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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED] - For the Fiscal Year Ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED] - For the Transition Period
From ____________________ to ____________________.
Commission file number 1-6311
TIDEWATER INC.
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(Exact name of registrant as specified in its Charter)
Delaware 72-0487776
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1440 Canal Street, New Orleans, Louisiana 70112
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code (504) 568-1010
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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
<TABLE>
<CAPTION>
Title of each class Name of each exchange on which registered
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<S> <C>
Common Stock, par value $0.10 New York Stock Exchange, Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange, Pacific Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
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 the
filing requirements for the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
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As of April 25, 1997, the aggregate market value of the voting stock held
by non-affiliates of the registrant was approximately $2,573,767,478.
60,341,642 shares of Tidewater Inc. common stock $0.10 par value per
share were outstanding on April 25, 1997. Registrant has no other class of
common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for Registrant's 1997 Annual Meeting of
Stockholders are incorporated into Part III of this report.
TABLE OF CONTENTS
PART I
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Page
Item Number
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<S> <C> <C>
1 & 2. Business and Properties . . . . . . . . . . . . . . . . . . . . . . 3
3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 7
4. Submission of Matters to a Vote of Security Holders . . . . . . . . 8
4A. Executive Officers of the Registrant . . . . . . . . . . . . . . . . 8
PART II
5. Market for the Registrant's Common Stock and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . 8
6. Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 9
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . 10
8. Financial Statements and Supplementary Data . . . . . . . . . . . . 18
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . . . . . . . . . 18
PART III
10. Directors and Executive Officers of the Registrant . . . . . . . . . 19
11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . 19
12. Security Ownership of Certain Beneficial Owners and Management . . . 19
13. Certain Relationships and Related Transactions . . . . . . . . . . . 19
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K . . . 19
</TABLE>
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PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
Tidewater Inc. (the "company") was incorporated in Delaware in 1956. The
company's principal executive offices are located at 1440 Canal Street, New
Orleans, Louisiana 70112, and its telephone number is (504) 568-1010. Unless
otherwise required by the context, the term "company" as used herein refers to
Tidewater Inc. and its consolidated subsidiaries.
The company's two principal divisions are Tidewater Marine and Tidewater
Compression. Tidewater Marine provides support services to the international
offshore petroleum industry. Tidewater Compression provides natural gas
compression equipment and services, primarily to the energy industry.
Information concerning revenues, operating profits and assets for each of
the company's divisions and the geographic distribution of its operations is
set forth in Item 7 of this report.
FORWARD LOOKING INFORMATION
In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the company notes that certain statements set
forth in Items 1 and 7 and elsewhere in this report, which provide other than
historical information and which are forward looking, involve risks and
uncertainties that may impact the company's actual results of operations. The
company faces many risks and uncertainties, many of which are beyond the
control of the company, including fluctuations in oil and gas prices; changes
in capital spending by customers in the energy industry for exploration,
development and production; unsettled political conditions, civil unrest and
governmental actions, especially in higher risk countries of operations;
foreign currency controls and environmental and labor laws. Other risk factors
are discussed elsewhere in this Form 10-K. Readers should consider all of these
risk factors, as well as other information contained in this report.
TIDEWATER MARINE
Tidewater Marine is the world's largest provider of offshore supply
vessels and marine support services. With a fleet of approximately 600
vessels, Tidewater Marine operates, and has a leading market share, in most of
the world's significant oil and gas exploration and production markets.
Tidewater Marine provides services supporting all phases of offshore
exploration, development and production, including: towing of and
anchor-handling of mobile drilling rigs and equipment; transporting supplies
and personnel necessary to sustain drilling, workover and production
activities; and supporting pipelaying and other offshore construction
activities.
The company's fleet is deployed in the major offshore oil and gas areas
of the world. The principal areas of the company's operations include the U.S.
Gulf of Mexico, areas offshore Australia, Brazil, Egypt, India, Indonesia,
Malaysia, Mexico, Trinidad, Venezuela and West Africa and in the North Sea and
the Persian Gulf. The company conducts its operations through wholly-owned
subsidiaries and joint ventures. For information concerning revenues derived
from domestic and international marine operations, see "Marine Division" in
Item 7 of this report.
Marine Services Equipment. The company's vessels regularly and routinely
move from one operating area to another, often to and from offshore operating
areas of different continents. Tables
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comparing the average number of vessels in the company's marine fleet by class
and geographic distribution appear under "Marine Division" in Item 7 of this
report.
The company's largest class of vessels consists of towing-supply and
supply vessels that are chartered to customers for use in transporting supplies
and equipment from shore bases to offshore drilling rigs, platforms and other
installations. In addition, vessels of the towing-supply class are equipped
for and are capable of towing drilling rigs and other marine equipment and
setting anchors for positioning and mooring drilling rigs.
The company's other classes of vessels include crew and utility vessels
that are chartered to customers for use in transporting supplies and personnel
from shore bases to offshore drilling rigs, platforms and other installations,
and offshore tugs that tow floating drilling rigs, dock tankers, tow barges,
assist pipelaying and construction barges and are used in a variety of other
commercial towing operations, including towing barges carrying a variety of
bulk cargoes and containerized cargo.
The company's vessels also include inshore tugs and both inshore and
offshore barges, production, line-handling and various special purpose vessels.
Inshore tugs, which are operated principally within inland waters, tow drilling
rigs to and from their locations, and tow barges carrying equipment and
materials for use principally in inland water drilling and production
operations. Barges are either used in conjunction with company tugs or are
chartered to others.
Information concerning the average age of the company's Marine vessel
fleet is set forth in Item 7 of this report.
On March 20, 1997 the company agreed to purchase for approximately $535
million O.I.L. Ltd. O.I.L. Ltd. is a subsidiary of Ocean Group plc, of the
United Kingdom, and owns a fleet of approximately 100 vessels, principally
composed of towing-supply and supply vessels operating in most major offshore
oil and gas exploration areas other than the United States. Final
determination of the purchase price is subject to certain conditions to be
satisfied at closing. The acquisition will be accounted for using the purchase
method and will be financed under a $600 million credit facility. The purchase
agreement calls for the closing to be no later than May 30, 1997, unless
extended by both parties.
In March 1996 the company acquired a fleet of 61 vessels owned and
operated by Hornbeck Offshore Services, Inc. ("Hornbeck") and it also acquired
Hornbeck's 49.9% interest in 29 safety/standby vessels operating in the North
Sea. In fiscal 1997 the company acquired for $12.4 million cash the remaining
equity interests in 22 of the 29 safety/standby vessels previously owned by
certain North Sea joint-venture companies. Information concerning these
acquisitions appears in Note 2 of Notes to Consolidated Financial Statements
included in this report. In addition, in fiscal 1997 the company acquired eight
used vessels, consisting of four towing-supply and supply vessels, two offshore
tugs and two crewboats.
Contributions of Main Classes of Vessels. Of the company's revenues from
marine vessel equipment operations, the following percentages were contributed
by the main classes of vessels:
<TABLE>
<CAPTION>
Year Ended March 31,
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1997 1996 1995
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<S> <C> <C> <C>
Towing-supply/Supply . . . . . . . . . . . . . . . . . . . . . . . . . 70.2% 72.8% 70.9%
Offshore Tugs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3% 16.6% 17.0%
Crew/Utility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5% 7.8% 8.6%
Safety/Standby . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3% -- --
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.7% 2.8% 3.5%
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</TABLE>
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Shipyards. Quality Shipyards, Inc., a wholly-owned subsidiary of the
company, operates two shipyards in Houma, Louisiana, which construct, modify,
repair and drydock vessels. Approximately 76% of the shipyards' business for
the year ended March 31, 1997 related to repairs, modifications and drydockings
of the company's vessels.
Risks of Operation and Insurance. The operation of any marine equipment
involves an inherent risk of catastrophic marine disaster, adverse weather
conditions, mechanical failure, collisions, property losses to the vessel and
business interruption due to political action in countries other than the
United States. Any such event may result in a reduction in revenues or
increased costs. The company's vessels are insured for their estimated market
value against damage or loss, including war and pollution risks. The company
also carries workers' compensation, maritime employer's liability, general
liability (including third party pollution) and other insurance customary in
the industry.
The company's international marine equipment operations are subject to
the usual risks inherent in doing business in countries other than the United
States. Such risks include political changes, possible vessel seizure, company
nationalization or other governmental actions, currency restrictions and
revaluations, and import/export restrictions, all of which are beyond the
control of the company. Although it is impossible to predict the likelihood of
such occurrences or their effect on the company, the company believes these
risks to be within acceptable limits and, in view of the mobile nature of the
company's principal revenue producing assets, does not consider them to
constitute a factor materially adverse to the conduct of its international
marine equipment operations as a whole.
Industry Conditions, Competition and Customers. Tidewater Marine's
operations are materially dependent upon the levels of activity in offshore oil
and natural gas exploration, development and production throughout the world.
Such activity levels are affected both by short-term and long-term trends in
world oil and natural gas prices. In recent years, oil and natural gas prices
and, therefore, the level of offshore drilling and exploration activity, have
been extremely volatile. A discussion of current market conditions appears
under "Business Overview" in Item 7 of this report.
The principal competitive factors for the offshore vessel service
industry are suitability and availability of equipment, price and quality of
service. The company has numerous competitors in virtually all areas in which
it operates. Certain customers of the company own and operate vessels to
service certain of their offshore activities.
Tidewater Marine's diverse, mobile asset base and geographic distribution
allow it to respond quickly to market conditions and provide a broad range of
vessel services to its customers throughout the world. Management believes
that the company has a significant competitive advantage because of the size,
diversity and geographic distribution of its fleet, the company's financial
condition and economies of scale.
Although one customer accounted for 11% and the five largest customers
accounted for approximately 30% of its marine revenues during the year ended
March 31, 1997, the company does not consider its marine operations dependent
on any single customer.
Government Regulations. The company's vessels are subject to various
statutes and regulations governing their operation and maintenance.
Under the Merchant Marine Act of 1936 and the Shipping Act, 1916, the
company would lose the privilege of engaging in U.S. coastwise trades if more
than 25% of the company's outstanding stock was owned by non-U.S. citizens.
The company has a dual stock certificate system to prevent non-U.S. citizens
from owning more than 25% of its common stock. In addition, the company's
charter permits the company certain remedies with respect to any transfer or
purported transfer of shares of the company's common stock that would result in
the ownership by non-U.S. citizens of more than 24% of its common stock.
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Based on information supplied to the company by its transfer agent,
approximately 3% of the company's outstanding common stock was owned by
non-U.S. citizens as of March 31, 1997.
At March 31, 1997, 204 vessels wholly owned by the company were
registered under flags other than the United States. In addition, all of the
company's 47 joint venture owned vessels were registered under non-U.S. flags
at March 31, 1997. The laws of the United States provide that once a vessel is
registered under a flag other than the United States, it cannot thereafter
engage in U.S. coastwise trade. Therefore, the company's non-U.S. flag vessels
must continue to be operated abroad, and if the company were not able to secure
charters abroad for them, and work would otherwise have been available for them
in the United States, its operations would be adversely affected.
All of the company's offshore vessels are subject to international safety
and classification standards. U.S. flag towing-supply and supply vessels are
required to undergo periodic inspections and to be recertified under drydock
examination at least twice every five years. Non-U.S. flag vessels are also
subject to various similar regulations.
TIDEWATER COMPRESSION
Tidewater Compression provides natural gas and air compression equipment
and services to the energy industry, primarily in the United States.
Gas Compression Rentals. The company rents natural gas compressors to
oil and gas producers and processors. With a fleet of approximately 2,800
compressors, Tidewater Compression operates one of the largest rental fleets of
gas compressors in the United States. The compressors are used primarily to
boost the pressure of natural gas from the wellhead into gas gathering systems,
into nearby gas processing plants, or into high pressure pipelines. Gas
compression equipment and services offered by the company also are used in the
production of coalbed methane and in enhanced recovery projects such as
fire-flooding, gas lift, or gas injection, with the objective of increasing the
amount of oil or condensate that can be recovered from a reservoir. Customers
often rent compressors rather than purchase them because the required
compressor horsepower and stage configuration can change several times in the
lifetime of a project. The primary market served is natural gas production
activities in the United States, although the company has modest operations in
Australia, Argentina, Venezuela and Canada. A table setting forth utilization,
rental rates and fleet size of the Tidewater Compression natural gas compressor
rental fleet appears in "Compression Division" in Item 7 of this report.
Equipment and Parts Sales. Tidewater Compression's Tide Air & Gas
division sells natural gas and air compressor packages and other related
equipment to domestic and international engineering contractors, oil and gas
producers and to manufacturers and other concerns. The equipment consists of
skid mounted compressors designed to meet complex specifications for
specialized applications. The gas compression equipment is used to facilitate
the production, transportation and storage of natural gas as well as boosting
fuel gas pressure for electrical power generation. The air compression
equipment is used to operate machinery, for instrumentation and in
manufacturing processes. The company's compression operations include an
engineering and fabrication facility at which the company designs and
constructs natural gas and air compression packages.
Distributorships. The company holds distributorships for various
manufacturers of natural gas and air compressors, related equipment and a wide
range of accessories. These manufacturers are the source for equipment and
accessories sold by the company.
Industry Conditions. In addition to well age and natural gas
consumption, a structural shift in U.S. onshore oil and gas industry operations
is affecting demand for natural gas compression package rentals. Many of the
major oil companies have directed their focus toward international operations
and away from
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domestic onshore natural gas reserves. Accordingly, these companies recently
have been selling their domestic onshore natural gas reserves and minimizing
staff in domestic operations. As a result, demand for rental packages of
natural gas compressors is expected to increase as buyers of natural gas
reserves or producers with reduced staffs are less likely to own and operate
natural gas compressor packages and more likely to rent natural gas compressor
packages to meet their natural gas compression needs.
Competition and Customers. The compression equipment market is highly
competitive, with the principal competitive factors being price, quality of
service and availability. The company competes with a large number of
companies in each area in which it operates.
Although one customer accounted for 7.5% and the five largest customers
accounted for approximately 21% of its compression revenues during the year
ended March 31, 1997, the company does not consider itself dependent on any one
customer.
International Operations. While most of Tidewater Compression's
operations are domestic, the company sells and rents natural gas compressor
packages and parts in Canada and rents natural gas compressors in Australia,
Argentina and Venezuela. The Tide Air & Gas division's natural gas and air
compression packages are sold to customers worldwide.
SEASONALITY
Tidewater Marine generally has its highest utilization rates in the
warmer temperature months when the weather is more favorable for offshore
exploration, development and construction work. Tidewater Compression
generally has its best results in the winter months when natural gas is in
greater demand. However, business volume for both Tidewater Marine and
Tidewater Compression is more dependent on oil and gas prices and the global
supply and demand conditions for the company's services than any seasonal
variation.
ENVIRONMENTAL COMPLIANCE
Compliance with existing governmental regulations which has been enacted
or adopted regulating the discharge of materials into the environment, or
otherwise relating to the protection of the environment, has not had, nor is
expected to have, a material effect on the company.
EMPLOYEES
As of March 31, 1997, the company had approximately 8,400 employees. The
company considers relations with employees to be satisfactory. The company is
not a party to any union contract in the United States but through several
subsidiaries is a party to union agreements covering local nationals in several
countries other than the United States.
ITEM 3. LEGAL PROCEEDINGS
The company is not a party to any litigation which, in the opinion of
management, is likely to have a material adverse effect on the company's
financial position or results of operations. However, the company is currently
involved in litigation concerning certain income tax issues and labor law
disputes which management believes, when resolved, will not have a material
adverse impact on the company's financial position or results of its ongoing
operations. Please refer to Item 7 and Note 10 of Notes to Consolidated
Financial Statements for further discussion of these matters.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1997.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
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Name Age Position
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William C. O'Malley . . . . . . 60 Chairman, President and Chief Executive Officer since October, 1994.
Chairman of the Board from 1987 to 1994 and Chief Executive Officer from
1990 to 1994 of Sonat Offshore Drilling, Inc. Employed 1994.
Richard M. Currence . . . . . . 58 Executive Vice President since 1992.
Ken C. Tamblyn . . . . . . . . . 53 Executive Vice President since 1992.
Cliffe F. Laborde . . . . . . . 45 Senior Vice President and General Counsel since 1992.
Stephen A. Snider . . . . . . . 49 Senior Vice President since 1991.
</TABLE>
There are no family relationships between the officers of the company.
The company's officers are elected annually by the Board of Directors and serve
for one-year terms or until their successors are elected.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The company's common stock is traded on the New York Stock Exchange and
the Pacific Stock Exchange under the symbol TDW. At March 31, 1997, there were
approximately 2,270 record holders of the company's common stock, based upon
the record holder list maintained by the company's stock transfer agent. The
following table sets forth the high and low closing sale prices of the
company's common stock as reported on the New York Stock Exchange Composite
Tape and the amount of cash dividends per share declared on Tidewater common
stock for the periods indicated.
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Fiscal Year Quarter High Low Dividend
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1997 First $ 44-5/8 $ 36-1/4 $0.125
Second 50 32-3/4 0.15
Third 47-1/4 36-1/2 0.15
Fourth 52-1/2 41 0.15
1996 First $26-1/4 $19-3/4 $0.10
Second 29-1/2 23-1/4 0.125
Third 31-5/8 24-5/8 0.125
Fourth 39-3/8 29-3/8 0.125
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</TABLE>
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ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth a summary of selected financial data for
each of the last five fiscal years. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Consolidated Financial Statements of the
company included in this report.
<TABLE>
<CAPTION>
Years Ended March 31
(in thousands, except ratio and per share amounts)
1997(7) 1996(6) 1995(5) 1994 1993
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<S> <C> <C> <C> <C> <C>
Revenues:
Marine operations $ 690,426 532,202 501,118 513,892 431,874
Compression operations 112,584 111,245 83,490 55,471 62,099
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$ 803,010 643,447 584,608 569,363 493,973
================================================================================================================
Earnings from continuing operations $ 146,011 76,177 51,187 44,660 27,890
Discontinued operations (1) -- -- -- -- 3,099
Extraordinary loss on early
debt retirement (2) -- -- -- (12,250) --
Accounting change (3) -- -- -- -- (6,640)
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Net earnings $ 146,011 76,177 51,187 32,410 24,349
================================================================================================================
Per common share:
Earnings from continuing
operations $ 2.34 1.23 .83 .73 .48
Discontinued operations (1) -- -- -- -- .05
Extraordinary loss on early
debt retirement (2) -- -- -- (.20) --
Accounting change (3) -- -- -- -- (.11)
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Net earnings $ 2.34 1.23 .83 .53 .42
================================================================================================================
Total assets $1,039,000 978,200 1,045,658 929,324 910,341
================================================================================================================
Long-term debt $ -- -- 121,023 7,833 110,381
================================================================================================================
Working capital $ 173,978 123,256 114,440 197,113 208,006
================================================================================================================
Current ratio 2.84 2.44 2.05 2.44 3.08
================================================================================================================
Cash dividends declared per
common share (4) $ .575 .475 .40 .30 .325
================================================================================================================
</TABLE>
(1) In fiscal 1993 the company disposed of its interest in a container
shipping business acquired in fiscal 1992 through the merger with Zapata
Gulf Marine Corporation.
(2) Fiscal 1994 charge results from the early retirement of notes and
debentures totaling $103,800,000.
(3) Fiscal 1993 charge results from the adoption of Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions."
(4) As a result of the timing of the fiscal 1994 Board of Directors meetings,
only three quarterly dividends of $.10 per common share each were
declared during fiscal 1994.
(5) See Note 10 of Notes to Consolidated Financial Statements for further
information concerning a $5.9 million pre-tax charge to earnings for the
cost of a restructuring program and a pre-tax charge of $2.5 million for
reserves to cover losses due to the potential insolvency of certain of
the Company's insurers.
(6) See Notes 2 and 7 of Notes to Consolidated Financial Statements for
further information concerning pre-tax merger expenses of $9.6 million
and a $3.0 million pre-tax charge for curtailment of the company's
pension plan.
(7) See Note 10 of Notes to Consolidated Financial Statements for further
information concerning a $2.8 million pre-tax charge to earnings due to
one of the company's insurers filing for liquidation.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The company provides services and equipment to the energy industry
through its Marine and Compression divisions. Company revenues, net earnings
and cash flows from operations are dependent upon activity levels of the Marine
vessel fleet and the Compression natural gas rental fleet. Activity levels for
the Marine vessel fleet and the Compression natural gas rental fleet are
ultimately dependent upon oil and natural gas prices which, in turn, are
determined by the supply/demand relationship for oil and natural gas. The
following discussion should be read in conjunction with the Selected Financial
Data and the Consolidated Financial Statements and related disclosures.
BUSINESS OVERVIEW
On March 20, 1997 the company agreed to purchase, for approximately
$535 million, O.I.L. Ltd. O.I.L. Ltd is a subsidiary of Ocean Group plc, of
the United Kingdom, and owns a fleet of approximately 100 vessels principally
composed of towing-supply and supply vessels operating in most major offshore
oil and gas exploration areas other than the United States. Final
determination of the purchase price is subject to certain conditions to be
satisfied at closing. The acquisition will be accounted for using the purchase
method and will be financed under a $600 million credit facility. The purchase
agreement calls for the closing to be no later than May 30, 1997, unless
extended by both parties.
During fiscal 1997's first quarter the company purchased for $12.4
million in cash the remaining equity interests in 22 of 29 safety/standby
vessels previously owned by joint-venture companies in the North Sea. The
acquisition of these safety/standby vessels in the North Sea was accounted for
using the purchase method.
In March 1996 the company expanded its domestic marine operations
when it merged with Hornbeck Offshore Services, Inc. (Hornbeck). Hornbeck's
fleet consisted of 61 towing-supply and supply vessels operating in the U.S.
Gulf of Mexico and a 49.9% interest in 29 safety/standby vessels operating in
the North Sea. The merger was accounted for as a pooling-of-interests and,
accordingly, the consolidated financial statements and the related disclosures
and the selected financial data for fiscal 1996 and prior years were restated
to include the accounts and the results of operations of Hornbeck. After-tax
merger costs of $7.8 million, or $.12 per common share, reduced fiscal 1996 net
earnings and consisted of legal, accounting and investment banking fees,
payments under severance and employment agreements, and a provision for certain
other costs related to the merger.
Better market conditions for the services provided by the company's
marine division in the U.S. Gulf of Mexico and in certain international
locations pushed operating performance above prior year levels as fiscal 1997
net earnings rose 92% above fiscal 1996's amount. The growth in fiscal 1997
net earnings was after allowing for unusual items in both fiscal 1997 and
fiscal 1996. Fiscal 1997 net earnings included an after-tax charge of $1.9
million, or $.03 per common share, to establish reserves for losses resulting
from one of the company's insurers filing for liquidation. Fiscal 1996 net
earnings included an after-tax charge of $9.8 million, or $.15 per common
share, for $7.8 million of merger costs discussed above and $2.0 million for
the curtailment of the company's pension plan. Future operating results should
be positively affected as domestically, market conditions for the services
provided by the company's Marine and Compression divisions remain favorable and
a larger and more diversified international-based Marine vessel fleet will
improve the company's ability to satisfy customer demands.
MARINE DIVISION
The Marine division provides a diverse range of services and
equipment to the offshore energy industry. Fleet size, utilization and vessel
day rates primarily determine the amount of revenues and
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operating profit because operating costs and depreciation do not change
proportionally with changes in revenues. Operating costs consist primarily of
crew costs, repair and maintenance, insurance, fuel, lube oil and supplies.
Fleet size and utilization are the major factors which affect crew costs. The
timing and amount of repair and maintenance costs are influenced by vessel age
and scheduled drydockings to satisfy safety and inspection requirements
mandated by regulatory agencies. Whenever possible, vessel drydockings are
done during seasonally slow periods to minimize any impact on vessel operations
and are only done if economically justified, given the vessel's age and
physical condition. The following tables compare revenues, operating expenses
(excluding general and administrative expenses and depreciation expense) and
operating margins of the Marine division's owned and operated vessel fleet for
the years ended March 31:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues (A):
United States $ 338,823 241,436 222,784
International 322,401 264,744 246,967
- -----------------------------------------------------------------------------------------------------
661,224 506,180 469,751
- -----------------------------------------------------------------------------------------------------
Operating expenses:
Crew costs 176,406 145,018 139,058
Repair and maintenance 96,815 84,567 69,669
Insurance 32,817 33,999 36,040
Fuel, lube oil and supplies 31,875 24,422 21,645
Other 23,582 19,909 18,640
- -----------------------------------------------------------------------------------------------------
361,495 307,915 285,052
- -----------------------------------------------------------------------------------------------------
Operating margins $ 299,729 198,265 184,699
=====================================================================================================
Operating margin percentages 45.3% 39.2% 39.3%
=====================================================================================================
Percentage rise(drop) in operating
costs compared to prior year 17.4% 8.0% (4.3%)
=====================================================================================================
</TABLE>
(A) For fiscal 1997, fiscal 1996 and fiscal 1995 one Marine customer accounted
for 11%, 12% and 12%, respectively, of Marine revenues.
The substantial growth in fiscal 1997 operating margins above the
prior year level was the result of higher utilization of the worldwide fleet, a
larger international-based fleet and significantly higher day rates for the
domestic-based fleet partially offset by higher operating expenses. Higher
utilization of the worldwide fleet in fiscal 1997 is attributable to greater
demand for offshore marine services. A larger international-based fleet is
the result of the fiscal 1997 first quarter purchase of the remaining 50.1%
equity interest in several safety/standby vessels previously operated by
joint-venture companies in the North Sea. Significantly higher day rates for
the domestic-based fleet is the result of a much more favorable supply/demand
relationship for offshore marine services in the U.S. Gulf of Mexico. Fiscal
1997 operating expenses rose above fiscal 1996's amount due to the expansion of
the North Sea fleet, increased costs associated with attracting, training and
retaining vessel personnel, higher activity for the domestic- based offshore
towing fleet, and a greater number of vessel drydockings.
Fiscal 1996 operating margins rose above the prior year level due to
higher utilization and average day rates for the worldwide vessel fleet.
Fiscal 1996's operating margins were adversely impacted by a significant
increase in the amount of repair and maintenance expense which primarily
affected the domestic-based vessel fleet. Approximately 68% of the increase in
repair and maintenance expense in
-11-
<PAGE> 12
fiscal 1996 is attributable to a change in estimated useful lives of marine
vessels, whereby costs which would have been capitalized under the previous
life estimates were expensed.
Revenues, operating expenses (excluding general and administrative
expense and depreciation expense) and operating margins of brokered vessels,
shipyard and other activities for the years ended March 31 were:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 29,202 26,022 31,367
Operating expenses 24,161 20,391 26,897
- -------------------------------------------------------------------------------------------------------
Operating margins $ 5,041 5,631 4,470
=======================================================================================================
</TABLE>
Marine division operating profit for the years ended March 31 consists
of the following:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Owned and operated vessels:
United States $ 120,275 46,839 41,427
International 82,591 60,291 24,947
- ---------------------------------------------------------------------------------------------------------
202,866 107,130 66,374
Gains from asset sales 5,352 6,930 13,098
Brokered vessels, shipyard and other 4,186 4,849 4,211
- ---------------------------------------------------------------------------------------------------------
Operating profit $ 212,404 118,909 83,683
=========================================================================================================
</TABLE>
Identifiable assets and depreciation expense for the years ended March
31 were:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Identifiable assets:
United States $ 376,380 349,554 356,593
International (A) 334,005 269,704 314,532
- -------------------------------------------------------------------------------------------------------
710,385 619,258 671,125
Investments in and advances to unconsolidated 20,556 35,861 38,378
- -------------------------------------------------------------------------------------------------------
$ 730,941 655,119 709,503
=======================================================================================================
Depreciation expense (B) $ 55,569 54,961 77,003
=======================================================================================================
</TABLE>
(A) Marine equipment operations are conducted worldwide with assets that
are highly mobile. Revenues and identifiable assets attributable to
these operations in any one country are not "significant" as that term
is defined by Statement of Financial Accounting Standards No. 14.
Further, most identifiable assets in each country are comprised of
offshore service vessels, which regularly and routinely move from one
operating area to another, often to and from offshore operating areas
of different continents. Equity in net assets of non-U.S.
subsidiaries is $211,450,000, $148,045,000 and $164,175,000 at March
31, 1997, 1996 and 1995, respectively. Other international
identifiable assets include accounts receivable and other balances
denominated in currencies other than the U.S. dollar which aggregate
approximately $6,652,000, $8,520,000 and $7,062,000 at March 31, 1997,
1996 and 1995, respectively. These amounts are subject to the usual
risks of fluctuating exchange rates and government-imposed exchange
controls.
(B) See Note 1 of Notes to Consolidated Financial Statements for a
discussion of depreciation policy changes effective in fiscal 1996.
Marine fleet utilization is determined primarily by market conditions
and to a lesser extent by drydocking requirements. Utilization of the
domestic-based fleet, which operates in U.S. waters, is primarily influenced by
offshore activity related to the exploration, development and production of
natural gas in the U.S. Gulf of Mexico; whereas, utilization of the
international-based fleet, which operates in waters other than the United
States, is primarily influenced by offshore activity related to the
exploration, development and production of oil. The following two sets of
tables compare day-based Marine fleet utilization percentages and average day
rates by vessel class and in total for each of the quarters in the years ended
March 31:
-12-
<PAGE> 13
UTILIZATION:
<TABLE>
<CAPTION>
1997 First Second Third Fourth Year
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic-based fleet:
- --------------------
Towing-supply/Supply 91.3% 90.2 90.0 93.3 91.2
Crew/Utility 90.9 94.1 88.6 86.7 90.1
Offshore Tugs 62.4 67.0 62.9 63.9 64.1
Other 48.8 61.9 50.2 45.1 51.3
Total 83.6% 85.1 82.4 84.0 83.7
International-based fleet:
- -------------------------
Towing-supply/Supply 87.5% 88.1 90.9 92.1 89.7
Crew/Utility 90.5 85.4 80.9 83.6 84.9
Offshore Tugs 75.4 70.3 79.3 85.9 77.6
Safety/Standby 84.4 78.2 83.9 80.1 80.8
Other 76.2 74.4 84.4 82.0 79.0
Total 84.0% 82.1 86.4 87.8 85.1
Worldwide fleet:
- ---------------
Towing-supply/Supply 89.2% 89.1 90.5 92.7 90.4
Crew/Utility 90.7 90.1 85.0 85.2 87.7
Offshore Tugs 69.7 68.8 71.8 75.9 71.5
Safety/Standby 84.4 78.2 83.9 80.1 80.8
Other 69.7 71.7 75.9 72.1 72.3
Total 83.8% 83.3 84.7 86.2 84.5
============================================================================================================
1996 First Second Third Fourth Year
- ------------------------------------------------------------------------------------------------------------
Domestic-based fleet:
- --------------------
Towing-supply/Supply 86.8% 85.6 89.9 91.1 88.3
Crew/Utility 81.7 79.5 83.7 80.1 81.2
Offshore Tugs 47.9 64.8 67.5 58.4 59.5
Other 44.9 64.8 51.3 43.3 50.9
Total 77.0% 79.9 83.1 81.0 80.2
International-based fleet:
- -------------------------
Towing-supply/Supply 86.7% 87.9 85.6 85.3 86.4
Crew/Utility 86.6 85.0 81.5 86.6 84.9
Offshore Tugs 72.2 71.2 77.4 76.1 74.4
Other 37.3 48.3 56.8 77.5 54.7
Total 76.1% 78.2 79.1 82.6 79.0
Worldwide fleet:
- ---------------
Towing-supply/Supply 86.8% 86.9 87.6 87.9 87.3
Crew/Utility 83.6 81.7 82.8 82.8 82.7
Offshore Tugs 60.6 68.4 73.4 69.0 67.9
Other 38.9 51.6 55.7 69.9 53.9
Total 76.5% 79.0 80.9 81.9 79.6
============================================================================================================
1995 First Second Third Fourth Year
- ------------------------------------------------------------------------------------------------------------
Domestic-based fleet:
Towing-supply/Supply 81.0% 80.1 85.1 87.2 83.4
Crew/Utility 90.3 92.9 89.0 85.0 89.3
Offshore Tugs 66.0 63.9 58.5 40.5 57.5
Other 51.6 50.9 58.9 26.2 47.2
Total 78.6% 77.8 79.3 75.2 77.7
International-based fleet:
- -------------------------
Towing-supply/Supply 82.2% 81.7 78.2 81.4 80.8
Crew/Utility 73.5 74.5 81.9 85.1 78.5
Offshore Tugs 80.4 71.3 72.7 80.8 76.4
Other 55.7 42.0 43.0 44.0 46.4
Total 75.9% 72.2 71.5 75.5 73.8
Worldwide fleet:
- ---------------
Towing-supply/Supply 81.6% 81.0 81.2 84.1 82.0
Crew/Utility 82.6 84.9 86.0 85.1 84.6
Offshore Tugs 73.5 67.5 65.4 61.2 66.9
Other 55.0 43.8 46.3 40.2 46.5
Total 77.0% 74.7 75.0 75.4 75.5
============================================================================================================
</TABLE>
-13-
<PAGE> 14
AVERAGE DAY RATES:
<TABLE>
<CAPTION>
1997 First Second Third Fourth Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Domestic-based fleet:
- --------------------
Towing-supply/Supply $4,278 5,049 5,842 6,382 5,401
Crew/Utility 1,424 1,512 1,664 1,800 1,594
Offshore Tugs 4,994 5,355 5,651 6,355 5,592
Other 3,158 3,050 3,505 3,224 3,231
Total $3,773 4,317 4,948 5,470 4,630
International-based fleet:
- -------------------------
Towing-supply/Supply $3,695 3,838 3,965 4,116 3,903
Crew/Utility 1,728 1,735 1,916 1,958 1,834
Offshore Tugs 2,708 2,916 3,290 3,299 3,063
Safety/Standby 5,194 4,907 5,290 5,906 5,331
Other 719 662 705 812 722
Total $2,939 3,144 3,296 3,475 3,218
Worldwide fleet:
- ---------------
Towing-supply/Supply $3,965 4,387 4,833 5,177 4,596
Crew/Utility 1,562 1,610 1,776 1,875 1,703
Offshore Tugs 3,602 3,971 4,237 4,468 4,079
Safety/Standby 5,194 4,907 5,290 5,906 5,331
Other 1,123 1,109 1,168 1,213 1,152
Total $3,298 3,639 3,988 4,310 3,814
===========================================================================================================
1996 First Second Third Fourth Year
- -----------------------------------------------------------------------------------------------------------
Domestic-based fleet:
- --------------------
Towing-supply/Supply $3,351 3,495 3,610 3,880 3,585
Crew/Utility 1,343 1,354 1,344 1,357 1,349
Offshore Tugs 5,220 4,584 4,909 5,162 4,943
Other 3,118 2,868 3,155 2,762 2,970
Total $3,115 3,178 3,309 3,492 3,273
International-based fleet:
- -------------------------
Towing-supply/Supply $3,644 3,670 3,651 3,713 3,670
Crew/Utility 1,884 1,767 1,646 1,712 1,752
Offshore Tugs 2,635 2,705 2,710 2,906 2,746
Other 726 727 674 631 680
Total $3,025 2,987 2,909 2,895 2,952
Worldwide fleet:
- ---------------
Towing-supply/Supply $3,507 3,590 3,632 3,791 3,630
Crew/Utility 1,567 1,526 1,470 1,514 1,519
Offshore Tugs 3,609 3,498 3,538 3,674 3,578
Other 1,298 1,265 1,138 923 1,130
Total $3,067 3,075 3,090 3,153 3,097
===========================================================================================================
1995 First Second Third Fourth Year
- -----------------------------------------------------------------------------------------------------------
Domestic-based fleet:
- --------------------
Towing-supply/Supply $3,710 3,364 3,270 3,466 3,451
Crew/Utility 1,270 1,251 1,294 1,288 1,276
Offshore Tugs 4,126 4,487 5,013 4,935 4,601
Other 2,917 2,970 2,884 3,839 3,045
Total $3,190 3,019 3,042 3,116 3,091
International-based fleet:
- -------------------------
Towing-supply/Supply $3,606 3,616 3,556 3,494 3,569
Crew/Utility 1,752 1,752 1,716 1,675 1,723
Offshore Tugs 2,765 2,416 2,432 2,702 2,591
Other 701 789 896 1,479 932
Total $2,843 2,917 2,852 2,916 2,882
Worldwide fleet:
- ---------------
Towing-supply/Supply $3,652 3,506 3,424 3,480 3,516
Crew/Utility 1,467 1,441 1,462 1,451 1,455
Offshore Tugs 3,352 3,421 3,617 3,422 3,451
Other 1,071 1,313 1,420 1,808 1,363
Total $2,996 2,964 2,942 3,006 2,977
===========================================================================================================
</TABLE>
-14-
<PAGE> 15
Additional investment in the vessel fleet for fiscal 1997, fiscal 1996 and
fiscal 1995 totaled $40.0 million, $41.0 million and $100.0 million,
respectively. In fiscal 1997, eight used vessels were acquired for $18.7
million consisting of four towing-supply/supply vessels, two offshore tugs and
two crewboats. In fiscal 1996, 28 used vessels were acquired for $28.7
million and consisted of eight towing-supply/supply vessels, eight offshore
tugs, 11 crewboats and a utility vessel. Fiscal 1995 vessel additions
consisted of 23 supply vessels, two offshore tugs and a crewboat for $64.3
million. Nineteen and ten of the vessels acquired in fiscal 1996 and fiscal
1995, respectively, were previously operated by the company under various
long-term lease agreements. The remainder of additions to the vessel fleet of
$21.3 million, $12.3 million and $35.7 million for fiscal 1997, fiscal 1996 and
fiscal 1995, respectively, were for modifications to the existing vessel fleet.
In fiscal 1997's first quarter the remaining 50.1% equity interest in 22 of 29
safety/standby vessels, previously operated by joint-venture companies in the
North Sea, was acquired and increased the size of the international-based
fleet. In fiscal 1996 and fiscal 1995 these vessels were classified as joint-
venture owned. The average age of the owned and operated vessel fleet is
approximately 19 years. The following table compares the average number of
vessels by class and geographic distribution during the years ended March 31:
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic-based fleet:
Towing-supply/supply 140 147 142
Crew/utility 42 51 51
Offshore tugs 43 41 47
Other 15 13 14
- -----------------------------------------------------------------------------------
Total 240 252 254
- -----------------------------------------------------------------------------------
International-based fleet:
Towing-supply/supply 166 171 175
Crew/utility 37 35 39
Offshore tugs 52 54 47
Safety/standby (A) 22 - -
Other 46 50 57
- -----------------------------------------------------------------------------------
Total 323 310 318
- -----------------------------------------------------------------------------------
Owned or chartered vessel included
in marine revenues 563 562 572
Vessels withdrawn from service 21 18 18
Joint-venture owned vessels (A) 52 74 72
- -----------------------------------------------------------------------------------
Total 636 654 662
===================================================================================
Worldwide fleet:
Towing-supply/supply 349 355 355
Crew/utility 89 95 96
Offshore tugs 101 98 98
Safety/standby 23 29 29
Other 74 77 84
- -----------------------------------------------------------------------------------
Total 636 654 662
===================================================================================
</TABLE>
(A) Change in number of vessels is the result of the company's acquisition
of the remaining 50.1% interest in a North Sea joint venture effective
June 1, 1996.
The drop in the average size of the worldwide fleet from fiscal 1996
to fiscal 1997 is the result of the return of previously leased vessels to
their owners and the disposition of obsolete vessels.
-15-
<PAGE> 16
COMPRESSION DIVISION
The Compression division provides natural gas compression services and
equipment for a variety of applications primarily in the energy industry.
Rental revenues are determined, for the most part, by utilization and fleet
size. Utilization is affected by natural gas storage levels and by the number
and age of producing oil and natural gas wells which, in turn, are dependent
upon the price levels of oil and natural gas. Quality of service, availability
and rental rates for equipment are also major factors which affect utilization.
Operating expenses are generally consistent from year-to-year and usually vary
in the short-term due to fluctuations in the amount of repair and maintenance
expense. Long-term growth in operating expenses will occur primarily as a
result of increased fleet size and general inflationary factors. Compression
division operating profit is primarily determined by operating margins from
rental gas compression operations. The following tables compare revenues,
operating expenses (excluding general and administrative expense and
depreciation expense), operating margins and related statistics for natural gas
compression operations for the years ended March 31:
<TABLE>
<CAPTION>
(in thousands, except statistics) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Rentals $ 72,695 72,765 49,235
Repair, service and other 3,297 6,161 6,335
- -------------------------------------------------------------------------------------------------------
75,992 78,926 55,570
- -------------------------------------------------------------------------------------------------------
Operating expenses:
Wages and benefits 11,832 11,654 8,702
Repairs and maintenance 14,132 13,348 8,124
Other 7,850 8,189 5,165
- -------------------------------------------------------------------------------------------------------
33,814 33,191 21,991
- -------------------------------------------------------------------------------------------------------
Operating margins $ 42,178 45,735 33,579
=======================================================================================================
Operating margin percentages 55.5% 57.9% 60.4%
=======================================================================================================
Horsepower based statistics:
Utilization 77% 74% 82%
Average monthly rental rate $ 16.67 17.45 17.41
Average fleet size 469,186 470,444 286,352
Actual fleet size at March 31 473,973 473,282 479,740
=======================================================================================================
</TABLE>
Increased competition for natural gas compression services during
fiscal 1997 depressed rental rates below the fiscal 1996 level and outweighed
the positive effect of higher utilization thus adversely affecting fiscal 1997
operating margins. Fiscal 1997 operating margins were also negatively
affected as repair and maintenance costs climbed above the fiscal 1996 level as
a result of a greater number of compressor overhauls partly caused by the
higher utilization level. Fiscal 1996 revenues and operating margins rose
above prior year levels as a result of a full year's impact of the expansion of
the natural gas compressor rental fleet which occurred in the third quarter of
fiscal 1995.
The Compression division also designs, fabricates and installs
engineered compressor systems and sells related parts and equipment. The
following table compares revenues, costs of sales and gross profit margins for
equipment and parts sales for the years ended March 31:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues $ 36,592 32,319 27,920
Costs of sales 30,339 26,345 23,895
- ------------------------------------------------------------------------------------------------------
Gross profit margins $ 6,253 5,974 4,025
======================================================================================================
Gross profit margin percentages 17.1% 18.5% 14.4%
======================================================================================================
</TABLE>
Fluctuations in the level of equipment and parts sales are due to the
timing of sales of engineered products. Fluctuations in gross profit margin
percentages are the result of competitive market forces.
-16-
<PAGE> 17
Costs of sales consist primarily of wages and benefits and material costs
associated with the design, fabrication and installation of packaged compressor
systems.
Additional investment in the natural gas compression rental fleet for
fiscal 1997, fiscal 1996 and fiscal 1995 totaled $ 17.9 million, $5.1 million
and $255.4 million, respectively. Additions for fiscal 1995 include the
acquisitions of the natural gas compression assets of Halliburton Company for
$205 million and the assets of Brazos Gas Compressing Company for $35 million.
The remainder of additions for fiscal 1995 and the additions for fiscal 1996
and 1997 were for modifications to the existing natural gas compressor rental
fleet and for the construction of additional natural gas compressors. During
the first quarter of fiscal 1997 the Compression division disposed of all of
its air rental equipment which generated proceeds of $3.5 million and a gain of
$.5 million. The remainder of gains from the sale of equipment for fiscal 1997
and gains from the sale of equipment for fiscal 1996 and fiscal 1995 were $.7
million, $.4 million and $1.1 million, respectively.
Identifiable assets and depreciation expense for the years ended March
31 were:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Identifiable assets $ 258,007 275,454 308,339
========================================================================================================
Depreciation expense $ 26,336 27,069 15,472
========================================================================================================
</TABLE>
The increase in depreciation expense from fiscal 1995 to fiscal 1996
is the result of a full year's impact of the Halliburton and Brazos
acquisitions.
