-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MK9tUEWJbmt6ElRhdIpAo8ijIuJbybH6YksyoGrdHTvsviJ7fd0Q75HUKyQzKhNN f/TUkDyywiS8qg49YWSCpA== 0000906280-97-000024.txt : 19970310 0000906280-97-000024.hdr.sgml : 19970310 ACCESSION NUMBER: 0000906280-97-000024 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19970307 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GULF ISLAND FABRICATION INC CENTRAL INDEX KEY: 0001031623 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED STRUCTURAL METAL PRODUCTS [3440] IRS NUMBER: 721147390 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-21863 FILM NUMBER: 97552310 BUSINESS ADDRESS: STREET 1: GULF ISLAND FABRICATION INC STREET 2: P O BOX 310 CITY: HOUMA STATE: LA ZIP: 70361 BUSINESS PHONE: 5048722100 MAIL ADDRESS: STREET 1: P O BOX 310 CITY: HOUMA STATE: LA ZIP: 70361 S-1/A 1 As filed with the Securities and Exchange Commission on March 7, 1997. Registration No. 333-21863 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 GULF ISLAND FABRICATION, INC. (Exact name of registrant as specified in its charter) Louisiana 3441 72-1147390 (State or other (Primary Standard Industrial I.R.S. Employer jurisdiction of Classification Code Number) Identification No.) incorporation 583 Thompson Road Houma, Louisiana 70363 (504) 872-2100 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Kerry J. Chauvin President and Chief Executive Officer Gulf Island Fabrication, Inc. 583 Thompson Road Houma, Louisiana 70363 (504) 872-2100 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Carl C. Hanemann Thomas P. Mason Jones, Walker, Waechter, Poitevent, Andrews & Kurth L.L.P. Carrere & Denegre, L.L.P. 4200 Texas Commerce Tower 201 St. Charles Avenue 600 Travis, Suite 4200 New Orleans, Louisiana 70170 Houston, Texas 77002 (504) 582-8000 (713) 220-4200 __________________________ Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. __________________________ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. EXPLANATORY NOTE This Amendment No. 1 to the Registration Statement contains only Part II of the Registration Statement and is being filed solely to file certain exhibits that have not been previously filed. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 13. Other Expenses of Issuance and Distribution. Estimated expenses payable in connection with the proposed sale of Common Stock covered hereby are as follows: SEC registration fee $ 11,152 NASD filing fee 4,180 Printing expenses Legal fees and expenses Accounting fees and expenses Blue Sky fees and expenses (including counsel fees) Transfer agent fees and expenses Miscellaneous expenses _____________ Total expenses $ ============= Item 14. Indemnification of Directors and Officers. The Louisiana Business Corporation Law (the "LBCL"), Section 83, (i) gives Louisiana corporations broad powers to indemnify their present and former directors and officers and those of affiliated corporations against expenses incurred in the defense of any lawsuit to which they are made parties by reason of being or having been such directors or officers; (ii) subject to specific conditions and exclusions, gives a director or officer who successfully defends such an action the right to be so indemnified; and (iii) authorizes Louisiana corporations to buy directors' and officers' liability insurance. Such indemnification is not exclusive of any other rights to which those indemnified may be entitled under any by-law, agreement, authorization of shareholders or otherwise. The Company's By-laws make mandatory the indemnification of directors and officers permitted by the LBCL. The standard to be applied in evaluating any claim for indemnification (excluding claims for expenses incurred in connection with the successful defense of any proceeding or matter therein for which indemnification is mandatory without reference to any such standard) is whether the claimant acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Company. With respect to any criminal action or proceeding, the standard is that the claimant had no reasonable cause to believe the conduct was unlawful. No indemnification is permitted in respect of any claim, issue or matter as to which a director or officer shall have been adjudged by a court of competent jurisdiction to be liable for willful or intentional misconduct or to have obtained an improper personal benefit, unless, and only to the extent that the court shall determine upon application that, in view of all the circumstances of the case, he is fairly and reasonably entitled to indemnity for such expenses that the court shall deem proper. The Company maintains liability policies to indemnify its officers and directors against loss arising from claims by reason of their legal liability for acts as officers and directors, subject to limitations and conditions to be set forth in the policies. The Underwriters have also agreed to indemnify the directors and certain of the Company's officers against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"), or to contribute to payments that such directors and officers may be required to make in respect thereof. Each of the Company's directors and executive officers has entered into an indemnity agreement with the Company, pursuant to which the Company has agreed under certain circumstances to purchase and maintain directors' and officers' liability insurance. The agreements also provide that the Company will indemnify the directors and executive officers against any costs and expenses, judgments, settlements and fines incurred in connection with any claim involving a director or executive officer by reason of his position as director or officer that are in excess of the coverage provided by any such insurance, provided that the director or officer meets certain standards of conduct. A form of indemnity agreement containing such standards of conduct is included as an exhibit to this Registration Statement. Under the indemnity agreements, the Company is not required to purchase and maintain directors' and officers' liability insurance if it is not reasonably available or, in the reasonable judgment of the Board of Directors, there is insufficient benefit to the Company from the insurance. Item 15. Recent Sales of Unregistered Securities None. Item 16. Exhibits and Financial Statement Schedules (a) Exhibits 1.1 Form of Underwriting Agreement.** 2.1 Stock Purchase Agreement with respect to Dolphin Services, Inc. dated January 2, 1997.* 2.2 Stock Purchase Agreement with respect to Dolphin Steel Sales, Inc., dated January 2, 1997.* 2.3 Stock Purchase Agreement with respect to Dolphin Sales & Rentals, Inc.* 3.1 Amended and Restated Articles of Incorporation of the Company.*** 3.2 By-laws of the Company.*** 4.1 See Exhibits 3.1 and 3.2 for provisions of the Company's Amended and Restated Articles of Incorporation and By-laws defining the rights of holders of Common Stock. 4.2 Specimen Common Stock certificate.** 5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P.** 10.1 Form of Indemnity Agreement by and between the Company and each of its directors and executive officers.*** 10.2 Registration Rights Agreement between the Company and Alden J. Laborde.* 10.3 Registration Rights Agreement between the Company and Huey J. Wilson.* 10.4 Fifth Amended and Restated Revolving Credit and Term Loan Agreement among the Company and First National Bank of Commerce and Whitney National Bank, dated as of October 24, 1996 (the "Bank Credit Facility").* 10.5 First Amendment to the Company's Bank Credit Facility, dated as of January 2, 1997.* 10.6 The Company's Long-Term Incentive Plan.*** 10.7 Form of Stock Option Agreement under the Company's Long-Term Incentive Plan.** 21.1 Subsidiaries of the Company.*** 23.1 Consent of Price Waterhouse LLP.*** 23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P. (included in Exhibit 5.1).** 24.1 Power of Attorney (included in the Signature Page to the Registration Statement).*** 27.1 Financial Data Schedule.*** Schedule II * Filed herewith. ** To be filed by amendment. *** Previously filed. Item 17. Undertakings. The undersigned registrant hereby undertakes to provide to the Underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment No. 1 to the Registration Statement (Registration No. 333-21863) to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houma, State of Louisiana, on March 6, 1997. GULF ISLAND FABRICATION, INC. By: /s/ Kerry J. Chauvin ___________________________ Kerry J. Chauvin President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date _________ _____ _____ * Chairman of the Board March 6, 1997 ________________________ Alden J. Laborde /s/ Kerry J. Chauvin President, Chief Executive Officer March 6, 1997 ________________________ and Director (Principal Executive Kerry J. Chauvin Officer) * Vice President - Finance, Chief March 6, 1997 ________________________ Financial Officer, Secretary and Joseph P. Gallagher, III Treasurer (Principal Financial and Accounting Officer) * Director March 6, 1997 ________________________ Gregory J. Cotter * Director March 6, 1997 ________________________ Thomas E. Fairley * Director March 6, 1997 ________________________ Hugh J. Kelly * Director March 6, 1997 ________________________ John P. Laborde * Director March 6, 1997 ________________________ Huey J. Wilson By: /s/ Kerry J. Chauvin _____________________ Kerry J. Chauvin Attorney-in-Fact SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS For the Three Years Ended December 31, 1996
===================================================================================================== Column A Column B Column C Column D Column E _____________________________________________________________________________________________________ Additions Deductions ______________________ ____________ Balance at Charged to Charged Balance at Beginning Costs and to Order End of Description of Period Expenses Accounts (Write-Offs) Period _____________________________________________________________________________________________________ Year Ended December 31, 1994 Allowance for doubtful accounts $4,290 $ - $ - $ - $ 4,290 Year Ended December 31, 1995 Allowance for doubtful accounts 4,290 30 - - 4,320 Year Ended December 31, 1996 Allowance for doubtful accounts 4,320 - - - 4,320
EXHIBIT INDEX Sequentially Exhibit Numbered Number Description of Exhibits Page 1.1 Form of Underwriting Agreement.** 2.1 Stock Purchase Agreement with respect to Dolphin Services, Inc. dated January 2, 1997.* 2.2 Stock Purchase Agreement with respect to Dolphin Steel Sales, Inc., dated January 2, 1997.* 2.3 Stock Purchase Agreement with respect to Dolphin Sales & Rentals, Inc.* 3.1 Amended and Restated Articles of Incorporation of the Company.*** 3.2 By-laws of the Company.*** 4.1 See Exhibits 3.1 and 3.2 for provisions of the Company's Amended and Restated Articles of Incorporation and By-laws defining the rights of holders of Common Stock. 4.2 Specimen Common Stock certificate.** 5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.** 10.1 Form of Indemnity Agreement by and between the Company and each of its directors and executive officers.*** 10.2 Registration Rights Agreement between the Company and Alden J. Laborde.* 10.3 Registration Rights Agreement between the Company and Huey J. Wilson.* 10.4 Fifth Amended and Restated Revolving Credit and Term Loan Agreement among the Company and First National Bank of Commerce and Whitney National Bank, dated as of October 24, 1996 (the "Bank Credit Facility").* 10.5 First Amendment to the Company's Bank Credit Facility, dated as of January 2, 1997.* 10.6 The Company's Long-Term Incentive Plan.*** 10.7 Form of Stock Option Agreement under the Company's Long-Term Incentive Plan.** 21.1 Subsidiaries of the Company*** 23.1 Consent of Price Waterhouse LLP*** 23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P. (included in Exhibit 5.1).** 24.1 Power of Attorney (included in the Signature Page to the Registration Statement).*** 27.1 Financial Data Schedule.*** ______________________ * Filed herewith. ** To be filed by amendment. *** Previously filed. EX-2 2 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT is made and entered into as of November 27, 1996 by, between and among Gulf Island Fabrication, Inc., a Louisiana corporation (hereinafter referred to as "Purchaser"), and E. M. Dupaquier, R. H. Marmande, Edward Cunningham, Jules Ledet, Jimmy Benoit, Kenny Bollinger, Willis Bonvillain, E. Hensley, Hugh Watson, Tina Piazza, Hays Adams, Curtis Ledet, Mark Foret, Davy Martin, Shelly Hebert, Wayne Verdun and David Weber, the holders of all of the outstanding shares of capital stock (the "Sellers") of Dolphin Services, Inc. (the "Corporation" or the "Company"). E. M Dupaquier and R. H. Marmande are also referred to herein variously as the "Officers" or "Sellers' Representatives". W I T N E S S E T H : WHEREAS, Sellers desire to sell and the Purchaser desire to purchase all of the outstanding shares (the "Shares") of common stock of the Corporation for the consideration and on the terms and conditions set forth herein; and, WHEREAS, Purchaser and certain of the Sellers desire to enter into certain non-competition agreements (the "Non- Competition Agreements") as provided in Section 4.01. NOW, THEREFORE, the parties hereto hereby agree as follows: I. PURCHASE AND SALE OF ASSETS 1.01 Purchase and Sale. At the closing of the transaction contemplated hereby (the "Closing"), upon the terms and subject to the conditions contained in this Agreement, Purchaser shall purchase from Sellers and Sellers shall sell the Shares consisting of 111,898 shares of common stock, no par value per share, free and clear of any and all liens, mortgages, encumbrances and security interests. 1.02 Stock Purchase Price. (a) The initial purchase price for the Shares ("Initial Purchase Price") shall be Four Million Five Hundred Ninety-Three Thousand One Hundred Thirty-Two ($4,593,132) Dollars, which shall be allocated among the Sellers in proportion to the Shares sold by each of them to Purchaser. (b)(1) The Initial Purchase Price shall be adjusted to the final purchase price ("Final Purchase Price") by increasing the Initial Purchase Price by the increase in the Net Book Value, as hereinafter defined, or by decreasing the Initial Purchase Price by the decrease in the Net Book Value of the Corporation between September 30, 1996 and the Closing as reflected on the Closing Balance Sheet (as hereinafter defined). However, the Final Purchase Price shall not be less than $4,072,555. (2) The term "Net Book Value" means the excess of (1) the book value of all of the Corporation's assets over (2) the book amounts of all the Corporation's current and long-term fixed liabilities and accrued expenses, including all unpaid ad valorem taxes prorated to the date of the Closing, whether or not any of the Corporation's assets are then subject to a lien therefor as of the Closing. All determinations of book value and book amounts shall be made in accordance with the accounting principles, methods and conventions employed in the preparation of the Corporation's September 30, 1996 balance sheet, a copy of which is attached as part of Schedule 1.02(b)(2) (hereinafter "Interim Financial Statements"), but with all intercompany payables, receivables and equity interests eliminated as among the Corporation, Dolphin Steel Sales, Inc. and Dolphin Sales & Rentals, Inc. as though they were members of a consolidated group. Net Book Value at September 30, 1996 was $4,393,132. (3) The term "Closing Balance Sheet" means for purposes of this Section 1.02(b) the balance sheet of the Corporation as of December 31, 1996 unless such date precedes the Closing by more than five (5) business days, in which case as of the date of the Closing ("Closing Date"), prepared in accordance with the same accounting principles, methods and conventions employed in the preparation of the Corporation's Interim Financial Statements. The Closing Balance Sheet shall be prepared by a certified public accountant or certified public accounting firm designated by Purchaser and shall be presented to Sellers and Purchaser within forty-five (45) days following the Closing. In the event either Sellers or Purchaser disagree with any of the figures shown on the Closing Balance Sheet, they or it shall notify the other parties hereto, within ten (10) days after their receipt of the Closing Balance Sheet, and shall furnish the reasons why that party is in disagreement. If the parties have not resolved their disagreements with respect to the Closing Balance Sheet within twenty (20) days after said notice, Sellers and Purchaser shall submit the handling of any disputed items to an independent nationally recognized accounting firm (other than Price, Waterhouse & Co.) selected by Purchaser and Sellers. If Purchaser and Sellers are unable to agree upon such a nationally recognized independent accounting firm within ten (10) days after expiration of said twenty (20) day period, such an independent nationally recognized accounting firm ("Arbitrator") shall be selected in accordance with the rules of the American Arbitration Association. The Arbitrator shall submit the correct Closing Balance Sheet to Purchaser and Sellers and shall certify the increase or decrease in Net Book Value between the date of the Interim Financial Statements and the close of business on the Closing Date. 1.03 Closing. The closing (the "Closing") shall take place at the offices of Messrs. Jones, Walker, Waechter, Poitevent, Carrere and Denegre, Baton Rouge, Louisiana, on a mutually agreeable date (the "Closing Date"), not later than ten (10) days following satisfaction of all conditions to Closing set forth in Article IX, but after January 1, 1997. Assuming the conditions set forth in Article IX shall have been satisfied, the Closing shall be deemed effective as of the close of business of the Corporation on the date of the Closing. At the Closing: (a) Purchaser shall deliver to Sellers by wire transfer or certified funds cash in an amount equal to Four Million One Hundred Ninety-Three Thousand, One Hundred Thirty-Two ($4,193,132) Dollars, allocated among Sellers in proportion to their ownership of the outstanding shares of capital stock of the Corporation, and shall deliver to Whitney National Bank Four Hundred Thousand and No/100 ($400,000.00) Dollars to be held pursuant to the escrow agreement (the "Escrow Agreement") in the form attached hereto as Schedule 1.03(a), which shall also be executed at or prior to the Closing. (b) Sellers shall deliver to Purchaser certificates representing in the aggregate One Hundred, Eleven Thousand, Eight Hundred, Ninety-eight (111,898) shares of capital stock of the Corporation with stock powers attached executed in blank, with signature guaranteed, free and clear of any and all liens, mortgages, security interests and encumbrances. (c) Purchaser and E. M. Dupaquier and R. H. Marmande shall execute the Employment Agreements referred to in Section 6.01. (d) All officers and directors of the Corporation shall tender their resignations from such positions, said tender to occur simultaneously with the act of delivery of funds described in Section 1.03(a). 1.04 Post-Closing. Within ten (10) days following the date on which the Closing Balance Sheet has been agreed upon by the parties or otherwise determined to be accurate, if the Net Book Value of the Corporation as reflected on the Closing Balance Sheet is more than or less than the Net Book Value as reflected on the September 30, 1996 balance sheet of the Corporation, attached as part of Schedule 1.02(b)(2), Purchaser shall pay to or receive from, respectively, Sellers (in proportion to their present ownership of the Shares) cash (by wire transfer or bank cashier's check) equal to the difference. Failure by any Seller to make a payment required pursuant to this Section 1.04 shall constitute a breach of a covenant for which the remedies provided in Section 10.02 are applicable. Each of E. M. Dupaquier and R. H. Marmande hereby jointly, severally and in solido guarantee the obligations of all other shareholders other than Edward Cunningham to make the payments required pursuant to this Section 1.04. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS For purposes of this Agreement the business (the "Business") of the Company is the onshore and offshore oil and gas production platform construction and maintenance business which consists of: outfitting and interconnect piping, painting and maintenance of onshore and offshore oil and gas production platforms; and the construction (including interconnect piping and pile driving) of shallow water and land platforms and pipeline installation. The phrase "in the ordinary course" means in the course of performing any one or more of those enumerated activities. Sellers herewith represent and warrant to Purchaser as of the date hereof and as of the Closing Date (unless another date is expressly set forth below) that: 2.01 Corporate Existence and Power. The Corporation is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Louisiana, and the Corporation has all corporate powers and all material governmental licenses, permits, authorizations, consents and approvals required to carry on the Business as now conducted. Subject to the provisions of the following sentence, the Corporation is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary. Sellers have heretofore delivered to Purchaser true and complete copies of the Corporation's Articles of Incorporation and By-Laws as currently in effect. 2.02 Governmental Authorization. The execution, delivery and performance by Sellers of this Agreement and the consummation by Sellers of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency, official or authority. 2.03 Non-Contravention. The execution, delivery and performance by Sellers of this Agreement and the consummation by Sellers of the transactions contemplated hereby do not and will not (i) contravene or conflict with the Articles of Incorporation or bylaws of the Corporation (other than any provision which may be waived by the Corporation and/or Sellers), (ii) contravene or conflict with or constitute a violation of any provision of law, regulation, judgment, injunction, order or decree binding upon or applicable to Sellers or the Corporation, or (iii) except as disclosed in Schedule 2.03, require any consent, approval or other action by any person or constitute a default under any obligation of Sellers or the Corporation under any provision of any contract or other instrument binding upon Sellers or the Corporation other than contracts and obligations which may be cancelled unilaterally upon notice to Sellers or the Corporation. 2.04 Subsidiaries. The Corporation does not own more than fifty (50%) percent of all outstanding shares of capital stock of, other ownership interests in, or other securities of any corporation or other entity. 2.05 Financial Statements. The balance sheet of the Corporation for the year ended December 31, 1995 (such date referred to herein as the "Balance Sheet Date" and such balance sheet the "Balance Sheet") and the related statements of income for the year ended December 31, 1995 (collectively, the "Financial Statements") have been previously delivered to Purchaser and are attached as Schedule 2.05. In all material respects, the Financial Statements fairly present the financial position of the Corporation as of the date thereof and its results of operations for the period then ended. 2.06 Absence of Certain Changes. Since the Balance Sheet Date to the date hereof, the Corporation has conducted the Business in the ordinary course consistent with past practice and, except as set forth in Schedule 2.06 or otherwise contemplated hereby, there has not been: (a) Any event, occurrence, development or state of circumstances or facts which has had or could reasonably be expected to have a material adverse effect on the Corporation, except to the extent the effect is reflected in the Interim Financial Statements; (b) Any incurrence, assumption or guarantee of any indebtedness for borrowed money or any material obligation or liability, except in the ordinary course of the Business consistent with past practice and except as reflected on the Interim Financial Statements; (c) Any creation or other incurrence of any Lien (as defined in Section 2.08) on any asset of the Corporation, except in the ordinary course of the Business consistent with past practice and except as reflected in the Interim Financial Statements; (d) Any making of any loan, advance or capital contributions to or investment in any person, except as reflected in the Interim Financial Statements; (e) Any amendment of any material term of any outstanding security of Seller; (f) Any material damage, destruction or other casualty loss affecting any of the assets of the Corporation, except those covered by insurance and except as reflected in the Interim Financial Statements; (g) Any transaction or commitment made, or any contract or agreement entered into, by the Corporation relating to its assets or the Business or any relinquishment of any contract or other right, in either case, material to the Corporation, other than transactions and commitments (including acquisitions and dispositions of steel and equipment) in the ordinary course of the Business consistent with past practice and except as reflected in the Interim Financial Statements; (h) Any declaration or payment of any dividend or other distribution by the Corporation or any repurchase, redemption or other acquisition for value of any security or other interest in the Corporation or any commitment to do any of the foregoing; (i) Any general or specific increase in the salary or other compensation (including, without limitation, bonuses, profit sharing or deferred compensation) payable or to become payable to any employees of the Corporation, except in the ordinary course of the Business consistent with past practice; (j) Any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Corporation or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to any employees of the Corporation; or (k) Any agreement entered into to do any of the foregoing. 2.07 Properties. (a) The Corporation has good and marketable title to, or in the case of leased property valid leasehold interests in, all property and assets (whether real or personal, tangible or intangible) reflected on the Balance Sheet or acquired after the Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practice. None of such properties or assets is subject to any liens, mortgages, security interests or other encumbrances (herein "Liens") except: (i) Liens disclosed on the Balance Sheet; (ii) Liens for taxes not yet due or being contested in good faith (and for which adequate accruals or reserves have been established on the Balance Sheet); (iii) Liens disclosed in Schedule 2.07(a) or which will be discharged at the Closing; (iv) Liens which do not materially detract from the value of such property or assets as now used, or materially interfere with any present or intended use of such property or assets; or (v) Liens in favor of vendors and lessors incurred in the ordinary course of business. Clauses (i), (ii), (iii) (iv) and (v) are, collectively, referred to herein as "Permitted Liens". (b) To the knowledge of Sellers and except as reflected on the Interim Financial Statements, there are no developments affecting any of such properties or assets pending or threatened which could materially detract from the value of such property or assets, materially interfere with any present or intended use of any such property or assets or materially adversely affect the marketability of such properties or assets. (c) All such leases of real and personal property with respect to which the Corporation is a lessee are as of the date hereof and will be on the Closing Date valid, binding and enforceable in accordance with their respective terms and there does not exist under any such lease any material default or any event which with notice or lapse of time or both would constitute a material default. (d) Schedule 2.07(d) identifies all real and personal property used or held for use in connection with the Business as of the date hereof (the "Property") and contains an accurate balance sheet showing the adjusted tax basis of all of the Corporation's assets for United States income tax purposes at September 30, 1996. The plants, buildings, structures, tools, steel inventory and equipment reflected on the Balance Sheet or acquired after the Balance Sheet Date through the date hereof have no material defects, are in good operating condition and repair and have been reasonably maintained consistent with standards generally followed in the industry (giving due account to the age and length of use of same, ordinary wear and tear excepted), are suitable for their present uses and, in the case of plants, buildings and other structures (including without limitation, the roofs thereof), are structurally sound, except as set forth on Schedule 2.07(d). Such plants, buildings and structures currently have access to (1) public roads or valid easements over private streets or private property for such ingress to and egress from all such plants, buildings and structures and (2) water supply, storm and sanitary sewer facilities, telephone, gas and electrical connections, fire protection, drainage and other public utilities, as is necessary for the conduct of the Business. None of the material structures on the immovable or real property of the Corporation encroaches upon real property of another person, and no structure of any other person substantially encroaches upon any immovable or real property of the Corporation. All items of equipment listed on Schedule 2.07(d) are in the possession and control of the Corporation and will be in the Corporation's possession and control on the Closing Date and are in good operating condition and are adequately performing the tasks which they are designed to perform. 2.08 Sufficiency of and Title to the Purchased Assets. (a) The assets (the "Assets") disclosed on the Balance Sheet and in Schedule 2.07(d) constitute as of the date thereof and hereof, respectively, all of the assets or property used or held for use in the Business and are adequate to conduct the Business as presently conducted. (b) Upon consummation of the transactions contemplated hereby, the Corporation will have good and marketable title in and to each of the Assets, free and clear of all Liens, except for Permitted Liens. 2.09 No Undisclosed Material Liabilities. Except as disclosed on Schedule 2.09, as of the Closing there will be no liabilities of the Corporation of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than: (i) Liabilities disclosed or provided for in the Interim Financial Statements; (ii) Liabilities for which adequate insurance is available; and, (iii) Liabilities incurred in the ordinary course of the Business, including tax liabilities and liabilities for personal injuries and property damage, which in the aggregate are not material to the Business taken as a whole. 2.10 Litigation. Except as set forth in Schedule 2.10, as of the date hereof there is no action, suit, investigation or proceeding (or any basis therefor) pending against, or to the knowledge of Sellers threatened against or affecting, Sellers, the Corporation or any of their or its properties before any court or arbitrator or any governmental body, agency, official or authority, which, individually or in the aggregate, if determined or resolved adversely to Sellers or the Corporation in accordance with the plaintiff's demands, would reasonably be expected to have a material adverse effect on Sellers or the Corporation or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. 2.11 Material Contracts. (a) Except as disclosed in Schedule 2.11(a) and elsewhere in this Agreement, as of the date hereof the Corporation is not a party to or subject to: (i) Any lease of real or immovable property; (ii) Any lease that is material to the Corporation of personal or movable property as lessee; (iii) Any contract for the purchase of materials, supplies, goods, services, equipment or other assets, other than in the ordinary course of the Business; (iv) Any sales, distribution or other similar agreement providing for the sale by the Corporation of materials, supplies, goods, services, equipment or other assets, other than to customers in the ordinary course of the Business; (v) Any lease of any item of tangible personal or movable property or real or immovable property as lessor other than to customers in the ordinary course of the Business; (vi) Any partnership, joint venture or other similar contract, arrangement or agreement; (vii) Any contract relating to indebtedness for borrowed money (whether incurred, assumed, guaranteed or secured by any asset); (viii) Any license, franchise or similar agreement; (ix) Any agency, dealer, sales representative or other similar agreement; (x) Any contract or commitment that substantially limits the freedom of the Corporation to compete in any line of business or with any person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any asset or which would so limit the freedom of the Corporation after the Closing; (xi) Any consulting agreement; (xii) Any contract relating to any guaranty or indemnity issued by the Corporation; (xiii) Any agreement relating to the acquisition or disposition of any part of the Business; or (xiv) Any other contract or commitment not made in the ordinary course of the Business consistent with past practice. (b) Each contract disclosed in any schedule to this Agreement or required to be disclosed pursuant to Section 2.11(a) is a valid and binding agreement of the Corporation, and, to the knowledge of Sellers, as of the date hereof is in full force and effect, and neither the Corporation nor, to the knowledge of Sellers, any other party thereto is in default or breach in any material respect under the terms of any such Contract, nor, to the knowledge of Sellers, has any event or circumstance occurred that, with notice or lapse of time or both, would constitute any such default or breach. 2.12 Licenses and Permits. Schedule 2.12 correctly describes each material governmental license, permit, authorization, consent or approval affecting, or relating in any way to, the Corporation and its business, together with the name of the governmental agency or entity issuing such license or permit (the "Permits"). Except as set forth on Schedule 2.12, such Permits are valid and in full force and effect and will not be terminated or impaired or become terminable as a result of the transactions contemplated hereby. 2.13 Ability to Conduct the Business. Except as set forth in Schedule 2.13, as of the date hereof there is no contract, nor any judgment, order, writ, injunction or decree that by its terms prevents or would reasonably be expected to prevent the use by the Corporation of the Assets or the conduct by the Corporation of the Business after the Closing Date. 2.14 Material Suppliers. Schedule 2.14 lists the five largest (in dollar value) suppliers of inventory to the Corporation during each of the last two completed fiscal years and through December 31, 1995. To the knowledge of Sellers, since the Balance Sheet Date there has not been any adverse change in the business relationship of the Corporation with any such supplier or with any supplier that is otherwise material to the Business or with any supplier as a result of the transactions contemplated hereby, except as disclosed on Schedule 2.14. 2.15 Insurance Coverage. Sellers have furnished or provided access to Purchaser to true and complete copies of, all insurance policies currently in effect covering the assets, the Business and the employees of the Corporation. Except as disclosed on Schedule 2.15, as of the date hereof there is no claim by the Corporation pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies. All premiums payable under all such policies have been paid and the Corporation is otherwise in full compliance with the terms and conditions of all such policies. 2.16 Compliance with Laws; No Defaults. (a) As of the date hereof, the Corporation is not in violation of, has not since December 31, 1995 violated, and to Sellers' knowledge is not under investigation with respect to or has not been threatened to be charged with or given notice of any violation of, any law, rules, ordinances or regulations, judgments, injunctions, orders or decrees binding upon or applicable to the Corporation, except for any violations set forth in Schedule 2.16(a) which would not, individually or in the aggregate, if finally determined adversely, result in a material adverse effect on the business of the Corporation. (b) As of the date hereof, the Corporation is not in default under, and no condition exists that with notice or lapse of time or both would constitute a default under any contract or other instrument binding upon the Corporation or affecting or relating to its business or any license, authorization, permit, consent or approval held by the Corporation or affecting or relating to the Business, except as otherwise disclosed in this Agreement or in Schedules attached hereto. 2.17 Inventories. The inventories set forth in the Balance Sheet were properly stated therein at cost determined in accordance with generally accepted accounting principles applied on a consistent basis. Since the Balance Sheet Date, the inventories related to the Business have been maintained in the ordinary course of business. Except as set forth in Schedule 2.17, all such inventory is owned free and clear of all Liens, except Permitted Liens. All of the inventory recorded on the Balance Sheet consists of, and all inventory related to the Business on the Closing Date will consist of, items of a quality usable or saleable in the normal course of the Business consistent with past practices and are and will be in quantities sufficient for the normal operation of the Business in accordance with past practice. 2.18 Receivables. All accounts, notes and other receivables (other than receivables collected since December 31, 1995) reflected on the Balance Sheet are, and all accounts, notes and other receivables arising out of or otherwise relating to the Corporation's business as of the Closing will be, valid, binding and enforceable, subject to applicable laws governing bankruptcy, moratorium or creditors' rights generally which may prevent their enforcement. The dollar amount shown for all such accounts on the Interim Financial Statements, less the allowance for doubtful accounts shown thereon, is collectible in full. All accounts, notes and other receivables arising out of or otherwise relating to the Business at the Balance Sheet Date have been included in the Balance Sheet, and all accounts, notes and other receivables arising out of or otherwise relating to the Business at the Closing Date will be reflected on the Corporation's financial books and records. 2.19 Intellectual Property. (a) Schedule 2.19(a) sets forth as of December 31, 1995 a list of all intellectual property rights (herein "Intellectual Property Rights") used or held for use or otherwise necessary in connection with the conduct of the Business, specifying as to each, as applicable: (i) the nature of such Intellectual Property Right; (ii) the owner of such Intellectual Property Right and if Seller is not the owner, the rights held by the Corporation; (iii) the jurisdictions by or in which such Intellectual Property Right is recognized, issued or registered or in which an application for such issuance or registration has been filed, including the respective registration or application numbers; and (iv) material licenses, sublicenses and other agreements as to which the Corporation is a party and pursuant to which any person is authorized to use such Intellectual Property Right, including the identity of all parties thereto, a description of the nature and subject matter thereof, the applicable royalty and the term thereof. (b) (i) Except as set forth in Schedule 2.19(b), the Corporation has not since January 1, 1996 been sued or charged in writing with or been a defendant in any claim, suit, action or proceeding relating to its business that has not been finally terminated prior to the date hereof and that involves a claim of infringement by the Corporation of any intellectual property rights of any other person, and (ii) the Corporation has no knowledge of any basis for any such claim of infringement, and no knowledge of any continuing infringement by any other person of any intellectual property rights used or held for use or otherwise necessary in connection with the conduct of the Business. No such intellectual property right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by the Corporation or restricting the licensing thereof by the Corporation to any Person. The Corporation has not entered into any agreement to indemnify any other person against any charge of infringement of any intellectual property rights. (c) As used herein, the term "Intellectual Property Right" means any trade name, trademark, service name, service mark, copyright, invention, patent, trade secret, know-how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right. 2.20 Employees. Schedule 2.20 identifies all of the Corporation's officers and key employees as of December 31, 1995. None of such key employees has indicated to the Corporation that he or she intends to resign or retire as a result of the transactions contemplated by this Agreement, except that E. M. Dupaquier and R. H. Marmande shall retire from the Corporation's employee six (6) months after the Closing. 2.21 Fees. There is no investment banker, broker, financial advisor, finder or other intermediary which has been retained by or is authorized to act on behalf of Sellers who might be entitled to any fee or commission from Purchaser upon consummation of the transactions contemplated by this Agreement. 2.22 Environmental Matters. (a) The following defined terms, as used herein, have the following meanings: "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and governmental restrictions, whether now or hereafter in effect, relating to human health, the environment or to emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "Environmental Liabilities" means any and all liabilities of, or relating to, Seller (including any entity which is, in whole or in part, a predecessor of Seller), whether vested or unvested, contingent or fixed, actual or potential, known or unknown, which (i) arise under or relate to matters covered by Environmental Laws (including without limitation any matters disclosed or required to be disclosed in Schedule 2.22 hereto) and (ii) relate to actions occurring or conditions existing on or prior to the Closing Date. "Environmental Permits" means all permits, licenses, authorizations, certificates and approvals of governmental authorities relating to or required by Environmental Laws and necessary or proper for the business of Seller as currently conducted. "Hazardous Substance" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics, including, without limitation, any substance regulated under Environmental Laws. "Regulated Activity" means any generation, treatment, storage, recycling, transportation or disposal of any Hazardous Substance. "Release" means any discharge, emission or release including a Release as defined in CERCLA at 42 U.S.C. 9601 (22). The term "Released" has a corresponding meaning. (b) Except as disclosed on Schedule 2.22 as of the date hereof: (i) No notice, notification, demand, request for information, citation, summons, complaint or order has been issued, no complaint has been filed, no penalty has been assessed and, to Seller's knowledge, no investigation or review is pending or threatened by any governmental entity or other person with respect to any (a) alleged violation by the Corporation of any Environmental Law or liability thereunder, (b) alleged failure by the Corporation to have any Environmental Permit, (c) Regulated Activity, or (d) Release of Hazardous Substances; (ii) Other than generation in compliance with all applicable Environmental Laws, (a) the Corporation has not engaged in any Regulated Activity and (b) no Regulated Activity has occurred at or on any property now or previously owned, leased or operated by the Corporation; (iii) No polychlorinated biphenyls, radioactive material, urea formaldehyde, lead, asbestos, asbestos-containing material or underground storage tank (active or abandoned) is or has been present at any property now or previously owned, leased or operated by the Corporation; (iv) No Hazardous Substance has been Released (and no notification of such Release has been filed or made) or is present (whether or not in a reportable or threshold planning quantity) at, on or under any property now or previously owned, leased or operated by the Corporation; (v) No property now or previously owned, leased or operated by the Corporation or any property to which the Corporation has, directly or indirectly, transported or arranged for the transportation of any Hazardous Substances is listed or, to Seller's knowledge, proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign list of sites requiring investigation or clean-up; (vi) There are no liens under Environmental Laws on any of the real property or other assets owned, leased or operated by the Corporation, no governmental actions have been taken or are in process which could subject any of such properties or assets to such liens and the Corporation would not be required to place any notice or restriction relating to Hazardous Substances at any property owned by it in any deed to such property; (vii) There are no Environmental Permits that are nontransferable or require consent, notification or other action to remain in full force and effect following the consummation of the transactions contemplated hereby; and (viii) All Perchloroethylene and each other chemical substance used by the Corporation in connection with the business has been disposed of in accordance with all applicable laws, rules, regulations and pronouncements of the United States, all applicable states and all applicable boards, agencies, departments and other divisions thereof. (c) There has been no environmental investigation, study, audit, test, review or other analysis conducted of which the Corporation or Sellers has knowledge in relation to the current or prior business of the Corporation or any property or facility now or previously owned or leased by the Corporation which has not been delivered to Purchaser at least five days prior to the date hereof. (d) For purposes of this Section 2.22, the term "Corporation" shall include any entity which is, in whole or in part, a predecessor of the Corporation. 2.23 Labor Matters. As of the date hereof, the Corporation is in compliance with all currently applicable laws respecting employment and employment practices (including terms and conditions of employment, wages and hours) and is not engaged in any unfair labor practice, the failure to comply with which or engagement in which, as the case may be, would reasonably be expected to have a material adverse effect on the Business. As of the date hereof there is no unfair labor practice complaint pending or, to the knowledge of Sellers, threatened against the Corporation before the National Labor Relations Board or before any other state or local board, agency or tribunal. 2.24 The Shares. (a) There are presently outstanding and at the Closing there will be outstanding a total of One Hundred Eleven Thousand, Eight Hundred Ninety-Eight (111,898) shares of no par value voting common stock of the Corporation (the "Shares"). No other class of common, preferred or other type of shares of stock is presently outstanding or will be outstanding at the Closing and no person has or will have at the Closing the right, option or obligation to acquire additional shares from the Corporation. (b) The issuance of all of the Shares has been duly authorized by all required action by the Corporation and all of the Shares are fully paid and non-assessable. (c) The Shares are registered in the names of the persons and in the amounts set forth in Schedule 2.24(c). All of the Shares registered in the names of the above persons may be conveyed by them without the consent of an person, other than Consents of the Corporation and the other Sellers which are waivable by them at or prior to the Closing Date. (d) None of the Shares is subject to any lien, mortgage, pledge, security interest or other encumbrance and each Seller has good and marketable title to all Shares registered in his name. 2.25 Binding Agreement. This Agreement constitutes a valid and binding obligation of Sellers. 2.26 Other Information. None of the documents or information delivered to Purchaser in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Sellers that: 3.01 Organization and Existence. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana. 3.02 Corporate Authorization. The execution, delivery and performance by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated hereby or thereby are within the powers of Purchaser and have been duly authorized by all necessary action on the part of Purchaser. This Agreement constitutes a valid and binding agreement of Purchaser. 3.03 Governmental Authorization. The execution, delivery and performance by Purchaser of this Agreement requires no action by or in respect of, or filing with, any governmental body, agency, official or authority. 3.04 Non-Contravention. The execution, delivery and performance by Purchaser of this Agreement does not and will not (i) contravene or conflict with the Articles of Incorporation or By-Laws of Purchaser or (ii) assuming compliance with the matters referred to in Section 3.03, contravene or conflict with any provision of any law, regulation, judgment, injunction, order or decree binding upon Purchaser. 3.05 Fees. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser who might be entitled to any fee or commission from Sellers upon consummation of the transactions contemplated by this Agreement. 3.06 Financing. Purchaser will have on the Closing Date sufficient funds available to purchase the Shares, provided all conditions set forth in Article IX are satisfied. 3.07 Litigation. There is no action, suit, investigation or proceeding pending against, or to the knowledge of Purchaser threatened against or affecting, Purchaser before any court or arbitrator or any governmental body, agency or official which in any matter challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated hereby. ARTICLE IV COVENANTS OF SELLERS 4.01 Conduct of the Business. From the date hereof until the Closing Date, Sellers shall cause the Corporation to conduct the Business in the ordinary course consistent with past practice and cause the Corporation to exert its best efforts to preserve intact its business organization and relationships with third parties and to keep available the services of its present officers and employees. Without limiting the generality of the foregoing, from the date hereof until the Closing Date, Sellers shall not cause the Corporation to and the Corporation shall not: (i) Merge or consolidate with any other person or acquire a material amount of assets of any other person, other than steel, tools and equipment purchased in the ordinary course of the Business; (ii) Declare and/or pay any dividend or make any other distribution or transfer of cash or other assets to its shareholders in their capacities as such; (iii) Sell, lease, license or otherwise dispose of any assets except (a) pursuant to existing contracts or commitments and (b) in the ordinary course of the Business consistent with past practices; or (iv) Agree or commit to do any of the foregoing. Sellers shall not permit the Corporation to (a) take or agree or commit to take any action that would make any representation and warranty of Sellers hereunder inaccurate in any respect at, or as of any time prior to, the Closing Date or (b) omit or agree to commit or omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. 4.02 "S" Election. Sellers and their spouses shall execute and cause the Corporation to execute Internal Revenue Service forms 2553 so as to elect the provisions of Subchapter S of the United States Internal Revenue Code, sections 1361, et seq., effective January 1, 1997 and shall deliver fully completed forms 2553 with all of their signatures to Purchaser on or before the earlier of the Closing Date or January 15, 1997. 4.03 Access to Information. Sellers (i) will give Purchaser, its counsel, financial advisors, auditors and other authorized representatives reasonable access to the offices, properties, books and records of the Corporation and will allow Purchaser or its representatives access to conduct all reasonable environmental tests and inspections, (ii) will furnish to Purchaser, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the Corporation as such persons may reasonably request and (iii) will instruct its employees, counsel and financial advisors to cooperate with Purchaser in its investigation of the Corporation; provided, however, Purchaser shall utilize the minimum number of personnel as will not interfere with the conduct of the Corporation's business and shall utilize them only at the times the Corporation is open for business. No investigation by Purchaser or other information received by Purchaser shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Sellers hereunder. 4.04 Life Insurance Policies. Prior to the Closing, each seller shall purchase all policies of life insurance on his life owned by the Corporation for cash in the amount of the cash surrender values of these policies. 4.05 Notices of Certain Events. Sellers shall promptly notify Purchaser of: (i) Any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement; (ii) Any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; (iii) Any actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Corporation or the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 2.10 or that relate to the consummation of the transactions contemplated by this Agreement. ARTICLE V COVENANTS OF PURCHASER Purchaser agrees that: 5.01 Confidentiality. Prior to the Closing Date and for a period of one (1) year after any termination of this Agreement, Purchaser will hold, and will use its best efforts to cause its respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information (including, without limitation, confidential commercial information and information with respect to customers and proprietary systems, technologies or processes) concerning the Business or which the Corporation or Sellers furnished to Purchaser in connection with the transactions contemplated by this Agreement, except to the extent that such information can be shown to have been (i) previously known on a non-confidential basis by Purchaser, (ii) in the public domain through no fault of Purchaser or (iii) later lawfully acquired by Purchaser from sources other than the Corporation or Sellers; provided, that Purchaser may disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement so long as such persons are informed by Purchaser of the confidential nature of such information and are directed by Purchaser to treat such information confidentially. This obligation shall be satisfied if Purchaser exercises the same reasonable and customary care, in light of the industry and its past practices, with respect to such information as it would take to preserve the confidentiality of its own confidential information. If this Agreement is terminated, Purchaser will, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to, destroy or deliver to Sellers, upon request, all documents and other materials, and all copies thereof, obtained by Purchaser or on their behalf from Sellers or the Corporation in connection with this Agreement that are subject to such confidence. Purchaser agrees that it will retain all documents and other materials obtained by Purchaser from Sellers or the Corporation in connection with this Agreement and the transactions contemplated hereby for a reasonable and customary period of time and will not destroy any material documents during such period without first providing Seller with the opportunity of making copies thereof. 5.02 Access. On and after the Closing Date, Purchaser will afford promptly to Sellers through their representatives, E. M. Dupaquier and/or R. H. Marmande ("Sellers' Representatives"), reasonable access to the Corporation's properties, books, records, employees and auditors to the extent necessary to permit Sellers to determine any matter relating to their rights and obligations hereunder and Sellers' federal and state income and other tax liabilities with respect to any period ending on or before the Closing Date and shall maintain them for a period of five (5) years following the Closing or for such longer period as any audit (private, tax or other governmental) of those documents is continuing; provided that any such access by Sellers shall not unreasonably interfere with the conduct of the Business of the Corporation or Purchaser. Sellers will hold, and will use their best efforts to cause their officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning Purchaser or the Business provided to them pursuant to this Section 5.02. 5.03 No Election Under Section 338. (a) Purchaser shall not cause nor shall the Corporation make or file any election under any provision of Section 338, including Section 338(h)(10), of the United States Internal Revenue Code (the "Code") with respect to the transactions contemplated by this Agreement. (b) Purchaser shall take no action nor permit any action or course of conduct to be taken by it or by the Corporation, or permit the filing of any Section 338 election with respect to any other stock acquisition by Purchaser of any other corporation, if such filing would have the same effect as if a formal election under any provision of Section 338, including Section 338(h)(10), of the Code had been filed with respect to the transaction contemplated hereby. ARTICLE VI COVENANTS OF SELLERS AND PURCHASER Sellers and Purchaser hereto agree that: 6.01 Employment Agreements. At the Closing, E. M. Dupaquier, R. H. Marmande and the Company shall execute the Employment Agreements in the forms attached hereto as Schedule 6.01. 6.02 Best Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, each of Sellers and Purchaser will use their and its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. Sellers and Purchaser each agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement, but without expanding the obligations and responsibilities of any party hereunder. 6.03 Certain Filings. Sellers and Purchaser shall cooperate with one another (a) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement, and (b) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers. 6.04 Public Announcements. The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by applicable law, will not issue any such press release or make any such public statement prior to such consultation. ARTICLE VII TAX MATTERS 7.01 Tax Definitions. The following terms, as used herein, have the following meanings: "Code" means the Internal Revenue Code of 1986, as amended. "Post-Closing Tax Period" means any tax period ending after the Closing Date, except that with respect to a tax period that commences before but ends after the Closing Date, the portion of such period after the close of business on the Closing Date. "Pre-Closing Tax Period" means any tax period ending on or before the close of business on the Closing Date and with respect to a tax period that commences before but ends after the Closing Date, the portion of such period up to the close of business on the Closing Date. "Tax" means (i) any net income, alternative or add-on minimum, gross income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up capital, profits, greenmail, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax (a "Taxing Authority") and (ii) any liability to any person (including any applicable Taxing Authority) in respect of any tax included in Clause (i) above by reason of any indemnity, transferee liability, contractual or legal obligation. 7.02 Tax Matters. Sellers hereby represent and warrant to Purchaser as of the date hereof and as of the Closing Date that, except as provided in Schedule 7.02, the Corporation has paid or will timely pay all material taxes payable by the Corporation and attributable to any Pre-Closing Tax Period which are required to be paid on or prior to the Closing Date, the non-payment of which would result in a lien on the Shares on or after the Closing Date, would otherwise materially adversely affect the Business after the Closing Date or would result in Purchaser becoming liable therefor, except for taxes caused by an actual or deemed election under Section 338 of the Code, which is Purchaser's responsibility pursuant to Section 5.03. Sellers herewith represent that the only Taxes which will be owed by the Corporation as of the Closing Date are those which arise or have arisen or have been incurred in the ordinary course of the Corporation's Business. The Corporation has filed all required income, franchise, sales, ad valorem, employment and other tax returns and paid the total amount of Taxes due by it. The provision for the corporate income and franchise tax liability of the Corporation for all periods through the Closing Date as shown on the Closing Balance Sheet will be adequate relative to the Corporation's actual liability therefor as finally determined. Sellers represent that the Corporation is not prohibited by any law, rule or regulation from electing the provisions of Subchapter S of the Code, sections 1361, et seq., commencing January 1, 1997. 7.03 Tax Cooperation: Allocation of Taxes. (a) Purchaser and Sellers agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Corporation, the non-compete covenant described in Section 4.01 and the Business as is reasonably necessary for the filing of all tax returns, and making of any election related to taxes, the preparation for any audit by any taxing authority, and the prosecution or defense of any claim, suit or proceeding relating to any tax return. Sellers and Purchaser shall cooperate with each other in the conduct of any audit or other proceeding related to taxes involving the Business and each shall execute and deliver such powers of attorney and other documents as are reasonably necessary to carry out the intent of this Paragraph (a) of Section 7.03. (b) Any transfer, documentary, sales, use or other taxes arising in connection with the transactions contemplated by this Agreement and any recording or filing fees with respect thereto (each, a "Transfer Tax") shall be the responsibility of Purchaser. (c) Each of Sellers and Purchaser shall execute all required elections pursuant to section 1377(a)(2) of the Code to terminate the Corporation's taxable year commencing January 1, 1997 and ending as of the close of business on the Closing Date (as defined in Section 1.03 entitled "Closing"), and allocate all of the Corporation's income or loss for that period to Sellers and the Corporation's income or loss for the remainder of calendar year 1997 to Purchaser. ARTICLE VIII EMPLOYEE BENEFITS 8.01 Employee Benefits Definitions. The following terms, as used herein, shall have the following meanings: "Benefit Arrangement" means any employment, severance or similar contract, or any other contract, plan, policy or arrangement (whether or not written) providing for compensation, bonus, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) that (i) is not an Employee Plan, (ii) is entered into, maintained, administered or contributed to, as the case may be, by Seller and (iii) covers any employee or former employee of the Corporation. "Employee Plan" means any "employee benefit plan" as defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is maintained, administered or contributed to by the Corporation and (iii) covers an employee or former employee of the Corporation. "ERISA Affiliate" of any entity means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code. "Multi-Employer Plan" means each Employee Plan that is a multi-employer plan, as defined in Section 3(37) of ERISA. "PBGC" means the Pension Benefit Guaranty Corporation. "Title IV Plan" means an Employee Plan, other than any Multi-Employer Plan, subject to Title IV of ERISA. 