Option Plan provides for grants of
incentive and nonqualified options to employees approved by a committee of the
Board of Directors. Options granted under the plan have a maximum term of ten
years and are exercisable, subject to continued employment, under terms and
conditions set forth by the committee. The number of shares reserved for
issuance under the plan was increased from 3,600,000 shares to 4,800,000 shares
during fiscal 1997 of which 2,280,942 were available for grant under the plan
of March 31, 1997. Changes in options outstanding under the Company's Plan
were as follows:
<TABLE>
<CAPTION>
AT 85% OF MARKET AT MARKET
------------------------- --------------------------
SHARES AVG. PRICE SHARES AVG. PRICE
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Outstanding on April 1, 1994 694,040 $ 3.090 657,600 $ 3.560
Granted 142,800 4.522 626,800 4.923
Surrendered (29,720) (3.463) (330,800) (3.513)
Exercised (36,536) (3.083) -- --
-------- ----------- --------- -----------
Outstanding on March 31, 1995 770,584 3.343 953,600 4.473
Granted 92,000 4.386 682,000 6.394
Surrendered (49,868) (3.506) (86,000) (4.921)
Exercised (64,310) (3.083) (23,200) (4.465)
-------- ----------- --------- -----------
Outstanding on March 31, 1996 748,406 3.482 1,526,400 5.306
Granted 32,000 12.962 312,500 15.307
Surrendered (42,314) 3.939 (181,980) (6.001)
Exercised (84,901) 3.609 (234,640) (4.181)
-------- ----------- --------- -----------
Outstanding on March 31, 1997 653,191 $ 4.011 1,422,280 $ 7.599
======== =========== ========= ===========
Exercisable at March 31, 1997 503,171 $ 3.176 314,800 $ 5.208
======== =========== ========= ===========
</TABLE>
The excess of the fair market value of shares subject to options
granted under the plan has been recorded as unearned stock compensation and is
included in the accompanying financial statements as a charge against
Additional Paid-in Capital. The unearned stock compensation is being amortized
to operations over the vesting period of the options and amounted to
approximately $90,000, $110,000 and $98,000 for fiscal 1997, 1996 and 1995,
respectively.
41
<PAGE> 42
The following table summarizes information about stock options
outstanding at March 31, 1997:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------------- --------------------------------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE
-------------------- ------------- ------------------ ---------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 3.0825 - 3.0825 472,111 5.88 $ 3.0825 472,011 $ 3.0825
3.3750 - 4.6500 221,160 7.45 4.0712 83,720 3.8670
4.7275 - 4.7500 348,000 7.49 4.7489 119,200 4.7498
4.9375 - 6.1250 198,600 7.96 5.5121 45,640 5.3860
6.2188 - 6.2188 307,200 8.61 6.2188 57,600 6.2188
6.3750 - 11.8750 208,600 8.67 7.3308 39,800 7.2601
12.3125 - 15.7500 238,300 9.34 14.2039 0 0.0000
15.8750 - 18.7500 77,500 9.70 17.5839 0 0.0000
22.0000 - 22.0000 2,000 9.79 22.0000 0 0.0000
22.3750 - 22.3750 2,000 9.83 22.3750 0 0.0000
------------------- --------- ---- --------- ------- ---------
$ 3.0825 - 22.3750 2,075,471 7.75 $ 6.4462 817,971 $ 3.9584
=================== ========= ==== ========= ======= =========
</TABLE>
UNEARNED STOCK COMPENSATION - The balance of Unearned Stock
Compensation to be amortized in future periods was $284,000, $422,000 and
$655,000 at March 31, 1997, 1996 and 1995, respectively.
NON-EMPLOYEE DIRECTOR STOCK PLAN - The Non-Employee Director Stock
Plan provides that each director of the Company who is not an employee shall
automatically receive 2,000 shares of Common Stock on August 1 of each year,
subject to an annual limitation that the aggregate fair market value of shares
transferred may not exceed 75% of such director's cash compensation for
services rendered with respect to the immediately preceding twelve-month
period. The plan specifies that a maximum of 40,000 shares of Common Stock
may be issued under the plan. As of March 31, 1997, 1996, and 1995 12,178,
8,800 and 2,400 shares, respectively, were awarded under the plan.
Non-employee director stock compensation expense was $50,000, $20,000 and
$13,000 for fiscal years 1997, 1996 and 1995, respectively.
1995 EMPLOYEE STOCK PURCHASE PLAN - Effective April 1, 1995, the
Company adopted the Global Industries, Ltd. 1995 Employee Stock Purchase Plan
("Purchase Plan") which provides a method whereby substantially all employees
may voluntarily purchase a maximum of 1,200,000 shares of Common Stock of the
Company on favorable terms. Under the Purchase Plan, eligible employees may
authorize payroll deductions during a twelve-month period ("Option Period"),
which deductions are used at the end of the Option Period to acquire shares of
Common Stock at 85% of the fair market value of the Common Stock on the first
or last day of the Option Period, whichever is lower. For the year ended March
31, 1997, 213 employees purchased 82,860 shares at a weighted average cost of
$9.164 per share. For the year ended March 31, 1996, 145 employees purchased
100,038 shares at a weighted average cost of $4.73 per share.
PROFORMA DISCLOSURE
In accordance with APB 25, compensation cost has been recorded in the Company's
financial statements based on the intrinsic value (i.e., the excess of the
market price of stock to be issued over the exercise price) of restricted stock
awards and shares subject to options. Additionally, under APB 25, the
Company's employee stock purchase plan is considered noncompensatory and,
accordingly, no compensation cost has been recognized in the financial
statements. Had compensation cost for the Company's grants under stock-based
compensation arrangements for the years ended March 31, 1997 and 1996 been
determined
42
<PAGE> 43
consistent with SFAS 123, the Company's net income and net income per share for
the respective years would approximate the following proforma amounts (in
thousands, except per share data):
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-------------------------------------------------
1997 1996
--------------------- -----------------------
AS AS
REPORTED PROFORMA REPORTED PROFORMA
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Net income $ 33,932 $ 32,950 $ 20,993 $ 20,295
======== ======== ======== ==========
Net income per share $ 0.84 $ 0.81 $ 0.54 $ 0.53
======== ======== ======== ==========
</TABLE>
The weighted average fair value of options granted during the years ended March
31, 1997 and 1996 was $7.81 and $3.20, respectively. The fair value of each
option granted is estimated on the date of grant using the Black-Scholes option
pricing model with the following assumptions: (i) dividend yield of 0%, (ii)
expected volatility of 18.94%, (iii) risk-free interest rate of 6.89%, and
(iv) expected life of 7.75 years.
8. MAJOR CUSTOMERS
Sales to various customers for the years ended March 31, 1997, 1996
and 1995, which amount to 10% or more of the Company's revenues, follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------------------------------------
1997 1996 1995
----------------- --------------- ----------------
AMT. % AMT. % AMT. %
-------- ------ ------ ----- ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Customer A $ -- -- $ -- -- $18,084 15%
Customer B 44,773 20% 17,508 12% 18,724 15%
Customer C 26,766 12% -- -- -- --
</TABLE>
43
<PAGE> 44
9. INDUSTRY SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates primarily in the offshore oil and gas
construction industry. Geographic information relating to the Company's
operations follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
-----------------------
1997 1996
--------- --------
(IN THOUSANDS)
<S> <C> <C>
Revenues:
Domestic $ 166,183 $114,807
West Africa 57,419 33,569
Asia Pacific 4,403 --
Other 1,137 --
--------- --------
Total $ 229,142 $148,376
========= ========
Operating Income (Loss):
Domestic $ 33,172 $ 17,547
West Africa 15,781 11,235
Asia Pacific (790) --
Other 10 --
--------- --------
Total $ 48,173 $ 28,782
========= ========
Identifiable Assets:
Domestic $ 281,337 $160,729
West Africa 48,606 36,367
Asia Pacific 10,292 --
Corporate 63,981 5,430
Other 18,471 --
--------- --------
Total $ 422,687 $202,526
========= ========
</TABLE>
44
<PAGE> 45
10. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Supplemental cash flow information for the three years ended March 31,
1997 follows:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
----------------------------
1997 1996 1995
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Cash Paid For:
Interest, net of amount $1,267 $ 176 $ 451
capitalized
Income taxes 4,400 5,615 5,892
Non-cash investing and Financing
Activities:
Assumption of long-term debt in
connection with acquisitions 2,886 -- --
Short-term debt issued for
acquisitions 4,700 -- --
</TABLE>
Other Non-Cash Transactions:
In fiscal year 1997, the tax effect of the exercise of stock options
resulted in an increase in additional paid-in capital and reductions to income
taxes payable of $1.3 million.
11. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The offshore marine construction industry in the Gulf of Mexico is
highly seasonal as a result of weather conditions and the timing of capital
expenditures by oil and gas companies. Historically, a substantial portion of
the Company's services has been performed during the period from June through
November. As a result, historically a disproportionate portion of the
Company's revenues and net income is earned during the second (July through
September) and third (October through December) quarters of its fiscal year.
The following is a summary of consolidated quarterly financial information for
fiscal 1997 and 1996:
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------
JUNE 30, SEPT. 30, DEC. 31, MARCH 31,
-------- --------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
FISCAL 1997
Revenues $50,332 $72,431 $56,776 $49,603
Gross profit 12,353 21,784 15,280 13,836
Net income 6,643 12,517 8,072 6,700
Net income per share 0.17 0.32 0.20 0.16
FISCAL 1996
Revenues $31,795 $45,362 $32,431 $38,788
Gross Profit 8,722 15,541 9,226 7,526
Net income 4,130 8,198 4,275 4,390
Net income per share 0.11 0.21 0.11 0.11
</TABLE>
45
<PAGE> 46
12. INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED AFFILIATE
On December 23, 1996, the Company acquired from a subsidiary of J. Ray
McDermott, S.A. a 49% ownership interest in CCC Fabricaciones y Construcciones,
S.A. de C.V. ("CCC"), a leading provider of offshore construction services in
Mexico, as well as the DB-21, a 400-foot combination pipelay derrick barge, a
crawler crane, a saturation diving system and approximately 21 acres of land
located adjacent to the Company's facility in New Iberia, Louisiana (the "CCC
Acquisition"). The Company also acquired from a subsidiary of J. Ray
McDermott, S.A. the DB-15, a 400-foot combination pipelay derrick barge
currently chartered to CCC. The total purchase price for the CCC Acquisition
was $38.0 million. In addition, the Company (i) loaned $23.0 million to CCC to
repay $15.0 million of existing indebtedness and for working capital needs and
(ii) provided performance guarantees supporting approximately $50.0 million of
CCC's existing indebtedness primarily relating to construction projects in
progress at the date of acquisition. The Company's investment in CCC is
accounted for under the equity method. For fiscal 1997, the Company's equity
in the operating results of CCC since the date of acquisition was not material.
Included in the 1997 balance sheet under the caption "Investment in
and Advances to Unconsolidated Affiliate" are the acquisition costs of the 49%
ownership interest in CCC of $3.5 million plus advances to CCC aggregating
$25.4 million. Such advances bear interest at an annual rate of 12% and are
due at varying dates through fiscal 2000. Included in the results of
operations for fiscal 1997 is $0.7 of interest income related to such
affiliated loans.
Pro forma net income for the years ended March 31, 1997 and 1996,
assuming the acquisition of the 49% ownership interest in CCC had occurred as
of April 1, 1995, amounted to $32,389,000 ($.80 per share) and, $15,033,000
($.39 per share), respectively.
Following is a summary of the financial position of CCC as of December
31, 1996 and its results of operations for the year then ended (in thousands):
<TABLE>
<CAPTION>
DECEMBER
31,
--------
1996
--------
<S> <C>
Current assets $109,268
Noncurrent assets, net 19,626
--------
Total $128,894
========
Current liabilities $105,185
Noncurrent liabilities 23,993
--------
Total $129,178
========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER
31,
--------
1996
--------
<S> <C>
Revenues $156,854
Gross profit 24,560
Net income (loss) (2,129)
</TABLE>
46
<PAGE> 47
13. SUBSEQUENT EVENT
The Company and Dresser Industries have signed a definitive agreement
to purchase selected assets of Sub Sea International, Inc., a subsidiary of
Dresser Industries, for $102 million, payable in cash at closing. The assets
to be acquired include pipelay, diving and liftboat assets in the United
States, and diving and ROV assets in the Middle East, the Far East and Asia
Pacific regions. The transaction is expected to be consummated during the
second quarter of fiscal 1998, assuming, that the Company receives regulatory
approval and that all of the conditions are met, including expiration or
termination of requisite waiting periods. As was expected, the parties have
received a "second request" seeking additional information under the
Hart-Scott-Rodino Antitrust Improvements Act. Global expects to substantially
comply with the request prior to the end of June 1997.
47
<PAGE> 48
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.
The information required by this Item is incorporated by reference to
the Company's definitive Proxy Statement to be filed pursuant to Regulation 14A
under the Securities Act of 1934 in connection with the Company's 1997 Annual
Meeting of Shareholders. See also "Item (Unnumbered) Executive Officers of the
Registrant" appearing in Part I of this Annual Report.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item is incorporated by reference to
the Company's definitive Proxy Statement to be filed pursuant to Regulation 14A
under the Securities Act of 1934 in connection with the Company's 1997 Annual
Meeting of Shareholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required by this Item is incorporated by reference to
the Company's definitive Proxy Statement to be filed pursuant to Regulation 14A
under the Securities Act of 1934 in connection with the Company's 1997 Annual
Meeting of Shareholders.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by this Item is incorporated by reference to
the Company's definitive Proxy Statement to be filed pursuant to Regulation 14A
under the Securities Act of 1934 in connection with the Company's 1997 Annual
Meeting of Shareholders.
48
<PAGE> 49
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements
The following financial statements included on pages 27
through 44 in this Annual Report are for the fiscal year ended
March 31, 1997.
Independent Auditors' Report.
Consolidated Balance Sheets as of March 31, 1997 and 1996.
Consolidated Statements of Operations for the Years Ended
March 31, 1997, 1996 and 1995.
Consolidated Statements of Shareholders' Equity for the
Years Ended March 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
All financial statement schedules are omitted because the
information is not required or because the information
required is in the financial statements or notes thereto.
3. Exhibits.
Pursuant to Item 601(L)(4)(iii), the Registrant agrees to
forward to the commission, upon request, a copy of any
instrument with respect to long-term debt not exceeding 10% of
the total assets of the Registrant and its consolidated
subsidiaries.
The following exhibits are filed as part of this Annual Report:
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C> <C>
3.1 - Amended and Restated Articles of Incorporation of Registrant as
amended, incorporated by reference to Exhibits 3.1 and 3.3 to the
Form S-1 Registration Statement filed by the Registrant (Reg. No 33-
56600).
3.2 - Bylaws of Registrant, incorporated by reference to Exhibit 3.2 to the
Form S-1 filed by Registrant (Reg. No. 33-56600).
4.1 - Form of Common Stock certificate, incorporated by reference to
Exhibit 4.1 to the Form S-1 filed by Registrant (Reg. No. 33-56600).
10.1+ - Global Industries, Ltd. 1992 Stock Option Plan, incorporated by
reference to Exhibit 10.1 to the Form S-1 filed by Registrant (Reg.
No. 33-56600).
10.2+ - Global Industries, Ltd. Profit Sharing and Retirement Plan, as
amended, incorporated by reference to Exhibit 10.2 to the Form S-1
filed by Registrant (Reg. No. 33-56600).
10.3+ - Global Industries, Ltd. Non-Employee Director Stock Plan, as amended
incorporated by reference to Exhibit 10.3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996.
</TABLE>
49
<PAGE> 50
<TABLE>
<S> <C> <C>
10.4 - Agreement of Lease dated May 1, 1992, between SFIC Gulf Coast
Properties, Inc. and Global Pipelines PLUS, Inc., incorporated by
reference to Exhibit 10.6 to the Form S-1 filed by Registrant (Reg.
No. 33-56600).
10.7 - Lease Extension and Amendment Agreement dated January 1, 1996,
between Global Industries, Ltd. and William J. Dore relating to the
Lafayette office and adjacent land incorporated by reference to
Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996.
10.11 - Agreement between Global Divers and Contractors, Inc. and Colorado
School of Mines, dated October 15, 1991, incorporated by reference to
Exhibit 10.20 to the Form S-1 filed by Registrant (Reg. No.
33-56600).
10.12 - Sublicense Agreement between Santa Fe International Corporation and
Global Pipelines PLUS, Inc. dated May 24, 1990, relating to the
CHICKASAW's reel pipelaying technology, incorporated by reference to
Exhibit 10.21 to the Form S-1 filed by Registrant (Reg. No.
33-56600).
10.13 - Non-Competition Agreement and Registration Rights Agreement between
the Registrant and William J. Dore, incorporated by reference to
Exhibit 10.23 to the Form S-1 filed by Registrant (Reg. No.
33-56600).
10.14+ - Global Industries, Ltd. Restricted Stock Plan, incorporated by
reference to Exhibit 10.25 to the Form S-1 filed by Registrant (Reg.
No. 33-56600).
10.15 - Capital Construction Fund Agreement by and between the United States
of America, represented by the Secretary of Transportation, acting by
and through the Maritime Administrator and Global Industries, Ltd.,
incorporated by reference to Exhibit 10.18 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1994.
10.16 - Second Amendment to the Global Industries, Ltd. Profit Sharing Plan,
incorporated by reference to Exhibit 10.19 to the Registrant's
Registration Statement on Form S-1 (Reg. No. 33-81322).
10.17+ - Global Industries, Ltd. 1995 Employee Stock Purchase Plan
incorporated by reference to Exhibit 10.20 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.
10.18 - Trust Indenture relating to United States Government Guaranteed Ship
Financing Obligations between Global Industries, Ltd., shipowner, and
Hibernia National Bank, Indenture Trustee, dated as of September 27,
1994 incorporated by reference to Exhibit 10.22 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31, 1995.
10.19+ - Amendment to Global Industries, Ltd. 1992 Stock Option Plan
incorporated by reference to Exhibit 10.23 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996.
*10.20 - Agreement dated as of April 17, 1997 by, and Among Bank One, National
Association, Global Industries, Ltd. and its Subsidiaries,
</TABLE>
50
<PAGE> 51
<TABLE>
<S> <C> <C>
*10.21 - Trust Indenture relating to United States Government Guaranteed Ship
Financing Obligations between Global Industries, Ltd., shipowner, and
First National Bank of Commerce, Indenture Trustee, dated as of
August 15, 1996.
*10.22 - Form of Indemnification Agreement between the Registrant and each of
the Registrant's directors.
10.23 - Asset Purchase Agreement between Global Industries, Ltd. and J. Ray
McDermott, Inc. dated as of December 23, 1996 incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on Form
8-K dated February 12, 1997.
10.24 - Barge and Crane Purchase Agreement between Global Industries, Ltd.
and Hydro Marine Services, Inc. dated as of December 23, 1996
incorporated by reference to Exhibit 2.2 to the Registrant's Current
Report on Form 8-K dated February 12, 1997.
10.25 - Barge Purchase Option Agreement between Global Industries Ltd. and
Hydro Marine Services, Inc. dated as of December 23, 1996
incorporated by reference to Exhibit 2.3 to the Registrant's Current
Report on Form 8-K dated February 12, 1997.
*10.26+ - 1996 Amendment to Global Industries, Ltd. 1995 Employee Stock
Purchase Plan .
*10.27 - Amendment Assignment and Assumption of Authorization Agreement
relating to United States Government Ship Financing obligations
between Global Industries, Ltd., shipowner, and First National Bank
of Commerce, Indenture Trustee, dated as of October 23, 1996.
* 21.1 - Subsidiaries of the Registrant.
* 23.1 - Consent of Deloitte & Touche LLP.
</TABLE>
*Filed herewith.
+ Management Compensation Plan or Agreement.
(b) Reports on Form 8-K
During the last quarter of the period covered by this Annual Report
the Registrant filed: (i) Current Report on Form 8-K dated January
27, 1997, reporting the Registrant's results of operations for the
third quarter of fiscal 1997 and (ii) Current Report on Form 8-K dated
February 12, 1997, reporting the acquisition of a 49% interest in CCC
Fabricaciones y Construcciones, S.A. de C.V., as well as the DB-21
pipelay derrick barge and certain other assets.
51
<PAGE> 52
SIGNATURES
Pursuant to the requirements option 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.
GLOBAL INDUSTRIES, LTD.
By: /s/ MICHAEL J. POLLOCK
-----------------------------------------
Michael J. Pollock
Vice President, Chief Financial Office
(Principal Financial and Accounting Officer)
June 26, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C> <C>
/s/ WILLIAM J. DORE' Chairman of the Board, President, June 26, 1997
- ------------------------------------------- Chief Executive Officer and
William J. Dore' Director
/s/ JAMES C. DAY Director June 26, 1997
- -------------------------------------------
James C. Day
/s/ MYRON J. MOREAU Director June 26, 1997
- -------------------------------------------
Myron J. Moreau
/s/ EDWARD P. DJEREJIAN Director June 26, 1997
- -------------------------------------------
Edward P. Djerejian
/s/ MICHAEL J. POLLOCK Vice President, Chief Financial June 26, 1997
- ------------------------------------------- Officer and Director
Michael J. Pollock
</TABLE>
52
<PAGE> 53
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C> <C>
3.1 - Amended and Restated Articles of Incorporation of Registrant as
amended, incorporated by reference to Exhibits 3.1 and 3.3 to the
Form S-1 Registration Statement filed by the Registrant (Reg. No 33-
56600).
3.2 - Bylaws of Registrant, incorporated by reference to Exhibit 3.2 to the
Form S-1 filed by Registrant (Reg. No. 33-56600).
4.1 - Form of Common Stock certificate, incorporated by reference to
Exhibit 4.1 to the Form S-1 filed by Registrant (Reg. No. 33-56600).
10.1+ - Global Industries, Ltd. 1992 Stock Option Plan, incorporated by
reference to Exhibit 10.1 to the Form S-1 filed by Registrant (Reg.
No. 33-56600).
10.2+ - Global Industries, Ltd. Profit Sharing and Retirement Plan, as
amended, incorporated by reference to Exhibit 10.2 to the Form S-1
filed by Registrant (Reg. No. 33-56600).
10.3+ - Global Industries, Ltd. Non-Employee Director Stock Plan, as amended
incorporated by reference to Exhibit 10.3 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996.
</TABLE>
<PAGE> 54
<TABLE>
<S> <C> <C>
10.4 - Agreement of Lease dated May 1, 1992, between SFIC Gulf Coast
Properties, Inc. and Global Pipelines PLUS, Inc., incorporated by
reference to Exhibit 10.6 to the Form S-1 filed by Registrant (Reg.
No. 33-56600).
10.7 - Lease Extension and Amendment Agreement dated January 1, 1996,
between Global Industries, Ltd. and William J. Dore relating to the
Lafayette office and adjacent land incorporated by reference to
Exhibit 10.7 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended March 31, 1996.
10.11 - Agreement between Global Divers and Contractors, Inc. and Colorado
School of Mines, dated October 15, 1991, incorporated by reference to
Exhibit 10.20 to the Form S-1 filed by Registrant (Reg. No.
33-56600).
10.12 - Sublicense Agreement between Santa Fe International Corporation and
Global Pipelines PLUS, Inc. dated May 24, 1990, relating to the
CHICKASAW's reel pipelaying technology, incorporated by reference to
Exhibit 10.21 to the Form S-1 filed by Registrant (Reg. No.
33-56600).
10.13 - Non-Competition Agreement and Registration Rights Agreement between
the Registrant and William J. Dore, incorporated by reference to
Exhibit 10.23 to the Form S-1 filed by Registrant (Reg. No.
33-56600).
10.14+ - Global Industries, Ltd. Restricted Stock Plan, incorporated by
reference to Exhibit 10.25 to the Form S-1 filed by Registrant (Reg.
No. 33-56600).
10.15 - Capital Construction Fund Agreement by and between the United States
of America, represented by the Secretary of Transportation, acting by
and through the Maritime Administrator and Global Industries, Ltd.,
incorporated by reference to Exhibit 10.18 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1994.
10.16 - Second Amendment to the Global Industries, Ltd. Profit Sharing Plan,
incorporated by reference to Exhibit 10.19 to the Registrant's
Registration Statement on Form S-1 (Reg. No. 33-81322).
10.17+ - Global Industries, Ltd. 1995 Employee Stock Purchase Plan
incorporated by reference to Exhibit 10.20 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1995.
10.18 - Trust Indenture relating to United States Government Guaranteed Ship
Financing Obligations between Global Industries, Ltd., shipowner, and
Hibernia National Bank, Indenture Trustee, dated as of September 27,
1994 incorporated by reference to Exhibit 10.22 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March 31, 1995.
10.19+ - Amendment to Global Industries, Ltd. 1992 Stock Option Plan
incorporated by reference to Exhibit 10.23 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 31, 1996.
*10.20 - Agreement dated as of April 17, 1997 by, and Among Bank One, National
Association, Global Industries, Ltd. and its Subsidiaries,
</TABLE>
<PAGE> 55
<TABLE>
<S> <C> <C>
* 10.21 - Trust Indenture relating to United States Government Guaranteed Ship
Financing Obligations between Global Industries, Ltd., shipowner, and
First National Bank of Commerce, Indenture Trustee, dated as of
August 15, 1996.
* 10.22 - Form of Indemnification Agreement between the Registrant and each of
the Registrant's directors.
10.23 - Asset Purchase Agreement between Global Industries, Ltd. and J. Ray
McDermott, Inc. dated as of December 23, 1996 incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on Form
8-K dated February 12, 1997.
10.24 - Barge and Crane Purchase Agreement between Global Industries, Ltd.
and Hydro Marine Services, Inc. dated as of December 23, 1996
incorporated by reference to Exhibit 2.2 to the Registrant's Current
Report on Form 8-K dated February 12, 1997.
10.25 - Barge Purchase Option Agreement between Global Industries Ltd. and
Hydro Marine Services, Inc. dated as of December 23, 1996
incorporated by reference to Exhibit 2.3 to the Registrant's Current
Report on Form 8-K dated February 12, 1997.
*10.26+ - 1996 Amendment to Global Industries, Ltd. 1995 Employee Stock
Purchase Plan .
*10.27 - Amendment Assignment and Assumption of Authorization Agreement
relating to United States Government Ship Financing obligations
between Global Industries, Ltd., shipowner, and First National Bank
of Commerce, Indenture Trustee, dated as of October 23, 1996.
* 21.1 - Subsidiaries of the Registrant.