CORPORATE
Earnings before income taxes for the company consists of the following
items for the years ended March 31:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Marine operating profit $ 212,404 118,909 83,683
Compression operating profit 12,394 14,565 14,436
Other income 6,788 5,436 5,589
Other expense (2,800) (12,600) (8,350)
Corporate expenses (11,235) (9,541) (10,285)
Interest expense (1,017) (5,882) (5,608)
- -------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 216,534 110,887 79,465
=======================================================================================================
</TABLE>
Other expense for fiscal 1997 is a charge to establish reserves for
losses resulting from one of the company's insurers filing for liquidation.
Fiscal 1996 other expense consisted of $9.6 million of costs resulting from
the merger with Hornbeck Offshore Services, Inc. and a $3.0 million charge as a
result of the removal of Marine fleet and Compression field service personnel
from the company's defined benefit pension plan. On April 1, 1996 these
Marine and Compression employees, along with all new employees of the company
who are eligible for pension plan membership, were enrolled in a new defined
contribution retirement plan. Fiscal 1995 other expense consisted of a $2.5
million charge for insurance losses as a result of the potential insolvency of
certain of the company's insurers and a $5.9 million charge for the costs of
restructuring the company's corporate headquarters and worldwide marine
operations which was designed to reduce costs and improve operating
efficiencies.
Corporate identifiable assets and depreciation expense for the years
ended March 31 were:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Identifiable assets $ 50,052 47,627 27,816
========================================================================================================
Depreciation expense $ 367 400 390
========================================================================================================
</TABLE>
-17-
<PAGE> 18
Consolidated general and administrative expenses for the years ended
March 31 consists of the following components:
<TABLE>
<CAPTION>
(in thousands) 1997 1996 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Personnel $ 38,512 34,463 38,298
Office and property 11,364 9,929 10,149
Sales and marketing 4,336 3,407 4,201
Professional services 5,307 4,545 3,683
Other 5,336 7,004 7,588
- -------------------------------------------------------------------------------------------------
$ 64,855 59,348 63,919
=================================================================================================
</TABLE>
Fiscal 1997 principal payments of $58.0 million on long-term debt were
primarily for the prepayment of the debt assumed in connection with the
purchase of the remaining equity interests in certain North Sea joint-venture
companies. Lower interest and other debt costs in fiscal 1997 compared with
the prior year resulted from the fiscal 1996 fourth quarter prepayment of debt
assumed in connection with the merger with Hornbeck Offshore Services, Inc.
During the third quarter of fiscal 1997 the Board of Directors authorized a
share repurchase program whereby the company could purchase in the open market
or through privately negotiated transactions up to $200 million of company
common stock through March 31, 1998. The company expended $84.8 million on the
purchase of 1,788,100 shares at an average cost, including broker commissions
and fees, of $47.42 per share during fiscal 1997. All shares purchased have
been canceled.
The Internal Revenue Service has notified the company of proposed
deficiencies aggregating approximately $17.5 million of additional income taxes
resulting from audits of the company's income tax returns for the years ended
March 31, 1993, 1994 and 1995. The company is the defendant to several alleged
labor-law pay violations claimed by certain current and former employees in
various areas of the world where its marine vessel operations are conducted.
While the amount, if any, of such claims for which the company ultimately may
be held liable is not presently determinable, if the claimants and all
similarly situated employees and former employees who might file claims were
successful, the aggregate amount of the company's liability, based on available
information, could approximate $15 million. The company is in the process of
defending against these claims and assessments and, in management's opinion,
the ultimate outcome of these matters will not have a material adverse effect
on the company's financial position or the results of its ongoing operations.
CURRENCY FLUCTUATIONS AND INFLATION
Because of its significant international operations, the company is
exposed to currency fluctuations and exchange risk. To minimize the financial
impact of these items the company attempts to contract a majority of its
services in United States dollars.
Day-to-day operating costs are generally affected by inflation.
However, because the energy services industry requires specialized goods and
services, general economic inflationary trends may not affect the company's
operating costs. The major impact on operating costs is the level of offshore
exploration, development and production spending by energy exploration and
production companies. As this spending increases, prices of goods and services
used by the energy industry and the energy services industry will increase.
Future improvements in vessel day rates and natural gas compressor rental rates
may shield the company from the inflationary effects on operating costs.
ENVIRONMENTAL MATTERS
During the ordinary course of business the company's operations are
subject to a wide variety of environmental laws and regulations. The company
attempts to comply with these laws and regulations in order to avoid costly
accidents and related environmental damage. Compliance with existing
governmental regulations which have been enacted or adopted regulating the
discharge of materials into the environment, or otherwise relating to the
protection of the environment, has not had, nor is expected to have, a material
effect on the company.
-18-
<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item is included in Part IV of this
report.
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
Information concerning directors of the company is incorporated by
reference from the company's definitive proxy statement to be filed on or
before July 29, 1997. For information regarding executive officers of the
company, see Item 4A of this report.
ITEM 11. EXECUTIVE COMPENSATION
Information concerning executive compensation is incorporated by
reference from the proxy statement described in Item 10 of this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning security ownership of certain beneficial owners
and management is incorporated by reference from the proxy statement described
in Item 10 of this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related transactions is
incorporated by reference from the proxy statement described in Item 10 of this
report.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. Financial Statements and Schedules
The Consolidated Financial Statements and Schedule of the company listed
on the accompanying Index to Financial Statements and Schedule (see page F-1)
are filed as part of this report.
B. Reports on Form 8-K
None.
-19-
<PAGE> 20
C. Exhibits
The index below describes each exhibit filed as a part of this report.
Exhibits not incorporated by reference to a prior filing are designated by an
asterisk; all exhibits not so designated are incorporated herein by reference
to a prior filing as indicated.
3(a) - Restated Certificate of Incorporation of Tidewater Inc. (filed with
the Commission as Exhibit 3(a) to the company's quarterly report on
Form 10-Q for the quarter ended September 30, 1993).
3(b) - Tidewater Inc. Bylaws (filed with the Commission as Exhibit 3(b) to
the company's quarterly report on Form 10-Q for the quarter ended
September 30, 1993).
4(a) - Restated Rights Agreement dated as of September 19, 1996 between
Tidewater Inc. and The First National Bank of Boston (filed with the
Commission as Exhibit 4 to the company's current report on Form 8-K
dated September 19, 1996).
*10(a) - $600,000,000 Revolving Credit and Term Loan Agreement dated March
19, 1997.
10(b) - Tidewater Inc. 1975 Incentive Program Stock Option Plan, as amended
in 1990 (filed with the Commission as Exhibit 10(c) to the company's
annual report on Form 10-K for the fiscal year ended March 31,
1991).
10(c) - Tidewater Inc. 1992 Stock Option and Restricted Stock Plan (filed
with the Commission as Exhibit 10(f) to the company's annual report
on Form 10-K for the fiscal year ended March 31, 1993).
10(d) - Tidewater Inc. Amended and Restated Supplemental Executive
Retirement Plan (filed with the Commission as Exhibit 10(g) to the
company's annual report on Form 10-K for the fiscal year ended March
31, 1993).
10(e) - Tidewater Inc. Amended and Restated Employees' Supplemental Savings
Plan (filed with the Commission as Exhibit 10(h) to the company's
annual report on Form 10-K for the fiscal year ended March 31,
1993).
10(f) - Supplemental Health Plan for Executive Officers of Tidewater Inc.
(filed with the Commission as Exhibit 10(i) to a Registration
Statement on September 12, 1989, Registration No. 33-31016).
10(g) - Tidewater Inc. Deferred Compensation Plan for Directors (filed with
the Commission as Exhibit 10(h) to the company's annual report on
Form 10-K for the fiscal year ended March 31, 1994).
10(h) - Tidewater Inc. Retirement Plan for Directors as adopted on March 22,
1990 (filed with the Commission as Exhibit 10(k) to the company's
annual report on Form 10-K for the fiscal year ended March 31,
1990).
10(i) - Employment and Consulting Agreement dated as of March 31, 1993
between Tidewater Inc. and John P. Laborde as amended (filed with
the Commission as Exhibit 10(l) to the company's annual report on
Form 10-K for the fiscal year ended March 31, 1993).
10(j) - Consulting Agreement dated as of March 13, 1996 between Tidewater
Inc. and Larry D. Hornbeck.
*10(k) - Change in Control Agreement dated September 30, 1996 between
Tidewater Inc. and William C. O'Malley.
*10(l) - Form of Change in Control Agreement entered into as of September 30,
1996 with four executive officers.
-20-
<PAGE> 21
*10(m) - Tidewater Inc. 1996 Annual Incentive Plan.
10(n) - Employment Agreement dated June 13, 1994 between Tidewater Inc. and
William C. O'Malley (filed with the Commission as Exhibit 10 to the
company's report on Form 8-K for June 13, 1994).
*10(o) - Agreement dated March 20, 1997 for the Acquisition of the share
capital of the O.I.L. group of companies.
*11 - Earnings per share Computation Information.
*21 - Subsidiaries of the company.
*24 - Consent of Independent Accountants.
*27 - Financial Data Schedule.
Certain instruments respecting long-term debt of Tidewater have been
omitted pursuant to Regulation S-K, Item 601. Tidewater hereby agrees to
furnish a copy of any such instrument to the Commission upon request.
-21-
<PAGE> 22
SIGNATURES OF REGISTRANT
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 on May 1, 1997.
TIDEWATER INC.
(Registrant)
By: /s/ William C. O'Malley
----------------------------------------
William C. O'Malley
Chairman of the Board of Directors,
President, and Chief Executive Officer
By: /s/ Ken C. Tamblyn
----------------------------------------
Ken C. Tamblyn
Executive Vice President and Chief
Financial Officer
SIGNATURES OF DIRECTORS
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 indicated on May 1, 1997.
/s/ Robert H. Boh /s/ Larry D. Hornbeck
- -------------------------------- ---------------------------------
Robert H. Boh Larry D. Hornbeck
/s/ Donald T. Bollinger /s/ Paul W. Murrill
- -------------------------------- ---------------------------------
Donald T. Bollinger Paul W. Murrill
/s/ Arthur R. Carlson /s/ William C. O'Malley
- -------------------------------- ---------------------------------
Arthur R. Carlson William C. O'Malley
/s/ Hugh J. Kelly /s/ Lester Pollack
- -------------------------------- ---------------------------------
Hugh J. Kelly Lester Pollack
/s/ John P. Laborde /s/ J. Hugh Roff, Jr.
- -------------------------------- ---------------------------------
John P. Laborde J. Hugh Roff, Jr.
-22-
<PAGE> 23
TIDEWATER INC.
ANNUAL REPORT ON FORM 10-K
ITEMS 8, 14(A), AND 14(D)
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS Page
----
<S> <C>
1. Independent Auditors' Report F-2
2. Consolidated Balance Sheets, March 31, 1997 and 1996 F-3
3. Consolidated Statements of Earnings, three years ended March 31, 1997 F-4
4. Consolidated Statements of Stockholders' Equity, three years ended March 31, 1997 F-5
5. Consolidated Statements of Cash Flows, three years ended March 31, 1997 F-6
6. Notes to Consolidated Financial Statements F-7
</TABLE>
FINANCIAL STATEMENT SCHEDULE
II. Tidewater Inc. and Subsidiaries Valuation and Qualifying Accounts
All other schedules are omitted as the required information is inapplicable or
the information is presented in the financial statements or the related notes.
F-1
<PAGE> 24
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders of Tidewater Inc.:
We have audited the accompanying consolidated financial statements of Tidewater
Inc. and subsidiaries as listed in the accompanying index. In connection with
our audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Tidewater Inc. and
subsidiaries as of March 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the years in the three-year period ended March
31, 1997, in conformity with generally accepted accounting principles. Also in
our opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
April 30, 1997
F-2
<PAGE> 25
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
March 31, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
ASSETS 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash, including temporary cash investments $ 41,114 28,768
Trade and other receivables, less allowance for doubtful accounts
of $10,648 in 1997 and $8,376 in 1996 187,612 144,472
Inventories 36,016 31,346
Other current assets 3,984 4,350
- -----------------------------------------------------------------------------------------------
Total current assets 268,726 208,936
- -----------------------------------------------------------------------------------------------
Investments in, at equity, and advances to unconsolidated companies 20,556 35,861
Properties and equipment:
Marine equipment 1,265,633 1,210,876
Compression equipment 322,512 324,069
Other 39,826 41,240
- -----------------------------------------------------------------------------------------------
1,627,971 1,576,185
Less accumulated depreciation 946,880 916,412
- -----------------------------------------------------------------------------------------------
Net properties and equipment 681,091 659,773
Other assets 68,627 73,630
- -----------------------------------------------------------------------------------------------
$1,039,000 978,200
===============================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------------------------------------------------------------------
Current liabilities:
Current maturities of long-term debt -- 2,934
Accounts payable and accrued expenses 81,500 71,902
Accrued property and liability losses 13,248 10,844
- -----------------------------------------------------------------------------------------------
Total current liabilities 94,748 85,680
- -----------------------------------------------------------------------------------------------
Deferred income taxes 95,595 76,579
Accrued property and liability losses 32,146 34,206
Other liabilities and deferred credits 46,847 42,985
Stockholders' equity:
Common stock, par value $.10, issued 60,334,889 shares
in 1997 and 61,882,695 shares in 1996 6,033 6,188
Additional paid-in capital 341,415 421,655
Retained earnings 433,347 322,736
- -----------------------------------------------------------------------------------------------
780,795 750,579
Less:
Cumulative foreign currency translation adjustment 10,676 10,771
Deferred compensation - restricted stock 455 1,058
- -----------------------------------------------------------------------------------------------
Total stockholders' equity 769,664 738,750
Commitments and other matters
- -----------------------------------------------------------------------------------------------
$1,039,000 978,200
===============================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-3
<PAGE> 26
CONSOLIDATED STATEMENTS OF EARNINGS
Years Ended March 31, 1997, 1996 and 1995
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Marine operations $ 690,426 532,202 501,118
Compression operations 112,584 111,245 83,490
- ------------------------------------------------------------------------------------------------------
803,010 643,447 584,608
- ------------------------------------------------------------------------------------------------------
Costs and expenses:
Marine operations 385,656 328,306 311,949
Compression operations 64,153 59,536 45,886
Depreciation 82,272 82,430 92,865
General and administrative 64,855 59,348 63,919
- ------------------------------------------------------------------------------------------------------
596,936 529,620 514,619
- ------------------------------------------------------------------------------------------------------
206,074 113,827 69,989
Other income (expenses):
Foreign exchange loss (397) (479) (611)
Gain on sales of assets 6,443 7,264 14,207
Equity in net earnings of unconsolidated companies 4,901 5,901 4,555
Minority interests (1,311) (1,385) (1,488)
Interest and miscellaneous income 4,641 4,241 6,920
Other expense (2,800) (12,600) (8,499)
Interest and other debt costs (1,017) (5,882) (5,608)
- ------------------------------------------------------------------------------------------------------
10,460 (2,940) 9,476
- ------------------------------------------------------------------------------------------------------
Earnings before income taxes 216,534 110,887 79,465
Income taxes 70,523 34,710 28,278
- ------------------------------------------------------------------------------------------------------
Net earnings $ 146,011 76,177 51,187
======================================================================================================
Primary and fully-diluted net earnings per common share $ 2.34 1.23 .83
======================================================================================================
Weighted average common shares and equivalents 62,280,281 62,160,978 61,858,894
======================================================================================================
Cash dividends declared per common share $ .575 .475 .40
======================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-4
<PAGE> 27
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Years Ended March 31, 1997, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
Cumulative
foreign Deferred
Additional currency compensation-
Common paid-in Retained translation restricted
stock capital earnings adjustment stock Total
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997
- --------------------------------------------------------------------------------
Amount at March 31, 1996 $ 6,188 421,655 322,736 (10,771) (1,058) 738,750
Net earnings -- -- 146,011 -- -- 146,011
Exercise of stock options 23 4,368 -- -- -- 4,391
Cash dividends declared -- -- (35,400) -- -- (35,400)
Stock repurchases (178) (84,608) -- -- -- (84,786)
Other -- -- -- 95 603 698
- ---------------------------------------------------------------------------------------------------
Amount at March 31, 1997 $ 6,033 341,415 433,347 (10,676) (455) 769,664
===================================================================================================
1996
- --------------------------------------------------------------------------------
Amount at March 31, 1995 $ 6,155 418,941 271,452 (10,745) (1,544) 684,259
Net earnings -- -- 76,177 -- -- 76,177
Exercise of stock options 33 2,950 -- -- -- 2,983
Cash dividends declared -- -- (25,327) -- -- (25,327)
Other -- (236) 434 (26) 486 658
- ---------------------------------------------------------------------------------------------------
Amount at March 31, 1996 $ 6,188 421,655 322,736 (10,771) (1,058) 738,750
===================================================================================================
1995
Amount at March 31, 1994 $ 6,102 416,559 241,520 (11,032) -- 653,149
Net earnings -- -- 51,187 -- -- 51,187
Issuance of restricted stock 7 1,629 -- -- (1,636) --
Exercise of stock options 12 876 -- -- -- 888
Cash dividends declared -- -- (21,255) -- -- (21,255)
Other 34 (123) -- 287 92 290
- ---------------------------------------------------------------------------------------------------
Amount at March 31, 1995 $ 6,155 418,941 271,452 (10,745) (1,544) 684,259
===================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-5
<PAGE> 28
CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended March 31, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
1997 1996 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 146,011 76,177 51,187
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 82,272 82,430 92,865
Provision for deferred income taxes 19,016 16,233 6,523
Gain on sales of assets (6,443) (7,264) (14,207)
Equity in net earnings of unconsolidated companies (4,901) (5,901) (4,555)
Minority interests 1,311 1,385 1,488
Compensation expense - restricted stock 603 595 92
Decrease (increase) in trade and other receivables (35,821) 11,780 (183)
Decrease (increase) in inventories (4,398) 4,572 4,977
Decrease (increase) in other current assets 366 20 (944)
Increase (decrease) in accounts payable/accrued expenses 3,712 (11,676) 9,462
Increase (decrease) in accrued property/liability losses 2,404 (689) 3,776
Other, net 1,332 6,548 5,001
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 205,464 174,210 155,482
- -----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Proceeds from sales of assets 22,737 18,044 26,510
Additions to properties and equipment (58,002) (46,116) (354,725)
Sale of marketable securities -- -- 27,310
Acquisition of joint-venture interests, net of cash received (3,435) -- --
Investments in unconsolidated companies, net of dividends received 5,151 9,102 (3,059)
Investment from minority interests, net of dividends paid (755) (1,064) 3,550
Other -- (592) (863)
- -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (34,304) (20,626) (301,277)
- -----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Common stock purchased (84,786) -- --
Principal payments on long-term debt (58,019) (145,395) (96,272)
Proceeds from the issuance of long-term debt 15,000 13,400 173,000
Proceeds from issuance of common stock 4,391 4,212 742
Cash dividends (35,400) (25,327) (21,255)
Other -- 40 (947)
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (158,814) (153,070) 55,268
- -----------------------------------------------------------------------------------------------------------------
Net increase in cash for Hornbeck Offshore Services, Inc.
for the quarter ended March 31, 1995 (Note 2) -- 4,980 --
Net increase (decrease) in cash,
including temporary cash investments 12,346 514 (90,527)
- -----------------------------------------------------------------------------------------------------------------
Cash, including temporary cash investments at beginning of year 28,768 23,274 113,801
- -----------------------------------------------------------------------------------------------------------------
Cash, including temporary cash investments at end of year $ 41,114 28,768 23,274
=================================================================================================================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 702 5,944 5,377
Income taxes $ 56,249 27,721 23,078
=================================================================================================================
Supplemental noncash investing activity:
Joint-venture interests acquired:
Fair value of assets acquired $ 51,305 -- --
Fair value of liabilities assumed (47,870) -- --
- -----------------------------------------------------------------------------------------------------------------
Net cash payment $ 3,435
=================================================================================================================
</TABLE>
See accompanying Notes to Consolidated Financial Statements
F-6
<PAGE> 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
March 31, 1997, 1996 and 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
The company provides services and equipment to the offshore energy
industry through its marine and compression divisions. The marine division owns
and operates the world's largest fleet of offshore service vessels and the
compression division owns and operates one of the largest rental fleets of
natural gas compressors in the United States. Activity levels for the marine
vessel fleet and compression rental fleet are ultimately dependent upon oil and
natural gas prices which, in turn, are determined by the supply/demand
relationship for oil and natural gas.
USE OF ESTIMATES
In preparing the company's financial statements management makes
informed estimates and assumptions that affect the amounts reported in the
financial statements and related disclosures. Actual results may differ from
these estimates.
BASIS OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of Tidewater
Inc. and its subsidiaries. Significant intercompany balances and transactions
are eliminated in consolidation.
INVENTORIES
Inventories are stated at average cost for operating supplies and at the
lower of cost (FIFO) or market (net realizable value) for merchandise held for
resale.
PROPERTIES AND EQUIPMENT
Properties and equipment are carried at cost. Depreciation for financial
reporting purposes is computed primarily on the straight-line basis beginning
with the first charter/rental, with salvage values of 5%-10% for marine
equipment and 30% for compression equipment, using estimated useful lives of:
<TABLE>
<CAPTION>
Years
- ------------------------------------------------------------------------------
<S> <C>
Marine equipment (from date of construction) 15 - 25
Compression equipment 8 - 12
Other properties and equipment 3 - 30
</TABLE>
Used equipment is depreciated in accordance with the above schedule;
however, no life less than six years is used for marine equipment regardless of
the date constructed.
Maintenance and repairs are charged to operations as incurred during the
asset's original estimated useful life. Major repair costs incurred after the
original estimated useful life that also have the effect of extending the
useful life of the asset are capitalized and amortized over three years. Major
modifications to equipment are capitalized and amortized over the remaining
life of the equipment.
In fiscal 1996 the estimated useful lives of the company's marine
vessels were increased from 10-20 years to 15-25 years. The increase in useful
lives was made in order to provide a better matching of revenues and
depreciation expense over a vessel's economic useful life. This change in
accounting estimate lowered fiscal 1996 depreciation expense by approximately
$25.2 million. Concurrent with this change approximately $10.2 million of
repair and maintenance costs that would have been capitalized in fiscal 1996
had the previous estimated useful lives been used, was expensed. The change
increased fiscal 1996 net earnings by $10.0 million, or $.16 per common share.
On April 1, 1996 the company adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The adoption
had no impact on the company's results of operations or financial position.
F-7
<PAGE> 30
ACCRUED PROPERTY AND LIABILITY LOSSES
The company's insurance subsidiary establishes case based reserves for
estimates of reported losses on direct business written, estimates received
from ceding reinsurers, and reserves based on past experience of unreported
losses. Such losses principally relate to the company's marine operations and
are included as a component of costs of marine operations in the Consolidated
Statements of Earnings. The liability for such losses and the related
reimbursement receivable from reinsurance companies are classified in the
Consolidated Balance Sheet into current and noncurrent amounts based upon
estimates of when the liabilities will be settled and when the receivables will
be collected.
PENSION AND OTHER POSTRETIREMENT BENEFITS
Pension costs are accounted for in accordance with the provisions of
Statement of Financial Accounting Standards No. 87 and are funded as required
by law. Prior service costs are amortized on the straight-line basis over the
average remaining service period of employees expected to receive pension
benefits. Postretirement benefits other than pensions are accounted for in
accordance with Statement of Financial Accounting Standards No. 106. The
estimated cost of postretirement benefits other than pensions are accrued
during the employees' active service period. Postemployment and postretirement
benefits other than pensions are funded as claims are submitted.
INCOME TAXES
Income taxes are accounted for in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
EARNINGS PER SHARE
Primary earnings per share are computed based on the weighted average
number of shares and dilutive equivalent shares of common stock (stock options
and restricted stock grants) outstanding during each year using the treasury
stock method.
FOREIGN CURRENCY TRANSLATION
The functional currency for certain non-U.S. subsidiaries and
unconsolidated companies is the applicable local currency. The translation of
the applicable local currencies into U.S. dollars is performed for balance
sheet accounts using current exchange rates in effect at the balance sheet date
and for revenue and expense accounts using weighted average exchange rates
during the period. The gains and losses resulting from the balance sheet
account translations, net of deferred income taxes, are included in
stockholders' equity.
Some transactions of the company and its subsidiaries are made in
currencies different from their own. Gains and losses from these transactions
are included in the Consolidated Statements of Earnings as they occur and
relate primarily to the revenue generating and purchasing activities in Brazil,
Venezuela, Mexico, United Kingdom, Singapore, Trinidad and Nigeria.
CASH FLOWS
For purposes of the Consolidated Statements of Cash Flows, all highly
liquid investments purchased with original maturities of approximately three
months or less are considered to be cash equivalents. Some items of compression
equipment are acquired and placed in inventories for subsequent sale or rent to
others. Acquisitions of these assets are considered operating activities in the
Consolidated Statements of Cash Flows, although they later may be transferred
to the compression equipment rental fleet.
F-8
<PAGE> 31
STOCK COMPENSATION
On April 1, 1996 the company elected to continue to use the intrinsic
value method of accounting for stock-based compensation prescribed by
Accounting Principles Board (APB) Opinion No. 25 and, accordingly, adopted the
disclosure provisions of SFAS No. 123 "Accounting for Stock-based
Compensation."
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings per Share" and SFAS No. 129,
"Disclosure of Information about Capital Structure." SFAS No. 128 is effective
for annual and interim periods ending after December 15, 1997. SFAS No. 129 is
effective for fiscal years ending after December 15, 1997. Management does not
believe that these pronouncements will have a material impact on its fiscal
1998 consolidated financial statements.
(2) BUSINESS COMBINATIONS
On March 20, 1997 the company agreed to purchase, for approximately $535
million, O.I.L. Ltd. O.I.L. Ltd is a subsidiary of Ocean Group plc, of the
United Kingdom, and owns a fleet of approximately 100 vessels principally
composed of towing-supply and supply vessels operating in most major offshore
oil and gas exploration areas other than the United States. Final determination
of the purchase price is subject to certain conditions to be satisfied at
closing. The acquisition will be accounted for using the purchase method and
will be financed under a $600 million credit facility. The purchase agreement
calls for the closing to be no later than May 30, 1997, unless extended by both
parties.
On May 31, 1996 the company acquired for $12.4 million cash the
remaining 50.1% equity interest in 22 of 29 safety/standby vessels previously
owned and operated by joint-venture companies in the North Sea. The acquisition
was accounted for by the purchase method and accordingly, the fair value of the
assets acquired and liabilities assumed and results of operations have been
included in the condensed consolidated financial statements effective June 1,
1996. Unaudited pro forma results of operations assuming the acquisition had
taken place on April 1, 1995 would not be materially different than actual
results.
F-9
<PAGE> 32
On March 13, 1996 Tidewater Inc. issued 8,475,214 shares of its common
stock in exchange for all of the outstanding common stock of Hornbeck Offshore
Services, Inc. (Hornbeck). Hornbeck owned and operated a fleet of 61 marine
service vessels operating in the U.S. Gulf of Mexico and had a 49.9% interest
in 29 safety/standby vessels operating in the North Sea. This business
combination has been accounted for as a pooling-of-interests and, accordingly,
the consolidated financial statements for periods prior to the combination have
been restated to include the accounts and results of operations of Hornbeck.
Operating results prior to the combination of the separate companies and the
combined amounts presented in the consolidated financial statements are
summarized below:
<TABLE>
<CAPTION>
(in thousands of dollars)
Nine Months
Ended Year Ended
December 31, March 31,
1995 1995
- --------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Revenues:
Tidewater $435,939 538,774
Hornbeck 46,341 45,834
- --------------------------------------------------------------------------------------------------------------
Combined $482,280 584,608
==============================================================================================================
Net earnings:
Tidewater $ 59,262 42,628
Hornbeck 4,783 8,559
- --------------------------------------------------------------------------------------------------------------
Combined $ 64,045 51,187
==============================================================================================================
</TABLE>
Adjustments to conform Hornbeck's accounting policies to those of Tidewater
and to apply pooling-of-interests accounting reduced (increased) net earnings
of the combined entity for the above periods by $2,359,000 and ($536,000),
respectively. The adjustments to conform accounting policies relate to
Hornbeck's capitalizing and amortizing the cost of vessel drydockings and major
overhauls rather than expensing such costs as incurred.
Prior to the combination Hornbeck's fiscal year end was December 31.
Tidewater's fiscal year end is March 31. In applying pooling-of-interests
accounting, the March 31, 1995 Tidewater statement of earnings was combined
with the Hornbeck statement of earnings for the year ended December 31, 1994.
Unaudited amounts for the nine-month period ended December 31, 1995 include
results of each entity for the nine-month period ended December 31, 1995.
Retained earnings of the combined entities were adjusted by $434,000 as of the
beginning of Tidewater's fiscal 1996 year to include the unaudited net earnings
of Hornbeck, including adjustments to conform accounting policies to those of
Tidewater, for the period January 1, 1995 to March 31, 1995. During this period
Hornbeck's revenues were $12,671,000. Additionally, the consolidated statement
of cash flows for the year ended March 31, 1996 was adjusted by $4,980,000 to
reflect the net increase in cash of Hornbeck for the three months ended March
31, 1995.
Merger expenses of $9.6 million include legal, investment banking and
accounting fees related to the business combination. Also included in merger
expenses are payments under severance and employment agreements and a provision
for certain other related costs. Merger expenses are classified as other
expense in the Consolidated Statements of Earnings.
In fiscal 1995 the company purchased for $35 million in cash the assets of
Brazos Gas Compressing Company, a subsidiary of Mitchell Energy & Development
Corporation, and the natural gas compression assets of Halliburton Company
using $55 million of available cash and borrowings of $150 million. The costs
of these acquisitions were allocated under the purchase method of accounting
based on the fair value of the assets acquired. In connection with the purchase
of the natural gas compression assets of Halliburton Company, goodwill of
approximately $25 million was recorded as other assets in the Consolidated
Balance Sheet and is being amortized in equal charges to earnings over a
15-year period.
The results of Brazos' and Halliburton's operations have been consolidated
with the company's effective October 1, 1994, and December 1, 1994,
respectively. Unaudited pro forma combined results of operations of the company
and of Brazos and Halliburton, including appropriate purchase accounting
F-10
<PAGE> 33
adjustments for the year ended March 31, 1995 as though the acquisition had
taken place on April 1, 1994, are as follows:
<TABLE>
<CAPTION>
(in thousands, except per share data)
1995
- --------------------------------------------------------------------------------
<S> <C>
Revenues $625,777
================================================================================
Earnings before extraordinary item 44,381
================================================================================
Net earnings 44,381
================================================================================
Primary and fully diluted earnings per common share .72
================================================================================
</TABLE>
(3) INVENTORIES
A summary of inventories at March 31 follows:
<TABLE>
<CAPTION>
(in thousands)
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Marine operating supplies $28,171 23,428
Compression supplies and merchandise held for sale 7,845 7,918
- --------------------------------------------------------------------------------
$36,016 31,346
================================================================================
</TABLE>
(4) UNCONSOLIDATED COMPANIES
Investments in, at equity, and advances to unconsolidated marine
joint-venture companies at March 31 were as follows:
<TABLE>
<CAPTION>
Percentage (in thousands)
ownership 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ravensworth Investments Ltd. (United Kingdom) 50% $ -- 14,505
National Marine Service (Abu Dhabi-UAE) 40% 12,107 11,557
Tidewater Port Jackson (Australia) 50% 3,789 4,682
Provident Marine, Ltd. (Mexico) 50% 1,841 2,126
Lamnalco (UAE) 50% 1,434 1,613
Others 20%-50% 1,385 1,378
- -----------------------------------------------------------------------------------------
$ 20,556 35,861
=========================================================================================
</TABLE>
The aggregate amount of undistributed earnings of all unconsolidated
joint-venture companies included in consolidated stockholders' equity at March
31, 1997 is approximately $12,902,000.
(5) INCOME TAXES
Earnings before income taxes derived from United States and international
operations for the years ended March 31 are as follows:
<TABLE>
<CAPTION>
(in thousands)
1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
United States $127,402 43,854 54,738
International 89,132 67,033 24,727
- --------------------------------------------------------------------------------
$216,534 110,887 79,465
================================================================================
</TABLE>
F-11
<PAGE> 34
Income tax expense for the years ended March 31 consists of the
following:
<TABLE>
<CAPTION>
(in thousands)
U.S.
-----------------
Federal State International Total
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
- --------------------------------------------------------------------------------
Current $ 39,362 404 11,741 51,507
Deferred 19,016 -- -- 19,016
- --------------------------------------------------------------------------------
$ 58,378 404 11,741 70,523
================================================================================
1996
- --------------------------------------------------------------------------------
Current $ 8,877 (629) 10,229 18,477
Deferred 16,233 -- -- 16,233
- --------------------------------------------------------------------------------
$ 25,110 (629) 10,229 34,710
================================================================================
1995
- --------------------------------------------------------------------------------
Current $ 13,977 797 6,981 21,755
Deferred 6,523 -- -- 6,523
- --------------------------------------------------------------------------------
$ 20,500 797 6,981 28,278
================================================================================
</TABLE>
The actual income tax expense for the years ended March 31, 1997, 1996
and 1995 differs from the amounts computed by applying the U.S. federal tax
rate of 35% to pre-tax earnings as a result of the following:
<TABLE>
<CAPTION>
(in thousands)
1997 1996 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense $ 75,787 38,810 27,813
Increase (reduction) resulting from:
Foreign (earnings) losses not includable in U.S. tax return (1,547) 482 (2,803)
Foreign taxes not creditable against U.S. taxes -- -- 1,039
Foreign tax credits not previously recognized (1,303) (7,440) --
Utilization of net operating loss carryforwards (386) (2,181) --
Expenses which are not deductible for tax purposes 129 1,496 177
Other, net (2,157) 3,543 2,052
- --------------------------------------------------------------------------------------------------
$ 70,523 34,710 28,278
==================================================================================================
</TABLE>
The significant components of deferred income tax expense for the years
ended March 31 are as follows:
<TABLE>
<CAPTION>
(in thousands)
1997 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred income tax expense (exclusive of the effects of
other components listed below) $10,527 7,478 218
Investment, foreign and minimum tax credits 8,489 8,755 6,305
- --------------------------------------------------------------------------------------
$19,016 16,233 6,523
======================================================================================
</TABLE>
F-12
<PAGE> 35
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
(in thousands)
1997 1996
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Financial provisions not deducted for tax purposes $ 19,605 15,755
Unrepatriated foreign earnings 3,267 9,233
Foreign net operating loss carryforwards 1,915 5,079
Foreign tax credit carryforwards 3,851 3,851
Alternative minimum tax credit carryforwards -- 1,968
Other 259 1,068
- --------------------------------------------------------------------------------------------------------
Gross deferred tax assets 28,897 36,954
Less valuation allowance 1,915 5,079
- --------------------------------------------------------------------------------------------------------
26,982 31,875
- --------------------------------------------------------------------------------------------------------
Deferred tax liabilities - depreciation differences on properties and equipment (122,577) (108,454)
- --------------------------------------------------------------------------------------------------------
Net deferred tax liability $ (95,595) (76,579)
========================================================================================================
</TABLE>
The net changes in the valuation allowance for the years ended March 31,
1997 and 1996 were decreases of $3,164,000 and $2,108,000, respectively. These
changes were made due to the realization of certain international net operating
loss carryforwards. The remaining balance of the deferred tax assets are
expected to be realized through future operating results and the reversal of
taxable temporary differences.
The company has not recognized a deferred tax liability of approximately
$31,500,000 for the undistributed earnings of certain non-U.S. subsidiaries
that arose in prior years because the company currently does not expect those
unremitted earnings to reverse and become taxable to the company in the
foreseeable future. A deferred tax liability will be recognized when the
company expects that it will realize those undistributed earnings in a taxable
manner, such as through receipt of dividends or sale of investments. As of
March 31, 1997, the undistributed earnings of these subsidiaries were
approximately $90,000,000.
(6) LONG-TERM DEBT
At March 31, 1997 the company had no long-term debt. Outstanding
long-term debt at March 31, 1996 of $2,934,000, all classified as current,
consisted of outstanding debt assumed in connection with the merger with
Hornbeck Offshore Services, Inc. on March 13, 1996.
The company's revolving credit and term loan agreement (the "agreement")
consists of a $200 million revolving credit facility and a $400 million
acquisition term loan. The acquisition term loan is for financing the future
acquisition of O.I.L. Ltd. Borrowings will bear interest, at the company's
option, at prime or Federal Funds rates plus .5% or Eurodollar rates plus
margins from .5% to 1% based on the company's debt to capitalization ratio. The
revolving credit commitment of $200 million expires on April 30, 1999, at which
time the then outstanding balance will convert to a term loan repayable in 16
quarterly installments beginning July 31, 1999. Borrowings under the
acquisition term loan are payable in 28 quarterly installments beginning
September 30, 1997 and ending June 30, 2004. All of the borrowings under the
agreement are unsecured and the company pays an annual fee of .25% on the
unused portion of the revolving credit facility.
Under the terms of the agreement, the company has agreed to limitations
on future levels of investments and aggregate indebtedness, a minimum level of
tangible net worth and maintenance of certain debt to capitalization ratios.
The agreement also prohibits the company from encumbering its assets, other
than assets already encumbered at March 19, 1997 for the benefit of others.
F-13
<PAGE> 36
(7) BENEFIT PLANS
Upon meeting various citizenship, age and service requirements, employees
are eligible to participate in a defined contribution savings plan. The plan
held 510,772 shares and 522,216 shares of the company's common stock at March
31, 1997 and 1996, respectively. Amounts charged to expense for the plan for
1997, 1996 and 1995 were $1,694,000, $1,035,000, and $951,000, respectively.
A defined benefit pension plan covers certain U.S. citizen employees and
employees who are permanent residents of the United States. Benefits are based
on years of service and employee compensation. The company also has a
supplemental retirement plan (Supplemental Plan) that provides pension benefits
to certain employees in excess of those allowed under the company's tax
qualified pension plan. Certain benefits programs are maintained in several
other countries which provide retirement income for covered employees.
Net periodic pension cost for the U.S. defined benefit pension plan and
the Supplemental Plan for 1997, 1996 and 1995 include the following components:
<TABLE>
<CAPTION>
(in thousands)
1997 1996 1995
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefit earned during the period $ 844 1,843 1,962
Interest cost on projected benefit obligation 2,258 2,208 1,954
Actual return on assets (3,170) (4,700) 503
Net amortization and deferral 1,591 3,530 (1,463)
- -------------------------------------------------------------------------------------
Net periodic pension cost $ 1,523 2,881 2,956
=====================================================================================
Assumptions used in the accounting are:
Discount rates 7.5% 7.5% 8.5%
Rates of annual increase in compensation levels 5.2% 5.2% 5.0%
Expected long-term rate of return on assets 9.5% 9.5% 9.5%
=====================================================================================
</TABLE>
The following table sets forth the assets and liabilities of the U.S.
defined benefit pension plan and the Supplemental Retirement Plan and the
amount of the net pension liability in the Consolidated Balance Sheets at March
31:
<TABLE>
<CAPTION>
(in thousands)
U.S. Defined Benefit Supplemental
Pension Plan Retirement Plan
-------------------- ------------------
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of vested benefit obligation $28,431 27,606 2,759 2,423
================================================================================================================
Accumulated benefit obligation $28,715 27,831 2,932 2,467
================================================================================================================
Projected benefit obligation $31,463 30,698 3,982 3,192
Plan assets at fair value, primarily bonds and common stock 29,847 23,935 -- --
- ----------------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets 1,616 6,763 3,982 3,192
Unrecognized net transitional obligation amortized over 15 years (87) (112) -- --
Unrecognized actuarial gain (loss) 680 (1,856) (1,672) (1,272)
Unrecognized prior service cost (364) (425) (296) (394)
Adjustment required to recognize minimum liability -- -- 918 941
- ----------------------------------------------------------------------------------------------------------------
Net accrued pension liability $ 1,845 4,370 2,932 2,467
================================================================================================================
</TABLE>
During the fourth quarter of fiscal 1996 the company recorded as other
expense a $3.0 million charge as a result of the removal of Marine fleet and
Compression field service personnel from the company's U.S. defined benefit
pension plan. Beginning April 1, 1996 these Marine and Compression employees,
along with all new employees of the company who are eligible for pension plan
membership, were enrolled in a new defined contribution retirement plan.
Company contributions in cash to the plan are based on employee compensation,
as defined by the plan, and are subject to certain vesting requirements. The
costs of the plan for fiscal 1997 was $2,309,000.
F-14
<PAGE> 37
Qualified retired employees currently are covered by a program which
provides limited health care and life insurance benefits. Costs of the program
are based on actuarially determined amounts and are accrued over the period
from the date of hire to the full eligibility date of employees who are
expected to qualify for these benefits.
Net periodic postretirement health care and life insurance costs for
1997, 1996 and 1995 include the following components:
<TABLE>
<CAPTION>
(in thousands)
1997 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefit earned during the period $ 928 743 924
Interest cost on accumulated postretirement benefit obligation 874 798 732
Other amortization and deferral (207) (296) (129)
- ----------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $ 1,595 1,245 1,527
==============================================================================================
</TABLE>
The unfunded actuarially-determined liabilities for postretirement
benefits at March 31 are as follows:
<TABLE>
<CAPTION>
(in thousands)
1997 1996
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated postretirement benefit obligation:
Current retirees $ 5,110 4,390
Current employees eligible for benefits 1,274 1,039
Current employees not yet eligible for benefits 8,175 6,431
- ------------------------------------------------------------------------------------------------
Total accumulated postretirement benefit obligation 14,559 11,860
Unrecognized prior service cost (197) 1,382
Unrecognized net gain 1,798 2,069
- ------------------------------------------------------------------------------------------------
Accrued postretirement benefit cost $ 16,160 15,311
================================================================================================
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation will be 9% in 1998, gradually declining to
5.5% in the year 2005 and thereafter. A 1% change in the assumed health care
cost trend rates for each year would change the accumulated postretirement
benefit obligation by approximately $2,235,000 at March 31, 1997 and change the
cost for the year ended March 31, 1997 by $329,000. The assumed discount rate
used in determining the accumulated postretirement benefit obligation was 7.5%
in 1997 and 1996.
(8) OTHER ASSETS, OTHER LIABILITIES AND DEFERRED CREDITS
A summary of other assets at March 31 follows:
<TABLE>
<CAPTION>
(in thousands)
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Recoverable insurance losses $32,146 34,206
Goodwill 21,357 23,068
Assets held for sale 5,852 7,155
Other 9,272 9,201
- --------------------------------------------------------------------------------
$68,627 73,630
================================================================================
</TABLE>
A summary of other liabilities and deferred credits at March 31 follows:
<TABLE>
<CAPTION>
(in thousands)
1997 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Postretirement benefit liability $16,160 15,311
Pension liability 4,777 3,837
Minority interests in net assets of subsidiaries 7,864 6,991
Noncurrent international and domestic taxes 6,957 6,957
Other 11,089 9,889
- --------------------------------------------------------------------------------
$46,847 42,985
================================================================================
</TABLE>
F-15
<PAGE> 38
(9) CAPITAL STOCK
Under the company's stock option and restricted stock plans, the
Compensation Committee of the Board of Directors has authority to grant stock
options and restricted shares of the company's stock to officers and other key
employees. At March 31, 1997, 2,271,040 shares of common stock are reserved for
issuance under the plans of which 332,528 shares are available for future
grants. Stock options are granted with an exercise price equal to the stock's
fair market value at the date of grant. All stock options have ten year terms
and most of the outstanding options vest and become exercisable in ratable
installments over a three-year period from the grant date.
