UNIFAB INTERNATIONAL INC
COMMERCIAL BUSINESS LOAN AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>5
<FILENAME>d03187exv10w1.txt
<DESCRIPTION>COMMERCIAL BUSINESS LOAN AGREEMENT
<TEXT>
<PAGE>
                                                                    EXHIBIT 10.1


                       COMMERCIAL BUSINESS LOAN AGREEMENT


         This Commercial Business Loan Agreement (the "Agreement") is dated
November 18, 2002 and is between Whitney National Bank ("Whitney") and UNIFAB
International, Inc. ("Borrower").

A. DEFINITIONS. For the purpose of this Agreement, the following terms shall
have the meanings specified below:

         "Advance" shall mean a disbursement under the Loan.

         "Advance Request" shall mean the Borrower's request for an Advance.

         "Affiliate" shall mean any Person, which has twenty percent (20%) or
more of any class of its capital stock (or, in the case of a Person which is not
a corporation, twenty percent (20%) or more of its equity interest) beneficially
owned or held or controlled, directly or indirectly, by Borrower or any
Subsidiary or William A. Hines. For purposes of this definition, "control" shall
mean the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

         "Agreement" shall mean this Commercial Business Loan Agreement, as the
same may from time to time be amended, restated or supplemented.

         "Business Day" shall mean a day other than a Saturday, Sunday or legal
holiday for commercial banks in New Orleans, Louisiana and London, England.

         "Closing Date" shall mean the date on which the Note and Collateral
Documents are executed and delivered by the Borrower to Whitney.

         "Collateral" shall mean the assets of Borrower and its Subsidiaries on
which Whitney has a Lien pursuant to the Collateral Documents.

         "Collateral Documents" shall mean collectively the Guaranties and the
documents required by Whitney to obtain the Lien in the Collateral, as described
in this Agreement.

         "Company Agent" shall mean Peter J. Roman or Steven P. Weems.

         "Consolidated" refers to the consolidation of any Person, in accordance
with GAAP, with its properly consolidated subsidiaries. References herein to a
Person's consolidated financial statements, financial position, financial
condition, liabilities, etc. refer to the condition, liabilities, etc. of such
Person and its properly consolidated subsidiaries.

         "Debt" of a Person shall mean at a particular date, the sum (without
duplication and in conformity with GAAP of (i) all indebtedness or other
obligations for borrowed money or for the deferred purchase price of property or
services, whether as maker or endorser, (including without limitation, all
notes, debentures, bonds or similar instruments and all liabilities shown on a
balance sheet or financial statement of Borrower, Guarantors and all their
Subsidiaries), (ii) capitalized lease obligations of such Person or any
subsidiary thereof, (iii) obligations with respect to any installment sale or
conditional sale agreement or title retention agreement, (iv) indebtedness
arising under acceptance facilities, (v) reimbursement obligations arising in
connection with surety, or performance or other similar bonds and in connection
with letters of credit issued in lieu of such bonds, (vi) the outstanding amount
of all


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other letters of credit and (vii) any withdrawal liability or obligation of such
Person or an ERISA affiliate to a multiemployer plan.

         "Default" shall mean the occurrence of any of the events specified in
Section F hereof.

         "GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time and applied on a consistent
basis.

         "Guarantors" shall mean Nassau Holding Corporation ("Nassau"), Allen
Process Systems, L.L.C., Universal Fabricators L.L.C., William A. Hines and
Jeanne M. Hines, which term means, collectively, and interchangeably any, each
and/or all of them, with each a Guarantor.

         "Guaranties" shall mean the unlimited continuing guaranties by each
Guarantor of all Obligations of Borrower to Whitney upon terms and conditions
acceptable to Whitney.

         "Libor Rate" shall mean an interest rate per annum (rounded upward to
the nearest hundredth of a percent (1/100 of 1%)) which is the offered quotation
to Whitney of the London interbank offered rate for U.S. Dollar deposits of
amounts in immediately available funds in the London market for one month as
recorded by the Bloomberg, L.P. or such other service used by Whitney as an
information vendor for the purpose of displaying British Bankers' Association
interest settlement rates for U.S. Dollar Deposits, as determined by Whitney as
of the opening of business of Whitney or as soon thereafter as practicable, plus
the applicable margin of 175 basis points (1 3/4% percent). The Libor Rate shall
be determined by Whitney initially as of the date of the initial Advance and
thereafter determined on the first day of each month (or on the last Business
Day of the prior month if the first day of the month is not a Business Day) with
the change in the Libor Rate to be effective as of the first day of each
calendar month.

         "Lien" shall mean any mortgage, pledge, hypothecation, security
interest, encumbrance, lien, judgment, garnishment, seizure, tax lien or levy
(statutory or otherwise) or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention agreement,
or any capitalized lease, and the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction).

         "Line of Credit Period" shall mean the period of time commencing on the
date of this Agreement and ending on the Maturity Date.

         "Loan" shall mean the loan to be made by Whitney to the Borrower
pursuant to Section B of this Agreement and shall include all principal,
interest, attorneys' fees and costs owed thereon.

         "Loan Documents" shall mean this Agreement, the Note and the Collateral
Documents.

         "Maturity Date" shall mean May 31, 2003.

         "Note" shall mean the note evidencing the Loan, dated November 18,
2002, in the principal sum of $8,000,000.00, payable to the order of Whitney on
the Maturity Date, and shall include any and all renewal and/or replacement
notes.

