<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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GULFMARK OFFSHORE, INC.
(Exact Name of Registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 4499 76-0526032
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code No.) Identification No.)
</TABLE>
5 POST OAK PARK, SUITE 1170
HOUSTON, TEXAS 77027
(713) 963-9522
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
---------------------
FRANK R. PIERCE
EXECUTIVE VICE PRESIDENT
GULFMARK OFFSHORE, INC.
5 POST OAK PARK, SUITE 1170
HOUSTON, TEXAS 77027
(713) 963-9522
(Address, including zip code, and telephone number, including area code, of
agent for service)
Copies to:
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<S> <C>
W. GARNEY GRIGGS, ESQ. LOUISE A. SHEARER, ESQ.
GRIGGS & HARRISON, P.C. BAKER & BOTTS, L.L.P.
1301 MCKINNEY, SUITE 3200 ONE SHELL PLAZA
HOUSTON, TEXAS 77010-3033 910 LOUISIANA
(713) 651-0600 HOUSTON, TEXAS 77002-4995
(713) 229-1234
</TABLE>
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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. [ ]
CALCULATION OF REGISTRATION FEE
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====================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF SECURITIES AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED(1) PER SHARE(1) OFFERING PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01
per share.................. 1,125,000 shares $27 1/8 $30,515,625 $9,248
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(1) Estimated in accordance with Rule 457(c) solely for the purpose of
calculating the registration fee based upon the average of the high and low
prices of the Common Stock as quoted on the Nasdaq National Market on July
10, 1997.
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
Subject to Completion, dated July 11, 1997
PROSPECTUS
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<S> <C> <C>
1,000,000 SHARES
GULFMARK OFFSHORE, INC.
COMMON STOCK
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[GULFMARK LOGO]
---------------------------
The 1,000,000 shares of common stock, par value $0.01 per share (the
"Common Stock") of GulfMark Offshore, Inc. (the "Company") offered hereby (the
"Offering") are being offered by the Company. See "Underwriting."
The Common Stock is listed on the Nasdaq National Market under the symbol
"GMRK." On July 10, the last reported sales price for the Common Stock as
reported on the Nasdaq National Market was $27 1/2 per share. See "Price Range
of Common Stock and Dividend Policy."
---------------------
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK
FACTORS" BEGINNING ON PAGE 14 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share................................ $ $ $
- ---------------------------------------------------------------------------------------------------------------
Total(3)................................. $ $ $
===============================================================================================================
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(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $455,300.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
an aggregate of 125,000 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively. See
"Underwriting."
---------------------------
The shares of Common Stock offered by this Prospectus are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that delivery of the certificates
for the shares of Common Stock offered will be made at the offices of Lehman
Brothers Inc., New York, New York on or about July , 1997.
---------------------------
LEHMAN BROTHERS
JEFFERIES & COMPANY, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
JULY , 1997
<PAGE> 3
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF SHARES OF COMMON STOCK FOLLOWING THE
PRICING OF THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK
OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK, AND THE
IMPOSITION OF PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE
"UNDERWRITING."
IN CONNECTION WITH THE OFFERING, CERTAIN UNDERWRITERS (AND SELLING GROUP
MEMBERS) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK OF
THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF
REGULATION M. SEE "UNDERWRITING."
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock offered by this Prospectus. This Prospectus,
which constitutes a part of such Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in exhibits to such Registration Statement as permitted by the
rules and regulations of the Commission. For further information with respect to
the Company and the Common Stock offered hereby, reference is made to the
Registration Statement, including the exhibits thereto. The Registration
Statement may be inspected without charge at the public reference facilities
maintained by the Commission and at the Regional Offices of the Commission, and
copies may be obtained from the Commission at prescribed rates. Statements made
in this Prospectus concerning the contents of any document referred to herein
are not necessarily complete. With respect to each such document filed with the
Commission as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected at the Public Reference Section of
the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the Regional Offices of the Commission at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7
World Trade Center, New York, New York 10048. Copies of such material can also
be obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. Such reports, proxy and information statements and other information
concerning the Company can also be inspected and copied at the offices of The
Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C., on which the Common
Stock is traded.
2
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[PHOTOS]
3
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and Consolidated Financial Statements (including the notes thereto)
included elsewhere in this Prospectus. Unless the context otherwise requires,
references in this Prospectus to the "Company" or "GulfMark" shall mean GulfMark
Offshore, Inc. and its subsidiaries and, for dates and periods prior to May 1,
1997, GulfMark International, Inc. and its subsidiaries. See "Recent
Developments." Unless otherwise indicated, the information in this Prospectus
assumes that the Underwriters' over-allotment option with respect to the sale of
the Common Stock will not be exercised. An investment in the Common Stock
offered hereby involves a high degree of risk and investors should carefully
consider the information set forth under the heading "Risk Factors." See
"Glossary" for the definition of certain industry terminology used herein.
THE COMPANY
GulfMark provides marine support and transportation services to companies
involved in the offshore exploration and production of oil and natural gas. The
Company's vessels transport drilling materials, supplies and personnel to
offshore facilities, as well as move and position drilling structures
(collectively, "Offshore Marine Services"). The majority of the Company's
operations are conducted in the North Sea and, with the exception of one vessel
operating offshore Brazil, the balance of the Company's operations are conducted
offshore Southeast Asia.
The Company's fleet has grown in size and capability from an original 11
vessels acquired in late 1990 to its present level of 30 vessels through
strategic acquisitions and new construction of technologically advanced vessels,
partially offset by dispositions of certain older, less profitable vessels.
Twenty-one vessels in GulfMark's fleet are owned, two vessels are bareboat
chartered and seven vessels are managed. The two bareboat charters run through
August 1998.
The age of an Offshore Marine Service vessel affects its earnings
potential, the amount of capital required to maintain the vessel and its
technological capabilities. The average age of all of the vessels owned by
GulfMark is 14 years. Excluding the six vessels acquired by the Company from
Maritime (Pte), Limited in August 1996, all of the Company's owned vessels have
been built or substantially refurbished since 1985. The average age of the
Company's nine owned platform supply vessels ("PSVs") included in the North Sea
fleet is just over nine years. According to Petrodata Limited, the average age
of the 10 North Sea PSVs recently acquired by another U.S.-based Offshore Marine
Services company was approximately 17 years.
The fleet summarized above does not include GulfMark's most modern,
technologically sophisticated vessel to date, the Highland Rover, a modified and
extended (236') UT 755 design PSV (see Glossary) currently under construction
and scheduled to be delivered in March 1998. In addition to the standard
capabilities of the technologically advanced UT 755 design, the Highland Rover
will be equipped with a computer-controlled maneuvering system (also known as
dynamic positioning) and will be capable of launching subsea remotely operated
vehicles ("ROVs") through a specialized "moon pool." Included in the fleet
described above are two other standard size (221') UT 755s, the Highland Piper
and the Highland Drummer, built in 1996 and 1997, respectively.
Additionally, the Company has recently purchased an unfinished supply
vessel hull, for which design and shipyard pricing have already commenced (the
"Gallant Project"). The Company anticipates that this vessel will be delivered
in 1998. The hull could be completed as a PSV or an anchor handling, towing and
supply ("AHTS") vessel, although the Company currently believes that the most
attractive potential application may be as a multipurpose support vessel for the
floating production, storage and offloading ("FPSO") market. For a variety of
economic reasons, exploration and production companies are increasingly
employing FPSO structures in lieu of conventional fixed platform installations.
The FPSO market typically employs more technologically advanced vessels capable
of performing multiple functions, potentially under longer term (even "life of
field") charters. The Company believes that the low cost (estimated at $11-14
million) and early delivery date of the Gallant Project should provide the
Company with a significant competitive advantage in serving the growing FPSO
market.
4
<PAGE> 6
GulfMark generated EBITDA (as defined on page 10) and income from
continuing operations of $4.1 million and $1.0 million, respectively, for the
quarter ended March 31, 1997, compared with $2.0 million and $0.2 million,
respectively, for the quarter ended March 31, 1996. EBITDA and income from
continuing operations for the year ended December 31, 1996 were $14.0 million
and $3.6 million, respectively, compared to $8.4 million and $0.4 million,
respectively, for the year ended December 31, 1995.
This improved financial performance of the Company reflects both the growth
of its fleet and improving markets, especially the North Sea market. GulfMark's
average day rate for its owned North Sea PSVs for the quarter ended March 31,
1997 was $9,583, compared to $7,355 for the quarter ended March 31, 1996. The
comparable rate for the year ended December 31, 1996 was $8,819, compared to
$7,840 for the year ended December 31, 1995. The Company's fleet utilization (as
defined on page 12) in the North Sea for these periods equaled or exceeded 93%.
In light of the need for downtime for ordinary maintenance and repairs, the
Company generally considers full practical utilization to be 95% or above. The
nine owned vessels operating in the North Sea accounted for 85% of the Company's
vessel earnings (revenues less direct costs) in the quarter ended March 31,
1997.
BUSINESS STRATEGY
GulfMark's goal is to enhance its position as a premier supplier of
Offshore Marine Services in international markets. The Company's strategy is to
profitably increase revenues and enhance shareholder value by (i) developing and
maintaining a large, diversified and technologically advanced fleet, (ii)
focusing on attractive international markets and (iii) managing its risk profile
through a balance of long-term and short-term charters. The Company also focuses
on providing dependable, high quality services to differentiate itself from its
competitors. This strategy is intended to produce higher vessel utilization,
relatively stable growth and returns on investments that are superior to those
of the Company's competitors.
Developing and Maintaining a Large, Diversified and Technologically
Advanced Fleet. The size, diversity and technologically advanced nature of
GulfMark's fleet enable it to provide offshore exploration and production
operators with a broad range of Offshore Marine Services in several strategic
markets. The Company regularly upgrades its fleet to improve capability,
reliability and customer satisfaction.
Upon delivery of the Highland Rover in 1998, the Company will own and
operate three of the 11 UT 755 design PSVs currently in service or on order. The
UT 755 is a technologically sophisticated design that the Company helped
introduce in the North Sea with the construction of the Highland Piper and
Highland Drummer, two of the first three UT 755s (built in 1996 and 1997,
respectively). The design has been favorably received by the market and is now
gaining wide acceptance. Additionally, with the growing use of ROVs, vessels
such as the Highland Rover, with its specialized "moon pool" vehicle launching
capabilities, are expected to be especially attractive because they will provide
customers with increased launch certainty in the harsh, unpredictable weather of
the North Sea.
The Company's North Sea fleet is comprised of vessels with a wide range of
technology, size and corresponding price options. Vessels in this fleet range
from the very large and sophisticated vessels built post-1990, such as the
modern UT 705s and UT 755s, to older UT 705s that offer the same large size but
not the sophistication of the modern UT 705s, and finally to smaller PSVs such
as the Highland Legend and Highland Sprite.
The Company's Southeast Asia fleet consists of vessels that can provide the
greatest functional flexibility for the varied needs of this geographically
diverse region. Substantially all of the Company's vessels in its Southeast Asia
fleet have sufficient anchor handling and towing capability to compete for work
in areas such as Indonesia, where drilling support and combinations of
production and drilling support are major uses of offshore support vessels.
Additionally, the Company's vessels are attractive as supply vessels in locales
such as Thailand and Malaysia, where the demand for such vessels is strong
because of their combination of relatively large on deck and below deck
capacities and relatively high horsepower.
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<PAGE> 7
The Company will use a portion of the net proceeds from the Offering to
further invest in the expansion and quality of its fleet. Specifically, the
Company intends to finance the completion of the Highland Rover and the Gallant
Project partly through the net proceeds from the Offering. See "Use of
Proceeds."
Focusing on Attractive International Markets. GulfMark has elected to focus
its operations in the North Sea and Southeast Asia markets because it believes
there are lower levels of competition, higher barriers to entry, less volatile
day rates and more potential for increasing day rates in those markets than in
other markets, such as the Gulf of Mexico. The Company's competitive position in
the North Sea is supported by the sophistication of its fleet, while its
competitive position in Southeast Asia is related to the flexibility of its
fleet. The Company's strong relationships and many years of operating experience
are also critical elements of its success in both markets. From time to time,
the Company has selectively targeted additional markets where it can supply
services under longer term contracts. An example of such a market is Brazil,
where the Company's current contract with Petrobras, the Brazilian national oil
company, was recently extended to May 1999. See "-- Overview of Major Markets."
Managing Its Risk Profile Through a Balance of Long-Term and Short-Term
Charters. The Company seeks to balance its portfolio of charters with both
long-term charters, which provide a significant degree of cash flow certainty,
and short-term charters, which provide the opportunity to benefit from
increasing day rates. The Company utilizes its many years of operating
experience to apply this strategy within the markets in which it operates.
Approximately 69% of the Company's first quarter 1997 revenues were derived
from charters longer than six months, and are associated with the Company's
newer vessels, which are predominantly in the North Sea. The balance of the
Company's revenues were derived from shorter duration charters, primarily in the
Southeast Asia market where the Company's vessels generally are older. The
Company's current balance of charters in Southeast Asia is weighted toward
shorter duration charters because management believes that long-term charter day
rates in Southeast Asia have been relatively unattractive compared to spot day
rates and that term charter day rates are likely to increase in the near future.
The Company has also selectively employed sharing arrangements with its
customers to enhance its profitability on longer term charters. These innovative
charters provide the Company and its customers the opportunity to benefit from
rising charter rates by subchartering contracted vessels to third parties at
prevailing market rates during any downtime in the customers' operations. If the
subcharter rate is below the original charter rate, the customer remains
obligated for the contracted rate shortfall. However, if the subcharter rate is
higher than the original charter rate, the Company and the customer share the
additional revenues. These arrangements permit both the customer and the Company
to benefit from improving market conditions and reduce any disincentive to
customers from entering into longer duration charters by minimizing the cost
associated with downtime.
OVERVIEW OF MAJOR MARKETS
The international Offshore Marine Services industry is relatively
fragmented, with more than 25 major participants and numerous small regional
competitors. Historically, few of these competitors have participated in all
five of the major markets (the Gulf of Mexico, the North Sea, offshore Southeast
Asia, offshore West Africa and the Persian Gulf). Recently, three U.S.-based
publicly traded Offshore Marine Service providers whose fleets have historically
been focused in the Gulf of Mexico purchased vessels currently employed in one
or more other markets, including the markets in which the Company operates.
Further consolidation, including acquisitions by the Company, in the markets in
which the Company operates may impact future day rates and the competitive
environment for the Company.
The North Sea Market. The Company defines the North Sea market as offshore
Norway, Denmark, the Netherlands, Germany, Great Britain and Ireland, the
Norwegian Sea and the area to the west of the Shetland Islands. Historically,
this market has been the most demanding of all oil and natural gas exploration
frontiers due to harsh weather, erratic sea conditions, significant water depths
and long sailing distances. Exploration and production operators in the North
Sea market are typically large and well capitalized entities (such as
6
<PAGE> 8
major oil companies and state owned oil companies), in large part because of the
significant financial commitment required in this market. Projects in the region
tend to be fewer in number, but larger in scope, with longer planning horizons,
than projects in regions with less demanding environments. Consequently, vessel
demand in the North Sea tends to be steadier and less susceptible to abrupt
swings than vessel demand in other regions. The Company's fleet has operated and
grown in the North Sea market since the Company's inception.
The Company believes that its North Sea fleet is well suited to take
advantage of several trends in this market. This region continues to mature as
an exploration area. The average size of new oil and natural gas developments is
now approximately 50 million barrels, compared to average developments of
approximately two billion barrels in the early 1970s. The decreasing size of
developments, in combination with such factors as increasing maintenance
requirements for aging platforms, puts additional pressure on oil companies to
reduce operating costs. One response by the oil companies has been to outsource
transportation and logistics support functions, which has given rise to the
recent creation of third-party logistics support service providers that combine
transportation and support functions that have previously been separate. These
service providers arrange vessel support for a large number of different
offshore structures with a wide range of vessel requirements. As a result, these
service providers tend to charter larger, more technologically advanced multi-
function vessels, such as the modern UT 705s and UT 755s, to avoid paying
potentially higher spot rates for incremental vessels. The Company anticipated
this increase in demand for multi-function vessels and has responded by
increasing the number of modern UT 705s and UT 755s in its North Sea fleet.
The Southeast Asia Market. The Company defines the Southeast Asia market as
offshore Asia bounded roughly on the west by the Indian subcontinent and on the
north by China. This market includes offshore Brunei, Cambodia, Indonesia,
Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. The
Company's competition in this region differs from country to country, but the
market is broadly characterized by a large number of small companies, in
contrast to many of the other major offshore areas of the world, where a few
large operators dominate the market. Affiliations and joint ventures with local
companies are generally necessary to maintain a viable marketing presence. The
Company's management has been involved in the region since the mid-1970s, and
the Company currently maintains long-standing business relationships with a
number of local companies.
The design requirements for vessels in the Southeast Asia market are
generally similar to the requirements in the Gulf of Mexico. However, the
varying weather conditions, annual monsoons and large distances between supply
centers in Southeast Asia also generate demand for more versatile vessel
designs. Advanced exploration and production technology and rapid projected
growth in energy demand among many Pacific Rim countries have led to more remote
drilling locations, which has increased both the overall demand in this market
and the technical requirements for vessels. In addition, the Company believes
that several major exploration and production projects, which are currently in
the planning stages, will significantly increase the demand for Offshore Marine
Services in the Southeast Asia market. Finally, the cost of mobilizing vessels
from the Gulf of Mexico or other offshore markets to the Southeast Asia market,
combined with the current high demand for vessels in the Gulf of Mexico and the
recent movement of vessels from the Southeast Asia market to West Africa, have
reduced the universe of economically viable vessels available in Southeast Asia.
The Company believes that the factors detailed above are likely to increase day
rates in Southeast Asia in the near future.
The Company believes that its Southeast Asia fleet is well suited for the
demand in this market. The Company's fleet includes 12 vessels that have an
attractive combination of relatively high horsepower and relatively large on
deck and below deck capacities, which enables them to perform small anchor
handling functions in areas such as Indonesia and supply functions in areas such
as Malaysia and Thailand, all of which are important areas of activity in the
Southeast Asia market.
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THE OFFERING
Common Stock Offered....... 1,000,000 shares
Common Stock Outstanding:
Before the Offering(a)... 6,765,893 shares
After the Offering(a).... 7,765,893 shares
Use of Proceeds............ The net proceeds to the Company from the sale of
the Common Stock offered hereby are estimated to be
approximately $ million. The Company intends to
use the net proceeds from the Offering to fund its
capital expenditures, including building new
vessels and upgrading its fleet, to repay a portion
of its indebtedness and, to the extent of any
remaining proceeds, for other general corporate
purposes. See "Use of Proceeds."
Nasdaq National Market
Symbol................... GMRK
- ---------------
(a) Does not include an aggregate of 497,646 shares of Common Stock subject to
outstanding options as of May 31, 1997 granted under the Company's 1987
Stock Option Plan, Amended and Restated 1993 Non-Employee Director Stock
Option Plan and 1988 Non-Employee Director Option Policy. See
"Management -- Director and Executive Officer Compensation" and "Description
of Capital Stock."
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SUMMARY OF CONSOLIDATED FINANCIAL DATA
The following table presents for the periods indicated certain historical
consolidated financial data for the Company. The following information should be
read together with "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements, including the notes thereto, contained in
this Prospectus. The results for the three months ended March 31, 1997 are not
necessarily indicative of results for the full year. The Consolidated Financial
Statements included in the Prospectus, as well as the financial data presented
in the table below, present the net assets and results of operations of the
non-marine businesses of the Company's predecessor as discontinued operations of
the Company for all periods presented. See "Recent Developments."
<TABLE>
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THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND NUMBER OF VESSELS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues.............................. $ 9,679 $ 6,623 $ 34,749 $ 27,233 $27,692 $ 22,564 $ 18,115
Direct operating expenses............. 4,302 3,641 16,178 15,386 15,171 12,060 7,488
General and administrative expenses... 1,281 966 4,523 3,483 3,643 3,280 3,075
Depreciation and amortization......... 1,604 1,113 5,013 5,472 5,065 3,752 3,351
-------- -------- -------- -------- ------- -------- --------
Operating income...................... 2,492 903 9,035 2,892 3,813 3,472 4,201
Gain on sale of vessel................ -- -- -- -- 842 -- --
Interest expense, net................. (1,132) (743) (3,467) (2,613) (2,179) (2,047) (2,351)
Other income (expense), net........... 82 60 (86) 180 (12) 68 285
Income tax provision.................. (398) (9) (1,839) (91) (981) (534) (601)
-------- -------- -------- -------- ------- -------- --------
Income from continuing operations..... 1,044 211 3,643 368 1,483 959 1,534
Income (loss) from discontinued
operations, net of taxes............ (648) (164) 4,796 (2,270) 591 1,685 334
Loss on disposal of segment, net of
taxes............................... (1,426) -- -- -- -- -- --
-------- -------- -------- -------- ------- -------- --------
Net income (loss)............. $ (1,030) $ 47 $ 8,439 $ (1,902) $ 2,074 $ 2,644 $ 1,868
======== ======== ======== ======== ======= ======== ========
Earnings per share from continuing
operations(a)....................... $ 0.16 $ 0.03 $ 0.55 $ 0.06 $ 0.22 $ 0.14 $ 0.23
Weighted average common shares........ 6,680 6,672 6,676 6,644 6,640 6,624 6,620
STATEMENT OF CASH FLOWS DATA:
Cash provided by (used in) operating
activities of continuing
operations.......................... $ 2,486 $ 1,376 $ 8,539 $ 6,389 $ 5,448 $ 2,653 $ 5,547
Cash provided by (used in) investing
activities.......................... (14,097) (12,250) (24,493) (15,093) (258) (16,836) (12,610)
Cash provided by (used in) financing
activities.......................... 5,742 11,937 17,894 9,567 (7,970) 12,810 6,259
Effect of exchange rate changes on
cash................................ (440) (15) 924 (160) 124 (56) (560)
OTHER DATA:
EBITDA(b)............................. $ 4,096 $ 2,016 $ 14,048 $ 8,364 $ 8,878 $ 7,224 $ 7,552
Cash dividends per share.............. -- -- -- -- -- -- --
Total vessels in fleet(c)............. 30 23 28 22 20 25 15
Average number of owned or chartered
vessels(d).......................... 21.9 14.1 17.3 14.0 15.1 14.4 11.1
</TABLE>
9
<PAGE> 11
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 31, ------------------------------------------------
1997 1996 1995 1994 1993 1992
--------- -------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 10,233 $ 17,234 $ 5,136 $ 2,645 $ 5,195 $ 6,541
Vessels and equipment, net................................ 94,912 87,405 61,343 51,175 53,002 44,717
Net assets of discontinued operations(e).................. 14,881 14,837 19,275 23,512 23,569 22,166
Total assets including discontinued operations............ 134,652 131,307 94,179 87,821 90,727 78,509
Total assets excluding discontinued operations............ 119,771 116,470 74,904 64,309 67,158 56,343
Long-term debt(f)......................................... 50,005 50,811 33,600 26,727 30,169 18,730
Total stockholders' equity................................ 59,641 62,016 50,928 53,025 50,388 48,306
Total stockholders' equity excluding discontinued
operations.............................................. 44,760 47,179 31,653 29,513 26,819 26,140
</TABLE>
- ---------------
(a) The dilutive effect of Common Stock equivalents is not material.
(b) As used herein, EBITDA is operating income plus depreciation and
amortization. EBITDA can be used by management of the Company as a
supplemental financial measurement in the evaluation of its business and in
establishing its capital budget and should not be considered as an
alternative to net income, as an indicator of the operating performance of
the Company, as an alternative to cash flows or as a measure of liquidity.
Because EBITDA is not uniformly calculated among and across industry groups,
this measure may not be comparable to similarly titled measures reported by
other companies. EBITDA is presented here to provide additional information
about the Company.
(c) Includes managed vessels, in addition to those that are owned and chartered.
See pages 36 and 37 for further information concerning the Company's fleet.
(d) Includes owned and chartered PSVs and AHTS vessels only. Adjusted for
additions and dispositions occurring during each period. See pages 36 and 37
for further information concerning the Company's fleet.
(e) Reflects the financial statement information for the non-marine businesses
of the Company's predecessor.
(f) Excludes current portion of long-term debt.
10
<PAGE> 12
SUMMARY FLEET INFORMATION
The following table sets forth certain fleet information with respect to
the Company as of the dates indicated. See "Glossary," "Business -- The Offshore
Marine Services Industry -- Vessel Classifications" and "Business -- The
Company -- The Company's Fleet" for further detail and fleet definitions.
<TABLE>
<CAPTION>
AT AT DECEMBER 31,
MARCH 31, ------------------------------------------
1997 1996 1995 1994 1993 1992
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NORTH SEA FLEET
Owned Vessels:
Large Platform Supply(a)............... 7 6 5 4 4 2
Platform Supply........................ 2 2 2 2 2 2
Anchor Handling, Towing and Supply..... -- -- -- -- 1 1
------ ------ ------ ------ ------ ------
Total............................. 9 8 7 6 7 5
Managed Vessels(b):
Large Platform Supply(a)............... 3 3 2 3 4 --
Anchor Handling, Towing and Supply..... 2 1 1 1 1 1
Specialty Vessel....................... 2 2 4 2 4 --
------ ------ ------ ------ ------ ------
Total............................. 7 6 7 6 9 1
------ ------ ------ ------ ------ ------
Total North Sea Vessels........... 16 14 14 12 16 6
SOUTHEAST ASIA FLEET
Owned Vessels:
Small Anchor Handling, Towing and
Supply............................... 10 10 4 4 5 5
Crewboat............................... 1 1 1 1 1 1
------ ------ ------ ------ ------ ------
Total............................. 11 11 5 5 6 6
Chartered Vessels(b):
Small Anchor Handling, Towing and
Supply............................... 1 1 1 1 1 1
Platform Supply........................ 1 1 1 1 1 1
------ ------ ------ ------ ------ ------
Total............................. 2 2 2 2 2 2
------ ------ ------ ------ ------ ------
Total Southeast Asia Vessels...... 13 13 7 7 8 8
BRAZIL
Owned Vessels:
Anchor Handling, Towing and Supply..... 1 1 1 1 1 1
------ ------ ------ ------ ------ ------
TOTAL VESSELS IN COMPANY'S
FLEET........................... 30 28 22 20 25 15
====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(a) Platform supply vessels with pipe carrying capabilities such as the UT 705s
and UT 755s.
(b) Managed and chartered vessels are on year-to-year contracts, except for the
two vessels in Southeast Asia that are chartered through August 1998 to
SeaMark Ltd., a Panamanian corporation owned 51% by the Company and 49% by
the vessels' owners.
11
<PAGE> 13
SUMMARY HISTORICAL OPERATING INFORMATION
The following table sets forth certain summary operating information for
the Company relating to average day and utilization rates for the Company's PSVs
and AHTS vessels and the average number of such vessels owned or bareboat
chartered during the periods indicated. These vessels generate substantially all
of the Company's revenues and operating profit. The information detailed below
is utilized by the Company's management to evaluate the performance of the
business.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
--------------- ------------------------------------------
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Rates Per Day Worked(a)(b):
North Sea Fleet(c)............ $9,583 $7,355 $8,819 $7,840 $7,551 $7,231 $7,690
Southeast Asia Fleet(d)....... 3,536 3,273 3,347 3,146 3,047 3,462 3,896
Overall Utilization Rate(a)(b):
North Sea Fleet............... 93.0% 95.1% 95.1% 96.4% 92.7% 78.9% 74.6%
Southeast Asia Fleet(d)....... 57.5% 81.6% 77.5% 80.5% 82.9% 83.0% 84.8%
Average Owned or Chartered
Vessels(a)(e):
North Sea Fleet............... 8.9 7.1 7.8 7.0 7.5 6.4 4.8
Southeast Asia Fleet(d)....... 13.0 7.0 9.5 7.0 7.7 8.0 6.3
------ ------ ------ ------ ------ ------ ------
Total................. 21.9 14.1 17.3 14.0 15.2 14.4 11.1
====== ====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(a) Includes all owned or bareboat chartered PSVs and AHTS vessels. The
Company's only crewboat and only standby rescue vessel (which was chartered
until December 31, 1996) are excluded, as are all managed vessels.
(b) Rates per day worked is total charter revenues divided by number of days
worked. Utilization rate is defined as the total number of days worked
divided by the total number of days in the period.
(c) Revenues for vessels in the North Sea fleet are earned in Sterling (L) and
have been converted to U.S. Dollars ($) at the average exchange rate ($/L)
for the periods indicated. The average exchange rates were L = $1.6323 and
L = $1.5319 for the periods ended March 31, 1997 and March 31, 1996,
respectively. The average exchange rates for the years ended December 31,
1996, 1995, 1994, 1993 and 1992 were L = $1.5623, L = $1.5778, L = $1.5360,
L = $1.4962 and L = $1.7586, respectively.
(d) Includes the vessel operating in Brazil.
(e) Adjusted for vessel additions and dispositions occurring during each period.
12
<PAGE> 14
RECENT DEVELOPMENTS
THE CONTRIBUTION, DISTRIBUTION AND MERGER
The Company was incorporated on December 4, 1996 under the name of "New
GulfMark, Inc.," a wholly owned subsidiary of the corporation then known as
GulfMark International, Inc. (the "Predecessor"). The Company was formed to
facilitate the Predecessor's separation of its international Offshore Marine
Services business from its only U.S. operations, an erosion control business
("Ercon"), and its large holding of common stock of Energy Ventures, Inc. (now
known as EVI, Inc. ("EVI")). In order to accomplish this separation, the
Predecessor agreed to transfer the assets, liabilities and operations of its
Offshore Marine Services business to the Company (the "Contribution"). On April
30, 1997, the Contribution occurred and the Offshore Marine Services business
was separated from the Predecessor through the distribution of all of the then
outstanding Common Stock of the Company to the Predecessor's common stockholders
(the "Distribution") in accordance with the Agreement and Plan of Distribution
dated December 5, 1996 (the "Distribution Agreement") among the Company, the
Predecessor and EVI. Following the Distribution, on May 1, 1997, a subsidiary of
EVI was merged (the "Merger") with and into the Predecessor, whose assets then
consisted primarily of Ercon and its investment in approximately 2.2 million
shares of EVI common stock. Immediately after the Merger, the Predecessor ceased
public trading of its common stock.
The Consolidated Financial Statements included in this Prospectus present
the net assets and results of operations of Ercon and the common stock of EVI
owned by the Predecessor as discontinued operations of the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and Notes 1 and 4 to the Consolidated Financial Statements of the
Company.
In connection with the Distribution, two shares of the Company's Common
Stock were issued for each share of the Predecessor's common stock. Also, in
connection with the Merger, the Predecessor's stockholders received shares of
EVI common stock.
The Predecessor received a tax opinion that the Contribution, Distribution
and Merger described above will not be taxable to the Company, the Predecessor
or EVI. See "Risk Factors -- Tax Indemnity to EVI" and "Business -- The
Company -- Distribution Agreement Obligations and Indemnities." One of the
criteria for such tax-free status required the Predecessor to distribute an
amount of stock that constituted control in GulfMark. The Offering was
contemplated at the time of the Contribution, Distribution and Merger, as a
result of which the shares issued in the Offering will be taken into account in
determining whether the shares involved in the Distribution constituted a
controlling interest in the Company. Consequently, to preserve the tax-free
status of the Contribution, the Distribution and the Merger, the number of
shares of Common Stock that the Company may issue in the Offering is limited.
The Company's tax advisor has advised the Company that the issuance of the
number of shares offered by this Prospectus (including the shares subject to the
over-allotment option) will not exceed the limitations set forth in the tax
opinion.
13
<PAGE> 15
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. The following factors should be carefully considered together with the
information provided elsewhere in this Prospectus in evaluating an investment in
the Common Stock.
DEPENDENCE ON OIL AND GAS INDUSTRY; MARKET VOLATILITY
The Company's operations are dependent on activity in the offshore oil and
natural gas exploration and production industry. The level of exploration and
development of offshore areas is affected by both short-term and long-term
trends in oil and natural gas prices which, in turn, are related to the demand
for petroleum products and the current availability of oil and natural gas
resources. The level of offshore activity is also related to local policies that
influence drilling activities. In recent years, oil and natural gas prices have
reacted to actual and perceived changes in the supply of and demand for oil and
natural gas, which has resulted in volatile levels of offshore exploration and
drilling activity. A significant or prolonged decline in future oil and natural
gas prices would likely result in reduced exploration and development of
offshore areas and a decline in the demand for Offshore Marine Services. Such
reduced activity could have a material adverse effect on the Company's financial
condition and results of operations. See "Business -- The Offshore Marine
Services Industry" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Charter rates for the Company's vessels are also dependent on the supply of
offshore support vessels. Excess vessel capacity in the industry can result from
refurbishment of "mothballed" vessels, conversion of vessels formerly dedicated
to services other than Offshore Marine Services, construction of new vessels and
migration of vessels between markets. The addition of new capacity to the
worldwide offshore marine fleet could increase competition in those markets
where the Company presently operates, which, in turn, could have a material
adverse effect on the Company's financial condition and results of operations.
RELIANCE ON SIGNIFICANT CUSTOMERS
The Company's principal customers are major integrated oil companies and
large independent oil and natural gas exploration and production companies
operating in international markets, as well as foreign government owned or
controlled organizations and companies that provide logistics, construction and
other services to such oil companies and foreign government organizations. The
percentage of the Company's revenues attributable to any particular customer
varies from time to time depending on the level of oil and natural gas
exploration undertaken by that customer, the suitability of the Company's
vessels for the customer's projects and other factors, many of which are beyond
the Company's control. For the year ended December 31, 1996, approximately 14%
and 15% of the Company's total revenues were received from Shell U.K.
Exploration & Production ("Shell") and Aberdeen Services Company (North Sea)
("ASCO"), respectively. For the quarter ended March 31, 1997, approximately 20%,
15% and 16% of the Company's total revenues were received from Shell, ASCO and
European Marine Contractors, respectively. See "Business -- The
Company -- Customers, Charter Terms and Competition."
ENVIRONMENTAL AND GOVERNMENT REGULATION
The Company's operations are materially affected by government regulation
in the form of international conventions, federal and state laws and regulations
in jurisdictions where the Company's vessels operate and/or are registered.
These conventions, laws and regulations govern oil spills and other matters of
environmental protection and worker health and safety, as well as the manning,
construction and operation of vessels.
The Company believes that it is presently in material compliance with the
environmental laws and regulations to which the Company's operations are
subject. The Company is not a party to any pending environmental litigation or
other proceeding and is unaware of any threatened environmental litigation or
proceeding, which, if adversely determined, would have a material adverse effect
on the financial condition or results of operations of the Company. However, the
risk of incurring substantial compliance costs, liabilities and penalties for
noncompliance is inherent in Offshore Marine Services operations. There can be
no
14
<PAGE> 16
assurance that significant costs, liabilities and penalties will not be incurred
by or imposed on the Company in the future. See "Business -- The
Company -- Environmental and Government Regulation."
OPERATIONAL RISKS AND INSURANCE
The Company's operations are subject to various risks, including
catastrophic marine disaster, adverse weather conditions, mechanical failure,
collision, oil and hazardous substance spills and navigation errors, all of
which represent a threat to the safety of personnel and to the Company's
vessels, cargo, equipment under tow and other property, as well as the
environment. The occurrence of any of the foregoing events could result in loss
of revenue, casualty loss, increased costs or significant liability of the
Company to third parties. Because a significant majority of the Company's vessel
earnings are produced by the nine owned vessels in its North Sea fleet, the
occurrence of such events with respect to any of those vessels could have a
disproportionate effect on the Company's revenues and earnings. The Company
maintains insurance coverage that it considers adequate against the casualty and
liability risks listed above, and it has not in the past experienced a loss in
excess of policy limits. There can be no assurance, however, that the Company's
existing insurance coverage can be renewed at commercially reasonable rates or
that such coverage will be adequate to cover future claims that may arise. See
"Business -- The Company -- Operational Risks and Insurance."
RELIANCE ON FOREIGN OPERATIONS
For each of the past five years, substantially all of the Company's
revenues from continuing operations were derived from foreign sources. The
Company's foreign operations are subject to various risks inherent in conducting
business in foreign nations. These risks include, among others, political
instability, potential vessel seizure, nationalization of assets, currency
restrictions, exchange rate fluctuations, import-export quotas and other forms
of public and governmental regulation, all of which are beyond the control of
the Company. Although the Company's operations historically have not been
affected materially by such conditions or events, it is not possible to predict
whether any such conditions or events might develop in the future. The
occurrence of any one or more of such conditions or events could have a material
adverse effect on the Company's financial condition and results of operations.
See "Business -- The Offshore Marine Services Industry -- The North Sea Market,"
"Business -- The Offshore Marine Services Industry -- The Southeast Asia Market"
and "Business -- The Offshore Marine Services Industry -- The Brazilian Market."
CURRENCY FLUCTUATIONS
Due to its foreign operations, the Company is exposed to currency
fluctuations and exchange rate risks. To minimize the financial impact of these
risks, the Company attempts to match the currency of its vessel debt and
operating costs with the currency of the charter revenues. For financial
statement reporting purposes, these accounts are translated into U.S. Dollars at
the weighted average exchange rates for the relevant period. From time to time,
the Company hedges certain transactions that are not in the functional currency
of the Company or its operating subsidiaries. During the first quarter of 1997,
the Company entered into a contract to hedge 92.8 million Norwegian Kroner
(approximately $13.9 million) of its commitment under a vessel construction
contract against unfavorable fluctuations in the British Pound Sterling
("Sterling") to Norwegian Kroner exchange rates. Because the Company conducts
substantially all its operations in foreign currencies, to the extent the U.S.
Dollar appreciates in relation to applicable foreign currencies, such
appreciation potentially could adversely affect the Company's operating revenues
when translated into U.S. Dollars. To date, currency fluctuations have not had a
material impact on the Company's financial condition or results of operations.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Currency Fluctuations and Inflation."
ONGOING CAPITAL EXPENDITURE REQUIREMENTS
As of March 31, 1997, the average age of the Company's owned offshore
support vessel fleet was approximately 14 years. The Company believes that,
after an offshore support vessel has been in service for approximately 25 years,
the amount of expenditures (which typically increase with vessel age) necessary
to satisfy required marine certification standards may not be economically
justifiable. There can be no assurance
15
<PAGE> 17
that the Company's financial resources will be sufficient to enable it to
maintain its fleet by extending the economic life of existing vessels through
major refurbishment or by acquiring new or used vessels. See "Business -- The
Company -- The Company's Fleet."
COMPETITION
The Company operates in a highly competitive industry. In addition to
price, service and reputation, the principal competitive factors for offshore
support vessel fleets include the existence of national flag preferences,
operating conditions and intended use (both of which determine the suitability
of vessel types), complexity of maintaining logistical support and the cost of
transferring equipment from one market to another. Some of the Company's
competitors have significantly greater financial resources than the Company. See
"Business -- The Company -- Customers, Charter Terms and Competition."
HIGH LEVERAGE AND DEBT SERVICE
Upon completion of the Offering, the Company will continue to have
substantial indebtedness. As of March 31, 1997, the Company's total outstanding
indebtedness was $63.8 million. In addition, the Company has significant future
payment obligations for the vessels currently under construction. The Company's
leverage poses certain risks, including the risk that the Company may not
generate sufficient cash flow to service its indebtedness; that the Company may
not be able to renegotiate the terms of its indebtedness; that the Company may
be unable to obtain additional financing in the future; that, to the extent it
is more leveraged than its competitors, the Company may be placed at a
competitive disadvantage; and that the Company's ability to borrow to the extent
necessary to respond to market conditions and other factors may be adversely
affected. The Company's ability to service its debt will depend on its future
performance, which will be subject to prevailing economic and competitive
conditions and other specific factors discussed herein, as well as developments
in capital markets generally. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
DISTRIBUTION INDEMNITY TO EVI
Pursuant to the Distribution Agreement, the Company has agreed to indemnify
the Predecessor, EVI and certain of their affiliates against (i) liabilities for
all past and future claims and litigation against EVI or the Predecessor
stemming from the Predecessor's or the Company's Offshore Marine Services
operations and (ii) liabilities for claims and litigation against EVI or the
Predecessor and its current or past subsidiaries and affiliates, including
Ercon, for periods prior to May 1, 1997 (the "Distribution Indemnity"). Although
the Company has established a reserve on its Consolidated Balance Sheet which it
believes to be adequate to cover such contingencies, there can be no assurance
that the reserve is adequate. In addition, the Distribution Agreement requires
that these indemnities be assumed by any future successor to the Company. This
requirement may have the effect of delaying, deferring or preventing a change of
control of the Company. See "Business -- The Company -- Distribution Agreement
Obligations and Indemnities" and "Recent Developments -- The Contribution,
Distribution and Merger."
TAX INDEMNITY TO EVI
In addition to the Distribution Indemnity, the Company has agreed to
indemnify EVI against any tax liabilities in the event the Contribution,
Distribution or Merger is determined to be taxable. EVI and the Predecessor
received a tax opinion that the Contribution, Distribution and Merger would be
tax-free under the Internal Revenue Code of 1986, as amended. If, however,
contrary to the opinion, the Contribution, Distribution or Merger is ever
determined to be taxable, the potential tax liability to the Company has been
estimated to be between $23 million and $36 million. This indemnity must be
assumed by any future successor to the Company. The requirement of a successor's
assumption of this indemnity may have the effect of delaying, deferring or
preventing a change of control of the Company. See "Business -- The Company --
Distribution Agreement Obligations and Indemnities" and "Recent
Developments -- The Contribution, Distribution and Merger."
16
<PAGE> 18
ABSENCE OF SIGNIFICANT TRADING MARKET; VOLATILITY OF MARKET PRICE
There has been a trading market for the Common Stock only since May 1,
1997. There can be no assurance as to the prices at which trading in the Common
Stock will occur after the completion of the Offering. Until an orderly market
develops for the Common Stock after the Offering, the trading price may be
especially volatile. Prices for shares of Common Stock will be determined in the
marketplace and may be influenced by many factors, including quarterly operating
results of the Company; changes in general conditions in the economy, the
financial markets or the Offshore Marine Services industry; changes in market
prices for oil and natural gas; or other developments affecting the Company, its
competitors or the financial markets. In recent years, the stock market,
including the stocks of Offshore Marine Services companies, has experienced
significant price and volume fluctuations. This volatility has affected the
market prices of securities issued by many companies for reasons unrelated to
their operating performance. In addition, the Company's operating results in
future periods may be below the expectations of securities analysts and
investors. In such event, the price of the Common Stock would likely decline,
perhaps substantially.
SUBSTANTIAL CONTROL BY EXISTING STOCKHOLDER
Upon completion of the Offering, Lehman Brothers Holdings Inc. will
beneficially own approximately 26.1% (25.7% if the over-allotment option is
exercised in full) of the issued and outstanding shares of Common Stock. In
addition, the Chairman of the Board of Directors of the Company and one
additional director are employees of Lehman Brothers Inc., an affiliate of
Lehman Brothers Holdings Inc. The stock ownership and current Board
representation of Lehman Brothers Holdings Inc. gives it the ability to exercise
substantial influence over the election of the Company's directors and other
corporate matters requiring stockholder or Board of Directors approval. This may
have the effect of delaying, deferring or preventing a change in control of the
Company. See "Principal Stockholders and Stock Ownership of Directors and
Officers."
FORWARD-LOOKING INFORMATION
Certain statements and information in this Prospectus constitute
forward-looking statements within the meaning of the Federal Private Securities
Litigation Reform Act of 1995. Such forward-looking statements typically include
words or phrases such as "anticipate," "estimate," "project," "believe" and
words or phrases of similar import. Such statements are subject to certain
risks, uncertainties and assumptions, including, without limitation, those set
forth in this section. Should one or more of these risks or uncertainties
materialize, or should these underlying assumptions prove incorrect, actual
results may vary materially from those anticipated, estimated or projected.
17
<PAGE> 19
THE COMPANY
GulfMark Offshore, Inc. was incorporated in Delaware in December 1996 and
commenced operations on May 1, 1997, the day after the Contribution,
Distribution and Merger. The Company provides Offshore Marine Services to
companies involved in offshore exploration and production of oil and natural
gas. The Company's vessels transport drilling materials, supplies and personnel
to offshore facilities, as well as move and position drilling structures. The
majority of the Company's operations are conducted in the North Sea and, with
the exception of one vessel operating offshore Brazil, the balance are conducted
in Southeast Asia.
The principal executive offices of the Company are located at 5 Post Oak
Park, Suite 1170, Houston, Texas 77027-3414, and its telephone number at that
address is (713) 963-9522.
USE OF PROCEEDS
The estimated net proceeds to be received by the Company from the Offering,
after deducting underwriting discounts and commissions and other estimated
expenses payable by the Company, are approximately $ million ($ million
if the Underwriters' over-allotment option is exercised in full).
A portion of these proceeds will be used for the Company's ongoing capital
expenditures, including building new vessels and upgrading the Company's fleet,
with emphasis on specific ongoing projects. The Company has contracted for the
construction of the Highland Rover, the Company's most modern, technologically
sophisticated PSV to date, and anticipates delivery in March 1998. The Company
previously obtained a bank revolving credit facility that fully covers the
remaining balance of the cost of construction of the Highland Rover
(approximately $13.9 million). However, the Company intends to use a portion of
the proceeds of the Offering to fund part or all of the remaining balance of
such cost. In addition, the Company has recently acquired the Gallant Project,
an unfinished vessel hull, and anticipates that the completed vessel will be
delivered in 1998. The hull could be completed as a PSV or AHTS vessel. The
Company currently believes, however, that the most attractive potential
application could be as a multipurpose support vessel serving the growing FPSO
market. It is anticipated that a portion of the cost of the Gallant Project
(estimated to be between $11 million and $14 million) will be funded from the
proceeds of the Offering.
The Company will use $3.4 million of the net proceeds of the Offering to
prepay indebtedness outstanding under a loan facility. The borrowings under this
facility bear interest at LIBOR plus 2 1/2% and mature on the earlier of
December 31, 1997 or the completion of the Offering.
The balance of the net proceeds of the Offering, if any, will be used by
the Company for general corporate purposes, including satisfaction of working
capital needs, vessel acquisitions and other purposes. Pending such uses, the
net proceeds will be invested in short-term, interest-bearing, investment-grade
securities.
18
<PAGE> 20
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock is traded on the Nasdaq National Market under the symbol
"GMRK." The following table sets forth the range of high and low sales prices
for Common Stock for the periods indicated, as reported on the Nasdaq National
Market.
<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
May 1, 1997 (first post-Distribution trading day; "when
issued" basis)............................................ $ 141/2 $ 13
Period ended June 30, 1997.................................. $ 26 $ 13
Quarter ended September 30, 1997 (through July 10, 1997).... $ 273/4 $ 261/2
</TABLE>
On July 10, 1997, the closing sale price of the Common Stock as reported by
the Nasdaq National Market was $27 1/2 per share.
The Company has not declared or paid any dividends during the past five
years. The Company currently anticipates that, for the foreseeable future, any
earnings will be retained for the development of the Company's business. The
declaration of dividends is at the discretion of the Company's Board of
Directors. The Company's dividend policy will be reviewed by the Board of
Directors at such time as may be appropriate in light of future operating
conditions, dividend restrictions of subsidiaries and investees, financial
requirements, general business conditions and other factors. Currently, four of
the Company's subsidiaries, Gulf Offshore N.S. Ltd. (United Kingdom), Gulf
Offshore Far East, Inc. (Panama), Gulf Offshore Marine International, Inc.
(Panama) and Gulf Offshore Shipping Services, Inc. (Panama), are restricted
under certain debt agreements from paying dividends to the Company without the
lender's approval. These subsidiaries own nine vessels currently operating in
the North Sea, 10 vessels currently operating in Southeast Asia and one vessel
currently operating in Brazil.
19
<PAGE> 21
CAPITALIZATION
The following table sets forth the historical consolidated capitalization
of the Company as of March 31, 1997 and as adjusted to reflect the issuance by
the Company of 1,000,000 shares of Common Stock offered hereby and the pro forma
application of the net proceeds therefrom as described under "Use of Proceeds."
This table should be read in conjunction with the Consolidated Financial
Statements of the Company, including the notes thereto, contained herein.
<TABLE>
<CAPTION>
MARCH 31, 1997
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term borrowings and current portion of long-term
debt...................................................... $ 13,840 $10,440
Long-term debt.............................................. 50,005 50,005
-------- -------
Total debt........................................ 63,845 60,445
-------- -------
Stockholders' equity:
Common Stock, $0.01 par value, 15,000,000 shares
authorized; 6,679,904 historically and 7,679,904 (as
adjusted) shares issued and outstanding(a)............. 67 77
Preferred stock, no par value, 2,000,000 shares
authorized; no shares issued and outstanding........... -- --
Additional paid-in capital................................ 26,793
Retained earnings......................................... 35,646 35,646
Cumulative foreign currency adjustment.................... (2,865) (2,865)
-------- -------
Total stockholders' equity........................ 59,641
-------- -------
Total capitalization........................................ $123,486 $
======== =======
</TABLE>
- ---------------
(a) Does not include an aggregate of 497,646 shares of Common Stock subject to
outstanding options granted under the Company's 1987 Stock Option Plan,
Amended and Restated 1993 Non-Employee Director Stock Option Plan and 1988
Non-Employee Director Option Policy. See "Management -- Director and
Executive Officer Compensation" and "Description of Capital Stock."
20
<PAGE> 22
SELECTED CONSOLIDATED FINANCIAL DATA
The historical financial data presented in the table below for and at the
end of each of the years in the five-year period ended December 31, 1996 are
derived from the Consolidated Financial Statements of the Company audited by
Arthur Andersen LLP, independent accountants. The historical financial data
presented in the table below for and as of the end of each of the three-month
periods ended March 31, 1997 and March 31, 1996 are derived from the unaudited
consolidated condensed financial statements of the Company. In the opinion of
management of the Company, such unaudited consolidated condensed financial
statements include all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the financial data for such periods. The
results for the three months ended March 31, 1997 are not necessarily indicative
of the results to be achieved for the full year.
The Consolidated Financial Statements included in this Prospectus, as well
as the financial data presented in the table below, presents the net assets and
results of operations of Ercon and the common stock of EVI owned by the
Predecessor as discontinued operations of the Company for all periods presented.
The data presented below should be read in conjunction with the Company's
Consolidated Financial Statements and the notes thereto included elsewhere in
this Prospectus, "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Recent Developments -- The Contribution,
Distribution and Merger."
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND NUMBER OF VESSELS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues............................. $ 9,679 $ 6,623 $ 34,749 $ 27,233 $27,692 $ 22,564 $ 18,115
Direct operating expenses............ 4,302 3,641 16,178 15,386 15,171 12,060 7,488
General and administrative
expenses........................... 1,281 966 4,523 3,483 3,643 3,280 3,075
Depreciation and amortization........ 1,604 1,113 5,013 5,472 5,065 3,752 3,351
-------- -------- -------- -------- ------- -------- --------
Operating income..................... 2,492 903 9,035 2,892 3,813 3,472 4,201
Gain on sale of vessel............... -- -- -- -- 842 -- --
Interest expense, net................ (1,132) (743) (3,467) (2,613) (2,179) (2,047) (2,351)
Other income (expense), net.......... 82 60 (86) 180 (12) 68 285
Income tax provision................. (398) (9) (1,839) (91) (981) (534) (601)
-------- -------- -------- -------- ------- -------- --------
Income from continuing operations.... 1,044 211 3,643 368 1,483 959 1,534
Income (loss) from discontinued
operations, net of taxes........... (648) (164) 4,796 (2,270) 591 1,685 334
Loss on disposal of segment, net of
taxes.............................. (1,426) -- -- -- -- -- --
-------- -------- -------- -------- ------- -------- --------
Net income (loss).................... $ (1,030) $ 47 $ 8,439 $ (1,902) $ 2,074 $ 2,644 $ 1,868
======== ======== ======== ======== ======= ======== ========
Earnings per share from continuing
operations(a)...................... $ 0.16 $ 0.03 $ 0.55 $ 0.06 $ 0.22 $ 0.14 $ 0.23
Weighted average common shares....... 6,680 6,672 6,676 6,644 6,640 6,624 6,620
STATEMENT OF CASH FLOWS DATA:
Cash provided by (used in) operating
activities of continuing
operations......................... $ 2,486 $ 1,376 $ 8,539 $ 6,389 $ 5,448 $ 2,653 $ 5,547
Cash provided by (used in) investing
activities......................... (14,097) (12,250) (24,493) (15,093) (258) (16,836) (12,610)
Cash provided by (used in) financing
activities......................... 5,742 11,937 17,894 9,567 (7,970) 12,810 6,259
Effect of exchange rate changes on
cash............................... (440) (15) 924 (160) 124 (56) (560)
OTHER DATA:
EBITDA(b)............................ $ 4,096 $ 2,016 $ 14,048 $ 8,364 $ 8,878 $ 7,224 $ 7,552
Cash dividends per share............. -- -- -- -- -- -- --
Total vessels in fleet(c)............ 30 23 28 22 20 25 15
Average number of owned or chartered
vessels(d)......................... 21.9 14.1 17.3 14.0 15.1 14.4 11.1
</TABLE>
21
<PAGE> 23
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 31, ------------------------------------------------
1997 1996 1995 1994 1993 1992
--------- -------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents....................... $ 10,233 $ 17,234 $ 5,136 $ 2,645 $ 5,195 $ 6,541
Vessels and equipment, net...................... 94,912 87,405 61,343 51,175 53,002 44,717
Net assets of discontinued operations(e)........ 14,881 14,837 19,275 23,512 23,569 22,166
Total assets including discontinued
operations.................................... 134,652 131,307 94,179 87,821 90,727 78,509
Total assets excluding discontinued
operations.................................... 119,771 116,470 74,904 64,309 67,158 56,343
Long-term debt(f)............................... 50,005 50,811 33,600 26,727 30,169 18,730
Total stockholders' equity...................... 59,641 62,016 50,928 53,025 50,388 48,306
Total stockholders' equity excluding
discontinued operations....................... 44,760 47,179 31,653 29,513 26,819 26,140
</TABLE>
- ---------------
(a) The dilutive effect of Common Stock equivalents is not material.
(b) As used herein, EBITDA is operating income plus depreciation and
amortization. EBITDA can be used by management of the Company as a
supplemental financial measurement in the evaluation of its business and in
establishing its capital budget and should not be considered as an
alternative to net income, as an indicator of the operating performance of
the Company, as an alternative to cash flows or as a measure of liquidity.
Because EBITDA is not uniformly calculated among and across industry groups,
this measure may not be comparable to similarly titled measures reported by
other companies. EBITDA is presented here to provide additional information
about the Company.
(c) Includes managed vessels in addition to those that are owned and chartered.
See pages 36 and 37 for further information concerning the Company's fleet.
(d) Includes owned and chartered PSVs and AHTS vessels only. Adjusted for
additions and dispositions occurring during each period. See pages 36 and 37
for further information concerning the Company's fleet.
(e) Reflects the financial statement information for the non-marine businesses
of the Company's Predecessor.
(f) Excludes current portion of long-term debt.
22
<PAGE> 24
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This information should be read in conjunction with the Company's
Consolidated Financial Statements, including the notes thereto, contained in
this Prospectus. See also "Selected Consolidated Financial Data."
GENERAL
The Company was incorporated on December 4, 1996 under the name of "New
GulfMark, Inc.," a wholly owned subsidiary of the Predecessor. The Company was
formed to facilitate the Predecessor's separation of its international Offshore
Marine Services business from its only U.S. business operation, Ercon, and its
large holding of common stock of EVI. In order to accomplish this separation,
the Predecessor agreed to transfer the assets, liabilities and operations of its
Offshore Marine Services business to the Company. On April 30, 1997, the
Contribution occurred, and the Offshore Marine Services business was separated
from the Predecessor through the distribution of all of the then outstanding
common stock of the Company to the Predecessor's common stockholders in
accordance with the Distribution Agreement. Following the Distribution, on May
1, 1997, a subsidiary of EVI was merged with and into the Predecessor, whose
assets then consisted principally of Ercon and its investment in approximately
2.2 million shares of EVI common stock. Immediately after the Merger, the
Predecessor ceased public trading of its common stock.
In connection with the Distribution, two shares of the Company's Common
Stock were issued for each share of the Predecessor common stock. Also, in
connection with the Merger, the Predecessor's stockholders received shares of
EVI common stock. See Notes 1 and 4 to the Consolidated Financial Statements.
The Company's operations currently consist of the Offshore Marine Services
business, which represents over half of the assets, revenues and operating
income of the businesses, operations and companies previously constituting the
Predecessor. Consequently, the following Management's Discussion and Analysis of
Financial Condition and Results of Operations, and the Consolidated Financial
Statements included elsewhere herein, present the net assets and results of
operations of Ercon and the common stock of EVI owned by the Predecessor as
discontinued operations of the Company for all periods presented. See Notes 1
and 4 to the Consolidated Financial Statements.
Unless otherwise indicated, references to "GulfMark" or the "Company" are
(i) for all periods through April 30, 1997, the effective date of the
Contribution and Distribution, to the Predecessor and its consolidated
subsidiaries (treating Ercon and the investment in EVI as discontinued
operations for all periods), and (ii) for all periods subsequent to April 30,
1997, to GulfMark Offshore, Inc. and its consolidated subsidiaries.
The Company provides marine support and transportation services to
companies involved in the offshore exploration and production of oil and natural
gas. The Company's vessels transport drilling materials, supplies and personnel
to offshore facilities, as well as move and position drilling structures. The
majority of its operations are conducted in the North Sea and, with the
exception of one vessel operating in Brazil, the balance of the Company's
operations are conducted in Southeast Asia. The Company's fleet has grown in
size and capability from an original 11 vessels acquired in late 1990 to its
present level of 30 vessels through strategic acquisitions and new construction
of technologically advanced vessels, partially offset by dispositions of certain
older, less profitable vessels. Twenty-one vessels in GulfMark's fleet are
owned, two are bareboat chartered and seven are managed. The two bareboat
charters run through August 1998.
The Company's results of operations are affected primarily by day rates,
fleet utilization and the number and type of vessels in its fleet. These factors
are driven by trends within the oil and natural gas exploration and production
industry, which generally affect the demand for vessels, as well as by trends
impacting the broader economy and capital markets, which generally affect the
supply of vessels. While offshore support vessels service existing oil and
natural gas production platforms and exploration and development activities,
incremental demand depends primarily upon drilling activity, which, in turn, is
related to both short-term and long-term trends in oil and natural gas prices.
As a result, trends in oil and natural gas prices may significantly affect fleet
utilization and day rates.
23
<PAGE> 25
An additional factor affecting operating earnings is the mix of vessels
owned versus bareboat chartered by the Company. Owned and bareboat chartered
vessels generate operating revenues and may incur expenses at similar rates.
However, chartered vessels also incur bareboat charter hire expense instead of
depreciation expense, which is generally less than charter hire expense.
In addition, the Company provides management services to other vessel
owners for a fee. Charter revenues and vessel expenses of such vessels are not
included in the Company's operating results, but management fees are included in
operating revenues. These vessels, the Company's only crewboat and a standby
rescue vessel that was chartered by the Company through December 31, 1996, have
been excluded for purposes of calculating fleet rates per day worked and
utilization in the applicable years.
The Company's operating costs are primarily a function of fleet size and
utilization levels. The most significant direct operating costs are wages paid
to vessel crews, maintenance and repairs and marine insurance. Generally,
fluctuations in vessel utilization affect only that portion of the Company's
direct operating costs that is incurred when the vessels are active. As a
result, direct operating costs as a percentage of revenues may vary
substantially due to changes in day rates and utilization.
In addition to these variable costs, the Company incurs fixed charges
related to the depreciation of its fleet and costs for routine drydock
inspections, maintenance and repairs designed to ensure compliance with
applicable regulations and maintain certifications for its vessels with various
international classification societies. Maintenance and repair expenses and
marine inspection amortization charges are generally determined by the aggregate
number of drydockings and other repairs undertaken in a given period. Costs
incurred for drydock inspection and regulatory compliance are capitalized and
amortized over the period between such drydockings, typically two to three
years.
Under applicable maritime regulations, vessels must be drydocked twice in a
five-year period for inspection and routine maintenance and repair. Should the
Company undertake a large number of drydockings in a particular fiscal quarter,
comparative results may be affected. For the three months ended March 31, 1997,
the Company completed the drydocking of five vessels at an aggregate cost of
$1.3 million, as compared to no drydocking costs in the comparable period of
1996. For the year ended December 31, 1996, the Company completed the drydocking
of five vessels at an aggregate cost of $1.2 million, versus six vessels
drydocked at an aggregate cost of $1.6 million in 1995 and seven vessels at an
aggregate cost of approximately $1.6 million in 1994.
Results of operations are also affected by the purchase and sale of
vessels. During 1994, the Company sold two of the original 11 vessels it
acquired in 1990. In June 1994, the 20-year old Highland Sentinel was sold and a
pretax gain of $0.8 million was recognized. Revenues earned by this vessel in
1994 were minimal, as its advancing age had become a disadvantage in the highly
competitive North Sea market. In December 1994, the Company sold the 1969-built
Seawind. The sale had only a small impact on earnings. Although the vessel's
utilization was good, the cost of routine maintenance and drydocking had reached
the level where it was no longer economically feasible to continue operating the
25-year old vessel.
The Company contracted with a Norwegian shipyard in December 1994 for the
construction of two UT 755 design PSVs for deployment in the North Sea. Delivery
of the first vessel, the Highland Piper, was made on March 15, 1996. The second
vessel, the Highland Drummer, was delivered January 3, 1997. The Company made
the final payment on the Highland Piper and interim construction payments on the
Highland Drummer (a total of $11.5 million) during 1996 and a final payment on
the Highland Drummer of $12.9 million in 1997. Funding of $7.3 million in 1997
was provided by additional borrowings under existing credit facilities.
In December 1995, the Company purchased the Atlantic Warrior (renamed the
Highland Warrior), a 1981-built pipe carrier/PSV that had been bareboat
chartered by the Company since July 1993, when the Company acquired the charter
as part of its acquisition of BP Shipping's offshore assets.
In August 1996, the Company purchased six offshore supply vessels in
Southeast Asia from Maritime (Pte), Limited (the "Maritime Acquisition").
Funding for the Maritime Acquisition was provided through a new $7.0 million
bank facility and a drawdown under existing loan facilities.
24
<PAGE> 26
On November 1, 1996, the Company entered into a contract with a Norwegian
shipyard to construct the Highland Rover, an enhanced UT 755 design PSV, at a
price of approximately $18.0 million denominated in Norwegian Kroner. This new
vessel, scheduled for delivery in March 1998, will be available to participate
in the growing demand for deepwater ROV support, standard supply duties and
specialized services in the North Sea. The Company made interim construction
payments of $0.9 million in 1996 and is required to make an additional $2.7
million of such payments in 1997. Final payment is due upon delivery of the
vessel. The Company anticipates financing the cost of the vessel through some
combination of additional borrowings, proceeds from the Offering and existing
funds. In March 1997, the Company entered into a contract to hedge 92.8 million
Norwegian Kroner (approximately $13.9 million) of its commitment on the Highland
Rover against unfavorable fluctuations in the British Pound Sterling to
Norwegian Kroner exchange rate. Upon delivery, any gain or loss under the
hedging contract (a loss of approximately $1.6 million as of June 30, 1997) will
be included in the cost of the vessel, but will be offset by the corresponding
change in the price of the vessel due to the exchange rate fluctuation.
RESULTS OF OPERATIONS
The table below sets forth, by region, the average day and utilization
rates for the Company's PSVs and AHTS vessels and the average number of such
vessels owned or bareboat chartered during the periods indicated. These vessels
generate substantially all of the Company's revenues and operating profit. The
information detailed below is utilized by the Company's management to evaluate
the performance of the business.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- --------------------------
1997 1996 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Rates Per Day Worked(a)(b):
North Sea Fleet(c).................. $9,583 $7,355 $8,819 $7,840 $7,551
Southeast Asia Fleet(d)............. 3,536 3,273 3,347 3,146 3,047
Overall Utilization(a)(b):
North Sea Fleet..................... 93.0% 95.1% 95.1% 96.4% 92.7%
Southeast Asia Fleet(d)............. 57.5% 81.6% 77.5% 80.5% 82.9%
Average Owned or Chartered
Vessels(a)(e):
North Sea Fleet..................... 8.9 7.1 7.8 7.0 7.5
Southeast Asia Fleet(d)............. 13.0 7.0 9.5 7.0 7.7
------ ------ ------ ------ ------
Total....................... 21.9 14.1 17.3 14.0 15.2
====== ====== ====== ====== ======
</TABLE>
- ---------------
(a) Includes all owned or bareboat chartered PSVs and AHTS vessels. The
Company's only crewboat and only standby rescue vessel (which was chartered
until December 31, 1996) are excluded, as are all managed vessels.
(b) Rates per day worked is defined as total charter revenues divided by number
of days worked. Utilization rate is defined as the total number of days
worked divided by the total number of days in the period.
(c) Revenues for vessels in the North Sea fleet are earned in Sterling (L) and
have been converted to U.S. Dollars ($) at the average exchange rate ($/L)
for the periods indicated. The average exchange rates were L = $1.6323 and L
= $1.5319 for the periods ended March 31, 1997 and March 31, 1996,
respectively. The average exchange rates for the years ended December 31,
1996, 1995 and 1994 were L = $1.5623, L = $1.5778 and L = $1.5360,
respectively.
(d) Includes the vessel operating in Brazil.
(e) Adjusted for vessel additions and dispositions occurring during each period.
25
<PAGE> 27
Comparison of the Three Months Ended March 31, 1997 with the Three Months
Ended March 31, 1996.
Changes to the Company's fleet were significant between the two periods.
Two large PSVs, the Highland Piper and the Highland Drummer, were purchased and
added to the Company's North Sea fleet on March 15, 1996 and January 3, 1997,
respectively, while vessels under management decreased by one. Management of the
large PSV Safe Truck was added to the fleet, while contracts to manage two other
specialty vessels were terminated. The Southeast Asia fleet increased by six
vessels in the three months ended March 31, 1997 compared to the three months
ended March 31, 1996, as a result of the Maritime Acquisition in August 1996.
Revenues and earnings for the quarter ended March 31, 1997 increased
sharply as compared to the quarter ended March 31, 1996. Income from continuing
operations was $1.0 million, or $0.16 per share, as compared to $0.2 million, or
$0.03 per share, for the same period in 1996. Revenues increased $3.1 million,
or 46%.
Two-thirds of the revenue increase and all of the increase in income from
continuing operations for the first quarter of 1997, as compared to the first
quarter of 1996, came from the North Sea fleet. In excess of 40% of these
increases was attributable to the additions of the Highland Piper in March 1996
and the Highland Drummer in January 1997. The balance of the increases came from
improved day rates in the region. Average day rates for the quarter for the
Highland Pride, Highland Champion, Highland Warrior and Highland Sprite
increased approximately 40% over those for the quarter ended March 31, 1996.
Utilization rates decreased slightly, in large part due to the increase in
vessel drydockings between the two periods. The effects of the lower utilization
were more than offset by the higher day rates, as well as the favorable impact
of the increase in drydockings on vessel operating costs, particularly in the
form of reduced repair and maintenance expenditures.
Revenues increased approximately 50%, or $0.8 million, in Southeast Asia,
due to the addition of six vessels in the Maritime Acquisition. However, the
additions did not contribute meaningfully to earnings in the 1997 quarter. The
average day rate for the fleet has improved, but it has come at the expense of
lower utilization.
The increase in general and administrative expenses of approximately $0.3
million was attributable to the addition of staff to support the increased size
of the Company's Singapore operations and to provide additional support for
construction and project work.
Increases in depreciation of $0.5 million and interest expense of $0.4
million were both related to the addition of the two new vessels in the North
Sea and the six additional vessels in Southeast Asia. Interest rates during the
two periods were not materially different.
In the quarter ended March 31, 1997, the Company reflected an operating
loss from discontinued operations of $0.6 million, compared to a loss of $0.2
million for the same period in 1996. The increased loss in the 1997 quarter is
primarily due to provisions for certain legal and tax issues related to Ercon's
operations.
Comparison of the Fiscal Years Ended December 31, 1996 and December 31, 1995.
The number of vessels in the fleet increased from 22 at December 31, 1995
to 28 at December 31, 1996. In March 1996, the Company took delivery of the
Highland Piper, which was immediately chartered. In August 1996, the Company
acquired six offshore supply vessels in Southeast Asia and, effective December
31, 1996, the Company terminated its bareboat charter of the standby rescue
vessel, Atlantic Guardian, and returned it to its owner. In addition, the
Company secured a management contract for the UT 755 Safe Truck, and the
management contract for the Whalley Supporter was terminated. These changes
brought the total fleet to 28 vessels at the end of 1996. Fourteen of the
vessels were in the North Sea fleet, 13 were in the Southeast Asia fleet and one
vessel was operating under a long-term charter offshore Brazil.
Revenues and operating income for 1996 were $34.7 million and $9.0 million,
respectively, compared to $27.2 million and $2.9 million, respectively, for
1995. The increased revenues were primarily attributable to the addition of the
Highland Piper to the North Sea fleet, as well as sharply increased day rates in
the North Sea. The rate increases were most notable late in the period for the
Highland Pride and Highland Fortress.
26
<PAGE> 28
The addition of six vessels to the Company's Southeast Asia fleet in the
Maritime Acquisition also contributed to the increase in revenue. Approximately
75% of the increase in earnings is attributable to the North Sea fleet, whose
day rates increased sharply while utilization and operating costs per day
remained stable. In addition, the acquisition of the Highland Warrior late in
1995 contributed significantly to earnings, while not materially increasing
revenue, since it had been under charter to the Company since 1993. Although
depreciation increased as a result of the acquisition of this vessel, the
increase was more than offset by the elimination of the bareboat charter fee.
The balance of the increase in earnings came from (i) the additions to the
Southeast Asia fleet, (ii) increased utilization of the Seapower, which
commenced a two-year charter in Brazil effective May 1995 (recently extended
through May 1999) and (iii) increased utilization of the crewboat Searunner. The
utilization rate for the Seapower increased to 100%, from 63% in 1995, and the
utilization rate for the Searunner increased to 58%, from 39% in 1995. The
average day rate for the Southeast Asia fleet for 1996 increased approximately
6% over the average rate for 1995, and the average operating costs per day
decreased slightly, while utilization dropped to approximately 78% from the 1995
level of 81%. These averages include the vessel in Brazil but do not include the
Company's only crewboat, the Searunner.
The increase in general and administrative expenses of approximately $1.0
million was attributable to the addition of staff to support the increased size
of the Company's Southeast Asia operations and to provide additional support for
construction and project work Company-wide, as well as the generally increased
level of activity.
Earnings benefited from reduced depreciation rates resulting from the
Company's change (effective January 1, 1996) in its estimate of vessel useful
lives from 20 years to 25 years. The effect of this benefit on 1996 earnings was
offset in Southeast Asia by increased depreciation associated with the 1996
Southeast Asia fleet additions and in the North Sea by increased depreciation
associated with the addition of the Highland Piper and Highland Warrior.
Interest expense, net of interest income, increased from $2.6 million in
1995 to $3.5 million in 1996 due to the overall increase in debt associated with
the various vessel additions. These increases were partially offset by a
decrease in average Sterling interest rates for the respective periods from 9.4%
to 7.7%. At December 31, 1996, approximately 81% of the Company's debt was
Sterling denominated.
Comparison of the Fiscal Years Ended December 31, 1995 and December 31, 1994.
The number of vessels in the fleet increased from 20 at year-end 1994 to 22
at year-end 1995. In August 1994, the Company sold the Highland Sentinel from
the North Sea fleet, and in December 1994, the Company sold the Seawind from the
Southeast Asia fleet. Proceeds from the sale of the Seawind approximated book
value, while the Company realized a gain of $0.8 million on the sale of the
Highland Sentinel.
The Company purchased the Atlantic Warrior (renamed the Highland Warrior)
in December 1995. This vessel had been on bareboat charter to the Company since
July 1993, when its charter was acquired as part of the Company's acquisition of
BP Shipping's offshore assets. In addition, in August 1995, the Company was
selected as the prime marine contractor for the Liverpool Bay Development
Project, a $1.6 billion plan to produce the first oil from the Irish Sea. This
project added three vessel management contracts (the Clwyd Supporter, the
Whalley Supporter and the Sefton Supporter) and required the maintenance of an
inventory of pollution containment equipment and an on-site manager. The
Company's involvement is as manager only and does not require significant
investment. None of the Company's owned vessels are employed in the project.
Also during 1995, the Company's management contract for a standby rescue vessel
was not renewed due to the sale of the vessel.
As a result of the activity noted above, the Company's North Sea fleet
(adjusted for part-year availability) averaged 7.4 units during 1994, as
compared to 7.0 units during 1995, and the average Southeast Asia fleet
decreased from 7.7 to 7.0 units. This decrease contributed to a reduction in
1995 results of operations. While revenues decreased slightly from $27.7 million
in 1994 to $27.2 million in 1995, operating
27
<PAGE> 29
income declined more sharply, from $3.8 million in 1994 to $2.9 million in 1995.
A 2% increase in North Sea revenues was more than offset by an 11% decline in
Southeast Asia revenues. The decline in operating income came from the Southeast
Asia fleet, offset partially by a small decrease in general and administrative
expenses.
For the North Sea fleet, earnings associated with increased utilization of
the Highland Sprite and the chartered standby rescue vessel, the Atlantic
Guardian, were offset by the absence of any earnings in 1995 from the vessel
sold in 1994 and by a 10% increase in average operating costs per day. The
increase in operating costs was attributable to increased repair and maintenance
costs, principally for the Highland Pride and Highland Fortress, and increased
personnel costs.
The average day rates for the Company's North Sea fleet in 1994 and 1995
were relatively flat after adjustment for the effects of changes in the British
Pound Sterling to U.S. Dollar exchange rate between the periods, as well as the
effect of a change in the mix of the fleet due to the sale of the Highland
Sentinel.
Fleet utilization improved from 93% in 1994 to 96% in 1995. This
improvement was in part due to the sale of the Highland Sentinel, an older
vessel whose utilization rate historically had been below the average of the
fleet. However, of the seven owned or chartered supply vessels in the fleet at
the end of 1995, three were at full practical utilization in both years. Of the
remaining four vessels, three vessels achieved full practical utilization for
1995. Only one vessel in the fleet finished the year with a materially lower
utilization rate for 1995 than 1994.
Operating income from the Southeast Asia fleet decreased approximately $0.9
million in 1995, as compared to 1994. Approximately one-third of the decrease
was attributable to a reduction in vessels resulting from the 1994 sale of the
Seawind. An additional one-third of the decrease was attributable to the
combination of marginally lower utilization rates for the AHTS vessels and a
significant drop in utilization for the crewboat, Searunner, which decreased
from 66% to 39%. The balance of the decrease was attributable to an increase in
direct vessel operating costs, principally supplies, repairs and maintenance.
LIQUIDITY AND CAPITAL RESOURCES
The Company's ongoing liquidity requirements arise primarily from its need
to service debt, fund working capital, acquire or improve equipment and make
other investments. Since its inception, the Company has been active in the
acquisition of additional vessels through both the resale market and new
construction. Bank financing and internally generated funds have provided
funding for these activities. Currently, the Company has significant lending
relationships with two major European commercial banks.
At March 31, 1997, the Company had outstanding debt of $63.8 million, all
of which was borrowed under various facilities with these banks. These
facilities are secured by preferred ship mortgages on 19 of the Company's
vessels and assignments of such vessels' earnings. Interest on the borrowings
accrued at rates between LIBOR plus 1 1/4% and LIBOR plus 2 1/4% per annum.
Scheduled debt repayments are expected to total $9.3 million for 1997. The loan
facility agreements place certain restrictions on the ability of the Company's
subsidiaries to pay dividends to the Company. Cash held by these subsidiaries
was $5.9 million as of March 31, 1997. In connection with the pending completion
of the Highland Rover's construction, the Company has obtained a bank revolving
credit facility which reduces the interest rate from its previous level of LIBOR
plus 1 1/4 to 1 3/8% to LIBOR plus 1% and provides up to an additional L9.0
million (approximately $13.9 million) for the Highland Rover's final payment
upon delivery (expected March 1998).
Net cash provided by operating activities of continuing operations was $2.5
million for the period ended March 31, 1997, as compared to $1.4 million for the
same period in 1996. This increase resulted from the increase in earnings.
Net cash used in investing activities was $14.1 million and $12.3 million
for the periods ended March 31, 1997 and 1996, respectively. Each of these
periods reflect significant vessel acquisitions. In 1997, the Company took
delivery of the Highland Drummer and in 1996, the Highland Piper. In the first
quarter of 1997, the Company also experienced a higher level of expenditures
related to the routine drydockings of three of its larger vessels in the North
Sea fleet, as compared with no drydockings in the prior year period.
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<PAGE> 30
Net cash provided by financing activities was $5.7 million and $11.9
million for the periods ended March 31, 1997 and March 31, 1996, respectively.
The decrease in cash provided from financing activities in the 1997 quarter was
largely due to the fact that the final payment on the Highland Piper in March
1996 was entirely funded with additional debt, while the final payment on the
Highland Drummer in January 1997 included approximately $5.6 million of
internally generated funds.
Substantially all of the Company's tax provision is for deferred taxes. The
net operating loss available in the United Kingdom is primarily the result of
accelerated depreciation allowances under United Kingdom tax law. The Company
believes that the current reserves of cash and short-term investments, cash
flows from operations and access to various credit arrangements will provide
sufficient resources to finance internal operating requirements. Such
investments may require the expenditure of significant resources, either in
cash, notes or a combination thereof.
CURRENCY FLUCTUATIONS AND INFLATION
Substantially all of the operations of the Company are overseas. As a
result, the Company is exposed to currency fluctuations and exchange rate risks.
Charters for vessels in the North Sea fleet are primarily denominated in
Sterling and substantially all the operating costs are in Sterling. North Sea
operations generated $25.6 million in revenues, $9.8 million in operating income
and $9.9 million of cash flows from operations for the year ended December 31,
1996. In 1996, the Sterling/U.S. Dollar exchange rate ranged from a high of
L = $1.71 to a low of L = $1.49, with an average of L = $1.56 for the year. As
of March 31, 1997, the Sterling/U.S. Dollar exchange rate was L = $1.64.
The Company reduces its exposure to currency fluctuations by arranging for
the debt financing on, and operating expenses of, each vessel to be in the same
currency in which the vessel's revenues will be earned. The effect on cash flows
of fluctuations in the Sterling/U.S. Dollar exchange rates is largely offset by
the Sterling denominated borrowings, which accounted for $48.7 million, or 81%,
of total debt as of December 31, 1996 and represented $4.4 million, or 100%, of
the debt repayments made in 1996.
Reflected in the accompanying balance sheet for March 31, 1997 is a $2.9
million cumulative translation adjustment primarily relating to the lower
Sterling exchange rate as of March 31, 1997 in comparison to the exchange rate
when the Company invested capital in its United Kingdom subsidiaries. Changes in
the cumulative translation adjustment are non-cash items that are primarily
attributable to investments in vessels and are partially offset by the Sterling
denominated debt associated with the North Sea fleet.
Several of the Company's Southeast Asia charters are denominated in
Malaysian ringgits, as are a portion of its operating costs. Revenues in this
currency were approximately $1.6 million for 1996. Malaysian currency rates have
been relatively stable for the last three years, with the exchange rate of
ringgits to U.S. Dollars averaging M$ = U.S.$0.40 during 1996 and the high and
low during the last three years within 3% of this average. The Company does not
currently hedge this currency. Where currency risks are potentially high, as in
Brazil, the Company accepts only a small percentage of charter hire in local
currency and the remainder is paid in U.S. Dollars.
To date, general inflationary trends have not had a material effect on the
operating revenues or expenses of the Company.
ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which was
effective for the Company on January 1, 1996. The statement sets forth
guidelines regarding when to recognize an impairment of long-lived assets,
including goodwill, and how to measure such impairment. Adoption of SFAS No. 121
did not have an effect on the Company's Consolidated Financial Statements.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share," which is effective after December 15, 1997. SFAS No.
128 revises the methodology to be used in
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<PAGE> 31
computing earnings per share ("EPS") to require that the computations of primary
and fully diluted EPS be replaced with computations of "basic" and "diluted"
EPS. Basic EPS is computed by dividing net income by the weighted average number
of shares of common stock outstanding during the year. Diluted EPS is computed
in the same manner as fully diluted EPS, except that, among other changes, the
average share price for the period is used in all cases when applying the
treasury stock method to potentially dilutive outstanding options. The statement
requires restatement for all prior period EPS data presented. EPS calculated in
accordance with SFAS No. 128 would be unchanged for the periods presented.
FORWARD-LOOKING STATEMENTS
This Prospectus, particularly the sections entitled "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business," contains certain forward-looking
statements and other statements that are not historical facts concerning, among
other things, market conditions, the demand for marine support services and
future capital expenditures. Such statements are subject to certain risks,
uncertainties and assumptions, including, without limitation, dependence on the
oil and natural gas industry, ongoing capital expenditure requirements,
uncertainties surrounding environmental and government regulation, risks
relating to leverage, risks of foreign operations, assumptions concerning
competition and risks of currency fluctuations and other matters described in
"Risk Factors." There can be no assurance that the Company has accurately
identified and properly weighed all of the factors which affect market
conditions and demand for the Company's vessels, that the information upon which
the Company has relied is accurate or complete, that the Company's analysis of
the market and demand for its vessels is correct or that the strategy based on
such analysis will be successful. See "Risk Factors" for a more detailed summary
of factors which could affect future results.
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<PAGE> 32
BUSINESS
THE OFFSHORE MARINE SERVICES INDUSTRY
OVERVIEW
The Offshore Marine Services industry employs vessels to provide services
that support the construction, positioning and ongoing operation of offshore oil
and natural gas drilling rigs and platforms. The industry employs various types
of vessels, referred to broadly as offshore support vessels, that are used to
transport materials, supplies, equipment and personnel. Offshore Marine Services
providers are employed by oil and natural gas companies and other companies that
participate in the offshore exploration and production of oil and natural gas.
Services provided by companies in this industry are performed in numerous
locations worldwide. In excess of 100 vessels are being employed in each of the
following major markets: the Gulf of Mexico, the North Sea, offshore Southeast
Asia, offshore West Africa and the Persian Gulf. Vessel usage is also
significant in other international areas, including offshore Brazil, India and
Australia and the Mediterranean Sea.
The industry is relatively fragmented, with more than 25 major participants
and numerous small regional competitors. Historically, few of these competitors
have participated in all five of the major markets. The Company currently
operates a fleet of 30 offshore support vessels, primarily in the North Sea (16
vessels) and Southeast Asia (13 vessels). Additionally, the Company operates one
vessel offshore Brazil. The Company expects delivery of three new vessels by the
end of 1998.
The Offshore Marine Services industry is directly impacted by the level of
activity in worldwide offshore oil and natural gas exploration, development and
production, which, in turn, is impacted by changes in oil and natural gas
prices. Oil and natural gas prices are affected by a host of geopolitical and
economic forces, including the fundamental principles of supply and demand.
Declines in oil and natural gas prices in the early 1980s and concerns relating
to the stability of prices that followed resulted in a significant reduction in
exploration and development activity worldwide. This decline in activity,
coupled with the overbuilding of new vessels in the early 1980s, resulted in an
oversupply of offshore support vessels. While there is some vessel
interchangeability between geographic regions, barriers such as mobilization
costs and vessel suitability restrict migration of excess capacity. This is most
notably the case in the North Sea, where vessel design requirements dictated by
the harsh operating environment restrict migration of vessels into that market
and, to a lesser degree, high operating costs restrict migration out of the
market. The effect of these restrictions on vessel migration is to segment
various regions into separate markets. These markets for Offshore Marine
Services are affected differently by the above-described forces because of each
area's unique blend of political, operating and economic factors.
Contract or charter durations vary from single day to multi-year in length,
based upon many different factors that vary by market. Historically, term
charters in the Offshore Marine Services industry have generally extended from
six months to one year in length. Additionally, there have been "evergreen"
charters (also known as "life of field" or "forever" charters), and at the other
end of the spectrum, there have been "spot" charters, which can vary from single
voyage to short duration charters of less than six months. Longer duration
charters are more common where equipment is not as readily available or specific
equipment is required. In the North Sea, multi-year charters have been more
common, and the Company believes that term charters constitute the majority of
the market. Term charters in Southeast Asia are currently somewhat less common
than in the North Sea and generally are two years or shorter in length. In
addition, FPSO support charters are typically "life of field" or "full
production horizon" charters. Recently, there have been several five-year
charters, and one even longer charter has recently been executed in Norway for a
supply vessel. The Gulf of Mexico has been a uniquely competitive environment
where the general availability of vessels historically has permitted oil
companies to avoid term charters. Typically, a charter of a year's length or
less in the Gulf of Mexico has a three-day or similar cancellation clause,
indicating the spot nature of the charter.
VESSEL CLASSIFICATIONS
Offshore support vessels generally fall into seven functional
classifications derived from their primary or predominant operating
characteristics or capabilities. However, these classifications are neither
precise nor
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rigid, and it is not unusual for a vessel to fit in more than one of these
categories. These functional classifications are: (i) platform supply vessels,
(ii) anchor handling, towing and supply vessels, (iii) construction support
vessels, (iv) standby rescue vessels, (v) crewboats, (vi) specialty vessels and
(vii) utility vessels.
- PLATFORM SUPPLY VESSELS ("PSVS") serve drilling and production facilities
and support offshore construction and maintenance work. They are
differentiated from other offshore support vessels by their cargo
handling capabilities, particularly their large capacity and versatility.
Utilizing space on deck and below deck, they are used to transport
supplies such as fuel, water, drilling fluids, equipment and provisions.
PSVs range in size from 150' to 200'. Large PSVs ("LgPSVs") range up to
275' and are particularly suited for supporting large concentrations of
offshore production locations because of their large clear after decks
and below deck capacities. The Company operates 10 LgPSVs in the North
Sea (seven of which are owned by the Company) that function primarily in
this classification but also are capable of service in construction
support. In addition, the Company operates two PSVs in the North Sea and
one in Southeast Asia that operate exclusively in this function and 11
SmAHTS vessels (as defined below) in Southeast Asia that often support
production operations as PSVs.
- ANCHOR HANDLING, TOWING AND SUPPLY VESSELS ("AHTS") are used to set
anchors for drilling rigs and tow mobile drilling rigs and equipment from
one location to another. In addition, these vessels typically can be used
in limited supply roles when they are not performing anchor handling and
towing services. They are characterized by large horsepower (up to 18,000
brake horsepower ("BHP") for the most powerful North Sea Class AHTS
vessels), shorter after decks and special equipment such as towing
winches. Vessels of this type with less than 7,000 BHP are referred to as
small AHTS vessels ("SmAHTS"), while AHTS vessels in excess of 10,000 BHP
are referred to as large AHTS vessels ("LgAHTS"). The Company operates
two AHTS vessels in the North Sea and 11 in Southeast Asia. From time to
time, all of the Company's AHTS vessels function as PSVs.
- CONSTRUCTION SUPPORT VESSELS are vessels such as pipelaying barges or
specially designed vessels, such as pipe carriers, used to transport the
large cargos of material and supplies required to support the
construction and installation of offshore platforms and pipelines. As
indicated in the PSV section above, the Company operates 10 vessels
(seven of which are owned by the Company) fitting the definition of pipe
carriers (LgPSVs). The Company's North Sea fleet has the distinction of
being the only significant concentration of pipe carrier capable vessels
outside of Scandinavian control.
- STANDBY RESCUE VESSELS ("STBY") perform a safety patrol function for an
area and are required for all manned locations in the United Kingdom
sector of the North Sea. These vessels typically remain on station to
provide a safety backup to offshore rigs and production facilities and
carry special equipment to rescue personnel. They are equipped to provide
first aid and shelter and, in some cases, also function as supply
vessels. The Company does not own any vessels of this type, but presently
manages two specialty vessels which operate in this capacity.
- CREWBOATS ("CREW") transport personnel and cargo to and from production
platforms and rigs. Older crewboats (early 1980s build) are typically
100' to 120' in length and are designed for speed and to transport
personnel. Newer crewboat designs are generally larger, 130' to 165' in
length, and have greater cargo carrying capacities. They are used
primarily to transport cargo on a time-sensitive basis. The Company
operates one of these vessels in Southeast Asia.
- SPECIALTY VESSELS ("SPV") generally have special features to meet the
requirements of specific jobs. The special features include large deck
spaces, high electrical generating capacities, slow controlled speed and
varied propulsion thruster configurations, extra berthing facilities and
long range capabilities. These vessels are primarily used to support
FPSOs, diving operations, ROVs, survey operations and seismic data
gathering, as well as oil recovery, oil spill response and well
stimulation. One of the Company's owned vessels, the Highland Fortress,
frequently provides specialty functions, and two managed vessels are
chartered for specialty functions (the Clwyd Supporter and the Sefton
Supporter). In addition, the ability to operate in specialty modes is one
of the key marketing concepts for the Highland Rover, which is currently
under construction.
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<PAGE> 34
- UTILITY VESSELS are typically 90' to 150' in length and are used to
provide limited crew transportation, some transportation of oilfield
support equipment and, in some locations, standby functions. The Company
does not operate any vessels in this category.
THE NORTH SEA MARKET
The Company defines the North Sea market as offshore Norway, Denmark, the
Netherlands, Germany, Great Britain and Ireland, the Norwegian Sea and the area
West of Shetlands. Historically, this has been the most demanding of all
exploration frontiers due to harsh weather, erratic sea conditions, significant
water depth and long sailing distances. Exploration and production operators in
the North Sea market are typically large and well capitalized entities (such as
major oil companies and state owned oil companies), in large part because of the
significant financial commitment required in this market. Projects in the region
tend to be fewer in number, but larger in scope, with longer planning horizons,
than projects in regions with less demanding environments, such as the Gulf of
Mexico. Consequently, vessel demand in the North Sea is generally more steady
and less susceptible to abrupt swings than vessel demand in other regions. The
Company's fleet has operated and grown in the North Sea market since the
Company's inception.
The market can be broadly divided into three areas: exploration, production
platform support and field development or construction. Support of the volatile
exploration segment of the market represents the primary demand for AHTS
vessels. While supply vessels also support the exploration segment, they
additionally support the production and field construction segments, which
generally are not affected by frequent short-term swings in demand. However,
since AHTS vessels are capable of performing in a supply role during periods of
weakness in the exploration segment, AHTS vessels can put downward pressure on
PSV demand.
The Company's North Sea fleet is oriented toward supply vessels which work
in the more stable segments of production platform support and field development
or construction and includes nine owned vessels (all PSVs) and seven managed
vessels (three PSVs, two AHTS vessels and two SpVs). These vessels are supported
by onshore bases in Aberdeen, Scotland and Liverpool, England. As of and for the
year ended December 31, 1996, the North Sea fleet accounted for 80% of the
Company's vessel assets measured by net book value, and approximately 78% of the
Company's revenues and approximately 74% of the Company's EBITDA.
The following table summarizes the PSVs working or available for work in
the North Sea market, according to Seascope Offshore, a vessel broker in the
North Sea market.
NORTH SEA PLATFORM SUPPLY VESSELS(A)
AS OF MAY 1997
<TABLE>
<CAPTION>
OWNER LGPSVS SMPSVS TOTAL PSVS
----- --------- --------- -----------
<S> <C> <C> <C>
Farstad Shipping..................................... 10 1 11
Saevik............................................... 7 3 10
Stirling............................................. 10 -- 10
Tidewater (formerly O. I. L. Limited)................ 6 4 10
GulfMark Offshore, Inc............................... 7 2 9
Skandi Brovig/DOF.................................... 7 -- 7
Maersk............................................... 5 -- 5
TOISA................................................ -- 5 5
Seacor/Smit.......................................... 2 2 4
Others (three or fewer vessels each)................. 24 3 27
--------- --------- -----------
Total...................................... 78 20 98
========= ========= ===========
</TABLE>
- ---------------
(a) Does not include managed vessels. The Company manages three PSVs.
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Vessel demand in the North Sea began to decline late in 1991 and continued
to remain low as oil companies reduced exploration activity in response to lower
world oil prices and changes in certain United Kingdom tax incentives. In
addition, construction seasons during this period were unusually short, which
further contributed to the softening market. Anticipated improvements in demand
in 1994 were delayed when oil prices declined to their lowest level since the
end of the Iraqi war. The decline in prices related to a number of factors,
including a continued sluggish world economy, an inability of the Organization
of Petroleum Exporting Countries ("OPEC") to reach an agreement on production
levels and prices and uncertainty surrounding the resumption of Iraqi oil
exports. Although oil prices recovered during 1995, the recovery was tenuous
because of continued uncertainty about exports of Iraqi oil, including the
effect on price levels of a limited and/or temporary resumption of such oil
exports. Nevertheless, exploration activity strengthened, with particular
emphasis in the area to the west of the Shetland Islands.
Over the past three years, the North Sea market has experienced
consistently high vessel utilization rates and increasing day rates. A number of
long-term drilling contracts were signed during 1995, increasing the demand for
vessels in 1996. Drilling activity continued to increase during 1996 and into
1997, as many semisubmersible drilling units were relocated to the North Sea. In
addition, the Company believes that long-term construction projects already
underway indicate the North Sea market for construction support vessels will be
strong for the remainder of 1997 and further indicates that demand in the region
should continue to be strong through 1999 and potentially 2000.
Countering the effect of expected improvements in demand from increased
exploration and construction activity is the increase in new vessel
construction. Limited new construction occurred in 1990 and 1991, and only a few
vessels were delivered between 1990 and 1995. In 1995 and 1996, the first
significant construction activity since the early 1980s occurred, with a number
of orders placed for delivery in 1996 and 1997. A total of 19 additional orders
have been placed through June 1997, with deliveries anticipated between 1997 and
1999. All of the new deliveries to date have been chartered, and the Company
believes that the market is capable of absorbing the number of vessels currently
on order.
THE SOUTHEAST ASIA MARKET
The Company defines the Southeast Asia market as offshore Asia bounded
roughly on the west by the Indian subcontinent and on the north by China. This
market includes offshore Brunei, Cambodia, Indonesia, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam. The design requirements for
vessels in this market are generally similar to the requirements in the Gulf of
Mexico. However, advanced exploration technology and rapid growth in energy
demand among many Pacific Rim countries have led to more remote drilling
locations, which has increased both the overall demand in this market and the
technical requirements for vessels. (The International Energy Agency estimates
that oil demand for non-Organization for Economic Cooperation and Development
Asian countries will grow at approximately 6% per annum during 1995-2000.) In
addition, the Company believes that several major exploration and production
projects, which are currently in the planning stages, will significantly
increase the demand for Offshore Marine Services in the Southeast Asia market.
The current shortage of vessels in the Gulf of Mexico has reduced the
universe of economically viable vessels available to be utilized in Southeast
Asia. Past practice has been for U.S. operators to transfer vessels out of the
Gulf of Mexico to work out their remaining useful lives in the Southeast Asia
market. In recent years, however, there has been pressure (most notably from
Malaysia) to upgrade offshore support vessel capabilities by establishing limits
on the age of vessels working in certain countries' territorial waters and
encouraging construction of new vessels designed particularly to operate in this
region.
In the Gulf of Mexico, there is currently little vessel attrition because
day rates are at levels that make substantial rehabilitation economic even with
relatively moderate extensions of vessel life. At the same time, there have been
announcements of meaningful new construction activity for Gulf of Mexico
vessels. An increase in the supply of Gulf of Mexico vessels may increase the
supply of vessels in Southeast Asia, although not all vessels currently
operating in the Gulf of Mexico would be able to operate in the Southeast Asia
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<PAGE> 36
market. Furthermore, transferring a vessel from the Gulf of Mexico market to
Southeast Asia would involve significant cash and opportunity costs.
The Southeast Asia market differs country by country, but the competitive
environment is broadly characterized by a large number of small companies, in
contrast to many of the other major offshore exploration and production areas of
the world, where a few large operators dominate the market. Affiliations and
joint ventures with local companies are generally necessary to maintain a viable
marketing presence. The Company's management has been involved in the region
since the mid-1970s, and the Company currently maintains long-standing business
relationships with a number of local companies.
Vessels in this market are typically smaller than in certain other areas,
such as the North Sea. Yet, the varying weather conditions, annual monsoons and
long distances between supply centers in Southeast Asia have allowed for a
variety of vessel designs to compete in this market, each suited for a
particular set of operating parameters.
Indonesia is the only member of OPEC in the region. Oil and natural gas
exploration activity in Indonesia has historically focused on oil exploration.
Vessel demand in this country softened in 1992, as exploration activities were
reduced while some of the major oil companies renegotiated their production
royalty and tax structures with local authorities. This reversed somewhat in
1993 and 1994, as some agreements were reached. However, in 1995, the oil
companies pressed for further modifications to their production royalty and tax
structures and reduced their exploration budgets, resulting in
lower-than-expected activity in 1995 and only marginal improvement in 1996 and
into early 1997.
The rapid economic growth of many countries in the Pacific Rim has resulted
in increased demand for energy and a related increase in oil and natural gas
exploration. Decisions by local governments to implement policies that will
reduce dependence on energy supplies from the Middle East have stimulated
additional interest in exploration in Southeast Asia. Virtually every country in
the region has known or potential reserves for oil and natural gas. However,
exploration activity suffered during 1993 and 1994, when oil prices declined,
and has been slow to recover. Exploration budgets for the region appear to be
higher for 1997, but there has been a reduction in available drilling rigs
because rigs have been redeployed to meet demand that has accelerated faster in
other areas of the world.
THE BRAZILIAN MARKET
In May 1995, the Seapower returned to Brazil to begin working under a
two-year contract (which has recently been extended through May 1999) with
Petrobras, the Brazilian national oil company. Although, in the past, Brazil has
experienced periods of high inflation and changing political climates, the
Company has experienced no problems with its operations in this market.
Similar to the North Sea, the Offshore Marine Services market in Brazil
requires a large number of highly sophisticated vessels due to the harsh
operating environment. The Company's ability to secure (and subsequently renew)
a multi-year commitment payable substantially in U.S. Dollars is an example of
the terms and conditions offered to attract such high quality vessels.
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<PAGE> 37
THE COMPANY
THE COMPANY'S FLEET
The fleet includes 30 vessels, 21 of which are owned (19 are mortgaged
under various debt agreements), two are bareboat chartered and seven are under
management. The following table summarizes information as of May 31, 1997 on
each of these vessels, as well as three additional vessels currently under
construction: the Leopard Bay, an AHTS vessel being built for Sanko Shipping to
be bareboat chartered by the Company, the Gallant Project and the Highland
Rover. Each of these vessels is scheduled to be delivered in 1998.
<TABLE>
<CAPTION>
YEAR LENGTH
LOCATION VESSEL TYPE(A) FLAG BUILT (FEET) BHP(B) DWT(C)
-------- ------ ------- ------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
CHARTERED
North Sea Leopard Bay(d) AHTS TBD 1998(d) 241 15,000 2,900
OWNED
TBD Gallant Project(e) TBD TBD 1998(e) TBD TBD TBD
North Sea Highland Rover(f) LgPSV UK 1998(f) 236 5,450 3,700
North Sea Highland Drummer LgPSV UK 1997 221 5,450 3,115
North Sea Highland Piper LgPSV UK 1996 221 5,450 3,115
North Sea Highland Pride LgPSV UK 1992 265 6,600 4,000
North Sea Highland Star LgPSV UK 1991 265 6,600 4,000
North Sea Highland Fortress LgPSV UK 1982 255 6,120 3,200
North Sea Highland Warrior LgPSV Bermuda 1981 265 5,300 3,890
North Sea Highland Champion LgPSV UK 1979 265 4,800 3,320
North Sea Highland Legend PSV UK 1986 194 3,590 1,442
North Sea Highland Sprite PSV UK 1986 194 3,590 1,442
MANAGED
North Sea Sea Truck LgPSV UK 1979 266 4,600 2,477
North Sea North Prince LgPSV UK 1978 259 6,000 2,717
North Sea Clwyd Supporter SpV UK 1984 266 10,700 1,400
North Sea Sefton Supporter SpV UK 1971 250 1,620 1,233
North Sea Portosalvo AHTS UK 1982 227 12,750 2,085
North Sea Safe Truck LgPSV UK 1996 221 5,450 2,800
North Sea Gargano AHTS UK 1975 211 8,480 1,374
OWNED
Southeast Asia Sem Courageous SmAHTS Malaysia 1981 191 4,000 1,000
Southeast Asia Sem Valiant SmAHTS Malaysia 1981 191 4,000 1,000
Southeast Asia Seawhip SmAHTS Panama 1983 192 3,900 1,200
Southeast Asia Seawitch SmAHTS Panama 1983 192 3,900 1,200
Southeast Asia Sea Explorer SmAHTS Panama 1981 192 5,750 1,420
Southeast Asia Sea Diligent SmAHTS Panama 1981 192 4,610 1,219
Southeast Asia Sea Endeavor SmAHTS Panama 1981 191 4,000 1,000
Southeast Asia Sea Conquest SmAHTS Panama 1977 185 3,850 1,142
Southeast Asia Sea Searcher SmAHTS Panama 1976 185 3,850 1,215
Southeast Asia Sea Eagle SmAHTS Panama 1976 185 3,850 1,215
Southeast Asia Searunner Crew US 1982 120 2,720 126
CHARTERED
Southeast Asia SeaMark South Carolina(g) SmAHTS Panama 1983 180 3,000 1,000
Southeast Asia SeaMark Mississippi(g) PSV Panama 1982 180 2,250 1,000
OWNED
Brazil Seapower SmAHTS Panama 1974 222 7,040 1,205
</TABLE>
- ---------------
(a) Legend:
LgPSV -- Large platform supply (UT 705s and UT 755s)
PSV -- Platform supply vessel
AHTS -- Anchor handling, towing and supply vessel
SmAHTS -- Small anchor handling, towing and supply vessel
Crew -- Crewboat
SpV -- Specialty vessel, including towing and oil spill response
TBD -- To be determined
(b) Brake horsepower.