The per share weighted-average fair values of stock options granted
during fiscal years 1997 and 1996 were $15.46 and $13.38, respectively, on the
dates of grant using the Black Scholes option-pricing model with the following
weighted-average assumptions:
<TABLE>
<CAPTION>
1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C>
Risk-free interest rate 6.4% 6.2%
Expected dividend yield 1.25% 1.25%
Expected stock price volatility 32.57% 31.75%
Expected stock option life 5 years 5 years
===================================================================================
</TABLE>
The company applies APB Opinion No. 25 in accounting for its plans and,
accordingly, no compensation cost has been recognized for its stock options in
the consolidated financial statements. Had the company determined compensation
cost based on the fair value at the grant date for its stock options under SFAS
No. 123, the company's net earnings would have been reduced to the pro forma
amounts as follows:
<TABLE>
<CAPTION>
1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C>
Net earnings (in thousands):
As reported $ 146,011 76,177
Pro forma 145,032 76,115
Primary and fully-diluted earnings per common share:
As reported $ 2.34 1.23
Pro forma 2.33 1.22
==================================================================================
</TABLE>
Pro forma net earnings and earnings per common share reflect only options
granted during fiscal years 1997 and 1996. Therefore, the full impact of
calculating compensation cost for stock options under SFAS No. 123 is not
reflected in the pro forma amounts presented above because compensation cost is
reflected over the options' vesting period of three years and compensation cost
for options granted prior to April 1, 1995 is not considered.
Stock option activity during 1997, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
Weighted-average Number
Exercise Price of Shares
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance at March 31, 1994 $ 13.73 895,736
Granted 21.58 901,875
Exercised 10.12 (131,783)
Expired or cancelled 17.66 (72,530)
- -----------------------------------------------------------------------------------------------------------
Balance at March 31, 1995 18.29 1,593,298
Granted 38.61 284,000
Exercised 12.67 (182,967)
Expired or cancelled 18.12 (27,826)
- -----------------------------------------------------------------------------------------------------------
Balance at March 31, 1996 22.38 1,666,505
Granted 43.49 520,000
Exercised 15.36 (269,177)
Expired or cancelled 19.14 (4,225)
- -----------------------------------------------------------------------------------------------------------
Balance at March 31, 1997 $ 29.11 1,913,103
===========================================================================================================
</TABLE>
F-16
<PAGE> 39
The 1,913,103 options outstanding at March 31, 1997 fall into three
general exercise-price ranges as follows:
<TABLE>
<CAPTION>
Exercise Price Range
- -------------------------------------------------------------------------------------------------------------
$4.75 - $13.25 $15.00 - $25.13 $35.75-$43.63
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding at March 31, 1997 154,475 962,628 796,000
Weighted average exercise price $12.00 $21.25 $41.93
Weighted average remaining contractual life 3.4 years 7.4 years 9.6 years
Options exercisable at March 31, 1997 154,475 685,114 100,990
Weighted average exercise price of options exercisable
at March 31, 1997 $12.00 $21.12 $38.71
=============================================================================================================
</TABLE>
At March 31, 1997, 1996 and 1995, the number of options exercisable under
the stock option plans was 940,579, 771,125 and 531,403, respectively; and the
weighted average exercise price of those options was $21.51, $17.43 and $13.82,
respectively.
The restricted stock plan permits the grant of company shares restricted
as to transferability and subject to a substantial risk of forfeiture. The
vesting restrictions and period during which the transferability restrictions
are applicable are determined on a case-by-case basis. During the restricted
period, the restricted shares may not be transferred or encumbered but the
recipient has the right to vote and receive dividends on the restricted shares.
At March 31, 1997, contingent awards totalling 25,409 restricted company shares
were outstanding, to be issued in conjunction with and as a result of the
exercise of certain stock options. All restrictions are removed from the
restricted shares six months after issuance.
In accordance with an employment agreement with the company's chairman of
the board, 70,000 shares of restricted common stock of the company were granted
to him on October 20, 1994. These restricted shares vest at varying intervals
when the average sales price of the common stock reaches certain predetermined
levels. During the years ended March 31, 1997 and 1996, 25,000 shares in each
year vested due to the attainment of the first and second average sales price
levels applicable to those shares. The fair market value of the stock at the
time of the grant was classified in stockholders' equity as deferred
compensation-restricted stock and is being amortized by equal monthly charges
to earnings over approximately seven years, adjusted for vestings during the
seven year period.
During the third quarter of fiscal 1997 the Board of Directors authorized
a share repurchase program whereby the company could purchase in the open
market or through privately negotiated transactions up to $200 million of
company common stock through March 31, 1998. The company expended $84.8 million
on the purchase of 1,788,100 common shares at an average cost, including broker
commissions and fees, of $47.42 per share during 1997. All shares purchased
have been canceled.
At March 31, 1997 and 1996, 3,000,000 shares of no par value preferred
stock were authorized and unissued.
Under a Shareholder Rights Plan, one preferred stock purchase right has
been distributed as a dividend for each outstanding common share. Each right
entitles the holder to purchase, under certain conditions, one one-hundredth of
a share of Series A Participating Preferred Stock at an exercise price of $160,
subject to adjustment. The rights will not be exercisable unless a person (as
defined in the plan) acquires beneficial ownership of 15% or more of the
outstanding common shares, or a person commences a tender offer or exchange
offer, which upon its consummation such person would beneficially own 15% or
more of the outstanding common shares. The Board of Directors is authorized in
certain circumstances to lower the beneficial ownership percentage to not less
than 10%.
If after the rights become exercisable a person becomes the beneficial
owner of 15% or more of the outstanding common shares (except pursuant to an
offer for all shares approved by the Board of Directors), each holder (other
than the acquirer) will be entitled to receive, upon exercise, common shares
having a market value of twice the exercise price. In addition, if the company
is involved in a merger (other than a merger which follows an offer for all
shares approved by the Board of Directors), major sale
F-17
<PAGE> 40
of assets or other business combination after a person becomes the beneficial
owner of 15% or more of the outstanding common shares, each holder of a right
(other than the acquirer) will be entitled to receive, upon exercise, common
stock of the acquiring company having a market value of twice the exercise
price.
The rights may be redeemed for $.01 per right at any time prior to ten
days following the acquisition by a person of 15% or more of the outstanding
common shares. The rights expire on November 1, 2006.
(10) COMMITMENTS AND OTHER MATTERS
An employment agreement exists with the company's chairman of the board,
president and chief executive officer whereby he will serve in such capacity
through December 31, 1997. The terms of the employment agreement provide for an
annual base salary and certain other benefits. Compensation continuation
agreements exist with all other officers of Tidewater Inc. whereby each
receives compensation and benefits in the event that their employment is
terminated following certain events relating to a change in control of the
company. The maximum amount of compensation that could be paid under the
agreements, based on present salary levels, is approximately $ 7.8 million. The
amount that could be paid for certain benefits is not presently determinable.
During the fourth quarter of fiscal 1997 and the third quarter of fiscal
1995, the company recorded as other expense charges of $2.8 million ($1.9
million after tax, or $.03 per common share) and $2.5 million ($1.6 million
after tax, or $.02 per common share), respectively, to establish reserves for
losses resulting from one of the company's insurers filing for liquidation and
for reserves to cover losses due to the potential insolvency of certain of the
company's insurers.
During the fourth quarter of fiscal 1995, the company recorded as other
expense $5.9 million ($3.7 million after tax, or $.06 per common share) for the
cost of a restructuring program of its corporate headquarters and worldwide
marine operations which was designed to reduce costs and improve operating
efficiencies. Substantially all of the costs associated with the restructuring
program were paid before March 31, 1995. The restructuring resulted in the
elimination of approximately 150 positions, realignment of duties and
responsibilities and streamlining of administrative functions. The charge
reflects the costs associated with staff reductions, relocations and related
transition expenses.
The Internal Revenue Service has notified the company of proposed
deficiencies aggregating approximately $17.5 million of additional income taxes
resulting from audits of the company's income tax returns for the years ended
March 31, 1993, 1994 and 1995. The company is the defendant to several alleged
labor-law pay violations claimed by certain current and former employees in
various areas of the world where its marine vessel operations are conducted.
While the amount, if any, of such claims for which the company ultimately may
be held liable is not presently determinable, if the claimants and all
similarly situated employees and former employees who might file claims were
successful, the aggregate amount of the company's liability, based on available
information, could approximate $15 million. The company is in the process of
defending against these claims and assessments and, in management's opinion,
the ultimate outcome of these matters will not have a material adverse effect
on the company's financial position or the results of its ongoing operations.
Various legal proceedings and claims are outstanding which arose in the
ordinary course of business. In the opinion of management, the amount of
ultimate liability, if any, with respect to these actions will not have a
materially adverse effect on the company's financial position or results of its
ongoing operations.
(11) DIVISIONS AND GEOGRAPHIC DISTRIBUTION OF OPERATIONS
The company operates principally in two divisions. Tidewater Marine
provides support services to the offshore energy industry, and Tidewater
Compression provides the energy industry with engineered products and services
used primarily in oil and gas production, enhanced recovery, natural gas
F-18
<PAGE> 41
transmission and natural gas processing. Please refer to Management's
Discussion and Analysis of Financial Condition and Results of Operations for
disclosures of additions to properties and equipment, identifiable assets,
revenues, operating profit and depreciation for each division.
(12) SUPPLEMENTARY INFORMATION--QUARTERLY FINANCIAL DATA (UNAUDITED)
Years Ended March 31, 1997 and 1996
(in thousands, except per share data)
<TABLE>
<CAPTION>
1997 First Second Third Fourth
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Marine operations $146,639 167,691 184,133 191,963
Compression operations 29,255 26,181 28,296 28,852
- -----------------------------------------------------------------------------------------------
$175,894 193,872 212,429 220,815
===============================================================================================
Operating profit:
Marine operations $ 34,045 46,338 62,312 69,709
Compression operations 3,539 2,748 3,270 2,837
- -----------------------------------------------------------------------------------------------
$ 37,584 49,086 65,582 72,546
===============================================================================================
Net earnings $ 24,370 32,952 43,170 45,519
===============================================================================================
Primary and fully diluted earnings per common share $ .39 .53 .68 .74
===============================================================================================
1996
Revenues:
Marine operations $128,054 132,726 135,891 135,531
Compression operations 27,039 28,034 30,536 25,636
- -----------------------------------------------------------------------------------------------
$155,093 160,760 166,427 161,167
===============================================================================================
Operating profit:
Marine operations $ 25,807 31,483 33,489 28,130
Compression operations 4,077 3,990 4,359 2,139
- -----------------------------------------------------------------------------------------------
$ 29,884 35,473 37,848 30,269
===============================================================================================
Net earnings $ 17,427 22,431 24,187 12,132
===============================================================================================
Primary and fully diluted earnings per common share $ .28 .36 .39 .20
===============================================================================================
</TABLE>
Operating profit consists of revenues less operating costs and expenses,
depreciation, general and administrative expenses and other income and expenses
of the Marine and Compression divisions.
See Notes 1, 2, 7 and 10 for detailed information regarding transactions which
affect fiscal 1997 and 1996 quarterly amounts.
F-19
<PAGE> 42
SCHEDULE II
TIDEWATER INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED MARCH 31, 1997, 1996, AND 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Balance
Balance at at
Beginning Additions End of
Description of period at Cost Deductions Period
----------- --------- ----------- ----------- --------
<S> <C> <C> <C> <C>
1997
Deducted in balance sheet from
trade accounts receivable:
Allowance for doubtful accounts $ 8,376 3,268 996 (A) 10,648
========== ======== ======= =======
Deducted in balance sheet from
other assets:
Amortization of goodwill, prepaid
rent and debt issuance costs $ 4,510 1,704 --- 6,214
========== ======== ======= =======
1996
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 9,636 121 1,381 (A) 8,376
========== ======== ======= =======
Deducted in balance sheet from
other assets:
Amortization of goodwill and
debt issuance costs $ 2,136 2,374 --- 4,510
========== ======== ======= =======
1995
Deducted in balance sheet from
trade accounts receivables:
Allowance for doubtful accounts $ 6,842 3,877 1,083 (A) 9,636
========== ======== ======= =======
Deducted in balance sheet from
other assets:
Amortization of goodwill and
debt issuance costs $ 940 1,196 --- 2,136
========== ======== ======= =======
</TABLE>
(A) Accounts receivable amounts considered uncollectible and removed from
accounts receivable by reducing allowance for doubtful accounts.
F-20
<PAGE> 43
TIDEWATER INC.
EXHIBITS FOR THE
ANNUAL REPORT ON FORM 10-K
FISCAL YEAR ENDED MARCH 31, 1997
<PAGE> 44
EXHIBIT INDEX
The index below describes each exhibit filed as a part of this report.
Exhibits not incorporated by reference to a prior filing are designated by an
asterisk; all exhibits not so designated are incorporated herein by reference
to a prior filing as indicated.
3(a) - Restated Certificate of Incorporation of Tidewater Inc. (filed with
the Commission as Exhibit 3(a) to the company's quarterly report on
Form 10-Q for the quarter ended September 30, 1993).
3(b) - Tidewater Inc. Bylaws (filed with the Commission as Exhibit 3(b) to
the company's quarterly report on Form 10-Q for the quarter ended
September 30, 1993).
4(a) - Restated Rights Agreement dated as of September 19, 1996 between
Tidewater Inc. and The First National Bank of Boston (filed with the
Commission as Exhibit 4 to the company's current report on Form 8-K
dated September 19, 1996).
*10(a) - $600,000,000 Revolving Credit and Term Loan Agreement dated March
19, 1997.
10(b) - Tidewater Inc. 1975 Incentive Program Stock Option Plan, as amended
in 1990 (filed with the Commission as Exhibit 10(c) to the company's
annual report on Form 10-K for the fiscal year ended March 31,
1991).
10(c) - Tidewater Inc. 1992 Stock Option and Restricted Stock Plan (filed
with the Commission as Exhibit 10(f) to the company's annual report
on Form 10-K for the fiscal year ended March 31, 1993).
10(d) - Tidewater Inc. Amended and Restated Supplemental Executive
Retirement Plan (filed with the Commission as Exhibit 10(g) to the
company's annual report on Form 10-K for the fiscal year ended March
31, 1993).
10(e) - Tidewater Inc. Amended and Restated Employees' Supplemental Savings
Plan (filed with the Commission as Exhibit 10(h) to the company's
annual report on Form 10-K for the fiscal year ended March 31,
1993).
10(f) - Supplemental Health Plan for Executive Officers of Tidewater Inc.
(filed with the Commission as Exhibit 10(i) to a Registration
Statement on September 12, 1989, Registration No. 33-31016).
10(g) - Tidewater Inc. Deferred Compensation Plan for Directors (filed with
the Commission as Exhibit 10(h) to the company's annual report on
Form 10-K for the fiscal year ended March 31, 1994).
10(h) - Tidewater Inc. Retirement Plan for Directors as adopted on March 22,
1990 (filed with the Commission as Exhibit 10(k) to the company's
annual report on Form 10-K for the fiscal year ended March 31,
1990).
10(i) - Employment and Consulting Agreement dated as of March 31, 1993
between Tidewater Inc. and John P. Laborde as amended (filed with
the Commission as Exhibit 10(l) to the company's annual report on
Form 10-K for the fiscal year ended March 31, 1993).
10(j) - Consulting Agreement dated as of March 13, 1996 between Tidewater
Inc. and Larry D. Hornbeck.
*10(k) - Change in Control Agreement dated September 30, 1996 between
Tidewater Inc. and William C. O'Malley.
*10(l) - Form of Change in Control Agreement entered into as of September 30,
1996 with four executive officers.
<PAGE> 45
*10(m) - Tidewater Inc. 1996 Annual Incentive Plan.
10(n) - Employment Agreement dated June 13, 1994 between Tidewater Inc. and
William C. O'Malley (filed with the Commission as Exhibit 10 to the
company's report on Form 8-K for June 13, 1994).
*10(o) - Agreement dated March 20, 1997 for the Acquisition of the share
capital of the O.I.L. group of companies.
*11 - Earnings per share Computation Information.
*21 - Subsidiaries of the company.
*24 - Consent of Independent Accountants.
*27 - Financial Data Schedule.
Certain instruments respecting long-term debt of Tidewater have been
omitted pursuant to Regulation S-K, Item 601. Tidewater hereby agrees to
furnish a copy of any such instrument to the Commission upon request.
<PAGE> 1
EXHIBIT 10(a)
REVOLVING CREDIT AND TERM LOAN AGREEMENT
AMONG
TIDEWATER INC., ET AL
(as Companies)
THE FIRST NATIONAL BANK OF BOSTON
(as Administrative Agent)
FIRST NATIONAL BANK OF COMMERCE
(as Documentation Agent)
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(as Syndication Agent)
FIRST NATIONAL BANK OF COMMERCE
THE FIRST NATIONAL BANK OF BOSTON
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(as Agents)
and
FIRST NATIONAL BANK OF COMMERCE,
THE FIRST NATIONAL BANK OF BOSTON,
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
(as Lenders)
------------
$600,000,000.00
------------
Dated: as of March 19, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Commitment of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Line of Credit; Conversion Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Acquisition Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Borrowing Procedure Under the Credit Facility . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Liability of the Companies; Additional Domestic Subsidiaries . . . . . . . . . . . . . . . 3
1.6 Termination of the Prior Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2. Promissory Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Line of Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Conversion Term Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Acquisition Term Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Principal Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3. Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Administrative Agent's Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Interest Payment Dates; Late Payment and Default Rate . . . . . . . . . . . . . . . . . . . 8
3.4 Facility Fee; Agents' Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Method of Calculating Interest and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4. Payments, Reduction or Termination of the Credit and Prepayments . . . . . . . . . . . 9
4.1 Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Reduction of Credit under the Line of Credit; Prepayments . . . . . . . . . . . . . . . . . 9
4.3 Prepayments of Term Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Pro Rata Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5. Representations and Warranties of the Companies . . . . . . . . . . . . . . . . . . . 10
5.1 Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.2 Authorization; Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.3 Conflicting Agreements and Other Matters . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 Litigation and Contingent Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.6 Outstanding Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Purpose 12
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5.9 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.11 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.12 Tax Returns; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.13 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.14 Foreign Assets Control Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.15 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.17 Special Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6. Covenants of the Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Inspection of Property and Books and Records . . . . . . . . . . . . . . . . . . . . . . 18
6.3 Covenant to Secure Notes Equally . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.4 Guaranteed or Collateralized Obligations . . . . . . . . . . . . . . . . . . . . . . . . 18
6.5 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.6 Maintenance of Corporate Existence/Compliance with Law/
Preservation of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.7 Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.8 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.9 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Dispositions of Stock and Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Mergers and Consolidations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.12 Minimum Fixed Charge Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.13 Minimum Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.14 Maximum Debt to Total Capitalization Ration . . . . . . . . . . . . . . . . . . . . . . . 24
6.15 Transactions with Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.16 Stock Transactions by Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.17 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.18 Federal Reserve Regulations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.20 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7A. Conditions Precedent to the Funding of any Advance under
the Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7A.1 Resolutions of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7A.2 Organization Documents; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7A.3 Incumbency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7A.4 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7A.5 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
7A.6 Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7A.7 Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
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7A.8 Termination of Prior Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7B. Conditions Precedent to the Funding of any Advance under the
Credit Facility for the Acquisition . . . . . . . . . . . . . . . . . . . . . 27
7B.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
7B.2 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 7C. Conditions Precedent to the Funding of the Conversion
Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7C.1 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7C.2 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8. Conditions Precedent to Advances after the Line of
Credit for Other than the Acquisition . . . . . . . . . . . . . . . . . . . . 28
8.1 Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.2 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9. Events of Default; Remedies; Set Offs . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.3 Waiver of Set-Offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 10. The Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.1 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.2 Agents' Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.3 Acts by Documentation Agent after Default, etc . . . . . . . . . . . . . . . . . . . . . 33
10.4 Lender Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.5 Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.6 Assignments and Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.7 Indemnification of the Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 11. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2 Financial Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.3 Delay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.5 Costs, Expenses and Taxes; Indemnification . . . . . . . . . . . . . . . . . . . . . . . 48
11.6 Foreign Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.9 Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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11.10 Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.11 Singular and Plural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
11.11 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Exhibit A List of Domestic Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 54
Exhibit B Commitments of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Exhibit C Form of Line of Credit Note . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Exhibit D Form of Conversion Term Note . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Exhibit E Form of Acquisition Term Note . . . . . . . . . . . . . . . . . . . . . . . . . 64
Exhibit F Form of Assignment and Acceptance . . . . . . . . . . . . . . . . . . . . . . . 68
Schedule 1.4 Subsidiaries of O.I.L.
Schedule 5.6 Outstanding Debt
Schedule 5.16 Environmental Matters
Schedule 6.10 Permitted Dispositions of Stock
</TABLE>
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<PAGE> 6
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS REVOLVING CREDIT AND TERM LOAN AGREEMENT (the "Agreement") dated
as of March 19, 1997 (the "Effective Date"), by and among Tidewater Inc., a
Delaware corporation (the "Company"), the Domestic Subsidiaries (as hereinafter
defined) of the Company named on Exhibit "A", attached hereto and made a part
hereof, the respective state of incorporation of each of which Domestic
Subsidiaries being set forth opposite its name and which Domestic Subsidiaries
constitute all of the Domestic Subsidiaries of the Company (herein together
with the Company called the "Companies"), and The First National Bank of
Boston, a national banking association, as administrative agent (the
"Administrative Agent"), First National Bank of Commerce, a national banking
association, as documentation agent (the "Documentation Agent") and Texas
Commerce Bank National Association, as Syndication Agent (the "Syndication
Agent")(the Administrative Agent, the Documentation Agent and the Syndication
Agent, collectively, the "Agents"), and the banks listed on the signature pages
hereof (the "Lenders").
RECITALS
A. Subject to the terms and conditions of this Agreement, the
Lenders have severally agreed (i) to make a $200,000,000 revolving line of
credit available to the Companies, and (ii) to make a $400,000,000 term loan to
the Companies, and the Companies have agreed to accept the line of credit and
borrow the term loan from the Lenders.
B. The Companies, Agents and Lenders desire to set forth the
terms and conditions of the loans herein.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual covenants,
agreements and undertakings herein contained, the Agents, Lenders and the
Companies hereby agree as follows:
Section 1. Commitment of Lenders. Subject to the terms and
conditions hereof, each Lender severally agrees to make a line of credit and
loan to the Companies, on the terms and conditions set forth in this Agreement,
in the aggregate principal amounts set forth on Exhibit B hereto:
1.1 Line of Credit; Conversion Term Loan. The Lenders shall
severally establish a revolving line of credit (the "Line of Credit") which may
be drawn upon by the Companies on
<PAGE> 7
any Business Day during the period from the date hereof until and including the
Drawdown Termination Date, in such amounts (but not less than $5,000,000 per
Advance and above $5,000,000 in even multiples of $1,000,000) as the Companies
may from time to time request (individually, an "Advance" and, collectively,
the "Advances"), but not exceeding the Commitments for the Line of Credit set
forth on Exhibit B hereto (the "Line of Credit Commitments"). The amount
outstanding under said Line of Credit as of the close of business on the
Drawdown Termination Date shall then convert on the following day to a four (4)
year term loan (the "Conversion Term Loan") with principal payable quarterly on
a four (4) year amortization schedule. The credit available to the Companies
from time to time under the Line of Credit shall be reduced by the aggregate of
the face amount of any and all unpaid Advances made by the Lenders to the
Companies pursuant to this Agreement and shall constitute the "Available
Credit."
1.2 Acquisition Term Loan. The Lenders shall severally make a
term loan (the "Acquisition Term Loan") to the Companies on the date the
Acquisition Date, in the amounts set forth on Exhibit B hereto (the
"Acquisition Term Loan Commitments"). If the Acquisition does not occur on or
prior to May 30, 1997, unless the parties hereto have extended such date on
terms and conditions satisfactory to the parties hereto, the Acquisition Term
Loan Commitments shall terminate and be of no further force and effect. The
termination of the Acquisition Term Loan Commitments shall not affect the
availability of the Line of Credit and Conversion Term Loan pursuant to this
Agreement.
1.3 Borrowing Procedure Under the Credit Facility. Advances shall
be made as follows: (i) in the case of a Base Rate Advance, on notice from the
Company to the Administrative Agent received by the Administrative Agent no
later than 10:00 A.M. (Eastern time) on the date of such proposed Advance,
specifying the amount thereof; and (ii) in the case of a Eurodollar Rate
Advance, on notice from the Company to the Administrative Agent at least three
(3) Business Days prior to the date of such proposed Advance. The
Administrative Agent will use its best efforts to give telephone notice of a
proposed Advance on the same day such notice is received by the Administrative
Agent from the Company. Not later than 2:00 P.M. (Eastern time) on the date of
such Advance and upon fulfillment of the applicable conditions set forth in
Sections 7A and 7B (in the case of Advances under the Line of Credit and under
the Acquisition Loan for the Acquisition) and Section 8 (in the case of each
other Advance under the Line of Credit), the Lenders will make such Advance
available to the Administrative Agent, which shall make such total Advance
available to the Company in same day funds at the Administrative Agent's office
at 100 Federal Street, Boston, Massachusetts. The request for an Advance under
the Line of Credit for any purpose other than the Acquisition shall constitute
a certification by the Companies that all of the representations and warranties
contained in Section 5 are true and correct as of the date of such request.
Subject to the provisions of Section 9.2 hereof, the Lenders shall be obligated
to fund Advances in proportion to their respective Commitments. The
obligations of the Lenders under this Agreement shall be separate and
- 2 -
<PAGE> 8
several and not joint and several or solidary; none of the Lenders shall be
responsible or liable for the acts or omissions of any of the other Lenders.
1.4 Use of Proceeds. The Companies shall use the proceeds of the
Line of Credit only (i) for the refinancing of any existing indebtedness of the
Companies pursuant to the Amended and Restated Loan Agreement among the
Companies, the Agents and certain other lenders, dated as of December 29, 1995,
as amended, and (ii) for general corporate purposes not inconsistent with the
provisions of this Agreement. The Companies shall use the proceeds of the
Acquisition Term Loan only for financing, in part, the acquisition of all of
the outstanding capital stock of O.I.L. Ltd. and its subsidiaries listed on
Schedule 1.4 hereto (the "Acquisition") and to pay certain fees and expenses in
connection therewith; the Companies may also use the proceeds of the Line of
Credit for the same purposes as the Acquisition Term Loan.
1.5 Liability of the Companies; Additional Domestic Subsidiaries.
Irrespective of the Company or Companies who directly or indirectly receive the
amounts funded on Advances, each of the Companies shall be liable jointly and
severally and solidarily to the Lenders for all amounts outstanding from time
to time under the Credit Facility. The Company shall promptly notify the
Documentation Agent of the creation or acquisition of any company that becomes
a Domestic Subsidiary after the Effective Date and shall sign such instruments
as the Documentation Agent prepares to make such new Domestic Subsidiary a
party thereto.
1.6 Termination of the Prior Credit Facility. Not later than the
Business Day following the Effective Date, the Companies shall give notice to
the administrative agent pursuant to the Amended and Restated Revolving Credit
and Term Loan Agreement, dated December 29, 1995, as amended, of the Companies'
termination of said agreement and the credit facility available thereunder.
Section 2. Promissory Notes.
2.1 Line of Credit Notes. The Line of Credit shall be evidenced
by promissory notes of the Companies, each in the form of Exhibit "C" hereto,
dated the Effective Date, and payable to each Lender respectively (together
with any and all renewals, extensions, rearrangements and/or modifications
thereof, the "Line of Credit Notes"), in the amount of the Lenders' respective
Line of Credit Commitments, with appropriate insertions, and payable in full on
the Drawdown Termination Date.
2.2 Conversion Term Notes. The Conversion Term Loan shall be
evidenced by promissory notes of the Companies in the form of Exhibit "D"
hereto, dated the day following the Drawdown Termination Date, payable to the
order of each Lender respectively (together with any and all renewals,
extensions, rearrangements and/or modifications thereof, the "Conversion Term
Notes"), in the Lenders' respective proportionate amount of the Conversion Term
Loan, with appropriate insertions. The Conversion Term Notes shall provide for
payment of 16
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quarterly installments of principal in an amount equal to one-sixteenth
(1/16th) of the initial principal balance thereof, and shall be payable in full
on the fourth anniversary of the Drawdown Termination Date. Once the
Conversion Term Loan is initially funded, the Lenders shall not fund any
additional Advances under the Conversion Term Loan.
2.3 Acquisition Term Notes. The Acquisition Term Loan shall be
evidenced by promissory notes of the Companies in the form of Exhibit "E"
hereto, dated the Acquisition Date, payable to the order of each Lender
respectively (together with any and all renewals, extensions, rearrangements
and/or modifications thereof, the "Acquisition Term Notes"), in the amount of
the Lenders' respective Acquisition Term Loan Commitments, with appropriate
insertions. The Acquisition Term Notes shall provide for payment of 28
quarterly installments of principal in an amount equal to one-twenty-eighth
(1/28th) of the initial principal balance thereof, and shall be payable in full
on June 30, 2004.
2.4 Principal Payment Dates. Principal payments under each
respective Loan shall be allocated first to Base Rate Tranches, then to
Eurodollar Rate Tranches having a Eurodollar Rate Interest Period ending on the
quarterly installment payment date, and then to Eurodollar Rate Tranches having
a Eurodollar Rate Interest Period ending subsequent to the quarterly
installment payment date (in which case the Companies shall pay any loss or
expense incurred or sustained by the Lenders as specified in Section 3.4(e)
hereof).
Section 3. Interest and Fees.
3.1 Interest. The unpaid principal of the Credit Facility shall
bear interest at one (or both) of the following interest rates, at the
Company's option: (i) Base Rate plus the Applicable Base Rate Margin or (ii)
Eurodollar Rate plus the Applicable Eurodollar Rate Margin; provided, that the
interest rate on the Acquisition Term Loan and any Advance under the Line of
Credit for the Acquisition shall be at the Federal Funds Rate plus 1.0% for the
period from the Acquisition Date through the fourth (4th) day thereafter. The
Company shall select the interest rate applicable to each Tranche at the time
of funding each Advance, and the selected interest rate shall continue as to
said Tranche until changed in accordance with the following. The Company shall
notify the Administrative Agent of the Company's desire to change the interest
rate on Advances (or any portion thereof) not less than three (3) Business Days
prior to the date on which such change shall be effective. The Company may
change from Base Rate Advances to Eurodollar Rate Advances at any time without
payment of premium or penalty, but the Company may change from Eurodollar Rate
Advances to Base Rate Advances only as of the last day of a Eurodollar Rate
Interest Period without payment of premium or penalty. In the absence of any
specific rate election by the Company, the Credit Facility shall bear interest
at the Base Rate. Not more than twelve (12) Line of Credit Eurodollar Rate
Tranches shall be permitted at any time, and not more than two (2) Conversion
Term Loan or Acquisition Term Loan Eurodollar Rate Tranches shall be permitted
at any time. No Credit Facility Tranche may have
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<PAGE> 10
a principal amount of less than $5,000,000, and each Tranche shall be
proportionately the same on each Note.
3.2 Administrative Agent's Determination. (a) The Administrative
Agent shall determine the amount of interest payable on each Tranche, and its
determination shall be conclusive in the absence of manifest error. The
Administrative Agent shall endeavor to notify the Company of the amount of any
interest payment prior to the date on which an interest payment is due:
provided that the failure of the Administrative Agent to provide such notice
shall not affect the Companies' obligation to pay interest on such date.
(b) If the Administrative Agent gives notice to the Company that
no Eurodollar Rate is quoted to the Administrative Agent for the applicable
Eurodollar Rate Interest Period or in the applicable amounts, then (i) the
obligation of the Lenders to make a Eurodollar Rate Advance and the ability of
the Company to select the Eurodollar Rate for a Tranche shall be suspended, and
(ii) the Companies shall either prepay all Eurodollar Rate Tranches for which
an interest rate is to be determined on such date or the Notes shall thereafter
bear interest at the Base Rate plus the Applicable Base Rate Margin.
(c) If any applicable domestic or foreign law, treaty, rule or
regulation (whether now in effect or hereinafter enacted or promulgated,
including Regulation D of the Board of Governors of the Federal Reserve System)
or any interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof (whether or not
having the force of law):
(i) changes the basis of taxation of payments to the Lenders
of any principal, interest, or other amounts attributable to any
Eurodollar Rate Tranche (other than taxes imposed on the overall net
income of the Lenders or any lending office of the Lenders by any
jurisdiction in which the Lenders or any such lending office is
located);
(ii) changes, imposes, modifies, applies or deems applicable
any reserve, special deposit, insurance assessments or similar
requirements in respect of any such Eurodollar Rate Tranche (excluding
those for which the Lenders are fully compensated pursuant to
adjustments made in the definition of Eurodollar Rate) or against
assets of, deposits with or for the account of, or credit extended by,
the Lenders; or
(iii) imposes on the Lenders or the interbank eurocurrency
deposit and transfer market any other condition affecting any such
Eurodollar Rate Tranche,
and the result of any of the foregoing is to increase the cost to the Lenders
of funding or maintaining any such Eurodollar Rate Tranche (other than costs
for which the Lenders are fully
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<PAGE> 11
compensated pursuant to adjustments made in the definition of Eurodollar Rate)
or to reduce the amount of any sum receivable by the Lenders in respect of any
such Eurodollar Rate Tranche by an amount deemed by the Lenders to be material,
then the Administrative Agent shall promptly notify the Companies in writing
(such writing including the necessary calculations in reasonable detail) of the
happening of such event and the Companies shall upon demand pay to the Lenders
such additional amount or amounts as will compensate the Lenders for such
additional cost or reduction accrued as of the time of such notice and
thereafter, the Companies may either continue to pay to the Lenders such
additional amount as will compensate the Lenders for the additional cost or
reduction of Eurodollar Rate Tranches, or the Companies may elect, by giving to
the Administrative Agent not less than three Business Days' notice, to change
the interest rate applicable to such Tranche from the Eurodollar Rate plus the
Applicable Eurodollar Rate Margin to the Base Rate plus the Applicable Base
Rate Margin.
(d) Notwithstanding any other provision hereof, if any change in
applicable laws, treaties, rules or regulations or in the interpretation or
administration thereof of or in any jurisdiction whatsoever, domestic or
foreign, shall make it unlawful or impracticable for the Lenders to maintain
Eurodollar Rate Tranches bearing interest at the Eurodollar Rate plus the
Applicable Eurodollar Rate Margin, or shall materially restrict the authority
of the Lenders to purchase, sell or take certificates of deposit or offshore
deposits of dollars, then all Eurodollar Rate Tranches which are then
outstanding and which cannot lawfully or practicably be maintained shall
immediately cease to bear interest at the Eurodollar Rate plus the Applicable
Eurodollar Rate Margin and shall commence to bear interest at the Base Rate
plus the Applicable Base Rate Margin. The Companies agree to indemnify the
Lenders and hold them harmless against all costs, expenses, claims, penalties,
liabilities and damages which may result from any such change in law, treaty,
rule, regulation, interpretation or administration, arising out of or in
connection with this Agreement and the Loans.
(e) The Companies will indemnify the Lenders against, and
reimburse each Lender on demand for, any loss or expense incurred or sustained
by the Lenders (including without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by the Lenders to fund or maintain Eurodollar Rate Tranches) as a result of (i)
any payment or prepayment (whether authorized or required hereunder or
otherwise) of all or a portion of any such Tranche on a day other than the day
on which the applicable Eurodollar Rate Interest Period ends, (ii) any payment
or prepayment, whether required hereunder or otherwise, of Eurodollar Rate
Tranches made after the delivery, but before the effective date, of an election
to have the Eurodollar Rate plus the Applicable Eurodollar Rate Margin apply to
a Eurodollar Rate Tranche, if such payment or prepayment prevents such election
from becoming fully effective, (iii) the failure of any Eurodollar Rate Tranche
to be made by the Lenders or of any such election to become effective due to
any condition precedent to a Eurodollar Rate Tranche not being satisfied or due
to any other action or inaction of the Companies, (iv) the Companies' election
to change the interest rate from the Eurodollar Rate plus the Applicable
Eurodollar Rate Margin to the Base Rate plus the Applicable Base Rate
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<PAGE> 12
Margin pursuant to Section 3.2(f)(iv) hereof, or (v) the occurrence of a
Default or the non-payment of the Notes at maturity of the Notes for any reason
as set forth in Section 3.3 hereof. For purposes of this Subsection, funding
losses arising by reason of liquidation or reemployment of deposits or other
funds acquired by the Lenders to fund or maintain Eurodollar Rate Tranches
shall be calculated as (A) the remainder, if a positive number, obtained by
subtracting (1) the yield (reflecting both stated interest rate and discount,
if any) to maturity of obligations of the United States Treasury as determined
by the Administrative Agent in an amount equal or comparable to such advance
for the period of time commencing on the date of the payment, prepayment or
change of rate as provided above and ending on the last day of the subject
Eurodollar Rate Interest Period, from (2) the Eurodollar Rate plus the
Applicable Eurodollar Rate Margin of the subject Eurodollar Rate Interest
Period, (B) times the number of days from the date of payment, prepayment or
change of rate to the last day of the Eurodollar Rate Interest Period, divided
by 360, (C) times the amount of the applicable Eurodollar Rate Tranche. Any
payment due under this section will be paid to the Administrative Agent within
five days after the Administrative Agent delivers to the Company a certificate
setting forth in reasonable detail the amount of such payment, which
certificate shall be conclusive in the absence of manifest error.
(f) The Companies covenant and agree that:
(i) The Companies will pay, when due and on an after-tax
basis, all present and future stamp and other taxes, levies, costs and
charges whatsoever imposed, assessed, levied or collected on or in
respect of any Eurodollar Rate Tranche (other than taxes, levies,
costs or charges imposed on or measured by the overall net income of
the Lenders, or any lending office of the Lenders by any jurisdiction
in which the Lenders or any such lending office is located) (all such
non-excluded taxes, levies, costs and charges being collectively
called "Reimbursable Taxes"). Promptly after the date on which
payment of any Reimbursable Taxes is due pursuant to applicable law,
the Companies will, at the request of the Administrative Agent,
furnish to the Lenders evidence in form and substance satisfactory to
the Lenders that the Companies have met their obligation under this
subsection.
(ii) The Companies will indemnify the Administrative Agent
and the Lenders against, and reimburse the Administrative Agent and
the Lenders on demand for, any Reimbursable Taxes paid by the
Administrative Agent and the Lenders and any loss, liability, claim or
expense, including interest, penalties and legal fees, that the
Administrative Agent and the Lenders may incur at any time arising out
of or in connection with the failure of the Companies to make any
payment of Reimbursable Taxes when due. Any payment due under this
subsection will be paid to the Administrative Agent within five days
after demand therefor by the Administrative Agent.
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<PAGE> 13
(iii) All payments on account of the principal of, and
interest on, Eurodollar Rate Tranches and all other amounts payable by
the Companies to the Lenders hereunder shall be made free and clear of
and without reduction by reason of any Reimbursable Taxes.
(iv) If the Companies are ever required to pay any
Reimbursable Taxes with respect to any Eurodollar Rate Tranches, the
Companies may elect, by giving to the Administrative Agent not less
than three (3) Business Days' notice, to change the interest rate
applicable to any such advance from the Eurodollar Rate plus the
Applicable Eurodollar Rate Margin to the Base Rate plus the Applicable
Base Rate Margin, but such election shall not diminish the Companies'
obligation to pay all Reimbursable Taxes theretofore imposed,
assessed, levied or collected.
(g) If any applicable law or regulation, or the action of any
applicable regulatory requirement increases the reserves or capital required
for the Credit, the Administrative Agent shall promptly deliver a certificate
to the Company specifying in reasonable detail the additional amount as will
compensate the Lenders for the additional costs, which certificate shall be
conclusive in the absence of manifest error. The Companies shall pay the
amount specified in such certificate promptly upon receipt.
3.3 Interest Payment Dates; Late Payment and Default Rate.
Interest on Base Rate Advances under any of the Loans shall be payable
quarterly in arrears on the last day of each March, June, September and
December, beginning March 31, 1997; interest on Eurodollar Rate Advances shall
be payable on the last day of each Eurodollar Rate Interest Period (1 month, 2
months, 3 months or 6 months), and in the case of 6-month Eurodollar Rate
Interest Periods, also at the end of the first 3 months thereof. Upon the
occurrence of a Default and for so long as such Default remains uncured, the
interest rate on the Notes shall be increased to the Base Rate plus the
Applicable Base Rate Margin plus two percent (2%). Interest after maturity of
the Notes for any reason whatsoever (including acceleration following the
occurrence of an Event of Default) shall be increased to the Base Rate plus the
Applicable Base Rate Margin plus two percent (2%) and shall be payable on
demand.
3.4 Facility Fee; Agents' Fee.
(a) A facility fee equal to the Applicable Facility Fee Rate on
the daily average Available Credit shall begin to accrue on the fourth (4th)
Business Day following the Effective Date and shall be payable by the Companies
quarterly in arrears on the last day of each March, June, September and
December, beginning March 31, 1997, through and including the Drawdown
Termination Date.
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<PAGE> 14
(b) An Agents' fee for the Credit Facility in the amount set forth
in the Agents' Fee Agreement shall be payable by the Companies to the Agents in
accordance with the Agents' Fee Agreement.
3.5 Method of Calculating Interest and Fees. Interest at the Base
Rate (based on the Prime Rate) shall be computed on the basis of a year
consisting of 365 days (366 days in a leap year) and paid for the actual days
elapsed. Interest at the Base Rate (based on the Federal Funds Rate) shall be
computed on the basis of a year consisting of 360 days and a month consisting
of 30 days and paid for the actual days elapsed. Interest at the Eurodollar
Rate shall be computed on the basis of a year consisting of 360 days and a
month consisting of 30 days and paid for the actual days elapsed. Interest at
the Applicable Facility Fee Rate shall be computed on the basis of a year
consisting of 360 days and a month consisting of 30 days and paid for the
actual days elapsed.
Section 4. Payments, Reduction or Termination of the Credit and
Prepayments.
4.1 Place of Payment. All payments hereunder (including payments
of interest, principal and fees) with respect to the Notes shall be made by the
Companies to the Administrative Agent in immediately available funds, prior to
1:00 p.m. (Eastern time) at its offices at 100 Federal Street, Boston,
Massachusetts, or at such other place as may be designated by Administrative
Agent to the Companies in writing. Any payment received after 1:00 p.m.
(Eastern time) shall be deemed received on the next Business Day. Whenever any
payment to be made hereunder or under the Notes fall on a date other than a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall be included in the computation of payment of
interest or any fees.
4.2 Reduction of Credit under the Line of Credit; Prepayments.
(a) The Companies may from time to time (in the case of Base Rate Tranches) or
at the end of any Eurodollar Rate Interest Period (in the case of Eurodollar
Rate Tranches), upon at least three (3) Business Days's prior telephonic notice
(confirmed in writing) to Administrative Agent, permanently reduce the amount
of the Commitments available under the Line of Credit (which Commitments shall
be reduced proportionately by the Lenders), but only upon payment of the
outstanding principal amount of the Line of Credit Notes in excess of the then
reduced amount of the Commitments available under the Line of Credit. Any such
reduction shall be in an amount of $10,000,000.00 or an integral multiple
thereof. The Companies may at any time (in the case of Base Rate Tranches) or
at the end of any Eurodollar Rate Interest Period (in the case of Eurodollar
Rate Tranches), on like notice, terminate the Commitments available under the
Line of Credit upon payment in full of the Line of Credit Notes and other
liabilities of the Companies hereunder. In the case of either a reduction or
termination of the Commitments, the Companies shall thereafter have no right to
increase or restore the Commitments.