         "Obligations" shall mean all obligations (monetary or otherwise,
including, but not limited to, all representations, warranties and covenants
contained in this Agreement) of the Borrower to Whitney, whether direct or
contingent, due or to become due, now existing or hereafter arising, including
future advances, with interest, attorneys' fees, expenses of collection and
costs arising under or in connection with this Agreement, the Loan, the Note,
the Collateral Documents, promissory notes, checks, overdrafts, letter of credit
agreements, endorsements and continuing guaranties.

         "Obligor" shall mean individually, collectively and interchangeably
any, each and/or all of Borrower, its Subsidiaries and Guarantors.


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<PAGE>


         "Permitted Liens" shall mean those presently outstanding and future
Liens of Obligor in favor of Whitney and (i) the Liens in favor of Midland
Fabricators & Process Systems, L.L.C., which Liens will be subordinate to the
Liens in favor of Whitney; (ii) pledges or deposits by Obligor under workmen's
compensation laws, unemployment insurance laws or similar legislation, or good
faith deposits in connection with bids, tenders, contracts (other than for the
payment of Debt of the Borrower) or leases (other than capitalized leases) to
which Obligor is a party, or deposits to secure statutory obligations of the
Borrower or deposits of cash or U.S. Government Bonds to secure surety or appeal
bonds to which the Borrower is a party, or deposits as security for contested
taxes or import duties or for the payment of rent; (iii) Liens imposed by law,
such as carriers', warehousemen's, materialmen's and mechanics' liens, incurred
in the ordinary course of business for sums not overdue or being contested in
good faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the books of Obligor; (iv) judgment Liens in existence less
than 30 days after the entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full (subject to a customary
deductible) by insurance; (v) Liens for property taxes not yet delinquent and
Liens for property taxes the payment of which is being actively contested in
good faith by appropriate proceedings and for which adequate reserves shall have
been set aside on the books of Obligor; and (vi) minor survey exceptions, minor
encumbrances, easements or reservations of, or rights of others for
rights-of-way, highways and railroad crossings, sewers, electric lines,
telegraph and telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real property or Liens incidental to the conduct
of the business of Obligor or to the ownership of its property which were not
incurred in connection with Debt of Obligor, which Liens do not in the aggregate
materially detract from the value of said properties or materially impair their
use in the operation of the business taken as a whole of Obligor.

         "Person" shall mean and include an individual, a partnership, a joint
venture, a corporation (including Borrower), a limited liability company, a
trust, an unincorporated organization, government or any department or agency
thereof.

         "Prime Rate" shall mean that rate of interest as recorded by Whitney
National Bank from time to time as its prime lending rate with the rate of
interest to change when and as said prime lending rate changes. The Prime Rate
is not necessarily the lowest interest rate charged by Whitney National Bank.

         "Subsidiary" shall mean, with respect to any Person, any corporation,
association, partnership, joint venture or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned 50% or more by such Person.

B. LOAN. Subject to the terms and conditions of this Agreement and provided
Obligor timely and completely performs all obligations in favor of Whitney
contained in this Agreement and in any other agreement, whether now existing or
hereafter arising, Whitney agrees to make Advances to Borrower periodically
during the Line of Credit Period in an aggregate principal amount outstanding
not to exceed the sum of Eight Million and No/100 ($8,000,000.00) Dollars. On
the Maturity Date, Whitney's obligations to make any Advance shall cease and all
interest and principal then owed on the Loan shall be due and payable. The Loan
is evidenced by the Note payable to the order of Whitney on the Maturity Date.
During the Line of Credit Period, the Advances shall accrue interest at Libor
Rate in accordance with Section B (4) and shall be payable interest only monthly
in arrears on the last day of each month, beginning the first month after the
initial Advance, and continuing on the last day of each succeeding month, with
the unpaid balance of principal and accrued interest due on the Maturity Date.

         (1)      ADVANCES. Upon the terms and subject to the conditions hereof,
                  Borrower may request an Advance during Whitney's regular
                  business hours. Borrower shall make a request for an Advance
                  under a Line of Credit by delivering to Whitney by mail,
                  hand-delivery, facsimile or by telephonic notice to Whitney's
                  applicable officer specifying (i) the amount to be borrowed,
                  (ii) the date the funds will be borrowed, and (iii) the
                  purpose of the Advance and all Advance Requests shall be made
                  by the Company Agent. Borrower hereby authorizes the Company
                  Agent to borrow money and contract obligations with Whitney.
                  Until Borrower notifies Whitney in writing of the withdrawal
                  of the Company Agent's rights and powers, Whitney shall be
                  able to rely conclusively upon the right of the Company Agent
                  to make Advances on behalf of Borrower. Borrower agrees that
                  only its duly authorized Company Agent shall make an Advance.
                  All proceeds of any Advance shall be deposited to Borrower's
                  account at Whitney.


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         (2)      CREDIT ADVICE. After the borrowing of any Advance in
                  accordance with this Agreement, Whitney will mail to Borrower
                  at the most recent address shown on Whitney's records a credit
                  advice showing the amount of the Advance and the amount of
                  funds credited into Borrower's account. Within ten (10) days
                  after the date of such advices, Borrower shall notify Whitney
                  of any inaccuracy in the credit advices or the lack of
                  authority to borrow the Advance. Failure by Borrower to notify
                  Whitney timely shall preclude the Borrower from asserting
                  against Whitney the inaccuracy of such advices and/or the lack
                  of authorization of such Advance. Whitney's failure to mail
                  the credit advice shall not alter Borrower's obligation to
                  repay the Loan or make Whitney liable to Borrower for failure
                  to mail the credit advice.