8.02 Employee Matters. The Sellers hereby represent and warrant to Purchaser as of the date hereof: (a) Schedule 8.02(a) lists each Employee Plan. Sellers have provided or allow Purchaser access to as a true and complete copy of each such Plan (and, if applicable, related trust documents) and all amendments thereto and written interpretations thereof together with (i) the three most recent annual reports prepared in connection with each such Employee Plan (Form 5500 including, if applicable, Schedule B thereto) and (ii) the most recent actuarial report, if any, prepared in connection with each Employee Plan. Schedule 8.02(a) identifies each person who is a participant or who is eligible to participate in each Employee Plan who is not an active employee of Seller. The term "active employee" shall mean any person who, on the Closing Date, is actively employed by the Corporation or who is on short-term disability leave, authorized leave of absence, military service or lay-off with recall rights as of the Closing Date. (b) Schedule 8.02(b) sets forth all Benefit Arrangements presently in place for all employees of the Corporation. (c) As of the date hereof, there is no litigation, administrative or arbitration proceeding or other dispute pending or threatened that involves any Employee Plan or Benefit Arrangement which could reasonably be expected to result in a liability to the Corporation or Purchaser. (d) No Employee Plan is (i) a Multi-Employer Plan, (ii) a Title IV Plan or (iii) is maintained in connection with any trust described in Section 501(c)(9) of the Code. No "prohibited transaction", as defined in Section 406 of ERISA or Section 4975 of the Code, has occurred that could result in a liability to the Corporation, Purchaser or any of its Affiliates. As used herein the term "Affiliate" means any individual, group of individuals, corporation, partnership or other entity controlled by, controlling or under common control with the person or entity with respect to which that term is used. Neither the Corporation nor any of its current or former Affiliates (while an Affiliate) has within the last five (5) years engaged in or is a successor or parent corporation to an entity that has engaged in, a transaction described in Section 4069 of ERISA. Neither the Corporation nor any of its current or former Affiliates has ever maintained or become obligated to contribute to any employee benefit plan (i) that is subject to Title IV of ERISA, (ii) to which Section 412 of the Code applies, or (iii) that is a multi-employer plan under Title IV of ERISA. The Corporation has not incurred, and does not reasonably expect to incur, (a) any liability under Title IV of ERISA arising in connection with the termination of, or complete or partial withdrawal from, any plan covered or previously covered by Title V of ERISA or (b) any liability under Section 4971 of the Code that in either case could become a liability of the Corporation or any of its Affiliates after the Closing Date. (e) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period from its adoption to date, and no event has occurred since such adoption that would adversely affect such qualification and each trust created in connection with each such Employee Plan forming a part thereof is exempt from tax pursuant to Section 501(a) of the Code. Sellers have furnished to Purchaser copies of the most recent Internal Revenue Service determination letters with respect to each such Plan. Each Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations including but not limited to ERISA and the Code. (f) Seller has furnished to Purchaser copies or descriptions of each Benefit Arrangement. Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Benefit Arrangement. Schedule 8.02(f) identifies each individual eligible to receive a benefit under a Benefit Arrangement who is not an active employee, as defined in Section 8.02(a), of the Corporation. (g) The Corporation has no current or projected liability in respect of post-retirement or post-employment welfare benefits for retired, current or former employees, except as required to avoid excise tax under Section 4980B of the Code. (h) Except as disclosed in writing to Purchaser prior to the date hereof, there has been no amendment to, written interpretation of or announcement (whether written or not written) by the Corporation or any of its Affiliates relating to, or change in employee participation or coverage under, any Employee Plan or Benefit Arrangement which would increase materially the expense of maintaining such Employee Plan or Benefit Arrangement above the level of the expense incurred in respect thereof in connection with the Corporation's Employees for the most recently completed fiscal year. (i) No employee of the Corporation will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced such benefit (including acceleration of an award, vesting or exercise of an incentive award) or any fee or payment of any kind solely as a result of any of the transactions contemplated hereby. (j) There is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of the Corporation or any of its Affiliates that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code. (k) No tax under Section 4980B of the Code has been incurred in respect of any Employee Plan that is a group health plan, as defined in Section 5000(b)(1) of the Code. ARTICLE IX CONDITIONS TO CLOSING 9.01 Conditions to the Obligations of Each Party. The obligations of Purchaser and Sellers to consummate the Closing are subject to the satisfaction, or waiver by both parties, of the following conditions: (a) No provision of any applicable law or regulation and no judgment, injunction, order or decree shall (i) prohibit the consummation of the Closing or (ii) restrain, prohibit or otherwise interfere with the effective operation or enjoyment by Purchaser of the Shares. (b) All actions by or in respect of or filings with any governmental body, agency, official or authority required to permit the consummation of the Closing, and all material third party consents necessary in connection with the consummation of the Closing, shall have been obtained. (c) All waivers of applicable rights of first refusal by the Corporation and the Sellers have been obtained to permit consummation of the transactions contemplated herein. 9.02 Conditions to Obligations of Purchaser. The obligation of Purchaser to consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Sellers shall have performed in all material respects all of their obligations hereunder required to be performed by them at or prior to the Closing Date (including their obligations set forth in Section 4.02), (ii) the representations and warranties of Sellers contained in this Agreement and in any certificate or other writing delivered by Sellers pursuant thereto, disregarding all qualifications and exceptions contained therein relating to materiality, shall be true at and as of the respective dates applicable to each of them as set forth herein, and (iii) Purchaser shall have received a certificate signed by the President of the Corporation to the foregoing effects. (b) No proceeding challenging this Agreement or the transactions contemplated hereby or seeking to prohibit, alter, prevent or materially delay the Closing shall have been instituted by any person before any court, arbitrator or governmental body, agency or official nor shall they be pending. (c) Purchaser shall have received all documents it may reasonably request relating to the existence of and good standing of the Corporation. (d) The Corporation shall have been issued an owner's title insurance policy with respect to all real or immovable property in a form and only with such exceptions as are reasonably acceptable to Purchaser. The cost of the owner's title insurance policy shall be borne equally between Sellers and Purchaser. (e) Nothing has come to Purchaser's attention which would indicate that any of the representations and warranties of Sellers are untrue in any material respect or that Sellers have failed to perform any of their covenants contained herein. 9.03 Conditions to Obligations of Sellers. The obligation of Sellers to consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Purchaser shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date and (ii) the representations and warranties of Purchaser contained in this Agreement and in any certificate or other writing delivered by Purchaser pursuant hereto shall be true in all material respects at and as of the Closing Date, as if made at and as of such date. (b) Sellers shall have received all documents they may reasonably request relating to the existence of Purchaser and the authority of Purchaser to execute and consummate this Agreement, all in form and substance reasonably satisfactory to Seller. ARTICLE X SURVIVAL; INDEMNIFICATION 10.01 Survival. The covenants, agreements, representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing. 10.02 Indemnification. (a) Sellers ("Indemnifying Party" or "Indemnifying Parties") jointly, severally and in solido hereby indemnify Purchaser and all of Purchaser's officers, directors, employees and shareholders (hereinafter "Indemnified Parties") against and agree to defend and hold them harmless from and against any and all damage, loss, liability and expense, including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding (collectively, "Loss") incurred or suffered by any of the Indemnified Parties arising out of any willful misrepresentation or breach of warranty, covenant or agreement made or to be performed by Sellers pursuant to this Agreement, including all of those made by Sellers in Articles I, II, IV, VI, VII and VIII hereof. Sellers shall have no obligation with respect to any loss, claim, demand, suit or action against the Corporation or Purchaser notice of which is given to Sellers' Representatives after December 31, 1998 as to all claims, demands, suits or actions other than for the payment of any Tax and after December 31, 2000 as to all claims, demands, suits or actions for the payment of any Tax. (b) Purchaser hereby agrees to defend and indemnify Sellers against and to hold Sellers harmless from any and all Loss incurred or suffered by Sellers arising out of any failure to perform, misrepresentation or breach of any warranty, covenant or agreement made or to be performed by Purchaser pursuant to this Agreement. Purchaser shall have no obligation with respect to any loss, claim, demand, suit or action against Sellers notice of which is given to Purchaser (by Sellers or any other person or governmental agency) after December 31, 1998. (c) Except as otherwise provided in Section 10.03 hereof in respect of matters relating to Taxes, the following provisions shall apply: (i) Promptly after receipt by an Indemnified Party of notice of the commencement of any action or proceeding involving a claim in respect of which indemnification is being sought, such Indemnified Party will, if a claim for indemnification hereunder is to be made against the Indemnifying Party, give written notice to the Indemnifying Parties (through Sellers' Representatives) of the commencement of such action or proceeding, the basis for such claim for indemnification and such other information relating thereto as the Indemnifying Party may reasonably request; provided, however, that failure to so notify the Indemnifying Parties or to provide such information shall not relieve such Indemnifying Parties from any liability which they may have with respect to such claim, except to the extent that they are actually materially prejudiced by such failure to give notice. (ii) In case any such action is brought against an Indemnified Party, the Indemnified Party shall assume and control the defense of such action with counsel selected by the Indemnified Party. It is understood that the Indemnifying Parties shall not, in connection with any action or related actions in the same jurisdiction, be liable for the fees and disbursements of more than one separate firm qualified in such jurisdiction to act as counsel for all Indemnified Parties, unless in any such Indemnified Party's reasonable judgment (i) a conflict of interest between such Indemnified Party and any other Indemnified Party may exist in respect of such claim or (ii) such Indemnified Party has available to it reasonable defenses which are different from or additional to those available to other Indemnified Parties. The Indemnifying Parties shall not be liable for any settlement of any proceeding effected without their written consent (given by Sellers' Representatives), but if settled with such consent or if there shall be a final judgment for the plaintiff, the Indemnifying Parties agree to indemnify the Indemnified Party and hold the Indemnified Party harmless from and against any Losses by reason of such settlement or judgment (it being understood that if the Sellers are the Indemnifying Party such indemnification obligation shall be joint and several). The Indemnifying Parties shall not, without the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Any dispute as to whether any Indemnified Party is entitled to indemnification in connection with any action or proceeding under Section 10.02(c), the defense or settlement of such action or proceeding, or any other rights or obligations of the parties hereto in connection with such action or proceeding shall be submitted to arbitration in accordance with Section 12.06 of this Agreement. (iii) In the event that an Indemnified Party shall claim a right to payment pursuant to this Agreement with respect to which there has been no action or proceeding involving such claim, such Indemnified Party shall send written notice of such claim to the Indemnifying Parties. Such notice shall specify the basis for such claim in reasonable detail. As promptly as possible after the Indemnified Party has given such notice, such Indemnified Party and the Indemnifying Parties (acting through Sellers' Representatives) shall establish the merits and amount of Losses, if any, to which the Indemnified Party is entitled. If the parties do not agree with respect to these matters within 30 days after the giving of such notice, either party may submit the matter to arbitration in accordance with Section 12.06 of this Agreement. In such arbitration, if the arbitrator determines that a breach of a representation, warranty, covenant or agreement in this Agreement by the Indemnifying Parties occurred and that such breach caused Losses to an Indemnified Party, the arbitrator will determine the amount of any such Losses. Within ten business days after the final determination of the merits of such claim and amount of such Losses, each Indemnifying Party shall, subject to the limitations set forth herein, deliver to the Indemnified Party an amount of cash in immediately available funds sufficient to satisfy such Losses or the portion of such Losses for which such Indemnifying Party is obligated to provide indemnity hereunder. (iv) If any Seller fails to timely deliver cash in the amount of any Losses payable by such Seller under the terms of this Agreement, Purchaser may withdraw from funds held in the Escrow Account (as defined below) an amount of cash equal to the amount of Losses which has not been paid by that Seller. (d) Wherever this Agreement requires actions or decisions of the Indemnifying Parties, those actions or decisions shall be taken by either or both of Sellers' Representatives acting on behalf of all Indemnifying Parties. 10.03 Covenants Regarding Tax Matters. (a) Taxes attributable to the taxable period of the Corporation beginning before and ending after the Closing Date shall be allocated (i) to the Sellers for the period up to and including the Closing Date to the extent such Taxes exceed the reserve therefor on the Closing Balance Sheet and (ii) to Purchaser for the period up to and including the Closing Date to the extent such Taxes do not exceed the reserve therefor on the Closing Date Balance Sheet and for the period subsequent to the Closing Date. For purposes of this Section 10.03(a), Taxes for the period up to and including the Closing Date and for the period subsequent to the Closing Date shall be determined on the basis of an interim closing of the books as of the Closing Date. (b) The Sellers may not file any amended returns or refund claims in respect of any taxable period of the Corporation ending on or prior to the Closing Date. (c) The Sellers shall cooperate fully with Purchaser and make available to Purchaser in a timely fashion such Tax data and other information as may be reasonably required for the preparation by Purchaser of any returns of the Corporation required to be prepared and filed by Purchaser hereunder. The Sellers and Purchaser shall make available to the other, as reasonably requested, all information, records or documents in their possession relating to Tax liabilities of the Corporation for all taxable periods of the Corporation ending on, prior to or including the Closing Date and shall preserve all such information, records and documents until the expiration of any applicable Tax statute of limitations or extensions thereof or, if a proceeding has been instituted for which the information, records or documents is required, until there is a final determination with respect to such proceeding. (d)(i) Purchaser shall promptly notify the Sellers' Representatives upon receipt by Purchaser or the Corporation of written notice of any Tax audits or of proposed assessments against the Corporation for taxable periods of the Corporation ending on or prior to the Closing Date; provided, however, that the failure of Purchaser to give Sellers' Representatives prompt notice as required herein shall not relieve the Sellers of any of their obligations hereunder, except to the extent that the Sellers are actually and materially prejudiced thereby. Purchaser shall have the right to represent the interests of the Corporation in any such Tax audit or administrative or court proceeding and to employ counsel of its choice; provided, however, that Purchaser may not agree to a settlement or compromise thereof without the prior written consent of Sellers' Representatives, which consent may be withheld solely in the event that Sellers' Representatives have been advised in writing by counsel reasonably acceptable to Purchaser that it is more likely than not that the issue under audit (or the proposed assessment) would be decided favorably to the Corporation and that written advice has been furnished to Purchaser. The Sellers agree that they will cooperate fully with Purchaser and its counsel in the defense against or compromise of any claim in any said audit or proceeding. (ii) The Sellers shall promptly notify Purchaser upon receipt by the Sellers of written notice of any Tax audit or proposed assessment or other proposed change or adjustment which may affect the Corporation or its Tax attributes. The Sellers shall keep Purchaser duly informed of the progress thereof and, if the results of such Tax audit or proceeding may have an adverse effect on the Corporation, Purchaser or its affiliates for any taxable period including or ending after the Closing Date, then the Sellers may not agree to a settlement or compromise thereof without Purchaser's consent. (e) Within ten (10) days after notice by Purchaser to Sellers' Representatives of the total amount of additional taxes, penalties and interest owed by the Corporation for periods prior to the Closing, Sellers shall remit to Purchaser the entire amount thereof less the future tax benefit attributable to the increase in future depreciation deductions as a result of the adjustment which caused those additional taxes. The future tax benefit shall be deemed equal to forty (40%) percent of the total additional depreciation which the Corporation would thereby be able to deduct in future years provided the amount of this reduction shall not exceed the amount of additional taxes (apart from penalties and interest) then owed by the Corporation. If any Seller fails to remit his entire proportionate share of the amount due, Purchaser may withdraw said amount from the Escrow Account, to the extent thereof, and if the Escrow Account is insufficient, any one or more of the other Sellers shall pay Purchaser the shortfall upon ten (10) days written notice. (f) The Sellers and Purchaser agree to treat any indemnity payment made pursuant to this Agreement as an adjustment to the Purchase Price for federal, state, local and foreign income tax purposes. If, notwithstanding such treatment by the parties, any indemnity payment is determined to be taxable to Purchaser or the Corporation by any taxing authority, the Sellers shall indemnify Purchaser and its Affiliates for any Taxes payable by reason of the receipt of such indemnity payment (including any payments under this Section 10.03(f)). ARTICLE XI TERMINATION 11.01 Grounds for Termination. This Agreement may be terminated at any time prior to the Closing: (i) by mutual written agreement of Sellers' Representatives and Purchaser; (ii) By Purchaser if the Closing shall not have been consummated on or before January 15, 1997 unless extended by mutual agreement of Sellers' Representatives and Purchaser; (iii) By either Sellers' Representatives or Purchaser if there shall be any law or regulation that makes the consummation of the transactions contemplated hereby illegal or otherwise prohibited or if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction; or, (iv) By Purchaser if anything has come to its attention that any of Sellers' representations or warranties are untrue in any respect or Purchaser has discovered any contamination or any Hazardous Substance on the premises of the Corporation or any violations of any Environmental Laws by the Corporation which have not been remedied as of the date of the discovery. The party desiring to terminate this Agreement pursuant to Clauses (ii), (iii) or (iv) shall give notice of such termination to the other party. 11.02 Effect of Termination. If this Agreement is terminated as permitted by Section 11.01, such termination shall be without liability of any party (or of any shareholder, director, officer, employee, agent, consultant or representative of such party) to the other parties to this Agreement; provided that if such termination shall result from the willful failure of any party to fulfill a condition to the performance of the obligations of another party or to perform a covenant of this Agreement or from a willful breach by any party to this Agreement, such party shall be fully liable for any and all Losses incurred or suffered by any other party as a result of such failure or breach. The provisions of Sections 5.01 and 12.03 shall survive any termination hereof pursuant to Section 11.01. ARTICLE XII MISCELLANEOUS 12.01 Notices. All notices, requests and other communications to either party hereunder shall be in writing (including facsimile, telecopy or similar writing) and shall be deemed given when delivered: If to Purchaser, to: Gulf Island Fabrication, Inc. Attn: Kerry J. Chauvin, President 583 Thompson Road Houma, LA 70361-0310 With a Copy to: Robert R. Casey, Esq. Four United Plaza, 5th Floor 8555 United Plaza Boulevard Baton Rouge, LA 70809-7000 If to Sellers or to Indemnifying Parties, to Sellers' Representatives: R. H. Marmande 1321 Dularge Road Theriot, LA 70397 E. M. Dupaquier 206 Maple Avenue Houma, LA 70364 Elward Cunningham 417 Parish Lane Houma, LA 70363 Jules Ledet 4612 Highway 56 Chauvin, LA 70344 Jimmy Benoit 125 Harding Drive Houma, LA 70364 Kenny Bollinger 601 Terre Haute Place Houma, LA 70364 Willis Bonvillain 227 Levey Drive Lafayette, LA 70506 E. Hensley 716 Park Ridge Drive River Ridge, LA 70123 Hugh Watson 8539 Hiawatha Houston, TX 77036 Tina Piazza 206 Angelle Drive Houma, LA 70360 Hays Adams 3036 Copasaw Drive Houma, LA 70364 Curtis Ledet P. O. Box 805 Bourg, LA 70343 Mark Foret 119 Eustice Houma, LA 70364 Davy Martin 3417 1/2 West Main Houma, LA 70364 Shelly Hebert 127 Grace Street Houma, LA 70360 Wayne Verdun 106 Nancy Court Thibodaux, LA 70301 David Weber 2006 Mary Hughes Drive Houma, LA 70363 With a Copy to: P. J. McMahon, Esq. P. O. Box 1545 Houma, LA 70361 Each of the above persons may change their address or facsimile number by notice to the other persons in the manner set forth above. 12.02 Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Purchaser and Seller, or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the existence of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 12.03 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. 12.04 Successors and Assigns. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other party hereto. Neither this Agreement nor any provision hereof is intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 12.05 Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of Louisiana without regard to the conflicts of law rules of such state. 12.06 Jurisdiction and Forum: Arbitration. Any controversy arising under, out of, in connection with, or relating to, this Agreement, and any amendment hereof, or the breach hereof or thereof, shall be determined and settled by arbitration in New Orleans, Louisiana by an arbitrator or arbitrators mutually agreed upon by Purchaser and the Sellers' Representatives or, if Purchaser and Sellers' Representatives shall fail or be unable to so agree within ten Business Days after the written request therefor by Purchaser or the Representatives to the other, such arbitrator or arbitrators as may be selected in accordance with the rules of the American Arbitration Association. Any award rendered therein shall specify the findings of fact of the arbitrator or arbitrators and the reasons for such award, with reference to and reliance on relevant law. Any such award shall be final and binding on each and all of the parties thereto and their personal representatives, and judgment may be entered thereon in any court having jurisdiction thereof. 12.07 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received as a counterpart hereof signed by the other party hereto. 12.08 Entire Agreement. This Agreement and any other agreements referred to herein constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect thereto. No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by either party hereto. 12.09 Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 12.10 Severability. In the event any one or more of the provisions of this Agreement shall be or become illegal or unenforceable in any respect, the validity, legality, operation and enforceability of the remaining provisions of this Agreement shall not be affected thereby. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers effective as of the day and year first above written but executed on the dates set forth below. WITNESSES: GULF ISLAND FABRICATION, Purchaser /s/ Alden J. Laborde BY: /s/ Kerry J. Chauvin ------------------------- ------------------------------- Kerry J. Chauvin, President /s/ John P. Laborde Date Executed: November 25,1996 ------------------------- ------------- SELLERS: /s/ Alden P. Laborde /s/ R. H. Marmande ------------------------- ----------------------------------- R. H. Marmande /s/ John P. Laborde Date Executed: November 25, 1996 ------------------------- ------------- /s/ Alden P. Laborde /s/ E. M. Dupaquier ------------------------- ----------------------------------- E. M. Dupaquier /s/ John P. Laborde Date Executed: November 25, 1996 ------------------------- ------------- /s/ Alden P. Laborde /s/ Elward Cunningham ------------------------- ----------------------------------- Elward Cunningham /s/ John P. Laborde Date Executed: November 25, 1996 ------------------------- ------------ /s/ Jules Ledet ------------------------- ----------------------------------- Jules Ledet ------------------------- Date Executed: , 1996 --------------- /s/ Jimmy Benoit ------------------------- ----------------------------------- Jimmy Benoit Date Executed: , 1996 ------------------------- ---------------- /s/ Kenny Bollinger ------------------------- ----------------------------------- Kenny Bollinger Date Executed: November 27 , 1996 ------------------------- ---------------- /s/ Willis Bonvillain ------------------------- ----------------------------------- Willis Bonvillain Date Executed: , 1996 ------------------------- -------------- /s/ E. Hensley, III ------------------------- ----------------------------------- E. Hensley ------------------------- Date Executed: , 1996 --------------- /s/ Hugh Watson ------------------------- ------------------------------------ Hugh Watson ------------------------- Date Executed: , 1996 ---------------- /s/ Tina Piazza ------------------------- ------------------------------------ Tina Piazza ------------------------- Date Executed: , 1996 ---------------- /s/ Hays Adams ------------------------- ------------------------------------ Hays Adams ------------------------- Date Executed: , 1996 --------------- /s/ Curtis Ledet ------------------------- ------------------------------------ Curtis Ledet Date Executed: , 1996 -------------------------- ---------------- /s/ Mark Foret -------------------------- ------------------------------------ Mark Foret Date Executed: , 1996 -------------------------- --------------- /s/ Davy Martin -------------------------- ----------------------------------- Davy Martin -------------------------- Date Executed: , 1996 ---------------- /s/ Shelly Hebert ------------------------- ------------------------------------ Shelly Hebert ------------------------- Date Executed: November 27 , 1996 ---------------- /s/ Wayne Verdun ------------------------- ------------------------------------ Wayne Verdun ------------------------- Date Executed: , 1996 ---------------- /s/ David Weber ------------------------- ------------------------------------- David Weber ------------------------- Date Executed: , 1996 ------------------ All schedules have been intentionally omitted. A copy of any omitted schedule will be furnished supplementally to the Commission upon request. EX-2 3 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT is made and entered into as of November 27, 1996 by, between and among Gulf Island Fabrication, Inc., a Louisiana corporation (hereinafter referred to as "Purchaser"), and E. M. Dupaquier and R. H. Marmande, the holders of all of the outstanding shares of capital stock (the "Sellers") of Dolphin Steel Sales, Inc. (the "Corporation" or the "Company"). E. M Dupaquier and R. H. Marmande are also referred to herein variously as the "Officers" or "Sellers' Representatives". W I T N E S S E T H : WHEREAS, Sellers desire to sell and the Purchaser desire to purchase all of the outstanding shares (the "Shares") of common stock of the Corporation for the consideration and on the terms and conditions set forth herein; and, WHEREAS, Purchaser and certain of the Sellers desire to enter into certain non-competition agreements (the "Non- Competition Agreements") as provided in Section 4.01. NOW, THEREFORE, the parties hereto hereby agree as follows: I. PURCHASE AND SALE OF ASSETS 1.01 Purchase and Sale. At the closing of the transaction contemplated hereby (the "Closing"), upon the terms and subject to the conditions contained in this Agreement, Purchaser shall purchase from Sellers and Sellers shall sell the Shares consisting of 1,000 shares of common stock, no par value per share, free and clear of any and all liens, mortgages, encumbrances and security interests. 1.02 Stock Purchase Price. (a) The initial purchase price for the Shares ("Initial Purchase Price") shall be Seven Hundred Seventy-Five Thousand, One Hundred Sixty-Three ($775,163) Dollars which shall be allocated among the Sellers in proportion to the Shares sold by each of them to Purchaser. (b)(1) The Initial Purchase Price shall be adjusted to the final purchase price ("Final Purchase Price") by increasing the Initial Purchase Price by the increase in the Net Book Value, as hereinafter defined, or by decreasing the Initial Purchase Price by the decrease in the Net Book Value of the Corporation between September 30, 1996 and the Closing as reflected on the Closing Balance Sheet (as hereinafter defined). However, the Final Purchase Price shall not be less than $775,163. (2) The term "Net Book Value" means the excess of (1) the book value of all of the Corporation's assets over (2) the book amounts of all the Corporation's current and long-term fixed liabilities and accrued expenses, including all unpaid ad valorem taxes prorated to the date of the Closing, whether or not any of the Corporation's assets are then subject to a lien therefor as of the Closing. All determinations of book value and book amounts shall be made in accordance with the accounting principles, methods and conventions employed in the preparation of the Corporation's September 30, 1996 balance sheet, a copy of which is attached as part of Schedule 1.02(b)(2) (hereinafter "Interim Financial Statements"), but with all intercompany payables, receivables and equity interests eliminated as among Dolphin Services, Inc., Dolphin Steel Sales, Inc. and Dolphin Sales & Rentals, Inc. as though they were members of a consolidated group. Net Book Value at September 30, 1996 was $775,163. (3) The term "Closing Balance Sheet" means for purposes of this Section 1.02(b) the balance sheet of the Corporation as of December 31, 1996 unless such date precedes the Closing by more than five (5) business days, in which case as of the date of the Closing ("Closing Date"), prepared in accordance with the same accounting principles, methods and conventions employed in the preparation of the Corporation's Interim Financial Statements. The Closing Balance Sheet shall be prepared by a certified public accountant or certified public accounting firm designated by Purchaser and shall be presented to Sellers and Purchaser within forty-five (45) days following the Closing. In the event either Sellers or Purchaser disagree with any of the figures shown on the Closing Balance Sheet, they or it shall notify the other parties hereto, within ten (10) days after their receipt of the Closing Balance Sheet, and shall furnish the reasons why that party is in disagreement. If the parties have not resolved their disagreements with respect to the Closing Balance Sheet within twenty (20) days after said notice, Sellers and Purchaser shall submit the handling of any disputed items to an independent nationally recognized accounting firm (other than Price, Waterhouse & Co.) selected by Purchaser and Sellers. If Purchaser and Sellers are unable to agree upon such a nationally recognized independent accounting firm within ten (10) days after expiration of said twenty (20) day period, such an independent nationally recognized accounting firm ("Arbitrator") shall be selected in accordance with the rules of the American Arbitration Association. The Arbitrator shall submit the correct Closing Balance Sheet to Purchaser and Sellers and shall certify the increase or decrease in Net Book Value between the date of the Interim Financial Statements and the close of business on the Closing Date. 1.03 Closing. The closing (the "Closing") shall take place at the offices of Messrs. Jones, Walker, Waechter, Poitevent, Carrere and Denegre, Baton Rouge, Louisiana, on a mutually agreeable date (the "Closing Date"), not later than ten (10) days following satisfaction of all conditions to Closing set forth in Article IX, but after January 1, 1997. Assuming the conditions set forth in Article IX shall have been satisfied, the Closing shall be deemed effective as of the close of business of the Corporation on the date of the Closing. At the Closing: (a) Purchaser shall deliver to Sellers by wire transfer or certified funds cash in an amount equal to Seven Hundred Twenty-Five Thousand, One Hundred Sixty-Three ($725,163) Dollars, allocated among Sellers in proportion to their ownership of the remaining outstanding shares of capital stock of the Corporation, and shall deliver to Whitney National Bank Fifty Thousand and No/100 ($50,000.00) Dollars to be held pursuant to the escrow agreement (the "Escrow Agreement") in the form attached hereto as Schedule 1.03(a), which shall also be executed at or prior to the Closing. (b) Sellers shall deliver to Purchaser certificates representing in the aggregate One Thousand (1,000) shares of capital stock of the Corporation with stock powers attached executed in blank, with signature guaranteed, free and clear of any and all liens, mortgages, security interests and encumbrances. (c) All officers and directors of the Corporation shall tender their resignations from such positions, said tender to occur simultaneously with the act of delivery of funds described in Section 1.03(a). 1.04 Post-Closing. Within ten (10) days following the date on which the Closing Balance Sheet has been agreed upon by the parties or otherwise determined to be accurate, if the Net Book Value of the Corporation as reflected on the Closing Balance Sheet is more than or less than the Net Book Value as reflected on the September 30, 1996 balance sheet of the Corporation, attached as part of Schedule 1.02(b)(2), Purchaser shall pay to or receive from, respectively, Sellers (in proportion to their present ownership of the Shares) cash (by wire transfer or bank cashier's check) equal to the difference. Failure by any Seller to make a payment required pursuant to this Section 1.04 shall constitute a breach of a covenant for which the remedies provided in Section 10.02 are applicable. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS For purposes of this Agreement the business (the "Business") of the Company is the onshore and offshore oil and gas production platform construction and maintenance business which consists of: outfitting and interconnect piping, painting and maintenance of onshore and offshore oil and gas production platforms; and the construction (including interconnect piping and pile driving) of shallow water and land platforms and pipeline installation. The phrase "in the ordinary course" means in the course of performing any one or more of those enumerated activities. Sellers herewith represent and warrant to Purchaser as of the date hereof and as of the Closing Date (unless another date is expressly set forth below) that: 2.01 Corporate Existence and Power. The Corporation is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Louisiana, and the Corporation has all corporate powers and all material governmental licenses, permits, authorizations, consents and approvals required to carry on the Business as now conducted. Subject to the provisions of the following sentence, the Corporation is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary. Sellers have heretofore delivered to Purchaser true and complete copies of the Corporation's Articles of Incorporation and By-Laws as currently in effect. 2.02 Governmental Authorization. The execution, delivery and performance by Sellers of this Agreement and the consummation by Sellers of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency, official or authority. 2.03 Non-Contravention. The execution, delivery and performance by Sellers of this Agreement and the consummation by Sellers of the transactions contemplated hereby do not and will not (i) contravene or conflict with the Articles of Incorporation or bylaws of the Corporation (other than any provision which may be waived by the Corporation and/or Sellers), (ii) contravene or conflict with or constitute a violation of any provision of law, regulation, judgment, injunction, order or decree binding upon or applicable to Sellers or the Corporation, or (iii) except as disclosed in Schedule 2.03, require any consent, approval or other action by any person or constitute a default under any obligation of Sellers or the Corporation under any provision of any contract or other instrument binding upon Sellers or the Corporation other than contracts and obligations which may be cancelled unilaterally upon notice to Sellers or the Corporation. 2.04 Subsidiaries. The Corporation does not own more than fifty (50%) percent of all outstanding shares of capital stock of, other ownership interests in, or other securities of any corporation or other entity. 2.05 Financial Statements. The balance sheet of the Corporation for the year ended December 31, 1995 (such date referred to herein as the "Balance Sheet Date" and such balance sheet the "Balance Sheet") and the related statements of income for the year ended December 31, 1995 (collectively, the "Financial Statements") have been previously delivered to Purchaser and are attached as Schedule 2.05. In all material respects, the Financial Statements fairly present the financial position of the Corporation as of the date thereof and its results of operations for the period then ended. 2.06 Absence of Certain Changes. Since the Balance Sheet Date to the date hereof, the Corporation has conducted the Business in the ordinary course consistent with past practice and, except as set forth in Schedule 2.06 or otherwise contemplated hereby, there has not been: (a) Any event, occurrence, development or state of circumstances or facts which has had or could reasonably be expected to have a material adverse effect on the Corporation, except to the extent the effect is reflected in the Interim Financial Statements; (b) Any incurrence, assumption or guarantee of any indebtedness for borrowed money or any material obligation or liability, except in the ordinary course of the Business consistent with past practice and except as reflected on the Interim Financial Statements; (c) Any creation or other incurrence of any Lien (as defined in Section 2.08) on any asset of the Corporation, except in the ordinary course of the Business consistent with past practice and except as reflected in the Interim Financial Statements; (d) Any making of any loan, advance or capital contributions to or investment in any person, except as reflected in the Interim Financial Statements; (e) Any amendment of any material term of any outstanding security of Seller; (f) Any material damage, destruction or other casualty loss affecting any of the assets of the Corporation, except those covered by insurance and except as reflected in the Interim Financial Statements; (g) Any transaction or commitment made, or any contract or agreement entered into, by the Corporation relating to its assets or the Business or any relinquishment of any contract or other right, in either case, material to the Corporation, other than transactions and commitments (including acquisitions and dispositions of steel and equipment) in the ordinary course of the Business consistent with past practice and except as reflected in the Interim Financial Statements; (h) Any declaration or payment of any dividend or other distribution by the Corporation or any repurchase, redemption or other acquisition for value of any security or other interest in the Corporation or any commitment to do any of the foregoing; (i) Any general or specific increase in the salary or other compensation (including, without limitation, bonuses, profit sharing or deferred compensation) payable or to become payable to any employees of the Corporation, except in the ordinary course of the Business consistent with past practice; (j) Any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Corporation or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to any employees of the Corporation; or (k) Any agreement entered into to do any of the foregoing. 2.07 Properties. (a) The Corporation has good and marketable title to, or in the case of leased property valid leasehold interests in, all property and assets (whether real or personal, tangible or intangible) reflected on the Balance Sheet or acquired after the Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practice. None of such properties or assets is subject to any liens, mortgages, security interests or other encumbrances (herein "Liens") except: (i) Liens disclosed on the Balance Sheet; (ii) Liens for taxes not yet due or being contested in good faith (and for which adequate accruals or reserves have been established on the Balance Sheet); (iii) Liens disclosed in Schedule 2.07(a) or which will be discharged at the Closing; (iv) Liens which do not materially detract from the value of such property or assets as now used, or materially interfere with any present or intended use of such property or assets; or (v) Liens in favor of vendors and lessors incurred in the ordinary course of business. Clauses (i), (ii), (iii) (iv) and (v) are, collectively, referred to herein as "Permitted Liens". (b) To the knowledge of Sellers and except as reflected on the Interim Financial Statements, there are no developments affecting any of such properties or assets pending or threatened which could materially detract from the value of such property or assets, materially interfere with any present or intended use of any such property or assets or materially adversely affect the marketability of such properties or assets. (c) All such leases of real and personal property with respect to which the Corporation is a lessee are as of the date hereof and will be on the Closing Date valid, binding and enforceable in accordance with their respective terms and there does not exist under any such lease any material default or any event which with notice or lapse of time or both would constitute a material default. (d) Schedule 2.07(d) identifies all real and personal property used or held for use in connection with the Business as of the date hereof (the "Property") and contains an accurate balance sheet showing the adjusted tax basis of all of the Corporation's assets for United States income tax purposes at September 30, 1996. The plants, buildings, structures, tools, steel inventory and equipment reflected on the Balance Sheet or acquired after the Balance Sheet Date through the date hereof have no material defects, are in good operating condition and repair and have been reasonably maintained consistent with standards generally followed in the industry (giving due account to the age and length of use of same, ordinary wear and tear excepted), are suitable for their present uses and, in the case of plants, buildings and other structures (including without limitation, the roofs thereof), are structurally sound, except as set forth on Schedule 2.07(d). Such plants, buildings and structures currently have access to (1) public roads or valid easements over private streets or private property for such ingress to and egress from all such plants, buildings and structures and (2) water supply, storm and sanitary sewer facilities, telephone, gas and electrical connections, fire protection, drainage and other public utilities, as is necessary for the conduct of the Business. None of the material structures on the immovable or real property of the Corporation encroaches upon real property of another person, and no structure of any other person substantially encroaches upon any immovable or real property of the Corporation. All items of equipment listed on Schedule 2.07(d) are in the possession and control of the Corporation and will be in the Corporation's possession and control on the Closing Date and are in good operating condition and are adequately performing the tasks which they are designed to perform. 2.08 Sufficiency of and Title to the Purchased Assets. (a) The assets (the "Assets") disclosed on the Balance Sheet and in Schedule 2.07(d) constitute as of the date thereof and hereof, respectively, all of the assets or property used or held for use in the Business and are adequate to conduct the Business as presently conducted. (b) Upon consummation of the transactions contemplated hereby, the Corporation will have good and marketable title in and to each of the Assets, free and clear of all Liens, except for Permitted Liens. 2.09 No Undisclosed Material Liabilities. Except as disclosed on Schedule 2.09, as of the Closing there will be no liabilities of the Corporation of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than: (i) Liabilities disclosed or provided for in the Interim Financial Statements; (ii) Liabilities for which adequate insurance is available; and, (iii) Liabilities incurred in the ordinary course of the Business, including tax liabilities and liabilities for personal injuries and property damage, which in the aggregate are not material to the Business taken as a whole. 2.10 Litigation. Except as set forth in Schedule 2.10, as of the date hereof there is no action, suit, investigation or proceeding (or any basis therefor) pending against, or to the knowledge of Sellers threatened against or affecting, Sellers, the Corporation or any of their or its properties before any court or arbitrator or any governmental body, agency, official or authority, which, individually or in the aggregate, if determined or resolved adversely to Sellers or the Corporation in accordance with the plaintiff's demands, would reasonably be expected to have a material adverse effect on Sellers or the Corporation or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. 2.11 Material Contracts. (a) Except as disclosed in Schedule 2.11(a) and elsewhere in this Agreement, as of the date hereof the Corporation is not a party to or subject to: (i) Any lease of real or immovable property; (ii) Any lease that is material to the Corporation of personal or movable property as lessee; (iii) Any contract for the purchase of materials, supplies, goods, services, equipment or other assets, other than in the ordinary course of the Business; (iv) Any sales, distribution or other similar agreement providing for the sale by the Corporation of materials, supplies, goods, services, equipment or other assets, other than to customers in the ordinary course of the Business; (v) Any lease of any item of tangible personal or movable property or real or immovable property as lessor other than to customers in the ordinary course of the Business; (vi) Any partnership, joint venture or other similar contract, arrangement or agreement; (vii) Any contract relating to indebtedness for borrowed money (whether incurred, assumed, guaranteed or secured by any asset); (viii) Any license, franchise or similar agreement; (ix) Any agency, dealer, sales representative or other similar agreement; (x) Any contract or commitment that substantially limits the freedom of the Corporation to compete in any line of business or with any person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any asset or which would so limit the freedom of the Corporation after the Closing; (xi) Any consulting agreement; (xii) Any contract relating to any guaranty or indemnity issued by the Corporation; (xiii) Any agreement relating to the acquisition or disposition of any part of the Business; or (xiv) Any other contract or commitment not made in the ordinary course of the Business consistent with past practice. (b) Each contract disclosed in any schedule to this Agreement or required to be disclosed pursuant to Section 2.11(a) is a valid and binding agreement of the Corporation, and, to the knowledge of Sellers, as of the date hereof is in full force and effect, and neither the Corporation nor, to the knowledge of Sellers, any other party thereto is in default or breach in any material respect under the terms of any such Contract, nor, to the knowledge of Sellers, has any event or circumstance occurred that, with notice or lapse of time or both, would constitute any such default or breach. 2.12 Licenses and Permits. Schedule 2.12 correctly describes each material governmental license, permit, authorization, consent or approval affecting, or relating in any way to, the Corporation and its business, together with the name of the governmental agency or entity issuing such license or permit (the "Permits"). Except as set forth on Schedule 2.12, such Permits are valid and in full force and effect and will not be terminated or impaired or become terminable as a result of the transactions contemplated hereby. 2.13 Ability to Conduct the Business. Except as set forth in Schedule 2.13, as of the date hereof there is no contract, nor any judgment, order, writ, injunction or decree that by its terms prevents or would reasonably be expected to prevent the use by the Corporation of the Assets or the conduct by the Corporation of the Business after the Closing Date. 2.14 Material Suppliers. Schedule 2.14 lists the five largest (in dollar value) suppliers of inventory to the Corporation during each of the last two completed fiscal years and through December 31, 1995. To the knowledge of Sellers, since the Balance Sheet Date there has not been any adverse change in the business relationship of the Corporation with any such supplier or with any supplier that is otherwise material to the Business or with any supplier as a result of the transactions contemplated hereby, except as disclosed on Schedule 2.14. 2.15 Insurance Coverage. Sellers have furnished or provided access to Purchaser to true and complete copies of, all insurance policies currently in effect covering the assets, the Business and the employees of the Corporation. Except as disclosed on Schedule 2.15, as of the date hereof there is no claim by the Corporation pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies. All premiums payable under all such policies have been paid and the Corporation is otherwise in full compliance with the terms and conditions of all such policies. 2.16 Compliance with Laws; No Defaults. (a) As of the date hereof, the Corporation is not in violation of, has not since December 31, 1995 violated, and to Sellers' knowledge is not under investigation with respect to or has not been threatened to be charged with or given notice of any violation of, any law, rules, ordinances or regulations, judgments, injunctions, orders or decrees binding upon or applicable to the Corporation, except for any violations set forth in Schedule 2.16(a) which would not, individually or in the aggregate, if finally determined adversely, result in a material adverse effect on the business of the Corporation. (b) As of the date hereof, the Corporation is not in default under, and no condition exists that with notice or lapse of time or both would constitute a default under any contract or other instrument binding upon the Corporation or affecting or relating to its business or any license, authorization, permit, consent or approval held by the Corporation or affecting or relating to the Business, except as otherwise disclosed in this Agreement or in Schedules attached hereto. 2.17 Inventories. The inventories set forth in the Balance Sheet were properly stated therein at cost determined in accordance with generally accepted accounting principles applied on a consistent basis. Since the Balance Sheet Date, the inventories related to the Business have been maintained in the ordinary course of business. Except as set forth in Schedule 2.17, all such inventory is owned free and clear of all Liens, except Permitted Liens. All of the inventory recorded on the Balance Sheet consists of, and all inventory related to the Business on the Closing Date will consist of, items of a quality usable or saleable in the normal course of the Business consistent with past practices and are and will be in quantities sufficient for the normal operation of the Business in accordance with past practice. 2.18 Receivables. All accounts, notes and other receivables (other than receivables collected since December 31, 1995) reflected on the Balance Sheet are, and all accounts, notes and other receivables arising out of or otherwise relating to the Corporation's business as of the Closing will be, valid, binding and enforceable, subject to applicable laws governing bankruptcy, moratorium or creditors' rights generally which may prevent their enforcement. The dollar amount shown for all such accounts on the Interim Financial Statements, less the allowance for doubtful accounts shown thereon, is collectible in full. All accounts, notes and other receivables arising out of or otherwise relating to the Business at the Balance Sheet Date have been included in the Balance Sheet, and all accounts, notes and other receivables arising out of or otherwise relating to the Business at the Closing Date will be reflected on the Corporation's financial books and records. 2.19 Intellectual Property. (a) Schedule 2.19(a) sets forth as of December 31, 1995 a list of all intellectual property rights (herein "Intellectual Property Rights") used or held for use or otherwise necessary in connection with the conduct of the Business, specifying as to each, as applicable: (i) the nature of such Intellectual Property Right; (ii) the owner of such Intellectual Property Right and if Seller is not the owner, the rights held by the Corporation; (iii) the jurisdictions by or in which such Intellectual Property Right is recognized, issued or registered or in which an application for such issuance or registration has been filed, including the respective registration or application numbers; and (iv) material licenses, sublicenses and other agreements as to which the Corporation is a party and pursuant to which any person is authorized to use such Intellectual Property Right, including the identity of all parties thereto, a description of the nature and subject matter thereof, the applicable royalty and the term thereof. (b) (i) Except as set forth in Schedule 2.19(b), the Corporation has not since January 1, 1996 been sued or charged in writing with or been a defendant in any claim, suit, action or proceeding relating to its business that has not been finally terminated prior to the date hereof and that involves a claim of infringement by the Corporation of any intellectual property rights of any other person, and (ii) the Corporation has no knowledge of any basis for any such claim of infringement, and no knowledge of any continuing infringement by any other person of any intellectual property rights used or held for use or otherwise necessary in connection with the conduct of the Business. No such intellectual property right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by the Corporation or restricting the licensing thereof by the Corporation to any Person. The Corporation has not entered into any agreement to indemnify any other person against any charge of infringement of any intellectual property rights. (c) As used herein, the term "Intellectual Property Right" means any trade name, trademark, service name, service mark, copyright, invention, patent, trade secret, know-how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right. 2.20 Employees. Schedule 2.20 identifies all of the Corporation's officers and key employees as of December 31, 1995. None of such key employees has indicated to the Corporation that he or she intends to resign or retire as a result of the transactions contemplated by this Agreement, except that E. M. Dupaquier and R. H. Marmande shall retire from the Corporation's employee on the Closing Date. 2.21 Fees. There is no investment banker, broker, financial advisor, finder or other intermediary which has been retained by or is authorized to act on behalf of Sellers who might be entitled to any fee or commission from Purchaser upon consummation of the transactions contemplated by this Agreement. 2.22 Environmental Matters. (a) The following defined terms, as used herein, have the following meanings: "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and governmental restrictions, whether now or hereafter in effect, relating to human health, the environment or to emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "Environmental Liabilities" means any and all liabilities of, or relating to, Seller (including any entity which is, in whole or in part, a predecessor of Seller), whether vested or unvested, contingent or fixed, actual or potential, known or unknown, which (i) arise under or relate to matters covered by Environmental Laws (including without limitation any matters disclosed or required to be disclosed in Schedule 2.22 hereto) and (ii) relate to actions occurring or conditions existing on or prior to the Closing Date. "Environmental Permits" means all permits, licenses, authorizations, certificates and approvals of governmental authorities relating to or required by Environmental Laws and necessary or proper for the business of Seller as currently conducted. "Hazardous Substance" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics, including, without limitation, any substance regulated under Environmental Laws. "Regulated Activity" means any generation, treatment, storage, recycling, transportation or disposal of any Hazardous Substance. "Release" means any discharge, emission or release including a Release as defined in CERCLA at 42 U.S.C. 9601 (22). The term "Released" has a corresponding meaning. (b) Except as disclosed on Schedule 2.22 as of the date hereof: (i) No notice, notification, demand, request for information, citation, summons, complaint or order has been issued, no complaint has been filed, no penalty has been assessed and, to Seller's knowledge, no investigation or review is pending or threatened by any governmental entity or other person with respect to any (a) alleged violation by the Corporation of any Environmental Law or liability thereunder, (b) alleged failure by the Corporation to have any Environmental Permit, (c) Regulated Activity, or (d) Release of Hazardous Substances; (ii) Other than generation in compliance with all applicable Environmental Laws, (a) the Corporation has not engaged in any Regulated Activity and (b) no Regulated Activity has occurred at or on any property now or previously owned, leased or operated by the Corporation; (iii) No polychlorinated biphenyls, radioactive material, urea formaldehyde, lead, asbestos, asbestos-containing material or underground storage tank (active or abandoned) is or has been present at any property now or previously owned, leased or operated by the Corporation; (iv) No Hazardous Substance has been Released (and no notification of such Release has been filed or made) or is present (whether or not in a reportable or threshold planning quantity) at, on or under any property now or previously owned, leased or operated by the Corporation; (v) No property now or previously owned, leased or operated by the Corporation or any property to which the Corporation has, directly or indirectly, transported or arranged for the transportation of any Hazardous Substances is listed or, to Seller's knowledge, proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign list of sites requiring investigation or clean-up; (vi) There are no liens under Environmental Laws on any of the real property or other assets owned, leased or operated by the Corporation, no governmental actions have been taken or are in process which could subject any of such properties or assets to such liens and the Corporation would not be required to place any notice or restriction relating to Hazardous Substances at any property owned by it in any deed to such property; (vii) There are no Environmental Permits that are nontransferable or require consent, notification or other action to remain in full force and effect following the consummation of the transactions contemplated hereby; and (viii) All Perchloroethylene and each other chemical substance used by the Corporation in connection with the business has been disposed of in accordance with all applicable laws, rules, regulations and pronouncements of the United States, all applicable states and all applicable boards, agencies, departments and other divisions thereof. (c) There has been no environmental investigation, study, audit, test, review or other analysis conducted of which the Corporation or Sellers has knowledge in relation to the current or prior business of the Corporation or any property or facility now or previously owned or leased by the Corporation which has not been delivered to Purchaser at least five days prior to the date hereof. (d) For purposes of this Section 2.22, the term "Corporation" shall include any entity which is, in whole or in part, a predecessor of the Corporation. 2.23 Labor Matters. As of the date hereof, the Corporation is in compliance with all currently applicable laws respecting employment and employment practices (including terms and conditions of employment, wages and hours) and is not engaged in any unfair labor practice, the failure to comply with which or engagement in which, as the case may be, would reasonably be expected to have a material adverse effect on the Business. As of the date hereof there is no unfair labor practice complaint pending or, to the knowledge of Sellers, threatened against the Corporation before the National Labor Relations Board or before any other state or local board, agency or tribunal. 