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<PAGE> 15
(b) The Companies may from time to time (in the case of Base Rate
Tranches) or at the end of any Eurodollar Rate Interest Period (in the case of
Eurodollar Rate Tranches) prepay the principal of the Line of Credit Notes in
whole or in part without premium; provided, however, any partial prepayment of
principal shall be in an amount of $1,000,000.00 or any integral multiple
thereof. Any prepayment of the principal of the Line of Credit Note shall
include accrued interest to the date of prepayment on the principal amount
being prepaid.
4.3 Prepayments of Term Notes. The Companies may from time to
time (in the case of Base Rate Tranches) or at the end of any Eurodollar Rate
Interest Period (in the case of Eurodollar Rate Tranches), upon at least three
Business Day's prior telephonic notice (confirmed in writing) to the
Administrative Agent, prepay the principal of the Term Notes in whole or in
part without premium; provided, however, any partial prepayment of principal
shall be in an amount not less than $20,000,000.00. Any prepayment of the
principal of the Term Notes shall include accrued interest to the date of
prepayment on the principal amount being prepaid. All prepayments when made
shall be applied pro rata to unpaid installments of principal, and shall not
relieve the Companies from the obligation to pay scheduled installments of
principal (as reduced by the pro rata application of the prepayment) in
accordance with the Term Notes.
4.4 Pro Rata Payments. All payments and prepayments of principal,
interest, fees (except the fees payable to the Agents pursuant to the Agents'
Fee Agreement), and other amounts paid by the Companies to the Administrative
Agent from time to time under this Agreement shall be promptly wired by the
Administrative Agent to the Lenders in proportion to their respective
Commitments.
Section 5. Representations and Warranties of the Companies.
The Companies represent and warrant to the Lenders that as of the
Effective Date and any date thereafter:
5.1 Corporate Existence. Each of the Companies is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and is duly qualified and in good
standing in all jurisdictions wherein the property it owns or the business it
transacts make such qualification necessary as a foreign corporation, except
where the failure to so qualify would not materially impair the ability of the
Company or any of its Subsidiaries to operate its business or own its assets;
and each of the Companies has and will continue to have (i) all necessary
corporate power and authority and (ii) all necessary material permits,
licenses, patents, trademarks and other intangibles, to acquire, own and hold
the property and all other properties it purports to own and hold and to carry
on its business as now conducted. The Domestic Subsidiaries listed on Exhibit
"A" attached hereto constitute all of the Domestic Subsidiaries of the Company.
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<PAGE> 16
5.2 Authorization; Validity. Each of the Companies is and/or has
been duly authorized to execute and deliver this Agreement and the Notes, and
is and will continue to be duly authorized to borrow monies hereunder and to
perform its obligations under this Agreement and the Notes. This Agreement and
the Notes, as executed and when delivered, shall constitute the legal, valid
and binding obligations of each of the Companies, enforceable in accordance
with their respective terms.
5.3 Conflicting Agreements and Other Matters. Neither the Company
nor any of its Subsidiaries is a party to any contract or agreement or subject
to any charter or other corporate restriction which materially and adversely
affects the business, property, assets, or financial condition of the Company
and its Subsidiaries, taken as a whole. Neither the execution nor delivery of
this Agreement or the Notes, nor fulfillment of nor compliance with the terms
and provisions hereof and of the Notes will conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, the charter or by-laws of the Company or any of its Subsidiaries, any
award of any arbitrator or any agreement (including any agreement with
stockholders) or instrument to which the Company or any of its Subsidiaries is
now a party, or result in the creation of any Lien on any property or assets of
the Company or any of its Subsidiaries, or constitute a violation of any law,
statute, rule, regulation, order, judgment or decree to which the Company or
any of its Subsidiaries is subject. Neither the Company nor any of its
Subsidiaries is a party to, or otherwise subject to any provision contained in,
any instrument evidencing indebtedness of the Company or such Subsidiary, any
agreement relating thereto or any other contract or agreement (including its
charter) which (i) limits the amount of, or otherwise imposes restrictions on
the incurring of, Debt of the Companies of the type to be evidenced by the
Credit, or (ii) which imposes restrictions on the granting of Liens by the
Companies on otherwise unencumbered assets of the Companies as security for the
Credit.
5.4 Financial Statements. The Company has furnished the Lenders
with the consolidated balance sheets of the Company and its Subsidiaries as at
fiscal year end in each of the years 1994 through 1996, inclusive, and for the
nine-month period ending December 31, 1996, and a consolidated statement of
income and statement of cash flows for each such fiscal year and such
nine-month period, all identified by a principal financial officer of such
Company and all (other than any financial information for such nine-month
period) certified by KPMG Peat Marwick LLP (or its predecessor). Such
financial statements (including any related schedules and/or notes) are true
and correct in all material respects (subject, as to interim statements, to
changes resulting from audits and normal year-end adjustments) and have been
prepared in accordance with generally accepted accounting principles, and,
unless otherwise set forth therein, consistently followed throughout the
periods involved and show all liabilities, direct and contingent, of the
Company and its Subsidiaries required to be shown in accordance with such
principles. The balance sheets fairly present the condition of the Company and
its Subsidiaries as at the dates thereof, and the related statements of
earnings, stockholders' equity and cash flows fairly present the results of the
operations of the Company and its Subsidiaries
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<PAGE> 17
for the periods indicated. As of the date of this Agreement, there has been no
material adverse change in the business, condition or operations (financial or
otherwise) of the Company and its Subsidiaries taken as a whole, since December
31, 1996.
5.5 Litigation and Contingent Liabilities. No litigation or
governmental proceedings are pending or threatened against the Company or any
of its Subsidiaries, the results of which are likely to materially adversely
affect the financial condition or operations of the Company and its
Subsidiaries on a consolidated basis, except as provided for or disclosed in
the financial statements referred to in Section 5.4 hereof. Other than any
liability incident to such litigation or proceedings provided for or disclosed
in the financial statements referred to in Section 5.4 hereof, or any other
material contingent liabilities provided for or disclosed in the financial
statements referred to in Section 5.4 hereof, the Company and its Subsidiaries,
on a consolidated basis, do not have any material contingent liabilities.
5.6 Outstanding Debt. Neither the Company nor any of its
Subsidiaries has outstanding any Debt except as permitted by Section 6.9 and as
set forth on Schedule 5.6 attached hereto and made a part hereof. There exists
no default under the provisions of any instrument evidencing Debt or of any
agreement relating thereto.
5.7 Title to Properties. Except for assets which are the subject
of capitalized lease obligations, the Company and its Subsidiaries each have
and will continue to have good and marketable title to their respective
properties and assets, including the properties and assets reflected in the
financial statements described in Section 5.4 hereof, subject to no Lien of any
kind except Liens permitted by Section 6.8 hereof. All leases necessary in any
material respect for the conduct of the respective businesses of the Company
and its Subsidiaries are valid and subsisting and are in full force and effect.
5.8 Purpose. The proceeds of the Loan will be used by the
Companies only for the purposes specified in Section 1.4 hereof.
5.9 Margin Stock. Neither the Company nor any of its Subsidiaries
is engaged in the business of purchasing or selling margin stock (as defined in
any regulation of the Board of Governors of the Federal Reserve System) or
extending credit to others for the purpose of purchasing or carrying margin
stock and no part of the proceeds of any borrowing hereunder will be used to
purchase or carry any margin stock or for any other purpose which would violate
any of the margin regulations of such Board of Governors.
5.10 ERISA. No accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived, exists with
respect to any Plan (other than a Multiemployer Plan). No liability to the
PBGC has been or is expected by the Company to be incurred with respect to any
Plan (other than a Multiemployer Plan) by the Company or any of its
Subsidiaries which is or would be materially adverse to the Company and its
Subsidiaries
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<PAGE> 18
taken as a whole. Neither the Company nor any of its Subsidiaries has incurred
or presently expects to incur any withdrawal of liability under Title IV of
ERISA with respect to any Multiemployer Plan which is or would be materially
adverse to the Company and its Subsidiaries taken as a whole. The execution
and delivery of this Agreement will not, and the delivery of the Notes will
not, involve any transaction which is subject to the prohibitions of Section
406 of ERISA or in connection with which a tax could be imposed pursuant to
Section 4975 of the Code. The term "Code" shall mean the Internal Revenue Code
of 1986, as amended; the term "Plan" shall mean an "employee pension benefit
plan" (as defined in Section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
by any trade or business, whether or not incorporated, which, together with the
Company, is under common control, as described in Section 414(b) or (c) of the
Code; and the term "Multiemployer Plan" shall mean any plan which is a
"multiemployer plan" (as such term is defined in Section 4001(a)(3) of ERISA).
5.11 Consents. No consent, approval or authorization of, or
registration or declaration with, any federal or state governmental authority
or other regulatory agent for the validity of the execution and delivery or for
the performance by any of the Companies of this Agreement and the Notes or any
agreement or instrument executed in connection herewith, is or will be
required.
5.12 Tax Returns; Taxes. The Company has and each of its
Subsidiaries have filed all federal, state, foreign and other income tax
returns which, to the knowledge of the officers of the Company, are required to
be filed by any jurisdiction, and each has paid and will pay all taxes which
have or subsequently become due pursuant to said returns or pursuant to any
assessments, except those contested in good faith by appropriate proceedings
and for which sufficient reserves have been or will be established.
5.13 Compliance with Laws. The Company and each of its Subsidiaries
is in substantial compliance with all laws and regulations applicable to the
Companies and the businesses conducted by them (including without limitation,
laws and regulations relating to pollution and environmental control, equal
employment opportunity and employer safety) in all jurisdictions in which the
Company and each of its Subsidiaries is presently doing business, and the
Company will substantially comply and cause each of its Subsidiaries to
substantially comply with all such laws and regulations which may be legally
imposed in the future in jurisdictions in which the Company or any Subsidiary
may then be doing business.
5.14 Foreign Assets Control Regulations. Neither the borrowing by
the Companies hereunder nor their use of the proceeds thereof will violate the
Foreign Assets Control Regulations, the Cuban Assets Control Regulations, the
Rhodesian Sanctions Regulations, the Iranian Assets Control Regulations, the
Nicaraguan Trade Control Regulations, the South African Transactions
Regulations, the Libyan Sanctions Regulations, the Iranian Transactions
Regulations, the Panamanian Transactions Regulations, Iraqi Sanctions
Regulations, the Kuwaiti
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<PAGE> 19
Assets Control Regulations, the Haitian Transactions Regulations or the Federal
Republic of Yugoslavia (Serbia and Montenegro) Sanctions Regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V), or the
Comprehensive Anti-Apartheid Act of 1986 (P.L. 99-440), or any similar asset
control regulations now existing or hereafter promulgated by the United States
Treasury Department.
5.15 Disclosure. Neither this Agreement nor any other document,
certificate or statement furnished to the Lenders by or on behalf of the
Company and the Subsidiaries in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
There is no fact peculiar to the Company or any of its Subsidiaries which
materially adversely affects or in the future may (so far as the Company can
now foresee) materially adversely affect the business, property or assets, or
financial condition, of the Company and any of its Subsidiaries, taken as a
whole, and which has not been set forth in this Agreement or in the other
documents, certificates and statements furnished to the Lenders by or on behalf
of the Company prior to the date hereof in connection with the transactions
contemplated hereby.
5.16 Environmental Matters. (i) Neither the Company nor any
Subsidiary is subject to any Environmental Liability or Environmental
Requirement which could reasonably be expected to have a material adverse
effect on the business, financial condition, operations or prospects of the
Company and its Subsidiaries, taken as a whole.
(ii) Except as set forth on Schedule 516, neither the Company nor any
Subsidiary has been designated as a potentially responsible party under CERCLA
or under any state statute similar to CERCLA. None of the Properties has been
identified on any current or proposed National Priorities List under 40 C.F.R.
Section 300 or any list arising from a state statute similar to CERCLA. None
of the Properties has been identified on any CERCLIS list.
(iii) No Hazardous Materials have been or are being used, produced,
manufactured, processed, generated, stored, disposed of, released, managed at
or shipped or transported to or from the Properties or are otherwise present
at, on, in or under the Properties or, to the best knowledge of the Companies,
at or from any adjacent site or facility, except for Hazardous Materials used,
produced, manufactured, processed, generated, stored, disposed of, released and
managed in the ordinary course of business in compliance with all applicable
Environmental Requirements, except where failure to comply could not reasonably
be expected to have a material adverse affect on the business, operations, or
financial condition of the Company and its Subsidiaries, taken as a whole.
(iv) Except as set forth in Schedule 516, the Company and each of its
Subsidiaries has procured all permits, licenses or authorizations (or any
variances or waivers) necessary under Environmental Requirements for the
conduct of its business.
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<PAGE> 20
5.17 Special Provisions. The foregoing representations and
warranties shall be true and correct as of the Effective Date, and shall
remain true and correct during the period from the Effective Date to the
Acquisition Date (but only as to Advances under the Line of Credit for purposes
other than the Acquisition) and after the Acquisition Date (whether or not the
Acquisition is consummated) for all purposes.
Section 6. Covenants of the Companies.
From the date of this Agreement and thereafter until the expiration or
termination of the Credit Facility and until the Notes and other liabilities of
the Companies hereunder are paid in full:
6.1 Financial Statements: The Company agrees that it will furnish
to the Documentation Agent one copy for each of the Lenders of the following:
(a) as soon as practicable and in any event within forty-five (45)
days after the end of each quarterly period (other than the
last quarterly period) in each fiscal year, a consolidated
balance sheet of the Company and its Subsidiaries as at the
end of such quarterly period and the related statement of
earnings and cash flows for the period from the beginning of
the current fiscal year to the end of such quarterly period,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in
reasonable detail and certified by an authorized financial
officer of the Company, subject to changes resulting from year
end adjustments; provided, however, that delivery pursuant to
clause (c) below of copies of the Quarterly Report on Form
10-Q of the Company for such quarterly period filed with the
Securities and Exchange Commission shall be deemed to satisfy
the requirements of this clause (a);
(b) as soon as practicable and in any event within ninety (90)
days after the end of each fiscal year, a consolidated balance
sheet of the Company and its Subsidiaries as at the end of
such year and the related statements of earnings,
stockholders' equity and cash flow for such year, setting
forth in each case in comparative form corresponding
consolidated figures from the preceding annual audit, all in
accordance with generally accepted accounting principles and
unrestricted in audit scope and certified as to consolidated
statements of the Company by independent public accountants of
recognized standing selected by the Company whose certificate
shall be in scope and substance satisfactory to Lenders;
provided, however, that delivery pursuant to clause (c) below
of copies of the Annual Report on Form 10-K of the Company for
such fiscal year filed with the Securities
- 15 -
<PAGE> 21
and Exchange Commission shall be deemed to satisfy the
requirements of this clause (b);
(c) promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as
the Company shall send to its public stockholders and copies
of all registration statements (without exhibits) and all
reports which the Company files with the Securities and
Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange
Commission);
(d) promptly upon receipt thereof, a copy of each other report
submitted to the Company or any of its Subsidiaries by
independent accountants in connection with any annual, interim
or special audit made by them of the books of the Company or
any of its Subsidiaries and which the Company or any of its
Subsidiaries shares with the audit committee of the Board of
Directors of the Company;
(e) with reasonable promptness, such other financial data as
Lenders may reasonably request;
(f) as soon as practicable and in any event within ninety (90)
days after the end of each fiscal year, a copy of the
Company's internal statement of operations by area; and
(g) as soon as practicable but in any event not later than ninety
(90) days after the beginning of each fiscal year, a
consolidated budget of the Company and its Subsidiaries for
the ensuing fiscal year, setting forth the anticipated
revenues and expenses for such year, the incurrence and
repayment of Debt during such year, and such other matters as
the Lenders may reasonably require.
Together with each delivery of financial statements required by clauses (a) and
(b) above, the Company will deliver to the Documentation Agent an original of
an Officer's Certificate demonstrating (with computations in reasonable detail)
compliance with Sections 6.12, 6.13 and 6.14, stating that there exists no
Event of Default or Default, or, if any such Event of Default or Default
exists, specifying the nature thereof, the period of existence thereof and what
action the Company proposes to take with respect thereto. Together with each
delivery of financial statements required by clause (b) above, the Company will
also deliver to the Documentation Agent an original of a certificate of said
accountants stating that, in making the audit necessary to the certification of
such financial statements, they have obtained no knowledge of any Default or
any Event of Default, or, if any such Event of Default or Default exists,
specifying the nature
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<PAGE> 22
and period of existence thereof. Such accountants, however, shall not be
liable to anyone by reason of their failure to obtain knowledge of any such
Event of Default or Default which would not be disclosed in the course of an
audit conducted in accordance with generally accepted auditing standards.
The Companies also agree that forthwith upon the chief executive
officer, principal financial officer or principal accounting officer of the
Company obtaining knowledge of:
(i) an Event of Default or Default;
(ii) a material adverse change in the financial condition,
business or operations of the Company and its
Subsidiaries, taken as a whole;
(iii) the institution of legal proceedings against the
Company and/or any Subsidiary, which is likely to
materially adversely affect the financial condition,
business or operations of the Company and its
Subsidiaries, taken as a whole, or which in any
manner draws into question the validity of or is
likely to impair the ability of the Companies to
perform their obligations under this Agreement or the
Notes;
(iv) the occurrence of any default (after the passage of
any grace period) by a Company under any agreement or
note evidencing borrowed money for an aggregate
initial principal amount equal to or greater than
$1,000,000;
(v) any (A) Environmental Liability which is likely to
materially adversely affect the financial condition,
business or operations of the Company and its
Subsidiaries, taken as a whole, (B) pending,
threatened or anticipated Environmental Proceedings,
which is likely to materially adversely affect the
financial condition, business or operations of the
Company and its Subsidiaries, taken as a whole, (C)
Environmental Notice which is likely to materially
adversely affect the financial condition, business or
operations of the Company and its Subsidiaries, taken
as a whole, (D) Environmental Judgment or Order which
is likely to materially adversely affect the
financial condition, business or operations of the
Company and its Subsidiaries, taken as a whole, or
(E) Environmental Releases at, on, in, under or in
any way materially affecting the Properties;
(vi) any violation of the provisions of Section 6.17
hereto relating to ERISA compliance; or
(vii) the occurrence of any other event that is likely to
impair the ability of the Companies to meet their
obligations hereunder.
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<PAGE> 23
the Company will deliver to the Documentation Agent an Officer's Certificate
specifying the nature and period of existence thereof and what action the
Company has taken, is taking or proposes to take with respect thereto.
The Documentation Agent will promptly distribute to the Lenders,
originals (to the extent available) or copies of the financial statements and
reports, the Officer's Certificates and all other documents received by the
Documentation Agent from the Borrower pursuant to this Section 6.1.
6.2 Inspection of Property and Books and Records. The Companies
agree that they will permit the Agents, each Lender (with prior notice to the
Agents) and any Person designated by the Agents in writing, at Agents' (or
Lender's) expense, to visit and inspect any of the properties of the Company
and its Subsidiaries, to examine the corporate books and financial records of
the Companies and make copies thereof or extracts therefrom, and to discuss the
affairs, finances and accounts of any of such corporations with the principal
officers of each of the Companies and their respective independent public
accountants, all at such reasonable times and as often as Agents or the Lenders
may reasonably request.
6.3 Covenant to Secure Notes Equally. (a) The Companies agree
that if the Company or any Subsidiary shall create or assume any Lien of any
kind upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens permitted by the provisions of Section 6.8 (unless
prior written consent to the creation or assumption thereof shall have been
obtained), they will make or cause to be made effective provisions whereby the
Notes will be secured by such Lien equally and ratably with any and all other
Debt thereby secured, as long as any such other Debt shall be so secured.
(b) The Companies agree not to become a party to, or otherwise be
subject to, any provision contained in any instrument evidencing indebtedness
of any of the Companies which imposes restrictions on the granting of Liens by
the Companies on otherwise unencumbered assets of the Companies as security for
the Notes, except as set forth herein.
6.4 Guaranteed or Collateralized Obligations. The Company agrees
that if it or any of its Subsidiaries incurs or permits to exist any Debt in
any event in excess of an aggregate principal amount equal to $10,000,000
guaranteed or collateralized (except as permitted by Sections 6.8(v) and
6.8(ix) hereof) in any other manner by any other Person (other than any
governmental entity, or other than in connection with (y) bonds, letters of
credit, letters of undertaking, or other instruments related to litigation, or
the avoidance thereof, involving the Company or its Subsidiaries, including the
release of assets of the Company or its Subsidiaries in connection with such
litigation, or (z) performance bonds, surety bonds, letters of credit, bank
guaranties, and other instruments related to the conduct of the business of the
Company or its Subsidiaries, excluding any obligation for borrowed money), it
will simultaneously cause
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<PAGE> 24
such Person to execute and deliver to the Lenders a guaranty agreement or
collateral agreement, as the case may be, in form and substance satisfactory to
the Lenders either (i) guaranteeing payment of the principal amount of the
Notes and any premium and interest thereon, which bears the same ratio to the
total unpaid principal amount of the Notes as the amount of such other
obligation which is guaranteed bears to the total unpaid principal amount of
such other obligation or (ii) collateralizing the Notes equally and ratably
with such other obligation, as the case may be. Nothing contained in the
foregoing shall be deemed to permit the Companies to incur Liens to Persons
other than the Lenders in excess of those permitted by Section 6.8 hereof.
6.5 Maintenance of Insurance. Each Company agrees that it and
each Subsidiary will maintain, with responsible insurers, insurance with
respect to its properties and business against such casualties and
contingencies (including, but not limited to, public liability, larceny,
embezzlement or other criminal misappropriation, pollution and war risks) and
in such amounts as is customary in the case of similarly situated corporations
engaged in the same or similar businesses.
6.6 Maintenance of Corporate Existence/Compliance with
Law/Preservation of Property. Except as allowed under Sections 6.11 and 6.12,
each Company covenants that it and each Subsidiary will do or cause to be done
all things necessary to preserve, renew and keep in full force and effect the
corporate existence of such Company and its Subsidiaries and comply in all
material respects with all laws and regulations (including, without limitation,
laws and regulations relating to equal employment opportunity and employee
safety) applicable to it and its Subsidiaries, the failure with which to comply
is likely to materially adversely affect the business, operations or financial
condition of such Company and its Subsidiaries, taken as a whole; at all times
maintain, preserve and protect all material intellectual property of such
Company and its Subsidiaries, and preserve all the remainder of its material
property used or useful in the conduct of its business and keep the same in
good repair, working order and condition. The Companies shall not enter into
business activities materially different from the nature of the business
activities of the Companies as of the date of this Agreement.
6.7 Compliance with Environmental Laws. Each of the Companies
will, and the Company will cause each of its Subsidiaries to, comply in a
timely fashion with, or operate pursuant to valid waivers of the provisions of,
all Environmental Requirements including, without limitation, requirements with
respect to the emission of wastewater effluent, solid and hazardous waste and
air pollution, and any other applicable requirements for conducting, on a
timely basis, periodic tests and monitoring for contamination of ground water,
surface water, air and land and for biological toxicity of the aforesaid, and
comply with any applicable regulations (except to the extent such regulations
are waived by appropriate governmental authorities) of the Environmental
Protection Agency or other relevant federal, state or local governmental
authority, except where the failure to do so is not likely to materially
adversely affect the business, operations or financial condition of the Company
and the Subsidiaries, taken as a whole. To the fullest extent permitted by
applicable law, each Company agrees to
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<PAGE> 25
indemnify and hold the Agents, the Lenders, their officers, agents and
employees harmless from any loss, liability, claim or expense that they may
incur or suffer as a result of a breach by the Company or any of the
Subsidiaries, as the case may be, of this covenant. No Company shall be deemed
to have breached or violated this Section 6.7 if such Company or Subsidiary is
challenging in good faith by appropriate proceedings diligently pursued the
application or enforcement of such Environmental Requirements for which
adequate reserves have been established in accordance with generally accepted
accounting principles.
6.8 Liens. The Companies agree that they will not and will not
permit any Subsidiary to create, assume or suffer to exist any Lien upon any of
their respective property or assets, whether now owned or hereafter acquired
(whether or not provision is made for the equal and ratable securing of the
Credit in accordance with the provisions of Section 6.3) except:
(i) Liens for taxes (including ad valorem and property
taxes) not yet due or which are being contested in
good faith by appropriate proceedings;
(ii) Liens incidental to the conduct of their businesses
or the ownership of their property and assets which
were not incurred in connection with the borrowing of
money or the obtaining of advances of credit, and
which do not in the aggregate materially detract from
the value of their property or assets or materially
impair the use thereof in the operation of their
business;
(iii) presently existing Liens on property or assets of any
of the Subsidiaries to secure obligations of any of
such Subsidiaries to the Company or another
Subsidiary;
(iv) presently existing Liens on property or assets of any
Foreign Subsidiary consisting of marine mortgages on
new vessels under construction or on vessels already
constructed, which Liens were required as a condition
of new vessel financing from non-United States
sources, all of which Liens (other than Liens which
are incidental and do not materially affect such
property or assets) are set forth on Schedule 2-Part
1 attached hereto and made a part hereof;
(v) any presently existing Lien which existed on any real
or personal property of any corporation at the time
it became a Subsidiary, or which existed prior to the
time of acquisition upon any real or personal
property acquired by the Company or any Subsidiary
through purchase, merger or consolidation or
otherwise, whether or not assumed by the Company or
any Subsidiary, or placed upon real or personal
property acquired by the Company or any Subsidiary,
in connection with the purchase thereof, all
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<PAGE> 26
of which Liens (other than Liens which are incidental
and do not materially affect such property) are set
forth on Schedule 2-Part 2 attached hereto and made a
part hereof, provided that any such Lien shall not
encumber any other property of the Company or any
Subsidiary;
(vi) any Lien renewing, extending or refunding any Lien
permitted by clause (v) above, provided that the
principal amount secured is not increased and the
Lien is not extended to other property;
(vii) Liens to secure up to $10,000,000 of letters of
credit obligations of the Company to the extent
permitted by Section 6.9(a);
(viii) any common law right of set off or banker's lien
arising in the ordinary course of business in
connection with deposit arrangements maintained by
the Company and its Subsidiaries with its banks or
other financial institution, other than a Lender in
connection with this Agreement (which such rights
have been waived pursuant to Section 9.3 hereof); and
(ix) Liens on assets covered by financing arrangements,
including lease financing arrangements which would be
characterized as capitalized leases in accordance
with generally accepted accounting principles, if the
indebtedness for all such agreements does not in the
aggregate exceed fifteen percent (15%) of
Consolidated Tangible Net Worth.
6.9 Investments. The Companies agree that they will not and will not
permit any Subsidiary to make any investment in, or any loan or advance to, or
own, purchase or acquire (other than as allowed in Section 6.11) any stock or
securities of, any Person (all of the foregoing being herein called "Restricted
Investments"), except that:
(i) the Company or any of its Subsidiaries may own,
purchase or acquire (A) direct obligations of the
United States of America or any of its agencies or
obligations guaranteed by the United States of
America or any of its agencies and having maturities
not in excess of two years from the date of purchase
or acquisition, (B) prime commercial paper rated A1
or P1 and having maturities not in excess of two
years from the date of purchase or acquisition, (C)
certificates of deposit issued by any banks with a
net worth of at least $100,000,000 and a rating by
either Moody's Investor Services, Inc. or Standard &
Poors of at least A or better and having maturities
not in excess of two years from the date of purchase
or acquisition; provided, however, that in the case
of any Lender or Lenders whose rating is less than A,
the maximum amount of the certificates of
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<PAGE> 27
deposit issued by such Lender or Lenders shall not
exceed $3,000,000 individually or $12,000,000 in the
aggregate;
(ii) any Canadian Subsidiary may own, purchase or acquire
direct obligations of the Canadian Government having
maturities not in excess of two years from the date
of purchase or acquisition;
(iii) the Company or any of its Subsidiaries may (A) make
or permit to remain outstanding loans or advances to
the Company or any Subsidiary, (B) own, purchase or
acquire stock or securities of a Subsidiary or of a
corporation which immediately after such purchase or
acquisition will be a Subsidiary, or (C) acquire and
own stock or securities received in a settlement of
debts created in the ordinary course of business and
owed to the Company or any Subsidiary;
(iv) any Foreign Subsidiary may own, purchase or acquire
certificates of deposit having maturities not in
excess of two years from the date of purchase or
acquisition and issued by foreign banks or by the
foreign branches of United States banks if each such
foreign bank or foreign branch has a net worth of at
least $100,000,000 and a rating by either Moody's
Investor Services, Inc. or Standard & Poors of at
least A or better;
(v) the Company or any Subsidiary may make loans or
advances to or own, purchase or acquire stock or
securities or an interest in any joint venture
entity; provided, however, that the aggregate amount
of all such loans, advances and investments in joint
venture entities at any time outstanding shall not
exceed $100,000,000; and
(vi) the Company may make the Acquisition.
The foregoing restrictions on investments by the Companies shall not apply to
funds maintained in rabbi trusts established by the Companies for supplemental
executive retirement plans and early retirement incentive programs.
6.10 Dispositions of Stock and Debt. The Companies agree that they
will not and will not permit any Subsidiary to sell or otherwise dispose of any
shares of stock or Debt of any Subsidiary, except (i) to the Company or another
Subsidiary, (ii) a sale of shares of a Subsidiary in connection with the
creation of a joint venture (subject to the limitations on investments set
forth in Subsections 6.09(v) and (iii) except that all shares of stock and Debt
of any Subsidiary at the time owned by or owed to the Company or any of its
Subsidiaries may be sold as an entirety for a cash consideration which
represents the fair value (as determined in good faith by
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<PAGE> 28
the Board of Directors of the Company) at the time of sale of the shares and
Debt so sold; provided that the assets of such Subsidiary do not constitute a
substantial part of the consolidated assets of the Company and its
Subsidiaries; and provided further that, at the time of such sale, such
Subsidiary shall not own, directly or indirectly, any Debt of the Company or
any shares of stock or Debt of any other Subsidiary (unless all of the shares
of stock and Debt of such other Subsidiary owned, directly or indirectly by the
Company and all Subsidiaries are simultaneously being sold as permitted by this
Section 6.10 hereof; provided, further, that the Company may sell 70% of the
stock of Tidewater (Malaysia) Sdn.Bhd. to citizens of Malaysia; provided,
however, that the transactions described on Schedule 6.10 are also expressly
permitted hereunder.
6.11 Mergers and Consolidations. The Companies agree that they will
not and will not permit any Subsidiary to merge or consolidate with any other
corporation or sell, lease or transfer or otherwise dispose of all or a
substantial part of its assets to any Person, except that provided no Default
has occurred and is continuing and further provided that no Default will occur
as a result thereof:
(i) any Subsidiary may merge or consolidate with the
Company (provided that the Company shall be the
continuing or surviving corporation) or with any one
or more other Subsidiaries;
(ii) any Subsidiary may sell, lease, transfer or otherwise
dispose of any of its assets to the Company or
another Subsidiary;
(iii) any Subsidiary may sell or otherwise dispose of all
or substantially all of its assets subject to the
conditions specified in Section 6.11 with respect to
a sale of the stock of such Subsidiary;
(iv) the Company may merge or consolidate with any
corporation provided that the Company shall be the
continuing or surviving corporation; and
(v) any Subsidiary may merge or consolidate with any
corporation provided such continuing or surviving
corporation shall remain or become a Subsidiary of
the Company.
6.12 Minimum Fixed Charge Ratio. The Company agrees that it will not
permit Consolidated EBITDA for the immediately preceding four consecutive
fiscal quarters less the tax expense for taxes actually paid during such
period, to be less than 200% of Consolidated Fixed Charges.
6.13 Minimum Tangible Net Worth. The Company agrees that it will not
permit at any time Consolidated Tangible Net Worth to be less than the
following: for the period from the
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<PAGE> 29
Effective Date up to the Acquisition Date and thereafter if the Acquisition is
not consummated, 80% of Consolidated Tangible Net Worth as of December 31,
1996, plus 50% of cumulative positive Consolidated Net Income after December
31, 1996, plus 100% of cumulative Net Equity Proceeds after December 31, 1996;
for the period following the Acquisition Date if the Acquisition is
consummated, 80% of Consolidated Tangible Net Worth as of the Acquisition Date
(after taking into account the effect of the Acquisition), plus 50% of
cumulative positive Consolidated Net Income after the Acquisition Date, plus
100% of cumulative Net Equity Proceeds after the Acquisition Date.
6.14 Maximum Debt to Total Capitalization Ratio. The Company agrees
that it will not permit its Debt to Total Capitalization Ratio to be greater
than the following:
<TABLE>
<CAPTION>
Debt to Total
Period Capitalization Ratio
------ --------------------
<S> <C>
Effective Date through
March 31, 1998 0.50%
April 1, 1998 through
March 31, 1999 0.45%
April 1, 1999 through
March 31, 2000 0.40%
April 1, 2000 and
thereafter 0.35%
</TABLE>
6.15 Transactions with Related Party. The Companies agree that they
will not and will not permit any Subsidiary to effect any transaction with any
Affiliate or Subsidiary by which any asset or services of a Company or a
Subsidiary is transferred to such Affiliate or Subsidiary, or from such
Affiliate or Subsidiary or enter into any other transaction with an Affiliate
or Subsidiary, on terms less favorable to such Company or such Subsidiary than
would be reasonably expected to be given in a similar transaction with an
unrelated entity. The foregoing restrictions shall not apply to transactions
between the Company and a Subsidiary or a Subsidiary and another Subsidiary.
6.16 Stock Transactions by Subsidiaries. The Company agrees that it
will not permit any Subsidiary to issue, sell or dispose of any shares of any
class of its stock (other than directors' qualifying shares or shares which are
effectively controlled by the Company) except to the Company or another
Subsidiary or as permitted by Section 6.11.
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<PAGE> 30
6.17 ERISA. The Company agrees that it will not, and will not permit
any Subsidiary to:
(i) terminate or withdraw from any Plan so as to result in
any material liability to the PBGC;
(ii) engage in or permit any Person to engage in any
prohibited transaction (as defined in Section 4975 of the Code) involving any
Plan (other than a Multiemployer Plan) which would subject the Company or any
Subsidiary to any material tax, penalty or other Liability;
(iii) incur or suffer to exist any material accumulated
funding deficiency (as defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, involving any Plan (other than a Multiemployer
Plan); or
(iv) allow or suffer to exist any risk or condition, which
presents a material risk of incurring a material liability to the PBGC.
6.18 Federal Reserve Regulations, etc. The Company agrees that it
will not, and will not permit any Subsidiary or any agent acting on behalf of
the Company or any Subsidiary, to take any action which might cause this
Agreement or the Notes to violate Regulation U or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Securities
Exchange Act of 1934, as amended, in each case as in effect now or as the same
may hereafter be in effect.
6.19 Environmental Matters. Each of the Companies agrees that it
will not, and will not permit any Third Party to, use, produce, manufacture,
process, generate, store, dispose of, manage at, or ship or transport to or
from the Properties any Hazardous Materials except for Hazardous Materials
used, produced, manufactured, processed, generated, stored, disposed of,
released or managed in the ordinary course of business in compliance with all
applicable Environmental Requirements and except for Hazardous Materials
released in amounts which do not require remediation pursuant to applicable law
or regulation, and which do not present any danger to health, safety or the
environment, or unless any liability resulting from such remediation is not
likely to materially adversely affect the business, operations or financial
condition of the Company and its Subsidiaries, taken as a whole.
6.20 Taxes. The Company agrees that it will pay when due, and cause
each of its Subsidiaries to pay when due, all taxes, assessments, and other
liabilities, other than for borrowed money, except and so long as contested in
good faith.
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<PAGE> 31
Section 7A. Conditions Precedent to the Funding of any Advance under
the Credit Facility. The obligation of the Lenders to make the initial Advance
under the Line of Credit and/or to make the Acquisition Term Loan to the
Companies under this Agreement are subject to the receipt by the Documentation
Agent of the following:
7A.1 Resolutions of the Companies. Copies, duly certified by the
secretary or assistant secretary of each of the Companies, of (a) the
resolutions of the Board of Directors of each of the Companies authorizing the
borrowings hereunder and the execution and delivery of this Agreement and the
Notes, (b) all documents evidencing other necessary corporate action, and (c)
all approvals, or consents, if any, necessary with respect to this Agreement
and the Notes.
7A.2 Organization Documents; Good Standing. Copies of (a) the
certificate of incorporation of the Company (certified as of a recent date by
the Secretary of State of Delaware), (b) the by-laws of the Company, certified
by the secretary or assistant secretary of the Company, (c) the certificate of
incorporation and by-laws of each Identified Subsidiary, certified by the
secretary or assistant secretary of such Identified Subsidiary, in each case as
in effect on the Effective Date, (d) certificates of good standing for the
Company and each of the Identified Subsidiaries, issued by the Secretary of
State of their respective states of incorporation, (e) certificate of
qualification to do business of the Company issued by the Secretary of State of
the State of Louisiana.
7A.3 Incumbency. Certificates of the secretary or assistant
secretary of each of the Companies, certifying the name of the officers of each
of the Companies, respectively, authorized to execute this Agreement and the
Notes, and all other documents or certificates to be delivered hereunder,
together with the true signatures of such officers.
7A.4 Notes. The duly executed Line of Credit Notes payable to the
respective Lenders.
7A.5 Officer's Certificate. A certificate of the president or
chief financial officer of the Company, dated as of the Effective Date,
certifying that as of the Effective Date (i) the representations and warranties
of the Companies set forth in Section 5 hereof are true and correct, (ii) no
Event of Default has occurred, and (iii) no material adverse change in the
financial condition, business, operations or prospects of the Company or its
Subsidiaries has occurred since December 31, 1996.
7A.6 Opinion. The opinion of Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P., special counsel to the Company, addressed to the
Lenders, to the effect that (a) each of the Company and the Identified
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and is duly
qualified and in good standing as a foreign corporation in all jurisdictions
wherein the property it owns or the business it transacts makes such
qualification necessary, except where the failure to so qualify would not
impair the ability of Company or any of the Identified Subsidiaries to
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<PAGE> 32
operate its business or own its assets; (b) each of the Companies has full
power to execute, deliver and perform its obligations under this Agreement, the
Line of Credit Notes and the Term Notes; (c) such actions have been duly
authorized by all necessary corporate action, and are not in conflict with any
provision of law or of the charter or by-laws of any of the Companies, nor in
conflict with any agreement binding upon the Company or any of the Identified
Subsidiaries; (d) this Agreement and the Line of Credit Notes and Acquisition
Term Notes, when executed and delivered, are the legal and binding obligations
of the Companies, enforceable in accordance with their respective terms, except
as enforcement may be limited by applicable bankruptcy, reorganization,
moratorium or similar laws; and (e) no consent or approval of the shareholders
of the Company or of any governmental authority is required as a condition to
the validity or enforceability of this Agreement or the Notes.
7A.7 Payment of Fees and Expenses. Evidence that the Company has
paid (i) all underwriting fees due the Administrative Agent pursuant to the
Agents' Fee Agreement, and (ii) all other fees and expenses of the Agents and
their counsel as described in Section 11.5 hereof.
7A.8 Termination of Prior Credit Facility. Copy of the irrevocable
notice of termination given by the Company, at least three days prior to any
Advance under the Credit Facility, to fully terminate the credit facility
pursuant to the Amended and Restated Revolving Credit and Term Loan Agreement,
dated December 29, 1995, as amended, together with a certification by the
Company that all amounts due thereunder have been paid in full.
Section 7B. Conditions Precedent to the Funding of any Advance under
Credit Facility for the Acquisition. In addition to the conditions precedent
set forth in Section 7A above, the obligation of the Lenders to make the
initial Advance under the Line of Credit and to make the Acquisition Term Loan
to the Companies, in both cases for the financing of the Acquisition in any
part under this Agreement, are subject to the receipt by the Documentation
Agent on the Acquisition Date or by May 30, 1997, whichever date is sooner, of
the following:
7B.1 Notes. The duly executed Acquisition Term Notes payable to
the respective Lenders.
7B.2 Officer's Certificate. A certificate of the president or
chief financial officer of the Company, dated as of the Acquisition Date,
certifying that (i) the representations and warranties of the Companies set
forth in Section 5 hereof were true and correct as of the Effective Date, (ii)
none of the events described in Subsections 9.1(g), (h), (i), (j) or (k) have
occurred (irrespective of the passage of any grace periods therein), and (iii)
all conditions to the consummation of the Acquisition (except for payment of
the purchase price to be funded under this Agreement) have been satisfied, and
(iv) upon payment of the purchase price, the Acquisition will be consummated
substantially on the terms, conditions, corporate and capital structure as
provided by the Company to the Agents in the Project Atlantic Modeling Results.
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<PAGE> 33
Section 7C. Conditions Precedent to the Funding of the Conversion
Term Loan. In addition to the conditions precedent set forth in Section 7A
above, the obligation of the Lenders to make the Conversion Term Loan to the
Companies, are subject to the receipt by the Documentation Agent on the
Drawdown Termination Date of the following:
7C.1 Notes. The duly executed Conversion Term Notes payable to the
respective Lenders.
7C.2 Officer's Certificate. A certificate of the president or
chief financial officer of the Company, dated as of the Drawdown Termination
Date, certifying that as of the Drawdown Termination Date (i) the
representations and warranties of the Companies set forth in Section 5 hereof
are true and correct, (ii) no Event of Default has occurred, and (iii) no
material adverse change in the financial condition, business, operations or
prospects of the Company or its Subsidiaries has occurred since the date of the
most recent financial statements timely furnished by the Company to the
Documentation Agent.
Section 8. Conditions Precedent to Advances after the Line of Credit
for Other than the Acquisition. In addition to the applicable conditions
precedent set forth in Section 7A above, the obligation of the Lenders to make
any subsequent Advances under the Line of Credit for purposes other than
financing the Acquisition, and the obligation of the Lenders to make the
Advances under the Conversion Term Loan, are subject to the satisfaction of
each of the following conditions precedent:
8.1 Default. Before and after giving effect to such Advance, no
Default shall have occurred and be continuing.
8.2 Representations and Warranties. Before and after giving
effect to such Advance, the representations and warranties in Section 5 hereof
shall be true and correct as though made on the date of such Advance, except
for such changes as are specifically permitted hereunder.
Section 9. Events of Default; Remedies; Set Offs.
9.1 Events of Default. Any one of the following events shall
constitute Events of Default hereunder and under the Credit Facility and the
Notes, individually and collectively:
(a) The Companies default in the payment of any principal on any
Note when the same shall become due, either by the terms thereof or otherwise
as herein provided.
(b) The Companies default in the payment of any interest on any
Note or any other amount due hereunder for more than 5 days after the date
due.
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<PAGE> 34
(c) The Company or any Subsidiary defaults in any payment of
principal or of interest on any other obligation for borrowed money (including,
but not limited to, any Capitalized Lease Obligation, any obligation under a
conditional sale or other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not secured by a
purchase money mortgage or any obligation under notes payable or drafts
accepted representing extensions of credit) beyond any period of grace provided
with respect thereto, or in the performance or observance of any other
agreement, term or condition contained in any agreement under which any such
obligation is created if the effect of such default is to cause, or permit the
holder or holders of such obligation (or a trustee on behalf of such holder or
holders) to cause, such obligation to become due (or to be defeased or
repurchased by the Company or any Subsidiary) prior to its stated maturity,
provided that the aggregate amount of all obligations as to which such payment
default shall occur and be continuing or such failure (or defeasance or resale)
or other event causing or permitting acceleration shall occur and be continuing
exceeds $1,000,000, individually or in the aggregate.
(d) Any representation or warranty made by the Companies herein or
in any writing furnished in connection with or pursuant to this Agreement shall
be false in any material respect on the date as of which made or deemed made.
(e) The Companies default in the performance or observance of any
agreement or covenant contained in Sections 6.8 through 6.20 of this Agreement.
(f) The Companies default in the performance or observance of any
other agreement, covenant, term or condition contained herein and such default
shall not have been remedied within 30 days after the earlier to occur of (i)
the date on which the President, the Treasurer or the Chief Financial Officer
of the Company obtains actual knowledge thereof or (ii) the date on which
written notice thereof shall have been received by the Company from the
Administrative Agent.