* 23.1 - Consent of Deloitte & Touche LLP.
* 27 - Financial Data Schedule
</TABLE>
*Filed herewith.
+Management Compensation Plan or Agreement.
<PAGE> 1
EXHIBIT 10.20
RESTATED CREDIT AGREEMENT
AMONG
GLOBAL INDUSTRIES, LTD.
AS BORROWER
AND
GLOBAL PIPELINES PLUS, INC.,
GLOBAL DIVERS AND CONTRACTORS, INC.,
GLOBAL MOVIBLE OFFSHORE, INC.,
PIPELINES, INCORPORATED,
GLOBAL INDUSTRIES OFFSHORE, INC., AND
GLOBAL INTERNATIONAL VESSELS, LTD.
AS GUARANTORS
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION
AND THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS BANKS
AND
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION,
AS AGENT
APRIL 17, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Commitments of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Terms of Revolving Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(d) Procedure for Obtaining Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(e) Mandatory Reduction of Revolving Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(f) Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(g) Voluntary Reduction of Revolving Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3. Notes Evidencing Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(a) Form of Revolving Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(b) Issuance of Additional Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(c) Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(d) Payment of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(e) Payment of Principal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(f) Payment to Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(g) Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(h) Non-Receipt of Funds by the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(i) Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4. Interest Rates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(a) Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) Interest Rate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(c) Conversion Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(d) Recoupment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5. Special Provisions Relating to Eurodollar Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(a) Unavailability of Funds or Inadequacy of Pricing . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) Reserve Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(c) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(d) Change in Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(e) Option to Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(f) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(g) Payments Not at End of Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(h) Replacement Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6. Collateral and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Unused Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) The Letter of Credit Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Agency Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
8. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(b) Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Creation and Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(b) Power and Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(d) No Legal Bar or Resultant Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(e) No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(f) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(g) Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(h) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(i) Taxes; Governmental Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(j) Titles, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(k) Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(l) Use of Proceeds; Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(m) Location of Business and Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(n) Compliance with the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(o) No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(p) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(q) Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
(r) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(s) Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(t) Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(u) Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10. Conditions of Lending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(a) Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(b) Certificates of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Taxes and Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(d) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(e) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(f) Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(g) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(h) Accounts and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(i) Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(j) Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(k) ERISA Information and Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(l) Environmental Reports and Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(m) Change of Principal Place of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(n) Payables and Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(o) New Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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12. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Negative Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Current Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Minimum Fixed Charge Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(d) Maximum Total Debt Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(e) Pre-Tax Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(f) Consolidations, Mergers and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(g) Debts, Guaranties and Other Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(h) Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(i) Transactions with Subsidiaries and Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(j) Change in Key Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(k) Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(l) Loans and Advances to Unaffiliated Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(m) Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(n) Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(o) Stock of Global Offshore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
14. The Agent and the Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(b) Note Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Consultation with Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(e) Resignation or Removal of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(f) Responsibility of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(g) Independent Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(h) Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(i) Benefit of Section 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(j) Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(k) Assumption as to Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(l) Other Financings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(m) Interests of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(n) Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15. Exercise of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
17. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
18. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
19. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
20. Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
21. Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
22. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
23. Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
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24. Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
25. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
26. Parties Bound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
27. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
28. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
29. Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
30. Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
31. Jury Trial Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
32. La. R.S. 6:1121 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
33. Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
34. Financial Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
EXHIBITS
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Exhibit "A" - Notice of Borrowing
Exhibit "B" - Revolving Note
Exhibit "C" - Continuing Guaranty
Exhibit "D" - Certificate of Compliance
Exhibit "E" - Form of Assignment and Acceptance Agreement
SCHEDULES
- ---------
Schedule 1 - Financial Condition
Schedule 2 - Liabilities
Schedule 3 - Litigation
Schedule 4 - Subsidiaries
Schedule 5 - Environmental Matters
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<PAGE> 6
RESTATED CREDIT AGREEMENT
THIS RESTATED CREDIT AGREEMENT (hereinafter referred to as the
"Agreement") executed as of the 17th day of April, 1997, by and among GLOBAL
INDUSTRIES, LTD., a Louisiana corporation (the "Borrower"), GLOBAL PIPELINES
PLUS, INC., a Louisiana corporation ("Plus"), GLOBAL DIVERS AND CONTRACTORS,
INC., a Louisiana corporation ("Divers"), GLOBAL MOVIBLE OFFSHORE, INC., a
Louisiana corporation ("Movible"), PIPELINES, INCORPORATED, a Louisiana
corporation ("Pipelines"), GLOBAL INDUSTRIES OFFSHORE, INC., a Delaware
corporation ("Industries Offshore") and GLOBAL INTERNATIONAL VESSELS, LTD., a
Cayman Islands corporation ("International Vessels") (Plus, Divers, Movible,
Pipelines, Industries Offshore and International Vessels are collectively
called the "Guarantors"), BANK ONE, LOUISIANA, NATIONAL ASSOCIATION, a national
banking association ("Bank One") and each of the financial institutions which
is a party hereto (as evidenced by the signature pages to this Agreement) or
which may from time to time become a party hereto pursuant to the provisions of
Section 29 hereof or any successor or assignee thereof (hereinafter
collectively referred to as "Banks", and individually, "Bank") and Bank One, as
Agent (in such capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower, the Guarantors and Bank One entered into a Credit
Agreement dated as of February 16, 1996 (the "Credit Agreement") under the
terms of which Bank One agreed to provide Borrower with a revolving loan
facility in amounts of up to $50,000,000.00; and
WHEREAS, pursuant to a First Amendment and Supplement to Credit
Agreement dated as of November 20, 1996 (the "First Amendment") under the terms
of which Bank One agreed to provide Borrower with an additional revolving
overline of credit in amounts of up to $25,000,000.00; and
WHEREAS, the Borrower has requested that Bank One consolidate the
revolving loan facility and the revolving overline loan facility into one
facility and that it increase the maximum amount available under such loan
facility to $85,000,000.00, Agent and the Banks are willing to consolidate such
facilities and increase the amount thereof to Borrower.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereby agree to restate the Credit
Agreement as follows:
1. DEFINITIONS. When used herein the terms "Agent," "Agreement,"
"Bank", "Banks", "Bank One", "Borrower", "Divers", "Guarantor", "Guarantors"
"Industries Offshore", "International Vessels", "Movible", "Pipelines" and
"Plus" shall have the meanings indicated above. When used herein the following
terms shall have the following meanings:
"Advance or Advances" shall mean a loan or loans hereunder.
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<PAGE> 7
"Affiliate" shall mean any Person which, directly or
indirectly, controls, is controlled by or is under common control with
the relevant Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and
"under common control with"), as used with respect to any Person,
shall mean a member of the board of directors, a partner or an officer
of such Person, or any other Person with possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, through the ownership (of
record, as trustee, or by proxy) of voting shares, partnership
interests or voting rights, through a management contract or
otherwise. Any Person owning or controlling directly or indirectly
ten percent or more of the voting shares, partnership interests or
voting rights, or other equity interest of another Person shall be
deemed to be an Affiliate of such Person.
"Assignment and Acceptance" shall mean a document
substantially in the form of Exhibit "D" hereto.
"Base Rate" shall mean, as of any date, the fluctuating rate
of interest per annum established from time to time by Bank One,
Texas, N.A. as its Base Rate (which rate of interest may not be the
lowest, best or most favorable rate of interest which Agent may charge
on loans to its customers). Each change in the Base Rate shall become
effective without prior notice to Borrower automatically as of the
opening of business on the date of such change in the Base Rate.
"Base Rate Interest Period" shall mean, with respect to any
Base Rate Loan, the period ending on the last day of each month,
provided, however, that (i) if any Base Rate Interest Period would end
on a day which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day, and (ii) if any Base
Rate Interest Period would otherwise end after the Revolving Maturity
Date such Interest Period shall end on the Revolving Maturity Date.
"Base Rate Loans" shall mean any loan during any period which
bears interest based upon the Base Rate or which would bear interest
based upon the Base Rate if the Maximum Rate ceiling was not in effect
at that particular time.
"Base Rate Margin" shall mean 0%.
"Borrowing Date" shall mean the date elected by Borrower
pursuant to Section 2(b) hereof for an Advance on the Revolving Loan.
"Business Day" shall mean the normal banking hours during any
day (other than Saturdays or Sundays) that banks are legally open for
business in Lafayette, Louisiana and New York, New York.
"Capital Lease" shall mean any lease in respect of which the
obligations thereunder constitute Capital Lease Obligations.
"Capitalized Lease Obligations" shall mean, without
duplication, all obligations of any Person to pay rent or amounts
under any Lease of, or other arrangement conveying the right to use,
real or personal property, a combination thereof, which obligation
shall have been or should be in accordance with GAAP, capitalized on
the books of such Person.
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"Change of Key Management" shall occur if William J. Dore ever
ceases to act as Chief Executive Officer of Borrower and a replacement
for such officer reasonably acceptable to Agent, is not appointed
within a reasonable time thereafter.
"Consolidated Subsidiaries" shall mean those Subsidiaries that
are required by GAAP to be included in the consolidated Financial
Statements of Borrower.
"Current Assets" shall mean the total of Borrower's
consolidated current assets, determined in accordance with GAAP.
"Current Liabilities" shall mean the total of Borrower's
consolidated current obligations determined in accordance with GAAP.
"Debt" shall mean as to Borrower and any Consolidated
Subsidiary, all obligations and liabilities of Borrower or such
Consolidated Subsidiary to any other Person including, without
limitation, all debts, claims, overdrafts and indebtedness,
heretofore, now and/or from time to time hereafter owing, due or
payable, however evidenced, created, incurred, acquired or owing and
however arising, whether under written or oral agreement, operation of
law or otherwise as shown in Borrower's Financial Statements.
"Default" shall mean any Event of Default and the occurrence
of an event or condition which would with the giving of any requisite
notice and/or passage of time or both constitute an Event of Default.
"Defaulting Bank" is used herein as defined in Section 3(f)
hereof.
"EBITDA" shall mean Borrower's consolidated earnings before
interest, taxes, depreciation and amortization.
"Effective Date" shall mean the date of this Agreement.
"Eligible Assignee" shall mean any of (i) a Bank or any
Affiliate of a Bank; (ii) a commercial bank organized under the laws
of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (iii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development, or a political
subdivision of any such country, and having a combined capital and
surplus of at least $100,000,000.00, provided that such bank is acting
through a branch or agency located in the United States; and (iv) a
Person that is primarily engaged in the business of commercial banking
and that (A) is a subsidiary of a Bank, (B) a subsidiary of a Person
of which a Bank is a subsidiary, or (C) a Person of which a Bank is a
subsidiary.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended by the Super Fund Amendments and Reauthorization Act of 1986,
42 U.S.C.A. Section 9601, etseq., the Resource Conservation and
-3-
<PAGE> 9
Recovery Act, as amended by the Hazardous Solid Waste Amendment of
1984, 42 U.S.C.A. Section 6901, et seq., the Clean Air Act, 42
U.S.C.A. Section 1251, et seq., the Toxic Substances Control Act, 15
U.S.C.A. Section 2601, etseq., The Oil Pollution Act of 1990, 33
U.S.G. Section 2701, et seq., and all other laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, order and restrictions of any federal, state, county,
municipal and other governments, departments, commissions, boards,
agencies, courts, authorities, officials and officers, domestic or
foreign, relating to air pollution, water pollution, noise control
and/or the handling, discharge, disposal or recovery of on-site or
off-site asbestos or "hazardous substances" as defined by 42 U.S.C.
Section 9601, et seq., as amended, as each of the foregoing may be
amended from time to time.
"Environmental Liability" shall mean any claim, demand,
obligation, cause of action, order, violation, damage, injury,
judgment, penalty or fine, cost of enforcement, cost of remedial
action or any other costs or expense whatsoever, including reasonable
attorneys' fees and disbursements, resulting from the violation or
alleged violation of any Environmental Law or the imposition of any
Environmental Lien (as hereinafter defined) which could reasonably be
expected to individually or in the aggregate have a Material Adverse
Effect.
"Environmental Lien" shall mean a Lien in favor of any court,
governmental agency or instrumentality or any other Person (i) for any
Environmental Liability or (ii) for damages arising from or cost
incurred by such court or governmental agency or instrumentality or
other person in response to a release or threatened release of
asbestos or "hazardous substance" into the environment, the imposition
of which Lien could reasonably be expected to have a Material Adverse
Effect.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Eurodollar Business Day" shall mean a Business Day on which
dealings in U.S. Dollar deposits are carried on in the London
interbank market.
"Eurodollar Interest Period" With respect to any Eurodollar
Loan (i) initially, the period commencing on the date such Eurodollar
Loan is made and ending one (1), two (2) or three (3) months
thereafter as selected by the Borrowers pursuant to Section 4(a)(ii),
and (ii) thereafter, each period commencing on the day following the
last day of the next preceding Interest Period applicable to such
Eurodollar Loan and ending one (1), two (2) or three (3) months
thereafter, as selected by the Borrowers pursuant to Section 4(a)(ii);
provided, however, that (i) if any Eurodollar Interest Period would
otherwise expire on a day which is not a Eurodollar Business Day, such
Interest Period shall expire on the next succeeding Eurodollar
Business Day unless the result of such extension would be to extend
such Interest Period into the next calendar month, in which case such
Interest Period shall end on the immediately preceding Eurodollar
Business Day, (ii) if any Eurodollar Interest Period begins on the
last Eurodollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) such Interest Period shall end on
the last Eurodollar Business Day of a calendar month, and (iii) any
Eurodollar Interest Period which would otherwise expire after the
Revolving Maturity Date shall end on such Revolving Maturity Date.
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<PAGE> 10
"Eurodollar Loan" shall mean any loan during any period which
bears interest at the Eurodollar Rate, or which would bear interest at
such rate if the Maximum Rate ceiling was not in effect at a
particular time.
"Eurodollar Margin" shall mean, with respect to each
Eurodollar Loan:
(i) one and three-fourths percent (1.75%) per
annum whenever Borrower's ratio of Funded Debt to EBITDA is
greater than 2.25 to 1.0;
(ii) one and one-half percent (1.50%) per annum
whenever Borrower's ratio of Funded Debt to EBITDA is greater
than 1.75 to 1.0 but less than or equal to 2.25 to 1.0;
(iii) one and one-quarter percent (1.25%) per annum
whenever Borrower's ratio of Funded Debt to EBITDA is greater
than 1.25 to 1.0 but less than or equal to 1.75 to 1.0;
(iv) one percent (1%) per annum whenever
Borrower's ratio of Funded Debt to EBITDA is greater than .75
to 1.0 but less than or equal to 1.25 to 1.0; or
(v) three quarters of one percent (.75%) per
annum whenever Borrower's ratio of Funded Debt to EBITDA is
less than or equal to .75 to 1.0.
For the purposes of calculating the Eurodollar Margin, Borrower's
ratio of Funded Debt to EBITDA shall be calculated as of the end of
each fiscal quarter beginning June 30, 1997. Until June 30, 1997, the
Eurodollar Margin shall be one percent (1%) per annum.
"Eurodollar Rate" shall mean with respect to any Eurodollar
Interest Period pertaining to any Eurodollar Loan, the rate per annum
equal to the rate quoted by the Bloomberg Financial Market Service or
Telerate or a recognized reporting service acceptable to Agent in its
sole discretion at approximately 9:00 a.m. Lafayette, Louisiana time
(or as soon thereafter as is practicable) on the date that is two (2)
Business Days prior to the first day of the Eurodollar Interest Period
for the number of days of such Eurodollar Interest Period and in an
amount of the Eurodollar Loan to which such Eurodollar Interest Period
applies. The Eurodollar Rate determined by Agent with respect to a
particular Eurodollar Interest Period shall be fixed at such rate for
the duration of such Eurodollar Interest Period.
"Event of Default" is used herein as defined in Section 13
hereof.
"Financial Statements" shall mean balance sheets, income
statements, statements of cash flow and appropriate footnotes and
schedules, prepared in accordance with GAAP.
"Fixed Charge Ratio" shall mean Net Cash Flow plus Fixed Costs
divided by current maturities of long-term Debt plus interest expense
and Fixed Costs.
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"Fixed Costs" shall mean Borrower's consolidated Capital Lease
Obligations due in one (1) year plus all consolidated rental expenses,
as determined in accordance with GAAP.
"Funded Debt" shall mean indebtedness created by the Borrower
and/or the Consolidated Subsidiaries, issued or incurred for (i)
borrowed money (whether by loan or the issuance and sale of debt
securities); (ii) obligations to pay the deferred purchase or
acquisition price of property or services, other than trade accounts
payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business; (iii) Debt of others
secured by a Lien on the property of Borrower and/or Consolidated
Subsidiaries whether or not the respective Debt so secured has been
assumed; (iv) letter of credit obligations; and (v) Capital Leases or
non-cancellable operating leases.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"Global Offshore" shall mean Global Offshore International,
Ltd.
"Guaranties" shall mean the continuing guaranties of each of
the Guarantors in favor of the Banks which obligate the Guarantors in
solido with the Borrower, which continuing Guaranty shall be in form
and substance satisfactory to the Agent and its counsel.
"Interest Payment Date" shall mean the last day of each
Interest Period.
"Interest Period" shall mean any Base Rate Interest Period or
Eurodollar Interest Period.
"Late Charge Rate" shall mean a late charge on all payments of
interest past due for more than ten (10) days equal to the greater of
5% of the delinquent interest or $25.00.
"Letters of Credit" is used herein as defined in Section 2(c)
hereof.
"Lien" shall mean any mortgage, deed of trust, pledge,
security interest, assignment, encumbrance or lien (statutory or
otherwise) of every kind and character.
"Loan Documents" shall mean this Agreement, the Note, the
Guaranties and all other documents executed in connection with the
transaction described in this Agreement.
"Majority Banks" shall mean Banks holding 66-2/3% or more of
the Revolving Commitments, one of which must be the Agent.
"Material Adverse Effect" shall mean any circumstance or event
which has a material adverse effect on (i) the assets or properties,
liabilities, financial condition, business or operations, of Borrower
and its Consolidated Subsidiaries, taken as a whole,
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<PAGE> 12
from the facts represented or warranted in this Agreement or any other
Security Instrument, or (ii) the ability of Borrower and its
Consolidated Subsidiaries, taken as a whole, to carry out their
respective businesses as of the date of this Agreement or as proposed
at the date of this Agreement to be conducted or to meet their
obligations under the Note, this Agreement or the other Loan Documents
on a timely basis.
"Maximum Rate" shall mean at any particular time in question,
the maximum non-usurious rate of interest which under applicable law
may then be charged on the Note. If such Maximum Rate changes after
the date hereof, the Maximum Rate shall be automatically increased or
decreased, as the case may be, without notice to Borrower from time to
time as the effective date of each change in such Maximum Rate.
"Net Cash Flow" shall mean Net Income plus depreciation,
amortization and interest expense minus any consolidated cash
dividends paid as of the end of each fiscal quarter for the previous
twelve (12) months ending on such date.
"Net Income" shall mean Borrower's consolidated net income
before income taxes, calculated in accordance with GAAP.
"Note or Notes" shall mean the Revolving Notes substantially
in the form of Exhibit "B" hereto issued or to be issued hereunder to
each Bank, respectively, to evidence the indebtedness to such Bank
arising by reason of the Advances on the Revolving Loan, together with
all modifications, renewals and extensions thereof or any part
thereof.
"NRSRO" shall mean the following nationally recognized
statistical rating organizations: Standard & Poors; Moody's; Duff &
Phelps; Fitch, Thompson; Bankwatch and International Bank Credit
Analysis.
"Other Financing" is used herein as defined in Section 14(l)
hereof.
"Payor" is used herein as defined in Section 3(h) hereof.
"Permitted Liens" shall mean (i) Liens for taxes not yet due
or which are being contested in good faith and by appropriate
proceedings; (ii) maritime, carriers', warehousemen's, mechanic's,
materialmen's, repairmen's or other like Liens arising or discharged
in the ordinary course of business or which are being contested in
good faith and by appropriate proceedings; (iii) pledges or deposits
in connection with workmen's compensation, unemployment insurance and
other social security legislation; (iv) deposits to secure the
performance of bids, trade contracts (other than for borrowed money),
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of like nature incurred in the ordinary
course of business; (v) easements, rights-of-way, restrictions and
other similar encumbrances incurred in the ordinary course of business
which, individually or in the aggregate, do not cause a Material
Adverse Effect; (vi) Liens on assets acquired with the proceeds of
indebtedness securing such indebtedness and (vii) Liens in favor of a
bonding company on the equipment, material and/or accounts receivable
of the Borrower securing the obligations of the Borrower to such
bonding company in respect of surety bonds issued for the account of
the Borrower or the
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<PAGE> 13
Consolidated Subsidiaries; and (viii) security interests granted prior
to the Effective Date by the Borrower or any of the Consolidated
Subsidiaries to the United States Maritime Administration for the
financing of construction of vessels, and any renewals thereof.
"Person" shall mean an individual, a corporation, a
partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
"Plan" shall mean any plan subject to Title IV of ERISA and
maintained by Borrower, or any such plan to which a Borrower is
required to contribute on behalf of its employees.
"Pre-Tax Income" shall mean Borrower's consolidated operating
income before income taxes, calculated in accordance with GAAP.
"Primary Lines of Business" shall mean construction services,
including pipeline construction, platform construction, platform
installation and removal and diving services primarily to the offshore
oil and gas industry.
"Pro Rata or Pro Rata Part" shall mean for each Bank, (i) for
all purposes where no Revolving Loan is outstanding, such Bank's
Revolving Commitment Percentage and (ii) otherwise, the proportion
which the portion of the outstanding Revolving Loans owed to such Bank
bears to the aggregate outstanding Revolving Loans owed to all Banks
at the time in question.
"Reimbursement Obligations" shall mean at any time, the
obligations of Borrower in respect of all Letters of Credit then
outstanding to reimburse amounts paid by any Bank in respect of any
drawing or drawings under a Letter of Credit.
"Required Payment" is used herein as defined in Section 3(h)
hereof.
"Revolving Commitment" shall mean (A) for all Banks, (i)
$85,000,000 from the Effective Date through June 30, 2000; (ii)
$60,000,000.00 from July 1, 2000 through June 30, 2001; and (iii)
$35,000,000.00 from July 1, 2001 through June 30, 2002 and (B) as to
any Bank, its obligation to make Advances hereunder on the Revolving
Loan and purchase its Pro Rata Part of participations in Letters of
Credit issued hereunder by the Agent in amounts not exceeding an
amount equal to its Revolving Commitment Percentage times the
Revolving Commitment in existence at the time of determination.
"Revolving Commitment Percentage" shall mean for each Bank the
percentage set forth opposite the name of such Bank on the signature
pages hereto under the heading "Revolving Commitment Percentage" or
its Assignment and Acceptance. At the Effective Date, Bank One's
Revolving Commitment Percentage is 100%.
"Revolving Loan" shall mean loans made under the Revolving
Commitment pursuant to Section 2 hereof.
"Revolving Maturity Date" shall mean July 30, 2002.
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<PAGE> 14
"Secured Obligations" is used herein as defined in Section 6
hereof.
"Shareholder's Equity" shall mean the total amount of assets
of the Borrower and its Consolidated Subsidiaries (less depreciation,
depletion and other properly deductible evaluation reserves) after
deducting good will, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organizational expense, unamortized
debt discount and expense, the excess cost of shares acquired over
book value of related assets, and such other assets as are properly
classified as "intangible assets" in accordance with GAAP.
"Subsidiary" shall mean any corporation or other entity of
which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly
owned by Borrower or another subsidiary.
"Total Outstandings" shall mean as of any date, the sum of (i)
the total principal balance outstanding on the Notes, plus (ii) the
total face amount of all outstanding Letters of Credit plus (iii) the
total amount of all unpaid Reimbursement Obligations.
"Tranche" shall mean a Eurodollar Loan or a Base Rate Loan.
"Unused Fee Rate" shall mean the percentage used to calculate
the Unused Fee, which percentage shall be:
(i) three-eighths of one percent (.375%) per
annum whenever Borrower's ratio of Funded Debt to EBITDA is
greater than 2.25 to 1.0;
(ii) five-sixteenths of one percent (.3125%) per
annum whenever Borrower's ratio of Funded Debt to EBITDA is
greater than 1.75 to 1.0 but less than or equal to 2.25 to
1.0;
(iii) one-quarter of one percent (.25%) per annum
whenever Borrower's ratio of Funded Debt to EBITDA is greater
than 1.25 to 1.0 but less than or equal to 1.75 to 1.0;
(iv) three-sixteenths of one percent (.1875%) per
annum whenever Borrower's ratio of Funded Debt to EBITDA is
greater than .75 to 1.0 but less than or equal to 1.25 to 1.0;
and
(v) one-eighth of one percent (.125%) per annum
whenever Borrower's ratio of Funded Debt to EBITDA is less
than or equal to .75 to 1.0.
For purposes of calculating the Unused Fee Rate, Borrower's ratio of
Funded Debt to EBITDA shall be calculated as of the end of each fiscal
quarter beginning June 30, 1997. Until June 30, 1997, the Unused Fee
Rate shall be .1875%.
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<PAGE> 15
2. COMMITMENTS OF THE BANK.
(a) Terms of Revolving Commitment. On the terms and
conditions hereinafter set forth, each Bank agrees severally to make
its Pro Rata Part of Advances to Borrower and issue Letters of Credit
for the benefit of Borrower from time to time during the period
beginning on the Effective Date and ending on the Maturity Date in
such amounts as Borrower may request up to an amount not to exceed, in
the aggregate principal amount outstanding at any time, the Revolving
Commitment. The obligation of Borrower hereunder shall be evidenced
by this Agreement and the Note or Notes issued in connection herewith,
said Note or Notes to be as described in Section 3 hereof.
Notwithstanding any other provision of this Agreement, no Advance
shall be required to be made hereunder if any Event of Default (as
hereinafter defined) has occurred and is continuing or if any event or
condition has occurred or failed to occur which with the passage of
time or service of notice, or both, would constitute an Event of
Default. Each Advance under the Revolving Commitment shall be an
aggregate amount of at least $500,000 or whole multiples of $100,000
in excess thereof. Irrespective of the face amount of the Note or
Notes, the Banks shall never have the obligation to Advance any amount
or amounts in excess of the Revolving Commitment or to increase the
Revolving Commitment. The total number of Tranches under the
Revolving Commitment which may be outstanding at any time hereunder
shall never exceed four (4), whether such Tranches are Base Rate
Loans, Eurodollar Loans, or a combination thereof.