(c) Deadweight tons.
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<PAGE> 38
(d) This North Sea class AHTS vessel is being built for Sanko Shipping and will
be bareboat chartered to the Company for up to five years. The Company
anticipates this vessel will be delivered in July 1998.
(e) The Company recently acquired this unfinished supply vessel hull, for which
design and shipyard pricing have already commenced. The Company anticipates
this vessel will be delivered in 1998.
(f) This modified and extended UT 755 design PSV is under construction and is
expected to be delivered in March 1998.
(g) The SeaMark South Carolina and SeaMark Mississippi are bareboat chartered
(with a purchase option) through August 1998 to SeaMark Ltd., a Panamanian
corporation owned 51% by the Company and 49% by the vessels' owners.
The vessels in the fleet are capable of transporting supplies and personnel
to offshore drilling platforms and rigs, production platforms and other
installations. Twenty of the 21 owned vessels are used primarily for carriage of
cargo. Seven of those 20 vessels are large PSVs, capable of supporting offshore
construction in the North Sea or large capacity platform supply duties. Ten
owned vessels are capable of performing light anchor handling and towing
services for moving rigs and platforms between locations. The crewboat is
smaller in length and is used primarily to transport crews to and from offshore
facilities.
The fleet summarized above includes GulfMark's most modern, technologically
sophisticated vessel to date, the Highland Rover, a modified and extended (236')
UT 755 design PSV currently under construction and scheduled to be delivered in
March 1998. In addition to the standard capabilities of the technologically
advanced UT 755 design, the Highland Rover will be equipped with a computer
controlled maneuvering system (also known as dynamic positioning) and will be
capable of launching ROVs through a specialized "moon pool."
The table also reflects the Company's recent purchase of an unfinished
supply vessel hull, the Gallant Project, for which design and shipyard pricing
have already commenced. The Company anticipates that delivery of this vessel
will be in 1998. The hull could be completed as a PSV or an AHTS vessel,
although the Company currently believes that the most attractive potential
application may be as a multi-purpose support vessel for the FPSO market. For a
variety of economic reasons, exploration and production companies are
increasingly employing FPSO structures in lieu of conventional fixed platform
installations. The FPSO market typically employs more technologically advanced
vessels capable of performing multiple functions, potentially under longer term
(even "life of field") charters. The Company believes that the low cost
(estimated at $11-14 million) and early delivery date of the Gallant Project
should provide a significant competitive advantage in serving the growing FPSO
market.
CUSTOMERS, CHARTER TERMS AND COMPETITION
The Company's principal customers are major integrated oil companies and
large independent oil and natural gas exploration and production companies
working in international markets, as well as foreign government owned or
controlled organizations and companies that provide logistic, construction and
other services to such oil companies and foreign government organizations.
During 1996, as a result of multiple charters in the ordinary course of
business, two customers each accounted for 10% or more of total consolidated
revenues: ASCO, at 15%, and Shell, at 14%. For the quarter ended March 31, 1997,
approximately 20%, 15% and 16% of the Company's total revenues were received
from Shell, ASCO and European Marine Contractors, respectively. ASCO is a
logistics coordinator primarily serving major international oil companies (such
as British Petroleum, Conoco and Amoco). European Marine Contractors is a
construction company jointly owned by Brown & Root and Saipem, a subsidiary of
ENI, the Italian national oil company. The charters with these customers were
industry standard time charters. The charters involved various of the Company's
vessels for periods ranging from just a few days or months to, in one case, one
year. The charters are generally not cancelable except for unsatisfactory
performance by the vessel. The loss of a major customer could have a material
adverse effect on the Company's financial condition and results of operations
until a replacement is obtained.
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As of June 30, 1997, 12 of the Company's owned and bareboat chartered
vessels are on term charters with initial charter periods of one year or longer.
Ten are on charters of less than one year but over 30 days and one of the
vessels is on a charter of less than 30 days.
Substantially all of the Company's charters are denominated in Sterling and
U.S. Dollars. The Company reduces currency risk by matching each vessel's
operating expenses to the currency in which it generates revenue. See "Risk
Factors -- Currency Fluctuations" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Currency Fluctuations and
Inflation."
Offshore Marine Services companies compete principally on the basis of
suitability of equipment, price and service. Also, in certain foreign countries,
preferences are given to vessels owned by local companies. The Company has
attempted to mitigate some of the impact of such preferences through
affiliations and joint ventures with local companies.
The Company competes with approximately 20 similar companies in the North
Sea market and numerous small and large competitors in the Southeast Asia
market. Some of these competitors have significantly greater financial resources
than the Company.
ENVIRONMENTAL AND GOVERNMENT REGULATION
All of the Company's vessels are subject to various international
conventions, including certain safety, environmental and construction standards.
Among the more significant of the conventions applicable to the fleet are: (i)
the International Convention for the Prevention of Pollution of the Sea, 1973,
1979 Protocol, (ii) the International Convention on the Safety of Life at Sea,
1974, 1978 and 1981/1983 Protocol, and (iii) the International Convention on
Standards of Training, Certification and Watchkeeping for Seafarers. These
regulations govern oil spills and other matters of environmental protection,
worker health and safety and the manning, construction and operation of vessels.
The Company believes that it presently is in material compliance with the
environmental laws and regulations to which the Company's operations are
subject. In addition, the countries under which the vessels are flagged require
certain periodic inspections and drydock examinations. Generally, surveys and
inspections are performed by internationally recognized classification
societies. Most of the owned vessels are flagged in Panama, the United Kingdom
or Malaysia. The Company is not a party to any pending environmental litigation
or other proceeding, and is unaware of any threatened environmental litigation
or proceeding which, if adversely determined, would have a material adverse
effect on the financial condition or results of operations of the Company.
However, the risks of incurring substantial compliance costs and liabilities and
penalties for noncompliance are inherent in Offshore Marine Service operations.
There can be no assurance that significant costs, liabilities, and penalties
will not be incurred by or imposed on the Company in the future. See "Risk
Factors -- Environmental and Government Regulation."
OPERATIONAL RISKS AND INSURANCE
The operation of offshore support vessels is subject to various risks, such
as catastrophic marine disasters, adverse weather conditions, mechanical
failures, collisions, oil and hazardous substance spills and navigation errors,
all of which represent a threat to the safety of personnel and to the Company's
vessels, cargo, equipment and other property, as well as the environment. All of
the Company's operations are in foreign waters and, as such, are subject to the
usual risks inherent in doing business in foreign countries. Such risks include
political instability, possible vessel seizure, nationalization of assets,
currency restrictions, exchange rate fluctuations, import/export quotas and
other forms of public and governmental regulation, all of which are beyond the
control of the Company. The occurrence of any of these events could result in
loss of revenue, casualty loss, increased costs or significant liability to
third parties.
The Company maintains insurance coverage against the casualty and liability
risks listed above which management considers to be adequate based on industry
standards and the value of the fleet, including hull and machinery insurance for
the vessels, protection and indemnity insurance against liabilities to employees
and third parties for injury, damage or pollution and other customary insurance.
The Company has not in the past experienced a loss in excess of policy limits.
There can be no assurance, however, that such insurance coverage will be
adequate to cover losses that the Company may incur or that adequate insurance
rates that the Company considers commercially reasonable will continue to be
available. See "Risk Factors -- Operational Risks and Insurance" and
" -- Reliance on Foreign Operations."
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SEASONALITY OF BUSINESS
The operations of the fleet are subject to seasonal factors. Operations in
the North Sea are generally at their highest level during the months from April
to August and at their lowest levels during November to February. Vessels
operating in Southeast Asia are generally at their lowest utilization rates
during the monsoon season, which moves across the Asian continent between
September and early March. The actual monsoon season for a specific Southeast
Asia location is about two months. In addition, operations in any market may be
affected by unusually long or short construction seasons due to, among other
things, abnormal weather conditions.
EMPLOYEES
At December 31, 1996, the Company had 539 employees located in the United
States, the United Kingdom, Southeast Asia and Brazil. Through its contract with
a crewing agency, it participates in collective bargaining arrangements with
approximately 352 employees working on its North Sea vessels under agreements
covering one-to-two year periods. The Company has no other collective bargaining
agreements. Relations with the employees are considered satisfactory. To date,
the operations of neither the Company nor its Predecessor have been interrupted
by strikes or work stoppages.
PROPERTIES
The principal executive offices for the Company are located in Houston,
Texas, while operations are headquartered in Lafayette, Louisiana. For local
support, the Company has offices and warehouse facilities in Singapore and
Aberdeen, Scotland. All facilities except the one in Aberdeen, Scotland are
under lease. The Company's operations generally do not require highly
specialized facilities, and suitable facilities are generally available on a
lease basis as required.
LEGAL PROCEEDINGS
Various legal proceedings and claims that arise in the ordinary course of
business may be instituted or asserted against the Company relating to the
Offshore Marine Services operations. Although the outcome of litigation cannot
be predicted with certainty, management believes, based on discussions with its
legal counsel and in consideration of reserves recorded, that the outcome of
these legal actions will not have a material adverse effect upon the
consolidated financial position and results of operations of the Company. As of
the date hereof, no claims have been made against the Company pursuant to the
indemnities described below under "-- Distribution Agreement Obligations and
Indemnities." The Company cannot predict whether any such claims may be made in
the future.
DISTRIBUTION AGREEMENT OBLIGATIONS AND INDEMNITIES
Indemnification Obligations to EVI. The Company has agreed under the
Distribution Agreement to indemnify, defend and hold the Predecessor, EVI and
their respective officers, directors, employees, agents and assigns harmless
from and against any and all liabilities or environmental liabilities
(including, without limitation, reasonable fees and expenses of attorneys,
accountants, consultants and experts) that such parties incur, are subject to a
claim for, or are subject to, that are based upon, arising out of, relating to
or otherwise in respect of: (i) any breach of any covenant or agreement of the
Company contained in the Distribution Agreement or any other agreement
contemplated thereby; (ii) the acts or omissions of the Predecessor or any of
its current or past subsidiaries or affiliated companies ("Predecessor
Companies"), including Ercon, on or before the effective time of the
Distribution; (iii) the acts or omissions of any Predecessor Company (other than
Ercon), the Company or any of the Company's affiliates or the conduct of any
business by them on or after the effective time of the Distribution; (iv) the
Assumed Liabilities (as defined below) under the Distribution Agreement; (v) the
assets being contributed to the Company, regardless of the Predecessor's or any
Predecessor Company's prior use of any such asset; (vi) the conveyance,
assignment, sale, lease or making available of such assets; (vii) the
conveyance, assignment, sale, merger or contribution of the stock or share
capital or assets of Ercon to the Predecessor; (viii) any taxes as a result of
the Contribution, the Distribution
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<PAGE> 41
or the Merger subsequently being determined to be a taxable transaction for
foreign, Federal, state or local law purposes, regardless of the theory or
reason for the transactions being subject to tax; (ix) any and all amounts for
which the Predecessor or EVI may be liable on account of any claims,
administrative charges, self-insured retentions, deductibles, retrospective
premiums or fronting provisions in insurance policies, including as the result
of any uninsured period, insolvent insurance carriers or exhausted policies,
arising from claims by the Predecessor's or any Predecessor Company's
affiliates, or the employees of any of the foregoing, or claims by insurance
carriers of the Predecessor or any Predecessor Company for indemnity arising
from or out of claims by or against the Predecessor or any Predecessor Company
for acts or omissions of the Predecessor or any Predecessor Company, or related
to any current or past business of the Predecessor or any Predecessor Company or
any product or service provided by the Predecessor or any Predecessor Company in
whole or part prior to the effective time of the Distribution; (x) any liability
under the Consolidated Omnibus Budget Reconciliation Act of 1986 with respect to
any employees of the Predecessor or any Predecessor Company who become employees
of the Company after the Distribution; (xi) any settlements or judgments in any
litigation commenced by one or more insurance carriers against the Predecessor
or EVI on account of claims by the Company or any Predecessor Company or
employees of the Company or any Predecessor Company; (xii) any and all
liabilities incurred by the Predecessor or EVI pursuant to its obligations
hereunder in seeking to obtain or obtaining any consent or approval to assign,
transfer or lease any interest in any asset or instrument, contract, lease,
permit or benefit arising thereunder or resulting therefrom; (xiii) any
liability relating to the failure to comply with any bulk sales or transfer laws
in connection herewith or with any of the other agreements contemplated hereby;
(xiv) the on-site or off-site handling, storage, treatment or disposal of any
Waste Materials (as defined below) generated by the Predecessor or any
Predecessor Company on or prior to the effective time of the Distribution or any
Predecessor Company (other than Ercon) at any time; (xv) any and all
Environmental Conditions (as defined below) on or prior to the effective time of
the Distribution, known or unknown, existing on, at or underlying any of the
properties owned, leased or operated by the Predecessor or Ercon on or after the
effective time of the Distribution; (xvi) any and all Environmental Conditions,
known or unknown, existing on, at or underlying any of the properties currently
or previously owned or operated by the Predecessor or any Predecessor Company
other than the properties owned, leased or operated by the Predecessor or Ercon
after the effective time of the Distribution; (xvii) any acts or omissions on or
prior to the effective time of the Distribution of the Predecessor or any
Predecessor Company relating to the ownership or operation of the business of
the Predecessor or any Predecessor Company or the properties currently or
previously owned or operated by the Predecessor or any Predecessor Company;
(xviii) any liability relating to any claim or demand by any stockholder of the
Predecessor or EVI with respect to the Contribution, the Distribution, the
Merger or the transactions relating thereto; and (xix) any liability relating to
the Predecessor's 401(k) Plan and the other employee benefit or welfare plans of
the Predecessor or any Predecessor Company arising out of circumstances
occurring on or prior to the effective time.
Covenants of the Company Relating to the EVI Indemnification. The Company
agreed in the Distribution Agreement that it will not, and will cause its
subsidiaries not to, merge, convert into another entity, engage in a share
exchange for a majority of its shares, liquidate or transfer, assign or
otherwise convey or allocate, directly or indirectly, in one or more
transactions, whether or not related, a majority of the Company's assets
(determined in good faith by a board resolution prior to the transaction on a
fair value and consolidated basis) to any person unless the acquiring person (i)
expressly assumes the obligations of the Company under the Distribution
Agreement, (ii) executes and delivers to the Predecessor and EVI an agreement
agreeing to be bound by each and every provision of the Distribution Agreement
as if the acquiring person were the Company and (iii) has a net worth on a pro
forma basis after giving effect to the acquisition or business combination equal
to or greater than that of the Company (on a consolidated basis).
Certain Definitions Under the Distribution Agreement. For purposes of the
Distribution Agreement, the following terms have the following meanings:
"Assumed Liabilities" means any and all liabilities and environmental
liabilities other than the Predecessor Retained Liabilities (as defined below)
to which the Predecessor or any of the assets being contributed to the
Predecessor may now or at any time in the future become subject (whether
directly or indirectly, including by reason of the Predecessor or any
Predecessor Company, excluding Ercon, owning,
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<PAGE> 42
controlling or operating any business or assets of any person (including any
current or past affiliate)), resulting from, arising out of or relating to (i)
any Predecessor Company, (ii) any taxes to which the Predecessor or any
Predecessor Company may be obligated for periods ending on or before the
effective time of the Distribution, (iii) any obligation, matter, fact,
circumstance or action or omission by any person in any way relating to or
arising from the business, operations or assets of the Predecessor or Ercon that
existed on or prior to the effective time of the Distribution, (iv) any product
or service provided by the Predecessor or any Predecessor Company prior to the
effective time of the Distribution, (v) the Contribution, the Distribution, the
Merger or any of the other transactions contemplated by the Distribution
Agreement, (vi) previously conducted operations of the Predecessor or any
Predecessor Company or (vii) the assets contributed to the Company.
"Environmental Conditions" means any pollution, contamination, degradation,
damage or injury caused by, related to, arising from or in connection with the
generation, handling, use, treatment, storage, transportation, disposal,
discharge, release or emission of any Waste Materials.
"Environmental Laws" means all laws, rules, regulations, statutes,
ordinances, decrees or orders of any governmental entity now or at any time in
the future in effect relating to (i) the control of any potential pollutant or
protection of the air, water or land, (ii) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal or transportation and (iii)
exposure to hazardous, toxic or other substances alleged to be harmful. The term
"Environmental Laws" includes, without limitation, (1) the terms and conditions
of any license, permit, approval or other authorization by any governmental
entity and (2) judicial, administrative or other regulatory decrees, judgments
and orders of any governmental entity. The term "Environmental Laws" includes,
but is not limited to the following statutes and the regulations promulgated
thereunder: the Clean Air Act, 42 U.S.C. sec. 7401 et seq., the Clean Water Act,
33 U.S.C. sec. 1251 et seq., the Resource Conservation Recovery Act, 42 U.S.C.
sec. 6901 et seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C.
sec. 11011 et seq., the Toxic Substances Control Act, 15 U.S.C. sec. 2601 et
seq., the Water Pollution Control Act, 33 U.S.C. sec. 1251, et seq., the Safe
Drinking Water Act, 42 U.S.C. sec. 300f et seq., the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. sec. 9601, et seq., and any
state, county or local regulations similar thereto.
The "Predecessor Retained Liabilities" means, and is limited solely to, (i)
accounts payable relating to the business of Ercon that are reflected on the
balance sheet of the Predecessor at the effective time of the Distribution, (ii)
accounts payable reflected on the balance sheet of the Predecessor at the
effective time of the Distribution and agreed to by EVI and (iii) the
obligations of the Predecessor and Ercon that arise after the effective time of
the Distribution (other than obligations relating to matters existing or
occurring on or prior to the effective time of the Distribution and
indemnification, warranty and product liability, wrongful death or property
claims associated with actions or omissions prior to the effective time of the
Distribution or any business conducted prior to the effective time of the
Distribution), including those obligations set forth under the express terms of
the contracts of the Predecessor relating to the operations of Ercon.
"Waste Materials" means any (i) toxic or hazardous materials or substances,
(ii) solid wastes, including asbestos, polychlorinated biphenyls, mercury,
buried contaminants, chemicals, flammable or explosive materials, (iii)
radioactive materials, (iv) petroleum wastes and spills or releases of petroleum
products and (v) any other chemical, pollutant, contaminant, substance or waste
that is regulated by any governmental entity under any Environmental Law (as
defined above).
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's executive officers and directors. Unless otherwise indicated, (i) the
business address for each person listed below is GulfMark Offshore, Inc., 5 Post
Oak Park, Suite 1170, Houston, Texas 77027-3414, and (ii) each individual listed
below is a citizen of the United States. All of the directors of the Company are
elected annually.
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION
---- --- ----------------
<S> <C> <C>
David J. Butters.................. 56 Chairman of the Board
Bruce A. Streeter................. 48 Director, President and Chief Operating Officer
Norman G. Cohen................... 75 Director
Marshall A. Crowe................. 76 Director
Louis S. Gimbel, 3rd.............. 68 Director
Robert B. Millard................. 46 Director
Frank R. Pierce................... 47 Executive Vice President, Secretary and Treasurer
John E. Leech..................... 44 Vice President
Kevin D. Mitchell................. 29 Controller and Assistant Secretary
</TABLE>
David J. Butters is Chairman of the Board and a member of the Executive and
Audit Committees. He is a Managing Director of Lehman Brothers, an investment
banking firm and division of Lehman Brothers Inc., which is a subsidiary of
Lehman Brothers Holdings Inc., where he has been employed for more than the past
five years. Mr. Butters is currently Chairman of the Board of EVI, a director of
Anangel-American Shipholdings, Ltd. and a member of the Board of Advisors of
Energy International, N.V. Mr. Butters has served as a director of the Company
since its formation in 1996 and served as a director of the Predecessor from
1989 until the Merger.
Bruce A. Streeter was elected President of the Predecessor's Marine
Division in November 1990 and continued in that capacity up to the effective
time of the Merger. Prior to November 1990, he was with Offshore Logistics, Inc.
for a period of 12 years, serving in a number of capacities including General
Manager, Marine Division. Mr. Streeter has served as President and Chief
Operating Officer of the Company since January 1997. Mr. Streeter was elected a
director of the Company in April 1997.
Norman G. Cohen is Chairman of the Audit and Compensation Committees. He
has served as President of Norman G. Cohen, Inc., consultants and mortgage
lenders, for more than five years and is a director of Brewster Wallcovering
Co., Randolf, Massachusetts. Mr. Cohen is a partner in Orie Co., a private
investment company, and former Chairman of the National Parks and Conservation
Association. Mr. Cohen has served as a director of the Company since its
formation in 1996 and served as a director of the Predecessor from 1972 until
the Merger.
Marshall A. Crowe serves as a member of the Audit Committee. Since January
1978, Mr. Crowe has served as President of M. A. Crowe Consultants, Inc.,
providing consulting services in the energy and financial fields. For four years
prior thereto, he was Chairman of the National Energy Board of Canada and was
previously Chairman of the Board of Canada Development Corporation, which was
engaged in the business of making equity investments in Canadian enterprises.
Mr. Crowe is also of counsel at Johnston & Buchan, barristers and solicitors,
Ottawa, Canada. Mr. Crowe has served as a director of the Company since its
formation in 1996 and served as a director of the Predecessor from 1978 until
the Merger. Mr. Crowe is a Canadian citizen.
Louis S. Gimbel, 3rd is a member of the Executive and Compensation
Committees. He is President, Chief Executive Officer and a Director of S. S.
Steiner, Inc. and President, Director and Chairman of the Board of Hops Extract
Corporation and Co-Manager of Stadelman Fruit LLC. He has been employed by S. S.
Steiner, Inc. for more than the past five years. S. S. Steiner, Inc. is engaged
in the farming, trading,
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processing, importing and exporting of hops and other specialty crops. Mr.
Gimbel has served as a director of the Company since its formation in 1996 and
served as a director of the Predecessor from 1970 until the Merger.
Robert B. Millard is a member of the Executive Committee. He is a Managing
Director of Lehman Brothers Inc., where he has been employed for more than the
past five years. Mr. Millard also serves as a director of EVI. Mr. Millard has
served as a director of the Company since its formation in 1996 and served as a
director of the Predecessor from 1989 until the Merger.
Frank R. Pierce was elected Executive Vice President, Secretary and
Treasurer of the Predecessor in December 1990, serving in that capacity up to
the effective time of the Merger. Mr. Pierce had been employed by the
Predecessor since July 1987, serving as its Vice President, Finance until
December 1990. Mr. Pierce was elected Executive Vice President, Secretary and
Treasurer of the Company in January 1997.
John E. Leech was elected Vice President of the Company in January 1997. He
served as Vice President of the Predecessor's Marine Division from its formation
in November 1990 up to the effective time of the Merger. Prior to November 1990,
Mr. Leech was with Offshore Logistics, Inc. for a period of 15 years, serving in
a number of capacities, including Manager, Domestic Operations and International
Operations Manager.
Kevin D. Mitchell was elected Controller and Assistant Secretary of the
Predecessor in September 1996, serving in that capacity up to the effective time
of the Merger. Prior to that, he served as controller for one year with E-Stamp
Corporation, a start-up software company, having previously completed five years
with Arthur Andersen LLP. Mr. Mitchell was elected Controller and Assistant
Secretary of the Company in January 1997.
COMMITTEES AND MEETINGS OF DIRECTORS
The standing committees of the Board of Directors of the Company are the
Executive Committee, the Audit Committee and the Compensation Committee. The
function of each of these three committees is described and the members of each
are listed below. During the year ended December 31, 1996, the Predecessor's
Board of Directors met five times, the Audit Committee met three times and the
Compensation Committee met twice. During 1996, each director attended 100% of
the combined meetings of the Predecessor's Board of Directors and the committees
of the Board on which he served, except Mr. Gimbel, who attended 80% of such
meetings.
Messrs. Butters, Cohen and Crowe are the current members of the Company's
Audit Committee. The Audit Committee makes recommendations to the Board
concerning the selection and discharge of the Company's independent auditors,
reviews professional services performed by the auditors, the results of their
audit engagement and the fees charged for services performed by the auditors and
evaluates the Company's system of internal accounting controls.
Messrs. Cohen and Gimbel are the current members of the Company's
Compensation Committee, the principal functions of which are to recommend to the
Board of Directors the salaries to be paid to the officers of the Company and to
administer the compensation and benefit plans of the Company.
Messrs. Butters, Gimbel and Millard are the current members of the
Executive Committee, which acts on behalf of the Board between regularly
scheduled meetings of the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee of the Company is or was an officer
or employee of the Company or had any relationship requiring disclosure under
applicable rules, except that Mr. Butters has a retainer arrangement with the
Company pursuant to which Mr. Butters receives $6,250 per month for serving as
Chairman of the Board of the Company. In 1996, Mr. Butters received $90,500 in
director fees and retainers from the Predecessor.
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DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
Retainer Arrangements. Each non-employee director of the Company is paid
$1,000 for each meeting of the Board of Directors and $500 for each committee
meeting he attends. In addition, a $2,000 retainer is paid to each non-employee
director of the Company for each quarter of the year in which such director
serves as a director. The Company has a retainer arrangement with Mr. Butters
pursuant to which he receives $6,250 per month for serving as Chairman of the
Board. Total compensation paid by the Predecessor in 1996 to the non-employee
directors, including director fees and retainers, was $90,500 for Mr. Butters,
$16,000 for Mr. Cohen, $15,000 for Mr. Crowe, $12,500 for Mr. Gimbel and $13,000
for Mr. Millard. In addition, the Company furnishes Messrs. Cohen, Crowe and
Gimbel with a $250,000 life insurance policy. Premiums paid by the Predecessor
during 1996 for such policies were $12,757 for Mr. Cohen, $15,428 for Mr. Crowe
and $6,805 for Mr. Gimbel.
Director Stock Option Plans. On December 8, 1993, each of the Company's
current directors received options to purchase shares of the Predecessor's
common stock under the Amended and Restated 1993 Non-Employee Director Stock
Option Plan (the "Director Plan"). An additional grant of stock options was made
to each director serving on the Predecessor's Board of Directors on March 18,
1996.
The Company assumed the Director Plan on the date of the Distribution.
Pursuant to the equitable adjustment provisions of the Director Plan, each
outstanding stock option previously granted pursuant to the Director Plan was
converted to an option to acquire shares of the Company's Common Stock and was
adjusted to preserve the aggregate intrinsic value of each option and the ratio
of the exercise price to market value per share. In addition, the number of
shares of Common Stock covered by the automatic grant provisions of the Director
Plan was doubled to reflect the Distribution. Accordingly, each non-employee
director will receive options to purchase 10,000 shares of Common Stock at an
exercise price equal to the fair market value of such shares of Common Stock on
the date of grant, upon his re-election as a director at the Company's annual
stockholders' meetings in 1999, 2002 and 2005. As of May 31, 1997, there were
221,121 option shares outstanding under the Director Plan and 300,000 shares
available for grant upon the election of a new director or under the automatic
grant provisions discussed above.
In 1988, the Predecessor adopted the 1988 Non-Employee Director Option
Policy (the "Director Policy"), under which each non-employee director of the
Predecessor was granted options to purchase shares of Common Stock of the
Predecessor. Each of the Company's current directors, except Mr. Streeter, has
received options under this arrangement. As of the effective time of the
Distribution, the Company assumed and adjusted the outstanding stock options
issued pursuant to this policy to preserve the aggregate intrinsic value of each
option and the ratio of exercise price to market value per share. As of May 31,
1997, there were 49,136 option shares outstanding under the Director Policy.
There are no further option shares available for grant under this policy.
Employee Plan. The 1987 Stock Option Plan (the "Employee Plan") was adopted
by the Board of Directors of the Predecessor on May 20, 1987, and approved by
the Predecessor's stockholders on May 18, 1988. A total of 200,000 shares of the
Predecessor's common stock was initially reserved for issuance thereunder. The
Employee Plan expired for future grant purposes on May 20, 1997. On May 31,
1997, there were 227,389 option shares outstanding under the Employee Plan.
As of the effective time of the Distribution, the Company assumed the
Employee Plan, and pursuant to the equitable adjustment provisions of the
Employee Plan, each outstanding stock option previously granted pursuant to the
Employee Plan was converted into or exchanged for an option to acquire shares of
the Company's Common Stock. The number of shares of Common Stock subject to, and
the exercise price of, each such option assumed were adjusted to preserve the
aggregate intrinsic value of each option and the ratio of the exercise price to
market value per share.
The Employee Plan is administered by the Compensation Committee of the
Board of Directors, currently consisting of Messrs. Cohen and Gimbel. The
Employee Plan contains appropriate provisions to assure that the Compensation
Committee satisfies the non-employee director administration provisions of
Section 16(b) of the Exchange Act and the rules promulgated thereunder. The
Compensation Committee has sole authority
44
<PAGE> 46
to select employees who are to be granted options and the number of shares to be
issued under each option. The Compensation Committee is authorized to interpret
the Employee Plan and may adopt such rules and regulations as it may deem
advisable to carry out the Employee Plan. All decisions made by the Compensation
Committee in selecting employees for option grants and the number of shares
issued under each option are final.
The aggregate compensation paid by the Predecessor for services rendered
during the last three years in all capacities to each of the highest paid
executive officers whose total annual salary and bonus exceeded $100,000 during
the year ended December 31, 1996 was as follows:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- SECURITIES
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(A) OPTIONS(B) COMPENSATION
------------------ ---- -------- ------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Streeter............. 1996 $175,000 $75,000 $ -- 39,310 $2,848(c)
President 1995 $140,000 $70,000 $ -- -- $2,765
1994 $135,000 $50,000 $ -- -- $2,708
Frank R. Pierce............... 1996 $135,000 $25,000 $ -- 9,828 $1,755(c)
Executive Vice President, 1995 $130,000 $15,000 $ -- -- $1,706
Secretary and Treasurer 1994 $125,000 $ 8,000 $ -- -- $1,663
John E. Leech................. 1996 $120,000 $50,000 $ -- 19,656 $2,623(c)
Vice President 1995 $110,000 $45,000 $ -- -- $2,550
1994 $105,000 $35,000 $ -- -- $2,525
</TABLE>
- ---------------
(a) Other annual compensation excludes perquisites and other benefits because
the aggregate amount of such compensation was less than 10% of the combined
total for salary and bonus.
(b) As adjusted to preserve the aggregate intrinsic value of the options and the
ratio of exercise price to market value per share on the date of the
Distribution.
(c) Includes matching contributions made by the Predecessor pursuant to its
401(k) savings plan of $1,900, $1,755 and $1,875 for Messrs. Streeter,
Pierce and Leech, respectively, and premiums associated with a $500,000
split-dollar life insurance policy of $948 and $748 for Messrs. Streeter and
Leech, respectively.
The Company expects to enter into employment agreements with Messrs.
Streeter and Leech, effective as of July 1, 1997, pursuant to which Mr. Streeter
will be entitled to be employed as President of the Company and to receive an
annual salary of not less than $180,000 for each year during the three-year term
of the agreement and Mr. Leech will be entitled to be employed as a Vice
President of the Company and to receive an annual salary of not less than
$125,000 for each year during the two-year term of the agreement. In addition to
annual salary, Messrs. Streeter and Leech may receive a bonus at the sole
discretion of the Company. Prior to a change of control of the Company or more
than twelve months after a change of control of the Company, any termination of
Messrs. Streeter's or Leech's employment without cause, or his resignation in
certain circumstances, would entitle him to the payment of his annual salary for
the time remaining under the term of his employment agreement and the
proportionate share of his annualized bonus for the previous fiscal year for the
time remaining under the term of his employment agreement, together with certain
other benefits and any unpaid salary, bonus amount, deferred compensation and
vacation pay accrued to the date of termination. Upon a change of control of the
Company, Mr. Streeter would be entitled to the payment of two times his annual
salary and two times his annualized bonus for the previous fiscal year. Within
twelve months after a change of control of the Company, any termination of Mr.
Streeter's employment without cause, or his resignation in certain
circumstances, would entitle Mr. Streeter to the payment of two times his annual
salary and two times his annualized bonus for the previous fiscal year, together
with certain other benefits and any
45
<PAGE> 47
unpaid salary, bonus amount, deferred compensation and vacation pay accrued to
the date of termination, less any amount paid to Mr. Streeter under the
agreement upon the change of control. Within twelve months after a change of
control of the Company, any termination of Mr. Leech's employment without cause,
or his resignation in certain circumstances, would entitle Mr. Leech to the
payment of his annual salary and his annualized bonus for the previous fiscal
year, together with certain other benefits and any unpaid salary, bonus amount,
deferred compensation and vacation pay accrued to the date of termination.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ------------------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF $ OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS EXERCISE PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM
OPTIONS/SARS(A) EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME(B) GRANTED(#)(C) FISCAL YEAR ($/SH)(C) DATE 5%($) 10%($)
------- --------------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Bruce A. Streeter.......... 39,310 47.1% $5.3675 03-18-06 $132,697 $336,280
Frank R. Pierce............ 9,828 11.8% $5.3675 03-18-06 $ 33,174 $ 84,070
John E. Leech.............. 9,828 11.8% $5.3675 03-18-06 $ 33,174 $ 84,070
John E. Leech.............. 9,828 11.8% $7.9368 09-05-06 $ 49,054 $124,312
</TABLE>
- ---------------
(a) One-third of the options granted became exercisable at each of one year, two
years and three years, respectively, from the date of grant.
(b) On May 1, 1997, options to purchase 30,000 shares, 2,000 shares and 12,000
shares were granted to Messrs. Streeter, Pierce and Leech, respectively,
with an exercise price of $13.75 per share. Those options are not reflected
in the table.
(c) As adjusted to preserve aggregate intrinsic value of the options and the
ratio of exercise price to market value per share on the date of the
Distribution.
The following table presents the total number of options to purchase Common
Stock held by the named executive officers of the Company as of December 31,
1996:
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR END FISCAL YEAR END
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED(A) UNEXERCISABLE(B) UNEXERCISABLE(C)
---- ----------- ----------- ---------------- --------------------
<S> <C> <C> <C> <C>
Bruce A. Streeter................... -- $ -- 24,569/39,310 $215,000/$253,000
Frank R. Pierce..................... 1,800(b) $46,350 44,716/ 9,828 $437,200/$ 63,250
John E. Leech....................... -- $ -- 24,569/19,556 $215,000/$101,250
</TABLE>
- ---------------
(a) Value based on difference in market value on date of exercise and exercise
price.
(b) As adjusted to preserve aggregate intrinsic value of the options and the
ratio of exercise price to market value per share on the date of the
Distribution.
(c) Value based on the difference between the market value of the common stock
of the Predecessor on December 31, 1996 and the exercise price. The actual
value, if any, of the unexercised options will be dependent upon the market
price of the Common Stock at the time of exercise.
46
<PAGE> 48
PRINCIPAL STOCKHOLDERS AND
STOCK OWNERSHIP OF DIRECTORS AND OFFICERS
Principal Stockholders and Officers. The following table sets forth certain
information with respect to each person who as of May 31, 1997 was known by the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock.
<TABLE>
<CAPTION>
NO. OF SHARES PERCENT OF CLASS
NAME AND ADDRESS OF BENEFICIALLY OWNED AS OF ---------------------------------
BENEFICIAL OWNER MAY 31, 1997(A) BEFORE OFFERING AFTER OFFERING
------------------- ------------------------ --------------- --------------
<S> <C> <C> <C>
Lehman Brothers Holdings Inc......... 2,030,226 30.0% 26.1%
3 World Financial Center
New York, New York 10285
Estabrook Capital Management Inc..... 767,900(b) 11.3% 9.9%
430 Park Avenue, Suite 1800
New York, New York 10022
Mutual Beacon Fund................... 638,074(c) 9.4% 8.2%
c/o Franklin Mutual Advisers, Inc.
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
</TABLE>
- ---------------
(a) Unless otherwise indicated below, the persons or group listed have sole
voting and investment power with respect to their shares of Common Stock.
(b) Estabrook Capital Management Inc. acts as an investment advisor and in such
capacity has shared voting power and sole investment power over the shares.
(c) Mutual Beacon Fund ("Beacon") is a portfolio of Franklin Mutual Series Fund
Inc., a registered investment company for which Franklin Mutual Advisers,
Inc. ("FMAI") acts as investment advisor. Pursuant to contracts with Beacon,
FMAI has sole investment and voting power over the shares owned by Beacon.
FMAI disclaims any economic beneficial interest in these shares.
Security Ownership of Directors and Officers. The following table sets
forth, as of May 31, 1997, the number of shares and percentage of Common Stock
beneficially owned by each of the Company's directors, each executive officer
named in the summary compensation table included under "Executive Officers and
Compensation," and all directors and officers as a group.
<TABLE>
<CAPTION>
PERCENT OF CLASS
NO. OF SHARES ---------------------------------
NAME BENEFICIALLY OWNED(A)(B) BEFORE OFFERING AFTER OFFERING
---- ------------------------ --------------- --------------
<S> <C> <C> <C>
David J. Butters.................... 216,507(c) 3.20% 2.79%
Norman G. Cohen..................... 97,689(d) 1.44% 1.26%
Marshall A. Crowe................... 61,622 * *
Louis S. Gimbel, 3rd................ 175,241(e) 2.59% 2.26%
Robert B. Millard................... 236,507 3.50% 3.05%
Frank R. Pierce..................... 56,991 * *
Bruce A. Streeter................... 43,602 * *
John E. Leech....................... 28,845 * *
All directors and officers as a
group (9 persons)................. 917,004 13.55% 11.81%
</TABLE>
- ---------------
* Less than one percent of the outstanding Common Stock.
(a) Unless otherwise indicated below, the persons listed have sole voting and
investment power with respect to their shares of Common Stock.
(b) The amounts set forth in this column include the following shares of Common
Stock considered to be beneficially owned through the holder's ability to
exercise stock options to purchase such shares within
47
<PAGE> 49
60 days: Messrs. Butters, Cohen and Millard -- 61,423 shares each; Mr.
Crowe -- 61,422; Mr. Gimbel -- 24,569; Mr. Pierce -- 47,991 shares; Mr.
Streeter -- 37,672 shares; Mr. Leech -- 27,845 shares; and all directors
and officers as a group -- 383,768 shares.
(c) Includes 43,000 shares of Common Stock owned by trusts of which Mr. Butters
is the co-trustee and 40,000 shares beneficially owned by Mr. Butters' wife.
(d) Includes 23,982 shares owned by a limited partnership in which Mr. Cohen is
a 49.5% limited partner, Mr. Cohen's wife is a 49.5% limited partner, and
the 1% general partner is a limited liability company controlled by Mr.
Cohen and his wife. Mr. Cohen has shared voting and investment power with
respect to all of such shares. Mr. Cohen disclaims beneficial interest of
the 11,991 shares owned by his wife through her interest in the limited
partnership.
(e) Includes 15,210 shares of Common Stock owned by trusts of which Mr. Gimbel
is the co-trustee.
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital stock consists of (i) 15,000,000 shares of
Common Stock, par value $.01 per share, and (ii) 2,000,000 shares of Preferred
Stock, with no par value ("Preferred Stock"). As of May 31, 1997, there were
6,765,893 shares of Common Stock outstanding and 497,646 shares of Common Stock
reserved for issuance pursuant to the Director Plan, the Employee Plan and the
Director Policy. There are no shares of Preferred Stock issued or outstanding.
The holders of shares of Common Stock will not be liable to further calls or
assessments by the Company. The description below is a summary of and is
qualified in its entirety by the provisions of the Company's Certificate of
Incorporation as currently in effect.
Subject to the rights of the holders of any outstanding shares of Preferred
Stock and those rights provided by law, (i) dividends may be declared and paid
or set apart for payment upon the Common Stock out of any assets or funds of the
Company legally available for the payment of dividends and may be payable in
cash, stock or otherwise, (ii) the holders of Common Stock have the exclusive
right to vote for the election of directors and, except as provided below, on
all other matters requiring stockholder action generally, with each share being
entitled to one vote and (iii) upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company, the net assets of the Company will be
distributed pro rata to the holders of the Common Stock in accordance with their
respective rights and interests, to the exclusion of the holders of any
outstanding shares of Preferred Stock.
Holders of the Common Stock do not have any cumulative voting, redemptive
or conversion rights and have no preemptive rights to subscribe for, purchase or
receive any class of shares or securities of the Company. Holders of the Common
Stock have no fixed dividend rights. Dividends may be declared by the Board of
Directors at its discretion depending on various factors, although no dividends
are anticipated for the foreseeable future. See "Price Range of Common Stock and
Dividend Policy."
The Preferred Stock may be issued from time to time in one or more series,
with each such series having such powers, preferences and rights and
qualifications and limitations or restrictions as may be fixed by the Company's
Board of Directors pursuant to the resolution or resolutions providing for the
issuance of such series.
Under Delaware law, a corporation may include provisions in its certificate
of incorporation that will relieve its directors of monetary liability for
breaches of their fiduciary duty to the corporation, subject to certain
exceptions, if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation, and with
respect to any criminal action, had no reasonable cause to believe their conduct
was unlawful. The Company's Certificate of Incorporation provides that the
Company's directors are not personally liable to the Company or its stockholders
for monetary damages for breach of their fiduciary duty to the full extent
permitted by Delaware law.
As a Delaware corporation, the Company is subject to Section 203 of the
Delaware General Corporation Law ("Section 203"). In general, Section 203
prevents an "interested stockholder" (defined generally as a person owning 15%
or more of a corporation's outstanding voting stock) from engaging in a
"business
48
<PAGE> 50
combination" (as defined) with a Delaware corporation for three years following
the date such person became an interested stockholder unless (i) before such
person became an interested stockholder, the board of directors of the
corporation approved the transaction in which the interested stockholder became
an interested stockholder or approved the business combination; (ii) upon
consummation of the transaction that resulted in the stockholder's becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding stock held by directors who are also officers of the
corporation and by employee stock plans that do not provide employees with the
rights to determine confidentially whether shares held subject to the plan will
be tendered in a tender or exchange offer); or (iii) following the transaction
in which such person became an interested stockholder, the business combination
is approved by the board of directors of the corporation and authorized at a
meeting of stockholders by the affirmative vote of the holders of two-thirds of
the outstanding voting stock of the corporation not owned by the interested
stockholder. Under Section 203, the restrictions described above also do not
apply to certain business combinations proposed by an interested stockholder
following the announcement or notification of one of certain extraordinary
transactions involving the corporation and a person who had not been an
interested stockholder during the previous three years or who became an
interested stockholder with the approval of a majority of the corporation's
directors, if such extraordinary transaction is approved or not opposed by a
majority of the directors who (a) were directors prior to any person's becoming
an interested stockholder during the previous three years or (b) were
recommended for election or elected to succeed such directors by a majority of
such directors. The Company has approved the acquisition by Lehman Brothers
Holdings Inc. of the shares of Common Stock owned by it and Lehman is therefore
not subject to the restrictions under Section 203.
The Registrar and Transfer Agent for the Common Stock is American Stock
Transfer and Trust Company, New York, New York.
49
<PAGE> 51
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, the Underwriters named below,
for whom Lehman Brothers Inc., Jefferies & Company, Inc. and The Robinson-
Humphrey Company, Inc. are acting as representatives (the "Representatives"),
have severally agreed to purchase from the Company, and the Company has agreed
to sell to each Underwriter, the aggregate number of shares of Common Stock set
forth opposite the name of such Underwriter below:
<TABLE>
<CAPTION>
NUMBER
UNDERWRITERS OF SHARES
------------ ---------
<S> <C>
Lehman Brothers Inc. .......................................
Jefferies & Company, Inc. ..................................
The Robinson-Humphrey Company, Inc. ........................
--------
Total............................................. 1,000,000
========
</TABLE>
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the initial public
offering price set forth on the cover page hereof, and to certain dealers at
such initial public offering price less a selling concession not in excess of
$ per share. The Underwriters may allow, and such dealers may reallow,
a concession not in excess of $ per share to certain other Underwriters
or to certain other brokers or dealers. After the initial offering to the
public, the offering price and other selling terms may be changed by the
Representatives.
The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to approval of certain legal matters by counsel and
to certain other conditions, including the condition that no stop order
suspending the effectiveness of the Registration Statement is in effect and no
proceedings for such purpose are pending or threatened by the Commission and
that there has been no material adverse change or any development involving a
prospective material adverse change in the condition of the Company from that
set forth in the Registration Statement otherwise than as set forth or
contemplated in this Prospectus, and that certain certificates, opinions and
letters have been received from the Company and its counsel. The Underwriters
are obligated to take and pay for all of the above shares of Common Stock if any
such shares are taken.
The Company and the Underwriters have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities under the Securities Act.
The Company has granted to the Underwriters an option to purchase up to an
additional 125,000 shares of Common Stock, exercisable solely to cover
over-allotments, at the initial public offering price, less the underwriting
discounts and commissions shown on the cover page of this Prospectus. Such
option may be exercised at any time until 30 days after the date of the
Underwriting Agreement. To the extent that the option is exercised, each
Underwriter will be committed to purchase a number of the additional shares of
Common Stock proportionate to each Underwriter's initial commitment as indicated
in the preceding table.
The Representatives of the Underwriters have informed the Company that the
Underwriters do not intend to confirm sales to accounts over which they exercise
discretionary authority.
The Company and Lehman Brothers Holdings Inc. have agreed that they will
not, without the prior written consent of Lehman Brothers Inc., in the case of
the Company, and the Representatives, in the case of Lehman Brothers Holdings
Inc., during the 180 days following the date of this Prospectus, offer for sale,
sell or otherwise dispose of any shares of Common Stock or any securities
convertible into, or exchangeable for, shares of Common Stock, or, as to the
Company, sell or grant options, rights or warrants with respect to any shares of
Common Stock, other than pursuant to existing benefit plans of the Company or
its subsidiaries. The directors of the Company have agreed they will not without
the prior written consent of Lehman Brothers Inc., during the 120 days following
the date of this Prospectus, offer for sale, sell or otherwise dispose of any
shares of Common Stock or any securities convertible into, or exchangeable for,
shares of Common Stock.
50
<PAGE> 52
Until the distribution of the Common Stock is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase shares of Common Stock. As an exception to these
rules, the Representatives are permitted to engage in certain transactions that
stabilize the price of the Common Stock. Such transactions may consist of bids
or purchases for the purpose of pegging, fixing or maintaining the price of the
Common Stock.
In addition, if the Representatives over-allot (i.e., if they sell more
shares of Common Stock than are set forth on the cover page of this Prospectus),
and thereby create a short position in the Common Stock in connection with the
Offering, the Representatives may reduce that short position by purchasing
Common Stock in the open market. The Representatives also may elect to reduce
any short position by exercising all or part of the over-allotment option
described herein.
The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group members
who sold those shares as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the Offering.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representatives will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
At May 31, 1997, Lehman Brothers Holdings Inc., an affiliate of Lehman
Brothers Inc., in the aggregate owned 2,030,236 shares of Common Stock
(approximately 30.0% of the outstanding Common Stock). As a result of such
ownership of Common Stock, the National Association of Securities Dealers, Inc.
("NASD") may view the Offering as a participation by Lehman Brothers Inc. in the
distribution in a public offering of securities issued by a company with which
Lehman Brothers Inc. has a conflict of interest. As a result, the Offering is
being made pursuant to the provisions of Rule 2720 of the NASD's Conduct Rules.
Such provisions require, among other things, that the initial public offering
price be no higher than that recommended by a "qualified independent
underwriter," who must participate in the preparation of the registration
statement and the prospectus and who must exercise the usual standards of "due
diligence" with respect thereto. Jefferies & Company, Inc. is acting as a
qualified independent underwriter in the Offering, and the initial public
offering price of the shares will not be higher than the price recommended by
Jefferies & Company, Inc.
In connection with the Contribution, Distribution and Merger, Jefferies &
Company, Inc. was engaged as financial advisor to the Predecessor and rendered
an opinion as to the fairness, from a financial point of view, of the
consideration to be received by the holders of the Predecessor's common stock in
connection with the Distribution and the Merger. Jefferies & Company, Inc.
received from the Predecessor a fee of $150,000 for its opinion, an amount which
the Company believes was reasonable and customary in transactions of that
nature.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon by Griggs & Harrison, P.C., Houston, Texas. Certain legal matters in
connection with the Offering will be passed upon for the Underwriters by Baker &
Botts, L.L.P., Houston, Texas.
51
<PAGE> 53
EXPERTS
The Company's Consolidated Financial Statements as of December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996,
included in this Prospectus and the Registration Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
report.
52
<PAGE> 54
GLOSSARY OF SELECTED INDUSTRY TERMS
AHTS. See Anchor Handling, Towing and Supply Vessels.
Anchor Handling, Towing and Supply Vessels. These vessels are typically
150' to 275' in length and are used to set anchors for drilling rigs and to tow
mobile drilling rigs and equipment from one location to another. In addition,
these vessels typically can be used as supply vessels when they are not
performing anchor handling and towing services.
Bareboat Charter. A charter contract whereby the vessel is chartered
without crew, stores or maintenance support, "the bare hull," for a fixed time
period. The contract results in the charterer being treated as the "disponent
owner" for the full duration of the charter.
Below Deck Capacity. The capacity of the tanks located below the deck of a
vessel which are used to carry various liquid and powdered products utilized in
production and drilling activities such as gas oil, potable water, drilling muds
and powdered cement.
BHP. See Brake Horsepower.
Brake Horsepower. The horsepower made available by an engine for driving
machinery other than itself. It is the highest continuous horsepower output an
engine develops.
Charter. A maritime contract for the hire of a vessel.
Classification Society. A member of the IACS (International Association of
Classification Societies) generally accepted for providing classification
services on behalf of governments. The societies are generally recognized as
establishing that ships classified are built and maintained within certain
established standards. The company has ships built under ABS (American Bureau of
Shipping), DNV (Det Norske Veritas) and LR (Lloyds Register of Shipping)
classification.
Construction Support Vessels. These vessels can be used in an actual
construction effort, such as pipe laying barges, or can be specially designed
vessels, such as pipe carriers, used to transport the large cargos of material
and supplies required to support construction and installation of offshore
platforms and pipelines.
Crew. See Crewboats.
Crewboats. Crewboats transport personnel and cargo to and from production
platforms and rigs. Older crewboats, built in the early 1980s, are typically
100' to 120' in length and are generally designed for speed to transport
personnel. Newer crewboat designs are generally larger, 130' to 165' in length,
and have greater cargo carrying capacities. They are used primarily to transport
cargo on a time sensitive basis.
Day Rate. Total charter revenues divided by number of days worked.
Drydocking. The process whereby a vessel is removed from the water to
accomplish repairs and complete classification inspection requirements. With the
exception of crewboats and vessels more than 20 years of age that are generally
drydocked more frequently, drydocks are required twice during a five-year
classification cycle. The time period of a drydocking differs based on the type
and age of vessel and the extent of survey and repairs needed.
Deadweight Tons. A measurement of the carrying capacity of a vessel,
calculated as the difference between the amount of water displaced by the
unloaded vessel and that displaced by the fully loaded vessel.
DWT. See Deadweight Tons.
Dynamic Positioning. An enhanced vessel maneuvering and control system that
will hold a vessel on station despite sea and weather conditions.
Floating Production, Storage and Offloading Vessels. Vessels (typically
converted crude oil tankers) configured and equipped to permit hydrocarbon
production to be processed, stored and offloaded, usually to ocean going tankers
for export but in some instances to local structures. These vessels are most
often used in
A-1
<PAGE> 55
areas where no pipelines or other infrastructure exists such as deep water
regions and offshore lesser-developed countries.
FPSO. See Floating Production, Storage and Offloading Vessels.
Full Production Horizon Contract. See Life of Field Contracts.
Large Platform Supply Vessels. These PSVs are well suited for large areas
with a concentration of offshore production platforms because of their large,
clear after deck and below deck capacities.
Life of Field Contract. A charter, the term of which is tied to a
production facility's lifespan.
Long-term Charter. A charter with an initial term exceeding six months.
LgPSVs. See Large Platform Supply Vessels.
Moon Pool. A structural modification in the hull of a vessel which provides
an opening allowing direct access to the sea. Moon pools are typically used to
launch and deploy ROVs or divers, or otherwise to allow entry and exit from the
water with some protection from wave action.
Oil Spill Response Vessels. Oil spill response vessels are specially
equipped to respond to oil spill emergencies.
On Deck Capacity. The amount of deck area on to which cargo can be loaded
on a vessel. The on deck capacity of a vessel is restricted by the weight and
dimensions of the total amount of cargo carried.
Petrobras. The Brazilian national oil company.
Platform Supply Vessels. These vessels are used to serve drilling and
production facilities and support offshore construction and maintenance work.
They are utilized for their cargo handling capabilities, particularly their
large capacity and versatility.
PSVs. See Platform Supply Vessels.
Rates Per Day. See Day Rate.
Remotely Operated Vehicle. An unmanned submersible craft which is used for
underwater construction, inspection and searches. It is controlled from the
launching vessel by umbilical controls and is "flown" through the water by a
trained technician who utilizes thrusters and cameras.
ROV. See Remotely Operated Vehicle.
Short-term Charter. A charter with an the initial term of six months or
less.
Specialty Vessels. These vessels generally have special features to meet
the requirements of specific jobs. The special features include large deck
spaces, high electrical generating capacities, slow controlled speed and varied
propulsion thruster configurations, extra berthing facilities and long range
capabilities. These vessels are primarily used for support of FPSOs, diving
operations, ROVs, survey operations and seismic data gathering, as well as well
stimulation oil recovery and oil pollution control.
SpV. See Specialty Vessels.
Stby. See Standby Rescue Vessels.
Standby Rescue Vessels. These vessels perform safety patrol functions for
an area and are equipped for all manned locations in the UK sector of the North
Sea. They typically remain on station to provide a safety backup to offshore
rigs and production facilities and carry special equipment to rescue personnel,
are equipped to provide first aid and shelter and, in some cases, also function
as supply vessels.
Time Charter. The hire of a fully operational ship for a specified period
of time; the shipowner provides the ship with crew, stores and provisions, ready
in all aspects to load cargo and proceed on a voyage.
Utility Vessels. These vessels are typically 90' to 150' in length and are
used to provide limited crew transportation, some transportation of oilfield
support equipment and, in some locations, standby functions.
A-2
<PAGE> 56
Utilization. Total days for which charter hire is earned divided by
calendar days in the period, adjusted for part-year availability caused by
vessel additions or dispositions.
UT 705. A supply vessel design developed by the Norwegian design and
construction firm Ulstein and first constructed in 1974. The vessel was first
designed to haul pipe in support of offshore pipeline construction. Post-1990
versions of this vessel have been enhanced to emphasize improved cargo handling
systems and sophisticated positioning capabilities, both of which provide for
high productivity and versatility in supply roles.
UT 755. A supply vessel design developed by the Norwegian design and
construction firm Ulstein. The vessel has a high cargo-to-size ratio, computer
controlled pumping and delivery systems, flexibility to add additional
accommodation or specialty equipment, circular product tanks for ease of
cleaning, large product capacities and improved maneuvering capability to
maximize effective working periods alongside installations.
A-3
<PAGE> 57
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
GulfMark Offshore, Inc. and Subsidiaries
Report of Independent Public Accountants.................. F-2
Consolidated Balance Sheets as of March 31, 1997
(Unaudited), December 31, 1996 and
1995................................................... F-3
Consolidated Statements of Income for the three months
ended March 31, 1997 (Unaudited) and 1996 (Unaudited)
and for the years ended December 31, 1996, 1995 and
1994................................................... F-4
Consolidated Statements of Stockholders' Equity for the
three months ended March 31, 1997 (Unaudited) and for
the years ended December 31, 1996, 1995 and 1994....... F-5
Consolidated Statements of Cash Flows for the three months
ended March 31, 1997 (Unaudited) and 1996 (Unaudited)
and for the years ended December 31, 1996, 1995 and
1994................................................... F-6
Notes to Consolidated Financial Statements................ F-7
</TABLE>
F-1
<PAGE> 58
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To GulfMark Offshore, Inc.:
We have audited the accompanying consolidated balance sheets of GulfMark
Offshore, Inc., a Delaware corporation (successor to GulfMark International,
Inc., see Note 1 to the Consolidated Financial Statements) and subsidiaries as
of December 31, 1996 and 1995, and the related consolidated statements of
income, stockholders' equity and cash flows for each of the three years in the
period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GulfMark Offshore, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Houston, Texas
May 30, 1997
F-2
<PAGE> 59
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
MARCH 31, -------------------
1997 1996 1995
----------- -------- -------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................ $ 10,233 $ 17,234 $ 5,136
Accounts receivable...................................... 10,870 8,939 5,026
Inventory, prepaids and other............................ 761 675 1,186
-------- -------- -------
Total current assets............................. 21,864 26,848 11,348
NET ASSETS OF DISCONTINUED OPERATIONS...................... 14,881 14,837 19,275
VESSELS AND EQUIPMENT, at cost, net of accumulated
depreciation of $20,049,000 (unaudited) in 1997,
$19,504,000 in 1996, and $14,722,000 in 1995............. 94,912 87,405 61,343
OTHER ASSETS............................................... 2,995 2,217 2,213
-------- -------- -------
$134,652 $131,307 $94,179
======== ======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of long-term
debt.................................................. $ 13,840 $ 9,341 $ 3,976
Accounts payable......................................... 2,338 1,931 931
Other accrued liabilities................................ 3,154 1,628 957
-------- -------- -------
Total current liabilities........................ 19,332 12,900 5,864
-------- -------- -------
LONG-TERM DEBT............................................. 50,005 50,811 33,600
DEFERRED TAXES AND OTHER................................... 5,260 5,079 3,372
MINORITY INTEREST.......................................... 414 501 415
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $0.01 par value; 15,000,000 shares
authorized; 6,679,904 (unaudited), 6,679,904 and
6,672,704 shares issued and outstanding,
respectively.......................................... 67 67 67
Additional paid-in capital............................... 26,793 26,793 26,770
Retained earnings........................................ 35,646 36,676 28,237
Cumulative translation adjustment........................ (2,865) (1,520) (4,146)
-------- -------- -------
Total stockholders' equity....................... 59,641 62,016 50,928
-------- -------- -------
$134,652 $131,307 $94,179
======== ======== =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
<PAGE> 60
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------- ---------------------------
1997 1996 1996 1995 1994
------- ------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES.......................................... $ 9,679 $6,623 $34,749 $27,233 $27,692
------- ------ ------- ------- -------
COST AND EXPENSES:
Direct operating expenses....................... 4,302 3,641 16,178 15,386 15,171
General and administrative expenses............. 1,281 966 4,523 3,483 3,643
Depreciation and amortization................... 1,604 1,113 5,013 5,472 5,065
------- ------ ------- ------- -------
7,187 5,720 25,714 24,341 23,879
------- ------ ------- ------- -------
Operating Income................................ 2,492 903 9,035 2,892 3,813
OTHER INCOME (EXPENSE):
Interest expense................................ (1,226) (798) (3,936) (2,801) (2,408)
Interest income................................. 94 55 469 188 229
Minority interest............................... 63 57 (86) 106 (124)
Gain on sale of vessel.......................... -- -- -- -- 842
Other........................................... 19 3 -- 74 112
------- ------ ------- ------- -------
(1,050) (683) (3,553) (2,433) (1,349)
------- ------ ------- ------- -------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES........................................... 1,442 220 5,482 459 2,464
INCOME TAX PROVISION.............................. 398 9 1,839 91 981
------- ------ ------- ------- -------
INCOME FROM CONTINUING OPERATIONS................. 1,044 211 3,643 368 1,483
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of
taxes........................................... (648) (164) 4,796 (2,270) 591
LOSS ON DISPOSAL OF DISCONTINUED OPERATIONS, net
of taxes........................................ (1,426) -- -- -- --
------- ------ ------- ------- -------
NET INCOME (LOSS)................................. $(1,030) $ 47 $ 8,439 $(1,902) $ 2,074
======= ====== ======= ======= =======
EARNINGS (LOSS) PER SHARE:
Income from continuing operations............... $ 0.16 $ 0.03 $ 0.55 $ 0.06 $ 0.22
Income (loss) from discontinued operations, net
of taxes..................................... (0.10) (0.02) 0.71 (0.35) 0.09
Loss on disposal of segment, net of taxes....... (0.21) -- -- -- --
------- ------ ------- ------- -------
Net Income (Loss)............................... $ (0.15) $ 0.01 $ 1.26 $ (0.29) $ 0.31
======= ====== ======= ======= =======
WEIGHTED AVERAGE SHARES
OUTSTANDING..................................... 6,680 6,672 6,676 6,644 6,640
======= ====== ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE> 61
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON
STOCK AT ADDITIONAL CUMULATIVE TOTAL
$.01 PAR PAID-IN RETAINED TRANSLATION STOCKHOLDERS'
VALUE CAPITAL EARNINGS ADJUSTMENT EQUITY
-------- ---------- -------- ----------- -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993................... $66 $26,583 $28,065 $(4,326) $50,388
Net Income................................. -- -- 2,074 -- 2,074
Issuance of stock.......................... -- 10 -- -- 10
Translation adjustment..................... -- -- -- 553 553
--- ------- ------- ------- -------
BALANCE, DECEMBER 31, 1994................... 66 26,593 30,139 (3,773) 53,025
Net Loss................................... -- -- (1,902) -- (1,902)
Issuance of stock.......................... 1 177 -- -- 178
Translation adjustment..................... -- -- -- (373) (373)
--- ------- ------- ------- -------
BALANCE, DECEMBER 31, 1995................... 67 26,770 28,237 (4,146) 50,928
Net Income................................. -- -- 8,439 -- 8,439
Issuance of stock.......................... -- 23 -- -- 23
Translation adjustment..................... -- -- -- 2,626 2,626
--- ------- ------- ------- -------
BALANCE, DECEMBER 31, 1996................... 67 26,793 36,676 (1,520) 62,016
Net Loss (unaudited)....................... -- -- (1,030) -- (1,030)
Translation adjustment (unaudited)......... -- -- -- (1,345) (1,345)
--- ------- ------- ------- -------
BALANCE, MARCH 31, 1997 (unaudited).......... $67 $26,793 $35,646 $(2,865) $59,641
=== ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE> 62
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- -----------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)................................... $ (1,030) $ 47 $ 8,439 $ (1,902) $ 2,074
(Income) loss from discontinued operations, net... 648 164 (4,796) 2,270 (591)
Loss on disposal of discontinued operations,
net............................................. 1,426 -- -- -- --
-------- -------- -------- -------- -------
Income from continuing operations................. 1,044 211 3,643 368 1,483
Adjustments to reconcile income from continuing
operations to net cash provided by continuing
operations --
Depreciation and amortization................... 1,604 1,113 5,013 5,472 5,065
Deferred and other income tax provision......... 316 (10) 1,707 (18) 739
Minority interest............................... (87) (57) -- (106) 124
Gain on sale of assets.......................... -- -- -- -- (842)
Change in operating assets and liabilities --
Accounts receivable.......................... (894) (406) (3,445) 1,020 786
Inventory, prepaids and other................ (94) 189 530 (85) (809)
Accounts payable............................. 467 (32) 1,003 42 (904)
Other accrued liabilities.................... 196 285 595 (779) 70
Other, net................................... (66) 83 (507) 475 (264)
-------- -------- -------- -------- -------
Cash provided by continuing operations....... 2,486 1,376 8,539 6,389 5,448
Cash flow from discontinued operations....... (692) (721) 9,234 1,788 106
-------- -------- -------- -------- -------
Net cash provided by operating
activities............................... 1,794 655 17,773 8,177 5,554
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of vessels and equipment................ (12,769) (12,182) (23,263) (14,121) (687)
Expenditures for drydocking and main engine
overhaul........................................ (1,328) (68) (1,230) (1,141) (1,592)
Proceeds from sale of vessels and other
equipment....................................... -- -- -- 169 2,021
-------- -------- -------- -------- -------
Net cash used in investing activities...... (14,097) (12,250) (24,493) (15,093) (258)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from debt, net of financing costs........ 7,087 12,387 22,227 25,098 893
Repayments of debt................................ (1,345) (450) (4,356) (15,709) (8,873)
Proceeds from issuance of stock................... -- -- 23 178 10
-------- -------- -------- -------- -------
Net cash provided by (used in) financing
activities............................... 5,742 11,937 17,894 9,567 (7,970)
Effect of exchange rate changes on cash........... (440) (15) 924 (160) 124
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS....................................... (7,001) 327 12,098 2,491 (2,550)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.... 17,234 5,136 5,136 2,645 5,195
-------- -------- -------- -------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.......... $ 10,233 $ 5,463 $ 17,234 $ 5,136 $ 2,645
======== ======== ======== ======== =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid..................................... $ 1,212 $ 655 $ 3,613 $ 2,793 $ 2,075
======== ======== ======== ======== =======
Income taxes paid................................. $ 13 $ 21 $ 180 $ 167 $ 360
======== ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of these Consolidated Financial
Statements.
F-6
<PAGE> 63
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BACKGROUND AND ORGANIZATION:
On April 30, 1997, the stockholders of GulfMark International, Inc., (the
"Predecessor") approved a transaction to transfer the assets, liabilities and
operations of its offshore marine services business (the "Marine Business") to
GulfMark Offshore, Inc. ("New GulfMark"), a new wholly owned subsidiary of the
Predecessor. Immediately after the transfer of the Marine Business, the
Predecessor completed a spin-off of New GulfMark by distributing all of the
common stock of New GulfMark to the Predecessor's stockholders (the
"Distribution"). Following the Distribution, on May 1, 1997, a subsidiary of
Energy Ventures, Inc. ("EVI") was merged (the "Merger") with and into the
Predecessor, whose assets then consisted solely of the Predecessor's remaining
active business, the erosion control business ("Ercon"), and the Predecessor's
investment in approximately 2.2 million shares of EVI common stock. The
Predecessor survived the Merger as a subsidiary of EVI.
Although the separation of the Marine Business from the remainder of the
operations of the Predecessor was structured as a "spin-off" of New GulfMark for
legal, tax and other reasons, New GulfMark succeeded to certain important
aspects of the Predecessor business, organization and affairs, namely: (i) the
Marine Business conducted by New GulfMark, which consisted of over half of the
assets, revenues and operating income of the businesses, operations and
companies previously constituting the Predecessor; (ii) each member of the Board
of Directors of the Predecessor became a Director of New GulfMark; (iii) New
GulfMark's management is substantially the same as the management of the
Predecessor; and (iv) New GulfMark retained as its headquarters the former
headquarters of the Predecessor. Consequently, the Consolidated Financial
Statements present the net assets, results of operations and cash flows of Ercon
and the EVI investment as discontinued operations. Reference is made to Note 4,
"Discontinued Operations and Disposition of Assets."
In connection with the Distribution, two shares of New GulfMark common
stock ($0.01 par value) were issued for each share of the Predecessor common
stock ($1.00 par value). Also in connection with the Merger, the Predecessor
stockholders received shares of EVI common stock. The total value of the EVI
stock received by the Predecessor stockholders was approximately $148 million in
the aggregate. Subsequent to the Distribution and Merger, the stockholders'
equity of GulfMark Offshore, Inc. relates solely to the shares of New GulfMark
common stock issued in the Distribution and represents the historical retained
earnings of the Marine Business. Numbers of shares and per share information
have been adjusted to reflect the Distribution.
For purposes of these financial statements, "GulfMark" or the "Company"
refers to the Predecessor and its subsidiaries prior to the Distribution and the
Merger and to GulfMark Offshore, Inc. and its subsidiaries subsequent to the
Distribution and the Merger.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
All significant intercompany accounts and transactions between affiliated
companies have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
F-7
<PAGE> 64
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Statement of Cash Flows
U.S. Government securities and commercial paper with original maturities of
up to three months are included in cash and cash equivalents in the accompanying
consolidated balance sheets and consolidated statements of cash flows.
Vessels and Equipment
Vessels and equipment is stated at cost, net of accumulated depreciation,
which is provided by the straight-line method. Prior to January 1, 1996 vessels
were depreciated over a useful life of 20 years. During the first quarter of
1996, management completed an evaluation of the useful life used for
depreciating vessels in light of recent vessel performance, changes in the
materials available to protect vessel hulls and industry practice. Based on the
results, it was determined that a useful life of 25 years for its vessels was a
better estimate than the 20 years used previously. Therefore, effective January
1, 1996, the estimated useful life was extended to 25 years. The impact of the
change on net income for the year ended December 31, 1996, was an increase of
approximately $1,202,000, or $0.18 per share. Equipment, furniture and fixtures
are depreciated over two to five years. Maintenance and repairs that do not
extend the useful life of the asset and are not attributable to drydockings of
vessels are charged to operations as incurred. Major renovation costs and
modifications are capitalized and amortized over the estimated remaining useful
life. Included in the consolidated statements of income for 1996, 1995 and 1994
is $1,920,000, $1,457,000 and $1,433,000, respectively, of costs for maintenance
and repairs.
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," which was
effective for the Company on January 1, 1996. The statement sets forth
guidelines regarding when to recognize an impairment of long-lived assets,
including goodwill, and how to measure such impairment. Adoption of SFAS No. 121
had no effect on the financial statements of the Company.
Other Assets
Other assets consist primarily of deferred drydocking costs and deferred
loan costs. Costs incurred in connection with drydocking are capitalized and
amortized over approximately a two to three year period, which approximates the
period between required drydockings. Deferred loan costs are amortized over the
expected term of the loan.
Earnings (Loss) Per Share
Earnings (Loss) per share is based on the weighted average number of shares
of Common Stock outstanding, as adjusted for the Distribution. Common stock
equivalents have not been included in the computation of earnings per share
since the effect is not significant. Fully diluted earnings per share is not
presented as such amounts do not materially differ from primary earnings per
share.
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128 "Earnings Per Share." SFAS No. 128 revises the methodology to be used in
computing earnings per share ("EPS") such that the computations required for
primary and fully diluted EPS are to be replaced with "basic" and "diluted" EPS.
Basic EPS is computed by dividing net income by the weighted average number of
shares of common stock outstanding during the year. Diluted EPS is computed in
the same manner as fully diluted EPS, except that, among other changes, the
average share price for the period is used in all cases when applying the
treasury method to potentially dilutive outstanding options. The Company will
adopt SFAS No. 128 effective December 15, 1997, and will restate EPS for all
periods presented. Management does not
F-8
<PAGE> 65
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
believe the adoption of SFAS No. 128 will have a material effect on the
Company's computation or presentation of earnings per share.
Revenue Recognition
Revenues from charters for offshore marine services are recognized as
earned based on contractual charter rates. Typically, charters are short term in
duration.
Income Taxes
The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes," which requires recognition of deferred tax assets
and liabilities for the expected future tax consequences of events that have
been recognized in the financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the difference
between the financial statement carrying amounts and tax bases of assets and
liabilities using enacted tax rates and laws in effect in the years in which the
differences are expected to reverse. SFAS No. 109 also requires that the
likelihood and amount of future taxable income be included in the criteria used
to determine the timing and amount of tax benefits recognized for net operating
losses and tax credit carryforwards in the financial statements. The Marine
Business has been included in consolidated federal income tax returns filed by
the Predecessor. However, the tax expense reflected in the consolidated
statements of income and the tax liabilities reflected in the consolidated
balance sheets have been prepared on a separate return basis as though the
Marine Business had filed stand-alone income tax returns, except for the
utilization of net operating loss (NOL) carryforward benefits. These benefits
have been allocated by the Predecessor to the Marine Business based on the
Marine Business' pro rata share of the Predecessor's actual pre-tax financial
statement earnings for each year. Had this allocation not been made, the pro
forma income from continuing operations would have been $3,643,000 (unaudited),
$264,000 (unaudited) and $1,109,000 (unaudited) for the years ended December 31,
1996, 1995 and 1994, respectively.
Allocation of Shared Services
Certain costs relating to the Company's general and administrative services
(including management personnel who provide legal, tax, accounting, treasury,
strategic planning and public policy services) have been directly charged to
either continuing or discontinued operations based upon actual utilization or
have been allocated based upon proportional operating expenses, number of
employees, external revenues, average capital and/or average equity. The Company
charges for services at fully distributed cost. The Marine Business' share of
these direct and indirect allocations was $1,381,000, $764,000 and $1,154,000
for the years ended December 31, 1996, 1995 and 1994, respectively. For the year
ended December 31, 1996, direct allocations to the Marine Business comprised
approximately 90% of the total shared corporate services allocated by the
Predecessor.
Although management considers the above allocation methods to be
reasonable, due to the relationship between the Marine Business and the
Predecessor, the terms of some or all of the transactions and allocations
discussed above may not necessarily be indicative of that which would have
resulted had the Marine Business been a stand-alone entity. Had the Marine
Business operated as a separate entity, management estimates that expense for
the years ended December 31, 1996, 1995 and 1994 would have been $1,534,000,
$1,007,000 and $1,209,000, respectively.
Foreign Currency Translation
Assets and liabilities of the Company's foreign affiliates, other than
those located in highly inflationary countries, are translated at year-end
exchange rates, while income and expenses are translated at average rates for
the period. For entities in highly inflationary countries, a combination of
current and historical rates is used
F-9
<PAGE> 66
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
to determine currency gains and losses resulting from financial statement
translation and those resulting from transactions. Translation gains and losses
are reported as a component of stockholders' equity, except for those associated
with highly inflationary countries that are reported directly in the
consolidated statements of income. Transaction gains and losses are reported
directly in the consolidated statements of income.
Concentration of Credit Risk
The Company extends credit to various companies in the energy industry that
may be affected by changes in economic or other external conditions. The
Company's policy is to manage its exposure to credit risk through credit
approvals and limits. Historically, write-offs for doubtful accounts have been
insignificant.
Nature of Operations
As of March 31, 1997, the Company operates 30 offshore support vessels,
principally in the North Sea and Southeast Asia. The vessels provide
transportation of materials, supplies and personnel to and from offshore
platforms and drilling rigs. Some of these vessels also perform anchor handling
and towing services.
3. VESSEL ACQUISITIONS:
In December 1994, the Company contracted with a shipyard in Norway for the
construction of two new UT 755 design vessels for deployment in the North Sea.
The first vessel, the Highland Piper, was delivered on March 15, 1996. The
second vessel, the Highland Drummer, was delivered on January 3, 1997. Included
in capital expenditures for the year ended December 31, 1996, is a total of
$11,508,000 related to the final construction payment on the Highland Piper and
interim construction payments on the Highland Drummer. Final payment of
$12,850,000 was made in 1997 upon delivery of the Highland Drummer. Funding of
$7,254,000 was provided through additional borrowings under existing credit
facilities. In connection with the delivery of these two vessels, the Company is
entitled to receive a subsidy from the Norwegian government equal to 9.5% of the
gross construction price. The Company has accounted for subsidies as a reduction
of the purchase price of the vessels.
The Company has entered into a contract with a shipyard to construct an
enhanced UT 755 design supply vessel at a price of approximately $18 million
denominated in Norwegian Kroner. The new ship will be a modified version of the
Company's recently delivered Highland Piper and Highland Drummer. This vessel,
scheduled for delivery in the first quarter of 1998, will be available to
participate in the growing demand for deepwater remotely operated vehicle
("ROV") support, standard supply duties and specialized services in the North
Sea. The Company made no interim construction payments in the three months ended
March 31, 1997, but made $0.9 million in interim construction payments for the
year ended December 31, 1996. The Company is required to make interim payments
totaling approximately $2.7 million in 1997. Final payment is due upon delivery
of the vessel. The Company anticipates financing the cost of the vessel through
additional borrowings, the sale of additional shares of common stock and
existing funds. In March 1997, the Company entered into a contract to hedge 92.8
million Norwegian Kroner (approximately $13.9 million) of the commitment against
unfavorable fluctuations in the Sterling to Kroner exchange rates. Upon
delivery, any gain or loss under the hedging contract (a loss of approximately
$865,000 as of April 30, 1997) will be included in the cost of the vessel, but
will be offset by the corresponding change in the price of the vessel due to the
exchange rate fluctuation.
On August 2, 1996, the Company purchased six offshore supply vessels from
Maritime (Pte), Limited, which operated in Southeast Asia. Funding for this
acquisition was provided through a new $7.0 million bank facility and a drawdown
available under existing facilities. The new facility requires 10 semiannual
payments beginning in 1997.
F-10
<PAGE> 67
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On December 21, 1995, the Company acquired the Highland Warrior, a
1981-built pipe carrier/platform supply vessel which had been bareboat chartered
by the Company since July 1993. Included in capital expenditures for 1995 is
$13,301,000 related to interim construction payments on the Highland Piper and
the purchase of the Highland Warrior.
The Company's 51% owned company, SeaMark Ltd., has bareboat chartered
certain vessels from the 49% owner, a U.S. owner/operator, at a combined rate of
less than $2,000 per day.
4. DISCONTINUED OPERATIONS AND DISPOSITION OF ASSETS:
As discussed in Note 1, on May 1, 1997, GulfMark International, Inc.,
completed a spin-off of the Marine Business by distributing all of the common
stock of its wholly owned subsidiary, GulfMark Offshore, Inc. to its
Shareholders. Immediately following the Distribution, GulfMark International,
Inc., whose remaining assets, consisted solely of Ercon and an investment of
approximately 2.2 million shares of EVI common stock (the "Merged Assets"),
merged with a subsidiary of EVI. Accordingly, for all periods presented in the
accompanying financial statements, the financial position, results of operations
and cash flows of the Merged Assets are reflected as discontinued operations.
Summarized financial information of the discontinued operations is presented in
the following tables:
NET ASSETS OF DISCONTINUED OPERATIONS:
<TABLE>
<CAPTION>
AS OF AS OF DECEMBER 31,
MARCH 31, -------------------
1997 1996 1995
--------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current Assets...................................... $ 750 $ 1,494 $ 1,362
Investment in EVI................................... 47,794 37,061 26,291
Other Non-Current Assets............................ 229 682 348
-------- -------- -------
Total Assets........................................ 48,773 39,237 28,001
Current Liabilities................................. (598) (1,754) (1,790)
Deferred Taxes & Other Non-Current Liabilities...... (33,294) (22,646) (6,936)
Net Assets.......................................... $ 14,881 $ 14,837 $19,275
======== ======== =======
</TABLE>
INCOME (LOSS) FROM DISCONTINUED OPERATIONS:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
--------------- --------------------------
1997 1996 1996 1995 1994
------ ------ ------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Revenues................................. $ 818 $ 538 $ 6,994 $ 8,844 $6,756
Direct operating expenses................ 678 440 3,922 5,963 4,350
Selling, general and administrative
expenses............................... 817 346 2,068 2,323 1,994
----- ----- ------- ------- ------
Operating income (loss).................. (677) (248) 1,004 558 412
Equity in earnings of EVI................ -- -- -- 761 1,012
Gain on sale of 300,000 EVI shares....... -- -- 6,264 -- --
Income tax (expenses) benefit............ 29 84 (2,472) (3,589) (127)
Extraordinary loss attributable to EVI
(net of tax)........................... -- -- -- -- (706)
----- ----- ------- ------- ------
Income (loss) from discontinued
operations, net of taxes............... $(648) $(164) $ 4,796 $(2,270) $ 591
===== ===== ======= ======= ======
</TABLE>
F-11
<PAGE> 68
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In addition to the loss from discontinued operations, the Company's
operating results for the three months ended March 31, 1997 include a charge of
$1.4 million, net of tax, for expenses incurred in connection with the Merger.
Certain liabilities of the Merged Assets of approximately $0.6 million were
retained by the Company.
5. SHORT-TERM BORROWINGS:
On July 8, 1993, the Company entered into a one-year loan facility
agreement with a bank under which the Company can borrow up to L3,300,000
($5,651,000). During each of 1994, 1995 and 1996, this facility was renewed for
one additional year. At December 31, 1996 and 1995, the Company had borrowings
of L2,100,000 ($3,596,000) and L600,000 ($932,000), respectively, under this
facility. Interest is charged at 2 1/4% above the lending bank's LIBOR rate.
This facility is secured by second priority mortgages on various vessels, as
well as second assignments of such vessels' earnings.
During 1996 and 1995, the Company had average borrowings outstanding of
$1,229,000 and $431,000, respectively, under the facility. The weighted average
interest rate during these periods was 8.3% and 9.0%, respectively.
6. LONG-TERM DEBT:
The Company's long-term debt at December 31, 1996 and 1995, consisted of
the following (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Revolving $24,486,000 credit facility (L11,250,000
($19,266,000) and $5,220,000 tranches); facility reduces by
10% semiannually beginning December 31, 1996, with final
payment due in 2000; interest at 1 5/8% over the lending
bank's LIBOR rate (7.8% as of December 31, 1996)............ $17,087 $15,415
Loan facility payable in British Pound Sterling; quarterly
principal payments of L395,000 ($676,000) with final payment
of L6,475,000 ($11,088,000) due in 2002; interest at 1 3/8%
over the lending bank's LIBOR rates (7.8% as of December 31,
1996)....................................................... 25,294 13,635
Loan facility payable in British Pound Sterling; semiannual
principal payments of L350,000 ($599,000) with final payment
of L340,000 ($582,000) due in 2002; interest at 1 1/4% over
the lending bank's LIBOR rate (7.7% as of December 31,
1996)....................................................... 7,175 7,594
Revolving $7,000,000 credit facility; facility reduces by
10% semiannually beginning January 31, 1997, with final
payment due in 2001; interest at 1 5/8% over the lending
bank's LIBOR rate (7.3% as of December 31, 1996)............ 7,000 --
------- -------
56,556 36,644
Less: Current maturities of long-term debt.................. 5,745 3,044
------- -------
$50,811 $33,600
======= =======
</TABLE>
F-12
<PAGE> 69
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of scheduled debt maturities by year (in
thousands):
<TABLE>
<S> <C>
1997....................................................... $ 5,745
1998....................................................... 8,348
1999....................................................... 10,746
2000....................................................... 13,466
2001....................................................... 5,305
Thereafter................................................. 12,946
-------
Total............................................ $56,556
=======
</TABLE>
Each of the above facilities is secured by mortgages on various vessels, as
well as assignments of such vessels' earnings. The loan facility agreements
restrict Gulf Offshore N.S. Ltd., Gulf Offshore Far East, Inc., Gulf Offshore
Shipping Services, Inc. and Gulf Offshore Marine International, Inc., the
subsidiaries that own the mortgaged vessels, from making dividends or other
distributions to their parent without consent of the lenders. The amount of net
assets restricted under these loan provisions was $42.3 million as of December
31, 1996, and includes cash and cash equivalents of $11.1 million.
7. COMMITMENTS AND CONTINGENCIES:
At December 31, 1996, the Company had long-term operating leases covering
office space and automobiles. Aggregate lease expense on operating leases for
1996, 1995 and 1994 was $380,000, $440,000 and $284,000, respectively. Future
minimum rental commitments under these operating leases are as follows (in
thousands):
<TABLE>
<S> <C>
1997........................................................ $336
1998........................................................ 195
1999........................................................ 164
2000........................................................ 81
2001........................................................ 58
Thereafter.................................................. --
----
Total............................................. $834
====
</TABLE>
The Company, along with a major railroad, was named in a lawsuit in which
the plaintiffs are claiming damages resulting from flooding and erosion
allegedly caused by the railroad and/or the Company. During the third quarter of
1996, the Company was discharged from all claims by the plaintiffs in exchange
for consideration which was immaterial to the financial statements of the
Company.
The Company is subject to legal proceedings and claims that arise in the
ordinary course of its business. Management believes, based on discussions with
its legal counsel and in consideration of reserves recorded, that the outcome of
these legal actions will not have a material adverse effect upon the
consolidated financial position and results of operations of the Company.
In connection with the transactions described in Note 1, the Company has
agreed to indemnify EVI and certain of their affiliates against liabilities for
claims and litigation relating to periods prior to May 1, 1997. The Company has
established accruals which it believes to be adequate to cover such claims, and
believes that claims, if any, will not have a material adverse effect on the
consolidated financial position and results of operations of the Company.
F-13
<PAGE> 70
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. STOCKHOLDERS' EQUITY:
Stock Options and Stock Option Plans
As part of the Contribution and Distribution, the Company assumed the
obligations of the Predecessor under its various Stock Option Plans.
Additionally, as discussed in Note 1, in conjunction with the Distribution, two
shares of GulfMark Offshore, Inc.'s Common Stock were issued for each share of
the Predecessor's common stock. Accordingly, the total number of shares under
option agreements has been modified and all references to shares in these
financial statements have been adjusted. Furthermore, in connection with these
transactions, optionees were entitled to an adjustment in the number of shares
under their agreements in order to preserve the intrinsic value of the options
prior to these transactions. After the adjustment, the ratio of the exercise to
fair market value of the shares and the total intrinsic value was the same as
before these transactions. Accordingly, no compensation expense was recognized.
Under the terms of the Company's Amended and Restated 1993 Non-Employee
Director Stock Option Plan (the "Director Plan"), options to purchase 10,000
shares of Common Stock were granted to each of the Company's five non-employee
directors in 1993 and 1996. Additionally, options to purchase 10,000 shares of
Common Stock are to be granted to each new non-employee director upon his or her
election. The exercise price of options granted under the Director Plan is fixed
at the market price at the date of grant. In May 1996, the number of shares
reserved for issuance under this Plan was increased from 100,000 to 400,000. The
options are for a term of ten years.
Under the terms of the Company's 1987 Employee Stock Option Plan (the
"Employee Plan"), options may be granted to employees to purchase Common Stock
at specified prices. The Employee Plan also provides for stock appreciation
rights ("SARS") that give the optionee the right, subject to certain conditions,
to surrender an option and receive cash and/or shares of Common Stock having a
value equal to the appreciation from date of grant of such option. As of
December 31, 1996, 262,666 shares were reserved for granting of options under
the Employee Plan.
<TABLE>
<CAPTION>
1996 1995 1994
------------------ ------------------ ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- -------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of
year...................... 140,000 $ 6.50 169,934 $6.40 173,334 $6.34
Granted..................... 84,000 $13.94 -- $ -- -- $ --
Exercised................... (6,800) $ 3.34 (29,934) $5.94 (3,400) $3.25
------- ------- -------
Outstanding at end of
year...................... 217,200 $ 9.48 140,000 $6.50 169,934 $6.40
======= ======= =======
Weighted average fair value
of options granted during
the year.................. $ 3.06 N/A N/A
Exercisable as of December 31, 1996.................................. 140,000
Shares available for future grants as of December 31, 1996........... 562,666
</TABLE>
F-14
<PAGE> 71
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table summarizes information about stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER AVERAGE
RANGE OF EXERCISE PRICES OUTSTANDING EXERCISE PRICE
- ------------------------ ----------- --------------
<S> <C> <C> <C>
$3.25 to $5.25................................................... 35,800 $ 4.13
$7.38 to $8.88................................................... 97,400 $ 7.59
$13.19 to $19.50................................................. 84,000 $13.94
-------
217,200 $ 9.48
=======
</TABLE>
Historically, the Company has used stock options as a long-term incentive
for its employees, officers and directors under the above-mentioned stock option
plans. The exercise price of options granted is equal to or greater than the
market price of the underlying stock on the date of the grant. Accordingly,
consistent with the provisions of Accounting Principles Board No. 25,
"Accounting for Stock Issued to Employees" ("APB No. 25"), no compensation
expense has been recognized in the accompanying financial statements.
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123
establishes financial accounting and reporting standards for stock-based
employee compensation. The pronouncement defines a fair-value based method of
accounting for an employee stock option or similar equity instrument. SFAS No.
123 also allows an entity to continue to measure compensation cost for those
instruments using the intrinsic value-based method of accounting prescribed by
APB No. 25. The Company has elected to follow APB No. 25 and related
interpretations in accounting for employee stock options because the valuation
models prescribed for use by SFAS No. 123 to determine the fair value of options
were not developed for use in valuing employee stock options. Under APB No. 25,
because the exercise price of the Company's employee stock options equaled the
market price of the underlying stock on the date of the grant, no compensation
expense has been recognized in the accompanying financial statements.
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123 and has been determined as if the Company had accounted
for its employee stock options under the fair-value method described above. No
fair-value calculations are required for 1995 as there were no options issued
during that period. The fair value for the 1996 options was estimated at the
date of the grant using the Black-Scholes option pricing model with the
following weighted average assumptions: Risk-free interest rates of 5%; a
weighted average volatility factor of the expected market price of the Company's
stock of .14; no expected dividends; and weighted average expected option lives
of 4 years.
For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the options' vesting period. Set forth
below is a summary of the Company's net income and earnings per share as
reported and pro forma as if the fair-value based method of accounting defined
in SFAS No. 123 had been applied. The pro forma information is not meant to be
representative of the effects on reported net income for future years, because
as provided by SFAS No. 123, only the effects of awards granted in 1995 and 1996
are required to be considered in the pro forma calculations.
<TABLE>
<CAPTION>
1996
-------------------------
AS REPORTED PRO FORMA
----------- ----------
<S> <C> <C>
Income from continuing operations........................... $3,643,000 $3,554,000
Net income.................................................. $8,439,000 $8,350,000
Earnings per share from continuing operations............... $ 0.55 $ 0.53
Earnings per share.......................................... $ 1.26 $ 1.25
</TABLE>
F-15
<PAGE> 72
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Preferred Stock
The Company is authorized by its Certificate of Incorporation to issue up
to 2,000,000 shares of no par value preferred stock. No shares have been issued.
9. INCOME TAXES:
Income from continuing operations before income taxes attributable to
domestic and foreign operations was (in thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1995 1994
------ ---- ------
<S> <C> <C> <C>
U.S. ...................................................... $ (498) $371 $ (192)
Foreign.................................................... 5,980 88 2,656
------ ---- ------
$5,482 $459 $2,464
====== ==== ======
</TABLE>
The components of GulfMark Offshore, Inc.'s tax provisions attributable to
income from continuing operations are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------- -------------------------- --------------------------
DEFERRED DEFERRED DEFERRED
AND AND AND
CURRENT OTHER TOTAL CURRENT OTHER TOTAL CURRENT OTHER TOTAL
------- -------- ------ ------- -------- ----- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
U.S.................. $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
Foreign.............. 132 1,707 1,839 109 (18) 91 242 739 981
---- ------ ------ ---- ---- ---- ---- ---- ----
$132 $1,707 $1,839 $109 $(18) $ 91 $242 $739 $981
==== ====== ====== ==== ==== ==== ==== ==== ====
</TABLE>
Deferred income taxes reflect the impact of temporary differences between
the amount of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws and regulations. The components of the net
deferred tax liability as of December 31, 1996 and 1995 were (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1995
-------- -------
<S> <C> <C>
Deferred tax assets --
Net operating loss carryforwards.......................... $ 8,668 $ 6,430
Non-deductible accruals................................... 1,381 1,192
Foreign tax credits....................................... 224 387
Alternative minimum tax credits........................... 597 284
Other tax credits......................................... 175 175
Valuation allowance....................................... (267) (846)
-------- -------
10,778 7,622
-------- -------
Deferred tax liabilities --
Depreciation.............................................. (12,866) (8,400)
Foreign income not currently recognizable................. (1,017) (709)
Other..................................................... (301) (323)
-------- -------
(14,184) (9,432)
-------- -------
Net deferred tax liability.................................. $ (3,406) $(1,810)
======== =======
</TABLE>
F-16
<PAGE> 73
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The difference between the provision at the statutory U.S. federal income
tax rate and the tax provision attributable to income from continuing operations
in the accompanying consolidated financial statements is analyzed below:
<TABLE>
<CAPTION>
1996 1995 1994
---- ----- -----
<S> <C> <C> <C>
U.S. federal statutory income tax rate...................... 34.0% 34.0% 34.0%
Effect of international operations.......................... (0.5) 8.4 21.0
Utilization of U.S. net operating loss carryforwards........ -- (22.6) (15.2)
---- ----- -----
33.5% 19.8% 39.8%
==== ===== =====
</TABLE>
As of December 31, 1996, GulfMark Offshore, Inc. had the following
carryforward losses and credits for income tax purposes that are, subject to
certain limitations, available to offset future taxable income (in thousands):
<TABLE>
<CAPTION>
AMOUNT EXPIRATION
------- ----------
<S> <C> <C>
U.S. tax purposes --
Foreign tax credits....................................... $ 224 1997-2000
Alternative minimum tax credits........................... $ 597 Indefinite
Other tax credits......................................... $ 175 1997-2000
Foreign tax purposes --
Net operating losses...................................... $26,267 Indefinite
</TABLE>
10. OPERATING SEGMENT INFORMATION:
Business Segments
The operations of GulfMark Offshore, Inc. are contained in a single
business segment -- offshore marine services. The business operated 30 offshore
support vessels as of March 31, 1997, principally in the North Sea and Southeast
Asia. The vessels provide transportation of materials, supplies and personnel to
and from offshore platforms and drilling rigs. Some of the vessels also perform
anchor handling and towing services.
F-17
<PAGE> 74
GULFMARK OFFSHORE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Geographic Regions
Information by geographical area is based on the location where services
were performed. Operating income represents revenues less operating expenses and
is not reduced for interest expense and income taxes. General corporate expenses
incurred in the United States have not been allocated to foreign operations for
purposes of this disclosure.
<TABLE>
<CAPTION>
EUROPE
UNITED (PRIMARILY BRAZIL
STATES U.K.) FAR EAST AND OTHER TOTAL
------- ---------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
1996 --
Revenues..................... $ -- $25,552 $ 7,732 $1,465 $ 34,749
Operating income (loss)...... $(2,513) $ 9,813 $ 1,473 $ 262 $ 9,035
Identifiable assets.......... $ 6,574 $85,036 $23,805 $1,055 $116,470
1995 --
Revenues..................... $ -- $20,176 $ 6,142 $ 915 $ 27,233
Operating income (loss)...... $(1,564) $ 4,027 $ 639 $ (210) $ 2,892
Identifiable assets.......... $ 2,153 $60,318 $10,939 $1,494 $ 74,904
1994 --
Revenues..................... $ -- $18,685 $ 8,178 $ 829 $ 27,692
Operating income (loss)...... $(2,070) $ 3,699 $ 2,431 $ (247) $ 3,813
Identifiable assets.......... $ 1,424 $43,607 $19,278 $ -- $ 64,309
</TABLE>
Major Customers
For the years ended December 31, 1996, 1995 and 1994, GulfMark Offshore,
Inc. had major customers who comprised more than 10% of revenues. The loss of a
major customer could have an adverse effect on the Company's financial condition
and results of operations until new charters are obtained.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Customer A.................................................. 15.4% 15.2% 13.3%
Customer B.................................................. 14.2% --% --%
Customer C.................................................. --% 12.9% 12.3%
Customer D.................................................. --% 12.9% 14.6%
</TABLE>
F-18
<PAGE> 75
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
NO DEALER SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFERING OTHER
THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED ON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES IN ANY STATE
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
STATE. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
---------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Prospectus Summary.................... 4
Recent Developments................... 13
Risk Factors.......................... 14
The Company........................... 18
Use of Proceeds....................... 18
Price Range of Common Stock and
Dividend Policy..................... 19
Capitalization........................ 20
Selected Consolidated Financial
Data................................ 21
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 23
Business.............................. 31
Management............................ 42
Principal Stockholders and Stock
Ownership of Directors and
Officers............................ 47
Description of Capital Stock.......... 48
Underwriting.......................... 50
Legal Matters......................... 51
Experts............................... 52
Glossary.............................. A-1
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>
1,000,000 SHARES
[GULFMARK LOGO]
GULFMARK OFFSHORE, INC.
COMMON STOCK
---------------------------
PROSPECTUS
July , 1997
---------------------------
LEHMAN BROTHERS
JEFFERIES & COMPANY, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
- ------------------------------------------------------
------------------------------------------------------
- ------------------------------------------------------
------------------------------------------------------
<PAGE> 76
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses in connection with the issuance and distribution of the
securities to be registered, other than underwriting discounts and commissions,
are as follows:
<TABLE>
<S> <C>
Securities Exchange Commission Registration Fee............. $ 9,248
Nasdaq National Market Additional Shares Listing Fee........ 17,500
NASD Filing Fee............................................. 3,552
Printing and Engraving Expenses............................. 150,000
Legal Fees and Expenses..................................... 110,000
Accounting Fees and Expenses................................ 150,000
Blue Sky Fees and Expenses.................................. 5,000
Transfer Agent Fees and Expenses............................ 5,000
Miscellaneous............................................... 5,000
--------
Total............................................. $455,300
========
</TABLE>
The foregoing expenses incident to the registration of the shares of Common
Stock, including any underwriting discounts and commissions attributable to the
sale of the shares, shall be paid by the Company.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
General
Article Eighth of the Company's Certificate of Incorporation, as amended
("Article Eighth") requires the Company to indemnify its directors, officers and
certain other individuals to the full extent permitted by the Delaware General
Corporation Law ("Delaware GCL") or other applicable laws and allows the Company
to enter into agreements with any person to provide greater or different
indemnification than that provided in Article Eighth or the Delaware GCL.
Article Ninth of the Company's Certificate of Incorporation ("Article
Ninth") limits the personal liability of the Company's directors to the Company
or its shareholders to the full extent permitted by the Delaware GCL, which
currently permits directors to be protected from monetary damages for breach of
their fiduciary duty of care. This limitation has no effect on claims arising
under the federal securities laws.
Indemnification and Insurance
Under the Delaware GCL, directors and officers as well as other employees
and individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation such
as a derivative action) if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard of
care is applicable in the case of actions by or in the right of the corporation,
except that indemnification extends only to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action, and the
Delaware GCL requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to the
corporation.
Article Eighth provides that each person who is or was or had agreed to
become a director or officer of the Company, and each such person who is or was
serving or who had agreed to serve at the request of the Board of Directors or
an officer of the Company as an employee or agent of the Company, or as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company to
the full extent permitted by the Delaware GCL or any other applicable laws as
presently or hereafter in effect. Under
II-1
<PAGE> 77
Article Eighth, subject to the limitations on indemnification imposed by the
Delaware GCL, a large award against an officer or director or other appropriate
individual could be paid by the Company, which could materially reduce the
assets of the Company.
Article Eighth provides that, without limiting the generality or effect of
the foregoing, the Company may enter into one or more agreements with any person
which provide for indemnification greater or different than that provided in
Article Eighth. Finally, Article Eighth and Article Ninth each provide that any
repeal or modification of such article shall not adversely affect any right or
protection existing thereunder immediately prior to such repeal or modification.
At present there is no pending litigation or proceeding involving a
director or officer of the Company in which indemnification would be required or
permitted by the indemnification agreements. The Board of Directors is not aware
of any threatened litigation or proceeding which may result in a claim for
indemnification under any such indemnification agreement.
Elimination of Liability in Certain Circumstances
Under the Delaware GCL, Article Ninth protects the Company's directors
against monetary damages for breaches of their duty of care, except as set forth
below. The inclusion of Article Ninth in the Company's Certificate of
Incorporation means that the Company and its shareholders forego the ability to
bring a cause of action against a director for monetary damages for certain
breaches of fiduciary duty, including actions in connection with proposals for
the acquisition of control of the Company. Directors remain liable for breaches
of their duty of loyalty to the Company and its shareholders, as well as acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law and transactions from which a director derives improper
personal benefit. Also, Article Ninth does not eliminate director liability
under Section 174 of the Delaware GCL, which makes directors personally liable
for unlawful dividends or unlawful stock repurchases or redemptions and
expressly sets forth a negligence standard with respect to such liability.
Although Article Ninth provides directors with protection from awards of
monetary damages for breaches of the duty of care, it does not eliminate the
directors' duty of care. Accordingly, Article Ninth has no effect on the
availability of equitable remedies such as an injunction or rescission based
upon a director's breach of the duty of care. The provisions of Article Ninth
which eliminate liability as described above apply to officers of the Company
only if they are directors of the Company and are acting in their capacity as
directors, and do not apply to officers of the Company who are not directors.
The Underwriting Agreement to be filed as Exhibit 1.1 hereto contains
reciprocal agreements of indemnity between the Company and the Underwriters as
to certain liabilities, including liabilities under the Securities Act of 1933,
as amended (the "Securities Act"), and in certain circumstances provides for
indemnification of the Company's directors and officers.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The Company was incorporated on December 4, 1996 at which time it issued
one share of its Common Stock to GulfMark International, Inc. for a purchase
price of $1,000. The only other sales of unregistered securities were sold to
directors of the Company and are outlined below.
(a) Securities Sold.
On May 8, 1997, the Company sold 24,568 shares of Common Stock.
On May 9, 1997, the Company sold 61,421 shares of Common Stock.
II-2
<PAGE> 78
(b) Underwriters and Other Purchasers.
None of the securities were publicly offered and, excepting the initial
share sold to GulfMark International, Inc., all were sold to the
following individuals who serve as directors of the Company:
<TABLE>
<S> <C>
David J. Butters...................... 12,284 Shares of Common Stock
Robert B. Millard..................... 12,284 Shares of Common Stock
Norman G. Cohen....................... 12,284 Shares of Common Stock
Louis A. Gimbel, 3rd.................. 49,137 Shares of Common Stock
</TABLE>
(c) Consideration.
With the exception of the initial share sold to GulfMark International,
Inc., all of the unregistered securities were sold for cash as a result
of the exercise of stock options held by certain directors of the
Company. The amount of consideration received by the Company for the
various sales varied due to the different strike prices under the
various options. The aggregate amount of consideration received by the
Company for all sales listed in Item 15(b) was $222,495.71.
(d) Exemption From Registration Claimed.
The securities are exempt from registration under Section 4(2) of the
Securities Act of 1933, as amended, as a transaction by the issuer not
involving any public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
*1.1 -- Form of Underwriting Agreement dated July , 1997 by and
between GulfMark Offshore, Inc. and Lehman Brothers Inc.,
Jefferies & Company, Inc. and The Robinson-Humphrey
Company, Inc.
3.1 -- Certificate of Incorporation of the Company (incorporated
by reference to Exhibit No. 3.1 to the Registration
Statement on Form S-4 No. 333-24141).
3.2 -- Certificate of Amendment to Certificate of Incorporation
of the Company (incorporated by reference to Exhibit No.
3.2 to the Registration Statement on Form S-4 No.
333-24141).
3.3 -- By-laws of the Company (incorporated by reference to
Exhibit No. 3.3 to the Registration Statement on Form S-4
No. 333-24141).
4.1 -- See Exhibit Nos. 3.1 and 3.2 for provisions of the
Certificate of Incorporation and By-laws of the Company
defining the rights of the holders of Common Stock.