(g) The Company or any Subsidiary makes an assignment for the
benefit of creditors or is generally not paying its debts as such debts become
due.
(h) Any decree or order for relief in respect of the Company or
any Subsidiary is entered under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereinafter in effect (herein called "Bankruptcy
Law"), of any jurisdiction.
(i) The Company or any Subsidiary petitions or applies to any
tribunal for, or consents to the appointment of, or taking possession by, a
trustee, receiver, custodian, liquidator or similar official, of the Company or
any Subsidiary, or of any substantial part of the assets of the Company or any
Subsidiary, or commences a voluntary case under the Bankruptcy Law of the
United States or any proceedings (other than proceedings for the voluntary
liquidation and
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<PAGE> 35
dissolution of a Subsidiary) relating to the Company or any Subsidiary under
the Bankruptcy Law of any other jurisdiction.
(j) Any such petition or application described in Section 9.1(i)
is filed, or any such proceedings are commenced, against the Company or any
Subsidiary, and the Company or such Subsidiary by any act indicates its
approval thereof, consent thereto, or acquiescence therein, or an order,
judgment or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in effect
for more than 60 days.
(k) Any order, judgment or decree is entered in any proceedings
against the Company decreeing the dissolution of the Company and such order
remains in effect for more than 60 days.
(l) Any order, judgment or decree is entered in any proceedings
against the Company or any Subsidiary, as the case may be, decreeing a split-up
of the Company or such Subsidiary which requires the divestiture of assets
representing a substantial part, or the divestiture of the stock of a
Subsidiary whose assets represent a substantial part, of the assets of the
Company and its Subsidiaries or which requires the divestiture of assets, or
stock of a Subsidiary, which shall have contributed a substantial part of the
Consolidated Net Income of the Company and its Subsidiaries for any of the
three (3) fiscal years then most recently ended, and such order, judgment or
decree remains unstayed and in effect for more than 60 days.
(m) A final judgment in an amount in excess of $1,000,000 is
rendered against the Company or any Subsidiary and, within 60 days after entry
thereof, such judgment is not discharged or execution thereof stayed pending
appeal, or within 60 days after the expiration of any such stay, such judgment
is not discharged.
9.2 Remedies. (a) Except as provided in Subsection (b) hereof,
(i) if any Event of Default specified in Subsections 9.1(h), 9.1(i) or 9.1(j)
occurs, the Credit Facility shall automatically be deemed terminated and the
outstanding Notes shall automatically become immediately due and payable, all
without presentment, demand, protest or notice of any kind, all of which are
hereby waived by the Companies; and (ii) if any Event of Default occurs under
any other subsection of Section 9.1, the Required Lenders may, at their option,
and in addition to any right, power or remedy provided by law or equity, by
notice in writing to the Company, declare the Credit Facility to be terminated
and the outstanding Notes to be immediately due and payable, whereupon the
Credit Facility shall be terminated and the outstanding Notes shall become
immediately due and payable, all without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Companies.
(b) Notwithstanding the provisions of Subsection (a), during the
period from the Effective Date through the Acquisition Date, (i) if any Event
of Default specified in Subsections
- 30 -
<PAGE> 36
9.1(h), 9.1(i) or 9.1(j) occurs, the Credit Facility shall automatically be
deemed terminated and the outstanding Notes shall automatically become
immediately due and payable, all without presentment, demand, protest or notice
of any kind, all of which are hereby waived by the Companies; and (ii) if any
Event of Default or Default specified in any other Subsections of Section 9.1
occurs (which with notice, the passage of time and/or the happening of any
further condition or act would constitute an Event of Default) and is
continuing uncured, (A) the Lenders shall have no obligation to make advances
under the Line of Credit Notes for purposes other than the Acquisition, unless
and until such Default is cured prior to the earlier of the occurrence of an
Event of Default or the Acquisition Date, and (B) the Required Lenders may, at
their option, and in addition to any right, power or remedy provided by law or
equity, by notice in writing to the Company, declare the Line of Credit (as it
relates solely to Advances for purposes other than the Acquisition) to be
terminated, and the outstanding Line of Credit Notes (as they relate solely to
Advances for purposes other than the Acquisition) to be immediately due and
payable, whereupon the Line of Credit (as it relates solely to Advances for
purposes other than the Acquisition) and the outstanding Line of Credit Notes
(as they relate solely to Advances for purposes other than the Acquisition)
shall become immediately due and payable, all without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Companies;
the foregoing provisions of Subsection (b)(ii) shall not apply to Advances
under the Line of Credit or the Acquisition Term Loan for purposes of the
Acquisition.
(c) In furtherance to the remedies specified above, the
Documentation Agent (with the direction of the Required Lenders) may proceed to
protect and enforce the Lenders' rights under this Agreement and the
outstanding Notes by exercising such remedies as are available to the
Documentation Agent or the Lenders in respect thereof under applicable law
(except to the extent waived by Section 9.3 hereof), either by suit in equity
or by action at law, or both, whether for specific performance of any covenant
or other agreement contained in this Agreement or in aid for the exercise of
any power granted in this Agreement. No remedy conferred in this Agreement
upon the Documentation Agent or the Lenders is intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and shall be
in addition to every other remedy conferred herein or now or hereafter existing
at law or in equity or by statute or otherwise, except to the extent waived by
Section 9.3 hereof.
9.3 Waiver of Set-Offs. The Administrative Agent, each Agent and
each Lender hereby specifically waive (i) the right to set-off any funds of any
of the Companies in possession of the Administrative Agent, each Agent or any
Lender against the obligation of the Companies to the Administrative Agent,
each Agent or any Lender pursuant to this Agreement, or (ii) any counterclaim
against, security interest in or banker's or other lien on, any of such funds
or accounts of the Companies.
Section 10. The Agents.
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<PAGE> 37
10.1 Appointment and Authorization. (a) Each Lender appoints and
authorizes the Administrative Agent to receive all payments of principal,
interest, fees and other amounts payable by the Companies under this Agreement
and to remit same immediately to the Lenders, to disburse the Advances from the
Lenders, and to take such action and to exercise such powers under this
Agreement and the Notes as are delegated to the Administrative Agent by the
Lenders from time to time. The Administrative Agent shall promptly distribute
to the Lenders upon receipt all payments and prepayments of principal,
interest, fees and other amounts paid by the Companies under this Agreement, in
proportion to the Lenders' Commitments. Similarly, the Lenders shall be
obligated to fund Advances in proportion to their Commitments. The
Administrative Agent shall promptly distribute to the Agents the fees payable
by the Companies pursuant to the Agents' Fee Agreement. The Administrative
Agent may resign at any time by written notice to the Lenders; the successor
Administrative Agent shall be selected by the Required Lenders from between
the remaining Agents.
(b) Each Lender appoints and authorizes the Documentation Agent to
hold this Agreement and all other documentation in connection herewith (except
for the Notes which will be held by the respective Lenders), and to take such
action and exercise such powers under this Agreement and the Notes as are
delegated to the Documentation Agent by the Lenders from time to time. Any
requests by the Company for consent by the Lenders or waiver or amendment of
provisions of the Agreement shall be delivered by the Company to the
Documentation Agent (with copies to the other Agents), but favorable action on
such requests shall require the approval of the Required Lenders.
(c) Each Lender appoints and authorizes the Syndication Agent to
supervise the syndication of the Credit Facility to a group of financial
institutions identified by the Syndication Agent in consultation with the
Administrative Agent, the Documentation Agent and the Company in accordance
with the provisions of Section 10.6 hereof.
10.2 Agents' Reliance. Neither the Agents nor any of their
directors, officers, agents or employees shall be liable for any action taken
or omitted to be taken by it or them under or in connection with this
Agreement and the Notes, except for its or their own gross negligence or
willful misconduct. Without limitation of the generality of the foregoing, the
Agents: (i) may treat the payee of any of the Notes as the holder thereof
until the Documentation Agent receives written notice of the assignment or
transfer thereof, signed by such payee and in form satisfactory to the
Documentation Agent; (ii) may consult with legal counsel (including counsel for
the Company), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
made in or in connection with this Agreement and the Notes; (iv) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms,
- 32 -
<PAGE> 38
covenants or conditions of this Agreement and the Notes or to inspect any
property (including the books and records) of the Companies; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement and the
Notes or any other instrument or document furnished pursuant thereto; and (vi)
shall incur no liability under or in respect to this Agreement and the Notes by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by facsimile, telegram, cable or telex) believed by it to be
genuine and signed or sent by the proper party or parties.
10.3 Acts by Administrative Agent after Default, etc. In the event
that the Administrative Agent shall have been notified in writing by any of the
Companies or the Lenders of any Event of Default (or in the event that the
officer of the Administrative Agent responsible for the Borrower's account
obtains actual knowledge of an Event of Default), the Administrative Agent (a)
shall immediately notify the Lenders; (b) shall take such action and assert
such rights under this Agreement as it is expressly required to do pursuant to
the terms of this Agreement with the consent of the Required Lenders; (c) may
take such other actions and assert such other rights as it deems advisable, in
its discretion, for the protection of the interests of the Lenders pursuant to
applicable laws with the consent of the Required Lenders; and (d) shall inform
all the Lenders of the taking of action or assertion of rights pursuant to this
Section. Each Lender agrees with the Administrative Agent and the other
Lenders that the decisions and determinations of the Required Lenders in
enforcing this Agreement and the Notes and guiding the Administrative Agent in
those matters shall be binding upon all the Lenders, including, without
limitation, authorizing the Administrative Agent at the pro rata expense of all
the Lenders (to the extent not reimbursed by the Companies) to retain attorneys
to seek judgment on this Agreement and the Notes. Each Lender agrees with the
other Lenders that it will not, without the consent of the other Lenders,
separately seek to institute any legal action with respect to the Loan;
provided that following the maturity of the Notes (whether by acceleration or
at stated maturity), each Lender may, without the concurrence of the other
Lenders, separately seek to institute any legal action with respect to the
Loan.
10.4 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agents or any other Lender and
based on the financial statements referred to in Section 5.4 hereof and such
other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents
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 Notes.
10.5 Agents. Agents shall have the same rights and powers under this
Agreement and the Notes as any other Lender and may exercise the same as though
it were not the Agents; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include Agents in its individual capacity.
Agents may accept deposits from, lend money to, act as trustee under
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<PAGE> 39
indentures of, and generally engage in any kind of business with the Company as
if Agents were not the Agents and without any duty to account therefor to the
Lenders.
10.6 Assignments and Participations. (a) No Lender may assign to any
other Person any portion of its interests, rights and obligations under this
Agreement (including, without limitation, any portion of its Commitment or the
Loan at the time owing to it and Note held by it) unless each of the following
conditions is or has been satisfied: (i) each of the Documentation Agent and
Administrative Agent have given its prior written consent (which consent will
not be unreasonably withheld), (ii) the Company has given its prior written
consent (which consent will not be unreasonably withheld), (iii) each such
assignment is of a constant, and not a varying, percentage of all the assigning
Lender's rights and obligations under this Agreement, (iv) the assignment is
for a Commitment of $20,000,000 or more, (v) the parties to such assignment
have executed and delivered to the Documentation Agent an Assignment and
Acceptance, substantially in the form of Exhibit "D" hereto (the "Assignment
and Acceptance"), together with any Note subject to such assignment, one or
more signature pages to this Agreement containing the signature of the
assignee, and (following the Effective Date) payment by the assignee to the
Documentation Agent for its own account of an assignment administration fee in
the amount of $3,500, (vi) the Documentation Agent shall have delivered to the
Company a fully executed copy of such Assignment and Acceptance, and (vii) the
assignee is (A) a state or national commercial bank located in the United
States or (B) a bank organized under a jurisdiction other than the United
States, provided that such foreign bank has provided the Documentation Agent
and the Company with the tax forms prescribed in Section 11.6(c) hereof, and
provided further that such foreign bank shall not transfer its interests,
rights and obligations under this Agreement to any Affiliate of such foreign
bank unless such Affiliate provides the Documentation Agent and the Company
with the aforesaid tax forms. Upon satisfaction of each of the foregoing
conditions and upon acceptance and notation by the Documentation Agent, from
and after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution
thereof, (x) the assignee thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of
a Lender, and (y) the assigning Lender shall, to the extent provided in such
assignment, be released from its obligations under this Agreement.
Notwithstanding the foregoing, the restrictions contained above in this Section
10.6(a) shall not apply to assignments to any Federal Reserve Bank, and the
conditions set forth in clauses (i) and (ii) above shall not apply to
assignments by any Lender to any Person which controls, is controlled by, or is
under common control with, or is otherwise substantially affiliated with that
Lender.
(b) Upon its receipt of an Assignment and Acceptance executed by
the parties to such assignment together with any Note or Notes subject to such
assignment and the written consent of the Documentation Agent, Administrative
Agent and the Company to such assignment, the Documentation Agent shall give
prompt notice thereof to the Company and the Lenders. Within five (5) Business
Days after receipt of such notice, the Companies at their own expense, shall
execute and deliver to the Documentation Agent, in exchange for the surrendered
Note, a new
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<PAGE> 40
Note or Notes to the order of such assignee(s) in an amount equal to the amount
assumed by such assignee(s) pursuant to such Assignment and Acceptance and, if
the assigning Lender has retained some portion of its obligations hereunder, a
new Note or Notes to the order of the assigning Lender in an amount equal to
the amount retained by it hereunder. Such new Note or Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Note, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in the form of the assigned Note. The
surrendered Note shall be cancelled and returned to the Company. The
Documentation Agent shall have the right to substitute a revised Exhibit B
hereto to reflect the respective commitments following each such assignment.
Furthermore, the parties hereto agree to execute an amendment to this Agreement
to reflect all of said assignments as of the Acquisition Date.
(c) Each Lender, without the consent of the Company or the Agents,
may sell participations to one or more banks in all or a portion of its Loans
(including its Commitment) under this Agreement, provided that the selling
Lender shall retain the sole right and responsibility to enforce the
obligations of the Companies relating to such Loans and that the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of this Agreement shall be the
right to approve waivers, amendments, or modifications which require the
consent of all of the Lenders as provided in Section 11.12 hereof.
Section 10.7 Indemnification of the Agents. The Lenders ratably
(computed by reference to each Lender's respective Commitment) shall indemnify
each Agent, their respective affiliates and the respective shareholders,
directors, officers, employees, agents and counsel of the foregoing (each an "
Agent Indemnitee") and hold each Agent Indemnitee harmless from and against any
and all claims (whether groundless or otherwise), liabilities, losses, damages,
costs and expenses of any kind, including, without limitation, (i) the
reasonable fees and disbursements of counsel and (ii) any expenses for which
the Agents have not been reimbursed by the Companies as required by this
Agreement), which may be incurred by such Agent Indemnitee arising out of or
related to this Agreement or the transactions contemplated hereby, or the
Agents' actions taken hereunder; provided that no Agent Indemnitee shall have
the right to be indemnified hereunder for such Agent Indemnitee's own gross
negligence or willful misconduct, as determined by a court of competent
jurisdiction, or to the extent that such claim relates to the breach by such
Agent Indemnitee of its obligations under this Agreement.
Section 11. General.
11.1 Definitions. As used in this Agreement, terms used herein with
initial capital letters shall have the following meanings, unless defined
elsewhere in this Agreement or unless the context clearly indicates otherwise:
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<PAGE> 41
"Acquisition" shall have the meaning specified in Section 1.4 hereof.
"Acquisition Date" shall mean the sooner to occur of the date on which
the Acquisition is consummated or May 30, 1997 or such later date as the
Agents, Lenders and Company agree to in writing.
"Acquisition Term Loan" shall have the meaning specified in Section
1.3 hereof.
"Acquisition Term Loan Commitment" shall have the meaning specified in
Section 1.2 hereof.
"Acquisition Term Notes" shall have the meaning specified in Section
2.3 hereof.
"Administrative Agent" shall mean The First National Bank of Boston,
or its successor selected pursuant to Section 10.1 hereof.
"Agent Indemnitee" shall have the meaning specified in Section 10.7
hereof.
"Advances" shall have the meaning specified in Section 1.1 hereof.
"Affiliate" shall mean, as to any Person, any Subsidiary of such
Person and any other Person which, directly or indirectly, controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control" shall mean the possession of the power to direct or
cause the direction of management and policies of such Person, whether through
the ownership of voting securities, by contract or otherwise, and an Affiliate
of any of the Companies includes, without limitation, any officer or director
of such corporation and any Person who beneficially owns, directly or
indirectly, 10% or more of the issued outstanding capital stock of such
corporation.
"Agents" shall mean First National Bank of Commerce, The First
National Bank of Boston and Texas Commerce Bank National Association.
"Agents Fee Agreement" shall mean any agreement among the Agents and
the Company from time to time relating to the compensation of the Agents in
connection with the preparation, negotiation, syndication and administration of
the Credit Facility.
"Agreement" shall mean this Revolving Credit and Term Loan Agreement,
as it may be amended and restated, modified and/or supplemented from time to
time.
"Applicable Base Rate Margin" shall mean the following per annum
interest rate applicable to Base Rate Advances from time to time depending on
the Debt to Total Capitalization Ratio Level of the Company:
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<PAGE> 42
<TABLE>
<CAPTION>
Level Applicable Base Rate Margin
----- ---------------------------
<S> <C>
Level I 0.000%
Level II 0.000%
Level III 0.000%
Level IV 0.000%
</TABLE>
The Applicable Base Rate Margin for any fiscal quarter shall be determined by
reference to the Debt to Total Capitalization Ratio as of the last day of the
second fiscal quarter prior to the quarter for which the Applicable Base Rate
Margin is determined. For example, the Applicable Base Rate Margin for the
fiscal quarter beginning April 1, 1997 shall be determined on the basis of the
Debt to Total Capitalization Ratio of the Company as of December 31, 1996.
Notwithstanding the foregoing, the Applicable Base Rate Margin for the balance
of the period through December 31, 1997 shall be at the Applicable Base Rate
Margin for Level IV.
"Applicable Eurodollar Rate Margin" shall mean the following per annum
interest rate applicable to Eurodollar Rate Advances from time to time
depending on the Debt to Total Capitalization Ratio Level of the Company:
<TABLE>
<CAPTION>
Level Applicable Eurodollar Rate Margin
----- ---------------------------------
<S> <C>
Level I 0.500%
Level II 0.625%
Level III 0.750%
Level IV 1.000%
</TABLE>
The Applicable Eurodollar Rate Margin for any fiscal quarter shall be
determined by reference to the Debt to Total Capitalization Ratio as of the
last day of the second fiscal quarter prior to the quarter for which the
Applicable Eurodollar Rate Margin is determined. For example, the Applicable
Eurodollar Rate Margin for the fiscal quarter beginning April 1, 1997 shall be
determined on the basis of the Debt to Total Capitalization Ratio of the
Company as of December 31, 1996. Notwithstanding the foregoing, the Applicable
Eurodollar Rate Margin for the period from the Effective Date through December
31, 1997 shall be at the Applicable Eurodollar Rate Margin for Level IV.
"Applicable Facility Fee Rate" shall mean the following per annum
facility fee interest rate applicable to the Available Credit from time to time
depending on the Debt to Total Capitalization Ratio Level of the Company:
<TABLE>
<CAPTION>
Level Applicable Facility Fee Rate
----- ----------------------------
<S> <C>
Level I 0.250%
Level II 0.250%
Level III 0.250%
Level IV 0.250%
</TABLE>
- 37 -
<PAGE> 43
The Applicable Facility Fee Rate for any fiscal quarter shall be determined by
reference to the Debt to Total Capitalization Ratio as of the last day of the
second fiscal quarter prior to the quarter prior to the quarter for which the
Applicable Facility Fee Rate is determined. For example, the Applicable
Facility Fee Rate for the fiscal quarter beginning April 1, 1997 shall be
determined on the basis of the Debt to Total Capitalization Ratio of the
Company as of December 31, 1996. Notwithstanding the foregoing, the Applicable
Facility Fee Rate for the period from the Effective Date through December 31,
1997 shall be at the Applicable Facility Fee Rate for Level IV.
"Assignment and Acceptance" shall have the meaning specified in
Section 10.6 hereof.
"Available Credit" shall have the meaning specified in Section 1.1
hereof.
"Bankruptcy Law" shall have the meaning specified in Section 9.1(h)
hereof.
"Base Rate" shall mean the greater of (i) the Prime Rate or (ii) the
Federal Funds Rate plus 0.5%.
"Base Rate Advances" shall mean advances bearing interest at the Base
Rate plus the Applicable Base Rate Margin.
"Base Rate Tranche" shall mean any part of the principal amount of the
Loans that constitutes Base Rate Advances.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New Orleans, Louisiana (or London, England in
the case of Eurodollar Rate Advances or payments) are required or authorized to
be closed.
"Canadian Subsidiary" shall mean any Subsidiary organized under the
laws of Canada or any province thereof.
"Capital Asset" shall mean any asset other than a current asset (as
determined in accordance with generally accepted accounting principles).
"Capitalized Lease Obligation" shall mean any rental obligation which,
under generally accepted accounting principles, is or will be required to be
capitalized on the books of the Company or any Subsidiary, taken at the amount
thereof accounted for as indebtedness (net of interest expense) in accordance
with such principles.
"CERCLA" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, as amended.
- 38 -
<PAGE> 44
"CERCLIS" shall mean the Comprehensive Environmental Response
Compensation and Liability Inventory System established pursuant to CERCLA.
"Code" shall have the meaning specified in Section 5.10.
"Commitments" shall mean the Line of Credit Commitments and the
Acquisition Term Loan Commitments.
"Company" shall mean Tidewater Inc.
"Companies" shall mean the Company and the Domestic Subsidiaries.
"Consolidated Debt" shall mean Debt of the Company and its
Subsidiaries which is consolidated in accordance with generally accepted
accounting principles.
"Consolidated EBITDA" shall mean Consolidated Net Income of the
Company and its Subsidiaries, plus (i) interest expense, (ii) tax expense and
(iii) depreciation and amortization expense, to the extent that any of such
items are deducted from consolidated gross revenues of the Company and its
Subsidiaries for the purpose of determining Consolidated Net Income.
"Consolidated Fixed Charges" shall mean the sum of all scheduled
payments of principal and interest due (and whether or not paid) on all Debt of
the Company and its Subsidiaries for the preceding 12 months, under which the
Company or any of its Subsidiaries is the obligor, on a consolidated basis.
"Consolidated Net Income" shall mean, for any period, the consolidated
net income of the Company and its Subsidiaries (excluding unusual,
extraordinary and/or non-recurring income and/or losses) determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Consolidated Tangible Net Worth" shall mean, at a particular date,
the sum of capital and preferred stock, paid-in capital and retained earnings
of the Company and its Subsidiaries, minus the sum of patents, patent
applications, trademarks, service marks, copyrights, trade names, good will and
all other intangibles of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Conversion Term Loans" shall have the meanings specified in Section
1.1 hereof.
"Conversion Term Notes" shall have the meanings specified in Section
2.2 hereof.
"Credit Facility" shall mean the Line of Credit, Conversion Term Loan
and the Acquisition Term Loan.
- 39 -
<PAGE> 45
"Debt" shall mean, without duplication, (a) any obligation for
borrowed money (and any notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed
money); (b) any obligation secured by a Lien on, or payable out of the proceeds
of production from, property of the Company or any Subsidiary (even though such
obligation shall not be assumed by the Company or such Subsidiary); and (c) any
obligation, which under generally accepted accounting principles is shown on
the balance sheet as a liability (including, without limitation, Capitalized
Lease Obligations and excluding reserves for deferred income taxes and for
foreign employee service indemnities and other reserves to the extent that such
reserves do not constitute an obligation); (d) amounts equal to the aggregate
net rentals (after making allowance for any interest, taxes or other expenses
included therein) under any lease (whether or not such rentals accrue and
become payable only on an annual or other periodic basis) which lease (i)
constitutes the substantial equivalent of a purchase of the property subject to
such lease, (ii) has an initial term materially less than the useful life of
such property and provides that the lessee has the option to renew such lease
for the remaining useful life of such property at a rental which at the
inception of such lease appears to be substantially less than the fair rental
value of such property, or (iii) provides an option to the lessee to acquire
the property subject to such lease at a price which, at the inception of such
lease, appears to be substantially less than the probable fair value of such
property at the time or times of permitted acquisition by the lessee; (e)
guarantees, endorsements (other than endorsements of negotiable instruments for
collection in the ordinary course of business) and other contingent liabilities
(whether direct or indirect) in connection with the obligations, stock or
dividends of any Person; (f) obligations under any contract providing for the
making of loans, advances or capital contributions to any Person, or for the
purchase of any property from any Person, in each case in order to enable such
Person primarily to maintain working capital, net worth or any other balance
sheet condition or to pay debts, dividends or expenses; (g) obligations under
any contract for the purchase of materials, supplies or other property if such
contract (or any related document) requires that payment for such materials,
supplies or other property shall be made regardless of whether or not delivery
of such materials, supplies or other property is ever made or tendered; (h)
obligations under any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides that the
obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or
requires that the lessee purchase or otherwise acquire securities or
obligations of the lessor; (i) obligations under any contract for the sale or
use of materials, supplies or other property if such contract (or any related
document) requires that payment for such materials, supplies or other property,
or the use thereof, shall be subordinated to any indebtedness (of the purchaser
or user of such materials, supplies or other property) owed or to be owed to
any Person; and (j) obligations under any other contract which, in economic
effect, is substantially equivalent to a guarantee; all as determined in
accordance with generally accepted accounting principles.
"Debt to Total Capitalization Ratio" shall mean the ratio of (i)
Consolidated Debt (defined for these purposes as Debt plus the face amount of
all letters of credit issued for the
- 40 -
<PAGE> 46
account of all Companies on a consolidated basis) to (ii) the sum of
Consolidated Debt (as defined in clause (i) hereof) plus Consolidated Total
Stockholders' Equity (defined for these purposes as the total stockholders'
equity of the Company, on a consolidated basis, as shown on the Company's
financial statements prepared in accordance with generally accepted accounting
principles) determined as of the last day of each fiscal quarter.
"Default" shall have the meaning specified in the definition of Event
of Default hereinafter.
"Domestic Subsidiary" shall mean any Subsidiary organized under the
laws of any State of the United States.
"Drawdown Termination Date" shall mean April 30, 1999, or such later
date as the Agents, Lenders and the Companies agree to in writing.
"Effective Date" shall mean the date on which this Agreement is
executed by the Companies and the Agents.
"Environmental Authority" shall mean any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Judgments and Orders" shall mean all judgments, decrees
or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Liabilities" shall mean any liabilities, whether
accrued or contingent, arising from or relating in any way to any Environmental
Requirements.
"Environmental Notices" shall mean any written communication from any
Environmental Authority stating possible or alleged noncompliance with or
possible or alleged liability under any Environmental Requirement, including
without limitation any complaints, citations, demands or requests from any
Environmental Authority for correction of any purported violation of any
Environmental Requirements or any investigation concerning any purported
violation of any Environmental Requirements. Environmental Notices also means
(i) any written communication from any private Person threatening litigation or
administrative proceedings against or involving any Company relating to an
alleged violation of any Environmental Requirements and (ii) any complaint,
petition or similar documents filed by any private Person commencing litigation
or administrative proceedings against or involving any Company relating to
alleged violation of any Environmental Requirements.
- 41 -
<PAGE> 47
"Environmental Proceedings" shall mean any judicial or administrative
proceedings arising from or in any way associated with any Environmental
Requirement.
"Environmental Releases" shall mean releases (as defined in CERCLA or
under any applicable state or local environmental law or regulation) of
Hazardous Materials. Environmental Releases do not include releases for which
no remediation or reporting is required by applicable Environmental
Requirements and which do not present a danger to health, safety or the
environment.
"Environmental Requirements" shall mean any applicable local, state or
federal law, rule, regulation, permit, order, decision, determination or
requirement relating in any way to Hazardous Materials or to the protection of
human health or the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Eurodollar Rate" means during any Eurodollar Rate Interest Period for
any Tranche, an interest rate per annum equal to the quotient (converted to a
percentage) of (i) the rate per annum as determined by the Administrative Agent
at or about 9:00 o'clock A.M. (Eastern time) (or as soon thereafter as
practicable) on the second Business Day prior to the first day of each
Eurodollar Rate Interest Period, as being the rate at which deposits of United
States Dollars are offered to the Administrative Agent in the London inter-bank
market by the Reference Banks, at the time of determination and in accordance
with the normal practice in such market, for delivery on the first day of such
Eurodollar Rate Interest Period and for the number of days comprised therein,
in amounts equal (as nearly as may be) to the amount of the Tranche as of the
first day of such Eurodollar Rate Interest Period, divided by (ii) 1.00 minus
the Eurodollar Rate Reserve Requirement (as defined below), expressed as a
decimal, for such Eurodollar Rate Interest Period. "Eurodollar Rate Reserve
Requirement" shall mean for any day during a Eurodollar Rate Interest Period
for any Eurodollar Rate Tranche, that percentage which is specified by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not limited to, any
marginal reserve requirement) for the Lenders with respect to liabilities
consisting of or including "Eurocurrency liabilities" (as defined in Regulation
D of the Board of Governors of the Federal Reserve System) with a maturity
equal to such Eurodollar Rate Interest Period. In determining the percentage,
the Administrative Agent may use any reasonable averaging and attribution
methods. "Reference Banks" shall mean (i) the principal London offices of the
banks shown on page 16 of the Telerate screen (or such other page as may
replace the Eurodollar page on that service for the purpose of displaying
London interbank offered rates of major banks), in the case of Eurodollar Rate
Interest Periods of 1 month, 2 months, 3 months or 6 months. "Eurodollar Rate
Interest Period" shall be the period between the Business Day on which the
Eurodollar Rate plus the Applicable Eurodollar Rate Margin shall begin and the
day on which the Eurodollar Rate plus the Applicable Eurodollar Rate Margin
shall end. The duration of each Eurodollar Rate Interest Period for a
Eurodollar Rate Advance shall be 1 month, 2 months, 3 months or 6
- 42 -
<PAGE> 48
months as the Company may select, subject to the following: (i) no Eurodollar
Rate Interest Period shall extend past the maturity date of either the Line of
Credit Notes, the Conversion Term Notes or the Acquisition Term Notes; (ii)
whenever the last day of any Eurodollar Rate Interest Period would otherwise
occur on a day other than a Business Day, the last day of such Eurodollar Rate
Interest Period shall be extended to occur on the next succeeding Business Day,
except that if the next succeeding Business Day would occur in the next
following calendar month, the last day of such Eurodollar Rate Interest Period
shall be shortened to occur on the next preceding Business Day; and (iii)
Eurodollar Rate Tranches outstanding under each Term Loan may not at any time
exceed the aggregate principal amount outstanding on such respective Term Loan.
"Eurodollar Rate Advances" shall mean Advances bearing interest at the
Eurodollar Rate plus the Applicable Eurodollar Rate Margin.
"Eurodollar Rate Interest Period" shall have the meaning specified in
the definition of Eurodollar Rate.
"Eurodollar Rate Tranche" shall mean any part of the principal amount
of the Loans that constitutes Eurodollar Rate Advances for a specific
Eurodollar Rate Interest Period.
"Event of Default" shall mean any of the events specified in Section
9, provided that there has been satisfied any requirements in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"Federal Funds Rate" shall mean the rate per annum (rounded upward, if
necessary, to the nearest 1/100th of 1%) equal to the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers on such day, as published by
the Federal Reserve Bank of New York on the Business Day next succeeding such
day, provided that (i) if such day is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day, and (ii) if no such rate is so published on such next succeeding
Business Day, the Federal Funds Rate for such day shall be the average rate
quoted to The First National Bank of Boston, Boston, Massachusetts on such day
on such transactions as determined by the Administrative Agent.
"Foreign Subsidiary" shall mean any Subsidiary other than a Domestic
Subsidiary.
"Hazardous Materials" includes, without limitation (a) hazardous waste
as defined in the Resource Conservation and Recovery Act of 1976, or in any
applicable state or local law or regulation, (b) hazardous substances, as
defined in CERCLA, or in any applicable state or local law or regulation, (c)
gasoline, or any other petroleum product or by-product, (d) toxic substances,
as defined in the Toxic Substances Control Act of 1976, or in any applicable
state
- 43 -
<PAGE> 49
or local law or regulation or (e) insecticides, fungicides, or rodenticides, as
defined in the Federal Insecticide, Fungicide, and Rodenticide Act of 1975, or
in any applicable state or local law or regulation, as each such Act, statute
or regulation may be amended from time to time.
"Identified Subsidiaries" shall mean each of Tidewater Marine, Inc.,
Tidewater Compression Service, Inc.; Tidewater Marine Alaska, Inc.; and Zapata
Gulf Marine Corporation.
"Lease Rental Expenses" shall mean lease rentals payable by the
Company or any Subsidiary pursuant to any agreements to rent or lease any real
or personal property (excluding rentals or leases of data processing equipment
and sales offices, rentals treated as Debt and rentals of real property which
have been subleased to others by the Company or any Subsidiary for the
remaining term of such leases at rents at least equal to those payable by the
Company or any Subsidiary).
"Lender Indemnitee" shall have the meaning specified in Section 11.5(b) hereof.
"Lenders" shall have the meaning specified in the first introductory
paragraph hereof, together with any other financial institutions which become a
party to this Agreement and the holder of a Note, from time to time.
"Level" shall mean the following levels based on the Debt to Total
Capitalization Ratio indicated:
<TABLE>
<CAPTION>
Debt to Total
Capitalization Ratio Level
-------------------- -----
<S> <C>
Less than 25% I
25% through 32.49% II
32.5% through 39.99% III
40% and greater IV
</TABLE>
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof, and the
filing of any financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for the purpose of,
or having the effect of protecting a creditor against loss or securing the
payment or preference of any obligation. "Liens" shall not include unsecured
guarantees.
"Line of Credit" shall have the meaning specified in Section 1.1
hereof.
"Line of Credit Commitment" shall have the meaning specified in
Section 1.1 hereof.
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<PAGE> 50
"Line of Credit Notes" shall have the meaning specified in Section
2.1 hereof.
"Loan" shall mean the loans under the Credit Facility (including the
Conversion Term Loan and the Acquisition Term Loan).
"Multiemployer Plan" shall have the meaning specified in Section 5.10.
"Net Equity Proceeds" shall mean (i) the amounts received by the
Company (after payment of underwriting fees, attorneys' fees, filing fees and
related costs) in connection with the issuance of securities of the Company for
cash, (ii) the net value of assets less liabilities (after payment of
underwriting fees, attorneys' fees, filing fees and related costs) in
connection with the issuance of securities of the Company for assets, and (iii)
the net worth of another company in connection with the issuance of securities
of the Company for securities of the other company (if the transaction is
accounted for as a pooling of interest) or the net value of assets less
liabilities (if the transaction is accounted for as a purchase of assets), in
either case, after payment of underwriting fees, attorneys' fees, filing fees
and related costs.
"Notes" shall mean the Line of Credit Notes, the Conversion Term Notes
and the Acquisition Term Notes, collectively, and any and all modifications,
amendments, supplements, renewals, rearrangements and/or extensions thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Plan" shall have the meaning specified in Section 5.10 hereof.
"Persons" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Prime Rate" shall mean the rate of interest announced publicly by The
First National Bank of Boston from time to time as its prime or base rate.
"Properties" means all real property owned, leased or otherwise used
or occupied by the Company or any Subsidiary, wherever located.
"Reimbursable Taxes" shall have the meaning specified in Section
3.2(f).
"Required Lenders" shall mean Lenders holding at least 66-2/3rds of
the aggregate principal amount of the Notes.
"Restricted Investments" shall have the meaning set forth in Section
6.10.
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<PAGE> 51
"Subsidiary" shall mean any corporation all of the stock of every
class of which, except directors' qualifying shares, shall, at the time as of
which any determination is being made, be beneficially owned or effectively
controlled by the Company, either directly or through Subsidiaries.
"Taxes" shall have the meaning set forth in Section 11.6.
"Term Notes" shall mean the Conversion Term Notes and the Acquisition
Term Notes.
"Third Party" shall mean all lessees, sublessees, licensees and other
users of the Properties, excluding those users of the Properties in the
ordinary course of the Company's business (consistent with its practices on the
date of this Agreement) and on a temporary basis.
"Tranche" shall mean a part of the Loans that bears interest at a
particular rate depending on whether such tranche is a Eurodollar Rate Tranche
or Base Rate Tranche.
11.2 Financial Terms. Unless otherwise defined or the context
otherwise requires, all financial and accounting terms shall be defined under
generally accepted accounting principles.
11.3 Delay. No delay on the part of the Lenders or any holder of the
Notes, in the exercise of any power or right shall operate as a waiver thereof,
nor shall any single or partial exercise of any power or right preclude other
or further exercise thereof, or the exercise of any other power or right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law (except to the extent waived by Section 9.3 hereof).
11.4 Notices. Any notice or demand which, by any provision of this
Agreement, is required or permitted to be given or served by any Agent or
Lenders to or on the Companies shall be deemed to have been sufficiently given
and served for all purposes (if mailed) three calendar days after being
deposited, postage prepaid, in the United States mail, registered or certified
mail, or (if delivered by express courier) one calendar day after being
delivered to such courier, or (if delivered in person) the same day as
delivery, in each case addressed (until another address or addresses are given
in writing by the Companies to Documentation Agent and Administrative Agent or
Lenders) as follows:
Tidewater Inc.
1440 Canal Street
New Orleans, Louisiana 70112
Attention: Chief Financial Officer
With a copy to:
- 46 -
<PAGE> 52
Tidewater Inc.
1440 Canal Street
New Orleans, Louisiana 70112
Attention: General Counsel
Any notice or demand which, by any provision of this Agreement, is
required or permitted to be given or served by the Companies to or on
Administrative Agent or Documentation Agent shall be deemed to have been
sufficiently given and served for all purposes (if mailed) three calendar days
after being deposited, postage prepaid, in the United States mail, registered
or certified mail, or (if delivered by express courier) one calendar day after
being delivered to such courier, or (if delivered in person) the same day as
delivery, in each case addressed (until another address or addresses are given
in writing by Administrative Agent or Documentation Agent to the Companies) as
follows:
Administrative Agent:
The First National Bank of Boston
100 Federal Street
Boston, Massachusetts 02110
Attention: Transportation Division
(Mail Stop 01-08-01)
Documentation Agent:
First National Bank of Commerce
FNBC Center, 28th Floor
201 St. Charles Avenue
New Orleans, LA 70170
Attention: Energy Group
J. Charles Freel, Jr.
Vice President
With a copy to:
Philip deV. Claverie, Esq.
Phelps Dunbar, L.L.P.
Texaco Center - 30th Floor
400 Poydras Street
New Orleans, Louisiana 70130
Any notice or demand which, by any provision of this Agreement, is
required or permitted to be given or served by the Companies to or on Lenders
shall be deemed to have been sufficiently given and served for all purposes (if
mailed) three calendar days after being deposited, postage prepaid, in the
United States mail, registered or certified mail, or (if
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<PAGE> 53
delivered by express courier) one calendar day after being delivered to such
courier, or (if delivered in person) the same day as delivery, in each case
addressed (until another address or addresses are given in writing by Lenders
to the Companies) to the Lenders at the addresses set forth on Exhibit B
hereto.
11.5 Costs, Expenses and Taxes; Indemnification. (a) The Companies
shall pay on demand the reasonable out-of-pocket costs and expenses of the
Agents in connection with the negotiation, syndication, preparation, execution
and delivery of this Agreement and any amendments thereto or waivers thereof
which may be requested by the Companies, including the reasonable fees and
out-of-pocket expenses of legal counsel to Agents. The Companies shall pay on
demand the reasonable out-of-pocket costs and expenses of the Agents and each
of the Lenders in connection with the enforcement of this Agreement and/or the
Notes and in connection with any amendments thereto or waivers thereof which
may be requested by the Companies during the continuance of, or to avoid, a
Default or Event of Default, including any amendments or waivers tantamount to
a refinancing, restructuring, or reorganization (whether or not under any
Bankruptcy Law). The out-of-pocket costs and expenses referred to in the
previous sentence shall include the reasonable fees and out-of-pocket expenses
of any legal counsel retained by the Agents or by any Lender, and the
reasonable fees and out-of-pocket expenses of any independent public
accountants and other outside experts retained by the Agents on behalf of the
Lenders. The Lenders agree that, with respect to the retention of separate
legal counsel for each Lender under such circumstances, each will consider in
good faith whether separate legal counsel is reasonably appropriate under the
policies of that Lender and, in any event, endeavor to avoid unreasonable
duplication of work effort by such legal counsel. The Companies shall pay any
and all documentary and other taxes (other than income or gross receipts taxes
generally applicable to banks) and shall reimburse, hold harmless, and
indemnify the Agents and each Lender from and against any and all loss,
liability, or legal or other expense with respect to or resulting from any
delay in paying or failure to pay any tax, cost, expense, fee, or charge or
that any of them may suffer or incur by reason of the failure of the Companies
to perform any of its obligations under this Agreement or the Notes. Any
amount payable to the Agents or any Lender under this Section shall bear
interest from the date of receipt of demand for payment at the Base Rate plus
one percent (1%).
(b) The Companies shall indemnify each Agent and Lender, their
respective affiliates and the respective shareholders, directors, officers,
employees, agents and counsel of the foregoing (each an "Indemnitee") and hold
each Indemnitee harmless from and against any and all liabilities, losses,
damages, costs and expenses of any kind, including, without limitation, the
reasonable fees and disbursements of counsel, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding (whether or not such Indemnitee shall be designated a party thereto)
brought or threatened relating to or arising out of the Credit Facility or any
actual or proposed use of proceeds of the Loans hereunder; provided that no
Indemnitee shall have the right to be indemnified hereunder for such
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<PAGE> 54
Indemnitee's own gross negligence or willful misconduct as determined by a
court of competent jurisdiction, or to the extent that such claim relates to
the breach by such Lender Indemnitee of its obligations under this Agreement.
11.6 Foreign Lenders. (a) All payments by the Company under the
Credit Facility shall be made free and clear of and without deduction for or on
account of any present or future income, stamp, or other taxes, fees, duties,
withholding or other charges of any nature whatsoever imposed by any taxing
authority, excluding in the case of each Lender taxes imposed on or measured by
its net income or franchise taxes imposed in lieu of net income taxes by the
jurisdiction in which it is organized or through which it acts for purposes of
this Agreement.
(b) If as a result of any change in law (or the interpretation
thereof) after the Effective Date, any withholding or deduction from any
payment to be made to, or for the account of, a Lender by the Companies
hereunder is required in respect of any non-excluded taxes referred to in
Subsection (a) above pursuant to any applicable law, rule, or regulation, then
the Company will (i) pay to the relevant authority the full amount required to
be so withheld or deducted; (ii) to the extent available, promptly forward to
the Agent an official receipt or other documentation satisfactory to the
Documentation Agent evidencing such payment to such authority; and (iii) pay to
the Administrative Agent, for the account of each affected Lender, such
additional amount or amounts as are necessary to ensure that the net amount
actually received by such Lender will equal the full amount such Lender would
have received had no such withholding or deduction been required. Each Lender
shall determine such additional amount or amounts payable to it (which
determination shall, in the absence of manifest error, be conclusive and
binding on the Company). If a Lender becomes aware that any such withholding
or deduction from any payment to be made by the Company under the Credit
Facility is required, then such Lender shall promptly notify the Documentation
Agent and the Company thereof stating the reasons therefor and the additional
amount required to be paid under this Section, and such Lender shall execute
and deliver to the Documentation Agent and the Company such forms as it may be
required to execute and deliver pursuant to Subsection (c) hereof. To the
extent that any such withholding or deduction results from the failure of a
Lender to provide a form required by Subsection (c) hereof, the Company shall
have no obligation to pay the additional amount required by clause (iii) above.