(b) Procedure for Borrowing. Whenever Borrower desires
an Advance hereunder, they shall give Agent telegraphic, telex,
facsimile or telephonic notice ("Notice of Borrowing") of such
requested Advance, which in the case of telephonic notice, shall be
promptly confirmed in writing. Each Notice of Borrowing shall be in
the form of Exhibit "A" attached hereto and shall be received by Agent
not later than 11:00 a.m. Lafayette, Louisiana time, (i) one (1)
Business Day prior to the Borrowing Date in the case of Base Rate
Loans, or (ii) three (3) Business Days prior to any proposed Borrowing
Date in the case of Eurodollar Loans. Upon receipt of such Notice,
Agent shall advise each Bank thereof; provided, that if the Banks have
received at least one (1) Business Day's notice of such Advance prior
to funding of a Base Rate Loan, or at least three (3) Business Days'
notice of each advance prior to the funding in the case of a
Eurodollar Loan, each Bank shall provide Agent at its office at 200
West Congress Street, Lafayette, Louisiana 70502, not later than 1:00
p.m., Lafayette, Louisiana time, on the Borrowing Date, in immediately
available funds, its Pro Rata share of the requested Advance, but the
aggregate of all such fundings by each Bank shall never exceed such
Bank's Revolving Commitment. Not later than 2:00 p.m., Lafayette,
Louisiana time, on the Borrowing Date, Agent shall make available to
Borrower at the same office, in like funds, the aggregate amount of
such requested Advance. Neither Agent nor any Bank shall incur any
liability to Borrower in acting upon any Notice of Borrowing referred
to above which Agent or such Bank believes in good faith to have been
given by a duly authorized officer or other person authorized to
borrow on behalf of Borrower or for otherwise acting in good faith
under this Section 2(b). Upon funding of Advances by Banks in
accordance with this Agreement, pursuant to any such Notice of
Borrowing, Borrower shall have effected Advances hereunder.
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<PAGE> 16
(c) Letters of Credit. On the terms and conditions
hereinafter set forth, the Agent shall from time to time during the
period beginning on the Effective Date and ending on the Maturity Date
upon request of Borrower issue (i) standby and/or commercial letters
of credit (non-automatically renewable) for the account of Borrower
for job performance and general corporate purposes in such amounts as
Borrower may request but not to exceed in the aggregate face amount at
any time outstanding the sum of Twenty Million Dollars
($20,000,000.00), each such letter of credit shall have an expiry date
no later than the earlier of eighteen (18) months from the date of
issuance or the Revolving Maturity Date, whichever occurs first (the
"Standby Letters of Credit"); and (ii) letters of credit
(automatically renewable) for the account of Borrower in such face
amounts as Borrower may request, but not to exceed in the aggregate
face amount at any time outstanding the greater of (A) $1,700,000.00,
or (B) one percent (1%) of the Revolving Commitment then in effect,
each such letter of credit shall have an expiry date of not more than
one (1) year from issuance, subject to automatic renewal but provided
that the final maturity of any such Letter of Credit shall not extend
beyond the Revolving Maturity Date (the "Evergreen Letters of Credit")
(the Standby Letters of Credit and the Evergreen Letters of Credit are
hereinafter collectively referred to as "Letters of Credit"). The
Evergreen Letters of Credit shall automatically renew upon each such
expiry date unless the Agent notifies the Borrower in writing on or
before a date concurrent with the expiry period notice required in any
such issued Letter of Credit that the Banks will not renew such
Evergreen Letter of Credit at the next expiry date. The face amount
of all Letters of Credit issued and outstanding hereunder shall be
considered as non-interest bearing Advances under the Revolving
Commitment. Each Bank agrees that, upon issuance of any Letter of
Credit hereunder, it shall automatically acquire a participation in
the Agent's liability under such Letter of Credit in an amount equal
to such Bank's Revolving Commitment Percentage of such liability, and
each Bank (other than Agent) thereby shall absolutely, unconditionally
and irrevocably assume, as primary obligor and not as surety, and
shall be unconditionally obligated to Agent to pay and discharge when
due, its Revolving Commitment Percentage of Agent's liability under
such Letter of Credit. Borrower hereby unconditionally agrees to pay
and reimburse the Agent for the amount of each payment under any
Letter of Credit at or prior to the date on which payment is made by
the Agent to the beneficiary thereunder, without presentment, demand,
protest or other formalities of any kind. Upon receipt from any
beneficiary of any Letter of Credit of any demand for payment under
such Letter of Credit, the Agent shall promptly notify Borrower of the
demand and the date upon which such payment is to be made by the Agent
to such beneficiary in respect of such demand. Forthwith upon receipt
of such notice from the Agent, Borrower shall advise the Agent whether
or not it intends to borrow hereunder to finance its obligations to
reimburse the Agent, and if so, submit a Notice of Borrowing as
provided in Section 2(b) hereof.
(d) Procedure for Obtaining Letters of Credit. The
amount and date of issuance, renewal, extension or reissuance of a
Letter of Credit pursuant to the Banks' commitment above in Section
2(c) shall be designated by Borrower's written request delivered to
Agent at least three (3) Business Days prior to the date of such
issuance, renewal, extension or reissuance. Concurrently with or
promptly following the delivery of the request for a Letter of Credit,
Borrower shall execute and deliver to the Agent an application and
agreement with respect to the Letters of Credit, said application and
agreement to be in the form used by the Agent. The Agent shall not be
obligated to issue, renew, extend or reissue such Letters of Credit if
(i) the amount thereon when added to the amount of the outstanding
Letters of Credit exceeds (A) Twenty Million
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<PAGE> 17
Dollars ($20,000,000.00) in the case of Standby Letters of Credit or
(B) the greater of $1,700,000.00 or one percent (1%) of the Revolving
Commitment in the case of Evergreen Letters of Credit, or (ii) the
amount thereof when added to the Total Outstandings would exceed the
Revolving Commitment. On the Effective Date, there are outstanding
Standby Letters of Credit in the total amount of $3,800,000.00. Once
issued, the Agent shall have the authority to renew and extend from
time to time the expiry date of any Letter of Credit without the
requirement of the joinder of any of the Banks, except that the Agent
shall not renew or extend the expiry date beyond the Revolving
Maturity Date. Borrower agrees to pay the Agent for the benefit of
the Banks commissions for issuing the Letters of Credit (calculated
separately for each Letter of Credit) in an amount equal to
seven-eighths of one percent (.875%) per annum on the face amount of
each Letter of Credit, to be reduced pro rata if the expiry date is
less than twelve (12) months. Borrower agrees to pay to Agent an
additional fee equal to one-eighth of one percent (.125%) per annum on
the maximum face amount of each Letter of Credit. Such commissions
shall be payable prior to the issuance of each Letter of Credit and
thereafter on each anniversary date of such issuance while such Letter
of Credit is outstanding. Borrower further agrees to pay to the Agent
an amendment fee for any amendment to letters of credit issued
hereunder, said fee to be in the amount of $50.00 per amendment and
shall be due upon the issuance of such amendment.
(e) Mandatory Reduction of Revolving Commitment. The
Revolving Commitment shall be reduced from time to time as specified
in Section 2(a) above.
(f) Several Obligations. The obligations of the Banks
under the Revolving Commitment are several and not joint. The failure
of any Bank to make an Advance required to be made by it shall not
relieve any other Bank of its obligation to make its Advance, and no
Bank shall be responsible for the failure of any other Bank to make
the Advance to be made by such other Bank.
(g) Voluntary Reduction of Revolving Commitment. The
Borrower may at any time, or from time to time, on not less than three
(3) Business Days' prior written notice to Agent, reduce or terminate
the Revolving Commitment. Any reduction in the Revolving Commitment
shall be a permanent reduction and must be in the amount of at least
$5,000,000.00 or whole multiples of $1,000,000.00 in excess thereof.
3. NOTES EVIDENCING LOANS. The loans described above in Section
2 shall be evidenced by a promissory notes of Borrower as follows:
(a) Form of Revolving Notes - The Revolving Loan shall be
evidenced by a Note or Notes in the aggregate face amount of
$85,000,000, in favor of each Bank in the amount of their Pro Rata
Part, and shall be in the form of Exhibit "B" hereto with appropriate
insertions. Notwithstanding the face amount of the Notes, the actual
principal amount due from Borrower to Banks on account of the Notes,
as of any date of computation, shall be the sum of Advances then and
theretofore made on account thereof, less all principal payments
actually received by Banks in collected funds with respect thereto.
Although the Notes may be dated as of the Effective Date, interest in
respect thereof shall be payable only for the period during which the
loans evidenced thereby are outstanding and, although the stated
amount of the Notes may be higher, the Notes shall
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<PAGE> 18
be enforceable, with respect to Borrower's obligation to pay the
principal amount thereof, only to the extent of the unpaid principal
amount of the loans.
(b) Issuance of Additional Notes - At the Effective Date
there shall be outstanding (i) one Revolving Note in the aggregate
face amount of $85,000,000 payable to the order of Bank One. From
time to time new Notes may issued to other Banks as such Banks become
parties to this Agreement. Upon request from Agent, Borrower shall
execute and deliver to Agent any such new or additional Notes. From
time to time as new Notes are issued the Agent shall require that each
Bank exchange their Notes for newly issued Notes to better reflect the
extent of each Bank's Revolving Commitments hereunder. Agent shall,
upon the written request of Borrower, cause the Banks to return to
Borrower the Notes which have been replaced within a reasonable period
of time after Borrower's request.
(c) Interest Rates - The unpaid principal balance of the
Notes shall bear interest from time to time as set forth in Section 4
hereof.
(d) Payment of Interest - Interest on the Notes shall be
payable on each Interest Payment Date commencing April 30, 1997.
(e) Payment of Principal - Principal of the Notes shall
be due and payable to the Agent for the ratable benefit of Banks on
the Revolving Maturity Date unless earlier due in whole or in part as
a result of an acceleration of the amount due or pursuant to the
mandatory prepayment provisions of Section 8(b) hereof.
(f) Payment to Banks - Each Bank's Pro Rata Part of
payment or prepayment of the Revolving Loans shall be directed by wire
transfer to such Bank by the Agent at the address provided to the
Agent for such Bank for payments no later than 2:00 p.m., Lafayette,
Louisiana, time on the Business Day such payments or prepayments are
deemed hereunder to have been received by Agent; provided, however, in
the event that any Bank shall have failed to make an Advance as
contemplated under Section 2 hereof (a "Defaulting Bank") and the
Agent or another Bank or Banks shall have made such Advance, payment
received by Agent for the account of such Defaulting Bank or Banks
shall not be distributed to such Defaulting Bank or Banks until such
Advance or Advances shall have been repaid in full to the Bank or
Banks who funded such Advance or Advances. Any payment or prepayment
received by Agent at any time after 12:00 noon, Lafayette, Louisiana,
time on a Business Day shall be deemed to have been received on the
next Business Day. Interest shall cease to accrue on any principal as
of the end of the day preceding the Business Day on which any such
payment or prepayment is deemed hereunder to have been received by
Agent. If Agent fails to transfer any principal amount to any Bank as
provided above, then Agent shall promptly direct such principal amount
by wire transfer to such Bank.
(g) Sharing of Payments, Etc. - If any Bank shall obtain
any payment (whether voluntary, involuntary, or otherwise) on account
of the Revolving Loans, (including, without limitation, any set-off)
which is in excess of its Pro Rata Part of payments on either of the
Revolving Loans, as the case may be, obtained by all Banks, such Bank
shall purchase from the other Banks such participation as shall be
necessary to cause such
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<PAGE> 19
purchasing Bank to share the excess payment pro rata with each of
them; provided that, if all or any portion of such excess payment is
thereafter recovered from such purchasing Bank, the purchase shall be
rescinded and the purchase price restored to the extent of the
recovery. Borrower agrees that any Bank so purchasing a participation
from another Bank pursuant to this Section may, to the fullest extent
permitted by law, exercise all of its rights of payment (including the
right of offset) with respect to such participation as fully as if
such Bank were the direct creditor of Borrower in the amount of such
participation.
(h) Non-Receipt of Funds by the Agent - Unless the Agent
shall have been notified by a Bank or Borrower (the "Payor") prior to
the date on which such Bank is to make payment to the Agent of the
proceeds of a Revolving Loan to be made by it hereunder or Borrower is
to make a payment to the Agent for the account of one or more of the
Banks, as the case may be (such payment being herein called the
"Required Payment"), which notice shall be effective upon receipt,
that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made
and may, in reliance upon such assumption (but shall not be required
to), make the amount thereof available to the intended recipient on
such date and, if the Payor has not in fact made the Required Payment
to the Agent, the recipient of such payment shall, on demand, pay to
the Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount
was made available by the Agent until the date the Agent recovers such
amount at the rate applicable to such portion of the applicable
Revolving Loan.
(i) Capital Adequacy - If either (i) the introduction or
implementation of or the compliance with or any change in or in the
interpretation of any law, rule or regulation or (ii) the introduction
or implementation of or the compliance with any mandatory request,
directive or guideline from any central bank or other governmental
authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by
any Bank or any corporation controlling any Bank as a result of
maintaining the Revolving Loans, then within fifteen (15) days after
demand by such Bank, Borrower will pay to such Bank, from time to time
as specified by such Bank, such additional amount or amounts which
such Bank shall reasonably determine to be appropriate to compensate
such Bank or any corporation controlling such Bank in light of such
circumstances, to the extent that such Bank reasonably determines that
the amount of any such capital would be increased, or the rate of
return on any such capital would be reduced in whole or in part, based
on the existence of the amount of the Revolving Loans or such Bank's
Revolving Commitment under this Agreement. No request for additional
compensation shall cover a period commencing earlier than ninety (90)
days prior to such request.
4. INTEREST RATES.
(a) Options.
(i) Base Rate Loans. Borrower agrees to pay
interest on the Notes calculated on the basis of a year
consisting of 360 days with respect to the unpaid principal
amount of each Base Rate Loan from the date the proceeds
thereof are made available to Borrower until maturity (whether
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<PAGE> 20
by acceleration or otherwise), at a varying rate per annum
equal to the lesser of (i) the Maximum Rate (defined herein),
or (ii) the sum of the Base Rate plus the Base Rate Margin.
Subject to the provisions of this Agreement as to prepayment,
the principal of the Notes representing Base Rate Loans shall
be payable as specified in Section 3(e) hereof and the
interest in respect of each Base Rate Loan shall be payable on
each Interest Payment Date. Past due interest shall be
subject to the Late Charge Rate. Past due principal shall
bear interest as specified herein.
(ii) Eurodollar Loans. Borrower agrees to pay
interest calculated on the basis of a year consisting of 360
days with respect to the unpaid principal amount of each
Eurodollar Loan from the date the proceeds thereof are made
available to Borrower until maturity (whether by acceleration
or otherwise), at a varying rate per annum equal to the lesser
of (i) the Maximum Rate, or (ii) the Eurodollar Rate plus the
Eurodollar Margin. Subject to the provisions of this
Agreement with respect to prepayment, the principal of the
Notes shall be payable as specified in Section 3(e) hereof and
the interest with respect to each Eurodollar Loan shall be
payable on each Interest Payment Date. Past due interest
shall be subject to the Late Charge Rate. Past due principal
shall bear interest as set forth herein. Upon three (3)
Business Days written notice prior to the making by the Banks
of any Eurodollar Loan (in the case of the initial Interest
Period therefor) or the expiration date of each succeeding
Interest Period (in the case of subsequent Interest Periods
therefor), Borrower shall have the option, subject to
compliance by Borrower with all of the provisions of this
Agreement, as long as no Event of Default exists, to specify
whether the Interest Period commencing on any such date shall
be a one (1), two (2) or three (3) month period. If Agent
shall not have received timely notice of a designation of such
Interest Period as herein provided, Borrower shall be deemed
to have elected to convert all maturing Eurodollar Loans to
Base Rate Loans.
(b) Interest Rate Determination. The Agent shall
determine each interest rate applicable to the Revolving Loans
hereunder. The Agent shall give prompt notice to Borrower of each
rate of interest so determined and its determination thereof shall be
conclusive absent error.
(c) Conversion Option. Borrower may elect from time to
time (i) to convert all or any part of its Eurodollar Loans to Base
Rate Loans by giving Agent irrevocable notice of such election in
writing prior to 10:00 a.m. (Lafayette, Louisiana time) on the
conversion date and such conversion shall be made on the requested
conversion date, provided that any such conversion of Eurodollar Loan
shall only be made on the last day of the Eurodollar Interest Period
with respect thereof, and (ii) to convert all or any part of its Base
Rate Loans to Eurodollar Loans by giving the Agent irrevocable written
notice of such election three (3) Business Days prior to the proposed
conversion and such conversion shall be made on the requested
conversion date or, if such requested conversion date is not a
Business Day on the next succeeding Business Day. Any such conversion
shall not be deemed to be a prepayment of any of the loans for
purposes of this Agreement on the Notes.
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<PAGE> 21
(d) Recoupment. If at any time the applicable rate of
interest selected pursuant to Sections 4(a)(i) or 4(a)(ii) above shall
exceed the Maximum Rate, thereby causing the interest on the Notes to
be limited to the Maximum Rate, then any subsequent reduction in the
interest rate so selected or subsequently selected shall not reduce
the rate of interest on the Notes below the Maximum Rate until the
total amount of interest accrued on the Notes equals the amount of
interest which would have accrued on the Notes if the rate or rates
selected pursuant to Sections 4(a)(i) or (ii), as the case may be, had
at all times been in effect.
5. SPECIAL PROVISIONS RELATING TO EURODOLLAR LOANS.
(a) Unavailability of Funds or Inadequacy of Pricing. In
the event that, in connection with any proposed Eurodollar Loan, any
Bank (i) shall have determined that U.S. Dollar deposits of the
relevant amount and for the relevant Eurodollar Interest Period for
Eurodollar Loans are not available to such Bank in the London
interbank market; or (ii) in good faith determines that the Eurodollar
Interest Rate will not adequately reflect the cost to the Banks of
maintaining or funding the Eurodollar Loans for such Interest Period,
the obligations of the Banks to make the Eurodollar Loans, as the case
may be, shall be suspended until such time such Bank in its sole
discretion reasonably exercised determines that the event resulting in
such suspension has ceased to exist. If any Bank shall make such
determination it shall promptly notify the Agent in writing, and Agent
shall promptly notify Borrower in writing, and Borrower shall either
repay the outstanding Eurodollar Loans, as the case may be, owed to
Banks, without penalty, on the last day of the current Interest Period
or convert the same to Base Rate Loans in the case of Eurodollar Loans
on the last day of the then current Interest Period for such
Eurodollar Loan.
(b) Reserve Requirements. In the event of any change in
any applicable law, treaty or regulation or in the interpretation or
administration thereof, or in the event any central bank or other
fiscal monetary or other authority having jurisdiction over any Bank
or the loans contemplated by this Agreement shall impose, modify or
deem applicable any reserve requirement of the Board of Governors of
the Federal Reserve System on any Eurodollar Loan or loans, or any
other reserve, special deposit, or some requirements against assets
to, deposits with or for the account of, or credit extended by, the
Banks or shall impose on any Bank or the London interbank market, as
the case may be, any other condition affecting this Agreement or the
Eurodollar Loans and the result of any of the foregoing is to increase
the cost to any Bank in making or maintaining its Eurodollar Loans or
to reduce any amount (or the effective return on any amount) received
by any Bank hereunder, then Borrower shall pay to the Banks upon
demand of any Bank as additional interest on the Notes evidencing the
Eurodollar Loans such additional amount or amounts as will reimburse
the Banks for such additional cost or such reduction. No request for
additional compensation shall cover a period commencing earlier than
ninety (90) days prior to such request. The Banks shall give notice
to Borrower upon becoming aware of any such change or imposition which
may result in any such increase or reduction. A certificate of any
Bank setting forth the basis for the determination of such amount
necessary to compensate Banks as aforesaid shall be delivered to
Borrower and shall be conclusive as to such determination and such
amount, absent error.
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<PAGE> 22
(c) Taxes. Both principal and interest on the Notes
evidencing the Eurodollar Loans are payable without withholding or
deduction for or on account of any taxes. If any taxes are levied or
imposed on or with respect to the Notes evidencing the Eurodollar
Loans or on any payment on the Notes evidencing the Eurodollar Loans
made to any Bank, then, and in any such event, Borrower shall pay to
the Banks upon demand of any Bank such additional amounts as may be
necessary so that every net payment of principal and interest on the
Notes evidencing the Eurodollar Loans, after withholding or deduction
for or on account of any such taxes, will not be less than any amount
provided for herein. In addition, if at any time when the Eurodollar
Loans are outstanding any laws enacted or promulgated, or any court of
law or governmental agency interprets or administers any law, which,
in any such case, materially changes the basis of taxation of payments
to any Bank of principal of or interest on the Notes evidencing the
Eurodollar Loans by reason of subjecting such payments to double
taxation or otherwise (except through an increase in the rate of tax
on the overall net income of such Bank or Banks) then Borrower will
pay the amount of loss to the extent that such loss is caused by such
a change. The Banks shall give notice to Borrower upon becoming aware
of the amount of any loss incurred by any Bank through enactment or
promulgation of any such law which materially changes the basis of
taxation of payments to one or more of the Banks. The Banks shall
also give notice on becoming aware of any such enactment or
promulgation which may result in such payments becoming subject to
double taxation or otherwise. A certificate of any Bank setting forth
the basis for the determination of such loss and the computation of
such amounts shall be delivered to Borrower and shall be conclusive of
such determination and such amount, absent error. The Banks will
reimburse Borrower for any amounts paid by Borrower pursuant to this
provision which are ultimately recovered to reduce or eliminate
amounts owed by Borrower hereunder.
(d) Change in Laws. If at any time any new law or any
change in existing laws or in the interpretation of any new or
existing laws shall make it unlawful for the Banks to maintain or fund
its Eurodollar Loans hereunder, then the Banks shall promptly notify
Borrower in writing and Borrower shall either repay the outstanding
Eurodollar Loans owed to the Banks, without penalty, on the last day
of the current Interest Periods (or, if any Bank may not lawfully
continue to maintain and fund such Eurodollar Loans, immediately), or
Borrower may convert such Eurodollar Loans at such appropriate time to
Base Rate Loans.
(e) Option to Fund. The Banks shall each have the option
if Borrower elects a Eurodollar Loan, to purchase one or more deposits
in order to fund or maintain its funding of the principal balance of
its Note to which such Eurodollar Loan is applicable during the
Interest Period in question; it being understood that the provisions
of this Agreement relating to such funding are included only for the
purpose of determining the rate of interest to be paid under such
Eurodollar Loan and any amounts owing hereunder and under the Notes.
Any Bank shall be entitled to fund and maintain its funding of all or
any part of that portion of the principal balance of the Notes in any
manner it sees fit, but such determinations hereunder shall be made
based on whether such Bank has actually funded and maintained that
portion of the principal balance of the Notes to which a Eurodollar
Loan is applicable during the applicable Interest Period through the
purchase
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<PAGE> 23
of deposits in an amount equal to the principal balance of the Notes
to which such Eurodollar Loan is applicable and having a maturity
corresponding to such Interest Period. Any Bank may fund the
outstanding principal balance of the Notes which is to be subject to
any Eurodollar Loan from any branch or office of such Bank as any Bank
may designate from time to time.
(f) Indemnity. Borrower shall indemnify and hold
harmless the Banks against all reasonable and necessary out-of-pocket
costs and expenses which the Banks may sustain (i) as a consequence of
any default by Borrower under this Agreement, or (ii) as a result of
the making of any loan or loans as a Eurodollar Loan under this
Agreement.
(g) Payments Not at End of Interest Period. If Borrower
makes any payment of principal with respect to any Eurodollar Loan on
any day other than the last day of the Interest Period applicable to
such Eurodollar Loan, then Borrower shall reimburse the Banks on
demand for any loss, cost or expense incurred by the Banks as a result
of the timing of such payment or in redepositing such principal
amount, including the sum of (i) the cost of funds to the Banks in
respect of such principal amount so paid, for the remainder of the
Interest Period applicable to such sum, reduced, if any Bank is able
to redeposit such principal amount so paid for the balance of the
Interest Period, by the interest earned by such Bank as a result of so
redepositing such principal amount, plus (ii) any expense or penalty
incurred by the Bank in redepositing such principal amount. A
certificate of any Bank setting forth the basis for the determination
of the amount owed by Borrower pursuant to this Section 5(g) shall be
delivered to Borrower and shall be conclusive in the absence of
manifest error.
(h) Replacement Banks. If any Bank has notified the
Borrower and the Agent of its incurring additional costs under Section
5(b) hereof or has required the Borrower to make payment for taxes
under Section 5(c) hereof, then Borrower may, unless such Bank has
notified the Borrower and the Agent that the circumstances giving rise
to such notice no longer apply, terminate, in whole but not in part,
the Revolving Commitment of any such Bank (other than the Agent) (the
"Terminated Bank") at any time upon five (5) Business Days prior
written notice to the Terminated Bank and the Agent (such notice
referred to herein as a "Notice of Termination"). In order to effect
the termination of the Revolving Commitment of the Terminated Bank,
the Borrower shall (i) obtain an agreement with one or more other
Banks to increase their Revolving Commitment or Revolving Commitments
and/or (ii) request any one or more other Eligible Assignees to become
parties to this Agreement in place and in stead of such Terminated
Bank and agree to accept a Revolving Commitment or Revolving
Commitments in an aggregate amount or amounts equal to the Revolving
Commitment held by the Terminated Bank and (iii) pay all amounts due
to the Terminated Bank pursuant to the provisions of Section 5(b) and
5(c) hereof; provided, however, that such one or more Eligible
Assignees selected by the Borrower must be reasonably acceptable to
the Agent and must become parties by accepting an Assignment and
Acceptance (the Banks or other Eligible Assignees that agree to accept
in whole or in part the Revolving Commitment of the Terminated Bank
being referred to herein as the "Replacement Banks"), such that the
aggregate increased and/or accepted Revolving Commitments of the
Replacement Banks under Clauses (i) and (ii) above equal to the
Revolving Commitment of the Terminated Bank. The Notice of
Termination shall include the name of the Terminated Bank, the
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<PAGE> 24
date the termination will occur (the "Termination Date"), and the
Replacement Bank or Replacement Banks to which the Terminated Bank
will assign its Revolving Commitment and, if there will be more than
one Replacement Bank, the portion of the Terminated Bank's Revolving
Commitment to be assigned to each Replacement Bank. On the
Termination Date, (i) the Terminated Bank shall by execution and
delivery of an Assignment and Acceptance assign its Revolving
Commitment to the Replacement Bank or Replacement Banks (pro rata, if
there is more than one Replacement Bank, in proportion to the portion
of the Terminated Bank's Revolving Commitment to be assigned to each
Replacement Bank) indicated in the Notice of Termination and shall
assign to the Replacement Bank or Replacement Banks all of its rights
and obligations under this Agreement, including, without limitation,
each of its Revolving Loan (if any) then outstanding and participation
interest in Letters of Credit (if any) then outstanding pro rata as
aforesaid, (ii) the Terminated Bank shall endorse its Note, payable
without recourse, representation or warranty to the order of the
Replacement Bank or Replacement Banks (pro rata as aforesaid), (iii)
the Replacement Bank or Replacement Banks shall purchase the Note held
by the Terminated Bank (pro rata as aforesaid) at a price equal to the
unpaid principal amount thereon plus interest and fees accrued and
unpaid to the Termination Date, and (iv) the Replacement Bank or
Replacement Banks will thereupon (pro rata as aforesaid) succeed to
and be substitute in all respects for the Terminated Bank with like
effect as if becoming a Bank pursuant to the terms of Section 29(a)
hereof. For each assignment made under this Section 5(h) the
replacement Bank shall pay to the Agent the assignment fee provided
for in Section 29(a). The Borrower shall be responsible for payment
of all breakage fees associated with termination and Replacement
Banks, as set forth in Section 5(g) hereof.