*4.2 -- Specimen Certificate for the Company's Common Stock,
$0.01 par value.
*5.1 -- Opinion of Griggs & Harrison, P.C.
10.1 -- GulfMark International, Inc. 1987 Stock Option Plan
(incorporated by reference to Exhibit No. 10.1 to the
Registration Statement on Form S-4 No. 333-24141).
*10.2 -- Amendment to the GulfMark International, Inc. 1987 Stock
Option Plan.
*10.3 -- GulfMark Offshore, Inc. Instrument of Assumption and
Adjustment (GulfMark International, Inc. 1987 Stock
Option Plan).
*10.4 -- Form of Incentive Stock Option Agreement (GulfMark
International, Inc. 1987 Stock Option Plan).
*10.5 -- Form of Amendment No. 1 to Incentive Stock Option
Agreement (GulfMark International, Inc. 1987 Stock Option
Plan, as amended).
*10.6 -- Form of Incentive Stock Option Agreement (GulfMark
Offshore, Inc. 1987 Stock Option Plan).
</TABLE>
II-3
<PAGE> 79
<TABLE>
<S> <C>
*10.7 -- GulfMark International, Inc. Amended and Restated 1993
Non-Employee Director Stock Option Plan.
*10.8 -- Amendment No. 1 to the GulfMark International, Inc.
Amended and Restated 1993 Non-Employee Director Stock
Option Plan.
*10.9 -- GulfMark Offshore, Inc. Instrument of Assumption and
Adjustment (GulfMark International, Inc. Amended and
Restated 1993 Non-Employee Director Stock Option Plan).
*10.10 -- Form of Stock Option Agreement (GulfMark International,
Inc. Amended and Restated 1993 Non-Employee Director
Stock Option Plan).
*10.11 -- Form of Amendment No. 1 to Stock Option Agreement
(GulfMark International, Inc. Amended and Restated 1993
Non-Employee Director Stock Option Plan).
*10.12 -- Form of Stock Option Agreement (GulfMark Offshore, Inc.
1993 Non-Employee Director Stock Option Plan).
*10.13 -- GulfMark Offshore, Inc. Instrument of Assumption and
Adjustment (GulfMark International, Inc. Director Stock
Option Agreements).
*10.14 -- Form of Stock Option Agreement (GulfMark International,
Inc. Director Stock Options).
*10.15 -- Form of Amendment No. 1 to Stock Option Agreement
(GulfMark International, Inc. Director Stock Options).
*10.16 -- Agreement dated October 20, 1995 Amending and Restating
the $5,800,000 and L9,400,000 Loan Facility Agreement
dated July 8, 1993, made by and between The Chase
Manhattan Bank, N.A. and GulfMark North Sea Limited, Gulf
Offshore Marine International, Inc., Gulf Offshore N.S.
Limited and Gulf Offshore Far East, Inc.
*10.17 -- Loan Facility Agreement dated as of July 26, 1996, made
between The Chase Manhattan Bank, Chase Manhattan
International Limited, as Agent, Gulf Offshore Shipping
Services, Inc., GulfMark International, Inc., GulfMark
North Sea Limited and Gulf Offshore Marine International,
Inc.
*10.18 -- Agreement Amending and Restating the L3,300,000 Loan
Facility dated July 8, 1993, made by The Chase Manhattan
Bank, N.A. and GulfMark North Sea Limited, Gulf Offshore
Marine International Inc., Gulf Offshore N.S. Limited and
Gulf Offshore Far East, Inc.
*10.19 -- Agreement amending Loan Facility dated July 8, 1993 as
amended by an amendment and restatement agreement dated
May 20, 1994 (L3,300,000 facility).
*10.20 -- Deed of Release and Substitution dated April 30, 1997 by
and among GulfMark Offshore, Inc. and The Chase Manhattan
Bank, GulfMark North Sea Limited, Gulf Offshore Marine
International, Inc., Gulf Offshore N.S. Limited and Gulf
Offshore Far East, Inc. relating to that certain
L3,300,000 Facility Agreement dated October 20, 1995
Amending and Restating the Loan Facility Agreement dated
July 8, 1993.
*10.21 -- Deed of Release and Substitution dated April 30, 1997 by
and among GulfMark Offshore, Inc. and Chase Manhattan
International Limited, as Agent, The Chase Manhattan
Bank, Gulf Offshore Shipping Services, Inc., GulfMark
International, Inc., GulfMark North Sea Limited and Gulf
Offshore Marine International, Inc. relating to a U.S.
$7,000,000 Credit Facility Agreement dated July 8, 1993.
</TABLE>
II-4
<PAGE> 80
<TABLE>
<S> <C>
*10.22 -- Deed of Release and Substitution dated April 30, 1997 by
and among GulfMark Offshore, Inc. and Chase Manhattan
International Limited, as Agent, The Chase Manhattan
Bank, The Governor and Company of the Bank of Scotland,
GulfMark North Sea Limited, Gulf Offshore Marine
International, Inc., Gulf Offshore N.S. Limited, and Gulf
Offshore Far East, Inc. relating to a U.S. $5,800,000 and
L9,400,000 Syndicated Loan Facility dated July 8, 1993 as
most recently amended and restated by an Agreement dated
October 20, 1995.
*10.23 -- Loan Agreement dated as of June 11, 1997, made by and
between Christiania Bank og Kreditkasse ASA and Gulf
Offshore N.S. Limited.
*10.24 -- Tax Allocation and Indemnification Agreement dated April
30, 1997 made by and among GulfMark International, Inc.,
GulfMark Offshore, Inc. and Energy Ventures, Inc.
23.1 -- Consent of Griggs & Harrison, P.C. (included in Exhibit
5.1).
*23.2 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of GulfMark Offshore, Inc.
24.1 -- Power of Attorney (contained on page II-5).
*27.1 -- Financial Data Schedule.
</TABLE>
- ---------------
* Filed herewith.
(b) Financial Statement Schedules
The following financial statement schedules are included in Part II of the
Registration Statement:
None
All other schedules are omitted because they are inapplicable or the
requested information is shown in the financial statements or noted therein.
ITEM 17. UNDERTAKINGS.
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 foregoing provisions, 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
of 1933 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.
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 a part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of Prospectus filed by the Company 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 the time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 81
If the Underwriters do not exercise their option to purchase additional
shares of Common Stock to cover overallotments, if any, or if such option is
partially exercised, the Company hereby undertakes to file a post-effective
amendment to the Registration Statement deregistering all such shares as to
which such option shall not have been exercised.
II-6
<PAGE> 82
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on July 11, 1997.
GULFMARK OFFSHORE, INC.
By: /s/ FRANK R. PIERCE
----------------------------------
Frank R. Pierce
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Frank R. Pierce, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments pursuant to Rule 462(b)
of the Securities Act) to this Registration Statement, and to file the same and
all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting said attorney-in-fact and agent,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ BRUCE A. STREETER President, Chief Operating Officer July 11, 1997
- ----------------------------------------------------- and Director (Principal
Bruce A. Streeter Executive Officer)
/s/ FRANK R. PIERCE Executive Vice President and Chief July 11, 1997
- ----------------------------------------------------- Financial Officer (Principal
Frank R. Pierce Financial Officer)
/s/ KEVIN D. MITCHELL Controller (Principal Accounting July 11, 1997
- ----------------------------------------------------- Officer)
Kevin D. Mitchell
/s/ DAVID J. BUTTERS Director and Chairman of the Board July 11, 1997
- -----------------------------------------------------
David J. Butters
/s/ NORMAN G. COHEN Director July 11, 1997
- -----------------------------------------------------
Norman G. Cohen
/s/ MARSHALL A. CROWE Director July 11, 1997
- -----------------------------------------------------
Marshall A. Crowe
/s/ LOUIS A. GIMBEL, 3RD Director July 11, 1997
- -----------------------------------------------------
Louis A. Gimbel, 3rd
/s/ ROBERT B. MILLARD Director July 11, 1997
- -----------------------------------------------------
Robert B. Millard
</TABLE>
II-7
<PAGE> 83
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
*1.1 -- Form of Underwriting Agreement dated July , 1997 by and
between GulfMark Offshore, Inc. and Lehman Brothers Inc.,
Jefferies & Company, Inc. and The Robinson-Humphrey
Company, Inc.
3.1 -- Certificate of Incorporation of the Company (incorporated
by reference to Exhibit No. 3.1 to the Registration
Statement on Form S-4 No. 333-24141).
3.2 -- Certificate of Amendment to Certificate of Incorporation
of the Company (incorporated by reference to Exhibit No.
3.2 to the Registration Statement on Form S-4 No.
333-24141).
3.3 -- By-laws of the Company (incorporated by reference to
Exhibit No. 3.3 to the Registration Statement on Form S-4
No. 333-24141).
4.1 -- See Exhibit Nos. 3.1 and 3.2 for provisions of the
Certificate of Incorporation and By-laws of the Company
defining the rights of the holders of Common Stock.
*4.2 -- Specimen Certificate for the Company's Common Stock,
$0.01 par value.
*5.1 -- Opinion of Griggs & Harrison, P.C.
10.1 -- GulfMark International, Inc. 1987 Stock Option Plan
(incorporated by reference to Exhibit No. 10.1 to the
Registration Statement on Form S-4 No. 333-24141).
*10.2 -- Amendment to the GulfMark International, Inc. 1987 Stock
Option Plan.
*10.3 -- GulfMark Offshore, Inc. Instrument of Assumption and
Adjustment (GulfMark International, Inc. 1987 Stock
Option Plan).
*10.4 -- Form of Incentive Stock Option Agreement (GulfMark
International, Inc. 1987 Stock Option Plan).
*10.5 -- Form of Amendment No. 1 to Incentive Stock Option
Agreement (GulfMark International, Inc. 1987 Stock Option
Plan, as amended).
*10.6 -- Form of Incentive Stock Option Agreement (GulfMark
Offshore, Inc. 1987 Stock Option Plan).
*10.7 -- GulfMark International, Inc. Amended and Restated 1993
Non-Employee Director Stock Option Plan.
*10.8 -- Amendment No. 1 to the GulfMark International, Inc.
Amended and Restated 1993 Non-Employee Director Stock
Option Plan.
*10.9 -- GulfMark Offshore, Inc. Instrument of Assumption and
Adjustment (GulfMark International, Inc. Amended and
Restated 1993 Non-Employee Director Stock Option Plan).
*10.10 -- Form of Stock Option Agreement (GulfMark International,
Inc. Amended and Restated 1993 Non-Employee Director
Stock Option Plan).
*10.11 -- Form of Amendment No. 1 to Stock Option Agreement
(GulfMark International, Inc. Amended and Restated 1993
Non-Employee Director Stock Option Plan).
*10.12 -- Form of Stock Option Agreement (GulfMark Offshore, Inc.
1993 Non-Employee Director Stock Option Plan).
*10.13 -- GulfMark Offshore, Inc. Instrument of Assumption and
Adjustment (GulfMark International, Inc. Director Stock
Option Agreements).
*10.14 -- Form of Stock Option Agreement (GulfMark International,
Inc. Director Stock Options).
*10.15 -- Form of Amendment No. 1 to Stock Option Agreement
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
*10.16 -- Agreement dated October 20, 1995 Amending and Restating
the $5,800,000 and L9,400,000 Loan Facility Agreement
dated July 8, 1993, made by and between The Chase
Manhattan Bank, N.A. and GulfMark North Sea Limited, Gulf
Offshore Marine International, Inc., Gulf Offshore N.S.
Limited and Gulf Offshore Far East, Inc.
*10.17 -- Loan Facility Agreement dated as of July 26, 1996, made
between The Chase Manhattan Bank, Chase Manhattan
International Limited, as Agent, Gulf Offshore Shipping
Services, Inc., GulfMark International, Inc., GulfMark
North Sea Limited and Gulf Offshore Marine International,
Inc.
*10.18 -- Agreement Amending and Restating the L3,300,000 Loan
Facility dated July 8, 1993, made by The Chase Manhattan
Bank, N.A. and GulfMark North Sea Limited, Gulf Offshore
Marine International Inc., Gulf Offshore N.S. Limited and
Gulf Offshore Far East, Inc.
*10.19 -- Agreement amending Loan Facility dated July 8, 1993 as
amended by an amendment and restatement agreement dated
May 20, 1994 (L3,300,000 facility).
*10.20 -- Deed of Release and Substitution dated April 30, 1997 by
and among GulfMark Offshore, Inc. and The Chase Manhattan
Bank, GulfMark North Sea Limited, Gulf Offshore Marine
International, Inc., Gulf Offshore N.S. Limited and Gulf
Offshore Far East, Inc. relating to that certain
L3,300,000 Facility Agreement dated October 20, 1995
Amending and Restating the Loan Facility Agreement dated
July 8, 1993.
*10.21 -- Deed of Release and Substitution dated April 30, 1997 by
and among GulfMark Offshore, Inc. and Chase Manhattan
International Limited, as Agent, The Chase Manhattan
Bank, Gulf Offshore Shipping Services, Inc., GulfMark
International, Inc., GulfMark North Sea Limited and Gulf
Offshore Marine International, Inc. relating to a U.S.
$7,000,000 Credit Facility Agreement dated July 8, 1993.
*10.22 -- Deed of Release and Substitution dated April 30, 1997 by
and among GulfMark Offshore, Inc. and Chase Manhattan
International Limited, as Agent, The Chase Manhattan
Bank, The Governor and Company of the Bank of Scotland,
GulfMark North Sea Limited, Gulf Offshore Marine
International, Inc., Gulf Offshore N.S. Limited, and Gulf
Offshore Far East, Inc. relating to a U.S. $5,800,000 and
L9,400,000 Syndicated Loan Facility dated July 8, 1993 as
most recently amended and restated by an Agreement dated
October 20, 1995.
*10.23 -- Loan Agreement dated as of June 11, 1997, made by and
between Christiania Bank og Kreditkasse ASA and Gulf
Offshore N.S. Limited.
*10.24 -- Tax Allocation and Indemnification Agreement dated April
30, 1997 made by and among GulfMark International, Inc.,
GulfMark Offshore, Inc. and Energy Ventures, Inc.
23.1 -- Consent of Griggs & Harrison, P.C. (included in Exhibit
5.1).
*23.2 -- Consent of Arthur Andersen LLP, with respect to the
financial statements of GulfMark Offshore, Inc.
24.1 -- Power of Attorney (contained on page II-5).
*27.1 -- Financial Data Schedule.
</TABLE>
- ---------------
* Filed herewith.
<PAGE> 1
EXHIBIT 1.1
1,000,000 SHARES
GULFMARK OFFSHORE, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_____ __, 1997
LEHMAN BROTHERS INC.
JEFFERIES & COMPANY, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
GulfMark Offshore, Inc., a Delaware corporation (the
"Company"), proposes to sell 1,000,000 shares (the "Firm Stock") of the
Company's Common Stock, par value $.01 per share (the "Common Stock"). In
addition, the Company proposes to grant to the Underwriters named in Schedule 1
hereto (the "Underwriters") an option to purchase up to an additional 125,000
shares of the Common Stock on the terms and for the purposes set forth in
Section 3 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters named in Schedule 1 hereto (the "Underwriters").
1. Representations, Warranties and Agreements of the
Company. The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to
the Stock has (i) been prepared by the Company in conformity with the
requirements of the United States Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations (the "Rule and
Regulations") of the United States Securities and Exchange Commission
(the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act and (iii) become
<PAGE> 2
effective under the Securities Act. Copies of such registration
statement have been delivered by the Company to you as the
representatives (the "Representatives") of the Underwriters. As used
in this Agreement, "Effective Time" means the date and the time as of
which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission;
"Effective Date" means the date of the Effective Time; "Preliminary
Prospectus" means each prospectus included in such registration
statement, or amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by the
Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such
registration statement, as amended at the Effective Time, including all
information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations in accordance with
Section 5(a) hereof and deemed to be a part of the registration
statement as of the Effective Time pursuant to paragraph (b) of Rule
430A of the Rules and Regulations; and "Prospectus" means such final
prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Rules and Regulations.
(b) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will, when they become
effective or are filed with the Commission, as the case may be, conform
in all respects to the requirements of the Securities Act and the Rules
and Regulations and do not and will not, as of the applicable effective
date (as to the Registration Statement and any amendment thereto) and
as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided that no representation or warranty is made as to information
contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on behalf of
any Underwriter specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined
in Section 15) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, are duly qualified to transact business
and are in good standing as foreign corporations in each jurisdiction
in which their respective ownership or lease of property or the conduct
of their respective businesses requires such qualification, and have
all power and authority necessary to own, lease, operate or hold their
respective properties and to conduct the businesses in which they are
engaged; and none of the subsidiaries of the Company (other than
GulfMark North Sea, Ltd., a United Kingdom company, Gulf Offshore N.S.
Ltd., a United Kingdom company, Gulf Offshore Marine International,
Inc., a Panamanian corporation, and Gulf Offshore Shipping Services,
Inc., a Panamanian corporation (the "Principal Subsidiaries") is a
"significant subsidiary," as such term is defined in Rule 405 of the
Rules and Regulations.
2
<PAGE> 3
(d) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and nonassessable and conform to the description thereof
contained in the Prospectus; and all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued and are fully paid, nonassessable and (except for
directors' qualifying shares and except as set forth in the Prospectus)
are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims.
(e) The shares of the Stock to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid and
nonassessable; and the Stock will conform to the description thereof
contained in the Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this
Agreement by the Company and the consummation of the transactions
contemplated hereby will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any of its
subsidiaries is subject, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or
assets; and, except for the registration of the Stock under the
Securities Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection with the
purchase and distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the
execution, delivery and performance of this Agreement by the Company
and the consummation of the transactions contemplated hereby.
(h) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such
securities in the securities registered pursuant to the Registration
Statement or in any securities being
3
<PAGE> 4
registered pursuant to any other registration statement filed by the
Company under the Securities Act.
(i) Except as described in the Prospectus, the Company has
not sold or issued any shares of Common Stock during the six-month
period preceding the date of the Prospectus, including any sales
pursuant to Rule 144A under, or Regulations D or S of, the Securities
Act, other than shares issued pursuant to employee benefit plans,
qualified stock options plans or other employee compensation plans.
(j) Neither the Company nor any of its subsidiaries has
sustained, since the date of the latest audited financial statements
included in the Prospectus, any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not
been any material change in the vessel fleet, capital stock or
long-term or short-term debt of the Company or any of its subsidiaries
or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general
affairs, management, consolidated financial position, stockholders'
equity, results of operations or prospects of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus.
(k) The financial statements (including the related notes
and supporting schedules) filed as part of the Registration Statement
or included in the Prospectus present fairly the financial condition
and results of operations of the entities purported to be shown
thereby, at the dates and for the periods indicated, and have been
prepared in conformity with U.S. generally accepted accounting
principles applied on a consistent basis throughout the periods
involved.
(l) Arthur Andersen LLP, who have certified certain
financial statements of the Company, whose report appears in the
Prospectus and who have delivered the initial letter referred to in
Section 7(g) hereof, are independent public accountants as required by
the Securities Act and the Rules and Regulations.
(m) Each of the Company and its subsidiaries has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits") as are necessary to own its
respective properties and to conduct its business in the manner
described in the Prospectus, subject in each case to such
qualifications as may be set forth in the Prospectus and except where
the failure to have such permits would not have a material adverse
effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries; each of the Company and its subsidiaries has fulfilled
and performed all of its obligations with respect to such permits and
no event has occurred which allows, or after notice or lapse of time
4
<PAGE> 5
would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permits,
subject in each case to such qualifications as may be set forth in the
Prospectus and except where the failure so to fulfill or perform or the
occurrence of such an event would not have a material adverse effect on
the consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries;
and, except as described in the Prospectus, none of such permits
contains any restriction that is materially burdensome to the Company
or its subsidiaries.
(n) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and
marketable title to all personal property (including vessels) owned by
them, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as do
not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the
Company and its subsidiaries; and all real property, buildings and
vessels held under lease by the Company and its subsidiaries are held
by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property, buildings and vessels by the
Company and its subsidiaries.
(o) The Company and each of its subsidiaries carry, or
otherwise are covered by, insurance in such amounts and covering such
risks as is adequate for the conduct of their respective businesses and
the value of their respective properties and as is customary for
companies engaged in similar businesses in similar industries, and
neither the Company nor any such subsidiary has received any notice of
cancellation or nonrenewal with respect to such insurance.
(p) The Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights and licenses
necessary for the conduct of their respective businesses and have no
reason to believe that the conduct of their respective businesses will
conflict with, and have not received any notice of any claim of
conflict with, any such rights of others.
(q) There are no legal or governmental proceedings
(domestic or foreign) pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, singly or in
the aggregate, if determined adversely to the Company or any of its
subsidiaries, might have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; and, to the
best of the Company's knowledge, no such proceedings are threatened or
contemplated by any governmental authorities or threatened by others.
5
<PAGE> 6
(r) There are no contracts or other documents that are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and
Regulations which have not been described in the Prospectus or filed as
exhibits to the Registration Statement.
(s) No relationship, direct or indirect, exists between or
among the Company, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company, on the other hand,
that is required to be described in the Prospectus and that is not so
described.
(t) No labor disturbance by the employees of the Company
exists or, to the knowledge of the Company, is imminent which might be
expected to have a material adverse effect on the consolidated
financial position, stockholders' equity, results of operations,
business or prospects of the Company and its subsidiaries; neither the
Company nor any of its subsidiaries has ever been party to a collective
bargaining agreement; and there are no significant unfair labor
practice complaints pending against the Company or any of its
subsidiaries or, to the best of the Company's knowledge, threatened
against any of them.
(u) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and
published interpretations thereunder ("ERISA"); no "reportable event"
(as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company would have any liability;
the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is
intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such
qualification.
(v) The Company has filed all federal, state, local and
foreign income and franchise tax returns required to be filed through
the date hereof and has paid all taxes due thereon, and no tax
deficiency has been determined adversely to the Company or any of its
subsidiaries which has had (nor does the Company have any knowledge of
any tax deficiency which, if determined adversely to the Company or any
of its subsidiaries, might have) a material adverse effect on the
consolidated financial position, stockholders' equity, results of
operations, business or prospects of the Company and its subsidiaries.
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<PAGE> 7
(w) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be
disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, (ii) incurred any liability or obligation, direct,
indirect or contingent, other than liabilities and obligations which
were incurred in the ordinary course of business, (iii) entered into
any transaction not in the ordinary course of business or (iv) declared
or paid any dividend on its capital stock.
(x) The Company (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any difference.
(y) Neither the Company nor any of its subsidiaries (i) is
in violation of its charter or by-laws, (ii) is in default in any
material respect, and no event has occurred which, with notice or lapse
of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is bound
or to which any of its properties or assets is subject or (iii) is in
violation in any material respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets
may be subject or has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct of its
business.
(z) Neither the Company nor any of its subsidiaries, nor
any director, officer, agent, employee or other person associated with
or acting on behalf of the Company or any of its subsidiaries, has used
any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; violated or is in
violation of any provision of the Foreign Corrupt Practices Act of
1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(aa) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any of
the property now or previously owned or leased by the Company or its
subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which
7
<PAGE> 8
could require remedial action under any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action which would not have, or could not
reasonably be expected to have, singularly or in the aggregate with all
such violations and remedial actions, a material adverse effect on the
general affairs, management, consolidated financial position,
stockholders' equity, results of operations or prospects of the Company
and its subsidiaries; there has been no material spill, discharge,
leak, emission, injection, escape, dumping or release of any kind onto
such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or
hazardous substances due to or caused by the Company or any of its
subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which would not
have or would not be reasonably likely to have, singularly or in the
aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a material adverse effect
on the general affairs, management, consolidated financial position,
stockholders' equity, results of operations or prospects of the Company
and its subsidiaries; and the terms "hazardous wastes," "toxic wastes,"
"hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(bb) The Company has not taken and will not take, directly
or indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of shares of the Common
Stock to facilitate the sale or resale of the Stock.
(cc) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations of the
Commission thereunder.
(dd) The transfer of the assets of the offshore marine
business of GulfMark International, Inc. (the "Predecessor") to the
Company (the "Contribution"), the distribution of all of the
then-outstanding Common Stock to the common stockholders of the
Predecessor (the "Distribution") and the merger of a subsidiary of
Energy Ventures, Inc. (now EVI, Inc. ("EVI")) with and into the
Predecessor (the "Merger") are not taxable to the Company, the
Predecessor or EVI. The issuance and sale of the Stock pursuant to
this Agreement will not render the Contribution, the Distribution or
the Merger taxable to the Company, the Predecessor or EVI.
(ee) Any certificate signed by any officer of the Company
and delivered to the Underwriters or counsel for the Underwriters,
whether pursuant to this Agreement or in connection with the payment of
the purchase price and delivery of the certificates for the
8
<PAGE> 9
Firm Stock or the Option Stock, shall be deemed a representation and
warranty by the Company to each of the Underwriters as to the matters
covered thereby.
2. Purchase of the Stock by the Underwriters. On the
basis of the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell 1,000,000
shares of the Firm Stock to the several Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase the number of
shares of the Firm Stock set opposite that Underwriter's name in Schedule 1
hereto. The respective purchase obligations of the Underwriters with respect
to the Firm Stock shall be rounded among the Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option
to purchase up to 125,000 shares of Option Stock. Such option is granted
solely for the purpose of covering over-allotments in the sale of Firm Stock
and is exercisable as provided in Section 5 hereof. Shares of Option Stock
shall be purchased severally for the account of the Underwriters in proportion
to the number of shares of Firm Stock set opposite the name of such
Underwriters in Schedule 1 hereto. The respective purchase obligations of each
Underwriter with respect to the Option Stock shall be adjusted by the
Representatives so that no Underwriter shall be obligated to purchase Option
Stock other than in 100-share amounts. The price of both the Firm Stock and
any Option Stock shall be $_____ per share.
The Company shall not be obligated to deliver any of the Stock
to be delivered on the First Delivery Date or the Second Delivery Date (as
hereinafter defined), as the case may be, except upon payment for all the Stock
to be purchased on such Delivery Date as provided herein.
3. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of
the Firm Stock, the several Underwriters propose to offer the Firm Stock for
sale upon the terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Stock. Delivery of
and payment for the Firm Stock shall be made at the office of Lehman Brothers
Inc., New York, New York, at 10:00 A.M., New York City time, on the [THIRD]
[FOURTH] full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to
as the "First Delivery Date." On the First Delivery Date, the Company shall
deliver or cause to be delivered certificates representing the Firm Stock to
the Representatives for the account of each Underwriter against payment to or
upon the order of the Company of the purchase price by wire transfer of
immediately available funds. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Underwriter hereunder. Upon delivery, the Firm Stock
shall be registered in such names and in such
9
<PAGE> 10
denominations as the Representatives shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection and packaging by the Representatives in New York, New York, at
least one full business day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of
this Agreement, the option granted in Section 2 may be exercised by written
notice being given to the Company by the Representatives. Such notice shall
set forth the aggregate number of shares of Option Stock as to which the option
is being exercised, the names in which the shares of Option Stock are to be
registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been
exercised nor later than the fifth business day after the date on which the
option shall have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as the "Second Delivery Date" and the
First Delivery Date and the Second Delivery Date are sometimes each referred to
as a "Delivery Date").
Delivery of and payment for the Option Stock shall be made at
the place specified in the first sentence of the first paragraph of this
Section 5 (or at such other place as shall be determined by agreement between
the Representatives and the Company) at 10:00 A.M., New York City time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer of immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Stock
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Stock, the Company shall make the certificates representing the Option Stock
available for inspection by the Representatives in New York, New York, at least
one full business day prior to the Second Delivery Date.
5. Further Agreements of the Company. The Company
agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act not later than Commission's close of business
on the second business day following the execution and delivery of this
Agreement or, if applicable, such earlier time as may be required by
Rule 430A(a)(3) under the Securities Act; to make no further amendment
or any supplement to the Registration Statement or to the Prospectus
except as permitted herein; to advise the
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<PAGE> 11
Representatives, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish the Representatives with
copies thereof; to advise the Representatives, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing
of the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop order or of
any order preventing or suspending the use of any Preliminary
Prospectus or the Prospectus or suspending any such qualification, to
use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and
to counsel for the Underwriters a signed copy of the Registration
Statement as originally filed with the Commission, and each amendment
thereto filed with the Commission, including all consents and exhibits
filed therewith;
(c) To deliver promptly to the Representatives such number
of the following documents as the Representatives shall reasonably
request: (i) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto and,
(ii) each Preliminary Prospectus, the Prospectus and any amended or
supplemented Prospectus; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the
offering or sale of the Stock or any other securities relating thereto
and if, at such time, any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply with
the Securities Act or the Exchange Act, to notify the Representatives
and, upon their request, to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the
Representatives, be required by the Securities Act or requested by the
Commission;
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<PAGE> 12
(e) Prior to filing with the Commission any amendment to
the Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, to
furnish a copy thereof to the Representatives and counsel for the
Underwriters and obtain the consent of the Representatives to the
filing;
(f) As soon as practicable after the Effective Date, to
make generally available to the Company's security holders and to
deliver to the Representatives an earnings statement of the Company and
its subsidiaries (which need not be audited) complying with Section
11(a) of the Securities Act and the Rules and Regulations (including,
at the option of the Company, Rule 158);
(g) For a period of five years following the Effective
Date, to furnish to the Representatives copies of all materials
furnished by the Company to its shareholders and all public reports and
all reports and financial statements furnished by the Company to the
Nasdaq National Market or any other national securities exchange upon
which the Common Stock may be listed pursuant to requirements of or
agreements with such exchange or to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for
offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Stock;
(i) For a period of 180 days from the date of the
Prospectus, not to, directly or indirectly, offer for sale, sell or
otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any
person at any time in the future of) any shares of Common Stock (other
than the Stock and shares issued pursuant to employee benefit plans
existing on the date hereof), or sell or grant options, rights or
warrants with respect to any shares of Common Stock (other than the
grant of options pursuant to option plans existing on the date hereof),
without the prior written consent of Lehman Brothers Inc.; and to cause
each director of the Company to furnish to the Representatives, prior
to the First Delivery Date, a letter or letters, in form and substance
satisfactory to counsel for the Underwriters, pursuant to which each
such person shall agree not to, directly or indirectly, offer for sale,
sell or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares of
Common Stock for a period of 120 days from the date of the Prospectus,
without the prior written consent of Lehman Brothers Inc.;
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<PAGE> 13
(j) Prior to the Effective Date, to apply for the
inclusion of the Stock on the Nasdaq National Market and to use its
best efforts to complete that listing, subject only to official notice
of issuance, prior to the First Delivery Date;
(k) Prior to filing with the Commission any reports on
Form SR pursuant to Rule 463 of the Rules and Regulations, to furnish a
copy thereof to the counsel for the Underwriters and receive and
consider its comments thereon, and to deliver promptly to the
Representatives a signed copy of each report on Form SR filed by it
with the Commission;
(l) To apply the net proceeds from the sale of the Stock
being sold by the Company as set forth in the Prospectus.
6. Expenses. The Company agrees to pay (a) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (b) the costs incident to the preparation,
printing and filing under the Securities Act of the Registration Statement and
any amendments and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) the costs of producing and
distributing this Agreement and any other related documents in connection with
the offering, purchase, sale and delivery of the Stock; (e) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Stock; (f) any applicable
listing or other fees; (g) the fees and expenses of qualifying the Stock under
the securities laws of the several jurisdictions as provided in Section 5(h)
and of preparing, printing and distributing a Blue Sky Memorandum, if any, (h)
all fees and expenses of an independent underwriter; and (i) all other costs
and expenses incident to the performance of the obligations of the Company
under this Agreement; provided that, except as provided in this Section 6 and
in Section 11, the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the Underwriters.
7. Conditions of Underwriters' Obligations. The
respective obligations of the Underwriters hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request
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<PAGE> 14
of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been
complied with.
(b) No Underwriter shall have discovered and disclosed to
the Company on or prior to such Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of Baker &
Botts, L.L.P., counsel for the Underwriters, is material or omits to
state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Stock, the Registration Statement and the Prospectus, and all other
legal matters relating to this Agreement and the transactions
contemplated hereby, shall be reasonably satisfactory in all material
respects to counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Griggs & Harrison, P.C. shall have furnished to the
Representatives its written opinion, as counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect
that:
(i) The Company and each of its Principal
Subsidiaries have been duly incorporated and are validly
existing as corporations in good standing under the laws of
their respective jurisdictions of incorporation, are duly
qualified to transact business and are in good standing as
foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and
have all power and authority necessary to own, lease, operate
or hold their respective properties and conduct the businesses
in which they are engaged;
(ii) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued shares
of capital stock of the Company (including the shares of Stock
being delivered on such Delivery Date) have been duly and
validly authorized and issued, are fully paid and
nonassessable and conform to the description thereof contained
in the Prospectus; and all of the issued shares of capital
stock of each Principal Subsidiary of the Company have been
duly and validly authorized and issued and are fully paid,
nonassessable and (except for directors' qualifying shares and
except as set forth in the Prospectus) are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims;
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<PAGE> 15
(iii) There are no preemptive or other rights to
subscribe for or to purchase, nor any restriction upon the
voting or transfer of, any shares of the Stock pursuant to the
Company's charter or by-laws or any agreement or other
instrument or otherwise known to such counsel;
(iv) The form of certificate representing shares
of Common Stock conforms to the applicable requirements of the
Delaware General Corporation Law;
(v) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal
or governmental proceedings (domestic or foreign) pending to
which the Company or any of its subsidiaries is a party or of
which any property or assets of the Company or any of its
subsidiaries is the subject which, if determined adversely to
the Company or any of its subsidiaries, might have a material
adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries; and, to the
best of such counsel's knowledge, no such proceedings are
threatened or contemplated by any governmental authorities or
threatened by others;
(vi) The Registration Statement was declared
effective under the Securities Act as of the date and time
specified in such opinion, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b) of the
Rules and Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued
and, to the knowledge of such counsel, no proceeding for that
purpose is pending or threatened by the Commission;
(vii) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the
Company prior to such Delivery Date (other than the financial
statements and related schedules therein, as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act
and the Rules and Regulations;
(viii) The statements contained in the Prospectus
under the captions "Business--The Company--Environmental and
Governmental Regulation," "Business--The Company--Distribution
Agreement Obligations and Indemnities," "Management--Director
and Executive Officer Compensation," "Description of Capital
Stock" and "Underwriting," and in Items 14 and 15 of Part II
of the Registration Statement, insofar as such statements
purport to summarize the provisions of the documents or
agreements referred to therein or matters of law or legal
conclusions, are true and correct in all material respects and
constitute a fair summary thereof;
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(ix) To the best of such counsel's knowledge,
there are no contracts or other documents that are required to
be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules
and Regulations that have not been described or filed as
exhibits to the Registration Statement;
(x) This Agreement has been duly authorized,
executed and delivered by the Company and, when duly executed
by the proper officers of the Company and delivered by the
Company, will constitute a valid and binding agreement of the
Company enforceable against the Company in accordance with its
terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in
a proceeding in equity or at law) or an implied covenant of
good faith and fair dealing;
(xi) The execution and delivery of this Agreement,
the issuance and sale of the shares of Stock being delivered
on such Delivery Date by the Company and the compliance by the
Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated hereby will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Company or any of its Principal Subsidiaries is a party or by
which the Company or any of its Principal Subsidiaries is
bound or to which any of the property or assets of the Company
or any of its Principal Subsidiaries is subject, nor will such
actions result in any violation of the provisions of the
charter or by-laws of the Company or any of its Principal
Subsidiaries or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or
body (whether domestic or foreign) having jurisdiction over
the Company or any of its Principal Subsidiaries or any of
their properties or assets; and, except for the registration
of the Stock under the Securities Act and such consents,
approvals, authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable state
securities laws in connection with the purchase and
distribution of the Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration
with, any such court or governmental agency or body is
required for the execution, delivery and performance of this
Agreement by the Company or the consummation of the
transactions contemplated hereby;
(xii) Neither the Company nor any subsidiary is an
"investment company" within the meaning of such term under the
Investment Company Act of 1940 and the rules and regulations
of the Commission thereunder; and
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<PAGE> 17
(xiii) To the best of such counsel's knowledge,
there are no contracts, agreements or understandings between
the Company and any person granting such person the right to
require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company
to include such securities in the securities registered
pursuant to the Registration Statement or in any securities
being registered pursuant to any other registration statement
filed by the Company under the Securities Act.
In rendering such opinion, such counsel may state that its opinion is
limited to matters governed by the Federal laws of the United States of
America, the laws of the State of Texas and the corporate laws of the
State of Delaware and that such counsel is not admitted in the State of
Delaware. In addition, such counsel may rely, to the extent it
considers such reliance appropriate, upon the opinion of other counsel
retained by it or the Company, provided that such other counsel is
satisfactory to counsel for the Underwriters, furnishes a copy of its
opinion to the Representatives and specifically addresses such opinion
to the Representatives. Such counsel shall also have furnished to the
Representatives a written statement, addressed to the Underwriters and
dated such Delivery Date, in form and substance satisfactory to the
Representatives, to the effect that (x) such counsel has acted as
counsel to the Company in connection with previous financing
transactions and has acted as counsel to the Company in connection with
the preparation of the Registration Statement, and (y) based on the
foregoing, no facts have come to the attention of such counsel which
lead it to believe that the Registration Statement, as of the Effective
Date, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, or that the
Prospectus contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The foregoing opinion and
statement may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for the statements
made in the Prospectus under the captions "Business--The
Company--Environmental and Governmental Regulation," "Business--The
Company--Distribution Agreement Obligations and Indemnities,"
"Management--Director and Executive Officer Compensation,""Description
of Capital Stock" and "Underwriting," and in Items 14 and 15 of Part II
of the Registration Statement, insofar as such statements relate to the
documents or agreements referred to therein, or matters of law or legal
conclusions.
(e) The Representatives shall have received from local
counsel licensed to practice in each of Louisiana, Scotland and
Singapore, which local counsel shall be satisfactory to counsel for the
Underwriters, such opinions, dated such Delivery Date and
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<PAGE> 18
addressed to the Underwriters, in form and substance reasonably
satisfactory to the Representatives.
(f) The Representatives shall have received from Baker &
Botts, L.L.P., counsel for the Underwriters, such opinion or opinions,
dated such Delivery Date, with respect to the issuance and sale of the
Stock, the Registration Statement, the Prospectus and other related
matters as the Representatives may reasonably require, and the Company
shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the
Representatives shall have received from Arthur Andersen LLP a letter,
in form and substance satisfactory to the Representatives, addressed to
the Underwriters and dated the date hereof, (i) confirming that they
are independent public accountants within the meaning of the Securities
Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of
the Commission, (ii) stating, as of the date hereof (or, with respect
to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus,
as of a date not more than five days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial
information and other matters ordinarily covered by accountants'
"comfort letters" to underwriters in connection with registered public
offerings.
(h) With respect to the letter of Arthur Andersen LLP
referred to in the preceding paragraph and delivered to the
Representatives concurrently with the execution of this Agreement (the
"initial letter"), the Company shall have furnished to the
Representatives a letter (the "bring-down letter") of such accountants,
addressed to the Underwriters and dated such Delivery Date, (i)
confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule
2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
of the bring-down letter (or, with respect to matters involving changes
or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more
than five days prior to the date of the bring-down letter), the
conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set
forth in the initial letter.
(i) The Company shall have furnished to the
Representatives a certificate, dated such Delivery Date, of its
Chairman of the Board, its President or a Vice President and its Chief
Financial Officer stating that:
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<PAGE> 19
(i) The representations, warranties and
agreements of the Company in Section 1 are true and correct as
of such Delivery Date; the Company has complied with all of
its agreements contained herein; and the conditions set forth
herein have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of
the Effective Date, the Registration Statement and Prospectus
did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and (B) since the Effective Date, no event has
occurred which should have been set forth in a supplement or
amendment to the Registration Statement or the Prospectus.
(j) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, or (ii) since
such date there shall not have been any material change in the vessel fleet,
capital stock or long-term or short-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, consolidated financial
position, stockholders' equity, results of operations or prospects of the
Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in clause (i)
or (ii), is, in the judgment of the Representatives so material and adverse as
to make it impracticable or inadvisable to proceed with the public offering or
the delivery of the Stock being delivered on such Delivery Date on the terms
and in the manner contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred any of the following: (i) trading
in securities generally on the New York Stock Exchange or the American
Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter
market, shall have been suspended or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal
or state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving
the United States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have occurred
such a material adverse change in general economic, political or financial
conditions or in the economic, political or financial conditions in the
primary markets in which the Company operates (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of the Representatives or a
majority
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<PAGE> 20
in interest of the several Underwriters, impracticable or inadvisable to
proceed with the public offering or delivery of the Stock being delivered
on such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(l) The Nasdaq National Market shall have approved the Stock
for inclusion, subject only to official notice of issuance.
(m) Lehman Brothers Holdings Inc. shall have furnished to the
Representatives a letter, in form and substance satisfactory to counsel for
the Underwriters, pursuant to which Lehman Brothers Holdings Inc. shall
agree not to, directly or indirectly, offer for sale, sell or otherwise
dispose of (or enter into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock for a period of 180 days
from the date of the Prospectus without the prior written consent of the
Representatives.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter (including any Underwriter in its role as qualified independent
underwriter pursuant to the rules of the National Association of Securities
Dealers, Inc.), its officers and employees and each person, if any, who
controls any Underwriter within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any
action in respect thereof (including, but not limited to, any loss, claim,
damage, liability or action relating to purchases and sales of Stock), to
which that Underwriter, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained
(A) in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (B) in any blue sky
application or other document prepared or executed by the Company (or based
upon any written information furnished by the Company) specifically for the
purpose of qualifying any or all of the Stock under the securities laws of
any state or other jurisdiction (any such application, document or
information being hereinafter called a "Blue Sky Application"), (ii) the
omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any amendment or supplement
thereto, or in any Blue Sky Application any material fact required to be
stated therein or necessary to make the statements therein not misleading
or (iii) any act or failure to act or any alleged act or failure to act by
any Underwriter in connection with, or relating in any manner to, the Stock
or the offering contemplated hereby, and which is included as part of or
referred to in any loss, claim,
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<PAGE> 21
damage, liability or action arising out of or based upon matters covered by
clause (i) or (ii) above (provided that the Company shall not be liable
under this clause (iii) to the extent that it is determined in a final
judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter
through its gross negligence or willful misconduct), and shall reimburse
each Underwriter and each such officer, employee or controlling person
promptly upon demand for any legal or other expenses reasonably incurred by
that Underwriter, officer, employee or controlling person in connection
with investigating or defending or preparing to defend against any such
loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, any untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application, in reliance upon and in
conformity with written information concerning such Underwriter furnished
to the Company through the Representatives by or on behalf of any
Underwriter specifically for inclusion therein. The foregoing indemnity
agreement is in addition to any liability which the Company may otherwise
have to any Underwriter or to any officer, employee or controlling person
of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each
of its directors (including any person who, with his or her consent, is
named in the Registration Statement as about to become a director of the
Company), and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained
(A) in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or (B) in any Blue
Sky Application or (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in
any amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the
statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through
the Representatives by or on behalf of that Underwriter specifically for
inclusion therein, and shall reimburse the Company and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling person
in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses
are incurred. The foregoing indemnity agreement is in addition to any
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<PAGE> 22
liability which any Underwriter may otherwise have to the Company or any
such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability that it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure and, provided further, that the failure to notify the indemnifying
party shall not relieve it from any liability that it may have to an
indemnified party otherwise than under this Section 8. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the defense
thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by the indemnified party
in connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Representatives shall have the
right to employ counsel to represent jointly the Representatives and those
other Underwriters and their respective officers, employees and controlling
persons who may be subject to liability arising out of any claim in respect
of which indemnity may be sought by the Underwriters against the Company
under this Section 8 if, in the reasonable judgment of the Representatives,
it is advisable for the Representatives and those Underwriters, officers,
employees and controlling persons to be represented by separate counsel,
and, in that event, the fees and expenses of such separate counsel (in
addition to the fees and expenses of any local counsel) shall be paid by
the Company. No indemnifying party shall (i) without the prior written
consent of the indemnified parties (which consent shall not be unreasonably
withheld), settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified parties are actual or potential parties to
such claim or action) unless such settlement, compromise or consent
includes a full and unconditional release of each indemnified party from
all liability arising out of such claim, action, suit or proceeding, or
(ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with the consent of the indemnifying party or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees
to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(c)
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in respect of any loss, claim, damage or liability, or any action in
respect thereof, referred to therein, then each indemnifying party shall,
in lieu of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such proportion
as shall be appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, from the
offering of the Stock or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company, on the one hand, and
the Underwriters, on the other, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other, with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the offering of
the Stock purchased under this Agreement (before deducting expenses)
received by the Company, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Stock purchased under this Agreement, on the other hand, bear
to the total gross proceeds from the offering of the shares of the Stock
under this Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters, the intent of the
parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be
deemed to include, for purposes of this Section 8(e), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 8(e)
are several in proportion to their respective underwriting obligations and
not joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of the
Stock by the Underwriters set forth on the
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<PAGE> 24
cover page of, the legend concerning over-allotments on the inside front
cover page of, and the concession and reallowance figures appearing under
the caption "Underwriting" in, the Prospectus are correct and constitute
the only information concerning such Underwriters furnished in writing to
the Company by or on behalf of the Underwriters specifically for inclusion
in the Registration Statement and the Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock that the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such date exceeds 9.09% of the total number of
shares of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock that it agreed to purchase on such Delivery
Date pursuant to the terms of Section 3. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Representatives who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all of the Stock to be purchased on such Delivery Date.
If the remaining Underwriters or other underwriters satisfactory to the
Representatives do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery
Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Sections 6 and 11. As used in this Agreement, the term "Underwriter" includes,
for all purposes of this Agreement unless the context requires otherwise, any
party not listed in Schedule 1 hereto who, pursuant to this Section 9,
purchases Firm Stock which a defaulting Underwriter agreed but failed to
purchase.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Representatives or the Company may
postpone the Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel
for the Underwriters may be necessary in the Registration Statement, the
Prospectus or in any other document or arrangement.
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10. Termination. The obligations of the Underwriters
hereunder may be terminated by the Representatives by notice given to and
received by the Company prior to delivery of and payment for the Firm Stock if,
prior to that time, any of the events described in Sections 7(i) or 7(j), shall
have occurred or if the Underwriters shall decline to purchase the Stock for
any reason permitted under this Agreement.
11. Reimbursement of Underwriters' Expenses. If (a) the
Company shall fail to tender the Stock for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled
by the Company is not fulfilled, the Company will reimburse the Underwriters
for all reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by the Underwriters in connection with this Agreement and the
proposed purchase of the Stock and, upon demand, the Company shall pay the full
amount thereof to the Representatives. If this Agreement is terminated
pursuant to Section 10 by reason of the default of one or more Underwriters,
the Company shall not be obligated to reimburse any defaulting Underwriter on
account of those expenses.
12. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Lehman Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate
Department (Facsimile No.: 212-526-6588), with a copy, in the case of any
notice pursuant to Section 8(d), to the Director of Litigation, Office of
the General Counsel, Lehman Brothers Inc., Three World Financial Center,
10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: Frank R. Pierce (Facsimile No.:
713-963-9796);
provided, however, that any notice to an Underwriter pursuant to Section 8(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by
the Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf
of the Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the
Company, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons,
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except that (A) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control any Underwriter within
the meaning of Section 15 of the Securities Act for the benefit of each and (B)
the indemnity agreement of the Underwriters contained in Section 8(c) of this
Agreement shall be deemed to be for the benefit of directors of the Company,
officers of the Company who have signed the Registration Statement and any
person controlling the Company within the meaning of Section 15 of the
Securities Act. Nothing in this Agreement is intended or shall be construed to
give any person, other than the persons referred to in this Section 13, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf on them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Stock and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any of them or any person controlling any of them.
15. Definition of the Terms "Business Day" and "Subsidiary."
For purposes of this Agreement, (a) "business day" means any day on which the
New York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or
more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
26
<PAGE> 27
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
GULFMARK OFFSHORE, INC.
By
-------------------------------
Name:
Title:
Accepted:
LEHMAN BROTHERS INC.
JEFFERIES & COMPANY, INC.
THE ROBINSON-HUMPHREY COMPANY, INC.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By LEHMAN BROTHERS INC.
By
---------------------------------
Authorized Representative
27
<PAGE> 28
SCHEDULE 1
<TABLE>
<CAPTION>
Number of
Underwriters Shares
- ------------ ----------
<S> <C>
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . . .
--------------
Total . . . . . . . . . . . . . . . . . . . . . .
==============
</TABLE>
28
<PAGE> 1
EXHIBIT 4.2
GMO
GULFMARK OFFSHORE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
COMMON STOCK COMMON STOCK
PAR VALUE $0.01 PAR VALUE $0.01
CUSIP 402629 10 9
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS IS TO CERTIFY THAT
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, PAR VALUE $0.01 EACH, OF
GULFMARK OFFSHORE, INC.
(herein after called the "Company"), transferable on the books of the
Company in person, or by duly authorized attorney, upon surrender of this
certificate properly endorsed. The Company will furnish without charge to each
stockholder who so requests the designations, preferences and relative,
participating, optional or other special rights of each class of stock or
series thereof of the Company, and the qualifications, limitations or
restrictions of such preferences and/or rights. This certificate and the
shares represented hereby are issued and shall be held subject to all the
provisions of the Certificate of Incorporation of the Company and all
amendments thereto and resolutions of the Board of Directors providing for the
issue of shares of the Preferred Stock (copies of which are on file in the
office of the Transfer Agent) to all of which the holder of this certificate by
acceptance hereof assents. This certificate is not valid until countersigned
by the Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Company and the facsimile signatures of
its authorized officers.
Dated: GULFMARK OFFSHORE, INC.
[CORPORATE SEAL] By
Secretary President
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
(New York, New York) Transfer Agent
and Registrar
By Authorized Officer
<PAGE> 1
Exhibit 5.1
July 11, 1997
GulfMark Offshore, Inc.
5 Post Oak Park, Suite 1170
Houston, Texas 77027
Gentlemen:
We have acted as counsel for GulfMark Offshore, Inc., a Delaware
corporation (the "Company"), in connection with the proposed offer and sale by
the Company to Lehman Brothers, Inc., Jefferies & Company, Inc. and The
Robinson-Humphrey Company, Inc. and the other underwriters to be named in the
Underwriting Agreement to be executed in connection with such offering (the
"Underwriters"), pursuant to a Prospectus forming a part of the Registration
Statement on Form S-1 to be filed with the Securities and Exchange Commission
on July 11, 1997 (the "Registration Statement"), of up to an aggregate of
1,125,000 shares (the "Shares") of the Company's common stock, par value $0.01
per share (the "Common Stock"), including 125,000 shares of Common Stock which
may be sold to the Underwriters to cover over-allotments.
In connection therewith, we have examined, among other things, the
Certificate of Incorporation and Bylaws of the Company, each as amended to
date, and originals or copies certified or otherwise identified to our
satisfaction of records of corporate proceedings which have occurred prior to
the date hereof with respect to the offering, certificates of public officials
and of representatives of the Company, statutes and other instruments and
documents, as a basis for the opinions hereinafter expressed. In rendering
such opinions, we have relied upon certificates of certain public officials and
officers of the Company with respect to the accuracy of the material factual
matters contained in such certificates.
Based upon the foregoing examination and review, we hereby advise you
that, in our opinion, when (a) the Registration Statement has become effective
under the Securities Act of 1933, as amended, and (b) the Shares have been
issued and sold against payment therefor as contemplated in the Registration
Statement and the Underwriting Agreement, the Shares will be validly issued,
fully paid and nonassessable.
<PAGE> 2
GulfMark Offshore, Inc.
July 11, 1997
Page 2
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our Firm under the caption
"Legal Matters" in the Prospectus forming a part of the Registration Statement.
In giving this consent, we do not hereby admit that we are within the category
of persons whose consent is required under Section 7 of the Securities Act of
1933, as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder.
Very truly yours,
/s/ Griggs & Harrison, P.C.
GRIGGS & HARRISON, P.C.
<PAGE> 1
EXHIBIT 10.2
AMENDMENT TO THE
GULFMARK INTERNATIONAL, INC.
1987 STOCK OPTION PLAN, AS AMENDED
Pursuant to the terms and provisions of Article IX of the GulfMark
International, Inc. 1987 Stock Option Plan, as amended (the "Plan"), GulfMark
International, Inc., a Delaware corporation formerly known as Gulf Applied
Technologies, Inc. (the "Company"), hereby adopts the following Amendment to
the Plan (the "Amendment").
1.
The first sentence of Article V of the Plan is hereby amended in its
entirety by substituting the following therefor:
"The aggregate number of shares which may be issued under
Options granted pursuant to the Plan shall not exceed 200,000 shares
of Stock, subject to adjustment in accordance with the antidilution
adjustment provisions of paragraph (b) of Article VIII."
2.
The fifth sentence of Article V of the Plan providing for an
adjustment in the number of shares issuable pursuant to the Plan to reflect a
change in the capitalization of the Company, such as a stock dividend or a
stock split, is hereby deleted in its entirety.
3.
Paragraph (b) of Article VIII of the Plan is hereby amended in its
entirety by substituting the following therefor:
"(b) In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock
dividend, stock split, combination of shares, rights offering, or
extraordinary dividend or divestiture (including a spin-off), or any
other change in the corporate structure or shares of the Company, the
Board (or, if the Company is not the surviving corporation in any such
transaction, the board of directors of the surviving corporation)
shall make adjustments, determined by the Board in its discretion to
be appropriate, as to the number and kind of securities subject to and
reserved under the Plan and, in order to prevent dilution or
enlargement of rights of participants, as to the number, kind and
where applicable, the option exercise price, of securities subject to
outstanding awards or securities subject to options issued in
replacement of outstanding awards."
<PAGE> 2
4.
The first sentence of Paragraph (c) of Article VIII of the Plan is
hereby deleted in its entirety.
5.
Article IX of the Plan is hereby amended in its entirety by
substituting the following therefor:
"The Board in its discretion may terminate the Plan at any
time with respect to any shares for which Options have not theretofore
been granted. The Board shall have the right to alter or amend the
Plan or any part thereof from time to time; provided, that no change
in any Option theretofore granted may be made which would impair the
rights of the optionee; and provided further that the Board may not
make any alteration or amendment which would materially increase the
benefits accruing to participants under the Plan, increase the
aggregate number of shares which may be issued under the Plan (other
than pursuant to the antidilution adjustment provisions of paragraph
(b) of Article VIII), change the class of individuals eligible to
receive Options under the Plan, or extend the term of the Plan,
without the approval of the stockholders of the Company."
6.
Each amendment made by this Amendment No. 1 to the Plan has been
effected in conformity with the provisions of the Plan. This Amendment No. 1
was adopted by the Board of Directors of the Company on December 5, 1996 and
approved by the stockholders of the Company on April 30, 1997.
7.
At the time of the adoption of this Amendment No. 1 to the Plan,
3,339,952 shares of the Company's common stock, $1.00 par value per share, were
outstanding and entitled to vote, 2,023,452 were represented in person or by
proxy, of which 1,997,799 shares were voted for this Amendment No. 1, 18,558
shares were voted against this Amendment No. 1 and 7,095 shares abstained from
voting.
Dated: April 30, 1997.
GULFMARK INTERNATIONAL, INC.
By: /s/ Frank R. Pierce
-------------------------------
Frank R. Pierce
Executive Vice President
-2-
<PAGE> 1
EXHIBIT 10.3
GULFMARK OFFSHORE, INC.
INSTRUMENT OF ASSUMPTION AND ADJUSTMENT
(GulfMark International Inc. 1987 Stock Option Plan, as amended)
This Instrument of Assumption and Adjustment (the "Assumption") is
executed by GULFMARK OFFSHORE, INC., a Delaware corporation ("New GulfMark"),
in accordance with the provisions of that certain Agreement and Plan of
Distribution dated December 5, 1995 ("Distribution Agreement") by and among
GULFMARK INTERNATIONAL, INC. ("GulfMark"), New GulfMark and ENERGY VENTURES,
INC. ("EVI") in connection with the stock distributions described below. All
capitalized terms in this Assumption shall have the meaning assigned them in
this preamble or in Paragraph 2, as applicable.
1. Purpose. The purpose of this Assumption is to effect (a) the
adoption and assumption by New GulfMark of the GulfMark Stock Option Plan as of
the Distribution Date, (b) the assumption by New GulfMark of, and the
substitution of New GulfMark Common Stock for GulfMark Common Stock with
respect to, each outstanding GulfMark Stock Option as of the Distribution Date,
(c) an adjustment in the exercise price and number of shares subject to each
outstanding GulfMark Stock Option as of the Distribution Date in accordance
with the requirements of Section 424 of the Code, as required by the
Distribution Agreement, to preserve the aggregate intrinsic value of each
option and the ratio of the exercise price to the market value per share, and
(d) an adjustment in the aggregate number of shares issued or reserved for
issuance pursuant to the Assumed Stock Option Plan in accordance with the
antidilution adjustment provisions of the GulfMark Stock Option Plan.
2. Definitions. Capitalized terms shall have the meanings
ascribed to such terms in the preamble to this Assumption and as follows:
(a) Assumed Stock Option Plan: the GulfMark
International, Inc. 1987 Stock Option Plan, as amended, as assumed and
adopted by New GulfMark from and after the Distribution Date.
(b) Code: the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
(c) Distribution: the distribution by GulfMark of all
the outstanding shares of New GulfMark Common Stock to the
stockholders of record of GulfMark Common Stock as of the record date
for the Distribution at the rate of two shares of New GulfMark Common
Stock per share of GulfMark Common Stock.
(d) Distribution Date: April 30, 1997.
- 1 -
<PAGE> 2
(e) GulfMark Common Stock: the common stock, par value
$1.00 per share, of GulfMark.
(f) GulfMark Stock Option: any option to purchase shares
of GulfMark Common Stock outstanding under the GulfMark Stock Option
Plan immediately prior to the Distribution Date.
(g) GulfMark Stock Option Agreement: any agreement
between GulfMark and a holder of GulfMark Stock Options granted
pursuant to the GulfMark Stock Option Plan.
(h) GulfMark Stock Option Plan: the GulfMark
International, Inc. 1987 Stock Option Plan, as amended.
(i) New GulfMark Adjusted Stock Option: any GulfMark
Stock Option, as adjusted and assumed by New GulfMark pursuant to this
Assumption from and after the Distribution Date.
(j) New GulfMark Common Stock: the common stock, $.01
par value per share, of New GulfMark.
3. Assumption of GulfMark Stock Option Plan. As of the
Distribution Date, New GulfMark hereby adopts and assumes the GulfMark Stock
Option Plan, all outstanding GulfMark Stock Options granted thereunder, and all
GulfMark Stock Option Agreements relating to outstanding GulfMark Stock Options
granted pursuant to the GulfMark Stock Option Plan. From and after the
Distribution Date,
(a) All references to the "Company" in the GulfMark Stock
Option Plan and in any GulfMark Stock Option Agreement shall mean New
GulfMark.
(b) All references to "Common Stock" in the GulfMark
Stock Option Plan and in any GulfMark Stock Option Agreement shall
mean the New GulfMark Common Stock.
(c) All references to "Plan" in the GulfMark Stock Option
Plan or in any GulfMark Stock Option Agreement shall mean the Assumed
Stock Option Plan.
4. Treatment of Outstanding GulfMark Stock Options. Effective as
of the Distribution Date, each outstanding GulfMark Stock Option shall
constitute a New GulfMark Adjusted Stock Option to purchase New GulfMark Common
Stock, and in accordance with the antidilution adjustment provisions of the
GulfMark Stock Option Plan, the number of shares covered by, and the exercise
price of, each GulfMark Stock Option, and the remaining terms and conditions of
each outstanding GulfMark Stock Option shall be adjusted as follows:
- 2 -
<PAGE> 3
(a) The grant date of each New GulfMark Adjusted Stock
Option shall be the date of grant of the GulfMark Stock Option
replaced thereby, and the expiration date of each New GulfMark
Adjusted Stock Option shall be the expiration date of the GulfMark
Stock Option replaced thereby.
(b) The number of shares of New GulfMark Common Stock
covered by each New GulfMark Adjusted Stock Option shall be the number
of shares covered by the GulfMark Stock Option being replaced thereby,
multiplied by a fraction equal to the ratio of the pre-Distribution
market price per share of GulfMark Common Stock to the
post-Distribution market price per share of New GulfMark Common Stock.
(c) The per share exercise price of each New GulfMark
Adjusted Stock Option shall be the exercise price per share of the
GulfMark Stock Option being replaced thereby, multiplied by a fraction
equal to the ratio of the post-Distribution market price per share of
the New GulfMark Common Stock to the pre-Distribution market price per
share of GulfMark Common Stock.
(d) For purposes of the foregoing adjustments, (i) the
pre-Distribution market price per share of GulfMark Common Stock shall
be deemed to be the closing price per share of GulfMark Common Stock
as reported by The Nasdaq Stock Market on the last day on which
GulfMark Common Stock is traded on The Nasdaq Stock Market, and (ii)
the post-Distribution market price per share of New GulfMark Common
Stock shall be deemed to be the closing price per share of New
GulfMark Common Stock as reported by The Nasdaq Stock Market on the
first day on which New GulfMark Common Stock is traded on The Nasdaq
Stock Market following the Distribution.
(e) The vesting and exercise provisions of each New
GulfMark Adjusted Stock Option shall be identical to the vesting and
exercise provisions of the GulfMark Stock Option replaced thereby.
(f) The remaining terms and conditions of each New
GulfMark Adjusted Stock Option shall be substantially the same as in
effect for the GulfMark Stock Option replaced thereby; provided,
however, that service with GulfMark prior to the Distribution shall be
treated under each New GulfMark Adjusted Stock Option as service with
New GulfMark.
5. Adjustment of Aggregate Number of Option Shares. Pursuant to
the antidilution adjustment provisions of the GulfMark Stock Option Plan, the
total number of option shares that may be granted pursuant to the Assumed Stock
Option Plan shall be as follows:
- 3 -
<PAGE> 4
<TABLE>
<CAPTION>
GulfMark Stock New GulfMark Assumed
Option Plan Stock Option Plan
(Originally Authorized) (As Adjusted)
--------------------- -----------
<S> <C> <C><C> <C>
Option Shares Exercised 32,567 32,567
Option Shares Outstanding 37,000 [ ] *
Option Shares Available 130,433 260,866 **
------- ----------
Total 200,000 [ ] ***
======= ==========
</TABLE>
*To be supplied by post-Distribution Date exhibit on May 2, 1997, with
each outstanding GulfMark Stock Option being adjusted in accordance
with Section 424 of the Code, as required by the Distribution
Agreement and as set forth in Section 4(b) above, to preserve
aggregate intrinsic value and the ratio of the exercise price to the
market value per share.
**Each remaining option share being adjusted to reflect the
Distribution of two shares of New GulfMark Common Stock per share of
GulfMark Common Stock.
***To be supplied by post-Distribution Date exhibit on May 2, 1997.
6. Intent of Option and Plan Adjustments. The adjustments to
each outstanding GulfMark Stock Option are designed solely to preserve the
aggregate intrinsic value of each option and the ratio of the exercise price to
the market value per share, in accordance with the requirements of Section 424
of the Code, as required by the Distribution Agreement and as permitted by
Article VIII of the GulfMark Stock Option Plan. The adjustments to the
aggregate number of shares issued and reserved for issuance pursuant to the
GulfMark Stock Option Plan are designed solely (i) to give effect to the
adjustment in outstanding option shares described above, and (ii) to reflect
the two-for-one nature of the Distribution.
7. Termination of GulfMark Obligations. From and after the
Distribution Date, all obligations of GulfMark pursuant to (i) the GulfMark
Stock Option Plan, (ii) all outstanding GulfMark Stock Options granted
thereunder, and (iii) all GulfMark Stock Option Agreements relating to
outstanding GulfMark Stock Options granted pursuant to the GulfMark Stock
Option Plan, respectively, shall terminate, and neither GulfMark nor EVI shall
have any further obligation whatsoever thereunder.
8. Miscellaneous. This Assumption is executed and shall
constitute an instrument supplemental to the GulfMark Stock Option Plan and
shall be construed with and as a part of the GulfMark Stock Option Plan.
Except as modified and expressly amended by this Assumption and any other
supplement or amendment, the GulfMark Stock Option Plan is in all respects
adopted, assumed, ratified and confirmed by New GulfMark, and all of the terms
provisions and conditions thereof, as supplemented hereby, shall be and remain
in full force and effect.
- 4 -
<PAGE> 5
EXECUTED and effective as of the Distribution Date.
GULFMARK OFFSHORE, INC.
By: /s/Frank R. Pierce
------------------------------------
Frank R. Pierce,
Executive Vice President
- 5 -
<PAGE> 6
EXHIBIT A
TO INSTRUMENT OF ASSUMPTION AND ADJUSTMENT
(GULFMARK INTERNATIONAL INC. 1987 STOCK OPTION PLAN, AS AMENDED)
<TABLE>
<CAPTION>
GulfMark Stock New GulfMark Assumed
Option Plan Stock Option Plan
(Originally Authorized) (As Adjusted)
--------------------- -----------
<S> <C> <C> <C>
Option Shares Exercised 32,567 32,567
Option Shares Outstanding 36,100 177,388 *
Option Shares Available 131,333 262,666 **
------- -------
Total 200,000 472,621
======= =======
</TABLE>
*Each outstanding GulfMark Stock Option being adjusted in accordance
with Section 424 of the Code, as required by the Distribution
Agreement and as set forth in Section 4(b) above, to preserve
aggregate intrinsic value and the ratio of the exercise price to the
market value per share.
**Each remaining option share being adjusted to reflect the
Distribution of two shares of New GulfMark Common Stock per share of
GulfMark Common Stock.
- 6 -
<PAGE> 1
EXHIBIT 10.4
INCENTIVE STOCK OPTION AGREEMENT
This Agreement, dated as of ___________________________, 19__, by and
between GulfMark International, Inc., a Delaware corporation (formerly Gulf
Applied Technologies, Inc., the "Company"), and _______________ ("Employee").
To carry out the purposes of the GulfMark International, Inc. 1987
Stock Option Plan (the "Plan") by affording Employee the opportunity to
purchase shares of the $1.00 par value common stock of the Company ("Stock"),
the Company and Employee hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to
Employee the right and option ("Option") to purchase all or any part of an
aggregate of ____________(___) shares of Stock, on the terms and conditions
set forth herein and in the Plan. This Option is intended to constitute an
incentive stock option within the meaning of section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price of Stock purchased pursuant
to the exercise of this Option shall be $__________ per share, which is deemed
to be not less than the fair market value of the Stock subject to this Option.
3. Exercise of Option. Subject to the earlier expiration of this
Option as herein provided, this Option may be exercised, by written notice to
the Company, at any time and from time to time, but this Option shall not be
exercisable for more than a percentage of the aggregate number of shares
offered by this Option determined by the number of full years from the date of
grant hereof to the date of such exercise, in accordance with the following
schedule:
<TABLE>
<CAPTION>
Number of Full Percentage of
Years From Date Shares
of Grant Purchasable
---------------- -------------
<S> <C>
less than 1 year -0-
1 year 33 1/3%
2 years 66 2/3%
3 years or more 100%
</TABLE>
This option is not transferable by Employee otherwise than by will or the laws
of descent and distribution, and may be exercised only by Employee during his
lifetime and while he remains an employee of the Company, except that:
1
<PAGE> 2
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
(a) If Employee's employment with the Company terminates for any
reason other than disability or death, his Option may be
exercised by Employee (or his estate or the person who acquires
this Option by bequest or inheritance or by reason of the death
of Employee) at any time during the period of three months
following such termination, but only as to the number of shares
Employee was entitled to purchase hereunder as of the date his
employment so terminates.
(b) If Employee's employment with the Company terminates by reason
of disability (within the meaning of section 22(e) (3) of the
Code), this Option may be exercised by Employee (or his estate
or the person who acquires this Option by bequest or
inheritance or by reason of the death of Employee) at any time
during the period of one year following such termination, but
only as to the number of shares Employee was entitled to
purchase hereunder as of the date his employment so terminates.
(c) If Employee dies while in the employ of the Company, his
estate, or the person who acquires this Option by bequest or
inheritance or by reason of the death of Employee, may exercise
this Option at any time during the period of one year following
the date of Employee's death, but only as to the number of
shares Employee was entitled to purchase hereunder as of the
date of his death.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. Except as provided in Paragraph 4, the
purchase price of shares as to which this Option is exercised shall be paid in
full in cash at the time of such exercise or, if Employee so elects, payment of
the purchase price may be made, in whole or in part, by delivery of a number of
shares of Stock (plus cash if necessary) having a fair market value equal to
such purchase price or part thereof. Unless and until a certificate or
certificates representing such shares shall have been issued by the Company to
him, Employee (or the person permitted to exercise this Option in the event of
the Employee's death) shall not be or have any of the rights or privileges of a
stockholder of the Company with respect to shares acquirable upon the exercise
of this Option.
4. Stock Appreciation Right. Upon an exercise of this Option,
Employee ( or the person permitted to exercise this Option in the event of
Employee's death), in the notice given to the Company exercising this Option,
may request that the Company distribute to him, in lieu of any number of the
shares of Stock with respect to which this Option is exercised, an amount (the
"Appreciation Amount") equal to the excess of the aggregate fair market value
of such number of shares over the aggregate option price of such shares.
Within 30 days after such notice is given, the committee appointed by the Board
of Directors of the Company to administer the Plan (the "Committee") shall give
notice to the Employee (or such person) either approving or disapproving such
request. If such request is disapproved, the notice given by Employee (or such
person) exercising this Option shall be treated as if it had never been given.
If such request is approved, the
2
<PAGE> 3
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
Company shall distribute to Employee (or such person) an amount of cash
and/or a number of shares of Stock equal in value in the aggregate to the
Appreciation Amount; the composition of the Appreciation Amount as between cash
and shares of Stock shall be determined in the discretion of the Committee, but
the Committee may take into account any preference for cash and/or shares of
Stock expressed by Employee (or such person) in the notice given to the Company
exercising this Option. For purposes of both determining the Appreciation
Amount and determining the number of shares of Stock distributed in
satisfaction of the Appreciation Amount, the fair market value of a share of
Stock shall be equal to the mean between the high and low quoted selling prices
of Stock on the day on which Employee (or such person) gives notice exercising
this Option or, if no selling prices are so quoted on such day, on the next
preceding day on which selling prices of Stock are so quoted.
5. Status of Stock. The Company shall not be required to issue
any shares of Stock upon the exercise of the option evidenced hereby if the
issuance of such shares of Stock would constitute or result in a violation by
the Company, or by the Employee, of any provision of any applicable law,
statute or regulation of any governmental authority.
Upon the exercise of the option evidenced hereby, the Company shall not be
required to issue any shares of Stock unless the Committee shall have received
evidence satisfactory to it that the Employee will not transfer such shares of
Stock until a registration statement with respect to such shares of Stock shall
have become effective under the Securities Act of 1933 or until an opinion of
counsel satisfactory to the Company shall have been received by the Company to
the effect that such registration is not required. Any determination in the
connection by the Committee shall be final, binding and conclusive.
The Company may, but shall in no event be obligated to, register under the
Securities Act of 1933, or register or otherwise qualify for sale under the
securities laws of any state, the shares of Stock issuable upon the exercise of
the option evidenced hereby. If any shares of Stock issuable upon the exercise
of such option are not registered under the Securities Act of 1933, the Company
may imprint on the certificates representing such shares of Stock the following
legend or any other legend that counsel for the Company considers necessary or
advisable to comply with the Securities Act of 1933:
The shares of stock represented by this certificate
have not been registered under the Securities Act of 1933 or
under the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt by
the Corporation of an opinion of counsel satisfactory to the
Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale or
transfer.
3
<PAGE> 4
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
The Company shall not be obligated to take any other affirmative action to
cause the exercise of the option evidenced hereby, or the issuance of shares of
Stock upon the exercise of such option, to comply with any law, statute or
regulation of any governmental authority.
6. Employment Relationship. Employee shall be considered to be in
the employment of the Company as long as he remains an employee of either the
Company, a parent or subsidiary corporation (as defined in section 424 of the
Code) of the Company, or a corporation or a parent or subsidiary of such
corporation assuming or substituting a new option for this Option in a
transaction to which section 424(a) of the Code applies. Any question as to
whether and when there has been a termination of such employment, and the cause
of such termination, shall be determined by the Board of Directors of the
employing corporation, and its determination shall be final.
7. Withholding of Tax. Upon an exercise of this Option, the
Company (or the employing corporation) may be required to withhold United
States federal and local tax with respect to the realization of compensation
pursuant to Paragraph 4. The Company (or the employing corporation) is hereby
authorized to satisfy any such withholding requirement out of (i) any cash
distributable upon such exercise and (ii) any other cash compensation then or
thereafter payable to Employee. To the extent that the Company in its sole
discretion determines that such sources are or may be insufficient to fully
satisfy such withholding requirement, Employee, as a condition to the exercise
of this Option, shall deliver to the Company cash in an amount determined by
the Company to be sufficient to satisfy any such withholding requirement.
8. Disqualifying Disposition. In the event Employee disposes of
any of the shares of Stock acquired pursuant to an exercise of this Option
(other than pursuant to Paragraph 4) prior to the later of (i) two years from
the date of grant of this Option or (ii) one year after the transfer of such
shares to him, Employee shall notify the Company not later than 10 days after
the date of such disposition of all the terms and conditions of such
disposition. The Company (or the employing corporation) is hereby authorized
to satisfy any requirement to withhold United States federal or local tax with
respect to the realization of compensation by reason of such disposition out of
any cash compensation then or thereafter payable to Employee. To the extent
that the Company in its sole discretion determines that such cash compensation
is or may be insufficient to fully satisfy such withholding requirement, upon
request from the Company Employee shall deliver to the Company cash in an
amount determined by the Company to be sufficient to satisfy such withholding
requirement.
9. Binding Effect. This Agreement shall be binding upon and
insure to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.
4
<PAGE> 5
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and Employee has executed
this Agreement, all on the day and year first above written.
GULFMARK INTERNATIONAL, INC.
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
-------------------------------
Name of Employee
Optionee
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<PAGE> 1
EXHIBIT 10.5
AMENDMENT NO. 1 TO INCENTIVE STOCK OPTION AGREEMENT
(1987 Stock Option Plan, as amended)
This AMENDMENT NO. 1 TO INCENTIVE STOCK OPTION AGREEMENT (the
"Amendment") is executed this 6th day of May, 1997, but effective as of April
30, 1997 (the "Distribution Date"), between GULFMARK OFFSHORE, INC., a Delaware
corporation ("GulfMark"), and ___________________ (the "Employee").
W I T N E S S E T H:
WHEREAS, pursuant to a Stock Option Agreement dated ____________,
19___ (the "Original Stock Option Agreement") between GulfMark International,
Inc. (the "Predecessor") and the Employee, the Employee received options to
purchase, on the terms and conditions more particularly set forth therein, an
aggregate of _____ shares of common stock, $1.00 par value, of the Predecessor
at an exercise price of $_____ per share, all [______ shares] of which remain
unexercised; and
WHEREAS, the parties desire to amend the Original Stock Option
Agreement as contemplated by that certain Instrument of Assumption and
Adjustment dated April 30, 1997 (the "Instrument of Assumption and Adjustment")
executed by GulfMark, pursuant to which GulfMark adopted and assumed the 1987
Stock Option Plan, as amended (the "Stock Option Plan") of the Predecessor,
with appropriate antidilution adjustments to the number of shares covered by,
and the exercise price of, each outstanding stock option.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and on the terms herein set forth, the parties hereby agree as
follows:
1. Effective as of the Distribution Date, GulfMark hereby
assumes, and the Employee hereby consents to the assumption by GulfMark of, the
obligations of the Predecessor under the Original Stock Option Agreement and
the outstanding stock options evidenced thereby.
2. GulfMark and the Employee acknowledge and agree to the
amendments to the Original Stock Option Agreement as set forth in the
Instrument of Assumption and Adjustment.
3. GulfMark and the Employee further acknowledge and agree that
effective as of the Distribution Date, and in accordance with the antidilution
adjustment provisions of the Stock Option Plan and pursuant to the adjustments
set forth in the Instrument of Assumption and Adjustment, the unexercised
outstanding options evidenced by the Original Stock Option Agreement constitute
options to purchase an aggregate of _____ shares of common stock, $0.01 par
value, of GulfMark, at an exercise price of $_____ per share.
-1-
<PAGE> 2
4. Except as otherwise specifically provided herein, the
remaining terms and conditions of the outstanding options evidenced by the
Original Stock Option Agreement, including without limitation vesting and
exercise provisions, shall remain unchanged.
5. The Employee does hereby fully RELEASE AND DISCHARGE the
Predecessor, effective as of the Distribution Date, from any and all
obligations of any kind whatsoever pursuant to the Original Stock Option
Agreement and agrees that from and after the Distribution Date, neither the
Predecessor nor Energy Ventures, Inc. shall have any obligation whatsoever to
the Employee pursuant to the Original Stock Option Agreement, including without
limitation any obligation to issue any common stock of the Predecessor or
Energy Ventures, Inc. to the Employee upon exercise of stock options evidenced
by the Original Stock Option Agreement, as amended hereby.
6. This instrument is executed and shall constitute an instrument
supplemental to and in amendment of the Original Stock Option Agreement and
shall be construed with and as a part of the Original Stock Option Agreement.
7. Except as modified and expressly amended by this Amendment,
the Instrument of Assumption and Adjustment and any other supplement or
amendment, the Original Stock Option Agreement is in all respects ratified and
confirmed, and all of the terms provisions and conditions thereof shall be and
remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first above mentioned.
GULFMARK OFFSHORE, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
EMPLOYEE:
----------------------------------------
Name of Employee
- 2 -
<PAGE> 1
EXHIBIT 10.6
INCENTIVE STOCK OPTION AGREEMENT
This Agreement, dated as of _________________, 19__, by and
between GulfMark Offshore, Inc., a Delaware corporation (formerly GulfMark
International, Inc. and Gulf Applied Technologies, Inc., the "Company"), and
_______________ ("Employee").
To carry out the purposes of the GulfMark Offshore, Inc. 1987 Employee
Stock Option Plan (the "Plan") by affording Employee the opportunity to
purchase shares of the $0.01 par value common stock of the Company ("Stock"),
the Company and Employee hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to
Employee the right and option ("Option") to purchase all or any part of an
aggregate of ___________(____) shares of Stock, on the terms and conditions
set forth herein and in the Plan. This Option is intended to constitute an
incentive stock option within the meaning of section 422(b) of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price of Stock purchased
pursuant to the exercise of this Option shall be $__________ per share, which
is deemed to be not less than the fair market value of the Stock subject to
this Option.
3. Exercise of Option. Subject to the earlier expiration of this
Option as herein provided, this Option may be exercised, by written notice to
the Company, at any time and from time to time, but this Option shall not be
exercisable for more than a percentage of the aggregate number of shares
offered by this Option determined by the number of full years from the date of
grant hereof to the date of such exercise, in accordance with the following
schedule:
<TABLE>
<CAPTION>
Number of Full Years Percentage of Shares
From Date of Grant Purchasable
-------------------- --------------------
<S> <C>
less than 1 year -0-
1 year 33 1/3%
2 years 66 2/3%
3 years or more 100%
</TABLE>
This option is not transferable by Employee otherwise than by will or the laws
of descent and distribution, and may be exercised only by Employee during his
lifetime and while he remains an employee of the Company, except that:
(a) If Employee's employment with the Company terminates for any
reason other than disability or death, his Option may be
exercised by Employee (or his estate or the
1
<PAGE> 2
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
person who acquires this Option by bequest or inheritance or
by reason of the death of Employee) at any time during the
period of three months following such termination, but only as
to the number of shares Employee was entitled to purchase
hereunder as of the date his employment so terminates.
(b) If Employee's employment with the Company terminates by reason
of disability (within the meaning of section 22(e) (3) of the
Code), this Option may be exercised by Employee (or his estate
or the person who acquires this Option by bequest or
inheritance or by reason of the death of Employee) at any time
during the period of one year following such termination, but
only as to the number of shares Employee was entitled to
purchase hereunder as of the date his employment so
terminates.
(c) If Employee dies while in the employ of the Company, his
estate, or the person who acquires this Option by bequest or
inheritance or by reason of the death of Employee, may
exercise this Option at any time during the period of one year
following the date of Employee's death, but only as to the
number of shares Employee was entitled to purchase hereunder
as of the date of his death.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. Except as provided in Paragraph 4, the
purchase price of shares as to which this Option is exercised shall be paid in
full in cash at the time of such exercise or, if Employee so elects, payment of
the purchase price may be made, in whole or in part, by delivery of a number of
shares of Stock (plus cash if necessary) having a fair market value equal to
such purchase price or part thereof. Unless and until a certificate or
certificates representing such shares shall have been issued by the Company to
him, Employee (or the person permitted to exercise this Option in the event of
the Employee's death) shall not be or have any of the rights or privileges of a
stockholder of the Company with respect to shares acquirable upon the exercise
of this Option.
4. Stock Appreciation Right. Upon an exercise of this Option,
Employee (or the person permitted to exercise this Option in the event of
Employee's death), in the notice given to the Company exercising this Option,
may request that the Company distribute to him, in lieu of any number of the
shares of Stock with respect to which this Option is exercised, an amount (the
"Appreciation Amount") equal to the excess of the aggregate fair market value
of such number of shares over the aggregate option price of such shares.
Within 30 days after such notice is given, the committee appointed by the Board
of Directors of the Company to administer the Plan (the "Committee") shall give
notice to the Employee (or such person) either approving or disapproving such
request. If such request is disapproved, the notice given by Employee (or such
person) exercising this Option shall be treated as if it had never been given.
If such request is approved, the Company shall distribute to Employee (or such
person) an amount of cash and/or a number of shares of Stock equal in value in
the aggregate to the Appreciation Amount; the composition of the
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<PAGE> 3
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
Appreciation Amount as between cash and shares of Stock shall be determined in
the discretion of the Committee, but the Committee may take into account any
preference for cash and/or shares of Stock expressed by Employee (or such
person) in the notice given to the Company exercising this Option. For
purposes of both determining the Appreciation Amount and determining the number
of shares of Stock distributed in satisfaction of the Appreciation Amount, the
fair market value of a share of Stock shall be equal to the mean between the
high and low quoted selling prices of Stock on the day on which Employee (or
such person) gives notice exercising this Option or, if no selling prices are
so quoted on such day, on the next preceding day on which selling prices of
Stock are so quoted.
5. Status of Stock. The Company shall not be required to issue
any shares of Stock upon the exercise of the option evidenced hereby if the
issuance of such shares of Stock would constitute or result in a violation by
the Company, or by the Employee, of any provision of any applicable law,
statute or regulation of any governmental authority.
Upon the exercise of the option evidenced hereby, the Company shall not be
required to issue any shares of Stock unless the Committee shall have received
evidence satisfactory to it that the Employee will not transfer such shares of
Stock until a registration statement with respect to such shares of Stock shall
have become effective under the Securities Act of 1933 or until an opinion of
counsel satisfactory to the Company shall have been received by the Company to
the effect that such registration is not required. Any determination in the
connection by the Committee shall be final, binding and conclusive.
The Company may, but shall in no event be obligated to, register under the
Securities Act of 1933, or register or otherwise qualify for sale under the
securities laws of any state, the shares of Stock issuable upon the exercise of
the option evidenced hereby. If any shares of Stock issuable upon the exercise
of such option are not registered under the Securities Act of 1933, the Company
may imprint on the certificates representing such shares of Stock the following
legend or any other legend that counsel for the Company considers necessary or
advisable to comply with the Securities Act of 1933:
The shares of stock represented by this certificate
have not been registered under the Securities Act of 1933 or
under the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt by
the Corporation of an opinion of counsel satisfactory to the
Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale
or transfer.
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<PAGE> 4
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
The Company shall not be obligated to take any other affirmative action to
cause the exercise of the option evidenced hereby, or the issuance of shares of
Stock upon the exercise of such option, to comply with any law, statute or
regulation of any governmental authority.
6. Employment Relationship. Employee shall be considered to be
in the employment of the Company as long as he remains an employee of either
the Company, a parent or subsidiary corporation (as defined in section 424 of
the Code) of the Company, or a corporation or a parent or subsidiary of such
corporation assuming or substituting a new option for this Option in a
transaction to which section 424(a) of the Code applies. Any question as to
whether and when there has been a termination of such employment, and the cause
of such termination, shall be determined by the Board of Directors of the
employing corporation, and its determination shall be final.
7. Withholding of Tax. Upon an exercise of this Option, the
Company (or the employing corporation) may be required to withhold United
States federal and local tax with respect to the realization of compensation
pursuant to Paragraph 4. The Company (or the employing corporation) is hereby
authorized to satisfy any such withholding requirement out of (i) any cash
distributable upon such exercise and (ii) any other cash compensation then or
thereafter payable to Employee. To the extent that the Company in its sole
discretion determines that such sources are or may be insufficient to fully
satisfy such withholding requirement, Employee, as a condition to the exercise
of this Option, shall deliver to the Company cash in an amount determined by
the Company to be sufficient to satisfy any such withholding requirement.
8. Disqualifying Disposition. In the event Employee disposes of
any of the shares of Stock acquired pursuant to an exercise of this Option
(other than pursuant to Paragraph 4) prior to the later of (i) two years from
the date of grant of this Option or (ii) one year after the transfer of such
shares to him, Employee shall notify the Company not later than 10 days after
the date of such disposition of all the terms and conditions of such
disposition. The Company (or the employing corporation) is hereby authorized
to satisfy any requirement to withhold United States federal or local tax with
respect to the realization of compensation by reason of such disposition out of
any cash compensation then or thereafter payable to Employee. To the extent
that the Company in its sole discretion determines that such cash compensation
is or may be insufficient to fully satisfy such withholding requirement, upon
request from the Company Employee shall deliver to the Company cash in an
amount determined by the Company to be sufficient to satisfy such withholding
requirement.
9. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.
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<PAGE> 5
GulfMark International, Inc.
INCENTIVE STOCK OPTION AGREEMENT
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and Employee has executed
this Agreement, all on the day and year first above written.
GULFMARK OFFSHORE, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
OPTIONEE
---------------------------------------
Name of Employee
5
<PAGE> 1
EXHIBIT 10.7
GULFMARK INTERNATIONAL, INC.
AMENDED AND RESTATED 1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. This Amended and Restated 1993 Non-Employee Director Stock
Option Plan (the "Plan") of GulfMark International, Inc., a Delaware
corporation (the "Company"), is adopted, subject to stockholder approval as
required by Paragraph 16 hereof, for the benefit of the directors of the
Company who at the time of their service are not employees of the Company or
any of its subsidiaries ("Non-Employee Directors"), and is intended to advance
the interests of the Company by providing the Non-Employee Directors with
additional incentive to serve the Company by increasing their proprietary
interest in the success of the Company.
2. Administration. The Plan shall be administered by a committee of
the Board of Directors of the Company (the "Committee") consisting of two or
more Directors. For the purposes of the Plan, a majority of the members of the
Committee shall constitute a quorum for the transaction of business, and the
vote of a majority of those members present at any meeting shall decide any
question brought before that meeting. In addition, the Committee may take any
action otherwise proper under the Plan by the affirmative vote, taken without a
meeting, of a majority of its members. No member of the Committee shall be
liable for any act or omission of any other member of the Committee or for any
act or omission on his or her own part, including but not limited to the
exercise of any power or discretion given to him or her under the Plan, except
those resulting from his or her own gross negligence or willful misconduct.
Except as otherwise expressly provided for herein, all questions of
interpretation and application of the Plan, or as to options granted hereunder
(the "Options"), shall be subject to the determination, which shall be final
and binding, of a majority of the whole Committee. Notwithstanding the above,
the selection of Non-Employee Directors to whom Options are to be granted, the
number of shares subject to any Option, the exercise price of any Option and
the term of any Option shall be as hereinafter provided and the Committee shall
have no discretion as to such matters.
3. Option Shares. The stock subject to the Options and other
provisions of the Plan shall be shares of the Company's Common Stock, $1.00 par
value (or such other par value as may be designated by act of the Company's
stockholders) (the "Common Stock"). The total amount of the Common Stock with
respect to which Options may be granted shall not exceed in the aggregate
200,000 shares; provided, that the class and aggregate number of shares which
may be subject to the Options granted hereunder shall be subject to adjustment
in accordance with the provisions of Paragraph 12 hereof. Such shares may be
treasury shares or authorized but unissued shares.
In the event that any outstanding Option for any reason shall expire or
terminate by reason of the death of the optionee or the fact that the optionee
ceases to be a director, the surrender of any such Option, or any other cause,
the shares of Common Stock allocable to the unexercised portion of such Option
may again be subject to an Option under the Plan.
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<PAGE> 2
4. Grant of Options. Subject to the provisions of Paragraph 16 and the
availability under the Plan of a sufficient number of shares of Common Stock
that may be issuable upon the exercise of outstanding Options, there shall be
granted:
(a) To each Non-Employee Director as of December 8, 1993, an Option to
purchase 5,000 shares of Common Stock at a price per share of Common
Stock (the "Option Price") equal to the fair market value of the
Common Stock, as defined in Paragraph 7 hereof, as of the date of
grant; and
(b) To each Non-Employee Director who is first elected as a director of
the Company after March 18, 1996, as of the date he or she is first
elected as a director of the Company, an Option to purchase 5,000
shares of Common Stock at an Option Price equal to the fair market
value of the Common Stock, as defined in Paragraph 7 hereof, as of
the date of grant; and
(c) To each Non-Employee Director as of March 18, 1996 an Option to
purchase 5,000 shares of Common Stock at an Option Price equal to
the fair market value of the Common Stock, as defined in Paragraph 7
hereof, on March 18, 1996, the date of grant; and
(d) On the dates of the Annual Meetings of Stockholders of the Company
held in 1999, 2002 and 2005 to each Non-Employee Director as of such
dates who is reelected as a director of the Company, an Option to
purchase 5,000 shares of Common Stock at an Option Price equal to
the fair market value of the Common Stock, as defined in Paragraph 7
hereof, as of the date of grant.
No Option shall be granted pursuant to the Plan after December 8, 2005.
5. Duration of Options. Each Option granted under the Plan shall be
exercisable for a term of ten years from the date of grant, subject to earlier
termination as provided in Paragraph 9 hereof.
6. Amount Exercisable. At any time following the first anniversary of
the date of an Option's grant until the Option terminates as provided in
Paragraph 9, each Option granted pursuant to the Plan shall be deemed fully
vested and may be exercised in whole or in part.
7. Exercise of Options. An optionee may exercise such optionee's
Option by delivering to the Company a written notice stating (i) that such
optionee wishes to exercise such Option on the date such notice is so
delivered, (ii) the number of shares of stock with respect to which such Option
is to be exercised, (iii) the address to which the certificate representing
such shares of stock should be mailed, and (iv) the social security number of
such optionee. In order to be effective, such written notice shall be
accompanied by (i) payment of the Option Price of such shares of stock and (ii)
if applicable, payment of an amount of money necessary to satisfy any
withholding tax liability that may result from the exercise of such Option.
Each such payment shall be made by cashier's
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<PAGE> 3
check drawn on a national banking association and payable to the order of the
Company in United States dollars.
If, at the time of receipt by the Company of such written notice, (i) the
Company has unrestricted surplus in an amount not less than the Option Price of
such shares of stock, (ii) all accrued cumulative preferential dividends and
other current preferential dividends on all outstanding shares of preferred
stock of the Company have been fully paid, (iii) the acquisition by the Company
of its own shares of stock for the purpose of enabling such optionee to
exercise such Option is otherwise permitted by applicable law and without any
vote or consent of any stockholder of the Company, and (iv) there shall have
been adopted, and there shall be in full force and effect, a resolution of the
Board of Directors of the Company authorizing the acquisition by the Company of
its own shares of stock for such purpose, then such optionee may deliver to the
Company, in payment of the Option Price of the shares of stock with respect to
which such Option is exercised, (x) certificates registered in the name of such
optionee that represent a number of shares of stock legally and beneficially
owned by such optionee (free of all liens, claims and encumbrances of every
kind) and having a fair market value on the date of receipt by the Company of
such written notice that is not greater than the Option Price of the shares of
stock with respect to which such Option is to be exercised, such certificates
to be accompanied by stock powers duly endorsed in blank by the record holder
of the shares of stock represented by such certificates, with the signature of
such record holder guaranteed by a national banking association (or, in lieu of
such certificates, other arrangements for the transfer of such shares to the
Company which are satisfactory to the Company) and (y) if the Option Price of
the shares of stock with respect to which such Options are to be exercised
exceeds such fair market value, a cashier's check drawn on a national banking
association and payable to the order of the Company in an amount, in United
States dollars, equal to the amount of such excess plus the amount of money
necessary to satisfy any withholding tax liability that may result from the
exercise of such Option. Notwithstanding the provisions of the immediately
preceding sentence, the Committee, in its sole discretion, may refuse to accept
shares of stock in payment of the Option Price of the shares of stock with
respect to which such Option is to be exercised and, in that event, any
certificates representing shares of stock that were received by the Company
with such written notice shall be returned to such optionee, together with
notice by the Company to such optionee of the refusal of the Committee to
accept such shares of stock. The Company may, at its option and upon approval
by the Board of Directors of the Company, retain shares of Common Stock which
would otherwise be issued upon exercise of an Option to satisfy any withholding
tax liability that may result from the exercise of such Option, which shares
shall be valued for such purpose at their then fair market value. If, at the
expiration of seven business days after the delivery to such optionee of such
written notice from the Company, such optionee shall not have delivered to the
Company a cashier's check drawn on a national banking association and payable
to the order of the Company in an amount, in United States dollars, equal to
the Option Price of the shares of stock with respect to which such Option is to
be exercised, such written notice from the optionee to the Company shall be
ineffective to exercise such Option.
As promptly as practicable after the receipt by the Company of (i) such
written notice from the optionee, (ii) payment, in the form required by the
foregoing provisions of this Paragraph 7, of the Option Price of the shares of
stock with respect to which such Option is to be exercised, and (iii)
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<PAGE> 4
payment, in the form required by the foregoing provisions of this Paragraph 7,
of an amount necessary to satisfy any withholding tax liability that may result
from the exercise of such Option, a certificate representing the number of
shares of stock with respect to which such Option has been so exercised,
reduced, to the extent applicable by the number of shares retained by the
Company to pay any required withholding tax, such certificate to be registered
in the name of such optionee, provided that such delivery shall be considered
to have been made when such certificate shall have been mailed, postage
prepaid, to such optionee at the address specified for such purpose in such
written notice from the optionee to the Company.
For purposes of this Paragraph 7, the "fair market value" of a share of
stock as of any particular date shall mean the average of the high and low
sales price of a share of Common Stock on that date as reported on The Nasdaq
Stock Market or the closing price of a share of Common Stock on any national
securities exchange if the Common Stock is then listed on a national securities
exchange, provided that if no such prices are so reported on that date or if,
in the discretion of the Committee, another means of determining the fair
market value of a share of stock at such date shall be necessary or advisable,
the Committee may provide for another means for determining such fair market
value.
8. Transferability of Options. Options shall not be transferable by
the optionee otherwise than by will or under the laws of descent and
distribution, and shall be exercisable, during his or her lifetime, only by him
or her.
9. Termination. Except as may be otherwise expressly provided herein,
each Option, to the extent it shall not previously have been exercised, shall
terminate on the earlier of the following:
(a) In the event that approval of the Plan by the stockholders of the
Company is required by Paragraph 16 hereof and shall not have been
obtained by such date;
(b) On the last day within the three month period commencing on the date
on which the optionee ceases to be a member of the Company's Board
of Directors, for any reason other than retirement meeting the
conditions of length of service set forth in Subparagraph 9(e)
below, or the death or disability of the optionee; during which
period the optionee shall be entitled to exercise all Options which
were fully vested on the date on which the optionee ceased on the
date to be a member of the Company's Board of Directors;
(c) On the last day within the one year period commencing on the date on
which the optionee ceases to be a member of the Company's Board of
Directors because of permanent disability, during which period the
optionee shall be entitled to exercise all Options which were fully
vested on the date on which the optionee ceased to be a member of
the Company's Board of Directors because of such disability;
(d) On the last day of the one year period commencing on the date of the
optionee's death while serving as a member of the Company's Board of
Directors, during which period the executor or administrator of the
optionee's estate or the person or persons to whom the
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<PAGE> 5
optionee's Option shall have been transferred by will or the laws of
descent or distribution, shall be entitled to exercise all Options
in respect of the number of shares that the optionee would have been
entitled to purchase had the optionee exercised such Options on the
date of his or her death;
(e) On the last day within the one year period commencing on the date
the optionee who has completed at least five (5) years of service on
the Board of Directors retires from the Board of Directors of the
Company, during which period the optionee, or the executor or
administrator of the optionee's estate or the person or persons to
whom such Option shall have been transferred by the will or the laws
of descent or distribution in the event of the optionee's death
within such one year period, as the case may be, shall be entitled
to exercise all Options in respect of the number of shares that the
optionee would have been entitled to purchase had the optionee
exercised such Options on the date of such retirement; and
(f) Ten years after the date of grant of such Option.
10. Requirements of Law. The Company shall not be required to sell or
issue any shares under any Option if the issuance of such shares shall
constitute a violation by the optionee or the Company of any provisions of any
law or regulation of any governmental authority. Each Option granted under the
Plan shall be subject to the requirements that, if at any time the Board of
Directors of the Company or the Committee shall determine that the listing,
registration or qualification of the shares subject thereto upon any securities
exchange or under any state or federal law of the United States or of any other
country or governmental subdivision thereof, or the consent or approval of any
governmental regulatory body, or investment or other representations, are
necessary or desirable in connection with the issue or purchase of shares
subject thereto, no such Option may be exercised in whole or in part unless
such listing, registration, qualification, consent, approval or representation
shall have been effected or obtained free of any conditions not acceptable to
the Board of Directors. If required at any time by the Board of Directors or
the Committee, an Option may not be exercised until the optionee has delivered
an investment letter to the Company. In addition, specifically in connection
with the Securities Act of 1933 (as now in effect or hereafter amended), upon
exercise of any Option, the Company shall not be required to issue the
underlying shares unless the Committee has received evidence satisfactory to it
to the effect that the holder of such Option will not transfer such shares
except pursuant to a registration statement in effect under such Act or unless
an opinion of counsel satisfactory to the Company has been received by the
Committee to the effect that such registration is not required. Any
determination in this connection by the Committee shall be final, binding and
conclusive. In the event the shares issuable on exercise of an Option are not
registered under the Securities Act of 1933, the Company may imprint on the
certificate for such shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act of 1933:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities laws
of any state and may not be sold or transferred except upon such
registration or upon receipt by the Corporation of an opinion
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<PAGE> 6
of counsel satisfactory, in form and substance to the Corporation, that
registration is not required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended) and, in the event any shares are so registered,
the Company may remove any legend on certificates representing such shares.
The Company shall not be obligated to take any other affirmative action in
order to cause the exercise of an Option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental authority.
11. No Rights as Stockholder. No optionee shall have rights as a
stockholder with respect to shares covered by his or her Option until the date
of issuance of a stock certificate for such shares; and, except as otherwise
provided in Paragraph 12 hereof, no adjustment for dividends, or otherwise,
shall be made if the record date therefor is prior to the date of issuance of
such certificate.
12. Changes in the Company's Capital Structure. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital adjustment of, or the payment of a dividend in capital stock or
other equity securities of the Company on, its Common Stock, or other increase
or reduction of the number of shares of the Common Stock without receiving
consideration therefor in money, services, or property, or the reclassification
of its Common Stock, in whole or in part, into other equity securities of the
Company, then (a) the number, class and per share price of shares of stock
subject to outstanding Options hereunder shall be appropriately adjusted (or in
the case of the issuance of equity securities as a dividend on, or in a
reclassification of, the Common Stock, the Options shall extend to such other
securities) in such a manner as to entitle an optionee to receive, upon
exercise of an Option, for the same aggregate cash compensation, the same total
number and class or classes of shares (or in the case of a dividend of, or
reclassification into, other equity securities, such other securities) he or
she would have held after such adjustment if he or she had exercised his or her
Option in full immediately prior to the event requiring the adjustment, or, if
applicable, the record date for determining stockholders to be affected by such
adjustment; and (b) the number and class of shares then reserved for issuance
under the Plan (or in the case of a dividend of, or reclassification into,
other equity securities, such other securities) shall be adjusted by
substituting for the total number and class of shares of stock then received,
the number and class or classes of shares of stock (or in the case of a
dividend of, or reclassification into, other equity securities, such other
securities) that would have been received by the owner of an equal number of
outstanding shares of Common Stock as the result of the event requiring the
adjustment. Comparable rights shall accrue to each optionee in the event of
successive
6
<PAGE> 7
subdivisions, consolidations, capital adjustment, dividends or reclassification
of the character described above.
If the Company shall distribute to all holders of its shares of Common
Stock (including any such distribution made to non-dissenting stockholders in
connection with a consolidation or merger in which the Company is the surviving
corporation and in which holders of shares of Common Stock continue to hold
shares of Common Stock after such merger or consolidation) evidences of
indebtedness or cash or other assets (other than cash dividends payable out of
consolidated retained earnings not in excess of, in any one year period, the
greater of (a) $1.00 per share of Common Stock and (b) two times the aggregate
amount of dividends per share paid during the preceding calendar year and
dividends or distributions payable in shares of Common Stock or other equity
securities of the Company described in the immediately preceding paragraph),
then in each case the Option Price shall be adjusted by reducing the Option
Price in effect immediately prior to the record date for the determination of
stockholders entitled to receive such distribution by the fair market value, as
determined in good faith by the Board of Directors of the Company (whose
determination shall be described in a statement filed in the Company's
corporate records and be available for inspection by any holder of an Option)
of the portion of the evidence of indebtedness or cash or other assets so to be
distributed applicable to one share of Common Stock; provided that in no event
shall the Option Price be less than the par value of a share of Common Stock.