         (3)      INTERNAL RECORDS SHALL CONTROL. The principal amount shown on
                  the face of the Note evidences the maximum aggregate principal
                  amount that may be outstanding on the Loan. Borrower agrees
                  that the internal records of Whitney shall constitute for all
                  purposes prima facie evidence of (i) the amount of principal
                  and interest owing on the Loan from time to time, (ii) the
                  amount of each Advance made to Borrower under the Loan and
                  (iii) the amount of each principal and/or interest payment
                  received by Whitney on the Loan, unless such internal records
                  of Whitney are manifestly erroneous.

         (4)      INTEREST. Interest on the outstanding principal owed on the
                  Loan shall be computed and assessed on the basis of the actual
                  number of days elapsed over a year composed of 360 days.
                  Whitney shall (in accordance with this Agreement) determine
                  each interest rate applicable to the Libor Rate. Whitney will
                  give notice to Borrower of each rate of interest so
                  determined, and its determination thereof shall be conclusive
                  in the absence of manifest error. Any change in Prime Rate
                  shall become effective as of the opening of business on the
                  day on which such change shall occur.

                  In the event that Whitney shall have determined in good faith
                  (which determination shall, absent manifest error, be final
                  and conclusive and binding upon all parties hereto):

                           (i) that, by reason of any changes arising after the
                           date of this Agreement affecting the London interbank
                           market, adequate and fair means do not exist for
                           ascertaining the applicable interest rate on the
                           basis provided for in the definition of Libor Rate;
                           or

                           (ii) at any time, that Whitney shall incur increased
                           costs or reductions in the amounts received or
                           receivable hereunder with respect to any Libor Rate
                           because of any change since the date of this
                           Agreement in any applicable law or governmental rule,
                           regulation, order, guideline or request or in the
                           interpretation or administration thereof and
                           including the introduction of any new law or
                           governmental rule, regulation, order, guideline or
                           request, such as, for example, but not limited to:
                           (A) a change in the basis of taxation of payment to
                           Whitney of the principal or interest on such Libor
                           Rate (except for changes in the rate of tax on, or
                           determined by reference to, the net income or profits
                           of Whitney) or (B) a change in official reserve
                           requirements; or

                           (iii) at any time, that the making or continuance of
                           any Libor Rate has been made (x) unlawful by any law
                           or governmental rule, regulation or order, (y)
                           impossible by compliance by Whitney in good faith
                           with any governmental request (whether or not having
                           force of law) or (z) impracticable as a result of a
                           contingency occurring after the date of this
                           Agreement which materially and adversely affects the
                           London interbank market;

                  then, and in any such event, Whitney shall promptly give
                  notice (by telephone confirmed in writing) to the Borrower.
                  Thereafter (x) in the case of clause (i) above, Libor Rate
                  shall no longer be available until such time as Whitney
                  notifies the Borrower that the circumstances giving rise to
                  such notice no longer exist, and (y) in the case of clause
                  (ii) above, the Borrower agrees to pay to Whitney, upon
                  written demand therefor, such additional amounts (in the form
                  of an increased rate


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                  of, or a different method of calculating, interest or
                  otherwise as agreed to by Whitney and Borrower) as shall be
                  required to compensate Whitney for such increased costs or
                  reductions in amounts received or receivable hereunder (a
                  written notice as to the additional amounts owed to Whitney,
                  showing the basis for the calculation thereof, submitted to
                  Borrower by Whitney in good faith shall, absent manifest
                  error, be final and conclusive and binding on all the parties
                  hereto) and (z) in the case of clauses (i) and (iii) above,
                  the Loan shall accrue interest at Prime Rate. Whitney agrees
                  that if it gives notice to the Borrower of any of the events
                  described in clauses (i) or (iii) above, it shall promptly
                  notify the Borrower if such event ceases to exist. If any such
                  event described in clause (i) or (iii) above ceases to exist,
                  Whitney's obligation to convert the interest accruing on the
                  Loan into Libor Rate on the terms and conditions contained
                  herein shall be reinstated.

         (5)      LETTERS OF CREDIT. Subject to the terms and conditions of this
                  Agreement and provided no Default has occurred, during the
                  term of the Loan, Whitney shall issue letter(s) of credit for
                  the account of Borrower provided that (i) Borrower shall
                  execute Whitney's standard form of letter of credit
                  application for each letter of credit, (ii) the term of any
                  letter of credit shall not extend beyond November 18, 2004,
                  (iii) Borrower shall pay Whitney the usual and customary fees
                  for issuing any letter of credit, (iv) the total aggregate
                  face amount of all letters of credit shall not at any one time
                  exceed the principal amount of Two Million and N0/100
                  ($2,000,000.00) Dollars, and (v) the total aggregate principal
                  balance of the Loan plus the total aggregate face amount of
                  all letters of credit shall not at any one time exceed the
                  principal amount of Eight Million and No/100 ($8,000,000.00)
                  Dollars.

         (6)      USE OF PROCEEDS. The proceeds of the Loan shall be used solely
                  to fund the working capital needs of Borrower.

         (7)      PREPAYMENT. Borrower shall be entitled to prepay the Loan in
                  whole or in part, without payment of premium or penalty.

C. REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower represents, warrants and
covenants to Whitney that:

         (1)      ORGANIZATION AND AUTHORIZATION. Obligor (other than an
                  individual) is an entity which is duly organized, validly
                  existing and, if a corporation, in good standing under
                  applicable laws. Obligor's execution, delivery and performance
                  of this Agreement and all other documents delivered to Whitney
                  has been duly authorized and does not violate Obligor's
                  articles of incorporation, articles of organization, operating
                  agreement or other governing documents, as applicable,
                  material contracts or any applicable law or regulations. All
                  documents delivered to Whitney are legal and binding
                  obligations of Obligor who executed same. Borrower's
                  Subsidiaries are Universal Fabricators L.L.C. and Allen
                  Process Systems, L.L.C. Whitney acknowledges and consents to
                  the liquidation of Oil Barges, Inc., Unifab International
                  West, LLC, Latoka, U.S.A., Inc. and Superior Derrick Services
                  of Texas, LLC.

         (2)      COMPLIANCE WITH TAX AND OTHER LAWS. Obligor shall comply (to
                  the extent necessary so that any failure to do so will not
                  materially and adversely affect the business or property of
                  Obligor) with all laws that are applicable to Obligor's
                  business activities, including, without limitation, all laws
                  regarding (i) the collection, payment and deposit of
                  employees' income, unemployment, Social Security, sales and
                  excise taxes; (ii) the filing of returns and payment of taxes;
                  (iii) pension liabilities including ERISA requirements; (iv)
                  environmental protection; and (v) occupational safety and
                  health.

         (3)      FINANCIAL INFORMATION. Borrower shall furnish, or cause to be
                  furnished, to Whitney:

                  (a)      within one hundred twenty (120) days after the close
                           of Borrower's fiscal year, a copy of the audited
                           financial statements of Borrower and all of its
                           Subsidiaries on a Consolidated


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                           basis, as of the close of such fiscal year prepared
                           in reasonable detail and in accordance with GAAP,
                           with such financial statements to include a balance
                           sheet of the Borrower and all of its Subsidiaries on
                           a Consolidated basis, as of the end of such year and
                           the related statement of operations, of stockholder's
                           equity and of cash flow prepared in reasonable detail
                           and in conformity GAAP, and audited by independent
                           certified public accountants selected by Borrower and
                           satisfactory to Whitney;

                  (b)      within sixty (60) days after the end of each quarter
                           of each fiscal year of Borrower, the Consolidated
                           unaudited balance sheet of Borrower and all of its
                           Subsidiaries as of the end of each such quarter and
                           the related unaudited statements of operations, of
                           shareholder's equity and of cash flow for such
                           quarter and the portion of the fiscal year throughout
                           such date, all prepared in reasonable detail and in
                           conformity with good accounting practices in the
                           United States in effect from time to time and applied
                           consistently throughout the period reflected therein
                           and certified by its chief financial officer;

                  (c)      within one hundred twenty (120) days after the close
                           of Nassau's fiscal year, a copy of the audited
                           financial statements of Nassau and all of its
                           Subsidiaries on a Consolidated basis, as of the close
                           of such fiscal year prepared in reasonable detail and
                           in accordance with GAAP, with such financial
                           statements to include a balance sheet of Nassau and
                           all of its Subsidiaries on a Consolidated basis, as
                           of the end of such year and the related statement of
                           operations, of stockholder's equity and of cash flow
                           prepared in reasonable detail and in conformity GAAP,
                           and audited by independent certified public
                           accountants selected by Nassau and satisfactory to
                           Whitney;

                  (d)      within sixty (60) days after the end of each quarter
                           of each fiscal year of Nassau, the Consolidated
                           unaudited balance sheet of Nassau and all of its
                           Subsidiaries as of the end of each such quarter and
                           the related unaudited statements of operations, of
                           shareholder's equity and of cash flow for such
                           quarter and the portion of the fiscal year throughout
                           such date, all prepared in reasonable detail and in
                           conformity with good accounting practices in the
                           United States in effect from time to time and applied
                           consistently throughout the period reflected therein
                           and certified by its chief financial officer;

                  (e)      on an annual basis, the current personal financial
                           statements of William H. Hines and Jeanne M. Hines,
                           including balance sheet, income statement, statement
                           of cash flows, and statement of contingent
                           liabilities within thirty (30) days of the effective
                           date of the personal financial statements currently
                           on file with Whitney; and

                  (f)      such additional financial and other information on
                           Obligor that Whitney may require.

         (4)      MERGERS, ETC. Without the prior written consent of Whitney,
                  Obligor shall not (a) be a party to a merger or consolidation,
                  (b) acquire all or substantially all of the assets of another
                  entity, or (c) sell, lease or transfer all, or substantially
                  all, of Obligor's assets. Obligor shall not permit any
                  material change to be made in the character of Obligor's
                  business as carried on at the original date of this Agreement.
                  Obligor shall not purchase, retire or redeem any shares of its
                  capital stock without the prior written consent of Whitney.

         (5)      INDEBTEDNESS AND LIENS. Other than obligations incurred in the
                  ordinary course of business and the Loan, Borrower shall not
                  create or incur any Debt without the prior written consent of
                  Whitney. Obligor shall not create, encumber or suffer any
                  Lien, other than the Collateral Documents and Permitted Liens,
                  to exist on their assets without the prior written consent of
                  Whitney.

         (6)      OTHER LIABILITIES. (a) Obligor shall not default in the
                  performance, observance or fulfillment of any of the
                  obligations, covenants or conditions contained in any
                  indenture, agreement or other instrument to which Obligor is a
                  party (the effect of which would materially adversely affect
                  the


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                  business or properties of such Obligor, either individually or
                  collectively as a whole); and (b) except as disclosed or
                  referred to in the financial statements furnished to Whitney,
                  there is no litigation, legal or administrative proceeding,
                  investigation or other action of any nature pending or, to the
                  knowledge of Obligor, threatened against or affecting Obligor
                  which involves the possibility of any judgment or liability
                  not fully covered by insurance, and which may materially and
                  adversely affect the business or assets of Obligor or
                  Obligor's ability to carry on business as now conducted.