6. COLLATERAL AND GUARANTIES. The obligation of the Borrower to
repay (i) with interest all amounts advanced under the Revolving Commitment as
evidenced by the Revolving Note or Notes, together with all renewals,
extensions, modifications and/or restatements of the Revolving Commitment
and/or the Revolving Note or Notes that are from time to time in effect, and
(ii) all fees, costs and expenses of the Banks, including reasonable attorneys'
fees incurred by the Banks under this Agreement (collectively, the "Secured
Obligations") shall be (A) secured by the pledge by Borrower of 66% of the
voting stock of Global Offshore and (B) guaranteed by a Guaranty executed by
each of the Guarantors in favor of the Banks dated of even date herewith,
whereby the Guarantors obligate themselves in solido with the Borrower. The
Guaranty to be executed by each Guarantor shall be in form of Exhibit "C"
hereto.
7. FEES.
(a) Unused Fee. Borrower shall pay to Agent for the
ratable benefit of the Banks an unused commitment fee (the "Unused
Fee") equivalent to the Unused Fee Rate times the unadvanced portion
of the Revolving Commitment (calculated on a daily basis) less the
outstanding amount of each unfunded Letter of Credit issued by the
Agent pursuant to Section 2(c) hereof. The Unused Commitment Fee
shall be payable in arrears on the last Business Day of each fiscal
quarter beginning June 30, 1997 with the final fee payment due on the
Maturity Date for any period then ending for which the Unused
Commitment Fee shall not have been theretofore paid. In the event the
Revolving Commitment terminates on any date prior to the end of any
such fiscal quarter, Borrower shall pay to the Agent for the ratable
benefit of the Banks, on the date of such termination, the Unused
Commitment Fee due for the period in which such termination occurs.
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<PAGE> 25
(b) The Letter of Credit Fee. Borrower shall pay to the
Agent the Letter of Credit fees required above in Section 2(d).
(c) Agency Fees. Borrower shall pay to the Agent certain
fees for acting as Agent hereunder in amounts to be negotiated between
Borrower and the Agent.
8. PREPAYMENTS.
(a) Voluntary Prepayments. Subject to any provisions of
this Agreement, Borrower may at any time and from time to time,
without penalty or premium except as required pursuant to Section 5(g)
hereof, prepay the Notes, in whole or in part. Each such prepayment
shall be made on at least one (1) Business Day's notice to Agent and
shall be in a minimum amount of at least $500,000 or whole multiples
of $100,000 in excess thereof or the unpaid balance on the Notes,
whichever is less, plus accrued interest thereon to the date of
prepayment.
(b) Mandatory Prepayment. In the event the Total
Outstandings ever exceed the Revolving Commitment as reduced from time
to time pursuant to Section 2(a) hereof, Borrower shall, within three
(3) Business Days after notification from the Agent of the occurrence
of such excess make an immediate mandatory prepayment of principal to
the Agent for the ratable benefit of the Banks sufficient to reduce
the Total Outstandings to an amount less than or equal to the
Revolving Commitment then in effect pursuant to Section 2(a) hereof
and, in addition, pay to the Agent for the ratable benefit of the
Banks any accrued, unpaid interest on such excess (through the date of
payment of the excess amount) when the Borrower makes its next regular
monthly interest payment pursuant to Section 4 hereof.
9. REPRESENTATIONS AND WARRANTIES. In order to induce the Banks
to enter into this Agreement, Borrower and each Guarantor hereby represent and
warrant to the Banks (which representations and warranties will survive the
delivery of the Notes) that:
(a) Creation and Existence. Borrower and each
Consolidated Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in
which it was formed and is duly qualified as a foreign corporation in
all jurisdictions wherein such qualification is necessary and failure
to qualify would result in a Material Adverse Effect. Borrower and
each Consolidated Subsidiary has all corporate power and authority to
own its properties and assets and to transact the business in which it
is engaged.
(b) Power and Authority. Borrower has all requisite
corporate power and authority to create and issue the Notes; and
Borrower and each Guarantor has all requisite corporate power and
authority to execute, deliver and perform the Loan Documents to which
it is a party, including this Agreement; and all corporate action on
Borrower's part requisite for the due creation and issuance of the
Notes and on Borrower's and each Guarantor's part for the due
execution, delivery and performance of the Loan Documents, including
this Agreement, has been duly and effectively taken.
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<PAGE> 26
(c) Binding Obligations. This Agreement does, and the
Notes and other Loan Documents upon their creation, issuance,
execution and delivery will, constitute valid and binding obligations
of Borrower enforceable in accordance with their respective terms
(except that enforcement may be subject to any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other
laws or judicial decisions now or hereafter in effect and relating to
or affecting the enforcement of creditors rights generally and by
general principles of equity, regardless of whether such enforcement
is considered in a proceeding in equity or at law). The Guaranties
upon their execution and delivery will constitute valid and binding
obligations of each Guarantor enforceable in accordance with their
respective terms (except that enforcement may be subject to any
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other laws or judicial decisions or similar
relief laws now or hereafter in effect and relating or affecting the
enforcement of creditor's rights generally and by general principals
of equity, regardless of whether such enforcement is considered
proceedings in equity or at law).
(d) No Legal Bar or Resultant Lien. The Notes and the
Loan Documents, including this Agreement, do not and will not, to the
best of Borrower's or the Guarantors' knowledge violate any provisions
of any contract, agreement, law, regulation, order, injunction,
judgment, decree or writ to which Borrower or any Guarantor is
subject, or result in the creation or imposition of any lien or other
encumbrance upon any assets or properties of Borrower or any
Guarantor, other than those contemplated by this Agreement.
(e) No Consent. The execution, delivery and performance
by Borrower of the Notes and the Loan Documents, including the
Agreement, and the execution and delivery by each Guarantor of the
Guaranties and this Agreement, do not require the consent or approval
of any other Person, including without limitation any regulatory
authority or governmental body of the United States or any state
thereof or any political subdivision of the United States or any state
thereof.
(f) Financial Condition. The unaudited consolidated
Financial Statements of Borrower dated December 31, 1996, which have
been delivered to the Agent fairly present the consolidated financial
position and results of operations and cash flow of the Borrower in
all material respects at the date and for the period indicated in
accordance with GAAP (in the case of unaudited interim Financial
Statements subject to year-end adjustments and the omission of certain
footnotes). As of the Date of this Agreement, no change has occurred
since the date of the last Financial Statement delivered to Agent in
the condition, financial or otherwise, of Borrower which is reasonably
expected to have a Material Adverse Effect, except as disclosed in
Schedule "1" attached hereto.
(g) Liabilities. Neither Borrower nor any Consolidated
Subsidiary has any material (individually or in the aggregate)
liability, absolute or contingent, except as disclosed in the
Financial Statements delivered to the Agent or on Schedule "2"
attached hereto. No unusual or unduly burdensome restrictions or
restraint exists by contract, law or governmental regulation or
otherwise relative to the business, assets or properties of Borrower
or any Consolidated Subsidiary which is reasonably expected to have a
Material Adverse Effect.
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<PAGE> 27
(h) Litigation. As of the Date of this Agreement except
as described in the Financial Statements in its 1996 Securities and
Exchange Commission Form 10K, or as otherwise disclosed to the Banks
in Schedule "3" attached hereto, there is no litigation, legal or
administrative proceeding, investigation or other action of any nature
pending or, to the knowledge of Borrower or any Consolidated
Subsidiary threatened against or affecting Borrower or any
Consolidated Subsidiary which involves the possibility of any judgment
or liability not fully covered by insurance, and which is reasonably
expected to have a Material Adverse Effect.
(i) Taxes; Governmental Charges. As of the Date of this
Agreement, Borrower and each Consolidated Subsidiary has filed all tax
returns and reports required to have been filed and has paid all
taxes, assessments, fees and other governmental charges levied upon it
or its assets, properties or income which are due and payable,
including interest and penalties, the failure of which to pay could
reasonably be expected to have a Material Adverse Effect on a
consolidated basis, except such as are being contested in good faith
by appropriate proceedings and for which reserves that it reasonably
believes to be adequate for the payment thereof as required by GAAP
has been provided and levy and execution thereon have been stayed and
continue to be stayed.
(j) Titles, Etc. Borrower and each Consolidated
Subsidiary has good and marketable title to all of its respective
material assets, free and clear of all Liens except Permitted Liens.
(k) Defaults. Neither Borrower nor any Consolidated
Subsidiary is in default and no event or circumstance has occurred
which, but for the passage of time or the giving of notice, or both,
would constitute a default under any loan or credit agreement,
indenture, mortgage, deed of trust, security agreement or other
agreement or instrument to which Borrower or any Consolidated
Subsidiary is a party that would be reasonably expected to have a
Material Adverse Effect. No Event of Default hereunder has occurred
and is continuing.
(l) Use of Proceeds; Margin Stock. The availability
under the Revolving Commitment will be used by Borrower for the
purposes of (i) acquisition and expansion of its business, (ii)
financing of its construction needs, (iii) for Letters of Credit, and
(iv) for general corporate purposes. Borrower is not engaged
principally or as one of its material activities in the business of
extending credit for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation U of the Board of Governors of the
Federal Reserve System (12 C.F.R. Part 221), or for the purpose of
reducing or retiring any indebtedness which was originally incurred to
purchase or carry a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of
said Regulation U.
Neither Borrower nor any person or entity acting on behalf of
Borrower has taken or will take any action which might cause the loans
hereunder or any of the Loan Documents, including this Agreement, to
violate Regulation U or any other regulation of
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<PAGE> 28
the Board of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934 or any rule or regulation thereunder,
in each case as now in effect or as the same may hereafter be in
effect.
(m) Location of Business and Offices. The principal
place of business and chief executive offices of Borrower and each
Consolidated Subsidiary is located at the address stated in Section 16
hereof.
(n) Compliance with the Law. To the best of Borrower's
and each Consolidated Subsidiary's knowledge, neither Borrower nor any
Consolidated Subsidiary:
(i) is in violation of any law, judgment, decree,
order, ordinance, or governmental rule or regulation to which
Borrower or any Consolidated Subsidiary, or any of their
assets or properties are subject; or
(ii) has failed to obtain any license, permit,
franchise or other governmental authorization necessary to the
ownership of any of their assets or properties or the conduct
of their business;
which violation or failure is reasonably expected to have a Material
Adverse Effect.
(o) No Material Misstatements. No written information,
exhibit or report furnished by Borrower or any Guarantor to the Banks
in connection with the negotiation of this Agreement contained a
misstatement of material fact or omitted to state a material fact or
any fact necessary to make the statement contained therein not
materially misleading.
(p) ERISA. Borrower and each Consolidated Subsidiary are
in compliance in all material respects with the applicable provisions
of ERISA, and no "reportable event", as such term is defined in
Section 403 of ERISA, has occurred with respect to any Plan of
Borrower.
(q) Public Utility Holding Company Act. Borrower is not
a "holding company", or "subsidiary company" of a "holding company",
or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company", or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(r) Subsidiaries. As of the date of this Agreement, all
of Borrower's Subsidiaries are listed on Schedule "4" hereto.
(s) Environmental Matters. Except as disclosed on
Schedule "5", neither Borrower nor any Consolidated Subsidiary (i) has
received notice of any Environmental Liability, (ii) has received
notice of any threatened or actual liability in connection with the
release of any toxic or hazardous waste into the environment which
would be reasonably likely to individually or in the aggregate have a
Material Adverse Effect or (iii) has received notice of any federal or
state investigation evaluating whether any remedial action is needed
to respond to a release or threatened release of any toxic or
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<PAGE> 29
hazardous waste into the environment for which Borrower or any
Consolidated Subsidiary is or may be liable which would be reasonably
likely to result in a Material Adverse Effect.
(t) Fiscal Year. Borrower's fiscal year ends on March 31.
(u) Guarantors. All of Borrower's Consolidated
Subsidiaries (excluding Global Offshore) that have total assets of
$5,000,000.00 or more and annual gross revenues of $5,000,000.00 or
more are Guarantors. All other non-guaranteeing Consolidated
Subsidiaries (excluding Global Offshore), taken as a whole, have less
than 10% of the total assets and total annual gross revenues of
Borrower and its Consolidated Subsidiaries, taken as a whole.
10. CONDITIONS OF LENDING.
(a) The effectiveness of this Agreement, and the
obligation to make the initial Advance under the Revolving Commitment
shall be subject to satisfaction of the following conditions
precedent:
(i) Execution and Delivery. Borrower shall each
have executed and delivered the Agreement, a pledge agreement
and blank stock power covering 66% of the outstanding stock of
Global Offshore, and other required documents, all in form and
substance satisfactory to the Agent;
(ii) Guarantor's Execution and Delivery. Each
Guarantor shall have executed and delivered a Guaranty and
other required documents, all in form and substance
satisfactory to Agent;
(iii) Legal Opinion. The Agent shall have received
from Borrower's and Guarantors' legal counsel a favorable
legal opinion in form and substance reasonably satisfactory to
Agent and its counsel;
(iv) Corporate Resolutions. The Agent shall have
received appropriate certified corporate resolutions of
Borrower and each Guarantor;
(v) Good Standing. The Agent shall have received
evidence of existence and good standing for Borrower and each
Guarantor;
(vi) Incumbency. The Agent shall have received a
signed certificate of Borrower and each Guarantor, certifying
the names of the officers of Borrower and each Guarantor
authorized to sign loan documents on behalf of Borrower and
each Guarantor, together with the true signatures of each such
officer. The Agent may conclusively rely on such certificate
until the Agent receives a further certificate of Borrower or
any Guarantor canceling or amending the prior certificate and
submitting signatures of the officers named in such further
certificate;
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<PAGE> 30
(vii) Articles of Incorporation and Bylaws. The
Agent shall have received copies of the Articles of
Incorporation of Borrower and each Guarantor and all
amendments thereto, certified by the Secretary of State of the
State of its incorporation, and a copy of the bylaws of
Borrower and each Guarantor and all amendments thereto,
certified by Borrower and each Guarantor as being true,
correct and complete;
(viii) Payment of Fees. The Agent shall have
received payment in full of all fees due at the Effective
Date.
(ix) Representation and Warranties. The
representations and warranties of Borrower and each
Consolidated Subsidiary under this Agreement are true and
correct in all material respects as of such date, as if then
made (except to the extent that such representations and
warranties related solely to an earlier date or the Majority
Banks shall have consented to the contrary);
(x) No Event of Default. No Event of Default
shall have occurred and be continuing nor shall any event have
occurred or failed to occur which, with the passage of time or
service of notice, or both, would constitute an Event of
Default;
(xi) Other Documents. Agent shall have received
such other instruments and documents incidental and
appropriate to the transaction provided for herein as Bank or
its counsel may reasonably request, and all such documents
shall be in form and substance reasonably satisfactory to the
Agent; and
(xii) Legal Matters Satisfactory. All legal
matters incident to the consummation of the transactions
contemplated hereby shall be reasonably satisfactory to
special counsel for Agent retained at the expense of Borrower.
(b) The obligation of the Banks to make any Advance on
the Revolving Commitment (including the initial Advance) shall be
subject to the following additional conditions precedent that, at the
date of making each such Advance and after giving effect thereto:
(i) Representation and Warranties. The
representations and warranties of Borrower and each
Consolidated Subsidiary under this Agreement are true and
correct in all material respects as of such date, as if then
made (except to the extent that such representations and
warranties related solely to an earlier date or the Majority
Banks shall have consented to the contrary);
(ii) No Event of Default. No Event of Default
shall have occurred and be continuing nor shall any event have
occurred or failed to occur which, with the passage of time or
service of notice, or both, would constitute an Event of
Default;
(iii) Legal Matters Satisfactory. All legal
matters incident to the issuance of any Letter of Credit
hereunder shall be reasonably satisfactory to special counsel
for Agent retained at the expense of Borrower.
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<PAGE> 31
11. AFFIRMATIVE COVENANTS. A deviation from the provisions of
this Section 11 shall not constitute an Event of Default under this Agreement
if such deviation is consented to in writing by Majority Banks. Without the
prior written consent of Majority Banks, Borrower and each Guarantor will (and
Borrower will cause each other Consolidated Subsidiary to), at all times comply
with the covenants contained in this Section 11 from the date hereof and for so
long as the Revolving Commitment is in existence or any part of the Revolving
Loan is outstanding.
(a) Financial Statements and Reports. Borrower shall
promptly furnish to the Agent from time to time upon request such
information regarding the business and affairs and financial condition
of Borrower, as the Agent may reasonably request, and will furnish to
the Agent:
(i) Annual Financial Statements. As soon as
available, and in any event within ninety (90) days after the
close of each fiscal year, the annual audited consolidated and
consolidating Financial Statements of Borrower, prepared in
accordance with GAAP;
(ii) Quarterly Financial Statements. As soon as
available, and in any event within forty-five (45) days after
the end of each fiscal quarter of each year, the quarterly
unaudited consolidated Financial Statements of Borrower
prepared in accordance with GAAP and certified by an
authorized officer of Borrower;
(iii) SEC Reports. As soon as available, and in
any event within five (5) days of filing, copies of all
filings by Borrower with the Securities and Exchange
Commission; and
(iv) Additional Information. Promptly upon
request of the Agent from time to time any additional
financial information or other information that the Agent may
reasonably request.
All additional information referred to in Subsection 11(a)(iv) above
shall be in such detail as the Agent may reasonably request concerning
the Borrower and the Guarantors.
(b) Certificates of Compliance. Concurrently with the
furnishing of the annual Financial Statements pursuant to Subsection
11(a)(i) hereof and the quarterly unaudited Financial Statements
pursuant to Subsection 11(a)(ii) hereof, Borrower will furnish or
cause to be furnished to the Agent a certificate in the form of
Exhibit "D" attached hereto, signed by the President or Chief
Financial Officer of Borrower.
(c) Taxes and Other Liens. Borrower and each
Consolidated Subsidiary will pay and discharge promptly all lawful
taxes, assessments and governmental charges or levies imposed upon
Borrower or any Consolidated Subsidiary or upon the income or any
assets or property of Borrower or any Consolidated Subsidiary as well
as all claims of any kind (including claims for labor, materials,
supplies and rent) which, if unpaid, might become a Lien or other
encumbrance upon any or all of the assets or property of Borrower or
any Consolidated Subsidiary and which could reasonably be expected to
result in a Material Adverse Effect; provided, however, that Borrower
and each Consolidated Subsidiary shall not be required to pay any such
tax, assessment, charge, levy or claim if the amount, applicability or
validity thereof shall currently be contested
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in good faith by appropriate proceedings diligently conducted, levy
and execution thereon have been stayed and continue to be stayed and
if such Borrower or Consolidated Subsidiary shall have set up adequate
reserves therefor, if required, under GAAP.
(d) Compliance with Laws. Borrower and each Consolidated
Subsidiary will observe and comply with all applicable laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions,
rules, regulations, orders and restrictions relating to environmental
standards or controls or to energy regulations of all federal, state,
county, municipal and other governments, departments, commissions,
boards, agencies, courts, authorities, officials and officers,
domestic or foreign, where the failure to so observe and comply is
reasonably expected to have a Material Adverse Effect.
(e) Further Assurances. Borrower will cure promptly any
defects in the creation and issuance of the Note and the execution and
delivery of the Notes and the Loan Documents, including this
Agreement. Each Guarantor will cure promptly all defects in execution
and delivery of their Guaranties. Borrower and each Guarantor at
their sole expense will promptly execute and deliver to Agent upon its
reasonable request all such other and further documents, agreements
and instruments in compliance with or accomplishment of the covenants
and agreements in this Agreement, or to correct any omissions in the
Note or more fully to state the obligations set out herein.
(f) Performance of Obligations. Borrower will pay the
Notes and other obligations incurred by it hereunder according to the
reading, tenor and effect thereof and hereof.
(g) Insurance. Borrower and each Consolidated Subsidiary
now maintains and will continue to maintain insurance with insurers
which they reasonably believe to be financially sound and reputable
with respect to its assets against such liabilities, fires,
casualties, risks and contingencies and in such types and amounts as
is customary in the case of persons engaged in the same or similar
businesses and similarly situated and in amounts which are consistent
with prudent business practices. Upon request of the Agent, Borrower
and each Consolidated Subsidiary will furnish or cause to be furnished
to the Agent from time to time a summary of the respective insurance
coverage of Borrower and each Consolidated Subsidiary in form and
substance satisfactory to the Agent, and, if requested, will furnish
the Agent copies of the applicable policies.
(h) Accounts and Records. Borrower and each Consolidated
Subsidiary will keep books, records and accounts in which full, true
and correct entries will be made of all dealings or transactions in
relation to its business and activities, prepared in a manner
consistent with prior years, subject to changes suggested by
Borrower's or the Consolidated Subsidiary's auditors.
(i) Right of Inspection. Borrower and each Consolidated
Subsidiary will permit any officer, employee or agent of the Agent to
examine Borrower's and each Consolidated Subsidiary's books, records
and accounts, and take copies and extracts therefrom, all at such
reasonable times during normal business hours and as often as the
Agent may reasonably request.
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(j) Notice of Certain Events. Borrower and the
Guarantors shall promptly notify the Agent if Borrower or any
Guarantor learns of the occurrence of (i) any event which constitutes
an Event of Default together with a detailed statement by Borrower or
such Guarantor of the steps being taken to cure the Event of Default;
or (ii) any legal, judicial or regulatory proceedings affecting
Borrower, any Consolidated Subsidiary, or any of the assets or
properties of Borrower or any Consolidated Subsidiary which, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect; or (iii) any dispute between Borrower or any
Consolidated Subsidiary and any governmental or regulatory body or any
other person or entity which, if adversely determined, might
reasonably be expected to cause a Material Adverse Effect; or (iv) any
other matter which in Borrower's or any Guarantor's opinion is
reasonably expected to have a Material Adverse Effect.
(k) ERISA Information and Compliance. Borrower and each
Consolidated Subsidiary will promptly furnish to the Agent immediately
upon becoming aware of the occurrence of any "reportable event", as
such term is defined in Section 4043 of ERISA, or of any "prohibited
transaction", as such term is defined in Section 4975 of the Internal
Revenue Code of 1954, as amended, in connection with any Plan or any
trust created thereunder, a written notice signed by the chief
financial officer of Borrower or such Consolidated Subsidiary
specifying the nature thereof, what action Borrower is taking or
proposes to take with respect thereto, and, when known, any action
taken by the Internal Revenue Service with respect thereto.
(l) Environmental Reports and Notices. Borrower and each
Consolidated Subsidiary will deliver to the Agent (i) notice, in
writing, promptly upon Borrower's or any Consolidated Subsidiary's
receipt of notice or otherwise learning of any claim, demand, action,
event, condition, report or investigation indicating any potential or
actual liability arising in connection with (x) the non-compliance
with or violation of the requirements of any Environmental Law which
reasonably could be expected to have a Material Adverse Effect; (y)
the release or threatened release of any toxic or hazardous waste into
the environment which reasonably could be expected to have a Material
Adverse Effect, or (ii) the existence of any Environmental Lien on any
properties or assets of Borrower or any Consolidated Subsidiary, and
Borrower or any Consolidated Subsidiary shall immediately deliver a
copy of any such notice to Agent. Upon request of Agent, Borrower and
each Consolidated Subsidiary will further deliver to the Agent a copy
of all reports, notices or other information reasonably required by
Agent in connection with the above items (i) and (ii).
(m) Change of Principal Place of Business. Borrower and
each Guarantor shall give Agent at least thirty (30) days prior
written notice of its intention to move its principal place of
business from the address set forth in Section 16 hereof.
(n) Payables and Other Indebtedness. Borrower and each
Consolidated Subsidiary shall pay their trade payables and other Debt
that arise in the ordinary course of business promptly as they become
due except to the extent any such trade payables or Debt are being
contested in good faith.
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<PAGE> 34
(o) New Guarantors. Borrower shall cause any
Consolidated Subsidiary (excluding Global Offshore) that at any time
after the Effective Date has both total assets of $5,000,000.00 or
more and annual gross revenues as of the end of its fiscal year of
$5,000,000.00 or more to execute and deliver to the Banks a continuing
guaranty in form and substance similar to the Guaranties, together
with the same information provided by the other Guarantors pursuant to
Section 10(a)(iv) through (vii) of this Agreement. In the event that
at any time after the Effective Date, the total assets and annual
gross revenues of all of the non-guaranteeing Consolidated
Subsidiaries (excluding Global Offshore), taken as a whole, exceed 10%
of the total assets and total annual gross revenues of all
Consolidated Subsidiaries, taken as a whole, Borrower shall cause one
or more of such non-guaranteeing Consolidated Subsidiaries (excluding
Global Offshore) to execute and deliver continuing guaranties in form
and substance similar to the Guaranties so that after the execution
and delivery of such Guaranties the total assets and annual gross
revenues of the then non-guaranteeing Consolidated Subsidiaries
(excluding Global Offshore) shall be 10% or less than the total assets
and total annual gross revenues of all Consolidated Subsidiaries,
taken as a whole.
12. NEGATIVE COVENANTS. A deviation from the provisions of this
Section 12 shall not constitute an Event of Default under this Agreement if
such deviation is consented to in writing by Majority Banks. Without the prior
written consent of Majority Banks, Borrower and each Guarantor will (and
Borrower will cause each other Consolidated Subsidiary) at all times comply
with the covenants contained in this Section 12 from the date hereof and for so
long as the Revolving Commitment is in existence or any part of the Revolving
Loan is outstanding.