Such adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of the distribution retroactive to the record date
for the determination of the stockholders entitled to receive such
distribution. Comparable adjustments shall be made in the event of successive
distributions of the character described above.
After the Company shall make a tender offer for, or grant to all of its
holders of its shares of Common Stock the right to require the Company to
acquire from such stockholders shares of, Common Stock, at a price in excess of
the Current Market Price (a "Put Right") or the Company shall grant to all of
its holders of its shares of Common Stock the right to acquire shares of Common
Stock for less than the Current Market Price (a "Purchase Right") then, in the
case of a Put Right, the Option Price shall be adjusted by multiplying the
Option Price in effect immediately prior to the record date for the
determination of stockholders entitled to receive such Put Right by a fraction,
the numerator of which shall be the number of shares of Common Stock then
outstanding minus the number of shares of Common Stock which could be purchased
at the Current Market Price for the aggregate amount which would be paid if all
Put Rights are exercised and the denominator of which is the number of shares
of Common Stock which would be outstanding if all Put Rights are exercised;
and, in the case of a Purchase Right, the Option Price shall be adjusted by
multiplying the Option Price in effect immediately prior to the record date for
the determination of the stockholders entitled to receive such Purchase Right
by a fraction, the numerator of which shall be the number of shares of Common
Stock then outstanding plus the number of shares of Common Stock which could be
purchased at the Current Market Price for the aggregate amount which would be
paid if all Purchase Rights are exercised and the denominator of which is the
number of shares of Common Stock which would be outstanding if all Purchase
Rights are exercised. In addition, the number of shares subject to the Option
shall be increased by multiplying the number of shares then subject to the
Option by a fraction which is the inverse of the fraction used to adjust the
Option
7
<PAGE> 8
Price. Notwithstanding the foregoing if any such Put Rights or Purchase Rights
shall terminate without being exercised, the Option Price and number of shares
subject to Option shall be appropriately readjusted to reflect the Option Price
and number of shares subject to the Option which would have been in effect if
such unexercised Rights had never existed. Comparable adjustments shall be
made in the event of successive transactions of the character described above.
After the merger of one or more corporations into the Company, after any
consolidation of the Company and one or more corporations, or after any other
corporate transaction described in Section 424(a) of the Internal Revenue Code
of 1986, as amended (the "Code") in which the Company shall be the surviving
corporation, each optionee, at no additional cost, shall be entitled to
receive, upon any exercise of his or her Option, in lieu of the number of
shares as to which the Option shall then be so exercised, the number and class
of shares of stock or other equity securities to which the optionee would have
been entitled pursuant to the terms of the agreement of merger or consolidation
if at the time of such merger or consolidation such optionee had been a holder
of a number of shares of Common Stock equal to the number of shares as to which
the Option shall then be so exercised and, if as a result of such merger,
consolidation or other transaction, the holders of Common Stock are not
entitled to receive any shares of Common Stock pursuant to the terms thereof,
each optionee, at no additional cost, shall be entitled to receive, upon
exercise of his or her Option, such other assets and property, including cash,
to which he or she would have been entitled if at the time of such merger,
consolidation or other transaction he or she had been the holder of the number
of shares of Common Stock equal to the number of shares as to which the Option
shall then be so exercised. Comparable rights shall accrue to each optionee in
the event of successive mergers or consolidations of the character described
above.
After a merger of the Company into one or more corporations, after any
consolidation of the Company and any one or more corporations, or after any
other corporate transaction described in Section 424(a) of the Code in which
the Company is not the surviving corporation, each optionee shall, at no
additional cost, be entitled at the option of the surviving corporation, (i) to
have his or her then existing Option assumed or to have a new option
substituted for the existing Option by the surviving corporation to the
transaction of which he or she is then serving as a director, or a parent or
subsidiary of such corporation, on a basis where the excess of the aggregate
fair market value of the shares subject to the option immediately after the
substitution or assumption over the aggregate option price of such option is
equal to the excess of the aggregate fair market value of all shares subject to
the option immediately before such substitution or assumption over the
aggregate option price of such shares, provided that the shares subject to the
new option must be traded on the New York or American Stock Exchange or quoted
on The Nasdaq Stock Market, or (ii) to receive upon any exercise of his or her
Option, in lieu of the number of shares as to which the Option shall then be so
exercised, the securities, property and other assets, including cash, to which
the Optionee would have been entitled pursuant to the terms of the agreement of
merger or consolidation or the agreement giving rise to the other corporate
transaction if at the time of such merger, consolidation or other transaction
such optionee had been the holder of the number of shares of Common Stock equal
to the number of shares as to which the Option shall then be so exercised.
8
<PAGE> 9
If a corporate transaction described in Section 424(a) of the Code which
involves the Company is to take place and there is to be no surviving
corporation while an Option remains in whole or in part unexercised, it shall
be canceled by the Board of Directors as of the effective date of any such
corporate transaction but before the date each optionee shall be provided with
a notice of such cancellation and each optionee shall have the right to
exercise such Option in full (without regard to any limitations set forth in or
imposed pursuant to Paragraph 9 of the Plan) to the extent it is then still
unexercised during a 30-day period preceding the effective date of such
corporate transaction.
For purposes of this Paragraph 12, Current Market Price per share of
Common Stock shall mean the average high and low sales price of a share of
Common Stock as reported in The Nasdaq Stock Market or the closing price of any
national securities exchange if the Common Stock is then listed on a national
securities exchange on the trading day immediately preceding the first trading
day on which, as a result of the establishment of a record date or otherwise,
the trading price reflects that an acquiror of Common Stock in the public
market will not participate in or receive the payment of any applicable
dividend or distribution.
Except as hereinbefore expressly provided, the issue by the Company of
shares of Common Stock of any class, or securities convertible into shares of
stock of any class, for cash or property, or for labor or services either upon
direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock then subject to outstanding Options.
13. Amendment or Termination of Plan. The Board of Directors may
modify, revise or terminate the Plan at any time and from time to time;
provided, however, that without the further approval of the holders of at least
a majority of the outstanding shares of voting stock, or if the provisions of
the corporate charter, by-laws or applicable state law prescribes a greater
degree of stockholder approval for this action, without the degree of
stockholder approval thus required, the Board of Directors may not (a) change
the aggregate number of shares which may be issued under Options pursuant to
the provisions of the Plan; (b) reduce the option price permitted for the
Options; (c) extend the term during which an option may be exercised or the
termination date of the Plan; or (d) materially increase any other benefits
accruing to directors under the Plan or materially modify the requirements as
to eligibility for participation in the Plan unless, in each such case, the
Board of Directors of the Company shall have obtained an opinion of legal
counsel to the effect that stockholder approval of the amendment is not
required (i) by law, (ii) by the applicable rules and regulations of, or any
agreement with, the National Association of Securities Dealers, Inc. if the
Common Stock is not then listed on any national securities exchange or if the
Common Stock is so listed, the rules and regulations, or any agreement with,
such securities exchange, and (iii) in order to make available to the optionee
with respect to any option granted under the Plan, the benefits of Rule 16b-3
of the Rules and Regulations under the Securities Exchange Act of 1934, or any
similar or successor rule. In addition, the terms of the Plan relating to the
number of shares that may be subject to an Option, the times at which Options
shall be granted, and the means by which the Option Price for Options granted
is to be determined shall not be amended more than once every six
9
<PAGE> 10
months, other than to comport with changes in the Code, the Employee Retirement
Income Security Act or the rules thereunder.
14. Written Agreement. Each Option granted hereunder shall be embodied
in a written option agreement, which shall be subject to the terms and
conditions prescribed above, and shall be signed by the optionee and by the
appropriate officer of the Company for and in the name and on behalf of the
Company. Such an option agreement shall contain such other provisions as the
Committee in its discretion shall deem advisable.
15. Indemnification of Committee. The Company shall indemnify each
present and future member of the Committee against, and each member of the
Committee shall be entitled without further act on his or her part to indemnity
from the Company for, all expenses (including the amount of judgments and the
amount of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him or her in connection with or arising out of any action, suit or
proceeding in which he or she may be involved by reason of his or her being or
having been a member of the Committee, whether or not he or she continues to
be such member of the Committee at the time of incurring such expenses;
provided, however, that such indemnity shall not include any expenses incurred
by any such member of the Committee (a) in respect of matters as to which he or
she shall be finally adjudged in any such action, suit or proceeding to have
been guilty of gross negligence or willful misconduct in the performance of his
or her duty as such member of the Committee, or (b) in respect of any matter in
which any settlement is effected, to an amount in excess of the amount approved
by the Company on the advice of its legal counsel; and provided further, that
no right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee unless, within
sixty (60) days after institution of any such action, suit or proceeding, he or
she shall have offered the Company, in writing, the opportunity to handle and
defend same at its own expense. The foregoing right of indemnification shall
inure to the benefit of the heirs, executors or administrators of each such
member of the Committee and shall be in addition to all other rights to which
such member of the Committee may be entitled to as a matter of law, contract,
or otherwise. Nothing in this Paragraph 15 shall be construed to limit or
otherwise affect any right to indemnification, or payment of expense, or any
provisions limiting the liability of any officer or director of the Company or
any member of the Committee, provided by law, the Certificate of Incorporation
of the Company or otherwise.
16. Effective Date of Plan. The amendments effected by this Amended and
Restated 1993 Non-Employee Director Stock Option Plan shall be deemed to have
been adopted and effective on March 18, 1996, when and if approved by the
holders of at least a majority of the outstanding shares of voting stock of the
Company or if the provisions of the corporate charter, by-laws or applicable
state law prescribes a greater degree of stockholder approval for this action,
the approval by the holders of that percentage, at the Company's Annual Meeting
of Stockholders to be held in 1996.
10
<PAGE> 1
EXHIBIT 10.8
AMENDMENT NO. 1
TO THE
GULFMARK INTERNATIONAL, INC.
AMENDED AND RESTATED
1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
Pursuant to the terms and provisions of Section 13 of the GulfMark
International, Inc. Amended and Restated 1993 Non-Employee Director Stock
Option Plan (the "Plan"), GulfMark International, Inc., a Delaware corporation
(the "Company"), hereby adopts the following Amendment No. 1 to the Plan (the
"Amendment No. 1").
1.
The second, third, fourth, fifth, sixth, seventh and eighth paragraphs
of Section 12 of the Plan are hereby amended in their entirety by substituting
the following therefor:
"In the event of any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock
split, combination of shares, rights offering, or extraordinary
dividend or divestiture (including a spin-off), or any other change in
the corporate structure or shares of the Company, the Board of
Directors (or, if the Company is not the surviving corporation in any
such transaction, the board of directors of the surviving corporation)
shall make adjustments, determined by the Board of Directors in its
discretion to be appropriate, as to the number and kind of securities
reserved under and subject to the automatic grant provisions of the
Plan and, in order to prevent dilution or enlargement of rights of
participants, as to the number, kind and where applicable, the option
exercise price, of securities subject to outstanding awards or
securities subject to options issued in replacement of outstanding
awards."
2.
Each amendment made by this Amendment No. 1 to the Plan has been
effected in conformity with the provisions of the Plan. This Amendment No. 1
was adopted by the Board of Directors of the Company on December 5, 1996 and
approved by the stockholders of the Company on April 30, 1997.
3.
At the time of the adoption of this Amendment No. 1 to the Plan,
3,339,952 shares of the Company's common stock, $1.00 par value per share, were
outstanding and entitled to vote, 2,023,452 were represented in person or by
proxy, of which 1,999,157 shares were voted for this Amendment No. 1, 18,604
shares were voted against this Amendment No. 1 and 5,691 shares abstained from
voting.
Dated: April 30, 1997.
GULFMARK INTERNATIONAL, INC.
By: /s/ Frank R. Pierce
-----------------------------------
Frank R. Pierce
Executive Vice President
<PAGE> 1
EXHIBIT 10.9
GULFMARK OFFSHORE, INC.
INSTRUMENT OF ASSUMPTION AND ADJUSTMENT
(Amended and Restated 1993 Non-Employee Director Stock Option Plan)
This Instrument of Assumption and Adjustment (the "Assumption") is
executed by GULFMARK OFFSHORE, INC., a Delaware corporation ("New GulfMark"),
in accordance with the provisions of that certain Agreement and Plan of
Distribution dated December 5, 1995 ("Distribution Agreement") by and among
GULFMARK INTERNATIONAL, INC. ("GulfMark"), New GulfMark and ENERGY VENTURES,
INC. ("EVI") in connection with the stock distributions described below. All
capitalized terms in this Assumption shall have the meaning assigned them in
this preamble or in Paragraph 2, as applicable.
1. Purpose. The purpose of this Assumption is to effect (a) the
adoption and assumption by New GulfMark of the GulfMark Stock Option Plan as of
the Distribution Date, (b) the assumption by New GulfMark of, and the
substitution of New GulfMark Common Stock for GulfMark Common Stock with
respect to, each outstanding GulfMark Stock Option as of the Distribution Date,
(c) an adjustment in the exercise price and number of shares subject to each
outstanding GulfMark Stock Option as of the Distribution Date in accordance
with the requirements of Section 424 of the Code, as required by the
Distribution Agreement, to preserve the aggregate intrinsic value of each
option and the ratio of the exercise price to the market value per share, and
(d) an adjustment in the aggregate number of shares issued or reserved for
issuance pursuant to the Assumed Stock Option Plan in accordance with the
antidilution adjustment provisions of the GulfMark Stock Option Plan.
2. Definitions. Capitalized terms shall have the meanings
ascribed to such terms in the preamble to this Assumption and as follows:
(a) Assumed Stock Option Plan: the GulfMark
International, Inc. Amended and Restated 1993 Non-Employee Director
Stock Option Plan, as assumed and adopted by New GulfMark from and
after the Distribution Date.
(b) Code: the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
(c) Distribution: the distribution by GulfMark of all
the outstanding shares of New GulfMark Common Stock to the
stockholders of record of GulfMark Common Stock as of the record date
for the Distribution at the rate of two shares of New GulfMark Common
Stock per share of GulfMark Common Stock.
(d) Distribution Date: April 30, 1997.
(e) GulfMark Common Stock: the common stock, par value
$1.00 per share, of GulfMark.
- 1 -
<PAGE> 2
(f) GulfMark Stock Option: any option to purchase shares
of GulfMark Common Stock outstanding under the GulfMark Stock Option
Plan immediately prior to the Distribution Date.
(g) GulfMark Stock Option Agreement: any agreement
between GulfMark and a holder of GulfMark Stock Options granted
pursuant to the GulfMark Stock Option Plan.
(h) GulfMark Stock Option Plan: the GulfMark
International, Inc. Amended and Restated 1993 Non-Employee Director
Stock Option Plan.
(i) New GulfMark Adjusted Stock Option: any GulfMark
Stock Option, as adjusted and assumed by New GulfMark pursuant to this
Assumption from and after the Distribution Date.
(j) New GulfMark Common Stock: the common stock, $.01
par value per share, of New GulfMark.
3. Assumption of GulfMark Stock Option Plan, Options and
Agreements. As of the Distribution Date, New GulfMark hereby adopts and
assumes the GulfMark Stock Option Plan, all outstanding GulfMark Stock Options
granted thereunder, and all GulfMark Stock Option Agreements relating to
outstanding GulfMark Stock Options granted pursuant to the GulfMark Stock
Option Plan. From and after the Distribution Date,
(a) All references to the "Company" in the GulfMark Stock
Option Plan and in any GulfMark Stock Option Agreement shall mean New
GulfMark.
(b) All references to "Common Stock" in the GulfMark
Stock Option Plan and in any GulfMark Stock Option Agreement shall
mean the New GulfMark Common Stock.
(c) All references to "Plan" in the GulfMark Stock Option
Plan or in any GulfMark Stock Option Agreement shall mean the Assumed
Stock Option Plan.
4. Treatment of Outstanding GulfMark Stock Options. Effective as
of the Distribution Date, each outstanding GulfMark Stock Option shall
constitute a New GulfMark Adjusted Stock Option to purchase New GulfMark Common
Stock, and in accordance with the antidilution adjustment provisions of the
GulfMark Stock Option Plan, the number of shares covered by, and the exercise
price of, each GulfMark Stock Option, and the remaining terms and conditions of
each outstanding GulfMark Stock Option shall be adjusted as follows:
(a) The grant date of each New GulfMark Adjusted Stock
Option shall be the date of grant of the GulfMark Stock Option
replaced thereby, and the expiration date of each New GulfMark
Adjusted Stock Option shall be the expiration date of the GulfMark
Stock Option replaced thereby; provided,
- 2 -
<PAGE> 3
however, that service with GulfMark prior to the Distribution shall be
treated under each New GulfMark Adjusted Stock Option as service with
New GulfMark.
(b) The number of shares of New GulfMark Common Stock
covered by each New GulfMark Adjusted Stock Option shall be the number
of shares covered by the GulfMark Stock Option being replaced thereby,
multiplied by a fraction equal to the ratio of the pre-Distribution
market price per share of GulfMark Common Stock to the
post-Distribution market price per share of New GulfMark Common Stock.
(c) The per share exercise price of each New GulfMark
Adjusted Stock Option shall be the exercise price per share of the
GulfMark Stock Option being replaced thereby, multiplied by a fraction
equal to the ratio of the post-Distribution market price per share of
the New GulfMark Common Stock to the pre-Distribution market price per
share of GulfMark Common Stock.
(d) For purposes of the foregoing adjustments, (i) the
pre-Distribution market price per share of GulfMark Common Stock shall
be deemed to be the closing price per share of GulfMark Common Stock
as reported by The Nasdaq Stock Market on the last day on which
GulfMark Common Stock is traded on The Nasdaq Stock Market, and (ii)
the post-Distribution market price per share of New GulfMark Common
Stock shall be deemed to be the closing price per share of New
GulfMark Common Stock as reported by The Nasdaq Stock Market on the
first day on which New GulfMark Common Stock is traded on The Nasdaq
Stock Market following the Distribution.
(e) The vesting and exercise provisions of each New
GulfMark Adjusted Stock Option shall be identical to the vesting and
exercise provisions of the GulfMark Stock Option replaced thereby.
(f) The remaining terms and conditions of each New
GulfMark Adjusted Stock Option shall be substantially the same as in
effect for the GulfMark Stock Option replaced thereby.
5. Adjustment of Automatic Grant Provisions. Pursuant to the
antidilution adjustment provisions of the GulfMark Stock Option Plan, each
automatic grant pursuant to Section 4 of the GulfMark Stock Option Plan from
and after the Distribution Date shall be adjusted to cover twice the number of
option shares referenced in the GulfMark Stock Option Plan, in order to reflect
the Distribution of two shares of New GulfMark Common Stock per share of
GulfMark Common Stock.
6. Adjustment of Aggregate Number of Option Shares. Pursuant to
the antidilution adjustment provisions of the GulfMark Stock Option Plan, the
total number of option shares that may be granted pursuant to the Assumed Stock
Option Plan shall be as follows:
- 3 -
<PAGE> 4
<TABLE>
<CAPTION>
GulfMark Stock New GulfMark Assumed
Option Plan Stock Option Plan
(Originally Authorized) (As Adjusted)
--------------------- -----------
<S> <C> <C><C> <C>
Option Shares Exercised 0 0
Option Shares Outstanding 50,000 [ ] *
Option Shares Available 150,000 300,000 **
------- ----------
Total 200,000 [ ] ***
======= ==========
</TABLE>
*To be supplied by post-Distribution Date exhibit on May 2, 1997, with
each outstanding GulfMark Stock Option being adjusted in accordance
with Section 424 of the Code, as required by the Distribution
Agreement and as set forth in Section 4(b) above, to preserve
aggregate intrinsic value and the ratio of the exercise price to the
market value per share.
**Each remaining option share being adjusted to reflect the
Distribution of two shares of New GulfMark Common Stock per share of
GulfMark Common Stock.
***To be supplied by post-Distribution Date exhibit on May 2, 1997.
7. Intent of Option and Plan Adjustments. The adjustments to
each outstanding GulfMark Stock Option are designed solely to preserve the
aggregate intrinsic value of each option and the ratio of the exercise price to
the market value per share, in accordance with the requirements of Section 424
of the Code, as required by the Distribution Agreement and as permitted by
Section 12 of the GulfMark Stock Option Plan. The adjustments to the aggregate
number of shares issued and reserved for issuance pursuant to the GulfMark
Stock Option Plan are designed solely (i) to give effect to the adjustment in
outstanding option shares described above, and (ii) to reflect the two-for-one
nature of the Distribution.
8. Termination of GulfMark Obligations. From and after the
Distribution Date, all obligations of GulfMark pursuant to (i) the GulfMark
Stock Option Plan, (ii) all outstanding GulfMark Stock Options granted
thereunder, and (iii) all GulfMark Stock Option Agreements relating to
outstanding GulfMark Stock Options granted pursuant to the GulfMark Stock
Option Plan, respectively, shall terminate, and neither GulfMark nor EVI shall
have any further obligation whatsoever thereunder.
9. Miscellaneous. This Assumption is executed and shall
constitute an instrument supplemental to the GulfMark Stock Option Plan and
shall be construed with and as a part of the GulfMark Stock Option Plan.
Except as modified and expressly amended by this Assumption and any other
supplement or amendment, the GulfMark Stock Option Plan is in all respects
adopted, assumed, ratified and confirmed by New GulfMark, and all of the terms
provisions and conditions thereof, as supplemented hereby, shall be and remain
in full force and effect.
- 4 -
<PAGE> 5
EXECUTED and effective as of the Distribution Date.
GULFMARK OFFSHORE, INC.
By: /s/Frank R. Pierce
-----------------------------------
Frank R. Pierce,
Executive Vice President
- 5 -
<PAGE> 6
EXHIBIT A
TO INSTRUMENT OF ASSUMPTION AND ADJUSTMENT
(AMENDED AND RESTATED 1993 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN)
<TABLE>
<CAPTION>
GulfMark Stock New GulfMark Assumed
Option Plan Stock Option Plan
(Originally Authorized) (As Adjusted)
--------------------- -----------
<S> <C> <C> <C>
Option Shares Exercised 0 0
Option Shares Outstanding 50,000 245,690 *
Option Shares Available 150,000 300,000 **
------- -------
Total 200,000 545,690
======= =======
</TABLE>
*Each outstanding GulfMark Stock Option being adjusted in accordance
with Section 424 of the Code, as required by the Distribution
Agreement and as set forth in Section 4(b) above, to preserve
aggregate intrinsic value and the ratio of the exercise price to the
market value per share.
**Each remaining option share being adjusted to reflect the
Distribution of two shares of New GulfMark Common Stock per share of
GulfMark Common Stock.
- 6 -
<PAGE> 1
EXHIBIT 10.10
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (the "Agreement") is made as of this ____ day of
__________, 19___, between GULFMARK INTERNATIONAL, INC., a Delaware corporation
("GulfMark"), and _______________ (the "Director").
W I T N E S S E T H:
WHEREAS, subject to the approval of the stockholders of GulfMark,
GulfMark has adopted the Amended and Restated 1993 Non-Employee Director Stock
Option Plan (the "Plan"); and
WHEREAS, the Director is now a non-employee member of GulfMark's Board
of Directors, and GulfMark desires to encourage the Director to remain in
GulfMark's service and, as an inducement thereto, has determined to grant to
the Director pursuant to the Plan the option provided for herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, GulfMark and the
Director hereby agree as follows:
1. Grant. Effective as of _____________, 19___, (the "Date of
Grant"), GulfMark hereby grants to the Director pursuant to the terms and
conditions of the Plan an option (the "Option") to purchase __________ shares
of the common stock of GulfMark, $1.00 par value ("Common Stock"), at a price
of $___________ per share (the "Option Price"). The granting of the Option is
subject to receipt of approval thereof by GulfMark's stockholders and, subject
to the receipt of such approval, the Option shall be exercisable at any time
following the first anniversary of the Date of Grant and to the extent not
exercised, may be exercised in whole or in part.
2. Changes in GulfMark's Capital Structure. (a) The existence of
the Option shall not affect in any way the right or power of GulfMark or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in GulfMark's capital structure or its
business, or any merger or consolidation of GulfMark, or any issue of bonds,
debentures, preferred or prior preference stock affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of GulfMark, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
(b) The number of shares of Common Stock subject to the Option, the
Option Price and the securities issuable upon exercise of the Option shall be
subject to adjustment as provided in the Plan.
3. Exercise of Options. The Option may be exercised from time to
time as to the total number of shares that may then be issuable upon the
exercise thereof or any portion thereof in the manner and subject to the
limitations provided for in the Plan.
4. Assignment. The Option may not be transferred or assigned in any
manner by the
<PAGE> 2
Director except by will or the laws of descent and distribution, and shall be
exercisable during the Director's lifetime only by him.
5. Requirements of Law. GulfMark shall not be required to sell or
issue any shares on the exercise of the Option if the issuance of such shares
shall constitute a violation by the Director or GulfMark of any provisions of
any law or regulation of any governmental authority. The Option shall be
subject to the requirements that, if at any time the Board of Directors of the
Company or the Administrative Committee of the Plan (the "Committee") shall
determine that the listing, registration or qualification of the shares subject
thereto upon any securities exchange or under any state or federal law of the
United States or of any other country or governmental subdivision thereof, or
the consent or approval of any governmental regulatory body, or investment or
other representations, are necessary or desirable in connection with the issue
or purchase of shares subject thereto, the Option may not be exercised in whole
or in part unless such listing, registration, qualification, consent, approval
or representation shall have been effected or obtained free of any conditions
not acceptable to the Board of Directors. If required at any time by the Board
of Directors or the Committee, the Option may not be exercised until the
Director has delivered an investment letter to GulfMark. In addition,
specifically in connection with the Securities Act of 1933 (as now in effect or
hereafter amended), upon exercise of the Option, GulfMark shall not be required
to issue the underlying shares unless the Committee has received evidence
satisfactory to it to the effect under such Act or unless an opinion of counsel
satisfactory to GulfMark has been received by GulfMark to the effect that such
registration is not required. Any determination in this connection by the
Committee shall be final, binding and conclusive. In the event the shares
issuable on exercise of the Option are not registered under the Securities Act
of 1933, GulfMark may imprint on the certificate for such shares the following
legend or any other legend which counsel for the Company considers necessary or
advisable to comply with Securities Act of 1933:
The shares of stock represented by this certificate
have not been registered under the Securities Act of 1933 or
under the securities laws of any state and may not be sold or
transferred except upon registration or upon receipt by the
Corporation of an opinion of counsel satisfactory to the
Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale or
transfer.
GulfMark may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Act. GulfMark shall not be obligated
to take any other affirmative action in order to cause the exercise of the
Option or the issuance of shares of Common Stock pursuant thereto to comply
with any law or regulation of any governmental authority.
6. Termination. The Option, to the extent it shall not previously
have been exercised, shall terminate on the earlier of the following:
(a) On the last day within the three month period commencing on
the date on which the Director ceases to be a member of GulfMark's
Board of Directors, for any reason other than retirement meeting the
conditions of length of service set forth in subparagraph 6(d) below,
or the death or disability of the Director, during which period the
Director shall be entitled to exercise the Option in respect of the
number of shares that the Director would have been entitled to
purchase had the Director
2
<PAGE> 3
exercised the Option on the date on which the Director ceased to be a
member of GulfMark's Board of Directors;
(b) On the last day within the one year period commencing on the
date on which the Director ceases to be a member of GulfMark's Board
of Directors because of permanent disability, during which period the
Director shall be entitled to exercise the Option in respect of the
number of shares that the Director would have been entitled to
purchase had the Director exercised the Option on the date on which
the Director ceased to be a member of GulfMark's Board of Directors
because of such disability;
(c) On the last day of the one year period commencing on the
date of the Director's death while serving as a member of GulfMark's
Board of Directors, during which period the executor or administrator
of the Director's estate or the person or persons to whom the Option
shall have been transferred by will or the laws of descent or
distribution, shall be entitled to exercise the Option in respect of
the number of shares that the Director would have been entitled to
purchase had the Director exercised the Option on the date of his
death;
(d) On the last day within the one year period commencing on the
date the Director who has completed at least five (5) years of service
on the Board of Directors retires from the Board of Directors of
GulfMark, during which period the Director, or the executor or
administrator of the Director's estate or the person or persons to
whom the Option shall have been transferred by will or the laws of
descent or distribution in the event of the Director's death within
such one year period, as the case may be, shall be entitled to
exercise the Option in respect of the number of shares that the
Director would have been entitled to purchase had the Director
exercised the Option on the date of such retirement; or
(e) On _________________, 20___. [Date ten years from Date of
Grant].
7. Amendment. This Agreement may not be changed, amended or
modified except by an agreement in writing signed on behalf of each of the
parties hereto.
8. No Rights as a Stockholder. The Director shall not have any
rights as a stockholder with respect to any shares of Common Stock issuable
upon the exercise of the Option until the date of issuance of the stock
certificate or certificates representing such shares following his exercise of
the Option pursuant to its terms and conditions and payment for such shares.
Except as otherwise provided in the Plan, no adjustment shall be made for
dividends or other distributions made with respect to the Common Stock the
record date for the payment of which is prior to the date of the exercise of
the Option with respect to which such certificate or certificates are issued.
9. Governing Law. The validity, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware. Any
invalidity of any provision of this Agreement shall not affect the validity of
any other provision.
3
<PAGE> 4
10. Notices. All notices, demands, requests or other communications
hereunder shall be in writing and shall be deemed to have been duly made or
given if mailed by registered or certified mail, return receipt requested. Any
such notice mailed to GulfMark shall be addressed to its principal executive
office at 5 Post Oak Park, Suite 1170, Houston, Texas 77027, and any notice
mailed to the Director shall be addressed to the Director's residence address
as it appears on the books and records of GulfMark or to such other address as
either party may hereafter designate in writing to the other.
11. Binding Effect. This Agreement shall, except as otherwise
provided to the contrary, inure to the benefit of and bind the legal
representatives, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first above mentioned.
GULFMARK INTERNATIONAL, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
DIRECTOR
By:
------------------------------------
(Name of Director)
4
<PAGE> 1
EXHIBIT 10.11
AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT
(Amended and Restated 1993 Non-Employee Director Stock Option Plan)
This AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT (the "Amendment") is
executed this 6th day of May, 1997, but effective as of April 30, 1997 (the
"Distribution Date"), between GULFMARK OFFSHORE, INC., a Delaware corporation
("GulfMark"), and ___________________ (the "Director").
W I T N E S S E T H:
WHEREAS, pursuant to a Stock Option Agreement dated ____________,
19___ (the "Original Stock Option Agreement") between GulfMark International,
Inc. (the "Predecessor") and the Director, the Director received options to
purchase, on the terms and conditions more particularly set forth therein, an
aggregate of 5,000 shares of common stock, $1.00 par value, of the Predecessor
at an exercise price of $_____ per share, all of which remain unexercised; and
WHEREAS, the parties desire to amend the Original Stock Option
Agreement as contemplated by that certain Instrument of Assumption and
Adjustment dated April 30, 1997 (the "Instrument of Assumption and Adjustment")
executed by GulfMark, pursuant to which GulfMark adopted and assumed the
Amended and Restated 1993 Non-Employee Director Stock Option Plan (the "Stock
Option Plan") of the Predecessor, with appropriate antidilution adjustments to
the number of shares covered by, and the exercise price of, each outstanding
stock option.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and on the terms herein set forth, the parties hereby agree as
follows:
1. Effective as of the Distribution Date, GulfMark hereby
assumes, and the Director hereby consents to the assumption by GulfMark of, the
obligations of the Predecessor under the Original Stock Option Agreement and
the outstanding stock options evidenced thereby.
2. GulfMark and the Director acknowledge and agree to the
amendments to the Original Stock Option Agreement as set forth in the
Instrument of Assumption and Adjustment.
3. GulfMark and the Director further acknowledge and agree that
effective as of the Distribution Date, and in accordance with the antidilution
adjustment provisions of the Stock Option Plan and pursuant to the adjustments
set forth in the Instrument of Assumption and Adjustment, the unexercised
outstanding options evidenced by the Original Stock Option Agreement constitute
options to purchase an aggregate of _____ shares of common stock, $0.01 par
value, of GulfMark, at an exercise price of $_____ per share.
- 1 -
<PAGE> 2
4. Except as otherwise specifically provided herein, the
remaining terms and conditions of the outstanding options evidenced by the
Original Stock Option Agreement, including without limitation vesting and
exercise provisions, shall remain unchanged.
5. The Director does hereby fully RELEASE AND DISCHARGE the
Predecessor, effective as of the Distribution Date, from any and all
obligations of any kind whatsoever pursuant to the Original Stock Option
Agreement and agrees that from and after the Distribution Date, neither the
Predecessor nor Energy Ventures, Inc. shall have any obligation whatsoever to
the Director pursuant to the Original Stock Option Agreement, including without
limitation any obligation to issue any common stock of the Predecessor or
Energy Ventures, Inc. to the Director upon exercise of stock options evidenced
by the Original Stock Option Agreement, as amended hereby.
6. This instrument is executed and shall constitute an instrument
supplemental to and in amendment of the Original Stock Option Agreement and
shall be construed with and as a part of the Original Stock Option Agreement.
7. Except as modified and expressly amended by this Amendment,
the Instrument of Assumption and Adjustment and any other supplement or
amendment, the Original Stock Option Agreement is in all respects ratified and
confirmed, and all of the terms provisions and conditions thereof shall be and
remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first above mentioned.
GULFMARK OFFSHORE, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
DIRECTOR:
---------------------------------------
(Name of Director)
- 2 -
<PAGE> 1
EXHIBIT 10.12
STOCK OPTION AGREEMENT
(Amended and Restated 1993 Non-Employee Director Stock Option Plan)
This STOCK OPTION AGREEMENT (the "Agreement") is made as of this _____
day of ______________, 19___, between GULFMARK OFFSHORE, INC., a Delaware
corporation ("GulfMark"), and _________________ (the "Director").
W I T N E S S E T H:
WHEREAS, with the approval of its sole stockholder, GulfMark has
assumed and adopted the GulfMark International, Inc. Amended and Restated 1993
Non-Employee Director Stock Option Plan (the "Plan"); and
WHEREAS, the Director is a non-employee member of GulfMark's Board of
Directors, and GulfMark desires to encourage the Director to remain in
GulfMark's service and, as an inducement thereto, has determined to grant to
the Director pursuant to the Plan the option provided for herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, GulfMark and the
Director hereby agree as follows:
1. Grant. Effective as of _______________, 19___, (the "Date of
Grant"), GulfMark hereby grants to the Director pursuant to the terms and
conditions of the Plan an option (the "Option") to purchase __________ shares
of the common stock of GulfMark, $0.01 par value ("Common Stock"), at a price
of $_________ per share (the "Option Price"). The Option shall be exercisable
at any time following the first anniversary of the Date of Grant and to the
extent not exercised, may be exercised in whole or in part.
2. Changes in GulfMark's Capital Structure. (a) The existence of
the Option shall not affect in any way the right or power of GulfMark or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in GulfMark's capital structure or its
business, or any merger or consolidation of GulfMark, or any issue of bonds,
debentures, preferred or prior preference stock affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of GulfMark, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
- 1 -
<PAGE> 2
(b) The number of shares of Common Stock subject to the Option, the
Option Price and the securities issuable upon exercise of the Option shall be
subject to adjustment as provided in the Plan.
3. Exercise of Options. The Option may be exercised from time to
time as to the total number of shares that may then be issuable upon the
exercise thereof or any portion thereof in the manner and subject to the
limitations provided for in the Plan.
4. Assignment. The Option may not be transferred or assigned in
any manner by the Director except by will or the laws of descent and
distribution, and shall be exercisable during the Director's lifetime only by
him.
5. Requirements of Law. GulfMark shall not be required to sell
or issue any shares on the exercise of the Option if the issuance of such
shares shall constitute a violation by the Director or GulfMark of any
provisions of any law or regulations of any governmental authority. The Option
shall be subject to the requirements that, if at any time the Board of
Directors of the Company or the Administrative Committee of the Plan (the
"Committee") shall determine that the listing, registration or qualification of
the shares subject thereto upon any securities exchange or under any state or
federal law of the United States or of any other country or governmental
subdivision thereof, or the consent or approval of any governmental regulatory
body, or investment or other representations, are necessary or desirable in
connection with the issue or purchase of shares subject thereto, the Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent, approval or representation shall have been effected or
obtained free of any conditions not acceptable to the Board of Directors. If
required at any time by the Board of Directors or the Committee, the Option may
not be exercised until the Director has delivered an investment letter to
GulfMark. In addition, specifically in connection with the Securities Act of
1933 (as now in effect or hereafter amended), upon exercise of the Option,
GulfMark shall not be required to issue the underlying shares unless the
Committee has received evidence satisfactory to it to the effect under such Act
or unless an opinion of counsel satisfactory to GulfMark has been received by
GulfMark to the effect that such registration is not required. Any
determination in this connection by the Committee shall be final, binding and
conclusive. In the event the shares issuable on exercise of the Option are not
registered under the Securities Act of 1933, GulfMark may imprint on the
certificate for such shares the following legend or any other legend which
counsel for the company considers necessary or advisable to comply with the
Securities Act of 1933:
The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any state and may not be sold or transferred except
upon registration or upon receipt by the Corporation of an opinion of
counsel satisfactory to the Corporation, in form and substance
satisfactory to the Corporation, that registration is not required for
such sale or transfer.
- 2 -
<PAGE> 3
GulfMark may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Act. GulfMark shall not be obligated
to take any other affirmative action in order to cause the exercise of the
Option or the issuance of shares of Common Stock pursuant thereto to comply
with any law or regulation of any governmental authority.
6. Termination. The Option, to the extent it shall not
previously have been exercised, shall terminate on the earlier of the
following:
(a) On the last day within the three month period commencing
on the date on which the Director ceases to be a member of GulfMark's
Board of Directors, for any reason other than retirement meeting the
conditions of length of service set forth in subparagraph 6(d) below,
or the death or disability of the Director, during which period the
Director shall be entitled to exercise the Option in respect of the
number of shares that the Director would have been entitled to
purchase had the Director exercised the Option on the date on which
the Director ceased to be member of GulfMark's Board of Directors;
(b) On the last day within the one year period commencing on
the date on which the Director ceases to be a member of GulfMark's
Board of Directors because of permanent disability, during which
period the Director shall be entitled to exercise the Option in
respect of the number of shares that the Director would have been
entitled to purchase had the Director exercised the Option on the date
on which the Director ceased to be a member of GulfMark's Board of
Directors because of such disability;
(c) On the last day of the one year period commencing on the
date of the Director's death while serving as a member of GulfMark's
Board of Directors, during which period the executor or administrator
of the Director's estate or the person or persons to whom the Option
shall have been transferred by will or the laws of descent or
distribution, shall be entitled to exercise the Option in respect of
the number of shares that the Director would have been entitled to
purchase had the Director exercised the Option on the date of his
death;
(d) On the last day within the one year period commencing on
the date the Director who has completed at least five (5) years of
service on the Board of Directors of GulfMark or its predecessor,
GulfMark International, Inc., retires from the Board of Directors of
GulfMark, during which period the Director, or the executor or
administrator of the Director's estate or the person or persons to
whom the Option shall have been transferred by will or the laws of
descent or distribution in the event of the Director's death within
such one year period, as the case may be, shall be entitled to
exercise the Option in respect of the number of shares that the
Director would have been entitled to purchase had the Director
exercised the option on the date of such retirement; or
- 3 -
<PAGE> 4
(e) On ______________, 20___ [the date ten years from the
Date of Grant].
7. Amendment. This Agreement may not be changed, amended or
modified except by an agreement in writing signed on behalf of each of the
parties hereto.
8. No Rights as a Stockholder. The Director shall not have any
rights as a stockholder with respect to any shares of Common Stock issuable
upon the exercise of the Option until the date of issuance of the stock
certificate or certificates representing such shares following his exercise of
the Option pursuant to its terms and conditions and payment for such shares.
Except as otherwise provided in the Plan, no adjustment shall be made for
dividends or other distributions made with respect to the Common Stock the
record date for the payment of which is prior to the date of the exercise of
the Option with respect to which such certificate or certificates are issued.
9. Governing Law. The validity, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware. Any
invalidity of any provision of this Agreement shall not affect the validity of
any other provision.
10. Notices. All notices, demands, requests or other
communications hereunder shall be in writing and shall be deemed to have been
duly made or given if mailed by registered or certified mail, return receipt
requested. Any such notice mailed to GulfMark shall be addressed to its
principal executive office at 5 Post Oak Park, Suite 1170, Houston, Texas
77027, and any notice mailed to the Director shall be addressed to the
Director's residence address as it appears on the books and records of
GulfMark, or to such other address as either party may hereafter designate in
writing to the other.
11. Binding Effect. This Agreement shall, except as otherwise
provided to the contrary, inure to the benefit of and bind the legal
representatives, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first above mentioned.
GULFMARK OFFSHORE, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
- 4 -
<PAGE> 5
DIRECTOR
By:
------------------------------------
Printed Name:
--------------------------
- 5 -
<PAGE> 1
EXHIBIT 10.13
GULFMARK OFFSHORE, INC.
INSTRUMENT OF ASSUMPTION AND ADJUSTMENT
(GulfMark International Inc. Director Stock Option Agreements)
This Instrument of Assumption and Adjustment (the "Assumption") is
executed by GULFMARK OFFSHORE, INC., a Delaware corporation ("New GulfMark"),
in accordance with the provisions of that certain Agreement and Plan of
Distribution dated December 5, 1995 ("Distribution Agreement") by and among
GULFMARK INTERNATIONAL, INC. ("GulfMark"), New GulfMark and ENERGY VENTURES,
INC. ("EVI") in connection with the stock distributions described below. All
capitalized terms in this Assumption shall have the meaning assigned them in
this preamble or in Paragraph 2, as applicable.
1. Purpose. The purpose of this Assumption is to effect (a) the
assumption by New GulfMark of, and the substitution of New GulfMark Common
Stock for GulfMark Common Stock with respect to, each outstanding GulfMark
Stock Option as of the Distribution Date, (b) the assumption by New GulfMark of
the GulfMark Stock Option Agreements as of the Distribution Date, and (c) an
adjustment in the exercise price and number of shares subject to each
outstanding GulfMark Stock Option as of the Distribution Date in accordance
with the requirements of Section 424 of the Code, as required by the
Distribution Agreement, to preserve the aggregate intrinsic value of each
option and the ratio of the exercise price to the market value per share.
2. Definitions. Capitalized terms shall have the meanings
ascribed to such terms in the preamble to this Assumption and as follows:
(a) Code: the Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder.
(b) Distribution: the distribution by GulfMark of all
the outstanding shares of New GulfMark Common Stock to the
stockholders of record of GulfMark Common Stock as of the record date
for the Distribution at the rate of two shares of New GulfMark Common
Stock per share of GulfMark Common Stock.
(c) Distribution Date: April 30, 1997.
(d) GulfMark Common Stock: the common stock, par value
$1.00 per share, of GulfMark.
(e) GulfMark Stock Option: any option to purchase shares
of GulfMark Common Stock outstanding under the GulfMark Stock Option
Policy immediately prior to the Distribution Date.
- 1 -
<PAGE> 2
(f) GulfMark Stock Option Agreement: any agreement
between GulfMark and a holder of GulfMark Stock Options granted
pursuant to the GulfMark Stock Option Policy.
(g) GulfMark Stock Option Policy: the Non-Employee
Director Stock Option Policy adopted and approved by the board of
directors and stockholders of GulfMark on July 27, 1989 and May 15,
1990, respectively.
(h) New GulfMark Adjusted Stock Option: any GulfMark
Stock Option, as adjusted and assumed by New GulfMark pursuant to this
Assumption from and after the Distribution Date.
(i) New GulfMark Common Stock: the common stock, $.01
par value per share, of New GulfMark.
3. Assumption of GulfMark Stock Options. As of the Distribution
Date, New GulfMark hereby assumes all outstanding GulfMark Stock Options
granted pursuant to the GulfMark Stock Option Policy and all GulfMark Stock
Option Agreements relating to outstanding GulfMark Stock Options granted
pursuant to the GulfMark Stock Option Policy. From and after the Distribution
Date,
(a) All references to the "Company" in any GulfMark Stock
Option Agreement shall mean New GulfMark.
(b) All references to "Common Stock" in any GulfMark
Stock Option Agreement shall mean the New GulfMark Common Stock.
4. Treatment of Outstanding GulfMark Stock Options. Effective as
of the Distribution Date, each outstanding GulfMark Stock Option shall
constitute a New GulfMark Adjusted Stock Option to purchase New GulfMark Common
Stock, and in accordance with the antidilution adjustment provisions of each
GulfMark Stock Option Agreement, the number of shares covered by, and the
exercise price of, each GulfMark Stock Option, and the remaining terms and
conditions of each outstanding GulfMark Stock Option shall be adjusted as
follows:
(a) The grant date of each New GulfMark Adjusted Stock
Option shall be the date of grant of the GulfMark Stock Option
replaced thereby, and the expiration date of each New GulfMark
Adjusted Stock Option shall be the expiration date of the GulfMark
Stock Option replaced thereby.
(b) The number of shares of New GulfMark Common Stock
covered by each New GulfMark Adjusted Stock Option shall be the number
of shares covered by the GulfMark Stock Option being replaced thereby,
multiplied by a fraction equal to the ratio of the pre-Distribution
market price per share of GulfMark Common Stock to the
post-Distribution market price per share of New GulfMark Common Stock.
- 2 -
<PAGE> 3
(c) The per share exercise price of each New GulfMark
Adjusted Stock Option shall be the exercise price per share of the
GulfMark Stock Option being replaced thereby, multiplied by a fraction
equal to the ratio of the post-Distribution market price per share of
the New GulfMark Common Stock to the pre-Distribution market price per
share of GulfMark Common Stock.
(d) For purposes of the foregoing adjustments, (i) the
pre-Distribution market price per share of GulfMark Common Stock shall
be deemed to be the closing price per share of GulfMark Common Stock
as reported by The Nasdaq Stock Market on the last day on which
GulfMark Common Stock is traded on The Nasdaq Stock Market, and (ii)
the post-Distribution market price per share of New GulfMark Common
Stock shall be deemed to be the closing price per share of New
GulfMark Common Stock as reported by The Nasdaq Stock Market on the
first day on which New GulfMark Common Stock is traded on The Nasdaq
Stock Market following the Distribution.
(e) The vesting and exercise provisions of each New
GulfMark Adjusted Stock Option shall be identical to the vesting and
exercise provisions of the GulfMark Stock Option replaced thereby.
(f) The remaining terms and conditions of each New
GulfMark Adjusted Stock Option shall be substantially the same as in
effect for the GulfMark Stock Option replaced thereby; provided,
however, that service with GulfMark prior to the Distribution shall be
treated under each New GulfMark Adjusted Stock Option as service with
New GulfMark.
5. Adjustment of Aggregate Number of Option Shares. Pursuant to
the antidilution adjustment provisions of the GulfMark Stock Option Agreements,
the total number of option shares that may be granted pursuant to the GulfMark
Stock Option Policy shall be as follows:
<TABLE>
<CAPTION>
Originally Authorized As Adjusted
--------------------- -----------
<S> <C> <C>
Option Shares Exercised 2,500 2,500
Option Shares Outstanding 22,500 [ ] *
Option Shares Available 0 0
------ ----------
Total 25,000 [ ] **
====== ==========
</TABLE>
*To be supplied by post-Distribution Date exhibit on May 2, 1997, with
each outstanding GulfMark Stock Option being adjusted in accordance
with Section 424 of the Code, as required by the Distribution
Agreement and as set forth in Section 4(b) above, to preserve
aggregate intrinsic value and the ratio of the exercise price to the
market value per share.
**To be supplied by post-Distribution Date exhibit on May 2, 1997.
- 3 -
<PAGE> 4
6. Intent of Option Adjustments. The adjustments to each
outstanding GulfMark Stock Option are designed solely to preserve the aggregate
intrinsic value of each option and the ratio of the exercise price to the
market value per share, in accordance with the requirements of Section 424 of
the Code, as required by the Distribution Agreement and as permitted by Section
2(b) of the GulfMark Stock Option Agreements.
7. Termination of GulfMark Obligations. From and after the
Distribution Date, all obligations of GulfMark pursuant to (i) all outstanding
GulfMark Stock Options granted pursuant to the GulfMark Stock Option Policy,
and (ii) all GulfMark Stock Option Agreements relating to outstanding GulfMark
Stock Options granted pursuant to the GulfMark Stock Option Policy,
respectively, shall terminate, and neither GulfMark nor EVI shall have any
further obligation whatsoever thereunder.
8. Miscellaneous. This Assumption is executed and shall
constitute an instrument supplemental to each GulfMark Stock Option Agreement
and shall be construed with and as a part of each GulfMark Stock Option
Agreement. Except as modified and expressly amended by this Assumption and any
other supplement or amendment, each GulfMark Stock Option Agreement is in all
respects adopted, assumed, ratified and confirmed by New GulfMark, and all of
the terms provisions and conditions thereof, as supplemented hereby, shall be
and remain in full force and effect.
EXECUTED and effective as of the Distribution Date.
GULFMARK OFFSHORE, INC.
By: /s/Frank R. Pierce
------------------------------------
Frank R. Pierce,
Executive Vice President
- 4 -
<PAGE> 5
EXHIBIT A
TO INSTRUMENT OF ASSUMPTION AND ADJUSTMENT
(GULFMARK INTERNATIONAL INC. DIRECTOR STOCK OPTION AGREEMENTS)
<TABLE>
<CAPTION>
Originally Authorized As Adjusted
--------------------- -----------
<S> <C> <C>
Option Shares Exercised 2,500 2,500
Option Shares Outstanding 22,500 110,556 *
Option Shares Available 0 0
------ -------
Total 25,000 113,056
====== =======
</TABLE>
*Each outstanding GulfMark Stock Option being adjusted in accordance
with Section 424 of the Code, as required by the Distribution
Agreement and as set forth in Section 4(b) above, to preserve
aggregate intrinsic value and the ratio of the exercise price to the
market value per share.
- 5 -
<PAGE> 1
EXHIBIT 10.14
GULFMARK INTERNATIONAL, INC.
Stock Option Agreement
This Stock Option Agreement (the "Agreement") is made between GulfMark
International, Inc. [Gulf Applied Technologies, Inc.], a Delaware corporation
(the "Company"), and ________________________________________ (the "Director").
W I T N E S S E T H:
WHEREAS, the Board of Directors (the "Board") and stockholders of the
Company have approved and adopted the Non-Employee Director Stock Option Plan
(the "Plan") as of July 27, 1989 and May 15, 1990, respectively; and
WHEREAS, the Director is a non-employee member of the Board and is not
otherwise an employee of an affiliate of the Company, and the Company desires
to encourage the Director to remain in the Company's service and, as an
inducement thereto, has granted to the Director pursuant to the Plan the option
provided for herein;
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Director hereby agree as follows:
1. Grant. The Company hereby documents the grant to the
Director, pursuant to the terms and conditions of the Plan and as set forth
herein, (i) effective as of _________________, 19__ (the "Date of First
Grant"), an option (the "First Option") to purchase 2,500 shares of the common
stock, $1.00 par value, of the Company ("Common Stock"), and (ii) effective
_______________, 19__ (the "Date of the Second Grant"), an option (the "Second
Option") (both the First Option and the Second Option shall be referred to
collectively as the "Options") to purchase 2,500 shares of Common Stock of the
Company. Subject to Section 6 hereof, the Options shall be exercisable in
accordance with the following:
(a) The Options may be exercised at any time.
(b) To the extent not exercised, the Options shall be
cumulative and may be exercised in whole or in part; and
(c) The price per share (the "Option Price") for the purchase
of Common Stock pursuant to the exercise of the First Option shall be ____ per
share and shall be ___ per share for the purchase of common stock pursuant to
the exercise of the Second Option. The above Option prices each are
1
<PAGE> 2
equal to the closing sales price of the Common Stock as quoted in The Wall
Street Journal for the day on which the Option was granted.
2. Changes in the Company's Capital Structure
(a) The existence of the Options shall not affect in any way the
right or power of the Company or its stockholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
(b) The number of shares of Common Stock subject to the Options,
the Option Price and the securities issuable upon exercise of the Options shall
be subject to adjustment for changes in the Company's capital structure as
approved by the majority vote of the disinterested directors on the Board.
3. Exercise of Options. The Options shall be exercised by the
delivery of written notice to the Company setting forth the number of shares of
Common Stock with respect to which such Option is to be exercised, together
with cash, certified check, bank draft, or postal or express money order
payable to the order of the Company, for an amount equal to the Option Price of
the shares. Such notice shall be delivered in person to the Secretary of the
Company or shall be sent by registered mail, return receipt requested, to the
Secretary of the Company, in which case delivery shall be deemed made three
days after the date such notice is deposited in the mail. The Company may then
request that there be presented to and filed with it such evidence as it may
deem necessary to establish that the shares of Common Stock to be purchased are
being acquired for investment and not with a view to their distribution. As
promptly as practical after receipt of such notification, payment and such
evidence of intent to acquire such Common Stock for investment as may be
required by the Company, the Company shall deliver to the Director a
certificate(s) for the number of shares with respect to which such Option has
been so exercised.
4. Assignment. The Options may not be transferred or assigned
in any manner by the Director except by will or the laws of descent and
distribution, and shall be exercisable during the Director's lifetime, only by
him.
5. Requirements of Law. The Company shall not be required to
sell or issue any shares on the exercise of the Options if the issuance of such
shares shall constitute a violation by the Director or the Company of any
provisions of any law or regulation of any governmental authority. The Options
shall be subject to the requirements that, if at any time the Board or an
authorized committee of the Board shall determine that the listing,
registration or qualification of the shares subject thereto upon any securities
exchange or under any state or federal law of the United States or of any other
country or governmental subdivision thereof, or the consent or approval of any
governmental regulatory body, or investment or other representations, are
necessary or desirable in
2
<PAGE> 3
connection with the issue or purchase of shares subject thereto, the Options
may not be exercised in whole or in part unless such listing, registration,
qualification, consent, approval or representation shall have been effected or
obtained free of any conditions not acceptable to the Board. If required at
any time by the Board or an authorized committee of the Board, the Options may
not be exercised until the Director has delivered an investment letter to the
Company. In addition, specifically in connection with the Securities Act of
1933 (as now in effect or hereafter amended), upon exercise of the Options, the
Company shall not be required to issue the underlying shares unless the Board
or an authorized committee of the Board has received evidence satisfactory to
it to the effect under such Act or unless an opinion of counsel satisfactory to
the Company has been received by the Company to the effect that such
registration is not required. Any determination in this connection by the
Board or an authorized committee of the Board shall be final, binding and
conclusive. In the event the shares issuable on exercise of the Options are
not registered under the Securities Act of 1933, the Company may imprint on the
certificate for such shares the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with
Securities Act of 1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT UPON
REGISTRATION OR UPON RECEIPT BY THE CORPORATION OF AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION, IN FORM AND SUBSTANCE
SATISFACTORY TO THE CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR
SUCH SALE OR TRANSFER.
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Act, the Company shall not be
obligated to take any other affirmative action in order to cause the exercise
of the Options or the issuance of shares of Common Stock pursuant thereto to
comply with any law or regulation of any governmental authority.
6. Termination. The Options, to the extent they have not
previously been exercised, shall terminate on the earlier of the following:
(a) On the last day within the three month period
commencing on the date on which the Director ceases to be a
Director on the Board, for any reason other than the death,
disability or retirement of the Director, during which period
the Director shall be entitled to exercise the Options in
respect of the number of shares that the Director would have
been entitled to purchase had the Director exercised the
Options on the date on which the Director ceased to be a
Director on the Board;
(b) On the last day within the one year period commencing
on the date on which the Director ceases to be a Director on
the Board because of permanent disability, during which period
the Director shall be entitled to exercise the Options in
respect of the number of shares that the Director would have
been entitled to purchase had the
3
<PAGE> 4
Director exercised the Options on the date on which the
Director ceased to be a Director on the Board because of such
disability.
(c) On the last day within the one year period commencing
on the date of the Director's death while serving as a
Director on the Board, during which period the executor or
administrator of the Director's estate or the persons to whom
the Options shall have been transferred by will or the laws of
descent or distribution, shall be entitled to exercise the
Options in respect of the number of shares that the Director
would have been entitled to purchase had the Director
exercised the Options on the date of his death;
(d) Ten years following the Date of First Grant and the
Date of Second Grant for the First Option and Second Option,
respectively.
7. Amendment. This Agreement may not be changed, amended or
modified except by an agreement in writing signed on behalf of each of the
parties hereto.
8. No Rights as a Stockholder. The Director shall not have any
rights as a stockholder with respect to any shares of Common Stock issuable
upon the exercise of the Options until the date of issuance of the stock
certificate or certificates representing such shares following his exercise of
the Options pursuant to its terms and conditions and payment for such shares.
Except as otherwise provided herein, no adjustment shall be made for dividends
or other distributions made with respect to the Common Stock the record date
for the payment of which is prior to the date of the exercise of the Options
with respect to which such certificate or certificates are issued.
9. Governing Law. The validity, construction and performance of
this Agreement shall be governed by the laws of the State of Delaware. Any
invalidity of any provision of this Agreement shall not affect the validity of
any other provision.
10. Notices. All notices, demands, requests or other
communications hereunder shall be in writing and shall be deemed to have been
duly made or given if mailed by registered or certified mail, return receipt
requested. Any such notice mailed to the Company shall be addressed to its
principal executive office at 5 Post Oak Park, Suite 1170, Houston, Texas
77027, and any notice mailed to the Director shall be addressed to the
Director's residence address as it appears on the books and records of the
Company or to such other address as either party may hereafter designate in
writing to the other.
11. Binding Effect. This Agreement shall, except as otherwise
provided to the contrary, inure to the benefit of and bind the legal
representatives, successors and assigns of the parties hereto.
4
<PAGE> 5
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first above mentioned.
GULFMARK INTERNATIONAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
DIRECTOR
------------------------------------
(Name of Director)
5
<PAGE> 1
EXHIBIT 10.15
AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT
(1988 Non-Employee Director Stock Option Policy)
This AMENDMENT NO. 1 TO STOCK OPTION AGREEMENT (the "Amendment") is
executed this 6th day of May, 1997, but effective as of April 30, 1997 (the
"Distribution Date"), between GULFMARK OFFSHORE, INC., a Delaware corporation
("GulfMark"), and ___________________ (the "Director").
W I T N E S S E T H:
WHEREAS, pursuant to a Stock Option Agreement granting options
effective as of August 1, 19___ and August 1, 19___ (the "Original Stock Option
Agreement") between GulfMark International, Inc. (the "Predecessor") and the
Director, the Director received options to purchase, on the terms and
conditions more particularly set forth therein, (i) an aggregate of 2,500
shares of common stock, $1.00 par value, of the Predecessor at an exercise
price of $_____ per share, all [none] of which remain unexercised, and (ii) an
aggregate of 2,500 shares of common stock, $1.00 par value, of the Predecessor
at an exercise price of $_____ per share, all of which remain unexercised;
WHEREAS, the parties desire to amend the Original Stock Option
Agreement as contemplated by that certain Instrument of Assumption and
Adjustment dated April 30, 1997 (the "Instrument of Assumption and Adjustment")
executed by GulfMark, pursuant to which GulfMark assumed the outstanding
options of the Predecessor evidenced by the Original Stock Option Agreement,
with appropriate antidilution adjustments to the number of shares covered by,
and the exercise price of, each outstanding stock option.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and on the terms herein set forth, the parties hereby agree as
follows:
1. Effective as of the Distribution Date, GulfMark hereby
assumes, and the Director hereby consents to the assumption by GulfMark of, the
obligations of the Predecessor under the Original Stock Option Agreement and
the outstanding stock options evidenced thereby.
2. GulfMark and the Director acknowledge and agree to the
amendments to the Original Stock Option Agreement as set forth in the
Instrument of Assumption and Adjustment.
3. GulfMark and the Director further acknowledge and agree that
effective as of the Distribution Date, and in accordance with the adjustments
approved a majority of the disinterested directors of GulfMark and as set forth
in the Instrument of Assumption and Adjustment, the unexercised outstanding
options evidenced by the Original Stock Option Agreement constitute options to
purchase (i) an aggregate of _____ shares of common stock, $0.01 par value, of
GulfMark, at an exercise price of $_____ per share, and (ii) an aggregate of
_____ shares of common stock, $0.01 par value, of GulfMark, at an exercise
price of $_____ per share, respectively.
- 1 -
<PAGE> 2
4. Except as otherwise specifically provided herein, the
remaining terms and conditions of the outstanding options evidenced by the
Original Stock Option Agreement, including without limitation vesting and
exercise provisions, shall remain unchanged.
5. The Director does hereby fully RELEASE AND DISCHARGE the
Predecessor, effective as of the Distribution Date, from any and all
obligations of any kind whatsoever pursuant to the Original Stock Option
Agreement and agrees that from and after the Distribution Date, neither the
Predecessor nor Energy Ventures, Inc. shall have any obligation whatsoever to
the Director pursuant to the Original Stock Option Agreement, including without
limitation any obligation to issue any common stock of the Predecessor or
Energy Ventures, Inc. to the Director upon exercise of stock options evidenced
by the Original Stock Option Agreement, as amended hereby.
6. This instrument is executed and shall constitute an instrument
supplemental to and in amendment of the Original Stock Option Agreement and
shall be construed with and as a part of the Original Stock Option Agreement.
7. Except as modified and expressly amended by this Amendment,
the Instrument of Assumption and Adjustment and any other supplement or
amendment, the Original Stock Option Agreement is in all respects ratified and
confirmed, and all of the terms provisions and conditions thereof shall be and
remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered as of the day and year first above mentioned.
GULFMARK OFFSHORE, INC.
By:
-------------------------------------
Title:
----------------------------------
Name:
----------------------------------
DIRECTOR:
-----------------------------------------
Name of Director
- 2 -
<PAGE> 1
EXHIBIT 10.16
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrowers
GULF OFFSHORE N.S. LIMITED
GULF OFFSHORE FAR EAST, INC.
as permitted borrowers
GULFMARK INTERNATIONAL INC.
as sponsor
THE CHASE MANHATTAN BANK, N.A.
as agent
and security trustee
THE CHASE MANHATTAN BANK, N.A.
as Hedge Counterparty
and
OTHERS
-----------------------------------------------
AGREEMENT
AMENDING AND RESTATING A
LOAN FACILITY DATED 8 JULY 1993
AS AMENDED BY AN AGREEMENT DATED 20 MAY 1994
------------------------------------------------
<PAGE> 2
THIS AGREEMENT is made the 20 October 1995
BETWEEN:
(1) GULFMARK NORTH SEA LIMITED ("GNS") and GULF OFFSHORE MARINE
INTERNATIONAL INC. ("GOMI") (together the "PRINCIPAL BORROWERS");
(2) GULF OFFSHORE N.S. LIMITED ("GONS") and GULF OFFSHORE FAR EAST
INC. ("GOFE") (together the "PERMITTED BORROWERS");
(3) GULFMARK INTERNATIONAL INC. (the "SPONSOR");
(4) THE CHASE MANHATTAN BANK, N.A. as agent (the "AGENT") and security
trustee ("SECURITY TRUSTEE");
(5) THE FINANCIAL INSTITUTIONS named in the First Schedule of the
Facility Agreement exhibited hereto as the Annex (the "BANKS");
and
(6) THE CHASE MANHATTAN BANK, N.A. as counterparty under the Master
Agreement referred to herein (the "HEDGE COUNTERPARTY").
WHEREAS
(A) Pursuant to a facility agreement dated 8 July 1993 as amended by
an agreement dated 20 May 1994 (the "FACILITY AGREEMENT") entered
into between the Banks, the Agent, the Security Trustee, the
Sponsor, the Hedge Counterparty, the Principal Borrowers and the
Permitted Borrowers, the Banks granted to the Borrowers, upon the
terms and subject to the conditions therein set forth, a revolving
loan facility in an aggregate amount of US$5,800,000 and a
sterling revolving loan facility in an aggregate amount of
L.9,400,000.
(B) The parties have agreed to amend the Facility Agreement to, inter
alia, (i) increase the sterling revolving loan facility to an
aggregate amount of L.12,500,000; and (ii) join Bank of Scotland
as a Bank in such facility as so increased.
(C) The amendments referred in (B) above are to be documented by way
of amendment and restatement of the Facility Agreement as
hereinafter described.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement (and in the Recitals) terms defined in the
Facility Agreement bear the same meaning herein.
1.2 "BANK OF SCOTLAND" shall means The Governor and Company of the
Bank of Scotland and "EFFECTIVE DATE" shall have the meaning given
to it at Clause 5.
- 1 -
<PAGE> 3
2. AMENDMENT AND RESTATEMENT
The Facility Agreement shall, on and from the Effective Date (or
such other date as the Banks and the Borrowers may agree) be
amended and restated so as to conform with the copy attached
hereto as The Annex.
3. REPRESENTATIONS
The Borrowers represent and warrant in the terms of Clause 18 of
the Facility Agreement as if such representations were made on the
date hereof and as if the expression "this Agreement" referred to
this Amendment Agreement (but no representation or warranty shall
be given in respect of any charter with British Gas which has at
the date hereof either expired or been terminated).
4. COUNTERPARTS
This Agreement may be executed in any number of counterparts
which, when taken together, shall constitute but one and the same
instrument and shall be governed by and construed in accordance
with English law.
5. EFFECTIVE DATE
The Effective Date, for the purposes of this Amendment Agreement,
shall be the date on which the Agent receives the last of the
following documents: (i) each of the documents set out in Part 2
of the Second Schedule to the Facility Agreement, (ii) a copy,
certified by a duly authorised officer of each Obligor, of a Board
Resolution of such Obligor approving and ratifying the execution,
delivery and performance of this Amendment Agreement and any
Security Document contemplated by Part 2 of the Second Schedule to
the Facility Agreement (iii) a certificate from a duly authorised
officer of each Obligor confirming that no changes have been made
to the Memorandum or Articles of Association (or other
constitutive documents) of such Obligor since the last certified
copies thereof were delivered to the Agent and (iv) a certificate
from a duly authorised officer of each Obligor setting out the
names and signatures of the person authorised to sign this
Amendment Agreement and any Security Document contemplated by Part
2 of the Second Schedule to the Facility Agreement on behalf of
such Obligor.
6. FEES
The Borrowers shall pay to the Agent for its own account on the
date hereof an arrangement fee equal to two fifths of one per cent
of each of the Facility Amount of each of the Dollar Facility and
the Sterling Facility.
7. ACCESSION OF THE BANK OF SCOTLAND
7.1 Without prejudice to Clause 2, on the first interest payment date
(as set out in clause 10.1 of the Facility Agreement) to occur
after the Effective Date (the "ACCESSION DATE"), Bank of Scotland
shall become party to the Facility Agreement as a Bank with the
Sterling Commitment and Dollar Commitment shown against its
name in the First Schedule to the Facility Agreement exhibited
hereto.
- 2 -
<PAGE> 4
7.2 The Chase Manhattan Bank, N.A. in its capacity as Bank hereby
assigns to Bank of Scotland on the Accession Date fifty per cent
of its share in all Advances outstanding on the Accession Date.
7.3 Paragraphs 4, 6 and 7 of the Fifth Schedule to the Facility
Agreement shall be deemed incorporated herein mutatis mutandis.
7.4 For the avoidance of any doubt, the Sponsor confirms that it
consents to be provisions of Clauses 7.1 and 7.2 and the Borrowers
hereby acknowledge notification of the assignment referred to in
Clause 7.2.
8. MISCELLANEOUS
8.1 Clauses 31, 33, 34, 38, 39, 41 and 42 of the Facility Agreement
shall apply MUTATIS MUTANDIS to this Agreement (and as if
references therein to the Facility Agreement were references to
this Agreement).
8.2 The Facility Agreement shall continue in full force and effect as
so amended and restated and all references therein, herein and in
the other Finance Documents to the "FACILITY AGREEMENT" or to the
"AGREEMENT" or similar terms shall be deemed to be references to
the Facility Agreement as so amended and restated.
AS WITNESS the hands of the representatives of the parties hereto the day and
year first before written.
- 3 -
<PAGE> 5
THE BORROWERS
GULFMARK NORTH SEA LIMITED
as principal borrower
by: /s/ DAVID DARE
DIRECTOR
Address: 10 Charlotte Road
London SW13 9QJ
Attention: David Dare
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrower
by: /s/ DAVID DARE
ATTORNEY IN FACT
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention: Bruce Streeter
GULF OFFSHORE N.S. LIMITED
as permitted borrower
by: /s/ DAVID DARE
DIRECTOR
Address: 10 Charlotte Road
London SW13 9QT
Attention: David Dare
- 4 -
<PAGE> 6
GULF OFFSHORE FAR EAST INC.
as permitted borrower
by: /s/ DAVID DARE
ATTORNEY IN FACT
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention: Bruce Streeter
THE SPONSOR
GULFMARK INTERNATIONAL INC.
by: /s/ DAVID DARE
ATTORNEY IN FACT
Address: 5 Post Oak Park
Suite 1170
Houston
Texas 77027
USA
Attention: Frank Pierce
THE AGENT
THE CHASE MANHATTAN BANK, N.A.
as agent and security trustee
By: /s/ JAMES HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Oil and Gas Group
Facsimile: 962 5030
Telex: 8954681 CMB G
- 5 -
<PAGE> 7
THE HEDGE COUNTERPARTY
THE CHASE MANHATTAN BANK, N.A.
By: /s/JAMES HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Oil and Gas Group
THE BANKS
THE CHASE MANHATTAN BANK, N.A.
By: /s/ JAMES HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Oil and Gas Group
Facsimile: 962 5030
Telex: 8954681 CMB G
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
By: /s/ J.S. GARDNER
Address: International Division
Orchard Brae House
30 Queensferry Road
Edinburgh EH4 2UG
Attention: Shipping Finance
Facsimile: (131) 343 7080
- 6 -
<PAGE> 8
THE ANNEX
FACILITY AGREEMENT
between
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrowers
GULF OFFSHORE N.S. LIMITED
GULF OFFSHORE FAR EAST, INC.
as permitted borrowers
GULFMARK INTERNATIONAL INC.
as sponsor
THE CHASE MANHATTAN BANK, N.A.
as agent
and security trustee
THE CHASE MANHATTAN BANK, N.A.
as Hedge Counterparty
and
OTHERS
- 7 -
<PAGE> 9
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE NO.
<S> <C> <C>
PART 1
INTERPRETATION
1. Interpretation . . . . . . . . . . . . . . . . . . . . . . 1
PART 2
THE FACILITY
2. The Facility . . . . . . . . . . . . . . . . . . . . . . . 12
3. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. Nature of Bank's Obligations . . . . . . . . . . . . . . . 12
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . 12
6. Additional Borrowers . . . . . . . . . . . . . . . . . . . 13
PART 3
AVAILABILITY OF THE FACILITIES
7. Availability of the Facilities . . . . . . . . . . . . . . 14
8. Determination of Eligible Amounts and Available
Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART 4
INTEREST
9. Interest Periods . . . . . . . . . . . . . . . . . . . . . 18
10. Interest . . . . . . . . . . . . . . . . . . . . . . . . . 18
11. Alternative Interest Rates . . . . . . . . . . . . . . . . 18
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT
12. Repayment . . . . . . . . . . . . . . . . . . . . . . . . 20
13. Reduction, Cancellation and Prepayment . . . . . . . . . . 20
PART 6
CHANGE IN CIRCUMSTANCES
14. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 22
15. Tax Receipts . . . . . . . . . . . . . . . . . . . . . . . 22
16. Increased Costs . . . . . . . . . . . . . . . . . . . . . 23
17. Illegality . . . . . . . . . . . . . . . . . . . . . . . . 24
PART 7
REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
18. Representations . . . . . . . . . . . . . . . . . . . . . 25
19. Financial Information . . . . . . . . . . . . . . . . . . 28
20. Financial Condition and Security Coverage . . . . . . . . 29
21 Covenants . . . . . . . . . . . . . . . . . . . . . . . . 32
22. Events of Default . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
- 8 -
<PAGE> 10
<TABLE>
<S> <C> <C>
PART 8
SPONSOR'S AND BORROWERS' OBLIGATIONS
23. Borrowers' Joint and Several Obligations . . . . . . . . . 42
24. Sponsor's Obligations . . . . . . . . . . . . . . . . . . 43
PART 9
DEFAULT INTEREST AND INDEMNITY
25. Default Interest and Indemnity . . . . . . . . . . . . . . 44
PART 10
PAYMENTS
26. Currency of Account and Payment . . . . . . . . . . . . . 46
27. Payments . . . . . . . . . . . . . . . . . . . . . . . . . 46
28. Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . 47
29. Redistribution of Payments . . . . . . . . . . . . . . . . 47
PART 11
FEES, COSTS AND EXPENSES
30. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
31. Costs and Expenses . . . . . . . . . . . . . . . . . . . . 49
PART 12
AGENCY PROVISIONS
32. The Agent and the Banks . . . . . . . . . . . . . . . . . 51
PART 13
ASSIGNMENT AND TRANSFERS
33. Benefit of Agreement . . . . . . . . . . . . . . . . . . . 55
34. Assignments and Transfers by the Obligors . . . . . . . . 55
35 Assignments and Transfers by Banks . . . . . . . . . . . . 55
36. Disclosure of Information . . . . . . . . . . . . . . . . 56
PART 14
MISCELLANEOUS
37. Calculations and Evidence of Debt . . . . . . . . . . . . 58
38. Remedies and Waivers . . . . . . . . . . . . . . . . . . . 58
39. Partial Invalidity . . . . . . . . . . . . . . . . . . . . 58
40. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 59
PART 15
LAW AND JURISDICTION
41. Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
42. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
- 9 -
<PAGE> 11
<TABLE>
<S> <C> <C> <C>
THE FIRST SCHEDULE : The Banks . . . . . . . . . . . . . 62
THE SECOND SCHEDULE : Condition Precedent Documents . . . 63
THE THIRD SCHEDULE : Notice of Drawdown . . . . . . . . 66
THE FOURTH SCHEDULE : Associated Costs Rate . . . . . . . 67
THE FIFTH SCHEDULE : Form of Supplemental Agreement . . 69
THE SIXTH SCHEDULE : Form of Transfer Certificate . . . 71
</TABLE>
- 10 -
<PAGE> 12
THIS AGREEMENT originally made the 8th day of July, 1993 is amended and
restated on 20 October 1995
BETWEEN
(1) GULFMARK NORTH SEA LIMITED ("GNS") and GULF OFFSHORE MARINE
INTERNATIONAL INC. ("GOMI") (together the "PRINCIPAL BORROWERS");
(2) GULF OFFSHORE N.S. LIMITED ("GONS") and GULF OFFSHORE FAR EAST INC.
("GOFE") (together the "PERMITTED BORROWERS");
(3) GULFMARK INTERNATIONAL INC. (the "SPONSOR");
(4) THE CHASE MANHATTAN BANK, N.A. as agent (the "AGENT") and security
trustee ("SECURITY TRUSTEE");
(5) THE FINANCIAL INSTITUTIONS named in the First Schedule (the "BANKS");
and
(6) THE CHASE MANHATTAN BANK, N.A. as counterparty under the Master
Agreement referred to herein (the "HEDGE COUNTERPARTY").
NOW IT IS HEREBY AGREED as follows:
PART 1
INTERPRETATION
1. INTERPRETATION
1.1 In this Agreement:
"ADVANCE" means, save as otherwise provided herein, a Dollar Advance or a
Sterling Advance made or to be made by the Banks hereunder;
"ADDITIONAL BORROWER" means any subsidiary of either of the Principal Borrowers
the entire share capital of which is legally and beneficially owned directly or
indirectly by the Principal Borrowers or either of them and which has become an
Additional Borrower under the Facility pursuant to and in accordance with
Clause 6;
"ADDITIONAL MORTGAGED VESSEL" means any vessel, other than the Original
Vessels, owned by any of the Borrowers subject to a first priority legal
mortgage and a deed of covenants collateral thereto (or documents conferring a
similar security interest), granted in favour of the Security Trustee as
security, INTER ALIA, for the obligations of the Borrowers hereunder, which
mortgage and collateral deed of covenants (or such documents) have been duly
registered, recorded or filed as required by the Security Trustee and are in
full force and effect;
"ADVANCE PAYMENT GUARANTEE ASSIGNMENT" means the assignment referred to in
paragraph 22 of Part 2 of the Second Schedule;
"APPROVED CHARTER" means any charterparty, contract or engagement of
affreightment or for the carriage or transportation of cargo, mail or
passengers or any of them, relating to any of the Mortgaged Vessels, whether
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<PAGE> 13
now existing or hereafter entered into by any of the Borrowers or any person,
firm or company on its behalf, the terms of which are approved by the Agent;
"APPROVED CHARTER EARNINGS" in relation to a Mortgaged Vessel means the amount
of all freights and hires which may be earned by any Borrower during the term
of any Approved Charter pursuant to the terms and conditions thereof, LESS the
estimated cost of such Borrower during such term of maintaining and operating
the Mortgaged Vessel to which such Approved Charter relates in accordance with
the terms and conditions hereof and of the mortgage and/or deed of covenants
relating to such Mortgaged Vessel to and such Approved Charter;
"ASSOCIATED COSTS RATE" in relation to any Advance or unpaid sum denominated in
sterling shall have the meaning ascribed to it in the Fourth Schedule;
"AVAILABLE DOLLAR AMOUNT" means the principal amount at any time available for
drawing under the Dollar Facility as computed by the Agent pursuant to Clause
8;
"AVAILABLE DOLLAR COMMITMENT" in relation to a Bank at any time means, save as
otherwise provided herein, its Dollar Commitment less its portion of each
Dollar Advance which has been made hereunder and is outstanding at such time;
"AVAILABLE DOLLAR FACILITY" means, at any time and save as otherwise provided
herein, the aggregate amount from time to time of the Available Dollar
Commitments at such time;
"AVAILABLE STERLING AMOUNT" means the principal amount at any time available
for drawing under the Sterling Facility as computed by the Agent pursuant to
Clause 8;
"AVAILABLE STERLING COMMITMENT" in relation to a Bank at any time means, save
as otherwise provided herein, its Sterling Commitment less its portion of each
Sterling Advance which has been made and is outstanding at such time;
"AVAILABLE STERLING FACILITY" means, at any time and save as otherwise provided
herein, the aggregate amount from time to time of the Available Sterling
Commitments at such time;
"BENEFICIARIES" mean the Agent, the Banks and the Hedge Counterparty;
"BORROWERS" means the Principal Borrowers, the Permitted Borrowers and any
Additional Borrowers and "BORROWER" means any of them;
"BP FLEET VESSELS" means each of the p.s.v. "Highland Champion" and the p.s.v.
"Highland Fortress";
"BUILDING CONTRACT" means the Contract referred to in paragraph 21 of Part 2 of
the Second Schedule;
"CHRISTIANIA MORTGAGES" means each of the mortgages over:
(a) the m.v. "Highland Star";
(b) the m.v. "Highland Pride";
(c) the m.v. "Highland Legend"
(d) the Christiania Newbuild,
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<PAGE> 14
securing the obligations of GONS in respect of loans made or to be made by
Christiania Bank og Kreditkasse to GNS on terms disclosed to and approved by
the Agent prior to the date hereof together with any deed of covenants (and/or
such other documents as may be executed assigning the earnings and insurance of
any of those vessels;
"CHRISTIANIA NEWBUILD" means the platform supply vessel type UT755 referred to
in yard contract 66 made between GONS and the Contractor;
"CONTRACTOR" means Brattvaag Skipsverft A.S.;
"DESIGNATED VESSEL" means a vessel which in the opinion of the Agent will,
forthwith upon the making of an Advance, become an Additional Mortgaged Vessel
and in respect of which the Agent has received each of the documents referred
to in Clause 7.3(ii) and (iii);
"DOLLAR ADVANCE" means an Advance made under the Dollar Facility;
"DOLLAR COMMITMENT" in relation to a Bank at any time means, subject to the
provisions of Clause 13.1 and save as otherwise provided herein, the amount of
the commitment set opposite its name in Column 1 of the First Schedule, the
amount of any commitment transferred to it in accordance with Clause 35 LESS
any amount of its Dollar Commitment transferred by it in accordance with Clause
35;
"DOLLAR FACILITY" means the dollar revolving loan facility granted to the
Borrowers pursuant to Clause 2.1;
"ENVIRONMENTAL AFFILIATE" means in relation to a party an agent or employee of
that party or a person in a contractual relationship with that party, with
respect to any of the Mortgaged Vessels or its operation or its carriage of
cargo thereon whose acts or omissions have or will have a Material Adverse
Effect;
"ENVIRONMENTAL APPROVALS" means any permit, licence, approval, ruling,
variance, exemption or other authorisation required under applicable
Environmental Laws;
"ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up, removal or other
governmental or regulatory actions or orders instituted or completed pursuant
to any Environmental Laws or Environmental Approvals together with claims made
by any third party relating to damage, contribution, loss or injury, resulting
from any Release of Material of Environmental Concern;
"ENVIRONMENTAL LAWS" means all national, state, local, foreign and
international laws, regulations, treaties and conventions pertaining to the
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata, navigable
waters, waters of the contiguous zone, ocean waters and international waters),
including laws, regulations, treaties and conventions relating to the Release
(or threatened release) of Material of Environmental Concern;
"EXISTING MORTGAGES" means:
(i) the first priority Panamanian mortgages in favour of
The Chase Manhattan Bank, N.A. over each of the GOMI
Vessels each dated 30 September 1991 and registered
at the Panamanian Registry of Shipping; and
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<PAGE> 15
(ii) the first priority mortgage in favour of
Skandinaviska Enskilda Banken over the m.v. Highland
Sprite dated 11 November 1990 and registered at the
British Ships Registry (Port of London);
"EVENT OF DEFAULT" means any of those events specified in Clause 22.1;
"FACILITIES" means the Dollar Facility and the Sterling Facility granted to the
Borrowers in this Agreement and "FACILITY" means either of them;
"FACILITY AMOUNT" means, in the case of the Dollar Facility $5,800,000 and in
the case of the Sterling Facility L.12,500,000;
"FACILITY OFFICE" in relation to the Agent or any Bank means the office
identified with its signature below or such other office as it may from time to
time select;
"FINAL MATURITY DATE" means 30 June 2000;
"FINANCE DOCUMENTS" means this Agreement, the Security Documents, the Master
Agreement and all other documents from time to time creating, evidencing or
entered into as security for, or guaranteeing the obligations of the Borrowers
or any of them hereunder or thereunder and any document entered into pursuant
hereto or thereby;
"FIXED ASSET INVESTMENT" means any investment which will in the reasonable
opinion of the Sponsor increase the marketability of a Mortgaged Vessel or any
other vessel or is necessary to ensure the compliance by the owner of such
Vessel of all laws and regulations applicable to such Mortgaged Vessel or any
other vessel;
"FREELY AVAILABLE LIQUID RESOURCES" shall have the meaning ascribed thereto in
Clause 20.3;
"GMM GROUP" means each of the Principal Borrowers and their subsidiaries for
the time being;
"GNS MORTGAGES" means the first priority mortgages as amended, varied,
supplemented or novated from time to time in favour of the Security Trustee to
be executed by the relevant Borrower over each of the GNS Vessels as security,
INTER ALIA, for the obligations of the Borrowers hereunder;
"GNS VESSELS" means each of:
(a) the BP Fleet Vessels; and
(b) the vessel m.v. "Highland Sprite";
"GOFE ASSIGNMENT" means the assignment agreement referred to in paragraph 7 of
the Second Schedule;
"GOMI MORTGAGES" means the first priority mortgages (each as amended, varied,
novated or supplemented from time to time, and which shall include for the
avoidance of doubt an addendum to the Mortgage over each of the m.v. Seawhip
and the m.v. Seawitch) in favour of the Security Trustee to be executed by the
relevant Borrower over each of the GOMI Vessels as security, INTER ALIA, for
the obligations of the Borrowers hereunder;
"GOMI VESSELS" means each of the vessels:
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<PAGE> 16
(a) the m.v. "Sem Courageous";
(b) the m.v. "Sem Valiant";
(c) the m.v. "Seawhip"; and
(d) the m.v. "Seawitch";
"GROUP" means the Sponsor and its subsidiaries for the time being;
"INSTRUCTING GROUP" means;
(i) before any Advance has been made hereunder, a group of Banks
whose Total Available Commitments amount in aggregate to more
than fifty one (51%) of the Total Available Facility; and
(ii) thereafter, a group of Banks to whom in aggregate more than
fifty one (51%) of the Loan is (or, immediately prior to its
repayment, was then) owed;
"INTEREST PERIOD" means, save as otherwise provided herein, any of those
periods mentioned in Clause 9.1;
"LIBOR" means, in relation to any Advance or unpaid sum, the rate per annum at
which the Agent was offering to prime banks in the London Interbank Market
deposits in the currency of and in an amount approximately equal to the amount
of such Advance or unpaid sum and for the specified period at or about 11.00
a.m. on the Quotation Date for such period and, for the purposes of this
definition, "SPECIFIED PERIOD" means the Interest Period of such Advance or, as
the case may be, the period in respect of which LIBOR falls to be determined in
relation to such unpaid sum;
"LOAN" means at any time the aggregate principal amount of all Advances (or if
such Advances are denominated in sterling, the dollar equivalent thereof) for
the time being outstanding hereunder;
"MARGIN" means one and five eighths per cent. per annum;
"MARKET VALUE" means, at any time, in relation to any Vessel, her sale value in
dollars as then most recently determined by an independent and internationally
recognised firm of shipbrokers acceptable to the Agent on the basis of a sale
of such Vessel (a) for cash (b) free of charter, liens, charges, mortgages and
encumbrances and (c) at arm's length on normal commercial terms between a
willing seller and a willing buyer;
"MASTER AGREEMENTS" means each of the interest rate swap and currency hedging
agreements entered or to be entered into between respectively the Agent and GNS
and the Agent and GOMI in connection with the amounts payable hereunder;
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the ability of any
of the Borrowers to meet its obligations to the Security Trustee, the Agent and
the Banks hereunder or under any of the Security Documents to which any of the
Borrowers is a party;
"MATERIAL OF ENVIRONMENTAL CONCERN" means and includes pollutants,
contaminants, toxic substances, oil as defined in the United States Oil
Pollution Act of 1990, and all hazardous substances as defined in the United
States Comprehensive Environmental Response, Compensation and Liability Act;
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<PAGE> 17
"MORTGAGED VESSELS" means (a) each of the Original Vessels in respect of which
a first priority legal mortgage and deed of covenant or assignments collateral
thereto granted in favour of the Security Trustee is in full force and effect;
and (b) each Additional Mortgaged Vessel and "MORTGAGED VESSEL" means any of
them;
"NEWBUILD" means the platform supply vessel type UT755 which is referred to in
the Building Contract;
"NOTICE OF DRAWDOWN" means a notice substantially in the form set out in the
Third Schedule;
"OBLIGORS" means the Sponsor and the Borrowers;
"ORIGINAL FINANCIAL STATEMENTS" means:
(i) in respect of each of the Principal Borrowers, the
consolidated financial statements of such Principal
Borrower and its subsidiaries for its financial year
ended 31 December 1992; and
(ii) in the case of the Sponsor the consolidated financial
statements of the Sponsor and its subsidiaries for
its financing year ended 31 December 1992;
"ORIGINAL VESSELS" means each of the GNS Vessels and the GOMI Vessels; and
"POTENTIAL EVENT OF DEFAULT" means any event which may become (with the passage
of time, the giving of notice, the making of any determination hereunder or any
combination thereof) an Event of Default;
"PROFITS AFTER TAX" means in respect of any financial year of any member of the
GMM Group, the profit after deduction of tax thereon of such member of the GMM
Group for such financial year determined by reference to the consolidated
profit and loss account of the GMM Group in respect of such financial year and
delivered to the Agent pursuant to Clause 19.1;
"QUOTATION DATE" means, in relation to any period for which an interest rate is
to be determined hereunder, the day on which quotations would ordinarily be
given by prime banks in the London Interbank Market for deposits in dollars for
delivery on the first day of that period Provided that, if for any such period
quotations would ordinarily be given on more than one date, the Quotation Date
for that period shall be the last of those dates;
"REDUCED AMOUNT" on any Reduction Date, and in relation to each of the
Facilities, means the amount of such Facility as the same has been reduced on
such Reduction Date in accordance with the provisions of Clause 13.1;
"REDUCTION DATE" means 31 December 1996 and then each of the days which are 6,
12, 18, 24, 30 and 36 months thereafter;
"RELEASE OF MATERIAL OF ENVIRONMENTAL CONCERN" means an emission, spill,
release or discharge into or upon (i) the air, (ii) surface water, (iii) ground
water or (iv) soils, of any Material of Environmental Concern for which any
member of the Group has any liability under Environmental Laws, except in
accordance with a valid Environmental Approval;
"SECURITY DOCUMENTS" means:
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<PAGE> 18
(i) the first priority statutory ship mortgage and deed
of covenants collateral thereto executed in respect
of the following vessels:
(a) the p.s.v. "Highland Champion";
(b) the p.s.v. "Highland Fortress";
(c) the m.v. "Highland Sprite";
(d) the m.v. "Sem Courageous"; and
(e) the m.v. "Sem Valiant";
(ii) the first preferred Panamanian ship mortgages and
assignments of earnings and insurance collateral
thereto which may be executed in respect of the
following vessels:
(a) the m.v. "Seawhip"; and
(b) the m.v. "Seawitch"
(iii) the first preferred ship mortgage and deed of
covenants collateral thereto and assignment of
earnings and insurance collateral thereto which may
be executed in respect of the Newbuild;
(iv) each of the mortgages and deed of covenants (and/or
such other documents as may be executed assigning the
earnings and insurances of any vessel) which may be
executed in respect of any vessel as security for the
obligations of the Borrowers hereunder;
(v) the Trust Deed;
(vi) the GOFE Assignment;
(vii) the Share Pledges; and
(viii) the Advance Payment Guarantee Assignment;
"SHARE PLEDGES" means each of the share pledges referred to in paragraph 6 of
the Second Schedule;
"SHORT TERM FACILITY" means the short term facility agreement dated 8 July 1993
as amended by the amendment agreement dated 20 May 1994, the amendment
agreement dated the date hereof, and as amended, varied, supplemented or
novated from time to time made between the Borrowers, as borrowers, the
Sponsor, as guarantor, and the Agent as lending bank;
"STERLING ADVANCE" means an Advance made under the Sterling Facility;
"STERLING COMMITMENT" in relation to a Bank at any time means, subject to the
provisions of Clause 13.1 and save as otherwise provided herein, the amount of
the commitment set opposite its name in Column 2 of the First Schedule, the
amount of any commitment transferred to in accordance with Clause 35 LESS any
amount of its Sterling Commitment transferred by it in accordance with Clause
35;
"STERLING FACILITY" means the sterling revolving loan facility granted to the
Borrowers pursuant to Clause 2.2;
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<PAGE> 19
"SUPPLEMENTAL AGREEMENT" means an agreement substantially in the form set out
in the Fifth Schedule;
"TOTAL AVAILABLE COMMITMENT" in relation to any Bank at any time means, save as
otherwise provided herein, the aggregate of its Available Dollar Commitment and
the dollar equivalent of its Available Sterling Commitment at such time;
"TOTAL AVAILABLE FACILITY" means the aggregate amount from time to time of the
Total Available Commitments;
"TRANSFER CERTIFICATE" means a certificate in the form set out in the Sixth
Schedule signed by a Bank and a Transferee whereby:
(a) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights and obligations hereunder
upon and subject to the terms and conditions set out in Clause
35; and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the
Agent as is contemplated in Clause 35;
"TRANSFER DATE" in relation to any Transfer Certificate means the date for the
making of the transfer as specified in such Transfer Certificate;
"TRANSFEREE" means a bank or other financial institution to which a Bank seeks
to transfer all or part of such Bank's rights and obligations hereunder;
"TRUST DEED" means the deed of trust referred to in paragraph 3 of the Second
Schedule.
1.2 Any reference in this Agreement to:
the "AGENT" or a "BANK" shall be construed so as to include it and any
subsequent successors and assigns in accordance with their respective
interests;
a "BUSINESS DAY" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks are generally open for business in London
and New York City;
a "CLAUSE" shall, subject to any contrary indication, be construed as a
reference to a clause hereof;
an "ENCUMBRANCE" shall be construed as a reference to a mortgage, charge,
pledge, lien or other encumbrance securing any obligation of any person or any
other type of preferential arrangement (including, without limitation, title
transfer and retention arrangements) having a similar effect;
the "EQUIVALENT" on any given date in one currency (the "FIRST CURRENCY") of an
amount denominated in another currency (the "SECOND CURRENCY") is a reference
to the amount of the first currency which could be purchased by the amount of
the second currency at the spot rate of exchange quoted by the Agent at or
about 11.00 a.m. on such date for the purchase of the first currency with the
second currency for delivery two business days thereafter;
a "HOLDING COMPANY" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned company or
corporation is a subsidiary;
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<PAGE> 20
"INDEBTEDNESS" shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment or repayment of money,
whether present or future, actual or contingent;
"INDEBTEDNESS FOR BORROWED MONEY" shall be construed so as to include, without
limitation, any indebtedness of any person for or in respect of:
(i) amounts raised by acceptance under any acceptance
credit facility;
(ii) amounts raised under any note purchase facility;
(iii) the amount of any liability in respect of leases or
hire purchase contracts which would, in accordance
with generally accepted accounting standards in the
United States and/or the United Kingdom (as used in
the Principal Borrowers' most recent audited annual
consolidated financial statements from time to time),
be treated as finance or capital leases;
(iv) the amount of any liability in respect of any
purchase price for assets or services the payment of
which is deferred for a period in excess of one
hundred and eighty days; and
(v) amounts raised under any other transaction
(including, without limitation, any forward sale or
purchase agreement) having the commercial effect of a
borrowing (excluding, for the avoidance of doubt,
indebtedness incurred in relation to commercial
transactions);
a "MONTH" is a reference to a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next succeeding calendar
month save that, where any such period would otherwise end on a day which is
not a business day, it shall end on the next succeeding business day, unless
that day falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the immediately preceding
business day Provided that, if a period starts on the last business day in a
calendar month or if there is no numerically corresponding day in the month in
which that period ends, that period shall end on the last business day in that
later month (and references to "MONTHS" shall be construed accordingly);
a "PERSON" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or more
of the foregoing;
"REPAY" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "PREPAY" (or, as the case may be, the
corresponding derivative form thereof);
"REQUISITION COMPENSATION" means the sums of money or other compensation from
time to time payable or paid by any person in connection with or by reason of
requisition for title or other compulsory acquisition of the Vessels or either
of them otherwise than by requisition for hire;
"REQUISITION FOR TITLE" (as a verb) includes, in relation to an asset,
compulsorily acquire, expropriate, nationalise, seize, capture, forfeit,
condemn as prize or otherwise act so as to divest the owner thereof of title
thereto and noun forms of the verb shall be construed accordingly;
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<PAGE> 21
a "SCHEDULE" shall, subject to any contrary indication, be construed as a
reference to a schedule hereto;
a "SUBSIDIARY" of a company or corporation shall be construed as a reference to
any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct
its affairs and/or to control the composition of its board of directors or
equivalent body;
"TAX" shall be construed so as to include any tax, levy, impost, duty or other
charge of a similar nature (including, without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same);
"TOTAL LOSS" shall be construed in accordance with the provisions of the
relevant Security Document;
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time;
a "WHOLLY-OWNED SUBSIDIARY" of a company or corporation shall be construed as a
reference to any company or corporation which has no other members except that
other company or corporation and that other company's or corporation's
wholly-owned subsidiaries or persons acting on behalf of that other company or
corporation or its wholly-owned subsidiaries; and
the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or corporation
shall be construed so as to include any equivalent or analogous proceedings
under the law of the jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such company or corporation carries
on business including the seeking of liquidation, winding-up, reorganisation,
dissolution, administration, arrangement, adjustment, protection or relief of
debtors.
1.3 "L." and "STERLING" denote the lawful currency of the United Kingdom
and "$" and "DOLLARS" denote lawful currency of the United States of America.
1.4 Save where the contrary is indicated, any reference in this Agreement
to:
(i) this Agreement or any other agreement or document
shall be construed as a reference to this Agreement
or, as the case may be, such other agreement or
document as the same may have been, or may from time
to time be, amended, varied, novated or supplemented;
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<PAGE> 22
(ii) a statute shall be construed as a reference to such
statute as the same may have been, or may from time
to time be, amended or re-enacted; and
(iii) a time of day shall be construed as a reference to
London time.
1.5 Clause and Schedule headings are for ease of reference only.
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<PAGE> 23
PART 2
THE FACILITY
2. THE FACILITY
2.1 The Banks grant to the Borrowers through their respective Facility
Offices, subject to the provisions of Clause 13 and otherwise upon the terms
and subject to the conditions hereof, a revolving loan facility in an aggregate
amount of $5,800,000.
2.2 The Banks grant to the Borrowers through their respective Facility
Offices, subject to the provisions of Clause 13 and otherwise subject to the
conditions hereof, a sterling revolving loan facility in an aggregate amount of
L.12,500,000.
3. PURPOSE
3.1 The Facility is intended to:
(i) to refinance existing indebtedness of the Permitted
Borrowers secured by the Existing Mortgages;
(ii) to be applied in or towards the cost of acquisition
of the undertaking and assets of the offshore supply
division of BP Shipping Limited, including the BP
Fleet Vessels;
(iii) to finance the completion of the Newbuild pursuant to
the terms of the Building Contract; and
(iv) for general working capital purposes.
3.2 Without prejudice to the obligations of the Borrowers under Clause
3.1, neither the Agent, the Banks nor any of them shall be obliged to concern
themselves with the application of amounts raised by any of the Borrowers
hereunder.
4. NATURE OF BANK'S OBLIGATIONS
4.1 The obligations of each Bank hereunder are several.
4.2 The failure by a Bank to perform its obligations hereunder shall not
affect the obligations of any Borrower to any other party hereto nor shall any
such other party be liable for the failure by such Bank to perform its
obligations hereunder.
5. CONDITIONS PRECEDENT
5.1 Save as the Agent may otherwise agree, no Borrower may deliver any
Notice of Drawdown hereunder unless the Agent has confirmed to the Sponsor that
it has received all of the documents listed in the Second Schedule and that
each is, in form and substance, satisfactory to the Agent.
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<PAGE> 24
5.2 In respect of the documents referred to in paragraphs 4 and 5 of the
Second Schedule (the "UNDATED SECURITY DOCUMENTS") the Agent agrees that they
are to be held in safe custody by it (or any sub-custodian as hereinafter
referred to) unless and until an Advance is made pursuant to Clause 7: in which
event the Agent shall where such Advance is made pursuant to the provisions of
Clause 7.1 contemporaneously date, or shall procure the contemporaneous dating
of, the Undated Security Documents referred to in paragraphs 4(iv), (v) and 5
of the Second Schedule and shall then endeavour to register (as soon as is
reasonably practicable to do so) the mortgages referred to in paragraphs 4(iv),
(v) and 5 of the Second Schedule on the Panamanian or Malaysian Register of
Ships as the case may be, and where such Advance is made pursuant to the
provisions of Clause 7.2, contemporaneously date, or shall procure the
contemporaneous dating of the Undated Security Documents referred to in
paragraphs 4(i), (ii) and (iii) of the Second Schedule and shall then endeavour
to register (as soon as is reasonably practicable to do so) the mortgages
referred to in paragraphs 4(i), (ii) and (iii) of the Second Schedule on the
British Register of Ships. The Agent may place the Undated Security Documents
with any firm of lawyers of good repute and, in the absence of gross negligence
or wilful default on the part of the Agent, the Agent shall not be responsible
for any loss thereby incurred.
5.3 The Agent shall not, in the absence of gross negligence or wilful
default on its part, be responsible for any loss, incurred by any person, if
for any reason it is not possible to put into effect any matter the subject of
Clause 5.2. The relevant Borrower shall from time to time execute and sign all
documents which the Agent may reasonably require for effecting the registration
of the Undated Security Documents and, furthermore, each of the Borrowers
agrees not to withdraw, or purport to withdraw, the Undated Security Documents
from the custody of the Agent (or any sub-custodian as hereinbefore referred
to) except with the prior written consent of the Agent.
6. ADDITIONAL BORROWERS
6.1 The Sponsor may with the prior written consent of the Agent on behalf
of the Banks, such consent not to be unreasonably withheld, from time to time
designate any wholly-owned subsidiary of either of the Principal Borrowers as
an Additional Borrower for the purposes of the Facilities, in which event the
Sponsor shall promptly deliver or cause to be delivered to the Agent a
Supplemental Agreement duly executed by the parties thereto (other than the
Agent).
6.2 Upon delivery to the Agent of any Supplemental Agreement referred to
in Clause 6.1 and subject to (i) the Agent having confirmed to the person or
persons party to such Supplemental Agreement as proposed Additional Borrower or
Borrowers that it has received, in form and substance satisfactory to it, all
of the conditions precedent specified therein and (ii) the Agent being
satisfied that neither the rights of the Banks under this Agreement nor any
security provided under the Security Documents are adversely affected in any
way by the proposed accession of any such Additional Borrower or Borrower, this
Agreement shall thenceforth be read and construed as if each wholly-owned
subsidiary of either of the Principal Borrowers which is a party to such
Supplemental Agreement as a proposed Additional Borrower were a party hereto
having all the rights and obligations of a Borrower and all references in any
Facility Document to "BORROWERS" and "PRINCIPAL BORROWERS" shall be treated as
including a reference to any such subsidiary which has become a party hereto in
the manner contemplated above.