         (7)      DOCUMENTATION. The Loan Documents shall be on Whitney's
                  standard forms, with such modifications as may be required by
                  Whitney. Upon the written request of Whitney, Obligor shall
                  promptly and duly execute and deliver all such further
                  instruments and documents and take such further action as
                  Whitney may deem necessary to obtain the full benefits of the
                  Loan Documents.

         (8)      REGULATIONS O, U AND G. Borrower shall not borrow any money or
                  make an Advance if such loan would violate the provisions of
                  Regulation O of the Board of Governors of the Federal Reserve
                  System as now and from time to time hereafter in effect. No
                  part of the proceeds of the Loan will be used as "purpose
                  credit" within the meaning of such term under Regulations U or
                  G of the Board of Governors of the Federal Reserve System as
                  now and from time to time hereafter in effect, if such use
                  would violate the provisions of Regulations U or G.

         (9)      COLLATERAL. As security for payment and performance of the
                  Obligations, Borrower and/or its Subsidiaries shall execute
                  and deliver to Whitney the following described Collateral
                  Documents:

                  (i)      a security agreement and financing statement by
                           Borrower and its Subsidiaries granting Whitney a Lien
                           in all accounts, inventory, chattel paper, equipment,
                           documents, fixtures and general intangibles;

                  (ii)     a security agreement and financing statement by
                           Borrower granting Whitney a Lien in the membership
                           interests in its Subsidiaries; and

                  (iii)    a mortgage or deed of trust on all leasehold
                           interests and immovable property owned by Borrower
                           and/or its Subsidiaries, which mortgage or deed of
                           trust shall include an assignment of leases and
                           rents.

                  Within ninety (90) days from the Closing Date, all of the
                  Collateral shall be free and clear of any Liens except
                  Permitted Liens and all consents to the mortgages by the
                  landlords of the leasehold interests shall consent to the
                  mortgages upon terms acceptable to Whitney.

         (10)     GUARANTIES. The Obligations shall be solidarily guaranteed by
                  each Guarantor.

         (11)     NEW SUBSIDIARIES. Within fifteen (15) days of the creation or
                  acquisition of any Subsidiary, in each case, in accordance
                  with the terms of this Agreement, any such new Subsidiary
                  shall, (a) execute and deliver to Whitney a Guaranty
                  solidarily guaranty the payment and performance of the
                  Obligations in a form acceptable to Whitney and (b) execute a
                  security agreement in favor of Whitney granting Whitney a
                  security interest in the movable assets of such Subsidiary
                  subject to no Liens other than Permitted Liens, as security
                  for the Obligations.

         (12)     TRANSACTION WITH AFFILIATES. No Obligor shall enter into any
                  transaction (including the purchase, sale or exchange of
                  property or the rendering of any service) with any Affiliate
                  except upon fair and reasonable terms which are at least as
                  favorable to the Borrower, Guarantors or any Subsidiary as
                  would be obtained in a comparable arm's length transaction
                  with a non-Affiliate.

         (13)     ENVIRONMENTAL MATTERS. (a) To the best of the Borrower's
                  knowledge, all operating facilities and Property owned,
                  leased, used, or operated by Borrower or any of its
                  Subsidiaries have been, and will continue to be, owned,
                  leased, used, or operated by any Borrower or any of its
                  Subsidiaries in


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                  substantial compliance with applicable environmental laws,
                  regulations, and guidelines. There has been no claim,
                  complaint, or notice received by Obligor with respect to a
                  violation of environmental laws which remains unsettled or
                  unresolved as of the date hereof, including but not limited
                  to, any unsettled or unresolved liabilities relating to,
                  arising out of or resulting from (i) any emission, discharge
                  or release of any pollutant, contaminant, Hazardous Material,
                  toxic material or other similar waste or (ii) any processing,
                  distribution, use, treatment, transport, removal, storage
                  and/or disposal of materials or wastes into or upon the
                  ambient air, surface water, ground water or land owned by
                  Obligor or any alleged violation of any federal, state, or
                  local statute, regulation, or ordinance relating to the
                  environment. There has been no complaint or notice received by
                  Obligor regarding potential liability under the Comprehensive
                  Environmental Response Compensation and Liability Act, as
                  amended, the Resource Conservation and Recovery Act, as
                  amended, or any comparable state or local law which is
                  unsettled or remains unresolved as of the date hereof. To the
                  Obligor's knowledge, there has been no release of a Hazardous
                  Material at any facility or property owned, leased, used, or
                  operated by Obligor which caused or could have cause a
                  material adverse change in Obligor's financial condition,
                  business or ability to pay or perform its Obligations. For
                  purposes of the last sentence of this Section III (k),
                  "release" shall have the meaning assigned to it under the
                  Comprehensive Environmental Response Compensation and
                  Liability Act.

                  (b) Obligor agrees to (i) give notice to Whitney immediately
                  upon its acquiring knowledge of the violation of any
                  Governmental Requirement regarding the presence of any
                  Hazardous Materials on any property of Borrower or any of its
                  Subsidiaries and/or of any Hazardous Materials Contamination
                  with a full description thereof; and (ii) promptly comply with
                  any Governmental Requirement requiring removal, treatment or
                  disposal of such Hazardous Materials or Hazardous Materials
                  Contamination and provide Whitney with satisfactory evidence
                  of such compliance. Upon the discovery of any Hazardous
                  Materials Contamination, or upon the occurrence of a Default
                  and the expiration of the applicable cure period, Whitney
                  shall have the right to cause an environmental audit or review
                  of the Property to be performed by a firm acceptable to
                  Whitney at the sole cost and expense of Borrower.