(a) Negative Pledge. Neither Borrower nor any
Consolidated Subsidiary shall without the prior written consent of the
Banks create, incur, assume or permit to exist any Lien, on any of its
assets or properties except Permitted Liens.
(b) Current Ratio. Borrower will not allow its ratio of
Current Assets to Current Liabilities to be less than 1.2 to 1.0 as of
the end of any fiscal quarter.
(c) Minimum Fixed Charge Ratio. Borrower will not allow
its Fixed Charge Ratio to ever be less than 2.0 to 1.0, as of the end
of any fiscal quarter.
(d) Maximum Total Debt Ratio. Borrower will not allow
its ratio of total Debt plus Capital Lease Obligations, to total Debt
plus Shareholder's Equity, as determined in accordance with GAAP, to
ever exceed 50%, as of the end of any fiscal quarter.
(e) Pre-Tax Losses. Borrower shall not incur or suffer
negative Pre-Tax Income for any fiscal year, calculated at the end of
each fiscal year.
(f) Consolidations, Mergers and Acquisitions. Neither
Borrower nor any Consolidated Subsidiary will consolidate or merge
with or into any other Person, except that (i) Borrower or any
Consolidated Subsidiary may merge with another Person if Borrower or
such Consolidated Subsidiary is the surviving entity in such merger
and (ii) any Consolidated Subsidiary may merge with another
Consolidated Subsidiary if, after giving effect to any such merger or
consolidation, no Default or Event of Default shall have occurred and
be continuing. Neither Borrower nor any Consolidated Subsidiary will
acquire any business entity for a cost or purchase obligation
exceeding $5,000,000 if the
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<PAGE> 35
business entity to be acquired is outside Borrower's or such
Consolidated Subsidiary's Primary Lines of Business as they exist on
the Effective Date.
(g) Debts, Guaranties and Other Obligations. Neither
Borrower nor any Consolidated Subsidiary will (A) incur, create,
assume or in any manner become or be liable in respect of any Debt,
(B) issue preferred stock that is mandatorily redeemable at any time
prior to the Revolving Maturity Date or (C) guarantee or otherwise in
any manner become or be liable in respect of any Debt of any other
person or entity, whether by agreement to purchase the Debt of any
other person or entity or agreement for the furnishing of funds to any
other person or entity through the purchase or lease of goods,
supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or
discharging the Debt of any other person or entity, or otherwise,
except that the foregoing restrictions shall not apply to:
(i) the Notes and any renewal or increase
thereof, or other indebtedness of Borrower and any
Consolidated Subsidiary heretofore disclosed to Banks in
Borrower's or any Financial Statements or on Schedule "2"
hereto; or
(ii) taxes, assessments or other government
charges which are not yet due or are being contested in good
faith by appropriate action promptly initiated and diligently
conducted, if such reserve as shall be required by GAAP shall
have been made therefor and levy and execution thereon have
been stayed and continue to be stayed; or
(iii) indebtedness for borrowed money not in excess
of $5,000,000 in the aggregate during any fiscal year; or
(iv) indebtedness (other than in connection with a
loan or lending transaction) incurred in the ordinary course
of business; or
(v) guarantees by the Borrower required for
normal operations of the Consolidated Subsidiaries in the
ordinary course of business; or
(vi) guarantees by the Borrower or any of the
Consolidated Subsidiaries to third parties in an aggregate
amount not to exceed $500,000; or
(vii) performance and currency exchange risk
guarantees given by Borrower on behalf of CCC Fabricaciones y
Construcciones S.A. de C.V. ("CCC") for job and project
completion costs performed in CCC's normal day-to-day
operations, which performance and currency exchange risk
guarantees involve an amount not to exceed in the aggregate
outstanding at any one time the sum of $50,000,000.00; or
(viii) guarantees of obligations of CCC to Bank One,
Texas, N.A. as Agent for itself and other financial
institutions pursuant to that certain Credit Agreement dated
of even date herewith among CCC and Bank One, Texas, N.A., et
al.; or
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<PAGE> 36
(ix) renewals or extensions of any or all of the
foregoing.
(h) Nature of Business. Neither Borrower nor any
Consolidated Subsidiary will permit any material change to be made in
its Primary Lines of Business as carried on at the date hereof, except
to the extent permitted by the last sentence of Section 12(f).
(i) Transactions with Subsidiaries and Affiliates.
Borrower will not enter into any transaction with any Affiliate other
than the Consolidated Subsidiaries and CCC, except transactions upon
terms that are no less favorable to it than would be obtained in a
transaction negotiated at arm's length with an unrelated third party.
(j) Change in Key Management. The Borrower shall not
permit any Change of Key Management.
(k) Dividends. The Borrower shall not declare or pay any
dividend, purchase, redeem or otherwise acquire for value any of its
preferred or common stock now or hereafter outstanding, return any
capital to its stockholders or make any distribution of its assets to
a stockholder as such, except that the foregoing shall not apply to
(i) cash dividends in an amount not in excess of thirty percent (30%)
of Borrower's cumulative Net Income after March 31, 1996, and (ii)
stock dividends; provided, however, that immediately before, and after
giving effect thereto, no Default or Event of Default shall exist.
(l) Loans and Advances to Unaffiliated Persons. Neither
Borrower nor any Consolidated Subsidiary shall make or permit to
remain outstanding any loans or advances to any unaffiliated Person or
entity, except the foregoing restriction shall not apply to:
(i) loans or advances to any Person which are set
forth in the Financial Statements of the Borrower and the
Consolidated Subsidiaries heretofore furnished to the Banks;
or
(ii) loans or advances made to CCC; or
(iii) loans or advances not in excess of $500,000
in the aggregate outstanding at any one time; or
(iv) loans or advances to employees pursuant to
employee benefit arrangements or otherwise consistent with
Borrower's or any Consolidated Subsidiary's practice.
(m) Investments. Neither Borrower nor any Consolidated
Subsidiary shall make any investments in any Person or entity, except
such restriction shall not apply to:
(i) investments, direct obligations or repurchase
agreements by the United States of America or any agency or
instrumentality thereof; or
(ii) investments in certificates of deposit issued
by Agent or certificates of deposit or banker's acceptances
with maturities of less than
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<PAGE> 37
one year, issued by other commercial banks in the United
States having capital and surplus in excess of $500,000,000; or
(iii) commercial paper rated in the highest two
short-term debt categories by at least one of the six NRSRO's;
or
(iv) corporate notes rated A or better by Moody's
or Standard & Poors; or
(v) Money Market Mutual Funds, master notes and
private placements rated by one or more NRSRO's as Tier 1 or
the equivalent; or
(vi) investments in its Primary Lines of Business;
or
(vii) investments permitted by the last sentence of
Section 12(f).
(n) Sale of Assets. Neither Borrower nor any
Consolidated Subsidiary shall sell, transfer or otherwise dispose of
any assets in excess of $5,000,000.00 in any fiscal year, other than
assets sold in the ordinary course of their respective businesses.
(o) Stock of Global Offshore. Borrower shall not (i)
sell, transfer or otherwise dispose of any of the voting stock of
Global Offshore or (ii) create, incur, assume or permit to exist any
Lien, on any of the voting stock of Global Offshore except the Lien
granted to the Banks and Permitted Liens.
13. EVENTS OF DEFAULT. Any one or more of the following events
shall be considered an "Event of Default" as that term is used herein:
(a) Borrower shall fail to pay when due or declared due
the principal of, and the interest on, the Notes, or any fee or any
other indebtedness or Secured Obligation of Borrower or any Guarantor
incurred pursuant to this Agreement or any other Loan Document; or
(b) Any representation or warranty made under this
Agreement or in the Guaranties, or in any certificate or statement
furnished or made to the Banks pursuant hereto, or in connection
herewith, or in connection with any document furnished hereunder,
shall prove to be untrue in any material respect as of the date on
which such representation or warranty is made (or deemed made), or any
representation, statement (including financial statements),
certificate, report or other data furnished or to be furnished or made
under any Loan Document, including this Agreement, proves to have been
untrue in any material respect, as of the date as of which the facts
therein set forth were stated or certified; or
(c) Default shall be made in the due observance or
performance of any of the covenants or agreements contained in the
Loan Documents, including this Agreement (excluding covenants
contained in Section 12(a), (b), (c), (d), (e), (f), (g), (k) and (n)
of this Agreement for which there is not cure period), and such
default shall continue for more than thirty (30) days after written
notice thereof from the Agent; or
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<PAGE> 38
(d) Default shall be made in the due observance or
performance of the covenants contained in Section 12(a), (b), (c),
(d), (e), (f), (g), (k) and (n) of this Agreement; or
(e) Default shall be made in respect of any obligation
for borrowed money, other than the Notes, in an aggregate outstanding
principal amount of $1,000,000 or more, for which Borrower or any
Consolidated Subsidiary is liable (directly, by assumption, as
guarantor or otherwise), or any obligations secured by any mortgage,
pledge or other security interest, lien, charge or encumbrance with
respect thereto, on any asset or property of Borrower or any
Consolidated Subsidiary or in respect of any agreement relating to any
such obligations unless Borrower or such Consolidated Subsidiary is
not liable for same (i.e., unless remedies or recourse for failure to
pay such obligations is limited to foreclosure of the collateral
security therefor), and if such default shall continue beyond the
applicable grace period, if any; or
(f) Borrower or any Consolidated Subsidiary shall
commence a voluntary case or other proceedings 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 an appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
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 fail
generally to pay its debts as they become due, or shall take any
corporate action authorizing the foregoing; or
(g) An involuntary case or other proceeding, shall be
commenced against Borrower or any Consolidated Subsidiary seeking
liquidation, reorganization or other relief with respect to it or its
debts under any bankruptcy, insolvency or similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of
ninety (90) days; or an order for relief shall be entered against
Borrower or any Consolidated Subsidiary under the federal bankruptcy
laws as now or hereinafter in effect; or
(h) A final judgment or order for the payment of money in
excess of $5,000,000 (or judgments or orders aggregating in excess of
$5,000,000) shall be rendered against Borrower or any of the
Consolidated Subsidiaries and such judgments or orders are not fully
covered by insurance shall continue unsatisfied and unstayed for a
period of sixty (60) days after such judgment or order becomes final;
or
(i) A Change of Key Management shall occur, without
succession reasonably acceptable to Agent.
Upon occurrence of any Event of Default specified in Subsections 13(f)
and (g) hereof, the entire principal amount due under the Note and all interest
then accrued thereon, and any other liabilities of Borrower hereunder, shall
become immediately due and payable all without
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<PAGE> 39
notice and without presentment, demand, protest, notice of protest or dishonor
or any other notice of default of any kind, all of which are hereby expressly
waived by Borrower. In any other Event of Default, the Agent, upon request of
Majority Banks, shall by notice to Borrower declare the principal of, and all
interest then accrued on, the Notes and any other liabilities hereunder to be
forthwith due and payable, whereupon the same shall forthwith become due and
payable without presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other notice of any kind, all of which Borrower and
each Guarantor hereby expressly waive, anything contained herein or in the Note
to the contrary notwithstanding. Nothing contained in this Section 13 shall be
construed to limit or amend in any way the Events of Default enumerated in the
Note, or any other document executed in connection with the transaction
contemplated herein.
Upon the occurrence and during the continuance of any Event of
Default, the Banks are hereby authorized at any time and from time to time,
without notice to Borrower or any Guarantor (any such notice being expressly
waived by Borrower and the Guarantors), 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 any of the Banks to or for the
credit or the account of Borrower or any Guarantor against any and all of the
indebtedness of Borrower and the Guarantors under the Notes and the Loan
Documents, including this Agreement, irrespective of whether or not the Banks
shall have made any demand under the Loan Documents, including this Agreement
or the Notes and although such indebtedness may be unmatured. Any amount
set-off by any of the Banks shall be applied against the indebtedness owed the
Banks by Borrower and the Guarantors pursuant to this Agreement and the Notes.
The Banks agree promptly to notify Borrower and the Guarantors after any such
setoff and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of the Bank
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Banks may have.
14. THE AGENT AND THE BANKS.
(a) Appointment and Authorization. Each Bank hereby
appoints Agent as its nominee and agent, in its name and on its
behalf: (i) to act as nominee for and on behalf of such Bank in and
under all Loan Documents; (ii) to arrange the means whereby the funds
of Banks are to be made available to Borrower under the Loan
Documents; (iii) to take such action as may be requested by any Bank
under the Loan Documents (when such Bank is entitled to make such
request under the Loan Documents); (iv) to receive all documents and
items to be furnished to Banks under the Loan Documents; (v) to be the
secured party, mortgagee, beneficiary, and similar party in respect
of, and to receive, as the case may be, any collateral for the benefit
of Banks; (vi) to promptly distribute to each Bank all material
information, requests, documents and items received from Borrower
under the Loan Documents; (vii) to promptly distribute to each Bank
such Bank's Pro Rata Part of each payment or prepayment (whether
voluntary, as proceeds of insurance thereon, or otherwise) in
accordance with the terms of the Loan Documents and (viii) to deliver
to the appropriate Persons requests, demands, approvals and consents
received from Banks. Each Bank hereby authorizes Agent to take all
actions and to exercise such powers under the Loan Documents as are
specifically delegated to such Agent by the terms hereof or thereof,
together with all other powers reasonably incidental thereto. With
respect to its commitments hereunder and the Notes issued to it, Agent
and
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<PAGE> 40
any successor Agent shall have the same rights under the Loan
Documents as any other Bank and may exercise the same as though it
were not the Agent; and the term "Bank" or "Banks" shall, unless
otherwise expressly indicated, include Agent and any successor Agent
in its capacity as a Bank. Agent and any successor Agent and its
Affiliates may accept deposits from, lend money to, act as trustee
under indentures of and generally engage in any kind of business with
Borrower, and any person which may do business with Borrower, all as
if Agent and any successor Agent were not Agent hereunder and without
any duty to account therefor to the Banks; provided that, if any
payments in respect of any property (or the proceeds thereof) now or
hereafter in the possession or control of Agent which may be or become
security for the obligations of Borrower arising under the Loan
Documents by reason of the general description of indebtedness secured
or of property contained in any other agreements, documents or
instruments related to any such other business shall be applied to
reduction of the obligations of Borrower arising under the Loan
Documents, then each Bank shall be entitled to share in such
application according to its pro rata part thereof. Each Bank, upon
request of any other Bank, shall disclose to all other Banks all
indebtedness and liabilities, direct and contingent, of Borrower to
such Bank as of the time of such request.
(b) Note Holders. From time to time as other Banks
become a party to this Agreement after receiving the consent of
Borrower, Agent shall obtain execution by Borrower of additional Notes
in amounts representing the Revolving Commitment of each such new
Bank, up to an aggregate face amount of all Revolving Notes not
exceeding the Revolving Commitment. The obligation of such Bank shall
be governed by the provisions of this Agreement, including but not
limited to, the obligations specified in Section 2 hereof. From time
to time, Agent may require that the Banks exchange their Notes for
newly issued Notes to better reflect the Revolving Commitments of the
Banks. Agent may treat the payee of any Note as the holder thereof
until written notice of transfer has been filed with it, signed by
such payee and in form satisfactory to Agent.
(c) Consultation with Counsel. Banks agree that Agent
may consult with legal counsel selected by Agent and shall not be
liable for any action taken or suffered in good faith by it in
accordance with the advice of such counsel.
(d) Documents. Agent shall not be under a duty to
examine or pass upon the validity, effectiveness, enforceability,
genuineness or value of any of the Loan Documents or any other
instrument or document furnished pursuant thereto or in connection
therewith, and Agent shall be entitled to assume that the same are
valid, effective, enforceable and genuine and what they purport to be.
(e) Resignation or Removal of Agent. Subject to the
appointment and acceptance of a successor Agent as provided below,
Agent may resign at any time by giving written notice thereof to Banks
and Borrower, and Agent may be removed at any time with or without
cause by Majority Banks. If no successor Agent has been s so
appointed by Majority Banks (and approved by Borrower) and has
accepted such appointment within 30 days after the retiring Agent's
giving of notice of resignation or removal of the retiring Agent, then
the retiring Agent may, on behalf of Banks, appoint a successor Agent.
Any successor Agent must be approved by Borrower, which approval will
not be unreasonably withheld. Upon the acceptance of any appointment
as Agent
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<PAGE> 41
hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights and duties of the
retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this
Section 14 shall continue in effect for its benefit in respect to any
actions taken or omitted to be taken by it while it was acting as
Agent.
(f) Responsibility of Agent. It is expressly understood
and agreed that the obligations of Agent under the Loan Documents are
only those expressly set forth in the Loan Documents and that Agent,
as the case may be, shall be entitled to assume that no Default or
Event of Default has occurred and is continuing, unless Agent, as the
case may be, has actual knowledge of such fact or has received notice
from a Bank or Borrower that such Bank or Borrower consider that a
Default or an Event of Default has occurred and is continuing and
specifying the nature thereof. Neither Agent nor any of their
directors, officers, attorneys or employees shall be liable for any
action taken or omitted to be taken by them under or in connection
with the Loan Documents, except for its or their own gross negligence
or willful misconduct. Agent shall incur no liability under or in
respect of any of the Loan Documents by acting upon any notice,
consent, certificate, warranty or other paper or instrument believed
by it to be genuine or authentic or to be signed by the proper party
or parties, or with respect to anything which it may do or refrain
from doing in the reasonable exercise of its judgment, or which may
seem to it to be necessary or desirable.
Agent shall not be responsible to Banks for any of Borrower's
or any Guarantor's recitals, statements, representations or warranties
contained in any of the Loan Documents, or in any certificate or other
document referred to or provided for in, or received by any Bank
under, the Loan Documents, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of or any of the Loan
Documents or for any failure by Borrower or any Guarantor to perform
any of their obligations hereunder or thereunder. Agent may employ
agents and attorneys-in-fact and shall not be answerable, except as to
money or securities received by it or its authorized agents, for the
negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.
The relationship between Agent and each Bank is only that of
agent and principal and has no fiduciary aspects. Nothing in the Loan
Documents or elsewhere shall be construed to impose on Agent any
duties or responsibilities other than those for which express
provision is therein made. In performing its duties and functions
hereunder, Agent does not assume and shall not be deemed to have
assumed, and hereby expressly disclaims, any obligation or
responsibility toward or any relationship of agency or trust with or
for Borrower or any of its beneficiaries or other creditors. As to
any matters not expressly provided for by the Loan Documents, Agent
shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the
instructions of all Banks and such instructions shall be binding upon
all Banks and all holders of the Notes; provided, however, that Agent
shall not be required to take any action which is contrary to the Loan
Documents or applicable law.
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<PAGE> 42
Agent shall have the right to exercise or refrain from
exercising, without notice or liability to the Banks, any and all
rights afforded to Agent, as the case may be, by the Loan Documents or
which Agent may have as a matter of law; provided, however, Agent
shall not, without the consent of Majority Banks, take any other
action with regard to amending the Loan Documents, waiving any default
under the Loan Documents or taking any other action with respect to
the Loan Documents which requires consent of Majority Banks. Provided
further, however, that no amendment, waiver, or other action shall be
effected pursuant to the preceding sentence without the consent of all
Banks which: (i) would increase the Revolving Commitment amount of any
Bank, (ii) would reduce any fees hereunder, or the principal of, or
the interest on, any Bank's Note or Notes, (iii) would postpone any
date fixed for any payment of any fees hereunder, or any principal or
interest of any Bank's Note or Notes, (iv) would materially increase
any Bank's obligations hereunder or would materially alter Agent's
obligations to any Bank hereunder, (v) would release Borrower from its
obligation to pay any Bank's Note or Notes, or (vi) would amend this
sentence. For purposes of this paragraph, a Bank shall be deemed to
have consented to any such action by Agent upon the passage of five
(5) Business Days after written notice thereof is given to such Bank
in accordance with Section 16 hereof, unless such Bank shall have
previously given Agent notice, complying with the provision of Section
16 hereof, to the contrary. Agent shall not have liability to Banks
for failure or delay in exercising any right or power possessed by
Agent pursuant to the Loan Documents or otherwise unless such failure
or delay is caused by the gross negligence of the Agent.
(g) Independent Investigation. Each Bank severally
represents and warrants to Agent that it has made its own independent
investigation and assessment of the financial condition and affairs of
Borrower in connection with the making and continuation of its
participation hereunder and has not relied exclusively on any
information provided to such Bank by Agent in connection herewith, and
each Bank represents, warrants and undertakes to Agent that it shall
continue to make its own independent appraisal of the credit
worthiness of Borrower while the Notes are outstanding or its
commitments hereunder are in force. Agent shall not be required to
keep itself informed as to the performance or observance by Borrower
of this Agreement or any other document referred to or provided for
herein or to inspect the properties or books of Borrower. Other than
as provided in this Agreement, Agent shall not have any duty,
responsibility or liability to provide any Bank with any credit or
other information concerning the affairs, financial condition or
business of Borrower which may come into the possession of Agent.
(h) Indemnification. Banks agree to indemnify Agent,
ratably according to their respective Revolving Commitments on a Pro
Rata basis, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
or disbursements of any proper and reasonable kind or nature
whatsoever which may be imposed on, incurred by or asserted against
Agent in any way relating to or arising out of the Loan Documents or
any action taken or omitted by Agent under the Loan Documents,
provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from
Agent's gross negligence or willful misconduct. Each Bank shall be
entitled to be reimbursed by the Agent for any amount such Bank paid
to Agent under this Section 14(h) to the extent the Agent has been
reimbursed for such payments
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<PAGE> 43
by Borrower or any other Person. THE PARTIES INTEND FOR THE
PROVISIONS OF THIS SECTION TO APPLY TO AND PROTECT THE AGENT FROM THE
CONSEQUENCES OF ANY LIABILITY INCLUDING STRICT LIABILITY IMPOSED OR
THREATENED TO BE IMPOSED ON AGENT AS WELL AS FROM THE CONSEQUENCES OF
ITS OWN NEGLIGENCE, WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE,
CONTRIBUTING OR CONCURRING CAUSE OF ANY SUCH LIABILITY.
(i) Benefit of Section 14. The agreements contained in
this Section 14 are solely for the benefit of Agent and the Banks and
are not for the benefit of, or to be relied upon by, Borrower, any
affiliate of Borrower or any other person.
(j) Pro Rata Treatment. Subject to the provisions of
this Agreement, each payment (including each prepayment) by Borrower
or any Guarantor and collection by Banks (including offsets) on
account of the principal of and interest on the Notes and fees
provided for in this Agreement, payable by Borrower or any Guarantor
shall be made Pro Rata; provided, however, in the event that any
Defaulting Bank shall have failed to make an Advance as contemplated
under Section 3 hereof and Agent or another Bank or Banks shall have
made such Advance, payment received by Agent for the account of such
Defaulting Bank or Banks shall not be distributed to such Defaulting
Bank or Banks until such Advance or Advances shall have been repaid in
full to the Bank or Banks who funded such Advance or Advances.
(k) Assumption as to Payments. Except as specifically
provided herein, unless Agent shall have received notice from Borrower
prior to the date on which any payment is due to Banks hereunder that
Borrower will not make such payment in full, Agent may, but shall not
be required to, assume that Borrower has made such payment in full to
Agent on such date and Agent may, in reliance upon such assumption,
cause to be distributed to each Bank on such due date an amount equal
to the amount then due such Bank. If and to the extent Borrower shall
not have so made such payment in full to Agent, each Bank shall repay
to Agent forthwith on demand such amount distributed to such Bank
together with interest thereon, for each day from the date such amount
is distributed to such Bank until the date such Bank repays such
amount to Agent, at the interest rate applicable to such portion of
the Revolving Loan.
(l) Other Financings. Without limiting the rights to
which any Bank otherwise is or may become entitled, such Bank shall
have no interest, by virtue of this Agreement or the Loan Documents,
in (a) any present or future loans from, letters of credit issued by,
or leasing or other financial transactions by, any other Bank to, on
behalf of, or with Borrower or any Guarantor (collectively referred to
herein as "Other Financings") other than the obligations hereunder;
(b) any present or future guarantees by or for the account of Borrower
or any Guarantor which are not contemplated by the Loan Documents; (c)
any present or future property taken as security for any such Other
Financings; or (d) any property now or hereafter in the possession or
control of any other Bank which may be or become security for the
obligations of Borrower or any Guarantor arising under any loan
document by reason of the general description of indebtedness secured
or property contained in any other agreements, documents or
instruments relating to any such Other Financings.
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<PAGE> 44
(m) Interests of Banks. Nothing in this Agreement shall
be construed to create a partnership or joint venture between Banks
for any purpose. Agent, Banks and Borrower recognizes that the
respective obligations of Banks under the Revolving Commitments shall
be several and not joint and that neither Agent, nor any of Banks
shall be responsible or liable to perform any of the obligations of
the other under this Agreement. Each Bank is deemed to be the owner
of an undivided interest in and to all rights, titles, benefits and
interests belonging and accruing to Agent under the Security
Instruments, including, without limitation, liens and security
interests in any collateral, fees and payments of principal and
interest by Borrower under the Revolving Commitments on a Pro Rata
basis. Each Bank shall perform all duties and obligations of Banks
under this Agreement in the same proportion as its ownership interest
in the Loans outstanding at the date of determination thereof.
(n) Investments. Whenever Agent in good faith determines
that it is uncertain about how to distribute to Banks any funds which
it has received, or whenever Agent in good faith determines that there
is any dispute among the Banks about how such funds should be
distributed, Agent may choose to defer distribution of the funds which
are the subject of such uncertainty or dispute. If Agent in good
faith believes that the uncertainty or dispute will not be promptly
resolved, or if Agent is otherwise required to invest funds pending
distribution to the Banks, Agent may invest such funds pending
distribution (at the risk of Borrower). All interest on any such
investment shall be distributed upon the distribution of such
investment and in the same proportions and to the same Persons as such
investment. All monies received by Agent for distribution to the
Banks (other than to the Person who is Agent in its separate capacity
as a Bank) shall be held by the Agent pending such distribution solely
as Agent for such Banks, and Agent shall have no equitable title to
any portion thereof.
15. EXERCISE OF RIGHTS. No failure to exercise, and no delay in
exercising, on the part of the Agent or the Banks, any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right. The rights of the Agent and the Banks hereunder shall be in addition to
all other rights provided by law. No modification or waiver of any provision
of the Loan Documents, including this Agreement, or the Note nor consent to
departure therefrom, shall be effective unless in writing, and no such consent
or waiver shall extend beyond the particular case and purpose involved. No
notice or demand given in any case shall constitute a waiver of the right to
take other action in the same, similar or other circumstances without such
notice or demand.