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<PAGE> 25
PART 3
AVAILABILITY OF THE FACILITIES
7. AVAILABILITY OF THE FACILITIES
7.1 Subject to the provisions of Clause 7.3 and save as otherwise provided
herein, a Dollar Advance will be made by the Banks to a Borrower if:
(i) not more than ten, nor less than five business days
before the proposed date for the making of such
Advance, the Agent has received from a Borrower a
notice of drawdown therefore, receipt of which shall
oblige such Borrower to borrow the amount therein
requested on the date therein stated upon the terms
and subject to the conditions herein;
(ii) the proposed date for the making of such Advance is a
business day which falls one or more months before
the Final Maturity Date;
(iii) the proposed amount of such Advance is (a) an amount
of not less than $1,000,000 which is an integral
multiple of $500,000 and which is less than the
Available Dollar Facility or (b) equal to, the amount
of the Available Dollar Facility;
(iv) the proposed amount of such Advance less the amount
of any Dollar Advances falling to be repaid on or
before the proposed date for the making of such
Advance does not exceed the Available Dollar Amount;
(v) in the case of the initial Dollar Advance the Agent
is satisfied that first priority legal mortgages over
each of the GOMI Vessels will be duly registered,
recorded and filed immediately on the making thereof;
(vi) the interest rate applicable to such Advance during
its first Interest Period would not fail to be
determined pursuant to Clause 11.01;
(vii) the making of such Advance would not result in a
breach of the requirements of Clause 20.1; and
(viii) either:
(a) no Event of Default or Potential Event of
Default has occurred; and
(b) the representations set out in Clause 18 are
true on and as of the proposed date for the
making of such Advance,
or the Banks agree (notwithstanding any matter
mentioned at (a) or (b) above) to make such Advance.
7.2 Subject to the provision of Clause 7.3 and save as otherwise provided
herein, a Sterling Advance will be made by the Banks to a Borrower if:
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<PAGE> 26
(i) not more than ten nor less than five business days
before the proposed date for the making of such
Advance, the Agent has received from a Borrower a
Notice of Drawdown therefor, receipt of which shall
oblige such Borrower to borrow the amount therein
requested on the date therein stated upon the terms
and subject to the conditions contained herein;
(ii) the proposed date for the making of such Advance is a
business day which falls one or more months before
the Final Maturity Date;
(iii) the proposed amount of such Advance in (a) in the
case of the initial Sterling Advance L.7,350,000, and
(b) in the case of each subsequent Advance the
proposed amount of such Advance is an amount of not
less than L.600,000 which is an integral multiple of
L.300,000 and which is less than the amount of the
Available Sterling Facility or (b) equal to the
amount of the Available Sterling Facility;
(iv) the proposed amount of such Advance less the amount
of any Sterling Advances falling to be repaid on or
before the proposed date for the making of such
Advance does not exceed the Available Sterling
Amount;
(v) in the case of the initial Sterling Advance the Agent
is satisfied that first priority legal mortgages over
each of the GNS Vessels will be duly registered,
recorded and filed immediately upon the making
thereof;
(vi) the interest rate applicable to such Advance during
its first Interest Period would not fail to be
determined pursuant to Clause 11.01;
(vii) the making of such Advance would not result in a
breach of the requirements of Clause 20.1; and
(viii) either:
(a) no Event of Default or Potential Event of
Default has occurred; and
(b) the representations set out in Clause 18 are
true on and as of the proposed date for the
making of such Advance,
or each of the Banks agree (notwithstanding any
matter mentioned at (a) or (b) above) to make such
Advance.
7.3 Save as the Agent may otherwise agree, other than in the case of each
of the first Dollar Advance and the first Sterling Advance, no Borrower may
deliver a Notice of Drawdown hereunder in respect of an Advance the
availability of which is determined by reference to the value of a Designated
Vessel, unless the Agent has confirmed to the Sponsor that it has received in
form and substance satisfactory to it:-
(i) evidence that such Designated Vessel
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<PAGE> 27
(a) is, or will be, registered in the name of a Borrower
under a flag acceptable to the Agent, free from all
charters, contracts liens and encumbrances other than
in favour of the Security Trustee or in terms
acceptable to the Agent;
(b) is classified by the American Bureau of Shipping A1
AMS or to an equivalent classification acceptable to
the Agent; and
(c) is, or will be, insured in accordance with the deed
of covenants (and/or such other document as may be
executed assigning the insurances of such Designated
Vessel) referred to in Clause 7.3(iii);
(ii) a first priority mortgage in respect of such Designated Vessel
in favour of the Security Trustee;
(iii) a deed of covenants (and/or such other document as may be
executed, assigning the earnings and insurances of such
Designated Vessel)
Provided that the documents referred to in Clause 7.3(ii) and (iii)
shall be left undated and held by the Agent on the terms and
conditions of Clause 5.2 and 5.3 mutatis mutandis.
8. DETERMINATION OF ELIGIBLE AMOUNTS AND AVAILABLE AMOUNTS
At any time (i) the "AVAILABLE DOLLAR AMOUNT" shall be an amount equal
to the Eligible Dollar Amount less the amount of all Dollar Advances
outstanding at that time; and (ii) the "AVAILABLE STERLING AMOUNT"
shall be an amount equal to the Eligible Sterling Amount less the
amount of all Sterling Advances outstanding at that time where,
(a) the "ELIGIBLE DOLLAR AMOUNT" shall be the aggregate
of:
(x) the Base Dollar Available Amount at such
time; and
(y) 51% of the aggregate amount of the Market
Value of (i) any Additional Mortgaged Vessels
at such time; and (ii) any Designated
Vessels;
(b) the "ELIGIBLE STERLING AMOUNT" shall be the aggregate
of:
(x) the Base Sterling Available Amount at such
time; and
(y) 51% of the sterling equivalent of the
aggregate amount of the Market Value of (i)
any Additional Mortgaged Vessels at such
time; and (ii) any Designated Vessels;
(c) the "BASE DOLLAR AVAILABLE AMOUNT" shall be
$4,500,000
less
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<PAGE> 28
(x) in the case of the sale of any of the GOMI
Vessels an amount equal to 51% of the
proceeds of sale of any such vessels (or, if
such proceeds are not denominated in dollars,
the dollar equivalent thereof); and
(y) an amount equal to 51% of the value of any
GOMI Vessel which ceases to be a Mortgaged
Vessel;
(d) the "BASE STERLING AVAILABLE AMOUNT" shall be
L.7,115,000
less
(x) in the case of the sale of any of the GNS
Vessels an amount equal to 51% of the
proceeds of sale of such vessels (or, if such
proceeds are not denominated in sterling, the
sterling equivalent thereof); and
(y) an amount equal to 51% of the sterling
equivalent of the value of any of the GNS
Vessels which ceases to be a Mortgaged
Vessel;
PROVIDED ALWAYS THAT the Eligible Dollar Amount and the Eligible Sterling
Amount shall be calculated without double counting the Market Value of any
Additional Mortgaged Vessels related thereto.
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<PAGE> 29
PART 4
INTEREST
9. INTEREST PERIODS
9.1 The period for which an Advance is outstanding shall be divided into
successive periods each of which (other than the first) shall start on the last
day of the preceding such period.
9.2 The duration of each Interest Period shall, save as otherwise provided
herein, be one, three or six months, in each case as the Borrower of the
Advance to which such Interest Period relates may by not less than five
business days' prior notice to the Agent select Provided that:
(i) if such Borrower fails to give such notice of its
selection in relation to an Interest Period, the
duration of that Interest Period shall, subject to
paragraphs (ii) and (iii) below, be three months;
(ii) any Interest Period which begins during or at the
same time as any other Interest Period shall (if the
Advances to which those Interest Periods relate are
in the same currency) end at the same time as that
other Interest Period; and
(iii) any Interest Period which would otherwise end during
the month preceding, or extend beyond, a Reduction
Date or the Final Maturity Date shall be of such
duration that it shall end on such date.
10. INTEREST
10.1 On the last day of each Interest Period (and in the case of an
Interest Period of a duration of six months or more, on the expiry of each
period of three months during such Interest Period) the relevant Borrower shall
pay accrued interest on the Advance to which such Interest Period relates.
10.2 The rate of interest applicable to an Advance from time to time during
an Interest Period relating thereto shall be the rate per annum which is the
sum of the Margin (and in the case of an Advance denominated in sterling the
Associated Cost Rate in respect thereof at such time) and LIBOR on the
Quotation Date therefor.
11. ALTERNATIVE INTEREST RATES
11.1 If, in relation to an Advance at or about 11.00 a.m. on the Quotation
Date for an Interest Period in respect of such Advance:
(i) the Agent was not offering to prime banks in the
London Interbank Market deposits in the currency in
which such Advance is to be denominated for the
proposed duration of such Interest Period; or
(ii) before the close of business in London on the
Quotation Date for such Interest Period, the Agent
has been notified by each of a group of Banks to whom
in aggregate fifty-one (51) per cent or more of the
aggregate amount of Advances denominated in the
currency of such Advance is (or, if an Advance were
then to be
- 18 -
<PAGE> 30
made, would be) owed that the rate at
which such deposits were being so offered does not
reflect the cost to it of obtaining such deposits,
then, notwithstanding the provisions of Clause 9:
(a) if paragraph (i) above applies the duration
of that Interest Period shall be one month
or, if less, such that it shall end on the
next succeeding Reduction Date or the Final
Maturity Date as the case may be; and
(b) the rate of interest applicable to each
Bank's portion of the Advance to which such
Interest Period relates from time to time
during such Interest Period shall be the rate
per annum which is the sum of the Margin
(and, in the case of sterling, the Associated
Costs Rate in respect thereof at such time)
and the rate per annum notified to the Agent
by such Bank before the last day of such
Interest Period to be that which expresses as
a percentage rate per annum the cost to such
Bank of funding its portion of the Advance
during such Interest Period from whatever
sources it may reasonably select.
11.2 If (i) the event mentioned in paragraph (i) or (ii) in Clause 11.1
occurs or (ii) by reason of circumstances affecting the London Interbank Market
during any period of three consecutive business days the Agent was not offering
deposits in the currency in which an Advance is to be denominated to prime
banks in the London Interbank Market, then:
(i) the Agent shall notify the Banks, the Sponsor and the
Borrowers of such event;
(ii) if the Agent so requires, within five days of such
notification the Agent and the Sponsor and each
relevant Borrower shall enter into negotiations with
a view to agreeing a substitute basis (a) for
determining the rates of interest from time to time
applicable to the Advances and/or (b) upon which the
Advances may be maintained (whether in dollars or
sterling) thereafter and any such substitute basis
that is agreed shall take effect in accordance with
its terms and be binding on each party hereto;
Provided Always that the Agent may not agree any such
substitute basis without the prior consent of each
Bank; and
(iii) if the Agent has required the Sponsor and any
Borrower to enter into such negotiations, the Agent
may declare (any such declaration to be binding on
the Borrowers) that each Advance shall become due and
payable on the last day of its then current Interest
Period unless by then a substitute basis has been
agreed upon in relation thereto.
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<PAGE> 31
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT
12. REPAYMENT
12.1 The Principal Borrowers shall, on the Final Maturity Date, repay or
procure the repayment by the Borrowers of each Advance then outstanding.
12.2 On each Reduction Date the Principal Borrowers shall repay, or procure
the repayment by the Borrowers, of the amount or amounts by which, on that
Reduction Date, Advances under either of the Facilities exceed the Reduced
Amount of that Facility.
13. REDUCTION, CANCELLATION AND PREPAYMENT
13.1 The amount of each of the Dollar Facility and the Sterling Facility
shall be reduced on each of the Reduction Dates by an amount equal to ten per
cent. (10%) of the Facility Amount.
13.2 The Sponsor may, by giving to the Agent not less than thirty days'
prior notice to that effect, cancel the whole or any part (being, in the case
of the Dollar Facility, an amount or integral multiple of $500,000 and, in the
case of the Sterling Facility, an amount or integral multiple of L.300,000)) of
the Facilities. Any such cancellation shall reduce the Available Dollar
Commitment and/or the Available Sterling Commitment, as the case may be, of the
Banks rateably.
13.3 Any Borrower may, if it has given to the Agent not less than ten
business days prior notice to that effect, prepay the whole of any Advance or
any part of any Advance (being an amount, in the case of any Advance
denominated in dollars, of not less than $1,000,000 and an integral multiple of
$500,000, and in the case of any Advance denominated in sterling of not less
than L.600,000 and an integral multiple of L.300,000) on the last day of any
Interest Period relating to that Advance.
13.4 In the event any Mortgaged Vessel is sold or is or becomes or is
declared an actual or constructive or comprised or agreed total loss then the
relevant Borrower shall apply the proceeds of sale or insurance proceeds or any
requisition compensation in respect thereof:
(i) first, where such Mortgaged Vessel was a GOMI Vessel
or an Additional Mortgaged Vessel by reference to the
value of which the Eligible Dollar Amount was
calculated, in repayment of Advances then outstanding
under the Dollar Facility, and where such Mortgaged
Vessel was a GNS Vessel or an Additional Mortgaged
Vessel by reference to the value of which the
Eligible Sterling Amount was calculated, in repayment
of Advances then outstanding under the Sterling
Facility; and
(ii) second, in repayment any other Advances then
outstanding
such repayment to be effected on the last day of the Interest Period in respect
of Advances in the currency in which such proceeds are to be first applied
during which such proceeds are received or, if earlier, 120 days from the date
of total loss; PROVIDED ALWAYS that if any such proceeds of sale or insurance
proceeds are recovered or requisition compensation received other than on the
last day of any Interest Period the Agent shall, at the request of the Sponsor,
retain such proceeds of sale or insurance proceeds or requisition compensation,
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<PAGE> 32
as the case may be, in a suspense account with interest accruing thereon for
the account of the relevant Borrower at such rate as the Agent would pay in the
normal course of its business in respect of deposits of a like amount and for a
like term.
13.5 Any notice of cancellation or prepayment given by the Sponsor or any
Borrower pursuant to Clause 13.2 or 13.3 shall be irrevocable, shall specify
the date upon which such cancellation or prepayment is to be made and the
amount of such cancellation or prepayment and, in the case of a notice of
prepayment, shall oblige such Borrower to make such prepayment on such date.
13.6 If any Bank claims indemnification from the Principal Borrowers under
Clause 14.2 or Clause 16.1 and within thirty days thereafter the Agent receives
from the Sponsor at least fifteen days' prior notice (which shall be
irrevocable) of the Borrowers' intention to repay such Bank's share of the
Advances then outstanding, the Borrowers shall on the last day of each of the
then current Interest Period of each such Advance repay such Bank's portion of
such Advances.
13.7 A Bank for whose account a repayment is to be made under Clause 13.6
shall not be obliged to make any advances hereunder on or after the date upon
which the Agent receives the Borrowers' notice of their intention to repay such
Bank's share of the Advances then outstanding, on which date such Bank's
Available Dollar Commitment and Available Sterling Commitment shall each be
reduced to zero.
13.8 The Borrowers shall not repay all or any part of any Advance except at
the times and in the manner expressly provided for in this Agreement, but,
shall subject to the terms and conditions hereof, be entitled to reborrow any
amount repaid.
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<PAGE> 33
PART 6
CHANGE IN CIRCUMSTANCES
14. TAXES
14.1 All payments to be made any of the Borrowers to any person hereunder
shall be made free and clear of and without deduction for or on account of tax
unless such Borrower is required to make such a payment subject to the
deduction or withholding of tax, in which case the sum payable by such Borrower
in respect of which such deduction or withholding is required to be made shall
be increased to the extent necessary to ensure that, after the making of the
required deduction or withholding, such person receives and retains (free from
any liability in respect of any such deduction or withholding) a net sum equal
to the sum which it would have received and so retained had no such deduction
or withholding been made or required to be made.
14.2 Without prejudice to the provisions of Clause 14.1, if any person or
the Agent on its behalf is required to make any payment on account of tax (not
being a tax imposed on the net income of its Facility Office in the
jurisdiction in which it is incorporated or in which its Facility Office is
located) or otherwise on or in relation to any sum received or receivable by
such person or the Agent on its behalf hereunder (including, without
limitation, any sum received or receivable under this Clause 14) or any
liability in respect of any such payment is asserted, imposed, levied or
assessed against such person or the Agent on its behalf, the relevant Borrower
shall, upon demand of the Agent, promptly indemnify such person against such
payment or liability, together with any interest, penalties and expenses
payable or incurred in connection therewith.
14.3 A Bank intending to make a claim pursuant to Clause 14.2, it shall
notify the Agent of the event by reason of which it is entitled to make such
claim whereupon the Agent shall notify the relevant Borrower and the Sponsor
thereof Provided that nothing herein shall require any Bank to disclose any
confidential information relating to the organisation of its affairs.
15. TAX RECEIPTS
15.1 If, at any time, any of the Borrowers is required by law to make any
deduction or withholding from any sum payable by it hereunder (or if thereafter
there is any change in the rates at which or the manner in which such
deductions or withholdings are calculated), such Borrower shall promptly notify
the Agent.
15.2 If any of the Borrowers makes any payment hereunder in respect of
which it is required to make any deduction or withholding, such Borrower shall
pay the full amount required to be deducted or withheld to the relevant
taxation or other authority within the time allowed for such payment under
applicable law and shall deliver to the Agent for each Bank, within thirty days
after it has made such payment to the applicable authority, an original receipt
(or a certified copy thereof) issued by such authority evidencing the payment
to such authority of all amounts so required to be deducted or withheld in
respect of such payment.
16. INCREASED COSTS
16.1 If, by reason of (i) any change in law or in its interpretation or
administration and/or (ii) compliance with any request from or requirement of
any central bank or other fiscal, monetary or other authority (including,
without limitation, a request or requirement which affects the manner in which
a Bank or any holding company of such Bank is required to or does maintain
capital resources having regard to such Bank's obligations hereunder and to
amounts owing to it hereunder):
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<PAGE> 34
(a) a Bank or any holding company of such Bank incurs a cost as a
result of its having entered into and/or performing its
obligations under this Agreement and/or assuming or
maintaining a commitment under this Agreement and/or making
one or more Advances;
(b) a Bank or any holding company of such Bank is unable to obtain
the rate of return on its overall capital which it would have
been able to obtain but for its having entered into and/or
performing its obligations and/or assuming or maintaining a
commitment under this Agreement;
(c) there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining all or any of
the advances comprised in a class of advances formed by or
including the Advances; or
(d) a Bank or any holding company of such Bank becomes liable to
make any payment on account of tax or otherwise (not being a
tax imposed on the net income of its Facility Office by the
jurisdiction in which it is incorporated or in which its
Facility Office is located) on or calculated by reference to
the amount of the Advances and/or to any sum received or
receivable by it hereunder; or
(e) the Associated Costs Rate, as calculated hereunder, does not
represent the cost to any Bank of complying with the
requirements of the Bank of England in relation to its funding
or maintaining of Advances,
then the Principal Borrowers shall, from time to time on demand of the Agent,
promptly pay to the Agent for the account of that Bank amounts sufficient to
indemnify that Bank or any such holding company against, as the case may be,
(1) such cost, (2) such reduction in such rate of return (or such proportion of
such reduction as is, in the opinion of that Bank, attributable to its
obligations hereunder), (3) such increased cost (or such proportion of such
increased cost as is, in the opinion of that Bank, attributable to its funding
or maintaining Advances) or (4) such liability.
16.2 A Bank intending to make a claim pursuant to Clause 16.1, it shall
notify the Agent of the event by reason of which it is entitled to do so
whereupon the Agent shall notify the Sponsor thereof Provided that nothing
herein shall require any Bank to disclose any confidential information relating
to the organisation of its affairs.
17. ILLEGALITY
If, at any time, it is unlawful for a Bank to make, fund or allow to remain
outstanding all or any of the Advances, then that Bank shall, promptly after
becoming aware of the same, deliver to the Borrowers through the Agent a
certificate to that effect and:
(i) such Bank shall not thereafter be obliged to make any
Advances and the amount of its Dollar Available
Commitment and its Sterling Available Commitment
shall be immediately reduced to zero; and
(ii) if the Agent on behalf of such Bank so requires, the
Borrowers shall on such date as the Agent shall have
specified repay such Bank's share of each outstanding
Advance together with accrued interest thereon and
all other amounts owing to such Bank hereunder and
any repayment so made shall reduce rateably the
remaining obligations of the Borrowers under Clause
12.
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<PAGE> 35
PART 7
REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
18. REPRESENTATIONS
18.1 Each of the Borrowers represents that:
(i) it is a corporation duly organised under the laws of
the Republic of Panama (in the case of GOMI and GOFE)
or England (in the case of GNS and GONS) with power
to enter into this Agreement and the Security
Documents to which it is a party and to exercise its
rights and perform its obligations hereunder and all
corporate and other action required to authorise its
execution of this Agreement and the Security
Documents to which it is a party and its performance
of its obligations hereunder has been duly taken;
(ii) under the laws of its jurisdiction of incorporation
in force at the date hereof, it will not be required
to make any deduction or withholding from any payment
it may make hereunder;
(iii) under the laws of its jurisdiction of incorporation
in force at the date hereof, the claims of the Agent
and the Banks against such Borrower under this
Agreement and under the Security Documents to which
it is a party will rank at least pari passu with the
claims of all its other unsecured creditors save
those whose claims are preferred solely by any
bankruptcy, insolvency, liquidation or other similar
laws of general application;
(iv) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement and the
Security Documents to which it is a party, it will
not be entitled to claim for itself or any of its
assets immunity from suit, execution, attachment or
other legal process;
(v) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement and any
of the Security Documents expressed to be governed by
English law, the choice of English law as the
governing law of this Agreement and such Security
Documents and any judgment obtained in England will
be recognised and enforced;
(vi) save for the registration of the GNS Mortgages and
the GOMI Mortgages with the appropriate authorities,
all acts, conditions and things required to be done,
fulfilled and performed in order (a) to enable it
lawfully to enter into, exercise its rights under and
perform and comply with the obligations expressed to
be assumed by it in this Agreement, (b) to ensure
that the obligations expressed to be assumed by it in
this Agreement and the Security Documents are legal,
valid and binding and (c) to make this Agreement and
the Security Documents admissible in evidence in its
jurisdiction of incorporation have been done,
fulfilled and performed;
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<PAGE> 36
(vii) under the laws of its jurisdiction of incorporation
in force at the date hereof, it is not necessary that
this Agreement and the Security Documents, other than
the GNS Mortgages and the GOMI Mortgages, the Share
Pledges and any deed of covenant or assignment of
earnings and insurance collateral thereto be filed,
recorded or enrolled with any court or other
authority in such jurisdiction or that any stamp,
registration or similar tax be paid on or in relation
to this Agreement or any Security Document; and
(viii) the obligations expressed to be assumed by it in this
Agreement and the Security Documents to which it is a
party are its legal, valid and binding obligations.
18.2 Each of the Borrowers further represents that:
(i) no member of the Group has taken any corporate action
nor have any other steps been taken or legal
proceedings been started or (to the best of the
Borrowers' knowledge and belief) threatened against
any member of the Group for its winding-up,
dissolution, administration or re-organisation or for
the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer
of it or of any or all of its assets or revenues;
(ii) no member of the Group is in breach of or in default
under any agreement to which it is a party or which
is binding on it or any of its assets to an extent or
in a manner which might have a Material Adverse
Effect on the business or financial condition of any
member of the Group;
(iii) no action or administrative proceeding of or before
any court or agency which might have a Material
Adverse Effect on the business or financial condition
of any member of the Group has been started or
threatened;
(iv) it and (to the best of its knowledge) its
Environmental Affiliates have complied with the
provisions of all applicable Environmental Laws,
except where non-compliance does not and will not
have a Material Adverse Effect;
(v) it and (to the best of its knowledge) its
Environmental Affiliates have obtained all requisite
Environmental Approvals and are in compliance with
such Environmental Approvals, except where the
failure to obtain or comply with any such
Environmental Approvals does not and will not have a
Material Adverse Effect;
(vi) neither it nor (to the best of its knowledge) its
Environmental Affiliates has received notice of any
Environmental Claim that alleges that it or any of
its Environmental Affiliates are not in compliance
with applicable Environmental Laws or Environmental
Approvals, where such non-compliance has or will have
a Material Adverse Effect;
(vii) there is no Environmental Claim pending or
threatened, to the best of its knowledge, that has or
will have a Material Adverse Effect;
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<PAGE> 37
(viii) there has been no Release of Material of
Environmental Concern except where such event does
not and will not have a Material Adverse Effect;
(ix) all of the written information supplied by any member
of the Group to the Agent and the Banks in connection
herewith is true, complete and accurate in all
material respects and it is not aware of any material
facts or circumstances that have not been disclosed
to the Agent and the Banks and which might, if
disclosed, adversely affect the decision of a person
considering whether or not to provide finance to the
Borrowers;
(x) the Sponsor is directly or indirectly, the sole legal
and beneficial owner of the entire share capital of
each of the Principal Borrowers; and
(xi) save for the Christiania Mortgages and any security
documents related or collateral thereto and any
encumbrance created pursuant to the provisions of
Clause 21.2(iii), no encumbrance exists over all or
any of the present or future revenues or assets of
any member of the Group.
18.3 Each of the Borrowers further represents that:
(i) the execution by each Borrower of this Agreement and
of each Security Document to which it is a party and
each Borrower's exercise of its rights and
performance of its obligations hereunder will not
result in the existence of nor oblige any member of
the Group to create any encumbrance over all or any
of its present or future revenues or assets: except,
insofar as the same may arise pursuant to the
Security Documents;
(ii) the execution by each Borrower of this Agreement and
each Borrowers' exercise of its rights and
performance of its obligations hereunder do not and
will not:
(a) conflict with any agreement, mortgage, bond
or other instrument or treaty to which any
Borrower is a party or which is binding upon
it or any of its assets;
(b) conflict with any Borrowers constitutive
documents and rules and regulations; or
(c) conflict with any applicable law, regulation
or official or judicial order; and
(iii) the execution by each Borrower of this Agreement
constitutes, and such Borrower's exercise of its
rights and performance of its obligations hereunder
will constitute, private and commercial acts done and
performed for private and commercial purposes.
18.4 GOFE represents that it, and each of the other parties thereto are in
compliance with all their obligations under each of the charters relating to
the GOMI Vessels, and GONS represents that it and BRITISH GAS are in compliance
with all their obligations under the charter relating to the m.v. "Highland
Sprite" and
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<PAGE> 38
none of the parties to such charters have cancelled or repudiated or sought to
terminate, cancel or repudiate their obligations thereunder.
18.5 GONS represents that:
(i) the Building Contract is in full force and effect and
has not been amended since 29 December 1994 and is
enforceable against the Contractor in accordance with
its terms; and
(ii) neither it nor the Contractor is in breach of or
default under the Building Contract.
19. FINANCIAL INFORMATION
19.1 The Sponsor shall, or shall procure that, the Principal Borrowers
shall:
(i) as soon as the same become available, but in any
event within 120 days after the end of each of its
financial years, deliver to the Agent in sufficient
copies for the Banks the audited consolidated
financial statements of the Group and each of the
Principal Borrowers for such financial year;
(ii) as soon as the same become available, but in any
event within 60 days after the end of each of its
financial quarter years, deliver to the Agent in
sufficient copies for Banks the consolidated
financial statements of the Group, each of the
Principal Borrowers and the GMM Group for such
period; and
(iii) from time to time on the request of the Agent,
furnish the Agent with such information about the
business and financial condition of the Group as the
Agent may reasonably require (including, but without
limitation, such further information as the Agent may
from time to time require in order to enable it to
ascertain where the obligations as set out in Clause
20 are complied with.
19.2 The Sponsor and each of the Principal Borrowers shall ensure that:
(i) each set of financial statements delivered by it
pursuant to Clause 19.1 is prepared on the same basis
as was used in the preparation of its Original
Financial Statements and in accordance with
accounting principles generally accepted in the
United States and/or the United Kingdom and
consistently applied;
(ii) each set of financial statements delivered by it
pursuant to Clause 19.1 is certified by a duly
authorised officer of the Sponsor as giving a true
and fair view of the financial condition of the Group
as at the end of the period to which those financial
statements relate and of the results of the Group's
operations during such period; and
(iii) each set of financial statements delivered by it
pursuant to paragraph (i) of Clause 19.1 has been
audited by auditors acceptable to the Agent.
20. FINANCIAL CONDITION AND SECURITY COVERAGE
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<PAGE> 39
20.1 Each of the Principal Borrowers shall ensure that at all times the
consolidated financial condition of the GMM Group, as evidenced by the
Sponsor's and the Principal Borrower's then most recent audited annual
consolidated financial statements and in the case of paragraph (iv) below the
then most recent quarterly financial statements delivered pursuant to Clause
19.1(ii) (each as adjusted, as the Agent may consider appropriate, to take
account of any changes in circumstances which occur after the date as of which
such audited annual consolidated financial statements or, as the case may be,
quarterly financial statements, were prepared), shall be such that:
(i) the ratio of Current Assets to Current Liabilities
shall exceed 1.15:1;
(ii) the ratio of Total Liabilities to Tangible Equity
shall not exceed 1.75:1;
(iii) the aggregate of Tangible Equity and Subordinated
Debt shall be equal to or exceed $29,000,000;
(iv) for the twelve month period preceding the date as of
which such financial statements were prepared, the
ratio of Gross Revenues to Operating Expenses shall
be equal to or exceed 1.75:1.
20.2 Each of the Borrowers shall at all times ensure that Freely Available
Liquid Resources exceed $1,500,000.
20.3 Each of the Principal Borrowers shall ensure at all times that the
aggregate of:
(i) gross revenues received in respect of the charter,
lease or hire of any of the Mortgaged Vessels during
the preceding six months; and
(ii) the projected gross revenues from any unconditional
committed charter, lease or agreement to hire of any
of the Mortgaged Vessels for the succeeding six
months
shall be equal to or exceed $5,000,000.
20.4 In this Clause 20:
(i) "CURRENT ASSETS" means the aggregate of all of the
assets of each member of the GMM Group, other than
monies due or to become due from another member of
the GMM Group, which would, in accordance with
generally accepted accounting practice in the U.S.
consistently applied, be classified as current
assets, all as shown on the latest financial
statements delivered in accordance with Clause 19.1;
(ii) "CURRENT LIABILITIES" means at any particular time
the aggregate of the obligations of each member of
the GMM Group to pay money other than (a) repayment
obligations in respect of Advances made hereunder
falling due within a six month period from the date
at which such liabilities are calculated and (b)
monies due or to become due to other members of the
GMM Group, which would, in accordance with generally
accepted accounting practice in the U.S. consistently
applied, be classified as current liabilities, all as
shown on the Sponsor's latest financial statements
delivered in accordance with Clause 19.1;
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<PAGE> 40
(iii) "FREELY AVAILABLE LIQUID RESOURCES" means the
aggregate of any cash and deposits in any
jurisdiction from which funds are freely
transferable, denominated in freely convertible and
transferable currencies (placed in a prime bank or
reputable financial institution) then solely legally
and beneficially owned by any of the Borrowers and
free from encumbrances;
(iv) "GROSS REVENUES" means in respect of the GMM Group
and in respect of any period of time the aggregate of
the following items (all ascertained on a before tax
basis and without double counting):
(a) the revenues received or receivable by the
GMM Group during such period in respect of
the charter, use or operation of any
Mortgaged Vessel;
(b) all compensation or other consideration
received or receivable by any member of the
GMM Group during such period from any person
on account of any requisition for hire of any
Mortgaged Vessel;
(c) any and all proceeds of insurances relating
to revenue claims received or receivable by
any member of the GMM Group during such
period in respect of any Mortgaged Vessel;
(d) any other amounts received or receivable by
any member of the GMM Group during such
period which the Agent has agreed may be
taken into account in calculating the Gross
Revenues for such period,
(v) "OPERATING EXPENSES" means in respect of the GMM
Group and in respect of any period of time the
aggregate of the following items (all ascertained on
a before tax basis and without double counting):
(a) all management fees paid or payable by any
member of the GMM Group during, or which are
attributable to, such period in connection
with the management of any of the Mortgaged
Vessels; and
(b) all administrative, operating and overhead
costs and expenses paid or payable by any
member of the GMM Group in connection with
any of the Mortgaged Vessels during, or which
are attributable to, such period (other than,
for the avoidance of doubt, items relating to
depreciation or amortisation),
but only to the extent, in the case of (a) and (b)
hereof, that such items are non-capital items and are
deductible from revenues under generally accepted
accounting principles in the United States and/or the
United Kingdom consistently applied;
(vi) "TOTAL LIABILITIES" means at any particular time the
aggregate of the obligations of each member of the
GMM Group on a consolidated basis for the payment of
monies whether borrowed or not and whether due or to
become due which would, in accordance with generally
accepted accounting practice in the U.S. consistently
applied, be classified as liabilities (including, for
the avoidance of doubt, liabilities in respect of
lease or hire purchase contracts, contracts of
charter and contracts of
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<PAGE> 41
guarantee), other than monies due or to become due to
any other member of the GMM Group;
(vii) "TANGIBLE EQUITY" means at any particular time the
aggregate of the amounts paid up or credited as paid
up in respect of the Principal Borrowers' share
capital and the aggregate amount of capital and
reserves of the Principal Borrowers including, but
not limited to any credit balance standing to the
consolidated profit and loss account of the GMM
Group;
but deducting
(a) any debit balance standing to the
consolidated profit and loss account of the
GMM Group; and
(b) any intangible asset, including (for the
avoidance of doubt) goodwill
but shall exclude the cumulative amount of any
translation or transaction adjustments as required to
be deducted from or added to equity but excluded from
the determination of consolidated profit and loss in
accordance with accounting principles generally
accepted in the United States;
(viii) "SUBORDINATED DEBT" means any indebtedness of any of
the Borrowers which is subordinated, in a manner and
to an extent satisfactory to the Agent, to the
indebtedness of the Borrowers under this Agreement.
20.5 All expressions used in the definitions of this Clause 20 which are
not otherwise defined herein shall be construed in accordance with generally
accepted accounting principles in the United States of America (as used in the
Sponsor's most recent audited annual consolidated financial statements).
20.6 If the Agent at any time determines that the aggregate of the Market
Value of each of the Mortgaged Vessels as determined by reference to the most
up-to-date valuation of the Mortgaged Vessels delivered pursuant to the
provisions of Clause 21.1(v) is less than 175% of the aggregate amount of all
Advances then outstanding (or the dollar equivalent thereof) (such requirement
being the "REQUIRED SECURITY COVERAGE") then the Principal Borrowers shall
within ten business days after a request therefor from the Agent either:
(a) prepay an amount of the Advance or Advances then outstanding which
shall be applied pro-rata in prepayment thereof, together with
interest thereon and any amounts falling due under Clause 25.4 as a
result of such prepayment; or
(b) provide additional security as may be acceptable to the Agent
such that the Required Security Coverage is met.
21 COVENANTS
21.1 Each of the Borrowers shall:
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<PAGE> 42
(i) and shall ensure that each other Borrower shall,
obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all
authorisations, approvals, licences and consents
required in or by the laws and regulations of its
jurisdiction of incorporation to enable it lawfully
to enter into and perform its obligations under this
Agreement and each of the Security Documents or to
ensure the legality, validity, enforceability or
admissibility in evidence in its jurisdiction of
incorporation of this Agreement and each of the
Security Documents;
(ii) without prejudice to the specific requirements of the
Security Documents procure that each member of the
GMM Group maintains insurances on and in relation to
its business and assets with reputable underwriters
or insurance companies against such risks and to such
extent as is usual for companies carrying on a
business such as that carried on by such member of
the GMM Group whose practice is not to self insure;
(iii) promptly inform the Agent of the occurrence of any
Event of Default or Potential Event of Default and,
upon receipt of a written request to that effect from
the Agent, confirm to the Agent that, save as
previously notified to the Agent or as notified in
such confirmation, no Event of Default or Potential
Event of Default has occurred;
(iv) without prejudice to the priority afforded by any
mortgage and deed of covenant or assignment
collateral thereto securing the obligations of the
Borrowers hereunder ensure that at all times the
claims of the Agent and the Banks against it under
this Agreement rank at least pari passu with the
claims of all its other unsecured creditors save
those whose claims are preferred by any bankruptcy,
insolvency, liquidation or other similar laws of
general application;
(v) at the request of the Agent, deliver to the Agent or
procure the delivery to the Agent of up-to-date
valuations of the Vessels prepared at the sole cost
and expense of the Borrowers, showing the Market
Value of each of the Mortgaged Vessels;
(vi) ensure that the Mortgaged Vessels are maintained in
good working order and condition and in any event in
such condition as enables them to maintain the
classification American Bureau of Shipping AI AMS or
to an equivalent classification acceptable to the
Agent free from all notations and recommendations
which have not been complied with within any
applicable time limit and ensure that such
classification is maintained;
(vii) comply with all applicable Environmental Laws
including, without limitation, requirements relating
to the establishment of financial responsibility (and
shall require that all Environmental Affiliates of
the Borrowers comply with all applicable
Environmental Laws and obtain and comply with all
required Environmental Approvals, which Environmental
Laws and Environmental Approvals relate to any of the
Mortgaged Vessels or their operation or their
carriage of cargo), except where such non-compliance
does not or will not have a Material Adverse Effect;
(viii) upon the request of the Agent, conduct and complete
all investigations, studies, sampling, audits and
testings reasonably required by any known (or
threatened)
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<PAGE> 43
Release of Material of Environmental Concern that has
or will have a Material Adverse Effect;
(ix) promptly upon the occurrence of either of the
following events, provide to the Agent a certificate
of an officer of the Sponsor specifying in detail the
nature of such event and the proposed response of the
relevant Borrower or its Environmental Affiliate
concerned:
(a) the receipt by any of the Borrowers or any
Environmental Affiliate (where the relevant
Borrower has knowledge of such receipt) of
any Environmental Claim which has or will
have a Material Adverse Effect; or
(b) any actual or threatened Release of Material
of Environmental Concern which has or will
have a Material Adverse Effect,
and upon the written request by the Agent submit to
the Agent in sufficient copies for the Banks, at
reasonable intervals, a report updating the status of
any occurrence of an Environmental Claim or a Release
of Material of Environmental Concern, that has or
will have a Material Adverse Effect;
(x) maintain the registration of the Mortgaged Vessels
under the laws and flag under which they are
currently maintained (or in the case of the m.v. "Sem
Courageous" and the m.v. "Sem Valiant" under the laws
and flag of Malaysia) and not cause or permit to be
done any act or omission whereby their registration
as such would or might be defeated or imperilled or
which might result in such Mortgaged Vessels being
required to be registered under any other flag and
registered with the appropriate authorities;
(xi) permit the Agent on reasonable notice to inspect the
Mortgaged Vessels and their logs;
(xii) from time to time on being required to do so by the
Agent, do or procure the doing of all such acts and
execute or procure the execution of all such
documents as the Agent may reasonably consider
necessary for giving full effect to each of the
Security Documents or for securing to the Banks the
full benefit of the rights, powers and remedies
intended to be conferred upon the Agent or the
Security Trustee pursuant to the Security Documents;
(xiii) at all times ensure that the Principal Borrowers are,
subject to the rights conferred by the Share Pledges,
the sole beneficial owners of the entire issued share
capital of each of the Permitted Borrowers and each
Additional Borrower;
(xiv) commencing from the date hereof and thereafter no
later than 14 days from and inclusive of each of 30th
September, 31st December, 30th March and 30th June
deliver to the Agent in sufficient copies for the
Banks a schedule in form and substance satisfactory
to the Agent detailing Fixed Asset Investments
exceeding $50,000 made by any of the Borrowers in the
three months proceeding the date upon which such
schedule is delivered;
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<PAGE> 44
(xv) no later than 14 days from and inclusive of 31st
March, 30th June, 30th September and 31st December in
each calendar year, furnish the Agent in sufficient
copies for the Banks with a report in form and
substance satisfactory to the Agent and at the cost
of the Borrowers, relating to the status, employment,
earnings and location of the Mortgaged Vessels as at
the date upon which such report is furnished in
respect of the period elapsing since the previous
such report, if any;
(xvi) forthwith upon the request of the Agent, charge,
pledge or otherwise encumber in favour of the
Security Trustee pursuant to a security document in
form and substance satisfactory to the Agent any
account into which Approved Charter Earnings are
paid;
(xvii) at the reasonable request of the Agent, and subject
to the Sponsors prior consent enter into, interest
rate and currency hedging agreements with the Hedge
Counterparty or such other counterparty as the Agent
may agree, such agreement not to be unreasonably
withheld, for the purpose of minimising currency and
interest rate exposure;
(xviii) GMM Group shall deliver promptly to the Agent a
monthly report (in a format to be agreed with the
Agent) concerning the status, technical issues, cost
overruns and charge orders relating to the
refurbishment of the Newbuild under the Building
Contract; and
(xix) GMM Group shall, as soon as it becomes available, but
in any event within 14 days of the completion of the
works to be undertaken pursuant to the Building
Contract deliver to the Agent evidence satisfactory
to the Agent that the Newbuild is classified with Det
norske Veritas with class +1 A1, SF, EO free from any
recommendation or requirement that has not been
complied with in accordance with its terms.
21.2 None of the Borrowers shall, and the Principal Borrowers shall ensure
that no member of the GMM Group shall, without the prior written
consent of an Instructing Group:
(i) in respect of the period commencing on the date
hereof and ending on 31 December 1996 pay, make or
declare any dividend or other distribution in respect
of any financial year of such member of the GMM
Group; and
(ii) in respect of the period commencing on 1 January 1997
pay, make or declare any dividend or other such
distribution unless:-
immediately thereafter Freely Available Liquid
Resources exceeds the aggregate of:
(aa) $2,000,000; and
(bb) an amount equal to the sum of the payment
obligations of the Borrowers in respect of
principal and interest payable hereunder due
or to be paid within the six months
succeeding such time;
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<PAGE> 45
PROVIDED ALWAYS that in no circumstance shall the
amount of any such payment, dividend or distribution
exceed the Profits After Tax of the such member of
the GMM Group for such financial year;
(iii) incur expenditure in respect of any management fees
payable other than management fees payable to the
Sponsor in such amount as the Agent, may agree having
regard to the annual budget and operating expenses of
the Sponsor;
(iv) create or permit to subsist any encumbrance over all
or any of its present or future revenues or assets
except:-
(a) pursuant to the Security Documents; or
(b) any encumbrance imposed by law, such as
carrier's, warehouseman's, mechanics' liens
and other similar liens arising in the
ordinary course of business or permitted
under the terms of the Security Documents; or
(c) any encumbrance over assets acquired after
the date hereof otherwise than from any other
Borrower and which encumbrance is in
existence prior to such acquisition or is
created in order to secure indebtedness
incurred in respect of such acquisition;
(d) the Christiania Mortgages; or
(e) a floating charge over the corporate accounts
maintained by the Principal Borrowers or
either of them with the Agent, securing
obligations arising under the Short Term
Facility;
(v) make any loans, grant any credit (save in the
ordinary course of business) or give any guarantee or
indemnity (except as required hereby) to or for the
benefit of any person or otherwise voluntarily assume
any liability, whether actual or contingent, in
respect of any obligation of any other person;
(vi) issue any further shares or alter any rights
attaching to its issued shares in existence at the
date hereof other than by GONS to GNS in exchange for
the shareholding of GNS in Dianne Operating Limited;
(vii) save as otherwise provided herein (disregarding sales
of stock in trade in the ordinary course of business
and sales of Mortgaged Vessels or other assets for
amounts not less than eighty per cent. of the Market
Value of such Mortgaged Vessel) sell, lease, transfer
or otherwise dispose of, by one or more transactions
or series of transactions (whether related or not),
the whole or any part (the book value of which is
thirty per cent. or more of the book value of the
whole) of its revenues or its assets;
(viii) incur any indebtedness for borrowed money other than
pursuant to this Facility and the Short Term Facility
in excess of $50,000 or its equivalent in other
currencies; save to the extent that such indebtedness
is owed to other members of the Group and is
subordinated to the obligations of the Borrowers
hereunder, and under each of the
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<PAGE> 46
Security Documents to which it is a party, on terms
acceptable to the Agent or is secured by encumbrances
of the nature referred to in Clause 21.2(iii)(c) or
the Christiania Mortgages;
(ix) carry on or engage in or be concerned with any
business or activities except insofar as they relate
to the ownership and operation of the Mortgaged
Vessels and other vessels engaged in similar
activities and activities relating thereto or
otherwise relate to the undertaking and assets of the
offshore supply division of BP Shipping Limited;
(x) merge, demerge or consolidate with any person;
(xi) undertake in any twelve month period any expenditure
of a capital nature without the Agent's consent save
insofar as such expenditure relates to:-
(a) any single Fixed Asset Investment which does
not exceed:
(i) $100,000 in respect of the
GOMI Vessels;
(ii) $150,000 in respect of each of
the m.v. Highland Sprite and
m.v. Highland Legend; and
(iii) $250,000 in respect of each of
the BP Fleet Vessels, the m.v.
Highland Star, the m.v.
Highland Pride, the
Christiania Newbuild and the
Newbuild;
(b) more than one Fixed Asset Investment the
amounts of which, when aggregated do not
exceed $500,000.
21.3 The Sponsor shall at all times remain subject to such rights as may be
conferred by the Share Pledges the sole beneficial owner free from all
encumbrances, of the entire issued share capital of each member of the GMM
Group.
21.4 The Sponsor shall not, save with the consent of the Agent or pursuant
to the Short Term Facility, give any guarantee or indemnity to or for the
benefit of any person or otherwise voluntarily assume any liability, whether
actual or contingent, in respect of any obligation of any other person Provided
always that this Clause 21.4 shall not apply to (i) the guarantee issued by the
Sponsor in favour of the Southwest Bank of Texas N.A. in respect of
indebtedness incurred by Ercon Development Co. ("ERCON") up to a maximum
aggregate principal amount of $500,000 or (ii) any bid or performance bond
issued by the Sponsor at the request of Ercon up to a maximum aggregate amount
of $500,000
21.5 GNS will ensure that upon the delivery of the Newbuild the legal and
beneficial owner (whether registered as such or not in any title or
other registry (the "OWNER")) of the Newbuild shall execute in favour
of the Security Trustee
(a) a first priority mortgage of the Owner's right, title and
interest in and to the Newbuild;
(b) a first priority assignment of the Owner's right, title and
interest in and to the earnings attributable to the Newbuild;
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<PAGE> 47
(c) a first priority assignment of the Owner's right, title and
interest in and to the insurances attributable to the
Newbuild;
(d) if the Owner is not already an Obligor, a supplement to this
Agreement whereby inter alia the Owner becomes and is treated
for all purposes as a Guarantor; and
(e) a report, issued by an independent person, (being an insurance
broker and/or insurance consultant), addressed to the Agent
confirming that insurances effected in respect of the Newbuild
are adequate.
22. EVENTS OF DEFAULT
22.1 If:
(i) any of the Borrowers fails to pay any sum due from it
hereunder or under the Master Agreement or any
Security Document at the time, in the currency and in
the manner specified herein or therein or if such
failure results solely from technical or
administrative difficulties relating to the transfer
of such sums, such failure is not remedied within
three days;
(ii) any representation or statement made by any of the
Borrowers in this Agreement or under any Security
Document or in any notice or other document,
certificate or statement delivered by it pursuant
hereto or thereto or in connection herewith is or
proves to have been incorrect or misleading when
made; or
(iii) any of the Borrowers or the Sponsor fails duly to
perform or comply with any of the obligations
expressed to be assumed by it in Clauses 19, 20 or 21
hereof or in the Master Agreement or duly to effect
insurance of the Mortgaged Vessels or any of them in
accordance with the applicable provisions of the
Security Documents; or
(iv) any of the Borrowers fails duly to perform or comply
with any other obligation expressed to be assumed by
it in this Agreement or under any Security Document
and such failure is not remedied within fourteen days
after the Agent has given notice thereof to such
Borrower; or
(v) any of the Borrowers is in breach of any of its
obligations under any of the Approved Charters or any
of the Borrowers seeks to cancel, terminate or
repudiate any of the Approved Charters without the
prior consent of the Agent; or
(vi) any indebtedness of the Sponsor or any member of the
GMM Group (other than indebtedness due to trade
creditors incurred in the normal course of business
of the Sponsor or such member of the GMM Group which
is disputed in good faith and by appropriate
proceedings diligently conducted) is not paid when
due or within any applicable grace period, any
indebtedness of the Sponsor or any member of the GMM
Group is declared to be or otherwise becomes due and
payable prior to its specified maturity or any
creditor or creditors of the Sponsor or any member of
the GMM Group become entitled to declare any
indebtedness of the Sponsor or such member of the GMM
Group due and payable prior to its specified
maturity; or
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<PAGE> 48
(vii) in any period of twelve months commencing from the
date hereof any judgments or judicial orders or
arbitration awards are made against any of the
Borrowers in an amount or an aggregate amount in
excess of $750,000 (or the equivalent in any other
currency) (other than any judgment, judicial order or
arbitration award as to which, and only to the extent
that, a reputable company or other surety, in either
case acceptable to the Agent, has acknowledged
coverage of such judgment, judicial order or
arbitration award in writing) and,
(a) any such judgment, judicial order or
arbitration award has not been stayed,
discharged, paid, bonded or vacated within 30
days or such longer period as may be agreed
by the Agent; or
(b) enforcement proceedings have been commenced
by any creditor on any such judgment,
judicial order or arbitration award;
(viii) the Sponsor or any member of the GMM Group is unable
to pay its debts as they fall due, commences
negotiations with any one or more of its creditors
with a view to the general readjustment or
rescheduling of its indebtedness or makes a general
assignment for the benefit of or a composition with
its creditors; or
(ix) (otherwise than for the purpose of a reconstruction
on terms previously approved by the Agent) the
Sponsor or any member of the GMM Group takes any
corporate action or other steps are taken or legal
proceedings are started for its winding-up,
dissolution, administration or re-organisation or for
the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer
of it or of any or all of its revenues and assets; or
(x) any execution or distress is levied against, or an
encumbrancer takes possession of the whole or any
material part of, the property, undertaking or assets
of the Sponsor or any member of the GMM Group; or
(xi) by or under the authority of any government, (a) the
management of the Sponsor or any member of the GMM
Group is wholly or partially displaced or the
authority of the Sponsor or any member of the GMM
Group in the conduct of its business is wholly or
partially curtailed or (b) all or a majority of the
issued shares of the Sponsor or any member of the GMM
Group or the whole or any part (the book value of
which is twenty per cent. or more of the book value
of the whole) of its revenues or assets is seized,
nationalised, expropriated or compulsorily acquired;
or
(xii) subject to the rights conferred by the Share Pledges,
the Sponsor ceases to be the sole legal and
beneficial owner of the entire share capital of the
Principal Borrowers; or
(xiii) the Principal Borrowers cease to be the beneficial
owner of the entire issued share capital of each of
the Permitted Borrowers and any Additional Borrower;
(xiv) save as provided in Clause 21.1(ix) any member of the
GMM Group ceases to carry on the business it carries
on at the date hereof or enters into any new type of
business; or
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(xv) the Sponsor or any of the Borrowers repudiates this
Agreement or any Security Document to which it is a
party or does or causes to be done any act or thing
evidencing an intention to repudiate this Agreement
or any such Security Document; or
(xvi) at any time any act, condition or thing required to
be done, fulfilled or performed in order (a) to
enable the Sponsor or any of the Borrowers lawfully
to enter into, exercise its rights under and perform
the obligations expressed to be assumed by it in this
Agreement and the Security Documents to which it is a
party, (b) to ensure that the obligations expressed
to be assumed by the Sponsor or any of the Borrowers
in this Agreement and the Security Documents to which
it is a party are legal, valid and binding or (c) to
make this Agreement and the Security Documents to
which it is a party admissible in evidence in any
Borrower's jurisdiction of incorporation is not done,
fulfilled or performed; or
(xvii) at any time any of the security interests constituted
by any of the Security Documents ceases to constitute
valid and perfected first priority security
interests;
(xviii) at any time it is or becomes unlawful for the Sponsor
or any of the Borrowers to perform or comply with any
or all of its obligations hereunder or under any of
the Security Documents to which it is a party or any
of the obligations of the Sponsor or any of the
Borrowers hereunder or under any of the Security
Documents to which it is a party are not or cease to
be legal, valid and binding; or
(xix) (a) any circumstances arise which give grounds in the
reasonable opinion of the Agent for belief that the
Sponsor or any of the Borrowers may not (or may be
unable to) perform or comply with its obligations
hereunder, or any of the Security Documents to which
it is a party (b) the Agent shall have given to the
Sponsor notice that it is of such opinion setting out
in reasonable detail the grounds upon which such
opinion is based and (c) after having given due
regard to any representation made by the Sponsor
during the period of ten days after the giving of
such notice by the Agent, the Agent is of the same
opinion upon the expiration of such period,
then, and in any such case and at any time thereafter, the Agent may (and, if
so instructed by an Instructing Group, shall) by written notice to the Sponsor:
(a) declare the Advances to be immediately due and payable
(whereupon the same shall become so payable together with
accrued interest thereon and any other sums then owed by the
Borrowers hereunder) or declare the Advances to be due and
payable on demand of the Agent; and/or
(b) declare that any undrawn portion of the Facilities shall be
cancelled, whereupon the same shall be cancelled and each of
the Available Dollar Facility and the Available Sterling
Facility shall be reduced to zero.
22.2 If, pursuant to Clause 22.1, the Agent declares the Advances to be due
and payable on demand of the Agent, then, and at any time thereafter, the Agent
may by written notice to the Sponsor:
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<PAGE> 50
(i) call for repayment of the Advances on such date as it
may specify in such notice (whereupon the same shall
become due and payable on such date together with
accrued interest thereon and any other sums then owed
by the Borrowers hereunder) or withdraw its
declaration with effect from such date as it may
specify in such notice; and/or
(ii) select as the duration of any Interest Period which
begins whilst such declaration remains in effect a
period of six months or less.
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PART 8
SPONSOR'S AND BORROWERS' OBLIGATIONS
23. BORROWERS' JOINT AND SEVERAL OBLIGATIONS
23.1 Each obligation of or expressed to be assumed by the Borrowers or any
of them in or under this Agreement or any Security Document is the joint and
several obligation of the Borrowers and of each of them.
23.2 Each Borrower acknowledges and confirms that it is a principal and
original debtor in respect of all amounts which may become payable by the
Borrowers in accordance with the terms hereof or any Security Document and
agrees that the Beneficiaries and each of them may in all circumstances treat
it as such whether or not any Beneficiary is or becomes aware that such
Borrower is or has become a surety for another.
23.3 The Borrowers agree to indemnify and hold harmless the Beneficiaries
and each of them from and against any loss incurred by any of them as a result
of any Clause or provision of this Agreement or any Security Document being or
becoming void, voidable or unenforceable for any reason whatsoever, whether or
not known to any such person, the amount of such loss being limited to the
amount which such Beneficiary would otherwise have been entitled to recover
hereunder or under any Security Document had such Clause or provision not
become void, voidable or unenforceable.
23.4 The obligations of each Borrower under this Agreement or any Security
Document shall not be in any way discharged or impaired by reason of (i) any
time or indulgence which may be granted by the Beneficiaries or any of them to
the other Borrower or any other person from whom they may seek payment of sums
due from a Borrower under this Agreement or any Security Document, (ii) by any
variation of this Agreement or any Security Document or any related document or
(iii) by any other circumstance which might (but for this provision) constitute
a legal or equitable discharge of such Borrower.
23.5 Any rights conferred on the Beneficiaries or any of them by this
Agreement or any Security Document shall be in addition to and not in
substitution for or derogation of any other right which the Beneficiaries or
any of them might at any time have to seek from the other Borrower or any other
person payment of sums due from a Borrower or indemnification against
liabilities incurred as a result of a Borrower's default in payment of sums due
from it under this Agreement or any Security Document.
23.6 None of the Beneficiaries shall be obliged before taking steps to
enforce any rights conferred on it by this Clause or exercising any of the
rights, powers and remedies conferred on it hereby or by law (a) to take action
or obtain judgment in any court against the other Borrower or any other person
from whom they may seek payment of any sum due from a Borrower under this
Agreement or any Security Document, (b) to make or file any claim in a
bankruptcy, winding-up, liquidation or re-organisation of the other Borrower or
any other such person or (c) to enforce or seek to enforce any other rights it
may have against the other Borrower or any other such person.
23.7 Each Borrower agrees that so long as any sums are or may be owed by
either Borrower under this Agreement or any Security Document any rights which
such Borrower may have at any time by reason of performance by it of its
obligations under this Clause to be indemnified by the other Borrower and/or to
take the benefit (in whole or in part) of any security taken pursuant to this
Agreement or any Security Document by the Banks or the Security Trustee on
their behalf shall be exercised by such Borrower in such manner and upon such
terms as the Banks may require and further agrees to hold any moneys at any
time received by it as a
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<PAGE> 52
result of the exercise of any such rights for and on behalf and to the order of
the Banks for application in or towards payment of any sums at any time owed by
either Borrower under this Agreement or any Security Document.
23.8 Each Borrower further agrees that so long as any sums are or may be
owed by either Borrower under this Agreement or any Security Document such
Borrower will not (i) claim any set-off or counter-claim against the other
Borrower in respect of any liability on the part of such other Borrower to such
first Borrower and attributable to this Agreement or any Security Document or
(ii) prove in competition with the Beneficiaries or any of them in any
liquidation or winding-up of the other Borrower, whether in respect of any
payment by such Borrower hereunder or under any Security Document or in respect
of any moneys including proceeds of realisation of securities, dividends or
otherwise.
24. SPONSOR'S OBLIGATIONS
For the avoidance of doubt, the obligations of the Sponsor herein contained
shall not constitute a guarantee of the obligations of the Borrowers, but shall
be limited to a liability in damages arising out of or in connection with any
breach by the Sponsor of the representations, covenants or undertakings on its
part contained herein.
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PART 9
DEFAULT INTEREST AND INDEMNITY
25. DEFAULT INTEREST AND INDEMNITY
25.1 If any sum due and payable by any of the Borrowers hereunder is not
paid on the due date therefor in accordance with the provisions of Clause 27 or
if any sum due and payable by any of the Borrowers under any judgment of any
court in connection herewith is not paid on the date of such judgment, the
period beginning on such due date or, as the case may be, the date of such
judgment and ending on the date upon which the obligation of such Borrower to
pay such sum (the balance thereof for the time being unpaid being herein
referred to as an "UNPAID SUM") is discharged shall be divided into successive
periods, each of which (other than the first) shall start on the last day of
the preceding such period and the duration of each of which shall (except as
otherwise provided in this Clause 25) be selected by the Agent.
25.2 During each such period relating thereto as is mentioned in Clause
25.1 an unpaid sum shall bear interest at the rate per annum which is the sum
from time to time of one per cent., the Margin and LIBOR on the Quotation Date
therefor and, in the case of any Advance denominated in sterling, the
Associated Costs Rate Provided that:
(i) if, for any such period, LIBOR cannot be determined,
the rate of interest applicable to such unpaid sum
shall be the sum from time to time of one per cent.,
the Margin and the rate per annum equal to the cost
to the Agent of funding such unpaid sum for such
period from whatever source it may select; and
(ii) if such unpaid sum is all or part of the Advance
which became due and payable on a day other than the
last day of an Interest Period relating thereto, the
first such period applicable thereto shall be of a
duration equal to the unexpired portion of that
Interest Period and the rate of interest applicable
thereto from time to time during such period shall be
that which exceeds by one per cent. the rate which
would have been applicable to it had it not so fallen
due.
25.3 Any interest which shall have accrued under Clause 25.2 in respect of
an unpaid sum shall be due and payable and shall be paid by the Borrower owing
such unpaid sum at the end of the period by reference to which it is calculated
or on such other date or dates as the Agent may specify by written notice to
such Borrower.
25.4 If any Bank or the Agent on its behalf receives or recovers all or any
part of such Bank's share of an Advance otherwise than on the last day of an
Interest Period relating to that Advance, the Borrowers shall pay to the Agent
on demand for account of such Bank an amount equal to the amount (if any) by
which (i) the additional interest which would have been payable on the amount
so received or recovered had it been received or recovered on the last day of
that Interest Period exceeds (ii) the amount of interest which in the opinion
of the Agent would have been payable to the Agent on the last day of that
Interest Period in respect of a dollar deposit equal to the amount so received
or recovered placed by it with a prime bank in London for a period starting on
the third business day following the date of such receipt or recovery and
ending on the last day of that Interest Period.
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<PAGE> 54
25.5 Each of the Borrowers undertakes to indemnify:
(i) each of the Agent and the Banks against any cost,
claim, loss, expense (including legal fees) or
liability together with any VAT thereon, which it may
sustain or incur as a consequence of the occurrence
of any Event of Default or any default by any of the
Borrowers in the performance of any of the
obligations expressed to be assumed by it in this
Agreement; and
(ii) each Bank against any loss it may suffer as a result
of its funding an Advance requested by a Borrower
hereunder but not made by reason of the operation of
any one or more of the provisions hereof.
25.6 Any unpaid sum shall (for the purposes of this Clause 25 and Clause
16.1) be treated as an advance and accordingly in this Clause 25 and Clause
16.1 the term "Advance" includes any unpaid sum and the term "Interest Period",
in relation to an unpaid sum, includes each such period relating thereto as is
mentioned in Clause 25.1.
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<PAGE> 55
PART 10
PAYMENTS
26. CURRENCY OF ACCOUNT AND PAYMENT
26.1 The currency of account and payment for each and every sum at any time
due from any of the Borrowers hereunder is:
(a) dollars in the case of the Dollar Facility; and
(b) sterling in the case of the Sterling Facility
Provided that:
(i) each payment in respect of costs and expenses shall
be made in the currency in which the same were
incurred; and
(ii) each payment pursuant to Clause 14.2 or Clause 16.1
shall be made in the currency specified by the Bank
to whom such payment is to be made.
26.2 If any sum due from any of the Borrowers under this Agreement or any
order or judgment given or made in relation hereto has to be converted from the
currency (the "FIRST CURRENCY") in which the same is payable hereunder or under
such order or judgment into another currency (the "SECOND CURRENCY") for the
purpose of (i) making or filing a claim or proof against such Borrower, (ii)
obtaining an order or judgment in any court or other tribunal or (iii)
enforcing any order or judgment given or made in relation hereto, such Borrower
shall indemnify and hold harmless each of the persons to whom such sum is due
from and against any loss suffered as a result of any discrepancy between (a)
the rate of exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (b) the rate or rates of
exchange at which such person may in the ordinary course of business purchase
the first currency with the second currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
27. PAYMENTS
27.1 On each date on which this Agreement or any of the Security Documents
requires an amount to be paid by any of the Borrowers or any of the Banks, such
Borrower or, as the case may be, such Bank shall make the same available to the
Agent:
(i) where such amount is denominated in dollars by
payment in dollars and in same day funds (or in such
other funds as may for the time being be customary in
New York City for the settlement in New York City of
international banking transactions in dollars) to the
Agent's account number 001-0-962009 with The Chase
Manhattan Bank NA, New York, N.Y. 10081, U.S.A. (or
such other account or bank as the Agent may have
specified for this purpose); and
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<PAGE> 56
(ii) where such amount is denominated in sterling, by
payment in sterling and immediately available, freely
transferable, cleared funds to The Chase Manhattan
Bank, N.A., London Branch, sort code 60-92-42
Attention: Global Petroleum (or such other account as
the Agent may have specified for this purpose).
27.2 If, at any time, it shall become impracticable (by reason of any
action of any governmental authority or any change in law, exchange control
regulations or any similar event) for any of the Borrowers to make any payments
hereunder in the manner specified in Clause 27.1, then such Borrower may agree
with each or any of the Banks alternative arrangements for such payments to be
made Provided that, in the absence of any such agreement with any Bank, such
Borrower shall be obliged to make all payments due to such Bank in the manner
specified herein. Upon reaching such agreement such Borrower and such Bank
shall immediately notify the Agent thereof and shall thereafter promptly notify
the Agent of all payments made direct to such Bank.
27.3 Save as otherwise provided herein, each payment received by the Agent
for the account of another person pursuant to Clause 27.1 shall be made
available by the Agent to such other person (in the case of a Bank, for the
account of its Facility Office) for value the same day by transfer to such
account of such bank in the principal financial centre of the country of the
currency of such payment as such person shall have previously notified to the
Agent.
27.4 All payments required to be made by any of the Borrowers hereunder
shall be calculated without reference to any set-off or counterclaim and shall
be made free and clear of and without any deduction for or on account of any
set-off or counterclaim.
27.5 Where a sum is to be paid hereunder to the Agent for account of
another person, the Agent shall not be obliged to make the same available to
that other person until it has been able to establish to its satisfaction that
it has actually received such sum, but if it does so and it proves to be the
case that it had not actually received such sum, the person to whom such sum
was so made available shall on request refund the same to the Agent together
with an amount sufficient to indemnify the Agent against any cost or loss it
may have suffered or incurred by reason of its having paid out such sum prior
to its having received such sum.
28. SET-OFF
Each of the Borrowers authorises each Bank to apply any credit balance to which
such Borrower is entitled on any account of such Borrower with that Bank in
satisfaction of any sum due and payable from such Borrower to such Bank
hereunder but unpaid; for this purpose, each Bank is authorised to purchase
with the moneys standing to the credit of any such account such other
currencies as may be necessary to effect such application. No Bank shall be
obliged to exercise any right given to it by this Clause 28.
29. REDISTRIBUTION OF PAYMENTS
29.1 If, at any time, the proportion which a Bank (a "RECOVERING BANK") has
received or recovered (whether by payment, the exercise of a right of set-off
or combination of accounts or otherwise) in respect of its portion of any
payment (a "RELEVANT PAYMENT") to be made under this Agreement by any of the
Borrowers for account of such Recovering Bank and the other Bank is greater
(the portion of such receipt or recovery giving rise to such excess proportion
being herein called an "EXCESS AMOUNT") than the proportion thereof so received
or recovered by the Bank so receiving or recovering the smallest proportion
thereof, then:
(i) such Recovering Bank shall pay to the Agent an amount
equal to such excess amount;
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<PAGE> 57
(ii) there shall thereupon fall due from such Borrower to
such Recovering Bank an amount equal to the amount
paid out by such Recovering Bank pursuant to
paragraph (i) above, the amount so due being, for the
purposes hereof, treated as if it were an unpaid part
of such Recovering Bank's portion of such relevant
payment; and
(iii) the Agent shall treat the amount received by it from
such Recovering Bank pursuant to paragraph (i) above
as if such amount had been received by it from such
Borrower in respect of such relevant payment and
shall pay the same to the persons entitled thereto
(including such Recovering Bank) pro rata to their
respective entitlements thereto.
29.2 If any sum (a "RELEVANT SUM") received or recovered by a Recovering
Bank in respect of any amount owing to it by any of the Borrowers becomes
repayable and is repaid by such Recovering Bank, then:
(i) each Bank which has received a share of such relevant
sum by reason of the implementation of Clause 29.1
shall, upon request of the Agent, pay to the Agent
for the account of such Recovering Bank an amount
equal to its share of such relevant sum; and
(ii) there shall thereupon fall due from such Borrower to
each such Bank an amount equal to the amount paid out
by it pursuant to paragraph (i) above, the amount so
due being, for the purposes hereof, treated as if it
were the sum payable to such Bank against which such
Bank's share of such relevant sum was applied.
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PART 11
FEES, COSTS AND EXPENSES
30. FEES
30.1 The Borrowers shall pay to the Agent for the account of the Banks a
commitment commission on the amount of each of the Available Dollar Facility
and the Available Sterling Facility from day to day during the period beginning
on the date hereof and ending on the Final Maturity Date, such commitment
commission to be calculated at the rate of three quarters of one per cent. per
annum and payable in arrear on the last day of each successive period of three
months which ends during such period and on the Final Maturity Date.
30.2 The Borrowers shall pay to the Agent for its own account the agency
fee specified in the letter of even date herewith from the Agent to the
Borrowers at the time and in the amount specified therein.
30.3 The Borrowers shall pay to the Agent for the account of the Banks an
arrangement fee equal to one per cent. of each of the Dollar Facility and the
Sterling Facility upon the date of drawdown of the first Advance made
hereunder.
30.4 The Borrowers shall pay to the Agent for its own account the fees
specified in the letter of even date herewith from the Agent to the Principal
Borrowers.
31. COSTS AND EXPENSES
31.1 The Borrowers shall, from time to time on demand of the Agent,
reimburse the Agent for all costs and expenses (including legal fees,
travelling and accommodation and other reasonable out of pocket expenses)
together with any VAT thereon incurred by it in connection with the
negotiation, preparation and execution of this Agreement and the completion of
the transactions herein contemplated.
31.2 The Borrowers shall, from time to time on demand of the Agent,
reimburse the Agent and all the Banks for all costs and expenses (including
legal fees) together with any VAT thereon incurred in or in connection with the
preservation and/or enforcement of any of the rights of the Agent, the Security
Trustee and the Banks under this Agreement.
31.3 The Borrowers shall pay all stamp, registration and other taxes to
which this Agreement or any judgment given in connection herewith is or at any
time may be subject and shall, from time to time on demand of the Agent,
indemnify the Agent, the Security Trustee and the Banks against any
liabilities, costs, claims and expenses resulting from any failure to pay or
any delay in paying any such tax.
31.4 If the Borrowers fails to perform any of their obligations under this
Clause 31, each Bank shall, in the proportion borne by its share of the Loan
(or, if no Advances have been made, its Available Commitment) to the amount of
the Loan (or, if no Advances have been made, the Available Facility) for the
time being (or, if the Loan has been repaid in full, immediately prior to the
final repayment thereof), indemnify the Agent against any loss incurred by any
of them as a result of such failure and the Borrower shall forthwith reimburse
each Bank for any payment made by it pursuant to this Clause 31.4.
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PART 12
AGENCY PROVISIONS
32. THE AGENT AND THE BANKS
32.1 Each Bank hereby appoints the Agent to act as its agent in connection
herewith and authorises the Agent to exercise such right, powers and
discretions as are specifically delegated to the Agent by the terms hereof
together with all such rights, powers and discretions as are reasonably
identical thereto.
32.2 The Agent may:
(i) assume that:
(a) any representation made by any of the
Borrowers in connection herewith is true;
(b) no event which is or may become an Event of
Default has occurred; and
(c) none of the Borrowers is in breach of or
default under its obligations hereunder
unless it has actual knowledge or actual notice to
the contrary;
(ii) assume that the Facility Office of each Bank is that
identified with its signature below until it has
received from such Bank a notice designating some
other office of such Bank to replace its Facility
Office and act upon any such notice until the same is
superseded by a further such notice;
(iii) engage and pay for the advice or services of any
lawyers, accountants, surveyors or other experts
whose advice or services may to it seem necessary,
expedient or desirable and rely upon any advice so
obtained;
(iv) rely as to any matters of fact which might reasonably
be expected to be within the knowledge of any of the
Sponsor or the Borrowers upon a certificate signed by
or on behalf of the Sponsor or such Borrower;
(v) rely upon any communication or document believed by
it to be genuine;
(vi) refrain from exercising any right, power or
discretion vested in it as agent hereunder unless and
until instructed by an Instructing Group as to
whether or not such right, power or discretion is to
be exercised and, if it is to be exercised, as to the
manner in which it should be exercised; and
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(vii) refrain from acting in accordance with any
instructions of an Instructing Group to begin any
legal action or proceeding arising out of or in
connection with this Agreement until it shall have
received such security as it may require (whether by
way of payment in advance or otherwise) for all
costs, claims, expenses (including legal fees) and
liabilities which it will or may expend or incur in
complying with such instructions.
32.3 The Agent shall:
(i) promptly inform each Bank of the contents of any
notice or document received by it in its capacity as
Agent from the Sponsor or any of the Borrowers
hereunder;
(ii) promptly notify each Bank of the occurrence of any
Event of Default or any default by the Sponsor or any
of the Borrowers in the due performance of or
compliance with its obligations under this Agreement
of which the Agent has notice from any other party
hereto;
(iii) save as otherwise provided herein, act as agent
hereunder in accordance with any instructions given
to it by an Instructing Group, which instructions
shall be binding on the Banks; and
(iv) if so instructed by an Instructing Group, refrain
from exercising any right, power or discretion vested
in it as agent hereunder.
32.4 Notwithstanding anything to the contrary expressed or implied herein,
the Agent shall not:
(i) be bound to enquire as to:
(a) whether or not any representation made by any
of the Borrowers in connection herewith is
true;
(b) the occurrence or otherwise of any Event of
Default or Potential Event of Default;
(c) the performance by the Sponsor or any of the
Borrowers of its obligations hereunder; or
(d) any breach of or default by the Sponsor or
any of the Borrowers of or under its
obligations hereunder;
(ii) be bound to account to any Bank for any sum or the
profit element of any sum received by it for its own
account;
(iii) be bound to disclose to any other person any
information relating to any member of the Group if
such disclosure would or might in its opinion
constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person; or
(iv) be under any obligations other than those for which
express provision is made herein.
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32.5 Each Bank shall, from time to time on demand by the Agent, indemnify
the Agent, in the proportion its share of the Loan (or, if no Advances have
been made, its Available Dollar Commitment) bears to the amount of the Loan
(or, if no Advances have been made, the Available Dollar Facility) at the time
of such demand (or, if the Loan has then been repaid in full, immediately prior
to the final repayment thereof), against any and all costs, claims, losses,
expenses (including legal fees) and liabilities together with any VAT thereon
which the Agent may incur, otherwise than by reason of its own gross negligence
or wilful misconduct, in acting in its capacity as agent hereunder.
32.6 The Agent accepts no responsibility for the accuracy and/or
completeness of any information supplied by the Sponsor or any of the Borrowers
in connection herewith or for the legality, validity, effectiveness, adequacy
or enforceability of this Agreement and the Agent shall be under no liability
as a result of taking or omitting to take any action in relation to this
Agreement, save in the case of gross negligence or wilful misconduct.
32.7 Each of the Banks agrees that it will not assert or seek to assert
against any director, officer or employee of the Agent any claim it might have
against any of them in respect of the matters referred to in Clause 32.6.
32.8 The Agent may accept deposits from, lend money to and generally engage
in any kind of banking or other business with any member of the Group.
32.9 The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior
written notice to that effect to each of the other parties hereto Provided
that no such resignation shall be effective until a successor for the Agent is
appointed in accordance with the succeeding provisions of this Clause 32.
32.10 If the Agent gives notice of its resignation pursuant to Clause 32.9,
then any reputable and experienced bank or other financial institution may be
appointed as a successor to the Agent by an Instructing Group during the period
of such notice but, if no such successor is so appointed, the Agent may appoint
such a successor itself.
32.11 If a successor to the Agent is appointed under the provisions of
Clause 32.10, then (i) the retiring Agent shall be discharged from any further
obligation hereunder but shall remain entitled to the benefit of the provisions
of this Clause 32 and (ii) its successor and each of the other parties hereto
shall have the same rights and obligations amongst themselves as they would
have had if such successor had been a party hereto.
32.12 It is understood and agreed by each Bank that it has itself been, and
will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
condition, affairs, status and nature of each member of the Group and,
accordingly, each Bank warrants to the Agent that it has not relied on and will
not hereafter rely on the Agent:
(i) to check or enquire on its behalf into the adequacy,
accuracy or completeness of any information provided
by the Sponsor or any of the Borrowers in connection
with this Agreement or the transactions herein
contemplated (whether or not such information has
been or is hereafter circulated to such Bank by the
Agent); or
(ii) to assess or keep under review on its behalf the
financial condition, creditworthiness, condition,
affairs, status or nature of any member of the Group.
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<PAGE> 62
PART 13
ASSIGNMENT AND TRANSFERS
33. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each party
hereto and its or any subsequent successors and assigns.
34. ASSIGNMENTS AND TRANSFERS BY THE OBLIGORS
None of the Obligors shall be entitled to assign or transfer all or
any of its rights, benefits and obligations hereunder.
35 ASSIGNMENTS AND TRANSFERS BY BANKS
35.1 Any Bank may, at any time, assign at its sole cost and expense all or
any of its rights and benefits hereunder or transfer in accordance with Clause
35.3 all or any of its rights, benefits and obligations subject to the Sponsors
consent, such consent not to be unreasonably withheld where the proposed
assignee or transferee is (i) acting through an office or branch in the United
Kingdom and is carrying on a bona fide banking business for the purposes of
Section 349 of the Income and Corporation Taxes Act 1988, or (ii) another bank
or financial institution to whom, at the time of such assignment or transfer
payments may be made without deduction or withholding on account of United
Kingdom taxes.
35.2 If any Bank assigns all or any of its rights and benefits hereunder in
accordance with Clause 35.1, then, unless and until the assignee has agreed
with the Agent and the other Banks that it shall be under the same obligations
towards each of them as it would have been under if it had been an original
party hereto as a Bank, the Agent and the other Banks shall not be obliged to
recognise such assignee as having the rights against each of them which it
would have had if it had been such a party hereto.
35.3 If any Bank wishes to transfer all or any of its rights, benefits
and/or obligations hereunder as contemplated in Clause 35.1, then such transfer
may be effected by the delivery to the Agent of a duly completed and duly
executed Transfer Certificate in which event, on the later of the Transfer Date
specified in such Transfer Certificate and the fifth business day after (or
such earlier business day endorsed by the Agent on such Transfer Certificate
falling on or after) the date of delivery of such Transfer Certificate to the
Agent:
(i) to the extent that in such Transfer Certificate the
Bank party thereto seeks to transfer its rights,
benefits and obligations hereunder, the Borrower and
such Bank shall be released from further obligations
towards one another hereunder and their respective
rights against one another shall be cancelled (such
rights, benefits and obligations being referred to in
this Clause 35.3 as "DISCHARGED RIGHTS AND
OBLIGATIONS");
(ii) the Borrower and the Transferee party thereto shall
assume obligations towards one another and/or acquire
rights against one another which differ from such
discharged rights and obligations only insofar as the
Borrower and such Transferee have assumed and/or
acquired the same in place of the Borrower and such
Bank; and
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<PAGE> 63
(iii) the Agent, such Transferee and the other Banks shall
acquire the same rights and benefits and assume the
same obligations between themselves as they would
have acquired and assumed had such Transferee been an
original party hereto as a Bank with the rights,
benefits and/or obligations acquired or assumed by it
as a result of such transfer.
35.4 On the date upon which a transfer takes effect pursuant to Clause
35.3, the Transferee in respect of such transfer shall pay to the Agent for its
own account a transfer fee of $500.
35.5 In the event that a Bank transfers its Facility Office and, at the
time of such transfer, there arises an obligation on the part of the Obligors
hereunder to pay to such Bank or any other person an amount in excess of the
amount it would have been obliged to pay but for such transfer, then, without
prejudice to any obligation of the Obligors which arise after the time of such
transfer, the Obligors shall not be obliged to pay the amount of such excess.
36. DISCLOSURE OF INFORMATION
36.1 Any information disclosed by the Borrowers to any of the Beneficiaries
in connection herewith or in connection with the negotiation of the
Facilities shall be kept confidential by such of the Beneficiaries,
Provided that:
(i) subject to the terms hereof each of the Beneficiaries
may disclose to any other of the Beneficiaries any
information about the Borrowers or any of them;
(ii) each of the Beneficiaries shall be entitled to
disclose such information:
(a) in connection with any proceedings arising
out of or in connection with any Finance
Document;
(b) if required to do so by an order of a court
of competent jurisdiction whether in
pursuance of any procedure for discovering
documents or otherwise;
(c) pursuant to any law or regulation in
accordance with which that party is required
or accustomed to act;
(d) to any governmental, banking or taxation
authority;
(e) to its auditors or legal or other
professional advisers; or
(f) if the information is in the public domain.
36.2 Any of the Beneficiaries may, at any time with the prior consent of
the Sponsor and the Agent, such consent not to be unreasonably
withheld, disclose to any actual or potential assignee or transferee
which has executed a confidentiality undertaking in favour of the
Agent and the Sponsor in a form acceptable to the Agent and the
Sponsor any information such Beneficiary has obtained about the
Obligors Provided always that no person may disclose any information
that they may have obtained about the Obligors or any of them, to any
person which it is aware is a supplier, competitor or customer of any
member of the Group.
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<PAGE> 64
PART 14
MISCELLANEOUS
37. CALCULATIONS AND EVIDENCE OF DEBT
37.1 Interest and commitment commission shall accrue from day to day and
shall be calculated on the basis of a year of 360 days or in the case of
sterling 365 days (or, if market practice differs, in accordance with market
practice) and the actual number of days elapsed.
37.2 Each Bank shall maintain in accordance with its usual practice
accounts evidencing the amounts from time to time lent by and owing to it
hereunder.
37.3 The Agent shall maintain on its books a control account or accounts in
which shall be recorded (i) the amount of any Advance made or arising hereunder
and each Bank's share therein, (ii) the amount of all principal, interest and
other sums due or to become due from any of the Borrowers to any of the Banks
hereunder and each Bank's share therein and (iii) the amount of any sum
received or recovered by the Agent hereunder and each Bank's share therein.
37.4 In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to Clauses
37.2 and 37.3, save for manifest error, shall be conclusive evidence of the
existence and amounts of the obligations of the Obligors therein recorded.
37.5 A certificate of a Bank as to (i) the amount by which a sum payable to
it hereunder is to be increased under Clause 14.1 or (ii) the amount for the
time being required to indemnify it against any such cost, payment or liability
as is mentioned in Clause 14.2 or 16.1 shall, in the absence of manifest error,
be conclusive for the purposes of this Agreement.
38. REMEDIES AND WAIVERS
No failure by the Agent or the Banks or any of them to exercise, nor any delay
by the Agent or the Banks or any of them in exercising, any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy prevent any further or other exercise thereof
or the exercise of any other right or remedy. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided by
law.
39. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
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<PAGE> 65
40. NOTICES
40.1 Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by telex, facsimile or letter.
40.2 Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless that other person has by
fifteen days' written notice to the Agent specified another address) be made or
delivered to that other person at the address identified with its signature
below (or in the case of a transferee, at the end of the Transfer Certificate
to which it is a party as Transferee) and shall be deemed to have been made or
delivered when despatched (in the case of any communication made by telex) or
(in the case of any communication made by fax) when receipt has been
acknowledged or (in the case of any communication made by letter) when left at
that address or (as the case may be) ten days after being deposited in the post
postage prepaid in an envelope addressed to it at that address Provided that
any communication or document to be made or delivered to the Agent shall be
effective only when received by the Agent and then only if the same is
expressly marked for the attention of the department or officer identified with
the Agent's signature below (or such other department or officer as the Agent
shall from time to time specify for this purpose).
40.3 Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified (by an officer of
the person making or delivering the same) as being a true and accurate
translation thereof.
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<PAGE> 66
PART 15
LAW AND JURISDICTION
41. LAW
This Agreement shall be governed by, and shall be construed in accordance with,
English law.
42. JURISDICTION
42.1 Each of the parties hereto irrevocably agrees for the benefit of each
of the Agent and the Banks that the courts of England shall have jurisdiction
to hear and determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this Agreement and, for
such purposes, irrevocably submits to the jurisdiction of such courts.
42.2 Each of the Obligors irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause 42.1 being nominated
as the forum to hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection with this
Agreement and agrees not to claim that any such court is not a convenient or
appropriate forum.
42.3 Each of the Obligors agrees that the process by which any suit, action
or proceeding is begun may be served on it by being delivered in connection
with any suit, action or proceeding in England, to Gulf Offshore N.S. Limited
at 10 Charlotte Road, London SW13 9QJ or its place of business for the time
being. If such appointment ceases to be effective in respect of any of the
Obligors, such Obligor or Obligors shall immediately appoint a further person
in England to accept service of process on its behalf in England, and failing
the appointment within 15 days, the Agent shall be entitled to appoint such a
person by notice or to such Obligor or Obligors. Nothing contained herein
shall affect the right to serve process in any other manner permitted by law.
42.4 The submission to the jurisdiction of the courts referred to in Clause
42.1 shall not (and shall not be construed so as to) limit the right of the
Agent, the Banks or any of them to take proceedings against any of the Obligors
in any other court of competent jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of proceedings
in any other jurisdiction (whether concurrently or not) if and to the extent
permitted by applicable law.
42.5 Each of the Obligors hereby consents generally in respect of any legal
action or proceeding arising out of or in connection with this Agreement to the
giving of any relief or the issue of any process in connection with such action
or proceeding including, without limitation, the making, enforcement or
execution against any property whatsoever (irrespective of its use or intended
use) of any order or judgment which may be made or given in such action or
proceeding.
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<PAGE> 67
42.6 To the extent that any of the Obligors may in any jurisdiction claim
for itself or its assets immunity from suit, execution, attachment (whether in
aid of execution, before judgment or otherwise) or other legal process and to
the extent that in any such jurisdiction there may be attributed to itself or
its assets such immunity (whether or not claimed), such Obligor hereby
irrevocably agrees not to claim and hereby irrevocably waives such immunity to
the full extent permitted by the laws of such jurisdiction.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
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<PAGE> 68
THE FIRST SCHEDULE
THE BANKS
<TABLE>
<CAPTION>
COLUMN 1 COLUMN 2
BANK COMMITMENT ($) COMMITMENT (L.)
<S> <C> <C>
The Chase Manhattan Bank, N.A. $2,900,000 L.6,250,000
The Governor and Company of the
Bank of Scotland $2,900,000 L.6,250,000
</TABLE>
- 57 -
<PAGE> 69
THE SECOND SCHEDULE
CONDITION PRECEDENT DOCUMENTS
PART 1
1. In relation to each of the Obligors and Chalvoyage (M) Sdn Bhd
("CHALVOYAGE"):
(i) a copy, certified a true copy by a duly authorised
officer of such Obligor, of the constitutive
documents of such Obligor and Chalvoyage;
(ii) a copy, certified a true copy by a duly authorised
officer of such Obligor and Chalvoyage, of a Board
Resolution of such Obligor and Chalvoyage approving
the execution, delivery and performance of this
Agreement and the terms and conditions hereof and
authorising a named person or persons to sign this
Agreement and any documents to be delivered by such
Obligor and Chalvoyage pursuant hereto; and
(iii) a certificate of a duly authorised officer of such
Obligor setting out the names and signatures of the
persons authorised to sign, on behalf of such
Obligor, this Agreement and any documents to be
delivered by such Obligor pursuant hereto.
2. A copy, certified a true copy by or on behalf of the Principal
Borrowers, of each such law, decree, consent, licence, approval,
registration or declaration as is, in the opinion of counsel to the
Agent, necessary to render this Agreement and the Security Documents
legal, valid, binding and enforceable, to make this Agreement and the
Security Documents admissible in evidence in each Obligor's
jurisdiction of incorporation and to enable each of the Obligors to
perform its obligations hereunder.
3. A deed of trust executed between the Security Trustee, the Banks, the
Hedge Counterparty, the Financial Institutions named in the Syndicated
Facility as banks, the Borrowers and others, pursuant to which the
Security Trustee declares itself to be trustee for the Banks, the
Hedge Counterparty and such Financial Institutions in respect of any
security granted pursuant to any Security Document.
4. A first priority statutory ship mortgage and deeds of covenant
collateral thereto executed in respect of the following vessels:-
(i) p.s.v. "Highland Champion";
(ii) p.s.v. "Highland Fortress";
(iii) m.v. "Highland Sprite";
(iv) m.v. "Sem Courageous"; and
(v) m.v. "Sem Valiant".
5. First preferred Panamanian ship mortgages and assignments of earnings
and insurance collateral thereto executed in respect of the following
vessels:-
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<PAGE> 70
(i) the m.v. "Seawhip"; and
(ii) the m.v. "Seawitch".
6. Share Pledges over:-
(i) all of the shares in GONS and GOFE legally owned by
the Principal Borrowers; and
(ii) all of the shares in Chalvoyage legally owned by
GOFE.
7. An assignment of all of the rights of GOFE in respect of the
$5,600,000 loan made or to be made available by GOFE to Chalvoyage
pursuant to an agreement made, or to be made between GOFE and
Chalvoyage.
8. Evidence that the Borrowers have complied with all of their
obligations arising under any Security Document relating to insurance
of the Original Vessels, together with a report, issued by an
independent person, (being an insurance broker and/or insurance
consultant), addressed to the Agent confirming that insurances
effected in respect of the Original Vessels are adequate.
9. All such notices of assignment as may be called for by any of the
Security Documents.
10. A valuation of the Mortgaged Vessels addressed to the Agent by an
independent valuer acceptable to the Agent, confirming that as at the
date hereof the value of the Mortgaged Vessels is not less than
$35,000,000.
11. Copies, certified true copies by a duly authorised officer of the
relevant Obligor of each charter relating to the Mortgaged Vessels,
together with confirmation that each such charter remains in full
force and effect.
12. Evidence as to the operational condition of each of the Original
Vessels, such evidence to be in such form and such terms as the Bank
may require.
13. The Master Agreements.
14. Evidence of the novation or assignment or consent by the charterers of
the BP Fleet Vessels to the novation or assignment of the time
charterparties relating to the BP Fleet Vessels.
15. An opinion of each of GOMI and GOFE's Panamanian counsel.
16. An opinion of each of GOMI and GOFE's English counsel.
17. An opinion from Chooi & Co., Malaysian counsel for the Agent.
18. An opinion from Arias, Fabrega and Fabrega, Panamanian counsel for the
Agent.
19. An opinion of Clifford Chance, solicitors for the Agent.
20. Evidence that GONS has agreed to act as agent for the Obligors for the
service of process in England.
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<PAGE> 71
PART 2
21. A certified true copy of the yard contract 67 (the "BUILDING
CONTRACT") between GONS and Brattvaag Skipsverft A.S. relating to the
building of a platform supply vessel, type UT 755 together with a
written confirmation from the Principal Borrowers that no amendments
have been made to the Building Contract.
22. An assignment to the Security Trustee of the advance payment
guarantees issued by Christiania Bank og Kreditkasse in favour of GONS
and relating to advance payments made by GONS to the Contractor under
the Building Contract.
23. A duly executed addendum to the first preferred Panamanian ship
mortgages over the m.v. Seawhip and the m.v. Seawitch in form and
substance acceptable to the Agent together with confirmation from
Patton, Moreno & Asvat that such addendum has been duly registered
with the Registry of Panamanian Ships in Panama City.
24. A legal opinion from Chooi & Co, the Malaysian counsel for the Agent,
in a form acceptable to the Security Trustee.
25. A legal opinion from Patton, Moreno & Asvat, the Panamanian counsel
for the Agent, in a form acceptable to the Security Trustee.
26. A legal opinion from Clifford Chance, solicitors for the Agent.
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<PAGE> 72
THE THIRD SCHEDULE
NOTICE OF DRAWDOWN
From: [ ]
To: [ ]
Dated:
Dear Sirs,
1. We refer to the agreement (as from time to time amended, varied,
novated or supplemented, the "Facility Agreement") dated [ ], 1993 and
made between Gulfmark North Sea Limited and Gulfmark Offshore Marine Inc. as
borrowers, Gulfmark International Inc as Sponsor, The Chase Manhattan Bank,
N.A. as Agent the financial institutions named therein as banks. Terms defined
in the Facility Agreement shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Facility Agreement and
on [date of proposed Advance], we wish to borrow an Advance in the amount of [
] dollars/[ ] sterling upon the terms and subject to the conditions
contained therein.
[3. We would like this Advance to have a first Interest Period of [ ]
months' duration.]*
4. We confirm that, at the date hereof, the representations set out in
Clause 18 of the Facility Agreement are true and no Event of Default or
Potential Event of Default has occurred.
5. The proceeds of this drawdown should be credited to [insert account
details].
Yours faithfully
.............................
for and on behalf of
[ ]
- ---------------------------------------------------------------
* Insert only if there are no outstanding Advances.
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<PAGE> 73
THE FOURTH SCHEDULE
ASSOCIATED COSTS RATE
1. For the purposes of this Agreement, the cost of compliance with
existing requirements of the Bank of England in respect of Advances denominated
in sterling will be calculated by the Agent in relation to each Advance by
reference to the circumstances existing on the first day of each Interest
Period in respect of such Advance and, if any such Interest Period exceeds
three months, at three calendar monthly intervals from the first day of such
Interest Period during its duration in accordance with the following formula:
AB + C(B - E) + D(B - F) per cent. per annum
------------------------
100 - (A + D)
Where:
A is the percentage of eligible liabilities which the Agent is
from time to time required to maintain as an interest free
cash deposit with the Bank of England to comply with cash
ratio requirements.
B is the percentage rate per annum at which sterling deposits
are offered by the Agent, in accordance with its normal
practice, for a period equal to (i) the relevant Interest
Period (or, as the case may be, remainder of such Interest
Period) in respect of the relevant Advance or (ii) three
months, whichever is the shorter, to a leading bank in the
London Interbank Market at or about 11.00 a.m. in a sum
approximately equal to the amount of such Advance.
C is the percentage of eligible liabilities which the Agent is
from time to time required by the Bank of England to maintain
as secured money with members of the London Discount Market
Association ("LDMA") and/or as secured call money with money
brokers and gilt edged market makers.
D is the percentage of eligible liabilities which the Agent is
required from time to time to maintain as interest bearing
special deposits with the Bank of England.
E is the percentage rate per annum at which members of the LDMA
are offered sterling deposits in a sum approximately equal to
the amount of the relevant Advance as a callable fixture from
the Agent for such period as determined in accordance with B
above at or about 11.00 a.m.
F is the percentage rate per annum payable by the Bank of
England to the Agent on interest bearing special deposits.
2. For the purposes of this Schedule "ELIGIBLE LIABILITIES" and "SPECIAL
DEPOSITS" shall bear the meanings ascribed to them from time to time by the
Bank of England.
3. The percentages used in A, C and D above shall be those required to be
maintained on the first day of the relevant period as determined in accordance
with B above.
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<PAGE> 74
4. In application of the above formula, A, B, C, D, E and F will be
included in the formula as figures and not as percentages e.g. if A is 0.5 per
cent. and B is 12 per cent., AB will be calculated as 0.5 x 12 and not as 0.5
per cent. x 12 per cent.
5. Calculations will be made on the basis of a 365 day year (or, if
market practice differs, in accordance with market practice).
6. A negative result obtained by subtracting E from B or F from B shall
be taken as zero.
7. The resulting figures shall be rounded upwards, if not already such a
multiple, to the nearest whole multiple of one-thirty-second of one per cent.
per annum.
8. Additional amounts calculated in accordance with this Schedule are
payable on the last day of the Interest Period to which they relate.
9. The determination of the Associated Costs Rate in relation to any
period shall, in the absence of manifest error, be conclusive and binding on
all of the parties hereto.
10. The Agent may from time to time, after consultation with the Borrower
and the Banks, determine and notify to all the parties hereto any amendments or
variations which are required to be made to the formula set out above in order
to comply with any requirements from time to time imposed by the Bank of
England in relation to Advances denominated in sterling (including without
limitation, any requirements relating to sterling primary liquidity) and, any
such determination shall, in the absence of manifest error, be conclusive and
binding on all the parties hereto.
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<PAGE> 75
THE FIFTH SCHEDULE
FORM OF SUPPLEMENTAL AGREEMENT
THIS SUPPLEMENTAL AGREEMENT is made on the day of 1993.
BETWEEN
(1) [ ] (the "ORIGINAL BORROWERS");
(2) [Additional Borrower(s)] (the "ADDITIONAL BORROWER(S)"); and
(3) [ ] on behalf of itself as agent and on behalf
of the parties party to the Agreement defined therein as Agent,
Security Trustee and as Banks (the "AGENT").
WHEREAS
(1) By an agreement [together with the supplemental agreements referred to
in (2) below], (the "AGREEMENT") dated [ ] and made between
the Original Borrowers, The Chase Manhattan Bank, N.A. as Agent and
Security Trustee, the financial institutions therein referred to and
others, the Banks have made available to the Borrowers a facility on
the terms and conditions therein defined.
(2) The agreement referred to in (1) above has been supplemented by the
following agreements:-
[List Supplemental Agreements]
(3) Pursuant to Clause 6 of the Agreement the Original Borrowers wish to
designate the Additional Borrower(s) as borrowers under the Facility.
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
Save as otherwise defined herein terms defined in the Agreement shall bear the
same meaning herein and in the Recitals thereto.
2. ADDITIONAL BORROWER(S)
With effect as from the date that the Agent confirms to the Original Borrowers
that it has received, in form and substance satisfactory to it [in relation to
each Additional Borrower], each of the conditions precedent specified in Clause
3, the Agreement shall henceforth be read and construed as if the [each]
Additional Borrower were party to the Agreement having all the rights and
obligations of an Additional Borrower and a Borrower under the Revolving
Facility. Accordingly all references in any Facility Document to (a) any
"ADDITIONAL BORROWER" or "BORROWER" shall be treated as including reference to
[such] Additional Borrower and (b) the Agreement shall be treated as a
reference to the Agreement as supplemented by this Agreement to the intent that
this Agreement and the Agreement shall be read and construed together as one
single agreement.
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<PAGE> 76
3. CONDITIONS PRECEDENT
The following are the conditions precedent referred to in Clause 2 which are
required to be delivered to the Agent in relation to the [each] Additional
Borrower:-
(a) a Deed of Accession as defined by Clause 1 of the Trust Deed;
(b) [other documents].
4. REPRESENTATIONS
[The] [Each] Additional Borrower hereby represents and warrants in respect of
itself as if the representations set out in Clause 18 of the Agreement were set
out in this Agreement.
5. COUNTERPARTS
This Agreement may be signed in counterparts, all of which taken together shall
constitute a single agreement.
6. LAW
This Agreement shall be governed by, and construed in accordance with, English
law.
[7. JURISDICTION]
[ ]
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
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<PAGE> 77
THE SIXTH SCHEDULE
FORM OF TRANSFER CERTIFICATE
To: [ ]
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Facility Agreement") dated [ ], 1993 whereby a dual
tranche revolving credit facility was made available to Gulf Offshore Marine
International Inc., Gulf North Sea Limited and Others as borrowers by a group
of banks on whose behalf The Chase Manhattan Bank, N.A. acted as agent in
connection therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee, Bank's
Participation and Amount Transferred are defined in the schedule hereto.
2. The Bank confirms that the Bank's Participation is an accurate summary
of its participation in the Facility Agreement and requests the Transferee to
accept and procure the transfer to the Transferee of a percentage of the Bank's
Participation (equal to the percentage that the Amount Transferred is of the
aggregate of the component amounts (as set out in the schedule hereto) of the
Bank's Participation) by counter-signing and delivering this Transfer
Certificate to the Agent at its address for the service of notices specified in
the Facility Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the purposes of
Clause 35 of the Facility Agreement so as to take effect in accordance with the
terms thereof on the Transfer Date or on such later date as may be determined
in accordance with the terms thereof.
4. The Transferee confirms that it has received a copy of the Facility
Agreement together with such other information as it has required in connection
with this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information and
further agrees that it has not relied and will not rely on the Bank to assess
or keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Borrower.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Facility Agreement that it will perform in accordance with their
terms all those obligations which by the terms of the Facility Agreement will
be assumed by it after delivery of this Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.
6. The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness, adequacy
or enforceability of the Facility Agreement or any document relating thereto
and assumes no responsibility for the financial condition of the Borrower or
for the performance and observance by the Borrower of any of its obligations
under the Facility Agreement or any document relating
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<PAGE> 78
thereto and any and all such conditions and warranties, whether express or
implied by law or otherwise, are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (i)
accept a re-transfer from the Transferee of the whole or any part of its
rights, benefits and/or obligations under the Facility Agreement transferred
pursuant hereto or (ii) support any losses directly or indirectly sustained or
incurred by the Transferee for any reason whatsoever including, without
limitation, the non-performance by the Borrower or any other party to the
Facility Agreement (or any document relating thereto) of its obligations under
any such document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (i) or (ii) above.
8. This Transfer Certificate and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with English
law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Bank's Participation:
Bank's Dollar Commitment Bank's Portion of the Dollar Advances
Bank's Sterling Commitment Bank's Portion of the Sterling Advances
5. Amounts Transferred:
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
- 67 -
<PAGE> 79
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address:
Contact Name:
Account for Payments
in dollars:
Telex:
Telephone:
- 68 -
<PAGE> 80
THE BORROWERS
GULFMARK NORTH SEA LIMITED
as principal borrower
by: /s/ DAVID DARE
Address: 10 Charlotte Road
London SW13 9QJ
Attention:
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrower
by: /s/ DAVID DARE
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention:
GULF OFFSHORE N.S. LIMITED
as permitted borrower
by: /s/ DAVID DARE
Address: 10 Charlotte Road
London SW13 9QT
Attention:
- 69 -
<PAGE> 81
GULF OFFSHORE FAR EAST INC.
as permitted borrower
by: /s/ DAVID DARE
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention:
THE SPONSOR
GULFMARK INTERNATIONAL INC.
by: /s/ DAVID DARE
Address: 5 Post Oak Park
Suite 1170
Houston
Texas 77027
USA
Attention:
THE AGENT
THE CHASE MANHATTAN BANK, N.A.
as agent and security trustee
By: /s/ J. G. HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Oil and Gas Group
Facsimile: 962 5030
Telex: 8954681 CMB G
- 70 -
<PAGE> 82
THE HEDGE COUNTERPARTY
THE CHASE MANHATTAN BANK, N.A.
By: /s/ J. G. HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Oil and Gas Group
The Banks
THE CHASE MANHATTAN BANK, N.A.
By: /s/ J. G. HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Oil and Gas Group
Facsimile: 962 5030
Telex: 8954681 CMB G
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
By: /s/ J. S. GARDNER
Address: International Division
Orchard Brae House
30 Queensferry Road
Edinburgh EH4 2UG
Attention: Shipping Finance
Facsimile: (131) 343 7080
JYS$02$5.21
- 71 -
<PAGE> 1
EXHIBIT 10.17
FACILITY AGREEMENT
between
GULF OFFSHORE SHIPPING SERVICES, INC.
as borrower
GULFMARK INTERNATIONAL, INC.
GULFMARK NORTH SEA LIMITED
and
GULF OFFSHORE MARINE INTERNATIONAL INC.
as sponsors
CHASE MANHATTAN INTERNATIONAL LIMITED
as agent
and security trustee
THE CHASE MANHATTAN BANK
as initial bank
and
OTHERS
CLIFFORD CHANCE
LONDON
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE NO.