2.24 The Shares. (a) There are presently outstanding and at the Closing there will be outstanding a total of One Thousand (1,000) shares of no par value voting common stock of the Corporation (the "Shares"). No other class of common, preferred or other type of shares of stock is presently outstanding. (b) The issuance of all of the Shares has been duly authorized by all required action by the Corporation and all of the Shares are fully paid and non-assessable. (c) The Shares are registered in the names of the persons and in the amounts set forth in Schedule 2.24(c). All of the Shares registered in the names of the above persons may be conveyed by them without the consent of an person, other than Consents of the Corporation and the other Sellers which are waivable by them at or prior to the Closing Date. (d) None of the Shares is subject to any lien, mortgage, pledge, security interest or other encumbrance and each Seller has good and marketable title to all Shares registered in his name. 2.25 Binding Agreement. This Agreement constitutes a valid and binding obligation of Sellers. 2.26 Other Information. None of the documents or information delivered to Purchaser in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Sellers that: 3.01 Organization and Existence. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana. 3.02 Corporate Authorization. The execution, delivery and performance by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated hereby or thereby are within the powers of Purchaser and have been duly authorized by all necessary action on the part of Purchaser. This Agreement constitutes a valid and binding agreement of Purchaser. 3.03 Governmental Authorization. The execution, delivery and performance by Purchaser of this Agreement requires no action by or in respect of, or filing with, any governmental body, agency, official or authority. 3.04 Non-Contravention. The execution, delivery and performance by Purchaser of this Agreement does not and will not (i) contravene or conflict with the Articles of Incorporation or By-Laws of Purchaser or (ii) assuming compliance with the matters referred to in Section 3.03, contravene or conflict with any provision of any law, regulation, judgment, injunction, order or decree binding upon Purchaser. 3.05 Fees. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser who might be entitled to any fee or commission from Sellers upon consummation of the transactions contemplated by this Agreement. 3.06 Financing. Purchaser will have on the Closing Date sufficient funds available to purchase the Shares, provided all conditions set forth in Article IX are satisfied. 3.07 Litigation. There is no action, suit, investigation or proceeding pending against, or to the knowledge of Purchaser threatened against or affecting, Purchaser before any court or arbitrator or any governmental body, agency or official which in any matter challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated hereby. ARTICLE IV COVENANTS OF SELLERS 4.01 Conduct of the Business. From the date hereof until the Closing Date, Sellers shall cause the Corporation to conduct the Business in the ordinary course consistent with past practice and cause the Corporation to exert its best efforts to preserve intact its business organization and relationships with third parties and to keep available the services of its present officers and employees. Without limiting the generality of the foregoing, from the date hereof until the Closing Date, Sellers shall not cause the Corporation to and the Corporation shall not: (i) Merge or consolidate with any other person or acquire a material amount of assets of any other person, other than steel, tools and equipment purchased in the ordinary course of the Business; (ii) Declare and/or pay any dividend or make any other distribution or transfer of cash or other assets to its shareholders in their capacities as such; (iii) Sell, lease, license or otherwise dispose of any assets except (a) pursuant to existing contracts or commitments and (b) in the ordinary course of the Business consistent with past practices; or (iv) Agree or commit to do any of the foregoing. Sellers shall not permit the Corporation to (a) take or agree or commit to take any action that would make any representation and warranty of Sellers hereunder inaccurate in any respect at, or as of any time prior to, the Closing Date or (b) omit or agree to commit or omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. 4.02 "S" Election. Sellers and their spouses shall execute and cause the Corporation to execute Internal Revenue Service forms 2553 so as to elect the provisions of Subchapter S of the United States Internal Revenue Code, sections 1361, et seq., effective January 1, 1997 and shall deliver fully completed forms 2553 with all of their signatures to Purchaser on or before the earlier of the Closing Date or January 15, 1997. 4.03 Access to Information. Sellers (i) will give Purchaser, its counsel, financial advisors, auditors and other authorized representatives reasonable access to the offices, properties, books and records of the Corporation and will allow Purchaser or its representatives access to conduct all reasonable environmental tests and inspections, (ii) will furnish to Purchaser, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the Corporation as such persons may reasonably request and (iii) will instruct its employees, counsel and financial advisors to cooperate with Purchaser in its investigation of the Corporation; provided, however, Purchaser shall utilize the minimum number of personnel as will not interfere with the conduct of the Corporation's business and shall utilize them only at the times the Corporation is open for business. No investigation by Purchaser or other information received by Purchaser shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Sellers hereunder. 4.04 Life Insurance Policies. Prior to the Closing, each seller shall purchase all policies of life insurance on his life owned by the Corporation for cash in the amount of the cash surrender values of these policies. 4.05 Notices of Certain Events. Sellers shall promptly notify Purchaser of: (i) Any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement; (ii) Any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; (iii) Any actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Corporation or the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 2.10 or that relate to the consummation of the transactions contemplated by this Agreement. ARTICLE V COVENANTS OF PURCHASER Purchaser agrees that: 5.01 Confidentiality. Prior to the Closing Date and for a period of one (1) year after any termination of this Agreement, Purchaser will hold, and will use its best efforts to cause its respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information (including, without limitation, confidential commercial information and information with respect to customers and proprietary systems, technologies or processes) concerning the Business or which the Corporation or Sellers furnished to Purchaser in connection with the transactions contemplated by this Agreement, except to the extent that such information can be shown to have been (i) previously known on a non-confidential basis by Purchaser, (ii) in the public domain through no fault of Purchaser or (iii) later lawfully acquired by Purchaser from sources other than the Corporation or Sellers; provided, that Purchaser may disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement so long as such persons are informed by Purchaser of the confidential nature of such information and are directed by Purchaser to treat such information confidentially. This obligation shall be satisfied if Purchaser exercises the same reasonable and customary care, in light of the industry and its past practices, with respect to such information as it would take to preserve the confidentiality of its own confidential information. If this Agreement is terminated, Purchaser will, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to, destroy or deliver to Sellers, upon request, all documents and other materials, and all copies thereof, obtained by Purchaser or on their behalf from Sellers or the Corporation in connection with this Agreement that are subject to such confidence. Purchaser agrees that it will retain all documents and other materials obtained by Purchaser from Sellers or the Corporation in connection with this Agreement and the transactions contemplated hereby for a reasonable and customary period of time and will not destroy any material documents during such period without first providing Seller with the opportunity of making copies thereof. 5.02 Access. On and after the Closing Date, Purchaser will afford promptly to Sellers through their representatives, E. M. Dupaquier and/or R. H. Marmande ("Sellers' Representatives"), reasonable access to the Corporation's properties, books, records, employees and auditors to the extent necessary to permit Sellers to determine any matter relating to their rights and obligations hereunder and Sellers' federal and state income and other tax liabilities with respect to any period ending on or before the Closing Date and shall maintain them for a period of five (5) years following the Closing or for such longer period as any audit (private, tax or other governmental) of those documents is continuing; provided that any such access by Sellers shall not unreasonably interfere with the conduct of the Business of the Corporation or Purchaser. Sellers will hold, and will use their best efforts to cause their officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning Purchaser or the Business provided to them pursuant to this Section 5.02. 5.03 No Election Under Section 338. (a) Purchaser shall not cause nor shall the Corporation make or file any election under any provision of Section 338, including Section 338(h)(10), of the United States Internal Revenue Code (the "Code") with respect to the transactions contemplated by this Agreement. (b) Purchaser shall take no action nor permit any action or course of conduct to be taken by it or by the Corporation, or permit the filing of any Section 338 election with respect to any other stock acquisition by Purchaser of any other corporation, if such filing would have the same effect as if a formal election under any provision of Section 338, including Section 338(h)(10), of the Code had been filed with respect to the transaction contemplated hereby. ARTICLE VI COVENANTS OF SELLERS AND PURCHASER Sellers and Purchaser hereto agree that: 6.01 Consulting Agreements. At the Closing, E. M. Dupaquier, R. H. Marmande and the Company shall execute the Consulting Agreements in the forms attached hereto as Schedule 6.01. 6.02 Best Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, each of Sellers and Purchaser will use their and its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. Sellers and Purchaser each agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement, but without expanding the obligations and responsibilities of any party hereunder. 6.03 Certain Filings. Sellers and Purchaser shall cooperate with one another (a) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement, and (b) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers. 6.04 Public Announcements. The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by applicable law, will not issue any such press release or make any such public statement prior to such consultation. ARTICLE VII TAX MATTERS 7.01 Tax Definitions. The following terms, as used herein, have the following meanings: "Code" means the Internal Revenue Code of 1986, as amended. "Post-Closing Tax Period" means any tax period ending after the Closing Date, except that with respect to a tax period that commences before but ends after the Closing Date, the portion of such period after the close of business on the Closing Date. "Pre-Closing Tax Period" means any tax period ending on or before the close of business on the Closing Date and with respect to a tax period that commences before but ends after the Closing Date, the portion of such period up to the close of business on the Closing Date. "Tax" means (i) any net income, alternative or add-on minimum, gross income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up capital, profits, greenmail, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax (a "Taxing Authority") and (ii) any liability to any person (including any applicable Taxing Authority) in respect of any tax included in Clause (i) above by reason of any indemnity, transferee liability, contractual or legal obligation. 7.02 Tax Matters. Sellers hereby represent and warrant to Purchaser as of the date hereof and as of the Closing Date that, except as provided in Schedule 7.02, the Corporation has paid or will timely pay all material taxes payable by the Corporation and attributable to any Pre-Closing Tax Period which are required to be paid on or prior to the Closing Date, the non-payment of which would result in a lien on the Shares on or after the Closing Date, would otherwise materially adversely affect the Business after the Closing Date or would result in Purchaser becoming liable therefor, except for taxes caused by an actual or deemed election under Section 338 of the Code, which is Purchaser's responsibility pursuant to Section 5.03. Sellers herewith represent that the only Taxes which will be owed by the Corporation as of the Closing Date are those which arise or have arisen or have been incurred in the ordinary course of the Corporation's Business. The Corporation has filed all required income, franchise, sales, ad valorem, employment and other tax returns and paid the total amount of Taxes due by it. The provision for the corporate income and franchise tax liability of the Corporation for all periods through the Closing Date as shown on the Closing Balance Sheet will be adequate relative to the Corporation's actual liability therefor as finally determined. Sellers represent that the Corporation is not prohibited by any law, rule or regulation from electing the provisions of Subchapter S of the Code, sections 1361, et seq., commencing January 1, 1997. 7.03 Tax Cooperation: Allocation of Taxes. (a) Purchaser and Sellers agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Corporation, the non-compete covenant described in Section 4.01 and the Business as is reasonably necessary for the filing of all tax returns, and making of any election related to taxes, the preparation for any audit by any taxing authority, and the prosecution or defense of any claim, suit or proceeding relating to any tax return. Sellers and Purchaser shall cooperate with each other in the conduct of any audit or other proceeding related to taxes involving the Business and each shall execute and deliver such powers of attorney and other documents as are reasonably necessary to carry out the intent of this Paragraph (a) of Section 7.03. (b) Any transfer, documentary, sales, use or other taxes arising in connection with the transactions contemplated by this Agreement and any recording or filing fees with respect thereto (each, a "Transfer Tax") shall be the responsibility of Purchaser. (c) Each of Sellers and Purchaser shall execute all required elections pursuant to section 1377(a)(2) of the Code to terminate the Corporation's taxable year commencing January 1, 1997 and ending as of the close of business on the Closing Date (as defined in Section 1.03 entitled "Closing"), and allocate all of the Corporation's income or loss for that period to Sellers and the Corporation's income or loss for the remainder of calendar year 1997 to Purchaser. ARTICLE VIII EMPLOYEE BENEFITS 8.01 Employee Benefits Definitions. The following terms, as used herein, shall have the following meanings: "Benefit Arrangement" means any employment, severance or similar contract, or any other contract, plan, policy or arrangement (whether or not written) providing for compensation, bonus, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) that (i) is not an Employee Plan, (ii) is entered into, maintained, administered or contributed to, as the case may be, by Seller and (iii) covers any employee or former employee of the Corporation. "Employee Plan" means any "employee benefit plan" as defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is maintained, administered or contributed to by the Corporation and (iii) covers an employee or former employee of the Corporation. "ERISA Affiliate" of any entity means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code. "Multi-Employer Plan" means each Employee Plan that is a multi-employer plan, as defined in Section 3(37) of ERISA. "PBGC" means the Pension Benefit Guaranty Corporation. "Title IV Plan" means an Employee Plan, other than any Multi-Employer Plan, subject to Title IV of ERISA. 8.02 Employee Matters. The Sellers hereby represent and warrant to Purchaser as of the date hereof: (a) Schedule 8.02(a) lists each Employee Plan. Sellers have provided or allow Purchaser access to as a true and complete copy of each such Plan (and, if applicable, related trust documents) and all amendments thereto and written interpretations thereof together with (i) the three most recent annual reports prepared in connection with each such Employee Plan (Form 5500 including, if applicable, Schedule B thereto) and (ii) the most recent actuarial report, if any, prepared in connection with each Employee Plan. Schedule 8.02(a) identifies each person who is a participant or who is eligible to participate in each Employee Plan who is not an active employee of Seller. The term "active employee" shall mean any person who, on the Closing Date, is actively employed by the Corporation or who is on short-term disability leave, authorized leave of absence, military service or lay-off with recall rights as of the Closing Date. (b) Schedule 8.02(b) sets forth all Benefit Arrangements presently in place for all employees of the Corporation. (c) As of the date hereof, there is no litigation, administrative or arbitration proceeding or other dispute pending or threatened that involves any Employee Plan or Benefit Arrangement which could reasonably be expected to result in a liability to the Corporation or Purchaser. (d) No Employee Plan is (i) a Multi-Employer Plan, (ii) a Title IV Plan or (iii) is maintained in connection with any trust described in Section 501(c)(9) of the Code. No "prohibited transaction", as defined in Section 406 of ERISA or Section 4975 of the Code, has occurred that could result in a liability to the Corporation, Purchaser or any of its Affiliates. As used herein the term "Affiliate" means any individual, group of individuals, corporation, partnership or other entity controlled by, controlling or under common control with the person or entity with respect to which that term is used. Neither the Corporation nor any of its current or former Affiliates (while an Affiliate) has within the last five (5) years engaged in or is a successor or parent corporation to an entity that has engaged in, a transaction described in Section 4069 of ERISA. Neither the Corporation nor any of its current or former Affiliates has ever maintained or become obligated to contribute to any employee benefit plan (i) that is subject to Title IV of ERISA, (ii) to which Section 412 of the Code applies, or (iii) that is a multi-employer plan under Title IV of ERISA. The Corporation has not incurred, and does not reasonably expect to incur, (a) any liability under Title IV of ERISA arising in connection with the termination of, or complete or partial withdrawal from, any plan covered or previously covered by Title V of ERISA or (b) any liability under Section 4971 of the Code that in either case could become a liability of the Corporation or any of its Affiliates after the Closing Date. (e) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period from its adoption to date, and no event has occurred since such adoption that would adversely affect such qualification and each trust created in connection with each such Employee Plan forming a part thereof is exempt from tax pursuant to Section 501(a) of the Code. Sellers have furnished to Purchaser copies of the most recent Internal Revenue Service determination letters with respect to each such Plan. Each Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations including but not limited to ERISA and the Code. (f) Seller has furnished to Purchaser copies or descriptions of each Benefit Arrangement. Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Benefit Arrangement. Schedule 8.02(f) identifies each individual eligible to receive a benefit under a Benefit Arrangement who is not an active employee, as defined in Section 8.02(a), of the Corporation. (g) The Corporation has no current or projected liability in respect of post-retirement or post-employment welfare benefits for retired, current or former employees, except as required to avoid excise tax under Section 4980B of the Code. (h) Except as disclosed in writing to Purchaser prior to the date hereof, there has been no amendment to, written interpretation of or announcement (whether written or not written) by the Corporation or any of its Affiliates relating to, or change in employee participation or coverage under, any Employee Plan or Benefit Arrangement which would increase materially the expense of maintaining such Employee Plan or Benefit Arrangement above the level of the expense incurred in respect thereof in connection with the Corporation's Employees for the most recently completed fiscal year. (i) No employee of the Corporation will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced such benefit (including acceleration of an award, vesting or exercise of an incentive award) or any fee or payment of any kind solely as a result of any of the transactions contemplated hereby. (j) There is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of the Corporation or any of its Affiliates that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code. (k) No tax under Section 4980B of the Code has been incurred in respect of any Employee Plan that is a group health plan, as defined in Section 5000(b)(1) of the Code. ARTICLE IX CONDITIONS TO CLOSING 9.01 Conditions to the Obligations of Each Party. The obligations of Purchaser and Sellers to consummate the Closing are subject to the satisfaction, or waiver by both parties, of the following conditions: (a) No provision of any applicable law or regulation and no judgment, injunction, order or decree shall (i) prohibit the consummation of the Closing or (ii) restrain, prohibit or otherwise interfere with the effective operation or enjoyment by Purchaser of the Shares. (b) All actions by or in respect of or filings with any governmental body, agency, official or authority required to permit the consummation of the Closing, and all material third party consents necessary in connection with the consummation of the Closing, shall have been obtained. (c) All waivers of applicable rights of first refusal by the Corporation and the Sellers have been obtained to permit consummation of the transactions contemplated herein. 9.02 Conditions to Obligations of Purchaser. The obligation of Purchaser to consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Sellers shall have performed in all material respects all of their obligations hereunder required to be performed by them at or prior to the Closing Date (including their obligations set forth in Section 4.02), (ii) the representations and warranties of Sellers contained in this Agreement and in any certificate or other writing delivered by Sellers pursuant thereto, disregarding all qualifications and exceptions contained therein relating to materiality, shall be true at and as of the respective dates applicable to each of them as set forth herein, and (iii) Purchaser shall have received a certificate signed by the President of the Corporation to the foregoing effects. (b) No proceeding challenging this Agreement or the transactions contemplated hereby or seeking to prohibit, alter, prevent or materially delay the Closing shall have been instituted by any person before any court, arbitrator or governmental body, agency or official nor shall they be pending. (c) Purchaser shall have received all documents it may reasonably request relating to the existence of and good standing of the Corporation. (d) The Corporation shall have been issued an owner's title insurance policy with respect to all real or immovable property in a form and only with such exceptions as are reasonably acceptable to Purchaser. The cost of the owner's title insurance policy shall be borne equally between Sellers and Purchaser. (e) Nothing has come to Purchaser's attention which would indicate that any of the representations and warranties of Sellers are untrue in any material respect or that Sellers have failed to perform any of their covenants contained herein. 9.03 Conditions to Obligations of Sellers. The obligation of Sellers to consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Purchaser shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date and (ii) the representations and warranties of Purchaser contained in this Agreement and in any certificate or other writing delivered by Purchaser pursuant hereto shall be true in all material respects at and as of the Closing Date, as if made at and as of such date. (b) Sellers shall have received all documents they may reasonably request relating to the existence of Purchaser and the authority of Purchaser to execute and consummate this Agreement, all in form and substance reasonably satisfactory to Seller. ARTICLE X SURVIVAL; INDEMNIFICATION 10.01 Survival. The covenants, agreements, representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing. 10.02 Indemnification. (a) Sellers ("Indemnifying Party" or "Indemnifying Parties") jointly, severally and in solido hereby indemnify Purchaser and all of Purchaser's officers, directors, employees and shareholders (hereinafter "Indemnified Parties") against and agree to defend and hold them harmless from and against any and all damage, loss, liability and expense, including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding (collectively, "Loss") incurred or suffered by any of the Indemnified Parties arising out of any willful misrepresentation or breach of warranty, covenant or agreement made or to be performed by Sellers pursuant to this Agreement, including all of those made by Sellers in Articles I, II, IV, VI, VII and VIII hereof. Sellers shall have no obligation with respect to any loss, claim, demand, suit or action against the Corporation or Purchaser notice of which is given to Sellers' Representatives after December 31, 1998 as to all claims, demands, suits or actions other than for the payment of any Tax and after December 31, 2000 as to all claims, demands, suits or actions for the payment of any Tax. (b) Purchaser hereby agrees to defend and indemnify Sellers against and to hold Sellers harmless from any and all Loss incurred or suffered by Sellers arising out of any failure to perform, misrepresentation or breach of any warranty, covenant or agreement made or to be performed by Purchaser pursuant to this Agreement. Purchaser shall have no obligation with respect to any loss, claim, demand, suit or action against Sellers notice of which is given to Purchaser (by Sellers or any other person or governmental agency) after December 31, 1998. (c) Except as otherwise provided in Section 10.03 hereof in respect of matters relating to Taxes, the following provisions shall apply: (i) Promptly after receipt by an Indemnified Party of notice of the commencement of any action or proceeding involving a claim in respect of which indemnification is being sought, such Indemnified Party will, if a claim for indemnification hereunder is to be made against the Indemnifying Party, give written notice to the Indemnifying Parties (through Sellers' Representatives) of the commencement of such action or proceeding, the basis for such claim for indemnification and such other information relating thereto as the Indemnifying Party may reasonably request; provided, however, that failure to so notify the Indemnifying Parties or to provide such information shall not relieve such Indemnifying Parties from any liability which they may have with respect to such claim, except to the extent that they are actually materially prejudiced by such failure to give notice. (ii) In case any such action is brought against an Indemnified Party, the Indemnified Party shall assume and control the defense of such action with counsel selected by the Indemnified Party. It is understood that the Indemnifying Parties shall not, in connection with any action or related actions in the same jurisdiction, be liable for the fees and disbursements of more than one separate firm qualified in such jurisdiction to act as counsel for all Indemnified Parties, unless in any such Indemnified Party's reasonable judgment (i) a conflict of interest between such Indemnified Party and any other Indemnified Party may exist in respect of such claim or (ii) such Indemnified Party has available to it reasonable defenses which are different from or additional to those available to other Indemnified Parties. The Indemnifying Parties shall not be liable for any settlement of any proceeding effected without their written consent (given by Sellers' Representatives), but if settled with such consent or if there shall be a final judgment for the plaintiff, the Indemnifying Parties agree to indemnify the Indemnified Party and hold the Indemnified Party harmless from and against any Losses by reason of such settlement or judgment (it being understood that if the Sellers are the Indemnifying Party such indemnification obligation shall be joint and several). The Indemnifying Parties shall not, without the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Any dispute as to whether any Indemnified Party is entitled to indemnification in connection with any action or proceeding under Section 10.02(c), the defense or settlement of such action or proceeding, or any other rights or obligations of the parties hereto in connection with such action or proceeding shall be submitted to arbitration in accordance with Section 12.06 of this Agreement. (iii) In the event that an Indemnified Party shall claim a right to payment pursuant to this Agreement with respect to which there has been no action or proceeding involving such claim, such Indemnified Party shall send written notice of such claim to the Indemnifying Parties. Such notice shall specify the basis for such claim in reasonable detail. As promptly as possible after the Indemnified Party has given such notice, such Indemnified Party and the Indemnifying Parties (acting through Sellers' Representatives) shall establish the merits and amount of Losses, if any, to which the Indemnified Party is entitled. If the parties do not agree with respect to these matters within 30 days after the giving of such notice, either party may submit the matter to arbitration in accordance with Section 12.06 of this Agreement. In such arbitration, if the arbitrator determines that a breach of a representation, warranty, covenant or agreement in this Agreement by the Indemnifying Parties occurred and that such breach caused Losses to an Indemnified Party, the arbitrator will determine the amount of any such Losses. Within ten business days after the final determination of the merits of such claim and amount of such Losses, each Indemnifying Party shall, subject to the limitations set forth herein, deliver to the Indemnified Party an amount of cash in immediately available funds sufficient to satisfy such Losses or the portion of such Losses for which such Indemnifying Party is obligated to provide indemnity hereunder. (iv) If any Seller fails to timely deliver cash in the amount of any Losses payable by such Seller under the terms of this Agreement, Purchaser may withdraw from funds held in the Escrow Account (as defined below) an amount of cash equal to the amount of Losses which has not been paid by that Seller. (d) Wherever this Agreement requires actions or decisions of the Indemnifying Parties, those actions or decisions shall be taken by either or both of Sellers' Representatives acting on behalf of all Indemnifying Parties. 10.03 Covenants Regarding Tax Matters. (a) Taxes attributable to the taxable period of the Corporation beginning before and ending after the Closing Date shall be allocated (i) to the Sellers for the period up to and including the Closing Date to the extent such Taxes exceed the reserve therefor on the Closing Balance Sheet and (ii) to Purchaser for the period up to and including the Closing Date to the extent such Taxes do not exceed the reserve therefor on the Closing Date Balance Sheet and for the period subsequent to the Closing Date. For purposes of this Section 10.03(a), Taxes for the period up to and including the Closing Date and for the period subsequent to the Closing Date shall be determined on the basis of an interim closing of the books as of the Closing Date. (b) The Sellers may not file any amended returns or refund claims in respect of any taxable period of the Corporation ending on or prior to the Closing Date. (c) The Sellers shall cooperate fully with Purchaser and make available to Purchaser in a timely fashion such Tax data and other information as may be reasonably required for the preparation by Purchaser of any returns of the Corporation required to be prepared and filed by Purchaser hereunder. The Sellers and Purchaser shall make available to the other, as reasonably requested, all information, records or documents in their possession relating to Tax liabilities of the Corporation for all taxable periods of the Corporation ending on, prior to or including the Closing Date and shall preserve all such information, records and documents until the expiration of any applicable Tax statute of limitations or extensions thereof or, if a proceeding has been instituted for which the information, records or documents is required, until there is a final determination with respect to such proceeding. (d)(i) Purchaser shall promptly notify the Sellers' Representatives upon receipt by Purchaser or the Corporation of written notice of any Tax audits or of proposed assessments against the Corporation for taxable periods of the Corporation ending on or prior to the Closing Date; provided, however, that the failure of Purchaser to give Sellers' Representatives prompt notice as required herein shall not relieve the Sellers of any of their obligations hereunder, except to the extent that the Sellers are actually and materially prejudiced thereby. Purchaser shall have the right to represent the interests of the Corporation in any such Tax audit or administrative or court proceeding and to employ counsel of its choice; provided, however, that Purchaser may not agree to a settlement or compromise thereof without the prior written consent of Sellers' Representatives, which consent may be withheld solely in the event that Sellers' Representatives have been advised in writing by counsel reasonably acceptable to Purchaser that it is more likely than not that the issue under audit (or the proposed assessment) would be decided favorably to the Corporation and that written advice has been furnished to Purchaser. The Sellers agree that they will cooperate fully with Purchaser and its counsel in the defense against or compromise of any claim in any said audit or proceeding. (ii) The Sellers shall promptly notify Purchaser upon receipt by the Sellers of written notice of any Tax audit or proposed assessment or other proposed change or adjustment which may affect the Corporation or its Tax attributes. The Sellers shall keep Purchaser duly informed of the progress thereof and, if the results of such Tax audit or proceeding may have an adverse effect on the Corporation, Purchaser or its affiliates for any taxable period including or ending after the Closing Date, then the Sellers may not agree to a settlement or compromise thereof without Purchaser's consent. (e) Within ten (10) days after notice by Purchaser to Sellers' Representatives of the total amount of additional taxes, penalties and interest owed by the Corporation for periods prior to the Closing, Sellers shall remit to Purchaser the entire amount thereof less the future tax benefit attributable to the increase in future depreciation deductions as a result of the adjustment which caused those additional taxes. The future tax benefit shall be deemed equal to forty (40%) percent of the total additional depreciation which the Corporation would thereby be able to deduct in future years provided the amount of this reduction shall not exceed the amount of additional taxes (apart from penalties and interest) then owed by the Corporation. If any Seller fails to remit his entire proportionate share of the amount due, Purchaser may withdraw said amount from the Escrow Account, to the extent thereof, and if the Escrow Account is insufficient, any one or more of the other Sellers shall pay Purchaser the shortfall upon ten (10) days written notice. (f) The Sellers and Purchaser agree to treat any indemnity payment made pursuant to this Agreement as an adjustment to the Purchase Price for federal, state, local and foreign income tax purposes. If, notwithstanding such treatment by the parties, any indemnity payment is determined to be taxable to Purchaser or the Corporation by any taxing authority, the Sellers shall indemnify Purchaser and its Affiliates for any Taxes payable by reason of the receipt of such indemnity payment (including any payments under this Section 10.03(f)). ARTICLE XI TERMINATION 11.01 Grounds for Termination. This Agreement may be terminated at any time prior to the Closing: (i) by mutual written agreement of Sellers' Representatives and Purchaser; (ii) By Purchaser if the Closing shall not have been consummated on or before January 15, 1997 unless extended by mutual agreement of Sellers' Representatives and Purchaser; (iii) By either Sellers' Representatives or Purchaser if there shall be any law or regulation that makes the consummation of the transactions contemplated hereby illegal or otherwise prohibited or if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction; or, (iv) By Purchaser if anything has come to its attention that any of Sellers' representations or warranties are untrue in any respect or Purchaser has discovered any contamination or any Hazardous Substance on the premises of the Corporation or any violations of any Environmental Laws by the Corporation which have not been remedied as of the date of the discovery. The party desiring to terminate this Agreement pursuant to Clauses (ii), (iii) or (iv) shall give notice of such termination to the other party. 11.02 Effect of Termination. If this Agreement is terminated as permitted by Section 11.01, such termination shall be without liability of any party (or of any shareholder, director, officer, employee, agent, consultant or representative of such party) to the other parties to this Agreement; provided that if such termination shall result from the willful failure of any party to fulfill a condition to the performance of the obligations of another party or to perform a covenant of this Agreement or from a willful breach by any party to this Agreement, such party shall be fully liable for any and all Losses incurred or suffered by any other party as a result of such failure or breach. The provisions of Sections 5.01 and 12.03 shall survive any termination hereof pursuant to Section 11.01. ARTICLE XII MISCELLANEOUS 12.01 Notices. All notices, requests and other communications to either party hereunder shall be in writing (including facsimile, telecopy or similar writing) and shall be deemed given when delivered: If to Purchaser, to: Gulf Island Fabrication, Inc. Attn: Kerry J. Chauvin, President 583 Thompson Road Houma, LA 70361-0310 With a Copy to: Robert R. Casey, Esq. Four United Plaza, 5th Floor 8555 United Plaza Boulevard Baton Rouge, LA 70809-7000 If to Sellers or to Indemnifying Parties, to Sellers' Representatives: E. M. Dupaquier 206 Maple Avenue Houma, LA 70364 R. H. Marmande 1321 Dularge Road Houma, LA 70397 With a Copy to: P. J. McMahon, Esq. P. O. Box 1545 Houma, LA 70361 Each of the above persons may change their address or facsimile number by notice to the other persons in the manner set forth above. 12.02 Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Purchaser and Seller, or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the existence of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 12.03 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. 12.04 Successors and Assigns. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other party hereto. Neither this Agreement nor any provision hereof is intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 12.05 Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of Louisiana without regard to the conflicts of law rules of such state. 12.06 Jurisdiction and Forum: Arbitration. Any controversy arising under, out of, in connection with, or relating to, this Agreement, and any amendment hereof, or the breach hereof or thereof, shall be determined and settled by arbitration in New Orleans, Louisiana by an arbitrator or arbitrators mutually agreed upon by Purchaser and the Sellers' Representatives or, if Purchaser and Sellers' Representatives shall fail or be unable to so agree within ten Business Days after the written request therefor by Purchaser or the Representatives to the other, such arbitrator or arbitrators as may be selected in accordance with the rules of the American Arbitration Association. Any award rendered therein shall specify the findings of fact of the arbitrator or arbitrators and the reasons for such award, with reference to and reliance on relevant law. Any such award shall be final and binding on each and all of the parties thereto and their personal representatives, and judgment may be entered thereon in any court having jurisdiction thereof. 12.07 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received as a counterpart hereof signed by the other party hereto. 12.08 Entire Agreement. This Agreement and any other agreements referred to herein constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect thereto. No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by either party hereto. 12.09 Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 12.10 Severability. In the event any one or more of the provisions of this Agreement shall be or become illegal or unenforceable in any respect, the validity, legality, operation and enforceability of the remaining provisions of this Agreement shall not be affected thereby. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers effective as of the day and year first above written but executed on the dates set forth below. WITNESSES: GULF ISLAND FABRICATION, Purchaser /s/ Elward Cunningham BY: /s/ Kerry J. Chauvin ------------------------- -------------------------------- Kerry J. Chauvin, President /s/ John P. Laborde Date Executed: November 25,1996 ------------------------- ------------- SELLERS: /s/ Alden J. Laborde /s/ R. H. Marmande ------------------------- ----------------------------------- R. H. Marmande /s/ John P. Laborde Date Executed: November 25, 1996 ------------------------- ------------ /s/ Alden J. Laborde /s/ E.M. Dupaquier ------------------------- ----------------------------------- E. M. Dupaquier /s/ John P. Laborde Date Executed: November 25, 1996 ------------------------- ------------ All schedules have been intentionally omitted. A copy of any omitted schedule will be furnished supplementally to the Commission upon request. EX-2 4 STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT is made and entered into as of November 27, 1996 by, between and among Gulf Island Fabrication, Inc., a Louisiana corporation (hereinafter referred to as "Purchaser"), and E. M. Dupaquier and R. H. Marmande, the holders of all of the outstanding shares of capital stock (the "Sellers") of Dolphin Sales & Rentals, Inc. (the "Corporation" or the "Company"). E. M Dupaquier and R. H. Marmande are also referred to herein variously as the "Officers" or "Sellers' Representatives". W I T N E S S E T H : WHEREAS, Sellers desire to sell and the Purchaser desire to purchase all of the outstanding shares (the "Shares") of common stock of the Corporation for the consideration and on the terms and conditions set forth herein; and, WHEREAS, Purchaser and certain of the Sellers desire to enter into certain non-competition agreements (the "Non- Competition Agreements") as provided in Section 4.01. NOW, THEREFORE, the parties hereto hereby agree as follows: I. PURCHASE AND SALE OF ASSETS 1.01 Purchase and Sale. At the closing of the transaction contemplated hereby (the "Closing"), upon the terms and subject to the conditions contained in this Agreement, Purchaser shall purchase from Sellers and Sellers shall sell the Shares consisting of 1,000 shares of common stock, no par value per share, free and clear of any and all liens, mortgages, encumbrances and security interests. 1.02 Stock Purchase Price. (a) The initial purchase price for the Shares ("Initial Purchase Price") shall be One Hundred Fifty-Two Thousand, Two Hundred Eighty-Two ($152,282) Dollars which shall be allocated among the Sellers in proportion to the Shares sold by each of them to Purchaser. (b)(1) The Initial Purchase Price shall be adjusted to the final purchase price ("Final Purchase Price") by increasing the Initial Purchase Price by the increase in the Net Book Value, as hereinafter defined, or by decreasing the Initial Purchase Price by the decrease in the Net Book Value of the Corporation between September 30, 1996 and the Closing as reflected on the Closing Balance Sheet (as hereinafter defined). However, the Final Purchase Price shall not be less than $152,282. (2) The term "Net Book Value" means the excess of (1) the book value of all of the Corporation's assets over (2) the book amounts of all the Corporation's current and long-term fixed liabilities and accrued expenses, including all unpaid ad valorem taxes prorated to the date of the Closing, whether or not any of the Corporation's assets are then subject to a lien therefor as of the Closing. All determinations of book value and book amounts shall be made in accordance with the accounting principles, methods and conventions employed in the preparation of the Corporation's September 30, 1996 balance sheet, a copy of which is attached as part of Schedule 1.02(b)(2) (hereinafter "Interim Financial Statements"), but with all intercompany payables, receivables and equity interests eliminated as among Dolphin Services, Inc., Dolphin Steel Sales, Inc. and Dolphin Sales & Rentals, Inc. as though they were members of a consolidated group. Net Book Value at September 30, 1996 was $152,282. (3) The term "Closing Balance Sheet" means for purposes of this Section 1.02(b) the balance sheet of the Corporation as of December 31, 1996 unless such date precedes the Closing by more than five (5) business days, in which case as of the date of the Closing ("Closing Date"), prepared in accordance with the same accounting principles, methods and conventions employed in the preparation of the Corporation's Interim Financial Statements. The Closing Balance Sheet shall be prepared by a certified public accountant or certified public accounting firm designated by Purchaser and shall be presented to Sellers and Purchaser within forty-five (45) days following the Closing. In the event either Sellers or Purchaser disagree with any of the figures shown on the Closing Balance Sheet, they or it shall notify the other parties hereto, within ten (10) days after their receipt of the Closing Balance Sheet, and shall furnish the reasons why that party is in disagreement. If the parties have not resolved their disagreements with respect to the Closing Balance Sheet within twenty (20) days after said notice, Sellers and Purchaser shall submit the handling of any disputed items to an independent nationally recognized accounting firm (other than Price, Waterhouse & Co.) selected by Purchaser and Sellers. If Purchaser and Sellers are unable to agree upon such a nationally recognized independent accounting firm within ten (10) days after expiration of said twenty (20) day period, such an independent nationally recognized accounting firm ("Arbitrator") shall be selected in accordance with the rules of the American Arbitration Association. The Arbitrator shall submit the correct Closing Balance Sheet to Purchaser and Sellers and shall certify the increase or decrease in Net Book Value between the date of the Interim Financial Statements and the close of business on the Closing Date. 1.03 Closing. The closing (the "Closing") shall take place at the offices of Messrs. Jones, Walker, Waechter, Poitevent, Carrere and Denegre, Baton Rouge, Louisiana, on a mutually agreeable date (the "Closing Date"), not later than ten (10) days following satisfaction of all conditions to Closing set forth in Article IX, but after January 1, 1997. Assuming the conditions set forth in Article IX shall have been satisfied, the Closing shall be deemed effective as of the close of business of the Corporation on the date of the Closing. At the Closing: (a) Purchaser shall deliver to Sellers by wire transfer or certified funds cash in an amount equal to One Hundred Two Thousand, Two Hundred Eighty-Two ($102,282) Dollars, allocated among Sellers in proportion to their ownership of the remaining outstanding shares of capital stock of the Corporation, and shall deliver to Whitney National Bank Fifty Thousand and No/100 ($50,000.00) Dollars to be held pursuant to the escrow agreement (the "Escrow Agreement") in the form attached hereto as Schedule 1.03(a), which shall also be executed at or prior to the Closing. (b) Sellers shall deliver to Purchaser certificates representing in the aggregate One Thousand (1,000) shares of capital stock of the Corporation with stock powers attached executed in blank, with signature guaranteed, free and clear of any and all liens, mortgages, security interests and encumbrances. (c) All officers and directors of the Corporation shall tender their resignations from such positions, said tender to occur simultaneously with the act of delivery of funds described in Section 1.03(a). 1.04 Post-Closing. Within ten (10) days following the date on which the Closing Balance Sheet has been agreed upon by the parties or otherwise determined to be accurate, if the Net Book Value of the Corporation as reflected on the Closing Balance Sheet is more than or less than the Net Book Value as reflected on the September 30, 1996 balance sheet of the Corporation, attached as part of Schedule 1.02(b)(2), Purchaser shall pay to or receive from, respectively, Sellers (in proportion to their present ownership of the Shares) cash (by wire transfer or bank cashier's check) equal to the difference. Failure by any Seller to make a payment required pursuant to this Section 1.04 shall constitute a breach of a covenant for which the remedies provided in Section 10.02 are applicable. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS For purposes of this Agreement the business (the "Business") of the Company is the onshore and offshore oil and gas production platform construction and maintenance business which consists of: outfitting and interconnect piping, painting and maintenance of onshore and offshore oil and gas production platforms; and the construction (including interconnect piping and pile driving) of shallow water and land platforms and pipeline installation. The phrase "in the ordinary course" means in the course of performing any one or more of those enumerated activities. Sellers herewith represent and warrant to Purchaser as of the date hereof and as of the Closing Date (unless another date is expressly set forth below) that: 2.01 Corporate Existence and Power. The Corporation is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Louisiana, and the Corporation has all corporate powers and all material governmental licenses, permits, authorizations, consents and approvals required to carry on the Business as now conducted. Subject to the provisions of the following sentence, the Corporation is duly qualified to conduct business as a foreign corporation and is in good standing in each jurisdiction where the character of the property owned or leased by it or the nature of its activities make such qualification necessary. Sellers have heretofore delivered to Purchaser true and complete copies of the Corporation's Articles of Incorporation and By-Laws as currently in effect. 2.02 Governmental Authorization. The execution, delivery and performance by Sellers of this Agreement and the consummation by Sellers of the transactions contemplated hereby require no action by or in respect of, or filing with, any governmental body, agency, official or authority. 2.03 Non-Contravention. The execution, delivery and performance by Sellers of this Agreement and the consummation by Sellers of the transactions contemplated hereby do not and will not (i) contravene or conflict with the Articles of Incorporation or bylaws of the Corporation (other than any provision which may be waived by the Corporation and/or Sellers), (ii) contravene or conflict with or constitute a violation of any provision of law, regulation, judgment, injunction, order or decree binding upon or applicable to Sellers or the Corporation, or (iii) except as disclosed in Schedule 2.03, require any consent, approval or other action by any person or constitute a default under any obligation of Sellers or the Corporation under any provision of any contract or other instrument binding upon Sellers or the Corporation other than contracts and obligations which may be cancelled unilaterally upon notice to Sellers or the Corporation. 2.04 Subsidiaries. The Corporation does not own more than fifty (50%) percent of all outstanding shares of capital stock of, other ownership interests in, or other securities of any corporation or other entity. 2.05 Financial Statements. The balance sheet of the Corporation for the year ended December 31, 1995 (such date referred to herein as the "Balance Sheet Date" and such balance sheet the "Balance Sheet") and the related statements of income for the year ended December 31, 1995 (collectively, the "Financial Statements") have been previously delivered to Purchaser and are attached as Schedule 2.05. In all material respects, the Financial Statements fairly present the financial position of the Corporation as of the date thereof and its results of operations for the period then ended. 2.06 Absence of Certain Changes. Since the Balance Sheet Date to the date hereof, the Corporation has conducted the Business in the ordinary course consistent with past practice and, except as set forth in Schedule 2.06 or otherwise contemplated hereby, there has not been: (a) Any event, occurrence, development or state of circumstances or facts which has had or could reasonably be expected to have a material adverse effect on the Corporation, except to the extent the effect is reflected in the Interim Financial Statements; (b) Any incurrence, assumption or guarantee of any indebtedness for borrowed money or any material obligation or liability, except in the ordinary course of the Business consistent with past practice and except as reflected on the Interim Financial Statements; (c) Any creation or other incurrence of any Lien (as defined in Section 2.08) on any asset of the Corporation, except in the ordinary course of the Business consistent with past practice and except as reflected in the Interim Financial Statements; (d) Any making of any loan, advance or capital contributions to or investment in any person, except as reflected in the Interim Financial Statements; (e) Any amendment of any material term of any outstanding security of Seller; (f) Any material damage, destruction or other casualty loss affecting any of the assets of the Corporation, except those covered by insurance and except as reflected in the Interim Financial Statements; (g) Any transaction or commitment made, or any contract or agreement entered into, by the Corporation relating to its assets or the Business or any relinquishment of any contract or other right, in either case, material to the Corporation, other than transactions and commitments (including acquisitions and dispositions of steel and equipment) in the ordinary course of the Business consistent with past practice and except as reflected in the Interim Financial Statements; (h) Any declaration or payment of any dividend or other distribution by the Corporation or any repurchase, redemption or other acquisition for value of any security or other interest in the Corporation or any commitment to do any of the foregoing; (i) Any general or specific increase in the salary or other compensation (including, without limitation, bonuses, profit sharing or deferred compensation) payable or to become payable to any employees of the Corporation, except in the ordinary course of the Business consistent with past practice; (j) Any labor dispute, other than routine individual grievances, or any activity or proceeding by a labor union or representative thereof to organize any employees of the Corporation or any lockouts, strikes, slowdowns, work stoppages or threats thereof by or with respect to any employees of the Corporation; or (k) Any agreement entered into to do any of the foregoing. 2.07 Properties. (a) The Corporation has good and marketable title to, or in the case of leased property valid leasehold interests in, all property and assets (whether real or personal, tangible or intangible) reflected on the Balance Sheet or acquired after the Balance Sheet Date, except for properties and assets sold since the Balance Sheet Date in the ordinary course of business consistent with past practice. None of such properties or assets is subject to any liens, mortgages, security interests or other encumbrances (herein "Liens") except: (i) Liens disclosed on the Balance Sheet; (ii) Liens for taxes not yet due or being contested in good faith (and for which adequate accruals or reserves have been established on the Balance Sheet); (iii) Liens disclosed in Schedule 2.07(a) or which will be discharged at the Closing; (iv) Liens which do not materially detract from the value of such property or assets as now used, or materially interfere with any present or intended use of such property or assets; or (v) Liens in favor of vendors and lessors incurred in the ordinary course of business. Clauses (i), (ii), (iii) (iv) and (v) are, collectively, referred to herein as "Permitted Liens". (b) To the knowledge of Sellers and except as reflected on the Interim Financial Statements, there are no developments affecting any of such properties or assets pending or threatened which could materially detract from the value of such property or assets, materially interfere with any present or intended use of any such property or assets or materially adversely affect the marketability of such properties or assets. (c) All such leases of real and personal property with respect to which the Corporation is a lessee are as of the date hereof and will be on the Closing Date valid, binding and enforceable in accordance with their respective terms and there does not exist under any such lease any material default or any event which with notice or lapse of time or both would constitute a material default. (d) Schedule 2.07(d) identifies all real and personal property used or held for use in connection with the Business as of the date hereof (the "Property") and contains an accurate balance sheet showing the adjusted tax basis of all of the Corporation's assets for United States income tax purposes at September 30, 1996. The plants, buildings, structures, tools, steel inventory and equipment reflected on the Balance Sheet or acquired after the Balance Sheet Date through the date hereof have no material defects, are in good operating condition and repair and have been reasonably maintained consistent with standards generally followed in the industry (giving due account to the age and length of use of same, ordinary wear and tear excepted), are suitable for their present uses and, in the case of plants, buildings and other structures (including without limitation, the roofs thereof), are structurally sound, except as set forth on Schedule 2.07(d). Such plants, buildings and structures currently have access to (1) public roads or valid easements over private streets or private property for such ingress to and egress from all such plants, buildings and structures and (2) water supply, storm and sanitary sewer facilities, telephone, gas and electrical connections, fire protection, drainage and other public utilities, as is necessary for the conduct of the Business. None of the material structures on the immovable or real property of the Corporation encroaches upon real property of another person, and no structure of any other person substantially encroaches upon any immovable or real property of the Corporation. All items of equipment listed on Schedule 2.07(d) are in the possession and control of the Corporation and will be in the Corporation's possession and control on the Closing Date and are in good operating condition and are adequately performing the tasks which they are designed to perform. 2.08 Sufficiency of and Title to the Purchased Assets. (a) The assets (the "Assets") disclosed on the Balance Sheet and in Schedule 2.07(d) constitute as of the date thereof and hereof, respectively, all of the assets or property used or held for use in the Business and are adequate to conduct the Business as presently conducted. (b) Upon consummation of the transactions contemplated hereby, the Corporation will have good and marketable title in and to each of the Assets, free and clear of all Liens, except for Permitted Liens. 2.09 No Undisclosed Material Liabilities. Except as disclosed on Schedule 2.09, as of the Closing there will be no liabilities of the Corporation of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than: (i) Liabilities disclosed or provided for in the Interim Financial Statements; (ii) Liabilities for which adequate insurance is available; and, (iii) Liabilities incurred in the ordinary course of the Business, including tax liabilities and liabilities for personal injuries and property damage, which in the aggregate are not material to the Business taken as a whole. 2.10 Litigation. Except as set forth in Schedule 2.10, as of the date hereof there is no action, suit, investigation or proceeding (or any basis therefor) pending against, or to the knowledge of Sellers threatened against or affecting, Sellers, the Corporation or any of their or its properties before any court or arbitrator or any governmental body, agency, official or authority, which, individually or in the aggregate, if determined or resolved adversely to Sellers or the Corporation in accordance with the plaintiff's demands, would reasonably be expected to have a material adverse effect on Sellers or the Corporation or which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. 2.11 Material Contracts. (a) Except as disclosed in Schedule 2.11(a) and elsewhere in this Agreement, as of the date hereof the Corporation is not a party to or subject to: (i) Any lease of real or immovable property; (ii) Any lease that is material to the Corporation of personal or movable property as lessee; (iii) Any contract for the purchase of materials, supplies, goods, services, equipment or other assets, other than in the ordinary course of the Business; (iv) Any sales, distribution or other similar agreement providing for the sale by the Corporation of materials, supplies, goods, services, equipment or other assets, other than to customers in the ordinary course of the Business; (v) Any lease of any item of tangible personal or movable property or real or immovable property as lessor other than to customers in the ordinary course of the Business; (vi) Any partnership, joint venture or other similar contract, arrangement or agreement; (vii) Any contract relating to indebtedness for borrowed money (whether incurred, assumed, guaranteed or secured by any asset); (viii) Any license, franchise or similar agreement; (ix) Any agency, dealer, sales representative or other similar agreement; (x) Any contract or commitment that substantially limits the freedom of the Corporation to compete in any line of business or with any person or in any area or to own, operate, sell, transfer, pledge or otherwise dispose of or encumber any asset or which would so limit the freedom of the Corporation after the Closing; (xi) Any consulting agreement; (xii) Any contract relating to any guaranty or indemnity issued by the Corporation; (xiii) Any agreement relating to the acquisition or disposition of any part of the Business; or (xiv) Any other contract or commitment not made in the ordinary course of the Business consistent with past practice. (b) Each contract disclosed in any schedule to this Agreement or required to be disclosed pursuant to Section 2.11(a) is a valid and binding agreement of the Corporation, and, to the knowledge of Sellers, as of the date hereof is in full force and effect, and neither the Corporation nor, to the knowledge of Sellers, any other party thereto is in default or breach in any material respect under the terms of any such Contract, nor, to the knowledge of Sellers, has any event or circumstance occurred that, with notice or lapse of time or both, would constitute any such default or breach. 