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 December 31, 1999
[ ] 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 (I.R.S. Employer
of incorporation of organization) Identification Number)
8000 Global Drive 70665
P.O. Box 442, Sulphur, 70664-0442
Louisiana (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (337) 583-5000
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 March 10, 2000 was $866,953,561
based on the last reported sales price of the Common Stock on
March 10, 2000 on the NASDAQ\NMS.
The number of shares of the registrant's Common Stock
outstanding as of March 10, 2000, was 91,414,027.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on May 17, 2000, are
incorporated by reference into Part III hereof.
GLOBAL INDUSTRIES, LTD.
INDEX - FORM 10-K
PART I
Item 1. Business 3
Item 2. Properties 9
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item (Unnumbered). Executive Officers of the Registrant 13
PART II
Item 5. Market for the Registrant's Common Equity and
Related Shareholder Matters 16
Item 6. Selected Financial Data 17
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 18
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk 27
Item 8. Financial Statements and Supplementary Data 28
Independent Auditors' Report 28
Consolidated Balance Sheets - December 31, 1999
and 1998 29
Consolidated Statements of Operations - Year
Ended December 31, 1999, Nine Months Ended
December 31, 1998 and Year Ended March 31, 1998 30
Consolidated Statements of Shareholders' Equity -
Year Ended December 31, 1999, Nine Months Ended
December 31, 1998 and Year Ended March 31, 1998 31
Consolidated Statements of Cash Flows - Year
Ended December 31, 1999, Nine Month Ended
December 31, 1998 and Year Ended March 31, 1998 32
Consolidated Statements of Comprehensive Income
(Loss) - Year Ended December 31, 1999, Nine
Months Ended December 31, 1998 and Year Ended
March 31, 1998 33
Notes to Consolidated Financial Statements 34
Item 9. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure 55
PART III
Item 10. Directors and Executive Officers of the Registrant 56
Item 11. Executive Compensation 56
Item 12. Security Ownership of Certain Beneficial Owners and
Management 56
Item 13. Certain Relationships and Related Transactions 56
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K 57
Signatures 62
PART I
ITEM 1. BUSINESS
Global Industries, Ltd. provides construction services
including, pipeline construction, platform installation and
removal, diving services,and construction support to the offshore
oil and gas industry in the United States Gulf of Mexico (the
"Gulf of Mexico") and in selected international areas. Unless
the context 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 twenty-five years ago and has
used selective acquisitions, new construction, and upgrades to
expand its operations and assets. The Company has the largest
number of offshore construction vessels currently available in the
Gulf of Mexico and its worldwide fleet includes twenty-three barges
that have various combinations of pipelay, pipebury, and derrick
capabilities. The Company's fleet currently includes seventy-two
manned vessels that were available for service during fiscal 1999.
At December 31, 1999 the Company's fleet consisted of seventy-
seven vessels.
In a Transaction Agreement effective July 1, 1999, Global
acquired the offshore marine construction business of CCC and sold
its 49% interest in CCC to CCC's other principal shareholder. Under
the terms of the transaction, Global acquired four marine vessels,
a marine support base at Ciudad del Carmen, Mexico, and existing
contracts to perform approximately $72.0 million of offshore marine
construction.
On December 30, 1999 the Company consummated a new $300.0
million credit facility, which consists of a $175.0 million term
loan facility and a $125.0 million revolving loan facility. This
new facility replaced the Company's previous facility, which
consisted of a $250.0 million revolving credit facility. The
principal purpose of this new credit facility is to extend out the
maturity of the loan and to increase the borrowing capacity of the
Company. Both the term and revolving loan facility mature on
December 30, 2004. The term and revolving loan agreement permit
both prime rate bank borrowings and London Interbank Offered Rate
("Libor") borrowings plus a floating spread. The spread for both
prime rate and Libor borrowings will float up or down based on the
Company's performance as determined by a leverage ratio. The
spreads can range from 0.5% to 1.50% and 1.75% to 2.75% for prime
rate and Libor based rate borrowings, respectively. In addition,
the facility allows for certain fixed rate interest options on
amounts outstanding. Stock of the Company's subsidiaries, certain
real estate, and the majority of the Company's vessels
collateralize the loans under the new credit facility. Both the
term loan and the revolving loan facilities are subject to certain
financial covenants with which the Company was in compliance with
at December 31, 1999.
In February 2000, the Company completed Title XI mortgage
financing for $99.0 million, at 7.71% per annum, for the conversion
of the Hercules. These bonds financed both Phase I and Phase II of
the Hercules conversion. Phase I proceeds, net of fees amounted to
$65.2 million. Phase II proceeds of $29.1 million, reside in
escrow and will be released to the Company once Phase II is
complete, which is expected to occur early in the third quarter of
fiscal 2000. Concurrently with the receipt of the net proceeds of
the bond issue, the Company prepaid $94.2 million of term debt
under its credit agreement. As of February 25, 2000 the Company
had $64.7 million of credit capacity available under its credit
facility and $68.4 in cash and escrow funds.
During 1999, the Company substantially completed construction
of a deepwater support facility and pipebase on 625 acres near
Carlyss, Louisiana, which is adjacent to the Calcasieu Ship Channel
("Carlyss Facility"). The Company replaced its existing
facilities in Houma and Amelia, Louisiana with the Carlyss
facility. Certain of the Company's administrative functions have
also relocated from its Lafayette, Louisiana and Houston, Texas
offices. The Carlyss Facility includes a pipe assembly rack used
for welding and assembly of pipe for spooling onto the Chickasaw
and the Hercules, a barge slip dedicated to pipe spooling operations,
and a large general purpose barge slip. The facility includes office
buildings, mechanics' shops, and storage facilities. Total cost for
completion is approximated at $41.2 million, of which $41.0 million
has been spent as of December 31, 1999. $28.4 million of the costs
have been financed with Port Improvement Revenue Bonds. Also in
fiscal 1999, the Company completed construction of its marine base
in Batam, Indonesia. The total cost of this facility was $16.4 million.
DESCRIPTION OF OPERATIONS
The Company is a leading offshore construction company offering
a comprehensive and integrated range of marine construction and
support services in the Gulf of Mexico, West Africa, Asia Pacific,
Latin America, and the Middle East. These services include pipeline
construction, platform installation and removal, subsea construction,
diving services, and deepwater remote intervention. In addition to
the aforementioned, the Company offers well abandonment services
whereby the Company manages operational costs and decommissioning
timing and assumes well abandonment obligations. See "Oil and Gas
Production and Abandonment Services" for a further discussion on
this matter.
The Company is equipped to provide services from shallow water
to depths of over 10,000 feet of water. As exploration companies
have made considerable commitments and expenditures for production
in water depths over 1,000 feet, the Company has invested in vessels,
equipment, technology, and skills to increase its abilities to provide
services in the growing deepwater market.
For financial information regarding the Company's operating
segments and the geographic areas in which they operate, see Note 8
of the Notes to Consolidated Financial Statements included elsewhere
in this Annual Report.
Offshore Construction
Offshore construction services performed by the Company
include pipelay, derrick, and related services. 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 up to 60-inch diameter 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 forty feet by its anchor
winches or tugboats. 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. The Company has vessels located in each
of the regions in which it currently operates that are capable of
installing pipe using the conventional method.
With the reel method, the Company performs the welding,
testing, and insulating 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 forty-five
miles of 4.5-inch diameter pipe, nineteen miles of 6.625-inch
diameter pipe, or four miles of 12.75-inch diameter 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 frequently must
be suspended 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,
insulating 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.
The planned second phase of the upgrade of the Hercules, which
is expected to be completed during the third quarter of 2000,
includes the addition of a reel system similar in design to the
Chickasaw's but with a much greater capacity. Current engineering
indicates that when completed (currently expected to be completed
during the third quarter of 2000), the Hercules reel will be
capable of spooling eighty-four miles of 6.625-inch diameter pipe,
twenty-two miles of 12.75-inch diameter pipe, or ten miles of 18-
inch diameter pipe. The Hercules is capable of providing
conventional and spooled pipelay services in water depths up to
10,000 feet.
For the Gulf of Mexico, The United States Department of
Interior Minerals Management Service ("MMS") requires the burial
of all offshore oil and gas pipelines greater than 8.75-inches in
diameter and located in water depths of 200 feet or less. The
Company believes it has the equipment and expertise necessary for
its customers to comply with MMS regulations. With the acquisition
of Norman Offshore Pipelines, Inc. in fiscal 1997, the Company
obtained the Mudbug technology and certain ownership interest in
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. Regulations also require that
these pipelines be periodically inspected, repaired, and, if
necessary, reburied. Inspection requires extensive diving or ROV
(remotely operated vehicles) services, and rebury requires either
hand-jetting by divers or use of one of the Company's large jet
sleds and a bury barge.
All twenty-three 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. The Hercules is equipped to perform
lifts up to 2,000 tons. 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. MMS regulations require platforms to be
removed within eighteen months once production ceases and that the
site be restored to meet stringent standards. According to MMS, in
March 2000 there were 3,876 platforms in U.S. waters of the Gulf of
Mexico.
Diving and Other Underwater Services
The Company performs diving operations in the Gulf of Mexico,
West Africa, Asia Pacific, Latin America, and the Middle East.
Demand for diving services covers the full life of an offshore oil
and gas property, including supporting exploration, 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 captive demand for saturation diving
services, for which divers are more highly compensated, and which
enables the Company to attract and retain qualified and experienced
divers. To support its diving operations in the Gulf of Mexico,
the Company operates a fleet of six dive support vessels ("DSV"s).
For the Gulf of Mexico, 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, repairs, and wet welding
technology will increase.
For diving projects involving long-duration deepwater dives to
1,500 feet, the Company uses saturation diving systems that 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 diver 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 Research and Development Center is an important part 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 so that welds can be performed and
tested to assure compliance with the customer's technical
specifications.
The Company also owns and operates remotely operated vehicles
("ROV"s) and performs these services in the Gulf of Mexico, Asia
Pacific, and the Middle East. In the Gulf of Mexico, the Company
owns and operates a Triton XL11 ROV that is depth-rated to 8,250
feet.
Liftboats and other Offshore Support Vessels
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 costs of operation make 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. Currently, the Company operates liftboats only in the
Gulf of Mexico. The Company has contracted to take delivery of a
new 190-foot class liftboat early in the third quarter of 2000.
Global's Pioneer is a SWATH (Small Waterplane Area Twin Hull)
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 installation support, and other services beyond the
capabilities of conventional DSVs. The Pioneer's current base of
operations is the Gulf of Mexico.
The Company also operates other offshore support vessels
("OSV"s) internationally to support its offshore construction
services and also time charters them to the offshore service
industry.
Oil and Gas Production and Abandonment Services
In June 1999 the Company formed Global Production Services
(GPS). This production company will offer alternatives for the
decommissioning of mature offshore properties. Offshore oil and
gas properties will be acquired in the final portion of their
life cycle. GPS will manage the operational costs and timing of
property decommissioning. In most cases GPS will assume all
abandonment obligations. GPS will be subject to all State and
Federal rules and regulations of a production company as
promulgated by, but not limited to, the Minerals Management Service
and Environmental Protection Agency. GPS will operate primarily
off the coasts of Louisiana and Texas, in state and federal waters.
Customers
The Company's customers are primarily oil and gas producers
and pipeline companies. During the year ended December 31, 1999, the
Company provided offshore marine construction services to over 100
customers. The Company's revenues are not dependent on any one
customer. Its largest single customer in any one of the last three
fiscal periods accounted for 21% of revenues. However, 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 traditional contracts are
typically of short duration, being completed in one to five months.
Engineering, Procurement, Installation and Commissioning contracts
(EPIC) and turnkey contracts in foreign areas can be for longer
durations of up to one or two years.
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" projects (where the
Company is responsible for the project from engineering through
hook-up), and for projects in international areas, the elapsed time
from bid request to commencement of work may exceed one year. The
Company's marketing staff contacts offshore operators known to have
projects scheduled to ensure 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 basis. The Company
attempts to qualify its contracts so it can recover the costs of
certain unexpected difficulties and the costs of weather related
delays during the winter months.
Competition
In each region of the world that the Company operates, the
offshore marine construction industry is highly competitive with
many different competitors. Price competition and contract terms
are the primary factors in determining which qualified contractor
is awarded a job. 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, J. Ray
McDermott and Cal Dive International. With increasing frequency,
international competitors such as Heerema S. A., Stolt Comex Seaway
S. A., Allseas Marine Contractors S.A., and Saipem S.p.a. bid and
compete for projects in the Gulf of Mexico. The Company's
competitors for shallow water projects include many smaller
companies including Horizon Offshore, Inc., Transcoastal Marine
Services and Torch, Inc. Some shallow water competitors operate
only one barge and compete based on price. The Company's primary
competition for abandonment services in the Gulf of Mexico is Cal
Dive International.
Backlog
As of January 31, 2000, the Company's backlog of construction
contracts supported by written agreements amounted to approximately
$97.2 million ($14.8 million for the U.S. Gulf of Mexico and $82.4
million for international operations), compared to the Company's
backlog at January 31, 1999, of $113.8 million ($26.9 million for
the U.S. Gulf of Mexico and $86.9 million for international
operations). The Company did not include in its backlog amounts
relating to vessel charter agreements, primarily the charters to
CCC (the Company's previous Mexican joint venture), or any portion
of contracts to be performed by CCC. Management expects most of
the Company's backlog to be performed within twelve months. The
Company does not consider its backlog amounts to be a reliable
indicator of future revenues.
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 certain ownership
interest in patents to certain pipe burying technology, called the
Mudbug, which permits pipelay and bury completion in a single pass.
The licenses continue until the expiration of the underlying
patents, which will occur at various times to 2007. In addition,
the Company has developed certain proprietary underwater welding
techniques and materials.
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 an 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 1999, the number of Company
employees ranged from a low of 1,417 to a high of 2,044, and as of
January 31, 2000, the Company had 1,894 employees. None of the
Company's employees are covered by a collective 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.
Seasonality
Each of the geographic areas in which the Company operates has
seasonal patterns that affect the Company's operating patterns.
The seasonal patterns are the results of weather conditions and the
timing of capital expenditures by oil and gas companies. In the
Gulf of Mexico, where the Company derived over 40% of its revenues
in the last fiscal period, a disproportionate amount of the
Company's revenues, gross profit, and net income is earned in the
interim periods that include July through December.
Government Regulation and Environmental Matters
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 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, laws and
regulations, as well as changing taxes and policies relating to the
oil and gas industry affect the Company's business. 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, in the United States, 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
believes that compliance with current environmental laws and
regulations is not 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 $0.2 million in expenditures
during the year ended December 31, 1999. 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.
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.
ITEM 2. PROPERTIES
The Company owns a fleet of twenty-three construction barges,
twenty-two liftboats, and thirty-two DSVs, OSVs, and other support
vessels. Twenty-one of the Company's construction barges 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 page 12.
The Company's Hercules is a 444-foot barge with a 2,000-ton
crane capable of performing revolving lifts up to approximately
1,600 tons. In July 1998, the Hercules completed its conversion
to a dynamically positioned pipelay/heavy-lift barge and returned
to service to begin its first conventional pipelay project. The
second phase of the upgrade of the Hercules, installation of a
reel on the barge to enable it to install offshore pipelines
using the reel method, is expected to be completed early in the
third quarter of 2000.
In addition to the dedicated pipelay reel on the Chickasaw,
which has a capacity ranging from forty-five miles of 4.5-inch
diameter pipe, nineteen miles of 6.625-inch diameter pipe or four
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 planned Hercules reel system is 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 eighty-four miles of 6.625-inch diameter
pipe, twenty-two miles of 12.75-inch diameter pipe, or ten miles of
18-inch 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 thirty-six
inches in diameter, and three Mudbugs, for burying pipe
simultaneously with the pipeline installation.
Global's Pioneer is a SWATH (Small Waterplane Area Twin Hull)
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 installation support, and other services beyond the
capabilities of conventional DSVs. During fiscal 2000, the Company
plans to modify the vessel to increase its load carrying capacity.
The Pioneer's current base is the Gulf of Mexico.
The Company operates twenty-two liftboats. 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.
The Company owns all of its barges and vessels, and fifty-nine
are subject to ship mortgages. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources." In compliance with 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 U.S.
Coast Guard, the American Bureau of Shipping, Bureau Veritas, and
Lloyd's Registry.
The Company also owns thirteen saturation diving systems. One
of the units 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 gases that the divers breathe and connecting hatches
for entering the diving bell and providing meals and supplies to
the divers.
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 owns 625 acres near Carlyss, Louisiana and has
constructed a deepwater support facility and pipebase. The
location serves as the corporate headquarters and the headquarters
of the Company's Gulf of Mexico offshore construction operations.
The facility is capable of accommodating the Company's deepwater
draft vessels and pipe spooling for the Chickasaw and the Hercules.
The Company has replaced the existing facilities in Houma and
Amelia, Louisiana with the Carlyss Facility. Total cost for
completion is approximately $41.2 million, of which, $41.0 million
has been expended through December 31, 1999. Approximately $28.0
million has been financed with Port Improvement Revenue Bonds. In
addition, the Company completed construction on its marine base in
Batam, Indonesia. The total cost of this facility was $16.4
million.
The following table summarizes the Company's significant existing
facilities as of December 31, 1999:
<TABLE>
<CAPTION>
Approximate
Square Feet Owned/Leased
Location Principal Use or Acreage (Lease Expiration)
- ----------------------- ---------------------- -------------- ------------------
<S> <C> <C> <C>
Carlyss LA Shore base/Corporate 625 acres Owned
Headquarters
Port of Iberia LA Shore base 39 acres Owned
Batam Island, Indonesia Shore base 52 acres Leased (Mar. 2028)
Houston TX Office 39,410 sq. ft. Leased (Aug. 2003)
Lafayette LA (1) Office/Training/Storage 21,000 sq. ft. Leased (Dec. 2001)
Cd. Del Carmen, Mexico Warehouses 51,613 sq. ft. Leased (Dec. 2002)
Cd. Del Carmen, Mexico Office/Workshop 41,042 sq. ft. Owned
Sharjah, United Arab
Emirates Office/Shore base 64,946 sq. ft. Leased (Jun. 2000)
Western Australia Office/Workshop 15,048 sq. ft. Owned
</TABLE>
(1) Leased from the Company's principal shareholder, Mr. William J. Dore'.
<TABLE>
<CAPTION>
Global Industries, Ltd.
Listing of Construction Barges and Swath Vessel
Pipelay
Derrick ----------------
------- Maximum Maximum
Maximum Pipe Water Living
Length Lift Diameter Depth Year Quarter
Vessel Type (Feet) (Tons) (Inches) (Feet) Acquired Capacity
--------------- ------ ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Construction Barges:
Hercules(1) Pipelay/derrick 444 2,000 60.00 10,000 1995 191
Seminole Pipelay/derrick 424 800 48.00 1,500 1997 220
Comanche Pipelay/derrick 400 1,000 48.00 1,500 1996 223
Shawnee Pipelay/derrick 400 860 48.00 1,500 1996 272
Iroquois Pipelay/derrick 400 250 60.00 1,000 1997 259
DLB 264 Pipelay/derrick 397 1,000 60.00 1,000 1998 220
DLB 332 Pipelay/derrick 351 750 60.00 1,000 1998 208
Cheyenne Pipelay/bury/ 350 800 36.00 1,500 1992 190
derrick
Arapaho Derrick 350 800 -- -- 1992 100
Cherokee Pipelay/derrick 350 925 36.00 1,500 1990 183
SaraMaria(2) Derrick 350 550 -- -- 1999 300
Mohawk Pipelay/bury/ 320 600 48.00 700 1996 200
derrick
Seneca Pipelay/bury 290 150 42.00 1,000 1997 126
Chickasaw Pipelay reel/ 275 160 12.75 6,000 1990 70
derrick
Delta 1 Pipelay/bury 270 25 14.00 200 1996 70
Tonkawa Derrick/bury 250 175 -- -- 1990 73
Sea Constructor Pipelay/bury 250 200 24.00 400 1987 104
Navajo Pipelay/derrick 240 150 10.00 600 1992 129
SubSea Constructor Pipelay/bury 240 150 16.00 150 1997 64
G/P 37 Pipelay/bury 188 140 16.00 300 1981 58
Pipeliner 5 Pipelay/bury 180 25 14.00 200 1996 60
G/P 35 Pipelay/bury 164 100 16.00 200 1978 46
MAD II Pipelay/bury 135 45 22.00 50 1975 33
SWATH Vessel:
Pioneer Multi-service 200 50 -- -- 1996 57
</TABLE>
(1) Scheduled to be equipped for reel method pipelay in 2000.
(2) Acquired from CCC in 1999.
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.
In November of 1999, the Company notified Groupe GTM that as
a result of material adverse changes and other breaches by Groupe
GTM, the Company was no longer bound by and was terminating the
Share Purchase Agreement to purchase the shares of ETPM S.A.
Groupe GTM responded stating that they believed the Company was in
breach. The Share Purchase Agreement provided for liquidated
damages of $25.0 million to be paid by a party that failed to
consummate the transaction under certain circumstances. The
Company has notified Groupe GTM that it does not believe that the
liquidated damages provision is applicable to its termination of
the Share Purchase Agreement. On December 23, 1999, Global filed
suit against Groupe GTM in Tribunal de Commerce de Paris to
recover damages. The Company believes that the outcome of these
matters will not have a material adverse effect on its business or
financial statements.
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.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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 December 31, 1999 follow:
Name Age Position
- ---- --- --------
William J. Dore' 57 Chairman of the Board of Directors,
President and Chief Executive Officer
Peter S. Atkinson 52 Vice President, Chief Financial Officer
James J. Dore' 45 Vice President, Diving and Special Services
George J. Friedel 42 Vice President, Gulf of Mexico
Andrew L. Michel 57 Vice President, Advanced Technologies and
Business Development
Robert L. Patrick 49 Vice President, Central/South America and
West Africa
Russell J. Robicheaux 51 Vice President, General Counsel
James Ricky Wiggins 51 Vice President, Worldwide Operations
Mr. William J. Dore' is the Company's founder and has served
as 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. He is a past President of the Association of Diving
Contractors and serves on the Board of Directors executive
committee of the National Ocean Industry Association. Mr. Dore'
also serves as a director for Noble Drilling Corporation. Mr.
Dore' controls over 30% the common stock of the Company.
Mr. Atkinson joined the Company in September of 1998 as Vice
President and Chief Financial Officer. Prior to joining Global
he had been Director - Financial Planning with J. Ray McDermott,
S.A., having previously served in various capacities at McDermott
International, Inc. and J. Ray McDermott, S.A. for twenty three
years. At McDermott, he served at the corporate level as well as
in the North Sea, Middle East, West Africa and Central and South
America.
Mr. James Dore' has over nineteen years of service with the
Company. He held a number of management positions with
responsibility for marketing, contracts and estimating, and
diving operations. Mr. Dore' was named Vice President, Marketing
in March 1993, Vice President, Special Services in November 1994
and Vice President, Diving and Special Services in February 1996.
Mr. Dore' is the brother of William J. Dore'.
Mr. Friedel joined Global Industries in April 1998 as
Manager for Deepwater. Prior to joining Global, Mr. Friedel
served in various management capacities for CDI Intl, Inc., J.
Ray McDermott, Offshore Pipeline, Inc. and Heerema Engineering
(US), Inc. He has twenty-one years of experience in the offshore
construction industry and has worked in the North Sea, Latin
America, South America and the U.S. Gulf of Mexico.
Mr. Michel joined the Company as Vice President, Global
Industries, Ltd. - Deepwater Technology in December 1995 in
connection with the Company's acquisition of ROV Technologies,
Inc. Mr. Michel founded ROV Technologies in 1986 and served as
its only President. Mr. Michel has thirty-four years of
experience in marine electronics and remote underwater
intervention services. He was appointed to his current position
in 1999.
Mr. Patrick joined Global Industries in July 1995 as
Operations Manager for the West Africa Division. Prior to joining
Global, Mr. Patrick served as Vice President of Operations for
Ugland in Mexico for five years. He has also managed projects in
India, West Africa, the Gulf of Mexico and offshore California.
Mr. Patrick has twenty-seven years of experience in marine
engineering and offshore construction.
Mr. Robicheaux joined Global Industries in August 1999 as
Vice President and General Counsel. Prior to joining the Company,
Mr. Robicheaux had been Assistant General Counsel with J. Ray
McDermott, S.A. since 1995. In addition, he served in various
engineering and legal capacities at McDermott International, Inc.
for the past twenty-five years, including design and field
engineering, project engineering, estimating and project
management.
Mr. Wiggins joined Global Industries in September 1997 as
Managing Director of the Middle East. Before joining Global Mr.
Wiggins served as Vice President for the Middle East and India
with J. Ray McDermott, S.A. and Vice President with Offshore
Pipelines, Inc. In addition, he served in various capacities for
fifteen years with Brown and Root, including Chief Estimator for
the Western Hemisphere and Project Manager. Mr. Wiggins has over
twenty-eight years of resident experience in Singapore, India,
Thailand, Bahrain, the United Arab Emirates, and the United
States.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The Company's Common Stock is traded on the NASDAQ National
Market System under the symbol "GLBL." The following table
presents for the periods indicated the high and low sales prices
per share of the Company's Common Stock.
Period High Low
------ ---- ---
January 1, 1998 - March 31, 1998 $ 21.438 $ 11.375
April 1, 1998 - June 30, 1998 25.750 15.375
July 1, 1998 - September 30, 1998 17.625 9.375
October 1, 1998 - December 31, 1998 11.875 4.719
January 1, 1999 - March 31, 1999 $ 10.563 $ 4.938
April 1, 1999 - June 30, 1999 13.188 8.000
July 1, 1999 - September 30, 1999 12.813 7.125
October 1, 1999 - December 31, 1999 9.688 6.000
As of March 10, 2000, there were approximately 1,275 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. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital
Resources."
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented below for each of the
past five fiscal periods 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. In 1998, the Company's changed the Company's
fiscal accounting year end to December 31 from March 31.
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended Year Ended
December 31, December 31, March 31,
--------------------- --------------------- --------------------------------
1999 (1) 1998 (4) 1998 1997 (4) 1998 (2) 1997 1996
---------- ---------- ---------- ---------- ---------- ---------- ----------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 387,452 $ 429,719 $ 342,201 $ 292,383 $ 379,901 $ 229,142 $ 148,376
Gross profit 45,600 119,716 95,973 90,913 114,656 63,253 41,015
Net income (loss) (1,131) 49,953 38,971 46,321 57,303 33,932 20,993
Net income (loss)
per share
Basic (0.01) 0.55 0.43 0.50 0.63 0.44 0.28
Diluted (0.01) 0.53 0.42 0.49 0.61 0.42 0.27
Weighted average common
Shares outstanding
Basic 90,700 91,488 91,498 90,981 91,110 77,746 75,624
Diluted 90,700 94,780 93,808 93,682 93,872 80,747 76,751
Total assets(3) 755,935 730,871 730,871 611,110 625,367 422,687 202,526
Working capital(3) 58,561 78,637 78,637 66,820 77,472 103,727 34,264
Long-term debt, total(3) 252,407 210,797 210,797 137,889 146,993 43,213 22,192
</TABLE>
________________
(1) Included in the results for the year ended December 31,
1999, beginning in the third quarter, are the consolidated
financial results of Global's ownership of CCC's offshore
construction business. See Note 12 of the Notes to
Consolidated Financial Statements.
(2) On July 31, 1997, the Company acquired certain business
operations and assets of Sub Sea International, Inc. and
certain of its subsidiaries. The results of operations of
the Sub Sea acquisition are included from the date of the
acquisition. See Note 13 of the Notes to Consolidated
Financial Statements.
(3) As of the end of the period.
(4) Unaudited
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion presents management's discussion
and analysis of the Company's financial condition and results of
operations and should be read in conjunction with the
Consolidated Financial Statements.
Certain of the statements included below and in other
portions of this annual report, including those regarding future
financial performance or results or that are not historical
facts, are or contain "forward looking" information as that
term is defined in the Securities Act of 1933, as amended. The
words "expect," "believe," "anticipate," "project," "estimate,"
and similar expressions are intended to identify forward-looking
statements. The Company cautions readers that any such statements
are not guarantees of future performance or events and such
statements involve risks, uncertainties and assumptions. Factors
that could cause actual results to differ from those expected
include, but are not limited to, dependence on the oil and gas
industry and industry conditions, general economic conditions
including interest rates and inflation, competition, the ability
of the Company to continue its acquisition strategy, successfully
manage its growth, and obtain funds to finance its growth, operating
risks, contract bidding risks, the use of estimates for revenue
recognition, risks of international operations, risks of vessel
construction such as cost overruns, changes in government regulations,
and disputes with construction contractors, dependence on key personnel
and the availability of skilled workers during periods of strong
demand, the impact of regulatory and environmental laws, the ability
to obtain insurance, and other factors discussed below. Operating
risks include hazards such as vessel capsizing, sinking, grounding,
colliding, and sustaining damage in severe weather conditions.
These hazards can also cause personal injury, loss of life, severe
damage to and destruction of property and equipment, pollution and
environmental damage, and suspension of operations. The risks
inherent with international operations include political, social,
and economic instability, exchange rate fluctuations, currency
restrictions, nullification, modification, or renegotiations of
contracts, potential vessel seizure, nationalization of assets,
import-export quotas, and other forms of public and governmental
regulation. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect,
actual results and outcomes may differ materially from those indicated
in the forward-looking statements.
Results of Operations
The following table sets forth, for the periods indicated, statement
of operations data expressed as a percentage of revenues.
Twelve Months Nine Months
Ended Ended
December 31, December 31,
------------------- -------------------
1999 1998 1998 1997
-------- -------- -------- --------
Revenues 100.0% 100.0% 100.0% 100.0%
Cost of revenues (88.2) (72.1) (72.0) (68.9)
-------- -------- -------- --------
Gross profit 11.8 27.9 28.0 31.1
Equity in net earnings (loss)
of unconsolidated affiliate (2.8) (1.8) (2.0) (0.3)
Selling, general and
administrative expenses (7.2) (6.4) (6.3) (5.8)
-------- -------- -------- --------
Operating income 1.8 19.7 19.7 25.0
Interest expense (3.7) (1.7) (2.0) (0.5)
Other income, net (0.4) (0.1) (0.2) 1.0
-------- -------- -------- --------
Income (loss) before
income taxes (2.3) 17.9 17.5 25.5
(Provision) benefit for
income taxes 2.0 (6.3) (6.1) (9.7)
-------- -------- -------- --------
Net income (loss) (0.3)% 11.6% 11.4% 15.8%
======== ======== ======== ========
The Company's results of operations reflect the level of
offshore construction activity in the Gulf of Mexico and all
other international locations, for all periods presented above.
In addition, the Company's results for periods ending after July
1997 include the results of additional business acquired in July
1997 from Subsea International, Inc. in the Gulf of Mexico, Asia
Pacific, and the Middle East. Also included in the results for
the year ended December 31, 1999, beginning in the third quarter,
are the consolidated financial results of Global's ownership of
CCC's offshore construction operations (see Note 12 of the Notes
to Consolidated Financial Statements). The results also reflect
the Company's ability to win jobs through competitive bidding and
manage awarded 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
in 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.
Year Ended December 31, 1999 Compared to Twelve Months Ended
December 31, 1998 (see Note 1 of the Notes to Consolidated
Financial Statements included elsewhere in this annual report)
Revenues. Revenues for the year ended December 31, 1999 of $387.5
million were 10% lower than revenues for the twelve months ended
December 31, 1998 of $429.7 million. The decrease in revenues
resulted largely from decreased domestic and Middle East division
activities and downward pricing pressure. These amounts were
partially offset by increases in the Company's Latin America and
Asia Pacific divisions The Latin America division's revenues
increased substantially due to the cessation of Global's 49%
ownership interest in CCC and subsequent acquisition of CCC's
offshore construction operations, as discussed previously.
Increases in Asia Pacific are primarily due to a large pipeline
contract, which occurred, in fiscal 1999.
Gross Profit. For the year ended December 31, 1999, the Company
had gross profit of $45.6 million compared with $119.7 million for
the twelve months ended December 31, 1998. The 62% decline was
largely the result of decreased domestic activity and margin
erosion, partially offset by higher gross profit from the Latin
America division. Gross profit as a percentage of revenues for the
year ended December 31, 1999, was 12 % compared to the gross profit
percentage for the twelve months ended December 31, 1998 of 28%.
Lower margins in the Gulf of Mexico, combined with the lower
margins for work in Asia Pacific and Middle East, principally
accounted for the decline.
Selling, General, and Administrative Expenses. For the year ended
December 31, 1999, selling, general, and administrative expenses of
$27.7 million were 1.5% higher than the $27.3 million reported
during the twelve months ended December 31, 1998. The increase
was attributable to increased labor costs and other related
expenses associated with the relocation of the Company's
corporate offices to Carlyss Louisiana and the consolidation of
CCC's offshore construction operations.
Depreciation and Amortization. Depreciation and amortization,
including amortization of dry-docking costs, for the year ended
December 31, 1999 was $55.0 million compared to the $43.2 million
recorded in the twelve months ended December 31, 1998. The 23%
increase was principally attributable to increased employment of
the upgraded Hercules in the Gulf of Mexico, which is depreciated
on a units-of-production basis. Lower employment of other vessels
that are also depreciated on a units-of-production basis partially
offset the increase.
Interest Expense. Interest expense was $14.5 million, net of
capitalized interest, for the year ended December 31, 1999,
compared to $7.5 million for the twelve months ended December 31,
1998 primarily due to higher average debt levels outstanding and
higher effective interest rates.
Net Income (Loss). Earnings for the year ended December 31, 1999
declined to a $1.1 million loss as compared to $50.0 million of net
income recorded for the twelve months ended December 31, 1998.
Included in the net loss for the year ended December 31, 1999 is
a $7.1 million loss associated with the Company's previous 49%
ownership interest in CCC. The loss associated with the CCC
ownership for the twelve months ended December 31, 1998 was $7.7
million. Also included in the net loss for fiscal 1999 are
nonrecurring charges of $3.7 million, related to cost associated
with the terminated ETPM acquisition and the replacement of the
Company's credit facility. The Company's effective tax rate for
the twelve months ended December 31, 1999 was 87%, compared to 35%
for the twelve months ended December 31, 1998, reflecting changes
in taxable income in differing taxable jurisdictions and the
resolution of prior year tax matters.
Segment Information. The Company has identified seven reportable
segments as required by SFAS 131 (see Note 8 of the Notes to
Consolidated Financial Statements included elsewhere in this annual
report). The following discusses the results of operations for
each of those reportable segments.
Gulf of Mexico Offshore Construction - Overall decreased demand for
offshore construction services in the Gulf of Mexico and resulting
pricing decreases caused this segment's gross revenues to decline
34% to $117.2 million (including $1.0 million intersegment
revenues) for the year ended December 31, 1999 compared to $176.7
million (including $3.6 million intersegment revenues) for the
twelve months ended December 31, 1998. The lower activity levels
and associated pricing decreases also caused income before taxes to
decline to $6.1 million during the year ended December 31, 1999
compared to $26.2 million for the twelve months ended December 31,
1998.
Gulf of Mexico Diving - Revenues and income before taxes from
diving-related services in the Gulf of Mexico declined due to
decreased demand from both external customers and the Gulf of
Mexico Offshore Construction Segment. Gross revenues for the year
ended December 31, 1999 declined 50% to $29.3 million (including
$10.2 million intersegment revenues) compared to $58.1 million
(including $23.7 million intersegment revenues) for the twelve
months ended December 31, 1998. The overall lower activity levels
and pricing pressure caused earnings before taxes to decline to a
loss of $0.9 million during the year ended December 31, 1999
compared to income of $19.1 million for the twelve months ended
December 31, 1998.
Gulf of Mexico Marine Support - Decreased demand and resulting
pricing pressures also affected the Gulf of Mexico Marine Support
services. Gross revenues from Gulf of Mexico Marine Support
services declined 37% to $27.7 million (including $9.5 million
intersegment revenues) for the year ended December 31, 1999,
compared to $44.0 million (including $10.6 million intersegment
revenues) for the twelve months ended December 31, 1998. Earnings
before taxes also declined to a loss of $3.6 million during the
year ended December 31, 1999 compared to income of $14.4 million
for the twelve months ended December 31, 1998.
West Africa Construction - During 1999, revenues from the West
Africa Construction market remained relatively stable. For the
year ended December 31, 1999, gross revenues decreased 4.3% to
$81.1 million compared to $84.8 million for the twelve months
ended December 31, 1998. Earnings before taxes decreased to $8.2
million during the year ended December 31, 1999 compared to $18.1
million for the twelve months ended December 31, 1998. Earnings
reductions were primarily due to lower margins on one large
contract.
Asia Pacific Construction - For the year ended December 31, 1999,
gross revenues increased 30% to $56.1 million compared to $43.0
million for the twelve months ended December 31, 1998. Earnings
before taxes decreased to a loss of $10.4 million during the year
ended December 31, 1999 compared to income of $4.0 million for
the twelve months ended December 31, 1998. Revenues increased
due primarily to the one large pipeline contract, which started
in March 1999. Earnings reductions were primarily a result of
new area startup costs and poor initial productivity.
Latin America Construction - Revenues increased 247% to $91.3
million for the year ended December 31, 1999, compared to $29.0
million for the twelve months ended December 31, 1998. Earnings
before taxes increased to $5.5 million during the year ended
December 31, 1999, net of $10.7 million of equity in CCC losses,
compared to a loss of $0.3 million for the twelve months ended
December 31, 1998. As previously discussed, effective July 1,
1999 Global acquired ownership of CCC's offshore construction
operations and divested itself of a 49% ownership in CCC's entire
operation.
Middle East Construction - Decreased demand and eroding margins
dramatically affected this division. Gross revenues declined 83%
to $4.0 million for the year ended December 31, 1999, compared to
$30.5 million for the twelve months ended December 31, 1998.
Earnings before taxes also declined to a loss of $6.8 million
during the year ended December 31, 1999 compared to a loss of
$2.3 million for the twelve months ended December 31, 1998.
Nine Months Ended December 31, 1998 Compared to Nine Months Ended
December 31, 1997 (see Note 1 of the Notes to Consolidated
Financial Statements included elsewhere in this annual report)
Revenues. Revenues for the nine months ended December 31, 1998 of
$342.2 million were 17% higher than revenues for the nine months
ended December 31, 1997 of $292.4 million. The increase in
revenues resulted largely from increased international activity and
the Company's expansion in those areas, through acquisitions.
Acquisitions that contributed to increased international revenues
included (i) certain business operations and assets of Sub Sea
International, Inc. in the Gulf of Mexico, Asia Pacific, and the
Middle East in July 1997, (ii) the construction barge Seminole
acquired in June 1997, and (iii) the construction barges DLB 332
and DLB 264 acquired in April 1998. The West Africa region
produced greater revenues during the nine months ended December 31,
1998 compared to the same period a year earlier as offshore
construction projects resumed after a cycle of low construction
activity in the earlier period. The overall increase in revenues
was partially offset by decreased revenues from operations in the
Gulf of Mexico.
Gross Profit. For the nine months ended December 31, 1998, the
Company had gross profit of $96.0 million compared with $90.9
million for the nine months ended December 31, 1997. The 6%
increase was largely the result of increased West Africa and Asia
Pacific activity, and was partially offset by lower gross profit
from the Gulf of Mexico. Gross profit as a percentage of revenues
for the nine months ended December 31, 1998, was 28% compared to
the gross profit percentage earned for the nine months ended
December 31, 1997 of 31%. Lower margins in the Gulf of Mexico,
combined with the lower margins for work in Asia Pacific and Middle
East, contributed to the decline. Margins as a percent of revenue
in West Africa for the nine months ended December 31, 1998, were
higher than the nine months ended December 31, 1997. Cost of
revenues for the nine months ended December 31, 1997 includes an
accrual of $3.5 million for retirement and incentive compensation
expense. The Company did not record a provision for retirement and
incentive compensation during the nine months ended December 31,
1998.
Selling, General, and Administrative Expenses. For the nine months
ended December 31, 1998, selling, general, and administrative
expenses of $21.7 million were 28% higher than the $16.9 million
reported during the nine months ended December 31, 1997. The
increase was attributable to the expansion of the Company's
business and accrued severance costs and was partially offset by
salary reductions effected in October 1998. As a percentage of
revenues these expenses remained at approximately 6%. During the
nine months ended December 31, 1997, the Company provided for $5.0
million of retirement and incentive compensation plan expenses with
$1.6 million included in selling, general, and administrative
expenses. The Company did not record a provision for retirement
and incentive compensation during the nine months ended December
31, 1998 because it does not anticipate making such payments to
employees for services during that period.
Depreciation and Amortization. Depreciation and amortization,
including amortization of dry-docking costs, for the nine months
ended December 31, 1998 was $35.6 million compared to the $21.9
million recorded in the nine months ended December 31, 1997. The
63% increase was principally attributable to increased employment
of the upgraded Hercules in the Gulf of Mexico and employment of
the Seminole, DLB 332, and DLB 264 in Asia Pacific, each of which
are depreciated on a units-of-production basis. A full nine months
of depreciation on assets acquired from SubSea in July 1997 and
higher amounts of dry-dock amortization also contributed to the
increase. Lower employment of other vessels that are also
depreciated on a units-of-production basis partially offset the
increase.
Effective April 1, 1998, the Company changed its estimate of the
useful lives of certain marine barges that are depreciated on the
units-of-production method. The Company increased total estimated
operating days for such barges to better reflect the estimated
periods during which the assets will remain in service. For the
nine months ended December 31, 1998, the change had the effect of
reducing depreciation expense by $3.7 million and increasing net
income by $2.4 million ($0.03 per basic and diluted share).
Interest Expense. Interest expense was $6.7 million net of
capitalized interest for the nine months ended December 31, 1998,
compared to $1.5 million for the nine months ended December 31,
1997 principally due to higher average long-term debt outstanding.
Net Income. Net income for the nine months ended December 31, 1998
declined 16% to $39.0 million as compared to $46.3 million recorded
for the nine months ended December 31, 1997. Included in net
income for the nine months ended December 31, 1998 is a $6.9
million loss associated with the Company's 49% ownership interest
in CCC. The loss associated with the CCC ownership for the nine
months ended December 31, 1997 was $0.9 million. Increased operating
losses, currency exchange rate losses, and an adjustment to prior years'
taxes contributed in the increase in CCC's losses. The Company's
effective tax rate for the nine months ended December 31, 1998 was
35%, compared to 38% for the nine months ended December 31, 1997,
reflecting changes in taxable income in differing taxable jurisdictions.
Segment Information. The Company has identified seven reportable
segments as required by SFAS 131 (see Note 8 of the Notes to
Consolidated Financial Statements included elsewhere in this annual
report). The following discusses the results of operations for
each of those reportable segments.
Gulf of Mexico Offshore Construction - Overall decreased demand for
offshore construction services in the Gulf of Mexico and resulting
pricing decreases caused this segment's gross revenues to decline
25% to $135.9 million (including $3.5 million intersegment
revenues) for the nine months ended December 31, 1998 compared to
$180.9 million (including $0.8 million intersegment revenues) for
the nine months ended December 31, 1997. The lower activity levels
also caused income before taxes to decline to $26.2 million during
the nine months ended December 31, 1998 compared to $44.1 million
for the nine months ended December 31, 1997. The Hercules returned
to service in July 1998, and helped partially offset the decline.
Gulf of Mexico Diving - Revenues and income before taxes from
diving-related services in the Gulf of Mexico declined due to
decreased demand from the Gulf of Mexico Offshore Construction
Segment. Gross revenues for the nine months ended December 31,
1998 declined 9% to $42.1 million (including $13.0 million
intersegment revenues) compared to $46.5 million (including $24.1
million intersegment revenues) for the same period ended December
31, 1997. Revenues from external customers increased by $6.7
million, but were partially offset by pricing decreases. The
overall lower activity levels caused income before taxes to decline
to $13.5 million during the nine months ended December 31, 1998
compared to $18.8 million for the nine months ended December 31,
1997.
Gulf of Mexico Marine Support - Decreased demand and resulting
pricing decreases also affected the Gulf of Mexico Marine Support
services. Gross revenues from Gulf of Mexico Marine Support
services declined 21% to $31.5 million (including $8.0 million
intersegment revenues) for the nine months ended December 31, 1998,
compared to $39.8 million (including $5.4 million intersegment
revenues) for the same period ended December 31, 1997. Income
before taxes also declined to $10.2 million during the nine months
ended December 31, 1998 compared to $15.3 million for the nine
months ended December 31, 1997. The overall declines were
partially offset by increased activity and resulting gross revenues
and profits from the SWATH Pioneer.
West Africa Construction - During 1998, the West Africa
Construction market recovered from a down cycle in 1997. For the
nine months ended December 31, 1998, gross revenues increased 470%
to $68.9 million compared to $11.4 million for the nine months
ended December 31, 1997. Income before taxes increased to $11.9
million during the nine months ended December 31, 1998 compared to
a $2.4 million loss for the nine months ended December 31, 1997.
For the first time since entering the West Africa market, the
Company employed two barges simultaneously during the nine months
ended December 31, 1998.
Asia Pacific Construction - Asia Pacific Construction results
benefited from the acquisition and placement of construction
barges in that region. For the nine months ended December 31,
1998, gross revenues increased 50% to $38.0 million compared to
$25.3 million for the nine months ended December 31, 1997.
Income before taxes increased to $3.4 million during the nine
months ended December 31, 1998 compared to a $0.4 million loss
for the nine months ended December 31, 1997. In April 1998, the
Company acquired the DLB 332 and DLB 264 in that region. Each of
the acquired barges were employed under a short-term bare boat
charter agreement with Hydro Marine Services, Inc., an affiliate
of J. Ray McDermott S.A., to allow for completion of certain
contractual commitments. The DLB 332 completed its commitment in
August 1998, and the DLB 264 completed its commitment in October 1998.
In September 1998, the Seminole began working in Asia Pacific after
the Company relocated it from the Middle East.