<S> <C> <C>
PART 1
INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . 1
1. INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PART 2
THE FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . 10
2. THE FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3. PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4. NATURE OF BANK'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
PART 3
AVAILABILITY OF THE FACILITY . . . . . . . . . . . . . . . . . . . . . 12
6. AVAILABILITY OF THE FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7. DETERMINATION OF AVAILABLE AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
PART 4
INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. INTEREST PERIODS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9. INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10. ALTERNATIVE INTEREST RATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT . . . . . . . . . . . . . . . . . . 16
11. REPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
12. REDUCTION, CANCELLATION AND PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
PART 6
CHANGE IN CIRCUMSTANCES . . . . . . . . . . . . . . . . . . . . . . 18
13. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14. TAX RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. INCREASED COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16. ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
PART 7
REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT . . . . . . . . . . . . . . . . 21
17. REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
18. FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
19. FINANCIAL CONDITION AND SECURITY COVERAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
20 COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
21. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
PART 8
SPONSORS' OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . 36
22. SPONSORS' OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
PART 9
DEFAULT INTEREST AND INDEMNITY . . . . . . . . . . . . . . . . . . . . 37
23. DEFAULT INTEREST AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
PART 10
PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 39
24. CURRENCY OF ACCOUNT AND PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
25. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
26. SET-OFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
27. REDISTRIBUTION OF PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
PART 11
FEES, COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . 42
28. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
29. COSTS AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
PART 12
AGENCY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 43
30. THE AGENT AND THE BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
PART 13
ASSIGNMENT AND TRANSFERS . . . . . . . . . . . . . . . . . . . . . . 47
31. BENEFIT OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
32. ASSIGNMENTS AND TRANSFERS BY THE OBLIGORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
33 ASSIGNMENTS AND TRANSFERS BY BANKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
34. DISCLOSURE OF INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
PART 14
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 50
35. CALCULATIONS AND EVIDENCE OF DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
36. REMEDIES AND WAIVERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
37. PARTIAL INVALIDITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
38. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
PART 15
LAW AND JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . 52
39. LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
40. JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
THE FIRST SCHEDULE 54
CONDITION PRECEDENT DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
THE SECOND SCHEDULE
NOTICE OF DRAWDOWN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
THE THIRD SCHEDULE
FORM OF TRANSFER CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
THE FOURTH SCHEDULE
THE ORIGINAL VESSELS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
<PAGE> 5
THIS AGREEMENT is made the 26th day of July, 1996
BETWEEN
(1) GULF OFFSHORE SHIPPING SERVICES, INC. (the "BORROWER");
(2) GULFMARK INTERNATIONAL, INC., GULFMARK NORTH SEA LIMITED, and GULF
OFFSHORE MARINE INTERNATIONAL, INC. (together the "SPONSORS" and each
a "SPONSOR");
(3) CHASE MANHATTAN INTERNATIONAL LIMITED as agent (the "AGENT") and
security trustee ("SECURITY TRUSTEE"); and
(4) THE CHASE MANHATTAN BANK (the "INITIAL BANK").
NOW IT IS HEREBY AGREED as follows:
PART 1
INTERPRETATION
1. INTERPRETATION
1.1 In this Agreement:
"ADVANCE" means, save as otherwise provided herein, an Advance made or to be
made by the Banks hereunder;
"ADDITIONAL MORTGAGED VESSEL" means any vessel, other than the Original
Vessels, owned by the Borrower subject to a first priority legal mortgage and a
deed of covenants collateral thereto (or documents conferring a similar
security interest), granted in favour of the Security Trustee as security,
INTER ALIA, for the obligations of the Borrower hereunder, which mortgage and
collateral deed of covenants (or such documents) have been duly registered,
recorded or filed as required by the Security Trustee and are in full force and
effect;
"APPROVED CHARTER" means any charterparty, contract or engagement of
affreightment or for the carriage or transportation of cargo, mail or
passengers or any of them, relating to any of the Mortgaged Vessels, whether
now existing or hereafter entered into by the Borrower or any person, firm or
company on its behalf, the terms of which are approved by the Agent;
"APPROVED CHARTER EARNINGS" in relation to a Mortgaged Vessel means the amount
of all freights and hires which may be earned by the Borrower during the term
of any Approved Charter pursuant to the terms and conditions thereof, LESS the
estimated cost of the Borrower during such term of maintaining and operating
the Mortgaged Vessel to which such Approved Charter relates in accordance with
the terms and
- 1 -
<PAGE> 6
conditions hereof and of the mortgage and/or deed of covenants relating to such
Mortgaged Vessel to and such Approved Charter;
"AVAILABLE AMOUNT" means the principal amount at any time available for drawing
under the Facility as computed by the Agent pursuant to Clause 7;
"AVAILABLE COMMITMENT" in relation to a Bank at any time means, save as
otherwise provided herein, its Commitment less its portion of each Advance
which has been made hereunder and is outstanding at such time;
"AVAILABLE FACILITY" means, at any time and save as otherwise provided herein,
the aggregate amount from time to time of the Available Commitments at such
time;
"BANKS" means the Initial Bank and its respective successors, any permitted
transferees or assigns which are for the time being participating in the
Facility;
"BENEFICIARIES" mean the Agent and the Banks;
"CHRISTIANIA MORTGAGES" means each of the mortgages over:
(a) the m.v. "HIGHLAND STAR";
(b) the m.v. "HIGHLAND PRIDE";
(c) the m.v. "HIGHLAND LEGEND";
(d) the m.v. "HIGHLAND PIPER"; and
(e) the m.v. "ATLANTIC WARRIOR",
securing the obligations of Gulf Offshore N.S. Limited in respect of loans (the
"CHRISTIANIA LOANS") made or to be made by Christiania Bank of Kreditkasse to
Gulf Offshore N.S. Limited on terms disclosed to and approved by the Agent
prior to the date hereof together with any deed of covenants (and/or such other
documents as may be executed assigning the earnings and insurance of any of
those vessels);
COMMITMENT" in relation to the Initial Bank at any time means, subject to the
provisions of Clause 12.1 and save as otherwise provided herein, the amount of
$7,000,000, the amount of any commitment transferred to it in accordance with
Clause 33 LESS any amount of its Commitment transferred by it in accordance
with Clause 33;
"DESIGNATED VESSEL" means a vessel which in the opinion of the Agent will,
forthwith upon the making of an Advance, become an Additional Mortgaged Vessel
and in respect of which the Agent has received each of the documents referred
to in Clause 6.2(ii) and 6.2(iii);
"ENVIRONMENTAL AFFILIATE" means in relation to a party an agent or employee of
that party or a person in a contractual relationship with that party, with
respect to any of the Mortgaged Vessels or its operation or its carriage of
cargo thereon whose acts or omissions have or will have a Material Adverse
Effect;
- 2 -
<PAGE> 7
"ENVIRONMENTAL APPROVALS" means any permit, licence, approval, ruling,
variance, exemption or other authorisation required under applicable
Environmental Laws;
"ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up, removal or other
governmental or regulatory actions or orders instituted or completed pursuant
to any Environmental Laws or Environmental Approvals together with claims made
by any third party relating to damage, contribution, loss or injury, resulting
from any Release of Material of Environmental Concern;
"ENVIRONMENTAL LAWS" means all national, state, local, foreign and
international laws, regulations, treaties and conventions pertaining to the
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata, navigable
waters, waters of the contiguous zone, ocean waters and international waters),
including laws, regulations, treaties and conventions relating to the Release
(or threatened release) of Material of Environmental Concern;
"EVENT OF DEFAULT" means any of those events specified in Clause 21.1;
"FACILITY" means the dollar revolving loan facility granted to the Borrower
pursuant to Clause 2;
"FACILITY AMOUNT" means $7,000,000;
"FACILITY OFFICE" in relation to the Agent or any Bank means the office
identified with its signature below or such other office as it may from time to
time select;
"FINAL MATURITY DATE" means 31 July 2001;
"FINANCE DOCUMENTS" means this Agreement, the Security Documents and all other
documents from time to time creating, evidencing or entered into as security
for, or guaranteeing the obligations of the Borrower hereunder or thereunder
and any document entered into pursuant hereto or thereby;
"FIXED ASSET INVESTMENT" means any investment which will in the reasonable
opinion of the Principal Sponsor increase the marketability of a Mortgaged
Vessel or any other vessel or is necessary to ensure the compliance by the
owner of such Vessel of all laws and regulations applicable to such Mortgaged
Vessel or any other vessel;
"FREELY AVAILABLE LIQUID RESOURCES" shall have the meaning ascribed thereto in
Clause 19.4;
"GMM GROUP" means the Sponsors (other than the Principal Sponsor), Gulf
Offshore N.S. Limited, Gulf Offshore Far East Inc. and subsidiaries for the
time being;
"GROUP" means the Principal Sponsor and its subsidiaries for the time being;
"INSTRUCTING GROUP" means;
- 3 -
<PAGE> 8
(i) before any Advance has been made hereunder, a group of Banks
whose Total Available Commitments amount in aggregate to more
than fifty one (51%) of the Total Available Facility; and
(ii) thereafter, a group of Banks to whom in aggregate more than
fifty one (51%) of the Loan is (or, immediately prior to its
repayment, was then) owed;
"INTEREST PERIOD" means, save as otherwise provided herein, any of those
periods mentioned in Clause 8.2.
"LIBOR" means, in relation to any Advance or unpaid sum, the rate per annum at
which the Agent was offering to prime banks in the London Interbank Market
deposits in the currency of and in an amount approximately equal to the amount
of such Advance or unpaid sum and for the specified period at or about 11.00
a.m. on the Quotation Date for such period and, for the purposes of this
definition, "SPECIFIED PERIOD" means the Interest Period of such Advance or, as
the case may be, the period in respect of which LIBOR falls to be determined in
relation to such unpaid sum;
"LOAN" means at any time the aggregate principal amount of all Advances for the
time being outstanding hereunder;
"MAIN FACILITY" means the facility agreement dated 8 July 1993, as amended by
the amendment agreement dated 20 May 1994 and 20 October 1995 and as amended,
varied, supplemented, extended or novated from time to time, and made between
GulfMark North Sea Limited, Gulf Offshore Marine International Inc. as
principal borrowers, Gulf Offshore N.S. Limited, as permitted borrowers, the
Principal Sponsor as sponsor, The Chase Manhattan Bank, N.A. as agent, security
trustee and hedge counterparty and others;
"MARGIN" means one point six two five per cent. (1.625%) per annum;
"MARKET VALUE" means, at any time, in relation to any Vessel, her sale value in
dollars as then most recently determined by an independent and internationally
recognised firm of shipbrokers acceptable to the Agent on the basis of a sale
of such Vessel (a) for cash (b) free of charter, liens, charges, mortgages and
encumbrances and (c) at arm's length on normal commercial terms between a
willing seller and a willing buyer;
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the ability of the
Borrower to meet its obligations to the Security Trustee, the Agent and the
Banks hereunder or under any of the Security Documents to which the Borrower is
a party;
"MATERIAL OF ENVIRONMENTAL CONCERN" means and includes pollutants,
contaminants, toxic substances, oil as defined in the United States Oil
Pollution Act of 1990, and all hazardous substances as defined in the United
States Comprehensive Environmental Response, Compensation and Liability Act;
"MORTGAGED VESSELS" means (a) each of the Original Vessels in respect of which
a first priority legal mortgage and deed of covenant or assignments collateral
thereto granted in favour of the Security Trustee
- 4 -
<PAGE> 9
is in full force and effect; and (b) each Additional Mortgaged Vessel and
"MORTGAGED VESSEL" means any of them;
"MORTGAGES" means the first priority mortgages (each as amended, varied,
novated, supplemented or extended from time to time and including, for the
avoidance of doubt, any addenda thereto) in favour of the Security Trustee to
be executed by the Borrower in favour of the Security Trustee over each of the
Original Vessels and each Additional Mortgaged Vessel;
"NOTICE OF DRAWDOWN" means a notice substantially in the form set out in the
Second Schedule;
"OBLIGORS" means the Sponsors and the Borrower;
"ORIGINAL FINANCIAL STATEMENTS" means the consolidated financial statements of
the Principal Sponsor and its subsidiaries for its financial year ended 31
December 1995;
"ORIGINAL VESSELS" means each of the vessels listed in the Fourth Schedule; and
"POTENTIAL EVENT OF DEFAULT" means any event which may become (with the passage
of time, the giving of notice, the making of any determination hereunder or any
combination thereof) an Event of Default;
"PRINCIPAL SPONSOR" means GulfMark International, Inc.;
"PROFITS AFTER TAX" means in respect of any financial year of any member of the
GMM Group, the profit after deduction of tax thereon of such member of the GMM
Group for such financial year determined by reference to the consolidated
profit and loss account of the GMM Group in respect of such financial year and
delivered to the Agent pursuant to Clause 18.1;
"QUOTATION DATE" means, in relation to any period for which an interest rate is
to be determined hereunder, the day on which quotations would ordinarily be
given by prime banks in the London Interbank Market for deposits in dollars for
delivery on the first day of that period Provided that, if for any such period
quotations would ordinarily be given on more than one date, the Quotation Date
for that period shall be the last of those dates;
"REDUCED AMOUNT" on any Reduction Date, and in relation to the Facility, means
the amount of the Facility as the same has been reduced on such Reduction Date
in accordance with the provisions of Clause 12.1;
"REDUCTION DATE" means 31 January 1997 and then each of the days which are 6,
12, 18, 24, 30, 36, 42, 48 and 54 months thereafter;
"RELEASE OF MATERIAL OF ENVIRONMENTAL CONCERN" means an emission, spill,
release or discharge into or upon (i) the air, (ii) surface water, (iii) ground
water or (iv) soils, of any Material of Environmental Concern for which any
member of the Group has any liability under Environmental Laws, except in
accordance with a valid Environmental Approval;
- 5 -
<PAGE> 10
"SECURITY DOCUMENTS" means:
(i) the first preferred Panamanian ship mortgage and
assignment of insurances and earnings collateral
thereto executed in respect of each of the Original
Vessels;
(ii) each of the mortgages and deed of covenants (and/or
such other documents as may be executed assigning the
earnings and insurances of any vessel) which may be
executed in respect of any vessel as security for the
obligations of the Borrower hereunder;
(iii) the Trust Agreement; and
(iv) the Share Pledge.
"SHARE PLEDGE" means the share pledge referred to in paragraph 5 of the First
Schedule;
"SHORT TERM FACILITY" means the short term facility agreement dated 8 July 1993
as amended by the amendment agreement dated 20 May 1994 and as amended, varied,
supplemented, extended or novated from time to time made between GulfMark North
Sea Limited, Gulf Offshore Marine International Inc., Gulf Offshore N.S.
Limited and Gulf Offshore Far East Inc., as borrowers, the Principal Sponsor,
as guarantor, and the Agent as lending bank;
"TRANSFER CERTIFICATE" means a certificate in the form set out in the Third
Schedule signed by a Bank and a Transferee whereby:
(a) such Bank seeks to procure the transfer to such Transferee of
all or a part of such Bank's rights and obligations hereunder
upon and subject to the terms and conditions set out in Clause
33; and
(b) such Transferee undertakes to perform the obligations it will
assume as a result of delivery of such certificate to the
Agent as is contemplated in Clause 33;
"TRANSFER DATE" in relation to any Transfer Certificate means the date for the
making of the transfer as specified in such Transfer Certificate;
"TRANSFEREE" means a bank or other financial institution to which a Bank seeks
to transfer all or part of such Bank's rights and obligations hereunder; and
"TRUST AGREEMENT" means the trust agreement referred to in paragraph 3 of the
First Schedule.
1.2 Any reference in this Agreement to:
the "AGENT", the "SECURITY TRUSTEE" or a "BANK" shall be construed so as to
include it and any subsequent successors in accordance with their respective
interests and "SUCCESSORS" in relation to a party means an assignee or
successor in title of such party or any person who, under the laws of its
jurisdiction
- 6 -
<PAGE> 11
of incorporation or domicile has assumed the rights and obligations of such
party hereunder or to which under such laws the same have been transferred;
a "BUSINESS DAY" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks are generally open for business in London
and New York City;
a "CLAUSE" shall, subject to any contrary indication, be construed as a
reference to a clause hereof;
an "ENCUMBRANCE" shall be construed as a reference to a mortgage, charge,
pledge, lien or other encumbrance securing any obligation of any person or any
other type of preferential arrangement (including, without limitation, title
transfer and retention arrangements) having a similar effect;
the "EQUIVALENT" on any given date in one currency (the "FIRST CURRENCY") of an
amount denominated in another currency (the "SECOND CURRENCY") is a reference
to the amount of the first currency which could be purchased by the amount of
the second currency at the spot rate of exchange quoted by the Agent at or
about 11.00 a.m. on such date for the purchase of the first currency with the
second currency for delivery two business days thereafter;
a "HOLDING COMPANY" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned company or
corporation is a subsidiary;
"INDEBTEDNESS" shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment or repayment of money,
whether present or future, actual or contingent;
"INDEBTEDNESS FOR BORROWED MONEY" shall be construed so as to include, without
limitation, any indebtedness of any person for or in respect of:
(i) amounts raised by acceptance under any acceptance
credit facility;
(ii) amounts raised under any note purchase facility;
(iii) the amount of any liability in respect of leases or
hire purchase contracts which would, in accordance
with generally accepted accounting standards in the
United States and/or the United Kingdom (as used in
the Principal Sponsor's most recent audited annual
consolidated financial statements from time to time),
be treated as finance or capital leases;
(iv) the amount of any liability in respect of any
purchase price for assets or services the payment of
which is deferred for a period in excess of one
hundred and eighty days; and
(v) amounts raised under any other transaction
(including, without limitation, any forward sale or
purchase agreement) having the commercial effect of a
borrowing (excluding, for the avoidance of doubt,
indebtedness incurred in relation to commercial
transactions);
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<PAGE> 12
a "MONTH" is a reference to a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next succeeding calendar
month save that, where any such period would otherwise end on a day which is
not a business day, it shall end on the next succeeding business day, unless
that day falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the immediately preceding
business day Provided that, if a period starts on the last business day in a
calendar month or if there is no numerically corresponding day in the month in
which that period ends, that period shall end on the last business day in that
later month (and references to "MONTHS" shall be construed accordingly);
a "PERSON" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or more
of the foregoing;
"REPAY" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "PREPAY" (or, as the case may be, the
corresponding derivative form thereof);
"REQUISITION COMPENSATION" means the sums of money or other compensation from
time to time payable or paid by any person in connection with or by reason of
requisition for title or other compulsory acquisition of the Vessels or either
of them otherwise than by requisition for hire;
"REQUISITION FOR TITLE" (as a verb) includes, in relation to an asset,
compulsorily acquire, expropriate, nationalise, seize, capture, forfeit,
condemn as prize or otherwise act so as to divest the owner thereof of title
thereto and noun forms of the verb shall be construed accordingly;
a "SCHEDULE" shall, subject to any contrary indication, be construed as a
reference to a schedule hereto;
a "SUBSIDIARY" of a company or corporation shall be construed as a reference to
any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct
its affairs and/or to control the composition of its board of directors or
equivalent body;
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<PAGE> 13
"TAX" shall be construed so as to include any tax, levy, impost, duty or other
charge of a similar nature (including, without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same);
"TOTAL LOSS" shall be construed in accordance with the provisions of the
relevant Security Document;
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time;
a "WHOLLY-OWNED SUBSIDIARY" of a company or corporation shall be construed as a
reference to any company or corporation which has no other members except that
other company or corporation and that other company's or corporation's
wholly-owned subsidiaries or persons acting on behalf of that other company or
corporation or its wholly-owned subsidiaries; and
the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or corporation
shall be construed so as to include any equivalent or analogous proceedings
under the law of the jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such company or corporation carries
on business including the seeking of liquidation, winding-up, reorganisation,
dissolution, administration, arrangement, adjustment, protection or relief of
debtors.
1.3 "L." and "STERLING" denote the lawful currency of the United Kingdom
and "$" and "DOLLARS" denote lawful currency of the United States of America.
1.4 Save where the contrary is indicated, any reference in this Agreement
to:
(i) this Agreement or any other agreement or document
shall be construed as a reference to this Agreement
or, as the case may be, such other agreement or
document as the same may have been, or may from time
to time be, amended, varied, novated or supplemented;
(ii) a statute shall be construed as a reference to such
statute as the same may have been, or may from time
to time be, amended or re-enacted; and
(iii) a time of day shall be construed as a reference to
London time.
1.5 Clause and Schedule headings are for ease of reference only.
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<PAGE> 14
PART 2
THE FACILITY
2. THE FACILITY
The Banks grant to the Borrower through their respective Facility
Offices, subject to the provisions of Clauses 7 and 12 and otherwise upon the
terms and subject to the conditions hereof, a revolving loan facility in an
aggregate amount of up to $7,000,000.
3. PURPOSE
3.1 The Facility is intended to be applied in or towards the cost of
acquisition of the Original Vessels and for general working capital purposes.
3.2 Without prejudice to the obligations of the Borrower under Clause 3.1,
neither the Agent, the Banks nor any of them shall be obliged to concern
themselves with the application of amounts raised by the Borrower hereunder.
4. NATURE OF BANK'S OBLIGATIONS
4.1 The obligations of each Bank hereunder are several.
4.2 The failure by a Bank to perform its obligations hereunder shall not
affect the obligations of the Borrower to any other party hereto nor shall any
such other party be liable for the failure by such Bank to perform its
obligations hereunder.
5. CONDITIONS PRECEDENT
5.1 Save as the Agent may otherwise agree, the Borrower may not deliver
any Notice of Drawdown hereunder unless the Agent has confirmed to the
Principal Sponsor that it has received all of the documents listed in the First
Schedule and that each is, in form and substance, satisfactory to the Agent.
5.2 In respect of the documents referred to in paragraphs 4 and 5 of the
First Schedule (the "UNDATED SECURITY DOCUMENTS") the Agent agrees that they
are to be held in safe custody by it (or any sub-custodian as hereinafter
referred to) unless and until an Advance is made pursuant to Clause 6: in which
event the Agent shall when such Advance is made contemporaneously date, or
shall procure the contemporaneous dating of, the Undated Security Documents
referred to in paragraphs 4 and 5 of the First Schedule and shall then
endeavour to register (as soon as is reasonably practicable to do so) the
mortgages referred to in paragraphs 4 of the First Schedule on the Panamanian
Register of Ships. The Agent may place the Undated Security Documents with any
firm of lawyers of good repute and, in the absence of gross negligence or
wilful default on the part of the Agent, the Agent shall not be responsible for
any loss thereby incurred.
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<PAGE> 15
5.3 The Agent shall not, in the absence of gross negligence or wilful
default on its part, be responsible for any loss, incurred by any person, if
for any reason it is not possible to put into effect any matter the subject of
Clause 5.2. The Borrower shall from time to time execute and sign all
documents which the Agent may reasonably require for effecting the registration
of the Undated Security Documents and, furthermore, the Borrower agrees not to
withdraw, or purport to withdraw, the Undated Security Documents from the
custody of the Agent (or any sub-custodian as hereinbefore referred to) except
with the prior written consent of the Agent.
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<PAGE> 16
PART 3
AVAILABILITY OF THE FACILITY
6. AVAILABILITY OF THE FACILITY
6.1 Subject to the provisions of Clause 6.2 and save as otherwise provided
herein, an Advance will be made by the Banks to the Borrower if:
(i) not more than ten, nor less than three business days
before the proposed date for the making of such
Advance, the Agent has received from the Borrower a
notice of drawdown therefore, receipt of which shall
oblige the Borrower to borrow the amount therein
requested on the date therein stated upon the terms
and subject to the conditions herein;
(ii) the proposed date for the making of such Advance is a
business day which falls one or more months before
the Final Maturity Date;
(iii) the proposed amount of such Advance is (a) an amount
of not less than $1,000,000 which is an integral
multiple of $500,000 and which is less than the
Available Facility or (b) equal to, the amount of the
Available Facility;
(iv) the proposed amount of such Advance (less the amount
of any Advances falling to be repaid on or before the
proposed date for the making of such Advance) will
not result, when such Advance is made, in the Loan
exceeding the Available Amount;
(v) in the case of the initial Advance the Agent is
satisfied that the Original Vessels will be
transferred to the Borrower free from encumbrances
and first priority legal mortgages over each of the
Original Vessels will be duly registered, recorded
and filed immediately on the making thereof;
(vi) the interest rate applicable to such Advance during
its first Interest Period would not fall to be
determined pursuant to Clause 10.1;
(vii) the making of such Advance would not result in a
breach of the requirements of Clause 19.1; and
(viii) either:
(a) no Event of Default or Potential Event of
Default has occurred; and
(b) the representations set out in Clause 17 are
true on and as of the proposed date for the
making of such Advance,
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<PAGE> 17
or the Banks agree (notwithstanding any matter
mentioned at (a) or (b) above) to make such Advance.
Provided always that if the Banks agree to make an Advance notwithstanding any
of the above, and the proceeds of such Advance are paid into an account with
The Chase Manhattan Bank or any of its subsidiaries or affiliates (the "DEPOSIT
HOLDING BANK"), the Deposit Holding Bank shall not be obliged to release such
proceeds from such account until the Agent is satisfied regarding compliance
with the above provisions and has confirmed such satisfaction to the Deposit
Holding Bank.
6.2 Save as the Agent may otherwise agree, other than in the case of the
initial Advance, the Borrower may not deliver a Notice of Drawdown hereunder in
respect of an Advance the availability of which is determined by reference to
the value of a Designated Vessel, unless the Agent has confirmed to the
Principal Sponsor that it has received in form and substance satisfactory to
it:-
(i) evidence that such Designated Vessel
(a) is, or will be, registered in the name of the
Borrower under a flag acceptable to the Agent, free
from all charters, contracts liens and encumbrances
other than in favour of the Security Trustee or in
terms acceptable to the Agent;
(b) is classified by the American Bureau of Shipping A1
AMS or to an equivalent classification acceptable to
the Agent; and
(c) is, or will be, insured in accordance with the deed
of covenants (and/or such other document as may be
executed assigning the insurances of such Designated
Vessel) referred to in Clause 6.2(ii);
(ii) a first priority mortgage in respect of such Designated Vessel
in favour of the Security Trustee; and
(iii) a deed of covenants (and/or such other document as may be
executed, assigning the earnings and insurances of such
Designated Vessel)
Provided that the documents referred to in Clause 6.2(ii) and (iii)
shall be left undated and held by the Agent on the terms and
conditions of Clause 5.2 and 5.3 mutatis mutandis.
7. DETERMINATION OF AVAILABLE AMOUNT
At any time "AVAILABLE AMOUNT" shall be an amount equal to the lesser
of (a) 51% of the aggregate amount of the Market Value of the Mortgaged Vessels
and (b) the Facility Amount Provided always that in calculating (a) the Agent
shall, in determining the Available Amount to ensure compliance with Clause
6.1(iv), treat any Designated Vessel by which the availability is to be
determined as a Mortgaged Vessel.
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<PAGE> 18
PART 4
INTEREST
8. INTEREST PERIODS
8.1 The period for which an Advance is outstanding shall be divided into
successive periods each of which (other than the first) shall start on the last
day of the preceding such period.
8.2 The duration of each Interest Period shall, save as otherwise provided
herein, be one, three or six months, in each case as the Borrower may by not
less than five business days' prior notice to the Agent select Provided that:
(i) if the Borrower fails to give such notice of its
selection in relation to an Interest Period, the
duration of that Interest Period shall, subject to
paragraphs (ii) and (iii) below, be three months;
(ii) any Interest Period which begins during or at the
same time as any other Interest Period shall (if the
Advances to which those Interest Periods relate are
in the same currency) end at the same time as that
other Interest Period; and
(iii) any Interest Period which would otherwise end during
the month preceding, or extend beyond, a Reduction
Date or the Final Maturity Date shall be of such
duration that it shall end on such date.
9. INTEREST
9.1 On the last day of each Interest Period (and in the case of an
Interest Period of a duration of six months or more, on the expiry of each
period of three months during such Interest Period) the Borrower shall pay
accrued interest on the Advance to which such Interest Period relates.
9.2 The rate of interest applicable to an Advance from time to time during
an Interest Period relating thereto shall be the rate per annum which is the
sum of the Margin and LIBOR on the Quotation Date therefor.
10. ALTERNATIVE INTEREST RATES
10.1 If, in relation to an Advance at or about 11.00 a.m. on the Quotation
Date for an Interest Period in respect of such Advance:
(i) the Agent was not offering to prime banks in the
London Interbank Market deposits in the currency in
which such Advance is to be denominated for the
proposed duration of such Interest Period; or
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<PAGE> 19
(ii) before the close of business in London on the
Quotation Date for such Interest Period, the Agent
has been notified by each of a group of Banks to whom
in aggregate fifty-one (51) per cent or more of the
aggregate amount of Advances denominated in the
currency of such Advance is (or, if an Advance were
then to be made, would be) owed that the rate at
which such deposits were being so offered does not
reflect the cost to it of obtaining such deposits,
then, notwithstanding the provisions of Clause 8:
(a) if paragraph (i) above applies the duration
of that Interest Period shall be one month
or, if less, such that it shall end on the
next succeeding Reduction Date or the Final
Maturity Date as the case may be; and
(b) the rate of interest applicable to each
Bank's portion of the Advance to which such
Interest Period relates from time to time
during such Interest Period shall be the rate
per annum which is the sum of the Margin and
the rate per annum notified to the Agent by
such Bank before the last day of such
Interest Period to be that which expresses as
a percentage rate per annum the cost to such
Bank of funding its portion of the Advance
during such Interest Period from whatever
sources it may reasonably select.
10.2 If (i) the event mentioned in paragraph (i) or (ii) in Clause 10.1
occurs or (ii) by reason of circumstances affecting the London Interbank Market
during any period of three consecutive business days the Agent was not offering
deposits in the currency in which an Advance is to be denominated to prime
banks in the London Interbank Market, then:
(i) the Agent shall notify the Banks, the Principal
Sponsor and the Borrower of such event;
(ii) if the Agent so requires, within five days of such
notification the Agent and the Principal Sponsor and
the Borrower shall enter into negotiations with a
view to agreeing a substitute basis (a) for
determining the rates of interest from time to time
applicable to the Advances and/or (b) upon which the
Advances may be maintained thereafter and any such
substitute basis that is agreed shall take effect in
accordance with its terms and be binding on each
party hereto; Provided Always that the Agent may not
agree any such substitute basis without the prior
consent of each Bank; and
(iii) if the Agent has required the Principal Sponsor and
the Borrower to enter into such negotiations, the
Agent may declare (any such declaration to be binding
on the Borrower) that each Advance shall become due
and payable on the last day of its then current
Interest Period unless by then a substitute basis has
been agreed upon in relation thereto.
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<PAGE> 20
PART 5
REPAYMENT, CANCELLATION AND PREPAYMENT
11. REPAYMENT
11.1 The Borrower shall, on the Final Maturity Date, repay each Advance
then outstanding.
11.2 On each Reduction Date the Borrower shall repay the amount or amounts
by which, on that Reduction Date, the Advances then outstanding under the
Facility exceed the Reduced Amount of the Facility.
12. REDUCTION, CANCELLATION AND PREPAYMENT
12.1 The amount of the Facility shall be reduced on each of the Reduction
Dates by an amount equal to ten per cent. (10%) of the Facility Amount.
12.2 The Borrower may, by giving to the Agent not less than thirty days'
prior notice to that effect, cancel the whole or any part (being an amount or
integral multiple of $500,000) of the Facility. Any such cancellation shall
reduce the Available Commitment of the Banks rateably.
12.3 The Borrower may, if it has given to the Agent not less than ten
business days prior notice to that effect, prepay the whole of any Advance or
any part of any Advance (being an amount of not less than $1,000,000 and an
integral multiple of $500,000) on the last day of any Interest Period relating
to that Advance.
12.4 In the event any Mortgaged Vessel is sold or is or becomes or is
declared an actual or constructive or comprised or agreed total loss then the
Borrower shall apply the proceeds of sale or insurance proceeds or any
requisition compensation in respect thereof in repayment of any Advances then
outstanding, such repayment to be effected on the last day of the Interest
Period during which such proceeds are received or, if earlier, 120 days from
the date of total loss; PROVIDED ALWAYS that if any such proceeds of sale or
insurance proceeds are recovered or requisition compensation received other
than on the last day of any Interest Period the Agent shall, at the request of
the Borrower, retain such proceeds of sale or insurance proceeds or requisition
compensation, as the case may be, in a suspense account with interest accruing
thereon for the account of the Borrower at such rate as the Agent would pay in
the normal course of its business in respect of deposits of a like amount and
for a like term.
12.5 Any notice of cancellation or prepayment given by the Borrower
pursuant to Clause 12.2 or 12.3 shall be irrevocable, shall specify the date
upon which such cancellation or prepayment is to be made and the amount of such
cancellation or prepayment and, in the case of a notice of prepayment, shall
oblige the Borrower to make such prepayment on such date.
12.6 If any Bank claims indemnification from the Borrower under Clause 13.2
or Clause 15.1 and within thirty days thereafter the Agent receives from the
Borrower at least fifteen days' prior notice (which shall be irrevocable) of
the Borrower's intention to repay such Bank's share of the Advances then
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<PAGE> 21
outstanding, the Borrower shall on the last day of each of the then current
Interest Period of each such Advance repay such Bank's portion of such
Advances.
12.7 A Bank for whose account a repayment is to be made under Clause 12.6
shall not be obliged to make any Advances hereunder on or after the date upon
which the Agent receives the Borrower's notice of their intention to repay such
Bank's share of the Advances then outstanding, on which date such Bank's
Available Commitment shall each be reduced to zero.
12.8 The Borrower shall not repay all or any part of any Advance except at
the times and in the manner expressly provided for in this Agreement, but,
shall subject to the terms and conditions hereof, be entitled to reborrow any
amount repaid.
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<PAGE> 22
PART 6
CHANGE IN CIRCUMSTANCES
13. TAXES
13.1 All payments to be made by the Borrower to any person hereunder shall
be made free and clear of and without deduction for or on account of tax unless
the Borrower is required to make such a payment subject to the deduction or
withholding of tax, in which case the sum payable by the Borrower in respect of
which such deduction or withholding is required to be made shall be increased
to the extent necessary to ensure that, after the making of the required
deduction or withholding, such person receives and retains (free from any
liability in respect of any such deduction or withholding) a net sum equal to
the sum which it would have received and so retained had no such deduction or
withholding been made or required to be made.
13.2 Without prejudice to the provisions of Clause 13.1, if any person or
the Agent on its behalf is required to make any payment on account of tax (not
being a tax imposed on the net income of its Facility Office in the
jurisdiction in which it is incorporated or in which its Facility Office is
located) or otherwise on or in relation to any sum received or receivable by
such person or the Agent on its behalf hereunder (including, without
limitation, any sum received or receivable under this Clause 13) or any
liability in respect of any such payment is asserted, imposed, levied or
assessed against such person or the Agent on its behalf, the Borrower shall,
upon demand of the Agent, promptly indemnify such person against such payment
or liability, together with any interest, penalties and expenses payable or
incurred in connection therewith.
13.3 A Bank intending to make a claim pursuant to Clause 13.2, shall notify
the Agent of the event by reason of which it is entitled to make such claim
whereupon the Agent shall notify the Borrower and the Principal Sponsor thereof
Provided that nothing herein shall require any Bank to disclose any
confidential information relating to the organisation of its affairs.
14. TAX RECEIPTS
14.1 If, at any time, the Borrower is required by law to make any deduction
or withholding from any sum payable by it hereunder (or if thereafter there is
any change in the rates at which or the manner in which such deductions or
withholdings are calculated), the Borrower shall promptly notify the Agent.
14.2 If the Borrower makes any payment hereunder in respect of which it is
required to make any deduction or withholding, the Borrower shall pay the full
amount required to be deducted or withheld to the relevant taxation or other
authority within the time allowed for such payment under applicable law and
shall deliver to the Agent for each Bank, within thirty days after it has made
such payment to the applicable authority, an original receipt (or a certified
copy thereof) issued by such authority evidencing the payment to such authority
of all amounts so required to be deducted or withheld in respect of such
payment.
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<PAGE> 23
15. INCREASED COSTS
15.1 If, by reason of (i) any change in law or in its interpretation or
administration and/or (ii) compliance with any request from or requirement of
any central bank or other fiscal, monetary or other authority (including,
without limitation, a request or requirement which affects the manner in which
a Bank or any holding company of such Bank is required to or does maintain
capital resources having regard to such Bank's obligations hereunder and to
amounts owing to it hereunder):
(a) a Bank or any holding company of such Bank incurs a cost as a
result of its having entered into and/or performing its
obligations under this Agreement and/or assuming or
maintaining a commitment under this Agreement and/or making
one or more Advances;
(b) a Bank or any holding company of such Bank is unable to obtain
the rate of return on its overall capital which it would have
been able to obtain but for its having entered into and/or
performing its obligations and/or assuming or maintaining a
commitment under this Agreement;
(c) there is any increase in the cost to a Bank or any holding
company of such Bank of funding or maintaining all or any of
the advances comprised in a class of advances formed by or
including the Advances; or
(d) a Bank or any holding company of such Bank becomes liable to
make any payment on account of tax or otherwise (not being a
tax imposed on the net income of its Facility Office by the
jurisdiction in which it is incorporated or in which its
Facility Office is located) on or calculated by reference to
the amount of the Advances and/or to any sum received or
receivable by it hereunder,
then the Borrower shall, from time to time on demand of the Agent, promptly pay
to the Agent for the account of that Bank amounts sufficient to indemnify that
Bank or any such holding company against, as the case may be, (1) such cost,
(2) such reduction in such rate of return (or such proportion of such reduction
as is, in the opinion of that Bank, attributable to its obligations hereunder),
(3) such increased cost (or such proportion of such increased cost as is, in
the opinion of that Bank, attributable to its funding or maintaining Advances)
or (4) such liability.
15.2 A Bank intending to make a claim pursuant to Clause 15.1, shall notify
the Agent of the event by reason of which it is entitled to do so whereupon the
Agent shall notify the Principal Sponsor thereof Provided that nothing herein
shall require any Bank to disclose any confidential information relating to the
organisation of its affairs.
16. ILLEGALITY
If, at any time, it is unlawful for a Bank to make, fund or allow to remain
outstanding all or any of the Advances, then that Bank shall, promptly after
becoming aware of the same, deliver to the Borrower through the Agent a
certificate to that effect and:
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<PAGE> 24
(i) such Bank shall not thereafter be obliged to make any
Advances and the amount of its Available Commitment
shall be immediately reduced to zero; and
(ii) if the Agent on behalf of such Bank so requires, the
Borrower shall on such date as the Agent shall have
specified repay such Bank's share of each outstanding
Advance together with accrued interest thereon and
all other amounts owing to such Bank hereunder and
any repayment so made shall reduce rateably the
remaining obligations of the Borrower under Clause
11.
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<PAGE> 25
PART 7
REPRESENTATIONS, COVENANTS AND EVENTS OF DEFAULT
17. REPRESENTATIONS
17.1 Each Obligor represents that:
(i) it is a corporation duly organised under the laws of
its jurisdiction of incorporation with power to enter
into this Agreement and the Security Documents to
which it is a party and to exercise its rights and
perform its obligations hereunder and all corporate
and other action required to authorise its execution
of this Agreement and the Security Documents to which
it is a party and its performance of its obligations
hereunder has been duly taken;
(ii) under the laws of its jurisdiction of incorporation
in force at the date hereof, it will not be required
to make any deduction or withholding from any payment
it may make hereunder;
(iii) under the laws of its jurisdiction of incorporation
in force at the date hereof, the claims of the Agent
and the Banks against it under this Agreement and
under the Security Documents to which it is a party
will rank at least pari passu with the claims of all
its other unsecured creditors save those whose claims
are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general
application;
(iv) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement and the
Security Documents to which it is a party, it will
not be entitled to claim for itself or any of its
assets immunity from suit, execution, attachment or
other legal process;
(v) in any proceedings taken in its jurisdiction of
incorporation in relation to this Agreement and any
of the Security Documents expressed to be governed by
English law, the choice of English law as the
governing law of this Agreement and such Security
Documents and any judgment obtained in England will
be recognised and enforced;
(vi) save for the registration of the Mortgages with the
appropriate authorities, all acts, conditions and
things required to be done, fulfilled and performed
in order (a) to enable it lawfully to enter into,
exercise its rights under and perform and comply with
the obligations expressed to be assumed by it in this
Agreement, (b) to ensure that the obligations
expressed to be assumed by it in this Agreement and
the Security Documents are legal, valid and binding
and (c) to make this Agreement and the Security
Documents admissible in evidence in its jurisdiction
of incorporation have been done, fulfilled and
performed;
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<PAGE> 26
(vii) under the laws of its jurisdiction of incorporation
in force at the date hereof, it is not necessary that
this Agreement and the Security Documents, other than
the Mortgages, the Share Pledge and any deed of
covenant or assignment of earnings and insurance
collateral thereto be filed, recorded or enrolled
with any court or other authority in such
jurisdiction or that any stamp, registration or
similar tax be paid on or in relation to this
Agreement or any Security Document; and
(viii) the obligations expressed to be assumed by it in this
Agreement and the Security Documents to which it is a
party are its legal, valid and binding obligations.
17.2 Gulf Offshore Marine International, Inc. and GulfMark North Sea
Limited further represents that:
(i) no member of the Group has taken any corporate action
nor have any other steps been taken or legal
proceedings been started or (to the best of the
Borrower's knowledge and belief) threatened against
any member of the Group for its winding-up,
dissolution, administration or re-organisation or for
the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer
of it or of any or all of its assets or revenues;
(ii) no member of the Group is in breach of or in default
under any agreement to which it is a party or which
is binding on it or any of its assets to an extent or
in a manner which might have a Material Adverse
Effect on the business or financial condition of any
member of the Group;
(iii) no action or administrative proceeding of or before
any court or agency which might have a Material
Adverse Effect on the business or financial condition
of any member of the Group has been started or
threatened;
(iv) it and (to the best of its knowledge) its and the
Borrower's Environmental Affiliates have complied
with the provisions of all applicable Environmental
Laws, except where non-compliance does not and will
not have a Material Adverse Effect;
(v) it and (to the best of its knowledge) its and the
Borrower's Environmental Affiliates have obtained all
requisite Environmental Approvals and are in
compliance with such Environmental Approvals, except
where the failure to obtain or comply with any such
Environmental Approvals does not and will not have a
Material Adverse Effect;
(vi) neither it nor (to the best of its knowledge) its or
the Borrower's Environmental Affiliates has received
notice of any Environmental Claim that alleges that
it or any of its Environmental Affiliates are not in
compliance with applicable Environmental Laws or
Environmental Approvals, where such non-compliance
has or will have a Material Adverse Effect;
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<PAGE> 27
(vii) there is no Environmental Claim against any member of
the Group pending or threatened, to the best of its
knowledge, that has or will have a Material Adverse
Effect;
(viii) there has been no Release of Material of
Environmental Concern except where such event does
not and will not have a Material Adverse Effect;
(ix) all of the written information supplied by any member
of the Group to the Agent and the Banks in connection
herewith is true, complete and accurate in all
material respects and it is not aware of any material
facts or circumstances that have not been disclosed
to the Agent and the Banks and which might, if
disclosed, adversely affect the decision of a person
considering whether or not to provide finance to the
Borrower;
(x) Gulf Offshore Marine International Inc. is directly
or indirectly, the sole legal and beneficial owner of
the entire share capital of the Borrower; and
(xi) save for the Christiania Mortgages, those
encumbrances created pursuant to the Main Facility
and the Short Term Facility and any encumbrance
created pursuant to the provisions of Clause
20.2(iii), no encumbrance exists over all or any of
the present or future revenues or assets of any
member of the Group.
17.3 Each Obligor further represents that:
(i) the execution by it of this Agreement and of each
Security Document to which it is a party and the
exercise of its rights and performance of its
obligations hereunder will not result in the
existence of nor oblige any member of the Group to
create any encumbrance over all or any of its present
or future revenues or assets: except, insofar as the
same may arise pursuant to the Security Documents;
(ii) the execution by it of this Agreement and the
exercise of its rights and performance of its
obligations hereunder do not and will not:
(a) conflict with any agreement, mortgage, bond
or other instrument or treaty to which it is
a party or which is binding upon it or any of
its assets;
(b) conflict with its constitutive documents and
rules and regulations; or
(c) conflict with any applicable law, regulation
or official or judicial order; and
(iii) the execution by it of this Agreement constitutes,
and the exercise of its rights and performance of its
obligations hereunder will constitute, private and
commercial acts done and performed for private and
commercial purposes.
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<PAGE> 28
17.4 The Borrower represents that it, and each of the other parties thereto
are in compliance with all their obligations under each of the charters
relating to the Original Vessels (and any Additional Mortgaged Vessels) and
none of the parties to such charters have cancelled or repudiated or sought to
terminate, cancel or repudiate their obligations thereunder.
18. FINANCIAL INFORMATION
18.1 The Sponsors shall, and shall procure that the Borrower shall:
(i) as soon as the same become available, but in any
event within 120 days after the end of each of its
financial years, deliver to the Agent in sufficient
copies for the Banks the audited consolidated
financial statements of the Group and the Borrower
for such financial year;
(ii) as soon as the same become available, but in any
event within 60 days after the end of each of its
financial quarter years, deliver to the Agent in
sufficient copies for Banks the consolidated
financial statements of the Group, the Borrower and
the GMM Group for such period; and
(iii) from time to time on the request of the Agent,
furnish the Agent with such information about the
business and financial condition of the Group as the
Agent may reasonably require (including, but without
limitation, such further information as the Agent may
from time to time require in order to enable it to
ascertain where the obligations as set out in Clause
19 are complied with).
18.2 Each of the Sponsors and the Borrower shall ensure that:
(i) each set of financial statements delivered by it
pursuant to Clause 18.1 is prepared on the same basis
as was used in the preparation of its Original
Financial Statements and in accordance with
accounting principles generally accepted in the
United States and/or the United Kingdom and
consistently applied;
(ii) each set of financial statements delivered by it
pursuant to Clause 18.1 is certified by a duly
authorised officer of the Principal Sponsor as giving
a true and fair view of the financial condition of
the Group as at the end of the period to which those
financial statements relate and of the results of the
Group's operations during such period; and
(iii) each set of financial statements delivered by it
pursuant to paragraph (i) of Clause 18.1 has been
audited by auditors acceptable to the Agent.
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19. FINANCIAL CONDITION AND SECURITY COVERAGE
19.1 Each of Gulf Offshore Marine International Inc. and GulfMark North Sea
Limited shall ensure that at all times the consolidated financial condition of
the GMM Group, as evidenced by the Sponsors' then most recent audited annual
consolidated financial statements and in the case of paragraph (iv) below the
then most recent quarterly financial statements delivered pursuant to Clause
18.1(ii) (each as adjusted, as the Agent may consider appropriate, to take
account of any changes in circumstances which occur after the date as of which
such audited annual consolidated financial statements or, as the case may be,
quarterly financial statements, were prepared), shall be such that:
(i) the ratio of Current Assets to Current Liabilities
shall exceed 1.15:1;
(ii) the ratio of Total Liabilities to Tangible Equity
shall not exceed 1.75:1;
(iii) the aggregate of Tangible Equity and Subordinated
Debt shall be equal to or exceed $29,000,000;
(iv) for the twelve month period preceding the date as of
which such financial statements were prepared, the
ratio of Gross Revenues to Operating Expenses shall
be equal to or exceed 1.75:1.
19.2 Each of Gulf Offshore Marine International Inc. and GulfMark North Sea
Limited shall at all times ensure that Freely Available Liquid Resources exceed
$1,500,000.
19.3 The Borrower shall ensure at all times that the aggregate of:
(i) gross revenues received in respect of the charter,
lease or hire of any of the Mortgaged Vessels during
the preceding six months; and
(ii) the projected gross revenues from any unconditional
committed charter, lease or agreement to hire of any
of the Mortgaged Vessels for the succeeding six
months
shall be equal to or exceed $4,000,000.
19.4 In this Clause 19:
(i) "CURRENT ASSETS" means the aggregate of all of the
assets of each member of the GMM Group, other than
monies due or to become due from another member of
the GMM Group, which would, in accordance with
generally accepted accounting practice in the U.S.
consistently applied, be classified as current
assets, all as shown on the latest financial
statements delivered in accordance with Clause 18.1;
(ii) "CURRENT LIABILITIES" means at any particular time
the aggregate of the obligations of each member of
the GMM Group to pay money other than (a) repayment
obligations in respect of Advances made hereunder
falling due within a six month period from the date
at which such liabilities are calculated and (b)
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<PAGE> 30
monies due or to become due to other members of the
GMM Group, which would, in accordance with generally
accepted accounting practice in the U.S. consistently
applied, be classified as current liabilities, all as
shown on the Principal Sponsor's latest financial
statements delivered in accordance with Clause 18.1;
(iii) "FREELY AVAILABLE LIQUID RESOURCES" means the
aggregate of any cash and deposits in any
jurisdiction from which funds are freely
transferable, denominated in freely convertible and
transferable currencies (placed in a prime bank or
reputable financial institution) then solely legally
and beneficially owned by the members of the GMM
Group and free from encumbrances;
(iv) "GROSS REVENUES" means in respect of the Borrower and
in respect of any period of time the aggregate of the
following items (all ascertained on a before tax
basis and without double counting):
(a) the revenues received or receivable by the
Borrower during such period in respect of the
charter, use or operation of any Mortgaged
Vessel;
(b) all compensation or other consideration
received or receivable by the Borrower during
such period from any person on account of any
requisition for hire of any Mortgaged Vessel;
(c) any and all proceeds of insurances relating
to revenue claims received or receivable by
the Borrower during such period in respect of
any Mortgaged Vessel;
(d) any other amounts received or receivable by
the Borrower during such period which the
Agent has agreed may be taken into account in
calculating the Gross Revenues for such
period,
(v) "OPERATING EXPENSES" means in respect of the Borrower
and in respect of any period of time the aggregate of
the following items (all ascertained on a before tax
basis and without double counting):
(a) all management fees paid or payable by the
Borrower during, or which are attributable
to, such period in connection with the
management of any of the Mortgaged Vessels;
and
(b) all administrative, operating and overhead
costs and expenses paid or payable by the
Borrower in connection with any of the
Mortgaged Vessels during, or which are
attributable to, such period (other than, for
the avoidance of doubt, items relating to
depreciation or amortisation),
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<PAGE> 31
but only to the extent, in the case of (a) and (b)
hereof, that such items are non-capital items and are
deductible from revenues under generally accepted
accounting principles in the United States and/or the
United Kingdom consistently applied;
(vi) "TOTAL LIABILITIES" means at any particular time the
aggregate of the obligations of each member of the
GMM Group on a consolidated basis for the payment of
monies whether borrowed or not and whether due or to
become due which would, in accordance with generally
accepted accounting practice in the U.S. consistently
applied, be classified as liabilities (including, for
the avoidance of doubt, liabilities in respect of
lease or hire purchase contracts, contracts of
charter and contracts of guarantee), other than
monies due or to become due to any other member of
the GMM Group;
(vii) "TANGIBLE EQUITY" means at any particular time the
aggregate of the amounts paid up or credited as paid
up in respect of the share capital and the aggregate
amount of capital and reserves of the members of the
GMM Group including, but not limited to any credit
balance standing to the consolidated profit and loss
account of the GMM Group;
but deducting
(a) any debit balance standing to the
consolidated profit and loss account of the
GMM Group; and
(b) any intangible asset, including (for the
avoidance of doubt) goodwill
but shall exclude the cumulative amount of any
translation or transaction adjustments as required to
be deducted from or added to equity but excluded from
the determination of consolidated profit and loss in
accordance with accounting principles generally
accepted in the United States;
(viii) "SUBORDINATED DEBT" means any indebtedness of any
member of the GMM Group which is subordinated, in a
manner and to an extent satisfactory to the Agent, to
the indebtedness of the Borrower under this
Agreement, the Main Facility and the Short Term
Facility.
19.5 All expressions used in the definitions of this Clause 19 which are
not otherwise defined herein shall be construed in accordance with generally
accepted accounting principles in the United States of America (as used in the
Principal Sponsor's most recent audited annual consolidated financial
statements).
19.6 If the Agent at any time determines that the aggregate of the Market
Value of each of the Mortgaged Vessels as determined by reference to the most
up-to-date valuation of the Mortgaged Vessels delivered pursuant to the
provisions of Clause 20.1(v) is less than 175% of the aggregate amount of all
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<PAGE> 32
Advances then outstanding (such requirement being the "REQUIRED SECURITY
COVERAGE") then the Borrower shall within ten business days after a request
therefor from the Agent either:
(a) prepay an amount of the Advance or Advances then outstanding which
shall be applied pro-rata in prepayment thereof, together with
interest thereon and any amounts falling due under Clause 23.4 as a
result of such prepayment; or
(b) provide additional security as may be acceptable to the Agent
such that the Required Security Coverage is met.
20 COVENANTS
20.1 Each of Gulf Offshore Marine International, Inc., Gulfmark North Sea
Limited and the Borrower shall:
(i) obtain, comply with the terms of and do all that is
necessary to maintain in full force and effect all
authorisations, approvals, licences and consents
required in or by the laws and regulations of its
jurisdiction of incorporation to enable it lawfully
to enter into and perform its obligations under this
Agreement and each of the Security Documents or to
ensure the legality, validity, enforceability or
admissibility in evidence in its jurisdiction of
incorporation of this Agreement and each of the
Security Documents;
(ii) without prejudice to the specific requirements of the
Security Documents procure that each member of the
GMM Group maintains insurances on and in relation to
its business and assets with reputable underwriters
or insurance companies against such risks and to such
extent as is usual for companies carrying on a
business such as that carried on by such member of
the GMM Group whose practice is not to self insure;
(iii) promptly inform the Agent of the occurrence of any
Event of Default or Potential Event of Default and,
upon receipt of a written request to that effect from
the Agent, confirm to the Agent that, save as
previously notified to the Agent or as notified in
such confirmation, no Event of Default or Potential
Event of Default has occurred;
(iv) without prejudice to the priority afforded by any
mortgage and deed of covenant or assignment
collateral thereto securing the obligations of the
Borrower hereunder ensure that at all times the
claims of the Agent and the Banks against the
Borrower under this Agreement rank at least pari
passu with the claims of all its other unsecured
creditors save those whose claims are preferred by
any bankruptcy, insolvency, liquidation or other
similar laws of general application;
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<PAGE> 33
(v) at the request of the Agent, deliver to the Agent or
procure the delivery to the Agent of up- to-date
valuations of the Vessels prepared at the sole cost
and expense of the Borrower, showing the Market Value
of each of the Mortgaged Vessels;
(vi) ensure that the Mortgaged Vessels are maintained in
good working order and condition and in any event in
such condition as enables them to maintain the
classification American Bureau of Shipping A1 AMS or
to an equivalent classification acceptable to the
Agent free from all notations and recommendations
which have not been complied with within any
applicable time limit and ensure that such
classification is maintained;
(vii) comply with all applicable Environmental Laws
including, without limitation, requirements relating
to the establishment of financial responsibility (and
shall require that all Environmental Affiliates of
the Borrower comply with all applicable Environmental
Laws and obtain and comply with all required
Environmental Approvals, which Environmental Laws and
Environmental Approvals relate to any of the
Mortgaged Vessels or their operation or their
carriage of cargo), except where such non-compliance
does not or will not have a Material Adverse Effect;
(viii) upon the request of the Agent, conduct and complete
all investigations, studies, sampling, audits and
testings reasonably required by any known (or
threatened) Release of Material of Environmental
Concern that has or will have a Material Adverse
Effect;
(ix) promptly upon the occurrence of either of the
following events, provide to the Agent, or procure
that there is provided to the Agent, a certificate of
an officer of the Principal Sponsor specifying in
detail the nature of such event and the proposed
response of the Borrower or its Environmental
Affiliate concerned:
(a) the receipt by the Borrower or any
Environmental Affiliate (where the Borrower
has knowledge of such receipt) of any
Environmental Claim which has or will have a
Material Adverse Effect; or
(b) any actual or threatened Release of Material
of Environmental Concern which has or will
have a Material Adverse Effect,
and upon the written request by the Agent submit to
the Agent in sufficient copies for the Banks, at
reasonable intervals, a report updating the status of
any occurrence of an Environmental Claim or a Release
of Material of Environmental Concern, that has or
will have a Material Adverse Effect;
(x) maintain the registration of the Mortgaged Vessels
under the laws and flag of Panama (or such other flag
as the Banks may, at the request of the Borrower,
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<PAGE> 34
from time to time to agree) and not cause or permit
to be done any act or omission whereby their
registration as such would or might be defeated or
imperilled or which might result in such Mortgaged
Vessels being required to be registered under any
other flag and registered with the appropriate
authorities;
(xi) permit the Agent on reasonable notice to inspect the
Mortgaged Vessels and their logs;
(xii) from time to time on being required to do so by the
Agent, do or procure the doing of all such acts and
execute or procure the execution of all such
documents as the Agent may reasonably consider
necessary for giving full effect to each of the
Security Documents or for securing to the Banks the
full benefit of the rights, powers and remedies
intended to be conferred upon the Agent or the
Security Trustee pursuant to the Security Documents;
(xiii) at all times ensure that Gulf Offshore Marine
International, Inc. is, subject to the rights
conferred by the Share Pledge, the sole beneficial
owner of the entire issued share capital of the
Borrower;
(xiv) commencing from the date hereof and thereafter no
later than 14 days from and inclusive of each of 30
September, 31 December, 31 March and 30 June deliver
to the Agent in sufficient copies for the Banks a
schedule in form and substance satisfactory to the
Agent detailing Fixed Asset Investments exceeding
$50,000 made by the Borrower in the three months
proceeding the date upon which such schedule is
delivered (whether such Fixed Asset Investment was
made with the consent of the Banks or pursuant to the
exception for such consent set out in Clause 20.2(x))
(xv) no later than 14 days from and inclusive of 31 March,
30 June, 30 September and 31 December in each
calendar year, furnish the Agent in sufficient copies
for the Banks with a report in form and substance
satisfactory to the Agent and at the cost of the
Borrower, relating to the status, employment,
earnings and location of the Mortgaged Vessels as at
the date upon which such report is furnished in
respect of the period elapsing since the previous
such report, if any; and
(xvi) forthwith upon the request of the Agent, charge,
pledge or otherwise encumber in favour of the
Security Trustee pursuant to a security document in
form and substance satisfactory to the Agent any
account into which Approved Charter Earnings are
paid.
20.2 The Borrower shall not without the prior written consent of an
Instructing Group:
(i) make or declare any dividend or other distribution in
respect of any financial year;
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<PAGE> 35
(ii) incur expenditure in respect of any management fees
payable other than management fees payable to the
Principal Sponsor or Gulf Offshore Marine
International, Inc. in such amount as the Agent may
agree, having regard to the annual budget and
operating expenses of the Principal Sponsor or Gulf
Offshore Marine International, Inc.;
(iii) create or permit to subsist any encumbrance over all
or any of its present or future revenues or assets
except:-
(a) pursuant to the Security Documents; or
(b) any encumbrance imposed by law, such as
carrier's, warehouseman's, mechanics' liens,
crew's wages and master's disbursements and
other similar liens arising in the ordinary
course of business or permitted under the
terms of the Security Documents; or
(c) any encumbrance over assets acquired after
the date hereof and which encumbrance is in
existence prior to such acquisition or is
created in order to secure indebtedness
incurred in respect of such acquisition;
(iv) make any loans, grant any credit (save in the
ordinary course of business) or give any guarantee or
indemnity (except as required hereby) to or for the
benefit of any person or otherwise voluntarily assume
any liability, whether actual or contingent, in
respect of any obligation of any other person;
(v) issue any further shares or alter any rights
attaching to its issued shares in existence at the
date hereof;
(vi) save as otherwise provided herein (disregarding sales
of stock in trade in the ordinary course of business
and sales of Mortgaged Vessels or other assets for
amounts not less than eighty per cent. of the Market
Value of such Mortgaged Vessel) sell, lease, transfer
or otherwise dispose of, by one or more transactions
or series of transactions (whether related or not),
the whole or any part (the book value of which is
thirty per cent. or more of the book value of the
whole) of its revenues or its assets;
(vii) incur any indebtedness for borrowed money other than
pursuant to this Facility in excess of $50,000 or its
equivalent in other currencies; save to the extent
that such indebtedness is owed to other members of
the Group and is subordinated to the obligations of
the Borrower hereunder, and under each of the
Security Documents to which it is a party, on terms
acceptable to the Agent or is secured by encumbrances
of the nature referred to in Clause 20.2(iii)(c);
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<PAGE> 36
(viii) carry on or engage in or be concerned with any
business or activities except insofar as they relate
to the ownership and operation of the Mortgaged
Vessels and other vessels engaged in similar
activities and activities relating thereto;
(ix) merge, demerge or consolidate with any person;
(x) make Fixed Asset Investment or acquire any shares
without the Banks' consent save insofar as such
investment or acquisition relates to the existing
activities of the Mortgaged Vessels and does not,
when aggregated with any other such investment or
acquisition made pursuant to this exception, exceed
$200,000; or
(xi) enter into any charterparty or contract or engagement
of affreightment in respect of any Mortgaged Vessel
or Designated Vessel other than an Approved Charter
save that any charterparty or contract or engagement
of affreightment having a duration of less than six
months (including any possible extension periods)
shall be deemed as having been approved automatically
by the Agent.
20.3 The Principal Sponsor shall at all times remain, subject to such
rights as may be conferred by the share pledges granted pursuant to the terms
of the Main Facility, the sole beneficial owner free from all encumbrances, of
the entire issued share capital of each member of the GMM Group.
20.4 The Sponsors shall not, save with the consent of the Agent or pursuant
to the Short Term Facility or the Main Facility, give any guarantee or
indemnity to or for the benefit of any person or otherwise voluntarily assume
any liability, whether actual or contingent, in respect of any obligation of
any other person Provided always that this Clause 20.4 shall not apply to (i)
the guarantee issued by the Principal Sponsor in favour of the Southwest Bank
of Texas N.A. in respect of indebtedness incurred by Ercon Development Co.
("ERCON") up to a maximum aggregate principal amount of $500,000, (ii) any bid
or performance bond issued by the Principal Sponsor at the request of Ercon up
to a maximum aggregate amount of $500,000 or (iii) the guarantees issued by
GulfMark North Sea Limited and Gulf Offshore Marine International, Inc. under
the Christiania Loans.
21. EVENTS OF DEFAULT
21.1 If:
(i) the Borrower fails to pay any sum due from it
hereunder or any Security Document at the time, in
the currency and in the manner specified herein or
therein or if such failure results solely from
technical or administrative difficulties relating to
the transfer of such sums, such failure is not
remedied within three days;
(ii) any representation or statement made by the Obligors,
or any of them, in this Agreement or under any
Security Document or in any notice or other document,
certificate or statement delivered by it pursuant
hereto or thereto or in connection herewith is or
proves to have been incorrect or misleading when
made; or
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<PAGE> 37
(iii) any of the Obligors fails duly to perform or comply
with any of the obligations expressed to be assumed
by it in Clauses 18, 19 or 20 hereof or duly to
effect insurance of the Mortgaged Vessels or any of
them in accordance with the applicable provisions of
the Security Documents; or
(iv) any of the Obligors fails duly to perform or comply
with any other obligation expressed to be assumed by
it in this Agreement or under any Security Document
and such failure is not remedied within fourteen days
after the Agent has given notice thereof to such
Obligor; or
(v) the Borrower is in breach of any of its obligations
under any of the Approved Charters or the Borrower
seeks to cancel, terminate or repudiate any of the
Approved Charters without the prior consent of the
Agent; or
(vi) any indebtedness of any Obligor or any member of the
GMM Group (other than indebtedness due to trade
creditors incurred in the normal course of business
of such Obligor or such member of the GMM Group which
is disputed in good faith and by appropriate
proceedings diligently conducted) is not paid when
due or within any applicable grace period, any
indebtedness of any Obligor or any member of the GMM
Group is declared to be or otherwise becomes due and
payable prior to its specified maturity or any
creditor or creditors of any Sponsors or any member
of the GMM Group become entitled to declare any
indebtedness of any Obligor or such member of the GMM
Group due and payable prior to its specified
maturity; or
(vii) in any period of twelve months commencing from the
date hereof any judgments or judicial orders or
arbitration awards are made against the Borrower in
an amount or an aggregate amount in excess of
$750,000 (or the equivalent in any other currency)
(other than any judgment, judicial order or
arbitration award as to which, and only to the extent
that, a reputable company or other surety, in either
case acceptable to the Agent, has acknowledged
coverage of such judgment, judicial order or
arbitration award in writing) and,
(a) any such judgment, judicial order or
arbitration award has not been stayed,
discharged, paid, bonded or vacated within 30
days or such longer period as may be agreed
by the Agent; or
(b) enforcement proceedings have been commenced
by any creditor on any such judgment,
judicial order or arbitration award;
(viii) any Obligor or any member of the GMM Group is unable
to pay its debts as they fall due, commences
negotiations with any one or more of its creditors
with a view to the general readjustment or
rescheduling of its indebtedness or makes a general
assignment for the benefit of or a composition with
its creditors; or
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<PAGE> 38
(ix) (otherwise than for the purpose of a reconstruction
on terms previously approved by the Agent) any
Obligor or any member of the GMM Group takes any
corporate action or other steps are taken or legal
proceedings are started for its winding-up,
dissolution, administration or re-organisation or for
the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer
of it or of any or all of its revenues and assets; or
(x) any execution or distress is levied against, or an
encumbrancer takes possession of the whole or any
material part of, the property, undertaking or assets
of any of the Obligors or any member of the GMM
Group; or
(xi) by or under the authority of any government, (a) the
management of any of the Obligors or any member of
the GMM Group is wholly or partially displaced or the
authority of any of the Obligors or any member of the
GMM Group in the conduct of its business is wholly or
partially curtailed or (b) all or a majority of the
issued shares of any of the Obligors or any member of
the GMM Group or the whole or any part (the book
value of which is twenty per cent. or more of the
book value of the whole) of its revenues or assets is
seized, nationalised, expropriated or compulsorily
acquired; or
(xii) subject to the rights conferred by the Share Pledge,
Gulf Offshore Marine International Inc. ceases to be
the sole legal and beneficial owner of the entire
share capital of the Borrower; or
(xiii) subject to the rights conferred by the Share Pledge,
the Principal Sponsor ceases to be the beneficial
owner of the entire issued share capital of each
member of the GMM Group;
(xiv) any member of the GMM Group ceases to carry on the
business it carries on at the date hereof or enters
into any new type of business; or
(xv) any Obligor repudiates this Agreement or any Security
Document to which it is a party or does or causes to
be done any act or thing evidencing an intention to
repudiate this Agreement or any such Security
Document; or
(xvi) at any time any act, condition or thing required to
be done, fulfilled or performed in order (a) to
enable any Obligor lawfully to enter into, exercise
its rights under and perform the obligations
expressed to be assumed by it in this Agreement and
the Security Documents to which it is a party, (b) to
ensure that the obligations expressed to be assumed
by any Obligor in this Agreement and the Security
Documents to which it is a party are legal, valid and
binding or (c) to make this Agreement and the
Security Documents to which it is a party admissible
in evidence in the Borrower's jurisdiction of
incorporation is not done, fulfilled or performed; or
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<PAGE> 39
(xvii) at any time any of the security interests constituted
by any of the Security Documents ceases to constitute
valid and perfected first priority security
interests;
(xviii) at any time it is or becomes unlawful for any Obligor
to perform or comply with any or all of its
obligations hereunder or under any of the Security
Documents to which it is a party or any of the
obligations of any Obligor hereunder or under any of
the Security Documents to which it is a party are not
or cease to be legal, valid and binding; or
(xix) (a) any circumstances arise which give grounds in the
reasonable opinion of the Agent for belief that any
Obligor may not (or may be unable to) perform or
comply with its obligations hereunder, or any of the
Security Documents to which it is a party (b) the
Agent shall have given to the Principal Sponsor
notice that it is of such opinion setting out in
reasonable detail the grounds upon which such opinion
is based and (c) after having given due regard to any
representation made by the Obligors during the period
of ten days after the giving of such notice by the
Agent, the Agent is of the same opinion upon the
expiration of such period,
then, and in any such case and at any time thereafter, the Agent may (and, if
so instructed by an Instructing Group, shall) by written notice to the
Principal Sponsor and the Borrower:
(a) declare the Advances to be immediately due and payable
(whereupon the same shall become so payable together with
accrued interest thereon and any other sums then owed by the
Borrower hereunder) or declare the Advances to be due and
payable on demand of the Agent; and/or
(b) declare that any undrawn portion of the Facility shall be
cancelled, whereupon the same shall be cancelled and the
Available Facility shall be reduced to zero.
21.2 If, pursuant to Clause 21.1, the Agent declares the Advances to be due
and payable on demand of the Agent, then, and at any time thereafter, the Agent
may by written notice to the Principal Sponsor and the Borrower:
(i) call for repayment of the Advances on such date as it
may specify in such notice (whereupon the same shall
become due and payable on such date together with
accrued interest thereon and any other sums then owed
by the Borrower hereunder) or withdraw its
declaration with effect from such date as it may
specify in such notice; and/or
(ii) select as the duration of any Interest Period which
begins whilst such declaration remains in effect a
period of six months or less.
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PART 8
PRINCIPAL SPONSOR'S OBLIGATIONS
22. PRINCIPAL SPONSOR'S OBLIGATIONS
For the avoidance of doubt, the obligations of the Principal Sponsor herein
contained shall not constitute a guarantee of the obligations of the Borrower,
but shall be limited to a liability in damages arising out of or in connection
with any breach by the Principal Sponsor of the representations, covenants or
undertakings on its part contained herein.
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PART 9
DEFAULT INTEREST AND INDEMNITY
23. DEFAULT INTEREST AND INDEMNITY
23.1 If any sum due and payable by the Borrower hereunder is not paid on
the due date therefor in accordance with the provisions of Clause 25 or if any
sum due and payable by the Borrower under any judgment of any court in
connection herewith is not paid on the date of such judgment, the period
beginning on such due date or, as the case may be, the date of such judgment
and ending on the date upon which the obligation of the Borrower to pay such
sum (the balance thereof for the time being unpaid being herein referred to as
an "UNPAID SUM") is discharged shall be divided into successive periods, each
of which (other than the first) shall start on the last day of the preceding
such period and the duration of each of which shall (except as otherwise
provided in this Clause 23) be selected by the Agent.
23.2 During each such period relating thereto as is mentioned in Clause
23.1 an unpaid sum shall bear interest at the rate per annum which is the sum
from time to time of one per cent., the Margin and LIBOR on the Quotation Date
therefor Provided that:
(i) if, for any such period, LIBOR cannot be determined,
the rate of interest applicable to such unpaid sum
shall be the sum from time to time of one per cent.,
the Margin and the rate per annum equal to the cost
to the Agent of funding such unpaid sum for such
period from whatever source it may select; and
(ii) if such unpaid sum is all or part of the Advance
which became due and payable on a day other than the
last day of an Interest Period relating thereto, the
first such period applicable thereto shall be of a
duration equal to the unexpired portion of that
Interest Period and the rate of interest applicable
thereto from time to time during such period shall be
that which exceeds by one per cent. the rate which
would have been applicable to it had it not so fallen
due.
23.3 Any interest which shall have accrued under Clause 23.2 in respect of
an unpaid sum shall be due and payable and shall be paid by the Borrower at the
end of the period by reference to which it is calculated or on such other date
or dates as the Agent may specify by written notice to the Borrower.
23.4 If any Bank or the Agent on its behalf receives or recovers all or any
part of such Bank's share of an Advance otherwise than on the last day of an
Interest Period relating to that Advance, the Borrower shall pay to the Agent
on demand for account of such Bank an amount equal to the amount (if any) by
which (i) the additional interest which would have been payable on the amount
so received or recovered had it been received or recovered on the last day of
that Interest Period exceeds (ii) the amount of interest which in the opinion
of the Agent would have been payable to the Agent on the last day of that
Interest Period in respect of a dollar deposit equal to the amount so received
or recovered placed by it with a prime bank in London for a period starting on
the third business day following the date of such receipt or recovery and
ending on the last day of that Interest Period.
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<PAGE> 42
23.5 The Borrower undertakes to indemnify:
(i) each of the Agent and the Banks against any cost,
claim, loss, expense (including legal fees) or
liability together with any VAT thereon, which it may
sustain or incur as a consequence of the occurrence
of any Event of Default or any default by the
Borrower in the performance of any of the obligations
expressed to be assumed by it in this Agreement; and
(ii) each Bank against any loss it may suffer as a result
of its funding an Advance requested by the Borrower
hereunder but not made by reason of the operation of
any one or more of the provisions hereof.
23.6 Any unpaid sum shall (for the purposes of this Clause 23 and Clause
15.1) be treated as an advance and accordingly in this Clause 23 and Clause
15.1 the term "Advance" includes any unpaid sum and the term "Interest Period",
in relation to an unpaid sum, includes each such period relating thereto as is
mentioned in Clause 23.1.
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<PAGE> 43
PART 10
PAYMENTS
24. CURRENCY OF ACCOUNT AND PAYMENT
24.1 Dollars is the currency of account and payment for each and every sum
at any time due from the Borrower hereunder Provided that:
(i) each payment in respect of costs and expenses shall
be made in the currency in which the same were
incurred; and
(ii) each payment pursuant to Clause 13.2 or Clause 15.1
shall be made in the currency specified by the Bank
to whom such payment is to be made.
24.2 If any sum due from any of the Borrower under this Agreement or any
order or judgment given or made in relation hereto has to be converted from the
currency (the "FIRST CURRENCY") in which the same is payable hereunder or under
such order or judgment into another currency (the "SECOND CURRENCY") for the
purpose of (i) making or filing a claim or proof against the Borrower, (ii)
obtaining an order or judgment in any court or other tribunal or (iii)
enforcing any order or judgment given or made in relation hereto, the Borrower
shall indemnify and hold harmless each of the persons to whom such sum is due
from and against any loss suffered as a result of any discrepancy between (a)
the rate of exchange used for such purpose to convert the sum in question from
the first currency into the second currency and (b) the rate or rates of
exchange at which such person may in the ordinary course of business purchase
the first currency with the second currency upon receipt of a sum paid to it in
satisfaction, in whole or in part, of any such order, judgment, claim or proof.
25. PAYMENTS
25.1 On each date on which this Agreement or any of the Security Documents
requires an amount to be paid by any of the Borrower or any of the Banks, the
Borrower or, as the case may be, such Bank shall make the same available to the
Agent by payment in dollars and in same day funds (or in such other funds as
may for the time being be customary in New York City for the settlement in New
York City of international banking transactions in dollars) to The Chase
Manhattan Bank, New York, N.Y. for the account of Chase Manhattan International
Limited, London (Swift Code CHASGB22 account number 544-7-14108) (or such other
account or bank as the Agent may have specified for this purpose).
25.2 If, at any time, it shall become impracticable (by reason of any
action of any governmental authority or any change in law, exchange control
regulations or any similar event) for the Borrower to make any payments
hereunder in the manner specified in Clause 25.1, then the Borrower may agree
with each or any of the Banks alternative arrangements for such payments to be
made Provided that, in the absence of any such agreement with any Bank, the
Borrower shall be obliged to make all payments due to such Bank in the manner
specified herein. Upon reaching such agreement the Borrower and such Bank
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<PAGE> 44
shall immediately notify the Agent thereof and shall thereafter promptly notify
the Agent of all payments made direct to such Bank.
25.3 Save as otherwise provided herein, each payment received by the Agent
for the account of another person pursuant to Clause 25.1 shall be made
available by the Agent to such other person (in the case of a Bank, for the
account of its Facility Office) for value the same day by transfer to such
account of such bank in the principal financial centre of the country of the
currency of such payment as such person shall have previously notified to the
Agent.
25.4 All payments required to be made by the Borrower hereunder shall be
calculated without reference to any set-off or counterclaim and shall be made
free and clear of and without any deduction for or on account of any set-off or
counterclaim.
25.5 Where a sum is to be paid hereunder to the Agent for account of
another person, the Agent shall not be obliged to make the same available to
that other person until it has been able to establish to its satisfaction that
it has actually received such sum, but if it does so and it proves to be the
case that it had not actually received such sum, the person to whom such sum
was so made available shall on request refund the same to the Agent together
with an amount sufficient to indemnify the Agent against any cost or loss it
may have suffered or incurred by reason of its having paid out such sum prior
to its having received such sum.
26. SET-OFF
The Borrower authorises each Bank to apply any credit balance to which the
Borrower is entitled on any account of the Borrower with that Bank in
satisfaction of any sum due and payable from the Borrower to such Bank
hereunder but unpaid; for this purpose, each Bank is authorised to purchase
with the moneys standing to the credit of any such account such other
currencies as may be necessary to effect such application. No Bank shall be
obliged to exercise any right given to it by this Clause 26.
27. REDISTRIBUTION OF PAYMENTS
27.1 If, at any time, the proportion which a Bank (a "RECOVERING BANK") has
received or recovered (whether by payment, the exercise of a right of set-off
or combination of accounts or otherwise) in respect of its portion of any
payment (a "RELEVANT PAYMENT") to be made under this Agreement by the Borrower
for account of such Recovering Bank and the other Bank is greater (the portion
of such receipt or recovery giving rise to such excess proportion being herein
called an "EXCESS AMOUNT") than the proportion thereof so received or recovered
by the Bank so receiving or recovering the smallest proportion thereof, then:
(i) such Recovering Bank shall pay to the Agent an amount
equal to such excess amount;
(ii) there shall thereupon fall due from the Borrower to
such Recovering Bank an amount equal to the amount
paid out by such Recovering Bank pursuant to
paragraph (i) above, the amount so due being, for the
purposes hereof, treated
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<PAGE> 45
as if it were an unpaid part of such Recovering
Bank's portion of such relevant payment; and
(iii) the Agent shall treat the amount received by it from
such Recovering Bank pursuant to paragraph (i) above
as if such amount had been received by it from the
Borrower in respect of such relevant payment and
shall pay the same to the persons entitled thereto
(including such Recovering Bank) pro rata to their
respective entitlements thereto.
27.2 If any sum (a "RELEVANT SUM") received or recovered by a Recovering
Bank in respect of any amount owing to it by the Borrower becomes repayable and
is repaid by such Recovering Bank, then:
(i) each Bank which has received a share of such relevant
sum by reason of the implementation of Clause 27.1
shall, upon request of the Agent, pay to the Agent
for the account of such Recovering Bank an amount
equal to its share of such relevant sum; and
(ii) there shall thereupon fall due from the Borrower to
each such Bank an amount equal to the amount paid out
by it pursuant to paragraph (i) above, the amount so
due being, for the purposes hereof, treated as if it
were the sum payable to such Bank against which such
Bank's share of such relevant sum was applied.
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<PAGE> 46
PART 11
FEES, COSTS AND EXPENSES
28. FEES
28.1 The Borrower shall pay to the Agent for the account of the Banks a
commitment commission on the amount of each of the Available Facility from day
to day during the period beginning on the date hereof and ending on the Final
Maturity Date, such commitment commission to be calculated at the rate of three
quarters of one per cent. per annum and payable in arrear on the last day of
each successive period of three months which ends during such period and on the
Final Maturity Date.
28.2 The Borrower shall pay to the Agent for the account of the Banks an
arrangement fee equal to one and a half per cent. (1.5%) of the Facility Amount
upon the earlier of the date of drawdown of the first Advance made hereunder
and the date being thirty days after the date of this Agreement.
29. COSTS AND EXPENSES
29.1 The Borrower shall, from time to time on demand of the Agent,
reimburse the Agent for all costs and expenses (including legal fees,
travelling and accommodation and other reasonable out of pocket expenses)
together with any VAT thereon incurred by it in connection with the
negotiation, preparation and execution of this Agreement and the completion of
the transactions herein contemplated.
29.2 The Borrower shall, from time to time on demand of the Agent,
reimburse the Agent and all the Banks for all costs and expenses (including
legal fees) together with any VAT thereon incurred in or in connection with the
preservation and/or enforcement of any of the rights of the Agent, the Security
Trustee and the Banks under this Agreement.
29.3 The Borrower shall pay all stamp, registration and other taxes to
which this Agreement or any judgment given in connection herewith is or at any
time may be subject and shall, from time to time on demand of the Agent,
indemnify the Agent, the Security Trustee and the Banks against any
liabilities, costs, claims and expenses resulting from any failure to pay or
any delay in paying any such tax.
29.4 If the Borrower fails to perform any of its obligations under this
Clause 29, each Bank shall, in the proportion borne by its share of the Loan
(or, if no Advances have been made, its Available Commitment) to the amount of
the Loan (or, if no Advances have been made, the Available Facility) for the
time being (or, if the Loan has been repaid in full, immediately prior to the
final repayment thereof), indemnify the Agent against any loss incurred by any
of them as a result of such failure and the Borrower shall forthwith reimburse
each Bank for any payment made by it pursuant to this Clause 29.4.
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PART 12
AGENCY PROVISIONS
30. THE AGENT AND THE BANKS
30.1 Each Bank hereby appoints the Agent to act as its agent in connection
herewith and authorises the Agent to exercise such right, powers and
discretions as are specifically delegated to the Agent by the terms hereof
together with all such rights, powers and discretions as are reasonably
identical thereto.
30.2 The Agent may:
(i) assume that:
(a) any representation made by an Obligor in
connection herewith is true;
(b) no event which is or may become an Event of
Default has occurred; and
(c) no Obligor is in breach of or default under
its obligations hereunder
unless it has actual knowledge or actual notice to
the contrary;
(ii) assume that the Facility Office of each Bank is that
identified with its signature below until it has
received from such Bank a notice designating some
other office of such Bank to replace its Facility
Office and act upon any such notice until the same is
superseded by a further such notice;
(iii) engage and pay for the advice or services of any
lawyers, accountants, surveyors or other experts
whose advice or services may to it seem necessary,
expedient or desirable and rely upon any advice so
obtained;
(iv) rely as to any matters of fact which might reasonably
be expected to be within the knowledge of any of the
Obligors upon a certificate signed by or on behalf of
the Obligors.
(v) rely upon any communication or document believed by
it to be genuine;
(vi) refrain from exercising any right, power or
discretion vested in it as agent hereunder unless and
until instructed by an Instructing Group as to
whether or not such right, power or discretion is to
be exercised and, if it is to be exercised, as to the
manner in which it should be exercised; and
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<PAGE> 48
(vii) refrain from acting in accordance with any
instructions of an Instructing Group to begin any
legal action or proceeding arising out of or in
connection with this Agreement until it shall have
received such security as it may require (whether by
way of payment in advance or otherwise) for all
costs, claims, expenses (including legal fees) and
liabilities which it will or may expend or incur in
complying with such instructions.
30.3 The Agent shall:
(i) promptly inform each Bank of the contents of any
notice or document received by it in its capacity as
Agent from any of the Obligors hereunder;
(ii) promptly notify each Bank of the occurrence of any
Event of Default or any default by any of the
Obligors in the due performance of or compliance with
its obligations under this Agreement of which the
Agent has notice from any other party hereto;
(iii) save as otherwise provided herein, act as agent
hereunder in accordance with any instructions given
to it by an Instructing Group, which instructions
shall be binding on the Banks; and
(iv) if so instructed by an Instructing Group, refrain
from exercising any right, power or discretion vested
in it as agent hereunder.
30.4 Notwithstanding anything to the contrary expressed or implied herein,
the Agent shall not:
(i) be bound to enquire as to:
(a) whether or not any representation made by any
Obligor in connection herewith is true;
(b) the occurrence or otherwise of any Event of
Default or Potential Event of Default;
(c) the performance by the Obligors of their
obligations hereunder; or
(d) any breach of or default by any Obligor of or
under its obligations hereunder;
(ii) be bound to account to any Bank for any sum or the
profit element of any sum received by it for its own
account;
(iii) be bound to disclose to any other person any
information relating to any member of the Group if
such disclosure would or might in its opinion
constitute a breach of any law or regulation or be
otherwise actionable at the suit of any person; or
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<PAGE> 49
(iv) be under any obligations other than those for which
express provision is made herein.
30.5 Each Bank shall, from time to time on demand by the Agent, indemnify
the Agent, in the proportion its share of the Loan (or, if no Advances have
been made, its Available Commitment) bears to the amount of the Loan (or, if no
Advances have been made, the Available Facility) at the time of such demand
(or, if the Loan has then been repaid in full, immediately prior to the final
repayment thereof), against any and all costs, claims, losses, expenses
(including legal fees) and liabilities together with any VAT thereon which the
Agent may incur, otherwise than by reason of its own gross negligence or wilful
misconduct, in acting in its capacity as Agent hereunder.
30.6 The Agent accepts no responsibility for the accuracy and/or
completeness of any information supplied by the Obligors in connection herewith
or for the legality, validity, effectiveness, adequacy or enforceability of
this Agreement and the Agent shall be under no liability as a result of taking
or omitting to take any action in relation to this Agreement, save in the case
of gross negligence or wilful misconduct.
30.7 Each of the Banks agrees that it will not assert or seek to assert
against any director, officer or employee of the Agent any claim it might have
against any of them in respect of the matters referred to in Clause 30.6.
30.8 The Agent may accept deposits from, lend money to and generally engage
in any kind of banking or other business with any member of the Group.
30.9 The Agent may resign its appointment hereunder at any time without
assigning any reason therefor by giving not less than thirty days' prior
written notice to that effect to each of the other parties hereto Provided
that no such resignation shall be effective until a successor for the Agent is
appointed in accordance with the succeeding provisions of this Clause 30.
30.10 If the Agent gives notice of its resignation pursuant to Clause 30.9,
then any reputable and experienced bank or other financial institution may be
appointed as a successor to the Agent by an Instructing Group during the period
of such notice but, if no such successor is so appointed, the Agent may appoint
such a successor itself.
30.11 If a successor to the Agent is appointed under the provisions of
Clause 30.10, then (i) the retiring Agent shall be discharged from any further
obligation hereunder but shall remain entitled to the benefit of the provisions
of this Clause 30 and (ii) its successor and each of the other parties hereto
shall have the same rights and obligations amongst themselves as they would
have had if such successor had been a party hereto.
30.12 It is understood and agreed by each Bank that it has itself been, and
will continue to be, solely responsible for making its own independent
appraisal of and investigations into the financial condition, creditworthiness,
condition, affairs, status and nature of each member of the Group and,
accordingly, each Bank warrants to the Agent that it has not relied on and will
not hereafter rely on the Agent:
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<PAGE> 50
(i) to check or enquire on its behalf into the
adequacy, accuracy or completeness of any information
provided by the Obligors in connection with this
Agreement or the transactions herein contemplated
(whether or not such information has been or is
hereafter circulated to such Bank by the Agent); or
(ii) to assess or keep under review on its behalf the
financial condition, creditworthiness, condition,
affairs, status or nature of any member of the Group.
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PART 13
ASSIGNMENT AND TRANSFERS
31. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each party
hereto and its or any subsequent successors and assigns.
32. ASSIGNMENTS AND TRANSFERS BY THE OBLIGORS
None of the Obligors shall be entitled to assign or transfer all or
any of its rights, benefits and obligations hereunder.
33 ASSIGNMENTS AND TRANSFERS BY BANKS
33.1 Any Bank may, at any time, assign at its sole cost and expense all or
any of its rights and benefits hereunder or transfer in accordance with Clause
33.3 all or any of its rights, benefits and obligations subject to the
Principal Sponsor's consent, such consent not to be unreasonably withheld where
the proposed assignee or transferee is (i) acting through an office or branch
in the United Kingdom and is carrying on a bona fide banking business for the
purposes of Section 349 of the Income and Corporation Taxes Act 1988, or (ii)
another bank or financial institution to whom, at the time of such assignment
or transfer payments may be made without deduction or withholding on account of
United Kingdom taxes.
33.2 If any Bank assigns all or any of its rights and benefits hereunder in
accordance with Clause 33.1, then, unless and until the assignee has agreed
with the Agent and the other Banks that it shall be under the same obligations
towards each of them as it would have been under if it had been an original
party hereto as a Bank, the Agent and the other Banks shall not be obliged to
recognise such assignee as having the rights against each of them which it
would have had if it had been such a party hereto.
33.3 If any Bank wishes to transfer all or any of its rights, benefits
and/or obligations hereunder as contemplated in Clause 33.1, then such transfer
may be effected by the delivery to the Agent of a duly completed and duly
executed Transfer Certificate in which event, on the later of the Transfer Date
specified in such Transfer Certificate and the fifth business day after (or
such earlier business day endorsed by the Agent on such Transfer Certificate
falling on or after) the date of delivery of such Transfer Certificate to the
Agent:
(i) to the extent that in such Transfer Certificate the
Bank party thereto seeks to transfer its rights,
benefits and obligations hereunder, the Borrower and
such Bank shall be released from further obligations
towards one another hereunder and their respective
rights against one another shall be cancelled (such
rights, benefits and obligations being referred to in
this Clause 33.3 as "DISCHARGED RIGHTS AND
OBLIGATIONS");
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<PAGE> 52
(ii) the Borrower and the Transferee party thereto shall
assume obligations towards one another and/or acquire
rights against one another which differ from such
discharged rights and obligations only insofar as the
Borrower and such Transferee have assumed and/or
acquired the same in place of the Borrower and such
Bank; and
(iii) the Agent, such Transferee and the other Banks shall
acquire the same rights and benefits and assume the
same obligations between themselves as they would
have acquired and assumed had such Transferee been an
original party hereto as a Bank with the rights,
benefits and/or obligations acquired or assumed by it
as a result of such transfer.
33.4 On the date upon which a transfer takes effect pursuant to Clause
33.3, the Transferee in respect of such transfer shall pay to the Agent for its
own account a transfer fee of $500.
33.5 In the event that a Bank transfers its Facility Office and, at the
time of such transfer, there arises an obligation on the part of the Obligors
hereunder to pay to such Bank or any other person an amount in excess of the
amount it would have been obliged to pay but for such transfer, then, without
prejudice to any obligation of the Obligors which arise after the time of such
transfer, the Obligors shall not be obliged to pay the amount of such excess.
34. DISCLOSURE OF INFORMATION
34.1 Any information disclosed by the Borrower to any of the Beneficiaries
in connection herewith or in connection with the negotiation of the Facilities
shall be kept confidential by such of the Beneficiaries, Provided that:
(i) subject to the terms hereof each of the Beneficiaries
may disclose to any other of the Beneficiaries any
information about the Borrower;
(ii) each of the Beneficiaries shall be entitled to
disclose such information:
(a) in connection with any proceedings arising
out of or in connection with any Finance
Document;
(b) if required to do so by an order of a court
of competent jurisdiction whether in
pursuance of any procedure for discovering
documents or otherwise;
(c) pursuant to any law or regulation in
accordance with which that party is required
or accustomed to act;
(d) to any governmental, banking or taxation
authority;
(e) to its auditors or legal or other
professional advisers; or
(f) if the information is in the public domain.
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<PAGE> 53
34.2 Any of the Beneficiaries may, at any time with the prior consent of the
Principal Sponsor and the Agent, such consent not to be unreasonably withheld,
disclose to any actual or potential assignee or transferee which has executed a
confidentiality undertaking in favour of the Agent and the Principal Sponsor in
a form acceptable to the Agent and the Principal Sponsor any information such
Beneficiary has obtained about the Obligors Provided always that no person may
disclose any information that they may have obtained about the Obligors or any
of them, to any person which it is aware is a supplier, competitor or customer
of any member of the Group.
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PART 14
MISCELLANEOUS
35. CALCULATIONS AND EVIDENCE OF DEBT
35.1 Interest and commitment commission shall accrue from day to day and
shall be calculated on the basis of a year of 360 days (or, if market practice
differs, in accordance with market practice) and the actual number of days
elapsed.
35.2 Each Bank shall maintain in accordance with its usual practice
accounts evidencing the amounts from time to time lent by and owing to it
hereunder.
35.3 The Agent shall maintain on its books a control account or accounts in
which shall be recorded (i) the amount of any Advance made or arising hereunder
and each Bank's share therein, (ii) the amount of all principal, interest and
other sums due or to become due from the Borrower to any of the Banks hereunder
and each Bank's share therein and (iii) the amount of any sum received or
recovered by the Agent hereunder and each Bank's share therein.
35.4 In any legal action or proceeding arising out of or in connection with
this Agreement, the entries made in the accounts maintained pursuant to Clauses
35.2 and 35.3, save for manifest error, shall be conclusive evidence of the
existence and amounts of the obligations of the Obligors therein recorded.
35.5 A certificate of a Bank as to (i) the amount by which a sum payable to
it hereunder is to be increased under Clause 13.1 or (ii) the amount for the
time being required to indemnify it against any such cost, payment or liability
as is mentioned in Clause 13.2 or 15.1 shall, in the absence of manifest error,
be conclusive for the purposes of this Agreement.
36. REMEDIES AND WAIVERS
No failure by the Agent or the Banks or any of them to exercise, nor any delay
by the Agent or the Banks or any of them in exercising, any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy prevent any further or other exercise thereof
or the exercise of any other right or remedy. The rights and remedies herein
provided are cumulative and not exclusive of any rights or remedies provided by
law.
37. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
- 50 -
<PAGE> 55
38. NOTICES
38.1 Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by telex, facsimile or letter.
38.2 Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless that other person has by
fifteen days' written notice to the Agent specified another address) be made or
delivered to that other person at the address identified with its signature
below (or in the case of a transferee, at the end of the Transfer Certificate
to which it is a party as Transferee) (save for Notices of Drawdown or notices
under Clause 8.2 relating to the duration of Interest Periods, which shall be
made or delivered to the Agent at Chaseside,Bournemouth, Dorset BH7 7DB
Attention: Elena Plant; Facsimile: 01202 343 706; Telex: 8954681 CMB G (or such
other address as the Agent may from time to time notify for this purpose))
shall be deemed to have been made or delivered when despatched (in the case of
any communication made by telex) or (in the case of any communication made by
fax) when receipt has been acknowledged or (in the case of any communication
made by letter) when left at that address or (as the case may be) ten days
after being deposited in the post postage prepaid in an envelope addressed to
it at that address Provided that any communication or document to be made or
delivered to the Agent shall be effective only when received by the Agent and
then only if the same is expressly marked for the attention of the department
or officer identified with the Agent's signature below (or such other
department or officer as the Agent shall from time to time specify for this
purpose).
38.3 Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified (by an officer of
the person making or delivering the same) as being a true and accurate
translation thereof.
- 51 -
<PAGE> 56
PART 15
LAW AND JURISDICTION
39. LAW
This Agreement shall be governed by, and shall be construed in accordance with,
English law.
40. JURISDICTION
40.1 Each of the parties hereto irrevocably agrees for the benefit of each
of the Agent and the Banks that the courts of England shall have jurisdiction
to hear and determine any suit, action or proceeding, and to settle any
disputes, which may arise out of or in connection with this Agreement and, for
such purposes, irrevocably submits to the jurisdiction of such courts.
40.2 Each of the Obligors irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause 40.1 being nominated
as the forum to hear and determine any suit, action or proceeding, and to
settle any disputes, which may arise out of or in connection with this
Agreement and agrees not to claim that any such court is not a convenient or
appropriate forum.
40.3 Each of the Obligors agrees that the process by which any suit, action
or proceeding is begun may be served on it by being delivered in connection
with any suit, action or proceeding in England, to Gulf Offshore N.S. Limited
at 10 Charlotte Road, London SW13 9QJ or its place of business for the time
being. If such appointment ceases to be effective in respect of any of the
Obligors, such Obligor or Obligors shall immediately appoint a further person
in England to accept service of process on its behalf in England, and failing
the appointment within 15 days, the Agent shall be entitled to appoint such a
person by notice or to such Obligor or Obligors. Nothing contained herein
shall affect the right to serve process in any other manner permitted by law.
40.4 The submission to the jurisdiction of the courts referred to in Clause
40.1 shall not (and shall not be construed so as to) limit the right of the
Agent, the Banks or any of them to take proceedings against any of the Obligors
in any other court of competent jurisdiction nor shall the taking of
proceedings in any one or more jurisdictions preclude the taking of proceedings
in any other jurisdiction (whether concurrently or not) if and to the extent
permitted by applicable law.
40.5 Each of the Obligors hereby consents generally in respect of any legal
action or proceeding arising out of or in connection with this Agreement to the
giving of any relief or the issue of any process in connection with such action
or proceeding including, without limitation, the making, enforcement or
execution against any property whatsoever (irrespective of its use or intended
use) of any order or judgment which may be made or given in such action or
proceeding.
- 52 -
<PAGE> 57
40.6 To the extent that any of the Obligors may in any jurisdiction claim
for itself or its assets immunity from suit, execution, attachment (whether in
aid of execution, before judgment or otherwise) or other legal process and to
the extent that in any such jurisdiction there may be attributed to itself or
its assets such immunity (whether or not claimed), such Obligor hereby
irrevocably agrees not to claim and hereby irrevocably waives such immunity to
the full extent permitted by the laws of such jurisdiction.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
- 53 -
<PAGE> 58
THE FIRST SCHEDULE
CONDITION PRECEDENT DOCUMENTS
1. In relation to each of the Obligors:
(i) a copy, certified a true copy by a duly authorised
officer of such Obligor, of the constitutive
documents of such Obligor;
(ii) a copy, certified a true copy by a duly authorised
officer of such Obligor of a Board Resolution of such
Obligor approving the execution, delivery and
performance of this Agreement and the terms and
conditions hereof and authorising a named person or
persons to sign this Agreement and any documents to
be delivered by such Obligor pursuant hereto; and
(iii) a certificate of a duly authorised officer of such
Obligor setting out the names and signatures of the
persons authorised to sign, on behalf of such
Obligor, this Agreement and any documents to be
delivered by such Obligor pursuant hereto.
2. A copy, certified a true copy by or on behalf of the Principal
Sponsor, of each such law, decree, consent, licence, approval,
registration or declaration as is, in the opinion of counsel to the
Agent, necessary to render this Agreement and the Security Documents
legal, valid, binding and enforceable, to make this Agreement and the
Security Documents admissible in evidence in each Obligor's
jurisdiction of incorporation and to enable each of the Obligors to
perform its obligations hereunder.
3. A trust agreement executed between the Security Trustee, the Initial
Bank, the Borrower and others, pursuant to which the Security Trustee
declares itself to be trustee for the Banks named therein, the Hedge
Counterparty and such financial institutions in respect of any
security granted pursuant to any Security Document.
4. A first preferred Panamanian ship mortgage and assignment of earnings
and insurances collateral thereto executed in respect of the following
vessels:-
(i) Sea Endeavor (ex Africa Eagle);
(ii) Sea Diligent (ex Sentosa Eagle);
(iii) Sea Explorer (ex Australia Eagle);
(iv) Sea Searcher (ex Golden Eagle);
(v) Sea Eagle (ex Singapore Eagle);
(vi) Sea Conquest (ex Indonesia Eagle).
- 54 -
<PAGE> 59
5. Share Pledge over all of the shares in the Borrower legally and
beneficially owned by Gulf Offshore Marine International, Inc.
6. Evidence that the Borrower has complied with all of its obligations
arising under any Security Document relating to insurance of the
Mortgaged Vessels, together with a report, issued by an independent
person, (being an insurance broker and/or insurance consultant),
addressed to the Agent confirming that insurances effected in respect
of the Original Vessels are adequate.
7. All such notices of assignment as may be called for by any of the
Security Documents.
8. A valuation of the Mortgaged Vessels by an independent valuer
acceptable to the Agent, confirming that as at the date hereof the
value of the Mortgaged Vessels is not less than $14,300,000.
9. Evidence as to the operational condition of each of the Original
Vessels, such evidence to be in such form and such terms as the Agent
may require.
10. An opinion from Patton Moreno & Asvat, Panamanian counsel for the
Agent.
11. An opinion of Clifford Chance, solicitors for the Agent.
12. Evidence that Gulf Offshore N.S. Limited has agreed to act as agent
for the Obligors for the service of process in England.
- 55 -
<PAGE> 60
THE SECOND SCHEDULE
NOTICE OF DRAWDOWN
From: [ ]
To: [ ]
Dated:
Dear Sirs,
1. We refer to the agreement (as from time to time amended, varied,
novated or supplemented, the "Facility Agreement") dated [ ] July, 1996 and
made between Gulf Offshore Shipping Services, Inc. as borrower, GulfMark
International Inc., GulfMark North Sea Limited and Gulf Offshore Marine
International, Inc. as sponsors, Chase Manhattan International Limited as agent
and security trustee and The Chase Manhattan Bank as initial bank. Terms
defined in the Facility Agreement shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Facility Agreement and
on [date of proposed Advance], we wish to borrow an Advance in the amount of [ ]
dollars upon the terms and subject to the conditions contained therein.
[3. We would like this Advance to have a first Interest Period of [ ]
months' duration.]*
4. We confirm that, at the date hereof, the representations set out in
Clause 17 of the Facility Agreement are true and no Event of Default or
Potential Event of Default has occurred.
5. The proceeds of this drawdown should be credited to [insert account
details].
Yours faithfully
........................
for and on behalf of
[ ]
- --------------------------------------------------------------------------------
* Insert only if there are no outstanding Advances.
- 56 -
<PAGE> 61
THE THIRD SCHEDULE
FORM OF TRANSFER CERTIFICATE
To: [ ]
TRANSFER CERTIFICATE
relating to the agreement (as from time to time amended, varied, novated or
supplemented, the "Facility Agreement") dated [ ] July, 1996 whereby a dollar
revolving credit facility was made available to Gulf Offshore Shipping
Services, Inc. as borrower by a bank on whose behalf Chase Manhattan
International Limited acted as agent in connection therewith.
1. Terms defined in the Facility Agreement shall, subject to any contrary
indication, have the same meanings herein. The terms Bank, Transferee, Bank's
Participation and Amount Transferred are defined in the schedule hereto.
2. The Bank confirms that the Bank's Participation is an accurate summary
of its participation in the Facility Agreement and requests the Transferee to
accept and procure the transfer to the Transferee of a percentage of the Bank's
Participation (equal to the percentage that the Amount Transferred is of the
aggregate of the component amounts (as set out in the schedule hereto) of the
Bank's Participation) by counter-signing and delivering this Transfer
Certificate to the Agent at its address for the service of notices specified in
the Facility Agreement.