Anything in this Section notwithstanding, if any Lender elects to require
payment by the Company of any material amount under this Section, the Company
may, within 60 days after the date of receiving notice thereof and so long as
no Default shall have occurred and be continuing, elect to terminate such
Lender as a party to this Agreement; provided that, concurrently with such
termination, the Company shall (i) if the Documentation Agent and each of the
other Lenders shall consent, pay that Lender all principal, interest and fees
and other amounts owed to such Lender through such date of termination or (ii)
have arranged for another financial institution approved by the Documentation
Agent (such approval not to be unreasonably withheld) as of such date, to
become a substitute Lender for all purposes under this Agreement in the manner
provided for herein; provided further that, prior to substitution for any
Lender, the Company shall have given written notice to the Documentation
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<PAGE> 55
Agent of such intention and the Lenders shall have the option, but not the
obligation, for a period of 60 days after receipt of such notice, to increase
their Commitments in order to replace the affected Lender in lieu of such
substitution.
(c) With respect to each Lender which is organized under the laws of
a jurisdiction outside the United States, on the day of the initial borrowing
from each such Lender hereunder and from time to time thereafter if requested
by the Company or the Documentation Agent, such Lender shall provide the
Documentation Agent and the Company with the forms prescribed by the Internal
Revenue Service of the United States certifying as to such Lender's status for
purposes of determining exemption from United States withholding taxes with
respect to all payments to be made to such Lender hereunder or other documents
satisfactory to such Lender and Documentation Agent indicating that all
payments to be made to such Lender hereunder are not subject to United States
withholding tax. Unless the Documentation Agent and the Company shall have
received such forms or such documents indicating that payments hereunder are
not subject to United States withholding tax, the Administrative Agent and the
Company shall withhold taxes from such payments at the applicable statutory
rate in the case of payments to or for any Lender organized under the laws of a
jurisdiction outside the United States.
11.7 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.8 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original but all such counterparts shall constitute but one and
the same instrument.
11.9 Law. This Agreement and the Notes shall be contracts made under
and governed by the laws of the State of Louisiana.
11.10 Successors. This Agreement shall be binding upon the Companies
and Lenders, and their respective successors and assigns, and shall inure to
the benefit of the Companies and Lenders, and the successors and assigns of
Lenders. The Companies shall not assign their rights or duties hereunder
without the consent of Lenders.
11.11 Singular and Plural. Words used herein in the singular, where
the context so permits, shall be deemed to include the plural and vice versa.
The definition of words in the singular herein shall apply to such words when
used in the plural where the context so permits and vice versa.
- 50 -
<PAGE> 56
11.12 Amendments. No amendment or waiver of any provision of this
Agreement or consent to any departure therefrom by the Companies or Lenders
shall be effective unless the same shall be in writing and signed by the
Companies, the Agents and the Required Lenders, provided that, without the
written consent of all of the Lenders, no amendment to this Agreement shall (i)
change the maturity of any Note, or (ii) change the principal of or the rate or
time of payment of interest or any premium payable with respect to any Note, or
(iii) change the principal payment date of any installment of the Conversion
Term Notes or the Acquisition Term Notes, or (iv) increase the Commitments, or
(v) release any of the Companies, or affect the time, amount or allocation of
any required prepayments, or (vi) reduce the proportion of the Required Lenders
required with respect to any consent, or (vii) change the definition of
Required Lenders or amend this Section 11.12. No course of dealing between any
of the Companies and the Lenders nor any delay in exercising any rights
hereunder or under any Note shall operate as a waiver of any rights of any of
the Lenders. In the case of a waiver or consent, such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given.
11.13 Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes any and all prior agreements with
respect to the transactions contemplated hereby.
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<PAGE> 57
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized as of the
date first written above.
TIDEWATER INC.
By: /s/ KEN C. TAMBLYN
----------------------------------------
Name: Ken C. Tamblyn
Title: Executive Vice President
and Chief Financial Officer
GULF FLEET SUPPLY VESSELS, INC.
HILLIARD OIL & GAS, INC.
JACKSON MARINE CORPORATION
JAVA BOAT CORPORATION
QUALITY SHIPYARDS, INC.
S.O.P., INC.
SEAFARER BOAT CORPORATION
TIDEWATER COMPRESSION SERVICE, INC.
POINT MARINE, INC.
T. BENETEE CORPORATION
TIDEWATER NORTH SEA SAFETY, INC.
TIDEWATER OFFSHORE (GP-1984), INC.
TIDEWATER OFFSHORE SERVICES, INC.
TIDEWATER MARINE, INC.
TIDEWATER MARINE ALASKA, INC.
TIDEWATER MARINE ATLANTIC, INC.
TIDEWATER MARINE SERVICE, INC.
TIDEWATER MARINE WESTERN, INC.
TIDEWATER SERVICES, INC.
TT BOAT CORPORATION
TWENTY GRAND MARINE SERVICE, INC.
TWENTY GRAND OFFSHORE, INC.
ZAPATA GULF MARINE CORPORATION
ZAPATA GULF MARINE OPERATORS, INC.
ZAPATA GULF PACIFIC, INC.
By: /s/ KEN C. TAMBLYN
----------------------------------------
Name: Ken C. Tamblyn
Title: Authorized Officer
<PAGE> 58
FIRST NATIONAL BANK OF COMMERCE,
Agent and Lender
By: /s/ J. CHARLES FREEL, JR.
----------------------------------
Name: J. Charles Freel, Jr.
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
Agent and Letter
By: /s/ VICTOR M. GARCIA
----------------------------------
Name: Victor M. Garcia
Title: Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, Agent and Lender
By: /s/ MONA M. FOCH
----------------------------------
Name: Mona M. Foch
Title: Vice President
AMSOUTH BANK OF ALABAMA, Lender
By: /s/ J. MAXWELL
----------------------------------
Name: Joseph P. Maxwell
Title: Commercial Bank Officer
BANK ONE, LOUISIANA, N.A., Lender
By: /s/ EMILE J. DUMESNIL
----------------------------------
Name: Emile J. Dumesnil
Title: Vice President
<PAGE> 59
HERNIA NATIONAL BANK, Lender
By: /s/ BRUCE L. ROSS
----------------------------------
Name: Bruce L. Ross
Title: Vice President
SUNTRUST BANK, ATLANTA, Lender
By: /s/ F. McCLELLAN DEAVER, III
----------------------------------
Name: F. McClellan Deaver, III
Title: Group Vice President
By: /s/ JOHN A. FIELDS, JR.
----------------------------------
Name: John A. Fields, Jr.
Title: Vice President
WACHOVIA BANK OF GEORGIA, N.A.,
Lender
By: /s/ CARL E. PEOPLES
----------------------------------
Name: Carl E. Peoples
Title: Vice President
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, Lender
By: /s/ FRANK W. SCHAGEMAN
----------------------------------
Name: Frank W. Schageman
Title: Vice President
ABN AMRO BANK N.V., Houston Agency,
Lender
By: /s/ CHERYL I. LIPSHOTZ
----------------------------------
Name: Cheryl I. Lipshotz
Title: Group Vice President
By: /s/ W. BRYAN CHAPMAN
----------------------------------
Name: W. Bryan Chapman
Title: Group Vice President
<PAGE> 60
ARAB BANKING CORPORATION (B.S.C.), Lender
By: /s/ STEPHEN A. PLAUCHE
--------------------------------------
Name: Stephen A. Plauche
Title: Vice President
BANQUE PARIBAS, Lender
By: /s/ MARIAN LIVINGSTON
--------------------------------------
Name: Marian Livingston
Title: Vice President
By: /s/ BARTON D. SCHOUEST
--------------------------------------
Name: Barton D. Schouest
Title: Group Vice President
THE BANK OF NEW YORK, Lender
By: /s/ ALAN F. LYSTER, JR.
--------------------------------------
Name: Alan F. Lyster, Jr.
Title: Vice President
CHRISTIANIA BANK OG KREDITKASSE,
NEW YORK BRANCH, Lender
By: /s/ MARTIN LUNDER
--------------------------------------
Name: Martin Lunder
Title: First Vice President
By: /s/ JUSTIN F. McCARTY, III
--------------------------------------
Name: Justin F. McCarty, III
Title: Vice President
CIBC INC., Lender
By: /s/ ALEKSANDRA K. DYMANUS
--------------------------------------
Name: Aleksandra K. Dymanus
Title: Vice President
<PAGE> 61
CORESTATES BANK, N.A., Lender
By: /s/ S. SCOTT GATES
-------------------------------
Name: S. Scott Gates
Title: Assistant Vice President
CREDIT LYONNAIS, Lender
By: /s/ PASCAL POUPELLE
-------------------------------
Name: Pascal Poupelle
Title: Senior Vice President
DEPOSIT GUARANTY NATIONAL BANK, Lender
By: /s/ DAVID L. CASTILAW
-------------------------------
Name: David L. Castilaw
Title: Senior Vice President
FLEET BANK N.A., Lender
By: /s/ WILLIAM DERASMO
-------------------------------
Name: William Derasmo
Title: Vice President
THE FUJI BANK, LIMITED, Lender
By: /s/ DAVID KELLEY
-------------------------------
Name: David Kelley
Title: Senior Vice President
<PAGE> 62
SOCIETE GENERALE, Lender
By: /s/ ELIZABETH W. HUNTER
----------------------------------
Name: Elizabeth W. Hunter
Title: Vice President
UNION BANK OF CALIFORNIA, N.A., Lender
By: /s/ RICHARD P. DeGREY, JR.
----------------------------------
Name: Richard P. DeGrey, Jr.
Title: Vice President
WHITNEY NATIONAL BANK, Lender,
By: /s/ DONALD J. ZOMMAN
----------------------------------
Name: Donald J. Zomman
Title: Vice President
<PAGE> 1
EXHIBIT 10(k)
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("the Agreement") between Tidewater,
Inc., a Delaware corporation (the "Company"), and William C. O'Malley (the
"Employee") is dated effective as of September 30, 1996 (the "Change of Control
Agreement Date").
ARTICLE I
DEFINITIONS
1.1 AFFILIATE DEFINED. "Affiliate" or "affiliated companies"
shall mean any company controlled by, controlling, or under common control
with, the Company.
1.2 CAUSE DEFINED. "Cause" shall mean:
(a) the willful and continued failure of the
Employee to perform substantially the Employee's duties with
the Company or its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the Employee by the Board of the Company which
specifically identifies the manner in which the Board believes
that the Employee has not substantially performed the
Employee's duties, or
(b) the willful engaging by the Employee in
illegal conduct or gross misconduct.
For purposes of this provision, no act or failure to act, on the part of the
Employee, shall be considered "willful" unless it is done, or omitted to be
done, by the Employee in bad faith or without reasonable belief that the
Employee's action or omission was in the best interests of the Company or its
Affiliates. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board or upon the instructions of a senior
officer of the Company or based upon the advice of counsel for the Company or
its Affiliates shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the Company or
its Affiliates. The cessation of employment of the Employee shall not be
deemed to be for Cause unless his action or inaction meets the foregoing
standard and until there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Employee and the
Employee is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Employee is
guilty of the conduct described in subparagraph (a) or (b) above, and
specifying the particulars thereof in detail.
1.3 CHANGE OF CONTROL DEFINED. "Change of Control" shall mean:
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<PAGE> 2
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 30% of the
outstanding shares of the Company's Common Stock, $0.10 par value per
share (the "Common Stock"); provided, however, that for purposes of
this subsection (a), the following shall not constitute a Change of
Control:
(i) any acquisition of Common Stock directly from
the Company,
(ii) any acquisition of Common Stock by the
Company,
(iii) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company, or
(iv) any acquisition of Common Stock by any
corporation pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section
1.3; or
(b) individuals who, as of the Change of Control
Agreement Date, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
Change of Control Agreement Date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the
Incumbent Board; or
(c) consummation of a reorganization, merger or
consolidation, or sale or other disposition of all of substantially
all of the assets of the Company (a "Business Combination"), in each
case, unless, following such Business Combination,
(i) all or substantially all of the individuals
and entities who were the beneficial owners of the Company's
outstanding common stock and the Company's voting securities
entitled to vote generally in the election of directors
immediately prior to such Business Combination have direct or
indirect beneficial ownership, respectively, of more than 50%
of the then outstanding shares of common stock, and more than
50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election
of directors, of the corporation resulting from such Business
Combination (which, for purposes of this paragraph (i) and
paragraphs (ii) and (iii), shall include a corporation which
as a result of such transaction controls the Company or all or
substantially all of the Company's assets either directly or
through one or more subsidiaries), and
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<PAGE> 3
(ii) except to the extent that such ownership
existed prior to the Business Combination, no person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan or related trust of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or
more of the then outstanding shares of common stock of the
corporation resulting from such Business Combination or 30% or
more of the combined voting power of the then outstanding
voting securities of such corporation, and
(iii) at least a majority of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(d) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
1.4 COMPANY DEFINED. As used in this Agreement, "Company" shall
mean the Company as defined above and any successor to or assignee of (whether
direct or indirect, by purchase, merger, consolidation or otherwise) all or
substantially all of the assets or business of the Company.
1.5 DISABILITY DEFINED. "Disability" shall mean a condition that
would entitle the Employee to receive benefits under the Company's long-term
disability insurance policy in effect at the time either because he is totally
disabled or partially disabled, as such terms are defined in the Company's
policy in effect as of the date of this Agreement or as similar terms are
defined in any successor policy. If the Company has no long-term disability
plan in effect, "Disability" shall occur if (a) the Employee is rendered
incapable because of physical or mental illness of satisfactorily discharging
his duties and responsibilities to the Company for a period of 90 consecutive
days, (b) a duly qualified physician chosen by the Company and acceptable to
the Employee or his legal representatives so certifies in writing, and (c) the
Board determines that the Employee has become disabled.
1.6 GOOD REASON DEFINED. "Good Reason" shall mean:
(a) Any failure of the Company or its Affiliates to
provide the Employee with the position, authority, duties and
responsibilities at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Change of Control.
The Employee's position, authority, duties and responsibilities after
a Change of Control shall be considered commensurate in all material
respects with Employee's position, authority, duties and
responsibilities prior to a Change of Control if after the Change of
Control Employee either holds (i) an equivalent position in the
Company or, (ii) if the Company is controlled or will after the
transaction be controlled by another company (directly or indirectly),
an equivalent position in the ultimate parent company.
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<PAGE> 4
(b) The assignment to the Employee of any duties
inconsistent in any material respect with Employee's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
3.1(b) of this Agreement, or any other action that results in a
diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith that is remedied within 10 days after
receipt of written notice thereof from the Employee to the Company;
(c) Any failure by the Company or its Affiliates to
comply with any of the provisions of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad
faith that is remedied within 10 days after receipt of written notice
thereof from the Employee to the Company;
(d) The Company or its Affiliates requiring the Employee
to be based at any office or location other than as provided in
Section 3.1(b)(ii) hereof or requiring the Employee to travel on
business to a substantially greater extent than required immediately
prior to the Change of Control;
(e) Any purported termination of the Employee's
employment otherwise than as expressly permitted by this Agreement; or
(f) Any failure by the Company to comply with and satisfy
Sections 4.1(c) and (d) of this Agreement.
ARTICLE II
STATUS OF EMPLOYMENT AGREEMENT
Notwithstanding any provisions thereof, after a Change of Control,
this Agreement supersedes the agreement dated as of June 13, 1994 between the
Company and the Employee or any subsequent employment agreement between
Employee and the Company that so provides (the "Employment Agreement"), except
with respect to those provisions of the Employment Agreement that are made a
part of and specifically incorporated by reference herein. Upon a Change of
Control of the Company, as defined herein, or upon a "Change of Control of the
Company" as defined in the Employment Agreement, the Employee shall be entitled
to the benefits provided herein and not to the benefits provided therein.
ARTICLE III
CHANGE OF CONTROL BENEFIT
3.1 EMPLOYMENT TERM AND CAPACITY AFTER CHANGE OF CONTROL. (a)
This Agreement shall commence on the date hereof and continue in effect through
December 31, 1997; provided, however, that commencing on January 1, 1998 and
each January 1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than September 30 of the
preceding year, the Company shall have given notice that it does not wish to
extend this Agreement; provided, further, that notwithstanding any such notice
by the Company not to extend,
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<PAGE> 5
if a Change of Control of the Company shall have occurred during the original
or extended term of this Agreement, this Agreement shall continue in effect
through the second anniversary of the Change of Control (such period following
a Change of Control being referred to herein as the "Employment Term"), subject
to any earlier termination of Employee's status as an employee pursuant to this
Agreement.
(b) After a Change of Control and during the Employment Term, (i)
the Employee's position (including status, offices, titles and reporting
requirements) authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding the Change of Control and (ii) the Employee's service shall be
performed during normal business hours at the Company's principal executive
office, at its location at the time of the Change of Control, or the location
where the Employee was employed immediately preceding the Change of Control or
any relocation of the Company's principal executive office to a location that
is not more than 35 miles from such current location. Employee's position,
authority, duties and responsibilities after a Change of Control shall not be
considered commensurate in all material respects with Employee's position,
authority, duties and responsibilities prior to a Change of Control unless
after the Change of Control Employee holds (x) an equivalent position in the
Company or, (y) if the Company is controlled or will after the transaction be
controlled by another company (directly or indirectly), an equivalent position
in the ultimate parent company.
3.2 COMPENSATION AND BENEFITS. During the Employment Term,
Employee shall be entitled to the following compensation and benefits:
(a) Base Salary. The Employee shall receive an annual
base salary ("Base Salary"), which shall be paid at a monthly rate, at
least equal to 12 times the highest monthly base salary that was paid
or is payable, including any base salary which has been earned but
deferred by the Employee, by the Company and its affiliated companies
with respect to any month in the 12-month period ending with the month
that immediately precedes the month in which the Change of Control
occurs. During the Employment Term, the Base Salary shall be reviewed
at such time as the Company undertakes a salary review of its other
executive officers, and, to the extent that salary increases are
granted to such other executive officers, the Employee shall be
granted a salary increase commensurate with his peer executives of the
Company and its affiliated companies for the year of determination.
Any increase in Base Salary shall not serve to limit or reduce any
other obligation to the Employee under this Agreement. Base Salary
shall not be reduced after any such increase and the term Base Salary
as utilized in this Agreement shall refer to Base Salary as so
increased.
(b) Annual Bonus. In addition to Base Salary, the
Employee shall be awarded, for each fiscal year ending during the
Employment Term, an annual bonus (the "Bonus") in cash in an amount at
least equal to the average of the annual bonus paid to the Employee
with respect to the three fiscal years immediately preceding the year
in which the Change of Control occurs under the Company's annual bonus
plan, or any comparable bonus under a successor plan. Each such Bonus
shall be paid no later than the end of the third month of the
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<PAGE> 6
fiscal year for which the Bonus is awarded, unless the Employee shall
elect to defer the receipt of such Bonus.
(c) Fringe Benefits. The Employee shall be entitled to
fringe benefits (including, but not limited to, automobile allowance,
reimbursement for membership dues, and air travel) commensurate with
those provided to other peer employees of the Company and its
affiliated companies.
(d) Expenses. The Employee shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the
Employee in accordance with the most favorable agreements, policies,
practices and procedures of the Company and its affiliated companies
in effect for the Employee at any time during the 120- day period
immediately preceding the Change of Control or, if more favorable to
the Employee, as in effect generally at any time thereafter with
respect to other peer employees of the Company and its affiliated
companies.
(e) Incentive, Savings and Retirement Plans. The
Employee shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable
generally to other peer employees of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Employee with incentive opportunities (measured
with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case, less
favorable than the most favorable of those provided by the Company and
its affiliated companies for the Employee under any agreements, plans,
practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Change of Control, including
any agreement by the Company to provide retirement benefits not less
in amount than the retirement benefits to which the Employee would
have been entitled under the terms of any qualified defined benefit
pension plans of his immediate prior employer, or, if more favorable
to the Employee, those provided generally at any time after the Change
of Control to other peer employees of the Company and its affiliated
companies.
(f) Welfare Benefit Plans. The Employee and/or the
Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs) to
the extent applicable generally to other peer employees of the Company
and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Employee with benefits,
in each case, less favorable than the most favorable of any
agreements, plans, practices, policies and programs in effect for the
Employee at any time during the 120-day period immediately preceding
the Change of Control or, if more favorable to the Employee, those
provided generally at any time after the Change of Control to other
peer employees of the Company and its affiliated companies.
-6-
<PAGE> 7
(g) Office and Support Staff. The Employee shall be
entitled to an office or offices of a size and with furnishings and
other appointments, and to exclusive personal secretarial and other
assistance, commensurate with those provided to other peer employees
of the Company and its affiliated companies.
(h) Vacation. The Employee shall be entitled to paid
vacation in accordance with the most favorable agreements, plans,
policies, programs and practices of the Company and its affiliated
companies as in effect for the Employee at any time during the 120-day
period immediately preceding the Change of Control or, if more
favorable to the Employee, as in effect generally at any time
thereafter with respect to other peer employees of the Company and its
affiliated companies.
(i) Indemnification. If in connection with any agreement
related to a transaction that will result in a Change of Control of
the Company, an undertaking is made to provide the Board of Directors
with rights to indemnification from the Company (or any other party to
such agreement), the Employee shall, by virtue of this Agreement, be
entitled to the same rights to indemnification as are provided to the
Board of Directors pursuant to such agreement. Otherwise, the
Employee shall be entitled to indemnification rights on terms no less
favorable to Employee than those available under the Certificate of
Incorporation, bylaws or resolutions of the Company at any time after
the change of control to other peer employees of the Company. Such
indemnification rights shall be with respect to all claims, actions,
suits or proceedings to which the Employee is or is threatened to be
made a party that arise out of or are connected to his services at any
time prior to the termination of his employment, without regard to
whether such claims, actions, suits or proceedings are made, asserted
or arise during or after the Employment Term.
(j) Directors and Officers Insurance. If in connection
with any agreement related to a transaction that will result in a
Change of Control of the Company, an undertaking is made to provide
the Board of Directors of the Company with continued coverage
following the Change of Control under one or more directors and
officers liability insurance policies, then the Employee shall, by
virtue of this Agreement, be entitled to the same rights to continued
coverage under such insurance policies as are provided to the Board of
Directors. Otherwise, the Company shall agree to cover Employee under
any of its director and officers liability insurance policies on terms
provided generally at any time after the Change of Control to other
peer employees of the Company.
3.3 OBLIGATIONS UPON TERMINATION AFTER A CHANGE OF CONTROL.
(a) Termination by Company for Reasons other than Death,
Disability or Cause or by Employee for Good Reason. If, after a
Change of Control and during the Employment Term, the Company
terminates the Employee's employment other than for Cause, death or
Disability, or the Employee terminates employment for Good Reason,
(i) the Company shall pay to the Employee in a
lump sum in cash within five business days of the date of
termination an amount equal to three times the sum
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<PAGE> 8
of (i) the amount of Base Salary in effect at the date of
termination, plus (ii) the greater of (x) the average of the
annual bonuses paid or to be paid to the Employee with respect
to the immediately preceding three fiscal years or (y) the
target Bonus for which the Employee is eligible for the
12-month period in which the date of termination occurs, as
such target bonus has been established by the Company for such
year;
(ii) for a period of thirty-six (36) months
following the date of termination of employment (the
"Continuation Period"), the Company shall at its expense
continue on behalf of the Employee and his dependents and
beneficiaries the life insurance, disability, medical, dental
and hospitalization benefits provided (x) to the Employee at
any time during the 120-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of the Company
during the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
2.3(a)(ii) during the Continuation Period shall be no less
favorable to the Employee and his dependents and
beneficiaries, than the most favorable of such coverages and
benefits during any of the periods referred to in clauses (x)
or (y) above. In addition, if Employee has reached age 52 and
has completed seven years of service at the time of a Change
of Control, Employee shall automatically become vested in the
post-retirement benefits provided under the Tidewater Group
Welfare Benefits Plan (the "GWB Plan") and be entitled to
receive, following termination of employment with the Company,
all benefits that would be payable to Employee under the GWB
Plan or any successor plan of the Company or its affiliated
companies had the Employee retired from employment with the
Company or one of its affiliated companies on the later of the
third anniversary of the Change of Control or the Employee's
date of retirement (as defined in the GWB Plan) from
employment with the Company. The Company's obligation
hereunder with respect to the foregoing benefits shall be
limited to the extent that the Employee obtains any such
benefits pursuant to a subsequent employer's benefit plans, in
which case the Company may reduce the coverage of any benefits
it is required to provide the Employee hereunder as long as
the aggregate coverages and benefits of the combined benefit
plans is no less favorable to the Employee than the coverages
and benefits required to be provided hereunder. The Employee
will be eligible for coverage under the Consolidated Omnibus
Budget Reconciliation Act at the end of the Continuation
Period or earlier cessation of the Company's obligation
hereunder.
(iii) the Employee shall immediately become fully
(100%) vested in his benefit under each supplemental or excess
retirement plan of the Company in which the Employee was a
participant, including, but not limited to the Tidewater, Inc.
Supplemental Executive Retirement Plan (the "SERP"), the
Supplemental Plan and any successor plans;
(iv) the Company shall contribute to the trust
established in connection with the SERP and the Supplemental
Savings Plan (the "Trust") for the Employee's
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account in cash within five business days of the date of
termination of employment an amount equal to the then present
value of the actuarial equivalent of the additional benefits,
if any, to which the Employee would be entitled under the
Tidewater, Inc. Pension Plan, the SERP and any other qualified
defined benefit plan maintained by the Company and covering
the Employee, regardless of the vesting requirements thereof,
or any agreement between the Company and the Employee with
respect to retirement benefits that is otherwise provided for
in the Employment Agreement (such retirement benefit agreement
being made a part hereof and specifically incorporated by
reference herein), if the Employee had continued to be
employed by the Company until the third anniversary of the
Change of Control.
(v) the Company shall contribute to the
Supplemental Savings Plan trust for the Employee's account in
cash within five business days of the date of termination of
employment an amount equal to the amount of employer
contributions that would have been made on the Employees's
behalf if the Employee had continued to participate in the
Company's Savings Plan, the Company's Supplemental Savings
Plan and any other qualified or non-qualified defined
contribution plan maintained by the Company until the third
anniversary of the Change of Control. Such contribution
shall, in the case of a qualified plan, be calculated as if
the Employee were fully vested and participating to the
maximum extent permitted by such plan and, in the case of a
non-qualified plan, be calculated on the same basis as the
Employee was participating in such plans and, in all cases, be
calculated on the basis of the Employee's annual salary rate
at the time of the Change of Control.
(vi) to the extent that Employee is not fully
vested in his accrued benefits under the Pension Plan, the
Savings Plan or any other qualified plan maintained by the
Company, at the time of termination of employment, the Company
shall contribute to the Trust, within five business days of
the date of termination of employment, an amount in cash equal
to the unvested but accrued benefits under such plans as of
the date of termination of employment.
Any contributions by the Company to the Trust as provided herein shall
be distributed at such time as shall be elected by the Employee at the
time of execution of this Agreement, except that amounts relating to
services previously provided shall be distributed in accordance with
the provisions of the plans or the related participant elections to
which such contributions relate. The benefits provided in this
Section 3.3(a) shall be without regard to any amendment to any plans
made after the Change of Control but prior to Employee's date of
termination of employment, which amendment adversely affects in any
manner the computation of benefits under such plans.
(b) Death. If, after a Change of Control and during the
Employment Term, the Employee's status as an employee is terminated by
reason of the Employee's death, this Agreement shall terminate without
further obligation to the Employee's legal representatives (other than
those already accrued to the Employee), other than the obligation to
make any payments due pursuant to employee benefit plans maintained by
the Company or its
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affiliated companies and any death benefits to
which the Employee is entitled under any Employment Agreement in
effect immediately prior to the Change of Control (the death benefits
provided by such Employment Agreement being made a part hereof and
specifically incorporated by reference herein).
(c) Disability. If, after a Change of Control and during
the Employment Term, the Employee's status as an employee is
terminated by reason of Employee's Disability, this Agreement shall
terminate without further obligation to the Employee (other than those
already accrued to the Employee), other than the obligation to make
any payments due pursuant to employee benefit plans maintained by the
Company or its affiliated companies and any disability benefits to
which Employee is entitled under any Employment Agreement in effect
immediately prior to the Change of Control (the disability provisions
of such Employment Agreement being made a part hereof and specifically
incorporated by reference herein).
(d) Cause. If, after a Change of Control and during the
Employment Term, the Employee's status as an employee is terminated by
the Company for Cause, this Agreement shall terminate without further
obligation to the Employee other than for obligations imposed by law
and obligations imposed pursuant to any employee benefit plan
maintained by the Company or its affiliated companies.
(e) Voluntary Termination. If, after a Change of Control
and during the Employment Term, the Employee voluntarily terminates
his employment with the Company other than for Good Reason, this
Agreement shall terminate without further obligation to the Employee
other than for obligations imposed by law and obligations imposed
pursuant to any employee benefit plan maintained by the Company or its
affiliated companies.
3.4 ACCRUED OBLIGATIONS AND OTHER BENEFITS. It is the intent of
this Agreement that upon termination of employment for any reason following a
Change of Control the Employee be entitled to receive promptly, and in addition
to any other benefits specifically provided, (a) the Employee's Base Salary
through the date of termination to the extent not theretofore paid, (b) any
accrued vacation pay, to the extent not theretofore paid, and (c) any other
amounts or benefits required to be paid or provided or which the Employee is
entitled to receive under any plan, program, policy practice or agreement of
the Company.
3.5 STOCK OPTIONS AND RESTRICTED STOCK. The foregoing benefits
are intended to be in addition to the value of any options to acquire Common
Stock of the Company or restricted stock the exercisability or vesting of which
is accelerated pursuant to the terms of any stock option, incentive or other
similar plan or agreement heretofore or hereafter adopted by the Company.
3.6 CERTAIN ADDITIONAL PAYMENTS. The Employee shall be entitled
to such payments from the Company related to any excise tax as a result of the
"excess parachute payment" provisions of section 4999 of the Internal Revenue
Code of 1986, as amended (or any successor thereto), as were provided for
under any Employment Agreement in effect immediately prior to the Change of
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<PAGE> 11
Control (the obligations of the Company to make such payments being made a part
hereof and specifically incorporated by reference herein).
3.7 LEGAL FEES. The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses which the Employee
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this Agreement
(including as a result of any contest by the Employee about the amount or
timing of any payment pursuant to this Agreement.)
3.8 SET-OFF; MITIGATION. After a Change of Control, the Company's
and its Affiliates' obligations to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company or its Affiliates may have against the
Employee or others; except that to the extent the Employee accepts other
employment in connection with which he is provided health insurance benefits,
the Company shall only be required to provide health insurance benefits to the
extent the benefits provided by the Employee's employer are less favorable than
the benefits to which he would otherwise be entitled hereunder. It is the
intent of this Agreement that in no event shall the Employee be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this Agreement.
3.9 OUTPLACEMENT ASSISTANCE. Upon any termination of employment
of the Employee other than for Cause within three years following a Change of
Control, the Company shall provide to the Employee outplacement assistance by a
reputable firm specializing in such services for the period beginning with the
termination of employment and ending two years following the Change of Control.
ARTICLE IV
MISCELLANEOUS
4.1 BINDING EFFECT; SUCCESSORS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and shall
not be assignable by the Employee without the consent of the Company (there
being no obligation to give such consent) other than such rights or benefits as
are transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase, merger, consolidation or
otherwise) all or substantially all of the assets or businesses of the Company
(i) to assume unconditionally and expressly this Agreement and (ii) to agree to
perform or to cause to be performed all of the obligations under this Agreement
in the same manner and to the same extent as would have been required of the
Company had no assignment or
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<PAGE> 12
succession occurred, such assumption to be set forth in a writing reasonably
satisfactory to the Employee.
(d) The Company shall also require all entities that
control or that after the transaction will control (directly or indirectly) the
Company or any such successor or assignee to agree to cause to be performed all
of the obligations under this Agreement, such agreement to be set forth in a
writing reasonably satisfactory to the Employee.
4.2 NOTICES. All notices hereunder must be in writing and shall
be deemed to have been given upon receipt of delivery by: (a) hand (against a
receipt therefor), (b) certified or registered mail, postage prepaid, return
receipt requested, (c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission with confirmation of
receipt. All such notices must be addressed as follows:
If to the Company, to:
Tidewater, Inc.
1440 Canal Street
New Orleans, Louisiana 70112
Attn: Cliffe F. Laborde
If to the Employee, to:
William C. O'Malley
1440 Canal Street
New Orleans, Louisiana 70112
or such other address as to which any party hereto may have notified the other
in writing.
4.3 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with and governed by the internal laws of the State of Louisiana
without regard to principles of conflict of laws.
4.4 WITHHOLDING. The Employee agrees that the Company has the
right to withhold, from the amounts payable pursuant to this Agreement, all
amounts required to be withheld under applicable income and/or employment tax
laws, or as otherwise stated in documents granting rights that are affected by
this Agreement.
4.5 AMENDMENT, WAIVER. No provision of this Agreement may be
modified, amended or waived except by an instrument in writing signed by both
parties.
4.6 SEVERABILITY. If any term or provision of this Agreement, or
the application thereof to any person or circumstance, shall at any time or to
any extent be invalid, illegal or unenforceable
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<PAGE> 13
in any respect as written, Employee and the Company intend for any court
construing this Agreement to modify or limit such provision so as to render it
valid and enforceable to the fullest extent allowed by law. Any such provision
that is not susceptible of such reformation shall be ignored so as to not affect
any other term or provision hereof, and the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid, illegal or unenforceable, shall not be
affected thereby and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
4.7 WAIVER OF BREACH. The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach thereof.
4.8 REMEDIES NOT EXCLUSIVE. No remedy specified herein shall be
deemed to be such party's exclusive remedy, and accordingly, in addition to all
of the rights and remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by applicable law, rule or
regulation.
4.9 COMPANY'S RESERVATION OF RIGHTS. Employee acknowledges and
understands that the Employee serves at the pleasure of the Board and that the
Company has the right at any time to terminate Employee's status as an employee
of the Company, or to change or diminish his status during the Employment Term,
subject to the rights of the Employee to claim the benefits conferred by this
Agreement.
4.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have caused this
Agreement to be executed as of the Change of Control Agreement Date.
TIDEWATER, INC.
By: /s/ ROBERT H. BOH
----------------------------------
Robert H. Boh
Compensation Committee Chairman
EMPLOYEE:
/s/ WILLIAM C. O'MALLEY
-------------------------------------
William C. O'Malley
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<PAGE> 1
EXHIBIT 10(l)
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("the Agreement") between Tidewater,
Inc., a Delaware corporation (the "Company"), and Ken C. Tamblyn (the
"Employee") is dated effective as of September 30, 1996 (the "Change of Control
Agreement Date").
ARTICLE I
DEFINITIONS
1.1 AFFILIATE DEFINED. "Affiliate" or "affiliated companies"
shall mean any company controlled by, controlling, or under common control
with, the Company.
1.2 CAUSE DEFINED. "Cause" shall mean:
(a) the willful and continued failure of the
Employee to perform substantially the Employee's duties with
the Company or its affiliates (other than any such failure
resulting from incapacity due to physical or mental illness),
after a written demand for substantial performance is
delivered to the Employee by the Board of the Company which
specifically identifies the manner in which the Board believes
that the Employee has not substantially performed the
Employee's duties, or
(b) the willful engaging by the Employee in
illegal conduct or gross misconduct.
For purposes of this provision, no act or failure to act, on the part of the
Employee, shall be considered "willful" unless it is done, or omitted to be
done, by the Employee in bad faith or without reasonable belief that the
Employee's action or omission was in the best interests of the Company or its
Affiliates. Any act, or failure to act, based upon authority given pursuant to
a resolution duly adopted by the Board or upon the instructions of a senior
officer of the Company or based upon the advice of counsel for the Company or
its Affiliates shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the Company or
its Affiliates. The cessation of employment of the Employee shall not be
deemed to be for Cause unless his action or inaction meets the foregoing
standard and until there shall have been delivered to the Employee a copy of a
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board at a meeting of the Board called and held
for such purpose (after reasonable notice is provided to the Employee and the
Employee is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Employee is
guilty of the conduct described in subparagraph (a) or (b) above, and
specifying the particulars thereof in detail.
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<PAGE> 2
1.3 CHANGE OF CONTROL DEFINED. "Change of Control" shall mean:
(a) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 30% of the
outstanding shares of the Company's Common Stock, $0.10 par value per
share (the "Common Stock"); provided, however, that for purposes of
this subsection (a), the following shall not constitute a Change of
Control:
(i) any acquisition of Common Stock directly from
the Company,
(ii) any acquisition of Common Stock by the
Company,
(iii) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the
Company, or
(iv) any acquisition of Common Stock by any
corporation pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of subsection (c) of this Section
1.3; or
(b) individuals who, as of the Change of Control
Agreement Date, constitute the Board (the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the
Change of Control Agreement Date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent Board
shall be considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the
Incumbent Board; or
(c) consummation of a reorganization, merger or
consolidation, or sale or other disposition of all of substantially
all of the assets of the Company (a "Business Combination"), in each
case, unless, following such Business Combination,
(i) all or substantially all of the individuals
and entities who were the beneficial owners of the Company's
outstanding common stock and the Company's voting securities
entitled to vote generally in the election of directors
immediately prior to such Business Combination have direct or
indirect beneficial ownership, respectively, of more than 50%
of the then outstanding shares of common stock, and more than
50% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election
of directors, of the corporation resulting from such Business
Combination (which, for purposes of this paragraph (i)
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and paragraphs (ii) and (iii), shall include a corporation
which as a result of such transaction controls the Company or
all or substantially all of the Company's assets either
directly or through one or more subsidiaries), and
(ii) except to the extent that such ownership
existed prior to the Business Combination, no person
(excluding any corporation resulting from such Business
Combination or any employee benefit plan or related trust of
the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30% or
more of the then outstanding shares of common stock of the
corporation resulting from such Business Combination or 30% or
more of the combined voting power of the then outstanding
voting securities of such corporation, and
(iii) at least a majority of the members of the
board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(d) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
1.4 COMPANY DEFINED. As used in this Agreement, "Company" shall
mean the Company as defined above and any successor to or assignee of (whether
direct or indirect, by purchase, merger, consolidation or otherwise) all or
substantially all of the assets or business of the Company.
1.5 DISABILITY DEFINED. "Disability" shall mean a condition that
would entitle the Employee to receive benefits under the Company's long-term
disability insurance policy in effect at the time either because he is totally
disabled or partially disabled, as such terms are defined in the Company's
policy in effect as of the date of this Agreement or as similar terms are
defined in any successor policy. If the Company has no long-term disability
plan in effect, "Disability" shall occur if (a) the Employee is rendered
incapable because of physical or mental illness of satisfactorily discharging
his duties and responsibilities to the Company for a period of 90 consecutive
days, (b) a duly qualified physician chosen by the Company and acceptable to
the Employee or his legal representatives so certifies in writing, and (c) the
Board determines that the Employee has become disabled.
1.6 GOOD REASON DEFINED. "Good Reason" shall mean:
(a) Any failure of the Company or its Affiliates to
provide the Employee with the position, authority, duties and
responsibilities at least commensurate in all material respects with
the most significant of those held, exercised and assigned at any time
during the 120-day period immediately preceding the Change of Control.
The Employee's position, authority, duties and responsibilities after
a Change of Control shall be considered commensurate in all material
respects with Employee's position, authority, duties and
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<PAGE> 4
responsibilities prior to a Change of Control if after the Change of
Control Employee either holds (i) an equivalent position in the Company
or, (ii) if the Company is controlled or will after the transaction be
controlled by another company (directly or indirectly), an equivalent
position in the ultimate parent company.
(b) The assignment to the Employee of any duties
inconsistent in any material respect with Employee's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
3.1(b) of this Agreement, or any other action that results in a
diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent
action not taken in bad faith that is remedied within 10 days after
receipt of written notice thereof from the Employee to the Company;
(c) Any failure by the Company or its Affiliates to
comply with any of the provisions of this Agreement, other than an
isolated, insubstantial and inadvertent failure not occurring in bad
faith that is remedied within 10 days after receipt of written notice
thereof from the Employee to the Company;
(d) The Company or its Affiliates requiring the Employee
to be based at any office or location other than as provided in
Section 3.1(b)(ii) hereof or requiring the Employee to travel on
business to a substantially greater extent than required immediately
prior to the Change of Control;
(e) Any purported termination of the Employee's
employment otherwise than as expressly permitted by this Agreement; or
(f) Any failure by the Company to comply with and satisfy
Sections 4.1(c) and (d) of this Agreement.
ARTICLE II
STATUS OF CHANGE OF CONTROL AGREEMENTS
Notwithstanding any provisions thereof, this Agreement supersedes the
agreement dated October 8, 1986 between the Company and the Employee that
provided for certain severance benefits in the event of a Change of Control of
the Company, as defined therein.
ARTICLE III
CHANGE OF CONTROL BENEFIT
3.1 EMPLOYMENT TERM AND CAPACITY AFTER CHANGE OF CONTROL. (a)
This Agreement shall commence on the date hereof and continue in effect through
December 31, 1997; provided, however, that commencing on January 1, 1998 and
each January 1 thereafter, the term of this Agreement shall automatically be
extended for one additional year unless, not later than September 30 of the
preceding year, the Company shall have given notice that it does not wish to
extend this
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<PAGE> 5
Agreement; provided, further, that notwithstanding any such notice by the
Company not to extend, if a Change of Control of the Company shall have occurred
during the original or extended term of this Agreement, this Agreement shall
continue in effect through the second anniversary of the Change of Control (such
period following a Change of Control being referred to herein as the "Employment
Term"), subject to any earlier termination of Employee's status as an employee
pursuant to this Agreement.
(b) After a Change of Control and during the Employment
Term, (i) the Employee's position (including status, offices, titles
and reporting requirements), authority, duties and responsibilities
shall be at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during
the 120-day period immediately preceding the Change of Control and (ii)
the Employee's service shall be performed during normal business hours
at the Company's principal executive office, at its location at the
time of the Change of Control, or the location where the Employee was
employed immediately preceding the Change of Control or any relocation
of the Company's principal executive office to a location that is not
more than 35 miles from such current location. Employee's position,
authority, duties and responsibilities after a Change of Control shall
not be considered commensurate in all material respects with Employee's
position, authority, duties and responsibilities prior to a Change of
Control unless after the Change of Control Employee holds (x) an
equivalent position in the Company or, (y) if the Company is controlled
or will after the transaction be controlled by another company
(directly or indirectly), an equivalent position in the ultimate parent
company.
3.2 COMPENSATION AND BENEFITS. During the Employment Term,
Employee shall be entitled to the following compensation and benefits:
(a) Base Salary. The Employee shall receive an annual
base salary ("Base Salary"), which shall be paid at a monthly rate, at
least equal to 12 times the highest monthly base salary that was paid
or is payable, including any base salary which has been earned but
deferred by the Employee, by the Company and its affiliated companies
with respect to any month in the 12-month period ending with the month
that immediately precedes the month in which the Change of Control
occurs. During the Employment Term, the Base Salary shall be reviewed
at such time as the Company undertakes a salary review of its other
executive officers, and, to the extent that salary increases are
granted to such other executive officers, the Employee shall be
granted a salary increase commensurate with his peer executives of the
Company and its affiliates. Any increase in Base Salary shall not
serve to limit or reduce any other obligation to the Employee under
this Agreement. Base Salary shall not be reduced after any such
increase and the term Base Salary as utilized in this Agreement shall
refer to Base Salary as so increased.