Latin America Construction - For the nine months ended December
31, 1998, revenue from services and equipment provided to CCC
increased 287% to $26.3 million compared to $6.8 million for the
nine months ended December 31, 1997. The increase was attributable
to CCC's increase in offshore construction activity. Income before
taxes and equity in CCC losses increased to $7.0 million during the
nine months ended December 31, 1998 compared to $1.2 million for
the nine months ended December 31, 1997. However, the increased
income was offset by equity in CCC losses of $6.9 million and $0.9
million, respectively. The increase in CCC's loss was largely the
result of increased operating losses, currency exchange rate
losses, and an adjustment to prior years' taxes.
Middle East Construction - Global entered into the Middle East
construction market with the July 1, 1997 acquisition of Sub Sea
International, Inc.'s Middle East operations and assets. Revenues
of $23.0 million for the nine months ended December 31, 1998
compared to the five-month revenues of $11.0 million included in
the nine months ended December 31, 1997. Losses before taxes
during the nine months ended December 31, 1998 increased to $1.8
million compared to a $0.7 million loss included in the nine months
ended December 31, 1997.
Liquidity and Capital Resources
The Company's operations generated cash flow of $47.5 million
during the year ended December 31, 1999. Cash from operations,
together with $12.0 million provided by financing activities,
funded investing activities of $50.7 million. Investing activities
consisted principally of (i) capital expenditures, (ii) net
receipts on advances to CCC, (iii) dry-docking costs, and (iv) the
release from escrow of Lake Charles Harbor and Terminal District
Port Improvement Revenue Bonds proceeds. Funds provided by
financing activities principally represent net borrowings under the
Company's credit agreement with a syndicate of commercial banks.
Working capital decreased $20.0 million during the year ended
December 31, 1999 from $78.6 million at December 31, 1998 to $58.6
million at December 31, 1999. The decrease in working capital is
due primarily to the scheduled term loan pay down as required by
the new credit facility.
Capital expenditures during the year ended December 31, 1999
aggregated $29.3 million. These expenditures included $4.2 million
for the continued conversion and upgrade of the Hercules, $14.0
for the continued construction of the Carlyss, Louisiana
Deepwater Support Facility and Pipebase, and $7.1 million for the
construction of a shorebase facility in Batam, Indonesia.
The Company estimates that the cost to complete capital
expenditure projects in progress at December 31, 1999, will be
approximately $11.5 million all of which is expected to be incurred
during the year ending December 31, 2000. The scheduled completion
of the addition of reel pipelay capability to the Hercules is early
in the third quarter of the year ending December 31, 2000. The
estimated remaining costs to complete the Hercules upgrades are
approximately $5.0 million, which is in addition to the
approximately $111.0 million of costs incurred as of December 31,
1999. The Company has also contracted to take delivery of a new
190-foot class liftboat early in the third quarter of 2000. The
estimated cost of this vessel is $5.8 million.
The Company substantially finished construction on its a
deepwater support facility and pipebase near Carlyss, Louisiana.
The Company replaced its existing facilities in Houma and Amelia,
Louisiana with the Carlyss Facility. Cost to complete 100% of the
facility is estimated at approximately $41.2 million. Tax exempt
revenue bonds issued by the Lake Charles Harbor and Terminal
District financed approximately $28.0 million of the construction.
The bonds bear interest at a variable rate, which was 5.5% at
December 31, 1999, and mature on November 1, 2027.
In August 1998, the Board of Directors authorized the
expenditure of up to $30.0 million to purchase shares of the
Company's outstanding common stock. The Board of Directors placed
no limit on the duration of the program. As of December 31, 1998,
the Company had purchased 1,429,500 shares since the authorization
at a total cost of $15.0 million. During fiscal 1999 no shares
were purchased. Under the Company's new credit facility stock
purchases are prohibited.
Long-term debt outstanding at December 31, 1999, (including
current maturities), includes $175.0 million drawn against the
Company's term loan, $37.1 million of Title XI bonds, the $28.0
million of Lake Charles Harbor and Terminal District bonds, and
$11.7 million of Heller Financial Inc., debt.
On December 30, 1999 the Company consummated a new $300.0
million credit facility, which consists of a $175.0 million term
loan facility and a $125.0 million revolving loan facility. This
new facility replaced the Company's previous facility, which
consisted of a $250.0 million revolving credit facility. The
principal purpose of this new credit facility is to extend out the
maturity of the loan and to increase the borrowing capacity of the
Company. Both the term and revolving loan facility mature on
December 30, 2004. The term and revolving loan agreement permit
both prime rate bank borrowings and London Interbank Offered Rate
("Libor") borrowings plus a floating spread. The spread for both
prime rate and Libor borrowings will float up or down based on the
Company's performance as determined by a leverage ratio. The
spreads can range from 0.5% to 1.50% and 1.75% to 2.75% for prime
rate and Libor based rate borrowings, respectively. In addition,
the facility allows for certain fixed rate interest options on
amounts outstanding. Stock of the Company's subsidiaries, certain
real estate, and the majority of the Company's vessels
collateralize the loans under the new credit facility. Both the
term loan and the revolving loan facilities are subject to certain
financial covenants with which the Company was in compliance with
at December 31, 1999.
The Company's Title XI 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 $0.9 million, plus interest. 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. If not met, additional covenants result that restrict
the operations of the Company and its ability to pay cash dividends.
The Company is currently in compliance with these covenants.
In conjunction with the disposition of the Company's 49%
ownership of CCC and the acquisition of CCC's offshore marine
construction business (as discussed further in Note 12), the
Company assumed $13.4 million of debt with Heller Financial Inc.
and $18.6 million of debt with Bank One. The Bank One debt was
repaid concurrently with the new credit facility consummation. The
Heller debt matures on April 1, 2003 and is collateralized by four
vessels.
In February 2000, the Company completed Title XI mortgage
financing for $99.0 million, at 7.71% per annum, for the conversion
of the Hercules. This bond financed both Phase I and Phase II of
the Hercules conversion. Phase I proceeds, net of fees, amounts to
$65.2 million and was used to pay down term debt under the Company's
credit facility. Phase II proceeds, $29.1 million, reside in escrow
and will be released to the Company once Phase II is complete, which
is expected to occur early in the third quarter. Concurrently with
the receipt of the net proceeds of the bond issue, the Company prepaid
$94.2 million of term debt under its credit agreement. As of March 10,
2000 the Company had $64.7 million of credit capacity available under
its credit facility. This Bond matures in 2025 and requires semi-annual
payments of $2.0 million, plus interest.
The Company also has short-term credit facilities at its
foreign locations that aggregate $10.4 million and are secured by
parent company guarantees. Additionally, in the normal course of
business, the Company provides guarantees and performance, bid,
and payment bonds pursuant to agreements or obtaining such agreements
to perform construction services. Some of these guarantees are secured
by parent guarantees. The aggregate of these guarantees and bonds
outstanding at December 31, 1999 was $20.9 million.
The Company expects funds available under the credit facilities,
proceeds from the tax exempt revenue bonds issued by the Lake Charles
Harbor and Terminal District, available cash, and cash generated from
operations to be sufficient to fund the Company's operations, scheduled
debt retirement, and planned capital expenditures for the next twelve
months.
In the normal course of business, the Company will continue to
evaluate its debt structure and consider viable financing alternatives
to lower its effective interest rate and borrowing costs.
Facilities Relocation
The Company has substantially completed constructing a
deepwater support facility and pipebase near Carlyss, Louisiana
to accommodate deeper draft vessels such as the Hercules and the
Pioneer. To gain anticipated efficiencies, the Company replaced
its existing facilities in Houma and Amelia, Louisiana with the
Carlyss Facility. Certain of the Company's administrative
functions also relocated to Carlyss from its Lafayette, Louisiana
and Houston, Texas offices.
Industry Outlook
The Company is optimistic but cautious in light of the recent
increase in energy prices. Oil and gas companies historically base
their capital budgets primarily on the projected demand of oil and
gas, their available reserves and the expected commodity prices.
If this holds true, capital spending for these companies should
increase resulting in an increase in the Company's domestic and
international business volume and industry pricing desensitivity.
The Company expects to see some affect of these changes in the
second half of fiscal 2000 and continue into fiscal 2001. In
addition, as the Company has historically done, it will continue
to evaluate the merits of any opportunities that may arise for
acquisitions of equipment or businesses.
Recent Accounting Pronouncements
In June 1998, the FASB issued Statement of Financial
Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133
establishes accounting and reporting standards for derivative
instruments and hedging activities and requires, among other
things, that an entity recognize all derivatives as either assets
or liabilities in the balance sheet and measure those instruments
at fair value. In June 1999, the FASB issued SFAS 137, which
delays the effective date of SFAS 133 to fiscal years beginning
after June 15, 2000. The Company will adopt the accounting
standard effective for its fiscal year beginning January 1, 2001,
as required. The Company has considered the implications of SFAS
133 and concluded that implementation of the new standard is not
currently expected to have a material effect on the consolidated
financial statements.
Year 2000
In order to minimize or eliminate the effect of the Year
2000 risk on its business systems and applications, the Company
identified, evaluated, implemented and tested changes to its
computer systems, applications and software necessary to achieve
Year 2000 compliance. The computer systems and equipment
successfully transitioned to the Year 2000 with no significant
issues. Management continues to keep its Year 2000 project management
in place to monitor latent problems that could surface at key dates or
events in the future. Management does not anticipate any significant
problems related to these events. The total cost of Year 2000 compliance
plan was approximately $0.3 million. These costs were expensed.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to the risk of changing interest rates and
foreign currency exchange rate risks. In fiscal year 1999 the Company
did not use derivative financial instruments to hedge interest or
currency risks. The Company has subsequently used derivative financial
instruments and will continue to use them in the future as deemed
advantageous. Interest on approximately $215.3 million, or 85% of the
Company's long-term debt with a weighted average interest rate of 8.67%
at December 31, 1999, was variable, based on short-term market rates.
Thus, a general increase of 1.0% in short-term market interest rates
would result in additional interest cost of $2.2 million per year if
the Company were to maintain the same debt level and structure.
Also, the Company has approximately $37.1 million fixed interest
rate long-term debt outstanding with a weighted-average interest rate
of approximately 7.8% and a market value of approximately $37.5 million
on December 31, 1999. A general increase of 1.0% in overall market
interest rates would result in a decline in market value of the debt to
approximately $34.3 million.
The Company uses natural hedging techniques to hedge against foreign
currency exchange losses by contracting, to the extent possible,
international construction jobs to be payable in U.S. dollars. The Company
also, to the extent possible, maintains cash balances at foreign locations
in U.S. dollar accounts. The Company does not believe that a change in
currency rates in the regions that it operates would have a significant
effect on its results of operations.
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 December 31, 1999
and 1998, and the related consolidated statements of operations,
shareholders' equity, cash flows, and comprehensive income (loss)
for the year ended December 31, 1999, the nine months ended
December 31, 1998, and the year ended March 31, 1998. Our audits
also included the financial statement schedules listed in the Index
at Item 14. 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 December 31, 1999 and 1998,
and the results of their operations and their cash flows for the
year ended December 31, 1999, the nine months ended December 31,
1998, and the year ended March 31, 1998, in conformity with
generally accepted accounting principles. Also, in our opinion,
such financial statement schedules, when considered in relation to
the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 25, 2000
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
December 31, December 31,
1999 1998
------------ ------------
ASSETS
Current Assets:
Cash $ 34,087 $ 25,368
Escrowed funds (Notes 1 and 3) 5,796 2,447
Receivables 92,835 107,992
Advances to unconsolidated
affiliate (Note 12) -- 8,190
Other receivables (Note 12) 8,600 --
Prepaid expenses and other 8,162 9,874
------------ ------------
Total current assets 149,480 153,871
------------ ------------
Escrowed Funds (Notes 1 and 3) 922 9,143
------------ ------------
Property and Equipment, net
(Notes 2, 3 and 6) 539,178 535,386
------------ ------------
Other Assets:
Deferred charges, net (Note 1) 20,979 16,218
Goodwill, net (Note 1) 43,997 2,249
Investment in and advances to
unconsolidated affiliate (Note 12) -- 10,655
Other 1,379 3,349
------------ ------------
Total other assets 66,355 32,471
------------ ------------
Total $ 755,935 $ 730,871
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of
long-term debt (Note 3) $ 20,165 $ 2,190
Accounts payable 50,033 53,005
Employee-related liabilities
(Note 5) 7,244 8,086
Income tax payable (Note 4) 5,352 1,427
Other accrued liabilities 8,125 10,526
------------ ------------
Total current liabilities 90,919 75,234
------------ ------------
Long-Term Debt (Note 3) 232,242 208,607
------------ ------------
Deferred Income Taxes (Note 4) 34,596 49,502
------------ ------------
Shareholders' Equity (Note 7):
Common stock, issued, 92,670,940
and 92,110,929 shares,
respectively 926 921
Additional paid-in capital 216,109 213,518
Treasury stock at cost
(1,429,500 shares) (15,012) (15,012)
Accumulated other comprehensive
income (loss) (8,970) (8,155)
Retained earnings 205,125 206,256
------------ ------------
Total shareholders' equity 398,178 397,528
------------ ------------
Total $ 755,935 $ 730,871
============ ============
See notes to consolidated financial statements.
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, except Per Share Data)
Year Nine Months Year
Ended Ended Ended
December 31, December 31, March 31,
1999 1998 1998
------------ ------------ ------------
Revenues (Note 9) $ 387,452 $ 342,201 $ 379,901
Cost of Revenues 341,852 246,228 265,245
------------ ------------ ------------
Gross Profit 45,600 95,973 114,656
Equity in Net Loss of
Unconsolidated Affiliate
(Note 12) (10,658) (6,890) (1,654)
Selling, General and
Administrative Expenses 27,710 21,720 22,492
------------ ------------ ------------
Operating Income 7,232 67,363 90,510
------------ ------------ ------------
Other Income (Expense):
Interest Expense (14,500) (6,744) (2,245)
Other (1,420) (665) 3,420
------------ ------------ ------------
(15,920) (7,409) 1,175
------------ ------------ ------------
Income (Loss) before
Income Taxes (8,688) 59,954 91,685
Provision (Benefit) for
Income Taxes (Note 4) (7,557) 20,983 34,382
------------ ------------ ------------
Net Income (Loss) (1,131) 38,971 57,303
============ ============ ============
Net Income (Loss)
Per Share (Note 7):
Basic (0.01) 0.43 0.63
Diluted (0.01) 0.42 0.61
============ ============ ============
See notes to consolidated financial statements.
<TABLE>
<CAPTION>
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in Thousands)
Accumulated
Additional Other
Common Stock Paid-in Treasury Compensation Retained
Shares Amount Capital Stock Income(loss) Earnings Total
---------- ------- ----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
March 31, 1997 90,556,750 $ 906 $ 201,331 $ -- $ -- $ 109,990 $ 312,227
Net income -- -- -- -- -- 57,303 57,303
Amortization of
unearned stock
compensation -- -- 179 -- -- -- 179
Restricted stock
issues, net 94,340 -- -- -- -- -- --
Exercise of
stock options 903,328 9 2,581 -- -- (8) 2,582
Tax effect of
exercise of
stock options -- -- 4,474 -- -- -- 4,474
Common stock
issued 39,088 -- 428 -- -- -- 428
Foreign currency
translation
adjustments -- -- -- -- (8,178) -- (8,178)
Other 3,608 -- (82) -- -- -- (82)
---------- ------- ----------- ---------- ------------ ----------- -----------
Balance at
March 31, 1998 91,597,114 915 208,911 -- (8,178) 167,285 368,933
Net income -- -- -- -- -- 38,971 38,971
Amortization of
unearned stock
compensation -- -- 604 -- -- -- 604
Restricted stock
issues, net 5,464 -- -- -- -- -- --
Exercise of
stock options 318,531 3 805 -- -- -- 808
Tax effect of
exercise of
stock options -- -- 1,318 -- -- -- 1,318
Common stock
issued 184,065 2 1,880 -- -- -- 1,882
Foreign currency
translation
adjustments -- -- -- -- 23 -- 23
Common stock
repurchased -- -- -- (15,012) -- -- (15,012)
Other 5,755 1 -- -- -- -- 1
---------- ------- ----------- ---------- ------------ ----------- -----------
Balance at
December 31,
1998 92,110,929 921 213,518 (15,012) (8,155) 206,256 397,528
Net loss -- -- -- -- -- (1,131) (1,131)
Amortization of
unearned stock
compensation -- -- 304 -- -- -- 304
Restricted
stock issues,
net 80,500 -- -- -- -- -- --
Exercise of
stock options 420,875 4 1,095 -- -- -- 1,099
Tax effect of
exercise of
stock options -- -- 688 -- -- -- 688
Common stock
issued 58,636 1 504 -- -- -- 505
Foreign currency
translation
adjustments -- -- -- -- (815) -- (815)
---------- ------- ----------- ---------- ------------ ----------- -----------
Balance at
December 31,
1999 92,670,940 $ 926 $ 216,109 $(15,012) $ (8,970) $ 205,125 $ 398,178
========== ======= =========== ========== ============ =========== ===========
</TABLE>
See notes to consolidated financial statements.
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
Year Nine Months Year
Ended Ended Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
Cash Flows From
Operating Activities:
Net income (loss) $ (1,131) $ 38,971 $ 57,303
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities
Depreciation and
amortization 55,006 35,602 29,576
(Gain) loss on sale,
disposal or impairment of
property and equipment 54 926 (72)
Deferred income taxes (14,888) 13,044 14,873
Equity in net loss of
unconsolidated affiliate 10,658 6,890 1,654
Other 282 (355) (989)
Changes in operating assets
and liabilities (net of
acquisitions):
Receivables 21,309 (10,836) (30,256)
Receivables from
unconsolidated
affiliate (7,151) (7,840) --
Prepaid expenses and other 3,098 (2,839) (3,242)
Account payable,
employee-related
liabilities,and other
accrued liabilities (18,935) 1,341 22,493
------------ ------------ ------------
Net cash provided by
operating activities 48,302 74,904 91,340
------------ ------------ ------------
Cash Flows From Investing
Activities:
Proceeds from sale of equipment 171 317 349
Decrease (increase) in escrowed
funds, net 4,872 17,795 (8,826)
Acquisition of businesses,
net of cash acquired -- -- (103,805)
(Net advances to) repayment
of advances to unconsolidated
affiliate (12,616) 6,835 2,593
Additions to property and
equipment (29,252) (132,881) (122,320)
Additions to deferred charges (14,248) (11,998) (10,076)
Other 399 540 (54)
------------ ------------ ------------
Net cash used in
investing activities (50,674) (119,392) (242,139)
------------ ------------ ------------
Cash Flows from
Financing Activities:
Repayment of long-term debt (192,104) (23,196) (27,220)
Proceeds from long-term debt 201,687 87,000 131,000
Proceeds from sale of
common stock, net 1,604 2,691 2,445
Purchase of treasury stock -- (15,012) --
------------ ------------ ------------
Net cash provided
by financing activities 11,187 51,483 106,225
------------ ------------ ------------
Effect of Exchange Rate Change
on Cash (96) (320) (714)
Cash:
Increase (decrease) 8,719 6,675 (45,288)
Beginning of period 25,368 18,693 63,981
------------ ------------ ------------
End of period 34,087 25,368 18,693
============ ============ ============
See notes to consolidated financial statements
GLOBAL INDUSTRIES, LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In Thousands)
Year Nine Months Year
Ended Ended Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
Net income (loss) $ (1,131) $ 38,971 $ 57,303
Other comprehensive income(loss):
Foreign currency translation
adjustments (815) 23 (8,178)
------------ ------------ ------------
Comprehensive income (loss) $ (1,946) $ 38,994 $ 49,125
============ ============ ============
See notes to consolidated financial statements.
Global Industries, Ltd.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Organization - Global Industries, Ltd. and subsidiaries (the
"Company") provides construction services, including pipeline
construction, platform installation and removal, construction
support and diving services, to the offshore oil and gas industry
in the United States Gulf of Mexico and in selected 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 basis. The Company's traditional
contracts are typically of short duration, being completed in one
to five months. Engineering, Procurement, Installation and
Commissioning contracts (EPIC) and turnkey contracts in foreign
areas can be for longer durations of up to one or two years.
Principles of Consolidation - The consolidated financial
statements include the accounts of Global Industries, Ltd. and its
wholly owned subsidiaries. All significant intercompany balances
and transactions have been eliminated. On 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 was
accounted for under the equity method. As more thoroughly discussed
in Note 12, the Company sold all of its interest in CCC and
acquired the offshore marine construction business of CCC effective
July 1, 1999. The new ownership structure is consolidated into the
Company's 1999 financial statements as of the effective date of the
transaction.
Fiscal Year - Effective December 31, 1998, the Company
changed its fiscal year-end to December 31 of each year. The
consolidated statements of operations, shareholders' equity, cash
flows, and comprehensive income (loss) for the period from April
1, 1998 to December 31, 1998 represent a transition period of
nine months which is referred to as the nine months ended
December 31, 1998.
The following is a comparative summary of the operating
results for the twelve months ended December 31, 1999 and 1998
and the nine-month periods ended December 31, 1998 and 1997:
Twelve Months Nine Months
Ended December 31, Ended December 31,
---------------------- -----------------------
1999 1998 1998 1997
(Unaudited) (Unaudited)
---------- ---------- ---------- -----------
(in thousands, except per share amounts)
Revenues $ 387,452 $ 429,719 $ 342,201 $ 292,383
Cost of Revenues 341,852 310,003 246,228 201,470
---------- ---------- ---------- ----------
Gross Profit 45,600 119,716 95,973 90,913
Equity in Net Loss
of Unconsolidated
affiliate (10,658) (7,690) (6,890) (854)
Selling, General
and Administrative
Expenses 27,710 27,305 21,720 16,907
---------- ---------- ---------- ----------
Operating Income 7,232 84,721 67,363 73,152
---------- ---------- ---------- ----------
Other Income (Expense):
Interest Expense (14,500) (7,530) (6,744) (1,459)
Other (1,420) (263) (665) 3,018
---------- ---------- ---------- ----------
(15,920) (7,793) (7,409) 1,559
---------- ---------- ---------- ----------
Income (Loss) before
Income Taxes (8,688) 76,928 59,954 74,711
Provision (Benefit)
for Income Taxes (7,557) 26,975 20,983 28,390
---------- ---------- ---------- ----------
Net Income (Loss) $ (1,131) $ 49,953 $ 38,971 $ 46,321
========== ========== ========== ==========
Net Income (Loss)
Per Share
Basic $ (0.01) $ 0.55 $ 0.43 $ 0.50
Diluted $ (0.01) $ 0.53 $ 0.42 $ 0.49
========== ========== ========== ==========
Cash - Cash includes cash on hand, demand deposits, repurchase
agreements having maturities less than three months, and money
market funds with banks.
Escrowed Funds - Escrowed funds totaled $6.7 million and $11.6
million at December 31, 1999 and December 31, 1998, respectively.
These amounts represent funds available for reimbursement to the
Company for amounts expended or which the Company expects to expend
on certain capital construction projects, restricted amounts held
under a Capital Construction Fund (CCF) agreement with the U.S.
Maritime Administration (MarAd) and funds held as security for the
debt with Heller Financial Inc. (see Note 3). Under the terms of
the financing agreement with the Lake Charles Harbor and Terminal
District, proceeds from the issuance of $28.0 million of Port
Improvement Revenue Bonds were deposited into a construction fund
for payment of related bond issuance costs and certain costs of
construction and improvement of a deepwater support facility and
pipebase in Carlyss, Louisiana (see Note 3). The Company also has
unreimbursed funds from the sale of U.S. Government Guaranteed
Financing Bonds deposited into an escrow account with MarAd. The
funds on deposit with MarAd are available for reimbursement to the
Company for certain vessel construction costs. Restricted funds
held in the CCF are available to the Company for certain vessel
construction costs and Title XI principal payments. Subsequent to
December 31, 1999, the Company terminated its Capital Construction
Fund and disbursed all $2.4 million held in the fund. $0.7 million
of the disbursement is a nonqualified withdrawal and, as such, will
be taxable income to the Company in 2000. The funds held as
security for the debt with Heller Financial, Inc. are being used to
service the debt in 2000. Substantially all of the escrowed funds
are invested in U.S. Treasury Bills and a money market account
invested in U.S. government and U.S. government agency securities.
At December 31, 1999 and 1998, the Company estimated $5.8 million
and $2.4 million, respectively, were currently reimbursable from
the escrowed funds for amounts expended on the related construction
projects and capital construction fund.
Subsequent to December 31, 1999, the Company terminated its
Capital Construction Fund Agreement with the MarAd. Prior to
termination, the fund held $2.4 million in funds of which $1.7
million was withdrawn as a qualified withdrawal for reimbursement
of principal payments on Title XI bonds. The remaining $0.7
million was withdrawn as a nonqualified withdrawal and will be
included in taxable income on the Company's 2000 corporate income
tax return.
Property and Equipment - Property and equipment are stated at
cost. Expenditures for property and equipment and items that
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 that 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 over 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:
Marine barges, vessels and related equipment 5 - 25 years
Machinery and equipment 5 - 18 years
Transportation equipment 3 - 10 years
Furniture and fixtures 2 - 12 years
Buildings and leasehold improvements 3 - 40 years
Effective April 1, 1998, the Company changed its estimate of
the useful lives of certain marine barges that are depreciated on
the units-of-production method. The Company increased total
estimated operating days for such barges to better reflect the
estimated periods during which the assets will remain in service.
For the nine months ended December 31, 1998, the change had the
effect of reducing depreciation expense by $3.7 million and
increasing net income by $2.4 million ($0.3 per both basic and
diluted share).
Depreciation and amortization expense of property and
equipment approximated $39.4 million, $29.2 million, and $24.9
million for the year ended December 31, 1999, the nine months ended
December 31, 1998, and the year ended March 31, 1998, respectively.
Interest Capitalization - Interest costs for the construction
of certain long-term assets are capitalized and amortized over the
related assets' estimated useful lives. During the year ended
December 31, 1999, the nine months ended December 31, 1998 and the
year ended March 31, 1998, interest costs of $3.1 million, $2.6
million, and $4.0 million, respectively, were capitalized.
Deferred Charges - Deferred charges consist principally of
dry-docking costs which are capitalized at cost and amortized on
the straight-line method through the date of the next scheduled
dry-docking. Amortization expense approximated $14.0 million, $5.8
million, and $4.4 million for the year ended December 31, 1999, the
nine months ended December 31, 1998, and the year ended March 31,
1998, respectively.
Goodwill - Goodwill represents the excess of the purchase
price and directly related costs over the value assigned to the net
tangible assets of acquired businesses and is being amortized on a
straight-line basis over estimated useful lives of fifteen years.
Amortization expense charged to operations for the year ended
December 31, 1999 was $1.3 million while amounts charged to
operations for the nine months ended December 31, 1998 and the year
ended March 31, 1998 were not material. Accumulated amortization
at December 31, 1999 and 1998 was $1.6 million and $0.3 million,
respectively.
Management evaluates the continuing value and future benefits
of goodwill, including the appropriateness of related amortization
periods, on a current basis.
Impairment of Long-Lived Assets - Long-lived assets held and
used by the Company are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company assesses the
recoverability of long-lived assets by determining whether the
carrying values can be recovered through projected cash flows and
operating results over their remaining lives. Any impairment of
the asset is recognized when it is probable that such future
undiscounted cash flows will be less than the carrying value of the
asset. During the nine months ended December 31, 1998, the Company
recorded impairment in the carrying value of certain facilities at
the Houma, Louisiana location of $0.6 million. No similar write-
downs were recorded for the years ended December 31, 1999 and March
31, 1998.
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.
Income Taxes - Income taxes are recognized during the year in
which transactions enter into the determination of net income, with
deferred taxes being provided for temporary differences between
assets and liabilities for financial reporting and such amounts as
measured by tax laws.
Fair Value of Financial Instruments - The carrying value of
the Company's financial instruments, including cash, escrowed
funds, receivables, advances to unconsolidated affiliate, accounts
payable, 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 December 31, 1999 and 1998 based upon
available market information, approximated $232. 2 million and
$216.1 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.
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.
Reclassifications - Certain prior year balances have been
reclassified to conform to the current year presentation.
Foreign Currency Translation - Effective October 1, 1999, the
Company determined that the United States dollar is the functional
currency for substantially all of the financial statements of its
foreign subsidiaries that previously used the local currency as the
functional currency. The change was adopted as a result of
significant changes in the operational and financial structure of
these foreign operations and management's resulting evaluation of
relevant economic facts and circumstances, including the high
proportion of contracts that are denominated in United States
dollars and the high volume of intercompany transactions and
financing indicators. Accordingly effective October 1, 1999,
current exchange rates are used to remeasure assets and
liabilities, except for certain accounts (including property and
equipment, goodwill and equity) which are remeasured using
historical rates. The translation calculation for the income
statement used average exchange rates during the period, except
certain items (including depreciation and amortization expense) for
which historical rates are used. Any resulting remeasure gain or
loss is included in other income (expense).
Prior to the change, the financial statements of those
subsidiaries in which United States dollars were not the functional
currency used the local currency as the functional currency. The
translation calculation for the income statement used the average
exchange rates during the period. The translation calculation for
assets and liabilities used the current exchange rates as of the
last day of the period and equity amounts were translated using
historical rates. The resulting balancing translation adjustments
for those periods are a component of accumulated other
comprehensive income (loss). Gains and losses resulting from
foreign currency transactions are included in other income
(expense) and are not material for the periods presented in the
statements of operations.
Basic and Diluted Net Income (Loss) Per Share - Basic net
income (loss) per share is computed based on the weighted-average
number of common shares outstanding during the period. Diluted
net income (loss) per share uses the weighted-average number of
common shares outstanding adjusted for the incremental shares
attributed to dilutive outstanding options to purchase common
stock and non-vested restricted stock awards.
Recent Accounting Pronouncements - In June 1998, the FASB
issued Statement of Financial Accounting Standards No. 133
"Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative instruments and hedging activities and
requires, among other things, that an entity recognize all
derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. In June 1999, the
FASB issued SFAS 137, which delays the effective date of SFAS 133
to fiscal years beginning after June 15, 2000. The Company will
adopt the accounting standard effective for its fiscal year
beginning January 1, 2001, as required. The Company has
considered the implications of SFAS 133 and concluded that
implementation of the new standard is not currently expected to
have a material effect on the consolidated financial statements.
2. Property and Equipment
Property and equipment at December 31, 1999 and 1998 is
summarized as follows:
December 31, December 31,
1999 1998
------------ ------------
(in thousands)
Marine barges, vessels, and related equipment $ 521,247 $ 503,894
Machinery and equipment 50,943 45,380
Transportation equipment 3,910 3,625
Furniture and fixtures 7,413 5,371
Buildings and leasehold improvements 58,415 9,438
Land 11,151 11,145
Construction in progress 30,305 61,914
------------ ------------
683,384 640,867
Less accumulated depreciation and amortization (144,206) (105,381)
------------ ------------
Property and equipment - net $ 539,178 $ 535,486
3. Financing Arrangements
Long-term debt at December 31, 1999 and 1998 consisted of the following:
December 31, December 31,
1999 1998
------------ ------------
(in thousands)
United States Government Guaranteed Ship
Financing Bonds, 1994 Series dated
September 27, 1994, payable in semi-
annual principal installments of
$418,000 with final installments of
$370,000 plus interest at 8.30%,
maturing July 15, 2020, collateralized
by the Pioneer vessel and related
equipment with a net book value of
$35.4 million at December 31, 1999 $ 17,508 $ 18,344
United States Government Guaranteed Ship
Financing Bonds, 1996 Series dated
August 15, 1996, payable in 49 semi-
annual principal installments 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 and
related equipment with a net book value
of $22.6 million at December 31, 1999 18,700 19,514
Heller Financial Inc. term loan, payable
in monthly principal installments of
$291,667 plus interest at variable rates
(at December 31, 1999 the interest rate
was 9.25%), maturing April 1, 2003,
collateralized by four vessels, with
a net book value of $11.7 million at
December 31, 1999 11,667 --
Obligation to service Lake Charles Harbor
and Terminal District Port Improvement
Revenue Bonds, dated November 1, 1998,
interest payable monthly at prevailing
market rates, maturing November 1, 2027,
collateralized by $28.4 million irrevocable
letter of credit 28,000 28,000
Revolving line of credit with a syndicate
of commercial banks,interest payable at
variable rates -- 143,000
Term loan with a syndicate of commercial
banks 175,000 --
Other obligations 1,532 1,939
------------ ------------
Total long-term debt 252,407 210,797
Less current maturities 20,165 2,190
------------ ------------
Long-term debt, less current maturities $ 232,242 $ 208,607
============ ============
Annual maturities of long-term debt for each of the five
fiscal years following December 31, 1999 and in total thereafter
follow (in thousands). These amounts reflect the Title XI
Hercules mortgage financing as discussed below:
2000 $ 20,165
2001 26,402
2002 26,407
2003 24,080
2004 22,770
Thereafter 132,583
---------
Total $ 252,407
=========
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.
The Lake Charles Harbor and Terminal District Port
Improvement Revenue Bonds (the "Bonds") are subject to optional
redemption, generally without premium, in whole or in part on any
business day prior to maturity at the direction of the Company.
Interest accrues at varying rates as determined from time to time
by the remarketing agent based on (i) specified interest rate
options available to the Company over the life of the Bonds and
(ii) prevailing market conditions at the date of such
determination. The interest rate on borrowings outstanding at
December 31, 1999 and 1998 was 5.5% and 4.1%, respectively.
Under the terms of the financing, proceeds from the issuance of
the Bonds were placed in a Construction Fund for the payment of
issuance related costs and the costs of acquisition, construction,
and improvement of a deepwater support facility and pipebase in
Carlyss, Louisiana. The unexpended funds are included in the
accompanying balance sheets under the caption "Escrowed Funds."
On December 30, 1999 the Company consummated a new $300.0
million credit facility, which consists of a $175.0 million term
loan facility and a $125.0 million revolving loan facility. This
new facility replaced the Company's previous facility, which
consisted of a $250.0 million revolving credit facility. Both the
term and revolving loan facility mature on December 30, 2004. The
term facility requires quarter payments of $8.2 million (net of
Hercules Title XI mortgage financing debt prepayment, as discussed
below) to be made starting June 2000 and continuing until maturity.
The term and revolving loan agreement permit both prime rate bank
borrowings and London Interbank Offered Rate ("Libor") borrowings
plus a floating spread. The spread for both prime rate and Libor
borrowings will float up or down based on the Company's performance
as determined by a leverage ratio. The spreads can range from 0.5%
to 1.50% and 1.75% to 2.75% for prime rate and Libor based rate
borrowings, respectively. In addition, the facility allows for
certain fixed rate interest options on amounts outstanding. Stock
of the Company's subsidiaries, certain real estate, and the
majority of the Company's vessels collateralize the loans under the
new credit facility. Both the term loan and the revolving loan
facilities are subject to certain financial covenants with which
the Company was in compliance with at December 31, 1999. As of
February 25, the Company had $64.7 million of credit capacity
available under its credit facility.
In February 2000, the Company completed Title XI mortgage
financing for $99.0 million, at 7.71% per annum, for the conversion
of the Hercules. These bonds financed both Phase I and Phase II of
the Hercules conversion. Phase I proceeds, net of fees amounted to
$65.2 million. Phase II proceeds of $29.1 million, reside in
escrow and will be released to the Company once Phase II is
complete, which is expected to occur early in the third quarter of
fiscal 2000. Concurrently with the receipt of the net proceeds of
the bond issue, the Company prepaid $94.2 million of term debt
under its credit agreement.
In conjunction with the disposition of the Company's 49%
ownership of CCC and the acquisition of CCC's offshore marine
construction business (as discussed further in Note 12), the
Company assumed $13.4 million of debt with Heller Financial Inc.
This loan matures on April 1, 2003 and is collateralized by four
vessels. This loan is subject to certain financial covenants with
which the Company was in compliance with at December 31, 1999.
The Company has short-term credit facilities available at its
foreign locations that aggregate $10.4 million and are secured by
parent company guarantees.
4. Income Taxes
The Company has provided for income tax expense (benefit) as follows:
Year Nine Months Year
Ended Ended Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
(in thousands)
U.S. Federal and State:
Current $ 1,365 $ 4,726 $ 18,465
Deferred (15,353) 13,031 14,873
Foreign:
Current 5,984 3,226 1,044
Deferred 447 -- --
------------ ------------ ------------
Total $ (7,557) $ 20,983 $ 34,382
============ ============ ============
State income taxes included above are not significant for any
of the periods presented.
Income (loss) before income taxes consisted of the following:
Year Nine Months Year
Ended Ended Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
(in thousands)
United States $ (27,375) $ 46,151 $ 87,839
Foreign 18,687 13,803 3,846
------------ ------------ ------------
Total $ (8,688) $ 59,954 $ 91,685
============ ============ ============
The provision (benefit) for income taxes varies from the Federal
statutory income tax rate due to the following:
Year Nine Months Year
Ended Ended Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
(in thousands)
Taxes at Federal statutory
rate of 35% $ (3,041) $ 20,984 $ 32,090
Tax benefit of disposition
of CCC, net (2,991) -- --
Adjustments related to
resolution of prior year
tax issues (1,500) -- --
Foreign income taxes at
different rates (109) (1,605) 1,044
Other 84 1,604 1,248
------------ ------------ ------------
Total $ (7,557) $ 20,983 $ 34,382
============ ============ ============
At December 31, 1999, the Company has an available, net
operating loss ("NOL") carryforward for regular federal income
tax purposes of approximately $46.6 million, which, if not used,
will expire in 2019. The Company also has a capital loss
carryforward of $19.0 million which, if not utilized, will expire
in 2004. The Company believes that it is more likely than not
that all of the NOL and capital loss carryforwards will be
utilized prior to their expiration.
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 December
31, 1999 and 1998 are as follows:
December 31, December 31,
1999 1998
------------ ------------
(in thousands)
Deferred Tax Liabilities:
Excess book over tax basis of
property and equipment $ 56,128 $ 44,853
Deferred charges 2,747 4,574
Other 1,295 1,390
Deferred Tax Assets:
Reserves not currently deductible (1,212) (1,315)
Net operating loss carryforward (17,256) --
Capital loss carryforward (7,106) --
------------ ------------
Net deferred tax liability $ 34,596 $ 49,502
============ ============
A substantial portion of the undistributed earnings of foreign
subsidiaries has been reinvested and the Company does not expect to
remit the earnings to the parent company. Accordingly, no Federal
income tax has been provided on such earnings and, at December 31,
1999, the cumulative amount of such undistributed earnings
approximated $50.0 million. It is not practicable to determine the
amount of applicable income taxes that would be incurred if any of
such earnings were repatriated.
5. Employee Benefits
The Company sponsors a defined contribution profit sharing
and 401(k) retirement plan that covers all employees who meet
certain eligibility requirements. Company contributions to the
profit-sharing plan are made at the discretion of the Board of
Directors and may not exceed 15% of the annual compensation of
each participant. No contributions to the profit-sharing portion
of the plan were made for the year ended December 31, 1999 and
the nine months ended December 31, 1998. Profit-sharing plan
expense was $2.5 million for the year ended March 31, 1998.
Under the 401(k) section of the retirement plan, the Company
began matching employee 401(k) plan contributions during the nine
months ended December 31, 1998. The Company's matching contributions
equal 100% of the first $1,000 of each participating employee's
contribution to the plan. 401(k) matching expense during the year
ended December 31, 1999 and the nine months ended December 31, 1998,
was $0.6 million and $0.7 million, respectively.
The Company has an incentive compensation plan, which rewards
employees when the Company's financial results meet or exceed budgets.
For the year ended December 31, 1999 and the nine months ended December
31, 1998, the Company recorded no incentive compensation expense. For
the year ended March 31, 1998, incentive compensation expense was $2.5
million (distributed to 1,150 employees).
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 Chief Executive Officer. Rent expense
for the year ended December 31, 1999, the nine months ended
December 31, 1998 and the year ended March 31, 1998, was
$1,901,000, $1,177,000, and $1,224,000, respectively, (of which
$47,000, $35,250, and $47,000, respectively, were related party
rental expense). The lease agreements, which include both non-
cancelable and month-to-month terms, generally provide for fixed
monthly rentals and, for certain real estate leases, renewal
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 December 31, 1999 and in total thereafter
follow (in thousands):
2000 $ 2,208
2001 1,910
2002 1,481
2003 1,115
2004 498
Thereafter 855
---------
Total $ 8,067
=========
Legal Proceedings - 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.
In November of 1999, the Company notified Groupe GTM that as a
result of material adverse changes and other breaches by Groupe GTM,
the Company was no longer bound by and was terminating the Share Purchase
Agreement to purchase the shares of ETPM S.A. Groupe GTM responded stating
that they believed the Company was in breach. The Share Purchase Agreement
provided for liquidated damages of $25.0 million to be paid by a party that
failed to consummate the transaction under certain circumstances. The
Company has notified Groupe GTM that it does not believe that the liquidated
damages provision is applicable to its termination of the Share Purchase
Agreement. On December 23, 1999, the Company filed suit against Groupe GTM
in Tribunal de Commerce de Paris to recover damages. The Company believes
that the outcome of these matters will not have a material adverse effect on
its business or financial statements.
Construction and Purchases in Progress - The Company estimates that
the cost to complete capital expenditure projects in progress at December
31, 1999 approximated $11.5 million.
Guarantees - In the normal course of its business activities, the
Company provides guarantees and performance, bid, and payment bonds
pursuant to agreements or obtaining such agreements to perform
construction services. Some of these financial instruments are secured
by parent guarantees. The aggregate of these guarantees and bonds at
December 31, 1999 was $20.9 million.
Letters of Credit - In the normal course of its business
activities, the Company is required to provide letters of credit
to secure the performance and/or payment of obligations, including
the payment of worker's compensation obligations. Additionally, the
Company has issued a letter of credit as collateral for $28.4 million
of Port Improvement Revenue Bonds. Outstanding letters of credit at
December 31, 1999 approximated $38.3 million.
7. Shareholders' Equity
Authorized Stock - The Company has authorized 30,000,000
shares of $0.01 par value preferred stock and 150,000,000 shares
of $0.01 par value common stock.
Treasury Stock - During August 1998, the Board of Directors
authorized the expenditure of up to $30.0 million to purchase
shares of the Company's outstanding common stock. Subject to
market conditions, the purchases may be effected from time to time
through solicited or unsolicited transactions in the market or in
privately negotiated transactions. No limit was placed on the
duration of the purchase program. Subject to applicable securities
laws, management will make purchases based upon market conditions
and other factors. As of December 31, 1999, the Company had
purchased 1,429,500 shares since the authorization at a total cost
of $15.0 million. No shares were purchased in 1999. Under the
Company's new credit facility stock purchases are prohibited.
Restricted Stock Awards and Stock Option Plans - The Company
has three stock-based compensation plans that provide for the
granting of restricted stock, stock options, or a combination of
both to officers and employees. Unearned stock 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 and is 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 amortized compensation amounted to approximately
$304,000, $604,000 and $179,000 for the year ended December 31, 1999,
the nine months ended December 31, 1998, and the year ended March 31,
1998, respectively. The balance of Unearned Stock Compensation to be
amortized in future periods was $2.4 million and $1.3 million at
December 31, 1999 and 1998, respectively.
The Company's 1992 Restricted Stock Plan provides for awards
of shares of restricted stock to employees approved by a committee
of the Board of Directors. Under the plan, 712,000 shares of Common
Stock have been reserved for issuance, of which 131,076 were available
for grant at December 31, 1999. Shares granted under the plan vest
33 1/3% on the third, fourth, and fifth anniversary date of grant.
During the year ended ended December 31, 1999 and the nine months ended
December 31, 1998, no awards were made under the plan. For the year
ended March 31, 1998, 5,000 awards with a weighted average value at the
time of issue of $13.444 per share were awarded. During the year ended
December 31, 1999, restrictions on 21,992 shares expired. On December
31, 1999, restrictions remained on 46,342 shares.
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.
As of December 31, 1999, the number of shares reserved for issuance
under the plan was 9,600,000 of which 3,446,384 were available for grant.
The Company does not expect to issue any additional awards
under its 1992 Restricted Stock Plan and its 1992 Stock Option
Plan.
The Company's 1998 Equity Incentive Plan permits the
granting of both restricted stock awards and stock option awards
to employees approved by a committee of the Board of Directors.
The plan also authorizes the Chief Executive Officer to grant
stock options and restricted stock awards to non-officer
employees. As of December 31, 1999, 3,200,000 shares of common
stock have been reserved for issuance under the plan, of which
1,969,650 were available for grant. Restricted shares granted
under the plan vest 33 1/3% on the third, fourth and fifth
anniversary date of the grant. During the year ended December
31, 1999, the nine months ended December 31, 1998, and the year
ended March 31, 1998, the Company issued 105,500 restricted stock
awards with a weighted average value at the time of issue of
$9.936 per share, 11,000 restricted stock awards with a weighted
average value at the time of issue of $17.341 per share, and
97,500 restricted stock awards with a weighted average value at
the time of issue of $16.500 per share, respectively. On
December 31, 1999, restrictions remained on 194,000 shares.
The following table shows the changes in options outstanding
under all plans for the year ended December 31, 1999, the nine
months ended December 31, 1998, and the year ended March 31,
1998:
At 85% of Market At or Above Market
--------------------- ---------------------
Weighted Weighted
Avg. Avg.