2.12 Licenses and Permits. Schedule 2.12 correctly describes each material governmental license, permit, authorization, consent or approval affecting, or relating in any way to, the Corporation and its business, together with the name of the governmental agency or entity issuing such license or permit (the "Permits"). Except as set forth on Schedule 2.12, such Permits are valid and in full force and effect and will not be terminated or impaired or become terminable as a result of the transactions contemplated hereby. 2.13 Ability to Conduct the Business. Except as set forth in Schedule 2.13, as of the date hereof there is no contract, nor any judgment, order, writ, injunction or decree that by its terms prevents or would reasonably be expected to prevent the use by the Corporation of the Assets or the conduct by the Corporation of the Business after the Closing Date. 2.14 Material Suppliers. Schedule 2.14 lists the five largest (in dollar value) suppliers of inventory to the Corporation during each of the last two completed fiscal years and through December 31, 1995. To the knowledge of Sellers, since the Balance Sheet Date there has not been any adverse change in the business relationship of the Corporation with any such supplier or with any supplier that is otherwise material to the Business or with any supplier as a result of the transactions contemplated hereby, except as disclosed on Schedule 2.14. 2.15 Insurance Coverage. Sellers have furnished or provided access to Purchaser to true and complete copies of, all insurance policies currently in effect covering the assets, the Business and the employees of the Corporation. Except as disclosed on Schedule 2.15, as of the date hereof there is no claim by the Corporation pending under any of such policies as to which coverage has been questioned, denied or disputed by the underwriters of such policies. All premiums payable under all such policies have been paid and the Corporation is otherwise in full compliance with the terms and conditions of all such policies. 2.16 Compliance with Laws; No Defaults. (a) As of the date hereof, the Corporation is not in violation of, has not since December 31, 1995 violated, and to Sellers' knowledge is not under investigation with respect to or has not been threatened to be charged with or given notice of any violation of, any law, rules, ordinances or regulations, judgments, injunctions, orders or decrees binding upon or applicable to the Corporation, except for any violations set forth in Schedule 2.16(a) which would not, individually or in the aggregate, if finally determined adversely, result in a material adverse effect on the business of the Corporation. (b) As of the date hereof, the Corporation is not in default under, and no condition exists that with notice or lapse of time or both would constitute a default under any contract or other instrument binding upon the Corporation or affecting or relating to its business or any license, authorization, permit, consent or approval held by the Corporation or affecting or relating to the Business, except as otherwise disclosed in this Agreement or in Schedules attached hereto. 2.17 Inventories. The inventories set forth in the Balance Sheet were properly stated therein at cost determined in accordance with generally accepted accounting principles applied on a consistent basis. Since the Balance Sheet Date, the inventories related to the Business have been maintained in the ordinary course of business. Except as set forth in Schedule 2.17, all such inventory is owned free and clear of all Liens, except Permitted Liens. All of the inventory recorded on the Balance Sheet consists of, and all inventory related to the Business on the Closing Date will consist of, items of a quality usable or saleable in the normal course of the Business consistent with past practices and are and will be in quantities sufficient for the normal operation of the Business in accordance with past practice. 2.18 Receivables. All accounts, notes and other receivables (other than receivables collected since December 31, 1995) reflected on the Balance Sheet are, and all accounts, notes and other receivables arising out of or otherwise relating to the Corporation's business as of the Closing will be, valid, binding and enforceable, subject to applicable laws governing bankruptcy, moratorium or creditors' rights generally which may prevent their enforcement. The dollar amount shown for all such accounts on the Interim Financial Statements, less the allowance for doubtful accounts shown thereon, is collectible in full. All accounts, notes and other receivables arising out of or otherwise relating to the Business at the Balance Sheet Date have been included in the Balance Sheet, and all accounts, notes and other receivables arising out of or otherwise relating to the Business at the Closing Date will be reflected on the Corporation's financial books and records. 2.19 Intellectual Property. (a) Schedule 2.19(a) sets forth as of December 31, 1995 a list of all intellectual property rights (herein "Intellectual Property Rights") used or held for use or otherwise necessary in connection with the conduct of the Business, specifying as to each, as applicable: (i) the nature of such Intellectual Property Right; (ii) the owner of such Intellectual Property Right and if Seller is not the owner, the rights held by the Corporation; (iii) the jurisdictions by or in which such Intellectual Property Right is recognized, issued or registered or in which an application for such issuance or registration has been filed, including the respective registration or application numbers; and (iv) material licenses, sublicenses and other agreements as to which the Corporation is a party and pursuant to which any person is authorized to use such Intellectual Property Right, including the identity of all parties thereto, a description of the nature and subject matter thereof, the applicable royalty and the term thereof. (b) (i) Except as set forth in Schedule 2.19(b), the Corporation has not since January 1, 1996 been sued or charged in writing with or been a defendant in any claim, suit, action or proceeding relating to its business that has not been finally terminated prior to the date hereof and that involves a claim of infringement by the Corporation of any intellectual property rights of any other person, and (ii) the Corporation has no knowledge of any basis for any such claim of infringement, and no knowledge of any continuing infringement by any other person of any intellectual property rights used or held for use or otherwise necessary in connection with the conduct of the Business. No such intellectual property right is subject to any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by the Corporation or restricting the licensing thereof by the Corporation to any Person. The Corporation has not entered into any agreement to indemnify any other person against any charge of infringement of any intellectual property rights. (c) As used herein, the term "Intellectual Property Right" means any trade name, trademark, service name, service mark, copyright, invention, patent, trade secret, know-how (including any registrations or applications for registration of any of the foregoing) or any other similar type of proprietary intellectual property right. 2.20 Employees. Schedule 2.20 identifies all of the Corporation's officers and key employees as of December 31, 1995. None of such key employees has indicated to the Corporation that he or she intends to resign or retire as a result of the transactions contemplated by this Agreement, except that E. M. Dupaquier and R. H. Marmande shall retire from the Corporation's employee on the Closing Date. 2.21 Fees. There is no investment banker, broker, financial advisor, finder or other intermediary which has been retained by or is authorized to act on behalf of Sellers who might be entitled to any fee or commission from Purchaser upon consummation of the transactions contemplated by this Agreement. 2.22 Environmental Matters. (a) The following defined terms, as used herein, have the following meanings: "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, codes, plans, injunctions, permits, concessions, grants, franchises, licenses, agreements and governmental restrictions, whether now or hereafter in effect, relating to human health, the environment or to emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof. "Environmental Liabilities" means any and all liabilities of, or relating to, Seller (including any entity which is, in whole or in part, a predecessor of Seller), whether vested or unvested, contingent or fixed, actual or potential, known or unknown, which (i) arise under or relate to matters covered by Environmental Laws (including without limitation any matters disclosed or required to be disclosed in Schedule 2.22 hereto) and (ii) relate to actions occurring or conditions existing on or prior to the Closing Date. "Environmental Permits" means all permits, licenses, authorizations, certificates and approvals of governmental authorities relating to or required by Environmental Laws and necessary or proper for the business of Seller as currently conducted. "Hazardous Substance" means any toxic, radioactive, caustic or otherwise hazardous substance, including petroleum, its derivatives, by-products and other hydrocarbons, or any substance having any constituent elements displaying any of the foregoing characteristics, including, without limitation, any substance regulated under Environmental Laws. "Regulated Activity" means any generation, treatment, storage, recycling, transportation or disposal of any Hazardous Substance. "Release" means any discharge, emission or release including a Release as defined in CERCLA at 42 U.S.C. 9601 (22). The term "Released" has a corresponding meaning. (b) Except as disclosed on Schedule 2.22 as of the date hereof: (i) No notice, notification, demand, request for information, citation, summons, complaint or order has been issued, no complaint has been filed, no penalty has been assessed and, to Seller's knowledge, no investigation or review is pending or threatened by any governmental entity or other person with respect to any (a) alleged violation by the Corporation of any Environmental Law or liability thereunder, (b) alleged failure by the Corporation to have any Environmental Permit, (c) Regulated Activity, or (d) Release of Hazardous Substances; (ii) Other than generation in compliance with all applicable Environmental Laws, (a) the Corporation has not engaged in any Regulated Activity and (b) no Regulated Activity has occurred at or on any property now or previously owned, leased or operated by the Corporation; (iii) No polychlorinated biphenyls, radioactive material, urea formaldehyde, lead, asbestos, asbestos-containing material or underground storage tank (active or abandoned) is or has been present at any property now or previously owned, leased or operated by the Corporation; (iv) No Hazardous Substance has been Released (and no notification of such Release has been filed or made) or is present (whether or not in a reportable or threshold planning quantity) at, on or under any property now or previously owned, leased or operated by the Corporation; (v) No property now or previously owned, leased or operated by the Corporation or any property to which the Corporation has, directly or indirectly, transported or arranged for the transportation of any Hazardous Substances is listed or, to Seller's knowledge, proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any similar federal, state or foreign list of sites requiring investigation or clean-up; (vi) There are no liens under Environmental Laws on any of the real property or other assets owned, leased or operated by the Corporation, no governmental actions have been taken or are in process which could subject any of such properties or assets to such liens and the Corporation would not be required to place any notice or restriction relating to Hazardous Substances at any property owned by it in any deed to such property; (vii) There are no Environmental Permits that are nontransferable or require consent, notification or other action to remain in full force and effect following the consummation of the transactions contemplated hereby; and (viii) All Perchloroethylene and each other chemical substance used by the Corporation in connection with the business has been disposed of in accordance with all applicable laws, rules, regulations and pronouncements of the United States, all applicable states and all applicable boards, agencies, departments and other divisions thereof. (c) There has been no environmental investigation, study, audit, test, review or other analysis conducted of which the Corporation or Sellers has knowledge in relation to the current or prior business of the Corporation or any property or facility now or previously owned or leased by the Corporation which has not been delivered to Purchaser at least five days prior to the date hereof. (d) For purposes of this Section 2.22, the term "Corporation" shall include any entity which is, in whole or in part, a predecessor of the Corporation. 2.23 Labor Matters. As of the date hereof, the Corporation is in compliance with all currently applicable laws respecting employment and employment practices (including terms and conditions of employment, wages and hours) and is not engaged in any unfair labor practice, the failure to comply with which or engagement in which, as the case may be, would reasonably be expected to have a material adverse effect on the Business. As of the date hereof there is no unfair labor practice complaint pending or, to the knowledge of Sellers, threatened against the Corporation before the National Labor Relations Board or before any other state or local board, agency or tribunal. 2.24 The Shares. (a) There are presently outstanding and at the Closing there will be outstanding a total of One Thousand (1,000) shares of no par value voting common stock of the Corporation (the "Shares"). No other class of common, preferred or other type of shares of stock is presently outstanding. (b) The issuance of all of the Shares has been duly authorized by all required action by the Corporation and all of the Shares are fully paid and non-assessable. (c) The Shares are registered in the names of the persons and in the amounts set forth in Schedule 2.24(c). All of the Shares registered in the names of the above persons may be conveyed by them without the consent of an person, other than Consents of the Corporation and the other Sellers which are waivable by them at or prior to the Closing Date. (d) None of the Shares is subject to any lien, mortgage, pledge, security interest or other encumbrance and each Seller has good and marketable title to all Shares registered in his name. 2.25 Binding Agreement. This Agreement constitutes a valid and binding obligation of Sellers. 2.26 Other Information. None of the documents or information delivered to Purchaser in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Sellers that: 3.01 Organization and Existence. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana. 3.02 Corporate Authorization. The execution, delivery and performance by Purchaser of this Agreement and the consummation by Purchaser of the transactions contemplated hereby or thereby are within the powers of Purchaser and have been duly authorized by all necessary action on the part of Purchaser. This Agreement constitutes a valid and binding agreement of Purchaser. 3.03 Governmental Authorization. The execution, delivery and performance by Purchaser of this Agreement requires no action by or in respect of, or filing with, any governmental body, agency, official or authority. 3.04 Non-Contravention. The execution, delivery and performance by Purchaser of this Agreement does not and will not (i) contravene or conflict with the Articles of Incorporation or By-Laws of Purchaser or (ii) assuming compliance with the matters referred to in Section 3.03, contravene or conflict with any provision of any law, regulation, judgment, injunction, order or decree binding upon Purchaser. 3.05 Fees. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Purchaser who might be entitled to any fee or commission from Sellers upon consummation of the transactions contemplated by this Agreement. 3.06 Financing. Purchaser will have on the Closing Date sufficient funds available to purchase the Shares, provided all conditions set forth in Article IX are satisfied. 3.07 Litigation. There is no action, suit, investigation or proceeding pending against, or to the knowledge of Purchaser threatened against or affecting, Purchaser before any court or arbitrator or any governmental body, agency or official which in any matter challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated hereby. ARTICLE IV COVENANTS OF SELLERS 4.01 Conduct of the Business. From the date hereof until the Closing Date, Sellers shall cause the Corporation to conduct the Business in the ordinary course consistent with past practice and cause the Corporation to exert its best efforts to preserve intact its business organization and relationships with third parties and to keep available the services of its present officers and employees. Without limiting the generality of the foregoing, from the date hereof until the Closing Date, Sellers shall not cause the Corporation to and the Corporation shall not: (i) Merge or consolidate with any other person or acquire a material amount of assets of any other person, other than steel, tools and equipment purchased in the ordinary course of the Business; (ii) Declare and/or pay any dividend or make any other distribution or transfer of cash or other assets to its shareholders in their capacities as such; (iii) Sell, lease, license or otherwise dispose of any assets except (a) pursuant to existing contracts or commitments and (b) in the ordinary course of the Business consistent with past practices; or (iv) Agree or commit to do any of the foregoing. Sellers shall not permit the Corporation to (a) take or agree or commit to take any action that would make any representation and warranty of Sellers hereunder inaccurate in any respect at, or as of any time prior to, the Closing Date or (b) omit or agree to commit or omit to take any action necessary to prevent any such representation or warranty from being inaccurate in any respect at any such time. 4.02 "S" Election. Sellers and their spouses shall execute and cause the Corporation to execute Internal Revenue Service forms 2553 so as to elect the provisions of Subchapter S of the United States Internal Revenue Code, sections 1361, et seq., effective January 1, 1997 and shall deliver fully completed forms 2553 with all of their signatures to Purchaser on or before the earlier of the Closing Date or January 15, 1997. 4.03 Access to Information. Sellers (i) will give Purchaser, its counsel, financial advisors, auditors and other authorized representatives reasonable access to the offices, properties, books and records of the Corporation and will allow Purchaser or its representatives access to conduct all reasonable environmental tests and inspections, (ii) will furnish to Purchaser, its counsel, financial advisors, auditors and other authorized representatives such financial and operating data and other information relating to the Corporation as such persons may reasonably request and (iii) will instruct its employees, counsel and financial advisors to cooperate with Purchaser in its investigation of the Corporation; provided, however, Purchaser shall utilize the minimum number of personnel as will not interfere with the conduct of the Corporation's business and shall utilize them only at the times the Corporation is open for business. No investigation by Purchaser or other information received by Purchaser shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Sellers hereunder. 4.04 Life Insurance Policies. Prior to the Closing, each seller shall purchase all policies of life insurance on his life owned by the Corporation for cash in the amount of the cash surrender values of these policies. 4.05 Notices of Certain Events. Sellers shall promptly notify Purchaser of: (i) Any notice or other communication from any person alleging that the consent of such person is or may be required in connection with the transactions contemplated by this Agreement; (ii) Any notice or other communication from any governmental or regulatory agency or authority in connection with the transactions contemplated by this Agreement; (iii) Any actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting the Corporation or the Business that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to Section 2.10 or that relate to the consummation of the transactions contemplated by this Agreement. ARTICLE V COVENANTS OF PURCHASER Purchaser agrees that: 5.01 Confidentiality. Prior to the Closing Date and for a period of one (1) year after any termination of this Agreement, Purchaser will hold, and will use its best efforts to cause its respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information (including, without limitation, confidential commercial information and information with respect to customers and proprietary systems, technologies or processes) concerning the Business or which the Corporation or Sellers furnished to Purchaser in connection with the transactions contemplated by this Agreement, except to the extent that such information can be shown to have been (i) previously known on a non-confidential basis by Purchaser, (ii) in the public domain through no fault of Purchaser or (iii) later lawfully acquired by Purchaser from sources other than the Corporation or Sellers; provided, that Purchaser may disclose such information to its officers, directors, employees, accountants, counsel, consultants, advisors and agents in connection with the transactions contemplated by this Agreement so long as such persons are informed by Purchaser of the confidential nature of such information and are directed by Purchaser to treat such information confidentially. This obligation shall be satisfied if Purchaser exercises the same reasonable and customary care, in light of the industry and its past practices, with respect to such information as it would take to preserve the confidentiality of its own confidential information. If this Agreement is terminated, Purchaser will, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents to, destroy or deliver to Sellers, upon request, all documents and other materials, and all copies thereof, obtained by Purchaser or on their behalf from Sellers or the Corporation in connection with this Agreement that are subject to such confidence. Purchaser agrees that it will retain all documents and other materials obtained by Purchaser from Sellers or the Corporation in connection with this Agreement and the transactions contemplated hereby for a reasonable and customary period of time and will not destroy any material documents during such period without first providing Seller with the opportunity of making copies thereof. 5.02 Access. On and after the Closing Date, Purchaser will afford promptly to Sellers through their representatives, E. M. Dupaquier and/or R. H. Marmande ("Sellers' Representatives"), reasonable access to the Corporation's properties, books, records, employees and auditors to the extent necessary to permit Sellers to determine any matter relating to their rights and obligations hereunder and Sellers' federal and state income and other tax liabilities with respect to any period ending on or before the Closing Date and shall maintain them for a period of five (5) years following the Closing or for such longer period as any audit (private, tax or other governmental) of those documents is continuing; provided that any such access by Sellers shall not unreasonably interfere with the conduct of the Business of the Corporation or Purchaser. Sellers will hold, and will use their best efforts to cause their officers, directors, employees, accountants, counsel, consultants, advisors and agents to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential documents and information concerning Purchaser or the Business provided to them pursuant to this Section 5.02. 5.03 No Election Under Section 338. (a) Purchaser shall not cause nor shall the Corporation make or file any election under any provision of Section 338, including Section 338(h)(10), of the United States Internal Revenue Code (the "Code") with respect to the transactions contemplated by this Agreement. (b) Purchaser shall take no action nor permit any action or course of conduct to be taken by it or by the Corporation, or permit the filing of any Section 338 election with respect to any other stock acquisition by Purchaser of any other corporation, if such filing would have the same effect as if a formal election under any provision of Section 338, including Section 338(h)(10), of the Code had been filed with respect to the transaction contemplated hereby. ARTICLE VI COVENANTS OF SELLERS AND PURCHASER Sellers and Purchaser hereto agree that: 6.01 Consulting Agreements. At the Closing, E. M. Dupaquier, R. H. Marmande and the Company shall execute the Consulting Agreements in the forms attached hereto as Schedule 6.01. 6.02 Best Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, each of Sellers and Purchaser will use their and its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. Sellers and Purchaser each agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement, but without expanding the obligations and responsibilities of any party hereunder. 6.03 Certain Filings. Sellers and Purchaser shall cooperate with one another (a) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement, and (b) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers. 6.04 Public Announcements. The parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by applicable law, will not issue any such press release or make any such public statement prior to such consultation. ARTICLE VII TAX MATTERS 7.01 Tax Definitions. The following terms, as used herein, have the following meanings: "Code" means the Internal Revenue Code of 1986, as amended. "Post-Closing Tax Period" means any tax period ending after the Closing Date, except that with respect to a tax period that commences before but ends after the Closing Date, the portion of such period after the close of business on the Closing Date. "Pre-Closing Tax Period" means any tax period ending on or before the close of business on the Closing Date and with respect to a tax period that commences before but ends after the Closing Date, the portion of such period up to the close of business on the Closing Date. "Tax" means (i) any net income, alternative or add-on minimum, gross income, gross receipts, sales, use, ad valorem, franchise, capital, paid-up capital, profits, greenmail, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or any penalty, addition to tax or additional amount imposed by any governmental authority (domestic or foreign) responsible for the imposition of any such tax (a "Taxing Authority") and (ii) any liability to any person (including any applicable Taxing Authority) in respect of any tax included in Clause (i) above by reason of any indemnity, transferee liability, contractual or legal obligation. 7.02 Tax Matters. Sellers hereby represent and warrant to Purchaser as of the date hereof and as of the Closing Date that, except as provided in Schedule 7.02, the Corporation has paid or will timely pay all material taxes payable by the Corporation and attributable to any Pre-Closing Tax Period which are required to be paid on or prior to the Closing Date, the non-payment of which would result in a lien on the Shares on or after the Closing Date, would otherwise materially adversely affect the Business after the Closing Date or would result in Purchaser becoming liable therefor, except for taxes caused by an actual or deemed election under Section 338 of the Code, which is Purchaser's responsibility pursuant to Section 5.03. Sellers herewith represent that the only Taxes which will be owed by the Corporation as of the Closing Date are those which arise or have arisen or have been incurred in the ordinary course of the Corporation's Business. The Corporation has filed all required income, franchise, sales, ad valorem, employment and other tax returns and paid the total amount of Taxes due by it. The provision for the corporate income and franchise tax liability of the Corporation for all periods through the Closing Date as shown on the Closing Balance Sheet will be adequate relative to the Corporation's actual liability therefor as finally determined. Sellers represent that the Corporation is not prohibited by any law, rule or regulation from electing the provisions of Subchapter S of the Code, sections 1361, et seq., commencing January 1, 1997. 7.03 Tax Cooperation: Allocation of Taxes. (a) Purchaser and Sellers agree to furnish or cause to be furnished to each other, upon request, as promptly as practicable, such information and assistance relating to the Corporation, the non-compete covenant described in Section 4.01 and the Business as is reasonably necessary for the filing of all tax returns, and making of any election related to taxes, the preparation for any audit by any taxing authority, and the prosecution or defense of any claim, suit or proceeding relating to any tax return. Sellers and Purchaser shall cooperate with each other in the conduct of any audit or other proceeding related to taxes involving the Business and each shall execute and deliver such powers of attorney and other documents as are reasonably necessary to carry out the intent of this Paragraph (a) of Section 7.03. (b) Any transfer, documentary, sales, use or other taxes arising in connection with the transactions contemplated by this Agreement and any recording or filing fees with respect thereto (each, a "Transfer Tax") shall be the responsibility of Purchaser. (c) Each of Sellers and Purchaser shall execute all required elections pursuant to section 1377(a)(2) of the Code to terminate the Corporation's taxable year commencing January 1, 1997 and ending as of the close of business on the Closing Date (as defined in Section 1.03 entitled "Closing"), and allocate all of the Corporation's income or loss for that period to Sellers and the Corporation's income or loss for the remainder of calendar year 1997 to Purchaser. ARTICLE VIII EMPLOYEE BENEFITS 8.01 Employee Benefits Definitions. The following terms, as used herein, shall have the following meanings: "Benefit Arrangement" means any employment, severance or similar contract, or any other contract, plan, policy or arrangement (whether or not written) providing for compensation, bonus, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance coverage (including any self-insured arrangements), health or medical benefits, disability benefits, workers' compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits (including compensation, pension, health, medical or life insurance benefits) that (i) is not an Employee Plan, (ii) is entered into, maintained, administered or contributed to, as the case may be, by Seller and (iii) covers any employee or former employee of the Corporation. "Employee Plan" means any "employee benefit plan" as defined in Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is maintained, administered or contributed to by the Corporation and (iii) covers an employee or former employee of the Corporation. "ERISA Affiliate" of any entity means any other entity which, together with such entity, would be treated as a single employer under Section 414 of the Code. "Multi-Employer Plan" means each Employee Plan that is a multi-employer plan, as defined in Section 3(37) of ERISA. "PBGC" means the Pension Benefit Guaranty Corporation. "Title IV Plan" means an Employee Plan, other than any Multi-Employer Plan, subject to Title IV of ERISA. 8.02 Employee Matters. The Sellers hereby represent and warrant to Purchaser as of the date hereof: (a) Schedule 8.02(a) lists each Employee Plan. Sellers have provided or allow Purchaser access to as a true and complete copy of each such Plan (and, if applicable, related trust documents) and all amendments thereto and written interpretations thereof together with (i) the three most recent annual reports prepared in connection with each such Employee Plan (Form 5500 including, if applicable, Schedule B thereto) and (ii) the most recent actuarial report, if any, prepared in connection with each Employee Plan. Schedule 8.02(a) identifies each person who is a participant or who is eligible to participate in each Employee Plan who is not an active employee of Seller. The term "active employee" shall mean any person who, on the Closing Date, is actively employed by the Corporation or who is on short-term disability leave, authorized leave of absence, military service or lay-off with recall rights as of the Closing Date. (b) Schedule 8.02(b) sets forth all Benefit Arrangements presently in place for all employees of the Corporation. (c) As of the date hereof, there is no litigation, administrative or arbitration proceeding or other dispute pending or threatened that involves any Employee Plan or Benefit Arrangement which could reasonably be expected to result in a liability to the Corporation or Purchaser. (d) No Employee Plan is (i) a Multi-Employer Plan, (ii) a Title IV Plan or (iii) is maintained in connection with any trust described in Section 501(c)(9) of the Code. No "prohibited transaction", as defined in Section 406 of ERISA or Section 4975 of the Code, has occurred that could result in a liability to the Corporation, Purchaser or any of its Affiliates. As used herein the term "Affiliate" means any individual, group of individuals, corporation, partnership or other entity controlled by, controlling or under common control with the person or entity with respect to which that term is used. Neither the Corporation nor any of its current or former Affiliates (while an Affiliate) has within the last five (5) years engaged in or is a successor or parent corporation to an entity that has engaged in, a transaction described in Section 4069 of ERISA. Neither the Corporation nor any of its current or former Affiliates has ever maintained or become obligated to contribute to any employee benefit plan (i) that is subject to Title IV of ERISA, (ii) to which Section 412 of the Code applies, or (iii) that is a multi-employer plan under Title IV of ERISA. The Corporation has not incurred, and does not reasonably expect to incur, (a) any liability under Title IV of ERISA arising in connection with the termination of, or complete or partial withdrawal from, any plan covered or previously covered by Title V of ERISA or (b) any liability under Section 4971 of the Code that in either case could become a liability of the Corporation or any of its Affiliates after the Closing Date. (e) Each Employee Plan which is intended to be qualified under Section 401(a) of the Code is so qualified and has been so qualified during the period from its adoption to date, and no event has occurred since such adoption that would adversely affect such qualification and each trust created in connection with each such Employee Plan forming a part thereof is exempt from tax pursuant to Section 501(a) of the Code. Sellers have furnished to Purchaser copies of the most recent Internal Revenue Service determination letters with respect to each such Plan. Each Employee Plan has been maintained in compliance with its terms and with the requirements prescribed by any and all applicable statutes, orders, rules and regulations including but not limited to ERISA and the Code. (f) Seller has furnished to Purchaser copies or descriptions of each Benefit Arrangement. Each Benefit Arrangement has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations which are applicable to such Benefit Arrangement. Schedule 8.02(f) identifies each individual eligible to receive a benefit under a Benefit Arrangement who is not an active employee, as defined in Section 8.02(a), of the Corporation. (g) The Corporation has no current or projected liability in respect of post-retirement or post-employment welfare benefits for retired, current or former employees, except as required to avoid excise tax under Section 4980B of the Code. (h) Except as disclosed in writing to Purchaser prior to the date hereof, there has been no amendment to, written interpretation of or announcement (whether written or not written) by the Corporation or any of its Affiliates relating to, or change in employee participation or coverage under, any Employee Plan or Benefit Arrangement which would increase materially the expense of maintaining such Employee Plan or Benefit Arrangement above the level of the expense incurred in respect thereof in connection with the Corporation's Employees for the most recently completed fiscal year. (i) No employee of the Corporation will become entitled to any bonus, retirement, severance, job security or similar benefit or enhanced such benefit (including acceleration of an award, vesting or exercise of an incentive award) or any fee or payment of any kind solely as a result of any of the transactions contemplated hereby. (j) There is no contract, plan or arrangement (written or otherwise) covering any employee or former employee of the Corporation or any of its Affiliates that, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to the terms of Section 280G of the Code. (k) No tax under Section 4980B of the Code has been incurred in respect of any Employee Plan that is a group health plan, as defined in Section 5000(b)(1) of the Code. ARTICLE IX CONDITIONS TO CLOSING 9.01 Conditions to the Obligations of Each Party. The obligations of Purchaser and Sellers to consummate the Closing are subject to the satisfaction, or waiver by both parties, of the following conditions: (a) No provision of any applicable law or regulation and no judgment, injunction, order or decree shall (i) prohibit the consummation of the Closing or (ii) restrain, prohibit or otherwise interfere with the effective operation or enjoyment by Purchaser of the Shares. (b) All actions by or in respect of or filings with any governmental body, agency, official or authority required to permit the consummation of the Closing, and all material third party consents necessary in connection with the consummation of the Closing, shall have been obtained. (c) All waivers of applicable rights of first refusal by the Corporation and the Sellers have been obtained to permit consummation of the transactions contemplated herein. 9.02 Conditions to Obligations of Purchaser. The obligation of Purchaser to consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Sellers shall have performed in all material respects all of their obligations hereunder required to be performed by them at or prior to the Closing Date (including their obligations set forth in Section 4.02), (ii) the representations and warranties of Sellers contained in this Agreement and in any certificate or other writing delivered by Sellers pursuant thereto, disregarding all qualifications and exceptions contained therein relating to materiality, shall be true at and as of the respective dates applicable to each of them as set forth herein, and (iii) Purchaser shall have received a certificate signed by the President of the Corporation to the foregoing effects. (b) No proceeding challenging this Agreement or the transactions contemplated hereby or seeking to prohibit, alter, prevent or materially delay the Closing shall have been instituted by any person before any court, arbitrator or governmental body, agency or official nor shall they be pending. (c) Purchaser shall have received all documents it may reasonably request relating to the existence of and good standing of the Corporation. (d) The Corporation shall have been issued an owner's title insurance policy with respect to all real or immovable property in a form and only with such exceptions as are reasonably acceptable to Purchaser. The cost of the owner's title insurance policy shall be borne equally between Sellers and Purchaser. (e) Nothing has come to Purchaser's attention which would indicate that any of the representations and warranties of Sellers are untrue in any material respect or that Sellers have failed to perform any of their covenants contained herein. 9.03 Conditions to Obligations of Sellers. The obligation of Sellers to consummate the Closing is subject to the satisfaction of the following further conditions: (a) (i) Purchaser shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date and (ii) the representations and warranties of Purchaser contained in this Agreement and in any certificate or other writing delivered by Purchaser pursuant hereto shall be true in all material respects at and as of the Closing Date, as if made at and as of such date. (b) Sellers shall have received all documents they may reasonably request relating to the existence of Purchaser and the authority of Purchaser to execute and consummate this Agreement, all in form and substance reasonably satisfactory to Seller. ARTICLE X SURVIVAL; INDEMNIFICATION 10.01 Survival. The covenants, agreements, representations and warranties of the parties hereto contained in this Agreement or in any certificate or other writing delivered pursuant hereto or in connection herewith shall survive the Closing. 10.02 Indemnification. (a) Sellers ("Indemnifying Party" or "Indemnifying Parties") jointly, severally and in solido hereby indemnify Purchaser and all of Purchaser's officers, directors, employees and shareholders (hereinafter "Indemnified Parties") against and agree to defend and hold them harmless from and against any and all damage, loss, liability and expense, including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding (collectively, "Loss") incurred or suffered by any of the Indemnified Parties arising out of any willful misrepresentation or breach of warranty, covenant or agreement made or to be performed by Sellers pursuant to this Agreement, including all of those made by Sellers in Articles I, II, IV, VI, VII and VIII hereof. Sellers shall have no obligation with respect to any loss, claim, demand, suit or action against the Corporation or Purchaser notice of which is given to Sellers' Representatives after December 31, 1998 as to all claims, demands, suits or actions other than for the payment of any Tax and after December 31, 2000 as to all claims, demands, suits or actions for the payment of any Tax. (b) Purchaser hereby agrees to defend and indemnify Sellers against and to hold Sellers harmless from any and all Loss incurred or suffered by Sellers arising out of any failure to perform, misrepresentation or breach of any warranty, covenant or agreement made or to be performed by Purchaser pursuant to this Agreement. Purchaser shall have no obligation with respect to any loss, claim, demand, suit or action against Sellers notice of which is given to Purchaser (by Sellers or any other person or governmental agency) after December 31, 1998. (c) Except as otherwise provided in Section 10.03 hereof in respect of matters relating to Taxes, the following provisions shall apply: (i) Promptly after receipt by an Indemnified Party of notice of the commencement of any action or proceeding involving a claim in respect of which indemnification is being sought, such Indemnified Party will, if a claim for indemnification hereunder is to be made against the Indemnifying Party, give written notice to the Indemnifying Parties (through Sellers' Representatives) of the commencement of such action or proceeding, the basis for such claim for indemnification and such other information relating thereto as the Indemnifying Party may reasonably request; provided, however, that failure to so notify the Indemnifying Parties or to provide such information shall not relieve such Indemnifying Parties from any liability which they may have with respect to such claim, except to the extent that they are actually materially prejudiced by such failure to give notice. (ii) In case any such action is brought against an Indemnified Party, the Indemnified Party shall assume and control the defense of such action with counsel selected by the Indemnified Party. It is understood that the Indemnifying Parties shall not, in connection with any action or related actions in the same jurisdiction, be liable for the fees and disbursements of more than one separate firm qualified in such jurisdiction to act as counsel for all Indemnified Parties, unless in any such Indemnified Party's reasonable judgment (i) a conflict of interest between such Indemnified Party and any other Indemnified Party may exist in respect of such claim or (ii) such Indemnified Party has available to it reasonable defenses which are different from or additional to those available to other Indemnified Parties. The Indemnifying Parties shall not be liable for any settlement of any proceeding effected without their written consent (given by Sellers' Representatives), but if settled with such consent or if there shall be a final judgment for the plaintiff, the Indemnifying Parties agree to indemnify the Indemnified Party and hold the Indemnified Party harmless from and against any Losses by reason of such settlement or judgment (it being understood that if the Sellers are the Indemnifying Party such indemnification obligation shall be joint and several). The Indemnifying Parties shall not, without the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. Any dispute as to whether any Indemnified Party is entitled to indemnification in connection with any action or proceeding under Section 10.02(c), the defense or settlement of such action or proceeding, or any other rights or obligations of the parties hereto in connection with such action or proceeding shall be submitted to arbitration in accordance with Section 12.06 of this Agreement. (iii) In the event that an Indemnified Party shall claim a right to payment pursuant to this Agreement with respect to which there has been no action or proceeding involving such claim, such Indemnified Party shall send written notice of such claim to the Indemnifying Parties. Such notice shall specify the basis for such claim in reasonable detail. As promptly as possible after the Indemnified Party has given such notice, such Indemnified Party and the Indemnifying Parties (acting through Sellers' Representatives) shall establish the merits and amount of Losses, if any, to which the Indemnified Party is entitled. If the parties do not agree with respect to these matters within 30 days after the giving of such notice, either party may submit the matter to arbitration in accordance with Section 12.06 of this Agreement. In such arbitration, if the arbitrator determines that a breach of a representation, warranty, covenant or agreement in this Agreement by the Indemnifying Parties occurred and that such breach caused Losses to an Indemnified Party, the arbitrator will determine the amount of any such Losses. Within ten business days after the final determination of the merits of such claim and amount of such Losses, each Indemnifying Party shall, subject to the limitations set forth herein, deliver to the Indemnified Party an amount of cash in immediately available funds sufficient to satisfy such Losses or the portion of such Losses for which such Indemnifying Party is obligated to provide indemnity hereunder. (iv) If any Seller fails to timely deliver cash in the amount of any Losses payable by such Seller under the terms of this Agreement, Purchaser may withdraw from funds held in the Escrow Account (as defined below) an amount of cash equal to the amount of Losses which has not been paid by that Seller. (d) Wherever this Agreement requires actions or decisions of the Indemnifying Parties, those actions or decisions shall be taken by either or both of Sellers' Representatives acting on behalf of all Indemnifying Parties. 10.03 Covenants Regarding Tax Matters. (a) Taxes attributable to the taxable period of the Corporation beginning before and ending after the Closing Date shall be allocated (i) to the Sellers for the period up to and including the Closing Date to the extent such Taxes exceed the reserve therefor on the Closing Balance Sheet and (ii) to Purchaser for the period up to and including the Closing Date to the extent such Taxes do not exceed the reserve therefor on the Closing Date Balance Sheet and for the period subsequent to the Closing Date. For purposes of this Section 10.03(a), Taxes for the period up to and including the Closing Date and for the period subsequent to the Closing Date shall be determined on the basis of an interim closing of the books as of the Closing Date. (b) The Sellers may not file any amended returns or refund claims in respect of any taxable period of the Corporation ending on or prior to the Closing Date. (c) The Sellers shall cooperate fully with Purchaser and make available to Purchaser in a timely fashion such Tax data and other information as may be reasonably required for the preparation by Purchaser of any returns of the Corporation required to be prepared and filed by Purchaser hereunder. The Sellers and Purchaser shall make available to the other, as reasonably requested, all information, records or documents in their possession relating to Tax liabilities of the Corporation for all taxable periods of the Corporation ending on, prior to or including the Closing Date and shall preserve all such information, records and documents until the expiration of any applicable Tax statute of limitations or extensions thereof or, if a proceeding has been instituted for which the information, records or documents is required, until there is a final determination with respect to such proceeding. (d)(i) Purchaser shall promptly notify the Sellers' Representatives upon receipt by Purchaser or the Corporation of written notice of any Tax audits or of proposed assessments against the Corporation for taxable periods of the Corporation ending on or prior to the Closing Date; provided, however, that the failure of Purchaser to give Sellers' Representatives prompt notice as required herein shall not relieve the Sellers of any of their obligations hereunder, except to the extent that the Sellers are actually and materially prejudiced thereby. Purchaser shall have the right to represent the interests of the Corporation in any such Tax audit or administrative or court proceeding and to employ counsel of its choice; provided, however, that Purchaser may not agree to a settlement or compromise thereof without the prior written consent of Sellers' Representatives, which consent may be withheld solely in the event that Sellers' Representatives have been advised in writing by counsel reasonably acceptable to Purchaser that it is more likely than not that the issue under audit (or the proposed assessment) would be decided favorably to the Corporation and that written advice has been furnished to Purchaser. The Sellers agree that they will cooperate fully with Purchaser and its counsel in the defense against or compromise of any claim in any said audit or proceeding. (ii) The Sellers shall promptly notify Purchaser upon receipt by the Sellers of written notice of any Tax audit or proposed assessment or other proposed change or adjustment which may affect the Corporation or its Tax attributes. The Sellers shall keep Purchaser duly informed of the progress thereof and, if the results of such Tax audit or proceeding may have an adverse effect on the Corporation, Purchaser or its affiliates for any taxable period including or ending after the Closing Date, then the Sellers may not agree to a settlement or compromise thereof without Purchaser's consent. (e) Within ten (10) days after notice by Purchaser to Sellers' Representatives of the total amount of additional taxes, penalties and interest owed by the Corporation for periods prior to the Closing, Sellers shall remit to Purchaser the entire amount thereof less the future tax benefit attributable to the increase in future depreciation deductions as a result of the adjustment which caused those additional taxes. The future tax benefit shall be deemed equal to forty (40%) percent of the total additional depreciation which the Corporation would thereby be able to deduct in future years provided the amount of this reduction shall not exceed the amount of additional taxes (apart from penalties and interest) then owed by the Corporation. If any Seller fails to remit his entire proportionate share of the amount due, Purchaser may withdraw said amount from the Escrow Account, to the extent thereof, and if the Escrow Account is insufficient, any one or more of the other Sellers shall pay Purchaser the shortfall upon ten (10) days written notice. (f) The Sellers and Purchaser agree to treat any indemnity payment made pursuant to this Agreement as an adjustment to the Purchase Price for federal, state, local and foreign income tax purposes. If, notwithstanding such treatment by the parties, any indemnity payment is determined to be taxable to Purchaser or the Corporation by any taxing authority, the Sellers shall indemnify Purchaser and its Affiliates for any Taxes payable by reason of the receipt of such indemnity payment (including any payments under this Section 10.03(f)). ARTICLE XI TERMINATION 11.01 Grounds for Termination. This Agreement may be terminated at any time prior to the Closing: (i) by mutual written agreement of Sellers' Representatives and Purchaser; (ii) By Purchaser if the Closing shall not have been consummated on or before January 15, 1997 unless extended by mutual agreement of Sellers' Representatives and Purchaser; (iii) By either Sellers' Representatives or Purchaser if there shall be any law or regulation that makes the consummation of the transactions contemplated hereby illegal or otherwise prohibited or if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction; or, (iv) By Purchaser if anything has come to its attention that any of Sellers' representations or warranties are untrue in any respect or Purchaser has discovered any contamination or any Hazardous Substance on the premises of the Corporation or any violations of any Environmental Laws by the Corporation which have not been remedied as of the date of the discovery. The party desiring to terminate this Agreement pursuant to Clauses (ii), (iii) or (iv) shall give notice of such termination to the other party. 11.02 Effect of Termination. If this Agreement is terminated as permitted by Section 11.01, such termination shall be without liability of any party (or of any shareholder, director, officer, employee, agent, consultant or representative of such party) to the other parties to this Agreement; provided that if such termination shall result from the willful failure of any party to fulfill a condition to the performance of the obligations of another party or to perform a covenant of this Agreement or from a willful breach by any party to this Agreement, such party shall be fully liable for any and all Losses incurred or suffered by any other party as a result of such failure or breach. The provisions of Sections 5.01 and 12.03 shall survive any termination hereof pursuant to Section 11.01. ARTICLE XII MISCELLANEOUS 12.01 Notices. All notices, requests and other communications to either party hereunder shall be in writing (including facsimile, telecopy or similar writing) and shall be deemed given when delivered: If to Purchaser, to: Gulf Island Fabrication, Inc. Attn: Kerry J. Chauvin, President 583 Thompson Road Houma, LA 70361-0310 With a Copy to: Robert R. Casey, Esq. Four United Plaza, 5th Floor 8555 United Plaza Boulevard Baton Rouge, LA 70809-7000 If to Sellers or to Indemnifying Parties, to Sellers' Representatives: E. M. Dupaquier 206 Maple Avenue Houma, LA 70364 R. H. Marmande 1321 Dularge Road With a Copy to: P. J. McMahon, Esq. P. O. Box 1545 Houma, LA 70361 Each of the above persons may change their address or facsimile number by notice to the other persons in the manner set forth above. 12.02 Amendments; No Waivers. (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Purchaser and Seller, or in the case of a waiver, by the party against whom the waiver is to be effective. (b) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the existence of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 12.03 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. 12.04 Successors and Assigns. The provisions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided that neither party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other party hereto. Neither this Agreement nor any provision hereof is intended to confer upon any person other than the parties hereto any rights or remedies hereunder. 12.05 Governing Law. This Agreement shall be construed in accordance with and governed by the law of the State of Louisiana without regard to the conflicts of law rules of such state. 12.06 Jurisdiction and Forum: Arbitration. Any controversy arising under, out of, in connection with, or relating to, this Agreement, and any amendment hereof, or the breach hereof or thereof, shall be determined and settled by arbitration in New Orleans, Louisiana by an arbitrator or arbitrators mutually agreed upon by Purchaser and the Sellers' Representatives or, if Purchaser and Sellers' Representatives shall fail or be unable to so agree within ten Business Days after the written request therefor by Purchaser or the Representatives to the other, such arbitrator or arbitrators as may be selected in accordance with the rules of the American Arbitration Association. Any award rendered therein shall specify the findings of fact of the arbitrator or arbitrators and the reasons for such award, with reference to and reliance on relevant law. Any such award shall be final and binding on each and all of the parties thereto and their personal representatives, and judgment may be entered thereon in any court having jurisdiction thereof. 12.07 Counterparts; Effectiveness. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received as a counterpart hereof signed by the other party hereto. 12.08 Entire Agreement. This Agreement and any other agreements referred to herein constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements, understandings and negotiations, both written and oral, between the parties with respect thereto. No representation, inducement, promise, understanding, condition or warranty not set forth herein has been made or relied upon by either party hereto. 12.09 Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 12.10 Severability. In the event any one or more of the provisions of this Agreement shall be or become illegal or unenforceable in any respect, the validity, legality, operation and enforceability of the remaining provisions of this Agreement shall not be affected thereby. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers effective as of the day and year first above written but executed on the dates set forth below. WITNESSES: GULF ISLAND FABRICATION, Purchaser /s/ Elward Cunningham BY: /s/ Kerry J. Chauvin ------------------------- ------------------------------- Kerry J. Chauvin, President /s/ John P. Laborde Date Executed: November 25,1996 ------------------------- ------------- SELLERS: /s/ Elward Cunningham /s/ R.H. Marmande -------------------------- ----------------------------------- R. H. Marmande /s/ John P. Laborde Date Executed: November 25, 1996 -------------------------- ------------- /s/ Elward Cunningham /s/ E. M. Dupaquier -------------------------- ----------------------------------- E. M. Dupaquier /s/ John P. Laborde Date Executed: November 25, 1996 -------------------------- ------------ All schedules have been intentionally omitted. A copy of any omitted schedule will be furnished supplementally to the Commission upon request. EX-10 5 REGISTRATION RIGHTS AGREEMENT This registration rights agreement (this "Agreement") is entered into this 6th day of March, 1997 by and between the undersigned and Gulf Island Fabrication, Inc. (the "Company"). WHEREAS, the undersigned was a founder of the Company and holds 1,416,100 shares of common stock, no par value per share (the "Common Stock"), of the Company. WHEREAS, the Company desires to grant certain registration rights to the undersigned; NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the undersigned and the Company agree as follows: 1. Certain Defined Terms. Certain terms used in this Agreement are defined as follows: "Holder" means anyone holding Registrable Securities. "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "Qualified Public Offering" means the closing of an underwritten public offering by the Company pursuant to a Registration Statement filed and declared effective under the Securities Act covering the offer and sale of Common Stock for the account of the Company in which the aggregate gross proceeds to the Company equal at least fifteen million dollars ($15,000,000). "Register," "registered" and "registration" refer to a registration effected by preparing and filing a Registration Statement with the SEC in compliance with the Securities Act for the purpose of effecting a public sale of securities. "Registrable Securities" means (a) all shares of Common Stock held by the undersigned as of the date hereof and (b) any other securities issued by the Company after the date hereof with respect to such shares (and with respect to the Common Stock generally) by means of exchange, reclassification, dividend, distribution, split up, combination, subdivision, recapitalization, merger, spin-off, reorganization or otherwise; provided, however, that as to any Registrable Securities, such securities shall cease to constitute Registrable Securities for the purposes of this Agreement if and when (i) a Registration Statement with respect to the sale of such securities shall have been declared effective by the SEC and such securities shall have been sold pursuant thereto in accordance with the intended plan and method of distribution therefor set forth in the final prospectus forming a part of such Registration Statement; (ii) such securities shall have been sold in satisfaction of all applicable resale provisions of Rule 144 under the Securities Act; (iii) as expressed in an opinion of counsel delivered to and satisfactory to the Company and the transfer agent for the Common Stock, such securities no longer constitute "restricted securities" within the meaning of Rule 144 under the Securities Act and the transfer of such securities neither requires registration under the Securities Act or qualification under any state securities or "blue sky" laws then in effect, or (iv) such securities cease to be issued and outstanding for any reason. "Registration Statement" means a registration statement filed by the Company with the SEC for a public offering and sale of securities of the Company (other than a registration statement on Form S-8 or Form S-4 or their successors or any other form for a limited purpose or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another Person). "Securities Act" means the Securities Act of 1933, as amended. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to the undersigned as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana; (b) The Company has the full legal right, power and authority to enter into and perform this Agreement, and this Agreement has been duly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms; subject, however, to any approvals that may be required under the Securities Act of 1933, as amended (the "Securities Act") and under state securities laws in connection with the registration and sale of any Registrable Securities; and (c) The execution, delivery and performance of this Agreement by the Company will not violate any provision of law, any order of any court or agency of government, the Articles of Incorporation or By-laws of the Company, each as amended through the date hereof, or any provision of any indenture or other agreement to which it or any of its properties or assets is bound, or conflict with, result in a breach or constitute (with due notice or lapse of time or both) a default under any such indenture or other agreement, result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon the properties or assets of the Company. 