16. NOTICES. Any notices or other communications required or
permitted to be given by this Agreement or any other documents and instruments
referred to herein must be given in writing (which may be by facsimile
transmission) and must be personally delivered or mailed by prepaid certified
or registered mail to the party to whom such notice or communication is
directed at the address of such party as follows: (a) BORROWER and GUARANTORS:
c/o GLOBAL INDUSTRIES, LTD., P.O. Box 31936, 107 Global Circle (70503),
Lafayette, Louisiana 70593-1936, Facsimile No. (318) 989-5752; Attention: Mr.
William J. Dore and Mr. Michael J. Pollock; and (b) AGENT and BANKS: c/o AGENT,
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION, 200 W. Congress Street, 9th Floor,
P.O. Box 3248, Lafayette, Louisiana 70502-3248, Facsimile No. (318) 236-7888,
Attention: Rose M. Miller, Vice President. Any such notice or other
communication shall be deemed to have been given (whether actually received or
not) on the day it is personally delivered or delivered by facsimile as
aforesaid or, if mailed, on the third day after it is mailed as aforesaid. Any
party may change its address for purposes of this Agreement by giving notice of
such change to the other party pursuant to this Section 16.
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<PAGE> 45
17. EXPENSES. Borrower shall pay (i) all reasonable and necessary
out-of-pocket expenses of the Banks, including reasonable fees and
disbursements of special counsel for the Agent, in connection with the
preparation of this Agreement, the other Loan Documents, title and other due
diligence and closing of the transaction described in this Agreement, any
waiver or consent hereunder or any amendment hereof or any default or Event of
Default or alleged default or Event of Default hereunder, (ii) all reasonable
and necessary out-of-pocket expenses of the Agent, including reasonable fees
and disbursements of special counsel for the Agent in connection with the
preparation of any participation agreement for a participant or participants
requested by Borrower or any amendment thereof and (iii) if a default or an
Event of Default occurs, all reasonable and necessary out-of-pocket expenses
incurred by the Banks, including fees and disbursements of counsel, in
connection with such default and Event of Default and collection and other
enforcement proceedings resulting therefrom. Borrower shall indemnify the
Banks against any transfer taxes, document taxes, assessments or charges made
by any governmental authority by reason of the execution, delivery and filing
of the Loan Documents.
18. INDEMNITY. Borrower agrees to indemnify and hold harmless the
Banks and their respective officers, employees, agents, attorneys and
representatives (singularly, an "Indemnified Party", and collectively, the
"Indemnified Parties") from and against any loss, cost, liability, damage or
expense (including the reasonable fees and out-of-pocket expenses of counsel to
the Banks, including all local counsel hired by such counsel) ("Claim")
incurred by the Banks in investigating or preparing for, defending against, or
providing evidence, producing documents or taking any other action in respect
of any commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law, federal or state environmental
law, or any other statute of any jurisdiction, or any regulation, or at common
law or otherwise, which is alleged to arise out of or is based upon any acts,
practices or omissions or alleged acts, practices or omissions of Borrower or
its agents or arises in connection with the duties, obligations or performance
of the Indemnified Parties in negotiating, preparing, executing, accepting,
keeping, completing, countersigning, issuing, selling, delivering, releasing,
assigning, handling, certifying, processing or receiving or taking any other
action with respect to the Loan Documents and all documents, items and
materials contemplated thereby even if any of the foregoing arises out of an
Indemnified Party's ordinary negligence. The indemnity set forth herein shall
be in addition to any other obligations or liabilities of Borrower to the Banks
hereunder or at common law or otherwise, and shall survive any termination of
this Agreement, the expiration of the Revolving Loan and the payment of all
indebtedness of Borrower to the Banks hereunder and under the Notes, provided
that Borrower shall have no obligation under this Section to the Bank with
respect to any of the foregoing arising out of the gross negligence or willful
misconduct of the Bank. If any Claim is asserted against any Indemnified
Party, the Indemnified Party shall endeavor to notify Borrower of such Claim
(but failure to do so shall not affect the indemnification herein made except
to the extent of the actual harm caused by such failure). The Indemnified
Party shall have the right to employ, at Borrower's expense, counsel of the
Indemnified Parties' choosing and to control the defense of the Claim.
Borrower may at its own expense also participate in the defense of any Claim.
Each Indemnified Party may employ separate counsel in connection with any Claim
to the extent such Indemnified Party believes it reasonably prudent to protect
such Indemnified Party. THE PARTIES INTEND FOR THE PROVISIONS OF THIS SECTION
TO APPLY TO AND PROTECT EACH INDEMNIFIED PARTY FROM THE
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<PAGE> 46
CONSEQUENCES OF ANY LIABILITY INCLUDING STRICT LIABILITY IMPOSED OR THREATENED
TO BE IMPOSED ON AGENT AS WELL AS FROM THE CONSEQUENCES OF ITS OWN NEGLIGENCE,
WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE, CONTRIBUTING, OR CONCURRING CAUSE
OF ANY CLAIM.
19. GOVERNING LAW. THE INTERNAL LAWS OF THE STATE OF LOUISIANA
AND THE UNITED STATES OF AMERICA SHALL GOVERN THE RIGHTS AND DUTIES OF THE
PARTIES HERETO AND THE VALIDITY, CONSTRUCTION, ENFORCEMENT, AND INTERPRETATION
OF THIS AGREEMENT, THE REVOLVING NOTES AND THE GUARANTIES AND OTHER LOAN
DOCUMENTS.
20. INVALID PROVISIONS. If any provision of this Agreement or any
of the Loan Documents is held to be illegal, invalid, or unenforceable under
present or future laws effective during the term of this Agreement or such Loan
Document, such provisions shall be fully severable and this Agreement or such
Loan Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement, and the
remaining provisions of the Agreement or such Loan Document shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
21. MAXIMUM INTEREST RATE. Regardless of any provisions contained
in this Agreement or in any other documents and instruments referred to herein,
the Banks shall never be deemed to have contracted for or be entitled to
receive, collect or apply as interest on the Notes any amount in excess of the
Maximum Rate, and in the event any Bank ever receives, collects or applies as
interest any such excess, of if an acceleration of the maturities of any Notes
or if any prepayment by Borrower result in Borrower having paid any interest in
excess of the Maximum Rate, such amount which would be excessive interest shall
be applied to the reduction of the unpaid principal balance of the Notes for
which such excess was received, collected or applied, and, if the principal
balance of such Note is paid in full, any remaining excess shall forthwith be
paid to Borrower. All sums paid or agreed to be paid to the Banks for the use,
forbearance or detention of the indebtedness evidenced by the Notes and/or this
Agreement shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the Maximum Rate. In determining whether or not
the interest paid or payable under any specific contingency exceeds the Maximum
Rate of interest permitted by law, Borrower and the Banks shall, to the maximum
extent permitted under applicable law, (i) characterize any non-principal
payment as an expense, fee or premium, rather than as interest; and (ii)
exclude voluntary prepayments and the effect thereof; and (iii) compare the
total amount of interest contracted for, charged or received with the total
amount of interest which could be contracted for, charged or received
throughout the entire contemplated term of the Note at the Maximum Rate.
22. AMENDMENTS. This Agreement may be amended only by an
instrument in writing executed by an authorized officer of the party against
whom such amendment is sought to be enforced.
23. MULTIPLE COUNTERPARTS. This Agreement may be executed in a
number of identical separate counterparts, each of which for all purposes is to
be deemed an original, but all of which shall constitute, collectively, one
agreement. No party to this Agreement shall be bound hereby until a
counterpart of this Agreement has been executed by all parties hereto.
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<PAGE> 47
24. CONFLICT. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the Loan Documents, the
terms or provisions contained in this Agreement shall be controlling.
25. SURVIVAL. All covenants, agreements, undertakings,
representations and warranties made in the Loan Documents, including this
Agreement, the Notes, the Guaranties or other documents and instruments
referred to herein shall survive all closings hereunder and shall not be
affected by any investigation made by any party.
26. PARTIES BOUND. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors, assigns,
heirs, legal representatives and estates, provided, however, that Borrower may
not, without the prior written consent of the Banks, assign any rights, powers,
duties or obligations hereunder.
27. CONSTRUCTION. Each party hereto acknowledges that each has
had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review this Agreement and all related Loan Documents and other
papers with its legal counsel and that this Agreement and the related Loan
Documents and other papers shall be construed as if jointly drafted by the
parties hereto.
28. TERMINATION. This Agreement shall not terminate until the
Secured Obligations and any and all liabilities and obligations owed to the
Banks by the Borrower in connection with the transactions contemplated by this
Agreement have been fully satisfied and the Banks shall have no further
obligation to make any advances hereunder or otherwise to the Borrower.
29. ASSIGNMENTS AND PARTICIPATIONS.
(a) Each Bank shall have the right to sell, assign or
transfer all or any part of its Note or Notes, its Revolving
Commitments and its rights and obligations hereunder to one or more
Affiliates, Banks, financial institutions, pension plans, investment
funds, or similar Persons or to a Federal Reserve Bank; provided, that
with each sale, assignment or transfer (other than to an Affiliate, a
Bank or a Federal Reserve Bank), shall require the consent of Borrower
and Agent, which consents will not be unreasonably withheld, and the
assignee, transferee or recipient shall have, to the extent of such
sale, assignment, or transfer, the same rights, benefits and
obligations as it would if it were such Bank and a holder of such
Note, Revolving Commitment and rights and obligations, including,
without limitation, the right to vote on decisions requiring consent
or approval of all Banks or Majority Banks and the obligation to fund
its Revolving Commitment; provided, further, that (1) each such sale,
assignment, or transfer (other than to an Affiliate, a Bank or a
Federal Reserve Bank) shall be in an aggregate principal amount not
less than $5,000,000, (2) each remaining Bank shall at all times
maintain Revolving Commitment then outstanding in an aggregate
principal amount at least equal to $5,000,000; (3) no Bank may offer
to sell its Note or Notes, Revolving Commitment, rights and
obligations or interests therein in violation of any securities laws;
and (4) no such assignments (other than to a Federal Reserve Bank)
shall become effective until the assigning Bank and its assignees
delivers to Agent and Borrower an Assignment and Acceptance and the
Note
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<PAGE> 48
or Notes subject to such assignment and other documents evidencing any
such assignment. An assignment fee in the amount of $2,500 for each
such assignment (other than to an Affiliate, a Bank or the Federal
Reserve Bank) will be payable to Agent by assignor or assignee.
Within five (5) Business Days after its receipt of copies of the
Assignment and Acceptance and the other documents relating thereto and
the Note or Notes, Borrower shall execute and deliver to Agent (for
delivery to the relevant assignee) a new Note or Notes evidencing such
assignee's assigned Revolving Commitment and if the assignor Bank has
retained a portion of its Revolving Commitment, a replacement Note in
the principal amount of the Revolving Commitment retained by the
assignor (except as provided in the last sentence of this paragraph
(a) such Note or Notes to be in exchange for, but not in payment of,
the Note or Notes held by such Bank). On and after the effective date
of an assignment hereunder, the assignee shall for all purposes be a
Bank, party to this Agreement and any other Loan Document executed by
the Banks and shall have all the rights and obligations of a Bank
under the Loan Documents, to the same extent as if it were an original
party thereto, and no further consent or action by Borrower, Banks or
the Agent shall be required to release the transferor Bank with
respect to its Revolving Commitment assigned to such assignee and the
transferor Bank shall henceforth be so released.
(b) Each Bank shall have the right to grant
participations in all or any part of such Bank's Notes and Revolving
Commitment hereunder to one or more pension plans, investment funds,
financial institutions or other Persons, provided, that:
(i) each Bank granting a participation shall
retain the right to vote hereunder, and no participant shall
be entitled to vote hereunder on decisions requiring consent
or approval of Bank or Majority Banks (except as set forth in
(iii) below);
(ii) in the event any Bank grants a participation
hereunder, such Bank's obligations under the Loan Documents
shall remain unchanged, such Bank shall remain solely
responsible to the other parties hereto for the performance of
such obligations, such Bank shall remain the holder of any
such Note or Notes for all purposes under the Loan Documents,
and Agent, each Bank and Borrower shall be entitled to deal
with the Bank granting a participation in the same manner as
if no participation had been granted;
(iii) no participant shall ever have any right by
reason of its participation to exercise any of the rights of
Banks hereunder, except that any Bank may agree with any
participant that such Bank will not, without the consent of
such participant (which consent may not be unreasonably
withheld) consent to any amendment or waiver requiring
approval of all Banks; and
(iv) no Bank may grant any participation in
violation of any Federal or state securities laws.
(c) It is understood and agreed that any Bank may provide
to assignees and participants and prospective assignees and
participants financial information and reports
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<PAGE> 49
and data concerning Borrower's properties and operations which was
provided to such Bank pursuant to this Agreement; provided that such
Person agrees to be bound by the confidentiality provisions of Section
33.
(d) Upon the reasonable request of either Agent or
Borrower, each Bank will identify those to whom it has assigned or
participated any part of its Notes and Revolving Commitment, and
provide the amounts so assigned or participated.
30. OTHER AGREEMENTS. THIS AGREEMENT, THE REVOLVING NOTE OR NOTES
AND THE GUARANTIES SET FORTH THE ENTIRE AGREEMENT OF THE PARTIES WITH RESPECT
TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR WRITTEN AND ORAL
UNDERSTANDINGS BETWEEN THE BORROWER, THE GUARANTORS, THE AGENT AND THE BANKS
AND ANY OTHER PARTIES WITH RESPECT TO THE MATTERS HEREIN SET FORTH. THIS
WRITTEN CREDIT AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE BANKS AND ANY OF THE OTHER PARTIES TO THIS AGREEMENT.
31. JURY TRIAL WAIVER. IN THE EVENT IT IS NECESSARY TO RESORT TO
JUDICIAL ACTION TO ENFORCE RIGHTS HEREUNDER, THEN THE AGENT, THE BANKS, THE
GUARANTORS AND THE BORROWER, HEREBY AGREE THAT TO THE EXTENT PERMITTED BY
APPLICABLE LAW ANY SUCH JUDICIAL ACTION, INCLUDING ANY OPPOSITION TO SUCH
ACTION, RECONVENTIONAL DEMANDS, AND CROSS CLAIMS, SHALL BE TRIED BEFORE A JUDGE
WITHOUT A JURY, ALL PARTIES HERETO HEREBY WAIVING THEIR RIGHT TO A JURY TRIAL.
32. LA. R.S. 6:1121. THIS AGREEMENT IS A CREDIT OR LOAN AGREEMENT
AS DESCRIBED IN LA. R. S. 6:Section 1121, E.T. SEQ.
33. CONFIDENTIAL INFORMATION. The Agent and the Banks agree to
use their best efforts not to disclose without the prior written consent of the
Borrower or the Guarantors any information with respect to the Borrower or the
Guarantors which is furnished pursuant to this Agreement, including any
information made available to the Agent or the Banks or their agents in the
course of any inspection; provided, however, this provision shall not apply (i)
to information which is generally available to the public, (ii) to information
disclosed by the Agent or any Bank in response to Fair Debt Reporting
inquiries, (iii) to information disclosed to bank examiners and the employees,
(iv) to information disclosed by the Agent or any Bank pursuant to a subpoena,
or (v) to information disclosed by the Agent or any Bank to another bank,
financial institution, pension plan, investment fund or similar Person or to
any Federal Reserve Bank (if the recipient of such information has agreed to be
bound by the confidentiality requirements of this Section 33) pursuant to or in
connection with an assignment or participation of any Note or Notes or a
portion of the Revolving Commitment pursuant to Section 29 hereof.
34. FINANCIAL TERMS. All accounting terms used in this Agreement
which are not specifically defined herein shall be construed in accordance with
GAAP.
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
BORROWER:
GLOBAL INDUSTRIES, LTD.
a Louisiana corporation
By:
-----------------------------------------
Michael J. Pollock, Vice President
GUARANTORS:
GLOBAL PIPELINES PLUS, INC.;
GLOBAL DIVERS AND CONTRACTORS, INC.;
GLOBAL MOVIBLE OFFSHORE, INC.;
PIPELINES, INCORPORATED;
GLOBAL INDUSTRIES OFFSHORE, INC.; AND
AND GLOBAL INTERNATIONAL VESSELS, LTD.
By:
-----------------------------------------
Michael J. Pollock, Vice President
AGENT:
BANK ONE, LOUISIANA, NATIONAL ASSOCIATION
a national banking association
By:
-----------------------------------------
Rose M. Miller, Vice President
BANKS:
Percentage of Revolving BANK ONE, LOUISIANA, NATIONAL ASSOCIATION
Commitment: 100% a national banking association
By:
-----------------------------------------
Rose M. Miller, Vice President
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<PAGE> 1
- --------------------------------------------------------------------------------
TRUST INDENTURE
RELATING TO UNITED STATES GOVERNMENT GUARANTEED
SHIP FINANCING OBLIGATIONS
BETWEEN
GLOBAL INDUSTRIES, LTD.,
SHIPOWNER
AND
FIRST NATIONAL BANK OF COMMERCE,
INDENTURE TRUSTEE
DATED AS OF AUGUST 15, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
TRUST INDENTURE
BETWEEN
GLOBAL INDUSTRIES, LTD.,
SHIPOWNER
AND
FIRST NATIONAL BANK OF COMMERCE,
INDENTURE TRUSTEE
DATED AS OF AUGUST 15, 1996
TABLE OF CONTENTS TO SPECIAL PROVISIONS OF THE INDENTURE*
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE FIRST
Incorporation of General Provisions . . . . . . . . . . . . . . . . . 3
ARTICLE SECOND
The Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE THIRD
Certain Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Mandatory Sinking Fund Redemptions of Bonds . . . . . . . . 4
(b) Credit Against Mandatory Sinking Fund Redemptions
of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(c) Optional Sinking Fund Redemptions of Bonds . . . . . . . . . 5
(d) Optional Redemptions of Bonds at Premium . . . . . . . . . . 5
</TABLE>
- -----------------
This Table of Contents is not a part of the Indenture and has no
bearing upon the interpretation of any of its terms and provisions.
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE FOURTH
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE FIFTH
Additions, Deletions, and Amendments to Exhibit 1 . . . . . . . . . . . . 6
(a) Concerning Section 2.04 . . . . . . . . . . . . . . . . . . . . 6
(b) Concerning Section 2.12 . . . . . . . . . . . . . . . . . . . . 6
(c) Concerning Notices of Transition Date and Stated Maturity . . . 7
(d) Concerning Payment of the Obligations . . . . . . . . . . . . . 7
(e) Concerning Selection of Bonds to be Redeemed . . . . . . . . . . 7
(f) Concerning References to 3.09(b) . . . . . . . . . . . . . . . . 8
(g) Concerning Home Office Payment . . . . . . . . . . . . . . . . . 8
(h) Concerning Section 5.02 . . . . . . . . . . . . . . . . . . . . 8
(i) Concerning Section 7.02 . . . . . . . . . . . . . . . . . . . . 8
(j) Concerning Section 10.01 . . . . . . . . . . . . . . . . . . . . 8
(k) Concerning Notices . . . . . . . . . . . . . . . . . . . . . . . 8
(l) Concerning Applicable Law . . . . . . . . . . . . . . . . . . . 9
(m) Execution of Counterparts . . . . . . . . . . . . . . . . . . . 9
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
EXHIBITS TO TRUST INDENTURE
---------------------------
SCHEDULE A Schedule of Definitions to Trust Indenture
EXHIBIT 1 General Provisions Incorporated into the Trust
Indenture by Reference
EXHIBIT 2 Forms of Bond, Guarantee, and Trustee's
Authentication Certificate
EXHIBIT 3 Authorization Agreement
EXHIBIT 4 Form of Secretary's Supplemental Indenture
- ii -
<PAGE> 4
TRUST INDENTURE
SPECIAL PROVISIONS
THIS TRUST INDENTURE, dated as of August 15, 1996 (said Trust
Indenture, as the same may be amended, modified, or supplemented from time to
time as permitted hereunder, herein called the "Indenture"), between (i) GLOBAL
INDUSTRIES, LTD., a Louisiana corporation (herein called the "Shipowner"), and
(ii) FIRST NATIONAL BANK OF COMMERCE, a national banking association (said
Bank, and any successor or assign hereunder, herein called the "Indenture
Trustee").
R E C I T A L S:
A. The Shipowner is a party to the following construction
contracts:
(1) A construction contract, dated April 3, 1996, with
Service Marine Industries, Inc., a Louisiana corporation ("Service
Marine"), for the construction of one 400' launch barge (the "Launch
Barge Construction Contract");
(2) A construction contract, dated April 3, 1996, with
Service Marine for the construction of one 300' deck barge (the "Deck
Barge Construction Contract"); and
(3) A construction contract, dated August 1, 1995, with
Bollinger Machine Shop & Shipyard, Inc., a Louisiana corporation
("Bollinger"), for the construction of two lift boats (the "Lift Boat
Construction Contract").
Service Marine and Bollinger are herein referred to collectively as the
"Shipyards" and the three construction contracts herein described are
hereinafter referred to collectively as the "Construction Contracts."
B. The Shipowner has under construction at Service Marine one
400' launch barge, Shipyard Hull No. 184, name to be assigned (the "Launch
Barge") and one 300' deck barge, Shipyard Hull No. 183, name to be assigned
(the "Deck Barge" and, together with the Launch Barge, collectively the
"Barges"), and at Bollinger two lift boats, Shipyard Hull Nos. 295, to be named
MAN-O-WAR (the "First Lift Boat"), and Shipyard Hull No. 296, to be named
KINGFISH (the "Second Lift Boat" and, together with the First Lift Boat,
collectively the "Lift Boats," and, together with the Barges, each individually
a "Vessel" and, collectively, the "Vessels").
Such Vessels as have not been delivered shall be defined each
individually as an "Undelivered Vessel" and collectively as the "Undelivered
Vessels," and such vessels as have been delivered, shall be defined each
individually as a "Delivered Vessel" and collectively as the "Delivered
Vessels."
<PAGE> 5
C. To aid in financing the cost of Construction of the Vessels,
the Shipowner will issue up to $20,328,000 aggregate principal amount of its
bonds pursuant to Section 2.03 of Exhibit 1 to this Indenture (the "Bonds" and,
together with any bonds issued in respect thereto pursuant to Sections 2.09,
2.10, 2.12, and 3.10(b) of said Exhibit 1, called the "Bonds" or "Obligations")
designated "United States Government Guaranteed Ship Financing Bonds, 1996
Series."
D. Under the Authorization Agreement, Contract No. MA-13229, set
forth as Exhibit 3 hereto, the Secretary, on behalf of the United States, will
authorize the Indenture Trustee, under the terms of Title XI of the Act, to
cause the guarantee of the payment of the unpaid principal and interest on the
Bonds according to the terms of the Guarantees, bearing the facsimile signature
of the Secretary and the facsimile seal of the United States Department of
Transportation, to be imprinted on the Bonds issued and to authenticate and
deliver the Bonds issued on the Closing Date, such agreements and
authorizations being subject to the conditions set forth in the Authorization
Agreement;
E. Pursuant to Section 1104A(b)(5) of the Act, the Secretary has
determined that the interest to be borne by the Bonds (exclusive of charges for
the Guarantee Fee and investigation and service charges, if any) at the rate
specified in the form thereof set forth in Exhibit 2 hereto is reasonable; and
F. All actions necessary have been taken in order (1) to make the
Obligations, when executed by the Shipowner, authenticated by the Indenture
Trustee, and issued under the Indenture, the valid, binding, and legal
obligations of the Shipowner in accordance with their terms, (2) to make the
Guarantees to be endorsed on the Obligations, when executed by the Secretary,
authenticated by the Indenture Trustee, and delivered under this Indenture, the
valid, binding, and legal obligations of the United States in accordance with
their terms, and (3) to make this Indenture the valid, binding, and legal
agreement of the parties hereto in accordance with its terms.
NOW, THEREFORE, in consideration of the premises, of the mutual
covenants herein contained, of the purchase of the Obligations by the Holders
thereof, and of other good and valuable consideration, the receipt and adequacy
of which the parties hereby acknowledge, and for the equal and proportionate
benefit of all the present and future Holders of the Obligations, the parties
hereto agree as follows:
ARTICLE FIRST
INCORPORATION OF GENERAL PROVISIONS
This Indenture shall consist of two parts: the Special Provisions and
the General Provisions attached hereto as Exhibit 1, made a part of this
Indenture and incorporated herein by reference.
- 2 -
<PAGE> 6
ARTICLE SECOND
THE BONDS
(a) The Obligations issued hereunder shall be designated "United
States Government Guaranteed Ship Financing Bonds, 1996 Series," and shall be
issuable in the aggregate amount of $20,328,000 of 7.25% Sinking Fund Bonds due
on the 25th anniversary of the Transition Date; provided that, the aggregate
principal amount of Obligations at any time Outstanding shall not exceed
$20,328,000 or the aggregate of the 87 1/2% of the Actual Cost or Depreciated
Actual Cost, as the case may be, of the Barges plus 75% of the Actual Cost or
Depreciated Actual Cost, as the case may be, of the Lift Boats, whichever is
less. The aggregate principal amount of Bonds which may be issued under this
Indenture shall not exceed $20,328,000 except as provided in Sections 2.09,
2.10, 2.12, and 3.10(b) of Exhibit 1 hereto.
(b) The Obligations, the Guarantees thereof, and the Indenture
Trustee's authentication certificate to be endorsed thereon shall be
substantially in the forms set forth in Exhibit 2 hereto.
(c) The Obligations shall be in the denominations of $1,000 or any
integral multiple thereof.
(d) The Shipowner shall at all times cause to be maintained in the
City of New Orleans, State of Louisiana, an office or agency for the purposes
specified in Section 5.03 of Exhibit 1 to this Indenture, which office or
agency shall be deemed at all times to be the Corporate Trust Office of the
Indenture Trustee.
(e) On the date of execution of this Indenture, the Indenture
Trustee's Corporate Trust Office is located at 210 Baronne Street, New Orleans,
Louisiana 70112.
(f) The Bonds shall mature on the 25th anniversary of the
Transition Date and shall bear interest at the rate of 7.25% per annum.