Shares Price Shares Price
----------- --------- ----------- ---------
Outstanding on March 31, 1997 1,306,382 $ 1.950 2,844,560 $ 3.800
Granted 28,000 14.602 2,244,900 16.124
Surrendered (32,460) 2.319 (264,900) 10.019
Exercised (335,060) 1.658 (412,980) 3.177
----------- --------- ----------- ---------
Outstanding on March 31, 1998 966,862 2.405 4,411,580 9.756
Granted 277,500 7.823 324,500 9.271
Surrendered (6,560) 1.847 (366,300) 12.911
Exercised (154,602) 1.572 (164,905) 3.513
----------- --------- ----------- ---------
Outstanding on December 31, 1998 1,083,200 3.779 4,204,875 9.690
Granted 58,000 6.059 866,500 9.669
Surrendered (67,200) 7.665 (716,130) 11.992
Exercised (184,240) 1.836 (237,900) 3.332
----------- --------- ----------- ---------
Outstanding on December 31, 1999 889,760 $ 3.737 4,117,345 $ 9.652
=========== ========= ========== =========
Exercisable at December 31, 1999 596,560 $ 2.833 1,824,495 $ 7.540
=========== ========= ========== =========
In October 1998, the Company repriced the exercise price on
665,000 incentive options. The table above has been restated for
the nine months ended December 31, 1998 and the year ended March
31, 1998 to reflect the repriced amounts. The repricing had the
effect of changing the weighted average exercise price per share
of the "at or above market" options from $13.633 to $9.271 for
options granted during the nine months ended December 31, 1998
and from $17.943 to $16.124 for options granted during the year
ended March 31, 1998.
The following table summarizes information about stock
options outstanding at December 31, 1999:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- --------------------------------------------------------------- ---------------------------
Weighted Average
Remaining Weighted Weighted
Range of Number Contractural Average Number Average
Exercise Prices Outstanding Life (Years) Exercise Price Exercisable Exercise Price
- ------------------- ----------- ------------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 1.5413 - 2.2344 538,020 3.42 $ 1.6108 514,020 $ 1.5862
2.3250 - 3.3125 1,217,100 5.27 2.7416 1,031,500 2.6919
3.7813 - 5.5938 288,975 8.26 5.0919 77,975 4.7470
5.9375 - 8.8750 1,326,190 8.45 7.6725 295,760 7.4518
9.2500 - 13.0156 571,900 8.13 11.5414 65,600 10.9838
14.6250 - 21.3750 1,064,920 7.74 19.5973 436,200 19.6092
- ------------------- ----------- ------------- -------------- ----------- --------------
$ 1.5413 - 21.3750 5,007,105 6.94 $ 8.6517 2,421,055 $ 6.3775
=================== =========== ============= ============== =========== ==============
</TABLE>
Non-Employee Director Compensation - Effective September 1,
1998, the Board of Directors terminated the Non-employee Director
Stock Plan and adopted the Global Industries, Ltd., Non-Employee
Directors Compensation Plan (the "Directors Compensation
Plan"). Under the Directors Compensation Plan, each non-
employee director may elect to defer receipt of all or part of
his or her annual retainer and meeting fees. In lieu of cash and
accrued interest, each non-employee director may elect to base
the deferred fees on Stock Units which have the same value as
common stock and increase and decrease in value to the full
extent of any increase or decrease in the value of the common
stock. Also, each non-employee director may receive up to
$20,000 of his or her annual retainer and meeting fees in shares
of common stock. With respect to annual retainer fees and
meeting fees earned after December 31, 1998, each non-employee
director must elect to receive at least $20,000 in common stock
or Stock Units. The maximum number of shares of common stock
that may be issued under the plan is 25,000. As of December 31,
1999 no shares have been issued under the plan.
Prior to the effective date of the Directors Compensation
Plan, the Non-Employee Director Stock Plan provided that each
director of the Company who was not an employee receive 4,000
shares of common stock on August 1st of each year, subject to an
annual limitation that the aggregate fair market value of shares
transferred could not exceed 75% of such director's cash
compensation for services rendered with respect to the
immediately preceding twelve-month period. The plan specified
that a maximum of 80,000 shares of common stock could be issued
under the plan. During the nine months ended December 31, 1998
and the year ended March 31, 1998, 5,755, and 3,608 shares,
respectively, were issued under the plan. Non-employee director
stock compensation expense was $69,000, and $55,000 for the nine
months ended December 31, 1998, and the year ended March 31,
1998, respectively.
1995 Employee Stock Purchase Plan - The Global Industries,
Ltd. 1995 Employee Stock Purchase Plan ("Purchase Plan")
provides a method for substantially all employees to voluntarily
purchase a maximum of 2,400,000 shares of the Company's common
stock at favorable terms. Under the Purchase Plan, eligible
employees may authorize payroll deductions that are used at the
end of the Option Period to acquire shares of common stock at 85%
of the fair market value on the first or last day of the Option
Period, whichever is lower. In August 1997, shareholders
approved an amendment to the plan whereby the plan has a twelve-
month and a six-month Option Period. In October 1998, the Board
of Directors further amended the plan effective December 31,
1998, to, among other items, change the twelve-month Option
Period to begin January 1 of each year and the six-month Option
Period to begin July 1 of each year. For the year ended December
31, 1999, 269 employees purchased 152,145 shares at a weighted
average cost of $5.63 per share. For the nine months ended
December 31, 1998, 241 employees purchased 58,636 shares at a
weighted average cost of $8.606 per share. For the year ended
March 31, 1998, 662 employees purchased 184,065 shares at a
weighted average cost of $10.225 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 year ended December
31, 1999, the nine months ended December 31, 1998 and the year
ended March 31, 1998, been determined consistent with SFAS 123,
the Company's net income (loss) and net income (loss) per share
amounts for the respective periods would approximate the
following proforma amounts (in thousands, except per share data):
Year Ended Nine Months Ended Year Ended
December 31, December 31, March 31,
------------------ ------------------ ------------------
1999 1998 1998
------------------ ------------------ ------------------
Reported Proforma Reported Proforma Reported Proforma
-------- -------- -------- -------- -------- --------
Net income (loss) $(1,131) $(4,670) $ 38,971 $ 36,341 $ 57,303 $ 55,474
======== ======== ======== ======== ======== ========
Net income (loss)
per share
Basic $ (0.01) $ (0.05) $ 0.43 $ 0.40 $ 0.63 $ 0.61
Diluted $ (0.01) $ (0.05) $ 0.42 $ 0.39 $ 0.61 $ 0.59
The weighted-average fair value of options that were granted
during the year ended December 31, 1999 was $6.27. The fair
value of each option granted is estimated on the date of the
grant using the Black-Scholes option pricing model with the
following assumptions: (i) dividend yield of 0%, (ii) expected
volatility of 61.49%, (iii) risk-free interest rate of 6.67%, and
(iv) expected life of 7.00 years.
The weighted-average fair value of options granted during
the nine months ended December 31, 1998 was $5.02. The fair
value of each option granted is estimated on the date of the
grant using the Black-Scholes option pricing model with the
following assumptions: (i) dividend yield of 0%, (ii) expected
volatility of 56.06%, (iii) risk-free interest rate of 5.31%, and
(iv) expected life of 7.00 years.
The weighted-average fair value of options granted during
the year ended March 31, 1998 was $10.26. 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 48.5%, (iii)
risk-free interest rate of 6.30%, and (iv) expected life of 6.50
years.
Basic and Diluted Net Income (loss) Per Share - The
following table presents the reconciliation between basic shares
and diluted shares (in thousands, except per share data):
<TABLE>
<CAPTION>
Weighted-Average Shares Income (Loss) Per Share
Net Income ----------------------------- -----------------------
(Loss) Basic Incremental Diluted Basic Diluted
---------- -------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended
December 31,1999 $ (1,131) 90,700 -- 90,700 $ (0.01) $ (0.01)
Nine Months ended
December 31,1998 38,971 91,498 2,310 93,808 0.43 0.42
Year ended
March 31, 1998 57,303 91,110 2,762 93,872 0.63 0.61
</TABLE>
All options outstanding during the year ended December 31,
1999 were excluded from the computation of diluted EPS because
the effect of their inclusion is antidilutive.
Options to purchase 1,356,000 shares of common stock, at an
exercise price range of $14.625 to $20.188 per share, were
outstanding during the nine months December 31, 1998, but were
not included in the computation of diluted EPS because the
options' exercise prices were greater than the average market
price of the common shares.
Options to purchase 1,859,100 shares of common stock, at an
exercise price of $15.375 to $21.1935 per share were outstanding
during the year ended March 31, 1998, but were not included in
the computation of diluted EPS because the options' exercise
prices were greater than the average market price of the common
shares.
8. Industry Segment and Geographic Information
The Company operates primarily in the offshore oil and gas
construction industry. However, the Company has used a
combination of factors to identify its reportable segments as
required by Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131"). The overriding determination of
the Company's segments is based on how the chief operating
decision-maker of the Company evaluates the Company's results of
operations. The underlying factors include types of service and
type of assets used to perform such services, operational
management, physical locations, degree of integration, and
underlying economic characteristics of the various types of work
the Company performs. The Company has identified eight segments
of which seven meet the quantitative thresholds as required by
SFAS 131 for disclosure. The Company's Gulf of Mexico Diving
segment did not meet the quantitative thresholds for the year
ended December 31, 1999. However, the Company feels that the
Gulf of Mexico Diving segment will have continuing significance
in future financial results and thus, is a reportable segment
also. The reportable segments are Gulf of Mexico Offshore
Construction, Gulf of Mexico Diving, Gulf of Mexico Marine
Support, Latin America, West Africa, Asia Pacific, and Middle
East. The Company's Gulf of Mexico ROV/other offshore
construction services and Global Production Services did not meet
the criteria of a reportable segment.
Gulf of Mexico Offshore Construction is principally related
services performed using the Company's construction barges in the
Gulf of Mexico, including pipelay and derrick services. Gulf of
Mexico Diving is all diving services including those performed
using dive support vessels. Gulf of Mexico Marine Support
includes services performed using the Company's SWATH vessel,
Pioneer, liftboat services, crewboat services, and transportation
services. Latin America, West Africa, Asia Pacific, and Middle
East include a broad range of offshore construction services,
including pipelay and derrick, diving, offshore support vessels,
trenching, and ROV services. Latin America also includes
services and equipment provided to CCC and the 49% equity in
CCC's results to July 1, 1999, the effective date of the
Company's disposal of its ownership interest in CCC (see Note
12). Many of the Company's services are integrated, and thus,
are performed for other of the Company's segments, typically at
rates charged to external customers.
The following tables show information about the profit or
loss and assets of each of the Company's reportable segments for
the year ended December 31, 1999, the nine months ended December
31, 1998, and the year ended March 31, 1998. The information
contains certain allocations of corporate expenses that the
Company deems reasonable and appropriate for the evaluation of
results of operations. Segment assets do not include
intersegment receivable balances as the Company feels that such
inclusion would be misleading or not meaningful. Segment assets
are determined by where they are situated at period-end. Because
the Company offers an integrated range of services, some assets
are used by more than one segment. However, the Company feels that
allocating the value of those assets among segments is impractical.
Nine Months
Year Ended Ended Year Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
(in thousands)
Revenues from external customers:
Gulf of Mexico Offshore
Construction $ 116,198 $ 132,299 $ 220,867
Gulf of Mexico Diving 19,141 29,032 27,795
Gulf of Mexico Marine Support 18,294 23,425 44,256
Latin America 91,332 26,312 9,506
West Africa 81,137 68,860 27,348
Asia Pacific 56,098 38,015 30,289
Middle East 4,006 22,992 18,549
Intersegment revenues:
Gulf of Mexico Offshore
Construction $ 1,009 $ 3,472 $ 843
Gulf of Mexico Diving 10,186 13,049 34,700
Gulf of Mexico Marine Support 9,450 8,039 7,286
Latin America -- -- --
West Africa -- -- --
Asia Pacific -- -- --
Middle East -- -- --
Interest expense:
Gulf of Mexico Offshore
Construction $ 3,435 $ 1,982 $ 230
Gulf of Mexico Diving 832 590 36
Gulf of Mexico Marine Support 1,680 440 9
Latin America 3,812 368 1,130
West Africa 1,243 994 1,227
Asia Pacific 2,481 533 199
Middle East 417 373 857
Depreciation and amortization:
Gulf of Mexico Offshore
Construction $ 21,136 $ 11,032 $ 12,368
Gulf of Mexico Diving 3,250 3,665 4,012
Gulf of Mexico Marine Support 8,425 3,867 4,060
Latin America 6,595 4,539 3,384
West Africa 4,295 3,226 2,462
Asia Pacific 5,664 6,745 1,945
Middle East 3,157 1,456 668
Income (loss) before income taxes:
Gulf of Mexico Offshore
Construction $ 6,060 $ 26,195 $ 44,230
Gulf of Mexico Diving (891) 13,498 24,404
Gulf of Mexico Marine Support (3,587) 10,235 19,443
Latin America 5,472 107 (37)
West Africa 8,224 11,923 3,712
Asia Pacific (10,451) 3,427 197
Middle East (6,816) (1,814) (707)
Segment assets at period-end:
Gulf of Mexico Offshore
Construction $ 228,151 $ 249,424 $ 227,887
Gulf of Mexico Diving 30,980 44,370 35,474
Gulf of Mexico Marine Support 70,960 88,150 94,268
Latin America 135,446 34,461 50,004
West Africa 61,643 69,972 53,175
Asia Pacific 145,808 149,998 60,635
Middle East 34,275 40,782 47,328
Expenditures for long-lived assets:
Gulf of Mexico Offshore
Construction $ 7,076 $ 54,406 $ 95,705
Gulf of Mexico Diving 963 272 8,323
Gulf of Mexico Marine Support 1,220 2,295 19,584
Latin America 58,174 4 20,366
West Africa 386 1,491 4,258
Asia Pacific 9,305 67,704 48,905
Middle East 129 4,908 38,408
The following table reconciles the reportable segments'
revenues, income (loss) before income taxes, assets, and other
items presented above, to the Company's consolidated totals.
Nine Months
Year Ended Year Ended Year Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
(in thousands)
Revenues
Total for reportable segments $ 406,851 $ 367,428 $ 423,074
Total for other segments 1,757 1,576 2,003
Elimination of intersegment
revenues (21,156) (26,803) (45,176)
------------ ------------ ------------
Total consolidated revenues $ 387,452 $ 342,201 $ 379,901
============ ============ ============
Income (loss) before income taxes
Total for reportable segments $ (1,989) $ 63,571 $ 91,242
Total for other segments 336 198 206
Unallocated corp. (expenses) income (7,035) (3,815) 237
------------ ------------ ------------
Total consolidated income (loss)
before tax $ (8,688) $ 59,954 $ 91,685
============ ============ ============
Segment assets at period-end
Total for reportable segments $ 707,263 $ 677,157 $ 568,771
Total for other segments 4,052 4,371 4,510
Corporate assets 44,620 49,343 52,086
----------- ------------ ------------
Total consolidated assets $ 755,935 $ 730,871 $ 625,367
=========== ============ ============
Other items:
Interest expense
Total for reportable segments $ 13,900 $ 5,280 $ 3,688
Total for other segments 64 -- --
Unallocated corp. interest expense 536 1,464 --
Interest allocated to segments in
excess of consolidated interest -- -- (1,443)
----------- ------------ ------------
Total consolidated interest
expense $ 14,500 $ 6,744 $ 2,245
=========== ============ ============
Depreciation and amortization
Total for reportable segments $ 52,522 $ 34,530 $ 28,899
Total for other segments 237 93 111
Unallocated corporate depreciation 2,247 979 566
----------- ------------ ------------
Total consolidated depreciation
and amortization $ 55,006 $ 35,602 $ 29,576
=========== ============ ============
Expenditures for long-lived assets
Total for reportable segments $ 77,253 $ 131,080 $ 217,333
Total for other segments 1 7 1,288
Corporate expenditures 10,105 1,794 866
----------- ------------ ------------
Total consolidated expenditures $ 87,359 $ 132,881 $ 219,487
=========== ============ ============
The following table presents the Company's revenues from
external customers attributed to operations in the United States
and foreign areas and long-lived assets in the United States and
foreign areas.
Nine Months
Year Ended Year Ended Year Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
(in thousands)
Revenues from external customers
United States $ 154,879 $ 186,022 $ 294,209
Foreign areas 232,573 156,179 85,692
Long-lived assets at period-end
United States $ 315,884 $ 336,146 $ 288,636
Foreign areas 223,294 199,240 143,588
9. Major Customers
Sales to various customers for the year ended December 31,
1999, the nine months ended December 31, 1998, and the year ended
March 31, 1998, that amount to 10% or more of the Company's
revenues, follows:
Nine Months
Year Ended Year Ended Year Ended
December 31, December 31, March 31,
------------------- ------------------- -------------------
1999 1998 1998
------------------- ------------------- -------------------
(dollars in thousands)
Amt. % Amt. % Amt. %
---------- ------- ---------- ------- ---------- -------
Customer A $ -- -- $ 35,310 10% $ 77,945 21%
Customer B 70,264 18% 68,968 20% 44,557 12%
Customer C 42,223 11% -- -- -- --
Sales to Customer A for all periods presented in the table
were reported by each of the Company's Gulf of Mexico segments
and its Asia Pacific segment. Sales to Customer B were reported
by each of the Company's Gulf of Mexico segments and its West
Africa segments. Sales to Customer C were reported by the
Company's Latin America segment
10. Supplemental Disclosures of Cash Flow Information
Supplemental cash flow information for the year ended
December 31, 1999, the nine months ended December 31, 1998 and
year ended March 31, 1998 are as follows:
Nine Months
Year Ended Year Ended Year Ended
December 31, December 31, March 31,
------------ ------------ ------------
1999 1998 1998
------------ ------------ ------------
(in thousands)
Cash paid for:
Interest, net of amount
capitalized $ 16,223 $ 4,679 $ 2,252
Income taxes 4,931 6,258 15,948
Non-cash investing and
financing activities:
In connection with acquisitions,
liabilities assumed were as
follows:
Fair value of assets acquired,
net of cash acquired $ 27,246 $ -- $ 114,931
Cash paid for net assets -- -- (103,805)
Goodwill acquired 43,085 -- --
------------ ------------ ------------
Fair value of liabilities
assumed $ 70,331 $ -- $ 11,126
============ ============ ============
Other Non-Cash Transactions:
During the year ended December 31, 1999, the nine months
ended December 31, 1998 and the year ended March 31, 1998, 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 $0.7 million, $1.3 million, and $4.5 million,
respectively.
11. Interim Financial Information (Unaudited)
The following is a summary of consolidated interim financial
information for the year ended December 31, 1999 and nine months
ended December 31, 1998:
Three Months Ended
---------------------------------------------
March 31 June 30 Sept. 30 Dec. 31(1)
---------- ---------- ---------- ----------
(in thousands, except per share amounts)
Year Ended December 31, 1999
Revenues $ 79,292 $ 92,343 $129,274 $ 86,543
Gross profit 9,754 9,111 18,751 7,984
Net income (loss) 198 (1,094) 3,428 (3,663)
Net income (loss) per share
Basic $ 0.00 $ (0.01) $ 0.04 $ (0.04)
Diluted $ 0.00 $ (0.01) $ 0.04 $ (0.04)
(1) Included in the fourth quarter of fiscal 2000 are non
recurring charges of $3.7 million after tax, related to the
attempted acquisition of ETPM and the replacement of the
Company's credit facility and a $1.5 million tax benefit relating
to the resolution of prior year tax issues.
Three Months Ended
-----------------------------------------
June 30 Sept. 30 Dec. 31
----------- ----------- -----------
(in thousands, except per share amounts)
Nine months ended December 31, 1998
Revenues $ 92,158 $ 120,575 $ 129,468
Gross profit 30,587 30,901 34,485
Net income 14,829 12,297 11,845
Net income per share:
Basic $ 0.16 $ 0.13 $ 0.13
Diluted $ 0.16 $ 0.13 $ 0.13
12. Investment in and Advances to Unconsolidated Affiliate
In a Transaction Agreement effective July 1, 1999, the
Company acquired the offshore marine construction business of CCC
Fabricaciones y Construcciones, S.A. de C.V. ("CCC"), a leading
provider of offshore construction services in Mexico, and sold
its 49% ownership interest in CCC to CCC's other principal
shareholder. Under the terms of the transaction, the Company
acquired four marine vessels, a marine support base at Ciudad del
Carmen, Mexico, and existing contracts to perform approximately
$72.0 million of offshore marine construction. As consideration
for the assets acquired, the Company assumed approximately $32.0
million of CCC indebtedness (which the Company previously
guaranteed) and other net accounts payable and liabilities of
approximately $38.3 million related to CCC's offshore marine
construction operation. The acquisition was accounted for as a
purchase and, accordingly, the acquisition cost has been
allocated to the net tangible assets acquired based on their fair
market values with the excess, approximating $43.1 million,
recorded as goodwill. The results of operations of the acquired
business are included (on a full consolidated basis) in the
accompanying 1999 financial statements from the effective date of
the acquisition.
The following unaudited proforma income statement data for
the year ended December 31, 1999 and the nine months ended
December 31, 1998 reflects the acquisition assuming it occurred
effective April 1, 1998:
Year Nine Months
Ended Ended
December 31, December 31,
------------ ------------
1999 1998
------------ ------------
Revenues $ 505,346 $ 493,693
Net income (loss) (10,190) 31,563
Net income (loss0 per share:
Basic $ (0.11) $ 0.34
Diluted $ (0.11) $ 0.34
Prior to the aforementioned sale of its 49% ownership
interest in CCC, the Company's investment in CCC was accounted
for under the equity method.
Summary financial information of CCC as of September 30,
1998 and December 31, 1997 and for the nine months ended
September 30, 1998 and the year ended December 31, 1997 follows
(in thousands):
September 30, December 31,
1998 1997
-------------- -------------
Current Assets $ 110,352 $ 63,819
Noncurrent asset, net 28,174 28,900
-------------- -------------
Total $ 138,526 $ 92,719
============== =============
Current liabilities $ 127,512 $ 65,681
Noncurrent liabilities 28,082 21,788
-------------- -------------
Total $ 155,594 $ 87,469
============== =============
Nine Months Nine Months
Ended Ended Year Ended
June 30, September 30, December 31,
----------- ------------- ------------
Revenues $ 128,786 $ 177,799 $ 150,482
Gross Profit 2,354 12,411 24,595
Net Income (loss) (21,751) (14,061) (3,375)
During the year ended December 31, 1999, the nine months
ended December 31, 1998, and the year ended March 31, 1998, the
Company advanced funds to CCC (under interest bearing and non-
interest bearing arrangements), provided barge charters, diving
and other construction support services to CCC, and was
reimbursed for expenditures paid on behalf of CCC. Included in
the accompanying balance sheet as "other receivables" at
December 31, 1999 and "advances to unconsolidated affiliate" at
December 31, 1998 are amounts due from CCC totaling $8.6 million
and $18.8million, respectively. Revenues and expense reimbursements
relating to transactions with CCC approximated $6.5 million and
$0.7 million, respectively, for the year ended December 31, 1999,
($26.3 million and $0.6 million, respectively, for the nine
months ended December 31, 1998, and $9.5 million and $15.1
million, respectively, for the year ended March 31, 1998). No
interest income related to advances to CCC was recognized during
the year ended December 31, 1999 and the nine months ended
December 31, 1998. For the year ended March 31, 1998, interest
income related to advances to CCC approximated $0.4 million.
13. Business Acquisition
On July 31, 1997, the Company completed the acquisition of
certain business operations and assets of Sub Sea International,
Inc. and certain of its subsidiaries. The major assets acquired
in the transaction included three construction barges, four
liftboats and one dive support vessel based in the United States,
four support vessels based in the Middle East, and support
vessels and ROVs based in the Far East and Asia Pacific. The
transaction was accounted for by the purchase method and,
accordingly, the acquisition cost of $103.8 million (consisting
of the purchase price of $102.0 million, and directly related
acquisition costs of $1.8 million) was allocated to the net
assets acquired based on their estimated fair market value. The
results of operations of the acquired business operations and
assets are included in the accompanying 1998 financial statements
since the date of acquisition.
The following unaudited pro forma income statement data for
the year ended March 31, 1998 reflects the effect of the
acquisition assuming it occurred effective April 1, 1996:
Year Ended
March 31,1998
---------------
(in thousands)
(except for share data)
Revenues $ 415,257
Net income 55,533
Net income per share:
Basic $ 0.61
Diluted $ 0.59
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 2000 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 2000 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 2000 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 2000 Annual Meeting of Shareholders.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) 1. Financial Statements
Included in Part II of this report.
Independent Auditors' Report.
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Operations for the year ended
December 31, 1999, the nine months ended December 31, 1998
and the year ended March 31, 1998.
Consolidated Statements of Shareholders' Equity for the
year ended December 31, 1999, the nine months ended
December 31, 1998 and the year ended March 31, 1998.
Consolidated Statements of Cash Flows for the year ended
December 31, 1999, the nine months ended December 31,
1998 and the year ended March 31, 1998.
Consolidated Statements of Comprehensive Income (Loss)
for the year ended December 31, 1999, the nine months
ended December 31, 1998 and the year ended March 31, 1998.
Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
The following financial statement schedule is included:
Schedule II - Valuation and Qualifying Accounts
All other 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(B)(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:
Exhibit
Number
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.
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 - 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, incorporated by reference to
Exhibit 10.21 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1997.
10.21 - Form of Indemnification Agreement between the
Registrant and each of the Registrant's
directors, incorporated by reference to
Exhibit 10.22 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
March 31, 1997.
10.22@ - 1996 Amendment to Global Industries, Ltd.
1995 Employee Stock Purchase Plan,
incorporated by reference to Exhibit 10.26 to
the Registrant's Annual Report on Form 10-K
for the fiscal year ended March 31, 1997.
10.23 - 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, incorporated by reference to Exhibit
10.27 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31,
1997.
10.24@ - Global Industries, Ltd. 1998 Equity Incentive
Plan incorporated by reference to exhibit
10.28 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended March 31,
1998.
10.25 - Acquisition Agreement among the Registrant
Sub Sea International and Dresser Industries,
dated, June 24, 1997, incorporated by
reference to Exhibit 21 to the Registrant's
current report on Form 8-K dated August 8,
1997.
10.26 - Facilities Agreement (related to Carlyss
Facility) by and between the Registrant and
Lake Charles Harbor and Terminal District
dated as of November 1, 1997, incorporated by
reference to Exhibit 10.2 to Registrant's
Quarterly Report on Form 10-Q for the
quarterly period ended December 31, 1997.
10.27 - Ground Lease and Lease-Back Agreement
(related to Carlyss Facility) by and between
the Registrant and Lake Charles Harbor and
Terminal District dated as of November 1,
1997, incorporated by reference to Exhibit
10.3 to Registrant's Quarterly Report on Form
10-Q for the quarterly period ended December
31, 1997.
10.28 - Trust Indenture (related to Carlyss Facility)
by and between Lake Charles Harbor and
Terminal District and First National Bank of
Commerce, as Trustee, dated as of November 1,
1997, incorporated by reference to Exhibit
10.4 to Registrant's Quarterly Report on Form
10-Q for the quarterly period ended December
31, 1997.
10.29 - Pledge and Security Agreement (related to
Carlyss Facility) by and between Registrant
and Bank One, Louisiana, National
Association, dated as of November 1, 1997,
incorporated by reference to Exhibit 10.5 to
Registrant's Quarterly Report on Form 10-Q
for the quarterly period ended December 31,
1997.
10.30@ - Global Industries, Ltd. Non-Employee
Directors Compensation Plan incorporated by
reference to Exhibit 4.1 to Registrant's
Registration Statement on Form S-8 (Reg. No.
333-69949).
10.31 - Transaction agreement between Global
Industries, Ltd., and CCC Fabricaciones Y
Construcciones, S.A. de C.V. dated July 1,
1999. Incorporated by reference to exhibit
2.1 to registrant's quarterly report on Form
10-Q for the quarterly period ended June 30,
1999.
10.32 - Share Purchase Agreement between Global
Industries, Ltd. and ETPM, S.A. incorporated
by reference to exhibit 2.1 to registrants'
quarterly report on Form 10-Q for the
quarterly period ended June 30, 1999.
* 10.33 - Trust Indenture relating to United States
Government Guaranteed Ship Financing
Obligations between Global Industries, Ltd.,
shipowner, and Wells Fargo Bank, Indenture
Trustee, dated as of February 22, 2000.
* 10.34 - Credit Agreement dated as of December 30,
1999 by, and Among Banc One, National
Association, as agent for lenders Global
Industries, Ltd. and Global Offshore Mexico,
S. DE R.L. DE C.V.
* 10.35 - Assignment and Assumption Agreement and First
Amendment to loan agreement between CCC
Fabricationes y Construcciones, SA de CV,
Heller Financial, Inc., Grupo Consorcio
Fabricaciones y Construcciones, SA de CV,
Global Industries, Ltd., and Global
Industries Offshore, Inc.
* 21.1 - Subsidiaries of the Registrant.
* 23.1 - Consent of Deloitte & Touche LLP.
* 27.1 - Financial Data Schedule
*Filed herewith.
@Management Compensation Plan or Agreement.
(b) Reports on Form 8-K.
None.
<TABLE>
<CAPTION>
Global Industries, Ltd.
Schedule II Valuation and Qualifying Accounts
For the Year Ended December 31, 1999, the Nine Months Ended
December 31, 1998, and the Year Ended March 31, 1998
(Thousands of dollars)
Additions
-------------------------
Balance at Charged to Charged to Balance at
Beginning of Costs and Other End of
Description Period Expenses Accounts Deductions Period
- --------------------------------- ------------ ------------ ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1999
Allowances for doubtful accounts $ 1,274 $ 7,692 $ -- $ 810 $ 8,156
Nine months ended December 31, 1998
Allowances for doubtful accounts *
Year ended March 31, 1998 *
Allowances for doubtful accounts
</TABLE>
* - Years not material
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GLOBAL INDUSTRIES, LTD.
By: /s/ PETER S. ATKINSON
____________________________________________
Peter S. Atkinson
Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
March 17, 2000
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.
/s/ WILLIAM J. DORE'
- ----------------------------
William J. Dore' Chairman of the Board, President, March 17, 2000
Chief Executive Officer and
Director
/s/ JAMES C. DAY
- ----------------------------
Janes C. Day Director March 17, 2000
/s/ EDGAR G. HOTARD
- ----------------------------
Edgar G. Hotard Director March 17, 2000
/s/ EDWARD P. DJEREJIAN
- ----------------------------
Edward P. Djerejian Director March 17, 2000
/s/ MICHAEL J. POLLOCK
- ----------------------------
Michael J. Pollock Director March 17, 2000
/s/ PETER S. ATKINSON
- ---------------------------
Peter S. Atkinson Vice President, Chief Financial March 17, 2000
Officer (Principal Financial and
Accounting Officer)
EXHIBIT 21.1
Subsidiaries of the Registrant
(Global Industries, Ltd.)
NAME INCORPORATION
Global Divers and Contractors, LLC Louisiana
Global Pipelines PLUS, LLC Louisiana
Pipelines, Incorporated Louisiana
Global Movible Offshore, LLC Louisiana
Pelican Transportation, LLC Louisiana
The Red Adair Company, LLC Louisiana
Global Industries Offshore, LLC Delaware
Global Offshore International, LTD Cayman Islands
Global International Vessels, Inc. Cayman Islands
Norman Offshore Pipelines, LLC Louisiana
Global Pipelines Plus Nigeria, Ltd. Nigeria
Global Offshore, Pty. Ltd. Australia
Global Industries Asia Pacific PTE, Ltd. Singapore
Yamado Enterprise, Sdn. Bhd. Brunei
PT Global Industries Asia-Pacific Indonesia
Global Asia Pacific Industries, Sdn. Bhd.Malaysia
Subtec Asia, Ltd. Isle of Mann
Subtec Marine Services, Ltd. Cyprus
Subtec Offshore Support, Ltd. Cyprus
Subtec Middle East, Ltd. Delaware
Subtec Mational Company, LLC United Arab Emirates
GIL Holdings, LLC Louisiana
Global Production Services, LLC Louisiana
Global Industries Mexico Holdings,
S. de R.L. de C.V. Mexico
Global Vessels Mexico, S. de R.L.
de C.V. Mexico
Global Industries Offshore Services,
S. de R.L. de C.V. Mexico
Global Industries Services,
S. de R.L. de C.V. Mexico
Global Offshore Mexico,
S. de R.L. de C.V. Mexico
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement Nos. 33-58048, 33-89778 and 333-69949 of Global Industries,
Ltd. on Form S-8 of our report dated February 25, 2000 appearing
in this Annual Report on Form 10-K of Global Industries, Ltd. for
the year ended December 31, 1999.
DELOITTE & TOUCHE LLP
New Orleans, Louisiana
March 17, 2000
TRUST INDENTURE
Relating to United States Government Guaranteed
Export Ship Financing Obligations, 2000 Series
Between
GLOBAL INDUSTRIES, LTD.,
as Shipowner
And
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
Dated February 23, 2000
TRUST INDENTURE
SPECIAL PROVISIONS
THIS TRUST INDENTURE, dated February 23, 2000 (the "Indenture"),
between (i) GLOBAL INDUSTRIES, LTD., a Louisiana corporation (the
"Shipowner"), and (ii) Norwest Bank Minnesota, National Association,
a national banking association (the "Indenture Trustee").
RECITALS
A. WHEREAS, pursuant to the understandings set forth in the
Security Agreement, the Shipowner has authorized the issuance of certain
Obligations pursuant to the terms and conditions of this Indenture in an
aggregate principal amount not to exceed $99,000,000 to finance the cost
of reconditioning the Vessel; and
B. WHEREAS, the Secretary, on behalf of the United States,
has agreed to Guarantee the payment of the unpaid interest to the date of
such payment on, and the unpaid balance of the principal of, such Obligations
under the provisions of Title XI of the Act, and has authorized the Indenture
Trustee to cause the Guarantees to be imprinted on the Obligations pursuant
to the Authorization Agreement.
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:
1. Incorporation of General Provisions
This Indenture shall consist of two parts: the Special Provisions and
the General Provisions attached hereto as Exhibit 1, and they shall be
treated as one instrument. In the event of a conflict, the terms of the
Special Provisions shall prevail.
2. The Obligations.
(a) The initial series of Obligations issued hereunder shall be
designated "United States Government Guaranteed Export Ship Financing
Obligations, 2000 Series," and shall be in the form of Exhibit 2 to this
Indenture. The aggregate principal amount of Obligations which may be issued
under this Indenture shall not exceed $99,000,000.
(b) The Obligations shall be in the denominations of United States
$1,000 or any integral multiple thereof.
(c) The Shipowner shall at all times cause to be maintained in the
City of Minneapolis, State of Minnesota, an office or agency for the purposes
specified in Section 5.03 of this Indenture.
(d) The Indenture Trustee shall at all times have its Corporate
Trust Office in the City of Minneapolis, State of Minnesota.
3. Additions, Deletions, and Amendments to Exhibit 1.
(a) Concerning Registered and Beneficial Ownership of the Bonds;
Legends.
(i) The Bonds shall be issued initially in the form of one
permanent global Bond in definitive, fully registered form without
interest coupons (the "Global Bond"). Except as provided in
paragraph (iii) below, owners of beneficial interests in the Global
Bond ("Obligation Owners") will not be entitled to receive separate
certificated Bonds("Definitive Bonds") and will not be considered
the Holders thereof. The Global Bond shall be deposited with the
Depository Trust Company ("DTC") or the Indenture Trustee, as
custodian for DTC, registered in the name of DTC or a nominee of DTC,
and duly executed by the Shipowner and authenticated by the Indenture
Trustee as provided in the Indenture, and DTC or such nominee of DTC
shall be the sole Holder for purposes of this Indenture until the
Global Bond becomes exchangeable for Definitive Bonds in accordance
with paragraph (iii)(2) below. The Global Bond shall bear such legend
as DTC may require.
(ii) Members of, or participants in, DTC shall have no rights under
the Indenture with respect to the Global Bond held on their behalf by
DTC or by the Indenture Trustee as the custodian of DTC or under such
Global Bond, and DTC may be treated by the Shipowner, the Indenture
Trustee and any agent of the Shipowner or the Indenture Trustee as the
absolute owner of such Global Bond for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the
Shipowner, the Indenture Trustee or any agent of the Shipowner or the
Indenture Trustee from giving effect to any written certification,
proxy or other authorization furnished by DTC or impair, as between
DTC and its members and participants, the operation of customary
practices of DTC governing the exercise of the rights of an Obligation
Owner in the Global Bond.
(iii)(1)The transfer and exchange of the Global Bond or beneficial
interests therein shall be effected through DTC or the Indenture
Trustee, as the custodian for DTC, in accordance with the Indenture
and the procedures of DTC therefor.
(2) The Global Bond shall be exchangeable for Definitive Bonds
registered in the names of Obligation Owners only if any of the
following events shall have occurred: (A) DTC notifies the Shipowner
that it is unwilling or unable to continue as depositary for such
Global Bond or DTC ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, at a time when DTC
is required to be so registered in order to act as depositary, and
a successor depositary is not appointed by the Shipowner within 90
days thereafter, (B) the Shipowner or the Indenture Trustee elects to
terminate DTC's service or the book entry system, (C) the Secretary
assumes the Bonds, or (D) the Secretary instructs the Shipowner and
the Indenture Trustee to terminate the Letter of Representations
relating to the Bonds between the Shipowner and the Indenture Trustee
and accepted by DTC.
(3) Any Global Bond that is exchangeable for Definitive Bonds
registered in the name of the Obligation Owners pursuant to this
paragraph (iii) shall be surrendered by DTC to the Indenture Trustee
to be so exchanged, without charge, and the Shipowner shall execute
and the Indenture Trustee shall authenticate and deliver, upon such
exchange of such Global Bond, an equal aggregate principal amount of
Definitive Bonds of authorized denominations. Definitive Bonds issued
in exchange for a beneficial interest in a Global Bond pursuant hereto
shall be registered in such names and in such authorized denominations
as DTC, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Indenture Trustee in
writing. The Indenture Trustee shall deliver such Definitive Bonds
to the Obligation Owners in whose names such Bonds are so registered
in accordance with the instructions of DTC.
(4) The registered Holder of a Global Bond may grant proxies and
otherwise authorize any Obligation Owner, including the DTC's members
and participants and Obligation Owners that may hold interests through
such members and participants, to take any action which a Holder is
entitled to take under the Indenture or the Obligations.
(5) In the event of the occurrence of any of the events specified
in paragraph (iii)(2), the Shipowner will promptly make available to
the Indenture Trustee a reasonable supply of Definitive Bonds.
(6) Notwithstanding any other provision of the Indenture, the
Global Bond may not be transferred except as a whole by DTC for such
Global Bond to a nominee of DTC or by a nominee of DTC to DTC or
another nominee of DTC.
(iv) At such time as all beneficial interests in the Global Bond
have either been exchanged for Definitive Bonds, redeemed, repurchased
or canceled, such Global Bond shall be returned to DTC for cancellation
or retained and canceled by the Indenture Trustee.
(v) The Indenture Trustee shall have no responsibility or
obligation to any Obligation Owner, a member of, or a participant in
DTC with respect to the accuracy of the records of DTC or its nominee
or of any participant or member thereof, with respect to any ownership
interest in the Obligations or with respect to the delivery to any
participant, member, or other Obligation Owner (other than DTC) of any
notice (including any notice of redemption) or the payment of any
amount or delivery of any Obligations (or other security or property)
under or with respect to such Obligations. All notices and
communications to be given to the Holders and all payments to be made
to Holders in respect of the Obligations shall be given or made only
to or upon the order of the registered Holders (which shall be DTC or
its nominee in the case of the Global Bond). The rights of Obligations
Owners shall be exercised only through DTC subject to the applicable
rules and procedures of DTC. The Indenture Trustee may rely and shall
be fully protected in relying upon information furnished by DTC with
respect to its members, participants and any Obligation Owner.
(b) Concerning Section 2.06. Section 2.06 of Exhibit 1 hereto is
hereby amended by inserting the word "manually" after the word "executed" in
the third line thereof.
(c) Concerning Section 2.07. Section 2.07(c) of Exhibit 1 is
hereby amended by deleting the words "The Shipowner shall not be required to
register transfers or make exchanges" in the first line thereof and inserting
in lieu thereof the words "Neither the Shipowner nor the Indenture Trustee
shall be required to register transfers or make exchanges".
(d) Concerning Section 3.02.
(i) Section 3.02(b) of Exhibit 1 hereto is hereby amended
by deleting the words "subsection (c)" in the fourth line
thereof and inserting in lieu thereof the words "Section 3.03."
(ii) Section 3.02(c) of Exhibit 1 hereto is hereby deleted
in its entirety.
(e) Concerning Section 3.03. Section 3.03 of Exhibit 1 hereto is
hereby amended as follows:
(i) by deleting Section 3.03 in its entirety and
substituting the following therefor:
"(a) Optional Redemptions of Obligations at a Premium. At
its option, the Shipowner may redeem the Obligations, in whole
or in part, at any time, at a redemption price equal to 100%
of the principal amount being redeemed plus (i) interest
accrued thereon to the date fixed for redemption and (ii) the
Make Whole Premium. The Shipowner may redeem such Obligations
on a date at least 40 days but not more than 60 days from the
Indenture Trustee's receipt of the Request to make such an
optional redemption and specifying the Redemption Date and the
principal amount of Obligations which the Shipowner intends to
redeem."
(ii) by adding a new subsection (b) as follows:
"(b) Calculation of Make Whole Premium. The Indenture
Trustee may retain the services of a consultant, the cost of
which shall be borne by the Shipowner, to perform its
obligations with respect to calculation of the Make Whole
Premium as defined and described in the Obligations. Such
consultant shall be a U.S. nationally recognized accounting
firm or investment banking firm with a capitalization of at
least $50,000,000 who regularly engages in bond underwritings
or placements. The Request of the Shipowner referred to in
Section 3.03(a) shall contain the identity of a proposed
consultant, and the Shipowner shall certify that such
consultant satisfies the requirements of this Section 3.03(b),
and shall also contain sufficient information (such as names
and phone numbers) to permit the Indenture Trustee to contact
and arrange for retention of the consultant. The Indenture
Trustee may use the consultant proposed by the Shipowner or
may, in its discretion, select another qualifying consultant.
The consultant shall certify the calculations and the result
thereof to the Indenture Trustee and the Shipowner in writing."
(f) Concerning Section 6.09. Section 6.09 is hereby amended by
adding at the end thereof a new subsection (c) as follows:
"(c) In the event that the Global Bond is registered in the
name of The Depository Trust Company ("DTC"), Cede & Co.
("Cede") or another nominee of DTC or Cede pursuant to the
Letter of Representations relating to the Obligations between
the Shipowner and the Indenture Trustee and accepted by DTC
(the "LOR"), and if the Secretary (i) assumes the Obligations
pursuant to Section 6.09(a) hereof or (ii) instructs the
Shipowner and the Indenture Trustee to terminate the LOR, then
the Shipowner and the Indenture Trustee, immediately upon
receipt of notice of such assumption or upon receipt of notice
of such termination, as applicable, shall terminate or cause
the termination of the LOR in accordance with Section 15
thereof. The Indenture Trustee shall, within 30 days from
receipt of notice of such assumption or termination from the
Secretary, also instruct DTC to notify its direct and indirect
participants of the need to re-register the Obligations in the
names of the Obligation Owners. Upon surrender by DTC of the
Global Bond issued in its name, the name of Cede or another
nominee, the Shipowner shall issue at its sole expense, and the
Indenture Trustee shall authenticate, Definitive Bonds in the
names provided to the Indenture Trustee by DTC."
(g) Concerning Section 10.04. The percentage "60%" in the
introductory paragraph of Section 10.04 is hereby deleted and the
percentage "51%" is substituted in its place.
4. Miscellaneous.
(a) Concerning Notices. Subject to the provisions of Section
13.01 of 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: Norwest Bank Minnesota, National Association
Corporate Trust Services
N9303-120
Sixth and Marquette
Minneapolis, Minnesota 55479
The Shipowner as: Global Industries, Ltd.
8000 Global Drive
Carlyss, Louisiana 70665
The Secretary as: SECRETARY OF TRANSPORTATION
c/o Maritime Administrator
Department of Transportation
400 Seventh Street, SW
Washington, D.C. 20590
(b) Concerning Applicable Law. This Indenture and each Obligation
shall be governed by the federal laws of the United State of America,
but to the extent that they are inapplicable, by the laws of the State
of Louisiana.
(c) Jurisdiction and Consent to Suit. Any proceeding to enforce
this Agreement may be brought in the Federal courts of the United
States of America located in the State of Louisiana of the United
States of America. The Shipowner and the Trustee hereby irrevocably
waive any present or future objection to such venue, and for each of
itself and in respect of any of their respective properties hereby
irrevocably consents and submits unconditionally to the exclusive
jurisdiction of those courts. The Shipowner further irrevocably
waives any claim that any such court is not a convenient forum for
any such proceeding. The Shipowner further agrees that final judgment
against it in any such action or proceeding arising out of or relating
to this Indenture shall be conclusive and may be enforced in any other
jurisdiction within or outside the United States of America by suit on
the judgment, a certified or exemplified copy of which shall be
conclusive evidence of that fact and of the judgment.
(d) 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.
IN WITNESS WHEREOF, this Indenture has been duly executed by the
parties hereto as of the day and year first above written.
GLOBAL INDUSTRIES, LTD.