3. Registration Rights (a) Demand Registration Rights. (i) After the date on which the Company has first effected a Qualified Public Offering, the Holders of 50% or more of the Registrable Securities may request in writing that the Company register all or any portion of the Registrable Securities held by such requesting Holder or Holders (the "Initiating Holders") for sale in the manner specified in such request. The Company shall promptly and in any event not later than ten days after such request, notify in writing all other Holders of such request and thereupon the Company will, at its sole cost and expense as provided in Section 4 below, use its best efforts to register (on the appropriate registration form reasonably acceptable to the Initiating Holders) that number of Registrable Securities specified in such request and all other Registrable Securities that the Company has been requested to register by such other Holder or Holders in a written response given to the Company by such other Holder or Holders (who, together with the Initiating Holders, are hereinafter referred to as the "Requesting Holders") within 30 days after receipt of the written notice of the proposed registration from the Company. The Company agrees to include in any such Registration Statement all information which, the opinion of counsel to the Requesting Holders, is required to be included. (ii) The Company shall be obligated to effect two registrations of the Registrable Securities pursuant to this Section 3(a). The obligation of the Company under this Section 3(a) shall be deemed satisfied only if a Registration Statement registering all Registrable Securities specified in the requests received pursuant to subsection 3(a)(i) for sale in accordance with the method of disposition specified by the Initiating Holders shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such Registrable Securities included therein have been sold pursuant thereto. (iii) The Company shall be entitled to include in any Registration Statement referred to in this Section 3(a), for sale in accordance with the methods of disposition specified by the Initiating Holders, securities to be sold by the Company for its own account, except as and to the extent that, in the opinion of the managing underwriter or underwriters (if the method of disposition requested by the Initiating Holders is an underwritten public offering), such inclusion would have a material adverse effect on the efforts to sell the Registrable Securities included in the Registration Statement pursuant to Section 3(a)(i). (iv) If the managing underwriter shall (A) certify in writing that the inclusion of some or all of the Registrable Securities would materially and adversely affect the market for the Company's securities, (B) state the basis of such opinion and (C) state the maximum number of Registrable Securities, if any, that may be distributed without such adverse effect, then the Company may, upon written notice to the Requesting Holders allocate such an offering pro rata among the Requesting Holders. (v) If at the time of any request to register Registrable Securities pursuant to this Section 3(a), the Company is engaged (or its Board of Directors has made a determination to engage within ninety days of the time of such request) in a registered public offering of securities for its own account in which the Requesting Holders may include Registrable Securities pursuant to Section 3(b) hereof, or is engaged in any other activity which, in the good faith determination of the Company's Board of Directors, would be adversely affected by the requested registration to the material detriment of the Company, then the Company may at its option direct that the filing of a Registration Statement pursuant to such a request be delayed for a period not in excess of 90 days from the effective date of such offering or the date of commencement of such other material activity, as the case may be. (vi) If requested by the underwriters for any underwritten offering by the Requesting Holders pursuant to a registration requested under this Section 3(a), the Company shall enter into an underwriting agreement with such underwriters in a form reasonably satisfactory in substance and form to each Requesting Holder and the underwriters that shall contain such representations and warranties by the Company and such other terms as are generally prevailing in an agreement of this type, including, without limitation, indemnities to the effect and to the extent provided in Section 8 hereof. The Requesting Holders will cooperate with the Company in the negotiation of the underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof. The Requesting Holders shall be parties to such underwriting agreement and may, in their discretion, require that any or all of the representations and warranties by, and other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Requesting Holders and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such Requesting Holders. In the case of a firm commitment public offering pursuant to this Section 3(a), the Initiating Holders shall choose the managing underwriter or underwriters; provided that this selection shall be subject to the approval of the Company, which approval shall not be unreasonably withheld. (vii) The Holders' rights under this Section 3(a) are in addition to registration rights of the Holders under Section 3(b) hereof. (b) Piggy-back Registration (i) If the Company proposes to file a Registration Statement, whether or not for its own account (other than pursuant to Section 3(a)), it will, at least thirty days prior to such a filing, give written notice to all Holders of its intention to do so and, upon the written request of any Holder or Holders given within fifteen days of the receipt of such notice (which request shall state the intended method of disposition of such Registrable Securities), the Company will use its best efforts to cause all Registrable Securities that the Holder or Holders requested the Company to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of the Holder or Holders; provided that the Company shall have the right to postpone or withdraw any registration effected pursuant to this Section 3(b) without obligation to the Holders. (ii) In connection with any offering under this Section 3(b) involving an underwriting, the Company shall not be required to include any Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and the managing underwriter or underwriters, selected by the Company, and then only in such quantity as will not, in the written opinion of the managing underwriter or underwriters, jeopardize the success of the offering by the Company. Each Holder that has requested that Registrable Securities held by him be included in such Registration Statement shall (together with the Company and the other Holders distributing the securities through such underwriting) enter into such underwriting agreement as agreed upon between the Company and the managing underwriter or underwriters. If in the written opinion of the managing underwriter or underwriters the registration of all, or part of, the Registrable Securities that the Holders have requested to be included would materially and adversely affect such public offering, the Company shall be required to include in the underwriting only that number of Registrable Securities, if any, that the managing underwriter or underwriters believes may be sold without causing such adverse effect. If the number of Registrable Securities to be included in the registration in accordance with the foregoing is less than the total number of securities that the Holders have requested to be included, then the number of Registrable Securities to be included in the registration shall be reduced pro rata among the requesting Holders based upon the number of Registrable Securities so requested to be registered. If any Holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter. 4. Registration Procedures. If and whenever the Company is required by the provisions of this Agreement to use its best efforts to effect the registration of any of the Registrable Securities under the Securities Act, the Company shall as expeditiously as reasonably possible: (a) Prepare and file with the Securities and Exchange Commission (the "SEC") a Registration Statement and otherwise comply with the provisions of the Securities Act with respect to such Registrable Securities and use its best efforts to cause that Registration Statement to become effective; (b) Prepare and file with the SEC any amendments and supplements to the Registration Statement as may be necessary to keep the Registration Statement effective until the earlier of (i) the date on which all Registrable Securities included therein have been sold pursuant to the plan of distribution included in such Registration Statement and (ii) the thirtieth day from the effective date of the Registration Statement; (c) Furnish to the Holders whose Registrable Securities have been included in such Registration Statement such numbers of copies of the prospectus, including preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Holders may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities; (d) Use its best efforts to register or qualify the Registrable Securities covered by the Registration Statement under the securities or blue sky laws of such jurisdictions as the Holders whose Registrable Securities have been included in such Registration Statement shall reasonably request, and do any and all other acts and things that may be necessary or advisable to enable such Holders to consummate the public sale or other disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify to do business as a foreign corporation or consent to general service of process in any such jurisdiction; (e) Before filing the Registration Statement or prospectus or amendments or supplements thereto, furnish the Holders whose Registrable Securities have been included in such Registration Statement with copies of all such documents proposed to be filed, which shall be subject to reasonable approval of counsel designated by such Holders; (f) Furnish to each Holder whose Registrable Securities have been included in such Registration Statement a signed counterpart, addressed to such Holder (and the underwriters, if any), of (i) an opinion of the Company's legal counsel dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), and (ii) a "comfort" letter dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the independent public accountants who certified the Company's financial statements included in such Registration Statement, covering substantially the same matters with respect to such Registration Statement (and the prospectus included therein, and in the case of the accountants' letter with respect to events subsequent to the date of such financial statements), as are customarily included in opinions of issuer's counsel and an accountant's letter delivered to the underwriters in underwritten public offerings of securities, and in the case of the accountant's letter, such other financial matters as such Holder (or the underwriters, if any) may reasonably request; and (g) At any time when a prospectus relating to the Registrable Securities is required to be delivered under the Securities Act, notify each Holder whose Registrable Securities have been included in such Registration Statement upon discovery of, or upon the happening of any event as a result of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made. If the Company has delivered preliminary or final prospectuses to the Holders whose Registrable Securities have been included in such Registration Statement, and after having done so the prospectus is amended to comply with the requirements of the Securities Act, the Company shall promptly notify such Holders and, if requested, such Holders shall immediately cease making offers of Registrable Securities and return all prospectuses to the Company. The Company shall promptly provide such Holders with a revised prospectuses and following receipt of the revised prospectuses such Holders shall be free to resume making offers of the Registrable Securities. 5. Expenses of Registration. The costs and expenses incurred in connection with any registration, qualification or compliance pursuant to this Agreement, including, without limitation, all registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company and the expenses of any special accounting services and audits incidental to or required by such registration, shall be paid by the Company; provided, however, the Company shall not be required to pay legal fees of the Holders, or underwriters' fees, discounts, commissions and broker-dealer charges relating to Registrable Securities. All such expenses relating to the Registrable Securities or to Holders' legal counsel shall be paid by Holders. 6. Information by Holders. The Holders will furnish the Company, upon the written request of the Company, all information in their possession necessary to effect the registration and qualifications under the Securities Act and the blue sky laws in connection with any registration and will otherwise cooperate with the Company in effecting such registration and qualifications. 7. Rule 144 Requirements. After the date on which the Company has effected a Qualified Public Offering, the Company shall: (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (b) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and Securities Exchange Act of 1934, as amended (the "Exchange Act") (and any time after it has become subject to such reporting requirements); and (c) furnish to any Holder upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety days following the closing of the first sale of securities by the Company pursuant to a Registration Statement), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as such Holder may reasonably request to avail itself of any similar rule or regulation of the SEC allowing itself any such securities without registration. 8. Indemnification. (a) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the Holders whose Registrable Securities have been included in such registration and each underwriter of such Registrable Securities and each other Person, if any, who controls such persons within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (including reasonable legal and other expenses incurred in investigating and defending against the same), joint or several, to which the Holders or such underwriter or controlling person may become subject under the Securities Act, the Exchange Act, state securities laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (1) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (2) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, if used prior to the effective date of the Registration Statement, or contained in the prospectus (as amended or supplemented if the Company files any amendment thereof or supplement thereto with the SEC), if used within the period during which the Company is required to keep the Registration Statement to which such prospectus relates current pursuant to the terms hereof, or the omission or alleged omission to state therein (if so used) a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that (A) the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or omission made in such Registration Statement, preliminary prospectus or prospectuses, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by or on behalf of such Holders, underwriter or controlling person specifically for use in the preparation thereof or (B) the Company shall not be required to indemnify any underwriter from whom the Person asserting any such losses, claims, damages, expenses or liabilities purchased the Registrable Securities that are the subject thereof or to the benefit of any person controlling such underwriter, if such underwriter failed to send or give a copy of the prospectus or any amendment thereof or supplement thereto to such person at or prior to the written confirmation of the sale of such Registrable Securities to such person. (b) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Holders whose Registrable Securities have been included in such registration shall indemnify and hold harmless the Company, each of its directors and officers and each underwriter (if any) and each person who controls the Company or any such underwriter within the meaning of the Securities Act or the Exchange Act, if any, against any losses, claims, damages or liabilities, joint or several, to which the Company, such directors and officers, underwriter or controlling person may become subject under the Securities Act, the Exchange Act, state securities or Blue Sky laws, or otherwise, insofar as such losses, claims, damages, liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus or final prospectus or prospectuses contained in the Registration Statement, or an amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Holders specifically for use in connection with the preparation of such Registration Statement, prospectus, amendment or supplement. (c) Each party entitled to indemnification under this Agreement (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld); and, provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement. The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party shall pay such expenses if (1) representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential different interests between the Indemnified Party and any other party represented by such counsel in such proceeding, (2) the employment of counsel by the Indemnified Party has been authorized by the Indemnifying Party, or (3) the Indemnifying Party has not, in fact, employed counsel to assume the defense of such action. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation, and no Indemni- fied Party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of the Indemnifying Party. 9. Miscellaneous. (a) Notices. Any notice or other communication required or permitted hereunder shall be in writing or by telex, telephone or facsimile transmission with subsequent written confirmation, and may be personally served or sent by United States mail and shall be deemed to have been given upon receipt by the party notified. For purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 9) shall be as set forth opposite each party's name on the signature page hereof. (b) Transfer of Registration Rights. The rights to cause the Company to register securities granted to Holders by the Company under Section 3 hereof may be assigned by Holders to a transferee or assignee of any Registrable Securities, provided, that the Company is given written notice at the time of or within a reasonable time after said transfer, stating the name and address of such transferee or assignee and identifying the securities with respect to which such registration rights are being assigned. (c) Waivers and Amendments; Noncontractual Remedies; Preservation of Remedies. This Agreement may be amended, super- seded, cancelled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Company and each of the Holders or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising a right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude a further exercise thereof or the exercise of any other such right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity. The rights and remedies of any party based upon, arising out of or otherwise in respect of any breach of any provision of this Agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such breach is based may also be the subject matter of any other provision of this Agreement (or of any other Agreement between the parties) as to which there is no breach. (d) Severability. If any provision of this Agreement or the applicability of any such provision to a person or circum- stances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement or the application of such provision to persons or circumstances other than those for which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law. To the extent permitted by applicable law each party hereto hereby waives any provision or provisions of law which would otherwise render any provision of this Agreement invalid, illegal or unenforceable in any respect. (e) Counterparts. This Agreement may be executed by the parties hereto in separate counterparts and when so executed shall constitute one Agreement, notwithstanding that all parties are not signatories to the same counterpart. (f) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Louisiana applicable to agreements made and to be performed entirely within such state. (g) Termination. This Agreement will terminate upon the earlier of (i) the date upon which the Company and each Holder existing on that date mutually agree in writing to terminate this Agreement and (ii) the first date on which there ceases to be any Registrable Securities. IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written. Address: GULF ISLAND FABRICATION, INC. 583 Thompson Road Houma, Louisiana 70363 By: /s/ Kerry J. Chauvin ______________________________ Kerry J. Chauvin, President Address: /s/ Alden J. Laborde 210 Baronne Street ______________________________ New Orleans, Louisiana 70112 Alden J. Laborde EX-10 6 REGISTRATION RIGHTS AGREEMENT This registration rights agreement (this "Agreement") is entered into this 6th day of March, 1997 by and between the undersigned and Gulf Island Fabrication, Inc. (the "Company"). WHEREAS, the undersigned was a founder of the Company and holds 1,725,500 shares of common stock, no par value per share (the "Common Stock"), of the Company. WHEREAS, the Company desires to grant certain registration rights to the undersigned; NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the undersigned and the Company agree as follows: 1. Certain Defined Terms. Certain terms used in this Agreement are defined as follows: "Holder" means anyone holding Registrable Securities. "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, limited liability companies, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "Qualified Public Offering" means the closing of an underwritten public offering by the Company pursuant to a Registration Statement filed and declared effective under the Securities Act covering the offer and sale of Common Stock for the account of the Company in which the aggregate gross proceeds to the Company equal at least fifteen million dollars ($15,000,000). "Register," "registered" and "registration" refer to a registration effected by preparing and filing a Registration Statement with the SEC in compliance with the Securities Act for the purpose of effecting a public sale of securities. "Registrable Securities" means (a) all shares of Common Stock held by the undersigned as of the date hereof and (b) any other securities issued by the Company after the date hereof with respect to such shares (and with respect to the Common Stock generally) by means of exchange, reclassification, dividend, distribution, split up, combination, subdivision, recapitalization, merger, spin-off, reorganization or otherwise; provided, however, that as to any Registrable Securities, such securities shall cease to constitute Registrable Securities for the purposes of this Agreement if and when (i) a Registration Statement with respect to the sale of such securities shall have been declared effective by the SEC and such securities shall have been sold pursuant thereto in accordance with the intended plan and method of distribution therefor set forth in the final prospectus forming a part of such Registration Statement; (ii) such securities shall have been sold in satisfaction of all applicable resale provisions of Rule 144 under the Securities Act; (iii) as expressed in an opinion of counsel delivered to and satisfactory to the Company and the transfer agent for the Common Stock, such securities no longer constitute "restricted securities" within the meaning of Rule 144 under the Securities Act and the transfer of such securities neither requires registration under the Securities Act or qualification under any state securities or "blue sky" laws then in effect, or (iv) such securities cease to be issued and outstanding for any reason. "Registration Statement" means a registration statement filed by the Company with the SEC for a public offering and sale of securities of the Company (other than a registration statement on Form S-8 or Form S-4 or their successors or any other form for a limited purpose or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another Person). "Securities Act" means the Securities Act of 1933, as amended. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to the undersigned as follows: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana; (b) The Company has the full legal right, power and authority to enter into and perform this Agreement, and this Agreement has been duly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company enforceable in accordance with its terms; subject, however, to any approvals that may be required under the Securities Act of 1933, as amended (the "Securities Act") and under state securities laws in connection with the registration and sale of any Registrable Securities; and (c) The execution, delivery and performance of this Agreement by the Company will not violate any provision of law, any order of any court or agency of government, the Articles of Incorporation or By-laws of the Company, each as amended through the date hereof, or any provision of any indenture or other agreement to which it or any of its properties or assets is bound, or conflict with, result in a breach or constitute (with due notice or lapse of time or both) a default under any such indenture or other agreement, result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon the properties or assets of the Company. 3. Registration Rights (a) Demand Registration Rights. (i) After the date on which the Company has first effected a Qualified Public Offering, the Holders of 50% or more of the Registrable Securities may request in writing that the Company register all or any portion of the Registrable Securities held by such requesting Holder or Holders (the "Initiating Holders") for sale in the manner specified in such request. The Company shall promptly and in any event not later than ten days after such request, notify in writing all other Holders of such request and thereupon the Company will, at its sole cost and expense as provided in Section 4 below, use its best efforts to register (on the appropriate registration form reasonably acceptable to the Initiating Holders) that number of Registrable Securities specified in such request and all other Registrable Securities that the Company has been requested to register by such other Holder or Holders in a written response given to the Company by such other Holder or Holders (who, together with the Initiating Holders, are hereinafter referred to as the "Requesting Holders") within 30 days after receipt of the written notice of the proposed registration from the Company. The Company agrees to include in any such Registration Statement all information which, the opinion of counsel to the Requesting Holders, is required to be included. (ii) The Company shall be obligated to effect two registrations of the Registrable Securities pursuant to this Section 3(a). The obligation of the Company under this Section 3(a) shall be deemed satisfied only if a Registration Statement registering all Registrable Securities specified in the requests received pursuant to subsection 3(a)(i) for sale in accordance with the method of disposition specified by the Initiating Holders shall have become effective and, if such method of disposition is a firm commitment underwritten public offering, all such Registrable Securities included therein have been sold pursuant thereto. (iii) The Company shall be entitled to include in any Registration Statement referred to in this Section 3(a), for sale in accordance with the methods of disposition specified by the Initiating Holders, securities to be sold by the Company for its own account, except as and to the extent that, in the opinion of the managing underwriter or underwriters (if the method of disposition requested by the Initiating Holders is an underwritten public offering), such inclusion would have a material adverse effect on the efforts to sell the Registrable Securities included in the Registration Statement pursuant to Section 3(a)(i). (iv) If the managing underwriter shall (A) certify in writing that the inclusion of some or all of the Registrable Securities would materially and adversely affect the market for the Company's securities, (B) state the basis of such opinion and (C) state the maximum number of Registrable Securities, if any, that may be distributed without such adverse effect, then the Company may, upon written notice to the Requesting Holders allocate such an offering pro rata among the Requesting Holders. (v) If at the time of any request to register Registrable Securities pursuant to this Section 3(a), the Company is engaged (or its Board of Directors has made a determination to engage within ninety days of the time of such request) in a registered public offering of securities for its own account in which the Requesting Holders may include Registrable Securities pursuant to Section 3(b) hereof, or is engaged in any other activity which, in the good faith determination of the Company's Board of Directors, would be adversely affected by the requested registration to the material detriment of the Company, then the Company may at its option direct that the filing of a Registration Statement pursuant to such a request be delayed for a period not in excess of 90 days from the effective date of such offering or the date of commencement of such other material activity, as the case may be. (vi) If requested by the underwriters for any underwritten offering by the Requesting Holders pursuant to a registration requested under this Section 3(a), the Company shall enter into an underwriting agreement with such underwriters in a form reasonably satisfactory in substance and form to each Requesting Holder and the underwriters that shall contain such representations and warranties by the Company and such other terms as are generally prevailing in an agreement of this type, including, without limitation, indemnities to the effect and to the extent provided in Section 8 hereof. The Requesting Holders will cooperate with the Company in the negotiation of the underwriting agreement and shall give consideration to the reasonable suggestions of the Company regarding the form thereof. The Requesting Holders shall be parties to such underwriting agreement and may, in their discretion, require that any or all of the representations and warranties by, and other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of such Requesting Holders and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such Requesting Holders. In the case of a firm commitment public offering pursuant to this Section 3(a), the Initiating Holders shall choose the managing underwriter or underwriters; provided that this selection shall be subject to the approval of the Company, which approval shall not be unreasonably withheld. (vii) The Holders' rights under this Section 3(a) are in addition to registration rights of the Holders under Section 3(b) hereof. (b) Piggy-back Registration (i) If the Company proposes to file a Registration Statement, whether or not for its own account (other than pursuant to Section 3(a)), it will, at least thirty days prior to such a filing, give written notice to all Holders of its intention to do so and, upon the written request of any Holder or Holders given within fifteen days of the receipt of such notice (which request shall state the intended method of disposition of such Registrable Securities), the Company will use its best efforts to cause all Registrable Securities that the Holder or Holders requested the Company to register to be registered under the Securities Act to the extent necessary to permit their sale or other disposition in accordance with the intended methods of distribution specified in the request of the Holder or Holders; provided that the Company shall have the right to postpone or withdraw any registration effected pursuant to this Section 3(b) without obligation to the Holders. (ii) In connection with any offering under this Section 3(b) involving an underwriting, the Company shall not be required to include any Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and the managing underwriter or underwriters, selected by the Company, and then only in such quantity as will not, in the written opinion of the managing underwriter or underwriters, jeopardize the success of the offering by the Company. Each Holder that has requested that Registrable Securities held by him be included in such Registration Statement shall (together with the Company and the other Holders distributing the securities through such underwriting) enter into such underwriting agreement as agreed upon between the Company and the managing underwriter or underwriters. If in the written opinion of the managing underwriter or underwriters the registration of all, or part of, the Registrable Securities that the Holders have requested to be included would materially and adversely affect such public offering, the Company shall be required to include in the underwriting only that number of Registrable Securities, if any, that the managing underwriter or underwriters believes may be sold without causing such adverse effect. If the number of Registrable Securities to be included in the registration in accordance with the foregoing is less than the total number of securities that the Holders have requested to be included, then the number of Registrable Securities to be included in the registration shall be reduced pro rata among the requesting Holders based upon the number of Registrable Securities so requested to be registered. If any Holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter. 4. Registration Procedures. If and whenever the Company is required by the provisions of this Agreement to use its best efforts to effect the registration of any of the Registrable Securities under the Securities Act, the Company shall as expeditiously as reasonably possible: (a) Prepare and file with the Securities and Exchange Commission (the "SEC") a Registration Statement and otherwise comply with the provisions of the Securities Act with respect to such Registrable Securities and use its best efforts to cause that Registration Statement to become effective; (b) Prepare and file with the SEC any amendments and supplements to the Registration Statement as may be necessary to keep the Registration Statement effective until the earlier of (i) the date on which all Registrable Securities included therein have been sold pursuant to the plan of distribution included in such Registration Statement and (ii) the thirtieth day from the effective date of the Registration Statement; (c) Furnish to the Holders whose Registrable Securities have been included in such Registration Statement such numbers of copies of the prospectus, including preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Holders may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities; (d) Use its best efforts to register or qualify the Registrable Securities covered by the Registration Statement under the securities or blue sky laws of such jurisdictions as the Holders whose Registrable Securities have been included in such Registration Statement shall reasonably request, and do any and all other acts and things that may be necessary or advisable to enable such Holders to consummate the public sale or other disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify to do business as a foreign corporation or consent to general service of process in any such jurisdiction; (e) Before filing the Registration Statement or prospectus or amendments or supplements thereto, furnish the Holders whose Registrable Securities have been included in such Registration Statement with copies of all such documents proposed to be filed, which shall be subject to reasonable approval of counsel designated by such Holders; (f) Furnish to each Holder whose Registrable Securities have been included in such Registration Statement a signed counterpart, addressed to such Holder (and the underwriters, if any), of (i) an opinion of the Company's legal counsel dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), and (ii) a "comfort" letter dated the effective date of such Registration Statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), signed by the independent public accountants who certified the Company's financial statements included in such Registration Statement, covering substantially the same matters with respect to such Registration Statement (and the prospectus included therein, and in the case of the accountants' letter with respect to events subsequent to the date of such financial statements), as are customarily included in opinions of issuer's counsel and an accountant's letter delivered to the underwriters in underwritten public offerings of securities, and in the case of the accountant's letter, such other financial matters as such Holder (or the underwriters, if any) may reasonably request; and (g) At any time when a prospectus relating to the Registrable Securities is required to be delivered under the Securities Act, notify each Holder whose Registrable Securities have been included in such Registration Statement upon discovery of, or upon the happening of any event as a result of which, the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made. If the Company has delivered preliminary or final prospectuses to the Holders whose Registrable Securities have been included in such Registration Statement, and after having done so the prospectus is amended to comply with the requirements of the Securities Act, the Company shall promptly notify such Holders and, if requested, such Holders shall immediately cease making offers of Registrable Securities and return all prospectuses to the Company. The Company shall promptly provide such Holders with a revised prospectuses and following receipt of the revised prospectuses such Holders shall be free to resume making offers of the Registrable Securities. 5. Expenses of Registration. The costs and expenses incurred in connection with any registration, qualification or compliance pursuant to this Agreement, including, without limitation, all registration, qualification and filing fees, printing expenses, fees and disbursements of counsel for the Company and the expenses of any special accounting services and audits incidental to or required by such registration, shall be paid by the Company; provided, however, the Company shall not be required to pay legal fees of the Holders, or underwriters' fees, discounts, commissions and broker-dealer charges relating to Registrable Securities. All such expenses relating to the Registrable Securities or to Holders' legal counsel shall be paid by Holders. 6. Information by Holders. The Holders will furnish the Company, upon the written request of the Company, all information in their possession necessary to effect the registration and qualifications under the Securities Act and the blue sky laws in connection with any registration and will otherwise cooperate with the Company in effecting such registration and qualifications. 7. Rule 144 Requirements. After the date on which the Company has effected a Qualified Public Offering, the Company shall: (a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (b) use its best efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and Securities Exchange Act of 1934, as amended (the "Exchange Act") (and any time after it has become subject to such reporting requirements); and (c) furnish to any Holder upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after ninety days following the closing of the first sale of securities by the Company pursuant to a Registration Statement), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as such Holder may reasonably request to avail itself of any similar rule or regulation of the SEC allowing itself any such securities without registration. 8. Indemnification. (a) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the Holders whose Registrable Securities have been included in such registration and each underwriter of such Registrable Securities and each other Person, if any, who controls such persons within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (including reasonable legal and other expenses incurred in investigating and defending against the same), joint or several, to which the Holders or such underwriter or controlling person may become subject under the Securities Act, the Exchange Act, state securities laws or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (1) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (2) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, if used prior to the effective date of the Registration Statement, or contained in the prospectus (as amended or supplemented if the Company files any amendment thereof or supplement thereto with the SEC), if used within the period during which the Company is required to keep the Registration Statement to which such prospectus relates current pursuant to the terms hereof, or the omission or alleged omission to state therein (if so used) a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that (A) the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or omission made in such Registration Statement, preliminary prospectus or prospectuses, or any such amendment or supplement, in reliance upon and in conformity with information furnished to the Company, in writing, by or on behalf of such Holders, underwriter or controlling person specifically for use in the preparation thereof or (B) the Company shall not be required to indemnify any underwriter from whom the Person asserting any such losses, claims, damages, expenses or liabilities purchased the Registrable Securities that are the subject thereof or to the benefit of any person controlling such underwriter, if such underwriter failed to send or give a copy of the prospectus or any amendment thereof or supplement thereto to such person at or prior to the written confirmation of the sale of such Registrable Securities to such person. (b) In the event of any registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Holders whose Registrable Securities have been included in such registration shall indemnify and hold harmless the Company, each of its directors and officers and each underwriter (if any) and each person who controls the Company or any such underwriter within the meaning of the Securities Act or the Exchange Act, if any, against any losses, claims, damages or liabilities, joint or several, to which the Company, such directors and officers, underwriter or controlling person may become subject under the Securities Act, the Exchange Act, state securities or Blue Sky laws, or otherwise, insofar as such losses, claims, damages, liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus or final prospectus or prospectuses contained in the Registration Statement, or an amendment or supplement to the Registration Statement, or arise out of or are based upon any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Holders specifically for use in connection with the preparation of such Registration Statement, prospectus, amendment or supplement. (c) Each party entitled to indemnification under this Agreement (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or litigation resulting therefrom; provided, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld); and, provided further, that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement. The Indemnified Party may participate in such defense at such party's expense; provided, however, that the Indemnifying Party shall pay such expenses if (1) representation of such Indemnified Party by the counsel retained by the Indemnifying Party would be inappropriate due to actual or potential different interests between the Indemnified Party and any other party represented by such counsel in such proceeding, (2) the employment of counsel by the Indemnified Party has been authorized by the Indemnifying Party, or (3) the Indemnifying Party has not, in fact, employed counsel to assume the defense of such action. No Indemnifying Party, in the defense of any such claim or litigation shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation, and no Indemni- fied Party shall consent to entry of any judgment or settle such claim or litigation without the prior written consent of the Indemnifying Party. 9. Miscellaneous. (a) Notices. Any notice or other communication required or permitted hereunder shall be in writing or by telex, telephone or facsimile transmission with subsequent written confirmation, and may be personally served or sent by United States mail and shall be deemed to have been given upon receipt by the party notified. For purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 9) shall be as set forth opposite each party's name on the signature page hereof. (b) Transfer of Registration Rights. The rights to cause the Company to register securities granted to Holders by the Company under Section 3 hereof may be assigned by Holders to a transferee or assignee of any Registrable Securities, provided, that the Company is given written notice at the time of or within a reasonable time after said transfer, stating the name and address of such transferee or assignee and identifying the securities with respect to which such registration rights are being assigned. (c) Waivers and Amendments; Noncontractual Remedies; Preservation of Remedies. This Agreement may be amended, super- seded, cancelled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the Company and each of the Holders or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising a right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any party of any such right, power or privilege, nor any single or partial exercise of any such right, power or privilege, preclude a further exercise thereof or the exercise of any other such right, power or privilege. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity. The rights and remedies of any party based upon, arising out of or otherwise in respect of any breach of any provision of this Agreement shall in no way be limited by the fact that the act, omission, occurrence or other state of facts upon which any claim of any such breach is based may also be the subject matter of any other provision of this Agreement (or of any other Agreement between the parties) as to which there is no breach. (d) Severability. If any provision of this Agreement or the applicability of any such provision to a person or circum- stances shall be determined by any court of competent jurisdiction to be invalid or unenforceable to any extent, the remainder of this Agreement or the application of such provision to persons or circumstances other than those for which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law. To the extent permitted by applicable law each party hereto hereby waives any provision or provisions of law which would otherwise render any provision of this Agreement invalid, illegal or unenforceable in any respect. (e) Counterparts. This Agreement may be executed by the parties hereto in separate counterparts and when so executed shall constitute one Agreement, notwithstanding that all parties are not signatories to the same counterpart. (f) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Louisiana applicable to agreements made and to be performed entirely within such state. (g) Termination. This Agreement will terminate upon the earlier of (i) the date upon which the Company and each Holder existing on that date mutually agree in writing to terminate this Agreement and (ii) the first date on which there ceases to be any Registrable Securities. IN WITNESS WHEREOF, this Agreement has been executed as of the date first above written. Address: GULF ISLAND FABRICATION, INC. 583 Thompson Road Houma, Louisiana 70363 By: /s/ Kerry J. Chauvin ______________________________ Kerry J. Chauvin, President Address: /s/ Huey J. Wilson Suite 650 ______________________________ 3636 South Sherwood Forest Blvd. Huey J. Wilson Baton Rouge, Louisiana 70816 EX-10 7 FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT Among GULF ISLAND FABRICATION, INC., As Borrower, FIRST NATIONAL BANK OF COMMERCE AND WHITNEY NATIONAL BANK, As Banks, AND FIRST NATIONAL BANK OF COMMERCE, As Agent Dated effective as of October 24, 1996 TABLE OF CONTENTS Section 1. Commitment of Banks to Renew Indebtedness..............5 1.1 Term Credit Facility................................. 6 1.2 Revolving Credit Facility............................ 7 1.3 Borrowing Procedure Under the Credit Facilities...... 8 1.4 Terms and Conditions Governing Letters of Credit..... 8 Section 2. Notes Evidencing Borrowings............................9 2.1 Term Notes........................................... 9 2.2 Revolving Notes..................................... 10 2.3 No Novation......................................... 10 Section 3. Interest and Fees.....................................10 3.1 Interest -- Term Credit Facility.................... 10 3.2 Interest -- Revolving Credit Facility............... 11 3.3 Default Rate........................................ 11 3.4 Prime Rate ..........................................12 3.5 Commitment Fee...................................... 12 3.6 Method of Calculating Interest and Fees .............12 3.7 Interest Rate Options............................... 12 Section 4. Payments, Prepayments, and Reduction or Termination of the Credit Facility..............................17 4.1 Method of Payment................................... 17 4.2 Sharing of Payments................................. 18 4.3 Payments Without Deduction ..........................19 4.4 Prepayments -- Term Credit Facility................. 19 4.5 Borrowing Base for Revolving Credit Facility; Mandatory Prepayments..........................................19 4.6 Reduction of Credit................................. 20 Section 5. Collateral...........................................21 5.1 Security for the Credit Facility 21 Section 6. Representations and Warranties of Borrower...........26 6.1 Corporate Existence .................................26 6.2 Authorization; Validity .............................26 6.3 No Conflicts ........................................26 6.4 Financial Statements ................................27 6.5 Litigation.......................................... 27 6.6 Liens ...............................................27 6.7 Subsidiaries........................................ 27 6.8 Purpose .............................................27 6.9 Use of Proceeds; Margin Securities ..................28 6.10 Compliance with ERISA............................... 28 6.11 Consents ............................................28 6.12 Tax Returns .........................................28 6.13 Ownership of Borrower............................... 29 6.14 Operation of Business............................... 29 6.15 Rights in Properties; Liens......................... 29 6.16 Debt ................................................29 6.17 Disclosure ..........................................29 6.18 Registered Office; Principal Place of Business; Location of Collateral...............................29 6.19 Investment Company Act.............................. 30 6.20 Other Agreements.................................... 30 6.21 Compliance with Law .................................30 6.22 Corporate Name...................................... 31 6.23 Collateral ..........................................32 6.24 Taxpayer I.D. Number ................................32 Section 7. Borrower's Covenants..................................32 7.1 Financial Statements................................ 32 7.2 Access.............................................. 33 7.3 Insurance ...........................................33 7.4 Repair.............................................. 33 7.5 Taxes ...............................................34 7.6 Corporate Existence................................. 34 7.7 Merger.............................................. 34 7.8 Compliance ..........................................34 7.9 Use of Proceeds .....................................35 7.10 Financial Covenants .................................36 7.11 Liens ...............................................36 7.12 Debt ................................................37 7.13 Redemptions, etc. ...................................37 7.14 Capital Expenditures................................ 38 7.15 Dividends ...........................................38 7.16 Shareholder or Employee Loans .......................38 7.17 Change in Business.................................. 39 7.18 Accounts Receivable................................. 39 7.19 Compliance with Agreements ..........................39 7.20 Further Assurances.................................. 39 7.21 Disposition of Assets ...............................39 7.22 Change Tax I.D. Number.............................. 39 7.23 Indemnity ...........................................39 7.24 GIFI Property .......................................40 Section 8. Conditions Precedent to Extensions of Credit..........40 8.1 Borrower's Resolutions.............................. 41 8.2 Notes............................................... 41 8.3 Incumbency ..........................................41 8.4 Certification .......................................41 8.5 GIF Collateral Mortgage .............................41 8.6 GIF Collateral Chattel Mortgages ....................41 8.7 Lease Assignment ....................................41 8.8 GIFI Collateral Chattel Mortgage ....................41 8.9 Real Property Collateral Mortgage ...................41 8.10 Security Agreement.................................. 42 8.11 Financing Statement .................................42 8.12 Other Documents .....................................42 8.13 Opinion .............................................42 8.14 Real Property Title Insurance .......................42 Section 9. Additional Conditions Precedent to Advances and/or Letters of Credit....................................42 9.1 Default............................................. 43 9.2 Warranties.......................................... 43 Section 10. Events of Default....................................43 10.1 Payment............................................. 43 10.2 Other Indebtedness ..................................43 10.3 Other Default .......................................44 10.4 Insolvency.......................................... 44 10.5 ERISA ...............................................44 10.6 Agreements.......................................... 45 10.7 Representation or Warranty.......................... 45 10.8 Change in Ownership of Borrower .....................45 Section 11. Agent................................................46 11.1 Authorization and Action............................ 46 11.2 Agent's Reliance, Etc............................... 47 11.3 First NBC and Affiliates ............................48 11.4 Bank Credit Decision................................ 48 11.5 Indemnification .....................................49 11.6 Successor Agent .....................................49 11.7 Benefits of Section .................................50 11.8 Change in Specified Percentage ......................50 Section 12. General..............................................50 12.1 Definitions .........................................50 12.2 Financial Terms..................................... 59 12.3 Delay ...............................................60 12.4 Notices .............................................60 12.5 Expenses ............................................61 12.6 Severability........................................ 62 12.7 Counterparts........................................ 62 12.8 Law .................................................62 12.9 Successors ..........................................62 12.10 Amendments .........................................63 12.11 Entire Agreement................................... 63 12.12 Conflicts ..........................................63 FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT THIS FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT (the "Agreement") dated effective as of the 24th day of October, 1996, by and among GULF ISLAND FABRICATION, INC., a Louisiana corporation ("Borrower") (formerly known as GIFI, Inc. ("GIFI"), successor by merger to Gulf Island Fabrication, Inc., a Louisiana corporation ("GIF")), WHITNEY NATIONAL BANK, a national banking association ("Whitney"), FIRST NATIONAL BANK OF COMMERCE, a national banking association, in its individual capacity ("First NBC") (each of Whitney and First NBC being sometimes referred to individually as a "Bank" and collectively as the "Banks"), and FIRST NATIONAL BANK OF COMMERCE, a national banking association, in its capacity as agent for Banks as set forth hereinafter (the "Agent"). W I T N E S S E T H: WHEREAS, GIF and First NBC entered into that certain Revolving Credit and Term Loan Agreement dated December 17, 1986 (the "Original Loan Agreement"); WHEREAS, GIF and First NBC entered into that certain First Amendment to Revolving Credit and Term Loan Agreement dated as of November 3, 1987 (the "First Loan Agreement Amendment"), whereby Borrower and First NBC amended certain terms and conditions of the Original Loan Agreement; WHEREAS, GIF and First NBC entered into that certain Second Amendment to Revolving Credit and Term Loan Agreement, dated effective as of December 21, 1987 (the "Second Loan Agreement Amendment"), whereby GIF and First NBC amended certain terms and conditions of the Original Loan Agreement, as amended by the First Loan Agreement Amendment; WHEREAS, GIF and First NBC entered into that certain Third Amendment to Revolving Credit and Term Loan Agreement dated effective as of September 13, 1988 (the "Third Loan Agreement Amendment"), whereby GIF and First NBC amended certain terms and conditions of the Original Loan Agreement, as amended by the First Loan Agreement Amendment and the Second Loan Agreement Amendment (the Original Loan Agreement, as amended by the First Loan Agreement Amendment, the Second Loan Agreement Amendment and the Third Loan Agreement Amendment being hereinafter referred to as the "Loan Agreement"); WHEREAS, GIF and First NBC entered into that certain First Amended and Restated Revolving Credit and Term Loan Agreement dated July 27, 1989, whereby GIF and First NBC further amended certain terms and conditions of the Loan Agreement and restated the Loan Agreement in its entirety (the "First Amended and Restated Loan Agreement"); WHEREAS, GIFI and GIF entered into that certain Merger Agreement dated effective as of March 1, 1990 (the "Merger Agreement"), whereby GIF was merged into GIFI, and, contempora- neously therewith, GIFI changed its corporate name to Gulf Island Fabrication, Inc. (the "Merger"); WHEREAS, Borrower and First NBC entered into that certain Second Amended and Restated Revolving Credit and Term Loan Agreement dated effective as of March 1, 1990, in order to reflect the Merger, to set forth further changes in their understanding concerning certain terms and conditions of the loan made pursuant to the First Amended and Restated Loan Agreement and to restate same in its entirety (the "Second Amended and Restated Loan Agreement"); WHEREAS, pursuant to the terms of that certain Partial Assignment of Notes and Security Therefor dated October 29, 1991, (as amended or modified from time to time, the "Assignment"), First NBC assigned to Whitney an undivided one-half(1/2) interest in and to the Second Amended and Restated Loan Agreement, all notes executed by Borrower payable to the order of First NBC pursuant to the Second Amended and Restated Loan Agreement (the "Second Loan Agreement Notes") and all security for the repayment of the Second Loan Agreement Notes, as described in the Second Amended and Restated Loan Agreement (the "Second Loan Agreement Security"); WHEREAS, as a result of the Assignment, each Bank now holds an undivided one-half (1/2) interest in and to the Second Amended and Restated Loan Agreement and all rights and obligations described therein or emanating therefrom, including, without limitation, the Second Loan Agreement Notes and the Second Loan Agreement Security; WHEREAS, Borrower, Banks and Agent entered into that certain Third Amended and Restated Revolving Credit and Term Loan Agreement, dated effective as of October 29, 1991 (the "Third Amended and Restated Loan Agreement"), whereby Borrower, Banks and Agent amended and restated the Second Amended and Restated Loan Agreement in order (a) to more fully reflect the agreement among the parties regarding the continuation of the loans made pursuant thereto, (b) to extend, modify and renew the obligations evidenced by the Second Amended and Restated Loan Agreement and the Second Loan Agreement Notes, (c) to reaffirm the existence and priority of the Second Loan Agreement Security and (d) to provide new security described therein (the "Third Loan Agreement Security"); WHEREAS, Borrower, Banks and Agent entered into that certain First Amendment to Third Amended and Restated Revolving Credit and Term Loan Agreement dated effective as of July 20, 1992 (the "Third Amended and Restated Loan Agreement Amendment"), whereby Borrower and First NBC amended certain terms and conditions of the Third Amended and Restated Loan Agreement (the Third Amended and Restated Loan Agreement, as amended by the Third Amended and Restated Loan Agreement Amendment, being hereinafter referred to as the "Third Loan Agreement"); WHEREAS, Borrower, Banks and Agent entered into that certain Fourth Amended and Restated Revolving Credit Agreement, dated effective as of February 25, 1993 (the "Fourth Amended and Restated Loan Agreement"), whereby Borrower, Banks and Agent amended and restated the Third Amended and Restated Loan Agreement in order to more fully reflect the agreement among the parties regarding the continuation of the loans made pursuant thereto; WHEREAS, Borrower, Banks and Agent entered into that certain First Amendment to Fourth Amended and Restated Revolving Credit Agreement, dated effective as of February 25, 1993 (the "First Fourth Amended and Restated Loan Agreement Amendment"), whereby Borrower, Banks and Agent amended certain terms and conditions of the Fourth Amended and Restated Loan Agreement; WHEREAS, Borrower, Banks and Agent entered into that certain Second Amendment to Fourth Amended and Restated Revolving Credit Agreement, dated effective as of April 20, 1994 (the "Second Fourth Amended and Restated Loan Agreement Amendment"), whereby Borrower, Banks and Agent further amended certain terms and conditions of the Fourth Amended and Restated Loan Agreement; WHEREAS, Borrower, Banks and Agent entered into that certain Third Amendment to Fourth Amended and Restated Revolving Credit Agreement, dated effective as of June 26, 1995 (the "Third Fourth Amended and Restated Loan Agreement Amendment"), whereby Borrower, Banks and Agent further amended certain terms and conditions of the Fourth Amended and Restated Loan Agreement; WHEREAS, Borrower, Banks and Agent entered into that certain Fourth Amendment to Fourth Amended and Restated Revolving Credit Agreement, dated effective as of May 1, 1996 (the "Fourth Fourth Amended and Restated Loan Agreement Amendment"), whereby Borrower, Banks and Agent further amended certain terms and conditions of the Fourth Amended and Restated Loan Agreement (the Fourth Amended and Restated Loan Agreement, as amended by the First Fourth Amended and Restated Loan Agreement Amendment, the Second Fourth Amended and Restated Loan Agreement Amendment, the Third Fourth Amended and Restated Loan Agreement Amendment and the Fourth Fourth Amended and Restated Loan Agreement Amendment being hereinafter referred to as the "Fourth Loan Agreement"); WHEREAS, Borrower, Banks and Agent desire to amend and restate the Fourth Loan Agreement in order to more fully reflect the agreement among the parties regarding the continuation of the loans made pursuant thereto; and WHEREAS, the execution of this Agreement does not constitute a novation, prepayment or payment of the loans described in the Fourth Loan Agreement, but is an extension, modification and renewal thereof; NOW, THEREFORE, for and in consideration of the mutual cove- nants, agreements and undertakings herein contained, Banks and Borrower hereby agree as follows: Section 1. Commitment of Banks to Renew Indebtedness. Subject to the terms and conditions hereof, each Bank severally agrees that Borrower's obligations as evidenced by the Fourth Loan Agreement and the Prior Notes shall be renewed, extended, modified and restated in their entirety on the terms and conditions set forth herein. To the extent there is any conflict between the Fourth Loan Agreement and this Agreement or the Prior Notes and the Notes, the provisions of this Agreement and the Notes shall govern. To the extent this Agreement or the Notes is silent on any matter or provision contained in the Fourth Loan Agreement or the Prior Notes, such matter or provision of the Fourth Loan Agreement or the Prior Notes shall be deemed to be revoked. Borrower and Banks acknowledge and agree that (i) the renewal, extension, modification and restatement of the Loans under the terms and conditions set forth herein do not constitute a payment, prepayment or novation of the loans evidenced by the Fourth Loan Agreement and the Prior Notes and (ii) the Loans continue to be secured by the Existing Security with the original rank and priority thereof, as well as the other Collateral and Collateral Documents described herein or hereafter granted or executed, as appropriate. Subject to the terms and conditions contained herein, the maximum principal amount of the Loans evidenced by this Agreement and the Notes is TWENTY-TWO MILLION AND NO/100 DOLLARS ($22,000,000.00). 