3. The Transferee hereby requests the Agent to accept this Transfer
Certificate as being delivered to the Agent pursuant to and for the purposes of
Clause 33 of the Facility Agreement so as to take effect in accordance with the
terms thereof on the Transfer Date or on such later date as may be determined
in accordance with the terms thereof.
4. The Transferee confirms that it has received a copy of the Facility
Agreement together with such other information as it has required in connection
with this transaction and that it has not relied and will not hereafter rely on
the Bank to check or enquire on its behalf into the legality, validity,
effectiveness, adequacy, accuracy or completeness of any such information and
further agrees that it has not relied and will not rely on the Bank to assess
or keep under review on its behalf the financial condition, creditworthiness,
condition, affairs, status or nature of the Borrower.
5. The Transferee hereby undertakes with the Bank and each of the other
parties to the Facility Agreement that it will perform in accordance with their
terms all those obligations which by the terms of the Facility Agreement will
be assumed by it after delivery of this Transfer Certificate to the Agent and
satisfaction of the conditions (if any) subject to which this Transfer
Certificate is expressed to take effect.
- 57 -
<PAGE> 62
6. The Bank makes no representation or warranty and assumes no
responsibility with respect to the legality, validity, effectiveness, adequacy
or enforceability of the Facility Agreement or any document relating thereto
and assumes no responsibility for the financial condition of the Borrower or
for the performance and observance by the Borrower of any of its obligations
under the Facility Agreement or any document relating thereto and any and all
such conditions and warranties, whether express or implied by law or otherwise,
are hereby excluded.
7. The Bank hereby gives notice that nothing herein or in the Facility
Agreement (or any document relating thereto) shall oblige the Bank to (i)
accept a re-transfer from the Transferee of the whole or any part of its
rights, benefits and/or obligations under the Facility Agreement transferred
pursuant hereto or (ii) support any losses directly or indirectly sustained or
incurred by the Transferee for any reason whatsoever including, without
limitation, the non-performance by the Borrower or any other party to the
Facility Agreement (or any document relating thereto) of its obligations under
any such document. The Transferee hereby acknowledges the absence of any such
obligation as is referred to in (i) or (ii) above.
8. This Transfer Certificate and the rights and obligations of the
parties hereunder shall be governed by and construed in accordance with English
law.
THE SCHEDULE
1. Bank:
2. Transferee:
3. Transfer Date:
4. Bank's Participation:
Bank's Commitment Bank's Portion of the Advances
5. Amounts Transferred:
[Transferor Bank] [Transferee Bank]
By: By:
Date: Date:
- 58 -
<PAGE> 63
ADMINISTRATIVE DETAILS OF TRANSFEREE
Address:
Contact Name:
Account for Payments
in dollars:
Telex:
Telephone:
- 59 -
<PAGE> 64
THE FOURTH SCHEDULE
THE ORIGINAL VESSELS
<TABLE>
<CAPTION>
VESSEL PROVISIONAL PATENTE
<S> <C>
Sea Endeavor (ex "Africa Eagle") 25422-PEXT
Sea Diligent (ex "Sentosa Eagle") 25418-PEXT
Sea Explorer (ex "Australia Eagle") 25421-PEXT
Sea Searcher (ex "Golden Eagle") 25419-PEXT
Sea Eagle (ex "Singapore Eagle") 25417-PEXT
Sea Conquest (ex "Indonesia Eagle") 25420-PEXT
</TABLE>
- 60 -
<PAGE> 65
THE BORROWER
GULF OFFSHORE SHIPPING SERVICES, INC.
as borrower
by: /s/ N. ALAN JONES
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention:
THE SPONSORS
GULFMARK INTERNATIONAL, INC.
by: /s/ N. ALAN JONES
Address: 5 Post Oak Park
Suite 1170
Houston
Texas 77027
USA
Attention:
GULF OFFSHORE MARINE INTERNATIONAL, INC.
by: /s/ N. ALAN JONES
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention:
- 61 -
<PAGE> 66
GULFMARK NORTH SEA LIMITED
by: /s/ N. ALAN JONES
Address: 10 Charlotte Road
London SW13 9QT
Attention:
THE AGENT AND SECURITY TRUSTEE
CHASE MANHATTAN INTERNATIONAL LIMITED
as agent and security trustee
By: /s/ J.G. HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Global Energy Group
Facsimile: 962 5030
Telex: 8954681 CMB G
THE INITIAL BANK
THE CHASE MANHATTAN BANK
By: /s/ TIM CHAPMAN
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Global Energy Group
Facsimile: 962 5030
Telex: 8954681 CMB G
- 62 -
<PAGE> 1
EXHIBIT 10.18
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrowers
GULF OFFSHORE N.S. LIMITED
GULF OFFSHORE FAR EAST, INC.
as permitted borrowers
GULFMARK INTERNATIONAL INC.
as guarantor
and
THE CHASE MANHATTAN BANK, N.A.
as lender
_________________________________________
AGREEMENT
AMENDING AND RESTATING A
LOAN FACILITY DATED 8 JULY 1993
__________________________________________
<PAGE> 2
THIS AGREEMENT is made the 20 May 1994
BETWEEN
(1) GULFMARK NORTH SEA LIMITED ("GNS") and GULF OFFSHORE MARINE
INTERNATIONAL INC. ("GOMI") (together the "PRINCIPAL BORROWERS");
(2) GULF OFFSHORE N.S. LIMITED ("GONS") and GULF OFFSHORE FAR EAST
INC. ("GOFE") (together the "PERMITTED BORROWERS");
(3) GULFMARK INTERNATIONAL INC. (the "GUARANTOR"); and
(4) THE CHASE MANHATTAN BANK, N.A. (the "BANK").
WHEREAS
(A) Pursuant to a facility agreement dated 8 July 1993 (the "FACILITY
AGREEMENT") entered into between the Bank, the Guarantor, the
Principal Borrowers and the Permitted Borrowers, the Bank granted
to the Borrowers, upon the terms and subject to the conditions
therein set forth, a loan facility in an aggregate amount of
L.3,300,000.
(B) The parties have agreed to amend the Facility Agreement.
(C) The amendments referred in (B) above are to be documented by way
of amendment and restatement of the Facility Agreement as
hereinafter described.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
In this Agreement (and in the Recitals):
(a) "EFFECTIVE DATE" means the date hereof or
such other date as the parties may agree;
(b) terms defined in the Facility Agreement
(on the assumption that the Effective
Date has occurred) bear the same meaning
herein.
2. AMENDMENT AND RESTATEMENT
The Facility Agreement shall, as of the Effective Date, be amended
and restated so as to conform with the copy attached hereto as The
Annex.
3. REPRESENTATIONS
-1-
<PAGE> 3
The Borrowers represent and warrant in the terms of Clause 16 of
the Facility Agreement (as if the Effective Date had occurred and
as if such representations were made on the date hereof and as if
the expression "this Agreement" referred to this Amendment
Agreement).
4. COUNTERPARTS
This Agreement may be executed in any number of counterparts
which, when taken together, shall constitute but one and the same
instrument and shall be governed by and construed in accordance
with English law.
5. COVENANT
Each of the Obligors covenants to provide to the Agent within 3
months of the date hereof a copy, certified by a duly authorised
officer of such Obligor, of a Board Resolution of such Obligor
approving and ratifying the execution, delivery and performance of
this Amendment Agreement. Failure by any Obligor to provide such
Board Resolution will be construed, for the purposes of the
Facility Agreement as an Event of Default and the Bank will be
entitled to act in accordance with, and exercise all its rights
under, the provisions of Clause 20 thereof.
6. MISCELLANEOUS
6.1 Clauses 28, 29, 30, 31.1, 34, 35, 37 and 38 of the Facility
Agreement shall apply MUTATIS MUTANDIS to this Agreement (and as
if references therein to the Facility Agreement were references to
this Agreement).
6.2 The Facility Agreement shall continue in full force and effect as
so amended and restated and all references therein herein and in
the other Finance Documents to the "FACILITY AGREEMENT" or to the
"AGREEMENT" or similar terms shall be deemed to be references to
the Facility Agreement as so amended and restated.
AS WITNESS the hands of the representatives of the parties hereto the day and
year first before written.
-2-
<PAGE> 4
THE BORROWERS
GULFMARK NORTH SEA LIMITED
as principal borrower
by: /s/ FRANK PIERCE
/s/ ELIZABETH BRUMLEY
Address: 10 Charlotte Road
London SW13 9QJ
Attention: David Dare
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrower
by: /s/ FRANK PIERCE
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
U.S.A.
Attention: Bruce Streeter
GULF OFFSHORE N.S. LIMITED
as permitted borrower
by: /s/ FRANK PIERCE
/s/ ELIZABETH BRUMLEY
Address: 10 Charlotte Road
London SW13 9QT
Attention: David Dare
-3-
<PAGE> 5
GULF OFFSHORE FAR EAST INC.
as permitted borrower
by: /s/ FRANK PIERCE
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
U.S.A
Attention: Bruce Streeter
THE GUARANTOR
GULFMARK INTERNATIONAL INC.
by: /s/ FRANK PIERCE
Address: 5 Post Oak Boulevard
Suite 1170
Houston
Texas 77027
U.S.A.
Attention: Frank Pierce
THE BANK
THE CHASE MANHATTAN BANK, N.A.
By: /s/ E. NELSON
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Global Petroleum
Facsimile: 962 5030
Telex: 8954681 CMB G
-4-
<PAGE> 6
CONTENTS
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C>
1. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. The Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Availability of the Facility . . . . . . . . . . . . . . . . . . . . . .
6. Additional Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Alternative Interest Rates . . . . . . . . . . . . . . . . . . . . . . .
10. Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Cancellation and Prepayment . . . . . . . . . . . . . . . . . . . . . .
12. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Tax Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17. Financial Information . . . . . . . . . . . . . . . . . . . . . . . . .
18. Financial Condition and Security Coverage . . . . . . . . . . . . . . .
19. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . .
21. Borrowers Joint and Several Obligations . . . . . . . . . . . . . . . .
22. Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23. Preservation of Rights . . . . . . . . . . . . . . . . . . . . . . . . .
24. Default Interest and Indemnity . . . . . . . . . . . . . . . . . . . . .
25. Currency of Account and Payment . . . . . . . . . . . . . . . . . . . .
26. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27. Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29. Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
30. Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .
31. Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32. Disclosure of Information . . . . . . . . . . . . . . . . . . . . . . .
33. Calculations and Evidence of Debt . . . . . . . . . . . . . . . . . . .
34. Remedies and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . .
35. Partial Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . .
36. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37. Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38. Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 7
THE SCHEDULES
<TABLE>
<S> <C>
The First Schedule : Condition Precedent Documents
The Second Schedule : Notice of Drawdown
The Third Schedule : Associated Costs Rate
</TABLE>
<PAGE> 8
L.3,300,000
FACILITY AGREEMENT
BETWEEN
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL INC.
AS PRINCIPAL BORROWERS
GULF OFFSHORE N.S. LIMITED
GULF OFFSHORE FAR EAST INC.
AS PERMITTED BORROWERS
GULFMARK INTERNATIONAL INC.
AS GUARANTOR
THE CHASE MANHATTAN BANK, N.A.
AS LENDER
<PAGE> 9
THIS AGREEMENT is made the 8th day of July, 1993
BETWEEN
(1) GULFMARK NORTH SEA LIMITED ("GNS") AND GULF OFFSHORE MARINE INTERNATIONAL
INC. ("GOMI") (TOGETHER THE "PRINCIPAL BORROWERS");
(2) GULF OFFSHORE N.S. LIMITED ("GONS") AND GULF OFFSHORE FAR EAST INC.
("GOFE") (TOGETHER THE "PERMITTED BORROWERS");
(3) GULFMARK INTERNATIONAL, INC. (THE "GUARANTOR"); AND
(4) THE CHASE MANHATTAN BANK, N.A. (THE "BANK").
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement:
"ADVANCE" means, save as otherwise provided herein, an advance made or to be
made by the Bank hereunder;
"ADDITIONAL BORROWER" means any subsidiary of either of the Principal Borrowers
the entire share capital of which is legally and beneficially owned directly or
indirectly by the Principal Borrowers or either of them and which has become an
Additional Borrower under the Facility pursuant to and in accordance with
Clause 6;
"ADDITIONAL MORTGAGED VESSEL" means any vessel, other than the Vessels, owned
by any of the Borrowers subject to a first priority legal mortgage and a deed
of covenants collateral thereto (or documents conferring a similar security
interest), granted in favour of the Security Trustee as security, inter alia,
for the obligations of the Borrowers hereunder, which mortgage and collateral
deed of covenants (or such documents) have been duly registered, recorded or
filed as required by the Security Trustee and are in full force and effect;
"APPROVED CHARTER" means any charterparty, contract or engagement of
affreightment or for the carriage or transportation of cargo, mail or
passengers or any of them, relating to any of the Mortgaged Vessels, whether
now existing or hereafter entered into by any of the Borrowers or any person,
firm or company on its behalf, the terms of which are approved in writing by
the Bank;
"APPROVED CHARTER EARNINGS" in relation to a Mortgaged Vessel means the amount
of all freights and hires which may be earned by any Borrower during the term
of any approved
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Charter pursuant to the terms and conditions thereof, less the estimated cost
of such Borrower during such term of maintaining and operating the Mortgaged
Vessel to which such Approved Charter relates in accordance with the terms and
conditions hereof and of the mortgage and/or deed of covenants relating to such
Mortgaged Vessel to and such Approved Charter;
"ASSOCIATED COSTS RATE" means, in relation to any Advance or unpaid sum, the
rate determined in accordance with the Third Schedule;
"ANNIVERSARY" means each of the days which are 364, 728, 1092 and 1456 day of
the date hereof, or if such day is not a business day, the next preceding
business day;
"AVAILABLE FACILITY" means, at any time and save as otherwise provided herein,
L.3,300,000 less the amount of each Advance which has then been made hereunder;
"BORROWERS" means the Principal Borrowers, the Permitted Borrowers and any
Additional Borrowers and "BORROWER" means any of them;
"BP FLEET VESSELS" means each of the p.s.v. "Balblair" (to be renamed "Highland
Champion") and the p.s.v. "Northern Fortress" (to be renamed "Highland
Fortress");
"ENVIRONMENTAL AFFILIATE" means in relation to a party an agent or employee of
that party or a person in a contractual relationship with that party, with
respect to any of the Mortgaged Vessels or its operation or its carriage of
cargo thereon whose acts or omissions have or will have a Material Adverse
Effect;
"ENVIRONMENTAL APPROVALS" means any permit, license, approval, ruling,
variance, exemption or other authorisation required under applicable
Environmental Laws;
"ENVIRONMENTAL CLAIM" means any and all enforcement, clean-up, removal or other
governmental or regulatory actions or orders instituted or completed pursuant
to any Environmental Laws or Environmental Approvals together with claims made
by any third party relating to damage, contribution, loss or injury, resulting
from any Release of Material of Environmental Concern;
"ENVIRONMENTAL LAWS" means all national, state, local, foreign and
international laws, regulations, treaties and conventions pertaining to the
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface or subsurface strata, navigable
waters, waters of the contiguous zone, ocean waters and international waters),
including laws, regulations, treaties and conventions relating to the Release
(or threatened release) of Material of Environmental Concern;
"EVENT OF DEFAULT" means any of those events specified in Clause 20.1;
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"EXTENDED REPAYMENT DATE" means any Anniversary subsequent to the Original
Repayment Date to which the facility may be extended pursuant to Clause 2;
"FACILITY" means the sterling loan facility granted to the Borrowers in this
Agreement;
"FACILITY OFFICE" means the office identified with the Bank's signature below
or such other office as it may from time to time select;
"FREELY AVAILABLE LIQUID RESOURCES" shall have the meaning ascribed thereto in
Clause 18.3;
"GMM GROUP" means each of the Principal Borrowers and their subsidiaries for
the time being;
"GNS MORTGAGES" means the first priority mortgages in favour of the Security
Trustee to be executed by the relevant Borrower over each of the GNS Vessels as
security, inter alia, for the obligations of the Borrowers hereunder;
"GNS VESSELS" means each of:
(a) the BP Fleet Vessels; and
(b) the vessel m.v. "Highland Sprite";
"GOMI MORTGAGES" means the first priority mortgages in favour of the Security
Trustee to be executed by the relevant Borrower over each of the GOMI Vessels
as security, inter alia, for the obligations of the Borrowers hereunder;
"GOMI VESSELS" means each of the vessels:
(a) the m.v. "Sea Courageous"; (to be renamed "Sem Courageous")
(b) the m.v. "Sea Valiant"; (to be renamed "Sem Valiant")
(c) the m.v. "Seawhip"; and
(d) the m.v. "Seawitch";
"GROUP" means the Guarantor and its subsidiaries for the time being;
"INTEREST PERIOD" means, save as otherwise provided herein, any of those
periods mentioned in Clause 7.1;
"LIBOR" means, in relation to any Advance or unpaid sum, the rate per annum at
which the Bank was offering to prime banks in the London Interbank Market
deposits in sterling and for the specified period at or about 11.00 a.m. on the
Quotation Date for such period and, for the purposes of this definition,
"SPECIFIED PERIOD" means the Interest Period of such Advance or, as the case
may be, the period in respect of which LIBOR fails to be determined in relation
to such unpaid sum;
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"LOAN" means the aggregate principal amount for the time being outstanding
hereunder;
"MARGIN" means two and one quarter percent (2-1/4%) per annum;
"MARKET VALUE" means, at any time, in relation to any Vessel, her sale value in
dollars as then most recently determined by an independent and internationally
recognised firm of shipbrokers acceptable to the Bank on the basis of a sale of
such Vessel (a) for cash (b) free of charter, liens, charges, mortgages and
encumbrances and (c) at arm's length on normal commercial terms between a
willing seller and a willing buyer;
"MATERIAL ADVERSE EFFECT" means a material adverse effect of the ability of any
of the Borrowers to meet its obligations to the Security Trustee and the Bank
hereunder or under any of the Security Documents to which any of the Borrowers
is a party;
"MATERIAL OF ENVIRONMENTAL CONCERN" means and includes pollutants,
contaminants, toxic substances, oil as defined in the United States Oil
Pollution Act of 1990, and all hazardous substances as defined in the United
States Comprehensive Environmental Response, Compensation and Liability Act;
"MORTGAGED VESSELS" means (a) each of the Original Vessels in respect of which
a first priority legal mortgage and deed of covenant or assignments collateral
thereto granted in favour of the Security Trustee is in full force and effect;
and (b) each Additional Mortgaged Vessel and "MORTGAGED VESSEL" means any of
them;
"NORSK SKIBS MORTGAGES" means each of the mortgages over:
(a) the m.v. "Highland Star";
(b) the m.v. "Highland Pride";
(c) the m.v. "Highland Legend"; and
(d) the m.v. "Highland Sentinel"
securing the obligations of GONS in respect of loans made or to be made by
Norsk Skibs Hypothekbank AS to GONS on terms disclosed to and approved by the
Bank prior to the date hereof, together with any deed of covenants (and/or such
other documents as may be executed assigning the earnings and insurance of any
such vessel);
"NOTICE OF DRAWDOWN" means a notice substantially in the form set out in the
Second Schedule;
"OBLIGORS" means the Borrowers and the Guarantor;
"ORIGINAL FINANCIAL STATEMENTS" means:
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(i) in respect of each of the Principal Borrowers, the
consolidated financial statements of such Principal
Borrower and its subsidiaries for its financial year
ended 31 December 1992; and
(ii) in the case of the Guarantor the consolidated
financial statements of the Guarantor and its
subsidiaries for its financing year ended 31 December
1992;
"ORIGINAL REPAYMENT DATE" means subject to the provision of Clause 2.3 the day
which is 12 months after the date hereof;
"ORIGINAL VESSELS" means each of the GNS Vessels and the GOMI Vessels; and
"POTENTIAL EVENT OF DEFAULT" means any event which may become (with the passage
of time, the giving of notice, the making of any determination hereunder or any
combination thereof) an Event of Default;
"PROFITS AFTER TAX" means in respect of any financial year of any member of the
GMM Group, the profit after deduction of tax thereon of such member of the GMM
Group for such financial year determined by reference to the consolidated
profit and loss account of the GMM Group in respect of such financial year and
delivered to the Bank pursuant to Clause 17.1;
"QUOTATION DATE" means, in relation to any period for which an interest rate is
to be determined hereunder, the day on which quotations would ordinarily be
given by prime banks in the London Interbank Market for deposits in sterling
for delivery on the first day of that period Provided that, if for any such
period quotations would ordinarily be given on more than one date, the
Quotation Date for that period shall be the last of those dates;
"SECURITY DOCUMENTS" means:
(a) each of the mortgages and deeds of covenants (and/or such
other documents as may be executed assigning the earnings and
insurances of any Vessel) which may be executed in respect of
any vessel as security for the obligations of the Borrowers
hereunder;
(b) the Trust Deed;
(c) the Share Pledges;
"SECURITY TRUSTEE" means The Chase Manhattan Bank, N.A. in its capacity as
trustee under the Trust Agreement;
"SHARE PLEDGES" means each of the share pledges referred to in paragraph 6 of
the First Schedule;
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"SYNDICATED FACILITY" means the syndicated revolving dual currency facility of
even date herewith made between the Borrowers as borrowers, the Guarantor as
sponsor, the Bank as agent and others;
"TRUST DEED" means the deed of trust referred to in paragraph 3 of the First
Schedule.
1.2 Any reference in this Agreement to:
the "BANK" shall be construed so as to include its and any subsequent
successors and assigns in accordance with their respective interests;
a "BUSINESS DAY" shall be construed as a reference to a day (other than a
Saturday or Sunday) on which banks are generally open for business in London;
a "CLAUSE" shall, subject to any contrary indication, be construed as a
reference to a clause hereof;
an "ENCUMBRANCE" shall be construed as a reference to a mortgage, charge,
pledge, lien or other encumbrance securing any obligation of any person or any
other type of preferential arrangement (including, without limitation, title
transfer and retention arrangements) having a similar effect;
a "HOLDING COMPANY" of a company or corporation shall be construed as a
reference to any company or corporation of which the first-mentioned company or
corporation is a subsidiary;
"INDEBTEDNESS" shall be construed so as to include any obligation (whether
incurred as principal or as surety) for the payment or repayment of money,
whether present or future, actual or contingent;
"INDEBTEDNESS FOR BORROWED MONEY" shall be construed so as to include, without
limitation, any indebtedness of any person for or in respect of:
(i) amounts raised by acceptance under any acceptance
credit facility;
(ii) amounts raised under any note purchase facility;
(iii) the amount of any liability in respect of leases or
hire purchase contracts which would, in accordance
with generally accepted accounting standards in the
United States and/or the United Kingdom (as used in
the Principal Borrowers' most recent audited annual
consolidated financial statements from time to time),
be treated as finance or capital leases;
(iv) the amount of any liability in respect of any purchase
price for assets or services the payment of which is
deferred for a period in excess of one hundred and
eighty days; and
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(v) amounts raised under any other transaction (including,
without limitation, any forward sale or purchase
agreement) having the commercial effect of a borrowing
(excluding, for the avoidance of doubt, indebtedness
incurred in relation to commercial transactions);
a "MONTH" is a reference to a period starting on one day in a calendar month
and ending on the numerically corresponding day in the next succeeding calendar
month save that, where any such period would otherwise end on a day which is
not a business day, it shall end on the next succeeding business day, unless
that day falls in the calendar month succeeding that in which it would
otherwise have ended, in which case it shall end on the immediately preceding
business day Provided that, if a period starts on the last business day in a
calendar month or if there is no numerically corresponding day in the month in
which that period ends, that period shall end on the last business day in that
later month (and references to "MONTHS" shall be construed accordingly);
a "PERSON" shall be construed as a reference to any person, firm, company,
corporation, government, state or agency of a state or any association or
partnership (whether or not having separate legal personality) of two or more
of the foregoing;
"REPAY" (or any derivative form thereof) shall, subject to any contrary
indication, be construed to include "PREPAY" (or, as the case may be, the
corresponding derivative form thereof);
a "SCHEDULE" shall, subject to any contrary indication, be construed as a
reference to a schedule hereto;
a "SUBSIDIARY" of a company or corporation shall be construed as a reference to
any company or corporation:
(i) which is controlled, directly or indirectly, by the
first-mentioned company or corporation;
(ii) more than half the issued share capital of which is
beneficially owned, directly or indirectly, by the
first-mentioned company or corporation; or
(iii) which is a subsidiary of another subsidiary of the
first-mentioned company or corporation
and, for these purposes, a company or corporation shall be treated as being
controlled by another if that other company or corporation is able to direct
its affairs and/or to control the composition of its board of directors or
equivalent body;
"TAX" shall be construed so as to include any tax, levy, impost, duty or other
charge of a similar nature (including, without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same);
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<PAGE> 16
"VAT" shall be construed as a reference to value added tax including any
similar tax which may be imposed in place thereof from time to time;
a "WHOLLY-OWNED SUBSIDIARY" of a company or corporation shall be construed as a
reference to any company or corporation which has no other members except that
other company or corporation and that other company's or corporation's wholly-
owned subsidiaries or persons acting on behalf of that other company or
corporation or its wholly-owned subsidiaries; and
the "WINDING-UP", "DISSOLUTION" or "ADMINISTRATION" of a company or corporation
shall be construed so as to include any equivalent or analogous proceedings
under the law of the jurisdiction in which such company or corporation is
incorporated or any jurisdiction in which such company or corporation carries
on business including the seeking of liquidation, winding-up, reorganisation,
dissolution, administration, arrangement, adjustment, protection or relief of
debtors.
1.3 "L." and "STERLING" denote lawful currency of the United Kingdom.
1.4 Save where the contrary is indicated, any reference in this Agreement to:
(i) this Agreement or any other agreement or document
shall be construed as a reference to this Agreement
or, as the case may be, such other agreement or
document as the same may have been, or may from time
to time be, amended, varied, novated or supplemented;
(ii) a statute shall be construed as a reference to such
statute as the same may have been, or may from time to
time be, amended or re-enacted; and
(iii) a time of day shall be construed as a reference to
London time.
1.5 Clause and Schedule headings are for ease of reference only.
2. THE FACILITY
2.1 The Bank grants to the Borrowers through the Facility Office, upon the
terms and subject to the conditions hereof, a sterling loan facility in the
aggregate amount of L.3,300,000.
2.2 Not more than three months nor less than one month prior to each
Anniversary, the Principal Borrowers may, by notice to the Bank, request the
Bank to extend its commitment by a further 364 days to the anniversary
following the anniversary on which the commitment of the Bank would otherwise
have terminated Provided that the Principal Borrowers shall not be entitled to
make any further request in accordance with the terms hereof after the fourth
Anniversary.
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2.3 Following a request under Clause 2.2 the Bank shall promptly notify the
Principal Borrowers whether it agrees to such request and if it does its
commitment shall be extended accordingly and the Original Repayment Date or, if
the Facility has already been extended pursuant to this Clause, the relevant
Extended Repayment Date shall be extended until the next succeeding
Anniversary.
3. PURPOSE
3.1 The Facility is intended for general corporate purposes and, accordingly,
the Borrowers shall apply all amounts raised by it hereunder in or towards
satisfaction of their general corporate financing requirements.
3.2 Without prejudice to the obligations of the Borrowers under Clause 3.1,
the Bank shall not be obliged to concern itself with the application of amounts
raised by the Borrowers hereunder.
4. CONDITIONS PRECEDENT
Save as the Bank may otherwise agree, none of the Borrowers may deliver any
Notice of Drawdown hereunder unless the Bank has confirmed to the Guarantor
that it or the Security Trustee on its behalf has received all of the documents
listed in the First Schedule and that each is, in form and substance,
satisfactory to the Bank.
5. AVAILABILITY OF THE FACILITY
Save as otherwise provided herein, an Advance will be made by the Bank to a
Borrower if:
(i) not more than ten nor less than five business days before the
proposed date for the making of such Advance, the Bank has
received from such Borrower a Notice of Drawdown therefor,
receipt of which shall oblige such Borrower to borrow the
amount therein requested on the date therein stated upon the
terms and subject to the conditions contained herein;
(ii) the proposed date for the making of such Advance is a business
day which falls one or more months before the Original
Repayment Date or, if the Facility has been extended pursuant
to Clause 2, the relevant Extended Payment Date;
(iii) the proposed date for the making of such Advance is not less
than five business days after the date upon which the previous
Advance (if any) was made hereunder;
(iv) the proposed amount of such Advance is (a) an amount of not
less than L.600,000 and integral multiple of L.300,000 and
which is less than the amount of the Available Facility or (b)
equal to the amount of the Available Facility;
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(v) the interest rate applicable to such Advance during its first
Interest Period would not fail to be determined pursuant to
Clause 9.l; and
(vi) either:
(a) no Event of Default or Potential Event of Default has
occurred; and
(b) the representations set out in Clause 16 are true on
and as of the proposed date for the making of such
Advance,
or the Bank agrees (notwithstanding any matter mentioned at
(a) or (b) above) to make such Advance.
6. ADDITIONAL BORROWERS
6.1 The Guarantor may with the prior written consent of the Bank, such
consent not to be unreasonably withheld, from time to time designate any
wholly-owned subsidiary of either of the Principal Borrowers as an Additional
Borrower for the purposes of the Facility, in which event the Guarantor shall
promptly deliver or cause to be delivered to the Bank a Supplemental Agreement
duly executed by the parties thereto (other than the Bank).
6.2 Upon delivery to the Bank of any Supplemental Agreement referred to in
Clause 6.1 and subject to (i) the Bank having confirmed to the person or
persons party to such Supplemental Agreement as proposed Additional Borrower or
Borrowers that it has received, in form and substance satisfactory to it, all
of the conditions precedent specified therein and (ii) the Bank being satisfied
that neither the rights of the Bank under this Agreement nor any security
provided under the Security Documents are adversely affected in any way by the
proposed accession of any such Additional Borrower or Borrower, this Agreement
shall thenceforth be read and construed as if each wholly-owned subsidiary of
either of the Principal Borrowers which is a party to such Supplemental
Agreement as a proposed Additional Borrower were a party hereto having all the
rights and obligations of a Borrower and all references in any Facility
Document to "Borrowers" and "Principal Borrowers" shall be treated as including
a reference to any such subsidiary which has become a party hereto in the
manner contemplated above.
7. INTEREST PERIODS
7.1 The period for which an Advance is outstanding shall be divided into
successive periods each of which (other than the first) shall start on the last
day of the preceding such period.
7.2 The duration of each Interest Period shall, save as otherwise provided
herein, be one, three or six months, in each case as the relevant Borrower may
by not less than five business days' prior notice to the Bank select Provided
that:
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(i) if such Borrower fails to give such notice of its selection in
relation to an Interest Period, the duration of that Interest
Period shall, subject to paragraphs (ii) and (iii) below, be
one month;
(ii) any Interest Period which begins during or at the same time as
any other Interest Period shall end at the same time as that
other Interest Period; and
(iii) any Interest Period which would otherwise end during the month
preceding, or extend beyond, the Original Repayment Date or,
if the Facility has been extended pursuant to Clause 2, the
relevant Extended Payment Date shall be of such duration that
it shall end on the Original Repayment Date or, as the case
may be, on the relevant Extended Repayment Date.
7.3 If two or more Interest Periods end at the same time, then, on the last
day of those Interest Periods, the Advances to which they relate shall be
consolidated into (and thereafter, save as otherwise provided herein, treated
in all respects as) a single Advance.
8. INTEREST
8.1 On the last day of each Interest Period the relevant Borrower shall pay
accrued interest on the Advance to which such Interest Period relates.
8.2 The rate of interest applicable to an Advance from time to time during an
Interest Period relating thereto shall be the rate per annum which is the sum
of the Margin, the Associated Costs Rate in respect thereof at such time and
LIBOR on the Quotation Date therefor.
9. ALTERNATIVE INTEREST RATES
9.1 If, at or about 11.00 a.m. on the Quotation Date for an Interest Period,
the Bank was not offering to prime banks in the London Interbank Market
deposits in sterling for the proposed duration of such Interest Period, then,
notwithstanding the provisions of Clauses 7 and 8:
(i) the duration of that Interest Period shall be one month or, if
less, such that it shall end on the next succeeding Repayment
Date; and
(ii) the rate of interest applicable to the Advance to which such
Interest Period relates from time to time during such Interest
Period shall be the rate per annum which is the sum of the
Margin, the Associated Costs Rate in respect thereof at such
time and the rate per annum determined by the Bank to be that
which expresses as a percentage rate per annum the cost to it
of funding such Advance during such Interest Period from
whatever sources it may reasonably select.
9.2 If the interest rate applicable to an Advance during an Interest Period
fails to be determined pursuant to Clause 9.1, then:
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(i) the Bank shall notify the Guarantor of such event;
(ii) if the Bank so requires, within five days of such notification
the Bank, the Guarantor and the relevant Borrower shall enter
into negotiations with a view to agreeing a substitute basis
(a) for determining the rates of interest from time to time
applicable to the Advances and/or (b) upon which the Advances
may be maintained (whether in sterling or some other currency)
thereafter and any such substitute basis that is agreed shall
take effect in accordance with its terms and be binding on
such Borrower and the Bank; and
(iii) if the Bank has required the Guarantor and a Borrower to enter
into such negotiations, the Bank may declare (any such
declaration to be binding on the Borrowers) that each Advance
shall become due and payable on the last day of its then
current Interest Period unless by then a substitute basis has
been agreed upon in relation thereto.
10. REPAYMENT
The Principal Borrower shall, on the Original Repayment Date or, if the
Facility has been extended pursuant to Clause 2, on the relevant Extended
Repayment Date repay or procure the repayment by the Borrowers of each Advance
then outstanding.
11. CANCELLATION AND PREPAYMENT
11.1 The Guarantor may, by giving to the Bank not less than thirty days' prior
notice to that effect, cancel the whole or any part (being an amount or
integral multiple of L.300,000) of the Available Facility.
11.2 Any Borrower may, if it has given to the Bank not less than thirty days'
prior notice to that effect, prepay the whole of any Advance or any part of any
Advance (being an amount of not less than L.600,000 and multiple of L.300,000)
on the last day of any Interest Period relating to that Advance.
11.3 Any notice of cancellation or prepayment given by the Guarantor or any
Borrower pursuant to Clause 11.1 or 11.2 shall be irrevocable, shall specify
the date upon which such cancellation or prepayment is to be made and the
amount of such cancellation or prepayment and, in the case of a notice of
prepayment, shall oblige such Borrower to make such prepayment on such date.
11.4 The Borrowers shall not repay all or any part of any Advance except at
the times and in the manner expressly provided for in this Agreement but shall,
subject to the terms and conditions hereof, be entitled to reborrow any amount
repaid.
12. TAXES
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12.1 All payments to be made by any of the Obligors to the Bank hereunder
shall be made free and clear of and without deduction for or on account of tax
unless such Obligor is required to make such a payment subject to the deduction
or withholding of tax, in which case the sum payable by such Obligor in respect
of which such deduction or withholding is required to be made shall be
increased to the extent necessary to ensure that, after the making of the
required deduction or withholding, the Bank receives and retains (free from any
liability in respect of any such deduction or withholding) a net sum equal to
the sum which it would have received and so retained had no such deduction or
withholding been made or required to be made.
12.2 Without prejudice to the provisions of Clause 12.1, if the Bank is
required to make any payment on account of tax (not being a tax imposed on the
net income of the Facility Office by the jurisdiction in which it is
incorporated or in which the Facility Office is located) or otherwise on or in
relation to any sum received or receivable by it hereunder (including, without
limitation, any sum received or receivable under this Clause 12) or any
liability in respect of any such payment is asserted, imposed, levied or
assessed against the Bank, the relevant Borrower shall, upon demand of the
Bank, promptly indemnify the Bank against such payment or liability, together
with any interest, penalties and expenses payable or incurred in connection
therewith.
12.3 If the Bank intends to make a claim pursuant to Clause 12.2, it shall
notify the Guarantor and the relevant Borrower of the event by reason of which
it is entitled to make such claim Provided that nothing herein shall require
the Bank to disclose any confidential information relating to the organisation
of its affairs.
13. TAX RECEIPTS
13.1 If, at any time, any of the Obligors is required by law to make any
deduction or withholding from any sum payable by it hereunder (or if thereafter
there is any change in the rates at which or the manner in which such
deductions or withholdings are calculated), such Obligor shall promptly notify
the Bank.
13.2 If any of the Obligors makes any payment hereunder in respect of which it
is required to make any deduction or withholding, it shall pay the full amount
required to be deducted or withheld to the relevant taxation or other authority
within the time allowed for such payment under applicable law and shall deliver
to the Bank, within thirty days after it has made such payment to the
applicable authority, an original receipt (or a certified copy thereof) issued
by such authority evidencing the payment to such authority of all amounts so
required to be deducted or withheld in respect of such payment.
14. INCREASED COSTS
14.1 If, by reason of (i) any change in law or in its interpretation or
administration and/or (ii) compliance with any request from or requirement of
any central bank (other than, save in the case of (e) below, the requirements
of the Bank of England reflected in the Associated Costs Rate) or other fiscal,
monetary or other authority (including, without limitation, a request or
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requirement which affects the manner in which the Bank or any holding company
of the Bank is required to or does maintain capital resources having regard to
such Bank's obligations hereunder and to amounts owing to it hereunder):
(a) the Bank or any holding company of the Bank incurs a cost as a
result of the Bank's having entered into and/or performing it
obligations under this Agreement and/or assuming or
maintaining a commitment under this Agreement and/or making
one or more Advances;
(b) the Bank or any holding company of the Bank is unable to
obtain the rate of return on its overall capital which it
would have been able to obtain but for the Bank's having
entered into and/or performing its obligations and/or assuming
or maintaining a commitment under this Agreement;
(c) there is any increase in the cost to the Bank or any holding
company of the Bank of funding or maintaining all or any of
the advances comprised in a class of advances formed by or
including the Advances;
(d) the Bank or any holding company of the Bank becomes liable to
make any payment on account of tax or otherwise (not being a
tax imposed on the net income of the Bank's Facility Office by
the jurisdiction in which it is incorporated or in which the
Facility Office is located) on or calculated by reference to
the amount of the Advances and/or to any sum received or
receivable by it hereunder; or
(e) the Associated Costs Rate, as calculated hereunder, does not
represent the cost to the Bank of complying with the
requirements of the Bank of England in relation to its funding
or maintaining of Advances,
then the Principal Borrowers shall, from time to time on demand of the Bank,
promptly pay to the Bank amounts sufficient to indemnify it or any such holding
company against, as the case may be, (1) such cost, (2) such reduction in such
rate of return (or such proportion of such reduction as is, in the opinion of
the Bank, attributable to its obligations hereunder), (3) such increased cost
(or such proportion of such increased cost as is, in the opinion of the Bank,
attributable to its funding or maintaining Advances), (4) such liability or (5)
such portion of such cost as is not represented by the Associated Costs Rate.
14.2 If the Bank intends to make a claim pursuant to Clause 14.1, it shall
notify the Guarantor of the event by reason of which it is entitled to do so
Provided that nothing herein shall require the Bank to disclose any
confidential information relating to the organisation of its affairs.
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15. ILLEGALITY
If, at any time, it is unlawful for the Bank to make, fund or allow to remain
outstanding all or any of the Advances, then the Bank shall, promptly after
becoming aware of the same, deliver to the Guarantor and the relevant Borrowers
a certificate to that effect and:
(i) the Bank shall not thereafter be obliged to make any Advances
and the amount of the Available Facility shall be immediately
reduced to zero; and
(ii) if the Bank so requires, the Borrowers shall on such date as
the Bank shall have specified repay each outstanding Advance
together with accrued interest thereon and all other amounts
owing to the Bank hereunder.
16. REPRESENTATIONS
16.1 Each of the Obligors represents that:
(i) it is a corporation duly organised under the laws of the state
of Delaware in the case of the Guarantor or the Republic of
Panama (in the case of GOMI and GOFE) or England (in the case
of GNS and GONS) with power to enter into this Agreement and
the Security Documents to which it is a party and to exercise
its rights and perform its obligations hereunder and all
corporate and other action required to authorise its execution
of this Agreement and the Security Documents to which it is a
party and its performance of its obligations hereunder has
been duly taken;
(ii) under the laws of its jurisdiction of incorporation in force
at the date hereof, it will not be required to make any
deduction or withholding from any payment it may make
hereunder;
(iii) under the laws of its jurisdiction of incorporation in force
at the date hereof, the claims of the Bank against such
Borrower under this Agreement and under the Security Documents
to which it is a party will rank at least pari passu with the
claims of all its other unsecured creditors save those whose
claims are preferred solely by any bankruptcy, insolvency,
liquidation or other similar laws of general application;
(iv) in any proceedings taken in its jurisdiction of incorporation
in relation to this Agreement and the Security Documents to
which it is a party, it will not be entitled to claim for
itself or any of its assets immunity from suit, execution,
attachment or other legal process;
(v) in any proceedings taken in its jurisdiction of incorporation
in relation to this Agreement and any of the Security
Documents expressed to be governed by
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<PAGE> 24
English law, the choice of English law as the governing law of
this Agreement and such Security Documents and any judgment
obtained in England will be recognised and enforced;
(vi) save for the registration of the GNS Mortgages and the GOMI
Mortgages with the appropriate authorities, all acts,
conditions and things required to be done, fulfilled and
performed in order (a) to enable it lawfully to enter into,
exercise its rights under and perform and comply with the
obligations expressed to be assumed by it in this Agreement,
(b) to ensure that the obligations expressed to be assumed by
it in this Agreement and the Security Documents are legal,
valid and binding and (c) to make this Agreement and the
Security Documents admissible in evidence in its jurisdiction
of incorporation have been done, fulfilled and performed;
(vii) under the laws of its jurisdiction of incorporation in force
at the date hereof, it is not necessary that this Agreement
and the Security Documents, other than the GNS Mortgages and
the GOMI Mortgages, the Share Pledges and any deed of covenant
or assignment of earnings and insurance collateral thereto be
filed, recorded or enrolled with any court or other authority
in such jurisdiction or that any stamp, registration or
similar tax be paid on or in relation to this Agreement or any
Security Document; and
(viii) the obligations expressed to be assumed by it in this
Agreement and the Security Documents to which it is a party
are its legal, valid and binding obligations.
16.2 Each of the Obligors further represents that:
(i) no member of the Group has taken any corporate action nor have
any other steps been taken or legal proceedings been started
or (to the best of the Borrowers' knowledge and belief)
threatened against any member of the Group for its winding-up,
dissolution, administration or re-organisation or for the
appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of it or of any or all of
its assets or revenues;
(ii) no member of the Group is in breach of or in default under any
agreement to which it is a party or which is binding on it or
any of its assets to an extent or in a manner which might have
a Material Adverse Effect on the business or financial
condition of any member of the Group;
(iii) no action or administrative proceeding of or before any court
or agency which might have a Material Adverse Effect on the
business or financial condition of any member of the Group has
been started or threatened;
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<PAGE> 25
(iv) it and (to the best of its knowledge) its Environmental
Affiliates have complied with the provisions of all applicable
Environmental Laws, except where non-compliance does not and
will not have a Material Adverse Effect;
(v) it and (to the best of its knowledge) its Environmental
Affiliates have obtained all requisite Environmental Approvals
and are in compliance with such Environmental Approvals,
except where the failure to obtain or comply with any such
Environmental Approvals does not and will not have a Material
Adverse Effect;
(vi) neither it nor (to the best of its knowledge) its
Environmental Affiliates has received notice of any
Environmental Claim that alleges that it or any of its
Environmental Affiliates are not in compliance with applicable
Environmental Laws or Environmental Approvals, where such non-
compliance has or will have a Material Adverse Effect;
(vii) there is no Environmental Claim pending or threatened, to the
best of its knowledge, that has or will have a Material
Adverse Effect;
(viii) there has been no Release of Material of Environmental Concern
except where such event does not and will not have a Material
Adverse Effect;
(ix) all of the written information supplied by any member of the
Group to the Bank in connection herewith is true, complete and
accurate in all material respects and it is not aware of any
material facts or circumstances that have not been disclosed
to Bank and which might, if disclosed, adversely affect the
decision of a person considering whether or not to provide
finance to the Borrowers;
(x) the Guarantor is directly or indirectly, the sole legal and
beneficial owner of the entire share capital of each of the
Principal Borrowers; and
(xi) save for the Norsk Skibs Mortgages and any security documents
related or collateral thereto, and any encumbrance created
pursuant to the provisions of Clause 21.2(iii), no encumbrance
exists over all or any of the present or future revenues or
assets of any member of the Group.
16.3 Each of the Obligors further represents that:
(i) the execution by each Obligor of this Agreement and of each
Security Document to which it is a party and each Obligor's
exercise of its rights and performance of its obligations
hereunder will not result in the existence of nor oblige any
member of the Group to create any encumbrance over all or any
of its present or future revenues or assets; except, insofar
as the same may arise pursuant to the Security Documents;
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<PAGE> 26
(ii) the execution by each Obligor of this Agreement and each
Obligor's exercise of its rights and performance of its
obligations hereunder do not and will not:
(a) conflict with any agreement, mortgage, bond or other
instrument or treaty to which any Obligor is a party
or which is binding upon it or any of its assets;
(b) conflict with any Obligor's constitutive documents and
rules and regulations; or
(c) conflict with any applicable law, regulation or
official or judicial order; and
(iii) the execution by each Obligor of this Agreement constitutes,
and such Obligor's exercise of its rights and performance of
its obligations hereunder will constitute, private and
commercial acts done and performed for private and commercial
purposes.
16.4 GOFE represents that it, and each of the other parties thereto are in
compliance with all their obligations under each of the charters relating to
the GOMI Vessels, and GONS represents that it and British Gas are in compliance
with all their obligations under the charter relating to the m.v. "Highland
Sprite" and none of the parties to such charters have cancelled or repudiated
or sought to terminate, cancel or repudiate their obligations thereunder.
17. FINANCIAL INFORMATION
17.1 The Guarantor shall, or shall procure that, the Principal Borrowers
shall:
(i) as soon as the same become available, but in any event within
120 days after the end of each of its financial years, deliver
to the Bank the audited consolidated financial statements of
the Group and each of the Principal Borrowers for such
financial year;
(ii) as soon as the same become available, but in any event within
60 days after the end of each of its financial quarter years,
deliver to the Bank the consolidated financial statements of
the Group, each of the Principal Borrowers and the GMM Group
for such period; and
(iii) from time to time on the request of the Bank, furnish the Bank
with such information about the business and financial
condition of the Group as the Bank may reasonably require
(including, but without limitation, such further information
as the Bank may from time to time require in order to enable
it to ascertain where the obligations as set out in Clause 18
are complied with.
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17.2 The Guarantor and each of the Principal Borrowers shall ensure that:
(i) each set of financial statements delivered by it pursuant to
Clause 17.1 is prepared on the same basis as was used in the
preparation of its Original Financial Statements and in
accordance with accounting principles generally accepted in
the United States and/or the United Kingdom and consistently
applied;
(ii) each set of financial statements delivered by it pursuant to
Clause 17.1 is certified by a duly authorised officer of the
Guarantor or a Principal Borrower, as the case may be, as
giving a true and fair view of the financial condition of the
Group or the operation of the relevant Principal Borrower, as
the case may be, as at the end of the period to which those
financial statements relate and of the results of the Group's
operations, or the operation of the relevant Principal
Borrower, as the case may be, during such period; and
(iii) each set of financial statements delivered by it pursuant to
paragraph (i) of Clause 17.1 has been audited by auditors
acceptable to the Bank.
18. FINANCIAL CONDITION AND SECURITY COVERAGE
18.1 The Guarantor and each of the Principal Borrowers shall ensure that at
all times the consolidated financial condition of the GMM Group, as evidenced
by the Guarantor and the Principal Borrower's then most recent audited annual
consolidated financial statements (adjusted, as the Bank may consider
appropriate, to take account of any changes in circumstances which occur after
the date as of which such audited annual consolidated financial statements were
prepared), shall be such that:
(i) the ratio of Current Assets to Current Liabilities shall
exceed 1.15:1;
(ii) the ratio of Total Liabilities to Tangible Equity shall not
exceed 1.75:1;
(iii) the aggregate of Tangible Equity and Subordinated Debt shall
be equal to or exceed $29,000,000.
18.2 The Guarantor and each of the Borrowers shall at all times ensure that
Freely Available Liquid Resources exceed $1,500,000.
18.3 In this Clause 18:
(i) "Current Assets" means the aggregate of all of the assets of
each member of the GMM Group, other than monies due or to
become due from another member of the GMM Group, which would,
in accordance with generally accepted accounting practice in
the U.S. consistently applied, be classified as current
assets, all as shown on the latest financial statements
delivered in accordance with Clause 17.1;
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<PAGE> 28
(ii) "Current Liabilities" means at any particular time the
aggregate of the obligations of each member of the GMM Group
to pay money other than (a) repayment obligations in respect
of Advances made hereunder falling due within a six month
period from the date at which such liabilities are calculated
and (b) monies due or to become due to other members of the
GMM Group, which would, in accordance with generally accepted
accounting practice in the U.S. consistently applied, be
classified as current liabilities, all as shown on the latest
financial statements delivered in accordance with Clause 17.1;
(iii) "Freely Available Liquid Resources" means the aggregate of any
cash and deposits in any jurisdiction from which funds are
freely transferable, denominated in freely convertible and
transferable currencies (placed in a prime bank or reputable
financial institution) then solely legally and beneficially
owned by any of the Borrowers and free from encumbrances;
(iv) "Total Liabilities" means at any particular time the aggregate
of the obligations of each member of the GMM Group on a
consolidated basis for the payment of monies whether borrowed
or not and whether due or to become due which would, in
accordance with generally accepted accounting practice in the
U.S. consistently applied, be classified as liabilities
(including, for the avoidance of doubt, liabilities in respect
of lease or hire purchase contracts, contracts of charter and
contracts of guarantee), other than monies due or to become
due to any other member of the GMM Group;
(v) "Tangible Equity" means at any particular time the aggregate
of the amounts paid up or credited as paid up in respect of
the Principal Borrowers' share capital and the aggregate
amount of capital and reserves of the Principal Borrowers
including, but not limited to any credit balance standing to
the consolidated profit and loss account of the GMM Group
but deducting
(a) any debit balance standing to the consolidated profit
and loss account of the GMM Group; and
(b) any intangible asset, including (for the avoidance of
doubt) goodwill
but shall exclude the cumulative amount of any translation or
transaction adjustments as required to be deducted from or
added to equity but excluded from the determination of
consolidated profit and loss in accordance with accounting
principles generally accepted in the United States;
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<PAGE> 29
(vi) "Subordinated Debt" means any indebtedness of any of the
Borrowers which is subordinated, in a manner and to an extent
satisfactory to the Bank, to the indebtedness of the Borrowers
under this Agreement and the Syndicated Facility.
18.4 All expressions used in the definitions of this Clause 18 which are
not otherwise defined herein shall be construed in accordance with generally
accepted accounting principles in the United States of America (as used in the
Guarantor's most recent audited annual consolidated financial statements).
19. COVENANTS
19.1 EACH OF THE BORROWERS SHALL:
(i) and shall ensure that each other Borrower shall, obtain,
comply with the terms of and do all that is necessary to
maintain in full force and effect all authorizations,
approvals, licenses and consents required in or by the laws
and regulations of its jurisdiction of incorporation to enable
it lawfully to enter into and perform its obligations under
this Agreement and each of the Security Documents or to ensure
the legality, validity, enforceability or admissibility in
evidence in its jurisdiction of incorporation of this
Agreement and each of the Security Documents;
(ii) without prejudice to the specific requirements of the Security
Documents procure that each member of the GMM Group maintains
insurances on and in relation to its business and assets with
reputable underwriters or insurance companies against such
risks and to such extent as is usual for companies carrying on
a business such as that carried on by such member of the GMM
Group whose practice is not to self insure;
(iii) promptly inform the Bank of the occurrence of any Event of
Default or Potential Event of Default and, upon receipt of a
written request to that effect from the Bank, confirm to the
Bank that, save as previously notified to the Bank or as
notified in such confirmation, no Event of Default or
Potential Event of Default has occurred;
(iv) without prejudice to the priority afforded by any mortgage and
deed of covenant or assignment collateral thereto securing the
obligations of the Borrowers hereunder ensure that at all
times the claims of the Bank against it under this Agreement
rank at least pari passu with the claims of all its other
unsecured creditors save those whose claims are preferred by
any bankruptcy, insolvency, liquidation or other similar laws
of general application;
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<PAGE> 30
(v) at the request of the Bank, deliver to the Bank or procure the
delivery to the Bank of up-to-date valuations of the Vessels
prepared at the sole cost and expense of the Borrowers,
showing the Market Value of each of the Mortgaged Vessels;
(vi) ensure that the Mortgaged Vessels are maintained in good
working order and condition and in any event in such condition
as enables them to maintain the classification American Bureau
of Shipping AI AMS or to an equivalent classification
acceptable to the Bank free from all notations and
recommendations which have not been complied with within any
applicable time limit and ensure that such classification is
maintained;
(vii) comply with all applicable Environmental Laws including,
without limitation, requirements relating to the establishment
of financial responsibility (and shall require that all
Environmental Affiliates of the Borrowers comply with all
applicable Environmental Laws and obtain and comply with all
required Environmental Approvals, which Environmental Laws and
Environmental Approvals relate to any of the Mortgaged Vessels
or their operation or their carriage of cargo), except where
such non-compliance does not or will not have a Material
Adverse Effect;
(viii) upon the request of the Bank, conduct and complete all
investigations, studies, sampling, audits and testings
reasonably required by any known (or threatened) Release of
Material of Environmental Concern that has or will have a
Material Adverse Effect;
(ix) promptly upon the occurrence of either of the following
events, provide to the Bank a certificate of an officer of the
Guarantor specifying in detail the nature of such event and
the proposed response of the relevant Borrower or its
Environmental Affiliate concerned;
(a) the receipt by any of the Borrowers or any
Environmental Affiliate (where the relevant Borrower
has knowledge of such receipt) of any Environmental
Claim which has or will have a Material Adverse
Effect; or
(b) any actual or threatened Release of Material of
Environmental Concern which has or will have a
Material Adverse Effect,
and upon the written request by the Bank submit to the Bank,
at reasonable intervals, a report updating the status of any
occurrence of an Environmental Claim or a Release of Material
of Environmental Concern, that has or will have a Material
Adverse Effect;
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<PAGE> 31
(x) maintain the registration of the Mortgaged Vessels under the
laws and flag under which they are currently maintained (or,
in the case of the m.v. Sea Courageous and the m.v. Sea
Valiant, under the laws and flag and Malaysia) and not cause
or permit to be done any act or omission whereby their
registration as such would or might be defeated or imperilled
or which might result in such Mortgaged Vessels being required
to be registered under any other flag and registered with the
appropriate authorities;
(xi) permit the Bank on reasonable notice to inspect the Mortgaged
Vessels and their logs;
(xii) from time to time on being required to do so by the Bank, do
or procure the doing of all such acts and execute or procure
the execution of all such documents as the Bank may reasonably
consider necessary for giving full effect to each of the
Security Documents or for securing to the Bank the full
benefit of the rights, powers and remedies intended to be
conferred upon the Bank or the Security Trustee pursuant to
the Security Documents;
(xiii) at all times ensure that the Principal Borrowers are, subject
to the rights conferred by the Share Pledges, the sole
beneficial owners of the entire issued share capital of each
of the Permitted Borrowers and each Additional Borrower;
(xiv) commencing from the date hereof and thereafter no later than
14 days from and inclusive of each of 30th September, 31st
December, 30th March and 30th June deliver to the Bank a
schedule in form and substance satisfactory to the Bank
detailing Fixed Asset Investments exceeding $50,000 made by
any of the Borrowers in the three months proceeding the date
upon which such schedule is delivered;
(xv) no later than 14 days from and inclusive of 31st March, 30th
June, 30th September and 31st December in each calendar year,
furnish the Bank with a report in form and substance
satisfactory to the Bank and at the cost of the Borrowers,
relating to the status, employment, earnings and location of
the Mortgaged Vessels as at the date upon which such report is
furnished in respect of the period elapsing since the previous
such report, if any;
(xvi) without prejudice to the obligations of the Borrowers under
any of the Security Documents ensure that all Approved Charter
Earnings are paid forthwith into accounts with the Borrowers
maintained with the Bank; and
(xvii) forthwith upon the request of the Bank, charge, pledge or
otherwise encumber in favour of the Security Trustee pursuant
to a security document in form and substance satisfactory to
the Bank any account into which Approved Charter Earnings are
paid.
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<PAGE> 32
19.2 None of the Borrowers shall, and the Principal Borrowers shall ensure
that no member of the GMM Group shall, without the prior written
consent of the Bank;
(i) pay, make or declare any dividend or other distribution in
respect of any financial year of the GMM Group;
(ii) incur expenditure in respect of any management fees payable
other than management fees payable to the Guarantor in such
amount as the Bank, may agree having regard to the annual
budget and operating expenses of the Guarantor;
(iii) create or permit to subsist any encumbrance over all or any of
its present or future revenues or assets except:-
(a) pursuant to the Security Documents; or
(b) any encumbrances imposed by law, such as carrier's,
warehouseman's, mechanics' liens and other similar
liens arising in the ordinary course of business or
permitted under the terms of the Security Documents;
or
(c) any encumbrance over assets acquired after the date
hereof otherwise than from any other borrower and
which encumbrance is in existence prior to such
acquisition or is created in order to secure
indebtedness incurred in respect of such acquisition;
or
(d) the Norsk Skibs Mortgages; or
(e) encumbrances over any assets of the GMM Group
securing obligations arising under the Syndicated
Facility;
(iv) make any loans, grant any credit (save in the ordinary course
of business) or give any guarantee or indemnity (except as
required hereby) to or for the benefit of any person or
otherwise voluntarily assume any liability, whether actual or
contingent, in respect of any obligation of any other person;
(v) issue any further shares or alter any rights attaching to its
issued shares in existence at the date hereof other than by
GONS to GNS in exchange for the shareholding of BNS in Dianne
Operating Limited;
(vi) save as otherwise provided herein (disregarding sales of stock
in trade in the ordinary course of business and sales of
Mortgaged Vessels or other assets for amounts not less than
eighty per cent. of the Market Value of such Mortgaged Vessel)
sell, lease, transfer or otherwise dispose of, by one or more
transactions or series of transactions (whether related or
not), the whole or any part (the book
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<PAGE> 33
value of which is thirty per cent. or more of the book value
of the whole) of its revenues or its assets;
(vii) incur any indebtedness for borrowed money other than pursuant
to this Facility and the Syndicated Facility in excess of
$50,000 or its equivalent in other currencies; save to the
extent that such indebtedness is owed to other members of the
Group and is subordinated to the obligations of the Borrowers
hereunder, and under each of the Security Documents to which
it is a party, on terms acceptable to the Bank or is secured
by encumbrances of the nature referred to in Clause
19.2(iii)(c) or the Norsk Skibs Mortgages;
(viii) carry on or engage in or be concerned with any business or
activities except insofar as they relate to the ownership and
operation of the Mortgaged Vessels and other vessels engaged
in similar activities and activities relating thereto or
otherwise relate to the undertaking and assets of the offshore
supply division of BP Shipping Limited;
(ix) merge, demerge or consolidate with any person;
(x) undertake in any twelve month period any expenditure of a
capital nature without the Bank's consent save insofar as such
expenditure relates to:-
(a) any single Fixed Asset Investment which does not
exceed:
(i) $100,000 in respect of the GOMI Vessels;
(ii) $150,000 in respect of the m.v. Highland
Sprite; and
(iii) $250,000 in respect of the BP Fleet Vessels;
(b) more than one Fixed Asset Investment the amounts of
which, when aggregated do not exceed $500,000.
19.3 The Guarantor shall at all times remain, subject to such rights as may
be conferred by the Share Pledges, the sole beneficial owner free from
all encumbrances, of the entire issued share capital of each member of
the GMM Group.
19.4 The Guarantor shall, not
(i) save pursuant hereto or otherwise with the consent of the
Bank, give any guarantee or indemnity to or for the benefit of
any person or otherwise voluntarily assume any liability,
whether actual or contingent, in respect of any obligation of
any other person; or
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<PAGE> 34
(ii) sell or otherwise dispose of any of its shares in Energy
Ventures Inc. without the consent of the Bank, nor create or
permit to subsist any encumbrances over such shares.
20. EVENTS OF DEFAULT
20.1 If:
(i) any of the Obligors fails to pay any sum due from it hereunder
or under the Syndicated Facility or any Security Document at
the time, in the currency and in the manner specified herein
or therein or if such failure results solely from technical or
administrative difficulties relating to the transfer of such
sums, such failure is not remedied withing three days;
(ii) any representation or statement made by any of the Obligors in
this Agreement or under any Security Document or in any notice
or other document, certificate or statement delivered by it
pursuant hereto or thereto or in connection herewith is or
proves to have been incorrect or misleading when made; or
(iii) any of the Obligors fails duly to perform or comply with any
of the obligations expressed to be assumed by it in Clauses
17, 18 or 19 hereof or duly to effect insurance of the
Mortgaged Vessels or any of them in accordance with the
applicable provisions of the Security Documents; or
(iv) any of the Obligors fails duly to perform or comply with any
other obligation expressed to be assumed by it in this
Agreement or under any Security Document and such failure is
not remedied within fourteen days after the Bank has given
notice thereof to such Borrower; or
(v) there occurs any "Event of Default" as such term is defined in
the Syndicated Facility in respect of which the Bank
thereunder exercises rights equivalent to those conferred upon
the Bank pursuant to this Clause 20; or
(vi) any of the Borrowers is in breach of any of its obligations
under any Approved Charters or any of the Borrowers seeks to
cancel, terminate or repudiate any of the Approved Charters
without the prior consent of the Bank; or
(vii) any indebtedness of the Guarantor or any member of the GMM
Group (other than indebtedness due to trade creditors incurred
in the normal course of business of the Guarantor or such
member of the GMM Group which is disputed in good faith and by
appropriate proceedings diligently conducted) is not paid when
due or within any applicable grace period, any indebtedness of
the Guarantor or any member of the GMM Group is declared to be
or otherwise becomes due and payable prior to its specified
maturity or any creditor or creditors of the
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<PAGE> 35
Guarantor or any member of the GMM Group become entitled to
declare any indebtedness of the Guarantor or such member of
the GMM Group due and payable prior to its specified maturity;
or
(viii) in any period of twelve months commencing from the date hereof
any judgments or judicial orders or arbitration awards are
made against any of the Obligors in an amount or an aggregate
amount in excess of $750,000 (or the equivalent in any other
currency) (other than any judgment, judicial order or
arbitration award as to which, and only to the extent that, a
reputable company or other surety, in either case acceptable
to the Bank, has acknowledged coverage of such judgment,
judicial order or arbitration award in writing) and,
(a) any such judgment, judicial order or arbitration
award has not been stayed, discharged, paid, bonded
or vacated within 30 days or such longer period as
may be agreed by the Bank; or
(b) enforcement proceedings have been commenced by any
creditor on any such judgment, judicial order or
arbitration award;
(ix) the Guarantor or any member of the GMM Group is unable to pay
its debts as they fall due, commences negotiations with any
one or more of its creditors with a view to the general
readjustment or rescheduling of its indebtedness or makes a
general assignment for the benefit of or a composition with
its creditors; or
(x) (otherwise than for the purpose of a reconstruction on terms
previously approved by the Bank) the Guarantor or any member
of the GMM Group takes any corporate action or other steps are
taken or legal proceedings are started for its winding-up,
dissolution, administration or re-organization or for the
appointment of a receiver, administrator, administrative
receiver, trustee or similar officer of it or of any or all of
its revenues and assets; or
(xi) any execution or distress is levied against, or an
encumbrancer takes possession of the whole or any material
part of, the property, undertaking or assets of the Guarantor
or any member of the GMM Group; or
(xii) by or under the authority of any government, (a) the
management of the Guarantor or any member of the GMM Group is
wholly or partially displaced or the authority of the
Guarantor or any member of the GMM Group in the conduct of its
business is wholly or partially curtailed or (b) all or a
majority of the issued shares of the Guarantor or any member
of the GMM Group or the whole or any part (the book value of
which is twenty per cent. or more of the book value of the
whole) of its revenues or assets is seized, nationalized,
expropriated or compulsorily acquired; or
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<PAGE> 36
(xiii) subject to such rights as may be conferred by the Share
Pledges, the Guarantor ceases to be the sole legal and
beneficial owner of the entire share capital of the Principal
Borrowers; or
(xiv) the Principal Borrowers cease to be the beneficial owner of
the entire issued share capital of each of the Permitted
Borrowers and any Additional Borrower;
(xv) save as provided in Clause 19.2(viii) the Guarantor or any
member of the GMM Group ceases to carry on the business it
carries on at the date hereof or enters into any new type of
business; or
(xvi) any of the Obligors repudiates this Agreement or any Security
Document to which it is a party or does or causes to be done
any act or thing evidencing an intention to repudiate this
Agreement or any such Security Document; or
(xvii) at any time any act, condition or thing required to be done,
fulfilled or performed in order (a) to enable or any of the
Obligors lawfully to enter into, exercise its rights under and
perform the obligations expressed to be assumed by it in this
Agreement and the Security Documents to which it is a party,
(b) to ensure that the obligations expressed to be assumed by
any of the Obligors in this Agreement and the Security
Documents to which it is a party are legal, valid and binding
or (c) to make this Agreement and the Security Documents to
which it is a party admissible in evidence in any Borrower's
jurisdiction of incorporation is not done, fulfilled or
performed; or
(xviii) at any time any of the security interests constituted by any
of the Security Documents ceases to constitute valid and
perfected first priority security interests;
(xix) at any time it is or becomes unlawful for any of the Obligors
to perform or comply with any or all of its obligations
hereunder or under any of the Security Documents to which it
is a party or any of the obligations of any of the Obligors
hereunder or under any of the Security Documents to which it
is a party are not or cease to be legal, valid and binding; or
(xx) (a) any circumstances arise which give grounds in the
reasonable opinion of the Bank for belief that any of the
Obligors may not (or may be unable to) perform or comply with
its obligations hereunder, or any of the Security Documents to
which it is a party (b) the Bank shall have given to the
Guarantor notice that it is of such opinion setting out in
reasonable detail the grounds upon which such opinion is based
and (c) after having given due regard to any representation
made by the Guarantor during the period of ten days after the
giving of such notice by the Bank, the Bank is of the same
opinion upon the expiration of such period,
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then, and in any such case and at any time thereafter, the Bank may by written
notice to the Guarantor and each relevant Borrower:
(a) declare the Advances to be immediately due and payable
(whereupon the same shall become so payable together with
accrued interest thereon and any other sums then owed by the
Borrowers hereunder) or declare the Advances to be due and
payable on demand of the Bank; and/or
(b) declare that any undrawn portion of the Facility shall be
cancelled, whereupon the same shall be cancelled and the
Available Facility shall be reduced to zero.
20.2 If, pursuant to Clause 20.1, the Bank declares the Advances to be due
and payable on demand of the Bank, then, and at any time thereafter, the Bank
may by written notice to the Guarantor:
(i) call for repayment of the Advances on such date as it may
specify in such notice (whereupon the same shall become due
and payable on such date together with accrued interest
thereon and any other sums then owed by the Borrowers
hereunder) or withdraw its declaration with effect from such
date as it may specify in such notice; and/or
(ii) select as the duration of any Interest Period which begins
whilst such declaration remains in effect a period of six
months or less.
21. BORROWERS JOINT AND SEVERAL OBLIGATIONS
21.1 Each obligation of or expressed to be assumed by the Borrowers or any
of them in or under this Agreement or any Security Document is the joint and
several obligation of the Borrowers and of each of them.
21.2 Each Borrower acknowledges and confirms that it is a principal and
original debtor in respect of all amounts which may become payable by the
Borrowers in accordance with the terms hereof or any Security Document and
agrees that the Bank may in all circumstances treat it as such whether or not
it is or becomes aware that such Borrower is or has become a surety for
another.
21.3 The Borrowers agree to indemnify and hold harmless the Bank from and
against any loss incurred by any of them as a result of any Clause or provision
of this Agreement or any Security Document being or becoming void, voidable or
unenforceable for any reason whatsoever, whether or not known to any such
person, the amount of such loss being limited to the amount which such
Beneficiary would otherwise have been entitled to recover hereunder or under
any Security Document had such Clause or provision not become void, voidable or
unenforceable.
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21.4 The obligations of each Borrower under this Agreement or any Security
Document shall not be in any way discharged or impaired by reason of (i) any
time or indulgence which may be granted by the Bank to the other Borrower or
any other person from whom they may seek payment of sums due from a Borrower
under this Agreement or any Security Document, (ii) by any variation of this
Agreement or any Security Document or any related document or (iii) by any
other circumstances which might (but for this provision) constitute a legal or
equitable discharge or such Borrower.
21.5 Any rights conferred on the Bank by this Agreement or any Security
Document shall be in addition to and not in substitution for or derogation of
any other right which the Bank might at any time have to seek from the other
Borrower or any other person payment of sums due from a Borrower or
indemnification against liabilities incurred as a result of a Borrower's
default in payment of sums due from it under this Agreement or any Security
Document.
21.6 The Bank shall not be obliged before taking steps to enforce any
rights conferred on it by this Clause or exercising any of the rights, powers
and remedies conferred on it hereby or by law (a) to take action or obtain
judgment in any court against the other Borrower or any other person from whom
they may seek payment of any sum due from a Borrower under this Agreement or
any Security Document, (b) to make or file any claim in a bankruptcy,
winding-up, liquidation or re-organization of the other Borrower or any other
such person or (c) to enforce or seek to enforce any other rights it may have
against the other Borrower or any other such person.
21.7 Each Borrower agrees that so long as any sums are or may be owed by
either Borrower under this Agreement or any Security Document any rights which
such Borrower may have at any time by reason of performance by it of its
obligations under this Clause to be indemnified by the other Borrower and/or to
take the benefit (in whole or in part) of any security taken pursuant to this
Agreement or any Security Document by the Bank or the Security Trustee on its
behalf shall be exercised by such Borrower in such manner and upon such terms
as the Bank may require and further agrees to hold any moneys at any time
received by it as a result of the exercise of any such rights for and on behalf
and to the order of the Bank for application in or towards payment of any sums
at any time owed by either Borrower under this Agreement or any Security
Document.
21.8 Each Borrower further agrees that so long as any sums are or may be
owed by either Borrower under this Agreement or any Security Document such
Borrower will not (i) claim any set-off or counter-claim against the other
Borrower in respect of any liability on the part of such other Borrower to such
first Borrower and attributable to this Agreement or any Security Document or
(ii) prove in competition with the Beneficiaries or any of them in any
liquidation or winding-up of the other Borrower, whether in respect of any
payment by such Borrower hereunder or under any Security Document or in respect
of any moneys including proceeds of realisation of securities, dividends or
otherwise.
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22. GUARANTEE
The Guarantor hereby irrevocably and unconditionally:
(i) guarantees to the Bank the due and punctual
observance and performance of all the terms,
conditions and covenants on the part of the Borrowers
contained in this Agreement and agrees to pay to the
Bank from time to time on demand any and every sum or
sums of money which the Borrowers or any of them
shall at any time be liable to pay to the Bank under
or pursuant to this Agreement and which shall not
have been paid at the time such demand is made; and
(ii) agrees as a primary obligation to indemnify the Bank
from time to time on demand from and against any loss
incurred by the Bank as a result of any of the
obligations of the Borrowers under or pursuant to
this Agreement being or becoming void, voidable,
unenforceable or ineffective as against the Borrowers
or any of them for any reason whatsoever, whether or
not known to the Bank or any other person, the amount
of such loss being the amount which the Bank
suffering it would otherwise have been entitled to
recover from the Borrowers or any of them.
23. PRESERVATION OF RIGHTS
23.1 The obligations of the Guarantor herein contained shall be in addition
to and independent of every other security which the Bank may at any time hold
in respect of any of the Borrowers' obligations hereunder.
23.2 The obligations of the Guarantor herein contained shall constitute and
be continuing obligations notwithstanding any settlement of account or other
matter or thing whatsoever, and in particular but without limitation, shall not
be considered satisfied by any intermediate payment or satisfaction of all or
any of the obligations of the Borrowers under this Agreement and shall continue
in full force and effect until final payment in full of all amounts owing by
the Borrowers hereunder and total satisfaction of all the Borrowers' actual and
contingent obligations hereunder.
23.3 Neither the obligations of the Guarantor herein contained nor the
rights, powers and remedies conferred in respect of the Guarantor upon the Bank
by this Agreement or by law shall be discharged, impaired or otherwise affected
by:
(i) the winding-up, dissolution, administration or re-
organisation of the Borrowers or any of them or any
other person or any change in its status, function,
control or ownership;
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(ii) any of the obligations of the Borrowers or any of
them or any other person hereunder or under any other
security taken in respect of any of its obligations
hereunder being or becoming illegal, invalid,
unenforceable or ineffective in any respect;
(iii) time or other indulgence being granted or agreed to
be granted to the Borrowers or any of them in respect
of its obligations hereunder or under any such other
security;
(iv) any amendment to, or any variation, waiver or release
of, any obligation of the Borrowers or any of them
hereunder or under any such other security;
(v) any failure to take, or fully to take, any security
contemplated hereby or otherwise agreed to be taken
in respect of any of the Borrowers' obligations
hereunder;
(vi) any failure to realise or fully to realise the value
of, or any release, discharge, exchange or
substitution of, any security taken in respect of any
of the Borrowers' obligations hereunder; or
(vii) any other act, event or omission which, but for this
Clause 23.3, might operate to discharge, impair or
otherwise affect any of the obligations of the
Guarantor herein contained or any of the rights,
powers or remedies conferred upon the Bank by this
Agreement or by law.
23.4 Any settlement or discharge between the Guarantor and the Bank shall
be conditional upon no security or payment to the Bank by the Borrowers or any
of them or the Guarantor or any other person on behalf of the Borrower or, as
the case may be, the Guarantor being avoided or reduced by virtue of any
provisions or enactments relating to bankruptcy, insolvency, liquidation or
similar laws of general application for the time being in force and, if any
such security or payment is so avoided or reduced, the Bank shall be entitled
to recover the value or amount of such security or payment from the Guarantor
subsequently as if such settlement or discharge had not occurred.
23.5 The Bank shall not be obliged before exercising any of the rights,
powers or remedies conferred upon them in respect of the Guarantor by this
Agreement or by law:
(i) to make any demand of the Borrowers or any of them;
(ii) to take any action or obtain judgment in any court
against the Borrowers or any of them;
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<PAGE> 41
(iii) to make or file any claim or proof in a winding-up or
dissolution of the Borrowers or any of them; or
(iv) to enforce or seek to enforce any other security
taken in respect of any of the obligations of the
Borrowers or any of them hereunder.
23.6 The Guarantor agrees that, so long as any amounts are or may be owed
by the Borrowers or any of them hereunder or any of the Borrowers is
under any actual or contingent obligations hereunder, the Guarantor
shall not exercise any rights which the Guarantor may at any time have
by reason of performance by it of its obligations hereunder:
(i) to be indemnified by the Borrowers or any of them;
and/or
(ii) to claim any contribution from any other guarantor of
the Borrowers' obligations hereunder; and/or
(iii) to take the benefit (in whole or in part and whether
by way of subrogation or otherwise) of any rights of
the Bank hereunder or of any other security taken by
the Bank pursuant to, or in connection with, this
Agreement.
24. DEFAULT INTEREST AND INDEMNITY
24.1 If any sum due and payable by either of the Obligors hereunder is not
paid on the due date therefor in accordance with the provisions of Clause 26 or
if any sum due and payable by either of the Obligors under any judgment of any
court in connection herewith is not paid on the date of such judgment, the
period beginning on such due date or, as the case may be, the date of such
judgment and ending on the date upon which the obligation of such Obligor to
pay such sum (the balance thereof for the time being unpaid being herein
referred to as an "unpaid sum") is discharged shall be divided into successive
periods, each of which (other than the first) shall start on the last day of
the preceding such period and the duration of each of which shall (except as
otherwise provided in this Clause 24) be selected by the Bank.
24.2 During each such period relating thereto as is mentioned in Clause
24.1 an unpaid sum shall bear interest at the rate per annum which is the sum
from time to time of one per cent., the Margin, the Associated Costs Rate in
respect thereof at such time and LIBOR on the Quotation Date therefor Provided
that:
(i) if, for any such period, LIBOR cannot be determined,
the rate of interest applicable to such unpaid sum
shall be the sum from time to time of one per cent.,
the Margin, the Associated Costs Rate in respect
thereof at such time and the rate per annum equal to
the cost to the Bank of funding such unpaid sum for
such period from whatever source it may select; and
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<PAGE> 42
(ii) if such unpaid sum is all or part of an Advance which
became due and payable on a day other than the last
day of an Interest Period relating thereto, the first
such period applicable thereto shall be of a duration
equal to the unexpired portion of that Interest
Period and the rate of interest applicable thereto
from time to time during such period shall be that
which exceeds by one per cent. the rate which would
have been applicable to it had it not so fallen due.
24.3 Any interest which shall have accrued under Clause 24.2 in respect of
an unpaid sum shall be due and payable and shall be paid by the Obligor owing
such unpaid sum at the end of the period by reference to which it is calculated
or on such other date or dates as the Bank may specify by written notice to
such Obligor.
24.4 If the Bank receives or recovers all or any part of an Advance
otherwise than on the last day of an Interest Period relating to that Advance,
the Principal Borrowers shall pay to the Bank on demand an amount equal to the
amount (if any) by which (i) the additional interest which would have been
payable on the amount so received or recovered had it been received or
recovered on the last day of that Interest Period exceeds (ii) the amount of
interest which in the opinion of the Bank would have been payable to the Bank
on the last day of that Interest Period in respect of a sterling deposit equal
to the amount so received or recovered placed by it with a prime bank in London
for a period starting on the third business day following the date of such
receipt or recovery and ending on the last day of that Interest Period.
24.5 The Borrowers undertake to indemnify the Bank against:
(i) any cost, claim, loss, expense (including legal fees)
or liability together with any VAT thereon, which it
may sustain or incur as a consequence of the
occurrence of any Event of Default or any default by
the Borrowers or any of them in the performance of
any of the obligations expressed to be assumed by
them in this Agreement; and
(ii) any loss it may suffer as a result of its funding an
Advance requested by the Borrowers hereunder but not
made by reason of the operation of any one or more of
the provisions hereof.
24.6 Any unpaid sum shall (for the purposes of this Clause 24, Clause 14.1
and the Third Schedule) be treated as an advance and accordingly in
this Clause 24, Clause 14.1 and the Third Schedule the term "Advance"
includes any unpaid sum and the term "Interest Period", in relation to
an unpaid sum, includes each such period relating thereto as is
mentioned in Clause 24.1.
25. CURRENCY OF ACCOUNT AND PAYMENT
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25.1 Sterling is the currency of account and payment for each and every sum
at any time due from either of the Obligors hereunder Provided that:
(i) each payment in respect of costs and expenses shall
be made in the currency in which the same were
incurred; and
(ii) each payment pursuant to Clause 12.2 or Clause 14.1
shall be made in the currency specified by the Bank.
25.2 If any sum due from either of the Obligors under this Agreement or any
order or judgment given or made in relation hereto has to be converted from the
currency (the "first currency") in which the same is payable hereunder or under
such order or judgment into another currency (the "second currency") for the
purpose of (i) making or filing a claim or proof against such Obligor, (ii)
obtaining an order or judgment in any court or other tribunal or (iii)
enforcing any order or judgment given or made in relation hereto, the Principal
Borrower shall indemnify and hold harmless the Bank from and against any loss
suffered as a result of any discrepancy between (a) the rate of exchange used
for such purpose to convert the sum in question from the first currency into
the second currency and (b) the rate or rates of exchange at which the Bank may
in the ordinary course of business purchase the first currency with the second
currency upon receipt of a sum paid to it in satisfaction, in whole or in part,
of any such order, judgment, claim or proof.
26. PAYMENTS
26.1 On each date on which this Agreement requires an amount denominated in
sterling to be paid by either of the Obligors, such Obligor shall make the same
available to the Bank for account of the Facility Office by payment in sterling
and in immediately available, freely transferable, cleared funds to The Chase
Manhattan Bank, N.A., London Branch, Sort Code 60-92-42, Attn: Global
Petroleum (or such other account or bank as the Bank may have specified for
this purpose).
26.2 On each date on which this Agreement requires an amount denominated in
sterling to be paid by the Bank to the Borrowers or any of them hereunder, the
Bank shall make the same available to the Borrower by payment in sterling and
in immediately available, freely transferable, cleared funds to the Borrower's
account number 11118965 with the Bank (or such other account as the Principal
Borrowers or either of them may have specified for this purpose.
26.3 If, at any time, it shall become impracticable (by reason of any
action of any governmental authority or any change in law, exchange control
regulations or any similar event) for any of the Obligors to make any payments
hereunder in the manner specified in Clause 26.1, then such Obligor may agree
with the Bank alternative arrangements for such payments to be made Provided
that, in the absence of any such agreement, such Obligor shall be obliged to
make all payments due to the Bank in the manner specified herein.
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26.4 All payments required to be made by any of the Obligors hereunder
shall be calculated without reference to any set-off or counterclaim and shall
be made free and clear of and without any deduction for or on account of any
set- off or counterclaim.
26.5 All moneys received, recovered or realised by the Bank by virtue of
Clause 21, 22 may, in the Bank's discretion, be credited to a suspense or
impersonal account and may be held in such account for so long as the Bank
thinks fit pending the application from time to time (as the Bank may think
fit) of such moneys in or towards the payment and discharge of any amounts
owing by either of the Obligors to the Bank hereunder.
27. SET-OFF
Each of the Obligors authorises the Bank to apply any credit balance to which
such Obligor is entitled on any account of such Obligor with the Bank in
satisfaction of any sum due and payable from such Obligor to the Bank hereunder
but unpaid; for this purpose, the Bank is authorised to purchase with the
moneys standing to the credit of any such account such other currencies as may
be necessary to effect such application. The Bank shall not be obliged to
exercise any right given to it by this Clause 27.
28. FEES
28.1 The Borrower shall pay to the Bank a commitment commission on the
amount of the Available Facility from day to day during the period beginning on
the date hereof and ending on the Repayment Date, such commitment commission to
be calculated at the rate of three quarters of one per cent. (0.75%) per annum
and payable in arrear on the last day of each successive period of three months
which ends during such period and on the Original Repayment Date and, if, the
Facility has been extended pursuant to Clause 2, each relevant Extended
Repayment Date.
28.2 The Borrower shall pay to the Bank an arrangement fee of L.32,000,
such fee to be paid within ten days of the date hereof (or, if earlier, on the
date on which the first Advance is made hereunder).
28.3 In the event that the Bank agrees to a request for the extension of
the Facilities made pursuant to the provisions of Clause 2.2 the Borrowers
shall pay to the Bank no later than 5 days after the date upon which the Bank
agrees to extend its commitment pursuant to such request an extension fee equal
to point three per cent (0.3%) of the aggregate amount of the Facility at that
time;
29. COSTS AND EXPENSES
29.1 The Borrowers shall, from time to time on demand of the Bank,
reimburse the Bank for all costs and expenses (including legal fees,
travelling, accommodation and other reasonable out of pocket expenses) together
with any VAT thereon incurred by it in connection with
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the negotiation, preparation and execution of this Agreement and the completion
of the transactions herein contemplated.
29.2 The Borrowers shall, from time to time on demand of the Bank,
reimburse the Bank for all costs and expenses (including legal fees) together
with any VAT thereon incurred in or in connection with the preservation and/or
enforcement of any of its rights under this Agreement.
29.3 The Borrowers shall pay all stamp, registration and other taxes to
which this Agreement or any judgment given in connection herewith is or at any
time may be subject and shall, from time to time on demand, indemnify the Bank
against any liabilities, costs, claims and expenses resulting from any failure
to pay or any delay in paying any such tax.
30. BENEFIT OF AGREEMENT
This Agreement shall be binding upon and enure to the benefit of each party
hereto and its or any subsequent successors and assigns.
31. ASSIGNMENTS
31.1 None of the Obligors shall be entitled to assign or transfer all or
any of its rights, benefits and obligations hereunder.
31.2 The Bank may at any time assign all or any of its rights and benefits
hereunder.
31.3 In the event that the Bank transfers its Facility Office and, at the
time of such transfer, there arises an obligation on the part of the Obligors
hereunder to pay to the Bank or any other person an amount in excess of the
amount it would have been obliged to pay but for such transfer, then, without
prejudice to any obligation of the Obligors which arise after the time of such
transfer, the Obligors shall not be obliged to pay the amount of such excess.
32. DISCLOSURE OF INFORMATION
32.1 Any information disclosed by the Borrowers to the Bank in connection
herewith or in connection with the negotiation of the Facility shall be kept
confidential by the Bank, Provided that the Bank shall be entitled to disclose
such information:
(a) in connection with any proceedings arising out of or in
connection with any Finance Document;
(b) if required to do so by an order of a court of competent
jurisdiction whether in pursuance of any procedure for
discovering documents or otherwise;
(c) pursuant to any law or regulation in accordance with which
they party is required or accustomed to act;
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(d) to any governmental, banking or taxation authority;
(e) to its auditors or legal or other professional advisers; or
(f) if the information is in the public domain.
32.2 The Bank may, at any time with the prior consent of the Guarantor,
such consent not to be unreasonably withheld, disclose to any actual or
potential assignee which has executed a confidentiality undertaking in favour
of the Bank and the Guarantor in a form acceptable to the Bank and the
Guarantor any information it has obtained about the Obligors Provided Always
that no person may disclose any information that they may have obtained about
the Obligors or any of them, to any person which it is aware is a supplier,
competitor or customer of any member of the Group.
33. CALCULATIONS AND EVIDENCE OF DEBT
33.1 Interest and commitment commission shall accrue from day to day and
shall be calculated on the basis of a year of 365 days (or, if market practice
differs, in accordance with market practice) and the actual number of days
elapsed.
33.2 The Bank shall maintain in accordance with its usual practice accounts
evidencing the amounts from time to time lent by and owing to it hereunder; in
any legal action or proceeding arising out of or in connection with this
Agreement, the entries made in such accounts shall be conclusive evidence of
the existence and amounts of the obligations of the Obligors therein recorded.
33.3 A certificate of the Bank as to (i) the amount by which a sum payable
to it hereunder is to be increased under Clause 12.1 or (ii) the amount for the
time being required to indemnify it against any such cost, payment or liability
as is mentioned in Clause 12.2 or 14.1 shall, in the absence of manifest error,
be conclusive for the purposes of this Agreement.
33.4 A certificate of the Bank as to the amount at any time due from the
Borrower hereunder or the amount which, but for any of the obligations of the
Borrowers or any of them hereunder being or becoming void, voidable,
unenforceable or ineffective, at any time would have been due from the Borrower
hereunder shall, in the absence of manifest error, be conclusive for the
purposes of Clauses 20, 21 and 22.
34. REMEDIES AND WAIVERS
No failure by the Bank to exercise, nor any delay by the Bank in exercising,
any right or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy prevent any further or other
exercise thereof or the exercise of any other right or remedy. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
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35. PARTIAL INVALIDITY
If, at any time, any provision hereof is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions hereof nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
36. NOTICES
36.1 Each communication to be made hereunder shall be made in writing but,
unless otherwise stated, may be made by telex, facsimile or letter.
36.2 Any communication or document to be made or delivered by one person to
another pursuant to this Agreement shall (unless that other person has by
fifteen days' written notice to the one specified another address) be made or
delivered to that other person at the address identified with its signature
below and shall be deemed to have been made or delivered when despatched (in
the case of any communication made by telex) or (in the case of any
communication made by fax), when receipt has been acknowledged (in the case of
any communication made by letter) when left at that address or (as the case may
be) ten days after being deposited in the post postage prepaid in an envelope
addressed to it at that address Provided that any communication or document to
be made or delivered by any of the Obligors to the Bank shall be effective only
when received by the Bank and then only if the same is expressly marked for the
attention of the department or officer identified with the Bank's signature
below (or such other department or officer as the Bank shall from time to time
specify for this purpose).
36.3 Each communication and document made or delivered by one party to
another pursuant to this Agreement shall be in the English language or
accompanied by a translation thereof into English certified (by an officer of
the person making or delivering the same) as being a true and accurate
translation thereof.
37. LAW
This Agreement shall be governed by, and shall be construed in accordance with,
English law.
38. JURISDICTION
38.1 Each of the parties hereto irrevocably agrees for the benefit of the
Bank that the courts of England shall have jurisdiction to hear and determine
any suit, action or proceeding, and to settle any disputes, which may arise out
of or in connection with this Agreement and, for such purposes, irrevocably
submits to the jurisdiction of such courts.
38.2 Each of the Obligors irrevocably waives any objection which it might
now or hereafter have to the courts referred to in Clause 38.1 being nominated
as the forum to hear and
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determine any suit, action or proceeding, and to settle any disputes, which may
arise out of or in connection with this Agreement and agrees not to claim that
any such court is not a convenient or appropriate forum.
38.3 Each of the Obligors agrees that the process by which any suit, action
or proceeding is begun may be served on it by being delivered in connection
with any suit, action or proceeding in England, to Gulf Offshore N.S. Limited
at 10 Charlotte Road, London SW13 9QJ or other its principal place of business
for the time being. If the appointment of the person mentioned in this Clause
38.3 ceases to be effective in respect of any of the Obligors, such Obligor or
Obligors shall immediately appoint a further person in England to accept
service of process on its behalf in England and, failing such appointment
within 15 days, the Bank shall be entitled to appoint such a person by notice
to such Obligor or Obligors. Nothing contained herein shall affect the right
to serve process in any other manner permitted by law.
38.4 The submission to the jurisdiction of the courts referred to in Clause
38.1 shall not (and shall not be construed so as to) limit the right of the
Bank to take proceedings against either of the Obligors in any other court of
competent jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of the proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
38.5 Each of the Obligors hereby consents generally in respect of any legal
action or proceeding arising out of or in connection with this Agreement to the
giving of any relief or the issue of any process in connection with such action
or proceeding including, without limitation, the making, enforcement or
execution against any property whatsoever (irrespective of its use or intended
use) of any order or judgment which may be made or given in such action or
proceeding.
38.6 To the extent that any of the Obligors may in any jurisdiction claim
for itself or its assets immunity from suit, execution, attachment (whether in
aid of execution, before judgment or otherwise) or other legal process and to
the extent that in any such jurisdiction there may be attributed to itself or
its assets such immunity (whether or not claimed), such Obligor hereby
irrevocably agrees not to claim and hereby irrevocably waives such immunity to
the full extent permitted by the laws of such jurisdiction.
AS WITNESS the hands of the duly authorised representatives of the parties
hereto the day and year first before written.
-41-
<PAGE> 49
THE FIRST SCHEDULE
Condition Precedent Documents
1. In relation to each of the Obligors and Chalvoyage (M) Sdn Bhd
("Chalvoyage"):
(i) a copy, certified a true copy by a duly authorised office of
such Obligor, of the constitutive documents of such Obligor
and Chalvoyage;
(ii) a copy, certified a true copy by a duly authorised officer of
such Obligor and Chalvoyage, of a Board Resolution of such
Obligor and Chalvoyage approving the execution, delivery and
performance of this Agreement and the terms and conditions
hereof and authorising a named person or persons to sign this
Agreement and any documents to be delivered by such Obligor
and Chalvoyage pursuant hereto; and
(iii) a certificate of a duly authorised officer of such Obligor
setting out the names and signatures of the persons authorised
to sign, on behalf of such Obligor, this Agreement and any
documents to be delivered by such Obligor pursuant hereto.
2. A copy, certified a true copy by or on behalf of the Principal
Borrowers, of each such law, decree, consent, licence, approval,
registration or declaration as is, in the opinion of counsel to the
Bank, necessary to render this Agreement and the Security Documents
legal, valid, binding and enforceable, to make this Agreement and the
Security Documents admissible in evidence in each Obligor's
jurisdiction of incorporation and to enable each of the Obligors to
perform its obligations hereunder.
3. A deed of trust executed between the Security Trustee, the Bank, the
Hedge Counterparty, the Financial Institutions named in the Syndicated
Facility as banks, the Borrowers and others, pursuant to which the
Security Trustee declares itself to be trustee for the Bank, the Hedge
Counterparty and such Financial Institutions in respect of any
security granted pursuant to any Security Document.
4. A first priority statutory ship mortgage and deeds of covenant
collateral thereto executed in respect of the following vessels:
(a) p.s.v. "Balblair", to be renamed "Highland Champion";
(b) p.s.v. "Northern Fortress", to be renamed "Highland Fortress";
(c) m.v. "Highland Sprite";
(d) m.v. "Sem Courageous"; and
-42-
<PAGE> 50
(e) m.v. "Sem Valiant".
5. First preferred Panamanian ship mortgages and assignments of earnings
and insurance collateral thereto executed in respect of the following
vessels:
(f) the m.v. "Sea Whip"; and
(g) the m.v. "Sea Witch".
6. Share Pledges over:
(h) all of the shares in GONS and GOFE legally owned by
the Principal Borrowers; and
(i) all of the shares in Chalvoyage legally owned by
GOFE.
7. An assignment of all the rights of GOFE in respect of the $5,600,000
loan made or to be made available by GOFE to Chalvoyage pursuant to an
agreement entered or to be entered into between GOFE and Chalvoyage.
8. Evidence that the Borrowers have complied with all of their
obligations arising under any Security Document relating to insurance
of the Original Vessels, together with a report, issued by an
independent person, (being an insurance broker and/or insurance
consultant), addressed to the Agent confirming that insurances
effected in respect of the Original Vessels are adequate.
9. All such notices of assignment as may be called for by any of the
Security Documents.
10. A valuation of the Mortgaged Vessels addressed to the Bank by an
independent valuer acceptable to the Bank, confirming that as at the
date hereof the value of the Mortgaged Vessels is not less than
$35,000,000.
11. Copies, certified true copies by a duly authorised officer of the
relevant Obligor of each charter relating to the Mortgaged Vessels,
together with confirmation that each such charter remains in full
force and effect.
12. Evidence as to the operational condition of each of the Original
Vessels, such evidence to be in such form and such terms as the Bank
may require.
13. The Master Agreements.
-43-
<PAGE> 51
14. Evidence of the novation or assignment or consent by the charterers of
the BP Fleet Vessels to the novation or assignment of the time
charterparties relating to the BP Fleet Vessels.
15 An opinion of the Guarantors' U.S. counsel.
16. An opinion of each of GOMI and GOFE's Panamanian counsel.
17. An opinion of each of GNS and GDNS's English counsel.
18. An opinion from Chooi & Co., Malaysian counsel for the Bank.
19. An opinion from Arias, Fabrega and Fabrega, Panamanian counsel for the
Bank.
20. An opinion of Clifford Chance, solicitors for the Bank.
21. Evidence that GONS has agrees to act as agent for the Obligors for the
service of process in England.
-44-
<PAGE> 52
THE SECOND SCHEDULE
Notice of Drawdown
From: [ ]
To: The Chase Manhattan Bank, N.A.
Dated:
Dear Sirs,
1. We refer to the agreement (as from time to time amended, varied,
novated or supplemented, the "Facility Agreement") dated [ ], 1993 and
made between ourselves and others as borrowers, GulfMark International Inc. as
guarantor and yourselves as lender. Terms defined in the Facility Agreement
shall have the same meaning in this notice.
2. We hereby give you notice that, pursuant to the Facility Agreement and
on [date of proposed Advance], we wish to borrow an Advance in the amount of [
] Sterling upon the terms and subject to the conditions contained therein.
[3. We would like this Advance to have a first Interest Period of [ ]
months' duration.]*
4. We confirm that, at the date hereof, the representations set out in
Clause 16 of the Facility Agreement are true and no Event of Default or
Potential Event of Default has occurred.
5. The proceeds of this drawdown should be credited to [insert account
details].
Yours faithfully
..................................
for and on behalf of
[ ]
- --------------------------------------------------------------------------------
* Insert only if there are no outstanding Advances.
-45-
<PAGE> 53
THE THIRD SCHEDULE
Associated Costs Rate
1. For the purposes of this Agreement, the cost of compliance with
existing requirements of the Bank of England in respect of Advances denominated
in sterling will be calculated by the Bank in relation to each Advance by
reference to the circumstances existing on the first day of each Interest
Period in respect of such Advance and, if any such Interest Period exceeds
three months, at three calendar monthly intervals from the first day of such
Interest Period during its duration in accordance with the following formula:
<TABLE>
<S> <C>
AB + C(B - E) + D(B - F) per cent., per annum
------------------------
100-(A + D)
</TABLE>
Where:
A is the percentage of eligible liabilities which the Bank is
from time to time required to maintain as an interest free
cash deposit with the Bank of England to comply with cash
ratio requirements.
B is the percentage rate per annum at which sterling deposits
are offered by the Bank, in accordance with its normal
practice, for a period equal to (i) the relevant Interest
Period (or, as the case by be, remainder of such Interest
Period) in respect of the relevant Advance or (ii) three
months, whichever is the shorter, to a leading bank in the
London Interbank market at or about 11.00 a.m. in a sum
approximately equal to the amount of such Advance.
C is the percentage of eligible liabilities which the Bank is
from time to time required by the Bank of England to maintain
as secured money with members of the London Discount Market
Association ("LDMA") and/or as secured call money with money
brokers and gilt edged market makers.
D is the percentage of eligible liabilities which the Bank is
required from time to time to maintain as interest bearing
special deposits with the Bank of England.
E is the percentage rate per annum at which members of the LDMA
are offered sterling deposits in a sum approximately equal to
the amount of the relevant Advance as a callable fixture from
the Bank for such period as determined in accordance with B
above at or about 11.00 a.m.
F is the percentage rate per annum payable by the Bank of
England to the Bank on interest bearing special deposits.
-46-
<PAGE> 54
2. For the purposes of this Schedule "eligible liabilities" and "special
deposits" shall bear the meanings ascribed to them from time to time by the
Bank of England.
3. The percentages used in A, C and D above shall be those required to be
maintained on the first day of the relevant period as determined in accordance
with B above.
4. In application of the above formula, A, B, C, D, E and F will be
included in the formula as figures and not as percentages e.g. if A is 0.5 per
cent. and B is 12 per cent., AB will be calculated as 0.5 x 12 and not as 0.5
per cent. x 12 per cent.
5. Calculations will be made on the basis of a 365 day year (or, if
market practice differs, in accordance with market practice).
6. A negative result obtained by subtracting E from B or F from B shall
be taken as zero.
7. The resulting figure shall be rounded upwards, if not already such a
multiple, to the nearest whole multiple of one-thirty-second of one per cent.
per annum.
8. Additional amounts calculated in accordance with this Schedule are
payable on the last day of the Interest Period to which they relate.
9. The determination of the Associated Costs Rate in relation to any
period shall, in the absence of manifest error, be conclusive and binding on
all of the parties hereto.
10. The Bank may from time to time, after consultation with the Borrower,
determine and notify to the Guarantor any amendments or variations which are
required to be made to the formula set out above in order to comply with any
requirements from time to time imposed by the Bank of England in relation to
Advances denominated in sterling (including without limitation, any
requirements relating to sterling primary liquidity) and, any such
determination shall, in the absence of manifest error, be conclusive and
binding on all the parties hereto.
-47-
<PAGE> 55
The Borrowers
GULFMARK NORTH SEA LIMITED
as principal borrower
by: /s/ David Dare
Address: 10 Charlotte Road
London SW13 9QJ
Attention: David Dare
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrower
by: /s/ David Dare
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention: Bruce Streeter
GULF OFFSHORE N.S. LIMITED
as permitted borrower
by: /s/ David Dare
Address: 10 Charlotte Road
London SW13 9QT
Attention: David Dare
-48-
<PAGE> 56
GULF OFFSHORE FAR EAST INC.
as permitted borrower
by: /s/ David Dare
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
USA
Attention: Bruce Streeter
THE GUARANTOR
GULFMARK INTERNATIONAL INC.
by: /s/ Frank R Pierce
Address: 5 Post Oak Boulevard
Suite 1170
Houston
Texas 77027-9408
USA
Attention: Frank Pierce
THE BANK
THE CHASE MANHATTAN BANK, N.A.
By: /s/ E Nelson
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Global Petroleum
Facsimile: 962 5030
Telex: 8954681 CMB G
-49-
<PAGE> 1
EXHIBIT 10.19
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrowers
GULF OFFSHORE N.S. LIMITED
GULF OFFSHORE FAR EAST, INC.
as permitted borrowers
GULFMARK INTERNATIONAL INC.
as guarantor
and
THE CHASE MANHATTAN BANK, N.A.
as lender
-----------------------------------------
AGREEMENT
AMENDING LOAN FACILITY DATED
8 JULY 1993 AS AMENDED BY
AN AMENDMENT AND RESTATEMENT
AGREEMENT DATED 20 MAY 1994
-----------------------------------------
<PAGE> 2
THIS AGREEMENT is made 20th October 1995
BETWEEN
(1) GULFMARK NORTH SEA LIMITED ("GNS") and GULF OFFSHORE MARINE
INTERNATIONAL INC. ("GOMI") (together the "PRINCIPAL BORROWERS");
(2) GULF OFFSHORE N.S. LIMITED ("GONS") and GULF OFFSHORE FAR EAST INC.
("GOFE") (together the "PERMITTED BORROWERS");
(3) GULFMARK INTERNATIONAL INC. (the "GUARANTOR"); and
(4) THE CHASE MANHATTAN BANK, N.A. (the "BANK").
WHEREAS
(A) Pursuant to a facility agreement dated 8 July 1993 as amended and
restated by an agreement dated 20 May 1994 (the "FACILITY AGREEMENT")
entered into between the Bank, the Guarantor, the Principal Borrowers
and the Permitted Borrowers, the Bank granted to the Borrowers, upon
the terms and subject to the conditions therein set forth, a loan
facility in an aggregate amount of L.3,300,000.
(B) The parties have agreed to amend the Facility Agreement.
NOW IT IS HEREBY AGREED as follows:
1. INTERPRETATION
In this Amendment Agreement (and in the Recitals):
(a) "EFFECTIVE DATE" shall have the meaning given to it at Clause
5;
(b) terms defined in the Facility Agreement (on the assumption
that the Effective Date has occurred) bear the same meaning
herein.