ARTICLE THIRD
CERTAIN REDEMPTIONS
(a) Mandatory Sinking Fund Redemptions of Bonds. The Bonds are
subject to redemption at a Redemption Price equal to 100% of the principal
amount thereof, together with interest accrued thereon to the applicable
sinking fund Redemption Date, through the operation of a mandatory sinking fund
providing for the semiannual redemption, commencing on the first Semiannual
Anniversary of the Transition Date and on each Semiannual Anniversary of the
Transition Date thereafter to and including the forty-ninth Semiannual
Anniversary of the Transition Date, of $407,000 principal amount of Bonds (or
such lesser principal amount of Bonds as shall then be Outstanding) (which
amount represents approximately one fiftieth (1/50) of the Original Principal
Amount of Bonds) and, on the fiftieth Semiannual Anniversary of the Transition
Date, there shall become due and payable, and the Shipowner shall pay, the
balance of the unpaid principal amount of Bonds at the time Outstanding,
together with all interest accrued thereon to such date. As to each mandatory
sinking fund redemption, the Indenture
- 3 -
<PAGE> 7
Trustee shall deliver to each Holder the notice of redemption required by
Section 3.08 of Exhibit 1 to the Indenture. Notwithstanding the foregoing
provisions of this Subsection (a), if the principal amount of Outstanding Bonds
shall be reduced by reason of any redemption pursuant to Sections 3.04 or 3.05
of Exhibit 1 to this Indenture, the principal amount of Bonds to be redeemed
pursuant to this subsection (a) on each subsequent mandatory sinking fund
Redemption Date for such Bonds shall be reduced by an amount equal to the
principal amount of such Bonds retired by reason of such redemption pursuant to
Sections 3.04 or 3.05 of Exhibit 1 hereto divided by the number of mandatory
sinking fund Redemption Dates (including the Stated Maturity of such Bonds)
scheduled thereafter (subject to such increase as shall be necessary so that
the total principal amount of Bonds to be redeemed on any such sinking fund
Redemption Date shall be an integral multiple of $1,000); provided that, the
entire unpaid principal amount of the Outstanding Bonds shall be paid no later
than the 25th anniversary of the Transition Date. The Shipowner shall, in
accordance with Section 3.02(d) of Exhibit 1 hereto, promptly after each
redemption pursuant to said Sections 3.04 or 3.05, furnish to the Secretary,
the Indenture Trustee, and each Holder of a Bond a revised table of sinking
fund payments reflecting the reductions made pursuant to this Subsection (a) as
a result of such redemption.
(b) Credit Against Mandatory Sinking Fund Redemptions of Bonds.
In lieu of making all or any part of any such mandatory sinking fund redemption
of Bonds, the Shipowner may, at its option, receive credit for Bonds not
previously so credited or applied to reduce the principal amount of Bonds
Outstanding (i) redeemed by the Shipowner pursuant to the optional redemption
provision provided for in Subsection (c) of this Article, (ii) redeemed by the
Shipowner pursuant to the optional redemption provision provided for in
Subsection (d) of this Article, or (iii) purchased or acquired by the Shipowner
(other than by redemption) and delivered to the Indenture Trustee for
cancellation pursuant to Section 2.13 of Exhibit 1 hereto. The Bonds so
credited or applied shall be credited or applied, as the case may be, by the
Indenture Trustee, at 100% of the principal amount thereof. If the Shipowner
shall elect to receive credit or application as aforesaid in lieu of making all
or part of any mandatory sinking fund redemption, it shall deliver to the
Indenture Trustee, at least 45 days but not more than 60 days prior to the due
date for such mandatory sinking fund redemption, a Request (i) specifying the
principal amount of Bonds so optionally redeemed or otherwise acquired and so
to be credited or applied, as the case may be, and (ii) stating that no such
Bonds have theretofore been made the basis of any such credit or application as
aforesaid and that none of such Bonds are subject to the terms of any agreement
or contract between the Secretary, the Shipowner, and/or any other person
restricting the Shipowner's right to apply any such Bonds as a credit pursuant
to the terms of this Subsection (b), together with the Bonds (uncancelled) for
which such credit or application is so requested (unless such Bonds shall
theretofore have been delivered to the Indenture Trustee). The Indenture
Trustee shall deliver a copy of such Request to each Holder along with the
notice of redemption required by Section 3.08 of Exhibit 1 to the Indenture in
connection with such mandatory sinking fund redemption.
(c) Optional Sinking Fund Redemptions of Bonds. At its option,
the Shipowner may redeem on any mandatory sinking fund Redemption Date, at a
Redemption Price equal to 100% of the principal amount thereof, together with
interest accrued thereon to such date, an additional principal amount of Bonds
of the same
- 4 -
<PAGE> 8
maturity up to the principal amount of Bonds of the same maturity required to
be redeemed under Subsection (a) of this Article on such date and before any
credit pursuant to Subsection (b) of this Article. The right to make any such
optional sinking fund redemption shall not be cumulative. If the Shipowner
shall elect to make any such optional sinking fund redemption, the Shipowner
shall, at least 45 days but not more than 60 days prior to such mandatory
sinking fund Redemption Date, deliver to the Indenture Trustee a Request
stating that the Shipowner intends to exercise its right as set forth in this
Subsection (c) to make such optional sinking fund redemption and specifying the
additional principal amount of Bonds which the Shipowner intends to redeem on
such mandatory sinking fund Redemption Date. The Indenture Trustee shall
deliver a copy of such Request to each Holder along with the notice of
redemption required by Section 3.08 of Exhibit 1 to the Indenture.
(d) Optional Redemptions of Bonds at Premium. At its option, the
Shipowner may redeem the Bonds, in whole or in part, at any time or from time
to time, at the Redemption Prices specified in the Bonds, together with
interest accrued thereon to the date fixed for redemption; provided that, no
such redemption shall be made prior to the tenth anniversary of the Transition
Date, directly or indirectly with the proceeds of, or in anticipation of,
borrowing by or for the account of the Shipowner if such borrowing has an
effective interest cost (calculated in accordance with generally accepted
financial practice) of less than the rate of interest borne by the Bonds. If
the Shipowner shall elect to make any such optional redemption, the Shipowner
shall, at least 45 days but not more than 60 days prior to the date fixed for
redemption, deliver to the Indenture Trustee a Request stating that the
Shipowner intends to exercise its rights as above set forth to make such
optional redemption and specifying the Redemption Date, the maturity date, and
the principal amount of Bonds which the Shipowner intends to redeem on such
date. In the case of any redemption pursuant to this Subsection (d) prior to
the tenth anniversary of the Transition Date, the Shipowner shall deliver to
the Indenture Trustee, at the time of delivery of said Request, an Officer's
Certificate stating that such redemption shall comply with the proviso relating
to such redemption prior to such date. The Indenture Trustee shall deliver a
copy of such Request to each Holder along with the notice of redemption
required by Section 3.08 of Exhibit 1 to the Indenture.
ARTICLE FOURTH
DEFINITIONS
For all purposes of this Indenture, unless expressly provided or
unless the context otherwise requires:
(1) All references herein to Articles, Sections,
or other subdivisions, unless otherwise specified, refer to
the corresponding Articles, Sections, and other subdivisions
of this Indenture;
- 5 -
<PAGE> 9
(2) The terms "hereof," "herein," "hereby,"
"hereto," "hereunder," and "herewith" refer to this Indenture;
(3) The terms used herein and defined in Schedule
A to this Indenture shall have the respective meanings stated
in said Schedule.
ARTICLE FIFTH
ADDITIONS, DELETIONS, AND AMENDMENTS TO EXHIBIT 1
The following additions, deletions, and amendments are hereby made to
Exhibit 1 to this Indenture:
(a) Concerning Section 2.04. The Shipowner and the Indenture
Trustee shall not enter into any Supplemental Indenture, and the Indenture
Trustee shall not enter into any supplement to the Authorization Agreement,
pursuant to Section 2.04 of Exhibit 1 to this Indenture, except to provide for
the issuance of additional Obligations of any series and Stated Maturity
theretofore issued, or of one or more additional series for the purpose of
aiding in financing or refinancing the construction, reconstruction, or
reconditioning of one or more of the Vessels, or to refund Obligations issued
for such purpose.
(b) Concerning Section 2.12. With respect to clause (1) of the
proviso to Section 2.12 of Exhibit 1 to the Indenture, a written agreement of
indemnity, which is satisfactory in form and substance to the Secretary, the
Shipowner, and the Indenture Trustee, executed and delivered by an
institutional Holder having a capital and surplus of at least $100,000,000
shall be considered sufficient indemnity to the Secretary, the Shipowner, and
the Indenture Trustee in connection with the execution, authentication, and
delivery of any new Obligations or the making of any payment as contemplated by
said Section 2.12.
(c) Concerning Notices of Transition Date and Stated Maturity.
Article II of Exhibit 1 hereto is hereby amended by adding a new Section 2.14
as follows:
"Section 2.14. Notices of the Transition Date and Stated
Maturity. (a) Not more than 30 days after the Transition Date, a
notice (indicating (1) the Transition Date, (2) the subsequent
Interest Payment Dates on the Bonds, and (3) the date fixed as the
Stated Maturity of the Bonds) shall be given by or on behalf of the
Shipowner or, at the Shipowner's request (provided that, the Indenture
Trustee shall have received such request not more than 20 days after
the Transition Date), by the Indenture Trustee in the name and at the
expense of the Shipowner by mailing a copy of such notice, by first
class mail, postage prepaid, to each Holder of an Outstanding Bond at
his last address appearing on the Obligation Register.
"(b) Each Bond issued by the Shipowner and authenticated
and delivered by the Indenture Trustee subsequent to the date of any
notice referred to in this Section 2.14 shall be appropriately
legended by the Indenture Trustee, in the
- 6 -
<PAGE> 10
name and at the expense of the Shipowner, to reflect the matters set
forth in such notice."
(d) Concerning Payment of the Obligations. Notwithstanding
anything to the contrary in Exhibit 1 hereto, the Obligations to be issued
hereunder shall be payable as to principal, premium (if any), and interest, at
an office or agency maintained by the Shipowner for such purpose at the
Corporate Trust Office of the Indenture Trustee or, at the option of the
Shipowner, as to payments of principal, premium (if any), or interest by check
mailed by such Corporate Trust Office to the addresses of the Obligees as such
addresses shall appear in the Obligation Register, subject in any event to the
provisions hereof concerning home office payment; provided that, upon
redemption in whole of any of the Bonds or upon maturity of any of the Bonds,
the Obligees shall surrender any such Bond, by mail or other means, to the
Indenture Trustee at the office of the Indenture Trustee set forth herein. The
Indenture Trustee agrees that, within 30 days from the date of any payment of
principal or interest when the same shall become due and payable by reason of
maturity or redemption, a Responsible Officer in the Corporate Trust Office of
the Indenture Trustee shall ascertain to his satisfaction that checks in
payment of such amounts have been mailed by such Corporate Trust Office to the
addresses of the Obligees as provided above, if payment is to be made by check
or, if payment is to be made by wire transfer or by credit to an account
maintained by the Obligee with the Indenture Trustee, that such funds have been
wired or credited or, if payment is to be made at the Corporate Trust Office,
that funds were held by the Indenture Trustee for such payment on the date the
payment was due. The Indenture Trustee shall have no obligation to determine
whether such checks or payments were received by the Obligees.
(e) Concerning Selection of Bonds to be Redeemed. Notwithstanding
the provisions of Section 3.07(b) of Exhibit 1 to this Indenture, (i) if less
than all the Bonds are to be optionally redeemed under any of the provisions
contained or referred to in Article Third hereof or Article III of said Exhibit
1, the Indenture Trustee shall select for redemption Bonds of the Stated
Maturity or Stated Maturities and (ii) if less than all the Bonds of a
particular Stated Maturity are to be redeemed under any provisions contained or
referred to in Article Third hereof or Article III of Exhibit 1 to this
Indenture, the Indenture Trustee shall select the particular Bonds and/or
portion ($1,000 or any integral multiple thereof) of Bonds to be redeemed on
the Redemption Date by allocating the principal amount to be redeemed among the
Holders of Bonds of such Stated Maturity in proportion to the respective
principal amount of Bonds of such Stated Maturity registered in their
respective names, making adjustments so the principal amount of any Obligation
to be redeemed shall be $1,000 or an integral multiple thereof.
(f) Concerning References to Section 3.09(b). All
cross-references to Section 3.09(b) made in Exhibit 1 hereto shall be deemed to
refer to Section 3.10(b) of Exhibit 1 hereto.
(g) Concerning Home Office Payment. Notwithstanding any terms of
this Indenture or the Obligations to the contrary, the Shipowner may enter into
an agreement with any Holder of an Obligation providing for payment to such
Holder by bank check or, at the request of such Holder, by credit to an account
maintained by the Holder with the Indenture Trustee or by wire transfer of the
principal of and the premium (if any) and interest on such Obligation or any
part
- 7 -
<PAGE> 11
thereof at a place other than the place or places specified in such Obligation
as the place for such payment, and for the making of notation (if any) of such
payment on such Obligation by such Holder or by an agent of the Shipowner or of
the Indenture Trustee without presentation of such Obligation. The Shipowner
will furnish to the Indenture Trustee a copy of each such agreement. The
Indenture Trustee hereby consents to such agreement contained in Section 7 of
the Bond Purchase Agreement dated as of August 15, 1996, between the Shipowner
and the Purchaser named therein and hereby acknowledges receipt of a copy
thereof.
(h) Concerning Section 5.02. The second sentence of Section 5.02
of Exhibit 1 to this Indenture is amended by inserting immediately following
the words "date fixed for each such payment" the words "funds of the type
required by the Indenture for such payment and in."
(i) Concerning Section 7.02. The amount "$3,000,000" in Section
7.02 of Exhibit 1 hereto is hereby deleted and there is substituted therefor
the amount "$25,000,000."
(j) Concerning Section 10.01. Paragraph (2) of Section 10.01 of
Exhibit 1 to this Indenture is deleted and the following substituted in lieu
thereof:
"(2) to evidence the succession pursuant to Article VIII
of another corporation or entity to the Shipowner or any
assumption of all or a part of the Obligations pursuant to
Article VIII;".
(k) Concerning Notices. Subject to the provisions of Section
13.01 of Exhibit 1 to this Indenture, any notice, request, demand, direction,
consent, waiver, approval, or other communication to be given to a party hereto
or the Secretary shall be deemed to have been sufficiently given or made when
addressed to:
The Indenture Trustee as: FIRST NATIONAL BANK OF COMMERCE
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Corporate Trust Department
The Shipowner as: GLOBAL INDUSTRIES, LTD.
107 Global Circle
Lafayette, Louisiana 70503
The Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Department of Transportation
400 Seventh Street, S.W.
Washington, D.C. 20590
(l) Concerning Applicable Law. This Indenture and each Obligation
shall be governed by the laws of the United States and, to the extent
applicable, the laws of the State of Louisiana.
- 8 -
<PAGE> 12
(m) Execution of Counterparts. This Indenture may be executed in
any number of counterparts. All such counterparts shall be deemed to be
originals and shall constitute but one and the same instrument.
- 9 -
<PAGE> 13
IN WITNESS WHEREOF, this Indenture has been duly executed by the
Shipowner effective as of the day and year first above written.
GLOBAL INDUSTRIES, LTD.,
SHIPOWNER
(SEAL) By: /s/ WILLIAM J. DORE
----------------------------
President
Attest:
/s/ MICHAEL J. POLLOCK
- ------------------------------
Vice President
- 10 -
<PAGE> 14
IN WITNESS WHEREOF, this Indenture has been duly executed by the
Indenture Trustee effective as of the day and year first above written.
FIRST NATIONAL BANK OF COMMERCE,
INDENTURE TRUSTEE
By: /s/ TIMOTHY C. BRENNAN
--------------------------------
Assistant Vice President
- 11 -
<PAGE> 1
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is made as of the 31st
day of May, 1996, by and between Global Industries, Ltd., a Louisiana
corporation (the "Company"), and______________________ (the "Indemnitee").
RECITALS
A. The Indemnitee is presently serving as a director and/or an
officer of the Company and/or, at the request of the Company, in an Authorized
Capacity (as defined below) of or for Another Entity (as defined below). The
Company desires the Indemnitee to continue in such capacity. The Company
believes that the Indemnitee's undertaking or continued undertaking of such
responsibilities is important to the Company and that the protection afforded
by this Agreement will enhance the Indemnitee's ability to discharge such
responsibilities under existing circumstances. The Indemnitee is willing,
subject to certain conditions including without limitation the execution and
performance of this Agreement by the Company and the Company's agreement to
provide the Indemnitee at all times the broadest and most favorable (to
Indemnitee) indemnification permitted by applicable law (whether by legislative
action or judicial decision), to continue in that capacity.
B. In addition to the indemnification to which the Indemnitee is
entitled under the Restated Articles of Incorporation of the Company (the
"Articles") and the By-Laws of the Company, as amended (the "By-Laws"), the
Company may obtain insurance protecting its officers and directors and certain
other persons (including the Indemnitee) against certain losses arising out of
actual or threatened actions, suits or proceedings to which such persons may be
made or threatened to be made parties ("D&O Insurance"). The Company, however,
may be unable to obtain such insurance, and, if obtained, there can be no
assurance as to the continuation or renewal thereof, or that any such insurance
will provide coverage for losses to which the Indemnitee may be exposed and for
which he or she may be permitted to be indemnified under the Louisiana Business
Corporation Law (the "LBCL").
Now, therefore, for and in consideration of the premises, the mutual
promises hereinafter set forth, the reliance of the Indemnitee hereon in
continuing to serve the Company or Another Entity in his or her present
capacity and in undertaking to serve the Company or Another Entity in any
additional capacity or capacities, the Company and the Indemnitee agree as
follows:
1. CONTINUED SERVICE. The Indemnitee will serve or continue to
serve as a director or an officer of the Company or in each such Authorized
Capacity of or for Another Entity, in each case so long as he or she is duly
elected and qualified to serve in such capacity or until he or she resigns or
is removed. The Indemnitee may at any time and for any reason resign from such
position (subject to any contractual obligations which Indemnitee shall have
assumed apart from this Agreement) and neither the Company nor any affiliate of
the Company shall have any obligation under this Agreement to continue the
Indemnitee in any such position.
2. INITIAL INDEMNITY. (a) The Company will indemnify the
Indemnitee when he or she was or is involved in any manner (including without
limitation as a party or as a deponent or witness) or is threatened to be made
so involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, formal or informal,
and any appeals therefrom (a "Proceeding") (other than a Proceeding by or in
the right of the Company), by reason of the fact that he or she is or was or
had agreed to become a director, officer, employee or agent of the Company, or
is or was serving or had agreed to serve at the request of the Company as a
director, officer, partner, member, trustee, employee or agent (each an
"Authorized Capacity") of another business, foreign or nonprofit corporation,
partnership, joint venture, trust or other enterprise (each "Another Entity"),
or by reason of any action alleged to have been taken or omitted in such
capacity, against any and all costs, charges and expenses (including attorneys'
and others' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such Proceeding if the
Indemnitee acted in good faith and in a manner that he or she reasonably
believed to be in, or not opposed to, the best interests of the Company, and,
with respect
<PAGE> 2
to any criminal Proceeding, the Indemnitee had no reasonable cause to believe
his or her conduct was unlawful. The termination of any Proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent will not, of itself, adversely affect the right of the
Indemnitee to indemnification or create a presumption that the Indemnitee did
not meet the foregoing standard of conduct to the extent applicable thereto.
(b) The Company will indemnify the Indemnitee when he or she was
or is involved in any manner (including without limitation as a party, deponent
or witness) or is threatened to be made so involved in any Proceeding by or in
the right of the Company to procure a judgment in its favor by reason of the
fact that he or she is or was or had agreed to become a director, officer,
employee or agent of the Company, or is or was serving or had agreed to serve
at the request of the Company in an Authorized Capacity of or for Another
Entity, against any and all costs, charges and expenses (including attorneys'
and others' fees), and amounts paid in settlement not exceeding, in the
judgment of the Board of Directors, the estimated expense of litigating the
Proceeding to conclusion, actually and reasonably incurred by him or her in
connection with the defense or settlement of such Proceeding if the Indemnitee
acted in good faith and in a manner that he or she reasonably believed to be in
or not opposed to the best interests of the Company, except that no
indemnification will be made in respect of any claim, issue or matter as to
which the Indemnitee shall have been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefor, to be liable for
willful or intentional misconduct in the performance of his or her duty to the
Company unless, and only to the extent, that the court in which the Proceeding
was brought determines upon application that, despite the adjudication of
liability but in view of all circumstances of the case, the Indemnitee is
fairly and reasonably entitled to indemnity for such costs, charges and
expenses which the court deems proper.
(c) To the extent that the Indemnitee has been successful on the
merits or otherwise, including without limitation the dismissal of a Proceeding
without prejudice, in the defense of any Proceeding referred to in Section 2(a)
or Section 2(b) or in the defense of any claim, issue or matter in any such
Proceeding, the Company will indemnify him or her against any and all costs,
charges and expenses, including without limitation attorneys' and others' fees,
actually and reasonably incurred by him or her in connection therewith.
(d) Any indemnification under Section 2(a), Section 2(b) or
Section 2(c) (unless ordered by a court) will be made by the Company only as
authorized in the specific case upon a determination, in accordance with
Section 4, that such indemnification is proper in the circumstances because he
or she has met the applicable standards of conduct set forth in Section 2(a)
and Section 2(b) (the "Indemnification Standards"). Such determination will be
made in the manner set forth in Section 4(b).
(e) Any and all costs, charges and expenses, including without
limitation attorneys' and others' fees, actually and reasonably incurred by the
Indemnitee in defending any Proceeding will be paid by the Company as incurred
and in advance of the final disposition of such Proceeding in accordance with
the procedure set forth in Section 4(e).
(f) Notwithstanding anything in this Agreement to the contrary,
the Indemnitee will not be entitled to indemnification or advancement of
expenses pursuant hereto in connection with any Proceeding initiated by the
Indemnitee against the Company (except for any Proceeding initiated by the
Indemnitee pursuant to Section 6) unless the Company has joined in or consented
to the initiation of such Proceeding.
3. ADDITIONAL INDEMNIFICATION. (a) Pursuant to Section 12:83E of
the LBCL, without limiting any right which the Indemnitee may have under
Section 2, the Articles, the By-Laws, the LBCL, any policy of insurance or
otherwise, but subject to the limitations set forth in Section 2(f) and to any
maximum permissible indemnity that may exist under applicable law at the time
of any request for indemnity hereunder as contemplated by this Section 3(a),
the Company will indemnify the Indemnitee against any amount which he or she is
or becomes legally obligated to pay relating to or arising out of any claim
made against him or her because of any act, failure to act or neglect or breach
of duty, including any actual or alleged error, omission, misstatement or
misleading statement, which he or she commits, suffers, permits or acquiesces
<PAGE> 3
in while acting in his or her capacity as a director or officer of the Company,
or, at the request of the Company, in an Authorized Capacity of or for Another
Entity. The payments which the Company is obligated to make pursuant to this
Section 3 will include without limitation damages, judgments, amounts paid in
settlement, fines and reasonable charges, costs, expenses, including attorneys'
fees, expenses of investigation, preparation, defense and settlement of
Proceedings, and expenses of appeal, attachment or similar bonds; provided,
however, that the Company will not be obligated under this Section 3(a) to make
any payment in connection with any claim against the Indemnitee:
(i) to the extent of any fine or similar governmental
imposition which the Company is prohibited by applicable law from
paying and which results from a final, nonappealable order; or
(ii) to the extent based upon or attributable to the
Indemnitee gaining in fact a personal profit to which he or she was
not legally entitled, including without limitation profits made from
the purchase and sale of equity securities of the Company which are
recoverable by the Company pursuant to Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and profits
arising from transactions in securities which were effected in
violation of Section 10(b) or Section 14(e) of the Exchange Act,
including Rule 10b-5 or Rule 14e-3 promulgated thereunder; or
(iii) to the extent such claim is the result of the
Indemnitees's willful or intentional misconduct.
The determination of whether the Indemnitee is entitled to indemnification
under this Section 3(a) shall be made in accordance with Section 4(b).
(b) Any and all costs, charges and expenses, including without
limitation attorneys' and others' fees, actually and reasonably incurred by the
Indemnitee in connection with any claim for which the Indemnitee may be
entitled to indemnification pursuant to Section 3(a) will be paid by the
Company as incurred and in advance of the final disposition thereof in
accordance with the procedure set forth in Section 4(e).
4. CERTAIN PROCEDURES RELATING TO INDEMNIFICATION AND ADVANCEMENT
OF EXPENSES. (a) Except as otherwise permitted or required by the LBCL, for
purposes of pursuing his or her rights to indemnification under Section 2(a),
Section 2(b), Section 2(c) or Section 3(a), as the case may be, the Indemnitee
shall submit to the Company (to the attention of the Secretary) a statement of
request for indemnification substantially in the form of Exhibit 1 attached
hereto (the "Indemnification Statement") stating that he or she believes that
he or she is entitled to indemnification pursuant to this Agreement, together
with such documents supporting the request as are reasonably available to the
Indemnitee and are reasonably necessary to determine whether and to what extent
the Indemnitee is entitled to indemnification hereunder (the "Supporting
Documentation"). Upon receipt of any Indemnification Statement the Company
will promptly advise the Board of Directors of the Company (the "Board") in
writing that the Indemnitee has requested indemnification.
(b) The Indemnitee's entitlement to indemnification under Section
2(a), Section 2(b), Section 2(c) or Section 3(a), as the case may be, will be
determined promptly following a claim by the Indemnitee for indemnification
thereunder, and in any event not more than 30 calendar days after receipt by
the Company of such Indemnification Statement and Supporting Documentation.
The Indemnitee's entitlement to indemnification under 2(a) or Section 2(b)
will, subject to the next sentence, be made in one of the following ways: (i)
by the Board by a majority vote of a quorum consisting of directors who are or
were not parties to such Proceeding or claim ("Disinterested Directors"), or
(ii) by written opinion of independent legal counsel selected by a majority of
the Disinterested Directors (or, if there are no Disinterested Directors or a
majority vote thereof is not obtainable, by a majority of the entire Board) and
to which the Indemnitee does not reasonably object, if a quorum of the Board
consisting of Disinterested Directors is not obtainable and the Board so
directs or, even if obtainable, the quorum of Disinterested Directors so
directs, or (iii) by the stockholders of the Company (but only if a majority of
Disinterested Directors, if they constitute a quorum of the Board, presents the
issue of entitlement to indemnification to the stockholders of the Company
<PAGE> 4
for their determination), or (iv) as deemed to have been determined in
accordance with Section 4(c). The Indemnitee's entitlement to indemnification
under Section 2(c), Section 3(a) or, in the event of a Change of Control (as
hereinafter defined), under Section 2(a) or Section 2(b) will be determined by
written opinion of independent legal counsel selected by the Indemnitee.