(SEAL) By
Its
ATTEST
By
Its
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
(SEAL) By
Its
$300,000,000.00
CREDIT AGREEMENT
Among
GLOBAL INDUSTRIES, LTD. AND
GLOBAL OFFSHORE MEXICO, S. DE R.L. DE C.V.
as Borrowers,
THE LENDERS NAMED IN THIS CREDIT AGREEMENT
as Lenders, and
BANK ONE, NA
as Administrative Agent,
with
BANC ONE CAPITAL MARKETS, INC.,
as Arranger,
CREDIT LYONNAIS NEW YORK BRANCH
as Syndication Agent,
and
WELLS FARGO BANK (TEXAS), N.A.
as Documentation Agent
December 30, 1999
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms 1
Section 1.02. Computation of Time Periods 24
Section 1.03. Accounting Terms 24
Section 1.04. Classes and Types of Advances 25
Section 1.05. Miscellaneous 25
ARTICLE II
THE ADVANCES
Section 2.01. The Advances 25
Section 2.02. Method of Borrowing 27
Section 2.03. Fees 30
Section 2.04. Reduction of the Commitments 31
Section 2.05. Repayment 31
Section 2.06. Interest 31
Section 2.07. Prepayments 33
Section 2.08. Funding Losses 35
Section 2.09. Increased Costs 35
Section 2.10. Payments and Computations 36
Section 2.11. Taxes 37
Section 2.12. Sharing of Payments, Etc. 39
Section 2.13. Lender Replacement 40
Section 2.14. Applicable Lending Offices 41
Section 2.15. Letters of Credit 41
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to Initial Advances 45
Section 3.02. Conditions Precedent to Each Borrowing 49
Section 3.03. Determinations Under Section 3.01 49
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Corporate Existence; Subsidiaries 50
Section 4.02. Corporate Power 50
Section 4.03. Authorization and Approvals 50
Section 4.04. Enforceable Obligations 50
Section 4.05. Financial Statements 51
Section 4.06. True and Complete Disclosure 51
Section 4.07. Litigation 51
Section 4.08. Use of Proceeds 51
Section 4.09. Investment Company Act 52
Section 4.10. Public Utility Holding Company Act 52
Section 4.11. Taxes 52
Section 4.12. Pension Plans 52
Section 4.13. Condition of Property; Casualties 53
Section 4.14. Insurance 53
Section 4.15. No Burdensome Restrictions; No Defaults 53
Section 4.16. Environmental Condition 53
Section 4.17. Title to Property, Etc. 54
Section 4.18. Security Interests 54
Section 4.19. Subsidiaries; Corporate Structure 55
Section 4.20. Year 2000 Compliance 55
Section 4.21. Citizenship 55
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5.01. Compliance with Laws, Etc. 55
Section 5.02. Maintenance of Insurance 56
Section 5.03. Preservation of Corporate Existence, Etc. 56
Section 5.04. Payment of Taxes, Etc. 56
Section 5.05. Reporting Requirements 57
Section 5.06. Maintenance of Property 59
Section 5.07. Inspection 59
Section 5.08. Use of Proceeds 59
Section 5.09. Nature of Business 59
Section 5.10. New Subsidiaries 60
Section 5.11. New Vessels 61
Section 5.12. Rate Hedging Agreements 61
Section 5.13. Post Closing Collateral 61
ARTICLE VI
NEGATIVE COVENANTS
Section 6.01. Liens, Etc 62
Section 6.02. Debts, Guaranties and Other Obligations 64
Section 6.03. Merger or Consolidation; Asset Sales 65
Section 6.04. Investments 66
Section 6.05. Transactions With Affiliates 66
Section 6.06. Compliance with ERISA 67
Section 6.07. Restricted Payments 67
Section 6.08. Maintenance of Ownership of Subsidiaries 67
Section 6.09. Agreements Restricting Liens and Distributions 67
Section 6.10. Leverage Ratio 67
Section 6.11. Minimum Net Worth 67
Section 6.12. Minimum Fixed Charge Coverage Ratio 68
Section 6.13. Capital Expenditures 68
ARTICLE VII
REMEDIES
Section 7.01. Events of Default 69
Section 7.02. Optional Acceleration of Maturity 71
Section 7.03. Automatic Acceleration of Maturity 71
Section 7.04. Non-exclusivity of Remedies 72
Section 7.05. Right of Set-off 72
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE ISSUING BANK
Section 8.01. Appointment; Nature of Relationship 72
Section 8.02. Powers 73
Section 8.03. General Immunity 73
Section 8.04. No Responsibility for Loans, Recitals, etc. 73
Section 8.05. Action on Instructions of Lenders 73
Section 8.06. Employment of Agents and Counsel 74
Section 8.07. Reliance on Documents; Counsel 74
Section 8.08. Reimbursement and Indemnification 74
Section 8.09. Notice of Default 75
Section 8.10. Rights as a Lender 75
Section 8.11. Lender Credit Decision 75
Section 8.12. Successor Administrative Agent and Issuing Bank 75
Section 8.13. Other Titles 76
ARTICLE IX
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
Section 9.01. Successors and Assigns 76
Section 9.02. Participations 77
Section 9.03. Assignments 77
Section 9.04. Dissemination of Information 78
Section 9.05. Tax Treatment 78
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Etc. 79
Section 10.02. Notices, Etc. 79
Section 10.03. No Waiver; Remedies 79
Section 10.04. Costs and Expenses 80
Section 10.05. Binding Effect 80
Section 10.06. Indemnification 80
Section 10.07. Execution in Counterparts 81
Section 10.08. Survival of Representations, etc. 81
Section 10.09. Severability 81
Section 10.10. Usury Not Intended 81
Section 10.11. Judgment Currency 82
Section 10.12. Forbearance Agreements 82
Section 10.13. Governing Law. 82
Section 10.14. Consent to Jurisdiction; Process Agent 83
Section 10.15. Waiver of Jury 83
EXHIBITS:
Exhibit A - Form of Assignment and Acceptance
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Guaranty
Exhibit D - Form of Mortgage
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Notice of Conversion or Continuation
Exhibit G - Form of Pledge Agreement
Exhibit H - Form of Revolving Note
Exhibit I - Form of Security Agreement
Exhibit J - Form of Swingline Note
Exhibit K - Form of Term Note
Exhibit L - Form of Request for Issuance of Letter of
Credit
Exhibit M - Form of the Borrowers' Outside Counsel
Opinion
SCHEDULES:
Schedule 1 - Notice Information for Lenders
Schedule 1.01(a) - Existing Letters of Credit
Schedule 1.01(b) - Permitted Bonds Obligations
Schedule 3.01(a)(iv) - List of Guaranties
Schedule 3.01(a)(v) - List of Pledge Agreements
Schedule 4.16 - Environmental Disclosures
Schedule 4.19 - Subsidiaries/Corporate Structure
Schedule 5.13 - Mortgaged Real Estate and Mortgaged
Vessels
Schedule 6.01 - Existing Liens
Schedule 6.02 - Existing Debt
CREDIT AGREEMENT
This Credit Agreement dated as of December 30, 1999 is among
(a) Global Industries, Ltd., a Louisiana corporation (the
"Company"), and Global Offshore Mexico, S. de R.L. de C.V., a
Mexican sociedad de responsabilidad limitada de capital variable
(the "Mexican Borrower" and, together with the Company, the
"Borrowers"), (b) the Lenders (as defined below), and (c) Bank
One, NA, as Administrative Agent (as defined below) for the
Lenders.
The Borrowers, the Lenders, and the Administrative Agent
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. Certain Defined Terms. As used in this
Agreement, the terms defined above shall have the meanings set
forth above and the following terms shall have the following
meanings (unless otherwise indicated, such meanings to be equally
applicable to both the singular and plural forms of the terms
defined):
"Acceptable Security Interest" in any Property means a Lien
(a) which exists in favor of the Administrative Agent for the
benefit of the Lenders; (b) which is superior to all other Liens
except Liens Permitted under Section 6.01(b)-(k); (c) which
secures the Obligations of (i) in the case of Global Collateral,
the Loan Parties other than the Mexican Subsidiaries and (ii) in
the case of Mexican Collateral, the Mexican Subsidiaries; and (d)
which is perfected and enforceable against all Persons in
preference to any rights of any Person therein (other than rights
in respect of Liens permitted under Section 6.01(b)-(k)).
"Administrative Agent" means Bank One in its capacity as
contractual representative of the Lenders pursuant to
Article VIII, and not in its individual capacity as a Lender, and
any successor administrative agent pursuant to Section 8.12.
"Advance" means a Revolving Advance, a Term Advance, or a
Swingline Advance and "Advances" means the Revolving Advances,
the Term Advances, and the Swingline Advances collectively.
"Affiliate" of any Person means any other Person that,
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such
Person or any Subsidiary of such Person. The term "control"
(including the terms "controlled by" or "under common control
with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies
of a Person, whether through ownership of a Control Percentage,
by contract or otherwise.
"Agreement" means this Credit Agreement dated as of December
30, 1999 among the Borrowers, the Lenders, and the Administrative
Agent, as it may be amended or modified and in effect from time
to time.
"Alternate Base Rate" means, for any day, a fluctuating rate
of interest per annum equal to the higher of (a) the Corporate
Base Rate in effect for such day and (b) the sum of the Federal
Funds Rate in effect for such day plus 2 of 1% per annum.
"Applicable Lending Office" means, with respect to any
Lender, the office, branch, subsidiary, affiliate or
correspondent bank of such Lender listed on Schedule 1 or such
other office, branch, subsidiary, affiliate or correspondent bank
as such Lender may from time to time specify to the Company and
the Administrative Agent from time to time.
"Applicable Margin" means, at any time with respect to each
Type and Class of Advance, each category of Letter of Credit, and
the Revolving Commitment fee, the percentage rate per annum as
set forth below for the Level in effect at such time:
Revolving Advances, Term Advances,
Revolving Commitments, and Letters of Credit
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
Eurodollar
Advances and
Letters of
Credit that
are Financial
Letters of
Credit or
commercial
Letters of
Credit 2.75% 2.50% 2.25% 2.00% 1.75%
Base Rate
Advances 1.50% 1.25% 1.00% 0.75% 0.50%
Revolving
Commitment
Fee 0.625% 0.50% 0.50% 0.50% 0.375%
Letters of
Credit that
are
Performance
Letters of
Credit 2.00% 1.75% 1.50% 1.25% 1.00%
"Arranger" means Banc One Capital Markets, Inc.
"Assignment and Acceptance" has the meaning set forth in
Section 9.03(a).
"Bank One" means Bank One, NA.
"Base Rate Advance" means an Advance in Dollars which bears
interest as provided in Section 2.06(a).
"Borrowing" means a Revolving Borrowing, a Term Borrowing, a
Swingline Borrowing or a Mandatory Revolving Borrowing.
"Borrowing Date" means a date on which any Advance is made
hereunder.
"Business Day" means, (a) with respect to any Borrowing,
payment or rate selection of Eurodollar Advances, a day (other
than a Saturday or Sunday) on which banks generally are open in
Chicago and New York for the conduct of substantially all of
their commercial lending activities and on which dealing in
Dollars are carried on in the London interbank market and (b) for
all other purposes, a day (other than a Saturday or Sunday) on
which banks generally are open in Chicago for the conduct of
substantially all of their commercial lending activities.
"Capital Expenditures" means, without duplication, any
expenditures for any purchase or other acquisition of any asset
which would be classified as a fixed asset on a consolidated
balance sheet of the Company and its Subsidiaries prepared in
accordance with GAAP.
"Capitalized Lease" of a Person means any lease of any
Property by such Person as lessee which would, in accordance with
GAAP, be required to be classified and accounted for as a capital
lease on the balance sheet of such Person.
"Capitalized Lease Obligations" of a Person means the amount
of the obligations of such Person under Capitalized Leases which
would be shown as a liability on a balance sheet of such Person
prepared in accordance with GAAP.
"Carlyss Facility Bonds" means the Lake Charles Harbor and
Terminal District Port Improvement Revenue Bonds in an amount
approximately equal to $28,000,000.00 issued to finance the
construction of a deepwater support facility and pipebase near
Carlyss, Louisiana.
"Cash Collateral Account" means a special cash collateral
account pledged to the Administrative Agent containing cash
deposited pursuant to Sections 2.15(e), 7.02(b) or 7.03(b) to be
maintained with the Administrative Agent in accordance with
Section 2.15(g).
"Casualty Event" means, with respect to any Mortgaged
Vessel, any loss or damage to, or any condemnation or taking of,
such Mortgaged Vessel for which such Person receives, anticipates
recovering or has filed a claim for insurance or a condemnation
award.
"CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, state and
local analogs, and all rules and regulations and requirements
thereunder in each case as now or hereafter in effect.
"Change in Control" means (a) the direct or indirect
acquisition after the Closing Date by any person (as such term is
used in Section 13(d) and Section 14(d)(2) of the Securities
Exchange Act of 1934), or related persons constituting a group
(as such term is used in Rule 13d-5 under the Securities Exchange
Act of 1934) other than a Permitted Holder (as defined below), of
beneficial ownership of issued and outstanding shares of voting
stock of the Company, the result of which acquisition is that
such person or such group possesses in excess of 50% of the
combined voting power of all then-issued and outstanding voting
stock of the Company or (b) during any period of 12 consecutive
months, beginning with and after the Closing Date, individuals
who at the beginning of such 12-month period were directors of
the Company (together with new directors elected by, or nominated
for election by, such directors or directors elected under this
parenthetical clause) shall cease for any reason to constitute a
majority of the board of directors of the Company at any time
during such period. A "Permitted Holder" is (i) William Dore',
(ii) any trust, corporation, partnership or other entity, 80% or
more of the controlling interest of which is held by William
Dore', and (iii) any Person related to William Dore' or to his
spouse either as a direct-line descendant or ancestor or as a
relative with ancestors in common (adopted persons shall be
considered the natural born children of their adoptive parents),
in each case to whom such individual has transferred capital
stock of the Borrower.
"Class" has the meaning set forth in Section 1.04.
"Closing Date" means December 30, 1999.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Collateral" means the Global Collateral and the Mexican
Collateral.
"Commitments" means (a) as to any Lender, its Revolving
Commitment and its Term Commitment, and (b) as to the Swingline
Bank, its Swingline Commitment.
"Compliance Certificate" means a Compliance Certificate
signed by a Responsible Officer of the Company in substantially
the form of the attached Exhibit B.
"Consolidated EBITDA" means, for any Person and its
Subsidiaries calculated on a consolidated basis for any period:
(a) Consolidated Net Income for such period plus
(b) to the extent deducted in determining Consolidated Net
Income, (i) Consolidated Interest Expense, (ii) foreign, federal,
state, and local taxes net of credits, (iii) depreciation
expense, (iv) amortization expense, (v) extraordinary losses, net
of related income taxes, (vi) in the case of the Company and its
Subsidiaries, legal, accounting, underwriting, and other fees and
expenses incurred in connection with this Agreement, (vii) losses
in the equity of the Company's former unconsolidated subsidiary,
CCC Fabricaciones y Construcciones S.A. de C.V., and (viii) costs
directly related to the attempt by the Company to acquire ETPM,
S.A. (including any liquidated damages in respect thereof), minus
(c) to the extent included in determining Consolidated Net
Income, extraordinary gains, net of related income taxes, all
determined in accordance with GAAP.
The following adjustments shall be made to Consolidated EBITDA of
the Company and its Subsidiaries for the four quarter periods
ending December 31, 1999 and March 31, 2000:
(i) for the four quarter period ending December 31,
1999, the Consolidated EBITDA attributable to the Mexican
Subsidiaries for the six-month period then ending shall be
multiplied by two; and
(ii) for the four quarter period ending March 31, 2000,
the Consolidated EBITDA attributable to the Mexican
Subsidiaries for the nine-month period then ending shall be
multiplied by 4/3.
"Consolidated Fixed Charges" means, for the Company and its
Subsidiaries calculated on a consolidated basis for any period,
without duplication, the sum of (a) Consolidated Interest
Expense, (b) scheduled principal payments on Consolidated Funded
Debt, (c) Consolidated Rentals, (d) cash taxes paid net of any
tax refunds, and (e) cash dividends and stock repurchases (other
than stock repurchases made in the ordinary course of business in
connection with any employee benefit or option plan) made for
such period, all determined in accordance with GAAP.
"Consolidated Funded Debt" means, at any time for the
Company and its Subsidiaries calculated on a consolidated basis,
(a) Funded Debt of the Company and its Subsidiaries at such time
minus (b) any unrestricted cash balances of the Company and the
Guarantors in excess of an aggregate of $20,000,000.00 deposited
with Lenders or held in an escrow or similar account as of such
time, all determined in accordance with GAAP.
"Consolidated Interest Expense" means, for any Person and
its Subsidiaries calculated on a consolidated basis for any
period, without duplication, the sum of (a) interest expense,
including the interest component of Capitalized Leases and the
net amount payable under any Rate Hedging Agreement, (b) the
interest component of Synthetic Leases, (c) commitment, facility,
usage and similar fees payable in connection with any Debt, and
(d) letter of credit fees for Financial Letters of Credit, all
determined in accordance with GAAP.
"Consolidated Net Income" means, for any Person and its
Subsidiaries calculated on a consolidated basis for any period,
net income after taxes for such period, as determined in
accordance with GAAP.
"Consolidated Net Worth" means, for the Company and its
Subsidiaries calculated on a consolidated basis at any time, (a)
all amounts which would be included under shareholders' equity
plus (b) any deductions made for foreign currency translation
adjustments since September 30, 1999 minus (c) any additions made
for foreign currency translation adjustments since September 30,
1999, all as determined in accordance with GAAP.
"Consolidated Rentals" means, for the Company and its
Subsidiaries calculated on a consolidated basis for any period,
all amounts payable under any Operating Leases for such period,
as determined in accordance with GAAP.
"Contingent Obligation" of a Person means any agreement,
undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes or is contingently
liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other
financial condition of any other Person, or otherwise assures any
creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay
contract or the obligations of any such Person as general partner
of a partnership with respect to the liabilities of the
partnership.
"Continue", "Continuation", and "Continued" each refers to a
continuation of Advances for an additional Interest Period upon
the expiration of the Interest Period then in effect for such
Advances.
"Control Percentage" means, with respect to any Person, the
percentage of the outstanding capital stock (or other ownership
interests and including any options, warrants or similar rights
to purchase such capital stock) of such Person having ordinary
voting power which gives the direct or indirect holder of such
stock or ownership interests the power to elect a majority of the
Board of Directors (or other applicable governing body) of such
Person.
"Controlled Group" means all members of a controlled group
of corporations or other business entities and all trades
(whether or not incorporated) under common control which,
together with the Company or any of its Subsidiaries, are treated
as a single employer under Section 414 of the Code.
"Convert", "Conversion", and "Converted" each refers to a
conversion of Advances of one Type into Advances of another Type
pursuant to Section 2.02(b).
"Corporate Base Rate" means a fluctuating rate of interest
per annum as shall be in effect from time-to-time equal to the
corporate base rate of interest publicly announced by Bank One
from time to time as its corporate base rate, whether or not the
Borrowers have notice thereof, when and as said corporate base
rate changes.
"Credit Documents" means this Agreement, the Notes, the
Guaranties, the Letter of Credit Documents, the Security
Documents, any Financial Contracts between the Company or any of
its Subsidiaries and any Lender or any Affiliate of any Lender
and each other agreement, instrument or document executed by the
Company, any of its Subsidiaries or any of its officers at any
time in connection with this Agreement.
"Debt," for any Person, means without duplication:
(a) indebtedness of such Person for borrowed money;
(b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(c) obligations of such Person to pay the deferred purchase
price of property or services (other than accounts payable
arising in the ordinary course of such Person's business payable
on terms customary in the trade);
(d) Capitalized Lease Obligations;
(e) all obligations of such Person in respect of letters of
credit, bank guarantees or similar instruments which are issued
upon the application of such Person or upon which such Person is
an account party or for which such Person is in any way liable;
(f) all obligations of such Person to purchase securities
or other Property arising out of or in connection with the sale
of the same or substantially similar securities or Property;
(g) Net Mark-to-Market Exposure of Financial Contracts;
(h) Synthetic Lease Obligations;
(i) Sale and Leaseback Transactions;
(j) indebtedness or obligations of others, whether or not
assumed, secured by Liens or payable out of the proceeds or
production from Property on or in respect of any Property now or
hereafter owned or acquired by such Person, the amount of such
Debt being deemed to be the lesser of the value of such Property
and the amount of the obligation so secured;
(k) Contingent Obligations in respect of the Debt of
another Person referred to in clauses (a) through (i) of this
definition; and
(l) the incurrence of withdrawal liability under Title IV
of ERISA by such person or a "commonly controlled entity" with
respect to a Multiemployer Plan and Unfunded Liabilities.
"Default" means (a) an Event of Default or (b) any event or
condition which with notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Dollars" and "$" means the lawful money of the United
States of America.
"Domestic Subsidiary" means each Subsidiary of the Company
organized in a state, province, or territory of the United States
of America.
"Environment" or "Environmental" shall have the meanings
set forth in 43 U.S.C. ' 9601(8) (1988).
"Environmental Claim" means any third party (including any
governmental agency or employee) action, lawsuit, claim,
regulatory action or proceeding, order, decree, consent agreement
or notice of potential or actual responsibility or violation
which seeks to impose liability under any Environmental Law.
"Environmental Law" means all Legal Requirements relating to
protection of the Environment, including without limitation
CERCLA, the Submerged Lands Act, the Outer Continental Shelf
Lands Act, the Federal Water Pollution Control Act of 1972, the
Oil Pollution Act of 1990, and the Act to Prevent Pollution from
Ships relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or
restoration of the air, surface water, groundwater, land surface
or subsurface strata, or other natural resources; (b) solid,
gaseous or liquid waste generation, treatment, processing,
recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants or contaminants or to
hazardous, medical, infectious, or toxic substances, materials or
wastes; or (d) the manufacture, processing, handling,
transportation, distribution in commerce, use, storage or
disposal of hazardous, medical, infectious, or toxic substances,
materials or wastes.
"Environmental Permit" means any permit, license, order,
approval, registration or other authorization required under
Environmental Law.
"Equity Issuance" means any issuance of equity securities
(including any preferred equity securities) by the Company or any
of its Subsidiaries other than (a) equity securities issued to
the Company or one of its Subsidiaries; (b) equity securities
issued pursuant to employee benefit or dividend reinvestment
plans in the ordinary course of business; and (c) equity
securities issued as consideration in connection with any
investment by the Company or any of its Subsidiaries in any other
Person pursuant to which such Person shall become a Subsidiary or
shall be merged into or consolidated with the Company or any of
its Subsidiaries.
"Equivalent Amount" of any currency with respect to any
amount of Dollars at any date shall mean the amount of such
currency that would be obtained from exchanging such amount of
Dollars for such other currency, calculated on the basis of the
arithmetical mean of the buy and sell spot rates of exchange of
the Administrative Agent for such currency in the London foreign
exchange market at approximately 11:00 a.m. (London, England
time) as of such date.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time-to-time.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D.
"Eurodollar Advance" means an Advance which bears interest
based on the Eurodollar Reference Rate.
"Eurodollar Rate Reserve Percentage" of any Lender for the
Interest Period for any Eurodollar Advance in Dollars means the
reserve percentage applicable during such Interest Period (or if
more than one such percentage shall be so applicable, the daily
average of such percentages for those days in such Interest
Period during which any such percentage shall be so applicable)
under regulations issued from time-to-time by the Federal Reserve
Board for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Lender with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities
having a term equal to such Interest Period.
"Eurodollar Reference Rate" means, with respect to a
Eurodollar Advance for the relevant Interest Period, the
applicable London interbank offered rate for deposits in Dollars
appearing on Dow Jones Markets (Telerate) Page 3750 as of
11:00 a.m. (London, England time) two Business Days prior to the
first day of such Interest Period, and having a maturity equal to
such Interest Period; provided that, if Dow Jones Markets
(Telerate) Page 3750 is not available for any reason, the
Eurodollar Reference Rate for the relevant Interest Period shall
instead be the London interbank offered rate for deposits in
Dollars appearing on Reuters Screen FRBD as of 11:00 a.m.
(London, England time) two Business Days prior to the first day
of such Interest Period, and having a maturity equal to such
Interest Period.
"Events of Default" has the meaning set forth in
Section 7.01.
"Excess Cash Flow" means, for any period for the Company and
its Subsidiaries calculated on a consolidated basis, (a) their
Consolidated EBITDA for such period minus (b) without
duplication, the sum of their (i) Consolidated Interest Expense,
(ii) cash taxes paid net of any tax refunds, (iii) Capital
Expenditures made, (iv) principal payments (including voluntary
prepayments, but excluding mandatory prepayments) made on Funded
Debt, (v) cash dividends paid and cash stock repurchases made
during such period; (vi) payments made in respect of the
principal component of Capital Leases during such period, and
(vii) additions to working capital for such period (i.e., the
increase in current assets minus current liabilities from the
beginning to the end of such period), plus (c) reductions, other
than reductions attributable solely to asset sales, to working
capital for such period (i.e., the decrease in current assets
minus current liabilities from the beginning to the end of such
period), all as determined in accordance with GAAP.
"Existing Bank Facilities" means (a) the Restated Credit
Agreement dated as of April 17, 1997 among the Company, the
lenders named therein, and Bank One, Louisiana, National
Association, as agent for such lenders, as amended and (b) the
Restated Credit Agreement dated as of March 30, 1999 among CCC
Fabricaciones y Construcciones S.A. de C.V., as borrower, Global
Industries, Ltd., as guarantor, the banks party thereto, and Bank
One, Texas, National Association, as agent.
"Existing Letters of Credit" means each of the letters of
credit listed on the attached Schedule 1.01(a), including the
letter of credit issued in connection with the Carlyss Facility
Bonds.
"Federal Funds Effective Rate" means, for any day, a
fluctuating interest rate per annum equal to the weighted average
of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers
on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations at approximately 10:00 a.m. (Chicago, Illinois time)
on such day on such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing
selected by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any of its successors.
"Financial Contract" of a Person means (a) any exchange-
traded or over-the-counter futures, forward, swap or option
contract or other financial instrument with similar
characteristics or (b) any Rate Hedging Agreement.
"Financial Contract Obligations" of a Person means any and
all obligations of such Person, whether absolute or contingent
and howsoever and whensoever created, arising, evidenced or
acquired (including all renewals, extensions and modifications
thereof and substitutions therefor), under (a) any and all
Financial Contracts, and (b) any and all cancellations, buy
backs, reversals, terminations or assignments of any Financial
Contract.
"Financial Letter of Credit" means a Letter of Credit
qualifying as a "financial guarantee-type letter of credit" under
12 CFR Part 3, Appendix A, Section 3(b)(1)(i) or any successor
U.S. Comptroller of the Currency regulation.
"Financial Statements" means (a) audited consolidated
balance sheet of the Company and its consolidated Subsidiaries as
at December 31, 1998, and the related consolidated statements of
operations, comprehensive income, cash flows, and shareholders'
equity of the Company and its consolidated Subsidiaries for the
nine months then ended, copies of which have been furnished to
the Administrative Agent and (b) the unaudited consolidated
balance sheet of the Company and its consolidated Subsidiaries as
at September 30, 1999, and the related consolidated statements of
operations and cash flows of the Company and its consolidated
Subsidiaries for the interim periods then ended, copies of which
have been furnished to the Administrative Agent.
"Fixed Charge Coverage Ratio" means, for the Company at the
end of any fiscal quarter, the ratio of (a) its Consolidated
EBITDA during the four quarters then ended minus its consolidated
Replacement Capital Expenditures for such period to (b)
Consolidated Fixed Charges for such period.
"Foreign Subsidiary" means any Subsidiary of the Company
organized in a jurisdiction other than a state, province or
territory of the United States.
"Fund," "Trust Fund," or "Superfund" means the Hazardous
Substance Response Trust Fund, established pursuant to 42 U.S.C.
' 9631 (1988) and the Post-closure Liability Trust Fund,
established pursuant to 42 U.S.C. ' 9641 (1988), which statutory
provisions have been amended or repealed by the Superfunds
Amendments and Reauthorization Act of 1986, and the "Fund,"
"Trust Fund," or "Superfund" that are now maintained pursuant to
' 9507 of the Code.
"Funded Debt," for any Person, means without duplication:
(a) indebtedness of such Person for borrowed money;
(b) obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(c) obligations of such Person to pay the deferred purchase
price of property or services (other than accounts payable
arising in the ordinary course of such Person's business payable
on terms customary in the trade);
(d) Capitalized Lease Obligations;
(e) all obligations of such Person in respect of Financial
Letters of Credit which are issued upon the application of such
Person or upon which such Person is an account party or for which
such Person is in any way liable;
(f) all obligations of such Person to purchase securities
or other Property arising out of or in connection with the sale
of the same or substantially similar securities or Property;
(g) Net Mark-to-Market Exposure of Financial Contracts;
(h) Synthetic Lease Obligations;
(i) Sale and Leaseback Transactions;
(j) indebtedness or obligations of others in respect of
Debt described in clauses (a)-(i) of this definition, whether or
not assumed, secured by Liens or payable out of the proceeds or
production from Property on or in respect of any Property now or
hereafter owned or acquired by such Person, the amount of such
Debt being deemed to be the lesser of the value of such Property
and the amount of the obligation so secured; and
(k) Contingent Obligations in respect of the Debt of
another Person described in clauses (a) through (i) of this
definition;
excluding, however, from any of the foregoing:
(i) obligations in respect of Permitted Mexican
Contract Financings and
(ii) Performance Letters of Credit, bank guaranties,
and surety bonds issued in the ordinary course of business
supporting non-financial obligations of the Company or any
of its Subsidiaries.
The amount of Funded Debt of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations
as described in clauses (a) through (j) above and the maximum
potential liability of any Contingent Obligations as described in
clause (k) above at such date assuming the occurrence of the
contingencies necessary to give rise to such Contingent
Obligations.
"GAAP" means with respect to any financial statements of the
Company or any of its Subsidiaries, or calculations related to
such financial statements of the Company or any of its
Subsidiaries, United States generally accepted accounting
principles as in effect from time-to-time applied on a basis
consistent with the requirements of Section 1.03.
"Global Collateral" means (a) all Vessels (as defined in
each of the Vessel Mortgages), the Collateral (as defined in the
Mortgages), the Collateral (as defined in the Security Agreements
and the Pledged Collateral (as defined in the Pledge Agreements),
in each case to the extent securing the Obligations of each Loan
Party other than the Mexican Subsidiaries and (b) all amounts
contained in the Cash Collateral Account. Global Collateral
shall not include the MARAD Collateral.
"Global Guarantors" means the parties listed as Global
Guarantors on Schedule 3.01(a)(iv).
"Global Guaranty" means the guaranty executed by each Global
Guarantor in favor of the Administrative Agent for the ratable
benefit of the Lenders guaranteeing the Obligations of the Loan
Parties, as it may be amended or modified and in effect from time
to time, in substantially the form of the attached Exhibit C.
"Governmental Authority" means, as to any Person in
connection with any subject, any foreign, supranational,
national, state or provincial governmental authority, or any
political subdivision of any state thereof, or any agency,
department, commission, board, authority or instrumentality,
bureau or court, in each case having jurisdiction over such
Person or such Person's Property in connection with such subject.
"Governmental Proceedings" means any action or proceedings
by or before any Governmental Authority, including, without
limitation, the promulgation, enactment or entry of any Legal
Requirement.
"Guaranty" means a Global Guaranty or a Mexican Guaranty.
"Guarantor" means a Global Guarantor or a Mexican Guarantor.
"Hazardous Substance" means the substances identified as
such pursuant to CERCLA and any chemicals regulated under any
other Environmental Law, including without limitation pollutants,
contaminants, petroleum or petroleum products Released into the
Environment, radionuclides, radioactive materials, and medical
and infectious waste.
"Hazardous Waste" means the substances regulated as such
pursuant to any Environmental Law.
"Heller Vessels" means the Sara Maria (Official Number
6502539), the Atlas del Mar (Official Number 7908207), El
Ingeniero (Official Number 8210354), and the Ingeniero II
(Official Number 7615084).
"Heller Loan Agreement" means that certain Loan Agreement
dated March 31, 1998 between Heller Financial Corp. and Global
Industries Offshore Inc., as assignee.
"Hercules Title XI Issue" means the United States Government
Guaranteed Export Ship Financing Bonds, 2000 Series, not in
excess of $100,000,000.00, guaranteed by MARAD under Title XI to
finance or refinance the cost of reconstruction, upgrade and
enlargement of the DLB Hercules.
"Initial Mortgaged Vessels" means each of the Vessels listed
on the attached Schedule 5.13.
"Interest Period" means, for each Eurodollar Advance
comprising part of the same Borrowing, the period commencing on
the date of such Advance or the date of the Conversion of any
existing Advance into such an Advance and ending on the last day
of the period selected by a Borrower pursuant to the provisions
below and Section 2.02 and, thereafter, each subsequent period
commencing on the last day of the immediately preceding Interest
Period and ending on the last day of the period selected by a
Borrower pursuant to the provisions below and Section 2.02. The
duration of each such Interest Period shall be one, two, three,
or six months (or such other period that is acceptable to the
Lenders), in each case as the relevant Borrower may select;
provided, however, that:
(a) such Borrower may not select any Interest Period for
any Term Advance of any Class which ends after any principal
repayment date for such Class of Term Advances unless, after
giving effect to such selection, the aggregate unpaid principal
amount of Term Advances of such Class that are Base Rate Advances
and Term Advances of such Class having Interest Periods which end
on or before such principal repayment date shall be at least
equal to the amount of Term Advances of such Class due and
payable on or before such date;
(b) Interest Periods commencing on the same date for
Advances by each Lender comprising part of the same Borrowing
shall be of the same duration;
(c) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day
of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided that if such extension would
cause the last day of such Interest Period to occur in the next
following calendar month, the last day of such Interest Period
shall occur on the next preceding Business Day;
(d) any Interest Period which begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the
calendar month in which it would have ended if there were a
numerically corresponding day in such calendar month;
(e) no Borrower may select any Interest Period for any
Revolving Advance which ends after the Revolving Credit Maturity
Date; and
(f) at the Administrative Agent's sole discretion, the
Borrowers may not select any Interest Period for any Eurodollar
Advance longer than 14 days until the earlier to occur of (i) 90
days following the Closing Date, and (ii) the satisfactory
completion of the syndication of this Agreement by the Arranger.
"Issuing Bank" means Bank One, Louisiana, National
Association, Bank One and any successor issuing bank pursuant to
Section 8.12.
"Legal Requirement" means, as to any Person, any law,
statute, ordinance, decree, requirement, order, judgment, rule,
regulation (or official interpretation of any of the foregoing)
of, and the terms of any license or permit issued by, any
Governmental Authority which is applicable to such Person.
"Lenders" means the lenders listed on the signature pages of
this Agreement and each Purchaser that shall become a party to
this Agreement pursuant to Article IX.
"Letter of Credit" means (a) a standby letter of credit or
(b) if the Issuing Bank in its sole reasonable discretion
determines that it is able to issue a bank guaranty, a bank
guaranty which guarantees obligations not covered by a Letter of
Credit, in each case issued under the Revolving Commitments and
subject to this Agreement.
"Letter of Credit Documents" means, with respect to any
Letter of Credit, such Letter of Credit and any agreements,
documents, and instruments entered into in connection with or
relating to such Letter of Credit.
"Letter of Credit Exposure" means, at any time, the sum of
(a) the aggregate undrawn maximum face amount of each Letter of
Credit at such time and (b) the aggregate unpaid amount of all
Reimbursement Obligations owing with respect to such Letters of
Credit at such time minus the amount of any cash collateral held
by the Administrative Agent in the Cash Collateral Account at
such time.
"Letter of Credit Obligations" means any obligations of the
Borrowers under this Agreement in connection with the Letters of
Credit.
"Level I, Level II, Level III, Level IV, and Level V," and
individually, a "Level," shall mean the applicable Leverage Ratio
set forth below:
Level Leverage Ratio
Level I > 3.50
Level II > 3.00 and <=3.50
Level III > 2.50 and <=3.00
Level IV > 2.00 and <=2.50
Level V <= 2.00
For purposes of determining the Applicable Margin applicable from
time-to-time under this Agreement: (a) Level I shall be deemed to
be applicable from the Closing Date until the fifth Business Day
after receipt by the Administrative Agent of the June 30, 2000
financial statements of the Company and (b) thereafter the
Leverage Ratio (and corresponding Level) shall be determined from
the financial statements of the Company and its Subsidiaries most
recently delivered pursuant to Section 5.05 and certified to the
Administrative Agent and the Lenders in the Compliance
Certificate required to be delivered by the Company in connection
with such financial statements pursuant to Section 5.05(d). Any
change in the Applicable Margin after June 30, 2000 shall be
effective on the fifth Business Day occurring after the date of
receipt by the Administrative Agent of the financial statements
pursuant to Section 5.05. If at any time the Company fails to
deliver such financial statements and Compliance Certificate
within the times specified in Section 5.05, Level I shall be
deemed to be in effect until the fifth Business Day after the
Administrative Agent receives such financial statements.
"Leverage Ratio" means, as of the last day of any fiscal
quarter of the Company, the ratio of (a) Consolidated Funded Debt
as of such day to (b) the Company's Consolidated EBITDA for the
four fiscal quarters then ended.
"Lien" means any mortgage, lien (statutory or other),
pledge, assignment, charge, deed of trust, security interest,
hypothecation, preference, deposit arrangement, encumbrance,
priority or other security arrangement or preferential
arrangement of any kind or nature whatsoever to secure or provide
for the payment of any obligation of any Person, whether arising
by contract, operation of law or otherwise (including, without
limitation, the interest of a vendor or lessor under any
conditional sale agreement, synthetic lease, Capitalized Lease or
other title retention agreement).
"Liquid Investments" means:
(a) short-term obligations of, or obligations the principal
of and interest on which are unconditionally and fully guaranteed
by, the United States of America;
(b) commercial paper rated "A-1" (or the then equivalent)
or better by the rating service of Standard & Poor's Ratings
Services, a division of The McGraw Hill Companies, Inc. or "P-1"
(or the then equivalent) or better by the rating service of
Moody's Investors Service, Inc. or upon the discontinuance of
both of such services, such other nationally recognized rating
service or services, as the case may be, as shall be selected by
the Administrative Agent with the consent of the Majority
Lenders;
(c) demand deposit accounts maintained in the ordinary
course of business;
(d) certificates of deposit issued by and time deposits
with commercial banks (whether domestic or foreign) having
capital and surplus in excess of $100,000,000.00 (or the
Equivalent Amount if denominated in a currency other than
Dollars); provided in each case that the same provides for
payment of both principal and interest (and not principal alone
or interest alone) and is not subject to any contingency
regarding the payment of principal or interest; and
(e) such other instruments (within the meaning of Article 9
of the Uniform Commercial Code as adopted in the State of New
York as of the Closing Date) as the Company may request and the
Administrative Agent may approve in writing, which approval will
not be unreasonably withheld.
"Loan Party" means each Borrower, each Guarantor, and each
of the Company's other Subsidiaries executing a Credit Document.
"Majority Lenders" means, at any time, (a) before the
Revolving Commitments terminate, Lenders holding at least 51% of
the then aggregate Revolving Commitments and unpaid principal
amount of the Term Notes held by the Lenders at such time and (b)
thereafter, Lenders having at least 51% of the aggregate unpaid
principal amount of the Notes and participation interests in the
Letter of Credit Exposure at such time.
"Mandatory Revolving Borrowing" means a Revolving Borrowing
comprised of Base Rate Advances made to repay a Swingline Advance
which has not been repaid to the Swingline Bank on the date due.
"MARAD" means the Maritime Administration, United States of
America.
"MARAD Collateral" means the MARAD Vessels, additions and
accessions thereto, inventory relating thereto, improvements
thereof, all reserve and construction funds associated with any
MARAD Financing and money and other instruments therein, MARAD
Revenues, insurance and proceeds from insurance in respect of
such property, and proceeds of any of the foregoing.
"MARAD Financing" means any debt obligations of the Company
or its Subsidiaries for the purpose of financing or refinancing
vessels which, pursuant to Title XI of the Merchant Marine Act of
1936, as amended, is secured by a full faith and credit guaranty
of the U.S. government, represented by the Secretary of
Transportation, acting through MARAD.
"MARAD Revenues" means the rights to payments and payments
made under any contracts between the Company or any of its
Subsidiaries and one or more of their customers under which the
Company or any of its Subsidiaries uses a MARAD Vessel to perform
any of its obligations under such contract.
"MARAD Vessels" means the Global Pioneer (Official Number
1040503), the Man-o-War (Official Number 1045921), the Kingfish
(Official Number 1049274), the L-400 (Official Number 1056079),
the CB-6 (Official Number 1048400), the GP-35 (Official Number
594130), the GP-37 (Official Number 631319), and, simultaneously
with the application of the Net Cash Proceeds from the Hercules
Title XI Issue to repay the Term Advances, the DB Hercules
(Official Number 635).
"Material Adverse Change" shall mean (a) a material adverse
change in the business, Property, condition (financial or
otherwise), results of operations of the Company and its
Subsidiaries, taken as a whole; (b) the occurrence and
continuance of any event or circumstance which could reasonably
be expected to have a material adverse effect on the Borrowers'
and the Guarantors' ability, taken as a whole, to perform their
obligations under this Agreement, any Note, any Guaranty, or any
Security Document to which it is party; or (c) a material adverse
effect on the validity or enforceability any material provision
of the Credit Agreement, any Note, any Guaranty, or any Security
Document or the material rights or remedies of the Administrative
Agent or the Lenders thereunder.
"Material Domestic Subsidiary" means any Material Subsidiary of
the Company which is not also a Foreign Subsidiary.
"Material Partial Loss" has the meaning set forth in the
Vessel Mortgages.
"Material Subsidiary" means any Subsidiary of the Company
having total assets or annual gross revenues in excess of
$10,000,000.00 (or the Equivalent Amount if denominated in a
currency other than Dollars), and "Material Subsidiaries" means
all such Subsidiaries collectively.
"Material Vessel" means any construction barge, liftboat,
dive support vessel, offshore support vessel, jet sled, remotely
operated vehicle, pushboat, cargo barges, utility boats,
operational saturation diving systems or other vessel with an
appraised value of $5,000,000.00 or more.
"Maximum Rate" means the maximum nonusurious interest rate
under applicable law (determined under such laws after giving
effect to any items which are required by such laws to be
construed as interest in making such determination, including
without limitation if required by such laws, certain fees and
other costs).
"Mexican Collateral" means (a) all Pledged Collateral (as
defined in the Mexican Pledge Agreement) and (b) the Global
Collateral.
"Mexican Guarantors" means the parties listed as Mexican
Guarantors on Schedule 3.01(a)(iv).
"Mexican Guaranty" means the guaranty executed by each
Mexican Guarantor in favor of the Administrative Agent for the
ratable benefit of the Lenders guaranteeing the Obligations of
the Mexican Borrower and the other Mexican Guarantors, as it may
be amended or modified and in effect from time to time, in
substantially the form of the attached Exhibit C.
"Mexican Parent" means Global Industries Mexico Holdings, S.
de R.L. de C.V., a Mexican sociedad de responsabilidad limitada
de capital variable.
"Mexican Security Documents" means the Pledge Agreement
executed by the Mexican Parent and all other documents or
instruments executed in connection therewith.
"Mexican Subsidiaries" means the Mexican Parent, the Mexican
Borrower, Global Vessels Mexico, S. de R.L. de C.V., a Mexican
sociedad de responsabilidad limitada de capital variable, Global
Industries Offshore Services, S. de R.L. de C.V., a Mexican
sociedad de responsabilidad limitada de capital variable, and
Global Industries Services, S. de R.L. de C.V., a Mexican
sociedad de responsabilidad limitada de capital variable, and
each other Person that becomes a Subsidiary of one or more of
such entities after the Closing Date.
"Mortgage" means each mortgage or deed of trust in
substantially the form of the attached Exhibit D and executed by
the Company or a Subsidiary of the Company to secure all or a
portion of the Obligations.
"Mortgaged Vessels" means the Initial Mortgaged Vessels and
Vessels becoming subject to a Vessel Mortgage pursuant to Section
5.11.
"Multiemployer Plan" means a multiemployer plan as defined
in section 4001(a)(3) of ERISA to which the Company or any member
of the Controlled Group is obligated to make contributions.
"Net Cash Proceeds" means, with respect to any sale,
transfer, or other disposition of any of the Company's or any of
its Subsidiaries' Property (including the issuance, sale or
transfer of stock or other equity interest by the Company or such
Subsidiary) all cash and Liquid Investments received by the
Company or any of its Subsidiaries from such issuance, sale,
transfer or other disposition after (a) payment of, or provision
for, all commissions and other reasonable out-of-pocket fees and
expenses actually incurred; (b) payment of any outstanding
obligations relating to such Property paid in connection with,
and necessary for, any such sale, transfer, or other disposition;
(c) the amount of reserves recorded in accordance with GAAP for
indemnity or similar obligations of the Company and its
Subsidiaries directly related to such sale, transfer or other
disposition; and (d) provision for all income or other taxes
payable in respect of the fiscal year in which such sale,
transfer, or other disposition occurs measured by or resulting
from such sale transfer or other disposition and which are
payable in such fiscal year or the succeeding fiscal year.
"Net Mark-to-Market Exposure" of a Person means, as of any
date of determination, the excess (if any) of all unrealized
losses over all unrealized profits of such Person arising from
Financial Contracts as determined in accordance with GAAP.
"Unrealized losses" means the fair market value of the cost to
such Person of replacing such Financial Contract as of the date
of determination (assuming the Financial Contract were to be
terminated as of that date), and "unrealized profits" means the
fair market value of the gain to such Person of replacing such
Financial Contract as of the date of determination (assuming such
Financial Contract were to be terminated as of that date).
"Note" means a Revolving Note, a Term Note, or a Swingline
Note, and "Notes" means all such promissory notes collectively.
"Notice of Assignment" has the meaning set forth in Section
9.03(b).
"Notice of Borrowing" means a notice of borrowing in the
form of the attached Exhibit E signed by a Responsible Officer of
a Borrower.
"Notice of Conversion or Continuation" means a notice of
conversion or continuation in the form of the attached Exhibit F
signed by a Responsible Officer of the Company.
"Obligations" means (a) all unpaid principal of the
Advances, unpaid interest on the Advances, all Reimbursement
Obligations, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations and amounts
payable by the Borrowers and the Guarantors to the Administrative
Agent or the Lenders under the Credit Documents and (b) all
Financial Contract Obligations of the Company or any of its
Subsidiaries owing to any Lender or any Affiliate of a Lender.
"Operating Lease" of a Person means any lease of Property
(other than a Capitalized Lease) by such Person as lessee which
has an original term (including any required renewals and any
renewals effective at the option of the lessor) of one year or
more.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Participants" has the meaning set forth in Section 9.02(a).
"Performance Letter of Credit" means a letter of credit
qualifying as a "performance-based standby letter of credit"
under 12 CFR Part 3, Appendix A, Section 3(b)(2)(i) or any
successor U.S. Comptroller of the Currency regulation.