                  (c) Obligor shall solidarily defend, indemnify and hold
                  Whitney, its directors, officers, agents and employees
                  harmless from any and all liabilities (including strict
                  liability), actions, demands, penalties, losses, costs or
                  expenses (including, without limitation, reasonable attorneys'
                  fees and remedial costs), suits, costs of any settlement or
                  judgment and claims of any and every kind whatsoever which may
                  now or in the future be paid, incurred, or suffered by, or
                  asserted against Whitney by any person or entity or
                  governmental agency for, with respect to, or as a direct or
                  indirect result of, the presence on or under, or the escape,
                  seepage, leakage, spillage, discharge, emission, discharging
                  or release from or onto any property of Borrower or any of its
                  Subsidiaries of any Hazardous Materials or any Hazardous
                  Materials Contamination, or arise out of, or result from, the
                  environmental condition of such property or the applicability
                  of any Governmental Requirement relating to Hazardous
                  Materials (including, without limitation, CERCLA or any so
                  called federal, state or local "super fund" or "super lien"
                  laws, statute, ordinance, code, rule, regulation, order or
                  decree) regardless of whether or not caused by or within the
                  control of Obligor. These representations, covenants and
                  warranties contained in this section shall survive the
                  termination of this Agreement.

         (14)     INSURANCE. (a) Borrower shall procure and maintain for the
                  benefit of Whitney original paid-up insurance policies from
                  companies satisfactory to Whitney, in amounts, in form and
                  substance, and with expiration dates acceptable to Whitney and
                  containing a noncontributory standard mortgagee clause or its
                  equivalent in a form satisfactory to Whitney, or the statutory
                  mortgagee clause, if any, required in the state where any of
                  Borrower's or its Subsidiaries' properties are located, or a
                  mortgagee's loss payable endorsement, in favor of Whitney,
                  providing the following types of insurance:


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<PAGE>


                                    (i) Multi-Peril Hazard Insurance. In each
                  case, the policies will afford insurance against loss or
                  damage by fire, lightning, explosion, earthquake, collapse,
                  theft, sprinkler leakage, vandalism and malicious mischief and
                  such other perils as are included in so-called "all-risks" or
                  "extended coverage" and against such other insurable perils
                  as, under good insurance practices, from time to time are
                  insured against for properties of similar character and
                  location; such insurance to be not less than 100% of the full
                  replacement cost of the improvements located on the property
                  of any Obligor, without deduction for depreciation; said
                  policies to contain replacement costs and stipulated value
                  endorsements.

                                    (ii) Comprehensive General Liability
                  Insurance. Comprehensive public liability insurance with
                  respect to the operations of Obligor on any property owned by
                  such Obligor or related thereto, whether conducted on or off
                  such property, against liability for personal injury
                  (including bodily injury and death) and property damage, of
                  not less than a total of $5,000,000.00 combined single limit
                  bodily injury and property damage; such comprehensive public
                  liability insurance to be on a per occurrence basis and to
                  specifically include but not limited to water damage
                  liability, products liability, motor vehicle liability for all
                  owned and nonowned vehicles, including rented and leased
                  vehicles, and contractual indemnification.

                                    (iii) Workers' Compensation and General
                  Liability. Workers' compensation and general liability
                  insurance against loss, damage or injury to employees, agents
                  or representatives of Obligor or of any contractor and
                  subcontractor, or insurance against loss, damage or injury
                  caused by any employees, agents or representatives of Obligor
                  or of any contractor or subcontractor.

                                    (iv) Flood Insurance. Flood Insurance Policy
                  in the amount of the Loan or the maximum amount obtainable,
                  whichever is less, if any improvement on any property of
                  Borrower or any of its Subsidiaries is located in a Flood
                  Hazard Area as defined by the Federal Emergency Management
                  Agency.

                                    (v) Other Insurance. Such other insurance or
                  any replacements or substitutions therefor and in such amounts
                  as may from time to time be reasonably required by Whitney
                  against other insurable casualties which at the time are
                  commonly insured against in the case of premises similarly
                  situated, due regard being given to the height and type of the
                  improvements on any property of any Obligor, its construction,
                  location, use and occupancy, or any replacements or
                  substitutions therefor.

                  (b) All of the foregoing policies shall contain an agreement
                  by the insurer not to cancel or amend the policies without
                  giving Whitney at least thirty (30) days' prior written notice
                  of its intention to do so and shall provide that the policies
                  shall be payable not withstanding the acts of Obligor, as
                  applicable.

                  (c) At or before Closing, Borrower shall deliver original
                  binders evidencing the insurance and within 15 days of closing
                  the original or certified policies to Whitney, and Borrower
                  shall deliver original or certified renewal policies with
                  satisfactory evidence of payment not less than fifteen (15)
                  days in advance of the expiration date of the existing policy
                  or policies. In the event Obligor should, for any reason
                  whatsoever, fail to keep the insurance in place, or to keep
                  said policies so payable, or fail to deliver to Whitney the
                  original or certified policies of insurance and the renewals
                  thereof upon demand, then Whitney after giving written notice
                  to Borrower of that deficiency and if after 15 days after
                  delivery of such notice, there is still no insurance coverage,
                  then Whitney, if it so elects, may itself have such insurance
                  effected in such amounts and in such companies as it may deem
                  proper and may pay the premiums therefor. The Borrower shall
                  reimburse Whitney upon demand for the amount of premium paid,
                  together with interest thereon at 15% percent per annum from
                  date until paid.