1.1 Term Credit Facility. Banks shall make available to Borrower a non-revolving line of credit in the maximum aggregate principal amount of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) (the "Non-Revolving Line of Credit"), which Non- Revolving Line of Credit may be drawn upon by Borrower on any Business Day of Banks during the period from the date hereof until and including March 31, 1997, or such earlier date as may be fixed by Borrower on at least one (1) Business Day's telephonic notice to Agent, to be confirmed in writing by Borrower, in the form of actual fundings to Borrower by Banks in such amounts as Borrower may from time to time request (each such funding being hereinafter referred to individually as a "Non- Revolving Advance" and collectively as the "Non-Revolving Advances"), so long as the aggregate principal amount of all outstanding Non-Revolving Advances at any one time does not exceed the Non-Revolving Commitment. On April 1, 1997, all of Banks' obligations to make Non-Revolving Advances on the Non- Revolving Line of Credit shall cease, and shall automatically, without the necessity of any further act on the part of Banks, Agent or Borrower, convert to a term loan in a principal amount equal to the aggregate amount of all Non-Revolving Advances made by Banks to Borrower during the period from the date hereof until and including March 31, 1997. All Non-Revolving Advances repaid on the Non-Revolving Line of Credit shall not be reborrowed but shall reduce the Non-Revolving Commitment on a dollar-for-dollar basis. The credit facility described in this Section 1.1 is hereinafter referred to as the "Term Credit Facility". 1.2 Revolving Credit Facility. Banks shall make available to Borrower a revolving line of credit (the "Revolving Credit Facility"; each of the Term Credit Facility and the Revolving Credit Facility being hereinafter sometimes referred to individually as a "Credit Facility" and collectively as the "Credit Facilities"), which Revolving Credit Facility may be drawn upon by Borrower on any Business Day of Banks during the period from the date hereof until and including December 31, 1998, or such earlier date as may be fixed by Borrower on at least one (1) Business Day's telephonic notice to Agent, to be confirmed in writing by Borrower, in the form of the issuance by Banks on behalf of and for the account of Borrower of irrevocable stand-by letters of credit in the form provided for by, and containing such terms and conditions as are acceptable to, Banks and in such amounts as Borrower may from time to time request (each such letter of credit, as well as any letters of credit issued pursuant to and in accordance with the Fourth Loan Agreement which remain outstanding on the date hereof, being hereinafter referred to individually as a "Letter of Credit" and collectively as the "Letters of Credit") or in the form of actual fundings to Borrower by Banks in such amounts as Borrower may from time to time request (each such funding, as well as the aggregate amount of the Prior Notes previously funded by Banks and outstanding on the date hereof, being hereinafter referred to individually as a "Revolving Advance" and collectively as the "Revolving Advances"), so long as (a) the aggregate principal amount of all Letters of Credit outstanding at any one time does not exceed the LC Commitment and (b) the aggregate principal amount of all Letters of Credit and of all Revolving Advances outstanding at any one time does not exceed the Revolving Commitment then in effect. The Revolving Commitment available to Borrower from time to time under the Revolving Credit Facility shall be reduced by the aggregate of the face amount of any outstanding Letters of Credit and of all unpaid Revolving Advances made by Banks to Borrower pursuant to this Agreement and shall constitute the "Unused Commitment". Any draws made under the Letters of Credit by the beneficiaries thereof shall constitute Revolving Advances as defined in this Agreement. The Unused Commitment available under the Revolving Credit Facility shall be restored but simultaneously reduced by the amount of any Revolving Advances which are made to Borrower to reimburse Banks for draws under the Letters of Credit. 1.3 Borrowing Procedure Under the Credit Facilities. Agent shall receive at least one (1) Business Day's prior tele- phonic notice from Borrower (to be confirmed in writing by Borrower) of each proposed Letter of Credit and of each Revolving Advance to be issued under the Revolving Credit Facility, and of each Non-Revolving Advance to be issued under the Term Credit Facility. If all conditions precedent to the issuance of any such Letter of Credit, any such Revolving Advance or any such Non-Revolving Advance have been met, Agent will, without any further consent or approval from Banks, or either one of them, on the date requested make each Letter of Credit, Revolving Advance or Non-Revolving Advance available to Borrower at Agent's office at 210 Baronne Street, New Orleans, Louisiana 70112, and each Letter of Credit, Revolving Advance and Non-Revolving Advance shall be shared equally by Banks. 1.4 Terms and Conditions Governing Letters of Credit. The terms and conditions governing the issuance of Letters of Credit by Banks on behalf of and for the account of Borrower shall be provided for by Agent in its standard form of Application for Stand-By Letter of Credit, a copy of which is attached hereto as Exhibit "A", with appropriate insertions and such additional terms and conditions governing the issuance of specific Letters of Credit as may be agreed upon by Borrower and Agent at the time of Borrower's request to Agent for the issuance thereof. Upon Agent's issuance of a Letter of Credit, one-half (1/2) of the amount of such Letter of Credit shall automatically be deemed to have been provided by Whitney, and, without the necessity of further documentation transferring an interest in the Letter of Credit to Whitney, Whitney shall possess a one-half (1/2) interest in all rights and obligations accruing to and incurred by Agent with respect to such Letter of Credit. Whitney shall record its one-half(1/2) share of any draws on the Letter of Credit on the schedule attached to its Revolving Note as provided in Section 2.2 below. Section 2. Notes Evidencing Borrowings. 2.1 Term Notes. The Non-Revolving Advances shall be evidenced by two (2) promissory notes of Borrower payable to the order of First NBC and Whitney, respectively, each in the original principal amount of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) and in the forms set forth as Exhibits "B" and "C" to this Agreement (each such note, together with any and all renewals, modifications, extensions, amendments, supplements and/or substitutions therefor, being sometimes referred to herein individually as a "Term Note" and collectively as the "Term Notes"), with appropriate insertions, each of which shall be dated the date hereof and shall be payable in full on March 31, 2004. All Non-Revolving Advances made by Banks to Borrower pursuant to this Agreement and all payments of principal shall be recorded by Banks on the schedule attached to each Term Note, but Banks' failure to record or to record correctly such Non- Revolving Advances shall in no way affect Borrower's obligation to repay same. Each Term Note shall provide for payment of quarterly installments of principal commencing June 30, 1997, each in an amount equal to one-twenty-eighth (1/28) of the aggregate amount of all Non-Revolving Advances made by Banks to Borrower during the period from the date hereof until and including March 31, 1997. 2.2 Revolving Notes. The Revolving Advances (including, without limitation, the outstanding indebtedness of Borrower to Banks under the Prior Notes which, as provided in Section 1.2, shall be deemed a "Revolving Advance" hereunder) shall be evidenced by two (2) promissory notes of Borrower payable to the order of First NBC and Whitney, respectively, each in the original principal amount of SIX MILLION AND NO/100 DOLLARS ($6,000,000.00) and in the forms set forth as Exhibits "D" and "E" to this Agreement (each such note, together with any and all renewals, modifications, extensions, amendments, supplements and/or substitutions therefor, being sometimes referred to herein individually as a "Revolving Note" and collectively as the "Revolving Notes"), with appropriate insertions, each of which shall be dated the date hereof and shall be payable in full on December 31, 1998. All Revolving Advances made by Banks to Borrower pursuant to this Agreement and all payments of principal shall be recorded by Banks on the schedule attached to each Revolving Note, but Banks' failure to record or to record correctly such Revolving Advances shall in no way affect Borrower's obligation to repay same. 2.3 No Novation. The execution and delivery of the Notes shall not constitute a payment, prepayment or novation of the obligations of Borrower heretofore evidenced by the Prior Notes, but does constitute a renewal and restatement of the Prior Notes in their entirety. Section 3. Interest and Fees. 3.1 Interest -- Term Credit Facility. In the absence of an Event of Default, during the period from the date hereof until, but not including, the Conversion Date, the Term Notes shall bear interest at the Prime Rate, adjusted daily, or the LIBO Rate, or some combination thereof, as specified in Section 3.7 below. Thereafter, in the absence of an Event of Default, the unpaid principal of the Term Notes shall bear interest until paid at the Term Rate. Interest on the Term Notes shall be paid quarterly in arrears on the last day of each March, June, September and December commencing December 31, 1996, and continuing until maturity. Borrower shall pay a fee of three- eighths (3/8) of one percent (1%) per annum on the difference between the maximum amount of the Term Credit Facility and the aggregate amount of all outstanding Non-Revolving Advances quarterly in arrears on December 31, 1996 and March 31, 1996. No such fee shall thereafter be payable on the Term Credit Facility. 3.2 Interest -- Revolving Credit Facility. In the absence of an Event of Default, the unpaid principal of the Revolving Notes shall bear interest until paid at the Prime Rate, adjusted daily, or the LIBO Rate, or some combination thereof, as specified in Section 3.7 below. Interest prior to maturity shall be payable quarterly in arrears on the last day of each March, June, September and December commencing December 31, 1996, and continuing until maturity. Interest after maturity of the Revolving Notes for any reason whatsoever shall be increased to the Prime Rate plus three percent (3%) and shall be payable on demand. Upon the issuance of a Letter of Credit by Agent on behalf of and for the account of Borrower, a fee of one percent (1%) per annum on the principal amount of such Letter of Credit shall be payable by Borrower for the number of days such Letter of Credit is to remain outstanding. A fee on the Unused Commitment of three-eighths (3/8) of one percent (1%) per annum shall be payable by Borrower quarterly in arrears on the last day of each March, June, September and December commencing December 31, 1996, and continuing until maturity. 3.3 Default Rate. If an Event of Default shall occur in the payment on or before the due date of any principal or interest due hereunder or under any of the other Loan Documents, including, without limitation, the Notes, Borrower will pay interest thereon (retroactively) from the date of the Event of Default on such payment up to the date of the actual payment (as well after as before judgment) at the Prime Rate plus three percent (3%) (the "Default Rate"), irrespective of whether there has been an acceleration of the payment of principal. Such interest at the Default Rate shall be payable on demand. 3.4 Prime Rate. "Prime Rate" shall mean that index which shall be established by Citibank, N.A. at New York, New York as its "prime rate". Each change in the interest rate on each Note shall take effect on the effective date of the change in the Prime Rate. 3.5 Commitment Fee. No commitment fee shall be payable by Borrower. 3.6 Method of Calculating Interest and Fees. Interest at the Prime Rate and the Term Rate and any fee shall be computed on the basis of a year consisting of 365 days and paid for actual days elapsed, and interest at the LIBO Rate shall be computed on the basis of a year consisting of 360 days. 3.7 Interest Rate Options. Until an Event of Default occurs, Borrower shall have the following interest rate options: (a) Advances to Borrower under the Revolving Credit Facility or, until but not including the Conversion Date, the Term Credit Facility may from time to time be (i) LIBO Rate Advances, (ii) Prime Rate Advances, or (iii) any combination thereof, as determined by Borrower with respect to its Advances and noticed to Agent in accordance with paragraphs (b), (c), and (d) below; provided that (x) no Advance shall be made to Borrower as a LIBO Rate Advance under the Term Credit Facility after the day that is one month prior to the Conversion Date and (y) no Advance shall be made to Borrower as a LIBO Rate Advance under the Revolving Credit Facility after the day that is one month prior to the Termination Date. For purposes of this paragraph (a), an Advance shall be deemed "made" upon an initial borrowing by Borrower under paragraph (b) below, any conversion of such Advance under paragraph (c) below, and upon any continuation of such Advance under paragraph (d) below. (b) With respect to any new Advance, Borrower shall provide Agent with telephonic notice of its intended borrowing, which notice must be received by Agent prior to 10:00 A.M., New Orleans time, at least one (1) Business Day prior to the requested Borrowing Date, which notice shall specify (i) the amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing is to be of LIBO Rate Advances or Prime Rate Advances or a combination thereof, (iv) the respective amounts of each such type of Advance, and (v) if the borrowing is to be entirely or partly of LIBO Rate Advances, the respective lengths of the Interest Periods therefor. (c) Borrower may elect from time to time to convert any of its LIBO Rate Advances to Prime Rate Advances by giving Agent telephonic notice of such election, which notice must be received by Agent prior to 10:00 A.M., New Orleans time, at least one (1) Business Day prior to the requested conversion; provided that any such conversion, of LIBO Rate Advances shall only be made on the last day of an Interest Period with respect thereto. Borrower may elect from time to time to convert any of its Prime Rate Advances to LIBO Rate Advances by giving Agent telephonic notice of such election, which notice must be received by Agent prior to 10:00 A.M., New Orleans time, at least one (1) Business Day prior to the requested conversion. Any such notice of conversion to LIBO Rate Advances shall specify the length of the initial Interest Period thereof and the amount of the Prime Rate Advance to be converted. All or any part of Borrower's outstanding LIBO Rate Advances and Prime Rate Advances may be converted as provided herein; provided that (i) no Prime Rate Advance may be converted into a LIBO Rate Advance when any Event of Default has occurred and is continuing, (ii) partial conversions of Prime Rate Advances to LIBO Rate Advances shall be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof, (iii) partial conversions of LIBO Rate Advances to Prime Rate Advances shall be in an aggregate principal amount of $500,000 or a whole multiple of $100,000 in excess thereof, (iv) no Prime Rate Advance under the Term Credit Facility may be converted into a LIBO Rate Advance after the date that is one month prior to the Conversion Date, (v) no Prime Rate Advance under the Revolving Credit Facility may be converted into a LIBO Rate Advance after the date that is one month prior to the Termination Date, and (vi) any such conversion may only be made if, after giving effect thereto, paragraph (e) shall not have been contravened. (d) Any LIBO Rate Advances may be continued as such upon the expiration of an Interest Period with respect thereto by Borrower giving Agent telephonic notice, which notice must be received by Agent prior to 10:00 A.M., New Orleans time, at least one (1) Business Day prior to the requested continuation; provided, that (i) no LIBO Rate Advance may be continued as such when any Event of Default has occurred and is continuing, (ii) no LIBO Rate Advances under the Term Credit Facility may be continued as such after the date that is one month prior to the Conversion Date, (iii) no LIBO Rate Advances under the Revolving Credit Facility may be continued as such after the date which is one month prior to the Termination Date, and (iv) any such continuation shall be made only if, after giving effect thereto, paragraph (e) shall not be contravened. If Borrower shall fail to give such notice or if such continuation is not permitted, then Borrower shall be deemed to have requested that the LIBO Rate Advance be converted automatically to a Prime Rate Advance on the last day of the then current Interest Period with respect thereto. (e) All borrowings, conversions and continuations of Advances hereunder by Borrower and all selections of Interest Periods hereunder by Borrower shall be in such amounts and be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Advances to Borrower constituting each LIBO Rate tranche (i.e., LIBO Rate Advances under the same Credit Facility, made on the same day, and having the same Interest Period) shall be equal to $500,000 or a whole multiple of $100,000 in excess thereof. If Borrower has no Prime Rate Advances outstanding, Borrower may have a maximum of five (5) LIBO Rate tranches in aggregate in effect at any one time under both Credit Facilities, and, if Borrower has Prime Rate Advances outstanding, Borrower may have a maximum of four (4) LIBO Rate tranches in aggregate in effect at any one time under both Credit Facilities. (f) Each determination of an interest rate by Agent pursuant to any provision of this Agreement shall be conclusive and binding on Borrower in the absence of manifest error. Agent shall, at the request of Borrower, deliver to Borrower a statement showing the quotations used by Agent in determining the LIBO Rate. (g) If prior to the first day of any Interest Period, Agent shall have determined (which determination shall be conclusive and binding upon Borrower) that either: (i) adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period; or (ii) the interest rate determined for such Interest Period does not adequately and fairly reflect the cost to Banks (as conclusively certified by Agent) of making, maintaining or funding their LIBO Rate Advances during such Interest Period, in either case with respect to (i) proposed Advances that Borrower has requested be made as LIBO Rate Advances, (ii) LIBO Rate Advances that will result from the requested conversion of Prime Rate Advances into LIBO Rate Advances, or (iii) the continuation of LIBO Rate Advances beyond the expiration of the then current Interest Period with respect thereto; Agent shall give telephonic notice thereof to Borrower as soon as practicable thereafter. Unless Borrower notifies Agent upon receipt of such notice that it wishes to rescind or modify its request, Agent shall arrange that (x) any affected LIBO Rate Advances requested by Borrower shall be made as Prime Rate Advances, (y) any Prime Rate Advances to Borrower that were to have been converted to LIBO Rate Advances shall be continued as, or converted to, Prime Rate Advances, and (z) all outstanding LIBO Rate Advances to Borrower shall be converted, on the last day of the then current Interest Period with respect thereto, to Prime Rate Advances. Until such notice has been withdrawn by Agent, no further LIBO Rate Advances shall be made to Borrower, nor shall Borrower have the right to convert Prime Rate Advances to LIBO Rate Advances. (h) Notwithstanding any other provision in this Agreement, if the adoption of or any change in any law or regulation or in the interpretation or application thereof (whether or not having the force of law) shall make it unlawful or impossible for Bank to make, maintain or fund LIBO Rate Advances as contemplated by this Agreement: (a) the commitment of Banks hereunder to make LIBO Rate Advances, continue LIBO Rate Advances as such and convert Prime Rate Advances to LIBO Rate Advances shall forthwith be cancelled; (b) the Advances then outstanding as LIBO Rate Advances, if any, shall be converted automatically to Prime Rate Advances on the respective last days of the then current Interest Periods with respect to such Advances or within such earlier period as required by law; and (c) Borrower shall pay Banks such amounts, if any, as may be required pursuant to paragraph (i) below. (i) Borrower agrees to indemnify Banks and to hold Banks harmless from any loss or expense which Banks may sustain or incur as a consequence of (a) the making by Borrower of a prepayment (whether mandatory or optional) or any other payment of a LIBO Rate Advance on a day which is not the last day of the Interest Period with respect thereto, and/or (b) the conversion, whether voluntary or involuntary, of a LIBO Rate Advance into a Prime Rate Advance pursuant to this Section 3.7 or otherwise on a day which is not the last day of an Interest Period with respect thereto, including, without limitation, in each case any such loss or expense arising from the reemployment of funds obtained by it to maintain its LIBO Rate Advances hereunder or from fees payable to terminate the deposits from which such funds were obtained. This covenant shall survive the termination of this Agreement and the payment of the Advances and all other obligations hereunder. Section 4. Payments, Prepayments, and Reduction or Termination of the Credit Facility. 4.1 Method of Payment. All payments of principal, interest and other amounts to be made by Borrower under this Agreement or any of the Notes or other Loan Documents shall be made to Agent for the account of Banks at Agent's office at 210 Baronne Street, New Orleans, Louisiana 70112 (or at such other address as Agent or either of Banks may notify Borrower in writing), in immediately available funds, without setoff, deduction or counterclaim, not later than 2:00 p.m. (New Orleans, Louisiana time) on the date on which such payment shall become due (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day) and, in the case of payments of principal under the Revolving Credit Facility, in an amount of at least $100,000.00, or an integral multiple thereof. Borrower shall, at the time of making each such payment, specify to Agent the sums payable by Borrower under this Agreement, the Notes or other Loan Documents to which such payment is to be applied. Notwithstanding the foregoing sentence, unless and until an Event of Default shall have occurred and be continuing (in which event such payments shall be applied by Agent as Banks in their sole discretion shall determine), all payments received by Agent shall be applied first to the payment of all amounts (except principal and interest) at the time due and unpaid hereunder or under any of the other Loan Documents, then to interest hereon or thereon accrued to the date of payment and finally to the unpaid principal hereunder or thereunder. Whenever any payment under this Agreement, the Notes or any other Loan Document shall be stated to be due on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest. Upon receipt of each such payment, Agent shall make prompt payment within three (3) Business Days to each Bank in like funds of all amounts received by Agent for the account of such Bank. 4.2 Sharing of Payments. Banks shall share equally all payments made pursuant to this Agreement and the benefits of and from the Collateral and all proceeds from the sale thereof. If either Bank shall receive at any time any payment hereunder, or interest thereon, or receive any Collateral (or proceeds thereof) in respect thereof (whether voluntarily or involuntarily, by setoff or otherwise), or interest in any of the foregoing, in a greater proportion than the other Bank (such Bank receiving the greater proportion being referred to herein as the "Benefitted Bank"), such Benefitted Bank shall purchase for cash from the other Bank such portion of such other Bank's Notes, Letters of Credit or Revolving Commitment, or shall provide such other Bank with the benefit of any such Collateral or the proceeds thereof, as the case may be, as shall be necessary to cause such Benefitted Bank to share the excess payment or benefits of such Collateral or proceeds equally with the other Bank; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Bank, such purchases shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery. Borrower agrees that each Bank so purchasing a portion of another Bank's Notes, Letters of Credit or Revolving Commitment, as the case may be, may exercise all rights of payment (including, without limitation, rights of setoff) with respect to such portion as fully as if such Bank were the direct holder of such portion. 4.3 Payments Without Deduction. Borrower shall pay principal, interest and other amounts under, and in accordance with the terms of, this Agreement, the Notes and the other Loan Documents free and clear of and without deduction for any and all present and future taxes, levies, imposts, deductions, charges, withholdings and all other liabilities whatsoever. 4.4 Prepayments -- Term Credit Facility. Borrower may from time to time, upon at least one (1) Business Day's prior telephonic notice (confirmed in writing) received by Agent, prepay the principal of the Term Notes in whole or in part without premium; provided, however, (a) any partial prepayment of principal shall be in an amount of $1,000.00 or an integral multiple thereof,(b) such prepayments shall be applied to the unpaid installments of the Term Notes in the inverse order of their maturity and (c) Borrower may not make any prepayment of one Term Note unless it makes an equal prepayment of the other Term Note. Any prepayment of the principal of the Term Notes shall include accrued interest and other charges to the date of prepayment on the principal amount being prepaid. 4.5 Borrowing Base for Revolving Credit Facility; Mandatory Prepayments. Notwithstanding anything contained herein or in any of the Loan Documents to the contrary, it is expressly understood and agreed that Banks shall not be obligated to make Revolving Advances to Borrower, or permit any Revolving Advances to Borrower to remain outstanding, or to issue Letters of Credit to Borrower, to the extent that the aggregate outstanding principal amount under the Revolving Notes, together with the aggregate principal amount of any Letters of Credit outstanding at any time, exceeds or (after the making of any requested Revolving Advance or issuance of any requested Letter of Credit) would exceed the Revolving Commitment. If at any time the aggregate outstanding principal amount under the Revolving Notes, together with the aggregate principal amount of any Letters of Credit outstanding, exceeds the Revolving Commitment, Borrower shall promptly, and in any event within five (5) days thereafter, (a) prepay a principal amount outstanding under the Revolving Notes equal to such excess or (b) provide Banks with additional collateral sufficient to bring the principal amount of the Revolving Credit Facility within the Revolving Commitment, such sufficiency of the additional collateral to be determined by Banks in each Bank's sole discretion. 4.6 Reduction of Credit. Borrower may from time to time, upon at least three (3) Business Day's prior telephonic notice (confirmed in writing) to Agent, (a) permanently reduce the amount of the maximum Non-Revolving Commitment under the Term Credit Facility, but only upon payment of the outstanding principal amount of each Term Note in excess of the then reduced amount of the maximum Non-Revolving Commitment available under the Term Credit Facility and/or (b) permanently reduce the amount of the maximum Revolving Commitment available under the Revolving Credit Facility, but only upon payment of the outstanding principal amount of each Revolving Note in excess of the then reduced amount of the maximum Revolving Commitment available under the Revolving Credit Facility. Any such reduction of the Revolving Commitment shall be in an amount of $100,000.00 or an integral multiple thereof. Borrower may at any time on like notice (x) terminate the maximum Non-Revolving Commitment available under the Term Credit Facility upon payment in full of the Term Notes and other liabilities of Borrower relating to the Term Credit Facility and/or (y) terminate the maximum Revolving Commitment available under the Revolving Credit Facility upon payment in full of the Revolving Notes and other liabilities of Borrower relating to the Revolving Credit Facility. Section 5. Collateral. 5.1 Security for the Credit Facility. As security for the Credit Facility and the borrowings under this Agreement with respect thereto: (a) Borrower has granted unto and in favor of Banks a first mortgage lien upon certain real property situated in Houma, Terrebonne Parish, Louisiana, evidenced by: (i) That certain Collateral Mortgage Note of GIF, dated December 17, 1986, in the principal sum of $6,500,000.00, bearing interest at the rate of eighteen percent (18%), per annum, from date until paid, and payable to the order of Bearer, as corrected by that certain Act of Correction of Collateral Mortgage Note by GIF, First NBC and William H. Hines, dated July 27, 1989 (the "GIF Property Collateral Note Act of Correction"), a copy of which Collateral Mortgage Note, together with the Act of Correction, is annexed to the Fourth Loan Agreement (such Collateral Mortgage Note, as corrected by the GIF Property Collateral Note Act of Correction, as further amended, extended and renewed from time to time, hereinafter referred to as the "GIF Property Collateral Note"); (ii) That certain Act of Collateral Mortgage of GIF, dated December 17, 1986, in favor of Mortgagee and any and all future holders, recorded in the mortgage records of Terrebonne Parish, Louisiana, in Mortgage Book No. 728, folio 323, under Entry No. 794226, which mortgage secures the GIF Property Collateral Note, as supplemented and amended by that certain Act of Supplement and Amendment to Act of Collateral Mortgage by GIF in favor of Mortgagee and any and all future holders, dated July 27, 1989, recorded in the mortgage records of Terrebonne Parish, Louisiana, in Mortgage Book No. 811, folio 143, under Entry No. 850040 (the "GIF Property Collateral Mortgage Supplement and Amendment"), a copy of which Act of Collateral Mortgage, together with the GIF Property Collateral Mortgage Supplement and Amendment, is annexed to the Fourth Loan Agreement (such Act of Collateral Mortgage, as supplemented and amended by the GIF Property Collateral Mortgage Supplement and Amendment, and as further supplemented, amended and reinscribed from time to time, hereinafter referred to as the "GIF Property Collateral Mortgage"); (iii) That certain Collateral Pledge Agreement and Receipt No. 32070, dated December 17, 1986, by GIF to First NBC, with respect to the GIF Property Collateral Note, as amended by that certain First Amendment to Collateral Pledge Agreement, dated as of November 3, 1987, by and between GIF and First NBC (the "GIF Property First Pledge Amendment"), as further amended by that certain Second Amendment to Collateral Pledge Agreement, dated July 27, 1989, by and between GIF and First NBC (the "GIF Property Second Pledge Amendment"), a copy of which Collateral Pledge Agreement and Receipt No. 32070, together with the GIF Property First Pledge Amendment and the GIF Property Second Pledge Amendment, is annexed to the Fourth Loan Agreement (such Collateral Pledge Agreement, as amended by the GIF Property First Pledge Amendment, the GIF Property Second Pledge Amendment, and as further supplemented and amended from time to time, hereinafter referred to as the "GIF Property Pledge Agreement"); (iv) That certain Collateral Pledge Agreement and Receipt (Possessory Collateral Security Agreement) No. 1000107, dated March 1, 1990, by Borrower to First NBC, with respect to the GIF Property Collateral Note, a copy of which Collateral Pledge Agreement (Possessory Collateral Security Agreement) No. 1000107 is annexed to the Fourth Loan Agreement (such Collateral Pledge Agreement and Receipt (Possessory Collateral Security Agreement), as supplemented and amended from time to time, hereinafter referred to as the "GIF Property First Additional Pledge Agreement"); (v) That certain Collateral Mortgage Note of Borrower dated October 29, 1991 in the principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00) bearing interest at the rate of eighteen percent (18%) per annum from date until paid and payable to the order of Bearer, a copy of which Collateral Mortgage Note is annexed to the Fourth Loan Agreement (as amended, extended and renewed from time to time, hereinafter referred to as the "Real Property Collateral Note"); (vi) That certain Act of Collateral Mortgage of Borrower dated October 29, 1991 in favor of Mortgagee and any and all future holders, which mortgage secures the Real Property Collateral Note, a copy of which Act of Collateral Mortgage is annexed to the Fourth Loan Agreement (such Act of Collateral Mortgage, as supplemented, amended and reinscribed from time to time, hereinafter referred to as the "Real Property Collateral Mortgage"); (vii) That certain Collateral Pledge Agreement and Receipt (Possessory Collateral Security Agreement) No. 1000760, dated October 29, 1991, by Borrower to Agent with respect to the GIF Property Collateral Note and the Real Property Collateral Note, as amended by that certain First Amendment to Collateral Pledge Agreement and Receipt (Possessory Collateral Security Agreement), dated February 25, 1993, by and among Borrower, Banks and Agent (the "Property First Additional Pledge Amendment"), as further amended by that certain Second Amendment to Collateral Pledge Agreement and Receipt (Possessory Collateral Security Agreement), dated of even date herewith, by and among Borrower, Banks and Agent (the "Property Second Additional Pledge Amendment") a copy of which Collateral Pledge Agreement (Possessory Collateral Security Agreement) No. 1000760, together with the Property First Additional Pledge Amendment is annexed to the Fourth Loan Agreement and a copy of the Property Second Additional Pledge Amendment, is annexed hereto as Exhibit "F" (such Collateral Pledge Agreement (Possessory Collateral Security Agreement), as amended by the Property First Additional Pledge Amendment, the Property Second Additional Pledge Amendment, and as further supplemented and amended from time to time, hereinafter referred to as the "Property Additional Pledge Agreement"); and (viii) That certain Collateral Assignment of Leases and Rents by Borrower dated October 29, 1991, with respect to the Real Property, as amended by that certain First Amendment to Collateral Assignment of Leases and Rents, dated February 25, 1993 by and among Borrower, Banks and Agent (the "First Lease Assignment Amendment"), as further amended by that certain Second Amendment to Collateral Assignment of Leases and Rents of even date herewith by and among Borrower, Banks and Agent (the "Second Lease Assignment Amendment") a copy of which Lease Assignment, together with the First Lease Assignment Amendment, is annexed to the Fourth Loan Agreement and a copy of the Second Lease Assignment Amendment, is annexed hereto as Exhibit "G" (the Lease Assignment, as amended by the First Lease Assignment Amendment, the Second Lease Assignment Amendment, and as further supplemented and amended from time to time, hereinafter referred to as the "Lease Assignment"); and (b) Borrower has granted unto and in favor of Banks a first mortgage lien upon the Original GIF Equipment, the New GIF Equipment and the GIFI Equipment, as well as a second mortgage lien on the Original GIF Equipment and a security interest in the Equipment. The mortgage creating a first mortgage lien on the Original GIF Equipment contemplated hereby has been evidenced by: (i) That certain Collateral Chattel Mortgage Note of GIF dated December 17, 1986, in the principal sum of $3,000,000.00, bearing interest at the rate of eighteen percent (18%), per annum, from date until paid, and payable to the order of Bearer, a copy of which Collateral Mortgage Note is annexed to the Fourth Loan Agreement (the "Original GIF Equipment Collateral Note"); (ii) That certain Act of Collateral Chattel Mortgage of GIF, dated December 17, 1986, in favor of Bearer of Collateral Chattel Mortgage Note, recorded in the chattel mortgage records of Terrebonne Parish, Louisiana, in Chattel Mortgage Book, Entry No. 794225, which mortgage secures the Original GIF Equipment Collateral Note, as amended by that certain Partial Release of Collateral Chattel Mortgage, dated February 4, 1987, by First NBC in favor of GIF (the "First Partial Release"), a copy of which Act of Collateral Chattel Mortgage, together with the First Partial Release, is annexed to the Fourth Loan Agreement (such Act of Collateral Chattel Mortgage, as amended by the First Partial Release, and as further supplemented, amended and reinscribed from time to time, hereinafter referred to as the "Original GIF Equipment Collateral Chattel Mortgage"); and (iii) That certain Collateral Pledge Agreement and Receipt No. 32069, dated December 17, 1986, by GIF to First NBC, with respect to the Original GIF Equipment Collateral Note, as amended by that certain First Amendment to Collateral Pledge Agreement, dated as of November 3, 1987, by and between GIF and First NBC (the "Original GIF Equipment First Pledge Amendment"), and as further amended by that certain Second Amendment to Collateral Pledge Agreement, dated July 27, 1989, by and between GIF and First NBC (the "Original GIF Equipment Second Pledge Amendment"), a copy of which Collateral Pledge Agreement and Receipt No. 32069, together with the Original GIF Equipment First Pledge Amendment and the Original GIF Equipment Second Pledge Amendment is annexed to the Fourth Loan Agreement (such Collateral Pledge Agreement, as amended by the Original GIF Equipment First Pledge Amendment and the Original GIF Equipment Second Pledge Amendment, and as further supplemented and amended from time to time, hereinafter referred to as the "Original GIF Equipment Pledge Agreement"). The mortgage creating a first mortgage lien on the New GIF Equipment and a second mortgage lien on the Original GIF Equipment contemplated hereby has been evidenced by: (i) That certain Collateral Chattel Mortgage Note of GIF dated July 27, 1989, in the principal sum of $8,000,000.00, bearing interest at the rate of eighteen percent (18%), per annum, from date until paid and payable to the order of Bearer, a copy of which Collateral Chattel Mortgage Note is annexed to the Fourth Loan Agreement (the "Second GIF Equipment Collateral Note"); (ii) That certain Act of Collateral Chattel Mortgage of GIF dated July 27, 1989, in favor of Bearer of Collateral Chattel Mortgage Note, recorded in the chattel mortgage records of Terrebonne Parish, Louisiana, in Chattel Mortgage Book, Entry No. 850041, which mortgage secures the Second GIF Equipment Collateral Note, a copy of which Act of Collateral Chattel Mortgage is annexed to the Fourth Loan Agreement (such Act of Collateral Chattel Mortgage, as supplemented, amended and reinscribed from time to time, hereinafter referred to as the "Second GIF Equipment Collateral Chattel Mortgage"); and (iii) That certain Collateral Pledge Agreement and Receipt No. 37588, dated July 27, 1989, by GIF to First NBC, with respect to the Second GIF Equipment Collateral Note, a copy of which Collateral Pledge Agreement and Receipt No. 37588 is annexed to the Fourth Loan Agreement (such Collateral Pledge Agreement and Receipt No. 37588, as supplemented and amended from time to time, hereinafter referred to as the "Second GIF Equipment Pledge Agreement"). The mortgage creating a first mortgage lien on the GIFI Equipment contemplated hereby has been evidenced by: (i) That certain Collateral Chattel Mortgage Note of GIFI, dated July 27, 1989, in the principal sum of $8,000,000.00, bearing interest at the rate of eighteen percent (18%), per annum, from date until paid and payable to the order of Bearer, a copy of which Collateral Chattel Mortgage Note is annexed to the Fourth Loan Agreement (the "GIFI Equipment Collateral Note"); (ii) That certain Act of Collateral Chattel Mortgage of GIFI, dated July 27, 1989, in favor of Bearer of Collateral Chattel Mortgage Note, recorded in the chattel mortgage records of East Baton Rouge Parish, Louisiana, under Chattel No. 1046292, which mortgage secures the GIFI Equipment Collateral Note, a copy of which Act of Collateral Chattel Mortgage is annexed to the Fourth Loan Agreement (such Act of Collateral Chattel Mortgage, as supplemented, amended and re- inscribed from time to time, hereinafter referred to as the "GIFI Equipment Collateral Chattel Mortgage"); and (iii) That certain Collateral Pledge Agreement and Receipt No. 37596, dated July 27, 1989, by GIFI to First NBC with respect to the GIFI Equipment Collateral Note, a copy of which Collateral Pledge Agreement and Receipt No. 37596 is annexed to the Fourth Loan Agreement (such Collateral Pledge Agreement and Receipt No. 37596, as supplemented and amended from time to time, hereinafter sometimes referred to as the "GIFI Equipment Pledge Agreement"). The first security interest in the Equipment contemplated hereby has been evidenced by: (i) That certain Commercial Security Agreement (Multi- Purpose) dated October 29, 1991 by and among Borrower, Banks and Agent, and creating a security interest in the Equipment and the Fixtures, as amended by that certain First Amendment to Commercial Security Agreement, dated February 25, 1993, by and among Borrower, Banks and Agent (the "First Security Agreement Amendment"), as further amended by that certain Second Amendment to Commercial Security Agreement, of even date herewith, by and among Borrower, Banks and Agent (the "Second Security Agreement Amendment"), a copy of which Security Agreement, together with the First Security Agreement Amendment, is attached to the Fourth Loan Agreement, and a copy of the Second Security Agreement Amendment is annexed hereto as Exhibit "H" (such Security Agreement, as amended by the First Security Agreement Amendment, the Second Security Agreement Amendment and as further supplemented and amended from time to time, hereinafter sometimes referred to as the "Security Agreement"); and (ii) A UCC-1 Financing Statement executed by Borrower and Agent, a copy of which UCC-1 Financing Statement is annexed to the Fourth Loan Agreement (such UCC-1 Financing Statement, as supplemented and amended from time to time, hereinafter sometimes referred to as the "Financing Statement"). Section 6. Representations and Warranties of Borrower. Borrower represents and warrants to Banks and Agent that: 6.1 Corporate Existence. Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana; and Borrower has all necessary cor- porate power and authority 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. 6.2 Authorization; Validity. Borrower is and/or has been duly authorized to execute and deliver this Agreement, the Notes and all other Loan Documents to which Borrower is a party and is and will continue to be duly authorized to borrow monies hereunder and to perform its obligations under this Agreement, the Notes and all other Loan Documents to which Borrower is a party. Each of this Agreement, the Notes, and each of the other Loan Documents to which Borrower is a party, as executed and delivered, constitutes the legal, valid and binding obligation of Borrower, enforceable in accordance with the respective terms thereof. 6.3 No Conflicts. The execution and delivery of the Loan Documents and the performance by Borrower of its obligations thereunder do not and will not conflict with any provision of law or of the charter or by-laws of Borrower or of any agreement binding upon Borrower, as the case may be. 6.4 Financial Statements. Borrower's audited financial statement as of December 31, 1995, a copy of which has been furnished to Banks, has been prepared in conformity with GAAP applied on a basis consistent with that of the preceding fiscal year and period, presents fairly the financial condition of Borrower as of such date and the results of its operations for the periods then ended. Borrower's unaudited financial statement as of September 30, 1996, a copy of which has been previously furnished to Banks, except for the absence of footnotes normally associated with financial statements prepared in accordance with GAAP, has been prepared in conformity with GAAP and presents fairly the financial condition of Borrower as of such date and the results of its operations for the periods then ended. Since December 31, 1995, there has been no material adverse change in Borrower's financial condition. 6.5 Litigation. To the best of Borrower's knowledge, after due inquiry, no litigation or governmental proceedings are pending or threatened against Borrower, the results of which might materially affect its financial condition or operations, except those referred to in a schedule furnished contemporaneous- ly herewith and attached hereto as Schedule 1. Other than any liability incident to such litigation or proceedings or provided for or disclosed in the financial statements referred to in Section 6.4, Borrower does not have any material contingent liabilities. 6.6 Liens. None of the assets of Borrower with a net book value of greater than $25,000.00 is subject to any Lien, except for the Liens created pursuant to the Collateral Documents and Permitted Liens. 6.7 Subsidiaries. Borrower has no subsidiaries. 6.8 Purpose. The proceeds of the Revolving Credit Facility shall be used by Borrower only for the support of work- ing capital and for other general corporate purposes. The proceeds of the Term Credit Facility shall be used by Borrower only to make capital improvements to the Real Property and to acquire additional Equipment to be located on the Real Property. 6.9 Use of Proceeds; Margin Securities. Borrower is not engaged in the business of purchasing or selling margin stock (as defined in Regulation U 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, without limiting the generality of Section 6.8 hereof, 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. 6.10 Compliance with ERISA. Borrower is in compliance with all statutes and governmental rules and regulations applica- ble to it, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). No condition exists or event or transaction has occurred in connection with any plan, as defined in Sections 3(3) and 3(37) of ERISA, maintained by Borrower (any such plan being hereinafter called the "Plan"), which could result in Borrower's incurring any material liability, fine or penalty. No Reportable Event (as defined in ERISA) has occurred with respect to any such Plan. Borrower has not withdrawn from any such Plan or initiated steps to do so and no steps have been taken to terminate any such Plan. 6.11 Consents. No consent, approval or authorization of, or registration or declaration with, any federal or state govern- mental authority or other regulatory agent for the validity of the execution and delivery or for the performance by Borrower of the Loan Documents is required. 6.12 Tax Returns. Borrower has filed all tax returns which are required to be filed by any jurisdiction, and has paid all taxes which have become due pursuant to said returns or pursuant to any assessments. 6.13 Ownership of Borrower. Fifty percent (50%) of the issued and outstanding stock of Borrower is owned by the Labordes and (50%) of the issued and outstanding stock of Borrower is owned by the Wilsons. 6.14 Operation of Business. Borrower possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto, to conduct its business substantially as now conducted and as presently proposed to be conducted, and Borrower is not in violation of any valid rights of others with respect to any of the foregoing. 6.15 Rights in Properties; Liens. Borrower has good and indefeasible title to its properties and assets, real and personal, including the properties and assets reflected in the financial statements described in Section 6.4 hereof, and none of the properties, assets or leasehold interests of Borrower is subject to any Lien, except as permitted by Section 7.11 hereof. 6.16 Debt. Borrower has no Debt, except as disclosed in the financial statements described in Section 6.4 hereof and as otherwise permitted by this Agreement. 6.17 Disclosure. No statement, information, report, representation or warranty made by Borrower in this Agreement or in any of the other Loan Documents or furnished by Borrower to Banks or Agent in connection with the negotiation or preparation of this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to Borrower that has not been disclosed in writing to Banks which has a material adverse effect, or which might in the future have a material adverse effect, on the business, assets, financial condition or operations of Borrower or on the Collateral. 6.18 Registered Office; Principal Place of Business; Location of Collateral. The principal place of business, chief executive office and registered office of Borrower and the place where Borrower keeps its books and records and all Collateral is located on the Real Property. Borrower has always maintained its registered office in either Terrebonne or East Baton Rouge Parish, Louisiana. Borrower does not do, and has never done, any business in any location other than as set forth in this Section. No persons other than Borrower, Agent and Banks have possession of any of the Collateral. 6.19 Investment Company Act. Borrower is not an "Investment Company" within the meaning of the Investment Company Act of 1940, as amended. 6.20 Other Agreements. With the exception of construction contracts entered into by Borrower in the ordinary course of Borrower's business, Borrower is not a party to any indenture, loan or credit agreement, or to any lease or other agreement or instrument, or subject to any charter of corporate restriction which could have a material adverse effect on the business, properties, assets, operations or conditions, financial or otherwise, of Borrower, or the ability of Borrower to pay and perform its obligations under the Loan Documents to which it is a party. Borrower is not in default in any respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument material to its business to which it is a party. 6.21 Compliance with Law. Borrower is in compliance with all laws, rules, regulations, orders and decrees which are applicable to Borrower or any of its properties. Without limiting the generality of the foregoing: (a) Employment Matters. Borrower is in full compliance with all applicable laws, rules, regulations and governmental standards regarding employment, including, without limitation, the minimum wage and overtime provisions of the Fair Labor Standards Act, as amended (29 U.S.C. Sections 201-219), and the regulations promulgated thereunder. (b) Environmental Matters. (i) Borrower and all of its properties, assets and operations are in full compliance with all Environmental Laws. Borrower is not aware of, nor has Borrower received notice of, any past, present or future conditions, events, activities, practices or incidents which may interfere with or prevent the compliance or continued compliance of Borrower with all Environmental Laws. (ii) With the exception of the permits specifically referred to in Section 7.8 hereof, each of which Borrower shall obtain and/or file, as the case may be, in accordance with the terms of Section 7.8, Borrower has obtained all permits, licenses and authorizations and has filed all plans which are required under Environmental Laws in order to conduct its business and/or own its properties and assets including without limitation all Louisiana air emission permits required under any Environmental Law in order to conduct Borrower's business and/or own its assets or properties. (iii) Borrower has on file an SPCC Plan as required under applicable Environmental Laws in connection with Borrower's storage of petroleum on the Real Property. (iv) No Hazardous Substances or Solid Wastes exist on, about or within or have been used, generated, stored, transported, disposed of on, or released from any of the properties or assets of Borrower except in compliance with Environmental Laws. (v) There is no action, suit, proceeding, investigation or inquiry before any court, administrative agency or other governmental authority pending or, to the knowledge of Borrower, threatened against Borrower relating in any way to any Environmental Law. Borrower has not (A) been notified of any liability for remedial action under any Environmental Law, (B) received any request for information by any governmental authority with respect to the condition, use or operation of any of its properties or assets, or (C) received any notice from any governmental authority or other Person with respect to any violation of or liability under any Environmental Law. 6.22 Corporate Name. The exact corporate name of Borrower as it appears in its articles of incorporation is as set forth in the introduction of this Agreement and, with the exception of doing business under the name GIFI, Inc., Borrower has never done any business in any location under any other name. 6.23 Collateral. The Collateral Documents create in favor of Banks, and/or Agent for the benefit of Banks, valid, enforceable and perfected Liens on the properties described therein, which Liens secure the payment and performance of the obligations of Borrower to Banks described in the Collateral Documents, and which Liens are superior to the rights of all third Persons, whether now existing or hereafter arising. 6.24 Taxpayer I.D. Number. Borrower's Federal Taxpayer Identification Number is 72-1147390. Section 7. Borrower's Covenants. From the date of this Agreement and thereafter until the expiration or termination of the Commitments, and until the Notes and other liabilities of Borrower hereunder are paid in full and all other obligations and liabilities under the Loan Documents are performed and paid in full, Borrower agrees that it will: 7.1 Financial Statements. Furnish to Agent: (a) within one hundred twenty (120) days after the end of each fiscal year, a copy of Borrower's financial statements, audited by independent certified public accountants of nationally recognized standing selected by Borrower and reasonably satisfactory to Banks, prepared in conformity with GAAP; (b) within forty-five (45) days after the end of each month, a copy of Borrower's unaudited financial statements prepared in conformity with GAAP, except for the absence of footnotes normally associated with financial statements prepared in accordance with GAAP; (c) together with the financial statements furnished by Borrower under preceding clause (a), a certificate of the president or chief financial officer of Borrower to the effect that no Event of Default with respect to Borrower, or event which might mature into an Event of Default with respect to Borrower, has occurred and is continuing; (d) forthwith upon the occurrence of an Event of Default, a certificate of the president or chief financial officer of Borrower specifying the nature and the period of existence thereof and what action Borrower proposes to take with respect thereto; (e) written notice of any and all litigation affecting Borrower, directly or indirectly; provided, however, this requirement shall not apply to litigation involving Borrower and any other party if such litigation involves, in the aggregate, less than $100,000.00; (f) prompt notice of any change in the present officers, directors and/or stockholders of Borrower; and (g) from time to time, such other information as Banks may reasonably request. 7.2 Access. Permit access by Banks and Agent to the books and records and other property of Borrower during normal business hours and upon reasonable notice and permit Banks to make copies of said books and records. 7.3 Insurance. Maintain with financially sound and reputable insurance companies workmen's compensation insurance, liability insurance and insurance on its property, assets and business at least to such extent and against such hazards and liabilities as is commonly maintained by similar companies and, in addition to the foregoing insurance, such insurance as may be required in the Collateral Documents. In the case of property in which Banks or Agent has a Lien, Borrower shall provide Agent with duplicate originals or certified copies of such policies of insurance in such forms and amounts, and containing such terms and conditions, as are satisfactory to Banks, naming Banks as additional loss payees and as additional insureds as their interests may appear and providing that such policies will not be canceled without thirty (30) days' prior written notice to Banks. 7.4 Repair. Maintain, preserve and keep Borrower's pro- perties in good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. 7.5 Taxes. Pay or discharge at or before maturity or before becoming delinquent (a) all taxes, levies, assessments and governmental charges imposed on Borrower or its income or profits or any of its property, and (b) all lawful claims for labor, materials and supplies which, if unpaid, might become a Lien upon any of Borrower's property; provided, however, that Borrower shall not be required to pay or discharge any tax, levy, assessment or governmental charge which is being contested in good faith by appropriate proceedings diligently pursued. 7.6 Corporate Existence. Maintain its corporate existence in good standing. 7.7 Merger. Without the prior written consent of Banks, not: (a) be a party to any merger or consolidation; (b) except in the normal course of its business, sell, transfer, convey, or lease all or any substantial part of Borrower's assets; (c) sell or assign, except in the normal course of its business, with or without recourse, any accounts receivable or chattel paper. 7.8 Compliance. Comply with all statutes, laws, ordi- nances, orders, rules and regulations applicable to Borrower, including, without limitation, all Environmental Laws and ERISA; provided, however, Borrower shall be deemed to be in compliance with this requirement for such time as it may be contesting, in good faith and with diligence by appropriate proceedings, any alleged violation of any statute, rule or regulation. Borrower shall not permit any condition to exist in connection with any Plan which might constitute grounds for the PBGC to institute proceedings to have such Plan terminated or a trustee appointed to administer such Plan, and Borrower shall not engage in, or permit to exist or occur any other condition, event or transaction with respect to, any such Plan which could result in Borrower's incurring any material liability, fine or penalty. Without limiting the generality of the foregoing, Borrower shall comply fully with and maintain in effect any and all environmental permits and licenses required under any Environmental Law in order to conduct Borrower's business. To the extent such permits are required but have not been obtained, or to the extent such existing permits must be modified or renewed, Borrower shall make timely application for and obtain all such permits, modifications or renewals thereof, as the case may be, including, but not limited to, necessary federal and/or state water discharge, air emission and waste management permits. Without limiting the generality of the foregoing, Borrower warrants that it has filed applications with the appropriate regulatory agencies for all federal NPDES water discharge permits and Louisiana LWDPS water discharge permits required under any Environmental Law in order to conduct Borrower's business and/or own its assets or properties. Borrower shall comply with all appropriate information requests by, and otherwise assist as appropriate, each regulatory agency processing Borrower's permit applications so as to ensure timely and uninterrupted review of each permit application. As often as Banks or Agent may require, Borrower shall submit to Agent written progress reports addressing the status of environmental permits and plans required of Borrower, including pending permit applications. All permits required hereunder shall be obtained and/or filed, as the case may be, within six (6) months from the effective date hereof. Anything contained herein to the contrary notwithstanding, Borrower shall not use any of its properties or allow such properties to be used for the storage, treatment or disposal of Solid Waste or Hazardous Substances if such storage, treatment or disposal would require a permit under any Environmental Laws. 7.9 Use of Proceeds. Not use or permit any proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying any margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended from time to time, and furnish to Banks, upon either of their requests, a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U of the Board of Governors of the Federal Reserve System. 7.10 Financial Covenants. Maintain: (a) a ratio of current assets to current liabilities, as determined in accordance with GAAP, in excess of 1.33 to 1; (b) a minimum Net Worth of NINETEEN MILLION AND NO/100 DOLLARS ($19,000,000.00) for the period commencing September 30, 1996 and ending December 31, 1997; a minimum Net Worth of TWENTY-ONE MILLION AND NO/100 DOLLARS ($21,000,000.00) for the period January 1, 1998 through December 31, 1998, and a minimum Net Worth of TWENTY-THREE MILLION AND NO/100 DOLLARS ($23,000,000.00) from and including January 1, 1999 and thereafter; (c) a ratio of Debt to Net Worth no greater than 1.1 to 1; and (d) a ratio of Cash Flow to Debt Service of at least 1.5 to 1, such ratio to be determined as of the end of each fiscal quarter by giving effect to such fiscal quarter and the three (3) immediately preceding fiscal quarters; provided that there shall be no Event of Default under this Section 7.10(d) unless Borrower fails to meet the ratio described in this Section 7.10(d) for three (3) successive fiscal quarters. 