(b) Annual Bonus. In addition to Base Salary, the
Employee shall be awarded, for each fiscal year ending during the
Employment Term, an annual bonus (the "Bonus") in cash in an amount at
least equal to the average of the annual bonuses paid to the Employee
with respect to the three fiscal years that immediately precede the
year in which the Change of Control occurs under the Company's annual
bonus plan, or any comparable bonus under
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<PAGE> 6
a successor plan. Each such Bonus shall be paid no later than the end
of the third month of the fiscal year next following the fiscal year
for which the Bonus is awarded, unless the Employee shall elect to
defer the receipt of such Bonus.
(c) Fringe Benefits. The Employee shall be entitled to
fringe benefits (including, but not limited to, automobile allowance,
reimbursement for membership dues, and air travel) commensurate with
those provided to other peer executive officers of the Company and its
affiliated companies.
(d) Expenses. The Employee shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the
Employee in accordance with the most favorable agreements, policies,
practices and procedures of the Company and its affiliated companies
in effect for the Employee at any time during the 120- day period
immediately preceding the Change of Control or, if more favorable to
the Employee, as in effect generally at any time thereafter with
respect to other peer employees of the Company and its affiliated
companies.
(e) Incentive, Savings and Retirement Plans. The
Employee shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable
generally to other peer employees of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and
programs provide the Employee with incentive opportunities (measured
with respect to both regular and special incentive opportunities, to
the extent, if any, that such distinction is applicable), savings
opportunities and retirement benefit opportunities, in each case, less
favorable than the most favorable of those provided by the Company and
its affiliated companies for the Employee under any agreements, plans,
practices, policies and programs as in effect at any time during the
120-day period immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at any time after
the Change of Control to other peer employees of the Company and its
affiliated companies.
(f) Welfare Benefit Plans. The Employee and/or the
Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the Company and
its affiliated companies (including, without limitation, medical,
prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs) to
the extent applicable generally to other peer employees of the Company
and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Employee with benefits,
in each case, less favorable than the most favorable of any
agreements, plans, practices, policies and programs in effect for the
Employee at any time during the 120-day period immediately preceding
the Change of Control or, if more favorable to the Employee, those
provided generally at any time after the Change of Control to other
peer employees of the Company and its affiliated companies.
(g) Office and Support Staff. The Employee shall be
entitled to an office or offices of a size and with furnishings and
other appointments, and to secretarial and other
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assistance, commensurate with those provided to other peer executive
officers of the Company and its affiliated companies.
(h) Vacation. The Employee shall be entitled to paid
vacation in accordance with the most favorable agreements, plans,
policies, programs and practices of the Company and its affiliated
companies as in effect for the Employee at any time during the 120-day
period immediately preceding the Change of Control or, if more
favorable to the Employee, as in effect generally at any time
thereafter with respect to other peer employees of the Company and its
affiliated companies.
(i) Indemnification. If in connection with any agreement
related to a transaction that will result in a Change of Control of
the Company, an undertaking is made to provide the Board of Directors
with rights to indemnification from the Company (or from any other
party to such agreement), the Employee shall, by virtue of this
Agreement, be entitled to the same rights to indemnification as are
provided to the Board of Directors pursuant to such agreement.
Otherwise, the Employee shall be entitled to indemnification rights on
terms no less favorable to Employee than those available under the
Certificate of Incorporation, bylaws or resolutions of the Company at
any time after the Change of Control to other peer employees of the
Company. Such indemnification rights shall be with respect to all
claims, actions, suits or proceedings to which the Employee is or is
threatened to be made a party that arise out of or are connected to
his services at any time prior to the termination of his employment,
without regard to whether such claims, actions, suits or proceedings
are made, asserted or arise during or after the Employment Term.
(j) Directors and Officers Insurance. If in connection
with any agreement related to a transaction that will result in a
Change of Control of the Company, an undertaking is made to provide
the Board of Directors of the Company with continued coverage
following the Change of Control under one or more directors and
liability insurance policies, then the Employee shall, by virtue of
this Agreement, be entitled to the same rights to continued coverage
under such directors and officers liability insurance policies as are
provided to the Board of Directors. Otherwise, the Company shall
agree to cover Employee under any directors and officers liability
insurance policies as are provided generally at any time after the
Change of Control to other executive officers of the Company.
3.3 OBLIGATIONS UPON TERMINATION AFTER A CHANGE OF CONTROL.
(a) Termination by Company for Reasons other than Death,
Disability or Cause or by Employee for Good Reason. If, after a
Change of Control and during the Employment Term, the Company
terminates the Employee's employment other than for Cause, death or
Disability, or the Employee terminates employment for Good Reason,
(i) the Company shall pay to the Employee in a
lump sum in cash within five business days of the date of
termination an amount equal to three times the sum of (i) the
amount of Base Salary in effect at the date of termination,
plus (ii) the
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<PAGE> 8
greater of (x) the average of the annual bonuses paid or to be
paid to the Employee with respect to the immediately preceding
three fiscal years or (y) the target Bonus for which the
Employee is eligible for the 12-month period in which the date
of termination occurs, as such target bonus has been
established by the Company for such year;
(ii) for a period of thirty-six (36) months
following the date of termination of employment (the
"Continuation Period"), the Company shall at its expense
continue on behalf of the Employee and his dependents and
beneficiaries the life insurance, disability, medical, dental
and hospitalization benefits provided (x) to the Employee at
any time during the 120-day period prior to the Change in
Control or at any time thereafter or (y) to other similarly
situated executives who continue in the employ of the Company
during the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
2.3(a)(ii) during the Continuation Period shall be no less
favorable to the Employee and his dependents and beneficiaries,
than the most favorable of such coverages and benefits during
any of the periods referred to in clauses (x) or (y) above. In
addition, if Employee has reached age 52 and has completed
seven years of service at the time of a Change of Control,
Employee shall automatically become vested in the
post-retirement benefits provided under the Tidewater Group
Welfare Benefits Plan (the "GWB Plan") and be entitled to
receive, following termination of employment with the Company,
all benefits that would be payable to Employee under the GWB
Plan or any successor plan of the Company or its affiliated
companies had the Employee retired from employment with the
Company or one of its affiliated companies on the later of the
third anniversary of the Change of Control or the Employee's
date of retirement (as defined in the GWB Plan) from employment
with the Company. The Company's obligation hereunder with
respect to the foregoing benefits shall be limited to the
extent that the Employee obtains any such benefits pursuant to
a subsequent employer's benefit plans, in which case the
Company may reduce the coverage of any benefits it is required
to provide the Employee hereunder as long as the aggregate
coverages and benefits of the combined benefit plans is no less
favorable to the Employee than the coverages and benefits
required to be provided hereunder. The Employee will be
eligible for coverage under the Consolidated Omnibus Budget
Reconciliation Act at the end of the Continuation Period or
earlier cessation of the Company's obligation hereunder.
(iii) the Employee shall immediately become fully
(100%) vested in his benefit under each supplemental or excess
retirement plan of the Company in which the Employee was a
participant, including, but not limited to the Tidewater, Inc.
Supplemental Executive Retirement Plan (the "SERP") , the
Supplemental Savings Plan and any successor plans;
(iv) the Company shall contribute to the trust
established in connection with the SERP and the Supplemental
Savings Plan (the "Trust") for the Employee's
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<PAGE> 9
account in cash within five business days of the date of
termination of employment an amount equal to the then present
value of the actuarial equivalent of the additional benefits,
if any, to which the Employee would be entitled under the
Tidewater, Inc. Pension Plan, the SERP and any other qualified
or non-qualified defined benefit plan maintained by the Company
and covering the Employee, regardless of the vesting
requirements thereof, if the Employee had continued to be
employed by the Company until the third anniversary of
the Change of Control.
(v) the Company shall contribute to the
Supplemental Savings Plan trust for the Employee's account in
cash within five business days of the date of termination of
employment an amount equal to the amount of employer
contributions that would have been made on the Employees's
behalf if the Employee had continued to participate in the
Company's Savings Plan, the Company's Supplemental Savings
Plan and any other qualified or non-qualified defined
contribution plan maintained by the Company until the third
anniversary of the Change of Control. Such contribution
shall, in the case of a qualified plan, be calculated as if
the Employee were fully vested and participating to the
maximum extent permitted by such plan and, in the case of a
non-qualified plan, be calculated on the same basis as the
Employee was participating in such plans and, in all cases be
calculated on the basis of the Employee's annual salary rate
at the time of the Change of Control.
(vi) to the extent that Employee is not fully
vested in his accrued benefits under the Pension Plan, the
Savings Plan or any other qualified plan maintained by the
Company, at the time of termination of employment, the Company
shall contribute to the Trust, within five business days of
the date of termination of employment, an amount in cash equal
to the unvested but accrued benefits under such plans as of
the date of termination of employment.
Any contributions by the Company to the Trust as provided herein shall
be distributed at such time as shall be elected by the Employee at the
time of execution of this Agreement, except that amounts relating to
services previously provided shall be distributed in accordance with
the provisions of the plans or the related participant elections to
which such contributions relate. The benefits provided in this Section
3.3(a) shall be without regard to any amendment to any plans made after
the Change of Control but prior to Employee's date of termination of
employment, which amendment adversely affects in any manner the
computation of benefits under such plans.
(b) Death. If, after a Change of Control and during the
Employment Term, the Employee's status as an employee is terminated by
reason of the Employee's death, this Agreement shall terminate without
further obligation to the Employee's legal representatives (other than
those already accrued to the Employee), other than the obligation to
make any payments due pursuant to employee benefit plans maintained by
the Company or its affiliated companies.
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<PAGE> 10
(c) Disability. If, after a Change of Control and during
the Employment Term, the Employee's status as an employee is
terminated by reason of Employee's Disability, this Agreement shall
terminate without further obligation to the Employee (other than those
already accrued to the Employee), other than the obligation to make
any payments due pursuant to employee benefit plans maintained by the
Company or its affiliated companies.
(d) Cause. If, after a Change of Control and during the
Employment Term, the Employee's status as an employee is terminated by
the Company for Cause, this Agreement shall terminate without further
obligation to the Employee other than for obligations imposed by law
and obligations imposed pursuant to any employee benefit plan
maintained by the Company or its affiliated companies.
(e) Voluntary Termination. If, after a Change of Control
and during the Employment Term, the Employee voluntarily terminates
his employment with the Company other than for Good Reason, this
Agreement shall terminate without further obligation to the Employee
other than for obligations imposed by law and obligations imposed
pursuant to any employee benefit plan maintained by the Company or its
affiliated companies.
3.4 ACCRUED OBLIGATIONS AND OTHER BENEFITS. It is the intent of
this Agreement that upon termination of employment for any reason following a
Change of Control the Employee be entitled to receive promptly, and in addition
to any other benefits specifically provided, (a) the Employee's Base Salary
through the date of termination to the extent not theretofore paid, (b) any
accrued vacation pay, to the extent not theretofore paid, and (c) any other
amounts or benefits required to be paid or provided or which the Employee is
entitled to receive under any plan, program, policy practice or agreement of
the Company.
3.5 STOCK OPTIONS AND RESTRICTED STOCK. The foregoing benefits
are intended to be in addition to the value of any options to acquire Common
Stock of the Company or restricted stock the exercisability or vesting of which
is accelerated pursuant to the terms of any stock option, incentive or other
similar plan heretofore or hereafter adopted by the Company.
3.6 CERTAIN ADDITIONAL PAYMENTS. Notwithstanding anything
contained in this Agreement to the contrary, if the Employee would be subject
to an excise tax by virtue of the "excess parachute payment" provisions of
Section 4999 of the Internal Revenue Code of 1986, as amended (or any successor
thereto) with respect to any amounts attributable to any payment or benefit
provided under this Agreement, or any other payment or benefits provided to, or
for the benefit of Employee under any other Company plan or arrangement (the
"Payments"), and if the imposition of such excise tax could be avoided by a
reduction of the benefits payable pursuant to this Agreement, then the payments
due hereunder shall be automatically reduced by such amount as shall be
necessary to eliminate any obligation of the Employee to pay such excise tax,
provided however that if the amount by which any payments or benefits payable
pursuant to this Agreement would have to be reduced to avoid the imposition of
the excise tax would exceed the excise tax that would be payable with respect
to any "excess parachute payments"(as such term is defined in the Code), then
no such reduction of any payments hereunder shall be made.
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<PAGE> 11
3.7 LEGAL FEES. The Company agrees to pay as incurred, to the
full extent permitted by law, all legal fees and expenses which the Employee
may reasonably incur as a result of any contest (regardless of the outcome
thereof) by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this Agreement
(including as a result of any contest by the Employee about the amount or
timing of any payment pursuant to this Agreement.)
3.8 SET-OFF; MITIGATION. After a Change of Control, the Company's
and its Affiliates' obligations to make the payments provided for in this
Agreement and otherwise to perform its obligations hereunder shall not be
affected by any set-off, counterclaim, recoupment, defense or other claim,
right or action which the Company or its Affiliates may have against the
Employee or others; except that to the extent the Employee accepts other
employment in connection with which he is provided health insurance benefits,
the Company shall only be required to provide health insurance benefits to the
extent the benefits provided by the Employee's employer are less favorable than
the benefits to which he would otherwise be entitled hereunder. It is the
intent of this Agreement that in no event shall the Employee be obligated to
seek other employment or take any other action by way of mitigation of the
amounts payable to the Employee under any of the provisions of this Agreement.
3.9 OUTPLACEMENT ASSISTANCE. Upon any termination of employment
of the Employee other than for Cause within two years following a Change of
Control, the Company shall provide to the Employee outplacement assistance by a
reputable firm specializing in such services for the period beginning with the
termination of employment and ending three years following the Change of
Control.
ARTICLE IV
MISCELLANEOUS
4.1 BINDING EFFECT; SUCCESSORS.
(a) This Agreement shall be binding upon and inure to the
benefit of the Company and any of its successors or assigns.
(b) This Agreement is personal to the Employee and shall
not be assignable by the Employee without the consent of the Company (there
being no obligation to give such consent) other than such rights or benefits as
are transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase, merger, consolidation or
otherwise) all or substantially all of the assets or businesses of the Company
(i) to assume unconditionally and expressly this Agreement and (ii) to agree to
perform or to cause to be performed all of the obligations under this Agreement
in the same manner and to the same extent as would have been required of the
Company had no assignment or succession occurred, such assumption to be set
forth in a writing reasonably satisfactory to the Employee.
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<PAGE> 12
(d) The Company shall also require all entities that
control or that after the transaction will control (directly or indirectly) the
Company or any such successor or assignee to agree to cause to be performed all
of the obligations under this Agreement, such agreement to be set forth in a
writing reasonably satisfactory to the Employee.
4.2 NOTICES. All notices hereunder must be in writing and shall
be deemed to have been given upon receipt of delivery by: (a) hand (against a
receipt therefor), (b) certified or registered mail, postage prepaid, return
receipt requested, (c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission with confirmation of
receipt. All such notices must be addressed as follows:
If to the Company, to:
Tidewater, Inc.
1440 Canal Street
New Orleans, Louisiana 70112
Attn: Cliffe F. Laborde
If to the Employee, to:
Ken C. Tamblyn
Tidewater, inc.
1440 Canal Street
New Orleans, Louisiana 70112
or such other address as to which any party hereto may have notified the other
in writing.
4.3 GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with and governed by the internal laws of the State of Louisiana
without regard to principles of conflict of laws.
4.4 WITHHOLDING. The Employee agrees that the Company has the
right to withhold, from the amounts payable pursuant to this Agreement, all
amounts required to be withheld under applicable income and/or employment tax
laws, or as otherwise stated in documents granting rights that are affected by
this Agreement.
4.5 AMENDMENT, WAIVER. No provision of this Agreement may be
modified, amended or waived except by an instrument in writing signed by both
parties.
4.6 SEVERABILITY. If any term or provision of this Agreement, or
the application thereof to any person or circumstance, shall at any time or to
any extent be invalid, illegal or unenforceable in any respect as written,
Employee and the Company intend for any court construing this
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<PAGE> 13
Agreement to modify or limit such provision so as to render it valid and
enforceable to the fullest extent allowed by law. Any such provision that is
not susceptible of such reformation shall be ignored so as to not affect any
other term or provision hereof, and the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid, illegal or unenforceable, shall not be
affected thereby and each term and provision of this Agreement shall be valid
and enforced to the fullest extent permitted by law.
4.7 WAIVER OF BREACH. The waiver by either party of a breach of
any provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach thereof.
4.8 REMEDIES NOT EXCLUSIVE. No remedy specified herein shall be
deemed to be such party's exclusive remedy, and accordingly, in addition to all
of the rights and remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by applicable law, rule or
regulation.
4.9 COMPANY'S RESERVATION OF RIGHTS. Employee acknowledges and
understands that the Employee serves at the pleasure of the Board and that the
Company has the right at any time to terminate Employee's status as an employee
of the Company, or to change or diminish his status during the Employment Term,
subject to the rights of the Employee to claim the benefits conferred by this
Agreement.
4.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have caused this
Agreement to be executed as of the Change of Control Agreement Date.
TIDEWATER, INC.
By: /s/ ROBERT H. BOH
---------------------------------------
Robert H. Boh
Chairman, Compensation Committee
EMPLOYEE:
/s/ KEN C. TAMBLYN
------------------------------------------
Ken C. Tamblyn
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<PAGE> 1
EXHIBIT 10(m)
TIDEWATER INC
Annual Incentive Plan
Summary Provisions
April 1, 1996
Revised
<PAGE> 2
TABLE OF CONTENTS
I. Plan Objectives
II. Basic Plan Concept
III. Eligibility Criteria
IV. Award Opportunities
V. Performance Measures and Standards
VI. Award Calculations
VII. Award Payments
VIII. Transfers
IX. Retirements and Terminations
X. Plan Amendments
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<PAGE> 3
SUMMARY PROVISIONS
OF THE
TIDEWATER INC.
ANNUAL INCENTIVE PLAN (AIP)
I. PLAN OBJECTIVE
The primary objective of the Tidewater Annual Incentive Plan (AIP) is
to assist in achieving specific business and financial goals conducive
to the organization's success which the company believes can best be
accomplished be providing cash incentives to key Tidewater employees.
The AIP helps prioritize and focus efforts on the accomplishment of
financial goals and other corporate objectives established each year
through the annual planning and budgeting process. This is achieved by
linking a significant annual element of variable annual compensation
to the accomplishment of selected goals. At target performance
levels, the AIP provides incentive compensation opportunities which,
in combination with base salary, will yield competitive total
compensation levels.
II. BASIC PLAN CONCEPT
The plan concept focuses primarily on the performance of Tidewater
overall. The AIP is comprised of three divisions which will enabled
the company to better measure performance results of eligible
participants by specific lines of business. The three divisions are
as follows:
o Administrative
o Marine
o Compression
Overall corporate performance is considered each year along with
certain divisional and individual performance measures specific to
each division's operations and functions. Regardless of corporate
performance, however, the Compensation Committee of the Board may at
its discretion establish a funding pool of up to 50% of the target
awards for all participants in order to make awards for outstanding
individual contributions even if the company does not achieve
threshold performance on plan performance measures within a year.
III. ELIGIBILITY CRITERIA
Eligibility for participation in the AIP will be limited to officers
and certain key employees that directly impact the company's financial
performance. The specific positions eligible to participate in the
plan will be reviewed and determined annually by Tidewater's Chief
Executive Officer and the Compensation Committee of the Board of
Directors.
<PAGE> 4
IV. AWARD OPPORTUNITIES
Prior to the beginning of each fiscal year, Tidewater will specify
target incentive awards for each eligible position. Prior to the
beginning of each fiscal year, Tidewater will determine the total pool
target, threshold and maximum incentive award amounts. These amounts
are determined from each eligible participant's base salary times the
target percent associated with the participant's position within the
company. The actual target percent is determined based upon the
employee's relevant position within the company and the measurable
amount of direct influence on the company's financial performance.
For fiscal 1997, the Company has established a base target percent and
an enhanced target percent that is intended to recognize the
risk/reward component of the company's overall compensation program.
Base target and enhanced target percents by position are as follows:
<TABLE>
<CAPTION>
A. Administrative BASE % ENHANCED %
------ ----------
<S> <C> <C> <C>
Chairman, President, & CEO 60% 75%
Executive Vice President 45% 60%
Senior Vice President 40% 50%
Vice President 35% 45%
B. Marine
Vice President - Tidewater Inc. 35% 45%
Controller - Marine 30% 35%
Safety Manager - Marine 30% 40%
Area Manager/Sales Manager (A) 30% 35%
Area Manager/Sales Manager (B) 25% 30%
Area Manager/Sales Manager (C) 20% 25%
C. Compression
Vice President - Tidewater Inc. 35% 45%
General Manager - TideAir 30% 35%
Director Operations - Compression 25% 30%
Controller - Compression 25% 30%
Dir. Tech. Services - Compression 25% 30%
V.P. Operations - TideAir 20% 25%
</TABLE>
V. PERFORMANCE MEASURES AND STANDARDS
Prior to the start of each fiscal year, specific corporate and
divisional measures and standards will be established. In addition,
the appropriate weighing to each measurement will also be established.
2
<PAGE> 5
A. Except as provided in Section II of this AIP, before any
individual incentive amount can be awarded, the company must
first achieve minimum (threshold) performance in at least one
of two company performance measures. For fiscal year 1997,
company performance measures are:
1. Adjusted Net Income vs. Budget - Under this test, net
income as compared with budgeted net income, adjusted
for selected charges/credits of an unusual nature
which would not be subject to normal budgeting
procedures, is used. The net income test is a
measurement test comparing actual results against
budgeted results for the year. For Fiscal 1997,
unless the Company's adjusted net income reaches at
least 115% of budget, the participant's base target
percentage will be used to determine the total pool
amount (see Exhibit 2). In the event the Company's
adjusted net income reaches or exceeds 115% of
budget, an enhanced target percent is triggered (see
Exhibit 2-A). The enhanced target percent, when
triggered, increases the participant's eligible award
from the base target percent and applies to all
performance measurements. When determining net
income against budget, pro-rating is not permitted
between 100% and 115% of budget.
In order to have the incentive pay program not
inhibit good management/business decisions, certain
adjustments to net income should be made in
determining if the net income test has been met.
Such adjustments should be objectively determinable
to avoid the appearance of impropriety. Accordingly,
the following items as reported in the corporation's
consolidated statement of earnings should be added to
or subtracted from net income as reported in order to
determine net income for purposes of the incentive
pay plan:
Cumulative effect of accounting changes;
Extraordinary items;
Discontinued operations; and
Unusual or infrequently occurring items (less
the amount of related income taxes), as that
term is used in Accounting Principles Board
Opinion No. 30.
NOTE: For purposes of calculating achievement of
this performance measure, budgeted net income shall
be divided by the average number of common shares
outstanding for the year as contemplated by the
budget. Likewise, the amount of Adjusted Net Income
shall be divided by the average number of common
shares outstanding during the year. For purposes of
making both of these Earnings Per Share calculations,
common stock equivalents shall not be considered in
determining the average number of common shares
outstanding.
3
<PAGE> 6
2. Return of Total Capital (ROTC) - Under this
performance measurement, the company must attain at
least the 40th percentile when compared to the Value
Line Peer Group (see Exhibit 1) on Return of Total
Capital (ROTC). ROTC would be defined as:
Earnings Before Interest Expense, Taxes
Depreciation and Amortization (EBITDA)
----------------------------------------------------
Average Shareholders Equity + Average Long-Term Debt
(including current maturities of Long-Term Debt)
NOTE: Average shareholders' equity and average
long-term debt shall be determined by summing the
respective totals as of the end of each interim
quarterly reporting period during the fiscal year as
shown on the company's consolidated balance sheet and
dividing such sums by the number of interim reporting
periods.
The standard for the ROTC performance measure will be
established by considering Tidewater's performance
against the Value Line Peer Group of companies (see
Exhibit 2 - Awards Matrix). When determining peer
group performance ranking, pro-rating is not
permitted below the 50th percentile.
B. Each participant, within each division, will have specific
standards established for the accomplishment of certain
company and individual performance measures. These criteria
will be established annually, prior to the beginning of each
fiscal year, and will be used to determine the amount of the
incentive award that each participant will be eligible to
receive. For Fiscal Year 1997, the performance measures are
as follows:
1. Administrative
a. Return on Total Capital - As defined above,
this measurement will carry a weight of 25%
of the individual's total award.
b. Adjusted Net Income - As defined above, this
measurement will carry a weight of 25% of the
individual's total award.
c. Individual Performance - This measurement is
determined on a subjective basis and will
carry a weight of 25% of the individual's
total award.
d. Safety Performance - This measurement is
determined by achievement of the company's
overall established safety performance goals
for the fiscal year. The safety performance
measurement will carry a weight of 25% of the
individual's total award.
4
<PAGE> 7
2. Marine
a. Safety Measurement - This measurement will be
considered in three parts.
1. First, each area will be given a
specific goal to achieve during the
fiscal year with respect to safety
performance as it relates to Lost
Time Accidents. Each area will be
graded on how well it performs
toward achieving the assigned goals.
Attached as Exhibit 3, is the Safety
Lost Time Accident goals for Fiscal
1997.
2. The second component of this
measurement is related to property
damage. For fiscal 1997, property
damage performance will be measured
by applying a subjective review of
overall property damage results for
the fiscal year. Only property
damage above the $20,000 per
occurrence deductible will be
included for measurement purposes.
Property damage claims will be
adjusted to include only Hull
(excluding machinery), Marine
Liability and Pollution claims. In
other words, preventable property
damage claims. Exhibit 4, provides
claim details by area for fiscal
1995 and fiscal 1996. This type of
information will form the basic
parameters that will be reviewed and
considered for fiscal 1997 results.
NOTE: Within this weighing (1 & 2 above),
personnel safety will comprise 80% and
property damage 20%.
3. Third, each area is evaluated on its
own overall safety performance,
taking into consideration such
things as number of deaths and/or
disabilities within an area,
incident ratios, nature of
accidents, preventable accidents,
etc.
Notwithstanding the above, no allocation
under this measurement is provided unless the
company achieves its overall established
safety performance goals for the fiscal year.
The safety measurement will carry a weight of
33.33% of the individual's total award.
(NOTE: HOW WELL EACH AREA DEMONSTRATES ITS
COMMITMENT TO TIDEWATER'S SAFETY PROGRAM
OVERALL WILL BE PART OF THE INDIVIDUAL
PERFORMANCE MEASUREMENT.)
b. Margins Test - Under the margins test,
operating margins, as defined, as compared
with a budgeted margins goal, will be used to
determine a component of the incentive pay
pool. The margins
5
<PAGE> 8
test will be an area specific test and carry
a Weight of 33.33% of the individual's total
award. Operating margins for this purpose
will be defined as follows:
Divisional Revenues from all operating
activities as reported in the
corporation's consolidated income
statement.
Minus Divisional Operating Costs and
Expenses, excluding depreciation
and amortization expense, as
reported in the corporation's
consolidated income statement
Minus Divisional General and
Administrative Expenses as
reported in the corporation's
consolidated income statement.
Minus Capitalized Repair and Maintenance
Costs.
Minus Minority interests in less than
100% owned consolidated
subsidiaries of the division.
Equals Operating Margins, as defined.
====== ==============================
c. Individual Performance - Individual
performance is determined annually and is
based upon a subjective evaluation by the
participant's manager(s) and encompasses the
overall performance of the individual for the
fiscal year. Individual performance will
also include an evaluation of each area's
commitment to Tidewater's safety program
overall. This measurement will carry a
weight of 33.34% of the individual's total
award.
Included as part of the individual
performance measure may be an area specific
test. This test may be optional by area and
would consist of zero to two specific
criteria relevant to a given area. Each
specific area will be advised of any specific
test for that fiscal year. Some examples
would be the percent improvement in
receivables over a period of time, delinquent
receivables collected, revenue enhancement
achieved over a period of time, utilization,
or other such criteria as deemed appropriate.
When an area specific test is utilized, the
particular measurement will be weighted as
part of the individual performance weight.
6
<PAGE> 9
3. Compression
a. Margin Test - With respect to the margins
test measurement for the Compression
Division, the Division's two segments,
Tidewater Compression and TideAir & Gas, will
be reviewed independently of one another.
Therefore, it is possible for one segment's
participants to receive awards for meeting
this criterion and not the other if one
segment does not reach its performance
criteria. However, the overall corporate
performance measures must be positive before
consideration of any incentive awards. Under
the margins test, segment operating margins,
as defined, as compared with a budgeted
margins goal, will be used to determine a
component of the incentive pay pool. The
margins test will carry a weight of 60% of
the individual's total award. Segment
operating margins for this purpose will be
defined as follows:
Segment Revenues from all operating
activities as reported in the corporation's
consolidated income statement.
Minus Segment Operating Costs and
Expense, excluding depreciation
and amortization expense, as
reported in the corporation's
consolidated income statement
Minus Segment General and
Administrative Expenses as
reported in the corporation's
consolidated income statement.
Minus Capitalized Repair and
Maintenance Costs.
Minus Minority interest in less than
100% owned consolidated
subsidiaries of the division.
Equals Segment Operating Margins,
as defined.
b. Individual Performance - Individual
performance is determined annually and is
based upon a subjective evaluation by the
participant's manager(s) and encompasses the
overall performance of the individual for the
fiscal year. This measurement will carry a
weight of 40% of the individual's total
award.
Included as part of the individual
performance measure may be an area specific
test. This test may be optional by area and
would consist of zero to two specific
criteria relevant to a given area. Some
examples would be the percent improvement in
receivables over a period of time, delinquent
receivables collected, revenue enhancement
achieved over a period of time,
7
<PAGE> 10
utilization, or other such criteria as deemed
appropriate. When an area specific test is
utilized, the particular measurement will be
weighted as part of the individual performance
weight.
VI. AWARD CALCULATIONS
A. Development of Incentive Funding Pool
The actual amount of the incentive pool to be awarded depends
on the attainment of specified corporate performance measures
as set forth in Section V-A. Each corporate measurement will
operate independently of one another in creating the funding
pool for annual incentive awards. Thus the company could
achieve above threshold on one performance measure and below
threshold on another performance measure and still have funds
available in the annual incentive pool.
Exhibit 2, attached, provides a matrix example of how the size
of the incentive funding pool would be calculated at different
levels of corporate performance. The Matrix also shows:
o The percentage of aggregate target annual incentives
paid for all plan participants; and
o The total amount of money allocated to the incentive
funding pool for fiscal 1997.
B. Individual Awards
The incentive funding pool is allocated to individual plan
participants by the performance measures set forth in Section
V-B.
Each division will also be looked at independently of one
another; therefore, it is possible for the Marine Division to
receive individual awards for meeting performance criteria and
not the Compression Division if it does not reach its
performance criteria. However, the overall corporate
performance measures must be positive before consideration of
any incentive awards.
The size of each divisional incentive pool is based upon the
number of eligible participants in each division. For
example, if the company meets target goals, each participant's
annual base salary is multiplied by the participants target
percent amount. All target amounts are then added together to
produce the total pool for that division. Each divisional
pool would be adjusted based upon the actual results of the
overall corporate measurements.
8
<PAGE> 11
VII. AWARD PAYMENTS
It is anticipated that awards will be payable in cash; however, the
company reserves the right to make payment in the form of company
stock at the company's option. Awards will be paid as soon as
administratively possible after the close of the fiscal year.
VIII. TRANSFERS
In the event that a participant transfers from one position to another
during the course of the year, his/her award for the year will be
calculated on a pro-rata basis according to the proportion of time
spent in each position during the year.
IX. RETIREMENTS AND TERMINATIONS
To receive an award under the AIP, the participant must be actively
employed on the last day of the performance cycle. At the discretion
of the Chief Executive Officer and with the approval of the
Compensation Committee of the Board of Directors, a participant who
separates from service prior to the end of the performance cycle may
be granted an award. The amount of the award, if any, will be based
in part upon the length of time employed during the performance cycle.
X. PLAN ADMINISTRATION, MODIFICATION, AND ADJUSTMENT
The AIP will be administered by Tidewater's Chief Executive Officer,
who may delegate certain elements of program administration to the
Chief Financial Officer and the Director of Employee Relations.
Actual performance goals, standards, and award determinations will be
approved by the Compensation Committee of the Board of Directors.
9
<PAGE> 1
EXHIBIT 10(o)
AGREEMENT FOR THE
ACQUISITION OF THE
SHARE CAPITAL OF THE
O.I.L. GROUP OF
COMPANIES
between
Ocean Group plc
as Vendor
Tidewater Inc.
as Purchaser
<PAGE> 2
CONTENTS
<TABLE>
<S> <C>
1. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Sale of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3. Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6. Pre-Completion Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7. Restriction of Vendor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
8. Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
9. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10. Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
11. Provisions Relating to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
13. Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
14. Environmental Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SCHEDULE 1 : COMPLETION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SCHEDULE 2 : COMPLETION CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SCHEDULE 3 : THE SALE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SCHEDULE 4 : THE SALE GROUP . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SCHEDULE 5 : WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SCHEDULE 6 : PARTICULARS OF PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SCHEDULE 7 : EMPLOYEE LETTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
SCHEDULE 8 : TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SCHEDULE 9 : NET ASSETS ADJUSTMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
SCHEDULE 10: PENSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
SCHEDULE 11: VENDOR'S PROTECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
SCHEDULE 12: THE VESSELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
</TABLE>
<PAGE> 4
THIS AGREEMENT is made on March 1997
BETWEEN
(1) OCEAN GROUP plc, a company registered in England under number 73975
whose registered office is at Ocean House, The Ring, Bracknell,
Berkshire RG12 IAN (the "Vendor"); and
(2) TIDEWATER INC., a corporation organized under the laws of the State of
Delaware, U.S.A. whose principal office is at Tidewater Place, 1440
Canal Street, Suite 2100, New Orleans, LA 70112, U.S.A. (the
"Purchaser").
WHEREAS:
(A) The Vendor owns, directly or indirectly, such percentage of the entire
share capital of each of the companies listed in column (1) of Schedule
3 (the "Sale Group") as is specified in column (4) of such Schedule.
(B) The Purchaser wishes to acquire the entirety of the direct or indirect
ownership interest of the Vendor in the members of the Sale Group
through the acquisition of the Sale Shares from the Vendor on the
terms of this Agreement.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Agreement where the context admits:
"Affiliate" means, in respect of any company, a company which is its
subsidiary or holding company, or a company which is a subsidiary of
that holding company;
"Business Day" means a day, other than a Saturday or Sunday, on which
banks are open for ordinary banking business in London;
"Competing Acquisition Proposal" means any offer or proposed offer by
any person to acquire all or any material part of the Sale Group or the
assets thereof;
"Completion" means completion of the sale and purchase of the Sale
Shares;
"Completion Conditions" bears the meaning given thereto in clause 4.1;
<PAGE> 5
"Completion Date" means such date as the parties may agree or as one
party may specify to the other on not less than 3 days' notice
following satisfaction or (if capable of waiver) waiver of the
Completion Conditions set out in sub-clauses (A)(1), (A)(2) and (B) of
Schedule 2, but, in any event, not later than 30th May 1997;
"Confidentiality Agreement" means the Confidentiality Agreement dated
January 10, 1997 made by and between the Vendor and the Purchaser a
copy of which is attached to the Disclosure Letter;
"Directors" means the persons named as such in Schedule 4 and "the
Continuing Directors" means the persons (if any) named as such in such
Schedule;
"Disclosure Letter" means the letter having the same date as this
Agreement delivered by the Vendor to the Purchaser;
"Encumbrance" includes any interest or equity of any person (including
any right to acquire, option or right of pre-emption) or any mortgage,
charge, pledge, lien other than liens arising by operation of law and
securing indebtedness not more than seven days overdue, assignment,
hypothecation or other priority interest, deferred purchase, title
retention, trust, leasing, sale-and-repurchase or sale-and-leaseback
arrangement, right of set off or any other agreement or arrangement
whatsoever having the same commercial or economic effect as security
(including any hold back or "flawed asset" arrangement) over or in any
property, assets or rights of whatsoever nature and includes any
agreement for any of the foregoing;
"Indebtedness" means the entire net indebtedness (expressed in pounds
sterling after translation (if necessary) at the appropriate exchange
rate then prevailing) owed or outstanding as at the Completion Date by
or to members of the Sale Group on the one hand to or by members of the
Vendor's Group on the other;
"Indebtedness Certificate" means a certificate from the Vendor signed
by its Finance Director certifying the amount of the Indebtedness;
"LIBOR" means in relation to a sum of money the interest rate at which
deposits in the currency of that sum (or nearest equivalent amount) and
for the period during which it is outstanding (or nearest equivalent
period) are offered by Barclays Bank Plc to leading banks in the London
Inter-bank market as from 11.00 am (London time) on the first Business
Day during which it is outstanding;
"London Stock Exchange" means London Stock Exchange Limited;
"New York Stock Exchange" means the New York Stock Exchange, Inc.;
"Properties" means the properties particulars of which are set out in
Schedule 6;
2
<PAGE> 6
"Restricted Business" has the meaning given in clause 7.1;
"Sale Group" means the companies listed in Schedule 4;
"Sale Shares" means the shares to be bought and sold pursuant to this
Agreement, being all the shares set forth in column (3) of Schedule 3;
"Taxes Act 1988" means Income and Corporation Taxes Act 1988;
"Value Added Tax" and "VAT" mean value added tax as provided for in the
Value Added Tax Act 1994 and legislation supplemental thereto or
replacing, modifying or consolidating it;
"Vendor's Group" means the Vendor and each of its Affiliates,
subsidiary undertakings and any other body corporate in which any such
company owns at least 20% in nominal value of the issued equity share
capital other than the Sale Group;
"Vessels" means the vessels described in Schedule 12; and
"Warranties" means the warranties set out in Schedule 5, in paragraph 4
of Schedule 8, in paragraph 5 of Schedule 10 and, for the purposes of
Schedule 11, shall include the provisions of clause 4.5 of this
Agreement.
1.2 CONSTRUCTION
In this Agreement, except where the context otherwise requires:-
(A) words and phrases the definitions of which are contained or
referred to in Part XXVI Companies Act 1985 shall be
construed as having the meanings so attributed to them;
(B) references to statutory provisions shall be construed as
references to those provisions as amended or re-enacted or
as their application is modified by other provisions from
time to time and shall include references to any provisions
of which they are re-enactments (whether with or without
modification);
(C) where any statement is qualified by the expression "so far
as the Vendor is aware" or "to the best of the Vendor's
knowledge and belief" or any similar expression, that
statement shall be deemed to include an additional statement
that such statement has been made after due and careful
enquiry;
3
<PAGE> 7
(D) references to clause(s) and schedule(s) are references to
clause(s) and schedule(s) of and to this Agreement,
references to sub-clause(s) or paragraph(s) are, unless
otherwise stated, references to sub-clause(s) of the clause
or paragraph(s) of the schedule in which the reference
appears;
(E) the words "include" and "including" are to be construed
without limitation;
(F) references to a "person" include any individual, company,
body corporate, corporation sole or aggregate, government,
state or agency of a state, firm, partnership, joint
venture, association, organisation or trust (in each case,
whether or not having separate legal personality and
irrespective of the jurisdiction in or under the law of
which it was incorporated or exists) and a reference to any
of them shall include a reference to the others;
(G) any reference to writing shall include typewriting,
printing, lithography, photography and other modes of
representing words in a legible form other than writing on
an electronic display screen or similar device; and
(H) references to any document being "in agreed terms" or "in an
agreed form" are to that document in the form signed on
behalf of the parties for identification.
1.3 HEADINGS
The headings and sub-headings, and any contents pages, are inserted for
convenience only and shall not affect the construction of this
Agreement.
1.4 SCHEDULES
Each of the schedules shall have effect as if set out in this
Agreement.
2. SALE OF SHARES
2.1 SALE AND PURCHASE
Subject to the terms and conditions of this Agreement, on the
Completion Date the Vendor with full title guarantee shall sell or
procure the sale of and the Purchaser shall purchase, free from all
Encumbrances and together with all rights now or hereafter attaching
thereto, the Sale Shares.
2.2 SIMULTANEOUS COMPLETION
Neither the Vendor nor the Purchaser shall be obliged to complete the
sale and purchase of the Sale Shares unless the sale and purchase of
all of the Sales Shares is completed simultaneously.
4
<PAGE> 8
3. CONSIDERATION
3.1 AMOUNT
The total consideration for the Sale Shares (which shall be allocated
as shown in column (5) of Schedule 3) shall, subject to adjustment as
otherwise provided for in this Agreement, be the payment by the
Purchaser of a sum equal to (A) L.328,000,000 (three hundred and
twenty-eight million pounds sterling) less the amount of the
Indebtedness plus or minus (B) the amount of the Net Assets as provided
in Schedule 9.
3.2 METHOD
The sum specified in clause 3.1 shall be payable in sterling in cash in
accordance with the provisions of paragraph 1.2 of Schedule 1.
3.3 PAYMENT OF INDEBTEDNESS
At Completion, the Purchaser shall repay the Indebtedness on behalf of
the Sale Group in accordance with the provisions of paragraph 1(2) of
Schedule 1.
3.4 ESTIMATED COMPLETION DATE PAYMENT
At Completion, the Purchaser shall pay to the Vendor the amount in
respect of the Estimated Completion Date Payment as provided in
paragraph 2 of Schedule 9.
4. CONDITIONS
4.1 CONDITIONS
Subject to the following provisions of this clause, Completion is
conditional upon the satisfaction or (if capable of waiver) waiver of
those conditions listed in Schedule 2 (the "Completion Conditions").
4.2 SATISFACTION
(A) Each of the parties will cooperate with the other and use
its reasonable efforts to (i) procure all necessary consents
and approvals, (ii) complete and file all necessary
applications and certificates, (iii) satisfy all
requirements prescribed by law for completion of the sale of
the Sale Shares and all Completion Conditions and (iv)
effect the transactions contemplated by this Agreement at
the earliest practicable date.
5
<PAGE> 9
(B) In addition and without limiting sub-clause (A), the
Purchaser agrees, immediately following exchange and public
announcement of this Agreement, to commence and diligently
pursue such physical inspection and other due diligence of
the Vessels as it deems necessary or prudent to satisfy
itself that the Completion Condition set out in paragraph
(B) of Schedule 2 can be met. The Vendor shall cooperate in
all reasonable respects by procuring that any relevant
member of the Sale Group shall (i) provide details of the
location of the Vessels; (ii) permit access to the Vessels
to the representatives of the Purchaser upon prior
appointment and permit such representatives to ascertain the
general physical and operating condition of the Vessels;
(iii) at or prior to such inspection provide to the
Purchaser's representatives details of the classification of
each Vessel and any material recommendations and notations
to such classification; and (iv) generally provide such
further information as the Purchaser's representatives may
reasonably require to assist the Purchaser in considering
whether or not the Completion Condition set out in paragraph
(B) of Schedule 2 has been met.
The Purchaser acknowledges and agrees that (i) the foregoing
obligation of the Vendor shall not require the Vendor to
undertake such actions in a manner that would interfere
materially with the normal conduct of its vessel operations;
(ii) it shall be liable for, and shall indemnify and hold
harmless the Vendor and each member of the Sale Group from
and against all costs, claims, demands, expenses or
liabilities whatsoever arising, directly or indirectly, out
of any injury or damage to any person and any damage to or
loss of any property of any person whatsoever in connection
with its inspection of the Vessels; and (iii) inspection of
any particular Vessel shall be subject to the Vendor or the
relevant member of the Sale Group having obtained the prior
consent of the charterer of such Vessel to such inspection
(and the Vendor agrees to use and to procure that each
relevant member of the Sale Group uses, all reasonable
endeavours, (excluding the expenditure of money) to obtain
such consent).