"Permitted Bond Obligations" means the Company and its
Subsidiaries' obligations in respect of the bonds and bank
guaranties listed on the attached Schedule 1.01(b) in an amount
not to exceed the amounts listed on such schedule and any renewal
and extension (but not increase) thereof.
"Permitted Liens" has the meaning set forth in Section 6.01.
"Permitted Mexican Contract Financing" means the financing
of any contract between a Mexican Subsidiary and one of it
customers whereby (a) no Loan Party other than a Mexican
Subsidiary is obligated to repay such financing or assure the
performance of such customer; and (b) any performance guaranties
delivered by the Company or one of its Subsidiaries in connection
with such financing is strictly limited to a guaranty of such
Mexican Subsidiaries' performance of such contract and in no way
guarantees the repayment of such financing.
"Person" means an individual, partnership, limited liability
partnership, limited liability company, corporation (including a
business trust), joint stock company, enterprise, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency, department or
instrumentality thereof or any trustee, receiver, custodian or
similar official.
"Plan" means an employee benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the
Code as to which the Company or any member of the Controlled
Group may have any liability.
"Pledge Agreements" means each of the Pledge Agreements in
substantially the form of the attached Exhibit G and executed by
the Pledgors to secure all or a portion of the Obligations.
"Pledgors" means the Company and its Subsidiaries listed on
Schedule 3.01(a)(v) and other Subsidiaries of the Company
executing a Pledge Agreement as required by Section 5.10.
"Property" of any Person means any and all property (whether
real, personal, or mixed, tangible or intangible) of such Person
or other assets owned, leased or operated by such Person.
"Pro Rata Share" means, at any time with respect to any
Lender, (a) before the Revolving Commitments terminate, the ratio
(expressed as a percentage) of such Lender's Revolving
Commitments and outstanding principal amount of Term Advances at
such time to the aggregate Revolving Commitments and aggregate
outstanding principal amount of Term Advances at such time and
(b) thereafter, the ratio (expressed as a percentage) of such
Lender's aggregate outstanding Advances and aggregate outstanding
participation interest in the Letter of Credit Exposure at such
time to the aggregate outstanding Advances of all the Lenders and
Letter of Credit Exposure at such time.
"Purchaser" has the meaning set forth in Section 9.03.
"Rate Hedging Agreement" means an agreement, device or
arrangement providing for payments which are related to
fluctuations of interest rates, exchange rates or forward rates,
including, but not limited to, dollar-denominated or cross-
currency interest rate exchange agreements, forward currency
exchange agreements, interest rate cap or collar protection
agreements, forward rate currency or interest rate options, puts
or warrants.
"Regulations T, U, X and D" means Regulations T, U, X, and D
of the Federal Reserve Board, as the same is from time-to-time in
effect, and all official rulings and interpretations thereunder
or thereof.
"Reimbursement Obligations" means all of the obligations of
the Company set forth in paragraph (c) of Section 2.15.
"Release" shall have the meaning set forth in CERCLA or
under any other Environmental Law.
"Replacement Capital Expenditures" means Capital
Expenditures incurred in the ordinary course of business to
maintain the current level of production capacity, but not for
acquisition of and improvements to capital assets to expand
production capacity.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA and the regulations issued under such
section for which the disclosure requirements have not been
waived by the PBGC.
"Response" shall have the meaning set forth in CERCLA or any
other Environmental Law.
"Responsible Officer" means, of any Person, the Chief
Executive Officer, President, Chief Financial Officer, any
Executive or Senior Vice President, Vice President, Treasurer,
Secretary of such Person or any other member of senior management
of such Person.
"Restricted Payment" means (a) the declaration or making by
the Company or any of its Subsidiaries of any dividends or other
distributions (in cash, property, or otherwise) on, or any
payment for the purchase, redemption or other acquisition of, any
shares of any capital stock (or other ownership interests) of
such Person, other than dividends payable in such Person's stock
or other ownership interests, as applicable; (b) the making by
the Company or any of its Subsidiaries of any payment (scheduled
or otherwise) in respect of Subordinated Debt, whether for
principal, interest, fees, indemnities or any other amount; and
(c) any defeasance or covenant defeasance by the Company or any
of its Subsidiaries in respect of Subordinated Debt of such
Person.
"Revolving Advance" means an advance by a Lender to a
Borrower as part of a Revolving Borrowing and refers to a Base
Rate Advance or a Eurodollar Advance.
"Revolving Borrowing" means a borrowing consisting of
simultaneous Revolving Advances of the same Type made by each
Lender pursuant to Section 2.01(a), Continued pursuant to Section
2.02(b), or Converted by each Lender to Revolving Advances of a
different Type pursuant to Section 2.02(b).
"Revolving Credit Maturity Date" means the earlier of
(a) December 30, 2004 and (b) the earlier termination in whole of
the Revolving Commitments pursuant to Section 2.04 or
Article VII.
"Revolving Commitment" means, for each Lender, the amount in
Dollars set opposite such Lender's name on the signature pages of
this Agreement as its Revolving Commitment or, if such Lender has
entered into any Assignment and Acceptance after the Closing
Date, the amount set forth for such Lender as its
Revolving Commitment in the Notice of Assignment delivered to the
Administrative Agent pursuant to Section 9.03(b).
"Revolving Note" means a promissory note of a Borrower
payable to the order of any Lender, in substantially the form of
the attached Exhibit H, evidencing indebtedness of such Borrower
to such Lender resulting from Revolving Advances owing to such
Lender.
"Revolving Share" means (a) at any time before the Revolving
Commitments terminate with respect to any Lender with a Revolving
Commitment, the ratio (expressed as a percentage) of such
Lender's Revolving Commitment at such time to the aggregate
Revolving Commitments at such time and (b) at any time thereafter
with respect to any Lender with outstanding Revolving
Commitments, the ratio (expressed as a percentage) of such
Lender's outstanding Revolving Advances at such time to the
aggregate outstanding Revolving Advances at such time.
"Sale and Leaseback Transaction" means any direct or
indirect arrangement with any Person or to which such Person is a
party providing for the leasing to the Company or any of its
Subsidiaries of any Property owned by the Company or any of its
Subsidiaries which has been or is sold or transferred by the
Company or such Subsidiary to such Person or to any other Person
from whom funds have been or are to be advanced by such Person on
the security of such Property.
"SEC" means the Securities and Exchange Commission, and any
successor entity.
"Security Agreements" means each of the Security Agreements
in substantially the form of the attached Exhibit I and executed
by the Company and each Domestic Subsidiary which is a Guarantor
to secure all or a portion of the Obligations.
"Security Documents" means the Mortgages, the Vessel
Mortgages, the Pledge Agreements, the Security Agreements, and
each other document, instrument or agreement executed in
connection therewith or otherwise executed in order to secure all
or a portion of the Obligations.
"Subordinated Debt" means any Debt of the Company or any of
its Subsidiaries which is subordinated to their respective
obligations under the Credit Documents in a manner satisfactory
to the Administrative Agent and the Majority Banks and which is
otherwise on terms and conditions satisfactory to the
Administrative Agent and the Majority Banks.
"Subsidiary" of a Person means any corporation, association,
partnership or other business entity of which more than 50% of
the outstanding shares of capital stock (or other equivalent
interests) having by the terms thereof ordinary voting power
under ordinary circumstances to elect a majority of the board of
directors or Persons performing similar functions (or, if there
are no such directors or Persons, having general voting power) of
such entity (irrespective of whether at the time capital stock
(or other equivalent interests) of any other class or classes of
such entity shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned
or controlled by such Person, by such Person and one or more
Subsidiaries of such Person or by one or more Subsidiaries of
such Person.
"Swingline Advance" means an advance made available to the
Company by the Swingline Bank pursuant to Section 2.01(c) and
refers to a Base Rate Advance.
"Swingline Bank" means Bank One or any other Lender as a
successor Swingline Bank.
"Swingline Borrowing" means a borrowing consisting of a
Swingline Advance made by the Swingline Bank.
"Swingline Commitment" means the obligation of the Swingline
Bank to make Swingline Advances up to a maximum principal amount
of $10,000,000.00 at any time outstanding.
"Swingline Note" means a promissory note in substantially
the form of the attached Exhibit J duly executed by the Company
and payable to the order of the Swingline Bank evidencing the
obligation of the Company to repay the Swingline Advances.
"Synthetic Lease Obligations" means the obligations of any
Person under a lease arrangement treated as an operating lease
for financial accounting purposes and a financing lease for tax
purposes.
"Tax Group" has the meaning set forth in Section 4.11.
"Taxes" has the meaning set forth in Section 2.11(a).
"Term Advance" means an advance by a Lender to the Company
as part of a Term Borrowing and refers to a Base Rate Advance or
a Eurodollar Advance.
"Term Borrowing" means the borrowing consisting of
simultaneous Term Advances of the same Type made by each Lender
pursuant to Section 2.01(b), Continued pursuant to Section
2.02(b), or Converted by each Lender to Term Advances of a
different Type pursuant to Section 2.02(b).
"Term Commitment" means, for each Lender, the amount in
Dollars set opposite such Lender's name on the signature pages of
this Agreement as its Term Commitment or, if such Lender has
entered into any Assignment and Acceptance after the Closing
Date, the amount set forth for such Lender as its Term Commitment
in the Notice of Assignment delivered to the Administrative Agent
pursuant to Section 9.03(b); provided, however, that after the
date the initial Term Borrowing is made, the Term Commitment for
such Lender shall be zero.
"Term Maturity Date" means December 30, 2004.
"Term Note" means a promissory note of the Company payable
to the order of any Lender in substantially the form of the
attached Exhibit K evidencing indebtedness of the Company to such
Lender resulting from any Term Advance owing to such Lender.
"Term Share" means (a) on the date of the funding of the
initial Term Advances with respect to any Lender with a Term
Commitment, the ratio (expressed as a percentage) of such
Lender's Term Commitment at such time to the aggregate Term
Commitments at such time and (b) at any time thereafter with
respect to any Lender with outstanding Term Advances, the ratio
(expressed as a percentage) of such Lender's outstanding Term
Advances at such time to the aggregate outstanding Term Advances
at such time.
"Termination Event" means (a) the occurrence of a Reportable
Event with respect to a Plan, as described in Section 4043 of
ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the provision for 30-day notice
to the PBGC under such regulations); (b) the withdrawal of any
Loan Party or a member of the Controlled Group from a Plan during
a plan year in which it was a "substantial employer" as defined
in Section 4001(a)(2) of ERISA; (c) the giving of a notice of
intent to terminate a Plan under Section 4041(c) of ERISA;
(d) the institution of proceedings to terminate a Plan by the
PBGC; or (e) any other event or condition which constitutes
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan.
"Total Loss" has the meaning set forth in the Vessel
Mortgages.
"Transferee" has the meaning set forth in Section 9.04.
"Type" has the meaning set forth in Section 1.04.
"Unfunded Liabilities" means the amount (if any) by which
the present value of all vested and unvested accrued benefits
under all Plans exceeds the fair market value of all such Plan
assets allocable to such benefits, all determined as of the then
most recent valuation date for such Plans using the actuarial
assumptions used for such Plans as of such valuation date.
"Vessel Mortgages" means each of the Vessel Mortgages in
form and substance satisfactory to the Administrative Agent
executed by the Company and each of its Subsidiaries which owns
an Initial Mortgaged Vessel or which obtains a Material Vessel
after the Closing Date to secure all or a portion of the
Obligations.
"Wholly Owned" means, with respect to any Subsidiary of any
Person, the direct or indirect ownership of all of the
outstanding capital stock or other ownership interest of such
Subsidiary (other than any director's qualifying shares or
investments by foreign nationals mandated by applicable law) by
such Person or one or more Wholly Owned Subsidiaries of such
Person.
"Year 2000 Compliant" is defined in Section 4.20.
"Year 2000 Issues" means anticipated costs, problems and
uncertainties associated with the inability of certain computer
applications to effectively handle date information including
dates on and after January 1, 2000, as such inability affects the
business, operations and financial condition of the Company and
its Subsidiaries and of the Company and its Subsidiaries'
material customers, suppliers and vendors.
"Year 2000 Program" is defined in Section 4.20.
Section 1.02. Computation of Time Periods. In this
Agreement in the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but
excluding".
Section 1.03. Accounting Terms. Except as otherwise
expressly provided herein, all accounting terms used herein shall
be interpreted, and all financial statements and certificates and
reports as to financial matters required to be delivered to the
Administrative Agent hereunder shall (unless otherwise disclosed
to the Administrative Agent in writing at the time of delivery
thereof) be prepared, in accordance with GAAP applied on a basis
consistent with those used in the preparation of the latest
financial statements furnished to the Administrative Agent
hereunder (which prior to the delivery of the first financial
statements under Section 5.05, shall mean the Financial
Statements). All calculations made for the purposes of
determining compliance with this Agreement shall (except as
otherwise expressly provided herein) be made by application of
GAAP applied on a basis consistent with those used in the
preparation of the Financial Statements. In addition, all
calculations and defined accounting terms used herein shall,
unless expressly provided otherwise, when referring to any
Person, refer to such Person on a consolidated basis and mean
such Person and its consolidated subsidiaries.
Section 1.04. Classes and Types of Advances. Advances are
distinguished by "Class" and "Type". The "Class" of an Advance
refers to the determination of whether such Advance is a
Revolving Advance, Term Advance, or Swingline Advance, each of
which constitutes a Class. The "Type" of an Advance refers to
the determination whether such Advance is a Eurodollar Advance or
a Base Rate Advance, each of which constitutes a Type.
Section 1.05. Miscellaneous. Article, Section, Schedule
and Exhibit references are to Articles and Sections of and
Schedules and Exhibits to this Agreement, unless otherwise
specified. All references to instruments, documents, contracts,
and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless
otherwise specified.
ARTICLE II
THE ADVANCES
Section 2.01. The Advances.
(a) Revolving Advances. Each Lender having a Revolving
Commitment severally agrees, on the terms and conditions set
forth in this Agreement, to make Revolving Advances to the
Company and the Mexican Borrower in Dollars from time-to-time on
any Business Day during the period from the Closing Date until
the Revolving Credit Maturity Date; provided that, (i) the sum of
(A) the aggregate outstanding principal amount of the Revolving
Advances plus (B) the Letter of Credit Exposure plus (C) the
aggregate outstanding principal amount of the Swingline Advances
may not exceed at any time the aggregate amount of the Revolving
Commitments and (ii) the aggregate outstanding Revolving Advances
made to the Mexican Borrower may not exceed $30,000,000.00; and
provided that no Revolving Advances shall be made to the Mexican
Borrower until the Company has executed and delivered a Guaranty
pursuant to Section 5.13. Each Revolving Borrowing shall be in
an aggregate amount not less than $5,000,000.00 and in integral
multiples of $1,000,000.00 in excess thereof and shall consist of
Revolving Advances of the same Type made on the same day by the
Lenders ratably according to their respective Revolving
Commitments. Within the limits of each Lender's Revolving
Commitment, the Borrowers may from time-to-time borrow, prepay
pursuant to Section 2.07 and reborrow under this Section 2.01(a).
(b) Term Advances. Each Lender having a Term Commitment
severally agrees on the terms and conditions set forth in this
Agreement to make a single Term Advance in Dollars to the Company
on the Closing Date in an amount equal to such Lender's
Term Commitment. The Term Borrowing shall consist of Term
Advances of the same Type made on the same day by the Lenders
ratably according to their respective Term Commitments. Any Term
Borrowing that has been repaid may not be reborrowed.
(c) Swingline Advances.
(i) On the terms and conditions set forth in this
Agreement, the Swingline Bank agrees to from time-to-time on
any Business Day during the period from the Closing Date
until the last Business Day occurring before the Revolving
Credit Maturity Date, make advances ("Swingline Advances")
in Dollars under the Swingline Note to the Company for
periods of up to five Business Days (except that no
Swingline Advance may mature after the Revolving Credit
Maturity Date), bearing interest at the Alternate Base Rate
plus the Applicable Margin, and in an aggregate principal
amount not to exceed $10,000,000.00 outstanding at any time;
provided that the sum of (A) the aggregate principal amount
of outstanding Revolving Advances plus (B) the aggregate
principal amount of outstanding Swingline Advances plus (C)
the Letter of Credit Exposure shall never exceed the
aggregate Revolving Commitments at such time; and provided
further that no Swingline Advance shall be made by the
Swingline Bank if the statements set forth in Section 3.02
are not true on the date of such Swingline Advance, it being
agreed by the Company that the giving of the applicable
Notice of Borrowing and the acceptance by the Company of the
proceeds of such Swingline Advance shall constitute a
representation and warranty by the Company that on the date
of such Swingline Advance such statements are true. Subject
to the other provisions hereof, the Company may from
time-to-time borrow, prepay (in whole or in part) and
reborrow Swingline Advances.
(ii) Except as provided in the following clause (iii)
below, each request for a Swingline Advance shall be made
pursuant to telephone notice to the Swingline Bank given no
later than 2:00 p.m. (Chicago, Illinois time) on the date of
the proposed Swingline Advance, promptly confirmed by a
completed and executed Notice of Borrowing telecopied to the
Administrative Agent. The Swingline Bank will promptly make
the Swingline Advance available to the Company at the
Company's account with the Administrative Agent.
(iii) The Company and the Lenders agree that in the
event any Swingline Advance is not repaid on the date due to
the Swingline Bank, the Administrative Agent may give each
Lender having a Revolving Commitment a notice of Mandatory
Revolving Borrowing, and upon receipt of such notice, each
Lender having a Revolving Commitment shall pay to the
Administrative Agent its Revolving Share of such Swingline
Advance and such payment shall be deemed to be a Base Rate
Advance made pursuant to such Lender's Revolving Commitment,
whether made before or after termination of the Revolving
Commitments, acceleration of the Revolving Advances, or
otherwise, and whether or not the conditions precedent in
Section 3.02 have been satisfied at the time of such
Mandatory Revolving Borrowing. The Administrative Agent
shall give each Lender notice of such Mandatory Revolving
Borrowing by 11:00 a.m. (Chicago, Illinois time) on the date
the Mandatory Revolving Borrowing is to be made. Each
Lender having a Revolving Commitment shall, regardless of
whether the conditions in Section 3.02 have been met at the
time of such Mandatory Revolving Borrowing and regardless of
whether there exists any Default or Event of Default, make
its Revolving Advance available to the Administrative Agent
for the account of the Swingline Bank in immediately
available funds by 1:00 p.m. (Chicago, Illinois time) on the
date requested, and the Company hereby irrevocably instructs
the Swingline Bank to apply the proceeds of such Mandatory
Revolving Borrowing to the payment of the outstanding
Swingline Advances.
Section 2.02. Method of Borrowing.
(a) Notice. Each Borrowing (other than a Mandatory
Revolving Borrowing) shall be made pursuant to a Notice of
Borrowing, given not later than (i) in the case of a Borrowing
comprised of Eurodollar Advances, 10:00 a.m. (Chicago, Illinois
time) on the third Business Day before the Borrowing Date of a
requested Borrowing and (ii) in the case of a Borrowing comprised
of Base Rate Advances, 10:00 a.m. (Chicago, Illinois time) on the
Business Day of a requested Borrowing, in each case to the
Administrative Agent's Applicable Lending Office. The
Administrative Agent shall give to each Lender prompt notice on
the day of receipt of a timely Notice of Borrowing of such
requested Borrowing by telecopier or telex. Each Notice of
Borrowing shall be by telecopier, telex or telephone, confirmed
promptly in writing specifying (A) the Borrowing Date (which
shall be a Business Day), (B) the requested Type and Class of
Advances comprising such Borrowing, (C) the requested aggregate
amount of such Borrowing, and (D) if such Borrowing is to be
comprised of Eurodollar Advances, the requested Interest Period
for each such Borrowing. In the case of a requested Borrowing
comprised of Eurodollar Advances, the Administrative Agent shall
promptly notify each Lender of the applicable interest rate under
Section 2.06(b). Each Lender shall make available its Revolving
Share or Term Share, as applicable, of such Borrowing before
12:00 p.m. (Chicago, Illinois time) on the date of such Borrowing
in immediately available funds to the Administrative Agent at its
Applicable Lending Office on the date of such Borrowing or such
other location as the Administrative Agent may specify by notice
to the Lenders. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth
in Article III, the Administrative Agent will promptly make such
funds available to the applicable Borrower not later than 2:00
p.m. (Chicago, Illinois time) at such account as such Borrower
shall specify in writing to the Administrative Agent.
(b) Conversions and Continuations. In order to elect to
Convert or Continue an Advance under this Section, the Company
shall deliver an irrevocable Notice of Conversion or Continuation
to the Administrative Agent at its Applicable Lending Office no
later than (i) 10:00 a.m. (Chicago, Illinois time) at least one
Business Day in advance of such requested Conversion date in the
case of a Conversion of a Eurodollar Advance to a Base Rate
Advance or (ii) 10:00 a.m. (Chicago, Illinois time) at least
three Business Days in advance of such requested Conversion date
in the case of a Conversion into or Continuation of a Eurodollar
Advance to another Eurodollar Advance. Each such Notice of
Conversion or Continuation shall be in writing or by telex,
telecopier or telephone, confirmed promptly in writing specifying
(A) the requested Conversion or Continuation date (which shall be
a Business Day), (B) the amount, Type, and Class of the Advance
to be Converted or Continued, (C) whether a Conversion or
Continuation is requested, and if a Conversion, into what Type of
Advance, and (D) in the case of a Conversion to, or a
Continuation of, a Eurodollar Advance, the requested Interest
Period. Promptly after receipt of a Notice of Conversion or
Continuation under this paragraph, the Administrative Agent shall
provide each Lender with a copy thereof and, in the case of a
Conversion to or a Continuation of a Eurodollar Advance, notify
each Lender of the interest rate under Sections 2.06(b). The
portion of Advances comprising part of the same Borrowing that
are converted to Advances of another Type shall constitute a new
Borrowing. Notwithstanding anything in this Agreement to the
contrary, Conversions of Eurodollar Advances may only be made at
the end of the applicable Interest Period for such Advances;
provided, however, that Conversions of Base Rate Advances may be
made at any time.
(c) Certain Limitations. Notwithstanding anything in
paragraphs (a) and (b) above:
(i) at no time shall there be more than (A) three
Interest Periods applicable to outstanding Eurodollar
Advances which are Term Advances and (B) five Interest
Periods applicable to outstanding Eurodollar Advances which
are Revolving Advances;
(ii) (A) if any Lender shall, at least one Business Day
before the date of any requested Borrowing, notify the
Administrative Agent that the introduction of or any change
in or in the interpretation of any law or regulation makes
it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful, for such Lender or
any of its Applicable Lending Offices to perform its
obligations under this Agreement to make Eurodollar
Advances, or to fund or maintain Eurodollar Advances, the
right of the Company to select Eurodollar Advances from such
Lender for such Borrowing or for any subsequent Borrowing
shall be suspended until such Lender shall notify the
Administrative Agent that the circumstances causing such
suspension no longer exist, and such Lender's Advance for
such Borrowing shall be a Base Rate Advance and (B) such
Lender agrees to use commercially reasonable efforts
(consistent with its internal policies and legal and
regulatory restrictions) to designate a different Applicable
Lending Office if the making of such designation would avoid
the effect of this paragraph and would not, in the
reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender;
(iii) if the Administrative Agent is unable to determine
the Eurodollar Reference Rate for any requested Borrowing
and the Administrative Agent gives telephonic or telecopy
notice thereof to the Company as soon as practicable, the
right of the Company to select Eurodollar Advances for such
Borrowing or for any subsequent Borrowing and the obligation
of the Lenders to make such Eurodollar Advances shall be
suspended until the Administrative Agent shall notify the
Company and the Lenders that the circumstances causing such
suspension no longer exist, and each Advance comprising such
Borrowing shall be a Base Rate Advance;
(iv) if the Majority Lenders shall, by 11:00 a.m.
(Chicago, Illinois time) at least one Business Day before
the date of any requested Borrowing, notify the
Administrative Agent that the Eurodollar Reference Rate will
not adequately reflect the cost to such Lenders of making or
funding their respective Eurodollar Advances and the
Administrative Agent gives telephonic or telecopy notice
thereof to the Company as soon as practicable, the right of
the Borrowers to select Eurodollar Advances for such
Borrowing or for any subsequent Borrowing and the obligation
of the Lenders to make Eurodollar Advances shall be
suspended until the Administrative Agent shall notify the
Company and the Lenders that the circumstances causing such
suspension no longer exist, and each Advance comprising such
Borrowing shall be a Base Rate Advance;
(v) if the Company shall fail to select the duration
or Continuation of any Interest Period for any Eurodollar
Advances in accordance with the provisions contained in the
definition of "Interest Period" in Section 1.01 and
paragraphs (a) and (b) above or shall fail to deliver a
Notice of Conversion or Continuation or to specify the Type
of Eurodollar Advance in a Notice of Conversion or
Continuation, the Administrative Agent will forthwith so
notify the Company and the Lenders and such Advances will be
made available to the Borrowers on the date of such
Borrowing and will have an Interest Period of one month; and
(vi) no Advance may be Converted or Continued as a
Eurodollar Advance at any time when a Default has occurred
and is continuing.
(d) Notices Irrevocable. Each Notice of Borrowing and
Notice of Conversion or Continuation delivered by a Borrower
shall be irrevocable and binding on the Borrowers. In the case
of any Borrowing which the related Notice of Borrowing or Notice
of Conversion or Continuation specifies is to be comprised of
Eurodollar Advances, the Company shall indemnify each Lender
against any loss, out-of-pocket cost or expense actually incurred
by such Lender as a result of any failure to fulfill on or before
the date specified in such Notice of Borrowing or such Notice of
Conversion or Continuation for such Borrowing the applicable
conditions set forth in Article III, including, without
limitation, any loss, cost or expense actually incurred by reason
of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund the Advance to be made by such
Lender as part of such Borrowing when such Advance, as a result
of such failure, is not made on such date.
(e) Administrative Agent Reliance. Unless the
Administrative Agent shall have received notice from a Lender
before any Borrowing Date that such Lender will not make
available to the Administrative Agent such Lender's Revolving
Share or Term Share, as applicable, of any Borrowing, the
Administrative Agent may assume that such Lender has made its
Revolving Share or Term Share, as applicable, of such Borrowing
available to the Administrative Agent on the Borrowing Date in
accordance with paragraph (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make
available to the applicable Borrower on such Borrowing Date a
corresponding amount. If and to the extent that such Lender
shall not have so made its Revolving Share or Term Share, as
applicable, of such Borrowing available to the Administrative
Agent, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate per annum
equal to the daily average Federal Funds Effective Rate for the
period until such Lender makes such amount immediately available
to the Administrative Agent. If such Lender shall repay to the
Administrative Agent such corresponding amount and interest as
provided above, such corresponding amount so repaid shall
constitute such Lender's Advance as part of such Borrowing for
purposes of this Agreement even though not made on the same day
as the other Advances comprising such Borrowing. If such
Lender's Advance as part of such Borrowing is not made available
by such Lender within three Business Days of the Borrowing Date,
the applicable Borrower shall repay such Lender's share of such
Borrowing (together with interest thereon at the interest rate
applicable during such period to Advances comprising such
Borrowing) to the Administrative Agent not later than three
Business Days after receipt of written notice from the
Administrative Agent specifying such Lender's share of such
Borrowing that was not made available to the Administrative
Agent.
(f) Lender Obligations Several. The failure of any Lender
to make the Advance to be made by it as part of any Borrowing
shall not relieve any other Lender of its obligation, if any, to
make its Advance on the Borrowing Date. No Lender shall be
responsible for the failure of any other Lender to make the
Advance to be made by such other Lender on any Borrowing Date.
(g) Notes. The indebtedness of each Borrower to each
Lender resulting from Revolving Advances and the Term Advances
owing to such Lender shall be evidenced by the Revolving Note and
the Term Note, respectively, of the applicable Borrower payable
to the order of such Lender. The indebtedness of the Company to
the Swingline Bank resulting from Swingline Advances owing to the
Swingline Bank shall be evidenced by the Swingline Note.
Section 2.03. Fees.
(a) Revolving Commitment Fees. The Company agrees to pay
to the Administrative Agent for the account of each Lender having
a Revolving Commitment a commitment fee on the average daily
amount by which such Lender's Revolving Commitment exceeds the
sum of (i) the aggregate principal amount of such Lender's
outstanding Revolving Advances and (ii) its participation share
of the Letter of Credit Exposure, from the Closing Date until the
Revolving Credit Maturity Date at the Applicable Margin for
Revolving Credit fees. The fees payable pursuant to this
clause (a) are due quarterly in arrears on the last Business Day
of each March, June, September, and December commencing March 31,
2000 and on the Revolving Credit Maturity Date.
(b) Agent's Fees. The Company agrees to pay to the
Administrative Agent and the Arranger the agent's and arranger's
fees as separately agreed upon by the Company and the
Administrative Agent in the letter agreement dated December 10,
1999 from the Arranger and Bank One to the Company on the dates
required by such letter.
(c) Letter of Credit Fees. The Company agrees to pay
(i) to the Administrative Agent for the pro rata benefit of each
Lender having a Revolving Commitment for each Letter of Credit
that is a Financial Letter of Credit and each Letter of Credit
that is a Performance Letter of Credit issued for its account, a
fee per annum equal to the Applicable Margin for such type of
Letter of Credit; provided that, after the occurrence and during
the continuance of an Event of Default, the applicable fee rate
on such Letters of Credit shall be the Applicable Margin for such
Letter of Credit plus 2% per annum and (ii) to such Issuing Bank,
a fee for each Letter of Credit issued for its account in an
amount per annum to be agreed upon between the Borrower and such
Issuing Bank. Each such fee shall be based on the maximum amount
available to be drawn under such Letter of Credit from the date
of issuance of the Letter of Credit until its expiration date and
shall be payable quarterly in arrears on the last Business Day of
each March, June, September, and December commencing March 31,
2000 and on its expiration date. In addition, the Company agrees
to pay to the Issuing Bank all customary transaction costs and
fees charged by the Issuing Bank in connection with the issuance
of a Letter of Credit for the Borrower's account, such costs and
fees to be due and payable on the date specified by the Issuing
Bank in the invoice for such costs and fees.
Section 2.04. Reduction of the Commitments. The Company
shall have the right, upon at least five days' irrevocable notice
to the Administrative Agent, to terminate in whole or reduce
ratably in part the unused portion of the Revolving Commitments;
provided that each partial reduction of Revolving Commitments
shall be in the minimum aggregate amount of $5,000,000.00 and in
integral multiples of $1,000,000.00 in excess thereof (or such
lesser amount as may then be outstanding); and provided further
that the aggregate amount of the Revolving Commitments may not be
reduced below the aggregate principal amount of the outstanding
Advances. Any reduction or termination of the Revolving
Commitments pursuant to this Section 2.04 shall be permanent,
with no obligation of the Lenders to reinstate such Revolving
Commitments and the commitment fees provided for in
Section 2.03(a) shall thereafter be computed on the basis of the
Revolving Commitments as so reduced. The Administrative Agent
shall give each Lender prompt notice of any commitment reduction
or termination.
Section 2.05. Repayment.
(a) Revolving Advances. Each Borrower shall repay the
outstanding principal amount of each Revolving Advance made to it
on the Revolving Credit Maturity Date.
(b) Term Advances. The Company shall repay the Term
Advances to the Administrative Agent for the benefit of the
Lenders based on each Lender's Term Share in 18 equal
installments in the principal amount of $9,210,526.32 each on the
last Business Day of each calendar quarter, commencing June 30,
2000, to and including September 30, 2004, and a final
installment in the principal amount of $9,210,526.24 on the Term
Maturity Date.
Section 2.06. Interest. The Borrowers shall pay interest
on the unpaid principal amount of each Advance made by each
Lender to it from the date of such Advance until such principal
amount shall be paid in full, at the following rates per annum:
(a) Base Rate Advances. If such Advance is a Base Rate
Advance, a rate per annum equal at all times to the lesser of
(i) the Alternate Base Rate in effect from time-to-time plus the
Applicable Margin and (ii) the Maximum Rate, payable in arrears
on the last Business Day of each calendar month and on the date
such Base Rate Advance shall be paid in full; provided that,
after the occurrence and during the continuance of an Event of
Default, such Advance shall bear interest at a rate per annum
equal at all times to the lesser of (i) the Alternate Base Rate
in effect from time-to-time plus the Applicable Margin plus 2%
and (ii) the Maximum Rate.
(b) Eurodollar Advances. If such Advance is a Eurodollar
Advance, a rate per annum equal at all times during the Interest
Period for such Advance to the lesser of (i) the Eurodollar
Reference Rate for such Interest Period plus the Applicable
Margin and (ii) the Maximum Rate, payable on the last day of such
Interest Period, and, in the case of Interest Periods of greater
than three months, on the Business Day which occurs during such
Interest Period 90 days from the first day of such Interest
Period; provided that, after the occurrence and during the
continuance of an Event of Default, such Advance shall bear
interest at a rate per annum equal at all times to the lesser of
(i) the rate required to be paid on such Advance immediately
prior to the occurrence of such Default plus 2% and (ii) the
Maximum Rate.
(c) Additional Interest on Eurodollar Advances. The
Company shall pay to each Lender, so long as any such Lender
shall be required under regulations of the Federal Reserve Board
to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities, additional
interest on the unpaid principal amount of each Eurodollar
Advance, from the effective date of such Advance until such
principal amount is paid in full, at an interest rate per annum
equal at all times to the remainder obtained by subtracting
(A) the Eurodollar Reference Rate for the Interest Period for
such Advance from (B) the rate obtained by dividing such
Eurodollar Reference Rate by a percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage of such Lender for such
Interest Period, payable on each date on which interest is
payable on such Advance. Such additional interest payable to any
Lender shall be determined by such Lender and notified to the
Company through the Administrative Agent (such notice to include
the calculation of such additional interest, which calculation
shall be conclusive in the absence of manifest error, and be
accompanied by any evidence indicating the need for such
additional interest as the Company may reasonably request).
(d) Usury Recapture. In the event the rate of interest
chargeable under this Agreement or the Notes at any time
(calculated after giving effect to all items charged which
constitute "interest" under applicable laws, including fees and
margin amounts, if applicable) is greater than the Maximum Rate,
the unpaid principal amount of the Notes shall bear interest at
the Maximum Rate until the total amount of interest paid or
accrued on the Notes equals the amount of interest which would
have been paid or accrued on the Notes if the stated rates of
interest set forth in this Agreement had at all times been in
effect.
In the event, upon payment in full of the Notes, the
total amount of interest paid or accrued under the terms of this
Agreement and the Notes is less than the total amount of interest
which would have been paid or accrued if the rates of interest
set forth in this Agreement had, at all times, been in effect,
then each Borrower shall, to the extent permitted by applicable
law, pay the Administrative Agent for the account of the Lenders
an amount equal to the difference between (i) the lesser of
(A) the amount of interest which would have been charged on its
Notes if the Maximum Rate had, at all times, been in effect and
(B) the amount of interest which would have accrued on its Notes
if the rates of interest set forth in this Agreement had at all
times been in effect and (ii) the amount of interest actually
paid under this Agreement on its Notes.
In the event the Lenders ever receive, collect or apply
as interest any sum in excess of the Maximum Rate, such excess
amount shall, to the extent permitted by law, be applied to the
reduction of the principal balance of the Notes, and if no such
principal is then outstanding, such excess or part thereof
remaining shall be paid to the Borrowers.
Section 2.07. Prepayments.
(a) Right to Prepay. The Borrowers shall have no right to
prepay any principal amount of any Advance except as provided in
this Section 2.07.
(b) Optional. A Borrower may elect to prepay any of the
Advances owing by it to the Lenders, after giving prior written
notice of such election by (i) 10:00 a.m. (Chicago, Illinois
time) five days before such prepayment date in the case of
Borrowings which are comprised of Eurodollar Advances, and (ii)
10:00 a.m. (Chicago, Illinois time) on the Business Day of such
prepayment, in case of Borrowings which are comprised of Base
Rate Advances, in each case to the Administrative Agent stating
the proposed date and aggregate principal amount of such
prepayment and the Type of Advances to be prepaid. If any such
notice is given, the Administrative Agent shall give prompt
notice thereof to each Lender and such Borrower shall prepay
Advances comprising part of the same Borrowing in whole or
ratably in part in an aggregate principal amount equal to the
amount specified in such notice, together with accrued interest
to the date of such prepayment on the principal amount prepaid
and amounts, if any, required to be paid pursuant to Section 2.08
as a result of such prepayment being made on such date; provided,
however, that each partial prepayment shall be in an aggregate
principal amount not less than $5,000,000.00 and in integral
multiples of $1,000,000.00 in excess thereof (or such lesser
amount as may then be outstanding).
(c) Mandatory.
(i) On any date on which the outstanding principal
amount of the Revolving Advances plus the Letter of Credit
Exposure plus the outstanding principal amount of the
Swingline Advances exceeds the aggregate Revolving
Commitments, the Company agrees to make a mandatory
prepayment of the Revolving Advances in the amount of such
excess.
(ii) The Company shall prepay the Term Advances by an
amount equal to (A) (1) the amount required by Section
6.03(b)(iii) from the sale of any assets permitted by
Section 6.03 (other than sales of assets from the Company to
any of its Subsidiaries or from any of its Subsidiaries to
the Company or another Subsidiary of the Company), to the
extent such amounts are not reinvested in accordance with
Section 6.03, on the 185th day after receipt of such amount
and (2) 100% of the Net Cash Proceeds the Company or any of
its Subsidiaries receives from an insurance policy or
condemnation award in connection with a Casualty Event
occurring when an Event of Default has occurred and is
continuing or in connection with a Total Loss or a Material
Partial Loss for which the insurance proceeds or
condemnation proceeds are not reinvested in replacement
assets of comparable value and utility within six months
after receipt of such insurance proceeds, on the 185th day
after receipt of such Net Cash Proceeds, (B) 100% of the Net
Cash Proceeds of the Hercules Title XI Issue upon receipt
thereof, (C) (i) 100% of the Net Cash Proceeds of any Equity
Issuance in excess of $50,000,000.00 upon the receipt
thereof, and (ii) 100% of the Net Cash Proceeds up to
$50,000,000.00 of any Equity Issuance not invested in assets
used in the Company's or its Subsidiaries' business on or
before the 60th day after receipt of such Net Cash Proceeds,
and (D) unless the Company's Leverage Ratio is less than 2.5
to 1.0 as of the end of such fiscal year, 75% of the Excess
Cash Flow for each fiscal year (commencing with the fiscal
year ending December 31, 2000), prior to April 30 of the
subsequent fiscal year.
(iii) Each prepayment pursuant to this Section 2.07(c)
shall be accompanied by accrued interest on the amount
prepaid to the date of such prepayment and amounts, if any,
required to be paid pursuant to Section 2.08 as a result of
such prepayment being made on such date.
(d) Application of Term Advance Prepayments. All Term
Advance prepayments (other than from the Net Cash Proceeds of the
Hercules Title XI Issue) shall be applied to future scheduled
principal payments of each such Term Advances in the inverse
order of maturity and all Term Advance prepayments from the
Hercules Title XI Issue shall be applied to future scheduled
payments pro rata.
(e) Illegality. If any Lender shall notify the
Administrative Agent and the Company that the introduction of or
any change in or in the interpretation of any law or regulation
makes it unlawful, or that any central bank or other Governmental
Authority asserts that it is unlawful for such Lender or its
Applicable Lending Office to perform its obligations under this
Agreement or to make or maintain Eurodollar Advances then
outstanding hereunder, the applicable Borrower shall, no later
than 10:00 a.m. (Chicago, Illinois time) (A) if not prohibited by
law or regulation to maintain such Eurodollar Advances for the
duration of the Interest Period, on the last day of the Interest
Period for each outstanding Eurodollar Advance or (B) if
prohibited by law or regulation to maintain such Eurodollar
Advances for the duration of the Interest Period, on the second
Business Day following its receipt of such notice, prepay all
Eurodollar Advances of all of the Lenders then outstanding,
together with accrued interest on the principal amount prepaid to
the date of such prepayment and amounts, if any, required to be
paid pursuant to Section 2.08 as a result of such prepayment
being made on such date, (ii) each Lender shall simultaneously
make a Base Rate Advance or, if not otherwise prohibited, make an
Eurodollar Advance in an amount equal to the aggregate principal
amount of the affected Eurodollar Advances, and (iii) the right
of the Borrowers to select Eurodollar Advances shall be suspended
until such Lender shall notify Administrative Agent that the
circumstances causing such suspension no longer exist. Each
Lender agrees to use commercially reasonable efforts (consistent
with its internal policies and subject to legal and regulatory
restrictions) to designate a different Applicable Lending Office
if the making of such designation would avoid the effect of this
paragraph and would not, in the reasonable judgment of such
Lender, be otherwise disadvantageous to such Lender. If the
condition requiring the prepayment under this paragraph shall
continue for such Lender for 90 days, such Lender may be replaced
in accordance with the procedures in Section 2.13.
(f) Ratable Payments; Effect of Notice. Each payment of
any Advance pursuant to this Section 2.07 or any other provision
of this Agreement shall be made in a manner such that all
Advances comprising part of the same Borrowing are paid in whole
or ratably in part. All notices given pursuant to this Section
2.07 shall be irrevocable and binding upon the Borrowers.
Section 2.08. Funding Losses. If (a) any payment of
principal of any Eurodollar Advance is made other than on the
last day of the Interest Period for such Advance as a result of
any payment pursuant to Section 2.07 or the acceleration of the
maturity of the Notes pursuant to Article VII or (b) if any
Borrower fails to make a principal or interest payment with
respect to any Eurodollar Advance on the date such payment is due
and payable, such Borrower shall, within 10 days of any written
demand sent by any Lender to the Company through the
Administrative Agent, pay to Administrative Agent for the account
of such Lender any amounts (without duplication of any other
amounts payable in respect of breakage costs) required to
compensate such Lender for any additional losses, out-of-pocket
costs or expenses which it may reasonably incur as a result of
such payment or nonpayment, including, without limitation, any
loss, cost or expense actually incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by any Lender to fund or maintain such Advance.
Section 2.09. Increased Costs.
(a) Eurodollar Advances. If, due to either (i) the
introduction of or any change (other than any change by way of
imposition or increase of reserve requirements included in the
Eurodollar Rate Reserve Percentage) in or in the interpretation
of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall
be any increase in the cost to any Lender of agreeing to make or
making, funding, or maintaining Eurodollar Advances or
participating in the Letter of Credit Exposure or to any Issuing
Bank for issuing a Letter of Credit, then the Company shall from
time-to-time, upon demand by such Lender or such Issuing Bank
(with a copy of such demand to the Administrative Agent),
immediately pay to Administrative Agent for the account of such
Lender or such Issuing Bank additional amounts (without
duplication of any other amounts payable in respect of increased
costs) sufficient to compensate such Lender for such increased
cost; provided, however, that, before making any such demand,
each Lender and each Issuing Bank agrees to use commercially
reasonable efforts (consistent with its internal policy and
subject to legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a
designation would avoid the need for, or reduce the amount of,
such increased cost and would not, in the reasonable judgment of
such Lender or such Issuing Bank, be otherwise economically
disadvantageous to such Lender or such Issuing Bank. A
certificate indicating the amount of such increased cost and
detailing the calculation of such cost shall be submitted by such
Lender or such Issuing Bank to the Company and the Administrative
Agent and shall be conclusive and binding for all purposes,
absent manifest error.
(b) Capital Adequacy. If any Lender or Issuing Bank
determines in good faith that compliance with any law or
regulation or any guideline or request from any central bank or
other Governmental Authority (whether or not having the force of
law) implemented or effective after the Closing Date affects or
would affect the amount of capital required or expected to be
maintained by such Lender or such Issuing Bank or any corporation
controlling such Lender or such Issuing Bank and that the amount
of such capital is increased by or based upon the existence of
such Lender's or such Issuing Bank's commitment to lend,
commitment to issue a Letter of Credit, or other commitments of
this type, then, upon demand by such Lender or such Issuing Bank
(with a copy of any such demand to the Administrative Agent), the
Company shall immediately pay to Administrative Agent for the
account of such Lender or such Issuing Bank as the case may be,
from time-to-time as specified by such Lender or such Issuing
Bank, additional amounts (without duplication of any other
amounts payable in respect of increased costs) sufficient to
compensate such Lender or such Issuing Bank, in light of such
circumstances, with respect to such Lender or such Issuing Bank,
to the extent that such Lender or such Issuing Bank reasonably
determines such increase in capital to be allocable to the
existence of such Lender's or such Issuing Bank's commitment to
lend or issue a Letter of Credit under this Agreement. A
certificate as to such amount and detailing the calculation of
such costs shall be submitted to the Company by such Lender or
such Issuing Bank, such certificate to be conclusive and binding
for all purposes, absent manifest error.
Section 2.10. Payments and Computations.
(a) Payments Generally. All payments of principal,
interest, fees, and other amounts to be made by the Borrowers
under this Agreement and the other Credit Documents shall be made
to the Administrative Agent in Dollars at its office in New York
or such other office as it designates to the Company in
immediately available funds, without setoff, deduction, or
counterclaim.
(b) Payment Procedures. The Borrowers shall make each
payment under this Agreement and under their respective Notes not
later than 12:00 p.m. (local time) on the day when due to the
Administrative Agent at the Administrative Agent's address
specified in Section 10.02 (or such other location as the
Administrative Agent shall designate in writing to the Borrower).