7.11 Liens. Not create, incur, or suffer to exist any Lien except ((a) through (g) of this Section being referred to collectively as the "Permitted Liens"): (a) those for taxes, assessments or governmental charges or levies on its property if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings; (b) those imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than sixty (60) days past due; (c) those arising out of pledges or deposits under workmen's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation; (d) utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of Borrower; (e) lessors' interests under financing leases; (f) liens on assets of Borrower not covered by the Loan Documents which liens secure obligations of Borrower in the ordinary course of business which in the aggregate for all such obligations of Borrower do not exceed $250,000.00; and (g) the Liens created pursuant to the Loan Documents. 7.12 Debt. Not create or permit to exist any Debt without the prior written consent of Banks, if, as a result thereof, exclusive of the indebtedness contemplated by this Agreement, the aggregate amount of Debt of Borrower would exceed the sum of $250,000.00. 7.13 Redemptions, etc. Not, without the prior written approval of Banks: (1) redeem, purchase or acquire, directly or indirectly, any of its stock; (2) authorize or issue additional stock of any class; (3) authorize any new class of stock; (4) authorize any currently existing or new classes of stock to become voting stock; or (5) sell or transfer any treasury shares of stock. Provided, however, subparts (2) through (5) of this Section 7.13 shall not apply except to the extent that as a result thereof either (a) the Labordes would fail to retain at least forty-five percent (45%) of the issued and outstanding stock of Borrower, or (b) the Wilsons would fail to retain at least forty-five percent (45%) of the issued and outstanding stock of Borrower. For purposes of this Section 7.13, the Labordes and the Wilsons shall be deemed owners of the issued and outstanding stock of Borrower with respect to any issued and outstanding stock that is owned either by the Labordes or the Wilsons, any descendant of the Labordes or the Wilsons, any trust for the exclusive benefit of the Labordes or the Wilsons or any descendant of the Labordes or the Wilsons, or the respective estates of the Labordes or the Wilsons or any descendant of the Labordes or the Wilsons if said stock will ultimately pass from the respective estates of the Labordes or the Wilsons to a descendant or a trust for the exclusive benefit of a descendant of the Labordes or the Wilsons. 7.14 Capital Expenditures. Not make capital expenditures which would exceed $9,000,000.00 in calendar year 1996; $8,000,000.00 in calendar year 1997; or $2,000,000.00 per calendar year thereafter. 7.15 Dividends. Not declare or pay any dividends or make any other distribution on account of, or purchase, acquire, redeem or retire any capital stock of, Borrower, whether now or hereafter outstanding, provided that, so long as there is no Event of Default hereunder and Borrower continues as an S Corporation, Borrower shall be permitted to pay the following cash dividends on a cumulative basis, to-wit: (a) commencing with Borrower's first fiscal quarter 1996 and with respect to each fiscal quarter thereafter, regular dividends not to exceed 40% of Borrower's pretax income earned in the fiscal quarter immediately prior to the fiscal quarter in question, as determined in accordance with GAAP; and (b) commencing annually in 1996, special dividends not to exceed 65% of Borrower's pretax income earned in the fiscal year of Borrower immediately prior to the fiscal year in question, as determined in accordance with GAAP and as provided in the audited financial statements furnished to Agent pursuant to Section 7.1(a) hereof, less the sum of dividends paid in the 2nd, 3rd, and 4th fiscal quarters of such prior fiscal year and dividends paid in the 1st fiscal quarter of the fiscal year in question. 7.16 Shareholder or Employee Loans. Not make advances or loans to Borrower's employees or shareholders which exceed the aggregate amount of $100,000.00. 7.17 Change in Business. Carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted; provided, however, that the foregoing shall not prevent Borrower from engaging in new and additional activities as long as said activities are in substantially the same fields of enterprise as are currently being engaged in by Borrower. 7.18 Accounts Receivable. Provide Banks with aging reports of Borrower's accounts receivable on a monthly basis. 7.19 Compliance with Agreements. Comply with all indentures, mortgages, deeds of trust and other agreements binding on it or affecting its properties or business. 7.20 Further Assurances. Execute and deliver such further documentation as may be requested by Banks or Agent to carry out the provisions and purposes of this Agreement and the other Loan Documents and to preserve and perfect the Liens of Banks or Agent for the benefit of Banks, as the case may be, in the Collateral. 7.21 Disposition of Assets. Not sell, lease, assign, transfer or otherwise dispose of any of its assets, except dispositions of inventory and equipment in the ordinary course of business and as otherwise provided in this Agreement. 7.22 Change Tax I.D. Number. Not change its Federal Taxpayer Identification Number as set forth in Section 6.24 hereof without giving Agent at least sixty (60) days' prior written notice. 7.23 Indemnity. Indemnify, defend and hold Agent and Banks and their respective directors, officers, agents, attorneys and employees harmless from and against all claims, demands, causes of action, liabilities, losses, costs and expenses (including, without limitation, costs of suit, reasonable legal fees and fees of expert witnesses) arising from or in connection with (a) the presence in, on or under any property of Borrower (including, without limitation, the Real Property and the GIFI Property) of any Hazardous Substance or Solid Waste, or any releases or discharges (as the terms "release" and "discharge" are defined under any applicable Environmental Law) of any Hazardous Substance or Solid Waste on, under or from such property, (b) any activity carried on or undertaken on or off such property of Borrower, whether prior to or during the term of this Agreement, and whether by Borrower or any predecessor in title to Borrower's property or any officers, employees, agents, contractors or subcontractors of Borrower or any predecessor in title to Borrower's property, or any third persons at any time occupying or present on such property, in connection with the handling, use, generation, manufacture, treatment, removal, storage, decontamination, clean-up, transportation or disposal of any Hazardous Substance or Solid Waste at any time located or present on or under any of the aforedescribed property, or (c) any breach of any representation, warranty or covenant under the terms of this Agreement. The foregoing indemnity shall further apply to any residual contamination on or under any or all of the aforedescribed property, or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the use, handling, storage, transportation or disposal of any Hazardous Substance or Solid Waste, and irrespective of whether any of such activities were or will be undertaken in accordance with applicable laws, regulations, codes and ordinances. The indemnity described in this Section shall survive the termination of this Agreement for any reason whatsoever. 7.24 GIFI Property. Not create a Lien on the GIFI Property in favor of, or otherwise convey the GIFI Property to, any Person without the prior written consent of Banks. Section 8. Conditions Precedent to Extensions of Credit. The obligation of Banks to extend credit to Borrower under this Agreement is subject to the satisfaction of the conditions precedent, in addition to the applicable conditions precedent set forth in Section 9 below with respect to Advances and/or Letters of Credit, that Borrower shall have delivered, or caused to be delivered, to Banks in form and substance satisfactory to Banks: 8.1 Borrower's Resolutions. Copies, duly certified by the secretary or assistant secretary of Borrower, of (a) the resolutions of Borrower's Board of Directors authorizing the borrowings hereunder and the execution and delivery of all of the Loan Documents to which Borrower is a party, (b) all documents evidencing other necessary corporate action and (c) all approvals or consents, if any, with respect to the Loan Documents. 8.2 Notes. Its duly executed Notes payable to the order of Banks. 8.3 Incumbency. Certificates of Borrower's secretary or assistant secretary, substantially in the form of Exhibit "I" hereto, certifying the name of the officers of Borrower authorized to execute the Loan Documents, and all other documents or certificates to be delivered hereunder, together with the true signatures of such officers. 8.4 Certification. A certificate, substantially in the form of Exhibit "J" hereto, of the president or chief financial officer of Borrower as to the matters set out in Sections 9.1 and 9.2 hereof. 8.5 GIF Collateral Mortgage. The duly executed GIF Collateral Mortgage. 8.6 GIF Collateral Chattel Mortgages. The duly executed GIF Collateral Chattel Mortgages. 8.7 Lease Assignment. The duly executed Lease Assignment. 8.8 GIFI Collateral Chattel Mortgage. The duly executed GIFI Collateral Chattel Mortgage. 8.9 Real Property Collateral Mortgage. The duly executed Real Property Collateral Mortgage. 8.10 Security Agreement. The duly executed Security Agreement. 8.11 Financing Statement. The duly executed Financing Statement. 8.12 Other Documents. Any and all other documents, agreements and/or instruments reasonably requested by Bank. 8.13 Opinion. The opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, counsel to Banks and Agent, addressed to Banks and Agent, to the effect that (a) Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana; (b) Borrower has full power to execute, deliver and perform its obligations under this Agreement, the Notes and the Collateral Documents; (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 Borrower, nor to the best of counsel's knowledge, in conflict with any agreement binding upon Borrower; and (d) this Agreement, the Notes, the Real Property Collateral Mortgage, the Lease Assignment, the Security Agreement and the Financing Statement are the legal and binding obligations of Borrower enforceable in accordance with their respective terms, except as enforcement may be limited by applicable bank- ruptcy, reorganization, moratorium or similar laws. 8.14 Real Property Title Insurance. A mortgagee's title policy in the amount of $3,000,000.00 with respect to the Real Property Collateral Mortgage, in form and substance satisfactory to Banks. Section 9. Additional Conditions Precedent to Advances and/or Letters of Credit. The obligation of Banks to make any Advance and/or issue any Letter of Credit under the Credit Facilities is subject to, in addition to the satisfaction of all other conditions precedent applicable to the Credit Facilities and set forth in Section 8 above, the satisfaction of each of the following conditions precedent: 9.1 Default. Before and after giving effect to such Advance and/or Letter of Credit under the Credit Facility in question, no Event of Default shall have occurred and be con- tinuing. 9.2 Warranties. Before and after giving effect to such Advance and/or Letter of Credit under the Credit Facility in question, the representations and warranties in Section 6 hereof shall be true and correct as though made on the date of such Advance and/or Letter of Credit under the Credit Facility in question, except for such changes as are specifically permitted hereunder. With respect to such changes, the Banks hereby specifically permit the Wilsons and the Labordes to reduce their respective ownership interests in Borrower to forty-five percent (45%) of Borrower's issued and outstanding stock in order to permit employees of Borrower to acquire up to ten percent (10%) of Borrower's issued and outstanding stock, and upon such reduction, the representation and warranty in Section 6.13 shall be automatically deemed to reflect the Labordes' and Wilsons' new ownership percentages. Section 10. Events of Default. The following events shall constitute Events of Default hereunder and under the Credit Facilities, individually and collectively, and under all other Loan Documents: 10.1 Payment. Default in the payment of principal on any one or more of the Notes when due, or default in the payment of any interest on any one or more of the Notes or any expense or fee hereunder or under any of the other Loan Documents, which default shall continue for a period of five (5) days following written notice thereof to Borrower from Banks or Agent; 10.2 Other Indebtedness. Any other indebtedness of Borrower is not paid at maturity or becomes due and payable prior to its expressed maturity by reason of any default by Borrower in the performance or observance of any obligation or condition thereunder which default shall continue for a period of thirty (30) days following written notice thereof to Borrower from Banks or Agent; 10.3 Other Default. Any default of any other obligation of Borrower under the terms of any note or notes, mortgage, indenture, loan agreement or security document of Borrower, including, without limitation, any of the Loan Documents, which default shall continue for a period of thirty (30) days following written notice thereof to Borrower from Banks or Agent, it being expressly understood and agreed that a default under any note, mortgage, indenture, loan agreement or security document of Borrower, including, without limitation, any of the Loan Documents, shall constitute a default under all other notes, mortgages, indentures, loan agreements and security documents held by Banks or Agent, including, without limitation, the Loan Documents; 10.4 Insolvency. Borrower becomes insolvent or admits in writing its inability to pay its debts as they mature or applies for, consents to, or acquiesces in the appointment of a trustee or receiver for Borrower or any of its property; or, in the absence of such application, consent or acquiescence, a trustee or receiver is appointed for Borrower or for a substantial part of any of its property and is not discharged within thirty (30) days; or any bankruptcy, reorganization, debt arrangement, or other proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding is instituted by or against Borrower, and if instituted against Borrower, it is consented to or acquiesced in by Borrower, or remains for thirty (30) days undismissed; or any warrant of attachment is issued against any substantial portion of the property of Borrower which is not released within thirty (30) days of service; 10.5 ERISA. The PBGC applies to a United States District Court for the appointment of a trustee to administer any Plan adopted, established or maintained by Borrower, or for a decree adjudicating that any such Plan must be terminated; a trustee is appointed pursuant to ERISA to administer any such Plan; any action is taken to terminate any such Plan or any such Plan is permitted or caused to be terminated if, at the time such action is taken or such termination of such Plan occurs, the Plan's "vested liabilities," as defined in Section 3(25) of ERISA, exceed the then value of its assets at the time of such termination; 10.6 Agreements. Default in the performance of any of Borrower's covenants and/or agreements set forth in this Agreement and/or any of the other Loan Documents (and not constituting an Event of Default under any of the preceding subsections of this Section 10), which default shall continue for a period of thirty (30) days after written notice thereof to Borrower from Banks or Agent; 10.7 Representation or Warranty. Any representation or warranty made by Borrower herein is untrue in any material respect, or any schedule, statement, report, notice or writing furnished by Borrower or any of the Owners to Banks is untrue in any material respect on the date as of which the facts set forth are stated or certified which default shall continue for a period of thirty (30) days after written notice thereof to Borrower from Banks or Agent; 10.8 Change in Ownership of Borrower. Either: (a) the Labordes fail to retain ownership of at least forty-five percent (45%) of the issued and outstanding stock of Borrower (provided, however, that no Event of Default shall occur under this Agreement so long as at least forty-five percent (45%) of the issued and outstanding stock of Borrower is owned by the Labordes, any descendant of the Labordes, any trust for the exclusive benefit of the Labordes or any descendant of the Labordes, or the respective estates of the Labordes or any descendant of the Labordes if said stock will ultimately pass from the respective estates of the Labordes to a descendant or a trust for the exclusive benefit of a descendant of the Labordes); or (b) the Wilsons fail to retain ownership of at least forty- five percent (45%) of the issued and outstanding stock of Borrower (provided, however, that no Event of Default shall occur under this Agreement so long as at least forty-five percent (45%) of the issued and outstanding stock of Borrower is owned by the Wilsons, any descendant of the Wilsons, any trust for the exclusive benefit of the Wilsons or any descendant of the Wilsons, or the respective estates of the Wilsons or any descendant of the Wilsons if said stock will ultimately pass from the respective estates of the Wilsons to a descendant or a trust for the exclusive benefit of a descendant of the Wilsons). Upon the occurrence of any Event of Default, Banks, or Agent upon the direction of Banks, in addition to all of the remedies conferred upon Agent and/or Banks under law, in equity or under any of the Loan Documents, may declare the Commitments to be terminated and the Notes to be due and payable, whereupon the Commitments shall immediately terminate, and the Notes shall become immediately due and payable, without notice of any kind, except that if an event described in Section 10.4 occurs, the Commitments shall immediately terminate, and the Notes shall become immediately due and payable without declaration or notice of any kind. Section 11. Agent. 11.1 Authorization and Action. Each Bank hereby appoints and authorizes Agent to execute the Collateral Documents on behalf of each such Bank and to take such action as Agent on such Bank's behalf, and to exercise such powers under the Loan Documents, as are delegated to Agent by the terms thereof, together with such other powers as are reasonably incidental thereto, including, without limitation, the enforcement of the Loan Documents in accordance with the terms thereof (including, without limitation, the collection of the Notes), and Agent hereby accepts such appointment. As to any matters not expressly provided for by the Loan Documents (including, without limitation, enforcement or collection of the Notes), Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of Banks and such instructions shall be binding upon Banks; provided, however, that Agent shall not be required to take any action which exposes Agent to personal liability or which is contrary to any of the Loan Documents or applicable law. Agent shall not consent to any amendment of this Agreement or any of the other Loan Documents (and no amendment by Banks shall be effective without consent of Agent), the effect of which would be to increase the amount of the Loans or extend the maturity of any obligation, reduce the bases on which any interest is computed, release any Collateral, waive any provision regarding covenants or obligations of Borrower or the Owners or Events of Default, without the express written consent of all Banks. 11.2 Agent's Reliance, Etc. Neither Agent nor any of its 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 any of the Loan Documents except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, Agent: (i) may treat the payee of any Note as the holder thereof until Agent receives written notice of the assignment or transfer thereof signed by such payee and in form satisfactory to Agent; (ii) may consult with legal counsel (including counsel for Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Bank and shall not be responsible to any Bank for any statements, warranties or representations made in or in connection with any of the Loan Documents; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of any of the Loan Documents on the part of Borrower or to inspect the property (including the books and records) of Borrower; (v) shall not be responsible to any Bank for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any of the Loan Documents or any other instruments or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of any of the Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, cable or telex) believed by it to be genuine and signed by the proper party or parties. 11.3 First NBC and Affiliates. With respect to the Notes payable to the order of First NBC and the portion of the Commitments applicable to First NBC, First NBC shall have the same rights and powers under the Loan Documents as the other Bank and may exercise the same as though it were not Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include First NBC in its individual capacity. Without limiting the generality of the foregoing, First NBC and its affiliates may accept deposits from, and generally engage in any kind of business with, Borrower, and any person, firm or corporation who may do business with or own securities of Borrower, all as if First NBC were not Agent and without any duty to account therefor to Banks. 11.4 Bank Credit Decision. Each Bank acknowledges that it has, independently and without reliance upon Agent or any other Bank and based on the financial statements furnished by Borrower and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon Agent or any other Bank 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 the Loan Documents. Each Bank acknowledges that a copy of this Agreement has been made available to it and each Bank acknowledges that it is satisfied with the form and substance of this Agreement. 11.5 Indemnification. Banks agree to indemnify and hold Agent harmless (to the extent not reimbursed by Borrower), ratably according to the respective principal amounts of the Notes then held by each of them (or if no Notes are at the time outstanding, ratably according to the respective amounts of their commitments hereunder), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against Agent in any way relating to or arising out of any of the Loan Documents or any action taken or omitted by Agent under any of the Loan Documents (including, without limitation, attorneys' fees and other costs associated with defending Agent against any of the foregoing), provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from Agent's gross negligence or wilful misconduct. Without limitation of the foregoing, each Bank agrees to reimburse Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including attorneys' fees) incurred by Agent in connection with the preparation, execution, administration, or enforcement of, or the preservation of any rights under, the Loan Documents, to the extent that Agent is not reimbursed for such expenses by Borrower. 11.6 Successor Agent. Agent may resign at any time by giving written notice thereof to Banks and Borrower and may be removed at any time with or without cause by Banks by notice to Borrower. Upon any such resignation or removal, Banks shall have the right to appoint a successor agent by notice to Borrower. If no successor agent shall have been so appointed by Banks, and shall have accepted such appointment, within thirty (30) days after Agent's giving of notice of its resignation, then Agent may, on behalf of Banks, appoint a successor agent, by notice to Borrower and Banks, which successor agent shall be a commercial bank organized under the laws of the United States of America or any state thereof having a combined capital and surplus of at least $5,000,000. Upon the acceptance of any appointment as Agent by a successor agent, such successor agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of Agent, and Agent shall be discharged from its duties and obligations under the Loan Documents. After Agent's resignation or removal hereunder as Agent, the provisions of this Section 11 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents. 11.7 Benefits of Section. None of the provisions of this Section shall inure to the benefit of Borrower or any Person other than Banks; consequently, neither Borrower nor any other Person shall be entitled to rely upon, or to raise as a defense, in any manner whatsoever, the failure of any Bank to comply with such provisions. 11.8 Change in Specified Percentage. No Bank shall assign outright its entire interest in the Credit Facilities or the Commitments or make any participation without the consent of the other Bank and Agent. Section 12. General. 12.1 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: "Advance" means a sum advanced by Banks to Borrower pursuant to either of the Credit Facilities. "Agent" has the meaning ascribed to the term on the first page hereof. "Agreement" means this Fifth Amended and Restated Revolving Credit and Term Loan Agreement, as it has been and may be amended, restated, modified and/or supplemented from time to time. "Assignment" has the meaning ascribed to the term in the recitals to this Agreement. "Bank" and "Banks" have the meanings ascribed to the terms on the first page hereof. "Benefitted Bank" has the meaning ascribed to the term in Section 4.2 hereof. "Borrower" has the meaning ascribed to the term on the first page hereof. "Borrowing Base" means an amount equal to eighty percent (80%) of the Eligible Receivables at the time in question. "Borrowing Date" means any Business Day specified in a notice pursuant to Section 3.7 as a date on which Borrower requests Banks to make Advances hereunder. "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a legal holiday for commercial banks in the State of Louisiana. "Capitalized Leases" means capital leases and subleases, as defined in the Financial Accounting Standards Board Statement of Financial Accounting Standard No. 13, dated November 1976, as amended. "Cash Flow" means, for any period in question, (a) the net income of Borrower plus depreciation and interest, each determined in accordance with GAAP, less (b) dividends and other distributions made by Borrower to its shareholders during such period. "Collateral" means all property described in and subject to the Collateral Documents and any and all other property hereafter made subject to a Lien to secure the payment and performance of the Obligations. "Collateral Documents" means the GIF Collateral Mortgage, the GIF Collateral Chattel Mortgages, the GIFI Collateral Chattel Mortgage, the Lease Assignment, the Real Property Collateral Mortgage, the Security Agreement, the Financing Statement and any and all other documents, instruments and agreements delivered to Agent or Banks to secure the Loans and/or any other obligations described in this Agreement, as the foregoing may be amended, modified or supplemented from time to time. "Commitments" means, collectively, the Non-Revolving Commitment and the Revolving Commitment. "Conversion Date" means April 1, 1997, the date on which all previously made Non-Revolving Advances shall automatically convert to a term loan in accordance with Section 1.1 hereof. "Credit Facilities" has the meaning ascribed to the term in Section 1.2 hereof. "Debt" means: (a) all obligations of Borrower for borrowed money, (b) all obligations of Borrower evidenced by bonds, notes, debentures or other similar instruments, (c) all obligations of Borrower to pay the deferred purchase price of property or services, except trade accounts payable by Borrower arising in the ordinary course of business which are not past due by more than sixty (60) days unless such trade accounts payable are being contested in good faith by appropriate proceedings, (d) all obligations of Borrower under any Capitalized Leases, (e) all obligations of Borrower under guaranties, endorsements (other than for collection or deposit in the ordinary course of business), assumptions or other contingent obligations, in respect of, or to purchaser or otherwise acquire, any obligation or indebtedness of Borrower, or any other obligations, contingent or otherwise, (f) all obligations secured by a Lien (except trade accounts payable by Borrower arising in the ordinary course of business which are not past due by more than sixty (60) days unless such trade accounts payable are being contested in good faith by appropriate proceedings secured by a vendor's lien) existing on property owned by Borrower, whether or not the obligations secured thereby have been assumed by Borrower or are non-recourse to the credit of Borrower, (g) all reimbursement obligations of Borrower, other than performance bonds of Borrower (whether contingent or otherwise), relating to letters of credit, bankers' acceptances and similar instruments, and (h) all liabilities of Borrower in respect of unfunded vested benefits under any Plan; provided, however, the term "Debt" shall not include money borrowed by Borrower to pay premiums on insurance policies obtained by Borrower in the ordinary course of Borrower's business. "Debt Service" means, for any period in question, the sum of (a) all interest due and payable by Borrower to any Person during such period and (b) the aggregate amount of all principal due and payable during such period under this Agreement and any of the other Loan Documents. "Default Rate" has the meaning ascribed to the term in Section 3.2 hereof. "Eligible Receivables" shall mean, as of any date, an amount equal to the aggregate invoice amount owing on all trade accounts receivable of Borrower for goods sold, after deducting each such account that is unpaid ninety (90) days after the original invoice date thereof. "Environmental Laws" means any and all federal, state and local laws, regulations, ordinances, orders and require- ments pertaining to health, safety or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Louisiana Environmental Quality Act, La. R.S. 30:2001, et seq., and all similar laws, regulations and requirements of any governmental authority or agency having jurisdiction over Borrower or any of its properties or assets, as such laws, regulations and requirements may be amended or supplemented from time to time. "Equipment" means all machinery, equipment, furniture and furnishings and other property described as "General Equipment" in the Security Agreement, now or hereafter owned by Borrower. "Event of Default" means the occurrence of any event described in Section 10 hereof or the occurrence of any other event which with the lapse of time, or lapse of time and notice to Borrower would constitute an Event of Default. "Existing Security" means all security granted by Borrower to Banks pursuant to the Collateral Documents and other Loan Documents including, without limitation, the Second Loan Agreement Security and the Third Loan Agreement Security. "Financing Statement" means the UCC-1 Financing Statement referred to in Section 5.1 hereof, as such instrument may be modified, supplemented and/or amended from time to time. "First Amended and Restated Loan Agreement" has the meaning ascribed to the term in the recitals to this Agreement. "First NBC" has the meaning ascribed to the term in the recitals to this Agreement. "Fixtures" means any and all goods and other property that, after placement on the Real Property and/or the GIFI Property, become component parts thereof. "FNBC LIBO Rate": with respect to each Interest Period pertaining to a LIBO Rate Advance, the rate per annum equal to the rate quoted on page 16 of the Telerate screen (or such other page as may replace the LIBO page on that service for displaying London interbank offered rates of major banks) at approximately 11:00 a.m. New Orleans, Louisiana time (or as soon thereafter as is practicable) on the day that is one Business Day prior to the beginning of such Interest Period for Eurodollar deposit instruments issued on the first day of such Interest Period for the number of months comprised therein and in an amount comparable to the amount of the LIBO Rate Advance to which such Interest Period applies. The FNBC LIBO Rate determined by Agent with respect to a particular Interest Period shall be fixed at such rate for the duration of such Interest Period. "Fourth Amended and Restated Loan Agreement" has the meaning ascribed to the term in the recitals to this Agreement. "Fourth Loan Agreement" has the meaning ascribed to the term in the recitals to this Agreement. "GAAP" means generally accepted accounting principles, applied on a consistent basis, as set forth in Opinions of the Accounting Principles Board of the American Institute of Certified Public Accountants and/or in statements of the Financial Accounting Standards Board and/or their respective successors and which are applicable in the circumstances as of the date in question. Accounting principles are applied on a "consistent basis" when the accounting principles observed in a current period are comparable in all material respects to those accounting principles applied in a preceding period. "GIF" has the meaning ascribed to the term on the first page hereof. "GIF Collateral Chattel Mortgages" means, collectively, the Original GIF Collateral Chattel Mortgage and the Second GIF Collateral Chattel Mortgage. "GIF Collateral Mortgage" means, collectively, the GIF Property Collateral Note, the GIF Property Collateral Mortgage, the GIF Property Pledge Agreement and the GIF Property First Additional Pledge Agreement referred to in Section 5.1 hereof, as such instruments may be modified, supplemented and/or amended from time to time. "GIF Equipment" means all equipment and other property described in and subject to the GIF Collateral Chattel Mortgages. "GIF Property" means the land, improvements and other property described in and subject to the GIF Collateral Mortgage and the Real Property Collateral Mortgage. "GIFI" has the meaning ascribed to the term on the first page hereof. "GIFI Collateral Chattel Mortgage" means collectively the GIFI Equipment Collateral Note, the GIFI Equipment Collateral Chattel Mortgage and the GIFI Equipment Pledge Agreement referred to in Section 5.1 hereof as creating a first mortgage lien on the GIFI Equipment, as such instru- ments may be modified, supplemented and/or amended from time to time. "GIFI Collateral Mortgage" means that certain Act of Collateral Mortgage of Borrower, dated July 27, 1989, in favor of Mortgagee and any and all future holders, recorded in the mortgage records of Terrebonne Parish, Louisiana, in Mortgage Book No. 811, folio 158, under Entry No. 850042, which mortgage has been released by First NBC. "GIFI Equipment" means the equipment and other property described in and subject to the GIFI Collateral Chattel Mortgage and the Security Agreement. "GIFI Property" means the property heretofore subject to the GIFI Collateral Mortgage and the property described on Exhibit "K" hereto. "Hazardous Substance" has the meaning specified in any applicable Environmental Law and means any substance, product, waste, pollutant, material, chemical, contaminant, constituent or other material which is or becomes listed, regulated or addressed under any Environmental Law, including, without limitation, asbestos, petroleum and polychlorinated biphenyls. "Interest Period" means with respect to any LIBO Rate Advance: (i) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such LIBO Rate Advance and ending one, two, or three months thereafter, as selected by Borrower in its notice to Agent of borrowing or notice of conversion, as the case may be, given with respect thereto; and (ii) thereafter, each period commencing on the day immediately following the last day of the next preceding Interest Period applicable to such LIBO Rate Advance and ending one, two or three months thereafter, as selected by Borrower by notice to Agent not less than one (1) Business Day prior to the last day of the then current Interest Period with respect thereto; and provided, that: (x) if any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day; (y) any Interest Period which, with respect to a LIBO Rate Advance under the Revolving Credit Facility, would otherwise extend beyond the Termination Date shall end on the Termination Date and any Interest Period which, with respect to a LIBO Rate Advance under the Term Credit Facility, would extend beyond the Conversion Date shall end on the Conversion Date; and (z) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month. "Labordes" means, jointly, severally and solidarily, Margaret Bienvenu, wife of/and Alden J. LaBorde. "LC Commitment" means the lesser of (a) FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) or (b) the Revolving Commitment at the time in question. "Lease Assignment" has the meaning ascribed to the term in Section 5.1 hereof. "Letters of Credit" has the meaning ascribed to the term in Section 1.2 hereof. "LIBO Rate": shall mean with respect to each day during an Interest Period for a LIBO Rate Advance, an interest rate per annum equal to the sum of (a) two percent (2.00%) plus (b) the FNBC LIBO Rate. "LIBO Rate Advance" means an Advance made under the Revolving Credit Facility or, until the Conversion Date, the Term Credit Facility which bears interest at the LIBO Rate. "Lien" means any lien, judgment, mortgage, deed of trust, security interest, tax lien, financing statement, pledge, charge, hypothecation, assignment, preference, priority or other encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or title retention agreement), whether arising by contract, operation of law or otherwise. "Loan Agreement" has the meaning ascribed to this term in the recitals to this Agreement. "Loan Documents" means collectively this Agreement, the Notes, the GIF Collateral Mortgage, the GIF Collateral Chattel Mortgages, the GIFI Collateral Chattel Mortgage, the Lease Assignment, the Real Property Collateral Mortgage, the Security Agreement, the Financing Statement and any and all other documents, instruments and agreements executed in connection with the Loans, as the foregoing may be modified, supplemented and/or amended from time to time. "Loans" means the loans under the Credit Facilities and "Loan" means any one of the Loans. "Net Worth" means the sum of the common stock, addi- tional paid-in capital and retained earnings accounts of Borrower, as shown in conformity with GAAP on its balance sheet at the time of such determination, less the amount of any treasury stock shown thereon and less the amount of any intangible assets (such as patents, trademarks, copyrights or goodwill) shown thereon. "New GIF Equipment" means the equipment and other property described in and subject to the Second GIF Collateral Chattel Mortgage. "Non-Revolving Advance" has the meaning ascribed to the term in Section 1.1 hereof. "Non-Revolving Commitment" means $10,000,000. "Non-Revolving Line of Credit" has the meaning ascribed to the term in Section 1.1 hereof. "Notes" means, collectively, the Term Notes and the Revolving Notes. "Obligations" means all obligations, indebtedness and liabilities of Borrower to Agent and/or either or both of Banks, now existing or hereafter arising, whether direct, indirect, related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or joint and several, including, without limitation, the obligations, indebtedness, and liabilities of Borrower under this Agreement, the Notes and the other Loan Documents, and all interest accruing thereon and all attorneys' fees and other expenses incurred in the enforcement or collection thereof. "Original GIF Collateral Chattel Mortgage" means collectively the Original GIF Equipment Collateral Note, the Original GIF Equipment Collateral Chattel Mortgage and the Original GIF Equipment Pledge Agreement referred to in Section 5.1 hereof as creating a first mortgage lien on the Original GIF Equipment, as such instruments may be modified, supplemented and/or amended from time to time. "Original GIF Equipment" means the equipment and other property described in and subject to the Original GIF Collateral Chattel Mortgage and the Second GIF Collateral Chattel Mortgage. "Owners" means, collectively, the Labordes and the Wilsons. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to all or any of its functions under ERISA. "Permitted Liens" has the meaning ascribed to the term in Section 7.11 hereof. "Person" means any individual, corporation, business, trust, association, company, partnership, joint venture, governmental authority or other entity. "Plan" has the meaning ascribed to the term in Section 6.10 hereof. "Prime Rate" has the meaning ascribed to the term in Section 3.4 hereof. "Prime Rate Advance" means an Advance made under the Revolving Credit Facility or, until the Conversion Date, the Term Credit Facility which bears interest at the Prime Rate. "Prior Notes" means, collectively, the promissory notes executed by Borrower in favor of Banks executed pursuant to the Fourth Loan Agreement. "Real Property" means the property described in and encumbered by the Real Property Collateral Mortgage. "Real Property Collateral Mortgage" means collectively the Real Property Collateral Note, the Real Property Collateral Mortgage and the Property Additional Pledge Agreement referred to in Section 5.1 hereof, as such instruments may be modified, supplemented and/or amended from time to time. "Revolving Advance" has the meaning ascribed to the term in Section 1.2 of this Agreement. "Revolving Commitment" means the lesser of (a) TWELVE MILLION AND NO/100 DOLLARS ($12,000,000.00) or (b) FOUR MILLION AND NO/100 DOLLARS ($4,000,000.00) plus the Borrowing Base at the time in question. "Revolving Credit Facility" has the meaning ascribed to the term in Section 1.2 of this Agreement. "Revolving Notes" has the meaning ascribed to the term in Section 2.2 of this Agreement. "Second Amended and Restated Loan Agreement" has the meaning ascribed to the term in the recitals to this Agreement. "Second Loan Agreement Security" has the meaning ascribed to the term in the recitals of this Agreement. "Second GIF Collateral Chattel Mortgage" means collectively the Second GIF Equipment Collateral Note, the Second GIF Equipment Collateral Chattel Mortgage and the Second GIF Equipment Pledge Agreement referred to in Section 5.1 hereof as creating a first mortgage lien on the New GIF Equipment and a second mortgage lien on the Original GIF Equipment, as such instruments may be modified, supplemented and/or amended from time to time. "Security Agreement" means the Security Agreement referred to in Section 5.1 hereof, as such instrument may be modified, supplemented and/or amended from time to time. "Solid Waste" has the meaning specified in any applicable Environmental Law. "Term Credit Facility" has the meaning ascribed to the term in Section 1.1 of this Agreement. "Term Notes" has the meaning ascribed to the term in Section 2.1 of this Agreement. "Term Rate" means the sum of (a) two percent (2.00%) per annum plus (b) the "ask yield" on United States Treasury Notes with a maturity of April, 2002 as reported in Section C of the Wall Street Journal on March 31, 1997 (or, if the Wall Street Journal does not report the "ask yield" on such instruments on March 31, 1997, then the "ask yield" on United States Treasury Notes with a maturity in the next earlier month which is reported in the Wall Street Journal on March 31, 1997). The Term Rate shall be determined only once and, as determined, shall apply throughout the remaining term of this Agreement. "Termination Date" means December 31, 1998. "Third Amended and Restated Loan Agreement" has the meaning ascribed to the term in the recitals to this Agreement. "Third Loan Agreement" has the meaning ascribed to the term in the recitals to this Agreement. "Third Loan Agreement Security" has the meaning ascribed to this term in the recitals to this Agreement. "UCC" means the Uniform Commercial Code, as in effect from time to time in each state where any of the Collateral is located or otherwise has a situs; provided, however, if the Uniform Commercial Code in no particular state is ascertainable or applicable, UCC shall mean the Uniform Commercial Code, as in effect from time to time in the State of Louisiana. "Unused Commitment" has the meaning ascribed to the term in Section 1.2 hereof. "Whitney" has the meaning ascribed to the term in the recitals to this Agreement. "Wilsons" means, jointly, severally and solidarily, Angelina Mumphrey, wife of/and Huey J. Wilson. All definitions contained in this Agreement are equally applicable to the singular and plural forms of the terms defined. The words "hereof," "herein" and "hereunder" and words of similar import referring to this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement. Unless otherwise specified, all Section references pertain to this Agreement. 12.2 Financial Terms. Unless otherwise defined or the context otherwise requires, all financial and accounting terms shall be defined under GAAP. 12.3 Delay. No delay on the part of Banks, Agent or any holder of any one or more 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. 12.4 Notices. All notices, statements, requests and demands given to or made under any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given or made when deposited in the mail, postage pre-paid, registered or certified mail return receipt requested, or in the case of telegraphic notice, when delivered to the telegraph company, charges prepaid, addressed: If to Banks: First National Bank of Commerce 210 Baronne Street New Orleans, Louisiana 70112 Attention: Mr. J. Charles Freel, Jr. Vice President and Whitney National Bank 228 St. Charles Avenue New Orleans, Louisiana 70130 Attention: Harry C. Stahel Senior Vice President With a copy to: William H. Hines, Esq. Jones, Walker, Waechter, Poitevent, Carrere & Denegre Place St. Charles 201 St. Charles Avenue New Orleans, Louisiana 70170 If to Agent: First National Bank of Commerce 210 Baronne Street New Orleans, Louisiana 70112 Attention: Mr. J. Charles Freel, Jr. Vice President With a copy to: William H. Hines, Esq. Jones, Walker, Waechter, Poitevent, Carrere & Denegre Place St. Charles 201 St. Charles Avenue New Orleans, Louisiana 70170 If to Borrower: Gulf Island Fabrication, Inc. 583 Thompson Road Houma, Louisiana 70363 Attention: Kerry J. Chauvin, President or Gulf Island Fabrication, Inc. P.O. Box 310 Houma, Louisiana 70361 Attention: Kerry J. Chauvin, President With respect to notices to Borrower, such notices shall, if sent by overnight courier or other means requiring a street address, be sent to the first address provided above. If such notices are sent by means not requiring a street address, such notices shall be sent to the second address provided above. 12.5 Expenses. Whether or not the Loans are advanced, Borrower agrees to reimburse Banks and Agent, upon demand, for all expenses (including reasonable attorneys' fees and legal expenses incurred by Banks and/or Agent) incurred by Banks and/or Agent in the preparation, negotiation and/or execution of the Loan Documents, and in enforcing the obligations of Borrower hereunder or under any of the other Loan Documents, and to pay, and save Banks and Agent harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of this Agreement, the execution, delivery or issuance of the Notes, and/or the execution, delivery and recordation of the other Loan Documents, which obligations of Borrower shall survive any termination of this Agreement. 12.6 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. 12.7 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. 12.8 Law. The Loan Documents, and each of them, shall be contracts made under and governed by the laws of the State of Louisiana. 12.9 Successors. This Agreement shall be binding upon Borrower, Banks, Agent and their respective successors and assigns, and shall inure to the benefit of Borrower, Banks and the successors and assigns of Banks and Agent. Borrower shall not assign its rights, obligations or duties hereunder or under any of the Loan Documents without the prior written consent of Banks. Banks shall give Borrower written notice of any assign- ment of its interests hereunder to any other Person, upon which assignment Borrower shall perform all of its respective obligations under the Loan Documents in favor of Banks' assignee(s) as though such assignee(s) were originally a party or parties to this Agreement. 12.10 Amendments. No amendment or waiver of any provision of this Agreement or consent to any departure therefrom by Borrower, Banks or Agent shall be effective unless the same shall be in writing and signed by Borrower, Banks and Agent and, 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. 12.11 Entire Agreement. This Agreement constitutes the en- tire agreement between the parties and supersedes any and all prior agreements with respect to the transactions contemplated hereby. 12.12 Conflicts. This Agreement is in addition to and supplements the provisions of the other Loan Documents. To the extent that the provisions of this Agreement are in conflict with, and not merely in addition to, the provisions of the other Collateral Documents, the provisions of this Agreement shall govern. IN WITNESS WHEREOF, the parties hereto and intervenors herein have caused this Agreement to be executed by their respective officers thereunto duly authorized effective as of the date first written above. BORROWER: GULF ISLAND FABRICATION, INC. By: /s/ Kerry J. Chauvin ------------------------------ Kerry J. Chauvin, President BANKS: FIRST NATIONAL BANK OF COMMERCE By: /s/ J. Charles Freel, Jr. ------------------------------ J. Charles Freel, Jr., Vice President WHITNEY NATIONAL BANK By: /s/ Harry C. Stahel ------------------------------- Harry C. Stahel, Senior Vice President AGENT: FIRST NATIONAL BANK OF COMMERCE By: /s/ J. Charles Freel, Jr. ------------------------------- J. Charles Freel, Jr., Vice President ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 23rd day of October, 1996, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared KERRY J. CHAUVIN, appearing herein in his capacity as President of Gulf Island Fabrication, Inc., to me personally known to be the identical person whose name is subscribed to the foregoing Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said corporation with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said corporation and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Witness /s/ Kerry J. Chauvin ---------------------------- --------------------------- KERRY J. CHAUVIN /s/ Joseph P. Gallagher, III ---------------------------- /s/ Notary Public ---------------------------------- NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 24th day of October, 1996, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared J. CHARLES FREEL, JR., appearing herein in his capacity as Vice President of First National Bank of Commerce, to me personally known to be the identical person whose name is sub- scribed to the foregoing Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said national banking association, appearing in said agreement in its individual capacity and its capacity as Agent, with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said national bank association and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ J. Charles Freel, Jr. ------------------------- ---------------------------- J. CHARLES FREEL, JR. /s/ Pamela B. Poteet ------------------------- /s/ F. Rivers Lelong, Jr. ------------------------------- NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 24th day of October, 1996, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared HARRY C. STAHEL, appearing herein in his capacity as Senior Vice President of Whitney National Bank, to me personally known to be the identical person whose name is subscribed to the foregoing Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said national banking association, appearing in said agreement in its individual capacity, with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said national bank association and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ Harry C. Stahel -------------------------- ---------------------------- HARRY C. STAHEL /s/ Pamela B. Poteet -------------------------- /s/ F. Rivers Lelong, Jr. --------------------------------- NOTARY PUBLIC EXHIBITS A. First NBC's form of Application for Stand-By Letter of Credit B. $5,000,000.00 Term Promissory Note made payable to the order of First NBC C. $5,000,000.00 Term Promissory Note made payable to the order of Whitney D. $6,000,000.00 Revolving Promissory Note made payable to the order of First NBC E. $6,000,000.00 Revolving Promissory Note made payable to the order of Whitney F. Second Amendment to Collateral Pledge Agreement and Receipt No. 1000760 (Possessory Collateral Security Agreement) by and among Borrower, Banks and Agent G. Second Amendment to Collateral Assignment of Leases and Rents by Borrower H. Second Amendment to Security Agreement by and among Borrower, Banks and Agent I. Incumbency Certificate J. Borrower's Default and Warranty Certificate K. GIFI Property SCHEDULES 1. List of Borrower's Litigation EX-10 8 FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT THIS FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT (this "First Amendment"), dated effective as of the 2nd day of January, 1997, by and among GULF ISLAND FABRICATION, INC., a Louisiana corporation ("Borrower"), WHITNEY NATIONAL BANK, a national banking association ("Whitney"), FIRST NATIONAL BANK OF COMMERCE, a national banking association, in its individual capacity ("First NBC") (each of Whitney and First NBC being sometimes referred to individually as a "Bank" and collectively as the "Banks"), and FIRST NATIONAL BANK OF COMMERCE, a national banking association, in its capacity as agent for the Banks as set forth hereinafter (the "Agent"). W I T N E S S E T H: WHEREAS, Borrower and First NBC entered into that certain Revolving Credit and Term Loan Agreement dated December 17, 1986 (the "Original Loan Agreement"); WHEREAS, Borrower and First NBC entered into that certain First Amendment to Revolving Credit and Term Loan Agreement dated as of November 3, 1987 (the "First Loan Agreement Amendment"), whereby Borrower and First NBC amended certain terms and conditions of the Original Loan Agreement; WHEREAS, Borrower and First NBC entered into that certain Second Amendment to Revolving Credit and Term Loan Agreement, dated effective as of December 21, 1987 (the "Second Loan Agreement Amendment"), whereby Borrower and First NBC further amended certain terms and conditions of the Original Loan Agreement; WHEREAS, Borrower and First NBC entered into that certain Third Amendment to Revolving Credit and Term Loan Agreement dated effective as of September 13, 1988 (the "Third Loan Agreement Amendment"), whereby Borrower and First NBC further amended certain terms and conditions of the Original Loan Agreement(the Original Loan Agreement as amended by the First Loan Agreement Amendment, the Second Loan Agreement Amendment and the Third Loan Agreement Amendment, the "Loan Agreement"); WHEREAS, Borrower and First NBC entered into that certain First Amended and Restated Revolving Credit and Term Loan Agreement dated July 27, 1989, whereby Borrower and First NBC further amended certain terms and conditions of the Loan Agreement and restated the Loan Agreement in its entirety (the "First Amended and Restated Loan Agreement"); WHEREAS, Borrower and First NBC entered into that certain Second Amended and Restated Revolving Credit and Term Loan Agreement dated effective as of March 1, 1990, to set forth further changes in their understanding concerning certain terms and conditions of the loan made pursuant to the First Amended and Restated Loan Agreement and to restate the same in its entirety (the "Second Amended and Restated Loan Agreement"); WHEREAS, pursuant to the terms of that certain Partial Assignment of Notes and Security Therefor, dated October 29, 1991 (as amended or modified from time to time, the "Assignment"), First NBC assigned to Whitney an undivided one-half(1/2) interest in and to the Second Amended and Restated Loan Agreement, all notes executed by Borrower payable to the order of First NBC pursuant to the Second Amended and Restated Loan Agreement and all security for the repayment of such notes, as described in the Second Amended and Restated Loan Agreement; WHEREAS, as a result of the Assignment, each Bank acquired an undivided one-half (1/2) interest in and to the Second Amended and Restated Loan Agreement and all rights and obligations described therein or emanating therefrom; WHEREAS, Borrower, Banks and Agent entered into that certain Third Amended and Restated Revolving Credit and Term Loan Agreement, dated effective as of October 29, 1991 (the "Third Amended and Restated Loan Agreement"), whereby Borrower, Banks and Agent amended and restated the Second Amended and Restated Loan Agreement in order to reflect more fully the agreement among the parties regarding the continuation of the loans made pursuant thereto; WHEREAS, Borrower, Banks and Agent entered into that certain First Amendment to Third Amended and Restated Revolving Credit and Term Loan Agreement (the "Third Amended and Restated Loan Agreement Amendment"), whereby Borrower, Banks and Agent amended certain terms and conditions of the Third Amended and Restated Loan Agreement; WHEREAS, Borrower, Banks and Agent entered into that certain Fourth Amended and Restated Revolving Credit Agreement, dated effective as of February 25, 1993 (the "Fourth Amended and Restated Credit Agreement"), whereby Borrower, Banks and Agent amended and restated the Third Amended and Restated Loan Agreement, as amended by the Third Amended and Restated Loan Agreement Amendment, in order to reflect more fully the agreement among the parties regarding the continuation of the loans made pursuant thereto; WHEREAS, Borrower, Banks and Agent entered into four subse- quent amendments to the Fourth Amended and Restated Revolving Credit Agreement, dated respectively effective as of February 25, 1993, April 20, 1994, June 26, 1995 and May 1, 1996 (collectively, the "Amendments to the Fourth Amended and Restated Credit Agreement"); WHEREAS, Borrower, Banks and Agent entered into that certain Fifth Amended and Restated Revolving Credit and Term Loan Agreement, dated effective as of October 24, 1996 (the "Fifth Amended and Restated Credit Agreement"), whereby Borrower, Banks and Agent amended and restated the Fourth Amended and Restated Loan Agreement, as previously amended by the Amendments to the Fourth Amended and Restated Credit Agreement, and added a $10,000,000 term loan facility; WHEREAS, Borrower, Banks and Agent desire to amend the Fifth Amended and Restated Credit Agreement to increase the term loan facility by $5,000,000, to permit Borrower to acquire Dolphin Services, Inc., Dolphin Steel Sales, Inc., and Dolphin Sales & Rentals, Inc., and to extend the maturity date of the Term Credit Facility under the Fifth Amended and Restated Credit Agreement; NOW, THEREFORE, for and in consideration of the mutual cove- nants, agreements and undertakings herein contained, Banks, Agent and Borrower hereby agree as follows: ARTICLE I AMENDMENTS TO FIFTH AMENDED AND RESTATED CREDIT AGREEMENT 1. Section 1. Section 1 of the Fifth Amended and Restated Credit Agreement is hereby amended by deleting the amount "TWENTY-TWO MILLION AND NO/100 DOLLARS ($22,000,000.00)" from the final sentence thereof and inserting in its place the amount "TWENTY-SEVEN MILLION AND NO/100 DOLLARS ($27,000,000.00)". 2. Section 1.1. Section 1.1 of the Fifth Amended and Restated Credit Agreement is hereby amended in its entirety to state: 1.1 Term Credit Facility. Banks shall make available to Borrower a non-revolving line of credit in the maximum aggregate principal amount of FIFTEEN MILLION AND NO/100 DOLLARS ($15,000,000.00) (the "Non- Revolving Line of Credit"), which Non- Revolving Line of Credit may be drawn upon by Borrower on any Business Day of Banks during the period from the date hereof until and including June 30, 1997, or such earlier date as may be fixed by Borrower on at least one (1) Business Day's telephonic notice to Agent, to be confirmed in writing by Borrower, in the form of actual fundings to Borrower by Banks in such amounts as Borrower may from time to time request (each such funding being hereinafter referred to individually as a "Non-Revolving Advance" and collectively as the "Non-Revolving Advances"), so long as the aggregate principal amount of all outstanding Non- Revolving Advances at any one time does not exceed the Non-Revolving Commitment. On July 1, 1997, all of Banks' obligations to make Non-Revolving Advances on the Non- Revolving Line of Credit shall cease, and shall automatically, without the necessity of any further act on the part of Banks, Agent or Borrower, convert to a term loan in a principal amount equal to the aggregate amount of all Non-Revolving Advances made by Banks to Borrower during the period from October 24, 1996 until and including June 30, 1997. All Non-Revolving Advances repaid on the Non-Revolving Line of Credit shall not be reborrowed but shall reduce the Non- Revolving Commitment on a dollar-for-dollar basis. The credit facility described in this Section 1.1 is hereinafter referred to as the "Term Credit Facility". 3. Section 2.1. Section 2.1 of the Fifth Amended and Restated Credit Agreement is hereby amended in its entirety to state: 2.1 Term Notes. The Non-Revolving Advances shall be evidenced by two (2) promissory notes of Bor- rower payable to the order of First NBC and Whitney, respectively, each in the original principal amount of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00) and in the forms set forth as Exhibits "B" and "C" to this Agreement (each such note, together with any and all renewals, modifications, extensions, amendments, supplements and/or substitutions therefor, being sometimes referred to herein individually as a "Term Note" and collectively as the "Term Notes"), with appropriate insertions, each of which shall be dated January 2, 1997 and shall be payable in full on June 30, 2004. All Non-Revolving Advances made by Banks to Borrower pursuant to this Agreement and all payments of principal shall be recorded by Banks on the schedule attached to each Term Note, but Banks' failure to record or to record correctly such Non-Revolving Advances shall in no way affect Borrower's obligation to repay same. Each Term Note shall provide for quarterly installments of principal commencing September 30, 1997, each in an amount equal to one- twenty-eighth (1/28th) of the aggregate amount of all Non-Revolving Advances made by Banks to Borrower during the period from October 24, 1996 through and including June 30, 1997. 4. Section 3.1. The penultimate sentence of Section 3.1 of the Fifth Amended and Restated Credit Agreement is hereby amended by replacing "December 31, 1996 and March 31, 1996" with the phrase "December 31, 1996, March 31, 1997, and June 30, 1997". 