(C) In addition and without limiting sub-clause (A), the Vendor
undertakes to and agrees with the Purchaser that the
directors of the Vendor will (i) convene an extraordinary
general meeting of the shareholders of the Vendor (the
"Extraordinary General Meeting") to be held on or prior to
21st April 1997 for purposes of considering and, if thought
fit, passing the resolution referred to in paragraph (A)(1)
of Schedule 2 (the "Resolution") (ii) procure the posting of
a circular to shareholders as soon as reasonably practicable
after, but, in any event, within 14 days of the date of
execution of this Agreement containing, subject to their
fiduciary duties as directors, a recommendation from the
Board of the Vendor that its shareholders vote at the
Extraordinary General Meeting in favour of the Resolution
and, in any event, a statement that each of the members of
the Board intends to vote his shares in favour of the
Resolution; and (iii) subject, in each case,
6
<PAGE> 10
to their fiduciary duties as directors, not make any other
or further resolution or recommendation inconsistent with
such recommendation and not withdraw such favourable
recommendation to the shareholders prior to the
Extraordinary General Meeting.
(D) If a Competing Acquisition Proposal is publicly announced
prior to the earlier of Completion and the termination of
this Agreement and either, (i) the directors of the Vendor
withdraw their favourable recommendation to the shareholders
or make any other or further resolution or recommendation
inconsistent with such favourable recommendation or (ii) the
shareholders of the Vendor fail to approve the sale of the
Sale Shares at the Extraordinary General Meeting then the
Vendor shall pay to the Purchaser in complete satisfaction
of the obligations of the Vendor under this Agreement and to
the exclusion of any other remedy or right which the
Purchaser may otherwise have hereunder but without prejudice
to the provisions of Clause 12.2, a termination fee of US$15
million in cash within 7 Business Days after the date (on or
prior to 31 March 1998) that the Vendor completes the sale
whether pursuant to the Competing Acquisition Proposal or
otherwise, all or any material part of the Sale Group or the
assets thereof.
(E) The Purchaser shall, no later than 8.30 pm (London time) on
10th April, 1997 either:
(1) confirm in writing to the Vendor that the
Completion Condition in paragraph (B) of Schedule
2 has been satisfied (or, as the case may be,
waived) (whereupon the said Completion Condition
shall be satisfied), falling which,
(2) deliver to the Vendor a written summary of the
reasons why the Purchaser believes that the
Completion Condition in paragraph (B) of Schedule
2 has not been satisfied, including, to the
extent reasonably practicable, information with
respect to the expenditures with respect to the
Vessels that the Purchaser has concluded would be
necessary for such Vessels to be in Satisfactory
Condition (as defined in that paragraph), it
being understood that any such information
provided by the Purchaser to the Vendor pursuant
to this sub-clause shall not preclude the
Purchaser from asserting the need for other
expenditures or asserting that other bases exist
for claiming that such Completion Condition has
not been satisfied in the event of a dispute
between the parties.
7
<PAGE> 11
4.3 WAIVER
The Purchaser may waive in whole or in part all or any of the
Completion Conditions (other than the condition set out in paragraph
(A)(1) of Schedule 2).
4.4 DISCLOSURE
Each of the parties shall disclose in writing to the other anything
which will or may prevent any of the Completion Conditions from being
satisfied by 30th May 1997 immediately after it comes to its notice.
4.5 CERTIFICATE
(A) The Vendor shall deliver a certificate, signed by its
Finance Director, in agreed terms (the "Completion
Certificate") to the Purchaser at Completion confirming that
the Condition set out in paragraph (A)(1) of Schedule 2 has
been satisfied (if this is the case) and confirming that,
save to the extent disclosed pursuant to clause 8.3, to the
best of the knowledge and belief of the Vendor, none of the
Warranties or covenants contained in clause 6.2 has been
broken or breached to any material extent (save as already
disclosed in the Disclosure Letter) and accepts that if
Completion occurs the Purchaser will have completed the
purchase of the Sale Shares in reliance, amongst other
things, on such certificate.
(B) If, following Completion, the Purchaser becomes aware that
the condition in paragraph (A)(1) of Schedule 2 was not
satisfied at Completion or that the Completion Certificate
was, when given, inaccurate, the Purchaser shall be entitled
to claim against the Vendor on the basis of the Completion
Certificate so given.
4.6 TERMINATION
If:
(A) the Completion Condition set out at paragraph (B) of
Schedule 2 is not satisfied or waived within 21 days of the
date hereof; or
(B) any fact which would prevent any of the Completion
Conditions set out in paragraph (A) of Schedule 2 from being
satisfied on or prior to 30th May 1997 comes to the
knowledge of either of the parties,
then (unless in the case of paragraph (B) above the relevant Completion
Condition is waived (where capable of waiver)) this Agreement shall
terminate forthwith without prejudice to the accrued rights of either
party at the time of termination and, with respect to a termination
pursuant to paragraph (B) above in relation to
8
<PAGE> 12
the Completion Condition set out at paragraph (A)(1) of Schedule 2
without prejudice to the provisions of clause 4.2(D).
5. COMPLETION
5.1 COMPLETION LOCATION
Completion shall take place on the Completion Date at the offices of
Simmons & Simmons 21 Wilson Street, London EC2M 2TX prior to 2.30 pm,
London time.
5.2 VENDOR'S OBLIGATIONS
On Completion the Vendor shall do or procure the doing of those things
set out in paragraph 1.1 of Schedule 1.
5.3 PURCHASER'S OBLIGATIONS
On Completion the Purchaser shall do or procure the doing of those
things set out in paragraph 1.2 of Schedule 1.
5.4 FAILURE TO COMPLETE
If the obligations of the Vendor under Schedule 1 are not complied with
in any material respect on the Completion Date, the Purchaser may:-
(A) defer Completion to a date not later than the later of (i)
30th May 1997 or (ii) 28 days after the Completion Date (in
either event so that the provisions of this sub-clause 5.4,
apart from this item (A), shall apply to Completion as so
deferred); or
(B) proceed to Completion so far as practicable (without
prejudice to its rights under this Agreement); or
(C) terminate this Agreement.
6. PRE-COMPLETION OBLIGATIONS
6.1 PURCHASER'S RIGHT OF ACCESS
After the date of satisfaction (or waiver) of the Completion Condition
set out at paragraph (B) of Schedule 2, the Purchaser and any persons
authorised by it, upon reasonable notice and subject to the terms of
the Confidentiality Agreement, shall be allowed all reasonable access
to all the premises books and records of each member of the Sale Group,
and the Vendor shall supply or procure the supply of any information
reasonably required by the Purchaser relating to the members of the
Sale Group and their respective affairs.
9
<PAGE> 13
6.2 LIAISON ON CONDUCT OF BUSINESS
The Vendor covenants that, from the date of this Agreement until
Completion, the business of the Sale Group will be carried on in the
usual and normal course and that no member of the Sale Group shall
enter into any contract or commitment or do anything which, in any such
case, is either out of the ordinary and usual course of its business or
of a material nature without the prior consent in writing of the
Purchaser. In particular, but without limiting the foregoing, the
Vendor covenants that from the date of this Agreement until Completion,
each member of the Sale Group shall preserve the possession and control
of all of its assets other than those permitted to be disposed of
pursuant to the terms of this Agreement, shall conduct its business
only in the ordinary course consistent with past practice and, except
as otherwise provided herein or with the prior consent in writing of
the Purchaser,
(A) shall procure that items 2.7(A)(1) to (26) of Schedule 5
(other than items 2.7(A)(7) and (14)) shall be complied with
at all times from the date hereof to Completion; or
(B) shall not enter into any new vessel charters including
charterer's options to extend (i) on other than arms' length
terms, or (ii) for less than full and proper consideration,
or (iii) for a term in excess of six months, or (iv) having
change of control or other comparable provisions that would
cause such contracts to terminate on, or cause by its terms
the rights or obligations of the parties thereto to be
materially affected by, the sale of the Sale Shares to the
Purchaser upon the terms of this Agreement; or
(C) shall not dispose of or enter into any agreement to dispose
of (whether by one transaction or by a series of
transactions) any Vessel, or, except for dispositions made
in the ordinary course of business and consistent with past
practices, sell, dispose of, lease, license, mortgage,
encumber or subject to any Encumbrance any of its other
properties or assets; or
(D) shall not make or agree to make any capital expenditure
other than those made in the ordinary course of business and
consistent with past practices out of available cash
(excluding the proceeds of borrowings) (it being understood
that any capital expenditures made or agreed to be made with
respect to the acquisition of a vessel shall be deemed
outside of the ordinary course of business); or
(E) save as referred to in the Disclosure Letter, shall not
declare, make or pay any dividends or distributions (whether
of capital or profits); or
(F) shall not authorise or agree to commit to do any of the
actions prohibited by sub-paragraphs (B), (C) or (D) or (E).
10
<PAGE> 14
6.3 EMPLOYEES
The Vendor shall use all reasonable endeavours to provide to the
Purchaser within 10 Business Days after the execution of this
Agreement, a list of all employees and consultants of the Sale Group
(other than vessel crews).
7. RESTRICTION OF VENDOR
7.1 RESTRICTED BUSINESS
In this clause, "Restricted Business" means the provision of platform
supply vessels and anchor-handling tug supply vessels to the offshore
oil and gas industries.
7.2 COVENANTS
The Vendor undertakes with the Purchaser that it will not and that none
of its Affiliates will:
(A) for the period of 3 years after Completion, either on its
own account or in conjunction with or on behalf of any
person, carry on, or be engaged, concerned or interested
(directly or indirectly) in carrying on anywhere in the
world, a Restricted Business (other than as a holder of less
than 3 per cent. of any class of shares or debentures listed
on the London Stock Exchange, the New York Stock Exchange or
any other stock exchange);
(B) for the period of 2 years after Completion, either on its
own account or in conjunction with or on behalf of any other
person, solicit or entice away from any member of the Sale
Group any person who on or after 1st January, 1997 is or was
an officer, manager, employee, servant or customer of such
member (save for any such person who answers a public
advertisement or who is approached by or who approaches the
Vendor or any of its Affiliates, at a time when he is no
longer an employee of any such member or of the Purchaser)
whether or not such person would commit a breach of contract
by reason of leaving service or transferring business; and
(C) directly or indirectly use or attempt to use in the course
of any business, at any time after Completion, on its own
account or in conjunction with or on behalf of any person,
any trade or service mark or logo used in the business of
any member of the Sale Group (including, but not limited to
OSA and/or OIL names or marks) or any other name, logo,
trade or service mark which is or might be confusingly
similar thereto.
11
<PAGE> 15
7.3 REASONABLENESS
The restrictions contained in sub-clause 7.2, as qualified by the
exceptions contained in this clause 7, are considered reasonable by the
parties, but if any such restriction shall be found to be void or
voidable but would be valid and effective if some part or parts of the
restriction were deleted, or the period or area of application reduced,
such restriction shall apply with such modification as may be necessary
to make it valid and effective.
7.4 REGISTRATION
Any provision of this Agreement, or of any agreement or arrangement of
which it forms a part, by virtue of which such agreement or arrangement
is subject to registration under the Restrictive Trade Practices Act
1976 shall only take effect the day after particulars of such agreement
or arrangement have been duly furnished to the Director General of Fair
Trading pursuant to section 24 of that Act.
7.5 LIMITED EXCEPTIONS
(A) Nothing contained in sub-clause 7.2 shall prohibit the
Vendor or any Affiliate of the Vendor from making
acquisitions of other businesses an insignificant part of
which consists of activities that would but for this clause
7.5 constitute a breach by the Vendor, or any Affiliate of
the Vendor, of the restrictions contained in sub-clause 7.2,
provided that the Vendor or such Affiliate disposes of any
business or assets that would otherwise be in breach of
sub-clause 7.2 within one year of the date of acquisition.
For the purposes of the foregoing an "insignificant" part
means less than 20% by reference to the contribution to
total revenues of the business so acquired.
(B) Nothing contained in clause 7.2 shall prohibit O.I.L.
(Shetland) Limited from continuing to carry on its existing
business in the same scope and manner and to the same extent
as presently carried on.
(C) Nothing contained in sub-clause 7.2(C) shall prohibit O.I.L.
(Shetland) Limited using "O.I.L." as part of its name for a
period of twelve months from Completion.
(D) The Purchaser covenants that neither it nor any member of
the Sale Group shall following the expiry of twelve months
after Completion use the name or business name "Ocean" or
the logo used by the Vendor in its business or any other
name, logo, trade or service mark which is or might be
confusingly similar thereto.
12
<PAGE> 16
8. WARRANTIES
8.1 PURCHASER'S KNOWLEDGE
The Warranties are given subject to matters fairly disclosed in this
Agreement or in the Disclosure Letter, but no other information
relating to the Sale Group of which the Purchaser has knowledge (actual
or constructive) shall prejudice any claim made by the Purchaser under
the Warranties or operate to reduce any amount recoverable.
8.2 WARRANTIES TO BE INDEPENDENT
Each of the Warranties shall be separate and independent and, save as
expressly provided, shall not be limited by reference to any other
Warranty or anything in this Agreement.
8.3 FURTHER DISCLOSURE
Each of the parties shall prior to Completion forthwith disclose in
writing to the other any act, action, event or occurrence which may
arise or become known to it after the date of this Agreement and before
Completion which constitutes a material breach of the Warranties or
which would constitute a breach with respect to the Warranties if they
were to be repeated as at Completion.
8.4 RIGHT OF TERMINATION
In the event of:-
(A) it becoming apparent on or before Completion that the Vendor
is in breach of any of the Warranties to an extent which
constitutes, individually or collectively, a Material
Breach; or
(B) any act, action, event or occurrence arising after the date
of this Agreement and before Completion which would if the
Warranties were to be repeated as at Completion, constitute
a Material Breach of the Warranties; or
(C) the failure by the Vendor to perform and comply in all
material respects with all agreements and covenants required
to be performed or complied with by it prior to or on the
Completion Date, including without limitation, the
provisions regarding Liaison of Business in clause 6.2;
then, in any such event, the Purchaser may terminate this Agreement by
notice in writing to the Vendor, such termination discharging in full
all obligations of each party to the other and so that this Agreement
shall cease to be of any force or effect but without prejudice to the
provisions of clause 12.2 and (in relation to sub-paragraph 8.4(A)
only) of clause 4.2(D).
13
<PAGE> 17
For the purposes of this sub-clause 8.4 (A) and (B) only, a Material
Breach shall be deemed to have occurred with respect to the Warranties
if there transpires any act, action, event or occurrence that
constitutes or that would, if such Warranties were to be given as at
Completion, have constituted a breach of such Warranties and that
results, or would reasonably be likely to result, individually or in
the aggregate, in a quantifiable loss of L.20 million or more.
For the purposes of sub-clause 8.4(C) only, a failure to perform and
comply with covenants and obligations in all material respects shall be
deemed to occur if that results, or would reasonably be likely to
result, individually or in aggregate, in a quantifiable loss of L.10
million or more.
9. CONFIDENTIALITY
The confidentiality obligations of the parties shall continue to be
governed by the Confidentiality Agreement.
10. ANNOUNCEMENTS
10.1 RESTRICTION
Between the date hereof and the Completion Date, and subject to
sub-clause 10.2, neither the Vendor nor the Purchaser shall make any
announcement concerning the sale of the Sale Shares without the prior
written approval of the other, such approval not to be unreasonably
withheld or delayed.
10.2 PERMITTED ANNOUNCEMENTS
Either the Vendor or the Purchaser may make an announcement concerning
the sale of the Sale Shares if the announcement is required by law or
by any securities exchange or regulatory or governmental body having
jurisdiction over it, wherever situated, including but not limited to
the United States Securities and Exchange Commission, the New York
Stock Exchange, the London Stock Exchange, and The Panel on Take-overs
and Mergers, and whether or not the requirement has the force of law
provided that any such announcement shall be made only after
consultation with the other party to the extent that the same is
practicable.
11. PROVISIONS RELATING TO THIS AGREEMENT
11.1 ASSIGNMENT
(A) This Agreement and the benefits and obligations under it and
any part of it (including the Warranties) shall not be
assignable except that the Purchaser may, upon giving
written notice to the Vendor, assign the benefit (but not
the burden) of this Agreement to an Affiliate of the
Purchaser provided that any such assignee remains an
Affiliate of the
14
<PAGE> 18
Purchaser and provided further that before such assignee
ceases to be an Affiliate of the Purchaser, the Purchaser
will procure that the benefit of this Agreement is assigned
to the Purchaser or (upon giving further written notice to
the Vendor) to another company which is an Affiliate of the
Purchaser (any such further assignment to be subject to the
same conditions as above).
(B) The Purchaser may, on one occasion only, also assign all or
any part of its rights and benefits under this Agreement,
including the Warranties and any cause of action arising
from any of them, to a transferee of the entire share
capital of OIL Engineering Limited or of all or
substantially all of the assets and undertaking of OIL
Engineering Limited Provided that
(1) without prejudice to the provisions of Schedule
11, the amount of the liability of the Vendor to
any such transferee to whom any such assignment
is made shall not, in respect of any breach of
the Warranties or any cause of action arising,
exceed the lesser of:
(a) the amount of the loss of such
transferee for which the Vendor would
otherwise be liable hereunder in
respect of the relevant breach of
Warranty giving rise to such cause of
action, and
(b) the amount of the loss of the
Purchaser for which the Vendor would
have been liable hereunder in respect
of the relevant breach of Warranty
giving rise to such cause of action;
and
(2) the Vendor shall have no liability whatsoever to
such transferee (if it otherwise would have)
unless such transferee fully observes the
obligations expressed to be undertaken by the
Purchaser pursuant to Schedule 11 of this
Agreement.
11.2 ENTIRE AGREEMENT
(A) This Agreement, together with any documents, schedules or
exhibits referred to in it (including, inter alia, the
Confidentiality Agreement), constitutes the whole agreement
between the parties relating to its subject matter and
supersedes and extinguishes any prior drafts, agreements,
undertakings, representations, warranties and arrangements
of any nature, whether in writing or oral, relating to such
subject matter.
(B) The Purchaser acknowledges that it has not been induced to
enter into this Agreement by any representation or warranty
other than those contained in this Agreement (as qualified
by the Disclosure Letter) and, having negotiated and freely
entered into this Agreement, agrees that it shall have
15
<PAGE> 19
no remedy in respect of any other such representation or
warranty except in the case of fraud. The Purchaser
acknowledges that its legal advisers have explained to it
the effect of this sub-clause.
(C) No variation of this Agreement shall be effective unless
made in writing and signed by each of the parties.
11.3 AGREEMENT SURVIVES COMPLETION
The covenants, conditions, provisions and Warranties contained in this
Agreement will not merge or terminate upon Completion, but to the
extent that they have not been fulfilled and satisfied or are capable
of having effect will remain in full force and effect.
11.4 RIGHTS ETC CUMULATIVE AND OTHER MATTERS
(A) The rights, powers, privileges and remedies provided in this
Agreement are cumulative and are not exclusive of any
rights, powers, privileges or remedies provided by law or
otherwise.
(B) No failure to exercise nor any delay in exercising any
right, power, privilege or remedy under this Agreement shall
impair or operate as a waiver thereof.
(C) No single or partial exercise of any right, power, privilege
or remedy under this Agreement shall prevent any further or
other exercise thereof or the exercise of any other right,
power, privilege or remedy.
11.5 FURTHER ASSURANCE
At any time after Completion, the Vendor shall, at the request and cost
of the Purchaser, execute or procure the execution of such documents
and do or procure the doing of such acts and things as the Purchaser
may reasonably require for the purpose of vesting the Sale Shares in
the Purchaser or its nominees and giving to the Purchaser the full
benefit of all the provisions of this Agreement.
11.6 INVALIDITY
If any provision of this Agreement shall be held to be illegal, void,
invalid or unenforceable under the laws of any jurisdiction, the
legality, validity and enforceability of the remainder of this
Agreement in that jurisdiction shall not be affected, and the legality,
validity and enforceability of the whole of this Agreement shall not be
affected in any other jurisdiction.
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<PAGE> 20
11.7 COUNTERPARTS
This Agreement may be executed in any number of counterparts, which
shall together constitute one Agreement. Any party may enter into this
Agreement by signing any such counterpart.
11.8 NOTICES
(A) Any notice (which term shall include any other
communication) required to be given under this Agreement or
in connection with the matters contemplated by it shall,
except where otherwise specifically provided, be in writing
in the English language.
(B) Any such notice shall be addressed as provided in sub-clause
11.8(C) and may be:-
(1) personally delivered, in which case it shall be
deemed to have been given upon delivery at the
relevant address; or
(2) if within the United Kingdom, sent by first class
pre-paid post, in which case it shall be deemed
to have been given two Business Days after the
date of posting; or
(3) if from or to any place outside the United
Kingdom, sent by pre-paid priority airmail, in
which case it shall be deemed to have been given
seven Business Days after the date of posting; or
(4) sent by facsimile, in which case it shall be
deemed to have been given when despatched,
subject to confirmation of uninterrupted
transmission by a transmission report, provided
that any notice despatched by facsimile after
17.00 hours on any day shall be deemed to have
been received at 08.00 on the next Business Day.
(C) The addresses and other details of the parties referred to
in sub-clause 11.8(B) are, subject to sub- clause 11.8(D):-
(1) Name: Ocean Group plc
For the attention of: Finance Director, Ocean
Group plc
Address: Ocean House, The Ring,
Bracknell, Berkshire
RG12 1AD
Facsimile number: 01344 744352
17
<PAGE> 21
(2) Name: Tidewater Inc.
For the attention of: William C. O'Malley
Address: Tidewater Place, 1440
Canal Street,
New Orleans, LA 70112
Facsimile number: 001 504 566 4580
With copies to
(a) Cliffe Laborde, Senior Vice President
and General Counsel, Tidewater Inc.,
at the same postal address, on
facsimile number 001 504 566 4559; and
(b) Curtis R. Hearn, Jones Walker,
Waechter, Poitevent, Carrere &
Denegre, Place St. Charles, 201 St.
Charles Avenue, New Orleans, Louisiana
70170-5100 USA, on facsimile number
001 504 582 8108.
(D) Any party to this Agreement may notify the other parties of
any change to the address or any of the other details
specified in sub-clause 11.8(C), provided that such
notification shall only be effective on the date specified
in such notice or five Business Days after the notice is
given, whichever is later.
12. COSTS
12.1 PAY OWN COSTS
Subject to sub-clause 12.2, each party shall pay its own costs of and
incidental to the negotiation, preparation, execution and carrying into
effect of this Agreement.
12.2 VENDOR PAYS
The Vendor shall on demand fully reimburse and indemnify the Purchaser
in respect of all expenses which the Purchaser has incurred(including
legal fees and expenses) in:-
(A) the negotiation, preparation, execution and carrying into
effect of this Agreement; and
(B) investigating the affairs of the Sale Group.
18
<PAGE> 22
with, in each case, any VAT chargeable if, by reason of a knowing and
intentional breach of any Warranty or covenant of this Agreement by the
Vendor, the Purchaser shall exercise the right conferred by clause 8.4
of this Agreement to terminate this Agreement.
13. LAW AND JURISDICTION
13.1 ENGLISH LAW
This Agreement shall be governed by, and construed in accordance with,
English law.
13.2 JURISDICTION
In relation to any legal action or proceedings to enforce this
Agreement or arising out of or in connection with this Agreement
("proceedings") each of the parties irrevocably submits to the
jurisdiction of the English courts and waives any objection to
proceedings in such courts on the grounds of venue or on the grounds
that the proceedings have been brought in an inconvenient forum.
13.3 PROCESS AGENT
The Purchaser appoints Simmlaw Services Limited of 21 Wilson Street
London EC2M 2TX as its process agent to receive on its behalf service
of process in any proceedings in England. Service upon the process
agent shall be good service upon the Purchaser whether or not it is
forwarded to and received by the Purchaser. If for any reason the
process agent ceases to be able to act as process agent, or no longer
has an address in England, the Purchaser irrevocably agrees to appoint
a substitute process agent with an address in England acceptable to the
Vendor and to deliver to the Vendor a copy of the substitute process
agent's acceptance of that appointment within 30 days.
14. ENVIRONMENTAL INDEMNITY
14.1 INDEMNITY
The Vendor hereby agrees with the Purchaser (for itself and as agent of
each member of the Sale Group) to indemnify and keep the Purchaser and
each member of the Sale Group fully and effectively indemnified from
and against any and all liabilities, losses, damages, claims, costs,
expenses, interest, awards, judgments and penalties (including, without
limitation, proper and reasonable lawyers' and consultants' fees and
expenses) (hereinafter a "Loss") actually suffered or incurred by the
Purchaser or any member of the Sale Group by reason of an Environmental
Claim relating to or arising or resulting from or which would not have
been made but for (i) any Release prior to the date hereof of Hazardous
Materials or Waste
19
<PAGE> 23
into the Environment on or about or from the Shetland Property or (ii)
any breach of Environmental Laws prior to the date hereof at or from
the Shetland Property.
14.2 INDEMNITY PERIOD
The Environmental Indemnity shall only apply in respect of
Environmental Claims made against the Purchaser or any member of the
Sale Group on or prior to the tenth anniversary of the date of this
Agreement.
14.3 NOTIFICATION
The Purchaser shall provide prompt written notice to the Vendor of any
matter of which the Purchaser shall become aware which gives rise to or
which the Purchaser has reason to believe may give rise to a Loss by
reason of an Environmental Claim and, as a result, a claim under the
Environmental Indemnity.
14.4 ENVIRONMENTAL PROCEEDINGS
(A) In relation to Environmental Proceedings in the form of
third party claims resulting from any matter to which the
indemnity in clause 14.1 is applicable, the Vendor (or such
other person as the Vendor shall determine) shall have the
right at any time to assume conduct of such Environmental
Proceedings Provided that such right is subject to the
Vendor agreeing at the time of such assumption that any Loss
which may be incurred by the Purchaser or any member of the
Sale Group shall (subject to the other provisions of this
clause 14) be recoverable under the indemnity contained in
sub-clause 14.1.
(B) If Environmental Proceedings arise under sub-clause 14.4(A)
above and the Vendor does not assume conduct of such
Environmental Proceedings as provided for in such
sub-clause, the Purchaser (or such other person as the
Purchaser shall determine) shall have conduct of such
Environmental Proceedings.
(C) In relation to Environmental Proceedings in the form of an
action brought by a regulatory authority resulting from any
matter to which sub-clause 14.1 applies, the Purchaser (or
such other person as the Purchaser shall determine) shall
have the right to assume conduct of such Environmental
Proceedings.
(D) The person having conduct of any Environmental Proceedings
as provided for above (the "Conduct Party") shall ensure
that:
(1) reasonably frequent and detailed reports shall be
provided to the other party regarding the
progress of such Environmental Proceedings;
20
<PAGE> 24
(2) save as may be prohibited by law, copies of all
correspondence and documents passing between the
parties to such Environmental Proceedings shall
be provided to the other party;
(3) all reasonable efforts are made in such
Environmental Proceedings to minimise losses;
(4) all reasonable instructions and requests of the
other party in relation to such Environmental
Proceedings are complied with;
(5) no settlement or admission (including any failure
to or decision not to appeal) shall be agreed or
made without the prior consent in writing of the
other party, provided that such consent is not to
be unreasonably withheld; and
(6) the other party shall provide or procure the
provision to the Conduct Party of all such
information and assistance as the Conduct Party
may reasonably request.
14.5 ENVIRONMENTAL LIMITATIONS
(A) CAP
The liability of the Vendor under the Environmental Indemnity
shall not in any event exceed in aggregate (i) the purchase
price payable hereunder for the Sale Shares as set out in
clause 3.1 (subject to adjustment as therein referred to)
plus the amount of the Indebtedness less (ii) all sums paid
by the Vendor under this Agreement by reason of any breach by
the Vendor of its obligations contained herein or of the
Warranties or under the indemnities in any of the schedules
hereto.
(B) ACTS AND OMISSIONS AFTER COMPLETION
(1) The Purchaser shall not be entitled to claim
under the Environmental Indemnity to the extent
that the relevant claim would not have arisen but
for, results from or is increased by a member of
the Sale Group or their respective officers,
directors, employees, partners, agents,
contractors, sub-contractors or consultants
disclosing after Completion information to any
relevant authority or any other person, except
where the disclosure is required by law.
(2) The Purchaser shall procure that with effect from
Completion each member of the Sale Group shall so
far as reasonable avoid, reduce and mitigate any
claim under the Environmental Indemnity provided
that this clause shall not entitle the Purchaser
21
<PAGE> 25
to claim for the cost of work carried out before
notification of a potential Environmental Claim
is made under sub-clause 14.3.
(C) FUTURE LAWS
The Purchaser shall only be entitled to claim under the
Environmental Indemnity the extent that the claim results
from Environmental Laws which are in force and directly
binding on the Purchaser or the relevant member of the Sale
Group as at Completion. The Purchaser and each member of
the Sale Group shall not be entitled to be paid under the
Environmental Indemnity to the extent that the claim would
not have arisen but for, results from or is increased by
Environmental Laws which come into force after the date of
Completion (except for the contaminated land provisions set
out at the date of Completion in section 57 of the
Environment Act 1995 and including the first set of
regulations and guidance which comes into force, but not
subsequent amendments to them) or changes in policy,
guidance or practice by the relevant authorities after the
date of Completion.
(D) LOSSES
The Purchaser shall not be entitled to claim under the
Environmental Indemnity in respect of loss of profits, loss
of sales, loss of production, business interruption, or any
other indirect or consequential loss or damage.
14.6 ENVIRONMENTAL DEFINITIONS
In this clause 14 the following expressions shall bear the following
respective meanings:
"Environment" means all or any of the media of air, water and land and
in relation to the media of air and water includes, without limitation,
the air and water within buildings and the air and water within other
natural or man-made structures above or below ground and any water
contained in any underground strata;
"Environmental Claims" means any and all actions, suits, demands,
demand letters, costs, claims, liens, notices of non-compliance or
violation, notices of liability or potential liability, investigations,
proceedings, consent orders or consent agreements relating in any way
to any Environmental Law, any Environmental Matter or Hazardous
Material or Waste arising from any alleged injury or threat of injury
to health, safety or to the Environment or damage or alleged damage to
property;
"Environmental Indemnity" means the indemnity contained at clause 14.1;
22
<PAGE> 26
"Environmental Laws" means any law now in effect relating to pollution
or protection of the Environment, health or safety or to the use,
handling, transportation, treatment, storage, disposal, release,
discharge of Hazardous Materials or Waste and, in respect of the United
Kingdom, section 57 and paragraph 162 of Schedule 22 to the Environment
Act 1995 shall, notwithstanding any provision in this Agreement to the
contrary, be deemed to be in force and applied on the date hereof;
"Environmental Matters" means:
(i) the Release of, contact with and exposure of any person to,
Hazardous Materials or Waste; and
(ii) any other matters relating to the condition, protection,
maintenance or restoration of the Environment or any part of
it arising out of the manufacturing, processing, treatment,
handling, storage, export or transportation of Hazardous
Materials or Waste;
"Environmental Proceedings" means criminal, civil, judicial, regulatory
or administrative proceeding suit or action brought or taken by a
relevant authority under Environmental Laws or some other person (not
being the Purchaser) to which the indemnified person is a party;
"Hazardous Materials" means (a) oil, petroleum and petroleum products,
bi-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, arsenic,
chromium, copper, mercury and (b) any other pollutant, contaminants,
chemicals, materials, articles or substances whether in soluble, liquid
or gaseous form which have resulted or may result in the pollution or
impairment of the Environment;
"Law" means any Governmental, supra-Governmental, federal, state, local
or foreign statute, law, and any court judgment, ordnance, regulation,
rule, code, order, code of practice, guidance (including the first
version which comes into force of any statutory guidance issued under
section 57 of the Environment Act 1995) or other requirement having the
force of law in any jurisdiction (including common law);
"Release" includes spillage, escape, leaching, release, discharge, leak
or emission or continuing migration howsoever caused;
"Shetland Property" means the property at Lerwick, Shetland Islands
previously owned or leased or occupied by O.I.L. Limited;
"Waste" includes any unwanted or surplus substance irrespective of
whether it is capable of being recycled or recovered or has any value.
23
<PAGE> 27
AS WITNESS the hands of the duly authorised representatives of the parties on
the date first before written.
SIGNED by )
duly authorised for and on behalf ) /s/ B.D. YOUNG
of OCEAN GROUP plc in the )
presence of: )
SIGNED by ) /s/ KEN C. TAMBLYN
duly authorised for and on behalf )
of TIDEWATER INC. in the ) /s/ CLIFFE F. LABORDE
presence of: )
24
<PAGE> 1
EXHIBIT 11
TIDEWATER INC.
EARNINGS PER SHARE COMPUTATION INFORMATION
YEARS ENDED MARCH 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
(in thousands, except share and per share data)
1997 1996 1995
--------------- ----------- ----------
<S> <C> <C> <C>
Net earnings $ 146,011 76,177 51,187
================ =========== ===========
Issued shares at March 31, 1997: 60,334,889
Weighted average common shares outstanding 61,606,144 61,675,360 61,586,175
Incremental shares applicable to stock options 674,137 485,618 272,719
--------------- ---------- ----------
Weighted average common shares and equivalents 62,280,281 62,160,978 61,858,894
=============== =========== ===========
Primary and fully-diluted net earnings per common share: $ 2.34 1.23 .83
=============== =========== ===========
</TABLE>
<PAGE> 1
EXHIBIT 21
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
PERCENTAGE
STATE OR OF VOTING
JURISDICTION OF SECURITIES
NAME INCORPORATION OWNED
---- --------------- ----------
<S> <C> <C>
Al Wasl Marine Limited . . . . . . . . . . . Dubai 49%
Antilles Marine Service Limited . . . . . . . Trinidad & Tobago 50%
Asie Zapata Marine Service Sdn. Bhd . . . . . Malaysia 49%
BESSA Cash Backed PLC . . . . . . . . . . . . United Kingdom 100%
BESSA Cash Backed II PLC . . . . . . . . . . United Kingdom 100%
BESSA Cash Backed III PLC . . . . . . . . . . United Kingdom 100%
Compania Maritima de Magallanes Limitada. . . Chile 100%
Equipo Mara, C.A. . . . . . . . . . . . . . . Venezuela 19.9%
Equipo Zulia, C.A. . . . . . . . . . . . . . Venezuela 100%
Gulf Fleet Abu Dhabi . . . . . . . . . . . . Abu Dhabi 49%
Gulf Fleet Middle East, Inc.. . . . . . . . . Panama 100%
Gulf Fleet NV . . . . . . . . . . . . . . . . Netherlands Antilles 100%
Gulf Fleet Supply Vessels, Inc. . . . . . . . Louisiana 100%
Hilliard Oil & Gas, Inc.. . . . . . . . . . . Nevada 100%
Hornbeck Shipping Limited . . . . . . . . . . Isle of Man 100%
Hornbeck Support Ships Limited. . . . . . . . Isle of Man 100%
Jackson Marine Corporation . . . . . . . . . Delaware 100%
Jackson Marine, S.A. . . . . . . . . . . . . Panama 100%
Jackson Marine Shipping Limited . . . . . . . United Kingdom 100%
Java Boat Corporation . . . . . . . . . . . . Louisiana 100%
Lamnalco Tidewater Marine Service Limited . . Vanuatu 50%
Marine Transportation Services
Sea-Barge Group, Inc. . . . . . . . . . . . Delaware 60%
Maritide Offshore Oil Services
Company S.A.E. . . . . . . . . . . . . . . Egypt 49%
Mashhor Marine Sdn. Bhd.. . . . . . . . . . . Brunei 70%
Matchmobile Limited . . . . . . . . . . . . . United Kingdom 100%
Mightmethod Limited . . . . . . . . . . . . . United Kingdom 100%
Neatern Limited . . . . . . . . . . . . . . . United Kingdom 100%
Nelson Navigation Limited . . . . . . . . . . Isle of Man 100%
Nuigini Energy Services (unincorporated). . . New Guinea 50%
Offshore Fleet International Incorporated . . Panama 100%
Offshore Marine Limited . . . . . . . . . . . United Kingdom 100%
Pacific Tidewater Pty. Ltd. . . . . . . . . . Australia 100%
Pan-Marine do Brasil Transportes Ltda . . . . Brazil 100%
Pan-Marine International, Inc.. . . . . . . . Cayman Islands 100%
Pental Insurance Co. Ltd. . . . . . . . . . . Bermuda 100%
Point Marine, Inc. . . . . . . . . . . . . . Louisiana 100%
Provident Marine Ltd. . . . . . . . . . . . . Turks & Caicos Is. 50%
</TABLE>
<PAGE> 2
<TABLE>
<CAPTION>
PERCENTAGE
STATE OR OF VOTING
JURISDICTION OF SECURITIES
NAME INCORPORATION OWNED
---- --------------- ----------
<S> <C> <C>
Quality Shipyards, Inc. . . . . . . . . . . . Louisiana 100%
Remolcadores y Gabarras Remigasa, S.A. . . . Venezuela 19.9%
Scott Navigation Limited . . . . . . . . . . Isle of Man 100%
Seaboard Coral Limited . . . . . . . . . . . Scotland 49.9%
Seaboard Holdings Limited . . . . . . . . . . Isle of Man 49.9%
Seaboard Offshore Group Limited . . . . . . . Scotland 49.9%
Seaboard Offshore Limited . . . . . . . . . . Scotland 49.9%
Seafarer Boat Corporation . . . . . . . . . . Louisiana 100%
Servicios de Abastecimientos Mexicanos,
S. de R.L. de C.V. . . . . . . . . . . . . Mexico 100%
Servicios Maritimos del Carmen, S.A. de C.V . Mexico 100%
Servicios Maritimos Ves, S. de R.L. de C.V. . Mexico 100%
Servicios y Representaciones Maritimas
Mexicanas, S.A. de C. V. . . . . . . . . . Mexico 100%
Shanghai Zapata Houlder Marine Service Peoples Republic
Corp. Ltd.. . . . . . . . . . . . . . . . . of China 50%
Sin-Hai Offshore Co. Pte. Ltd.. . . . . . . . Singapore 97.5%
Sonatide Marine, Ltd. . . . . . . . . . . . . Cayman Islands 49%
S.O.P., Inc.. . . . . . . . . . . . . . . . . Louisiana 100%
Southern Ocean Services Pte. Ltd. . . . . . . Singapore 100%
Sunset Personnel Services Limited . . . . . . Cyprus 49.9%
Sylcon Personnel Services Limited . . . . . . Cyprus 100%
T. Benetee Corporation. . . . . . . . . . . . Delaware 100%
The National Marine Services Company . . . . Abu Dhabi 40%
Tidewater Caribe, C.A. . . . . . . . . . . . Venezuela 100%
Tidewater Compression Service, Inc. . . . . . Texas 100%
Tidewater Crewing Limited . . . . . . . . . . Cayman Islands 100%
Tidewater Foreign Sales Corporation . . . . . Barbados 100%
Tidewater Marine Alaska, Inc. . . . . . . . . Alaska 100%
Tidewater Marine Atlantic, Inc. . . . . . . . Delaware 100%
Tidewater Marine, Inc.. . . . . . . . . . . . Louisiana 100%
Tidewater Marine International, Inc.. . . . . Panama 100%
Tidewater Marine International Pte. Ltd. . . Singapore 100%
Tidewater Marine (I.O.M.) Limited. . . . . . . . Isle of Man 100%
Tidewater Marine (Malaysia) Sdn. Bhd. . . . . Malaysia 100%
Tidewater Marine North Sea Limited . . . . . . . . United Kingdom 100%
Tidewater Marine Service, C.A. . . . . . . . Venezuela 100%
Tidewater Marine Service, Inc.. . . . . . . . Louisiana 100%
Tidewater Marine West Indies Limited. . . . . Bahama Islands 100%
Tidewater Marine Western, Inc. . . . . . . . Texas 100%
Tidewater North Sea Safety, Inc. . . . . . . Delaware 100%
Tidewater Offshore (GP-1984), Inc.. . . . . . Delaware 100%
Tidewater Offshore Limited. . . . . . . . . . Scotland 100%
Tidewater Offshore Services, Inc. . . . . . . Delaware 100%
Tidewater Port Jackson Marine Pty. Ltd. . . . Australia 50%
</TABLE>
-2-
<PAGE> 3
<TABLE>
<CAPTION>
PERCENTAGE
STATE OR OF VOTING
JURISDICTION OF SECURITIES
NAME INCORPORATION OWNED
---- --------------- ----------
<S> <C> <C>
Tidewater Services, Inc.. . . . . . . . . . . Louisiana 100%
Tidewater Venezuela, C.A. . . . . . . . . . . Venezuela 100%
Tidex (Malaysia) Sdn. Bhd . . . . . . . . . . Malaysia 100%
Tidex Nigeria Limited . . . . . . . . . . . . Nigeria 60%
Tidex/OTS Nigeria Limited (unincorporated). . Nigeria 50%
Torrens Ship Builders Pty. Ltd. . . . . . . . Australia 50%
TPJM Nominees Limited . . . . . . . . . . . . Vanuatu 50%
TT Boat Corporation . . . . . . . . . . . . . Louisiana 100%
Twenty Grand Marine Service, Inc. . . . . . . Louisiana 100%
Twenty Grand Offshore, Inc. . . . . . . . . . Louisiana 100%
Zapata Gulf Crews, Inc. . . . . . . . . . . . Panama 100%
Zapata Gulf Indonesia Limited . . . . . . . . Vanuatu 80%
Zapata Gulf Marine Corporation. . . . . . . . Delaware 100%
Zapata Gulf Marine International Limited. . . Vanuatu 100%
Zapata Gulf Marine Operators, Inc. . . . . . Delaware 100%
Zapata Gulf Pacific, Inc. . . . . . . . . . . Delaware 100%
Zapata Marine Service (Nigeria) Limited . . . Nigeria 100%
Zapata Offshore Marine Service Inc. . . . . . Liberia 50%
Zapata Services (U.K.) Limited . . . . . . . United Kingdom 100%
Zapata Servicos Maritimos Ltda. . . . . . . . Brazil 100%*
Zhong Chang Offshore Marine People's Republic
Service Co. Ltd. . . . . . . . . . . . . . of China 50%
</TABLE>
* Includes Zapata Gulf Marine Corporation's ownership of 15% of the capital
stock and Gulf Fleet Supply Vessels, Inc.'s ownership of 3% of the capital
stock.
-3-
<PAGE> 1
EXHIBIT 24
ACCOUNTANTS' CONSENT
The Board of Directors and Stockholders of Tidewater Inc.:
We consent to incorporation by reference in the Registration Statements 2-69356
and 33-38240 on Form S-8 of Tidewater Inc. of our report dated April 30, 1997
relating to the consolidated balance sheets of Tidewater Inc. and subsidiaries
as of March 31, 1997 and 1996 and the related consolidated statements of
earnings, stockholders' equity and cash flows and related schedule for each of
the years in the three-year period ended March 31, 1997, which report appears
in the March 31, 1997 annual report on Form 10-K of Tidewater Inc.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
April 30, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND THE CONSOLIDATED STATEMENTS OF EARNINGS AT THE
DATE AND FOR THE PERIOD INDICATED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS. ALL AMOUNTS ARE SHOWN IN THOUSANDS OF DOLLARS,
EXCEPT PER SHARE DATA.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 41,114
<SECURITIES> 0
<RECEIVABLES> 198,260
<ALLOWANCES> 10,648
<INVENTORY> 36,016
<CURRENT-ASSETS> 268,726
<PP&E> 1,627,971
<DEPRECIATION> 946,880
<TOTAL-ASSETS> 1,039,000
<CURRENT-LIABILITIES> 94,748
<BONDS> 0
0
0
<COMMON> 6,033
<OTHER-SE> 763,631
<TOTAL-LIABILITY-AND-EQUITY> 1,039,000
<SALES> 803,010
<TOTAL-REVENUES> 803,010
<CGS> 596,936
<TOTAL-COSTS> 596,936
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,800
<INTEREST-EXPENSE> 1,017
<INCOME-PRETAX> 216,534
<INCOME-TAX> 70,523
<INCOME-CONTINUING> 146,011
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 146,011
<EPS-PRIMARY> 2.34
<EPS-DILUTED> 2.34
</TABLE>