The Administrative Agent will promptly thereafter, and in any
event prior to the close of business on the day any timely
payment is made, cause to be distributed like funds relating to
the payment of principal, interest or fees ratably (other than
amounts payable solely to the Administrative Agent, or a specific
Lender pursuant to Section 2.03(b), 2.03(c), 2.08, 2.09, or 2.11,
but after taking into account payments effected pursuant to
Section 10.04) (i) before the acceleration of the Advances
pursuant to Section 7.02 or 7.03, (A) in the case of payments in
respect of Revolving Advances in accordance with each Lender's
Revolving Share, and (B) in the case of payments in respect of
Term Advances, in accordance with each Lender's Term Share and
(ii) after the acceleration of the Advances pursuant to Section
7.02 or 7.03, in accordance with each Lender's Pro Rata Share to
the Lenders for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of any
other amount payable to any Lender to such Lender for the account
of its Applicable Lending Offices, in each case to be applied in
accordance with the terms of this Agreement. All payments owing
in respect of Advances made or Letters of Credit issued in one
currency (including, without limitation, interest, principal,
commitment fees and letter of credit fees) shall be paid or
repaid, as the case may be, in the same currency as such Advance
or Letter of Credit, as applicable.
(c) Computations. All computations of interest based on
the Corporate Base Rate shall be made by the Administrative Agent
on the basis of a year of 365 or 366 days, as the case may be,
and all computations of interest based on the Federal Funds
Effective Rate, the Eurodollar Reference Rate and of fees shall
be made by the Administrative Agent, on the basis of a year of
360 days, in each case for the actual number of days (including
the first day, but excluding the last day) occurring in the
period for which such interest or fees are payable. Each
determination by the Administrative Agent of an interest rate
shall be conclusive and binding for all purposes, absent manifest
error.
(d) Non-Business Day Payments. Whenever any payment shall
be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the
computation of payment of interest or fees, as the case may be.
(e) Agent Reliance. Unless the Administrative Agent shall
have received written notice from a Borrower prior to the date on
which any payment is due to the Lenders that such Borrower will
not make such payment in full, the Administrative Agent may
assume that such Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to
each Lender on such date an amount equal to the amount then due
to such Lender. If and to the extent a Borrower shall not have
so made such payment in full to Administrative Agent, each Lender
shall repay to the Administrative Agent forthwith on demand such
amount distributed to such Lender, together with interest, for
each day from the date such amount is distributed to such Lender
until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Effective Rate for
such day.
Section 2.11. Taxes.
(a) No Deduction for Certain Taxes. Any and all payments
by the Borrowers shall be made, in accordance with Section 2.10,
free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or
withholdings and all liabilities with respect thereto, excluding
(i) in the case of each Lender and the Administrative Agent,
taxes imposed on its income, and franchise taxes imposed on it by
the jurisdiction under the laws of which such Lender or the
Administrative Agent (as the case may be) is organized or any
political subdivision of the jurisdiction and (ii) any taxes
imposed by the United States of America by means of withholding
at the source if and to the extent that such taxes shall be in
effect and shall be applicable, on the Closing Date (or, in the
case of a Lender which becomes a party to this Agreement after
the Closing Date, on the date such Lender becomes a party to this
Agreement), to payments to be made to such Lender or the
Administrative Agent (all such nonexcluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes") and, in the case of each
Lender, Taxes by the jurisdiction of such Lender's Applicable
Lending Office or any political subdivision of such jurisdiction.
If a Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable to any Lender or the
Administrative Agent, (i) the sum payable shall be increased as
may be necessary so that, after making all required deductions,
such Lender or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no
such deductions been made; provided, however, that if a
Borrower's obligation to deduct or withhold Taxes is caused
solely by such Lender's or Administrative Agent's failure to
provide the forms described in paragraph (e) of this Section 2.11
and such Lender or Administrative Agent could have provided such
forms, no such increase shall be required; (ii) such Borrower
shall make such deductions; and (iii) such Borrower shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) Other Taxes. In addition, each Borrower agrees to pay
any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise
from any payment made or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement,
the Notes, or the other Credit Documents (hereinafter referred to
as "Other Taxes").
(c) Indemnification. Each Borrower indemnifies each Lender
and the Administrative Agent for the full amount of Taxes or
Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this
Section 2.11) paid by such Lender or the Administrative Agent (as
the case may be) and any liability (including interest and
expenses) arising therefrom or with respect thereto (whether or
not such Taxes or Other Taxes were correctly or legally
asserted), in either case, attributable to such Borrower. Each
payment required to be made by a Borrower in respect of this
indemnification shall be made to the Administrative Agent for the
benefit of any party claiming such indemnification within 30 days
from the date such Borrower receives written demand detailing the
calculation of such amounts therefor from Administrative Agent on
behalf of itself as Administrative Agent or any such Lender. If
any Lender or the Administrative Agent receives a refund in
respect of any taxes paid by a Borrower under this paragraph (c),
such Lender or Administrative Agent, as the case may be, shall
promptly pay to such Borrower its share of such refund.
(d) Evidence of Tax Payments. Each Borrower will pay prior
to delinquency all Taxes payable in respect of any payment.
Within 30 days after the date of any payment of Taxes, such
Borrower will furnish to the Administrative Agent, at its address
referred to in Section 10.02, the original or a certified copy of
a receipt evidencing payment of such Taxes.
(e) Foreign Lender Withholding Exemption. Each Lender that
is not incorporated under the laws of the United States of
America or a state thereof agrees that it will deliver to the
Company and the Administrative Agent on the Closing Date or upon,
the effectiveness of any Assignment and Acceptance (i) two duly
completed copies of United States Internal Revenue Service
Form 1001 or 4224 or successor applicable form, as the case may
be, certifying in each case that such Lender is entitled to
receive payments under this Agreement and the Notes payable to
it, without deduction or withholding of any United States federal
income taxes, (ii) if applicable, an Internal Revenue Service
Form W-8 or W-9 or successor applicable form, as the case may be,
to establish an exemption from United States backup withholding
tax, and (iii) any other governmental forms which are necessary
or required under an applicable tax treaty or otherwise by law to
reduce or eliminate any withholding tax, which have been
reasonably requested by a Borrower. Each Lender which delivers
to the Company and the Administrative Agent a Form 1001 or 4224
and Form W-8 or W-9 pursuant to the preceding sentence further
undertakes to deliver to the Company and the Administrative Agent
two further copies of Form 1001 or 4224 and Form W-8 or W-9, or
successor applicable forms, or other manner of certification, as
the case may be, on or before the date that any such form expires
or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered
by it to the Company and the Administrative Agent, and such
extensions or renewals thereof as may reasonably be requested by
the Company and the Administrative Agent certifying in the case
of a Form 1001 or 4224 that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of
any United States federal income taxes. If an event (including
without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any delivery required by the
preceding sentence would otherwise be required which renders all
such forms inapplicable or which would prevent any Lender from
duly completing and delivering any such form with respect to it
and such Lender advises the Company and the Administrative Agent
that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax, and
in the case of a Form W-8 or W-9, establishing an exemption from
United States backup withholding tax, such Lender shall not be
required to deliver such forms. Each Borrower shall withhold tax
at the rate and in the manner required by the laws of the United
States with respect to payments made to a Lender failing to
timely provide the requisite Internal Revenue Service forms and
shall not be required to pay any additional amounts pursuant to
paragraph (a) or indemnify a Lender pursuant to paragraph (c)
with respect to such withheld tax.
(f) Repayment under Certain Circumstances. If a Borrower
is required by any law or regulation to make any deduction or
withholding from any sum payable by it under this Agreement and
is prevented by law from fulfilling the related gross-up
obligation, upon written notice to such Borrower from the
Administrative Agent (which shall give such notice if, and only
if, so requested by any Lender) the relevant Advances shall be
repaid within 30 days of the date such notice is received by such
Borrower together with accrued interest and any amounts owing
under Section 2.08.
(g) Mitigation. Each Lender shall use its best efforts
(consistent with its internal policies and legal and regulatory
restrictions) to select a jurisdiction for its Applicable Lending
Office or change the jurisdiction of its Applicable Lending
Office, as the case may be, so as to avoid the imposition of any
Taxes or Other Taxes or to eliminate the amount of any such
additional amounts which may thereafter accrue; provided that no
such selection or change of the jurisdiction for its Applicable
Lending Office shall be made if, in the reasonable judgment of
such Lender, such selection or change would be disadvantageous to
such Lender.
Section 2.12. Sharing of Payments, Etc. If any Lender shall
obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off or otherwise) on account of the
Advances made by it in excess of its Pro Rata Share, Revolving
Share, or Term Share, as applicable, of payments on account of
the Advances or Letter of Credit Obligations obtained by all the
Lenders, such Lender shall notify the Administrative Agent and
forthwith purchase from the other Lenders such participations in
the Advances made by them or Letter of Credit Obligations held by
them as shall be necessary to cause such purchasing Lender to
share the excess payment ratably in accordance with the
requirements of this Agreement with each of them; provided,
however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase
from each Lender shall be rescinded and such Lender shall repay
to the purchasing Lender the purchase price to the extent of such
Lender's ratable share (according to the proportion of (a) the
amount of the participation sold by such Lender to the purchasing
Lender as a result of such excess payment to (b) the total amount
of such excess payment) of such recovery, together with an amount
equal to such Lender's ratable share (according to the proportion
of (a) the amount of such Lender's required repayment to the
purchasing Lender to (b) the total amount of all such required
repayments to the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the
total amount so recovered. Each Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to
this Section 2.12 may, to the fullest extent permitted by law,
unless and until rescinded as provided above, exercise all its
rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct
creditor of such Borrower in the amount of such participation.
Section 2.13. Lender Replacement. If any Lender has
notified the Company and the Administrative Agent of its
incurring additional costs under Section 2.09 or has required the
Borrower to make payment for taxes under Section 2.11(a) (other
than payments in respect of Mexican Taxes), then the Company may,
unless such Lender has notified the Company and the
Administrative Agent that the circumstances giving rise to such
notice no longer apply or a Default exists, terminate, in whole
but not in part, the Revolving Commitment of any such Lender
(other than the Administrative Agent) (the "Terminated Lender")
and repay the Advances of such Lender at any time upon five
Business Days prior written notice to the Terminated Lender and
the Administrative Agent (such notice referred to herein as a
"Notice of Termination"). In order to effect the termination of
the Revolving Commitment of the Terminated Lender and the
repayment of such Terminated Lender's Advances, the Company shall
(i) obtain an agreement with one or more other Lenders to
increase their Revolving Commitment or Revolving Commitments and
accept an assignment of the Terminated Lender's Advances or (ii)
request any one or more other Persons otherwise meeting the
requirements of Section 9.03(a) ("Eligible Assignees") to become
parties to this Agreement in place of such Terminated Lender 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 Lender and accept an assignment
of the Terminated Lender's Advances and (iii) pay all amounts due
to the Terminated Lender pursuant to the provisions of Section
2.09 and 2.11(a); provided, however, that such one or more
Eligible Assignees selected by the Company must become parties by
accepting an Assignment and Acceptance (the Lenders or other
Eligible Assignees that agree to accept in whole or in part the
Revolving Commitment of the Terminated Lender and accept an
assignment of the Terminated Lender's Advances being referred to
herein as the "Replacement Lenders"), such that the aggregate
increased or accepted Revolving Commitments of the Replacement
Lenders and Advances assigned to the Replacement Lenders under
clauses (i) and (ii) above equal to the Revolving Commitment and
Advances of the Terminated Lender. The Notice of Termination
shall include the name of the Terminated Lender, the date the
termination will occur (the "Termination Date"), and the
Replacement Lender or Replacement Lenders to which the Terminated
Lender will assign its Revolving Commitment and Advances and, if
there will be more than one Replacement Lender, the portion of
the Terminated Lender's Revolving Commitment and Advances to be
assigned to each Replacement Lender. On the Termination Date,
(i) the Terminated Lender shall by execution and delivery of an
Assignment and Acceptance assign its Revolving Commitment and
Advances to the Replacement Lender or Replacement Lenders (pro
rata, if there is more than one Replacement Lender, in proportion
to the portion of the Terminated Lender's Revolving Commitment
and Advances to be assigned to each Replacement Lender) indicated
in the Notice of Termination and shall assign to the Replacement
Lender or Replacement Lenders all of its rights and obligations
under this Agreement, including, without limitation, each of its
Advances then outstanding and participation interest in Letters
of Credit (if any) then outstanding pro rata at a price equal to
the unpaid principal amount thereon plus interest and fees
accrued and unpaid to the Termination Date, and (ii) the
Replacement Lender or Replacement Lenders will thereupon succeed
to and be substitute in all respects for the Terminated Lender
with like effect as if becoming a Lender pursuant to the terms of
Section 9.03. For each assignment made under this Section 2.13
the Replacement Lender shall pay to the Administrative Agent the
assignment fee provided for in Section 9.03(b). The Company
shall be responsible for payment of all breakage fees associated
with termination and Replacement Lenders, as set forth in Section
2.08.
Section 2.14. Applicable Lending Offices. Subject to
subsection 2.01, each Lender may book its Advances at any
Applicable Lending Office selected by such Lender and may change
its Applicable Lending Office from time to time. All terms of
this Agreement shall apply to any such Applicable Lending Office
and the Advances and Notes issues hereunder shall be deemed held
by each Lender for the benefit of such Applicable Lending Office.
Each Lender may, by written notice to the Administrative Agent
and the Company designate replacement or additional Applicable
Lending Offices through which Advances will be made by it and for
whose account repayments are to be made.
Section 2.15. Letters of Credit.
(a) Issuance. From time-to-time from the Closing Date
until 30 days before the Revolving Credit Maturity Date, at the
request of a Borrower, the Issuing Bank shall, on the terms and
conditions hereinafter set forth, issue, increase, or extend the
expiration date of Letters of Credit for the account of the
Company or any of its Subsidiaries on any Business Day. No
Letter of Credit will be issued, increased, or extended:
(i) if such issuance, increase, or extension would
cause (A) the Letter of Credit Exposure to exceed (B) the
lesser of (1) $75,000,000.00 and (2)(I) the aggregate
Revolving Commitments minus (II) the sum of the aggregate
outstanding principal Amount of all Revolving Advances and
the aggregate outstanding principal amount of the Swingline
Advances;
(ii) unless such Letter of Credit has an expiration
date not later than the earlier of (A) one year after the
date of issuance thereof and (B) five Business Days prior to
the Revolving Credit Maturity Date; provided that, any such
Letter of Credit with a one-year tenor may expressly provide
that it is renewable at the option of the Issuing Bank for
additional one-year periods (which shall in no event extend
beyond the Revolving Credit Maturity Date);
(iii) unless such Letter of Credit is in form and
substance acceptable to the Issuing Bank in its sole
discretion;
(iv) unless such Borrower has delivered to the Issuing
Bank a completed and executed request for issuance of letter
of credit in the form of the attached Exhibit L; and
(v) unless such Letter of Credit is governed by the
Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No.
500, the International Standby Practices (ISP98),
International Chamber of Commerce Publication No. 590, or
any successor to such publication. If the terms of any
letter of credit application referred to in the foregoing
clause (iv) conflicts with the terms of this Agreement, the
terms of this Agreement shall control.
(b) Participations. (i) On the Closing Date, the Issuing
Bank shall be deemed to have sold to each Lender having a
Revolving Commitment and each other Lender having a Revolving
Commitment shall be deemed to have purchased from the Issuing
Bank a participation equal to such Lender's Revolving Share on
such date in the Letter of Credit Obligations with respect to the
Existing Letters of Credit and (ii) upon the date of the issuance
or increase of a Letter of Credit occurring on or after the
Closing Date, the Issuing Bank shall be deemed to have sold to
each other Lender and each other Lender shall have been deemed to
have purchased from the Issuing Bank a participation in the
related Letter of Credit Obligations equal to such Lender's
Revolving Share at such date and such sale and purchase shall
otherwise be in accordance with the terms of this Agreement. The
Issuing Bank shall promptly notify each such participant Lender
by telex, telephone, or telecopy of each Letter of Credit issued
or increased and the actual dollar amount of such Lender's
participation in such Letter of Credit.
(c) Reimbursement. Each Borrower hereby agrees to pay on
demand to the Issuing Bank for the benefit of the Lenders in
respect of each Letter of Credit issued for its account an amount
equal to any amount paid by the Issuing Bank under or in respect
of such Letter of Credit. In the event the Issuing Bank makes a
payment pursuant to a request for draw presented under a Letter
of Credit and such payment is not promptly reimbursed by the
relevant Borrower upon demand, the Issuing Bank shall give notice
of such failure to pay to the Administrative Agent and the
applicable Lenders, and each Lender having a Revolving Commitment
shall promptly reimburse the Issuing Bank for such Lender's
Revolving Share of such payment, and such reimbursement shall be
deemed for all purposes of this Agreement to constitute a
Borrowing comprised of Base Rate Advances to such Borrower from
such Lender. If such reimbursement is not made by any Lender to
the Issuing Bank on the same day on which the Issuing Bank shall
have made payment on any such draw, such Lender shall pay
interest thereon to the Issuing Bank at a rate per annum equal to
the Federal Funds Effective Rate. Each Borrower hereby
unconditionally and irrevocably authorizes, empowers, and directs
the Administrative Agent and the Lenders to record and otherwise
treat such payment under a Letter of Credit not immediately
reimbursed by Borrower as a Borrowing comprised of Base Rate
Advances.
(d) Obligations Unconditional. The obligations of each
Borrower under this Agreement in respect of each Letter of Credit
shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all
circumstances, notwithstanding the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit Documents;
(ii) any amendment or waiver of or any consent to
departure from any Letter of Credit Documents;
(iii) the existence of any claim, set-off, defense or
other right which such Borrower may have at any time against
any beneficiary or transferee of such Letter of Credit (or
any Persons for whom any such beneficiary or any such
transferee may be acting), the Issuing Bank, any Lender or
any other person or entity, whether in connection with this
Agreement, the transactions contemplated in this Agreement
or in any Letter of Credit Documents or any unrelated
transaction;
(iv) any statement or any other document presented
under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
to the extent the Issuing Bank would not be liable therefor
pursuant to the following paragraph (f);
(v) payment by the Issuing Bank under such Letter of
Credit against presentation of a draft or certificate which
does not comply with the terms of such Letter of Credit; or
(vi) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing;
provided, however, that nothing contained in this paragraph (d)
shall be deemed to constitute a waiver of any remedies of a
Borrower in connection with the Letters of Credit.
(e) Prepayments of Letters of Credit. In the event that
any Letters of Credit shall be outstanding or shall be drawn and
not reimbursed after the applicable Revolving Credit Maturity
Date, the Company shall pay to the Administrative Agent an amount
equal to the Letter of Credit Exposure allocable to such Letters
of Credit to be held in the Cash Collateral Account and applied
in accordance with paragraph (g) below.
(f) Liability of Issuing Bank. Each Borrower assumes all
risks of the acts or omissions of any beneficiary or transferee
of any Letter of Credit with respect to its use of such Letter of
Credit. Neither the Issuing Bank nor any of its officers or
directors shall be liable or responsible for:
(i) the use which may be made of any Letter of Credit
or any acts or omissions of any beneficiary or transferee in
connection therewith;
(ii) the validity, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such
documents should prove to be in any or all respects invalid,
insufficient, fraudulent or forged;
(iii) payment by the Issuing Bank against presentation
of documents which do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any
reference or adequate reference to the relevant Letter of
Credit; or
(iv) any other circumstances whatsoever in making or
failing to make payment under any Letter of Credit
(including the Issuing Bank's own negligence),
except that such Borrower shall have a claim against the Issuing
Bank, and the Issuing Bank shall be liable to, and shall promptly
pay to, such Borrower, to the extent of any direct, as opposed to
consequential, damages suffered by such Borrower which such
Borrower proves were caused by (A) the Issuing Bank's willful
misconduct or gross negligence in determining whether documents
presented under a Letter of Credit comply with the terms of such
Letter of Credit or (B) the Issuing Bank's willful failure to
make lawful payment under any Letter of Credit after the
presentation to it of a draft and certificate strictly complying
with the terms and conditions of such Letter of Credit.
In furtherance and not in limitation of the foregoing, the
Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(g) Cash Collateral Account.
(i) If a Borrower is required to deposit funds in the
Cash Collateral Account pursuant to Sections 2.15(e),
7.02(b) or 7.03(b), then such Borrower and the
Administrative Agent shall establish the Cash Collateral
Account and such Borrower shall execute any documents and
agreements, including the Administrative Agent's standard
form assignment of deposit accounts, that the Administrative
Agent requests in connection therewith to establish the Cash
Collateral Account and grant the Administrative Agent an
Acceptable Security Interest in such account and the funds
therein. The Company hereby pledges to the Administrative
Agent and grants the Administrative Agent a security
interest in the Cash Collateral Account, whenever
established, all funds held in the Cash Collateral Account
from time to time, and all proceeds thereof as security for
the payment of the Obligations.
(ii) Funds held in the Cash Collateral Account shall be
held as cash collateral for obligations with respect to
Letters of Credit and promptly applied by the Administrative
Agent at the request of the Issuing Bank to any
reimbursement or other obligations under Letters of Credit
that exist or occur. To the extent that any surplus funds
are held in the Cash Collateral Account above the Letter of
Credit Exposure during the existence of an Event of Default
the Administrative Agent may (A) hold such surplus funds in
the Cash Collateral Account as cash collateral for the
Obligations or (B) apply such surplus funds to any
Obligations in any manner directed by the Majority Lenders.
If no Event of Default exists, the Administrative Agent
shall release to the Company at the Company's written
request any funds held in the Cash Collateral Account above
the amounts required by Section 2.15(e) or otherwise.
(iii) Funds held in the Cash Collateral Account shall be
invested in Liquid Investments maintained with, and under
the sole dominion and control of, the Administrative Agent
or in another investment if mutually agreed upon by the
Borrower and the Administrative Agent, but the
Administrative Agent shall have no other obligation to make
any other investment of the funds therein. The
Administrative Agent shall exercise reasonable care in the
custody and preservation of any funds held in the Cash
Collateral Account and shall be deemed to have exercised
such care if such funds are accorded treatment substantially
equivalent to that which the Administrative Agent accords
its own property, it being understood that the
Administrative Agent shall not have any responsibility for
taking any necessary steps to preserve rights against any
parties with respect to any such funds.
ARTICLE III
CONDITIONS OF LENDING
Section 3.01. Conditions Precedent to Initial Advances.
The obligation of each Lender to make its initial Advances as
part of the initial Borrowings or the Issuing Bank to issue the
initial Letters of Credit is subject to the conditions precedent
that:
(a) Documentation. On or before the day on which the
initial Borrowing is made or the initial Letters of Credit are
issued, the Administrative Agent and the Lenders shall have
received the following, each dated on or before such day, duly
executed by all the parties thereto, in form and substance
satisfactory to the Administrative Agent and the Lenders:
(i) this Agreement and all attached Exhibits and
Schedules;
(ii) (A) a Revolving Note by the Company payable to the
order of each Lender with a Revolving Commitment in the
amount of its Revolving Commitment; (B) a Revolving Note by
the Mexican Borrower payable to the order of each Lender
with a Revolving Commitment in the amount of 24% of its
Revolving Commitment; and (C) a Term Note by the Company
payable to the order of each Lender with a Term Commitment
in the amount of its Term Commitment;
(iii) the Swingline Note executed by the Company;
(iv) the Guaranties described in Part I of Schedule
3.01(a)(iv);
(v) the Pledge Agreements described in Schedule
3.01(a)(v), in each case together with stock certificates,
stock powers executed in blank, UCC-1 financing statements,
and any other documents, agreements, or instruments
necessary to create an Acceptable Security Interest in such
equity interests;
(vi) the Security Agreements executed by each Material
Domestic Subsidiaries (other than Pipelines, Inc.) granting
to the Administrative Agent for the benefit of the Lenders a
Lien in substantially all of the personal property of such
Material Domestic Subsidiaries (other than personal property
not subject to the Uniform Commercial Code and the MARAD
Collateral) to secure the Obligations, in each case together
with UCC-1 financing statements and any other documents,
agreements, or instruments necessary to create an Acceptable
Security Interest in such pledged collateral;
(vii) certificates from the appropriate Governmental
Authority certifying as to the good standing, existence and
authority of each of the Loan Parties in all jurisdictions
where reasonably required by the Administrative Agent;
(viii) certificates from a Responsible Officer of
the Company stating that (A) all representations and
warranties of the Loan Parties set forth in the Credit
Documents are true and correct in all material respects;
(B) no Default has occurred and is continuing; and (C) the
conditions in this Section 3.01 have been met;
(ix) copies, certified as of the Closing Date by a
Responsible Officer of the appropriate Person of (A) the
resolutions of the Board of Directors of each Loan Party
approving the Credit Documents to which it is a party and
the transactions contemplated thereby, (B) the articles or
certificate (as applicable) of incorporation or other
charter document and bylaws of each Loan Party, and (C) all
other documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this
Agreement, the Notes, and the other Credit Documents;
(x) certificates of a Responsible Officer of each of
the Loan Parties certifying the names and true signatures of
officers of the Loan Parties authorized to sign this
Agreement, the Notes, Notices of Borrowing and the other
Credit Documents to which such Loan Parties are a party;
(xi) certificates of insurance from an insurance agent
or insurer evidencing compliance with the requirements of
Section 5.02 and the Security Documents;
(xii) a favorable opinion of Vinson & Elkins, L.L.P.,
counsel to the Company, substantially in the form of the
attached Exhibit M;
(xiii) a certificate from the Company's chief
financial officer addressed to the Administrative Agent and
each of the Lenders, which shall be in form and in substance
reasonably satisfactory to the Administrative Agent and
shall state that, subject to the qualifications stated
therein, after giving effect to the initial Borrowings
contemplated under this Agreement and the other Credit
Documents, (i) on a pro forma basis, the fair value and
present fair saleable value of the Company's and each of its
Material Subsidiaries' assets would exceed its stated
liabilities and identified Contingent Obligations; (ii) the
Company and each of its Material Subsidiaries should be able
to pay their debts as they become absolute and mature; and
(iii) the Company and each of its Material Subsidiaries will
have sufficient capital to engage in its business as
management has indicated it is now conducted; and
(xiv) such other documents, governmental certificates
and agreements as the Administrative Agent and the Lender
may reasonably request.
(b) Due Diligence. The Administrative Agent and the
Lenders shall have completed satisfactory due diligence review of
the assets, liabilities, business, operations and condition
(financial or otherwise) of the Company and its Material
Subsidiaries, including, but not limited, to a review of their
Contingent Obligations, product liabilities, intellectual
property, Year 2000 Issues, Year 2000 Program, and all legal,
financial, accounting, governmental, tax and regulatory matters
of the proposed financing.
(c) Payment of Fees. On the Closing Date, the Company
shall have paid the fees required to be paid to the
Administrative Agent, the Arranger, and the Lenders and all costs
and expenses which have been invoiced and are payable pursuant to
Section 10.04.
(d) Termination of Existing Bank Facilities. The
Administrative Agent and the Lenders shall have received
sufficient evidence indicating that contemporaneously with the
making of the initial Advances, the obligations of the Company
and its Subsidiaries under the Existing Bank Facilities will be
repaid with the proceeds of such Advances (or, in the case of
outstanding letters of credit, supported by Letters of Credit
issued hereunder) and thereafter all obligations of the Company
and its lenders under the Existing Bank Facilities shall be
terminated (including, without limitation, any obligations of any
Subsidiary of the Company in respect of guaranties, security
agreements executed in connection with such Existing Bank
Facilities but excluding any obligations which expressly survive
the repayment of the amounts owing under the Existing Bank
Facilities).
(e) Delivery of Financial Statements. The Administrative
Agent and the Lenders shall have received true and correct copies
of the Financial Statements and such other financial information
as the Administrative Agent may reasonably request.
(f) Projections. The Administrative Agent shall have
received (i) an estimated consolidated balance sheet of the
Company and its Subsidiaries as of the Closing Date giving effect
to the initial Borrowings contemplated hereunder, which shall not
be materially less favorable in the Administrative Agent's
reasonable judgment than the five year projections dated December
1999 and the estimated balance sheet previously provided to the
Administrative Agent and the Banks (the "Projections"), together
with such other financial information as the Administrative Agent
may reasonably request to confirm the tax, legal and business
assumptions made in the Projections. The Projections shall be
prepared in accordance with GAAP, subject to the omission of
notes and certain other matters described therein and must
demonstrate, in the reasonable judgment of the Administrative
Agent, together will all other information then available to the
Administrative Agent, that the Company can repay its Debt and
satisfy its other obligations as and when due, and can comply
with the financial covenants required by Section 6.10 through
6.12 of this Agreement.
(g) Appraisals. The Administrative Agent shall have
received satisfactory appraisals (on a fair market value basis)
of the Initial Mortgaged Vessels of the Company. Such appraisals
shall be in form and substance reasonably satisfactory to the
Administrative Agent and shall be issued by firms reasonably
acceptable to the Administrative Agent.
(h) Security Documents. The Administrative Agent shall
have received all appropriate evidence required by the
Administrative Agent in its sole discretion necessary to
determine that arrangements have been made for the Administrative
Agent for the benefit of Lenders to have an Acceptable Security
Interest in the Collateral required under Section 3.01,
including, without limitation, (i) lien, tax and judgment
searches conducted on the Company and the other Loan Parties
reflecting no Liens other than Permitted Liens against any of the
Collateral as to which perfection of a Lien is accomplished by
the filing of a financing statement other than in favor of the
Administrative Agent for the benefit of the Lenders and (ii) lien
releases with respect to any Collateral currently subject to a
Lien other than Permitted Liens.
(i) No Default. No Default shall have occurred and be
continuing or would result from such Advance or from the
application of the proceeds therefrom or from the issuance of the
initial Letters of Credit.
(j) Representations and Warranties. The representations
and warranties contained in Article IV and in each other Credit
Document shall be true and correct before and after giving effect
to (i) the initial Advances and to the application of the
proceeds from such Advances and (ii) the issuance of the initial
Letters of Credit, in each case from date of such Advance or
issuance, as applicable, as though made on and as of such date.
(k) No Material Adverse Change. No event or events which,
individually or in the aggregate, has had or is reasonably likely
to cause a Material Adverse Change shall have occurred.
(l) No Proceeding or Litigation; No Injunctive Relief. No
action, suit, investigation or other proceeding (including,
without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority
shall be threatened or pending and no preliminary or permanent
injunction or order by a state or federal court shall have been
entered in connection with this Agreement, any transaction
contemplated hereby or which, in any case, in the reasonable
judgment of the Administrative Agent, could reasonably be
expected to cause a Material Adverse Change.
(m) Consents, Licenses, Approvals, etc. The Administrative
Agent shall have received true copies (certified to be such by
the Company or other appropriate party) of all consents, licenses
and approvals required from Governmental Authorities in
accordance with applicable law in connection with the execution,
delivery, performance, validity and enforceability of this
Agreement and the other Credit Documents. In addition, the
Company and Subsidiaries shall have all material consents,
licenses and approvals required in connection with the continued
operation of the Company and its Subsidiaries, and such approvals
shall be in full force and effect.
(n) Environmental Reports. The Administrative Agent shall
have received copies of all of the environmental reports
pertaining to the Company that are in the Company's possession
and shall be reasonably satisfied with the contents thereof and
the Company's response plans with respect thereto.
(o) Notice of Borrowing. The Administrative Agent shall
have received a Notice of Borrowing from the Borrowers with
appropriate insertions, and, if applicable, an application for
request for issuance of a Letter of Credit in the form of Exhibit
L, in each case executed by a duly authorized Responsible Officer
of the applicable Borrower.
(p) Revolving Commitment Availability. Immediately after
giving effect to the initial Borrowing and the transactions
contemplated hereby, there shall be at least $50,000,000.00 of
unused availability under the Revolving Commitments.
(q) Additional Information. The Administrative Agent shall
have received such additional information which the
Administrative Agent shall have reasonably requested, and such
information shall be reasonably satisfactory in form and
substance to the Administrative Agent and its counsel.
Section 3.02. Conditions Precedent to Each Borrowing. The
obligation of each Lender to make an Advance on the occasion of
each Borrowing (including the initial Borrowing) or Convert to or
Continue a Eurodollar Advance and the obligation of the Issuing
Bank to issue, extend or increase Letters of Credit shall be
subject to the further conditions precedent that on the Borrowing
Date, the date of Continuation or Conversion, or issuance,
extension or increase date of such Letters of Credit, the
following statements shall be true (and each of the giving of the
applicable Notice of Borrowing or Notice of Conversion or
Continuation and the acceptance by a Borrower of the proceeds of
such Advance or the request for the issuance, extension or
increase of a Letter of Credit shall constitute a representation
and warranty by such Borrower that on the date of such Advance,
the date of such Conversion or Continuation, or the date of such
issuance, extension or increase such statements are true):
(a) the representations and warranties contained in
Article IV and in each other Credit Document are true and correct
on and as of the date of such Advance, Continuation or
Conversion, or the issuance, extension or increase of such Letter
of Credit before and after giving effect to such Advance and to
the application of the proceeds from such Advance, such
Continuation or Conversion, or to the issuance, extension or
increase of such Letter of Credit, as applicable, as though made
on, and as of such date; and
(b) no Default has occurred and is continuing or would
result from such Advance or from the application of the proceeds
therefrom or from such issuance, extension or increase of such
Letter of Credit.
Section 3.03. Determinations Under Section 3.01. For
purposes of determining compliance with the conditions specified
in Section 3.01, each Lender shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to the Lenders unless an officer
of the Administrative Agent responsible for the transactions
contemplated by the Credit Documents shall have received written
notice from such Lender prior to the Borrowings hereunder
specifying its objection thereto and such Lender shall not have
made available to the Administrative Agent such Lender's ratable
portion of such Borrowings.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each Borrower jointly and severally represents and warrants as
follows:
Section 4.01. Corporate Existence; Subsidiaries. Each of
the Company and its Subsidiaries is duly organized, validly
existing, and in good standing under the laws of the jurisdiction
of its incorporation or formation and in good standing and
qualified to do business in each jurisdiction where its ownership
or lease of Property or conduct of its business requires such
qualification and where a failure to be qualified could
reasonably be expected to cause a Material Adverse Change.
Section 4.02. Corporate Power. The execution, delivery,
and performance by the Company and each of the other Loan Parties
of this Agreement, the Notes, the other Credit Documents to which
each is a party and the consummation of the transactions
contemplated hereby and thereby (a) are within such Loan Party's
corporate powers, (b) have been duly authorized by all necessary
corporate action, (c) do not contravene (i) such Loan Party's
articles or certificate (as applicable) of incorporation or
bylaws or (ii) any law or any contractual restriction binding on
or affecting such Loan Party which could reasonably be expected
to cause a Material Adverse Change, and (d) will not result in or
require the creation or imposition of any Lien prohibited by this
Agreement. At the time of each Advance or the issuance,
extension or increase of each Letter of Credit, such Advance and
the use of the proceeds of such Advance or the issuance,
extension or increase of such Letter of Credit will be within the
applicable Borrower's corporate powers, will have been duly
authorized by all necessary corporate action, will not contravene
(i) such Borrower's articles or certificate (as applicable) of
incorporation or other charter document or bylaws or (ii) any law
or any contractual restriction binding on or affecting such
Borrower which could reasonably be expected to cause a Material
Adverse Change and will not result in or require the creation or
imposition of any Lien prohibited by this Agreement.
Section 4.03. Authorization and Approvals. No
authorization or approval or other action by, and no notice to or
filing with, any Governmental Authority is required for the due
execution, delivery and performance by the Company and each of
the other Loan Parties of this Agreement, the Notes, the other
Credit Documents to which each is a party or the consummation of
the transactions contemplated thereby. At the time of each
Advance or the issuance, extension or increase of each Letter of
Credit, no authorization or approval or other action by, and no
notice to or filing with, any Governmental Authority will be
required for such Advance or the use of the proceeds of such
Advance or the issuance, extension or increase of such Letter of
Credit.
Section 4.04. Enforceable Obligations. This Agreement, the
Notes, and the other Credit Documents to which the Company and
the other Loan Parties are a party have been duly executed and
delivered by the Company or such Loan Parties, as applicable.
Each Credit Document to which the Company or any of the other
Loan Parties is a party is the legal, valid, and binding
obligation of the Company and each such Loan Party and is
enforceable against the Company and each such Loan Party in
accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization,
moratorium, or similar law affecting creditors' rights generally
and by general principles of equity (whether considered in a
proceeding at law or in equity).
Section 4.05. Financial Statements.
(a) The Company has delivered to the Administrative Agent
the Financial Statements, and the Financial Statements are
accurate and complete in all material respects and present fairly
the consolidated financial condition of the Company as of their
respective dates and for their respective periods in accordance
with GAAP. As of the date of the Financial Statements, there
were no material Contingent Obligations, liabilities for taxes,
unusual forward or long-term commitments, or unrealized or
anticipated losses of the Company or any of its Subsidiaries,
except as disclosed therein and adequate reserves for such items
have been made in accordance with GAAP.
(b) Since December 31, 1998, no Material Adverse Change has
occurred.
Section 4.06. True and Complete Disclosure. All factual
information (whether delivered before or after the Closing Date)
furnished by or on behalf of the Company and its Subsidiaries in
writing to the Administrative Agent and the Lenders for purposes
of or in connection with this Agreement, any other Credit
Document or any transaction contemplated hereby or thereby is
true and accurate in all material respects on the date as of
which such information is dated or certified and not incomplete
by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time.
Section 4.07. Litigation. There is no pending or
threatened action or proceeding affecting the Company or any of
its Subsidiaries before any court, Governmental Authority or
arbitrator, which could reasonably be expected to cause a
Material Adverse Change or which purports to affect the legality,
validity, binding effect or enforceability of this Agreement, any
Note, or any other Credit Document. Additionally, there is no
pending or threatened action or proceeding instituted against the
Company or any of its Subsidiaries which seeks to adjudicate the
Company or any of its Subsidiaries as bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or
other similar official for it or for any substantial part of its
Property.
Section 4.08. Use of Proceeds. The proceeds of the
Advances will be used by the Borrowers and their Subsidiaries for
the purposes described in Section 5.08. The Company and its
Subsidiaries are not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation U). No proceeds of any Advance will be
used to purchase or carry any margin stock in violation of
Regulation T, U or X.
Section 4.09. Investment Company Act. Neither the Company
nor any of its Subsidiaries is an "investment company" or a
company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Section 4.10. Public Utility Holding Company Act. Neither
the Company nor any of its Subsidiaries is a "holding company",
or a "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", as such terms are
used in the Public Utility Holding Company Act of 1935, as
amended.
Section 4.11. Taxes. All federal, state, local and foreign
tax returns, reports and statements required to be filed (after
giving effect to any extension granted in the time for filing) by
the Company or any member of the Controlled Group (hereafter
collectively called the "Tax Group") have been filed with the
appropriate governmental agencies in all jurisdictions in which
such returns, reports and statements are required to be filed
(except where any obligation to so file is being contested in
good faith and by appropriate proceedings and after adequate
reserves have been provided therefor), and all taxes (which are
material in amount) and other impositions due and payable have
been timely paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for non-
payment thereof except where contested in good faith and by
appropriate proceedings and after providing adequate reserves
therefor. None of the Company nor any member of the Tax Group
has given, or been requested to give, a waiver of the statute of
limitations relating to the payment of any federal, state, local
or foreign taxes or other impositions which are material in
amount. None of the Property owned by the Company or any other
member of the Tax Group is Property which the Company or any
member of the Tax Group is required to treat as being owned by
any other Person pursuant to the provisions of Section 168(f)(8)
of the Code. Proper and accurate amounts have been withheld by
the Company and all other members of the Tax Group from their
employees for all periods to comply in all material respects with
the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law. Timely
payment of all material sales and use taxes required by
applicable law have been made by the Company and all other
members of the Tax Group.
Section 4.12. Pension Plans. No Termination Event has
occurred with respect to any Plan, and, except for any failure
that could not reasonably be expected to cause a Material Adverse
Change, each Plan has complied with and been administered in all
material respects in accordance with applicable provisions of
ERISA and the Code. No "accumulated funding deficiency" (as
defined in Section 302 of ERISA) has occurred with respect to any
Plan and there has been no excise tax imposed with respect to any
Plan under Section 4971 of the Code. The present value of all
benefits vested under each Plan (based on the assumptions used to
fund such Plan) did not, as of the last annual valuation date
applicable thereto, exceed the value of the assets of such Plan
allocable to such vested benefits in any amount that would
reasonably be expected to cause a Material Adverse Change. None
of the Company nor any member of the Controlled Group has had a
complete or partial withdrawal from any Multiemployer Plan for
which there is any unpaid withdrawal liability that could
reasonably be expected to cause a Material Adverse Change. As of
the most recent valuation date applicable thereto, none of the
Company nor any member of the Controlled Group has received
notice that any Multiemployer Plan is insolvent or in
reorganization. Based upon GAAP existing as of the Closing Date
and current factual circumstances, the Company has no reason to
believe that the annual cost during the term of this Agreement to
the Company or any of its Subsidiaries for post-retirement
benefits to be provided to the current and former employees of
the Company or any of its Subsidiaries under welfare benefit
plans (as defined in Section 3(1) of ERISA) could, in the
aggregate, reasonably be expected to cause a Material Adverse
Change.
Section 4.13. Condition of Property; Casualties. The
material Properties used or to be used in the continuing
operations of the Company and each of its Subsidiaries are (a) in
substantially the same or better repair, working order, and
condition as such Properties were as of December 31, 1998, normal
wear and tear excepted and (b) in such repair, working order and
condition to permit the Company and its Subsidiaries to operate
such Properties in substantially the same or better manner as
operated as of December 31, 1998. Since the Closing Date,
neither the business nor the material Properties of the Company
and each of its Subsidiaries has been affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking
of Property or cancellation of contracts, permits or concessions
by a Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy, which effect would reasonably
be expected to cause a Material Adverse Change.
Section 4.14. Insurance. The Company and its Subsidiaries
are insured by reputable insurers in respect of such of their
respective Properties, in such amounts and against such risks as
is customarily maintained by other Persons of similar size
engaged in similar businesses or, self-insure to the extent that
is customary for Persons of similar size engaged in similar
businesses.
Section 4.15. No Burdensome Restrictions; No Defaults.
(a) Neither the Company nor any of its Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or
other agreement or instrument or subject to any charter or
corporate restriction or provision of applicable law or
governmental regulation which would reasonably be expected to
cause a Material Adverse Change. Neither the Company nor any of
its Subsidiaries is in default under or with respect to any
contract, agreement, lease or other instrument to which the
Company or such Subsidiary is a party and which would reasonably
be expected to cause a Material Adverse Change. Neither the
Company nor any of its Subsidiaries has received any notice of
default under any contract, agreement, lease or other instrument
to which the Company or its Subsidiaries is a party which is
continuing or which, if not cured, would reasonably be expected
to cause a Material Adverse Change.
(b) No Default has occurred and is continuing.
Section 4.16. Environmental Condition. Except as disclosed
on the attached Schedule 4.16:
(a) The Company and its Subsidiaries (i) have obtained all
material Environmental Permits necessary for the ownership and
operation of their respective material Properties and the conduct
of their respective businesses; (ii) have been and are in
compliance with all material terms and conditions of such
Environmental Permits and with all other material requirements of
applicable Environmental Laws; (iii) have not received notice of
any material violation or alleged violation of any Environmental
Law or Environmental Permit by the Company or any of its
Subsidiaries; and (iv) are not subject to any material actual or
contingent Environmental Claim.
(b) (i) None of the present or previously owned or operated
Properties of the Company or of any of its present or former
Subsidiaries, wherever located, (A) has been placed on or
proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability
Information System list, the RCRA Corrective Action List, or
their state or local analogs, nor has the Company been otherwise
notified of the designation, listing or identification of any
Property of the Company or any of its present or former
Subsidiaries as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, corrective action, or
other response activity under any Environmental Laws (except as
such activities may be required by permit conditions); (B) is
subject to a Lien, arising under or in connection with any
Environmental Laws, that attaches to any revenues or to any
Property owned or operated by the Company or any of its present
or former Subsidiaries, wherever located; or (C) has been the
site of any Release of Hazardous Substances or Hazardous Wastes
from present or past operations which has caused at the site or
at any third-party site any condition that has resulted in or
would reasonably be expected to result in the need for Response
that would cause a Material Adverse Change and (ii) none of the
Company or any of their present or former Subsidiaries has
generated or transported or has caused to be generated or
transported Hazardous Substances to any third party site which
would reasonably be expected to result in the need for Response
that would cause a Material Adverse Change.
Section 4.17. Title to Property, Etc.
(a) Each of the Company and its Subsidiaries has good and
marketable title in all its Property, except where the failure to
have such good and marketable title would not reasonably be
expected to cause a Material Adverse Change, and none of such
Property is subject to any Lien, except Permitted Liens.
(b) Schedule 5.13 sets forth all the Material Vessels of
the Company and its Subsidiaries on the Closing Date and
identifies the registered owner, flag, official or patent number,
as the case may be, on the Closing Date.
Section 4.18. Security Interests. On the Closing Date, all
governmental actions and all other filings, recordings,
registrations, third party consents, and other actions which are
necessary to create and perfect the Liens provided for in the
Security Documents executed on the Closing Date will have been
made, obtained, and taken in all relevant jurisdictions, or
satisfactory arrangements will have been made for all
governmental actions and all other filings, recordings,
registrations, third party consents, and other actions which are
necessary to create and perfect the Liens provided for in such
Security Documents to be made, obtained, or taken in all relevant
jurisdictions. Upon the filing of the Security Documents
referred to in this Section 4.18, each of the Security Documents
executed on the Closing Date creates, as security for the
Obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and Lien on all of the
Collateral subject thereto, to the extent perfection of a
security interest or Lien is governed by Article 9 of the UCC (as
defined in the applicable Security Documents) and subject to no
other Liens (other than Permitted Liens) in favor of the
Administrative Agent for the ratable benefit of the
Administrative Agent and the Lenders. No filings or recordings
are required in order to perfect the security interests created
under any Security Document except for filings or recordings
required in connection with any such Security Document which
shall have been made upon or prior to (or are the subject of
arrangements, satisfactory to the Administrative Agent, for
filing on or promptly after the date of) the execution and
delivery thereof.
Section 4.19. Subsidiaries; Corporate Structure. The
Subsidiaries of the Company listed on Schedule 4.19 constitute
all of the Subsidiaries of the Company on the Closing Date.
Schedule 4.19 correctly lists the names, ownership, jurisdictions
of incorporation or formation of each of the Company's
Subsidiaries as of the Closing Date.