5. Section 5.1. New Sections 5.1(c) and 5.1(d) are hereby added to the Fifth Amended and Restated Credit Agreement to state: (c) As of January 2, 1997, Borrower has granted to First NBC, as Agent for Banks, as security for the Notes and other Obligations, a first priority security interest in all capital stock of Dolphin Sales & Rentals, Inc. ("Dolphin Sales"), Dolphin Steel Sales, Inc. ("Dolphin Steel"), and Dolphin Services, Inc. ("Dolphin Services"), as evidenced by (i) that certain Commercial Pledge and Security Agreement, dated January 2, 1997, by Borrower, as pledgor, in favor of First NBC, as Agent for Banks, as pledgee (the "Stock Pledge") and (ii) that certain UCC-1 Financing Statement by Borrower (the "Stock Pledge Financing Statement"). Dolphin Sales, Dolphin Steel, and Dolphin Services shall be referred to collectively as the "Dolphin Companies", and each such company may be referred to generically as a "Dolphin Company". (d) As of January 2, 1997, Borrower has caused the Dolphin Companies to guarantee the Notes and Borrower's other Obligations to Banks and to grant mortgages on their respective immovable properties (collectively, the "Dolphin Real Estate") and a security interest in their respective Equipment and Fixtures as security for the aforesaid guaranties and as direct security for the Notes and Borrower's other Obligations to Banks, as evidenced by: (i) That certain Commercial Guaranty by Dolphin Sales, dated January 2, 1997, in favor of First NBC, as Agent for Banks, which secures the Notes and Borrower's other Obligations to Banks (the "Dolphin Sales Guaranty"); (ii) That certain Commercial Guaranty by Dolphin Steel, dated January 2, 1997, in favor of First NBC, as Agent for Banks, which secures the Notes and Borrower's other Obligations to Banks (the "Dolphin Steel Guaranty"); (iii) That certain Commercial Guaranty by Dolphin Services, dated January 2, 1997, in favor of First NBC, as Agent for Banks, which secures the Notes and Borrower's other Obligations to Banks (the "Dolphin Services Guaranty"); (iv) That certain Collateral Mortgage Note by Dolphin Sales, dated January 2, 1997, in the principal sum of $3,000,000.00, bearing interest at the rate of eighteen percent (18%) per annum, from date until paid, and payable to the order of Bearer (the "Dolphin Sales Note"); (v) That certain Collateral Mortgage by Dolphin Sales, dated January 2, 1997, in favor of First NBC, as Agent for Banks, and any and all future holders, which mortgage encumbers Dolphin Sales' immovable property in Terrebonne Parish, Louisiana more fully described on Exhibit "L" to this Agreement (the "Dolphin Sales Real Estate") and secures the Dolphin Sales Note (the "Dolphin Sales Mortgage"); (vi) That certain Pledge of Collateral Mortgage Note, dated January 2, 1997, by Dolphin Sales to First NBC, as Agent for Banks, with respect to the Dolphin Sales Note, which secures the Notes, Borrower's other Obligations to Banks, and the Dolphin Sales Guaranty (the "Dolphin Sales Pledge"); (vii) That certain Collateral Mortgage Note by Dolphin Services, dated January 2, 1997, in the principal sum of $3,000,000.00, bearing interest at the rate of eighteen percent (18%) per annum, from date until paid, and payable to the order of Bearer (the "Dolphin Services Note"); (viii) That certain Collateral Mortgage by Dolphin Services, dated January 2, 1997, in favor of First NBC, as Agent for Banks, and any and all future holders, which mortgage encumbers Dolphin Services' immovable property in Terrebonne Parish, Louisiana more fully described on Exhibit "M" to this Agreement (the "Dolphin Services Real Estate") and secures the Dolphin Services Note (the "Dolphin Services Mortgage"); (ix) That certain Pledge of Collateral Mortgage Note, dated January 2, 1997, by Dolphin Services to First NBC, as Agent for Banks, with respect to the Dolphin Services Note, which secures the Notes, Borrower's other Obligations to Banks, and the Dolphin Services Guaranty (the "Dolphin Services Pledge"); (x) That certain Commercial Security Agreement, dated January 2, 1997, by Dolphin Sales, as grantor, in favor of First NBC, as Agent for Banks, creating a security interest in Dolphin Sales' Equipment and Fixtures, as security for the Notes, Borrower's other Obligations to Banks, and the Dolphin Sales Guaranty (the "Dolphin Sales Security Agreement"); (xi) A UCC-1 Financing Statement executed by Dolphin Sales in connection with the Dolphin Sales Security Agreement; (xii) That certain Commercial Security Agreement, dated January 2, 1997, by Dolphin Steel, as grantor, in favor of First NBC, as Agent for Banks, creating a security interest in Dolphin Steel's Equipment and Fixtures, as security for the Notes, Borrower's other Obligations to Banks, and the Dolphin Steel Guaranty (the "Dolphin Steel Security Agreement"); (xiii) A UCC-1 Financing Statement executed by Dolphin Steel in connection with the Dolphin Steel Security Agreement; (xiv) That certain Commercial Security Agreement, dated January 2, 1997, by Dolphin Services, as grantor, in favor of First NBC, as Agent for Banks, creating a security interest in Dolphin Services' Equipment and Fixtures, as security for the Notes, Borrower's other Obligations to Banks, and the Dolphin Services Guaranty (the "Dolphin Services Security Agreement"); and (xv) A UCC-1 Financing Statement executed by Dolphin Services in connection with the Dolphin Services Security Agreement. 6. Section 6. Section 6 of the Fifth Amended and Restated Credit Agreement is hereby amended in its entirety to state: Section 6.Representations and Warranties of Borrower. Borrower represents and warrants to Banks and Agent that: 6.1 Corporate Existence. Each of Borrower and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the State of Louisiana; and each of Borrower and its Subsidiaries has all necessary corporate power and authority 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. 6.2 Authorization; Validity. Each of Borrower and its Subsidiaries is and/or has been duly authorized to execute and deliver this Agreement and all other Loan Documents to which such Borrower or Subsidiary is a party and to perform its obligations under this Agreement and all other Loan Documents to which such Borrower or Subsidiary is a party. Borrower is duly authorized and will continue to be duly authorized to borrow money hereunder. Each of this Agreement and the other Loan Documents to which Borrower or one of its Subsidiaries is a party, as executed and delivered, constitutes the legal, valid and binding obligation of Borrower and/or such Subsidiary, enforceable in accordance with the respective terms thereof. 6.3 No Conflicts. The execution and delivery of the Loan Documents and the performance by each of Borrower and its Subsidiaries of its obligations there- under do not and will not conflict with any provision of law or of the charter or by-laws of Borrower or such Subsidiary or of any agreement binding upon Borrower or such Subsidiary, as the case may be. 6.4 Financial Statements. Borrower's audited financial statement as of December 31, 1995, a copy of which has been furnished to Banks, has been prepared in conformity with GAAP applied on a basis consistent with that of the preceding fiscal year and period, presents fairly the financial condition of Borrower as of such date and the results of its operations for the periods then ended. Borrower's unaudited financial statement as of September 30, 1996, a copy of which has been previously furnished to Banks, except for the absence of footnotes normally associated with financial statements prepared in accordance with GAAP, has been prepared in conformity with GAAP and presents fairly the financial condition of Borrower as of such date and the results of its operations for the periods then ended. Since December 31, 1995, there has been no material adverse change in Borrower's financial condition. Since December 31, 1996, there has been no material adverse change in the financial condition of any of Borrower's Subsidiaries. 6.5 Litigation. To the best of Borrower's knowledge, after due inquiry, no litigation or governmental proceedings are pending or threatened against Borrower or any of its Subsidiaries, the results of which might materially affect Borrower's or such Subsidiary's financial condition or operations, except those referred to in a schedule furnished contemporaneously herewith and attached hereto as Schedule 1. Other than any liability incident to such litigation or proceedings or provided for or disclosed in the financial statements referred to in Section 6.4, Borrower does not have any material contingent liabilities. No Subsidiary has any material contingent liability other than those imposed by the Dolphin Guaranties and the other Dolphin Security Instruments. 6.6 Liens. None of the assets of Borrower or any of its Subsidiaries with a net book value of greater than $25,000.00 is subject to any Lien, except for the Liens created pursuant to the Collateral Documents and Permitted Liens. 6.7 Subsidiaries. Borrower has no Subsidiaries other than the Dolphin Companies, and no Dolphin Company has any Subsidiaries. 6.8 Purpose. The proceeds of the Revolving Credit Facility shall be used by Borrower only for the support of working capital and for other general corporate purposes. The proceeds of the Term Credit Facility shall be used by Borrower only to make capital improvements to the Real Property, to acquire additional Equipment to be located on the Real Property or on the Dolphin Real Estate, and to fund Borrower's acquisition of the Dolphin Companies. 6.9 Use of Proceeds; Margin Securities. Borrower is not engaged in the business of purchasing or selling margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) or extending credit to others for the purpose of purchas- ing or carrying margin stock and, without limiting the generality of Section 6.8 hereof, 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. 6.10 Compliance with ERISA. Each of Borrower and its Subsidiaries is in compliance with all statutes and governmental rules and regulations applicable to it, including, without limitation, the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). No condition exists or event or transaction has occurred in connection with any plan, as defined in Sections 3(3) and 3(37) of ERISA, maintained by Borrower or any of its Subsidiaries (any such plan being hereinafter called the "Plan"), which could result in Borrower's or such Subsidiary's incurring any material liability, fine or penalty. No Reportable Event (as defined in ERISA) has occurred with respect to any such Plan. Neither Borrower nor any of its Subsidiaries has withdrawn from any such Plan or initiated steps to do so and no steps have been taken to terminate any such Plan. 6.11 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 Borrower or any of its Subsidiaries of the Loan Documents is required. 6.12 Tax Returns. Each of Borrower and its Subsidiaries has filed all tax returns which are required to be filed by any jurisdiction, and has paid all taxes which have become due pursuant to said returns or pursuant to any assessments. 6.13 Ownership of Borrower and Subsidiaries. No less than forty-five percent (45%) of the issued and outstanding stock of Borrower is owned by the Labordes and no less than forty-five percent (45%) of the issued and outstanding stock of Borrower is owned by the Wilsons. Borrower owns one hundred percent (100%) of the issued and outstanding stock of each Dolphin Company. 6.14 Operation of Business. Each of Borrower and its Subsidiaries possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto, to conduct its business substantially as now conducted and as presently proposed to be conducted, and neither Borrower nor any of its Subsidiaries is in violation of any valid rights of others with respect to any of the foregoing. 6.15 Rights in Properties; Liens. Each of Borrower and its Subsidiaries has good and indefeasible title to its properties and assets, real and personal, including the properties and assets reflected in the financial statements described in Section 6.4 hereof, and none of the properties, assets or leasehold interests of Borrower or any Subsidiary is subject to any Lien, except as permitted by Section 7.11 hereof. 6.16 Debt. Borrower has no Debt, except as disclosed in the financial statements described in Section 6.4 hereof and as otherwise permitted by this Agreement. No Subsidiary of Borrower has any Debt except as owed to Borrower or as otherwise permitted by this Agreement. 6.17 Disclosure. No statement, information, report, representation or warranty made by Borrower or any of its Subsidiaries in this Agreement or in any of the other Loan Documents or furnished by Borrower or any of its Subsidiaries to Banks or Agent in connection with the negotiation or preparation of this Agreement, or any amendment hereto, contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading. There is no fact known to Borrower or to any of its Subsidiaries that has not been disclosed in writing to Banks which has a material adverse effect, or which might in the future have a material adverse effect, on the business, assets, financial condition or operations of Borrower, any of its Subsidiaries or on the Collateral. 6.18 Registered Office; Principal Place of Business; Location of Collateral. The principal place of business, chief executive office and registered office of Borrower and the place where Borrower keeps its books and records and all Collateral is located on the Real Property. The principal place of business, chief executive office and registered office of each of the Dolphin Companies and the place where each of the Dolphin Companies keeps its books and records and all collateral encumbered by the Dolphin Security Agreements is located in Terrebonne Parish, Louisiana (with the exception of certain collateral encumbered by the Dolphin Security Agreements which is, from time to time and in the ordinary course of the Dolphin Companies' businesses, temporarily located at job sites outside of Terrebonne Parish). Borrower has always maintained its registered office in either Terrebonne or East Baton Rouge Parish, Louisiana, and each of the Dolphin Companies has always maintained its registered office in Terrebonne Parish, Louisiana. Neither Borrower nor any of its Subsidiaries does, or has ever done, any business from any location other than as set forth in this Section. No Person other than Borrower, the Dolphin Companies, Agent and Banks has possession of any of the Collateral. 6.19 Investment Company Act. Neither Borrower nor any of its Subsidiaries is an "Investment Company" within the meaning of the Investment Company Act of 1940, as amended. 6.20 Other Agreements. With the exception of construction contracts entered into by Borrower or one of its Subsidiaries in the ordinary course of Borrower's or such Subsidiary's business, neither Borrower nor any of its Subsidiaries is a party to any indenture, loan or credit agreement, or to any lease or other agreement or instrument, or subject to any charter of corporate restriction which could have a material adverse effect on the business, properties, assets, operations or conditions, financial or otherwise, of Borrower or such Subsidiary, or the ability of Borrower or such Subsidiary to pay and perform its obligations under the Loan Documents to which it is a party. Neither Borrower nor any of its Subsidiaries is in default in any respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument material to its business to which it is a party. 6.21 Compliance with Law. Each of Borrower and its Subsidiaries is in compliance with all laws, rules, regulations, orders and decrees which are applicable to Borrower, its Subsidiaries or any of their respective properties. Without limiting the generality of the foregoing: (a) Employment Matters. Each of Borrower and its Subsidiaries is in full compliance with all applicable laws, rules, regulations and governmental standards regarding employment, including, without limitation, the minimum wage and overtime provisions of the Fair Labor Standards Act, as amended (29 U.S.C. Sections 201 - 219 ), and the regulations promulgated thereunder. (b) Environmental Matters. (i) Each of Borrower and its Subsidiaries and all of their respective properties, assets and operations are in full compliance with all Environmental Laws. Neither Borrower nor any of its Subsidiaries is aware of or has received notice of, any past, present or future conditions, events, activities, practices or incidents which may interfere with or prevent the compliance or continued compliance of Borrower or any of its Subsidiaries with all Environmental Laws. (ii) With the exception of the permits specifically referred to in Section 7.8 hereof, each of which Borrower or its Subsidiaries shall obtain and/or file, as the case may be, in accordance with the terms of Section 7.8, each of Borrower and its Subsidiaries has obtained all permits, licen- ses and authorizations and has filed all plans which are required under Environmental Laws in order to conduct its business and/or own its properties and assets including without limitation all Louisiana air emission permits required under any Environmental Law in order to conduct Borrower's or such Subsidiary's business and/or own its assets or properties. (iii) Each of Borrower and its Subsidiaries has on file an SPCC Plan as required under applicable Environmental Laws in connection with Borrower's storage of petroleum on the Real Property or, if applicable, in connection with a Subsidiary's storage of petroleum on its immovable property. (iv) No Hazardous Substances or Solid Wastes exist on, about or within or have been used, generated, stored, transported, disposed of on, or released from any of the properties or assets of Borrower or any of its Subsidiaries except in compliance with Environmental Laws. (v) There is no action, suit, proceeding, investigation or inquiry before any court, administrative agency or other governmental authority pending or, to the knowledge of Borrower or any of its Subsidiaries, threatened against Borrower or any of its Subsidiaries relating in any way to any Environmental Law. Neither Borrower nor any of its Subsidiaries has (A) been notified of any liability for remedial action under any Environmental Law, (B) received any request for information by any governmental authority with respect to the condition, use or operation of any of its properties or assets, or (C) received any notice from any governmental authority or other Person with respect to any violation of or liability under any Environmental Law. 6.22 Corporate Name. The exact corporate name of Borrower as it appears in its articles of incorporation is as set forth in the introduction of this Agreement and, with the exception of doing business under the name GIFI, Inc., Borrower has never done any business in any location under any other name. The exact corporate name of each Dolphin Company as it appears in its articles of incorporation is as set forth in Section 5.1(c) of this Agreement, and no Dolphin Company has ever done any business in any location under any other name. 6.23 Collateral. The Collateral Documents create in favor of Banks, and/or Agent for the benefit of Banks, valid, enforceable and perfected Liens on the properties described therein, which Liens secure the payment and performance of the obligations of Borrower and its Subsidiaries to Banks described in the Collateral Documents, and which Liens are superior to the rights of all third Persons, whether now existing or hereafter arising. 6.24 Taxpayer I.D. Numbers. Borrower's Federal Taxpayer Identification Number is 72-1147390. Dolphin Services' Federal Taxpayer Identification Number is 72- 0890896; Dolphin Sales' Federal Taxpayer Identification Number is 72-1092285; and Dolphin Steel's Federal Taxpayer Identification Number is 72-1092757. 7. Section 7. Section 7 of the Fifth Amended and Restated Credit Agreement is hereby amended in its entirety to state: Section 7. Borrower's Covenants. From the date of this Agreement and thereafter until the expiration or termination of the Commitments, and until the Notes and other liabilities of Borrower hereunder are paid in full and all other obligations and liabilities under the Loan Documents are performed and paid in full, Borrower agrees that it will: 7.1 Financial Statements. Furnish to Agent: (a) within one hundred twenty (120) days after the end of each fiscal year, a copy of Borrower's financial statements (describing assets, liabilities, and results of operations both for Borrower individually and for Borrower and its Subsidiaries on a consolidated basis), audited by independent certified public accountants of nationally recognized standing selected by Borrower and reasonably satisfactory to Banks, prepared in conformity with GAAP; (b) within forty-five (45) days after the end of each month, a copy of Borrower's unaudited financial statements (describing assets, liabilities, and results of operations both for Borrower individually and for Borrower and its Subsidiaries on a consolidated basis) prepared in conformity with GAAP, except for the absence of footnotes normally associated with financial statements prepared in accordance with GAAP; (c) together with the financial statements furnished by Borrower under preceding clause (a), a certificate of the president or chief financial officer of Borrower to the effect that no Event of Default with respect to Borrower, or event which might mature into an Event of Default with respect to Borrower, has occurred and is continuing; (d) forthwith upon the occurrence of an Event of Default, a certificate of the president or chief financial officer of Borrower specifying the nature and the period of existence thereof and what action Borrower proposes to take with respect thereto; (e) written notice of any and all litigation affecting Borrower or any of its Subsidiaries, directly or indirectly; provided, however, this requirement shall not apply to litigation involving Borrower or one of its Subsidiaries and any other party if such litigation involves, in the aggregate, less than $100,000.00; (f) prompt notice of any change in the present officers, directors and/or stockholders of Borrower or any of its Subsidiaries; and (g) from time to time, such other information as Banks may reasonably request. 7.2 Access. Permit access, and cause its Subsidiaries to permit access, by Banks and Agent to the books and records and other property of Borrower and its Subsidiaries during normal business hours and upon reasonable notice and permit, and cause its Subsidiaries to permit, Banks to make copies of said books and records. 7.3 Insurance. Maintain, and cause its Subsidiaries to maintain, with financially sound and reputable insurance companies workmen's compensation insurance, liability insurance and insurance on Borrower's and its Subsidiaries' property, assets and business at least to such extent and against such hazards and liabilities as is commonly maintained by similar companies and, in addition to the foregoing insurance, such insurance as may be required in the Collateral Documents. In the case of property (whether owned by Borrower or by one of its Subsidiaries) in which Banks or Agent has a Lien, Borrower shall provide, and shall cause its Subsidiaries to provide, Agent with duplicate originals or certified copies of such policies of insurance in such forms and amounts, and containing such terms and conditions, as are satisfactory to Banks, naming Banks as additional loss payees and as additional insureds as their interests may appear and providing that such policies will not be canceled without thirty (30) days' prior written notice to Banks. 7.4 Repair. Maintain, preserve and keep, and cause its Subsidiaries to maintain, preserve, and keep, Borrower's and such Subsidiaries' properties in good repair, working order and condition, and make, and cause its Subsidiaries to make, necessary and proper repairs, renewals and replacements so that Borrower's and its Subsidiaries' business carried on in connection therewith may be properly conducted at all times. 7.5 Taxes. Pay or discharge, and cause its Subsidiaries to pay and discharge, at or before maturity or before becoming delinquent (a) all taxes, levies, assessments and governmental charges imposed on Borrower or any of its Subsidiaries or its income or profits or any of its property, and (b) all lawful claims for labor, materials and supplies which, if unpaid, might become a Lien upon any of Borrower's property or the property of any of its Subsidiaries; provided, however, that neither Borrower nor any Subsidiary shall be required to pay or discharge any tax, levy, assessment or governmental charge which is being contested in good faith by appropriate proceedings diligently pursued. 7.6 Corporate Existence. Maintain its corporate existence in good standing and cause its Subsidiaries to maintain their respective corporate existences in good standing. 7.7 Merger. Without the prior written consent of Banks, not, and cause each of its Subsidiaries not to: (a) be a party to any merger or consolidation (other than a merger of one or more of the Dolphin Companies into another Dolphin Company or a merger of one or more of the Dolphin Companies into Borrower, in either event followed by notice to Banks of the merger delivered within ten (10) days after the merger becomes effective); (b) except in the normal course of its business, sell, transfer, convey, or lease all or any substantial part of Borrower's or a Subsidiary's assets; (c) sell or assign, except in the normal course of Borrower's business or the business of one of its Subsidiaries, with or without recourse, any accounts receivable or chattel paper. 7.8 Compliance. Comply, and cause its Subsidiaries to comply, with all statutes, laws, ordi- nances, orders, rules and regulations applicable to Borrower or such Subsidiary, including, without limitation, all Environmental Laws and ERISA; provided, however, Borrower and its Subsidiaries shall be deemed to be in compliance with this requirement for such time as Borrower or one of its Subsidiaries may be contesting, in good faith and with diligence by appropriate proceedings, any alleged violation of any statute, rule or regulation. Borrower shall not permit, and shall cause each of its Subsidiaries not to permit, any condition to exist in connection with any Plan which might constitute grounds for the PBGC to institute proceedings to have such Plan terminated or a trustee appointed to administer such Plan, and Borrower shall not engage in, or permit to exist or occur, and shall cause its Subsidiaries not to engage in or permit to occur or exist, any other condition, event or transaction with respect to, any such Plan which could result in Borrower or one of its Subsidiaries incurring any material liability, fine or penalty. Without limiting the generality of the foregoing, Borrower shall comply, and shall cause each of its Subsidiaries to comply, fully with and maintain in effect any and all environmental permits and licenses required under any Environmental Law in order to conduct Borrower's or such Subsidiary's business. To the extent such permits are required but have not been obtained, or to the extent such existing permits must be modified or renewed, Borrower shall make, and shall cause its Subsidiaries to make, timely application for and obtain all such permits, modifications or renewals thereof, as the case may be, including, but not limited to, necessary federal and/or state water discharge, air emission and waste management permits. As often as Banks or Agent may require, Borrower shall submit to Agent written progress reports addressing the status of environmental permits and plans required of Borrower or any of its Subsidiaries, including pending permit applications. All permits required hereunder shall be obtained and/or filed, as the case may be, within six (6) months from the effective date hereof. Anything contained herein to the contrary notwithstanding, Borrower shall not use, or permit any of its Subsidiaries to use, any of the properties of Borrower or of one of Borrower's Subsidiaries or allow such properties to be used for the storage, treatment or disposal of Solid Waste or Hazardous Substances except in the ordinary course of Borrower's or such Subsidiary's business and in compliance with the terms or any applicable Environmental Law or permit. 7.9 Use of Proceeds. Not use or permit any proceeds of the Loans to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying any margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System, as amended from time to time, and furnish to Banks, upon either of their requests, a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U of the Board of Governors of the Federal Reserve System. 7.10 Financial Covenants. Maintain, on a consolidated basis with all of its Subsidiaries, (a) a ratio of current assets to current liabilities, as determined in accordance with GAAP, in excess of 1.33 to 1; (b) a minimum Net Worth of NINETEEN MILLION AND NO/100 DOLLARS ($19,000,000.00) for the period commencing September 30, 1996 and ending December 31, 1997; a minimum Net Worth of TWENTY-ONE MILLION AND NO/100 DOLLARS ($21,000,000.00) for the period January 1, 1998 through December 31, 1998, and a minimum Net Worth of TWENTY-THREE MILLION AND NO/100 DOLLARS ($23,000,000.00) from and including January 1, 1999 and thereafter; (c) a ratio of Debt to Net Worth no greater than 1.1 to 1; and (d) a ratio of Cash Flow to Debt Service of at least 1.5 to 1, such ratio to be determined as of the end of each fiscal quarter by giving effect to such fiscal quarter and the three (3) immediately preceding fiscal quarters; provided that there shall be no Event of Default under this Section 7.10(d) unless Borrower fails to meet the ratio described in this Section 7.10(d) for three (3) successive fiscal quarters. 7.11 Liens. Not create, incur, or suffer to exist, and not permit any of Borrower's Subsidiaries to create, incur or suffer to exist, any Lien on any of Borrower's property or on the property of Borrower's Subsidiaries except ((a) through (g) of this Section being referred to collectively as the "Permitted Liens"): (a) those for taxes, assessments or governmental charges or levies if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being contested in good faith and by appropriate proceedings; (b) those imposed by law, such as carriers', warehousemen's and mechanics' liens and other similar liens arising in the ordinary course of business which secure payment of obligations not more than sixty (60) days past due; (c) those arising out of pledges or deposits under workmen's compensation laws, unemployment insurance, old age pensions, or other social security or retirement benefits, or similar legislation; (d) utility easements, building restrictions and such other encumbrances or charges against real property as are of a nature generally existing with respect to properties of a similar character and which do not in any material way affect the marketability of the same or interfere with the use thereof in the business of Borrower or of any of Borrower's Subsidiaries; (e) lessors' interests under financing leases; (f) liens on assets of Borrower and its Subsidiaries not covered by the Loan Documents which liens secure obligations of Borrower or its Subsidiaries in the ordinary course of business which in the aggregate for all such obligations of Borrower and its Subsidiaries do not exceed $250,000.00; and (g) the Liens created pursuant to the Loan Documents. 7.12 Debt. Not create or permit to exist, and not allow any of Borrower's Subsidiaries to create or permit to exist, any Debt without the prior written consent of Banks, if, as a result thereof, exclusive of the indebtedness contemplated by this Agreement, the aggregate amount of Debt of Borrower and its Subsidiaries would exceed the sum of $250,000.00; provided, however, that any Subsidiary may incur Debt owed to Borrower and such Debt owed to Borrower shall not be included in the $250,000.00 limit. 7.13 Redemptions, etc. Not, without the prior written approval of Banks: (1) redeem, purchase or acquire, directly or indirectly, any of Borrower's stock; (2) authorize or issue additional stock in Borrower of any class; (3) authorize any new class of stock in Borrower; (4) authorize any currently existing or new classes of stock in Borrower to become voting stock; or (5) sell or transfer any treasury shares of stock in Borrower. Provided, however, subparts (2) through (5) of this Section 7.13 shall not apply except to the extent that as a result thereof either (a) the Labordes would fail to retain at least forty-five percent (45%) of the issued and outstanding stock of Borrower, or (b) the Wilsons would fail to retain at least forty-five percent (45%) of the issued and outstanding stock of Borrower. For purposes of this Section 7.13, the Labordes and the Wilsons shall be deemed owners of the issued and outstanding stock of Borrower with respect to any issued and outstanding stock that is owned either by the Labordes or the Wilsons, any descendant of the Labordes or the Wilsons, any trust for the exclusive benefit of the Labordes or the Wilsons or any descendant of the Labordes or the Wilsons, or the respective estates of the Labordes or the Wilsons or any descendant of the Labordes or the Wilsons if said stock will ultimately pass from the respective estates of the Labordes or the Wilsons to a descendant or a trust for the exclusive benefit of a descendant of the Labordes or the Wilsons. 7.14 Capital Expenditures. Not make capital expenditures, directly or through a Subsidiary, which would exceed $9,000,000.00 in calendar year 1996; $8,000,000.00 in calendar year 1997 (in addition to and excluding the purchase price paid by Borrower for the Dolphin Companies); or $2,000,000.00 per calendar year thereafter. 7.15 Dividends. Not declare or pay any dividends or make any other distribution on account of, or purchase, acquire, redeem or retire any capital stock of, Borrower, whether now or hereafter outstanding, provided that, so long as there is no Event of Default hereunder and Borrower continues as an S Corporation, Borrower shall be permitted to pay the following cash dividends on a cumulative basis, to-wit: (a) commencing with Borrower's first fiscal quarter 1996 and with respect to each fiscal quarter thereafter, regular dividends not to exceed 40% of Borrower's pretax income earned in the fiscal quarter immediately prior to the fiscal quarter in question, as determined in accordance with GAAP; and (b) commencing annually in 1996, special dividends not to exceed 65% of Borrower's pretax income earned in the fiscal year of Borrower immediately prior to the fiscal year in question, as determined in accordance with GAAP and as provided in the audited financial statements furnished to Agent pursuant to Section 7.1(a) hereof, less the sum of dividends paid in the 2nd, 3rd, and 4th fiscal quarters of such prior fiscal year and dividends paid in the 1st fiscal quarter of the fiscal year in question. 7.16 Shareholder or Employee Loans. Not make, and not permit any Subsidiary to make, advances or loans to employees of Borrower or any Subsidiary or shareholders of Borrower which exceed the aggregate amount of $100,000.00. 7.17 Change in Business. Carry on and conduct, and cause its Subsidiaries to carry on and conduct, the business of Borrower and each of its Subsidiaries in substantially the same manner and in substantially the same fields of enterprise as such businesses are presently conducted; provided, however, that the foregoing shall not prevent Borrower or one of its Subsidiaries from engaging in new and additional activities as long as said activities are in substantially the same fields of enterprise as are currently being engaged in by Borrower and the Dolphin Companies. 7.18 Accounts Receivable. Provide, and cause Dolphin Services to provide, Banks with aging reports of Borrower's and Dolphin Services' accounts receivable on a monthly basis. 7.19 Compliance with Agreements. Comply with, and cause each of its Subsidiaries to comply with, all indentures, mortgages, deeds of trust and other agreements binding on Borrower or any Subsidiary or affecting its properties or business. 7.20 Further Assurances. Execute and deliver, and cause its Subsidiaries to execute and deliver, such further documentation as may be requested by Banks or Agent to carry out the provisions and purposes of this Agreement and the other Loan Documents and to preserve and perfect the Liens of Banks or Agent for the benefit of Banks, as the case may be, in the Collateral. 7.21 Disposition of Assets. Not sell, lease, assign, transfer or otherwise dispose of, and shall cause each of its Subsidiaries not to sell, lease, assign, transfer or otherwise dispose of, any of its assets, except dispositions of inventory and equipment in the ordinary course of business and as otherwise provided in this Agreement. 7.22 Change Tax I.D. Number. Not change, and cause its Subsidiaries not to change, any of the Federal Taxpayer Identification Numbers set forth in Section 6.24 hereof without giving Agent at least sixty (60) days' prior written notice. 7.23 Indemnity. Indemnify, defend and hold Agent and Banks and their respective directors, officers, agents, attorneys and employees harmless from and against all claims, demands, causes of action, liabilities, losses, costs and expenses (including, without limitation, costs of suit, reasonable legal fees and fees of expert witnesses) arising from or in connection with (a) the presence in, on or under any property of Borrower or of any Subsidiary of Borrower (including, without limitation, the Real Property, the GIFI Property, and the Dolphin Real Estate) of any Hazardous Substance or Solid Waste, or any releases or discharges (as the terms "release" and "discharge" are defined under any applicable Environmental Law) of any Hazardous Substance or Solid Waste on, under or from such property, (b) any activity carried on or undertaken on or off such property of Borrower or of any of its Subsidiaries, whether prior to or during the term of this Agreement, and whether by Borrower, any of its Subsidiaries or any predecessor in title to Borrower's or such Subsidiary's property or any officers, employees, agents, contractors or subcontractors of Borrower, any Subsidiary of Borrower or any predecessor in title to the property of Borrower or such Subsidiary, or any third persons at any time occupying or present on such property, in connection with the handling, use, generation, manufacture, treatment, removal, storage, decontamination, clean-up, transportation or disposal of any Hazardous Substance or Solid Waste at any time located or present on or under any of the aforedescribed property, or (c) any breach of any representation, warranty or covenant under the terms of this Agreement. The foregoing indemnity shall further apply to any residual conta- mination on or under any or all of the aforedescribed property, or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the use, handling, storage, transportation or disposal of any Hazardous Substance or Solid Waste, and irrespective of whether any of such activities were or will be undertaken in accordance with applicable laws, regulations, codes and ordinances. The indemnity described in this Section shall survive the termination of this Agreement for any reason whatsoever. 7.24 GIFI Property and Dolphin Real Estate. Not create a Lien on the GIFI Property, or permit any Subsidiary to create a Lien on the Dolphin Real Estate, in favor of, or otherwise convey, or permit a Subsidiary to convey, the GIFI Property or the Dolphin Real Estate to any Person without the prior written consent of Banks. 8. Section 10.4. Section 10.4 of the Fifth Amended and Restated Credit Agreement is hereby amended in its entirety to state: 10.4 Insolvency. Borrower or any Subsidiary of Borrower becomes insolvent or admits in writing its inability to pay its debts as they mature or applies for, consents to, or acquiesces in the appointment of a trustee or receiver for Borrower, such Subsidiary or any property of Borrower or of such Subsidiary; or, in the absence of such application, consent or acquiescence, a trustee or receiver is appointed for Borrower, for any Subsidiary of Borrower or for a substantial part of any property of either Borrower or of any of its Subsidiaries and is not discharged within thirty (30) days; or any bankruptcy, reorganization, debt arrangement, or other proceeding under any bankruptcy or insolvency law, or any dissolution or liquidation proceeding is instituted by or against Borrower or any of Borrower's Subsidiaries, and if instituted against Borrower or one of Borrower's Subsidiaries, it is consented to or acquiesced in by Borrower or such Subsidiary, or remains for thirty (30) days undismissed; or any warrant of attachment is issued against any substantial portion of the property of Borrower or of any Subsidiary of Borrower which is not released within thirty (30) days of service; 9. Section 10.5. Section 10.5 of the Fifth Amended and Restated Credit Agreement is hereby amended to insert the phrase "....or by any Subsidiary of Borrower...." immediately following the word "Borrower" in the second line thereof. 10. Section 10.9. A new section 10.9 is hereby added to the Fifth Amended and Restated Credit Agreement to state: 10.9 Subsidiary Default. Any Subsidiary of Borrower defaults on the payment of any amount due Banks under any Loan Document to which such Subsidiary is a party, which default shall continue for a period of five (5) days following written notice thereof to Borrower from Banks or Agent; any representation or warranty made by a Subsidiary of Borrower under any Loan Document is untrue in any material respect as of the date made, or any schedule, statement, report, notice or writing furnished by a Subsidiary of Borrower to Banks is untrue in any material respect on the date as of which the facts set forth are stated or certified, which default shall continue for a period of thirty (30) days after written notice thereof to Borrower from Banks or Agent; or any Subsidiary of Borrower defaults in the performance of any other covenant and/or agreement set forth in any Loan Document to which such Subsidiary is a party, which default shall continue for a period of thirty (30) days after written notice thereof to Borrower from Banks or Agent. 11. Section 12.1. Section 12.1 of the Fifth Amended and Restated Credit Agreement is hereby amended to include the following substituted or additional definitions: "Agreement" means this Fifth Amended and Restated Revolving Credit and Term Loan Agreement, as it has been amended by that certain First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement and as it may be further amended, restated, modified and/or supplemented from time to time in the future. "Collateral Documents" means the GIF Collateral Mortgage, the GIF Collateral Chattel Mortgages, the GIFI Collateral Chattel Mortgage, the Lease Assignment, the Real Property Collateral Mortgage, the Security Agreement, the Financing Statement, the Stock Pledge, the Stock Pledge Financing Statement, the Dolphin Security Instruments and any and all other documents, instruments and agreements delivered to Agent or Banks to secure the Loans and/or any other obligations described in this Agreement, as the foregoing may be amended, modified or supplemented from time to time. "Conversion Date" means June 30, 1997, the date on which all previously made Non-Revolving Advances shall automatically convert to a term loan in accordance with Section 1.1 hereof. "Debt" means: (a) all obligations of Borrower or of any of Borrower's Subsidiaries for borrowed money, (b) all obligations of Borrower or of any of Borrower's Subsidiaries evidenced by bonds, notes, debentures or other similar instruments, (c) all obligations of Borrower or of any of Borrower's Subsidiaries to pay the deferred purchase price of property or services, except trade accounts payable by Borrower or by any of Borrower's Subsidiaries arising in the ordinary course of business which are not past due by more than sixty (60) days unless such trade accounts payable are being contested in good faith by appropriate proceedings, (d) all obligations of Borrower or of any of Borrower's Subsidiaries under any Capitalized Leases, (e) all obligations of Borrower or of any of Borrower's Subsidiaries under guaranties, endorsements (other than for collection or deposit in the ordinary course of business), assumptions or other contingent obligations, in respect of, or to purchaser or otherwise acquire, any obligation or indebtedness of Borrower or of any of Borrower's Subsidiaries, or any other obligations, contingent or otherwise, (f) all obligations secured by a Lien (except trade accounts payable by Borrower or by any of Borrower's Subsidiaries arising in the ordinary course of business which are not past due by more than sixty (60) days unless such trade accounts payable are being contested in good faith by appropriate proceedings secured by a vendor's lien) existing on property owned by Borrower or by any of Borrower's Subsidiaries, whether or not the obligations secured thereby have been assumed by Borrower or by any of Borrower's Subsidiaries or are non-recourse to the credit of Borrower or of any of Borrower's Subsidiaries, (g) all reimbursement obligations of Borrower or of any of Borrower's Subsidiaries, other than performance bonds of Borrower or of any of Borrower's Subsidiaries (whether contingent or otherwise), relating to letters of credit, bankers' acceptances and similar instruments, and (h) all liabilities of Borrower or of any of Borrower's Subsidiaries in respect of unfunded vested benefits under any Plan; provided, however, the term "Debt" shall not include money borrowed by Borrower or by any of Borrower's Subsidiaries to pay premiums on insurance policies obtained by Borrower or by any of Borrower's Subsidiaries in the ordinary course of Borrower's or of any of Borrower's Subsidiaries' business. "Debt Service" means, for any period in question, the sum of (a) all interest due and payable by Borrower or by any of Borrower's Subsidiaries to any Person during such period and (b) the aggregate amount of all principal due and payable during such period under this Agreement and any of the other Loan Documents. "Eligible Receivables" shall mean, as of any date, an amount equal to the aggregate invoice amount owing on all trade accounts receivable of Borrower or of any of Borrower's Subsidiaries for goods sold, after deducting each such account that is unpaid ninety (90) days after the original invoice date thereof. "Dolphin Companies" has the meaning ascribed in Section 5.1(c) above, and "Dolphin Company" likewise has the meaning ascribed in Section 5.1(c) above. "Dolphin Guaranties" means, collectively, the Dolphin Sales Guaranty, the Dolphin Services Guaranty, and the Dolphin Steel Guaranty, and each of such guaranties may be referred to generically as a "Dolphin Guaranty". "Dolphin Mortgage Instruments" means, collectively, the Dolphin Sales Note, the Dolphin Sales Mortgage, the Dolphin Sales Pledge, the Dolphin Services Note, the Dolphin Services Mortgage, and the Dolphin Services Pledge, and each of such instruments may be referred to generically as a "Dolphin Mortgage Instrument". "Dolphin Real Estate" has the meaning ascribed in Section 5.1(d) above. "Dolphin Sales" has the meaning ascribed in Section 5.1(c) above. "Dolphin Sales Guaranty" has the meaning ascribed in Section 5.1(d) above. "Dolphin Sales Mortgage" has the meaning ascribed in Section 5.1(d) above. "Dolphin Sales Note" has the meaning ascribed in Section 5.1(d) above. "Dolphin Sales Pledge" has the meaning ascribed in Section 5.1(d) above. "Dolphin Sales Real Estate" has the meaning ascribed in Section 5.1(d) above. "Dolphin Sales Security Agreement" has the meaning ascribed in Section 5.1(d) above. "Dolphin Security Agreements" means, collectively, the Dolphin Sales Security Agreement, the Dolphin Services Security Agreement, and the Dolphin Steel Security Agreement, together with any associated UCC-1 financing statements, and each of such instruments may be referred to generically as a "Dolphin Security Agreement". "Dolphin Security Instruments" means, collectively, the Dolphin Guaranties, the Dolphin Mortgage Instruments, and the Dolphin Security Agreements, and each of such instruments may be referred to generically as a "Dolphin Security Instrument". "Dolphin Services" has the meaning ascribed in Section 5.1(c) above. "Dolphin Services Guaranty" has the meaning ascribed in Section 5.1(d) above. "Dolphin Services Mortgage" has the meaning ascribed in Section 5.1(d) above. "Dolphin Services Note" has the meaning ascribed in Section 5.1(d) above. "Dolphin Services Pledge" has the meaning ascribed in Section 5.1(d) above. "Dolphin Services Real Estate" has the meaning ascribed in Section 5.1(d) above. "Dolphin Services Security Agreement" has the meaning ascribed in Section 5.1(d) above. "Dolphin Steel" has the meaning provided in Section 5.1(c) above. "Dolphin Steel Guaranty" has the meaning ascribed in Section 5.1(d) above. "Dolphin Steel Security Agreement" has the meaning ascribed in Section 5.1(d) above. "Environmental Laws" means any and all federal, state and local laws, regulations, ordinances, orders and requirements pertaining to health, safety or the environment, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the Louisiana Environmental Quality Act, La. R.S. 30:2001, et seq., and all similar laws, regulations and requirements of any governmental authority or agency having jurisdiction over Borrower, any of its Subsidiaries or any of the property or assets of Borrower or of any of its Subsidiaries, as such laws, regulations and requirements may be amended or supplemented from time to time. "Equipment" means all machinery, equipment, furniture and furnishings and other property described as "General Equipment" in the Security Agreement or as "equipment" under any of the Dolphin Security Agreements, now or hereafter owned by Borrower or by one of Borrower's Subsidiaries. "Fixtures" means any and all goods and other property that, after placement on the Real Property, the GIFI Property, and/or the Dolphin Real Estate, become component parts thereof. "Loan Documents" means, collectively, this Agreement, the Notes, the Collateral Documents, and any and all other documents, instruments and agreements executed in connection with the Loans, as the foregoing may be modified, supplemented and/or amended from time to time. "Non-Revolving Commitment" means $15,000,000. "Stock Pledge" has the meaning ascribed in Section 5.2(c) above. "Stock Pledge Financing Statement" has the meaning ascribed in Section 5.2(c) above. "Subsidiary" means, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. ARTICLE II SPECIAL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THIS FIRST AMENDMENT In order to induce Banks and Agent to enter into this First Amendment, Borrower represents and warrants to Banks that: 1. Borrower Authorization. Borrower is duly authorized to execute, deliver and perform its obligations under this First Amendment and is and will continue to be duly authorized to borrow monies under and to perform its obligations under the Fifth Amended and Restated Credit Agreement, as amended by this First Amendment and as it may be further amended from time to time. 2. Enforceability Against Borrower. This First Amendment shall, upon execution and delivery, constitute the legal, valid and binding obligation of Borrower, enforceable in accordance with its terms. 3. Dolphin Companies Authorization. Each of the Dolphin Companies is duly authorized to execute, deliver and perform its obligations under any Dolphin Security Instrument to which it is a party. 4. Enforceability Against Dolphin Companies. Upon execution and delivery, each Dolphin Security Instrument shall constitute the legal, valid and binding obligation of the Dolphin Company which is a party thereto, enforceable against such Dolphin Company in accordance with its terms. 5. No Conflicts. The execution and delivery of the Dolphin Security Instruments and the performance by each of the Dolphin Companies of their respective obligations thereunder do not and will not conflict with any provision of law or of the charter or by-laws of such Dolphin Company or of any agreement binding upon such Dolphin Company, as the case may be. ARTICLE III CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS FIRST AMENDMENT This First Amendment shall become effective as of the date first above written when and only when (i) Agent shall have received at the offices of Agent, a counterpart of this First Amendment executed and delivered by Borrower, the Dolphin Companies, and Banks and (ii) Agent shall have additionally received all of the following documents, each document (unless otherwise indicated) being dated the date of receipt thereof by Agent, duly authorized, executed and delivered, and in form and substance satisfactory to Agent and each of the Banks: (a) Borrower's Resolutions. Copies, duly certified by the Secretary or Assistant Secretary of Borrower, of the resolutions of Borrower's Board of Directors authorizing the borrowings under the Fifth Amended and Restated Credit Agreement, as amended hereby, and the execution and delivery of this First Amendment and the Notes. (b) Term Notes. Borrower's duly executed Term Notes payable to the order of Banks, in the form attached as Exhibits "B" and "C" hereto, with appropriate insertions. (c) Borrower Incumbency Certificate. Certificates of Borrower's Secretary or Assistant Secretary, substantially in the form of Exhibit "I" to the Fifth Amended and Restated Credit Agreement, certifying the names of the officers of Borrower authorized to execute the Loan Documents, and all other documents or certificates to be delivered hereunder by Borrower, together with the true signatures of such officers. (d) Dolphin Companies' Resolutions. Copies, duly certified by the Secretary or Assistant Secretary of each of the Dolphin Companies, of the resolutions of the respective Dolphin Companies' Boards of Directors, authorizing the execution and delivery of this Agreement and the Dolphin Security Instruments. (e) Dolphin Companies' Incumbency Certificates. Certificate of the Secretaries or Assistant Secretaries of each of the Dolphin Companies, substantially in the form of Exhibit "A" to this First Amendment, certifying the names of the officers of each Dolphin Company authorized to execute this Agreement and the Dolphin Security Instruments, and all other documents or certificates to be delivered hereunder by the Dolphin Companies, together with true signatures of such officers. (f) Title Insurance. Mortgagee's title insurance commitments issued by Lawyers Title Insurance Corporation to First NBC, as Agent for Banks, in form and substance satisfactory to Banks and containing such endorsements as are required by Banks and, with respect to the Dolphin Sales Property, with coverage in the amount of $250,000 and with respect to the Dolphin Services Property, with coverage in the amount of $1,750,000. (g) Environmental Report. A Phase I environmental report prepared by Walk, Haydel & Associates, Inc., dated December, 1996, certified to each Bank, reporting the current environmental condition of the Dolphin Sales Property and the Dolphin Services Property. (h) Dolphin Security Instruments. Duly authorized and executed originals of each of the Dolphin Security Instruments. (i) Lien Searches. Uniform Commercial Code and chattel mortgage searches in the name of Borrower and each Dolphin Company which confirm that the Liens granted to Banks by Borrower and the Dolphin Companies are first priority liens. (j) Delivery of Stock Certificates. The stock certificates, registered in Borrower's name and subject to no transfer or pledge restrictions, representing the shares pledged to Banks pursuant to the Stock Pledge, together with blank stock powers executed by Borrower and in form and substance acceptable to Banks. (k) Proof of Flood Insurance. Proof, in form and substance acceptable to Banks, that Dolphin Sales and Dolphin Services maintain all flood insurance with respect to the Dolphin Real Estate which they are legally required to maintain as a condition to the use of such Dolphin Real Estate to collateralize their respective Dolphin Guaranties, the Notes, and Borrower's other Obligations to Banks. ARTICLE IV MISCELLANEOUS 1. Definitions. All terms used herein with initial capital letters and not otherwise defined herein shall have the meanings ascribed to such terms in the Fifth Amended and Restated Credit Agreement. 2. No Other Changes. The Fifth Amended and Restated Credit Agreement as hereby amended is hereby ratified and confirmed in all respects. Any reference to the Fifth Amended and Restated Credit Agreement in any Loan Document shall be deemed to refer to the Fifth Amended and Restated Credit Agreement as amended hereby. Any reference to the Term Notes in any Loan Document shall be deemed to refer to the Term Notes executed of even date herewith in the forms of Exhibits "B" and "C" attached hereto. The execution, delivery and effectiveness of this First Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of Banks under the Fifth Amended and Restated Credit Agreement or any other Loan Document. Except as amended by this First Amendment, the Fifth Amended and Restated Credit Agreement shall remain in full force and effect. Nothing contained herein or in any other documents contemplated hereby shall be considered a novation or discharge of the debt of Borrower to Banks under the Fifth Amended and Restated Credit Agreement. 3. Ratification of Notes and Liens. Borrower does hereby ratify, reaffirm and acknowledge its obligations under the Revolving Notes, and Borrower does hereby further ratify, reaffirm and acknowledge its mortgage, pledge and/or assignment of, and/or grant of a security interest in, all Collateral heretofore provided by Borrower as security for the Notes and the other Obligations under the Fifth Amended and Restated Credit Agreement. Borrower does hereby further ratify, confirm and acknowledge to Agent and Banks that: (a) the mortgage, pledge and/or assignment of, and/or grant of a security interest in, all such Collateral is and shall remain in full force and effect; (b) the Collateral Documents to which Borrower is a party are and shall continue to be valid, binding and enforceable obligations of Borrower; and (c) the Collateral Documents and the Collateral shall continue to secure, with retroactive priority to the extent permitted by law, the Notes and the other Obligations of Borrower as continued pursuant to the Revolving Notes and as renewed, rearranged, extended and now evidenced by, and as the amount thereof has been increased by, the Term Notes executed of even date herewith in the forms attached hereto as Exhibits "B" and "C". 4. Substitution and Addition of Exhibits and Schedule. Exhibits "B" and "C" of the Fifth Amended and Restated Credit Agreement are hereby deleted, and Exhibits "B" and "C" attached hereto are hereby substituted in place thereof. New Exhibits "L" (describing the Dolphin Sales Real Estate) and "M" (describing the Dolphin Services Real Estate) are hereby added to the Fifth Amended and Restated Credit Agreement. Schedule 1 of the Fifth Amended and Restated Credit Agreement is hereby deleted, and Schedule 1 attached hereto is hereby substituted in place thereof. 5. Counterparts. This First Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto in separate counterparts, each of which, when so executed, shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be executed by their respective officers thereunto duly authorized, effective as of the date first written above. BORROWER: GULF ISLAND FABRICATION, INC. By: /s/ Kerry J. Chauvin -------------------------------- Kerry J. Chauvin, President BANKS: FIRST NATIONAL BANK OF COMMERCE By: /s/ J. Charles Freel, Jr. -------------------------------- J. Charles Freel, Jr., Vice President WHITNEY NATIONAL BANK By: /s/ Harry C. Stahel -------------------------------- Harry C. Stahel, Senior Vice President AGENT: FIRST NATIONAL BANK OF COMMERCE By: /s/ J. Charles Freel, Jr. -------------------------------- J. Charles Freel, Jr., Vice President INTERVENTION NOW INTO THESE PRESENTS COMES Dolphin Sales & Rentals, Inc., Dolphin Steel Sales, Inc., and Dolphin Services, Inc., who hereby bind themselves in solido with each other and with Borrower with respect to all representations and warranties contained Article I, Section 8 and Article II, Sections 3, 4, and 5 of this First Amendment to Fifth Amended and Restated Credit Agreement and who, in order to induce Banks to enter into this First Amendment to Fifth Amended and Restated Credit Agreement, agree to execute and deliver to Banks the Dolphin Security Instruments as defined herein. DOLPHIN SALES & RENTALS, INC. By: /s/ Kerry J. Chauvin ------------------------------- Kerry J. Chauvin, President DOLPHIN STEEL SALES, INC. By: /s/ Kerry J. Chauvin ------------------------------- Kerry J. Chauvin, President DOLPHIN SERVICES, INC. By: /s/ Kerry J. Chauvin ------------------------------- Kerry J. Chauvin, President ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 2nd day of January, 1997, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared KERRY J. CHAUVIN, appearing herein in his capacity as President of Gulf Island Fabrication, Inc., to me personally known to be the identical person whose name is subscribed to the foregoing First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said corporation with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said corporation and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ Kerry J. Chauvin ------------------------- -------------------------- KERRY J. CHAUVIN /s/ Scott D. Morgan ------------------------- /s/ F. Rivers Lelong, Jr. --------------------------------- NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 2nd day of January, 1997, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared J. CHARLES FREEL, JR., appearing herein in his capacity as Vice President of First National Bank of Commerce, to me personally known to be the identical person whose name is sub- scribed to the foregoing First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said national banking association, appearing in said agreement in its individual capacity and its capacity as Agent, with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said national bank association and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ J. Charles Freel, Jr. -------------------------- ---------------------------- J. CHARLES FREEL, JR. /s/ Scott D. Morgan -------------------------- /s/ F. Rivers Lelong, Jr. ------------------------------ NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 2nd day of January, 1997, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared HARRY C. STAHEL, appearing herein in his capacity as Senior Vice President of Whitney National Bank, to me personally known to be the identical person whose name is sub- scribed to the foregoing First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said national banking association, appearing in said agreement in its individual capacity, with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said national bank association and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ Harry C. Stahel ------------------------ --------------------------- HARRY C. STAHEL /s/ Scott D. Morgan ------------------------ /s/ F. Rivers Lelong, Jr. --------------------------------- NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 2nd day of January, 1997, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared KERRY J. CHAUVIN, appearing herein in his capacity as President of Dolphin Sales & Rentals, Inc., to me personally known to be the identical person whose name is subscribed to the foregoing First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said corporation with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said corporation and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ Kerry J. Chauvin -------------------------- -------------------------- KERRY J. CHAUVIN /s/ Scott D. Morgan -------------------------- /s/ F. Rivers Lelong, Jr. --------------------------------- NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 2nd day of January, 1997, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared KERRY J. CHAUVIN, appearing herein in his capacity as President of Dolphin Steel Sales, Inc., to me personally known to be the identical person whose name is subscribed to the foregoing First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said corporation with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said corporation and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ Kerry J. Chauvin --------------------------- ---------------------------- KERRY J. CHAUVIN /s/ Scott D. Morgan --------------------------- /s/ F. Rivers Lelong, Jr. ------------------------------------ NOTARY PUBLIC ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF ORLEANS BE IT KNOWN, that on this 2nd day of January, 1997, before me, the undersigned authority, duly commissioned, qualified and sworn within and for the State and Parish aforesaid, personally came and appeared KERRY J. CHAUVIN, appearing herein in his capacity as President of Dolphin Services, Inc., to me personally known to be the identical person whose name is subscribed to the foregoing First Amendment to Fifth Amended and Restated Revolving Credit and Term Loan Agreement, who declared and acknowledged to me, Notary, in the presence of the undersigned competent witnesses, that he executed the same on behalf of said corporation with full authority of its Board of Directors, and that the same instrument is the free act and deed of the said corporation and was executed for the uses, purposes and benefits therein expressed. WITNESSES: /s/ Patsy G. Holwadel /s/ Kerry J. Chauvin ------------------------- -------------------------- KERRY J. CHAUVIN /s/ Scott D. Morgan ------------------------- /s/ F. Rivers Lelong, Jr. --------------------------------------- NOTARY PUBLIC -----END PRIVACY-ENHANCED MESSAGE-----