                  (d) Obligor agrees to notify Whitney immediately in writing of
                  any material fire or other casualty to or accident involving
                  any of property of Borrower or any of its Subsidiaries,
                  whether or not such


                                       34
<PAGE>


                  fire, casualty or accident is covered by insurance. Obligor
                  further agree to notify promptly Borrower or any of its
                  Subsidiaries' insurance company and to submit an appropriate
                  claim and proof of claim to the respective insurance company
                  if any of the assets of any Obligor is damaged or destroyed by
                  fire or other casualty.

                  (e) Whitney is hereby authorized and empowered, at its option,
                  to collect and receive the proceeds from any policy or
                  policies of insurance, and each insurance company is hereby
                  authorized and directed to make payment of all such losses
                  directly to Whitney instead of to the Obligor and Whitney
                  jointly.

         (15)     ERISA. Obligor shall fulfill its obligations under the minimum
                  funding standards of Employee Retirement Income Security Act
                  of 1974, as amended from time to time and the Internal Revenue
                  Code of 1986, as amended, with respect to each Plan, and
                  neither the Borrower nor any Affiliate or Subsidiary shall
                  take any action that would result in the termination of a Plan
                  by the Pension Benefit Guaranty Corporation.


         (16)     FINANCIAL CONDITION. The financial statements of Borrower as
                  heretofore furnished to Whitney have been prepared in
                  accordance with the generally accepted accounting principles
                  applied on a consistent basis and fairly present the financial
                  condition of Borrower as of those dates. To the best of
                  Borrower's knowledge and belief, Borrower does not have any
                  contingent obligation or liability for taxes not disclosed by
                  or reserved against in said financial statements, and there
                  have been no material adverse changes in the financial
                  condition of Borrower from that set forth in said financial
                  statements. The financial statements of Guarantors as
                  heretofore furnished to Whitney fairly present the financial
                  condition of each Guarantor as of the date hereof. To the best
                  of each Guarantor's knowledge and belief, each Guarantor has
                  no contingent obligation or liability for taxes not disclosed
                  by or reserved against in said financial statements, and there
                  have been no material adverse changes in the financial
                  condition of any Guarantor from that set forth in said
                  financial statements. Since the close of the period covered by
                  the latest financial statement delivered to Whitney with
                  respect to the Borrower and Guarantors, there has been no
                  material adverse change in the assets, liabilities or
                  financial condition of the Borrower or any Guarantor. No event
                  has occurred (including, without limitation, any litigation or
                  administrative proceedings) and no condition exists or, to the
                  knowledge of Borrower or Guarantors, is threatened, which (i)
                  might render Borrower or any Guarantor unable to perform its
                  obligations under the Loan Documents, or (ii) would constitute
                  a Default hereunder, or (iii) might adversely affect the
                  financial condition of the Borrower or any Guarantor or the
                  validity or priority of the lien of the Collateral Documents.
                  All parties acknowledge that Whitney is relying upon said
                  financial statements in entering into this Agreement and the
                  Loan.

E. CONDITIONS PRECEDENT TO LOANS. Whitney shall be obligated to make the Loan
only so long as: (i) all of the Loan Documents required by this Agreement have
been delivered to Whitney, (ii) Obligor is current in the performance of all of
the other obligations of Obligor contained in the Loan Documents, (iii) no
Default has occurred, (iv) no adverse material change in the financial condition
of Obligor has occurred, and (v) all of the indebtedness of Borrower to Midland
Fabricators & Process Systems, L.L.C. ("Midland") shall be subordinate to the
Obligations and all Liens in favor of Midland shall be subordinate to the Liens
in favor of Whitney. Notwithstanding the foregoing, should Whitney choose to
make an Advance prior to obtaining all of the Loan Documents required hereby,
Borrower shall deliver or arrange to have executed and delivered such Loan
Documents upon the request of Whitney.

F. DEFAULT. The occurrence of any one or more of the following events shall
constitute a default (a "Default") under this Agreement:

         (a) the failure of Borrower to pay promptly when due any interest or
principal on any of the Obligations, including but not limited to the Loan;


                                       35
<PAGE>


         (b) the failure of Obligor to observe or perform promptly when due any
covenant, agreement, or obligation due to the Whitney;

         (c) the failure to pay on demand any amounts advanced by Whitney for
the payment of taxes and assessments or the cost of obtaining the release of any
Collateral from any seizure, Lien, or attachment;

         (d) the inaccuracy at any time of any warranty, representation, or
statement made to Whitney by any Obligor, whether such warranty, representation,
or statement is made (i) in this Agreement, the Note, or the Collateral
Documents, or (ii) in any other agreement, document, or writing;

         (e)  any default on or in connection with any Obligation;

         (f) any material discrepancy between any financial statement submitted
to Whitney by Borrower and/or Guarantors and its actual financial condition;

         (g) any garnishment, seizure, or attachment of, or any tax lien or tax
levy against, any assets of any Obligor, including, without limitation, those
assets that are Collateral, unless the same is being contested in good faith and
is secured by adequate reserves in an amount sufficient to satisfy same;

         (h) one or more judgments, decrees, arbitration award, rulings or
decisions shall be entered against any Obligor involving in the aggregate a
liability (not paid or fully covered by insurance including self-insurance or
the payment or performance bonds) of $100,000 or more and all such judgments,
decrees, awards and rulings shall not have been vacated, paid, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof;