Section 4.20. Year 2000 Compliance. The Company has
(a) initiated a review and assessment of all Year 2000 Issues
within its and each of its Subsidiaries' business and operations,
(b) developed a program for remediating the Year 2000 Issues (a
"Year 2000 Program") on a timely basis, and (c) to date,
implemented that Year 2000 Program in accordance with its
timetable. The Company reasonably believes that all of its
computer applications that are material to its or any of its
Subsidiaries' business and operations will be able to perform
adequately all date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "Year 2000 Compliant") prior
to December 31, 1999, except to the extent that a failure to do
so would not reasonably be expected to cause a Material Adverse
Change.
Section 4.21. Citizenship. Each Loan Party which owns a
Material Vessel is qualified to own and operate such Material
Vessel under the laws of the jurisdiction in which any such
Material Vessel is flagged.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as the Notes or any amount under any Credit Document
shall remain unpaid, any Lender shall have any Commitment
hereunder, or there shall exist any Letter of Credit Exposure,
each Borrower agrees, unless the Majority Lenders otherwise
consent in writing, to comply with the following covenants.
Section 5.01. Compliance with Laws, Etc. Each of the
Company and its Subsidiaries will comply with all Legal
Requirements except where the failure to so comply could not
reasonably be expected to cause a Material Adverse Change.
Without limiting the generality and coverage of the foregoing,
each of the Company and its Subsidiaries shall comply with all
applicable Environmental Laws, and all laws, regulations, or
directives with respect to equal employment opportunity and
employee safety in all jurisdictions in which the Company and its
Subsidiaries do business except where the failure to so comply
could not reasonably be expected to cause a Material Adverse
Change.
Section 5.02. Maintenance of Insurance.
(a) Each of the Company and its Subsidiaries will maintain
insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risks as are
customarily carried by companies engaged in similar businesses
and owning similar Properties in the same general areas in which
the Company and its Subsidiaries operate. In addition, the
Company and its Subsidiaries shall comply with all requirements
regarding insurance contained in the Security Documents.
(b) If a Loan Party who owns a Mortgaged Vessel affected by
a Casualty Event that results in a Total Loss or a Material
Partial Loss shall have made all necessary repairs and
replacements to the Mortgaged Vessel affected by such Total Loss
or Material Partial Loss within six months (or such longer period
as reasonably may be required, not to exceed one year) following
such Total Loss or Material Partial Loss then, so long as no
Event of Default shall have occurred and be continuing, all
insurance proceeds and proceeds from condemnation received by
such Loan Party or the Administrative Agent as a result of such
Casualty Event shall be applied in payment for all necessary
repairs and replacement to the Mortgaged Vessel affected by such
Casualty Event or, to the extent the costs of such repairs and
replacements shall have been paid by a Loan Party, to reimburse
such Person. If an Event of Default exists or if repairs and
replacements are not made as required in the preceding sentence,
all proceeds of insurance or condemnation in connection with a
Casualty Event received by a Loan Party or the Administrative
Agent as a result of such Casualty Event shall be applied to
repay the Obligations as required by Section 2.07(c)(ii).
Section 5.03. Preservation of Corporate Existence, Etc.
Except as permitted by Section 6.03, each of the Company and each
of its Subsidiaries will preserve and maintain its corporate
existence, rights, franchises and privileges in the jurisdiction
of its formation, and qualify and remain qualified in each
jurisdiction in which qualification is necessary or desirable in
view of its business and operations or the ownership of its
Properties and where failure to qualify could reasonably be
expected to cause a Material Adverse Change.
Section 5.04. Payment of Taxes, Etc. Each of the Company
and each of its Subsidiaries will pay and discharge before the
same shall become delinquent, (a) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income
or profits or Property that are material in amount, prior to the
date on which penalties attach thereto and (b) all lawful claims
of Governmental Authorities that are material in amount which, if
unpaid, might by law become a Lien upon its Property; provided,
however, that the Company and its Subsidiaries shall not be
required to pay or discharge any such tax, assessment, charge,
levy, or claim which is being contested in good faith and by
appropriate proceedings, and with respect to which reserves, if
required in conformity with GAAP, have been provided.
Section 5.05. Reporting Requirements. The Company will
furnish to the Administrative Agent for distribution to the
Lenders (with sufficient copies for each Lender to receive a copy
from the Administrative Agent):
(a) Defaults. As soon as possible and in any event within
five Business Days after the occurrence of a Default becomes
known to a Responsible Officer of a Borrower which is continuing
on the date of such statement, a statement of a Responsible
Officer of such Borrower setting forth the details of such
Default and the actions which such Borrower has taken and
proposes to take with respect thereto;
(b) Quarterly Financials. As soon as available and in any
event not later than 60 days after the end of each of the first
three fiscal quarters of each fiscal year of the Company, the
consolidated balance sheet of the Company, as of the end of such
quarter and the consolidated statements of operations, and cash
flows of the Company for the periods then ended and for the
period commencing at the end of the previous year and ending with
the end of such fiscal quarter, all in reasonable detail and duly
certified with respect to such statements (subject to year-end
audit adjustments) by an authorized financial officer of the
Company as having been prepared in accordance with GAAP;
(c) Audited Annual Financials. As soon as available and in
any event not later than 105 days after the end of each fiscal
year of the Company, copies of the annual audited financial
statements for such year for the Company, including therein the
consolidated balance sheet of the Company as of the end of such
fiscal year and consolidated statements of operations, changes in
shareholders' equity and cash flows for such fiscal year, in each
case certified by independent certified public accountants of
nationally recognized standing together with a certificate of
such accounting firm to the Administrative Agent and the Lenders
stating that, in the course of the regular audit of the business
of the Company, which audit was conducted by such accounting firm
in accordance with generally accepted auditing standards, such
accounting firm has obtained no knowledge that a Default has
occurred and is continuing, or if, in the opinion of such
accounting firm, a Default has occurred and is continuing, a
statement as to the nature thereof;
(d) Compliance Certificates. (i) Within 60 days of each
fiscal quarter end of the Company for the first three fiscal
quarters of each fiscal year of the Company and (ii) within 105
days of each fiscal year end of the Company, a Compliance
Certificate for such fiscal quarter or fiscal year then ended
indicating compliance with Sections 6.10 through 6.13;
(e) Other Creditors. The Company shall provide promptly
and in any event within five Business Days after the giving or
receipt thereof, copies of any material notices, information, and
documents given or received by any Loan Party pursuant to the
terms of any indenture, loan agreement, credit agreement, or
similar agreement relating to Debt of $5,000,000.00 or more;
(f) Securities Law Filings. Promptly and in any event
within 15 days after the sending or filing thereof, copies of all
proxy material, reports and other information which the Company
or any of its Subsidiaries files with the SEC;
(g) Termination Events. As soon as possible and in any
event (i) within 30 days after the Company or any of its
Subsidiaries knows or has reason to know that any Termination
Event described in clause (a) of the definition of Termination
Event with respect to any Plan has occurred, and (ii) within 10
days after the Company or its Subsidiaries knows or has reason to
know that any other Termination Event with respect to any Plan
has occurred, a statement of a senior financial officer of the
Company or such Subsidiary describing such Termination Event and
the action, if any, which the Company or such Subsidiary proposes
to take with respect thereto;
(h) Termination of Plans. Promptly and in any event within
ten Business Days after receipt thereof by the Company or any
member of the Controlled Group from the PBGC, copies of each
notice received by the Company or any such member of the
Controlled Group of the PBGC's intention to terminate any Plan or
to have a trustee appointed to administer any Plan;
(i) Other ERISA Notices. Promptly and in any event within
five Business Days after receipt thereof by the Company or any
member of the Controlled Group from a Multiemployer Plan sponsor,
a copy of each notice received by the Company or any member of
the Controlled Group concerning the imposition of withdrawal
liability pursuant to Section 4202 of ERISA in an amount that
could reasonably be expected to cause a Material Adverse Change;
(j) Disputes, etc. Prompt written notice of any claims,
proceedings, or disputes, or to the knowledge of the Company and
its Subsidiaries threatened, or affecting the Company or any of
its Subsidiaries which, if adversely determined, could reasonably
be expected to cause a Material Adverse Change;
(k) Material Changes. Prompt written notice of any
condition or event of which the Company or any of its
Subsidiaries has knowledge, which condition or event has resulted
or may reasonably be expected to result in a Material Adverse
Change;
(l) Environmental Notices. Promptly upon the receipt
thereof by the Company or any of its Subsidiaries, a copy of any
form of notice, summons or citation received from any
Governmental Authority or any other third party, concerning
(i) violations or alleged violations of Environmental Laws, which
seeks to impose liability therefor in excess of $5,000,000.00,
(ii) any action or omission on the part of the Company or any of
its Subsidiaries in connection with Hazardous Waste or Hazardous
Substances which could result in a liability therefor in excess
of $5,000,000.00, (iii) any notice of potential responsibility
under CERCLA or any analogous law which could result in a
liability therefor in excess of $5,000,000.00, or (iv) concerning
the filing of a Lien other than a Permitted Lien upon, against or
in connection with the Company or any of its Subsidiaries, or any
of their leased or owned Property with a value of more than
$5,000,000.00, wherever located;
(m) Insurance. On or before April 15 of each year
commencing April 15, 2000, the Company will deliver to the
Administrative Agent a report prepared by the Company's
independent maritime insurance broker which report (i) lists all
insurance policies and programs then in effect with respect to
the Mortgaged Vessels, (ii) specifies for each such policy and
program, (A) the amount thereof, (B) the risks insured against
thereby, (C) the name of the insurer and each insured party
thereunder and (D) the policy or other identification number
thereof, and (iii) certifies that all such policies and programs
are (A) in full force and effect, (B) are placed with such
insurance companies, underwriters or associations, in such
amounts, against such risks, and in such form, as are customarily
issued against by Persons of similar size and established
reputation engaged in the same or similar businesses and
similarly situated and as are necessary or advisable for the
protection of the Administrative Agent as mortgagee, and (C)
conform with the requirements of this Agreement and the Security
Documents;
(n) Year 2000 Compliance. The Company will promptly notify
the Administrative Agent in the event the Company discovers or
determines that any computer applications that are material to
its or any of its Subsidiaries' business and operations are not
Year 2000 Compliant, except to the extent that such failure could
not reasonably be expected to cause a Material Adverse Change;
and
(o) Other Information. Such other information respecting
the business or Properties, or the condition or operations,
financial or otherwise, of the Company and its Subsidiaries as
the Administrative Agent or any Lender may from time-to-time
reasonably request.
Section 5.06. Maintenance of Property. Each of the Company
and its Subsidiaries shall (a) maintain their material owned,
leased, or operated property, equipment, buildings and fixtures
in substantially the same or better condition and repair as the
condition and repair as of December 31, 1999, normal wear and
tear excepted and (b) not knowingly or willfully permit the
commission of waste or other injury, or the release of Hazardous
Substances on or about the owned or operated property in
violation of applicable Environmental Laws.
Section 5.07. Inspection. From time-to-time upon
reasonable notice and during normal business hours, the Company
and its Subsidiaries shall (a) permit the Administrative Agent
(at the request of any Lender) to examine and copy their books
and records, (b) permit the Administrative Agent and the Lenders
to visit and inspect their Properties, and (c) permit the
Administrative Agent and Lenders to discuss the business
operations and Properties of the Company and its Subsidiaries
with their officers and directors.
Section 5.08. Use of Proceeds. The Borrowers shall use the
proceeds of Advances for (i) the refinancing of existing Debt of
the Company and its Subsidiaries, (ii) Capital Expenditures, and
(iii) general corporate purposes of the Company and its
Subsidiaries. The Borrowers will not engage in the business of
extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U).
Section 5.09. Nature of Business. Neither the Company nor
any of its Subsidiaries shall engage in any business if, as a
result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the Company
and its Subsidiaries would be substantially changed from the
general nature of the business engaged in by the Company and its
Subsidiaries on the Closing Date.
Section 5.10. New Subsidiaries.
(a) Within 10 Business Days after (i) the date of the
creation of any new Material Domestic Subsidiary of the Company,
(ii) the date that any Subsidiary of the Company that was not a
Material Domestic Subsidiary becomes a Material Domestic
Subsidiary, or (iii) the purchase permitted by this Agreement by
the Company or any of its Subsidiaries of the capital stock of
any Person, which purchase results in such Person becoming a
Material Domestic Subsidiary of the Company, the Company shall,
in each case, cause (A) such Material Domestic Subsidiary to
execute and deliver to the Administrative Agent (with sufficient
originals for each applicable Lender) any or all of the following
documents requested by the Administrative Agent: a Guaranty to
guaranty the Obligations and a Security Agreement, a Pledge
Agreement (if such new Subsidiary owns one or more Subsidiaries),
one or more Vessel Mortgages (if such new Subsidiary owns one or
more Material Vessels), and such other Security Documents as the
Administrative Agent may reasonably request, in each case to
secure the Obligations together with evidence of corporate
authority to enter into such Guaranty, Security Agreement, Pledge
Agreement, Vessel Mortgages and other Security Documents as the
Administrative Agent may reasonably request and (B) the Company
or its Subsidiary owning capital stock or other equity interests
of such new Subsidiary to execute a Pledge Agreement pledging
100% of its interests in the capital stock or other equity
interests of such new Subsidiary to secure the Obligations and
deliver such evidence of corporate authority to enter into such
Pledge Agreement as the Administrative Agent may reasonably
request, along with share certificates pledged thereby and
appropriately executed stock powers in blank.
(b) Within 10 Business Days after (i) the date of the
creation of any new Mexican Subsidiary that is a Material
Subsidiary or (ii) the purchase of a Person by a Mexican
Subsidiary, which purchase results in such Person becoming a
Mexican Subsidiary that is a Material Subsidiary, the Company
shall, in each case, cause (A) such Mexican Subsidiary to execute
and deliver to the Administrative Agent (with sufficient
originals for each applicable Lender) any or all of the following
documents requested by the Administrative Agent or any Lender: a
Guaranty to guaranty the Mexican Subsidiaries' Obligations and
Mexican Security Documents and one or more Vessel Mortgages (if
such new Subsidiary owns one or more Material Vessels), and such
other Security Documents and the Administrative Agent or any
Lender may reasonably request, in each case to secure the Mexican
Subsidiaries's Obligations together with evidence of corporate
authority to enter into such Guaranty, Mexican Security Document,
and Vessel Mortgages and (B) the Company or its Subsidiary owning
capital stock or other equity interests of such new Subsidiary to
execute a Pledge Agreement pledging 100% of its interests in the
capital stock or other equity interests of such new Subsidiary to
secure the Mexican Subsidiaries' Obligations and 66% of its
interests in such capital stock to secure the Loan Parties'
Obligations and such evidence of corporate authority to enter
into such Pledge Agreement as the Administrative Agent may
reasonably request, along with share certificates pledged thereby
and appropriately executed stock powers in blank.
(c) Within 10 Business Days after (i) the date of the
creation of any new Material Subsidiary that is a Foreign
Subsidiary (other than a Mexican Subsidiary) or (ii) the purchase
of a Person by the Company or any of its Subsidiaries of a
Foreign Subsidiary that is a Material Subsidiary, the Company
shall, in each case to the extent permitted by applicable foreign
law, cause the stockholder of such new Subsidiary to execute a
Pledge Agreement pledging 66% of its interests in the capital
stock or other equity interests of such new Subsidiary to secure
the other Foreign Subsidiaries' Obligations and 66% of its
interests in such capital stock or other equity interests to
secure the Company and its Domestic Subsidiaries' Obligations and
in all cases such evidence of corporate authority to enter into
such Pledge Agreement as the Administrative Agent may reasonably
request, along with share certificates pledged thereby and
appropriately executed stock powers in blank.
Section 5.11. New Vessels. Upon the acquisition by the
Company or any of its Subsidiaries of any Material Vessel, the
Company will, or will cause the Subsidiary which acquired such
Material Vessel to, execute and deliver to Administrative Agent
for the ratable benefit of the Lenders (a) a Vessel Mortgage
granting a security interest in such Material Vessel to secure
(i) in the case of the Company or a Domestic Subsidiary, the Loan
Parties' Obligations and (ii) in the case of a Foreign
Subsidiary, such Foreign Subsidiary's Obligations and (b) such
evidence of corporate authority to enter into such Vessel
Mortgage as the Administrative Agent may reasonably request;
provided, however, that the Company and its Subsidiaries shall
not be required to execute and deliver a Vessel Mortgage covering
any Material Vessel which is acquired or to be acquired with
MARAD Financing, subject to liens securing purchase money debt or
Capital Leases, or subject to liens securing Debt permitted by
clause 6.02(e).
Section 5.12. Rate Hedging Agreements. If the Hercules
Title XI Issue has not been completed within 180 days after the
Closing Date, then the Company shall, within 30 days after such
initial 180-day period has concluded, enter into Rate Hedging
Agreements with a Lender or Lenders in an aggregate notional
amount not less than 50% of the outstanding principal amount of
the Term Advances that reduces proportionately with the
amortization of the Term Advances. Such Rate Hedging Agreements
shall be in form and substance reasonably satisfactory to the
Administrative Agent.
Section 5.13. Post Closing Collateral. The Company shall
provide or cause to be provided:
(a) within 45 days after the Closing Date, such surveys and
title insurance as may be reasonably requested by the
Administrative Agent for the Property subject to the Mortgages;
(b) within 45 days after receipt of written request of the
Administrative Agent made no earlier than six months after the
Closing Date, a Mortgage granting an Acceptable Security Interest
in any of the real estate of the Company and its Subsidiaries
held for sale on the Closing Date that has not been sold as of
the date of the Company's receipt of such notice and such surveys
and title insurance for such real estate as the Administrative
Agent may reasonably request;
(c) within 30 days after the Closing Date, (i) a Guaranty
executed by the Company and the Guaranties described in Part II
of Schedule 3.01(a)(iv) duly executed by the Guarantors party
thereto, (ii) Pledge Agreements duly executed by the pledgors
party thereto, pledging all of the equity interests held by the
Company and its Subsidiaries in the Company's Material Domestic
Subsidiaries not pledged as of the Closing Date and 66% of the
equity interests held by the Company and its Subsidiaries in the
Company's Material Foreign Subsidiaries, in each case together
with stock certificates, stock powers executed in blank, UCC-1
financing statements, and any other documents, agreements, on
instruments necessary to create an Acceptable Security Interest
in such equity interests; (iii) Security Agreements duly executed
by the Company and Pipelines, Incorporated granting to the
Administrative Agent for the benefit of the Lenders a Lien in
substantially all of the personal property of such Persons (other
than personal property not subject to the Uniform Commercial Code
and the MARAD Collateral) to secure the Obligations, in each case
together with UCC-1 financing statements and any other documents,
agreements, or instruments necessary to create an Acceptable
Security Interest in such pledged collateral, (iv) the Vessel
Mortgages executed by each of the Company and each of its
Subsidiaries which owns a Vessel listed on Schedule 5.13 duly
executed by the parties thereto, granting a Lien to the
Administrative Agent for the benefit of the Lenders in such
Vessels listed on Schedule 5.13 (which Schedule does not list the
MARAD Vessels and the Heller Vessels) to secure the Obligations,
in each case together with any other documents, agreements or
instruments necessary to create an Acceptable Security Interest
in such Vessels and the revenues therefrom (other than MARAD
Collateral); (v) a Mortgage executed by the Company granting a
Lien to the Administrative Agent for the benefit of the Lenders
in the real estate listed on the attached Schedule 5.13 to secure
the Obligations; and (vi) a favorable opinion of Vinson & Elkins,
L.L.P. and, if applicable, of local counsel reasonably
satisfactory to the Administrative Agent covering such items as
the Administrative Agent may reasonably request for New York,
Texas, Louisiana, Mexico, Vanuatu, and the Cayman Islands, and
any other jurisdiction in which a Material Subsidiary is located
or a material amount, as determined by the Administrative Agent
in its reasonable discretion, of the Collateral is located; and
(d) within 30 days after the repayment of the Debt secured
by the Heller Vessels, a Vessel Mortgage granting the
Administrative Agent an Acceptable Security Interest in such
Vessels.
ARTICLE VI
NEGATIVE COVENANTS
So long as the Notes or any amount under any Credit Document
shall remain unpaid, any Lender shall have any Commitment, or
there shall exist any Letter of Credit Exposure, each Borrower
agrees, unless the Majority Lenders otherwise consent in writing,
to comply with the following covenants.
Section 6.01. Liens, Etc. Neither the Company nor any of
its Subsidiaries will create, assume, incur or suffer to exist,
any Lien on or in respect of any of its Property whether now
owned or hereafter acquired, or assign any right to receive
income, except that the Company and its Subsidiaries may create,
incur, assume or suffer to exist the following which are
permitted liens ("Permitted Liens"):
(a) Liens securing the Obligations;
(b) Liens for taxes, assessments or governmental charges or
levies on Property of the Company and its Subsidiaries to the
extent not required to be paid pursuant to Sections 5.01 and
5.04;
(c) Liens set forth in the attached Schedule 6.01 securing
Debt described therein and refinancings of such Debt; provided
that, the aggregate principal amount of such Debt shall not be
renewed, refinanced or extended if the amount of such Debt so
renewed, refinanced or extended is greater than the outstanding
amount of such Debt on the Closing Date;
(d) Liens imposed by law or contract, such as preferred
maritime Liens incurred in the ordinary course of business
(including liens for wages, tort, general average salvage,
repair, supplies, towage, use of a drydock facility or marine
railway, or other necessaries supplied to a vessel), carrier's,
warehousemen's, mechanic's, materialmen's, repairmen's or other
like Liens arising in the ordinary course of business (whether or
not statutory) which are not overdue for a period of more than 30
days or which are being contested in good faith and by
appropriate proceedings, for which a reserve or other appropriate
provision, if any, as shall be required by GAAP, shall have been
made;
(e) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations and other obligations of
a like nature incurred in the ordinary course of business in an
aggregate amount outstanding at any time not to exceed
$7,500,000.00;
(f) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business
and encumbrances consisting of zoning restrictions, easements,
leases, subleases, licenses, sublicenses, restrictions on the use
of Property or minor imperfections in title thereto which,
individually and in the aggregate, could not reasonably be
expected to cause a Material Adverse Change, and which do not in
any case materially detract from the value of the Property
subject thereto or interfere with the ordinary conduct of the
business of the Company or any of its Subsidiaries;
(g) Liens on Property of Persons which become Subsidiaries
of the Company after the Closing Date securing Debt permitted
hereby; provided that, (i) such Liens are in existence at the
time the respective Persons become Subsidiaries of the Company
and were not created in anticipation thereof and (ii) the Debt
secured by such Liens (A) is secured only by such Property and
not by any other assets of the Subsidiary acquired, and (B) is
not increased in amount;
(h) Liens arising in the ordinary course of business out of
pledges or deposits under workers' compensation laws,
unemployment insurance, old age pensions or other social security
or retirement benefits, or similar legislation or to secure
public or statutory obligations of the Borrower;
(i) purchase money Liens or purchase money security
interests upon or in any equipment acquired or held by the
Company or any of its Subsidiaries in the ordinary course of
business prior to or at the time of the Company's or such
Subsidiary's acquisition of such equipment; provided that, the
Debt secured by such Liens (i) was incurred solely for the
purpose of financing the acquisition of such equipment, and does
not exceed the aggregate purchase price of such equipment, (ii)
is secured only by such equipment and not by any other assets of
the Company and its Subsidiaries, (iii) is not increased in
amount, and (iv) the aggregate principal amount of the
indebtedness secured by the Liens permitted by this paragraph (i)
shall not exceed $10,000,000.00;
(j) Liens securing any MARAD Financing, including the
Hercules Title XI Issue; provided that each such Lien encumbers
only the property financed in connection with the creation of any
such Debt and any other MARAD Collateral; and
(k) Liens securing Capitalized Leases to the extent such
Debt is permitted under Section 6.02(j); provided that (i) each
such Lien only encumbers the property acquired in connection with
the creation of such Capital Lease and all proceeds therefrom and
(ii) the fair market value of the collateral securing any such
Debt may exceed the outstanding principal amount of such Debt
only to the extent such excess is within customary commercial
bank lending and collateralization requirements.
Section 6.02. Debts, Guaranties and Other Obligations. The
Company will not, and will not permit any of its Subsidiaries to,
create, assume, suffer to exist or in any manner become or be
liable, in respect of any Debt except:
(a) Debt of the Company and its Subsidiaries under the
Credit Documents;
(b) intercompany Debt incurred in the ordinary course of
business owed (i) by any Wholly Owned Subsidiary of the Company
to the Company or to any other Wholly Owned Subsidiary of the
Company, (ii) by the Company to any of its Wholly Owned
Subsidiaries, and (iii) by any Mexican Subsidiary to another
Mexican Subsidiary; provided that, all such intercompany Debt
shall be subordinated to the Obligations in accordance with the
terms set forth in the Guaranties;
(c) Debt secured by the Liens permitted under
paragraphs (c) and (i) of Section 6.01;
(d) any MARAD Financing used to finance the acquisition,
construction, or improvement of the Company's or any of its
Subsidiaries' Vessels (including any rearrangements, extensions,
or refinancing thereof) in an aggregate principal amount
outstanding at any time not to exceed $150,000,000.00; provided
that, except as permitted by clause (e) below, the Company and
its Subsidiaries may not enter into additional MARAD Financing
described in this clause (d) (other than rearrangements,
extensions, or refinancings thereof) if a Default is continuing
or entering into the additional indebtedness would reasonably be
expected to cause a Default;
(e) the Hercules Title XI Issue;
(f) the Company's obligations in respect of the Carlyss
Facility Bonds;
(g) Debt listed on Schedule 6.02 and all extensions,
amendments, refinancings, and renewals thereof so long as none of
the principal amount of such Debt is increased;
(h) reimbursement obligations of the Company and its
Subsidiaries in respect of any surety bonds or letters of credit
otherwise permitted under this Agreement issued to secure payment
of any insurance premiums, regulatory obligations, or trust fund
obligations for the Company or any of its Subsidiaries;
(i) Unfunded Liabilities that would not reasonably be
expected to cause a Material Adverse Change;
(j) Capitalized Leases with an aggregate principal amount
outstanding at any time not to exceed $25,000,000.00;
(k) Permitted Bond Obligations;
(l) unsecured obligations other than Permitted Bond
Obligations in respect of standby letters of credit, bonds and
guaranties issued for the account of the Company or any of its
Subsidiaries in the ordinary course of business with an aggregate
face amount outstanding at time not to exceed $50,000,000.00 or
its Equivalent Amount in another currency;
(m) nonspeculative Financial Contract Obligations entered
into in the ordinary course of business;
(n) Permitted Mexican Contract Financing in an aggregate
amount outstanding at any time not to exceed $50,000,000.00; and
(o) other unsecured Debt of the Company and its
Subsidiaries with an aggregate principal amount outstanding not
to exceed $15,000,000.00.
Section 6.03. Merger or Consolidation; Asset Sales.
Neither the Company nor any of its Subsidiaries will (a) merge or
consolidate with or into any other Person or (b) sell, lease,
transfer, or otherwise dispose of any of its Property (other than
the sale of inventory in the ordinary course of business or the
sale of obsolete or worn-out property in the ordinary course of
business) except that so long as after giving effect thereto no
Default or Event of Default shall exist:
(i) any Loan Party may merge or consolidate with any
corporation, provided that such Loan Party shall be the
continuing or surviving entity, and provided that no Default
occurs or would be caused by such merger or consolidation;
(ii) any Loan Party (other than the Company) may merge
or consolidate with any other Loan Party, provided that no
Loan Party's Obligations under the Credit Documents shall
decrease as a result of such merger or consolidation;
(iii) the Company and its Subsidiaries may sell, lease,
transfer or otherwise dispose of any assets to third parties
outside the ordinary course of business; provided that, the
Net Cash Proceeds received by the Company or such Subsidiary
from all such sales in excess of $10,000,000.00 in any
calendar year shall either (A) be re-invested by the Company
or such Subsidiary in replacement assets of comparable value
and utility within six months of the date received or (B)
applied as a prepayment of Term Advances within such six-
month period in accordance with Section 2.07; and
(iv) the Company and its Subsidiaries may sell,
discount or factor foreign accounts receivable with an
uncollected face amount outstanding at any time not to
exceed $50,000,000.00 without recourse or representation or
warranty other than customary representations and warranties
and recourse that would not prevent true sale treatment of
such sale, discount or factor under GAAP.
Section 6.04. Investments. Neither the Company nor any of
its Subsidiaries will make or permit to exist any loans, advances
or capital contributions to, or make any investment in, or
purchase or commit to purchase any stock or other securities or
evidences of indebtedness of or interests in any Person, except
for:
(a) loans, advances, capital contributions or investments
in any Domestic Subsidiary and in any Foreign Subsidiary in
existence on the Closing Date;
(b) Liquid Investments;
(c) intercompany loans from the Company to or from any of
its Subsidiaries and intercompany loans between Subsidiaries;
(d) the acquisition by the Company or any of its
Subsidiaries, in a single transaction or any series of related
transactions, of any Person or the business or all or
substantially all of the assets of any such Person, or any
division of any such Person, whether through investment, purchase
of assets, merger or otherwise, including, but not limited to, in
any transaction pursuant to which any such Person that was not
theretofore a Subsidiary of the Company, becomes a Subsidiary of
the Company and is consolidated with the Company for financial
reporting purposes; provided, however, in the case of any
transaction subject to this clause (d), that, after giving effect
to such transaction on a pro forma basis, no Default exists or
would be caused thereby;
(e) loans or advances in an aggregate amount outstanding at
any time not to exceed $5,000,000.00 made in the ordinary course
of business; and
(f) loans or advances to employees made in the ordinary
course of business in an amount outstanding at any time not to
exceed $5,000,000.00.
Section 6.05. Transactions With Affiliates. Neither the
Company nor any of its Subsidiaries shall, directly or
indirectly, enter into or permit to exist any transaction or
series of transactions (including, but not limited to, the
purchase, sale, lease or exchange of Property, the making of any
investment, the giving of any guaranty or the rendering of any
service) with any of their Affiliates other than the Company or a
Wholly Owned Subsidiary of the Company unless such transaction or
series of transactions is on terms no less favorable to the
Company or such Subsidiary than those that could be obtained in a
comparable arm's length transaction with a Person that is not an
Affiliate.
Section 6.06. Compliance with ERISA. Neither the Company
nor any of its Subsidiaries will (a) terminate, or permit any
member of the Controlled Group to terminate, any Plan so as to
result in a Material Adverse Change or (b) permit to exist any
occurrence of any Reportable Event or any other event or
condition, which presents a material (in the reasonable opinion
of the Majority Lenders) risk of such a termination by the PBGC
of any Plan.
Section 6.07. Restricted Payments. Neither the Company nor
any of its Subsidiaries shall make any Restricted Payments other
than Restricted Payments by Subsidiaries of the Company to the
Company or another Subsidiary of the Company and by the Company
to any of its Subsidiaries.
Section 6.08. Maintenance of Ownership of Subsidiaries.
Except as permitted by Section 6.03, the Company will not, and
will not permit any of its Subsidiaries to, sell or otherwise
dispose of any shares of capital stock of any of the Company's
Material Subsidiaries or permit any Subsidiary of the Company to
issue, sell or otherwise dispose of (other than to its parent)
any shares of its capital stock or the capital stock of any of
the Company's Material Subsidiaries.
Section 6.09. Agreements Restricting Liens and
Distributions. The Company will not, nor will it permit any of
its Subsidiaries to, enter into or permit to exist any agreement
(other than a Credit Document, the Heller Loan Agreement, any
agreement entered into in connection with MARAD financing
permitted hereunder, including the Hercules Title XI Issue) which
(a) except with respect to specific Property encumbered to secure
payment of Debt related to such Property, imposes restrictions
greater than those under this Agreement upon the creation or
assumption of any Lien upon its Properties, revenues or assets,
whether now owned or hereafter acquired or (b) limits Restricted
Payments to or any advance by any of the Company's Subsidiaries
to the Company.
Section 6.10. Leverage Ratio. The Company will not permit
its Leverage Ratio at the end of any fiscal quarter to be greater
than the levels indicated below for the corresponding periods:
Period Ratio
Closing Date through June 30, 2000 4.50 to 1.00
July 1, 2000 through December 31, 2000 3.50 to 1.00
January 1, 2001 and thereafter 2.75 to 1.00
Section 6.11. Minimum Net Worth. The Company shall not
permit Consolidated Net Worth as of the last day of any fiscal
quarter to be less than (a) $345,000,000.00 plus (b) 50% of its
Consolidated Net Income for each fiscal quarter beginning with
the fiscal quarter ending on December 31, 1999, during which
Consolidated Net Income is positive, but without reductions for
any fiscal quarters during which Consolidated Net Income is
negative plus (c) 100% of the Net Cash Proceeds from any Equity
Issuance on and after January 1, 2000 plus (d) without
duplication of the preceding clause (c), 100% of any increase in
Consolidated Net Worth from the conversion of any Debt to equity,
the issuance of any capital stock, warrants or options to
purchase capital stock or other equity interest, and any other
transaction the effect of which is to increase Consolidated Net
Worth.
Section 6.12. Minimum Fixed Charge Coverage Ratio. The
Company will not permit the Fixed Charge Coverage Ratio at the
end of any fiscal quarter to be less than the following ratios
during the following periods:
Period Ratio
Closing Date through December 31, 2000 1.15 to 1.00
January 1, 2001 and thereafter 1.25 to 1.00
Section 6.13. Capital Expenditures. The Company will not
permit its consolidated Capital Expenditures to exceed the
following amounts during the following calendar years:
Calendar Year Maximum Amount
2000 $50,000,000.00
2001 $60,000,000.00
2002 $70,000,000.00
2003 $75,000,000.00
2004 $85,000,000.00
Beginning with calendar year 2001, the foregoing maximum amount
for each calendar year shall be increased by the Carryover Amount
for the prior calendar year. The "Carryover Amount" for any
calendar year equals (A) 50% times (B) the positive difference,
if any, between the maximum amount (without regard to any
Carryover Amount) and the actual Capital Expenditures for such
calendar year.
ARTICLE VII
REMEDIES
Section 7.01. Events of Default. The occurrence of any of
the following events shall constitute an "Event of Default" under
any Credit Document:
(a) Payment. A Borrower shall fail to pay any principal of
any Note (including, without limitation, any mandatory prepayment
required by Section 2.07) when the same becomes due and payable,
or any interest on the Notes or any fee or other amount payable
hereunder or under any other Credit Document within three
Business Days after the same becomes due and payable;
(b) Representation and Warranties. Any representation or
warranty made or deemed to be made by a Borrower or any other
Loan Party (or any of their respective officers) in this
Agreement, in any other Credit Document, or in any certificate
delivered in connection with this Agreement or any other Credit
Document shall prove to have been incorrect when made or deemed
to be made;
(c) Covenant Breaches. A Borrower or any other Loan Party
shall (i) fail to perform or observe any covenant contained in
Sections 5.02, 5.05(a), 5.05(b), 5.12, and Article VI of this
Agreement or (ii) fail to perform or observe any other term or
covenant set forth in this Agreement or in any other Credit
Document which is not covered by clause (i) above or any other
provision of this Section 7.01 if such failure shall remain
unremedied for 30 days from the earlier of written notice of such
default to the Company from the Administrative Agent or any
Lender or the date of actual knowledge of such default by a
Responsible Officer of the Company or any of its Subsidiaries;
(d) Cross-Default. (i) The Company or any of its
Subsidiaries shall fail to pay any principal of or premium or
interest on its Debt which is outstanding in a principal amount
of at least $5,000,000.00 (or the Equivalent Amount of Debt
denominated in a currency other than Dollars) when aggregated
with all such Debt of the Person so in default (but excluding
Debt evidenced by the Notes) when the same becomes due and
payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), (ii) any other event shall
occur or condition shall exist under any agreement or instrument
relating to Debt which is outstanding in a principal amount of at
least $5,000,000.00 (or the Equivalent Amount of Debt denominated
in a currency other than Dollars) when aggregated with all such
Debt of the Person so in default (but excluding Debt evidenced by
the Notes), and shall continue after the applicable grace period,
if any, specified in such agreement or instrument, if the effect
of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or (iii) any such
Debt shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof;
(e) Insolvency. The Company or any of its Material
Subsidiaries shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against the Company or any of its Material Subsidiaries seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of
a receiver, trustee or other similar official for it or for any
substantial part of its property and, in the case of any such
proceeding instituted against the Company or any of its Material
Subsidiaries, either such proceeding shall remain undismissed for
a period of 60 days or any of the actions sought in such
proceeding shall occur; or the Company or any of its
Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this paragraph (e);
(f) Judgments. Any judgment, decree or order for the
payment of money shall be rendered against the Company or any of
its Subsidiaries in an amount in excess of $5,000,000.00 (or the
Equivalent Amount of thereof if denominated in a currency other
than Dollars) if rendered solely against the Company or any of
its Subsidiaries, or for which the Company's or any such
Subsidiary's allocated portion of which exceeds $5,000,000.00 (or
the Equivalent Amount thereof if denominated in a currency other
than Dollars) and either (i) such judgment, decree or order
remains unsatisfied and in effect for a period of 60 consecutive
days or more without being vacated, discharged, satisfied or
stayed or bonded pending appeal or (ii) enforcement proceedings
shall have been commenced by any creditor upon such judgment,
decree or order;
(g) Termination Events. Any Termination Event with respect
to a Plan shall have occurred, and, 30 days after notice thereof
shall have been given to the Company by the Administrative Agent,
(i) such Termination Event shall not have been corrected and
(ii) the then present value of such Plan's vested benefits
exceeds the then current value of assets accumulated in such Plan
by an amount that would reasonably be expected to cause or to
have a Material Adverse Change (or in the case of a Termination
Event involving the withdrawal of a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA), the withdrawing
employer's proportionate share of such excess shall exceed such
amount);
(h) Plan Withdrawals. The Company or any member of the
Controlled Group as employer under a Multiemployer Plan shall
have made a complete or partial withdrawal from such
Multiemployer Plan and the plan sponsor of such Multiemployer
Plan shall have notified such withdrawing employer that such
employer has incurred a withdrawal liability in an annual amount
that could reasonably be expected to cause or to have a Material
Adverse Change;
(i) Guaranty. (i) Any of the provisions in any of the
Guaranties requiring payment shall for any reason cease to be
valid and binding on the applicable Guarantor or (ii) any of the
Guarantors shall so state in writing;
(j) Security Documents. (i) The Administrative Agent and
the Lenders shall fail to have an Acceptable Security Interest in
the Collateral or (ii) any material provision of any Security
Document shall for any reason cease to be valid and binding on
the Company or other Loan Parties executing such Security
Document, or any such Person shall so state in writing; or
(k) Change in Control. A Change in Control shall occur.
Section 7.02. Optional Acceleration of Maturity. If any
Event of Default (other than an Event of Default pursuant to
paragraph (e) of Section 7.01) shall have occurred and be
continuing, then, and in any such event:
(a) the Administrative Agent (i) shall at the request of,
or may with the consent of, the Majority Lenders, by notice to
the Company, declare the obligation of each Lender to make
Advances and the obligation of the Issuing Bank to issue Letters
of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request of, or may with the
consent of, the Majority Lenders, by notice to the Company,
declare the Notes, all interest thereon, and all other amounts
payable under this Agreement to be forthwith due and payable,
whereupon the Notes, all such interest, and all such amounts
shall become and be forthwith due and payable in full, without
presentment, demand, protest or further notice of any kind
(including, without limitation, any notice of intent to
accelerate or notice of acceleration), all of which are hereby
expressly waived by the Borrower;
(b) a Borrower shall, on demand of the Administrative Agent
at the request or with the consent of the Majority Lenders,
deposit with the Administrative Agent into the Cash Collateral
Account an amount of cash in Dollars equal to the outstanding
Letter of Credit Exposure as security for the Obligations to the
extent the Letter of Credit Obligations are not otherwise paid at
such time; and
(c) the Administrative Agent and the Lenders may exercise
all rights and remedies available under the Security Documents
and applicable law.
Section 7.03. Automatic Acceleration of Maturity. If any
Event of Default pursuant to paragraph (e) of Section 7.01 shall
occur:
(a) the obligation of each Lender to make Advances and the
obligation of the Issuing Bank to issue Letters of Credit shall
immediately and automatically be terminated and the Notes, and
all other amounts payable under this Agreement shall immediately
and automatically become and be due and payable in full, without
presentment, demand, protest or any notice of any kind
(including, without limitation, any notice of intent to
accelerate or notice of acceleration), all of which are hereby
expressly waived by the Borrowers;
(b) a Borrower shall deposit, without demand, with the
Administrative Agent into the Cash Collateral Account an amount
of cash in Dollars equal to the outstanding Letter of Credit
Exposure as security for the Obligations to the extent the Letter
of Credit Obligations are not otherwise paid at such time; and
(c) the Administrative Agent and the Lenders may exercise
all rights and remedies available under the Security Documents
and applicable law.
Section 7.04. Non-exclusivity of Remedies. No remedy
conferred upon the Administrative Agent is intended to be
exclusive of any other remedy, and each remedy shall be
cumulative of all other remedies existing by contract, at law, in
equity, by statute or otherwise.
Section 7.05. Right of Set-off. Upon (a) the occurrence
and during the continuance of any Event of Default and (b) the
making of the request or the granting of the consent, if any,
specified by Section 7.02 to authorize the Administrative Agent
upon the consent of the Majority Lenders to declare the Notes and
any other amount payable hereunder due and payable pursuant to
the provisions of Section 7.02 or the automatic acceleration of
the Notes and all amounts payable under this Agreement pursuant
to Section 7.03, each Lender, for the ratable benefit of all the
Lenders, is hereby authorized at any time and from time-to-time,
to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time
owing by such Lender to or for the credit or the account of a
Borrower against any and all of the obligations of the Borrowers
now or hereafter existing under this Agreement, the Notes, and
the other Credit Documents, irrespective of whether or not such
Lender shall have made any demand under this Agreement, the
Notes, or such other Credit Documents, and although such
obligations may be unmatured. Each Lender agrees to promptly
notify the Company after any such set-off and application made by
it, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights
of each Lender under this Section are in addition to any other
rights and remedies (including, without limitation, other rights
of set-off) which such Lender may have.
ARTICLE VIII
THE ADMINISTRATIVE AGENT AND THE ISSUING BANK
Section 8.01. Appointment; Nature of Relationship. Bank One
is hereby appointed by the Lenders as the Administrative Agent
hereunder and under each other Credit Document (other than the
Vessel Mortgage), and to act as the security trustee under the
Vessel Mortgage, and each of the Lenders irrevocably authorizes
the Administrative Agent to act as the contractual
representatives of such Lender with the rights and duties
expressly set forth herein and in the other Credit Documents.
Bank One is hereby appointed by the Lenders as the Issuing Bank
hereunder and under each other Credit Document, and each of the
Lenders irrevocably authorizes the Issuing Bank to act with the
rights and duties expressly set forth herein and in the other
Credit Document regarding the Issuing Bank. The Administrative
Agent agrees to act as such contractual representative upon the
express conditions contained in this Article VIII.
Notwithstanding the use of the defined term "Agent," it is
expressly understood and agreed that the Administrative Agent
shall not have any fiduciary responsibilities to any Lender by
reason of this Agreement or any other Credit Document and that
the Administrative Agent is merely acting as the representative
of the Lender s with only those duties as are expressly set forth
in this Agreement and the other Credit Documents. In its
capacity as the Lenders' contractual representative, the
Administrative Agent (a) does not hereby assume any fiduciary
duties to any of the Lenders, (b) are "representatives" of the
Lenders within the meaning of Section 9-105 of the Uniform
Commercial Code as adopted in the State of New York and (c) are
acting as independent contractors, the rights and duties of which
are limited to those expressly set forth in this Agreement and
the other Credit Documents. Each of the Lenders hereby agrees to
assert no claim against the Administrative Agent on any agency
theory or any other theory of liability for breach of fiduciary
duty, all of which claims each Lender hereby waives.
Section 8.02. Powers. The Administrative Agent and the
Issuing Bank shall have and may exercise such powers under the
Credit Documents as are specifically delegated to the
Administrative Agent and the Issuing Bank, respectively, by the
terms of each thereof, together with such powers as are
reasonably incidental thereto. Neither the Administrative Agent
nor the Issuing Bank shall have any implied duties to the
Lenders, or any obligation to the Lenders to take any action
thereunder except any action specifically provided by the Credit
Documents to be taken by the Administrative Agent or the Issuing
Bank, as applicable.
Section 8.03. General Immunity. None of the Administrative
Agent, the Issuing Bank or any of their respective directors,
officers, agents or employees shall be liable to the Borrowers or
any Lender for any action taken or omitted to be taken by it or
them hereunder or under any other Credit Document or in
connection herewith or therewith except for its or their own
gross negligence or willful misconduct.
Section 8.04. No Responsibility for Loans, Recitals, etc.
None of the Administrative Agent, the Issuing Bank or any of its
directors, officers, agents or employees shall be responsible for
or have any duty to ascertain, inquire into, or verify (a) any
statement, warranty or representation made in connection with any
Credit Document or any borrowing hereunder; (b) the performance
or observance of any of the covenants or agreements of any
obligor under any Credit Document, including, without limitation,
any agreement by an obligor to furnish information directly to
each Lender; (c) the satisfaction of any condition specified in
Article III, except receipt of items required to be delivered to
the Agent; (d) the validity, enforceability, effectiveness,
sufficiency or genuineness of any Credit Document or any other
instrument or writing furnished in connection therewith; or (e)
the value, sufficiency, creation, perfection or priority of any
interest in any collateral security. The Administrative Agent
agrees to provide to the Lenders copies of all information it
receives from the Company under Section 5.05 that is not
otherwise delivered by the Company to the Lenders. Neither the
Administrative Agent nor the Issuing Bank shall, however, have
any duty to disclose to the Lenders information that is not
required to be furnished by the Company or any of its
Subsidiaries to the Administrative Agent or the Issuing Bank at
such time, but is voluntarily furnished by the Company or any of
its Subsidiaries to the Administrative Agent or the Issuing Bank
(either in its capacity as Administrative Agent or the Issuing
Bank, as applicable, or in its individual capacity).