Independent legal counsel selected as described above will be a law firm or
member of a law firm (x) that neither at the time in question nor in the five
years immediately preceding such time has been retained to represent (A) the
Company (or any of its affiliates) or the Indemnitee in any matter material to
either such party or (B) any other party to the Proceeding or claim giving rise
to a claim for indemnification under this Agreement, (y) that, under the
applicable standards of professional conduct then prevailing under the law of
the State of Louisiana, would not be precluded from representing either the
Company or the Indemnitee in an action to determine the Indemnitee's rights
under this Agreement and (z) to which the Indemnitee or the Company, acting
therein through a majority of the Disinterested Directors or, if there are no
Disinterested Directors, by a majority of the entire Board, does not reasonably
object. If the Company or the Indemnitee reasonably objects to such
independent legal counsel the Company, acting therein as hereinbefore provided,
or the Indemnitee shall select another independent legal counsel subject to
similar reasonable objection until there is no further such objection to such
independent legal counsel. The Company will pay the fees and expenses of such
independent legal counsel.
(c) Submission of an Indemnification Statement and Supporting
Documentation to the Company pursuant to Section 4(b) will create a presumption
that the Indemnitee is entitled to indemnification under Section 2(a), Section
2(b), Section 2(c) or Section 3(a), as the case may be, and thereafter the
Company will have the burden of proof to overcome that presumption in reaching
a contrary determination. In any event, the Indemnitee will be deemed to be
entitled to indemnification under Section 2(a), Section 2(b), Section 2(c) or
Section 3(a) herein unless, within the 30-calendar day period following receipt
by the Company of such Indemnification Statement and Supporting Documentation,
the person or persons empowered under Section 4(b) to determine the
Indemnitee's entitlement to indemnification have been appointed and have made a
determination, based upon clear and convincing evidence (sufficient to rebut
the foregoing presumption), that the Indemnitee is not entitled to such
indemnification and the Indemnitee has received notice within such period in
writing of such determination. The foregoing notice shall (i) disclose with
particularity the evidence in support of such determination and (ii) be sworn
to by all persons who participated in the determination and voted to deny
indemnification or, if such determination was made by independent legal
counsel, include a signed copy of the related written opinion of such counsel.
The provisions of this Section 4(c) are intended to be procedural only; any
determination pursuant to this Section 4(c) that the Indemnitee is not entitled
to indemnification and any related failure to make the payments requested in
the Indemnification Statement will be subject to review as provided in Section
6.
(d) If a determination is made or deemed to have been made
pursuant to this Section 4 that the Indemnitee is entitled to indemnification,
the Company will pay to the Indemnitee the amounts to which the Indemnitee is
entitled within five business days after such determination of entitlement to
indemnification has been made or deemed to have been made.
(e) In order to obtain advancement of expenses pursuant to Section
2(e), the Indemnitee will submit to the Company a written undertaking
substantially in the form of Exhibit 2 attached hereto, executed personally or
on his or her behalf (the "Undertaking"), stating that (i) he or she has
incurred or will incur actual expenses in defending a Proceeding and (ii) if
and to the extent required by law at the time of such advance, he or she
undertakes to repay such amounts advanced as to which it may ultimately be
determined that the Indemnitee is not entitled. In order to obtain advancement
of expenses pursuant to Section 3(b), the Indemnitee may submit an Undertaking
or, if the Indemnitee chooses not to submit an Undertaking, shall submit such
other form of request as he or she determines to be appropriate (an "Expense
Request"). Upon receipt of an Undertaking or Expense Request, as the case may
be, the Company will within 5 calendar days make payment of the costs, charges
and expenses stated in the Undertaking or Expense Request. No security will be
required in connection with any Undertaking or Expense Request and any
Undertaking or Expense Request will be accepted, and all such payments shall be
made, without reference to the Indemnitee's ability to make repayment.
<PAGE> 5
5. DUPLICATION OF PAYMENTS. The Company will not be liable under
this Agreement to make any payment in connection with any claim made against
the Indemnitee to the extent the Indemnitee has actually received payment
(under any insurance policy, the Articles, the By-Laws, the LBCL or otherwise)
of the amount otherwise payable hereunder.
6. ENFORCEMENT. (a) If a claim for indemnification or
advancement of expenses made to the Company pursuant to Section 4 is not timely
paid in full by the Company as required by Section 4, the Indemnitee will be
entitled to seek judicial enforcement of the Company's obligations to make such
payments. If a determination is made pursuant to Section 4 that the Indemnitee
is not entitled to indemnification or advancement of expenses hereunder, (i)
the Indemnitee may at any time thereafter seek an adjudication of his or her
entitlement to such indemnification or advancement either, at the Indemnitee's
sole option, in (A) an appropriate court of the State of Louisiana or any other
court of competent jurisdiction or (B) an arbitration to be conducted by a
single arbitrator pursuant to the rules of the American Arbitration
Association, (ii) any such judicial proceeding or arbitration will be de novo
and the Indemnitee will not be prejudiced by reason of such prior adverse
determination, and (iii) in any such judicial proceeding or arbitration the
Company will have the burden of proving that the Indemnitee is not entitled to
indemnification or advancement of expenses under this Agreement.
(b) The Company will be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to the provisions of Section 6(a)
that the procedures and presumptions of this Agreement are not valid, binding
and enforceable and will stipulate in any such court or before any such
arbitrator that the Company is bound by all the provisions of this Agreement.
(c) In any action brought under Section 6(a), it will be a defense
to a claim for indemnification pursuant to Section 2(a) or Section 2(b) (but
not an action brought to enforce a claim for costs, charges and expenses
incurred in defending any Proceeding in advance of its final disposition where
the Undertaking, if any is required, has been tendered to the Company) that the
Indemnitee has not met the standards of conduct which make it permissible under
the LBCL for the Company to indemnify the Indemnitee for the amount claimed,
but the burden of proving such defense will be on the Company. Neither the
failure of the Company (including any person or persons empowered under Section
4(b) to determine the Indemnitee's entitlement to indemnification) to have made
a determination as to the propriety of indemnification of the Indemnitee
hereunder prior to commencement of such action nor an actual determination by
the Company (including any person or persons empowered under Section 4(b) to
determine the Indemnitee's entitlement to indemnification) that the Indemnitee
has not met the applicable standard of conduct hereunder will be a defense to
the action or create a presumption that the Indemnitee has not met the
applicable standard of conduct.
(d) It is the intent of the Company that the Indemnitee shall not
be required to incur the expenses associated with the enforcement of his or her
rights under this Agreement by litigation or other legal action because the
cost and expense thereof would substantially detract from the benefits intended
to be extended to the Indemnitee hereunder. Accordingly, if it should appear
to the Indemnitee that the Company has failed to comply with any of its
obligations under this Agreement, or if the Company or any other person takes
any action to declare this Agreement void or unenforceable or institutes any
action, suit or proceeding designed (or having the effect of being designed) to
deny, or to recover from, the Indemnitee the benefits intended to be provided
to the Indemnitee hereunder, the Company irrevocably authorizes the Indemnitee
from time to time to retain counsel of his or her choice, at the expense of the
Company as hereafter provided, to represent the Indemnitee in connection with
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 the Indemnitee's entering into an
attorney-client relationship with such counsel, and in that connection the
Company and the Indemnitee acknowledge that a confidential relationship will
exist between the Indemnitee and such counsel. Regardless of the outcome
thereof, the Company will pay and be solely responsible for any and all costs,
charges and expenses, including without limitation attorneys' and others' fees,
incurred by the Indemnitee (i) as a result of the Company's failure to perform
this Agreement or any provision hereof or (ii) as a result of the Company or
any person contesting the validity or enforceability of this Agreement or any
provision hereof as aforesaid.
7. LIABILITY INSURANCE AND FUNDING. If the Company obtains D&O
Insurance, the Company
<PAGE> 6
will use its best efforts, subject to commercial reasonability, to maintain
such insurance in force at the Company's sole expense. To the extent that the
Company obtains or maintains D&O Insurance, the Indemnitee will be covered by
such policy or policies, in accordance with its or their terms, to the maximum
extent of the coverage available for a director or officer of the Company or a
person serving at the request of the Company in an Authorized Capacity of or
for Another Entity, as the case may be. The Company may, but shall not be
required to, create a trust fund, grant a security interest or use other means
(including without limitation a letter of credit) to ensure the payment of such
amounts as may be necessary to satisfy its obligations to indemnify and advance
expenses pursuant to this Agreement.
8. FUNDAMENTAL CHANGE OR CHANGE OF CONTROL. (a) If the Company
sells or otherwise disposes of all or substantially all of its assets or is a
constituent corporation in a consolidation, merger or other business
combination transaction or if there is a Change of Control (as defined below)
of the Company, (i) the Company will require (if it is not the surviving,
resulting or acquiring corporation therein) the surviving, resulting or
acquiring corporation expressly to assume the Company's obligations under this
Agreement and to agree to indemnify the Indemnitee to the full extent provided
herein and (ii), whether or not the Company is the resulting, surviving or
acquiring corporation in any such transaction (or Change of Control), the
Indemnitee will also stand in the same position under this Agreement with
respect to the resulting, surviving or acquiring corporation as he or she would
have with respect to the Company if the transaction (or Change of Control) had
not occurred.
(b) The Company agrees that, if there is a Change of Control of the
Company (other than a Change of Control which has been approved by a majority
of the Company's Board who were directors immediately prior to such Change of
Control), then with respect to all matters thereafter arising concerning the
rights of the Indemnitee to indemnity payments and advancement of expenses
under this Agreement or any other agreement or Articles or Bylaw provision now
or hereafter in effect, the Company shall seek legal advice only from
independent legal counsel selected as provided in Section 4(b). Such counsel,
among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent the Indemnitee would be permitted
to be indemnified under applicable law. The Company agrees to pay the
reasonable fees of such independent legal counsel and to indemnify such counsel
fully against any and all expenses (including attorneys' fees), claims,
liabilities and damages arising out of or relating to this Agreement or its
engagement pursuant hereto.
(c) For purposes of this Agreement, a "Change of Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) together with its affiliates, other than
William J. Dore, together with his affiliates, or a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing [20%] or more of the total voting power represented by the
Company's then outstanding Voting Securities, or (ii) the individuals who
constitute the Board on the date of this Agreement (the "Incumbent Board")
cease for any reason to constitute at least a majority thereof (provided that
any person who becomes a director subsequent to the date of this Agreement
whose election or nomination for election by the Company's stockholders was
approved by a vote of at least 80% of the directors comprising the Incumbent
Board shall be considered as though such person were a member of the Incumbent
Board, (iii) or the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or (v) an
agreement for the sale or disposition by the Company of (in one transaction or
a series of transactions) all or substantially all the Company's assets.
9. PARTIAL INDEMNITY. If the Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of the costs, charges, expenses, judgments, fines and amounts paid in
settlement of a Proceeding but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Indemnitee for the portion thereof to
which the Indemnitee is entitled.
<PAGE> 7
10. NONEXCLUSIVITY AND SEVERABILITY. (a) The right to
indemnification and advancement of expenses provided by this Agreement is not
exclusive of any other right to which the Indemnitee may be entitled under the
Articles, the By-Laws, the LBCL, any other statute, insurance policy,
agreement, vote of stockholders or of directors or otherwise, both as to
actions in his or her official capacity and as to actions in another capacity
while holding such office, and will continue after the Indemnitee has ceased to
serve as a director or officer of the Company or in an Authorized Capacity in
or for Another Entity and will inure to the benefit of his or her heirs,
executors and administrators; provided, however, that to the extent the
Indemnitee otherwise would have any greater right to indemnification or
advancement of expenses under any provision of the Articles or By-Laws as in
effect on the date hereof, the Indemnitee will be deemed to have such greater
right pursuant to this Agreement; and, provided further, that inasmuch as it is
the intention of the Company to provide the Indemnitee with the broadest and
most favorable (to the Indemnitee) indemnity permitted by applicable law
(whether by legislative action or judicial decision), to the extent that the
LBCL currently permits or in the future permits (whether by legislative action
or judicial decision) any greater right to indemnification or advancement of
expenses than that provided under this Agreement as of the date hereof, the
Indemnitee will automatically, without the necessity of any further action by
the Company or the Indemnitee, be deemed to have such greater right pursuant to
this Agreement. Similarly, the Indemnitee shall have the benefit of any future
changes to the Articles or the By-Laws which grant or permit any greater right
to indemnification or advancement of expenses.
(b) The Company will not adopt any amendment to the Articles or
By-Laws the effect of which would be to deny, diminish or encumber the
Indemnitee's rights to indemnity pursuant to the Articles of Incorporation of
the Company, By-Laws, the LBCL or any other applicable law as applied to any
act or failure to act occurring in whole or in part prior to the date upon
which any such amendment was approved by the Board or the stockholders, as the
case may be. Notwithstanding the foregoing, in the event that the Company
adopts any amendment to the Articles or By-Laws the purported effect of which
is to so deny, diminish or encumber the Indemnitee's rights to such indemnity,
such amendment will apply only to acts or failures to act occurring entirely
after the effective date thereof.
(c) If any provision or provisions of this Agreement are held to
be invalid, illegal or unenforceable for any reason whatsoever: (i) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation all portions of any paragraph of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) will
not in any way be affected or impaired thereby and (ii) to the fullest extent
possible, the provisions of this Agreement (including without limitation all
portions of any paragraph of this Agreement containing any such provision held
to be invalid, illegal or unenforceable, that are not themselves invalid,
illegal or unenforceable) will be construed so as to give effect to the intent
manifested by the provision held invalid, illegal or unenforceable. No claim
or right to indemnity or advancement of expenses pursuant to Section 3 hereof
shall in any way affect or limit any right which the Indemnitee may have under
Section 2 hereof, the Articles, the By-Laws, the LBCL, any policy of insurance
or otherwise.
11. GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of Louisiana, without giving
effect to the principles of conflict of laws thereof.
12. MODIFICATION; SURVIVAL. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof; provided,
however, that this provision shall not be construed to affect the Company's
obligations to the Indemnitee under the Articles or the By-Laws. This
Agreement may be modified only by an instrument in writing signed by both
parties hereto. The provisions of this Agreement will survive the death,
disability, or incapacity of the Indemnitee or the termination of the
Indemnitee's service as a director or an officer of the Company or in an
Authorized Capacity of or for Another Entity and will inure to the benefit of
the Indemnitee's heirs, executors and administrators.
13. CERTAIN TERMS. For purposes of this Agreement, references to
a person's capacity as a "director" shall include without limitation such
person's capacity as a member of any committee appointed by the board of which
such person is a director; references to "Another Entity" will include employee
benefit plans; references to "fines" will include any excise taxes assessed on
the Indemnitee with respect to any employee benefit plan; and references to
"serving at the request of the Company" will include any service in any
capacity which imposes duties on, or involves services by, the Indemnitee with
respect to an employee benefit plan, its participants or beneficiaries;
references to Sections or Exhibits are to Sections or Exhibits
<PAGE> 8
of or to this Agreement; references to the singular will include the plural and
vice versa; and if the Indemnitee acted in good faith and in a manner he or she
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan he or she will be deemed to have acted in a "manner
not opposed to the best interests of the Company" as referred to herein;
references to "Voting Securities" shall mean any securities of the Company
which vote generally in the election of directors.
14. JOINT DEFENSE. Notwithstanding anything to the contrary
contained herein, if (a) the Indemnitee elects to retain counsel in connection
with any Proceeding or claim in respect of which indemnification may be sought
by the Indemnitee against the Company pursuant to this Agreement and (b) any
other director or officer of the Company or person serving at the request of
the Company in an Authorized Capacity of or for Another Entity may also be
subject to liability arising out of such Proceeding or claim and in connection
with such Proceeding or claim seeks indemnification against the Company
pursuant to an agreement similar to this Agreement, the Indemnitee, together
with such other persons, will employ counsel to represent jointly the
Indemnitee and such other persons unless the Indemnitee determines that such
joint representation would be precluded under the applicable standards of
professional conduct then prevailing under the law of the State of Louisiana,
in which case the Indemnitee will notify the Company (to the attention of the
Secretary) thereof and will be entitled to be represented by separate counsel.
15. EXPRESS NEGLIGENCE ACKNOWLEDGMENT. WITHOUT LIMITING OR
ENLARGING THE SCOPE OF THE INDEMNIFICATION OBLIGATIONS SET FORTH IN THIS
AGREEMENT, THE INDEMNITEE WILL BE ENTITLED TO INDEMNIFICATION HEREUNDER IN
ACCORDANCE WITH THE TERMS HEREOF, REGARDLESS OF WHETHER THE CLAIM GIVING RISE
TO SUCH INDEMNIFICATION OBLIGATION IS THE RESULT OF THE SOLE, CONCURRENT OR
COMPARATIVE NEGLIGENCE, OR STRICT LIABILITY, OF THE INDEMNITEE.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
GLOBAL INDUSTRIES, LTD.
By:
--------------------------------
INDEMNITEE
Name:
-------------------------------
<PAGE> 9
EXHIBIT 1
INDEMNIFICATION STATEMENT
1. This Indemnification Statement is submitted pursuant to the
Indemnification Agreement, dated as of _____________, 199___ (the
"Indemnification Agreement"), between Global Industries, Ltd., a Louisiana
corporation (the Company"), and the undersigned.
2. I am requesting indemnification in connection with a
Proceeding (as defined in the Indemnification Agreement) or claim in which I
was or am involved or am threatened to be made involved.
3. With respect to all matters related to any such Proceeding or
claim, I believe that I am entitled to be indemnified pursuant to the
provisions of the Indemnification Agreement.
4. Without limiting any other rights which I have or may have, I
am requesting indemnification against liabilities which have or may arise out
of ____________________________________________________________________________
_____________.
5. I have attached such documents supporting this request as are
reasonably available to me and are reasonably necessary to determine whether
and to what extent I am entitled to indemnification under the Indemnification
Agreement.
Name:
------------------------------
<PAGE> 10
EXHIBIT 2
UNDERTAKING
1. This Undertaking is submitted pursuant to the Indemnification
Agreement, dated as of ______________, 199__ (the "Indemnification
Agreement"), between Global Industries, Ltd., a Louisiana corporation (the
"Company"), and the undersigned.
2. I am requesting advancement of certain costs, charges and
expenses (including attorneys' and others' fees) which I have incurred or will
incur in defending a Proceeding (as defined in the Indemnification Agreement)
or in connection with a claim for which I may be entitled to indemnification
pursuant to the Indemnification Agreement.
3. I hereby undertake to repay this advancement of expenses if it
is ultimately determined that I am not entitled to be indemnified by the
Company under the Indemnification Agreement.
4. The costs, charges and expenses for which advancement is
requested are, in general, all expenses related to ____________________________
____________________.
Name:
-------------------------------
<PAGE> 1
FIRST AMENDMENT TO
GLOBAL INDUSTRIES, LTD.
1995 EMPLOYEE STOCK PURCHASE PLAN
WHEREAS, the requirements of Rule 16b-3 regarding stockholder approval of
benefit plans and amendments thereto have recently been amended; and
WHEREAS, the Company desires to amend the Global Industries, Ltd. 1995 Employee
Stock Purchase Plan (the "Plan") to permit more flexibility in amending the
Plan as permitted by the new Rule 16b-3.
NOW THEREFORE the Global Industries, Ltd. 1995 Employee Stock Purchase Plan
(the "Plan") is hereby amended as follows (terms not otherwise defined have the
meaning ascribed to them in the Plan), effective as of February 12, 1997:
1. Paragraph 15 of the Plan shall be amended by replacing such paragraph
with a new paragraph 15 which shall read in its entirety as follows:
15. AMENDMENT OR TERMINATION OF THE PLAN. The Board in its
discretion may terminate the Plan at any time with respect to any
shares for which options have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof
from time to time; provided that no change in any option theretofore
granted may be made which would impair the rights of the optionee
without the consent of the optionee, and provided, further, that the
Board may not, without approval of the stockholders, amend the Plan to
increase the maximum aggregate number of shares that may be issued
under the Plan (other than as a result of the anti-dilution provisions
of the Plan) or cause options under the plan to fail to meet the
requirements of employee stock purchase plan options as defined in
Section 423 of the Code.
2. The Plan as amended and modified by this First Amendment shall remain
in full force and effect, and this First Amendment shall not change or modify
the terms of any options outstanding under the Plan on the date of its
adoption.
Adopted by the Board of Directors
on February 12, 1997
<PAGE> 1
CONTRACT NO. MA-9135
1996 AMENDMENT
ASSIGNMENT AND ASSUMPTION
OF
AUTHORIZATION AGREEMENT
THIS 1996 AMENDMENT, ASSIGNMENT, AND ASSUMPTION OF AUTHORIZATION
AGREEMENT, Contract No. MA-9135, dated as of October, 23, 1996 (the
"Agreement") to Authorization Agreement, dated December 5, 1978, (the
"Authorization Agreement") is between The Bank of New York (The "RESIGNING
INDENTURE TRUSTEE"), The First National Bank of Commerce (the "Successor
Indenture Trustee"), and the United States of America, represented by the
Secretary of Transportation, acting by and through the Maritime Administrator
(the "Secretary"), and together with the Resigning Indenture Trustee and the
Successor Indenture Trustee, (the "Parties").
WHEREAS, pursuant to Section 7.05 of the General Provisions of the
Trust Indenture dated December 5, 1978 (the "Indenture"), between the Resigning
Indenture Trustee and Pipelines, Inc. (Formerly Pipelines, Inc. of Harvey) (the
"Shipowner"), the Resigning Indenture Trustee has notified the Shipowner and
the Bondholders that it intends to resign its appointment under the Indenture
and the Authorization Agreement, and,
WHEREAS, under the provisions of Section 7.06(b) of the Indenture, the
appointment of any Successor Trustee requires the Secretary's consent, and,
pursuant to Section 4.04 of the Authorization Agreement, such Successor is
required to fulfill the obligations of the predecessor Indenture Trustee by
entering into an amendment to the Authorization Agreement.
NOW THEREFORE, in consideration of the premises, the mutual covenants
set forth herein, and for other good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, the Parties agree as follows:
(1) On the date set forth above the Resigning Indenture Trustee
transfers and assigns to the Successor Indenture Trustee all of its rights,
privileges, duties and obligations set forth in the Authorization Agreement, as
amended through the date hereof.
(2) On the date set forth above the Successor Indenture Trustee
hereby:
(a) represents and warrants that it is and at all
times shall be a bank or trust company which is (I) organized
as a corporation doing business under the laws of the United
States or the state of Louisiana; (ii) is authorized under
such laws to exercise corporate trust powers; (iii) is subject
to supervision by Federal or State authority; (iv) has
combined capital and surplus (as set forth in the most recent
published report of condition) of $398,469,000; and (v) shall
not have become incapable of acting or have been adjudged a
bankrupt or an insolvent, shall not have had a receiver
appointed for itself or for any of its property, or shall not
have had a public officer take charge of its property for the
purpose of rehabilitation, conservation or liquidation; and,
(b) assumes all the Resigning Indenture Trustee's
rights, privileges, duties and obligations set forth in the
Authorization Agreement, as amended through the date hereof.
(3) On the date set forth above the Secretary consents to the
resignation of the Resigning indenture Trustee, and to the appointment of the
Successor Indenture Trustee, and to the former's assignment of and the latter's
assumption of the Authorization Agreement, as amended through the date hereof.
(4) This Agreement may be executed in multiple counterparts, all
of which shall be deemed to be originals and together shall constitute one and
the same instrument.
(5) Terms used by undefined herein shall have the meanings
ascribed to them in Schedule A to the Trust Indenture.
<PAGE> 2
IN WITNESS WHEREOF, this 1996 Amendment, Assignment and Assumption of
the Authorization Agreement has been duly executed by the Parties, and is
effective as of the day and year first above written, as evidenced by their
authorized signatures set forth below.
UNITED STATES OF AMERICA
(SEAL) Represented by the Secretary of Transportation
Acting by and through the Maritime
Administrator
Attest:
By: Acting Secretary
- ---------------------------- ------------------------
(SEAL) FIRST NATIONAL BANK OF COMMERCE
Attest:
By:
- ---------------------------- --------------------------------------
Timothy C. Brennan
Assistant Vice President & Trust Officer
(SEAL) THE BANK OF NEW YORK
Attest:
By:
- ---------------------------- --------------------------------------
Authorized Officer
<PAGE> 1
EXHIBIT 21.1
Subsidiaries of the Registrant
(Global Industries, Ltd.)
<TABLE>
<CAPTION>
NAME INCORPORATION
- ---------------------------------------------- --------------------------------
<S> <C>
Global Divers and Contractors, Inc. Louisiana
Global Pipelines PLUS, Inc. Louisiana
Pipelines, Incorporated Louisiana
Global Movible Offshore, Inc. Louisiana
Pelican Transportation, Inc. Louisiana
The Red Adair Company, Inc. Louisiana
Global Industries Offshore, Inc. Delaware
Global Offshore International, Ltd. Cayman Islands
Global International Vessels, Inc. Cayman Islands
Norman Offshore Pipelines, Inc. Louisiana
Global Offshore, Pty. Ltd. Australia
Global Industries Asia Pacific Pte. Ltd. Indonesia
Global Offshore, Pte. Singapore
CCC Fabricaciones y Construcciones, S.A. Mexico
de C.V. (1)
================================================================================
</TABLE>
(1) CCC Fabricaciones y Construcciones, S.A. de C.V. is a 49% owned,
unconsolidated subsidiary.
All other subsidiaries are 100% owned.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
33-58048 & 33-89778 of Global Industries, Ltd. on Form S-8 of our report dated
June 6, 1997 (June 24, 1997 as to Note 13), appearing in this Annual Report on
Form 10-K of Global Industries, Ltd. for the year ended March 31, 1997.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
June 24, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GLOBAL
INDUSTRIES, LTD.'S FINANCIAL STATEMENTS FOR THE TWELVE MONTHS ENDED MARCH 31,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 63,981
<SECURITIES> 0
<RECEIVABLES> 51,762
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 151,642
<PP&E> 243,915
<DEPRECIATION> 0
<TOTAL-ASSETS> 442,687
<CURRENT-LIABILITIES> 47,915
<BONDS> 40,947
0
0
<COMMON> 454
<OTHER-SE> 311,773
<TOTAL-LIABILITY-AND-EQUITY> 422,687
<SALES> 0
<TOTAL-REVENUES> 229,142
<CGS> 0
<TOTAL-COSTS> 165,889
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,358
<INCOME-PRETAX> 48,475
<INCOME-TAX> 14,543
<INCOME-CONTINUING> 33,932
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 33,932
<EPS-PRIMARY> .84
<EPS-DILUTED> 0
</TABLE>