         (i) any Obligor shall default in any payment of principal of or
interest on any Debt other than the Loan in the aggregate principal amount of
more than $100,000, in each instance, beyond the period of grace, if any,
provided in the instrument or agreement under which such Debt or observance or
performance of any other agreement or condition relating to any such Debt or
contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the holder or
holders of such Debt or beneficiary or beneficiaries of such (or a trustee,
agent or other Person acting on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such Debt to
become due prior to its stated maturity;


                                       36
<PAGE>


         (j) a receiver, conservator, liquidator or trustee of Obligor, or of
any of their property (including the Property) is appointed by order or decree
of any court or agency or supervisory authority having jurisdiction; or an order
for relief is entered against Obligor under the Federal Bankruptcy Code; or
Obligor is adjudicated bankrupt or insolvent; or any material portion of any
property of Obligor (including the Property) is sequestered by court order and
such order remains in effect for more than thirty (30) days after such party
obtains knowledge thereof; or a petition is filed against Obligor under any
state, reorganization, arrangement, insolvency, readjustment of debt,
dissolution, liquidation or receivership law of any jurisdiction, whether now or
hereafter in effect, and such petition is not dismissed within sixty (60) days;

         (k) Obligor files a case under the Federal Bankruptcy Code or seeks
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of any
jurisdiction, whether now or hereafter in effect, or consents to the filing of
any case or petition against it under any such law;

         (l) Obligor makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they become due,
or consents to the appointment of a receiver, trustee or liquidator of such
Obligor or of all or any part of its property;

         (m) the entry of a final court order that enjoins or restrains any
Obligor's conduct of their business activities;

         (n) the existence or future enactment of any law, by any federal,
state, parish, county, municipal, or other taxing authority, requiring or
permitting Borrower to deduct any amount from any payments to be made on the
Loan or any other Obligation;

         (o) the failure of Obligor to pay any federal, state, or local tax,
fee, or duty, unless the same is being contested in good faith and is secured by
an adequate reserve in an amount sufficient to satisfy same and enforcement
proceedings have not begun;

         (p) any material adverse change in Borrower's or any Guarantor's
financial condition, business, or ability to pay or perform its obligations to
Whitney; or

         (q) the death of William A. Hines.

         Upon the happening of any event of Default and such Default continues
for a period of ten (10) days for a payment default under the Loan or the
Obligations or thirty (30) days for any other type of default, after Whitney has
mailed or sent written notice of such Default to the Borrower (but with no
notice required in the event of a Default under paragraphs (j), (k), or (l)),
Whitney may declare the entire principal amount of all Obligations then
outstanding, including the Loan and interest accrued thereon, to be immediately
due and payable without presentment, demand, protest, notice of protest or
dishonor or other notice of default of any kind, all of which are hereby
expressly waived by the Borrower and Whitney is then authorized to exercise any
and all of its rights and remedies under the Collateral Documents and/or the
Obligations.

         Upon the occurrence of any Default without the necessity of any notice
or cure period, all obligations, if any, of Whitney to the Borrower hereunder
including but not limited to the obligation to lend money and make an Advance to
Borrower or issue a letter of credit on behalf of Borrower, shall at the option
of Whitney immediately cease and terminate.

G. CONFLICTING PROVISIONS. In the event of actual conflict in the terms and
provisions of this Agreement and any of the Loan Documents which controls or
governs any collateral given to secure Borrower's Obligations, the terms and
provisions of this Agreement will control.

H. MISCELLANEOUS PROVISIONS. Borrower agrees to pay all of the costs, expenses
and fees incurred in connection with the Loan, including attorneys fees and
appraisal fees. This Agreement is not assignable by Borrower and no party other
than Borrower is entitled to rely on this Agreement. In no event shall Borrower
or


                                       37
<PAGE>


Whitney be liable to the other for indirect, special or consequential damages,
including the loss of anticipated profits, that may arise out of or are in any
way connected with this Agreement. No condition or other term of this Agreement
may be waived or modified except by a writing signed by Borrower and Whitney.
This Agreement shall supersede and replace any commitment letter or loan
agreement between Whitney and Borrower relating to the Loan. If any provision of
this Agreement shall be held to be legally invalid or unenforceable by any court
of competent jurisdiction, all remaining provisions of this Agreement shall
remain in full force and effect. This Agreement shall be governed by and
construed in accordance with the laws of State of Louisiana.

I. COUNTERPARTS. This Agreement may be executed in two or more counterparts, and
it shall not be necessary that the signatures of all parties hereto be contained
on any one counterpart hereof; each counterpart shall be deemed an original, but
all of which together shall constitute one and the same instrument.

J. AMENDMENTS AND RENEWALS. In the event the Loan is renewed, extended, amended
or modified, such loan and other Obligations of Borrower and Obligor will be
governed by the terms of this Agreement to the extent such terms remain
applicable. This Agreement shall be binding upon and shall inure to the benefit
of Whitney, the Borrower, Obligor and their respective successors and assigns

         IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.


                                       38
<PAGE>


                                  WHITNEY NATIONAL BANK


                                  By:   /s/ Joseph S. Exnicious
                                        ----------------------------------------
                                        Joseph S. Exnicios
                                  Its:  Senior Vice President

                                  UNIFAB INTERNATIONAL, INC.


                                  By:   /s/ Peter J. Roman
                                        ----------------------------------------
                                        Peter J. Roman
                                  Its:  Vice President and Chief Financial
                                        Officer







                                       39


</TEXT>
</DOCUMENT>