Section 8.05. Action on Instructions of Lenders. The
Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder and under any
other Credit Document in accordance with written instructions
signed by the Majority Lenders, and such instructions and any
action taken or failure to act pursuant thereto shall be binding
on all of the Lender and on all holders of Notes. The Lenders
hereby acknowledge that the Administrative Agent shall be under
no duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement or any other
Credit Document unless it shall be requested in writing to do so
by the Majority Lenders. The Administrative Agent shall be fully
justified in failing or refusing to take any action hereunder and
under any other Credit Document unless it shall first be
indemnified to its satisfaction by the Lenders pro rata against
any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.
Section 8.06. Employment of Agents and Counsel. The
Administrative Agent and the Issuing Bank may execute any of
their respective duties as Administrative Agent and Issuing Bank
hereunder and under any other Credit Document by or through
employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or
misconduct of the Administrative Agent or attorneys-in-fact
selected by it with reasonable care. The Administrative Agent
and the Issuing Bank shall be entitled to advice of their
respective counsels concerning all matters pertaining to the
agency hereby created and its duties hereunder and under any
other Credit Document.
Section 8.07. Reliance on Documents; Counsel. The
Administrative Agent and the Issuing Bank shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to
be genuine and correct and to have been signed or sent by the
proper person or persons, and, in respect to legal matters, upon
the opinion of counsel selected by Administrative Agent, which
counsel may be employees of Administrative Agent.
Section 8.08. Reimbursement and Indemnification.
THE LENDERS AGREE TO REIMBURSE AND INDEMNIFY THE ADMINISTRATIVE AGENT AND THE
ISSUING BANK RATABLY IN PROPORTION TO THEIR RESPECTIVE PRO RATA SHARES (I) FOR
ANY AMOUNTS NOT REIMBURSED BY THE BORROWERS FOR WHICH THE ADMINISTRATIVE AGENT
OR THE ISSUING BANK, AS APPLICABLE, IS ENTITLED TO REIMBURSEMENT BY THE
BORROWERS UNDER THE CREDIT DOCUMENTS, (II) FOR ANY AMOUNTS NOT REIMBURSED BY
THE BORROWERS FOR ANY OTHER EXPENSES INCURRED BY THE ADMINISTRATIVE AGENT OR
THE ISSUING BANK ON BEHALF OF THE LENDERS, IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION AND ENFORCEMENT OF THE CREDIT DOCUMENTS,
AND (III) FOR ANY AMOUNTS NOT REIMBURSED BY THE BORROWERS FOR ANY LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS OF ANY KIND AND NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT OR ANY
ISSUING BANK IN ANY WAY RELATING TO OR ARISING OUT OF THE CREDIT DOCUMENTS OR
ANY OTHER DOCUMENT DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
CONTEMPLATED THEREBY, OR THE ENFORCEMENT OF ANY OF THE TERMS THEREOF OR OF ANY
SUCH OTHER DOCUMENTS, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY OF THE
FOREGOING TO THE EXTENT THEY ARISE FROM THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE ADMINISTRATIVE AGENT OR THE ISSUING BANK. THE
INDEMNIFICATION RIGHTS IN FAVOR OF THE ADMINISTRATIVE AGENT AND THE ISSUING
BANK SHALL EXTEND ONLY TO COSTS AND EXPENSES INCURRED IN SUCH CAPACITIES AND
SHALL NOT INCLUDE ANY COSTS AND EXPENSES INCURRED IN EITHER'S CAPACITY AS A
LENDER. THE OBLIGATIONS OF THE LENDERS UNDER THIS SECTION 8.08 SHALL SURVIVE
PAYMENT OF THE OBLIGATIONS AND TERMINATION OF THIS AGREEMENT.
Section 8.09. Notice of Default. The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default hereunder unless the
Administrative Agent have received written notice from a Lender
or a Borrower referring to this Agreement describing such Default
or Event of Default. In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give
prompt notice thereof to the Lenders.
Section 8.10. Rights as a Lender. In the event that either
the Administrative Agent or the Issuing Bank is a Lender, the
Administrative Agent and the Issuing Bank shall have the same
rights and powers hereunder and under any other Credit Document
as any Lender and may exercise the same as though it were not the
Administrative Agent or Issuing Bank, as applicable, and the term
"Lender" or "Lenders" shall, at any time when the Administrative
Agent or the Issuing Bank is a Lender, unless the context
otherwise indicates, include Administrative Agent or the Issuing
Bank, as applicable, in its individual capacity. The
Administrative Agent and the Issuing Bank may accept deposits
from, lend money to, and generally engage in any kind of trust,
debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Credit Document, with
the Company or any of its Subsidiaries in which the Company or
such Subsidiary is not restricted hereby from engaging with any
other Person. The Administrative Agent, in its individual
capacities, is not obligated to remain a Lender.
Section 8.11. Lender Credit Decision. Each Lender
acknowledges that it has, independently and without reliance upon
the Administrative Agent, the Issuing Bank or any other Lender
and based on the financial statements prepared by the Company and
such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement and the other Credit Documents. Each Lender
also acknowledges that it will, independently and without
reliance upon the Administrative Agent, the Issuing Bank or any
other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this
Agreement and the other Credit Documents.
Section 8.12. Successor Administrative Agent and Issuing
Bank. The Administrative Agent and the Issuing Bank may resign
at any time by giving prior written notice thereof to the Lenders
and the Company, such resignation to be effective upon the
appointment of a successor Administrative Agent or successor
Issuing Bank, as applicable, or, if no successor Administrative
Agent or successor Issuing Bank, as applicable, has been
appointed, 45 days after the retiring Administrative Agent gives
notice of its intention to resign. Upon any such resignation,
the Majority Lenders shall have the right to appoint, on behalf
of the Borrowers and the Lenders, a successor Administrative
Agent or a successor Issuing Bank, as applicable. If no
successor Administrative Agent or successor Issuing Bank, as
applicable, shall have been so appointed by the Majority Lenders
within thirty days after the resigning Administrative Agent's or
resigning Issuing Bank's giving notice of its intention to
resign, then the resigning Administrative Agent or resigning
Issuing Bank, as applicable, may appoint, on behalf of the
Borrowers and the Lenders, a successor Administrative Agent or
successor Issuing Bank, as applicable. If the Administrative
Agent has resigned and no successor Administrative Agent has been
appointed, the Lenders may perform all the duties of the
Administrative Agent hereunder and the Borrowers shall make all
payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders.
No successor Administrative Agent or successor Issuing Bank, as
applicable, shall be deemed to be appointed hereunder until such
successor Administrative Agent or successor Issuing Bank, as
applicable, has accepted the appointment. Any such successor
Administrative Agent or successor Issuing Bank shall be a
commercial bank having capital and retained earnings of at least
$100,000,000. Upon the acceptance of any appointment as
Administrative Agent or Issuing Bank, as applicable, hereunder by
a successor Administrative Agent or successor Issuing Bank, such
successor Administrative Agent or successor Issuing Bank shall
thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the resigning. Upon the
effectiveness of the resignation of an Administrative Agent or
Issuing Bank, the resigning Administrative Agent or resigning
Issuing Bank shall be discharged from its duties and obligations
hereunder and under the Credit Documents. After the
effectiveness of the resignation of an Administrative Agent or
Issuing Bank, the provisions of this Article VIII shall continue
in effect for the benefit of Administrative Agent or Issuing Bank
in respect of any actions taken or omitted to be taken by it
while it was acting as the Administrative Agent or Issuing Bank
hereunder and under the other Credit Documents.
Section 8.13. Other Titles. Neither the Syndication Agent
as listed on the cover page to this Agreement nor the
Documentation Agent as listed on the cover page to this Agreement
shall have any rights, obligations, or duties in such capacities
under this Agreement and the other Credit Documents.
ARTICLE IX
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
Section 9.01. Successors and Assigns. The terms and
provisions of the Credit Documents shall be binding upon and
inure to the benefit of the Borrowers and the Lenders and their
respective successors and assigns, except that (a) a Borrower
shall not have the right to assign its rights or obligations
under the Credit Documents and (b) any assignment by any Lender
must be made in compliance with Section 9.03. Notwithstanding
clause (b) of this Section, any Lender may at any time, without
the consent of the Borrowers or the Administrative Agent, assign
all or any portion of its rights under this Agreement and its
Notes to a Federal Reserve Bank; provided, however, that no such
assignment to a Federal Reserve Bank shall release the transferor
Lender from its obligations hereunder. The Administrative Agent
may treat the payee of any Note as the owner thereof for all
purposes hereof unless and until such payee complies with Section
9.03 in the case of an assignment thereof or, in the case of any
other transfer, a written notice of the transfer is filed with
the Administrative Agent. Any assignee or transferee of a Note
agrees by acceptance thereof to be bound by all the terms and
provisions of the Credit Documents. Any request, authority, or
consent of any Person, who at the time of making such request or
giving such authority or consent is the holder of any Note, shall
be conclusive and binding on any subsequent holder, transferee,
or assignee of such Note or of any Note or Notes issued in
exchange therefor.
Section 9.02. Participations.
(a) Permitted Participants; Effect. Any Lender may, in the
ordinary course of its business and in accordance with applicable
law, at any time sell to one or more banks or other entities
excluding entities classified by SIC code 1389 ("Participants")
participating interests in any Advances owing to such Lender, any
Note held by such Lender, any Commitment of such Lender or any
other interest of such Lender under the Credit Documents. In the
event of any such sale by a Lender of participating interests to
a Participant, such Lender's obligations under the Credit
Documents shall remain unchanged, such Lender shall remain solely
responsible to the other parties hereto for the performance of
such obligations, such Lender shall remain the holder of any such
Note for all purposes under the Credit Documents, all amounts
payable by the Borrowers under this Agreement shall be determined
as if such Lender had not sold such participating interests, and
the Borrowers and the Administrative Agent shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under the Credit Documents.
(b) Voting Rights. Each Lender shall retain the sole right
to approve, without the consent of any Participant, any
amendment, modification, or waiver of any provision of the Credit
Documents other than any amendment, modification, or waiver which
effects any of the amendments, modifications or waivers
referenced in clauses (a) through (h) of Section 10.01.
(c) Benefit of Setoff. Each Borrower agree that each
Participant shall be deemed to have the right of setoff provided
in Section 7.05 in respect of its participating interest in
amounts owing under the Credit Documents to the same extent as if
the amount of its participating interest were owing directly to
it as a Lender under the Credit Documents; provided, that each
Lender shall retain the right of setoff provided in Section 7.05
with respect to the amount of participating interests sold to
each Participant; and provided further that such right of setoff
shall not be exercisable until five Business Days after the date
upon which the Company receives written notice of the fact that
such Participant is a Participant (it being understood that
neither the Administrative Agent, the Lender granting such
participation nor the Participant shall be obligated to give such
notice). The Lenders agree to share with each Participant, and
each Participant, by exercising the right of setoff provided in
Section 7.05, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of setoff, such
amounts to be shared as if each Participant were a Lender.
Section 9.03. Assignments.
(a) Permitted Assignments. Any Lender may, in the ordinary
course of its business and in accordance with applicable law, at
any time assign to one or more banks or other entities
("Purchasers") all or any part of its rights and obligations
under the Credit Documents; provided, however, that in the case
of an assignment to an entity which is not a Lender or an
Affiliate of a Lender, such assignment shall be in a minimum
amount of the lesser of (i) $5,000,000.00 and (ii) all of such
Lender's Commitments and Advances of the Class being assigned.
Subject to the minimum amount set forth in the preceding
sentence, any Lender making such an assignment may assign any
percentage of a Class of Advances and its Commitments related
thereto without respect to the percentage assigned, if any, of
any other Class of Advances and related Commitments. A Lender
making an assignment shall also assign or cause such Lender's
affiliate, if any, who is a Swingline Bank to assign a portion of
such Swingline Bank's Swingline Advances to the assignee or an
appropriate affiliate of the assignee equal to the same portion
of the Revolving Commitments and Revolving Advances sold to such
Assignee. No Swingline Bank may assign any portion of its
Swingline Advances unless it or its affiliate which has a
Revolving Commitment assigns the same portion of such Lender's
Revolving Commitments and Revolving Advances to the Person or an
affiliate of the Person purchasing the assignment from such
Swingline Bank. Such assignment shall be made pursuant to an
Assignment and Acceptance substantially in the form of Exhibit A
or in such other form as may be agreed to by the parties thereto
("Assignment and Acceptance"). The consent of the Administrative
Agent and, so long as no Default is continuing, the Company shall
be required prior to an assignment becoming effective with
respect to a Purchaser which is not a Lender or an Affiliate
thereof. Such consent shall not be unreasonably withheld.
(b) Effect; Effective Date. Upon (a) delivery to the
Administrative Agent of a notice of assignment, substantially in
the form attached as Exhibit I to the Assignment and Acceptance
(a "Notice of Assignment"), together with any consents required
by Section 9.03(a) and (b) payment of a $3,500.00 fee to the
Administrative Agent for processing such assignment, such
assignment shall become effective on the effective date specified
in such Notice of Assignment. On and after the effective date of
such assignment, (i) such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Credit Document
executed by the Lenders and shall have all the rights and
obligations of a Lender under the Credit Documents, to the same
extent as if it were an original party hereto, and (ii) the
transferor Lender shall be released with respect to the
percentage of the Commitments and Advances assigned to such
Purchaser without any further consent or action by the Borrowers,
the Lenders, or the Administrative Agent. Upon the consummation
of any assignment to a Purchaser pursuant to this Section
9.03(b), the transferor Lender, the Administrative Agent, and the
Borrowers shall make appropriate arrangements so that replacement
Notes are issued to such transferor Lender and new Notes or, as
appropriate, replacement Notes, are issued to such Purchaser, in
each case in principal amounts reflecting their Commitments, as
adjusted pursuant to such assignment.
Section 9.04. Dissemination of Information. Each Borrower
authorizes each Lender to disclose to any Participant or
Purchaser or any other Person acquiring an interest in the Credit
Documents by operation of law (each a "Transferee") and any
prospective Transferee any and all information in such Lender's
possession concerning the creditworthiness of the Company and its
Subsidiaries.
Section 9.05. Tax Treatment. If any interest in any Credit
Document is transferred to any Transferee which is organized
under the laws of any jurisdiction other than the United States
or any State thereof, the transferor Lender shall cause such
Transferee, concurrently with the effectiveness of such transfer,
to comply with the provisions of Section 2.11.
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments, Etc. No amendment or waiver of
any provision of this Agreement, the Notes, or any other Credit
Document, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Majority Lenders and the
Borrowers, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for
which given; provided, however, that no amendment, waiver or
consent shall, unless in writing and signed by all the Lenders
and the Borrowers, do any of the following: (a) increase the
Commitments of the Lenders, (b) reduce the principal of, or
interest on, the Notes or any fees or other amounts payable
hereunder or under any other Credit Document, (c) postpone any
date fixed for any scheduled payment or prepayment of principal
of, or interest on, the Notes or any fees or other amounts
payable hereunder, (d) change the number of Lenders which shall
be required for the Lenders or any of them to take any action
hereunder or under any other Credit Document, (e) amend Section
2.12 or this Section 10.01, (f) release any Guarantor from its
obligations under its Guaranty, (g) release all or any
substantial portion of the Collateral, or (h) amend the
definition of "Majority Lenders"; and provided, further, that (i)
no amendment, waiver or consent shall, unless in writing and
signed by the Administrative Agent or the Issuing Bank, as
applicable, in addition to the Lenders required above to take
such action, affect the rights or duties of the Administrative
Agent or the Issuing Bank, as applicable, under this Agreement or
any other Credit Document and (iii) no waiver of any of the
conditions specified in Article III shall be effective against
any Lender not executing such waiver.
Section 10.02. Notices, Etc. All notices and other
communications shall be in writing (including telecopy or telex)
and mailed, telecopied, telexed, hand delivered or delivered by a
nationally recognized overnight courier, if to the Company or any
other Borrower, at its address as set forth on Schedule 1; if to
any Lender, at its specified Applicable Lending Office specified
opposite its name on Schedule 1; if to the Administrative Agent
or the Issuing Bank, at their respective addresses for notices
set forth in Schedule 1; and if a Notice of Borrowing or a Notice
of Conversion or Continuation to the Administrative Agent at the
specified Applicable Lending Office of Administrative Agent and,
if different, the specified Applicable Lending Office for
Administrative Agent specified opposite its name on Schedule 1
or, as to each party, at such other address or teletransmission
number as shall be designated by such party in a written notice
to the other parties. All such notices and communications shall,
when mailed, telecopied, telexed or hand delivered or delivered
by overnight courier be effective: upon receipt, if mailed, when
telecopy transmission is completed, when confirmed by telex
answer-back or when delivered, respectively, except that notices
and communications to the Administrative Agent and the Issuing
Bank pursuant to Article II or VIII shall not be effective until
received by the Administrative Agent and the Issuing Bank, as
applicable.
Section 10.03. No Waiver; Remedies. No failure on the part
of any Lender or the Administrative Agent to exercise, and no
delay in exercising, any right hereunder or under any Note shall
operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies
provided in this Agreement are cumulative and not exclusive of
any remedies provided by law.
Section 10.04. Costs and Expenses. The Borrowers agree to
pay on demand (a) all reasonable out-of-pocket costs and expenses
of the Administrative Agent and the Issuing Bank and reasonable
fees and out-of-pocket expenses of outside counsel for the
Administrative Agent and the Issuing Bank, in connection with the
preparation, execution, delivery, administration, modification
and amendment of this Agreement, the Notes and the other Credit
Documents, (b) all reasonable out-of-pocket costs and expenses of
the Administrative Agent and the Issuing Bank and reasonable fees
and out-of-pocket expenses of outside counsel for the
Administrative Agent and the Issuing Bank in connection with
advising the Administrative Agent and the Issuing Bank with
respect to their respective rights and responsibilities under
this Agreement, and (c) all reasonable out-of-pocket costs and
expenses of the Administrative Agent, the Issuing Bank and each
Lender and reasonable fees and out-of-pocket expenses of outside
counsel for the Administrative Agent, the Issuing Bank and each
Lender in connection with the enforcement (whether through
negotiations, legal proceedings or otherwise) of this Agreement,
the Notes and the other Credit Documents.
Section 10.05. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrowers, the
Administrative Agent and the Issuing Bank, and when the
Administrative Agent shall have, as to each Lender, either
received a counterpart hereof executed by such Lender or been
notified by such Lender that such Lender has executed it and
thereafter shall be binding upon and inure to the benefit of the
Borrowers, the Administrative Agent and each Lender and their
respective successors and assigns, except that a Borrower shall
not have the right to assign its rights or delegate its duties
under this Agreement or any interest in this Agreement without
the prior written consent of each Lender.
Section 10.06. Indemnification. EACH BORROWER SHALL INDEMNIFY THE
ADMINISTRATIVE AGENT, THE ISSUING BANK, THE ARRANGER, THE LENDERS AND EACH
AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS FROM, AND DISCHARGE, RELEASE, AND HOLD EACH OF THEM HARMLESS AGAINST,
ANY AND ALL LOSSES, LIABILITIES, CLAIMS OR DAMAGES TO WHICH ANY OF THEM MAY
BECOME SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES, CLAIMS OR DAMAGES ARISE
OUT OF OR RESULT FROM (I) ANY ACTUAL OR PROPOSED USE BY THE COMPANY OR ANY
AFFILIATE OF THE COMPANY OF THE PROCEEDS OF ANY ADVANCE, (II) ANY BREACH BY A
BORROWER OF ANY PROVISION OF THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, (III)
ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING (INCLUDING ANY THREATENED
INVESTIGATION OR PROCEEDING) RELATING TO THE FOREGOING, OR (IV) ANY
ENVIRONMENTAL CLAIM OR REQUIREMENT OF ENVIRONMENTAL LAWS CONCERNING OR RELATING
TO THE PRESENT OR PREVIOUSLY OWNED OR OPERATED PROPERTIES, OR THE OPERATIONS OR
BUSINESS, OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, AND EACH BORROWER SHALL
REIMBURSE THE ADMINISTRATIVE AGENT, THE ISSUING BANK, THE ARRANGER, AND EACH
LENDER, AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS, UPON DEMAND FOR ANY REASONABLE OUT-OF-POCKET EXPENSES
(INCLUDING LEGAL FEES) INCURRED IN CONNECTION WITH ANY SUCH INVESTIGATION,
LITIGATION OR OTHER PROCEEDING; AND EXPRESSLY INCLUDING ANY SUCH LOSSES,
LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE PERSON BEING
INDEMNIFIED'S OWN NEGLIGENCE, BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES,
CLAIMS, DAMAGES OR EXPENSES INCURRED BY REASON OF THE GROSS NEGLIGENCE, BAD
FAITH OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED, OR IN THE CASE OF
CLAUSE (IV) ABOVE, CAUSED BY THE AFFIRMATIVE ACT OF THE ADMINISTRATIVE AGENT,
THE ISSUING BANK, THE ARRANGER OR SUCH LENDER.
Section 10.07. Execution in Counterparts. This Agreement
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
Section 10.08. Survival of Representations, etc. All
representations and warranties contained in this Agreement or
made in writing by or on behalf of a Borrower in connection
herewith shall survive the execution and delivery of this
Agreement and the Credit Documents, the making of the Advances
and any investigation made by or on behalf of the Lenders, none
of which investigations shall diminish any Lender's right to rely
on such representations and warranties. All obligations of the
Borrowers provided for in Sections 2.08, 2.09, 2.11(c), and 10.06
shall survive any termination of this Agreement and repayment in
full of the Obligations.
Section 10.09. Severability. In case one or more provisions
of this Agreement or the other Credit Documents shall be
invalid, illegal or unenforceable in any respect under any
applicable law, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not be
affected or impaired thereby.
Section 10.10. Usury Not Intended. It is the intent of the
Borrowers and each Lender in the execution and performance of
this Agreement and the other Credit Documents to contract in
strict compliance with applicable usury laws, including conflicts
of law concepts, governing the Advances of each Lender including
such applicable laws of the State of New York and the United
States of America from time-to-time in effect. In furtherance
thereof, the Lenders and the Borrowers stipulate and agree that
none of the terms and provisions contained in this Agreement or
the other Credit Documents shall ever be construed to create a
contract to pay, as consideration for the use, forbearance or
detention of money, interest at a rate in excess of the Maximum
Rate and that for purposes hereof "interest" shall include the
aggregate of all charges which constitute interest under such
laws that are contracted for, charged or received under this
Agreement; and in the event that, notwithstanding the foregoing,
under any circumstances the aggregate amounts taken, reserved,
charged, received or paid on the Advances, include amounts which
by applicable law are deemed interest which would exceed the
Maximum Rate, then such excess shall be deemed to be a mistake
and each Lender receiving same shall credit the same on the
principal of its Notes (or if such Notes shall have been paid in
full, refund said excess to the Borrower). In the event that the
maturity of the Notes are accelerated by reason of any election
of the holder thereof resulting from any Event of Default under
this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes
interest may never include more than the Maximum Rate and excess
interest, if any, provided for in this Agreement or otherwise
shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be
credited on the applicable Notes (or, if the applicable Notes
shall have been paid in full, refunded to the applicable Borrower
of such interest). In determining whether or not the interest
paid or payable under any specific contingencies exceeds the
Maximum Rate, the Borrowers and the Lenders shall to the maximum
extent permitted under applicable law amortize, prorate, allocate
and spread in equal parts during the period of the full stated
term of the Notes all amounts considered to be interest under
applicable law at any time contracted for, charged, received or
reserved in connection with the Obligations. The provisions of
this Section shall control over all other provisions of this
Agreement or the other Credit Documents which may be in apparent
conflict herewith.
Section 10.11. Judgment Currency. If for the purposes of
obtaining judgment in any court it is necessary to convert a sum
due from a Borrower hereunder in the currency expressed to be
payable herein (the "specified currency") into another currency,
the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that
at which in accordance with normal banking procedures the
Administrative Agent could purchase the specified currency with
such other currency at the Administrative Agent's main Chicago
office on the Business Day preceding that on which final,
non-appealable judgment is given. The obligations of a Borrower
in respect of any sum due to any Lender or the Administrative
Agent hereunder shall, notwithstanding any judgment in a currency
other than the specified currency, be discharged only to the
extent that on the Business Day following receipt by such Lender
or the Administrative Agent (as the case may be) of any sum
adjudged to be so due in such other currency such Lender or the
Administrative Agent (as the case may be) may in accordance with
normal, reasonable banking procedures purchase the specified
currency with such other currency. If the amount of the
specified currency so purchased is less than the sum originally
due to such Lender or the Administrative Agent, as the case may
be, in the specified currency, such Borrower agrees, to the
fullest extent that it may effectively do so, as a separate
obligation and notwithstanding any such judgment, to indemnify
such Lender or the Administrative Agent, as the case may be,
against such loss, and if the amount of the specified currency so
purchased exceeds (a) the sum originally due to any Lender or the
Administrative Agent, as the case may be, in the specified
currency and (b) any amounts shared with other Lenders as a
result of allocations of such excess as a disproportionate
payment to such Lender under Section 2.12, such Lender or the
Administrative Agent, as the case may be, agrees to remit such
excess to the Borrowers.
Section 10.12. Forbearance Agreements. The Administrative
Agent and the Lenders acknowledge that it is customary practice
in certain areas where the Company and its Subsidiaries conduct
business for customers of offshore construction companies such as
the Company and its Subsidiaries to require forbearance
agreements from such contractor's secured creditors. The Lenders
authorize and direct the Administrative Agent to execute and
deliver such forbearance agreements in cases deemed appropriate
by the Administrative Agent in its sole discretion containing
such terms as are reasonably acceptable to the Administrative
Agent.
Section 10.13. Governing Law. THIS AGREEMENT AND EACH OF THE OTHER
CREDIT DOCUMENTS (EXCEPT AS OTHERWISE EXPRESSLY SET FORTH THEREIN) SHALL BE
GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
Section 10.14. Consent to Jurisdiction; Process Agent.
(a) EACH BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY UNITED STATES FEDERAL OR ILLINOIS STATE COURT SITTING IN
CHICAGO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT
DOCUMENTS AND SUCH BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT
OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS
AN INCONVENIENT FORUM. ANY JUDICIAL PROCEEDING BY A BORROWER AGAINST THE
ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER OR ANY AFFILIATE OF THE
ADMINISTRATIVE AGENT, THE ISSUING BANK OR ANY LENDER OR BY THE ADMINISTRATIVE
AGENT, THE ISSUING BANK OR ANY LENDER OR ANY AFFILIATE OF THE ADMINISTRATIVE
AGENT, THE ISSUING BANK OR ANY LENDER AGAINST A BORROWER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY CREDIT DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO, ILLINOIS.
(b) The Mexican Borrower hereby irrevocably appoints CT
Corporation System (the "Process Agent"), with an office on the
date hereof at 1633 Broadway, New York, New York 10019, as its
agent to receive on behalf of it and its Properties service of
copies of the summons and complaint and any other process which
may be served in any such action or proceeding. Such service may
be made by mailing by certified mail a copy of such process to
the Mexican Borrower in care of the Process Agent at the Process
Agent's above address, with a copy to the Mexican Borrower at its
address specified herein, and the Mexican Borrower hereby
irrevocably authorizes and directs the Process Agent to accept
such service on its behalf. As an alternative method of service,
the Mexican Borrower also irrevocably consents to the service of
any and all process in any such action or proceeding by the
mailing by certified mail of copies of such process to it at its
address specified herein. The Mexican Borrower agrees that a
final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.
Section 10.15. Waiver of Jury. THE BORROWERS, THE ISSUING BANK,
THE LENDERS AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVE ANY AND ALL
RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL PROCEEDING, DIRECTLY OR
INDIRECTLY, (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER CREDIT DOCUMENT, ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY, OR THE RELATIONSHIP ESTABLISHED HEREUNDER.
EXECUTED as of the 30th day of December, 1999.
BORROWERS:
GLOBAL INDUSTRIES, LTD.
By:
Name:
Title:
GLOBAL OFFSHORE MEXICO, S. DE R.L.
DE C.V.
By:
Name:
Title:
ADMINISTRATIVE AGENT:
BANK ONE, NA,
as Administrative Agent
By:
Name:
Title:
ISSUING BANK
BANK ONE, LOUISIANA, NATIONAL
ASSOCIATION
By:
Name:
Title:
BANKS:
REVOLVING COMMITMENT BANK ONE, NA
$47,916,667.00
TERM COMMITMENT By:
$67,083,333.00 Name:
Title:
REVOLVING COMMITMENT CREDIT LYONNAIS NEW YORK BRANCH
$20,833,333.00
TERM COMMITMENT By:
$29,166,667.00 Name:
Title:
REVOLVING COMMITMENT WELLS FARGO BANK (TEXAS), N.A.
$20,833,333.00
TERM COMMITMENT By:
$29,166,667.00 Name:
Title:
REVOLVING COMMITMENT WHITNEY NATIONAL BANK
$14,583,333.00
TERM COMMITMENT By:
$20,416,667.00 Name:
Title:
REVOLVING COMMITMENT CREDIT SUISSE FIRST BOSTON
$10,416,667.00
TERM COMMITMENT By:
$14,583,333.00 Name:
Title:
REVOLVING COMMITMENT HIBERNIA NATIONAL BANK
$10,416,667.00
TERM COMMITMENT By:
$14,583,333.00 Name:
Title:
Houston:164705 v 1
- -iv-
Houston:164705 v 1
- -4-
Houston:164705 v 1
Houston:164705 v 1
ASSIGNMENT AND ASSUMPTION AGREEMENT AND
FIRST AMENDMENT TO LOAN AGREEMENT
This ASSIGNMENT AND ASSUMPTION AGREEMENT AND FIRST AMENDMENT
TO LOAN AGREEMENT (the "Agreement") is made by and among C.C.C.
Fabricaciones y Construcciones, S.A. de C.V., a United Mexican
States corporation ("Borrower"), Heller Financial, Inc., a
Delaware corporation ("Heller"), Grupo Consorcio Fabricaciones y
Construcciones, S.A. de C.V. ("Grupo"), Global Industries, Ltd.,
a Louisiana corporation ("Guarantor") and Global Industries
Offshore, Inc. ("Assumptor").
W I T N E S S E T H :
WHEREAS, Borrower is a Company duly incorporated according
to Mexican law, in accordance with Public Deed number 64,029,
dated August 28, 1978 drafted before Notary Public number 21 of
the Federal District Mr. Joaquin Humberto Caceres y Ferraez duly
registered in the Public Registry of Commerce under mercantile
number 540 and in the Maritime Public Registry under Number 732,
Registration No. 1304. On March 5, 1992, Borrower amended its
articles of incorporation and bylaws in order to change its
registered corporate name, as evidenced by Public Deed number
14,568, dated March 5, 1992 drafted before Notary Public number
165 of the Federal District Mr. Carlos A. Sotelo Regil Hernandez
duly registered in the Public Registry of Commerce under
mercantile number 540; and
WHEREAS, Heller is a corporation duly incorporated under the
laws of the State of Delaware that is (a) authorized to transact
business in the State of Illinois and (b) duly registered as a
foreign financial entity before the Secretary of Hacienda y
Public Credit in the United Mexican States; and
WHEREAS, Assumptor is a Company duly incorporated under the
laws of the State of Delaware; and
WHEREAS, Borrower and Heller entered into a Loan Agreement
dated as of March 31, 1998 (the "Original Loan Agreement")
pursuant to which Heller made a loan of US $17,500,000 (the
"Loan") to Borrower; and
WHEREAS, the Loan is evidenced presently by the Term Note,
dated March 30, 1998, of Borrower payable to the order of Heller
and Assumptor has agreed to execute and deliver to Heller a
restated Term Note in substantially the same form as the existing
one; and
WHEREAS, Assumptor desires to (i) acquire the Vessels,
subject to the Lien of the Mortgage, and (ii) assume liability
for, and otherwise perform, the indebtedness and liabilities of
Borrower under the Loan Documents; and
WHEREAS, in order to effect said assumption and the transfer
of the Vessels from Borrower to Assumptor, subject to the
Mortgage, the written consent of Heller is required; and
WHEREAS, Guarantor and Assumptor desire to induce Heller to
(i) so consent as aforesaid, (ii) consent to terminate the
Guaranty Trust Agreement and the Trust Account, (iii) consent to
the charter (the "Charter") of the Vessels by Borrower to Global
Mexico S. de R.L. de C.V. (the "Charterer"), which Charter shall
be assumed by Assumptor and shall be subordinated and inferior to
the Lien of the Mortgage and (iv) consent to the assignment of
the Charter by Borrower to Assumptor; and
WHEREAS, capitalized terms used but not defined herein have
the meanings assigned to them in the Original Loan Agreement as
amended by this Agreement;
WHEREAS, Assumptor will be the successor and assignee of
Borrower under the Loan Documents; and
WHEREAS, as part of the inducement to Heller to enter into
this Agreement, Guarantor has executed and delivered an Amended
and Restated Guaranty Agreement of even date herewith (the
"Amended Guaranty"); and
WHEREAS, Heller has agreed to consent to the transfer of the
Vessels and the assumption of the Loan, subject to the terms and
conditions stated below;
NOW, THEREFORE, for and in consideration of the premises and
the mutual covenants and agreements contained herein, and for
other good and valuable considerations, the receipt and
sufficiency of which are hereby acknowledged, Heller, Borrower,
Assumptor, Grupo and Guarantor hereby agree as follows:
1. Assumption of Obligations. Assumptor agrees to ASSUME
AND DOES HEREBY ASSUME all of the obligations of Borrower set
forth in the Term Note, the Mortgage and the other Loan Documents
in accordance with their respective terms and conditions,
including without limitation, the obligation of payment of all
sums due under the Term Note. To further assure said assumption,
Assumptor agrees to execute and deliver to Lender (i) a restated
Term Note reflecting it as the maker thereof and (ii) an
amendment to the Mortgage, the effect of which shall be to
conform the Mortgage to the laws of the Republic of Panama, or a
new Panamanian Naval Mortgage for each Vessel (in form and
substance satisfactory to Lender in its sole discretion), or
both. Assumptor further agrees to abide by and be bound by all
of the terms of the Loan Documents, all as though each of the
Loan Documents had been made, executed and delivered by Assumptor
as the "Borrower" thereunder. The Mortgage is not being
discharged, terminated or released but may be removed from the
Records of the Mexican Maritime Registry when the Lien thereof
(or a replacement Lien) is perfected in the Republic of Panama.
2. Consents to Transfer. Heller hereby consents to
(i) the Charter, (ii) the transfer of the Vessels to Assumptor,
(iii) the assignment of the Charter to Assumptor and (iv) the
assumption by Assumptor of all of the obligations of Borrower
under the Loan Documents, subject to the terms and conditions set
forth in this Agreement. Heller's consent to the transfer of the
Vessels to Assumptor is not intended to be and shall not be
construed as a consent to any subsequent transfer or conveyance
which requires the Heller's consent pursuant to the terms of the
Mortgage or the other Loan Documents. All Vessels will be
transferred of record by January 31, 2000 and Assumptor shall, by
said date, have taken all steps required by Heller to effect
continuation of the Mortgage in Panama for all Vessels.
3. Transfer of Funds in Trust Account. All funds in the
Trust Account shall be wire transferred to Heller to be held as
collateral for the Obligations. In addition, the approximately
$385,868.19 invested by the Trustee in Inverworld Iwg Services,
Ltd. that will be returned by the Trustee and placed in the Trust
Account shall be wire transferred to Heller to be held as
collateral for the Obligations. Heller consents to the use of
such funds to pay regularly scheduled payments on the Note.
4. Release and Discharge. In consideration of the
assumption of all of Borrower's obligations set forth in the Term
Note, the Mortgage and the other Loan Documents by Assumptor and
the provision by Guarantor to Heller of the Amended Guaranty,
Heller hereby agrees to RELEASE and DISCHARGE Borrower and Grupo
from and against any and all recourse liability pursuant to the
Loan Documents.
5. No Impairment of Lien. Nothing set forth herein shall
affect the priority or extent of the Lien of any of the Loan
Documents, nor, except as expressly set forth herein, release or
change the liability of any Person who may now be or after the
date of this Agreement, become liable, primarily or secondarily,
under the Loan Documents. Except as expressly modified hereby
and by other written documents necessary or advisable to effect
the provisions hereof, the Term Note, the Mortgage and the other
Loan Documents shall remain in full force and effect and this
Agreement shall have no effect on the priority or validity of the
Liens set forth in the Mortgage or the other Loan Documents,
which are incorporated herein by reference.
6. Assumptor's Obligations. From and after the date of
this Agreement, any documents, actions or responsibility which
are required to be undertaken by Borrower under the Loan
Documents shall be deemed to be a responsibility of Assumptor.
For example, but without limitation, Assumptor is now required to
provide financial statements and information with respect to
itself in lieu of the provision of financial information by
Borrower as to Borrower. Additionally, circumstances in the Loan
Documents which would or could create a default and/or an Event
of Default and which are relative to the nature or condition of
Borrower shall now be deemed effective as to the nature or
condition of Assumptor (e.g., dissolution or bankruptcy of
Assumptor shall now constitute a default rather than dissolution
or bankruptcy of Borrower).
7. No Waiver of Remedies. Except as may be expressly set
forth herein, nothing contained in this Agreement shall
prejudice, act as, or be deemed to be a waiver of any right or
remedy available to Heller by reason of the occurrence or
existence of any fact, circumstance or event constituting a
default under the Term Note or the other Loan Documents.
8. Release of Heller. By their execution hereof, Borrower
and Grupo hereby release Heller, its officers, directors,
employees and agents from all claims and liability relating to
the transactions evidenced by the Term Note, the Mortgage, the
other Loan Documents, through and including the date hereof.
9. Notices. Any notices or other communications required
or permitted under this Agreement or the Loan Documents shall be
provided in accordance with the requirements therefor as set
forth in the Loan Documents; provided, however, from and after
the date hereof the address of the Assumptor shall be added to
such notice provisions as follows:
Assumptor: 8000 Global Drive
Carlyss, Louisiana 70665
Telephone: (337) 583-5000
Fax: (337) 583-5010
10. Costs and Expenses. Contemporaneously with the
execution and delivery hereof, Assumptor shall pay, or cause to
be paid, all costs and expenses incident to the preparation,
execution and recordation hereof and the consummation of the
transaction contemplated hereby, including, but not limited to,
reasonable fees and expenses of legal counsel to Heller.
11. Fee. Assumptor agrees to pay to Heller a fee for its
consents given herein of U.S. $40,000.
12. Additional Documentation. From time to time, Assumptor
or Guarantor, or both, shall execute or procure and deliver to
Heller such other and further documents and instruments
evidencing, securing or pertaining to the Loan or the Loan
Documents as shall be reasonably requested by Heller so as to
evidence or effect the terms and provisions hereof. Upon
Heller's request, Assumptor shall cause to be delivered to Heller
an opinion of counsel, satisfactory to Heller as to form,
substance and rendering attorney, with respect to (i) the
validity and enforceability of this Agreement and the terms and
provisions hereof, and any other agreement executed in connection
with the transaction contemplated hereby; (ii) the authority of
Assumptor, and any constituents of Assumptor, to execute, deliver
and perform its or their respective obligations under the Loan
Documents, as hereby modified; and (iii) such other matters as
reasonably requested by Heller.
13. Amendments to Loan Agreement. (a) After giving effect
to this Agreement, the definitions of "Guaranty Trust Agreement,"
"Trust Account," and "Trustee" found in Section 1.1 of the Loan
Agreement, and all references thereto in the Loan Documents, are
deleted in their entirety.
(b) The definitions of "Assignment of Collection
Rights" and "Majority Owner" found in Section 1.1 of the
Loan Agreement are deleted in their entirety and the
following are substituted therefor:
"Assignment of Collection Rights" means
an assignment of the charter (and related
accounts receivable due to the Borrower)
under the Vessel Contracts to Heller, in form
and substance satisfactory to Heller, in its
sole discretion.
"Majority Owner" means Global
Industries, Inc.
(c) The definition of "Guaranty" found in Section 1.1
of the Loan Agreement is amended by adding the following
sentence thereto:
"References to the Guaranty include the
Guaranty Agreement dated as of December 15,
1999 from the Guarantor to Heller, which
Guaranty Agreement is being executed and
delivered in connection with the assumption
of the Obligations by Global Industries
Offshore, Inc."
(d) The definition of "Mortgage" is amended by adding
the following sentence at the end thereof:
"In addition, any and all vessel
mortgages executed by Borrower covering one
or more of the Vessels filed or to be filed
with the Republic of Panama shall be included
in the definition of Mortgage as shall all
substitutions, amendments and modifications
thereof."
(e) Sections 3.1(v) and 5.1(j) of the Loan Agreement
is deleted and the following substituted therefor:
"[omitted intentionally]."
(f) Section 5.1(dd) of the Loan Agreement is amended
in its entirety to read as follows:
"(dd) Future Vessel Contracts.
Promptly assign the accounts receivable due
under each future Vessel Contract to Heller
pursuant to the Assignment of Collection
Rights."
14. Effectiveness of the Loan Documents. Except as
expressly modified by the terms and provisions hereof, each of
the terms and provisions of the Loan Documents are hereby
ratified and shall remain in full force and effect; provided,
however, that any reference in any of the Loan Documents to the
Loan, the amount constituting the Loan, any defined terms, or to
any of the other Loan Documents shall be deemed, from and after
the date hereof, to refer to the Loan, the amount constituting
the Loan, defined terms and to such other Loan Documents, as
modified hereby.
15. GOVERNING LAW. THE TERMS AND PROVISIONS HEREOF SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN.
16. Time. Time is of the essence in the performance of the
covenants contained herein and in the Loan Documents.
17. Binding Agreement. This Agreement shall be binding
upon the successors and assigns of the parties hereto; provided,
however, the provisions of this Paragraph 17 shall not be deemed
or construed to (i) permit, sanction, authorize or condone the
assignment of all or any part of the Vessels or any of
Assumptor's rights, titles or interests in and to the Vessels,
except as expressly authorized in the Loan Documents; or (ii)
confer any right, title, benefit, cause of action or remedy upon
any person or entity not a party hereto, which such party would
not or did not otherwise possess.
18. Headings. The section headings hereof are inserted for
convenience of reference only and shall in no way alter, amend,
define or be used in the construction or interpretation of the
text of such section.
19. Construction. Whenever the context hereof so requires,
reference to the singular shall include the plural and likewise,
the plural shall include the singular; words denoting gender
shall be construed to mean the masculine, feminine or neuter, as
appropriate; and specific enumeration shall not exclude the
general, but shall be construed as cumulative of the general
recitation.
20. Severability. If any clause or provision of this
Agreement is or should ever be held to be illegal, invalid or
unenforceable under any present or future law applicable to the
terms hereof, then and in that event, it is the intention of the
parties hereto that the remainder of this Agreement shall not be
affected thereby, and that in lieu of each such clause or
provision of this Agreement that is illegal, invalid or
unenforceable, such clause or provision shall be judicially
construed and interpreted to be as similar in substance and
content to such illegal, invalid or unenforceable clause or
provision, as the context thereof would reasonably suggest, so as
to thereafter be legal, valid and enforceable.
21. Counterparts. To facilitate execution, this Agreement
may be executed in as many counterparts as may be convenient or
required. It shall not be necessary that the signature and
acknowledgment of, or on behalf of, each party, or that the
signature and acknowledgment of all persons required to bind any
party, appear on each counterpart. All counterparts shall
collectively constitute a single instrument. It shall not be
necessary in making proof of this Agreement to produce or account
for more than a single counterpart containing the respective
signatures and acknowledgment of, or on behalf of, each of the
parties hereto. Any signature and acknowledgment page to any
counterpart may be detached from such counterpart without
impairing the legal effect of the signatures and acknowledgments
thereon and thereafter attached to another counterpart identical
thereto except having attached to it additional signature and
acknowledgment pages.
22. ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES
HERETO AND THERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN
OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND
MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF
THE PARTIES HERETO OR THERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO OR THERETO. THE PROVISIONS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS MAY BE AMENDED OR WAIVED
ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE RESPECTIVE PARTIES
TO SUCH DOCUMENTS.
EXECUTED to be effective as of December 14, 1999.
HELLER:
HELLER FINANCIAL, INC.
By:
Name:
Title:
BORROWER:
C.C.C. FABRICACIONES y
CONSTRUCCIONES, S.A. de C.V.
By:
Name:
Title:
-and-
ASSUMPTOR:
GLOBAL INDUSTRIES OFFSHORE, INC.
By:
Name: Peter Atkinson
Title: Treasurer
GUARANTOR:
GLOBAL INDUSTRIES, LTD.
By:
Name: Peter Atkinson
Title: Treasurer
-and-
GRUPO:
GRUPO CONSORCIO FABRICACIONES
y CONSTRUCCIONES, S.A. de C.V.
By:
Name:
Title:
Houston:163523 v 1
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND FIRST AMENDMENT TO LOAN AGREEMENT - Page 1
ASSIGNMENT AND ASSUMPTION AGREEMENT
AND FIRST AMENDMENT TO LOAN AGREEMENT - Page 1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM GLOBAL
INDUSTRIES, LTD.'S FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10K.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 34,087
<SECURITIES> 0
<RECEIVABLES> 92,835
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 149,480
<PP&E> 539,178
<DEPRECIATION> 0
<TOTAL-ASSETS> 755,935
<CURRENT-LIABILITIES> 103,814
<BONDS> 219,347
0
0
<COMMON> 926
<OTHER-SE> 397,252
<TOTAL-LIABILITY-AND-EQUITY> 755,935
<SALES> 0
<TOTAL-REVENUES> 387,452
<CGS> 0
<TOTAL-COSTS> 341,852
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,500
<INCOME-PRETAX> (8,688)
<INCOME-TAX> (7,557)
<INCOME-CONTINUING> (1,131)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,131)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