2. AMENDMENT
The Facility Agreement shall as of the Effective Date be amended as
follows
(i) In Clause 1.1
(a) the definition of "ANNIVERSARY" will be amended to
read "ANNIVERSARY" means each of the days which are 364,
728, 1092, 1456 and 1820 days after the date hereof, or
if such date is not a business day, the next succeeding
business day"
- 1 -
<PAGE> 3
(b) the definition of "MARGIN" shall be amended to
read ""MARGIN" means 2 per cent (2%) per annum"
(ii) In the last line of Clause 2.2 the word "FOURTH" will
be deleted and replaced with the word "FIFTH".
(iii) In clause 16.2(xi) the words "Norsk Skibs" will be
eleted and replaced with the words "Christiania
Bank".
3. REPRESENTATIONS
The Borrowers represent and warrant in the terms of Clause 16 of the
Facility Agreement as if the Effective Date had occurred and as if
such representations were made on the date hereof and as if the
expression "this Agreement" referred to this Amendment Agreement (but
no representation or warranty shall be given in respect of any charter
with British Gas which has as at the date hereof either expired or
been terminated).
4. COUNTERPARTS
This Amendment Agreement may be executed in any number of counterparts
which, when taken together, shall constitute but one and the same
instrument and shall be governed by and construed in accordance with
English law.
5. EFFECTIVE DATE
The Effective Date for the purposes of this Amendment Agreement, shall
be the date on which the Bank received the last of the following
documents: (i) each of the documents set out in the Schedule (ii) a
copy, certified by a duly authorised officer of each Obligor, of a
Board Resolution of such Obligor approving and ratifying the
execution, delivery and performance of this Amendment Agreement (iii)
a certificate from a duly authorised officer of each Obligor
confirming that no changes have been made to the Memorandum or
Articles of Association (or other constitutive documents) of such
Obligor since the last certified copies thereof were delivered to the
Bank and (iv) a certificate from a duly authorised officer of each
Obligor setting out the names and signatures of the person authorised
to sign this Amendment Agreement.
6. MISCELLANEOUS
6.1 Clauses 29, 30, 31.1, 34, 35, 37 and 38 of the Facility Agreement
shall apply MUTATIS MUTANDIS to this Amendment Agreement (and as if
references therein to the Facility Agreement were references to this
Amendment Agreement).
6.2 The Facility Agreement shall continue in full force and effect as so
amended and restated and all references therein, herein and in the
other Finance Documents to the "FACILITY AGREEMENT" or to the
"AGREEMENT" or similar terms shall be deemed to be references to the
Facility Agreement as so amended and restated.
- 2 -
<PAGE> 4
AS WITNESS the hands of the representatives of the parties hereto the day and
year first before written.
- 3 -
<PAGE> 5
SCHEDULE
1. A certified true copy of the yard contract 67 (the "BUILDING
CONTRACT") between GONS and Brattvaag Skipsverft A.S. relating to the
building of a platform supply vessel, type UT 755 together with a
written confirmation from the Principal Borrowers that no amendments
have been made to the Building Contract.
2. An assignment to the Security Trustee of the advance payment
guarantees issued by Christiania Bank og Kreditkasse in favour of GONS
and relating to advance payments made by GONS to the Contractor under
the Building Contract.
3. A duly executed addendum to the first preferred Panamanian ship
mortgages over the m.v. Seawhip and the m.v. Seawitch in form and
substance acceptable to the Agent together with confirmation from
Patton, Moreno & Asvat that such addendum has been duly registered
with the Registry of Panamanian Ships in Panama City.
4. A legal opinion from Chooi & Co, the Malaysian counsel for the Agent,
in a form acceptable to the Security Trustee.
5. A legal opinion from Patton, Moreno & Asvat, the Panamanian counsel
for the Agent, in a form acceptable to the Security Trustee.
6. A legal opinion from Clifford Chance, solicitors for the Agent.
- 4 -
<PAGE> 6
THE BORROWERS
GULFMARK NORTH SEA LIMITED
as principal borrower
by: /s/ DAVID DARE
DIRECTOR
Address: 10 Charlotte Road
London SW13 9QJ
Attention: David Dare
GULF OFFSHORE MARINE INTERNATIONAL INC.
as principal borrower
by: /s/ DAVID DARE
ATTORNEY IN FACT
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
U.S.A.
Attention: Bruce Streeter
GULF OFFSHORE N.S. LIMITED
as permitted borrower
by: /s/ DAVID DARE
DIRECTOR
Address: 10 Charlotte Road
London SW13 9QT
Attention: David Dare
- 5 -
<PAGE> 7
GULF OFFSHORE FAR EAST INC.
as permitted borrower
by: /s/ DAVID DARE
ATTORNEY IN FACT
Address: 201 Energy Center Parkway
Suite 220
Lafayette
Louisiana 70508
U.S.A
Attention: Bruce Streeter
THE GUARANTOR
GULFMARK INTERNATIONAL INC.
by: /s/ DAVID DARE
ATTORNEY IN FACT
Address: 5 Post Oak Park
Suite 1170
Houston
Texas 77027
U.S.A.
Attention: Frank Pierce
THE BANK
THE CHASE MANHATTAN BANK, N.A.
By: /s/ JAMES HAYNES
Address: Woolgate House
Coleman Street
London EC2P 2HD
Attention: Oils and Gas Group
Facsimile: 962 5030
Telex: 8954681 CMB G
- 6 -
<PAGE> 1
EXHIBIT 10.20
DATED 30TH APRIL 1997
----------------------------------------------------------------------
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL INC.
(AS PRINCIPAL BORROWERS)
GULF OFFSHORE N.S. LIMITED
GULF OFFSHORE FAR EAST, INC.
(AS PERMITTED BORROWERS)
GULFMARK INTERNATIONAL, INC.
(AS GUARANTOR)
THE CHASE MANHATTAN BANK
(AS LENDER)
- AND -
GULFMARK OFFSHORE, INC.
-------------------------------------------------------------------
DEED OF RELEASE AND SUBSTITUTION RELATING TO A
L.3,300,000 FACILITY AGREEMENT DATED 8TH JULY 1993,
AS AMENDED AND RESTATED BY AN AGREEMENT DATED 20TH MAY 1994 AND,
AS AMENDED AND RESTATED BY AN AGREEMENT DATED 20TH OCTOBER 1995
-------------------------------------------------------------------
PEACHEY & CO
95 ALDWYCH
LONDON WC2B 4JF
TEL: 0171 316 5200
FAX: 0171 316 5222
REF: DAW/TMF
<PAGE> 2
DEED OF RELEASE AND SUBSTITUTION dated the 30th day of April 1997
MADE BETWEEN:
(1) GULFMARK NORTH SEA LIMITED a company incorporated under the laws of
England and having its principal place of business at 10 Charlotte
Road, London SW13 9QT England;
(2) GULF OFFSHORE MARINE INTERNATIONAL, INC. a company incorporated
under the laws of Panama and having its principal place of business at
Comosa Building, Samuel Lewis Avenue, Panama, Republic of Panama;
(3) GULF OFFSHORE N.S. LIMITED a company incorporated under the laws of
England and having its principal place of business in the UK at 10
Charlotte Road, London SW13 9QT;
(4) GULF OFFSHORE FAR EAST, INC a company incorporated under the laws of
Panama and having its principal place of business at Comosa Building,
Samuel Lewis Avenue, Panama, Republic of Panama;
(Parties 1, 2, 3 and 4 being together referred to as the "Borrowers")
(5) GULFMARK INTERNATIONAL, INC. a company incorporated under the laws of
the State of Delaware and having its principal place of business at 5
Post Oak Park, Suite 1170, Houston, Texas 77027 (the "Guarantor");
(6) THE CHASE MANHATTAN BANK having its principal place of business in the
UK at Woolgate House, Coleman Street, London, EC2P 2HD; (the "Bank");
(7) GULFMARK OFFSHORE, INC. a company incorporated under the laws of the
State of Delaware and having its principal place of business at 5 Post
Oak Park, Suite 1170, Houston, Texas 77027 (the "New Guarantor").
- 1 -
<PAGE> 3
WHEREAS:
(A) Pursuant to an Agreement and Plan of Merger dated 5th December 1996
between the Guarantor, the New Guarantor and others, the Guarantor and
New Guarantor have each agreed, inter alia, to enter into a
reorganisation and merger (the "Merger") to be completed on or before
31st March 1997 since extended to 30th April 1997 (the "Closing
Date");
(B) The Merger provides that the Guarantor's obligations contained in a
L.3,300,000 Facility Agreement dated 8th July 1993 as amended and
restated by an agreement dated 20th May 1994 and as amended and
restated by an agreement dated 20th October 1995 made between the
Borrowers, the Guarantor, and the Bank (the "Facility Agreement") and
referred to below are to be assumed by the New Guarantor;
(C) As provided for in the Facility Agreement the Guarantor wishes to
obtain the Bank and Borrowers' agreement to its release as Guarantor,
and replacement by the New Guarantor as detailed below.
NOW IT IS HEREBY AGREED as follows:
1. GUARANTOR'S RELEASE
1.1 Subject to clause 4.1, in consideration of the covenant entered into
by the New Guarantor in clause 2, the Bank and Borrowers hereby
irrevocably release and forever discharge the Guarantor from all its
obligations contained in, and all its liabilities whatsoever under,
the Facility Agreement or any other deed or document supplemental to
the Facility Agreement (other than this Deed) on and from the Closing
Date.
1.2 Subject to clause 4.1, the Guarantor is, on and as from the Closing
Date, released from all its obligations and liabilities in respect of
all damages, actions, proceedings,
- 2 -
<PAGE> 4
costs, claims, demands and expenses arising from such obligations and
liabilities in respect of or arising from or under the terms of the
Facility Agreement which such obligations and liabilities shall be
assumed by the New Guarantor in accordance with clause 4.1.
2. NEW GUARANTOR'S COVENANT
2.1 The New Guarantor hereby covenants with the Bank that, as from the
Closing Date, it will, throughout the term of the Facility Agreement,
duly perform and observe all the Guarantor's covenants and obligations
in accordance with the terms contained therein and specifically
acknowledges its obligations as Guarantor under the Facility Agreement
and the terms and provisions of the guarantee contained in clause 22
thereof.
3. NEW GUARANTOR'S REPRESENTATIONS
3.1 Clauses 16.1, 16.2 and 16.3 of the Facility Agreement are deemed to be
incorporated herein save that the New Guarantor shall be deemed to be
included within the definition of "Obligors". All other terms are
defined as in the Facility Agreement.
4. ACCRUED RIGHTS
4.1 Nothing in this Deed shall waive or be deemed to waive any breach of
the obligations of the Guarantor which may have occurred prior to the
Closing Date but, for the avoidance of doubt, all damages, actions,
proceedings, costs, claims, demands and expenses arising from any
accrued right of action already vested in any of the Bank and the
Borrowers at the date hereof shall also be assumed by the New
Guarantor.
4.2 Save as provided herein, the provisions of the Facility Agreement
shall remain in full force and effect as if the New Guarantor were
party to the Facility Agreement.
- 3 -
<PAGE> 5
5. FEES AND COSTS
5.1 The New Guarantor agrees to pay all fees and expenses reasonably
incurred (including but not limited to legal fees) in connection with
the negotiation and execution of this Deed and all other documents
reasonably required by the Bank in connection therewith.
6. LAW & JURISDICTION
6.1 Clause 38 of the Facility Agreement is deemed to be incorporated
herein save that the New Guarantor shall be deemed to be included
within the definition of "Obligor". All other terms are as defined in
the Facility Agreement.
7. COUNTERPARTS
7.1 This deed may be executed in counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
agreement.
IN WITNESS WHEREOF the parties have executed this Deed the day and year first
before written.
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULFMARK )
NORTH SEA LIMITED )
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
MARINE INTERNATIONAL INC. )
- 4 -
<PAGE> 6
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
N.S. LIMITED )
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
FAR EAST, INC. )
Executed as a Deed )
by /s/ FRANK R. PIERCE )
)
for and on behalf of GULFMARK )
INTERNATIONAL, INC. )
Executed as a Deed )
by /s/ JAMES G. HAYNES )
)
for and on behalf of THE CHASE )
MANHATTAN BANK )
Executed as a Deed )
by /s/ FRANK R. PIERCE )
)
for and on behalf of GULFMARK )
OFFSHORE, INC. )
- 5 -
<PAGE> 1
EXHIBIT 10.21
DATED 30th April 1997
-------------------------------------------------------------------
GULF OFFSHORE SHIPPING SERVICES, INC
(AS BORROWER)
GULFMARK INTERNATIONAL, INC.
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL, INC.
(AS SPONSORS)
CHASE MANHATTAN INTERNATIONAL LIMITED
(AS AGENT AND SECURITY TRUSTEE)
THE CHASE MANHATTAN BANK
(AS INITIAL BANK)
- AND -
GULFMARK OFFSHORE, INC.
DEED OF RELEASE AND SUBSTITUTION RELATING TO A
US$7,000,000 CREDIT FACILITY AGREEMENT DATED 26TH JULY 1996
PEACHEY & CO
95 ALDWYCH
LONDON WC2B 4JF
TEL: 0171 316 5200
FAX: 0171 316 5222
REF: DAW/TMF
<PAGE> 2
DEED OF RELEASE AND SUBSTITUTION dated the 30th day of April 1997 MADE BETWEEN:
(1) GULF OFFSHORE SHIPPING SERVICES, INC. a company incorporated under the
laws of Panama and having its principal place of business at 201
Energy Centre Parkway, Suite 220, Lafayette, Louisiana, 70508 USA (the
"Borrower");
(2) GULFMARK INTERNATIONAL, INC. a company incorporated under the laws of
the State of Delaware and having its principal place of business at 5
Post Oak Park, Suite 1170, Houston, Texas 77027 (the "Principal
Sponsor");
(3) GULFMARK NORTH SEA LIMITED a company incorporated under the laws of
England and having its principal place of business at 10 Charlotte
Road, London SW13 9QT England;
(4) GULF OFFSHORE MARINE INTERNATIONAL, INC. a company incorporated under
the laws of Panama and having its principal place of business at
Comosa Building, Samuel Lewis Avenue, Panama, Republic of Panama;
(Parties 3 and 4 being together referred to as the "Sponsors")
(5) CHASE MANHATTAN INTERNATIONAL LIMITED having its principal place of
business in the UK at 125 London Wall, London, EC2G 5AJ; (as "Agent"
and "Security Trustee" under the Facility Agreement (as defined
below));
(6) THE CHASE MANHATTAN BANK having its principal place of business in the
UK at 125 London Wall, London, EC29 5AJ (as "Initial Bank" (together
with its successors and assigns) under the Facility Agreement (as
defined below));
(7) GULFMARK OFFSHORE, INC. a company incorporated under the laws of the
State of Delaware and having its principal place of business at 5 Post
Oak Park, Suite 1170, Houston, Texas 77027 (the "New Sponsor").
- 1 -
<PAGE> 3
WHEREAS:
(A) Pursuant to an Agreement and Plan of Merger dated 5th December 1996
between the Principal Sponsor, the New Sponsor and others, the
Principal Sponsor and New Sponsor have each agreed, inter alia, to
enter into a reorganisation and merger (the "Merger") to be completed
on or before 31st March 1997 since extended to 30th April 1997 (the
"Closing Date");
(B) The Merger provides that the Principal Sponsor's obligations contained
in a US$7,000,000 Credit Facility Agreement dated 26th July 1996, made
between the Borrower, the Principal Sponsor, the Sponsors, the Agent
and Security Trustee (as one party but in separate capacities) and the
Initial Bank (the "Facility Agreement") and referred to below are to
be assumed by the New Sponsor;
(C) As provided for in the Facility Agreement the Principal Sponsor wishes
to obtain the agreement of the Agent, the Security Trustee, the
Initial Bank, the Sponsors and the Borrower to the Principal Sponsor's
release as sponsor, and replacement by the New Sponsor as detailed
below.
NOW IT IS HEREBY AGREED as follows:
1. PRINCIPAL SPONSOR'S RELEASE
1.1 Subject to clause 4.1, in consideration of the covenant entered into
by the New Sponsor in clause 2, the Agent, the Security Trustee, the
Initial Bank, the Sponsors and Borrower hereby irrevocably release
and forever discharge the Principal Sponsor from all its obligations
contained in, and all its liabilities whatsoever under, the Facility
Agreement or any other deed or document supplemental to the Facility
Agreement (other than this Deed) on and from the Closing Date.
1.2 Subject to clause 4.1, the Principal Sponsor is, on and from the
Closing Date,
- 2 -
<PAGE> 4
released from all its obligations and liabilities in respect of all
damages, actions, proceedings, costs, claims, demands and expenses
arising from or under the terms of the Facility Agreement which such
obligations and liabilities shall be assumed by the New Sponsor in
accordance with clause 4.1.
2. NEW SPONSOR'S COVENANT
2.1 The New Sponsor hereby covenants with the Agent, the Security Trustee
and the Initial Bank that, as from the Closing Date, it will,
throughout the term of the Facility Agreement, duly perform and
observe all the Principal Sponsor's covenants and obligations in
accordance with the terms contained therein.
3. NEW SPONSOR'S REPRESENTATIONS
3.1 Clauses 17.1 and 17.3 of the Facility Agreement are deemed to be
incorporated herein save that the New Sponsor shall be deemed to be
included within the definition of "Obligor". All other terms are
defined as in the Facility Agreement.
4. ACCRUED RIGHTS
4.1 Nothing in this Deed shall waive or be deemed to waive any breach of
the obligations of the Principal Sponsor which may have occurred prior
to the Closing Date but, for the avoidance of doubt, all damages,
actions, proceedings, costs, claims, demands and expenses arising from
any accrued right of action already vested in any of the Agent, the
Security Trustee, the Initial Bank, the Sponsors and the Borrower, or
any of them, at the date hereof shall also be assumed by the New
Sponsor.
4.2 Save as provided herein, the provisions of the Facility Agreement and
each Security Document shall remain in full force and effect as if the
New Sponsor were party to the Facility Agreement.
- 3 -
<PAGE> 5
5. FEES AND COSTS
5.1 The New Sponsor agrees to pay all fees and expenses reasonably
incurred (including but not limited to legal fees) in connection with
the negotiation and execution of this Deed and all other documents
reasonably required by the Agent in connection therewith.
6. LAW & JURISDICTION
6.1 Part 15 of the Facility Agreement is deemed to be incorporated herein
save that the New Sponsor shall be deemed to be included within the
definition of "Obligor" . All other terms and as defined by the
Facility Agreement.
7. COUNTERPARTS
7.1 This deed may be executed in counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
agreement.
IN WITNESS WHEREOF the parties have executed this Deed the day and year first
before written.
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
SHIPPING SERVICES, INC. )
Executed as a Deed )
by /s/ FRANK R. PIERCE )
)
for and on behalf of GULFMARK )
INTERNATIONAL, INC. )
- 4 -
<PAGE> 6
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULFMARK )
NORTH SEA LIMITED )
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
MARINE INTERNATIONAL, INC. )
Executed as a Deed )
by /s/ TIMOTHY N. CHAPMAN )
)
for and on behalf of CHASE )
MANHATTAN INTERNATIONAL )
LIMITED )
(in its capacity as Agent and Security
Trustee)
Executed as a Deed )
by /s/ JAMES G. HAYNES )
)
for and on behalf of THE CHASE )
MANHATTAN BANK )
Executed as a Deed )
by /s/ FRANK R. PIERCE )
)
for and on behalf of GULFMARK )
OFFSHORE, INC. )
- 5 -
<PAGE> 1
EXHIBIT 10.22
DATED 30th April 1997
-------------------------------------------------------------------
GULFMARK NORTH SEA LIMITED
GULF OFFSHORE MARINE INTERNATIONAL, INC.
(AS PRINCIPAL BORROWERS)
GULF OFFSHORE N.S. LIMITED
GULF OFFSHORE FAR EAST, INC.
(AS PERMITTED BORROWERS)
GULFMARK INTERNATIONAL, INC.
(AS SPONSOR)
CHASE MANHATTAN INTERNATIONAL LIMITED
(AS AGENT AND SECURITY TRUSTEE)
THE CHASE MANHATTAN BANK
(AS HEDGE COUNTERPARTY)
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND
- AND -
GULFMARK OFFSHORE, INC.
-------------------------------------------------------------------
DEED OF RELEASE AND SUBSTITUTION RELATING TO A US$5,800,000 AND
L.9,400,000 SYNDICATED LOAN FACILITY DATED 8TH JULY 1993,
AS AMENDED AND RESTATED BY AN AGREEMENT DATED 20TH MAY 1994 AND
AS AMENDED AND RESTATED BY AN AGREEMENT DATED 20TH OCTOBER 1995
-------------------------------------------------------------------
PEACHEY & CO
95 ALDWYCH
LONDON WC2B 4JF
TEL: 0171 316 5200
FAX: 0171 316 5222
REF: DAW/TMF
<PAGE> 2
DEED OF RELEASE AND SUBSTITUTION dated the 30th day of April 1997 MADE BETWEEN:
(1) GULFMARK NORTH SEA LIMITED a company incorporated under the laws of
England and having its principal place of business at 10 Charlotte
Road, London SW13 9QT England;
(2) GULF OFFSHORE MARINE INTERNATIONAL, INC. a company incorporated
under the laws of Panama and having its principal place of business at
Comosa Building, Samuel Lewis Avenue, Panama, Republic of Panama;
(3) GULF OFFSHORE N.S. LIMITED a company incorporated under the laws of
England and having its principal place of business in the UK at 10
Charlotte Road, London SW13 9QT;
(4) GULF OFFSHORE FAR EAST, INC a company incorporated under the laws of
Panama and having its principal place of business at Comosa Building,
Samuel Lewis Avenue, Panama, Republic of Panama;
(Parties 1, 2, 3 and 4 being together referred to as the "Borrowers")
(5) GULFMARK INTERNATIONAL, INC. a company incorporated under the laws of
the State of Delaware and having its principal place of business at 5
Post Oak Park, Suite 1170, Houston, Texas 77027 (the "Sponsor");
(6) CHASE MANHATTAN INTERNATIONAL LIMITED having its principal place of
business in the UK at 125 London Wall, London, EC2G 5AJ; (as "Agent"
and "Security Trustee" under the Facility Agreement (as defined
below)).
As a result of the merger between The Chase Manhattan Bank, N.A. and
Chemical Bank
- 1 -
<PAGE> 3
in July 1996, Chase Manhattan International Limited assumed the role
of Security Trustee and Agent under the Facility Agreement (as defined
below);
(7) THE CHASE MANHATTAN BANK having its principal place of business in the
UK at 125 London Wall, London EC2G 5AJ (as "Hedge Counterparty" and
"Bank" under the Facility Agreement (as defined below)).
(8) THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND a
company incorporated under the laws of Scotland and having its
principal place of business in the UK at International Division,
Orchard Brae House, 30 Queensferry Road, Edinburgh EH4 2OG (together
with The Chase Manhattan Bank in its capacity as a Bank and together
with each of their successors and assigns the "Banks")
(9) GULFMARK OFFSHORE, INC. a company incorporated under the laws of the
State of Delaware and having its principal place of business at 5 Post
Oak Park, Suite 1170, Houston, Texas 77027 (the "New Sponsor").
WHEREAS:
(A) Pursuant to an Agreement and Plan of Merger dated 5th December 1996
between the Sponsor, the New Sponsor and others, the Sponsor and New
Sponsor have each agreed, inter alia, to enter into a reorganisation
and merger (the "Merger") to be completed on or before 31st March 1997
since extended to 30th April 1997 (the "Closing Date");
(B) The Merger provides that the Sponsor's obligations contained in a
US$5,800,000 and L.9,400,000 Syndicated Loan Facility dated 8th July
1993 as amended and restated by an agreement dated 20th May 1994 and
as amended and restated by an agreement dated 20th October 1995 made
between the Borrowers, the Sponsor, and the Agent and Security Trustee
(as one party but in separate capacities), the Hedge Counterparty and
the Banks
- 2 -
<PAGE> 4
(the "Facility Agreement") and referred to below are to be assumed by
the New Sponsor;
(C) As provided for in the Facility Agreement the Sponsor wishes to obtain
the agreement of the Agent, the Security Trustee, the Hedge
Counterparty, the Banks and the Borrower, to the Sponsor's release as
sponsor, and replacement by the New Sponsor as detailed below.
NOW IT IS HEREBY AGREED as follows:
1. SPONSOR'S RELEASE
1.1 Subject to clause 3.1, in consideration of the covenant entered into
by the New Sponsor in clause 2, the Agent, the Security Trustee, the
Hedge Counterparty, the Banks and the Borrowers hereby irrevocably
release and forever discharge the Sponsor from all its obligations
contained in, and all its liabilities whatsoever under, the Facility
Agreement or any other deed or document supplemental to the Facility
Agreement (other than this Deed) on and from the Closing Date.
1.2 Subject to clause 3.1, the Sponsor is, on and from the Closing Date,
released from all its obligations and liabilities in respect of all
damages, actions, proceedings, costs, claims, demands and expenses
arising from or under the terms of the Facility Agreement which such
obligations and liabilities shall be assumed by the New Sponsor in
accordance with clause 3.1.
2. NEW SPONSOR'S COVENANT
2.1 The New Sponsor hereby covenants with the each of the Agent, the
Security Trustee, the Hedge Counterparty and the Banks that, as from
the Closing Date, it will, throughout the term of the Facility
Agreement, duly perform and observe all the Sponsor's covenants
- 3 -
<PAGE> 5
and obligations in accordance with the terms contained therein.
3. ACCRUED RIGHTS
3.1 Nothing in this Deed shall waive or be deemed to waive any breach of
the obligations of the Sponsor which may have occurred prior to the
Closing Date but, for the avoidance of doubt, all damages, actions,
proceedings, costs, claims, demands and expenses arising from any
accrued right of action already vested in any of the Agent, the
Security Trustee, the Hedge Counterparty, the Banks and the Borrowers,
or any of them, at the date hereof shall also be assumed by the New
Sponsor.
3.2 Save as provided herein, the provisions of the Facility Agreement and
each Security Document shall remain in full force and effect as if the
New Sponsor were party to the Facility Agreement.
4. FEES AND COSTS
4.1 The New Sponsor agrees to pay all fees and expenses reasonably
incurred (including but not limited to legal fees) in connection with
the negotiation and execution of this Deed and all other documents
reasonably required by the Agent in connection therewith.
5. LAW & JURISDICTION
5.1 Part 15 of the Facility Agreement is deemed to be incorporated herein
save that the New Sponsor shall be deemed to be included within the
definition of "Obligor". All other terms as defined as in the
Facility Agreement.
6. COUNTERPARTS
6.1 This deed may be executed in counterparts, each of which shall be an
original, but all
- 4 -
<PAGE> 6
of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF the parties have executed this Deed the day and year first
before written.
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULFMARK )
NORTH SEA LIMITED )
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
MARINE INTERNATIONAL INC. )
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
N.S. LIMITED )
Executed as a Deed )
by /s/ BRUCE A. STREETER )
)
for and on behalf of GULF OFFSHORE )
FAR EAST, INC. )
- 5 -
<PAGE> 7
Executed as a Deed )
by /s/ FRANK R. PIERCE )
)
for and on behalf of GULFMARK )
INTERNATIONAL INC. )
Executed as a Deed )
by /s/ TIMOTHY G. CHAPMAN )
)
for and on behalf of CHASE )
MANHATTAN INTERNATIONAL )
LIMITED )
Executed as a Deed )
by /s/ JAMES G. HAYNES )
)
for and on behalf of THE CHASE )
MANHATTAN BANK )
(in its capacity as the Hedge
Counterparty and a Bank)
Executed as a Deed )
by /s/ GORDON GRIEVE )
)
for and on behalf of THE GOVERNOR )
AND COMPANY OF THE BANK OF )
SCOTLAND )
Executed as a Deed )
by /s/ FRANK R. PIERCE )
)
for and on behalf of GULFMARK )
OFFSHORE, INC. )
- 6 -
<PAGE> 1
EXHIBIT 10.23
Dated 11 June, 1997
GULF OFFSHORE N.S. LIMITED
as Borrower
-and-
CHRISTINIA BANK OG KREDITKASSE ASA
as Lender and Security Trustee
-------------------------
LOAN AGREEMENT
-------------------------
relating to
a L.27,565,000 Revolving Term Loan Facility
WATSON, FARLEY & WILLIAMS
London
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
CLAUSE PAGE
<S> <C> <C>
1 INTERPRETATION 4
2 FACILITY 7
3 DRAWDOWN 7
4 INTEREST 7
5 INTEREST PERIODS 8
6 DEFAULT INTEREST 8
7 REPAYMENT AND PREPAYMENT 9
8 CONDITIONS PRECEDENT 10
9 REPRESENTATIONS AND WARRANTIES 11
10 GENERAL UNDERTAKINGS 12
11 CORPORATE UNDERTAKINGS 15
12 SECURITY COVER 16
13 PAYMENTS AND CALCULATIONS 17
14 APPLICATION OF RECEIPTS 18
15 APPLICATION OF EARNINGS 18
16 EVENTS OF DEFAULT 18
17 FEES AND EXPENSES 22
18 INDEMNITIES 23
19 NO SET-OFF OR TAX DEDUCTION 24
20 ILLEGALITY, ETC 25
21 INCREASED COSTS 25
22 CHANGES IN CIRCUMSTANCES 26
23 SET-OFF 27
24 TRANSFERS AND CHANGES IN LENDING OFFICES 27
25 VARIATIONS AND WAIVERS 29
26 NOTICES 30
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
27 THE SECURITY TRUSTEE 31
28 SUPPLEMENTAL 34
29 LAW AND JURISDICTION 34
</TABLE>
EXECUTION
SCHEDULE 1 DRAWDOWN NOTICE
SCHEDULE 2 CONDITION PRECEDENT DOCUMENTS
SCHEDULE 3 TRANSFER CERTIFICATE
SCHEDULE 4 COMPLIANCE CERTIFICATE
APPENDIX A FORM OF MORTGAGE
APPENDIX B FORM OF DEED OF COVENANT
APPENDIX C FORM OF ACCOUNT SECURITY DEED
APPENDIX D FORM OF GUARANTEE
<PAGE> 4
LOAN AGREEMENT made on the 11th day of June, 1997
BETWEEN :
(1) GULF OFFSHORE N.S. LIMITED, a company incorporated in England with
company number 2541716, whose registered office is at 10 Charlotte
Road, London SW13 9QJ, England (the "Borrower");
(2) CHRISTIANIA BANK OG KREDITKASSE ASA, acting through its office at
Middelthunsgate 17, 0368 Oslo, Norway, as Lender; and
(3) CHRISTIANIA BANK OG KREDITKASSE ASA acting through its office at
Middelthunsgate 17, 0368 Oslo, Norway, as Security Trustee.
WHEREAS the Lender has agreed to make available to the Borrower a facility of
L.27,565,000 to refinance certain existing indebtedness of the Borrower and to
provide post-delivery finance for the acquisition of a platform supply vessel
presently under construction for the Borrower by Brattvag Skipsverft AS and
known during construction as Yard No. 68.
IT IS AGREED as follows:
1 INTERPRETATION
1.1 Subject to Clause 1.7, in this Agreement:
"Account Security Deed" means a deed creating security in respect of
the Earnings Account in the form set out in Appendix C;
"Advance" means the amount of each borrowing by the Borrower under
this Agreement;
"Approved Manager" means any company which the Lender may approve
from time to time as the manager of the Ships (or any of them);
"Assigned Value" means, in relation to each Ship, 60 per cent. of
the value in Sterling set out against its name below, such values
being reduced by eight per cent. (8%) on each anniversary of the
first Drawdown Date (except that, in relation to the Newbuilding, the
first such reduction shall only occur on the second anniversary of
the first Drawdown Date):
<TABLE>
<S> <C>
Newbuilding L.10,840,000
Highland Pride L.10,645,000
Highland Star L.10,645,000
Highland Piper L. 9,000,000
Highland Legend L. 3,550,000
Highland Warrior L. 5,241,000
</TABLE>
"Availability Period" means the period commencing on the date of
this Agreement and ending on (a) in relation to the first Advance,
30th June 1997 (or such later date as the Lender may agree with the
Borrower), or (b) in relation to the second Advance, 30th June, 1998
(or such later date as the Lender may agree with the Borrower) or (c)
if earlier, the date on which the Lender's obligation to make the
Loan is cancelled or terminated;
"Building Contract" means the contract dated 1st November, 1996 (as
subsequently supplemented and amended) entered into between the
Borrower and Brattvag Skipsverft AS pursuant to which Brattvag
Skipsverft AS agreed to build and sell, and the Borrower agreed to
purchase, the Newbuilding;
<PAGE> 5
"Business Day" means a day on which banks are open in Oslo and
London;
"Deed of Covenant" means, in relation to Ship, a deed of covenant
collateral to the Mortgage on Ship and creating charges over that
Ship, her Insurances, her Earnings and any requisition compensation
in the form set out in Appendix B (and, in the plural, means all of
them);
"Drawdown Date" means, in relation to each Advance, the date
requested by the Borrower for that Advance to be made, or (as the
context requires) the date on which that Advance is actually made;
"Drawdown Notice" means a notice in the form set out in Schedule 1
(or in any other form which the Lender approves or reasonably
requires);
"Earnings" means, in relation to each Ship, all moneys whatsoever
which are now, or later become payable (actually or contingently) to
the Borrower and which arise out of the use or operation of that
Ship, including (but not limited to) (a) all freight, hire and
passage moneys, compensation payable to the Borrower in the event of
requisition of that Ship for hire, remuneration for salvage and
towage services, demurrage and detention moneys and damages for
breach (or payments for variation or termination) of any charterparty
or other contract for the employment of that Ship, (b) all moneys
which are at any time payable under Insurances in respect of loss of
earnings, and (c) if and whenever that Ship is employed on terms
whereby any moneys falling within (a) or (b) are pooled or shared
with any other person, that proportion of the net receipts of the
relevant pooling or sharing arrangement which is attributable to that
Ship;
"Earnings Account" means an account in the name of the Borrower with
the Lender in London with account number 51295101, or any other
account (with that or another office of the Lender or with a bank or
financial institution other than the Lender) which is designated by
the Lender as the Earnings Account for the purposes of this
Agreement;
"Event of Default" means any of the events or circumstances
described in Clause 16.1;
"Finance Documents" means (a) this Agreement, the Guarantee, the
Deeds of Covenant, the Mortgages and the Account Security Deed and
(b) any other document (whether creating a Security Interest or not)
which is executed at any time by the Borrower or any other person as
security for, or to establish any form of subordination or priorities
arrangement in relation to, any amount payable to the Lender under
this Agreement or any of the documents referred to in this
definition;
"Financial Indebtedness" means, in relation to a person (the
"debtor"), a liability of the debtor (a) for principal, interest or
any other sum payable in respect of any moneys borrowed or raised by
the debtor, (b) under any loan stock, bond, note or other security
issued by the debtor, (c) under any acceptance credit, guarantee or
letter of credit facility made available to the debtor, (d) under a
financial lease, a deferred purchase consideration arrangement or any
other agreement having the commercial effect of a borrowing or
raising of money by the debtor, (e) under any interest or currency
swap or any other kind of derivative transaction entered into by the
debtor, or (f) under a guarantee, indemnity or similar obligation
entered into by the debtor in respect of a liability of another
person which would fall within (a) to (e) if the references to the
debtor referred to the other person;
"GNS" means GulfMark North Sea Limited, a company incorporated in
England with company number 2625893, whose registered office is at 10
Charlotte Road, London SW13 9QJ, England;
2
<PAGE> 6
"GOMI" means Gulf Offshore Marine International Inc., a company
incorporated in Panama, whose registered office is at Comosa
Building, Samuel Lewis Avenue, Panama City, Panama;
"Guarantee" means a guarantee in the form set out in Appendix D;
"Guarantors" means, together, GNS and GOMI (and, in the singular,
means either of them);
"Highland Legend" means the platform supply vessel named "Highland
Legend" registered in the name of the Borrower under British flag
with official number 709907;
"Highland Piper" means the platform supply vessel named "Highland
Piper" registered in the name of the Borrower under British flag with
Official Number 728724;
"Highland Pride" means the platform supply vessel named "Highland
Pride" registered in the name of the Borrower under British flag with
official number 722013;
"Highland Star" means the platform supply vessel named "Highland
Star" registered in the name of the Borrower under British flag with
official number 719032;
"Highland Warrior" means the platform supply vessel named "Highland
Warrior" registered in the name of the Borrower under British flag at
the Port of Hamilton, Bermuda with Official Number 716310;
"Insurances" means, in relation to each Ship, (a) all policies and
contracts of insurance, including entries of that Ship in any
protection and indemnity or war risks association, which are effected
in respect of that Ship, her Earnings or otherwise in relation to
her, and (b) all rights and other assets relating to, or derived
from, any of the foregoing, including any rights to a return of a
premium;
"Interest Period" means a period determined in accordance with
Clause 5;
"Latest Accounts" means, in relation to the Borrower, the latest
audited annual or unaudited quarterly accounts delivered to the
Lender under Clause 10.6 or, in relation to a Guarantor, under Clause
4.1 of the Guarantee;
"Lender" means, subject to Clause 24.6, (a) Christiania Bank og
Kreditkasse ASA, acting through its branch at Middelthunsgate 17,
0368 Oslo, Norway (or through another branch notified to the Lender
under Clause 24.4) and (b) the holder for the time being of a
Transfer Certificate;
"Liquid Assets" means:
(i) cash in hand;
(ii) deposits in prime banks or other financial institutions with
a maturity of 6 months or less;
(iii) government issued bills and bonds; and
(iv) marketable securities quoted on a recognised stock exchange,
but excluding any of those assets (other than monies standing to the
credit of the Earnings Account) subject to any Security Interest;
"Loan" means the principal amount for the time being outstanding
under this Agreement;
"Margin" means one per cent. (1%) per annum, Provided that if the
Value Adjusted Equity exceeds fifty per cent. (50%) and no Event of
Default or Potential Event of Default has occurred, the Margin shall
be reduced to seven eighths of one per cent. (7/8%) per
3
<PAGE> 7
annum from the next Interest Period commencing after the Lender has
received a quarterly compliance certificate in the form set out in
Schedule 4 showing that the Value Adjusted Equity exceeds 50%;
"Mortgage" means, in relation to each Ship, the first priority
account current ship mortgage on that Ship in the form set out in
Appendix A (and, in the plural, means all of them);
"net working capital" means, in relation to the Borrower and each
Guarantor and at any time, its current assets less its current
liabilities as shown in its Latest Accounts;
"Newbuilding" means, with effect from delivery to and acceptance by
the Borrower under the Building Contract, the platform supply vessel
presently under construction for the Borrower by Brattvag Skipsverft
AS and known during construction as Yard No. 68;
"Pertinent Jurisdiction", in relation to a company, means (a) England
and Wales, (b) the country under the laws of which the company is
incorporated or formed, (c) a country in which the company's central
management and control is or has recently been exercised, (d) a
country in which the overall net income of the company is subject to
corporation tax, income tax or any similar tax, (e) a country in
which assets of the company (other than securities issued by, or
loans to, related companies) having a substantial value are situated,
in which the company maintains a permanent place of business, or in
which a Security Interest created by the company must or should be
registered in order to ensure its validity or priority, and (f) a
country the courts of which have jurisdiction to make a winding up,
administration or similar order in relation to the company or which
would have such jurisdiction if their assistance were requested by
the courts of a country referred to in (b) or (c);
"Potential Event of Default" means an event or circumstance which,
with the giving of any notice, the lapse of time, a determination of
the Lender and/or the satisfaction of any other condition, would
constitute an Event of Default;
"Pounds", "L." and "Sterling" means the lawful currency for the time
being of the United Kingdom;
"Repayment Date" means a date on which a repayment is required to be
made under Clause 7;
"Security Interest" means (a) a mortgage, charge (whether fixed or
floating) or pledge, any maritime or other lien or any other security
interest of any kind, (b) the rights of the plaintiff under an action
in rem in which the vessel concerned has been arrested or a writ has
been issued or similar step taken, and (c) any arrangement entered
into by a person (A) the effect of which is to place another person
(B) in a position which is similar, in economic terms, to the
position in which B would have been had he held a security interest
over an asset of A; but (c) does not apply to a right of set off or
combination of accounts conferred by the standard terms of business
of a bank or financial institution;
"Security Party" means each Guarantor and any other person (except
the Lender) who, as a surety or mortgagor, as a party to any
subordination or priorities arrangement, or in any similar capacity,
executes a document falling within paragraph (b) of the definition of
"Finance Documents";
"Security Period" means the period commencing on the date of this
Agreement and ending on the date on which all amounts payable by the
Borrower or any Security Party under the Finance Documents have been
paid;
"Security Trustee" means Christiania Bank og Kreditkasse ASA, acting
through its branch at Middelthunsgate 17, 0368 Oslo, Norway;
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"Ships" means, together, Highland Legend, Highland Star, Highland
Pride, Highland Piper, Highland Warrior, and from delivery to, and
acceptance by, the Borrower under the Building Contract, the
Newbuilding (and, in the singular, means each of them);
"Total Liabilities" means, at any time, the total liabilities of the
Borrower as shown in its Latest Accounts;
"Total Loss" and "Total Loss Date" have, in relation to each Ship,
the meaning given in the Deed of Covenant relating to that Ship;
"Transfer Certificate" has the meaning given in Clause 24;
"Value Adjusted Equity" means Value Adjusted Total Assets less Total
Liabilities (excluding any Financial Indebtedness which by its terms
is subordinated to the Loan); and
"Value Adjusted Total Assets" means, at any time, the total assets
of the Borrower as shown in its Latest Accounts after deducting (i)
goodwill and (ii) the values of the ships used in the preparation of
its Latest Accounts and substituting, in the case of the Ships, the
most recent market values shown by valuations complying with the
requirements of Clause 12.4 and, in the case of any other ships, the
most recent market values shown by valuations prepared on a similar
basis (and if no such valuations have been made, the Lender shall be
entitled to require that valuations shall be made on such similar
basis).
1.1 In this Agreement:
"asset" includes every kind of property, asset, interest or right,
including any present, future or contingent right to any revenues or
other payment;
"company" includes any partnership, joint venture and unincorporated
association;
"contingent liability" means a liability which is not certain to
arise and/or the amount of which remains unascertained;
"document" includes a deed; also a letter, fax or telex;
"expense" means any kind of cost, charge or expense (including all
legal costs, charges and expenses) and any applicable value added or
other tax;
"law" includes any form of delegated legislation, any order or
decree, any treaty or international convention and any regulation,
directive or decision of the Council of the European Union or the
European Commission;
"legal or administrative action" means any legal proceeding or
arbitration and any administrative or regulatory action or
investigation;
"liability" includes every kind of debt or liability (present or
future, certain or contingent), whether incurred as principal or
surety or otherwise;
"months" shall be construed in accordance with Clause 1.3;
"official consent" and "official requirement" mean respectively:
(a) any consent, authorisation or clearance; and
(b) any requirement, directive, request, guideline or notice
(whether general or specific and whether or not having the
force of law);
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<PAGE> 9
of or issued by any fiscal, monetary or banking authority or any
other governmental, official or public authority of any kind,
including the Council of the European Union or the European
Commission; and "official requirement" also includes a resolution of
the United Nations or of its Security Council;
"parent company" has the meaning given in Clause 1.4;
"person" includes any company; any state, political sub-division of
a state and local or municipal authority; and any international
organisation;
"subsidiary" has the meaning given in Clause 1.4; and
"tax" includes any present or future tax, duty, impost, levy or
charge of any kind which is imposed by any state, any political
sub-division of a state or any local or municipal authority
(including any such imposed in connection with exchange controls),
and any connected penalty, interest or fine.
1.2 A period of one or more "months" ends on the day in the relevant
calendar month numerically corresponding to the day of the calendar
month on which the period started ("the numerically corresponding
day"), but:
(a) on the Business Day following the numerically corresponding
day if the numerically corresponding day is not a Business Day
or, if there is no later Business Day in the same calendar
month, on the Business Day preceding the numerically
corresponding day; or
(b) on the last Business Day in the relevant calendar month, if
the period started on the last Business Day in a calendar
month or if the last calendar month of the period has no
numerically corresponding day;
and "month" and "monthly" shall be construed accordingly.
1.3 A company (S) is a subsidiary of another company (P) if:
(a) a majority of the issued shares in S (or a majority of the
issued shares in S which carry unlimited rights to capital and
income distributions) are directly owned by P or are
indirectly attributable to P; or
(b) P has direct or indirect control over a majority of the
voting rights attaching to the issued shares of S; or
(c) P has the direct or indirect power to appoint or remove a
majority of the directors of S; or
(d) P otherwise has the direct or indirect power to ensure that
the affairs of S are conducted in accordance with the wishes
of P;
and any company of which S is a subsidiary is a parent company of S.
1.4 In this Agreement:
(a) references to, or to a provision of, a Finance Document
or any other document are references to it as amended or
supplemented, whether before the date of this Agreement or
otherwise; and
(b) references to, or to a provision of, any law include
any amendment, extension, re-enactment or replacement, whether
made before the date of this Agreement or otherwise.
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1.5 Clauses 1.1 to 1.5 apply unless the contrary intention appears.
1.6 References in Clause 1.1 to a document being in the form of a
particular Appendix include references to that form with any modifications to
that form which the Lender approves or reasonably requires.
1.7 The clause headings shall not affect the interpretation of this
Agreement.
2 FACILITY
2.1 Subject to the other provisions of this Agreement, the Lender shall
make a loan facility not exceeding L.27,565,000 available to the Borrower.
2.2 The Borrower undertakes with the Lender to use the Loan only for the
purposes stated in the preamble to this Agreement.
3 DRAWDOWN
3.1 Subject to the following conditions, the Borrower may request an
Advance to be made by ensuring that the Lender receives a completed Drawdown
Notice not later than 11.00 a.m. (Oslo time) 3 Business Days prior to the
intended Drawdown Date for that Advance.
3.2 Those conditions are that:
(a) Subject to the provisions of Clause 7.12, there shall only
be two Advances, the first of L.18,565,000 and the second
of L.9,000,000; and
(b) the Drawdown Date for an Advance has to be a Business Day
during the applicable Availability Period.
3.3 A Drawdown Notice must be signed by a director of the Borrower; and,
once served, a Drawdown Notice cannot be revoked without the prior consent of
the Lender.
3.4 Subject to the provisions of this Agreement, the Lender shall on the
Drawdown Date for an Advance make available to the Borrower the proceeds of
that Advance as the Borrower shall direct in the Drawdown Notice for that
Advance.
4 INTEREST
4.1 Subject to the provisions of this Agreement, interest on
an Advance in respect of an Interest Period applicable to it shall be paid by
the Borrower on the last day of that Interest Period.
4.2 Subject to the provisions of this Agreement, the rate of interest on
an Advance in respect of an applicable Interest Period shall be the aggregate
of the Margin and LIBOR for that Interest Period.
4.3 LIBOR for an Interest Period is the rate per annum determined by the
Lender to be the rate of the offered quotation for deposits in Sterling which
appears on the Reuter Monitor Money Rates Service page designated FRBD (or such
other page on that service as may replace that page) at or about 11.00 a.m.
(London time) on the second Business Day prior to the commencement of that
Interest Period for a period equal to that Interest Period.
4.4 However, in the case of an Interest Period longer than 6 months,
accrued interest shall be paid every 6 months during the Interest Period and on
the last day of the Interest Period.
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5 INTEREST PERIODS
5.1 The first Interest Period applicable to an Advance shall commence on
the Drawdown Date for that Advance and each subsequent Interest Period
applicable to that Advance shall commence on the expiry of the preceding
Interest Period applicable to that Advance.
5.2 Subject to Clauses 5.3 and 5.4, each Interest Period shall be:
(a) 1, 3 or 6 months as notified by the Borrower to the Lender
not later than 11.00 a.m. (London time) 3 Business Days before
the commencement of the Interest Period; or
(b) 3 months, if the Borrower fails to notify the Lender by the
time specified in paragraph (a) above; or
(c) such other period as the Lender may agree with the Borrower.
5.3 However,
(a) unless the Lender notifies the Borrower to the contrary, the
first Interest Period applicable to the second Advance and any
Advance made pursuant to Clause 7.12 shall end on the last day
of the Interest Period then current in respect of the first
Advance, whereupon both Advances shall be consolidated and
treated as a single Advance;
(b) in respect of an amount due to be repaid under Clause 7 on
a particular Repayment Date, an Interest Period shall end on
that Repayment Date; and
(c) the Borrower shall not select Interest Periods of 1 month
more often than 3 times in each period of 12 months from the
first Drawdown Date.
5.4 If, after the Borrower has selected an Interest Period longer than
6 months, the Lender notifies the Borrower by 11.00 a.m. (London time) on the
second Business Day before the commencement of the Interest Period that it is
not satisfied that deposits in Sterling for a period equal to the Interest
Period will be available to it in the London Interbank Market when the Interest
Period commences, the Interest Period shall be of 6 months.
6 DEFAULT INTEREST
6.1 The Borrower shall pay interest in accordance with the following
provisions on any amount payable by the Borrower under any Finance
Document which the Lender or the Security Trustee does not receive on or before
the relevant date, that is:
(a) the date on which the Finance Documents provide that such
amount is due for payment; or
(b) if a Finance Document provides that such amount is payable
on demand, the date on which the demand is served; or
(c) if such amount has become immediately due and payable under
Clause 16.4, the date on which it became immediately due and
payable.
6.2 Interest shall accrue on an overdue amount from (and including) the
relevant date until the date of actual payment (as well after as before
judgment) at the rate per annum determined by the Lender to be 2 per cent.
above:
(a) in the case of an overdue amount of principal, the higher
of the rates set out at paragraphs (a) and (b) of Clause 6.3;
or
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(b) in the case of any other overdue amount, the rate set out at
paragraph (b) of Clause 6.3.
6.3 Those rates are:
(a) the rate applicable to the overdue principal amount
immediately prior to the relevant date (but only for any
unexpired part of any then current Interest Period);
(b) the Margin plus, in respect of successive periods of any
duration (including at call) up to three months which the
Lender may select from time to time:
(i) LIBOR, as determined by the Lender in accordance
with Clause 4.3; or
(ii) if the Lender determines that Sterling deposits for
any such period are not being made available to it by
leading banks in the London Interbank Market in the
ordinary course of business, a rate from time to time
determined by the Lender by reference to the cost of
funds to it from such other sources as the Lender may
from time to time determine.
6.4 The Lender shall promptly notify the Borrower of each interest rate
determined by it under Clause 6.3 and of each period selected by it for the
purposes of paragraph (b) of that Clause; but this shall not be taken to imply
that the Borrower is liable to pay such interest only with effect from the date
of the Lender's notification.
6.5 Subject to the other provisions of this Agreement, any interest due
under this Clause shall be paid on the last day of the period by
reference to which it was determined.
6.6 Any such interest which is not paid at the end of the period by
reference to which it was determined shall thereupon be compounded.
7 REPAYMENT AND PREPAYMENT
7.1 Subject to Clauses 7.2 and 7.10 below, the Borrower shall repay the
Loan by 24 consecutive three-monthly instalments, the first 4 of five hundred
and seventy thousand Pounds (L.570,000) each, the next 19 of seven hundred and
seventy thousand Pounds (L.770,000) each and the final instalment of ten million
six hundred and fifty five thousand Pounds (L.10,655,000). Instalments falling
due shall be payable whether or not the second Advance has been made on any
Repayment Date.
7.2 If the second Advance is not made for any reason, each of the first
23 instalments specified in Clause 7.1 shall be five hundred and seventy
thousand Pounds (L.570,000) and the final instalment shall be five million four
hundred and fifty five thousand Pounds (L.5,455,000).
7.3 The first instalment shall be repaid on the date falling 3 months
after the first Drawdown Date and the last instalment on the date falling 72
months after the first Drawdown Date.
7.4 On the final Repayment Date, the Borrower shall additionally pay to
the Lender all other sums then accrued or owing under any Finance Document.
7.5 Subject to the following conditions, the Borrower may prepay the
whole or any part of the Loan on the last day of an Interest Period.
7.6 Those conditions are:
(a) that a partial prepayment shall be L.500,000 or a multiple
thereof;
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(b) that the Lender has received from the Borrower at least 20
days prior written notice specifying the amount to be prepaid
and the date on which the prepayment is to be made;
(c) that the Borrower has provided evidence satisfactory to the
Lender that any official consent required by the Borrower or
any Security Party in connection with the prepayment has been
obtained and remains in force, and that any official
requirement relevant to this Agreement which affects the
Borrower or any Security Party has been complied with.
7.7 A prepayment notice may not be withdrawn or amended without the
consent of the Lender.
7.8 If a Ship is sold or becomes a Total Loss, the Borrower shall prepay
a portion of the Loan equal to the then prevailing Assigned Value of that Ship.
Such prepayment shall be made simultaneously with the sale of that Ship (and as
a condition of the release of the Mortgage on that Ship) or within 120 days
after the Total Loss Date.
7.9 A prepayment shall be made together with accrued interest (and any
other amount payable under Clause 18 below or otherwise) in respect of the
amount prepaid and, if the prepayment is not made on the last day of an Interest
Period together with any sums payable under Clause 18.1(b) but without premium
or penalty.
7.10 Each partial prepayment shall be applied against the repayment
instalments specified in Clause 7.1 in inverse order of maturity.
7.11 Except as provided in Clause 7.12, no amount prepaid under any
provisions of this Agreement may be re-borrowed.
7.12 Subject to the following conditions, the Borrower may prepay the
whole or any part of the Loan on the last day of an Interest Period in a minimum
amount of L.2,500,000, and re-borrow any amount so prepaid.
Those conditions are:
(a) that the Lender has received from the Borrower at least 20
days prior written notice specifying the amount to be prepaid
and the date on which the prepayment is to be made, and that
amount is available for re-borrowing;
(b) that the provisions of Clauses 3.1, 3.3 and 3.4 shall apply
to any re-borrowing; and
(c) no re-borrowing of any amount prepaid pursuant to this Clause
7.12 can be made if and to the extent that it would result in
the amount of the Loan exceeding the amount which the Loan
should then be pursuant to the other provisions of this
Agreement; and
(d) no re-borrowing of any amount prepaid pursuant to this Clause
7.12 can be made if an Event of Default or a Potential Event
of Default has occurred and is continuing.
8 CONDITIONS PRECEDENT
8.1 The Lender's obligation to make each Advance is subject to the
following conditions precedent:
(a) that the Lender receives the documents described in Schedule
2 below in form and substance satisfactory to it and its
lawyers on or before the service of the Drawdown Notice for
the Advance or, in the case of paragraph 9 of Part I and
paragraph 3 of Part II, on or before the Drawdown Date for the
Advance;
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(b) that, on or before the first Drawdown Date, the Lender
receives the arrangement fee and the trustee fee referred to
in Clause 17.1;
(c) that on or before each Drawdown Date, the Lender receives all
accrued commitment fee payable pursuant to Clause 17.1;
(d) that both at the date of the Drawdown Notice and at the
Drawdown Date for that Advance:
(i) no Event of Default or Potential Event of Default
has occurred and is continuing or would result from
the making of the Advance;
(ii) the representations and warranties in Clause 9.1 and
those of the Borrower or any Security Party which are
set out in the other Finance Documents would be true
and not misleading if repeated on each of those dates
with reference to the circumstances then existing;
(iii) none of the circumstances contemplated by Clause 22
has occurred and is continuing; and
(e) that, if the ratio set out in Clause 12.1 were applied
immediately following the making of the Advance, the Borrower
would not be obliged to provide additional security or prepay
part of the Loan under that Clause.
8.2 If the Lender, at its discretion, permits an Advance to be made
before certain of the conditions referred to in Clause 8.1 are satisfied, the
Borrower shall ensure that those conditions are satisfied within 5 Business days
after the Drawdown Date for that Advance (or such longer period as the Lender
may specify).
9 REPRESENTATIONS AND WARRANTIES
9.1 The Borrower represents and warrants to the Lender and the Security
Trustee as follows.
9.2 The Borrower is duly incorporated and validly existing under the
laws of England.
9.3 The Borrower has an authorised share capital of L.655,865
divided into 655,865 registered shares of L.1 each, of which 655,767 shares
have been issued fully paid, and the legal title (other than the legal title to
1 share held by GOMI) and beneficial ownership of all those shares is held,
free of any Security Interest (except as disclosed in writing to the Lender) or
other claim, by GNS.
9.4 The Borrower has the corporate capacity, and has taken
all corporate action and obtained all official consents necessary for it:
(a) to execute the Building Contract;
(b) to execute the Finance Documents to which the Borrower is a
party; and
(c) to borrow under this Agreement and to make all the payments
contemplated by, and to comply with, those Finance Documents.
9.5 All the official consents referred to in Clause 9.4 remain in force
and nothing has occurred which makes any of them liable to revocation.
9.6 The Finance Documents to which the Borrower is a party, do now or,
as the case may be, will, upon execution and delivery (and, where applicable,
registration as provided for in the Finance Documents):
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(a) constitute the Borrower's legal, valid and binding
obligations enforceable against the Borrower in accordance
with their respective terms; and
(b) create legal, valid and binding Security Interests
enforceable in accordance with their respective terms;
subject to any relevant insolvency laws affecting creditors' rights
generally.
9.7 The execution by the Borrower of each Finance Document, and the
borrowing by the Borrower of the Loan, and its compliance with each Finance
Document will not involve or lead to a contravention of:
(a) any law or official requirement; or
(b) the constitutional documents of the Borrower; or
(c) any contractual or other obligation or restriction which is
binding on the Borrower or any of its assets.
9.8 All payments which the Borrower is liable to make under the
Finance Documents may be made without deduction or withholding for or on
account of any tax payable under any law of England.
9.9 No Event of Default or Potential Event of Default has occurred and
is continuing.
9.10 All information which has been provided in writing by or on behalf
of the Borrower or any Security Party to the Lender in connection with any
Finance Document satisfied the requirements of Clause 10.5; all audited and
unaudited accounts which have been so provided satisfied the requirements of
Clause 10.7; and there has been no material adverse change in the financial
position or state of affairs of the Borrower from that disclosed in the latest
of those accounts.
9.11 No legal or administrative action involving the Borrower has been
commenced or taken or, to the Borrower's knowledge, is likely to be commenced
or taken which, in either case, would be likely to have a material adverse
effect on the Borrower's financial position or profitability.
9.12 The copy of the Building Contract delivered to the Lender before the
date of this Agreement is a true and complete copy; the Building Contract
constitutes valid, binding and enforceable obligations of Brattvag Skipsverft AS
and the Borrower respectively in accordance with its terms; and no amendments or
additions to the Building Contract have been agreed nor has the Borrower or
Brattvag Skipsverft AS waived any of their respective rights under the Building
Contract.
9.13 There is no agreement or understanding to allow or pay any rebate,
premium, commission or other payment (howsoever described) to the Borrower or a
third party in connection with the purchase by the Borrower of the Newbuilding,
other than as disclosed to the Lender in writing on or prior to the date of this
Agreement.
9.14 At the date of this Agreement, the Borrower is in compliance with
Clauses 10.2, 10.4, 10.9 and 10.13.
9.15 The Borrower has paid all taxes applicable to, or imposed on or in
relation to the Borrower, its business or any Ship.
10 GENERAL UNDERTAKINGS
10.1 The Borrower undertakes with the Lender and the Security Trustee to
comply with the following provisions of this Clause 10 at all times during the
Security Period, except as the Lender may otherwise permit in writing.
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10.2 The Borrower will hold the legal title to, and own the entire
beneficial interest in each Ship, her Insurances and her Earnings, free from
all Security Interests and other interests and rights of every kind, except for
those created by the Finance Documents and the effect of assignments contained
in the Finance Documents, but this undertaking shall not apply to the
Newbuilding until the second Drawdown Date.
10.3 The Borrower will not transfer, lease or otherwise dispose of:
(a) all or a substantial part of its assets, whether by one
transaction or a number of transactions, whether related or
not; or
(b) any debt payable to it or any other right (present, future or
contingent right) to receive a payment, including any right to
damages or compensation.
10.4 The Borrower will not incur any liabilities or obligations except:
(a) those existing at the date of this Agreement;
(b) those arising under the Building Contract and the Finance
Documents;
(c) those incurred in the ordinary course of managing, operating
and chartering any vessel owned, managed or chartered by the
Borrower;
(d) those incurred in ordering and acquiring one additional
platform supply vessel of the same UT 755 design as the
Newbuilding and otherwise as already disclosed by the Borrower
to the Lender in writing; or
(e) in addition to those covered by paragraphs (a) to (d) above,
those not exceeding L.500,000 in aggregate at any time.
10.5 All financial and other information which is provided in writing by
or on behalf of the Borrower under or in connection with any Finance Document
will be true and not misleading and will not omit any material fact or
consideration.
10.6 The Borrower will send to the Lender:
(a) as soon as possible, but in no event later than 150 days
after the end of each financial year of the Borrower, the
audited accounts of the Borrower;
(b) as soon as possible, but in no event later than 45 days
after the end of each quarter in each financial year of the
Borrower:
(i) unaudited accounts of the Borrower prepared in
accordance with accounting principles generally
accepted in England, consistently applied and
certified as to their correctness by a director of the
Borrower; and
(ii) management accounts in a format approved by the
Lender which show the results of the operation of each
Ship during the preceding financial quarter and which
are certified as to their correctness by a director of
the Borrower; and
(iii) a compliance certificate in the form set out in
Schedule 4 signed by a director of the Borrower.
10.7 All accounts (audited and unaudited) delivered under Clause 10.6 will:
(a) be prepared in accordance with all applicable laws and
accounting principles generally accepted in England
consistently applied;
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(b) give a true and fair view of the state of affairs of the
Borrower at the date of those accounts and of its profit for
the period to which those accounts relate; and
(c) fully disclose or provide for all significant liabilities of
the Borrower.
10.8 The Borrower will send to the Lender, at the same time as they are
despatched, copies of all communications which are despatched to the Borrower's
shareholders or creditors or any class of them (other than communications to a
specific creditor under the terms of any agreement with that creditor)
10.9 The Borrower will maintain in force and promptly obtain or renew,
and will promptly send certified copies to the Lender of, all official
consents required:
(a) for the Borrower to perform its obligations under any Finance
Document;
(b) for the validity or enforceability of any Finance Document;
(c) for the Borrower to continue to own and operate each Ship;
and the Borrower will comply with the terms of all such official
consents.
10.10 The Borrower will promptly register, file, record or enrol any Finance
Document with any court or authority in England, Bermuda or Panama, pay any
stamp, registration or similar tax in England, Bermuda or Panama in respect of
any Finance Document, give any notice or take any other step which may be or
become necessary or desirable for any Finance Document to be valid, enforceable
or admissible in evidence or to ensure or protect the priority of any Security
Interest which it creates.
10.11 The Borrower will provide the Lender with details of any legal or
administrative action involving the Borrower, any Security Party or any Ship,
her Earnings or her Insurances as soon as such action is instituted or it
becomes apparent to the Borrower that it is likely to be instituted, unless it
is clear that the legal or administrative action cannot be considered material
in the context of any Finance Document.
10.12 The Borrower will not agree to any material amendment or supplement
to, or waive or fail to enforce, the Building Contract or any of its
provisions.
10.13 The Borrower will maintain its registered office, and keep its
corporate documents and records, at the address stated at the commencement of
this Agreement.
10.14 The Borrower will, within two Business Days after service by the
Lender of a written request, serve on the Lender a notice which is signed by
two directors of the Borrower and which:
(a) states that no Event of Default or Potential Event of
Default has occurred; or
(b) states that no Event of Default or Potential Event of
Default has occurred, except for a specified event or matter,
of which all material details are given.
10.15 The Borrower will notify the Lender as soon as the Borrower becomes
aware of:
(a) the occurrence of an Event of Default or a Potential Event
of Default; or
(b) any matter which indicates that an Event of Default or a
Potential Event of Default may have occurred;
and will thereafter keep the Lender fully up-to-date with all
developments.
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10.16 The Borrower will, as soon as practicable after receiving the request,
provide the Lender with any additional financial or other information relating:
(a) to the Borrower, any Ship, her Insurances or her Earnings;
or
(b) to any other matter relevant to, or to any provision of, a
Finance Document;
which may reasonably be requested by the Lender at any time.
11 CORPORATE UNDERTAKINGS
11.1 The Borrower also undertakes with the Lender and the Security
Trustee to comply with the following provisions of this Clause 11 at all times
during the Security Period except as the Lender may otherwise permit (such
permission not to be unreasonably withheld in relation to Clause 11.3(g)).
11.2 The Borrower will maintain its separate corporate existence under
the laws of England.
11.3 The Borrower will not:
(a) make any material change in the nature of its business as
conducted at the date of this Agreement; or
(b) repay any principal of or interest on a loan owing to any
such person or company as is referred to in Clause 11.3(c)
below or pay any dividend or make any other form of
distribution or effect any form of redemption, purchase or
return of share capital unless, after doing so, the aggregate
of the net working capital of the Borrower and of each
Guarantor exceeds L.4,000,000; or
(c) provide any form of credit or financial assistance to:
(i) a person who is directly or indirectly interested in
the Borrower's share or loan capital; or
(ii) any company in or with which such a person is
directly or indirectly interested or connected;
or enter into any transaction with or involving such a person
or company on terms which are, in any respect, less
favourable to the Borrower than those which it could obtain
in a bargain made at arms' length;
(d) assign or otherwise dispose of any book debt;
(e) issue, allot or grant any person a right to any shares in
its capital or repurchase or reduce its issued share capital;
(f) acquire any shares or other securities other than government
issued bills and bonds, certificates of deposit issued by
prime banks and marketable securities quoted on a recognised
stock exchange, or enter into any transaction in a
derivative (other than an interest rate or currency hedge
entered into in the ordinary course of business); or
(g) enter into any form of amalgamation, merger or de- merger or
any form of reconstruction or reorganisation.
11.4 The Borrower will:
(a) at all times retain Liquid Assets of at least L.500,000;
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(b) ensure that the Borrower's Value Adjusted Equity is at least
L.12,000,000; and
(c) ensure that the Borrower's Value Adjusted Equity is at least
40 per cent. of the Borrower's Value Adjusted Total Assets.
12 SECURITY COVER
12.1 The Borrower undertakes with the Lender and the Security Trustee
that, if the Lender notifies the Borrower that:
(a) the aggregate of the market values (determined as provided
below) of the Ships; plus
(b) the net realisable value of any additional security
previously provided under this Clause 12;
is below 150 per cent. of the Loan, the Borrower will, within one
month after the date on which the Lender's notice is served, either:
(i) provide, or ensure that a third party provides,
additional security which, in the reasonable opinion
of the Lender, has a net realisable value at least
equal to the shortfall and which, if it consists of
or includes a Security Interest, covers such asset or
assets and is documented in such terms as the Lender
may reasonably approve or require; or
(ii) prepay in accordance with Clause 7 such part (at
least) of the Loan as will eliminate the shortfall.
12.2 In Clause 12.1 "security" means a Security Interest over an asset or
assets (whether securing the Borrower's liabilities under the Finance Documents
or a guarantee in respect of those liabilities), or a guarantee, letter of
credit or other security in respect of the Borrower's liabilities under the
Finance Documents.
12.3 The Borrower shall not be deemed to have complied with Clause 12.1
(i) above until the Lender has received in connection with the additional
security certified copies of documents of the kinds referred to in paragraphs
3, 4 and 5 of Part I Schedule 2 below and such legal opinions in terms
reasonably acceptable to the Lender from such lawyers as it may select.
12.4 The market value of a Ship at any date is the arithmetic mean of the
values shown by valuations prepared:
(a) as at a date not more than 14 days previously;
(b) by 2 independent sale and purchase shipbrokers which
the Borrower has appointed and the Lender has approved or (if
the Borrower has not appointed 2 such shipbrokers promptly
after a request from the Lender to do so) which the Lender
has appointed for the purpose;
(c) with or without physical inspection of that Ship (as the
Lender may require);
(d) on the basis of a sale for prompt delivery for cash on
normal arm's length commercial terms as between a willing
seller and a willing buyer, free of any existing charter or
other contract of employment;
(e) after deducting the estimated amount of the usual and
reasonable expenses which would be incurred in connection
with the sale.
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12.5 The net realisable value of any additional security which is provided
under Clause 12.1 and which consists of a Security Interest over a vessel shall
be that shown by a valuation complying with the requirements of Clause 12.4.
12.6 Any valuation under Clause 12.1(i), 12.4 or 12.5 shall be binding
and conclusive as regards the Borrower, as shall be any valuation which the
Lender makes of a security which does not consist of or include a Security
Interest.
12.7 The Borrower shall promptly provide the Lender and any shipbroker or
expert acting under Clause 12.4 or 12.5 with any information which the Lender
or the shipbroker or expert may request for the purposes of the valuation; and,
if the Borrower fails to provide the information by the date specified in the
request, the valuation may be made on any basis and assumptions which the
shipbroker or the Lender (or the expert appointed by it) considers prudent.
12.8 The Borrower shall, on demand, pay the Lender the amount of the fees
and expenses of any shipbroker or expert instructed by the Lender under this
Clause (but not more often than twice in any calendar year) and all legal and
other expenses incurred by the Lender in connection with any matter arising out
of this Clause.
13 PAYMENTS AND CALCULATIONS
13.1 All payments to be made by the Borrower to the Lender or the
Security Trustee under a Finance Document shall be made to the Lender (or to
the Security Trustee, in the case of an amount payable to it):
(i) by not later than 11.00 a.m. (London time) on the
due date;
(ii) in same day Sterling funds settled in such manner
as the Lender shall specify as being customary at the
time for the settlement of international transactions
of the type contemplated by this Agreement);
(iii) in the case of an amount payable to the Lender, to
such account of the Lender with such bank as the
Lender may from time to time notify to the Borrower;
and
(iv) in the case of an amount payable to the Security
Trustee, to such account of the Security Trustee with
such bank as the Security Trustee may from time to
time notify to the Borrower.
13.2 If any payment by the Borrower under a Finance Document would
otherwise fall due on a day which is not a Business Day:
(a) the due date shall be extended to the next succeeding
Business Day; or
(b) if the next succeeding Business Day falls in the next
calendar month, the due date shall be brought forward to the
immediately preceding Business Day;
and interest shall be payable during any extension under paragraph
(a) at the rate payable on the original due date.
13.3 All interest and commitment fee and any other payments under any
Finance Document which are of an annual or periodic nature shall accrue from
day to day and shall be calculated on the basis of the actual number of days
elapsed and a 365 day year.
13.4 The Lender shall maintain an account showing the amounts advanced
by the Lender and all other sums owing to the Lender from the Borrower and each
Security Party under the Finance Documents and all payments in respect of those
amounts made by the Borrower and any Security Party.
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13.5 If the account maintained under Clauses 13.4 shows an amount to be
owing by the Borrower or a Security Party to the Lender, that account shall be
prima facie evidence that that amount is owing to the Lender.
14 APPLICATION OF RECEIPTS
14.1 Except as any Finance Document may otherwise provide, any sums which
are received or recovered by the Lender or the Security Trustee under or by
virtue of any Finance Document shall be applied:-
FIRST: in or towards satisfaction of any amounts then due and payable
under the Finance Documents (or any of them) in such order of
application and/or such proportions as the Lender may specify by
notice to the Borrower, the Security Parties and the Security
Trustee;
SECONDLY: in retention of an amount equal to any amount not then due
and payable under any Finance Document but which the Lender, by
notice to the Borrower, the Security Parties and the Security
Trustee, states in its opinion will or may become due and payable in
the future and, upon those amounts becoming due and payable, in or
towards satisfaction of them in accordance with the foregoing
provisions of this Clause; and
THIRDLY: any surplus shall be paid to the Borrower or to any other
person appearing to be entitled to it.
14.2 The Lender may, by notice to the Borrower, the Security Parties and
the Security Trustee, provide for a different manner of application from that
set out in Clause 14.1 either as regards a specified sum or sums or as regards
sums in a specified category or categories.
14.3 The Lender may give notices under Clause 14.2 from time to time;
and such a notice may be stated to apply not only to sums which may be received
or recovered in the future, but also to any sum which has been received or
recovered on or after the third Business Day before the date on which the
notice is served.
14.4 This Clause 14 and any notice which the Lender gives under Clause
14.2 shall override any right of appropriation possessed, and any appropriation
made, by the Borrower or any Security Party.
15 APPLICATION OF EARNINGS
15.1 The Borrower undertakes with the Lender to ensure that, throughout
the Security Period (and subject only to the provisions of the Deeds of
Covenant), all the Earnings are paid to the Earnings Account.
15.2 Until such time after an Event of Default occurs as the Lender
directs to the contrary, sums standing to the credit of the Earnings Account
shall be at the disposal of the Borrower for any purpose not inconsistent with
the terms of the Finance Documents.
15.3 The Lender shall be entitled (but not obliged) from time to time to
debit the Earnings Account without prior notice in order to discharge any
amount due and payable to it under Clause 17 or 18 or payment of which it or
the Security Trustee has become entitled to demand under Clause 17 or 18.
16 EVENTS OF DEFAULT
16.1 An Event of Default occurs if:
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(a) the Borrower or any Security Party fails to pay when due or
(if so payable) on demand any sum payable under a Finance
Document or under any document relating to a Finance
Document; or
(b) any breach occurs of Clause 8.2, 10.2, 10.3, 11.2, 11.3,
11.4 or 12.1; or
(c) any breach by the Borrower or any Security Party occurs of
any provision of a Finance Document (other than a breach
covered by paragraph (a) or (b) above) unless the breach is
capable of remedy and within 14 Business Days (or such other
remedy period as may be specified by the relevant provision
of the Finance Documents) after the Lender serves on the
Borrower a notice requiring the breach to be remedied, the
Lender notifies the Borrower in writing that the breach has
been remedied to its satisfaction; or
(d) any representation, warranty or statement made by, or by an
officer of, the Borrower or a Security Party in a Finance
Document or in the Drawdown Notice or any other notice or
document relating to a Finance Document is untrue or
misleading when it is made; or
(e) any of the following occurs in relation to any Financial
Indebtedness of, or aggregating, L.50,000 or more or the
equivalent in another currency of a Relevant Person (as
defined in Clause 16.7) unless such occurrence is being
contested by bona fide proceedings diligently pursued:
(i) any such Financial Indebtedness is not paid when due
or, if so payable, on demand; or
(ii) any such Financial Indebtedness becomes due and
payable or capable of being declared due and payable
prior to its stated maturity date as a consequence of
any event of default; or
(iii) a lease, hire purchase agreement or charter creating
any such Financial Indebtedness is terminated by the
lessor or owner or becomes capable of being
terminated as a consequence of any termination event;
or
(iv) any overdraft, loan, note issuance, acceptance credit,
letter of credit, guarantee, foreign exchange or
other facility, or any swap or other derivative
contract or transaction, relating to any such
Financial Indebtedness ceases to be available or
becomes capable of being terminated as a result of
any event of default, or cash cover is required, or
becomes capable of being required, in respect of such
a facility as a result of any event of default; or
(v) any Security Interest securing any such Financial
Indebtedness becomes enforceable; or
(f) any of the following occurs in relation to a Relevant Person:
(i) a Relevant Person becomes, in the reasonable opinion
of the Lender, unable to pay its debts as they fall
due; or
(ii) any assets of a Relevant Person are subject of any
form of execution, attachment, arrest, sequestration
or distress in respect of a sum of, or sums
aggregating, L.50,000 or more or the equivalent in
another currency unless such event is being contested
by bona fide proceedings diligently pursued; or
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(iii) any administrative or other receiver is appointed
over any asset of a Relevant Person; or
(iv) a Relevant Person makes any formal declaration of
bankruptcy or any formal statement to the effect that
it is insolvent or likely to become insolvent, or a
winding up or administration order is made in
relation to a Relevant Person, or the members or
directors of a Relevant Person pass a resolution to
the effect that it should be wound up, placed in
administration or cease to carry on business, save
that this paragraph does not apply to a fully solvent
winding up of a Relevant Person other than the
Borrower or a Guarantor which is, or is to be,
effected for the purposes of an amalgamation or
reconstruction previously approved by the Lender and
effected not later than 3 months after the
commencement of the winding up; or a petition is
(v) presented in any Pertinent Jurisdiction for the
winding up or administration, or the appointment of a
provisional liquidator, of a Relevant Person unless
the petition is being contested in good faith and on
substantial grounds and is dismissed or withdrawn
within 30 days of the presentation of the petition;
or
(vi) a Relevant Person petitions a court, or presents any
proposal for, any form of judicial or non-judicial
suspension or deferral of payments, reorganisation of
its debt (or certain of its debt) or arrangement with
all or a substantial proportion (by number or value)
of its creditors or of any class of them or any such
suspension or deferral of payments, reorganisation or
arrangement is effected by court order, contract or
otherwise; or any meeting
(vii) of the members or directors of a Relevant Person
is summoned for the purpose of considering a
resolution or proposal to authorise or take any
action of a type described in paragraphs (iii), (iv),
(v) or (vi) above; or
(viii) in a Pertinent Jurisdiction other than England, any
event occurs or any procedure is commenced which, in
the opinion of the Lender, is similar to any of the
foregoing; or
(g) the Borrower ceases or suspends carrying on its business or
a part of its business which, in the opinion of the Lender,
is material in the context of this Agreement; or
(h) it becomes unlawful in any Pertinent Jurisdiction or
impossible (i) for the Borrower or any Security Party to
discharge any liability under a Finance Document or to comply
with any other obligation which the Lender considers material
under a Finance Document or (ii) for the Lender or the
Security Trustee to exercise or enforce any right under, or
to enforce any Security Interest created by, a Finance
Document; or
(i) any official consent necessary to enable the Borrower to own,
operate or charter the Ships or to enable the Borrower or any
Security Party to comply with any provision which the Lender
considers material of a Finance Document or the Building
Contract is not granted, expires without being renewed, is
revoked or becomes liable to revocation or any condition of
such a consent is not fulfilled; or
(j) it appears to the Lender that, without its prior consent, a
material change has occurred or probably has occurred in the
ultimate beneficial ownership of any of the shares in the
Borrower or either Guarantor or in the ultimate control of
the voting rights attaching to any of those shares; or
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(k) any provision which the Lender considers material of a
Finance Document proves to have been or becomes invalid or
unenforceable, or a Security Interest created by a Finance
Document proves to have been or becomes invalid or
unenforceable or such a Security Interest proves to have
ranked after, or loses its priority to, another Security
Interest or any other third party claim or interest; or
(l) the security constituted by a Finance Document is in any way
imperilled or in jeopardy; or
(m) there occurs any material (in the opinion of the Lender)
adverse change in the financial position of the Borrower or
either Guarantor in the light of which the Lender considers
that there is a significant risk that the Borrower or either
Guarantor is, or will later become, unable to discharge its
liabilities under the Finance Documents to which it is a
party as they fall due.
16.2 On, or at any time after, the occurrence of an Event of Default:
(a) the Lender may;
(i) serve on the Borrower a notice stating that all
obligations of the Lender to the Borrower under this
Agreement are terminated; and/or
(ii) serve on the Borrower a notice stating that the Loan,
all accrued interest and all other amounts accrued or
owing under this Agreement are immediately due and
payable; and/or
(iii) take any other action which, as a result of the
Event of Default or any notice served under paragraph
(i) or (ii) above, the Lender is entitled to take
under any Finance Document or any applicable law;
and/or
16.2 (b) the Security Trustee may take any action which, as a result
of the Event of Default or any notice served under paragraph
(a) (i) or (ii) above, the Security Trustee and/or the Lender
is entitled to take under any Finance Document or any
applicable law.
16.3 On the service of a notice under paragraph (a)(i) of Clause 16.2, all
the obligations of the Lender to the Borrower under this Agreement shall
terminate.
16.4 On the service of a notice under paragraph (a)(ii) of Clause 16.2, the
Loan, all accrued interest and all other amounts accrued or owing from the
Borrower or any Security Party under this Agreement and every other Finance
Document shall become immediately due and payable.
16.5 The Lender may serve notices under paragraphs (a) (i) and (ii) of
Clause 16.2 simultaneously or on different dates and it may take any action
referred to in that Clause if no such notice is served or simultaneously with
or at any time after the service of both or either of such notices.
16.6 Neither the Lender nor the Security Trustee nor any receiver or
manager appointed by the Lender or the Security Trustee, shall have
any liability to the Borrower or a Security Party:
(a) for any loss caused by an exercise of rights under,
or enforcement of a Security Interest created by, a
Finance Document or by any failure or delay to
exercise such a right or to enforce such a Security
Interest; or
(b) as mortgagee in possession or otherwise, for any
income or principal amount which might have been
produced by or realised from any asset comprised in
such a
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Security Interest or for any reduction (however
caused) in the value of such an asset;
except that this does not exempt the Lender, the Security Trustee or
a receiver or manager from liability for losses shown to have been
caused mainly and directly by the gross and culpable negligence or
the dishonesty of the Lender's or the Security Trustee's own officers
and employees or (as the case may be) such receiver's or manager's
own partners or employees.
16.7 In this Clause 16 "a Relevant Person" means the Borrower, each
Security Party and any company which is a subsidiary or a fellow-subsidiary of
the Borrower or a Security Party; but excluding any company which is dormant
and the value of whose gross assets is L.50,000 or less.
16.8 In Clause 16.1(e) references to an event of default or a termination
event include any event, howsoever described, which is similar to an event of
default in a facility agreement or a termination event in a finance lease; and
in Clause 16.1(f) "petition" includes an application.
17 FEES AND EXPENSES
17.1 The Borrower shall pay to the Lender:
(a) (i) on the earlier of the first Drawdown Date and the date
falling one month after the date of this Agreement, an
arrangement fee of L.27,847.50 and (ii) on the earlier of the
second Drawdown date and 30th June, 1998, an arrangement fee
of L.22,500; and
(b) quarterly in arrears during the period from (and including)
9th May, 1997 to the earlier of (i) the second Drawdown Date
and (ii) 30th June, 1998, and on the last day of that period
a commitment fee at the rate of 3/8 per cent. per annum on
the undrawn amount of the Loan;
(c) in respect of any amounts prepaid pursuant to Clause 7.12
which remain available for re-borrowing, quarterly in arrears
during the period from (and including) 9th May, 1997 to the
earlier of (i) the date on which such amount is advanced to
the Borrower, and (ii) such amount ceases to be available for
re-borrowing, and on the last day of that period a commitment
fee at the rate of 3/8 per cent. per annum on the undrawn
amount of the Loan, and
(d) for the benefit of the Security Trustee, on the first
Drawdown Date and each anniversary thereof, a trustee fee of
L.5,000.
17.2 The Borrower shall pay to the Lender or the Security Trustee on its
demand the amount of all expenses incurred by the Lender or the Security
Trustee in connection with the negotiation, preparation, execution or
registration of any Finance Document or any related document or with any
transaction contemplated by a Finance Document or a related document.
17.3 The Borrower shall pay to the Lender or the Security Trustee, on its
demand, the amount of all expenses incurred by the Lender or the Security
Trustee in connection with:
(a) any amendment or supplement to a Finance Document, or any
proposal for such an amendment to be made;
(b) any consent or waiver by the Lender or the Security Trustee
concerned under or in connection with a Finance Document, or
any request for such a consent or waiver;
(c) the valuation of any security provided or offered under
Clause 12 or any other matter relating to such security; or
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(d) any step taken by the Lender or the Security Trustee with a
view to the protection, exercise or enforcement of any right
or Security Interest created by a Finance Document or for any
similar purpose.
There shall be recoverable under paragraph (d) the full amount of
all legal expenses, whether or not such as would be
allowed under rules of court or any taxation or other procedure
carried out under such rules.
17.4 The Borrower shall promptly pay any tax payable on or by reference
to any Finance Document, and shall, on the Lender's demand, fully indemnify the
Lender and the Security Trustee against any liabilities and expenses resulting
from any failure or delay by the Borrower to pay such a tax.
17.5 A notice which is signed by two officers of the Lender or the
Security Trustee, which states that a specified amount, or aggregate amount, is
due to the Lender or the Security Trustee (as the case may be) under this
Clause 17 and which indicates (without necessarily specifying a detailed
breakdown) the matters in respect of which the amount, or aggregate amount, is
due shall be prima facie evidence that the amount, or aggregate amount, is due.
18 INDEMNITIES
18.1 The Borrower shall fully indemnify the Lender and the Security
Trustee on its demand in respect of all expenses, liabilities and losses which
are incurred by the Lender or the Security Trustee, or which the Lender or the
Security Trustee reasonably and with due diligence estimates that it will
incur, as a result of or in connection with:
(a) the Loan not being borrowed on the date specified in the
Drawdown Notice for any reason other than a default by the
Lender or the Security Trustee;
(b) the receipt or recovery of all or any part of the Loan or an
overdue sum otherwise than on the last day of an Interest
Period or other relevant period;
(c) any failure (for whatever reason) by the Borrower to make
payment of any amount due under a Finance Document on the due
date or, if so payable, on demand (after giving credit for
any default interest paid by the Borrower on the amount
concerned under Clause 6);
(d) the occurrence and/or continuance of an Event of Default or
a Potential Event of Default and/or the acceleration of
repayment of the Loan under Clause 16;
and in respect of any tax (other than tax on its overall net income)
for which the Lender or the Security Trustee is liable in connection
with any amount paid or payable to the Lender (whether for its own
account or otherwise) under any Finance Document.
18.2 Without limiting its generality, Clause 18.1 covers any liability,
expense or loss, including a loss of a prospective profit, incurred
by the Lender or the Security Trustee:
(a) in liquidating or employing deposits from third parties
acquired or arranged to fund or maintain all or any part of
the Loan and/or any overdue amount (or an aggregate amount
which includes the Loan or any overdue amount); and
(b) in terminating, or otherwise in connection with, any interest
and/or currency swap or any other transaction entered into
(whether with another legal entity or with another office or
department of the Lender or the Security Trustee) to hedge
any exposure arising under this Agreement or a number of
transactions of which this Agreement is one.
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18.3 The Borrower shall fully indemnify the Lender and the Security
Trustee on its demand in respect of all claims, demands, proceedings,
liabilities, taxes, losses and expenses of every kind ("liability items") which
may be made or brought against, or incurred by, the Lender or the Security
Trustee, in any country, in relation to:
(a) any action taken, or omitted or neglected to be taken, under
or in connection with any Finance Document by the Lender or
the Security Trustee or by any receiver appointed under a
Finance Document;
(b) any other event, matter or question which occurs or arises
at any time during the Security Period and which has any
connection with, or any bearing on, any Finance Document, any
payment or other transaction relating to a Finance Document
or any asset covered (or previously covered) by a Security
Interest created (or intended to be created) by a Finance
Document;
other than liability items which are shown to have been caused mainly
and directly by the gross and culpable negligence or the dishonesty
of the Lender's or the Security Trustee's own officers or employees.
18.4 Without prejudice to its generality, Clause 18.3 covers any
liability items which arise, or are asserted, under or in connection with any
law relating to safety at sea, pollution or the protection of the environment.
18.5 If any sum due from the Borrower or any Security Party to the Lender
or the Security Trustee under a Finance Document or under any order or judgment
relating to a Finance Document has to be converted from the currency in which
the Finance Document provided for the sum to be paid (the "Contractual
Currency") into another currency (the "Payment Currency") for the purpose of:
(a) making or lodging any claim or proof against the Borrower or
any Security Party, whether in its liquidation, any
arrangement involving it or otherwise; or
(b) obtaining an order or judgment from any court or other
tribunal; or
(c) enforcing any such order or judgment;
the Borrower shall indemnify the Lender against the loss arising when
the amount of the payment actually received by the Lender is
converted at the available rate of exchange into the Contractual
Currency.
Here the "available rate of exchange" means the rate at which the
Lender is able at the opening of business (London time) on the
Business Day after it receives the sum concerned to purchase the
Contractual Currency with the Payment Currency.
18.6 Clause 18.5 creates a separate liability of the Borrower which is
distinct from its other liabilities under the Finance Documents and which shall
not be merged in any judgment or order relating to those other liabilities.
18.7 A notice which is signed by two officers of the Lender, which states
that a specified amount, or aggregate amount, is due to the Lender under this
Clause 18 and which indicates (without necessarily specifying a detailed
breakdown) the matters in respect of which the amount, or aggregate amount, is
due shall be prima facie evidence that the amount, or aggregate amount, is due.
19 NO SET-OFF OR TAX DEDUCTION
19.1 All amounts due from the Borrower under a Finance Document
shall be paid:
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(a) without any form of set-off, cross-claim or condition; and
(b) free and clear of any tax deduction except a tax deduction
which the Borrower is required by law to make.
19.2 If the Borrower is required by law to make a tax deduction from any
payment:
(a) the Borrower shall notify the Lender as soon as it becomes
aware of the requirement;
(b) the Borrower shall pay the tax deducted to the appropriate
taxation authority promptly, and in any event before any fine
or penalty arises;
(c) the amount due in respect of the payment shall be increased
by the amount necessary to ensure that the Lender and the
Security Trustee receives and retains (free from any
liability relating to the tax deduction) a net amount which,
after the tax deduction, is equal to the full amount which it
would otherwise have received.
19.3 Within one month after making any tax deduction, the Borrower shall
deliver to the Lender documentary evidence satisfactory to the Lender that the
tax had been paid to the appropriate taxation authority.
19.4 In this Clause 19 "tax deduction" means any deduction or withholding
for or on account of any present or future tax except tax on the Lender's or
Security Trustee's overall net income.
20 ILLEGALITY, ETC
20.1 This Clause 20 applies if the Lender notifies the Borrower that it
has become, or will with effect from a specified date, become:
(a) unlawful or prohibited as a result of the introduction of a
new law, an amendment to an existing law or a change in the
manner in which an existing law is or will be interpreted or
applied; or
(b) contrary to, or inconsistent with, an official requirement,
for the Lender to maintain or give effect to any of its
obligations under this Agreement in the manner contemplated
by this Agreement.
20.2 On the Lender so notifying the Borrower, the Lender's obligation to
make the Loan shall terminate; and thereupon or, if later, on the date
specified in the Lender's notice as the date on which the notified event would
become effective the Borrower shall prepay the Loan in full in accordance with
Clause 7.
21 INCREASED COSTS
21.1 This Clause 21 applies if the Lender notifies the Borrower that it
considers that as a result of:
(a) the introduction or alteration after the date of this
Agreement of a law or an official requirement or an
alteration after the date of this Agreement in the manner in
which a law is interpreted or applied (disregarding any
effect which relates to the application to payments under
this Agreement of a tax on the Lender's overall net income);
or
(b) the effect of complying with any official requirement
(including any which relates to capital adequacy or liquidity
controls or which affects the manner in which the Lender
allocates capital resources to its obligations under this
Agreement) which is
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introduced, or altered, or the interpretation or application
of which is altered, after the date of this Agreement,
is that the Lender (or a parent company of it) has incurred or will
incur an "increased cost", that is to say,:
(i) an additional or increased cost incurred as a result
of, or in connection with, the Lender having entered
into, or being a party to, this Agreement or having
taken an assignment of rights under this Agreement,
of funding or maintaining the Loan or performing its
obligations under this Agreement, or of having
outstanding all or any part of the Loan or other
unpaid sums; or
(ii) a reduction in the amount of any payment to the
Lender under this Agreement or in the effective
return which such a payment represents to the Lender
or on its capital;
(iii) an additional or increased cost of funding all or
maintaining all or any of the advances comprised in
a class of advances formed by or including the Loan
or (as the case may require) the proportion of that
cost attributable to the Loan; or
(iv) a liability to make a payment, or a return foregone,
which is calculated by reference to any amounts
received or receivable by the Lender under this
Agreement;
but not an item attributable to a change in the rate of tax
on the overall net income of the Lender (or a parent company of it)
or an item covered by the indemnity for tax in Clause 18.1 or by
Clause 19.
21.2 The Borrower shall pay to the Lender, on its demand, the amounts
which the Lender from time to time notifies the Borrower that it has specified
to be necessary to compensate it for the increased cost.
21.3 If the Borrower is not willing to continue to compensate the Lender
for the increased cost under Clause 21.2, the Borrower may give the Lender not
less than 14 days' notice of its intention to prepay the Loan at the end of an
Interest Period.
21.4 That notice shall be irrevocable; and on the date specified in its
notice of intended prepayment, the Borrower shall prepay (without premium or
penalty) the Loan, together with accrued interest thereon at the applicable
rate plus the Margin.
21.5 Clause 7 shall apply in relation to the prepayment.
22 CHANGES IN CIRCUMSTANCES
21.1 This Clause 22 applies if by reason of circumstances affecting
the London Interbank Market the Lender is unable to determine LIBOR in
accordance with Clause 4.3 or is unable to obtain Sterling in the London
Interbank Market in order to fund the Loan (or any part of it) during any
Interest Period.
22.2 The Lender shall promptly notify the Borrower stating the
circumstances which have caused its notice to be given.
23.3 If the Lender's notice is served on the Borrower before an Advance
is made, the Lender's obligation to make that Advance shall be suspended while
the circumstances referred to in the Lender's notice continue.
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22.4 The Borrower and the Lender shall use reasonable endeavours to agree,
within the 30 days after the date on which the Lender serves its notice under
Clause 22.2 (the "Negotiation Period"), an alternative interest rate or (as the
case may be) an alternative basis for the Lender to fund or continue to fund
the Loan during the Interest Period concerned.
22.5 Any alternative interest rate or an alternative basis which is
agreed during the Negotiation Period shall take effect in accordance with the
terms agreed.
22.6 However, if an alternative interest rate or alternative basis is not
agreed within the Negotiation Period, and the relevant circumstances are
continuing at the end of the Negotiation Period, then the Lender shall set an
interest period and interest rate representing the cost of funding of the
Lender in Sterling or in any available currency of the Loan plus the Margin;
and the procedure provided for by this Clause 22.6 shall be repeated if the
relevant circumstances are continuing at the end of the interest period so set
by the Lender.
22.7 If the Borrower does not agree with an interest rate set by the
Lender under Clause 22.6, the Borrower may give the Lender not less than 15
Business Days' notice of its intention to prepay at the end of the interest
period set by the Lender.
22.8 That notice shall be irrevocable; and on the last Business Day of
the interest period set by the Lender, the Borrower shall prepay (without
premium or penalty) the Loan, together with accrued interest thereon at the
applicable rate plus the Margin.
22.9 Clause 7 shall apply in relation to the prepayment.
23 SET-OFF
23.1 The Lender and the Security Trustee may without prior notice:
(a) apply any balance (whether or not then due) which at any
time stands to the credit of any account in the name of the
Borrower at any office in any country of the Lender or the
Security Trustee in or towards satisfaction of any sum then
due from the Borrower to the Lender or the Security Trustee
under any of the Finance Documents; and
(b) for that purpose:
(i) break, or alter the maturity of, all or any part of
a deposit of the Borrower;
(ii) convert or translate all or any part of a deposit or
other credit balance into Sterling;
(iii) enter into any other transaction or make any entry
with regard to the credit balance which the Lender or
the Security Trustee considers appropriate.
23.2 Neither the Lender nor the Security Trustee shall be obliged to
exercise any of its rights under Clause 23.1; and those rights shall be without
prejudice and in addition to any right of set-off, combination of accounts,
charge, lien or other right or remedy to which the Lender or the Security
Trustee is entitled (whether under the general law or any document).
24 TRANSFERS AND CHANGES IN LENDING OFFICES
24.1 The Borrower may not, without the consent of the Lender:
(a) transfer any of its rights or obligations under any Finance
Document; or
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(b) enter into any merger, de-merger or other reorganisation,
or carry out any other act, as a result of which any of its
rights or liabilities would vest in, or pass to, another
person.
24.2 Subject to Clauses 24.4, a Lender (the "Transferor Lender") may at
any time at its sole cost and expense, with the consent of the Borrower (such
consent not to be unreasonably withheld and not to be required in the case of a
transfer to a subsidiary or the parent company of the Transferor Lender or to
another subsidiary of its parent company), cause:
(a) its rights in respect of all or part of the Loan; or
(b) its obligations to advance all or part of the Loan; or
(c) a combination of (a) and (b);
to be (in the case of its rights) transferred to, or (in the case of
its obligations) assumed by, another bank or financial institution (a
"Transferee Lender") by delivering to the Security Trustee a
completed certificate in the form set out in Schedule 3 with any
modifications approved or required by the Security Trustee (a
"Transfer Certificate") executed by the Transferor Lender and the
Transferee Lender.
24.3 As soon as reasonably practicable after a Transfer Certificate is
delivered to the Security Trustee, it shall (unless it has reason to believe
that the Transfer Certificate may be defective):
(a) sign the Transfer Certificate on behalf of itself, the
Borrower and each Security Party;
(b) on behalf of the Transferee Lender, send to the Borrower
and each Security Party letters or faxes notifying them of
the Transfer Certificate and attaching a copy of it;
(c) send to the Transferee Lender copies of the letters or faxes
sent under paragraph (b) above.
24.4 A Transfer Certificate becomes effective on the date, if any,
specified in the Transfer Certificate as its effective date, provided that it
is signed by the Security Trustee under Clause 24.3 on or before that date.
24.5 No assignment or transfer of any right or obligation of a Lender
under any Finance Document is binding on, or effective in relation to, the
Borrower, any Security Party or the Security Trustee unless it is effected,
evidenced or perfected by a Transfer Certificate.
24.6 However, if a Lender enters into any merger, de-merger or other
reorganisation as a result of which all its rights or obligations vest
in another person (the "successor"), the Security Trustee may, if it sees fit,
by notice to the successor and the Borrower waive the need for the execution
and delivery of a Transfer Certificate; and, upon service of the Security
Trustee's notice, the successor shall become a Lender with the same obligations
and rights as were held by the predecessor Lender.
24.7 A Transfer Certificate takes effect in accordance with English law
as follows:
(a) to the extent specified in the Transfer Certificate, all
rights and interests (present, future or contingent) which
the Transferor Lender has under or by virtue of the Finance
Documents are assigned to the Transferee Lender absolutely,
free of any defects in the Transferor Lender's title and of
any rights or equities which the Borrower or any Security
Party had against the Transferor Lender;
(b) the Transferor Lender's obligations are discharged to the
extent specified in the Transfer Certificate;
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(c) the Transferee Lender becomes a Lender with the obligations
previously held by the Transferor Lender specified in the
Transfer Certificate;
(d) the Transferee Lender becomes bound by all the provisions of
the Finance Documents which are applicable to the Lenders
generally, including those about the exclusion of liability
on the part of, and the indemnification of, the Security
Trustee and, to the extent that the Transferee Lender becomes
bound by those provisions (other than those relating to
exclusion of liability), the Transferor Lender ceases to be
bound by them;
(e) an Advance or part of an Advance which the Transferee Lender
makes after the Transfer Certificate's effective date ranks
in point of priority and security in the same way as it would
have ranked had it been made by the transferor, assuming that
any defects in the transferor's title and any rights or
equities of the Borrower or any Security Party against the
Transferor Lender had not existed; and
(f) the Transferee Lender becomes entitled to all the rights
under the Finance Documents which are applicable to the
Lenders generally and to the extent that the Transferee
Lender becomes entitled to such rights, the Transferor Lender
ceases to be entitled to them.
The rights and equities of the Borrower or any Security Party
referred to above include, but are not limited to, any right of set
off and any other kind of cross-claim.
24.8 The Borrower irrevocably authorises the Security Trustee to sign
Transfer Certificates on its behalf.
24.9 The Lender may sub-participate all or any part of its rights and/or
obligations under or in connection with the Finance Documents without the
consent of, or any notice to, the Borrower, any Security Party or the Security
Trustee.
24.10 The Lender may disclose to a potential transferee or sub-participant
any information which the Lender has received in relation to the Borrower, any
Security Party or their affairs under or in connection with any Finance
Document, unless the information is clearly of a confidential nature.
24.11 The Lender may change its lending office by giving notice to the
Borrower and the change shall become effective on the later of:
(a) the date on which the Borrower receives the notice; and
(b) the date, if any, specified in the notice as the date on
which the change will come into effect.
24.12 If, at the time of any transfer or change of lending office by the
Lender, circumstances exist which would oblige the Borrower to pay to the
Transferee Lender or the Lender under Clauses 19, 20 or 21 any sum in excess of
the sum (if any) which it would have been obliged to pay to the Lender under
the relevant Clause in the absence of that transfer or change of lending office
the Borrower shall not be obliged to pay that excess.
25 VARIATIONS AND WAIVERS
25.1 A document shall be effective to vary, waive, suspend or limit any
provision of a Finance Document, or the Lender's or the Security Trustee's
rights or remedies under such a provision or the general law, only if the
document is signed, or specifically agreed to by fax or telex, by the Borrower,
the Security Trustee and the Lender and, if the document relates to a Finance
Document to which a Security Party is party, by that Security Party.
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25.2 Except for a document which satisfies the requirements of Clauses
25.1, no document, and no act, course of conduct, failure or neglect to act,
delay or acquiescence on the part of the Lender or the Security Trustee (or any
person acting on its behalf) shall result in the Lender or the Security Trustee
(or any person acting on its behalf) being taken to have varied, waived,
suspended or limited, or being precluded (permanently or temporarily) from
enforcing, relying on or exercising:
(a) a provision of this Agreement or another Finance Document; or
(b) an Event of Default; or
(c) a breach by the Borrower or a Security Party of an
obligation under a Finance Document or the general law; or
(d) any right or remedy conferred by any Finance Document or by
the general law;
and there shall not be implied into any Finance Document any term or
condition requiring any such provision to be enforced, or such right
or remedy to be exercised, within a certain time.
26 NOTICES
26.1 Unless otherwise specifically provided, any notice under or in
connection with any Finance Document shall be given by letter, fax or telex;
and references in the Finance Documents to written notices, notices in writing
and notices signed by particular persons shall be construed accordingly.
26.2 A notice shall be sent:
(a) to the Borrower: 10 Charlotte Road
London SW13 9QJ
Fax No: 0181 748 568
with a copy to:
201 Energy Centre Parkway
Suite 200
Lafayette
Louisiana 70508
Fax No: 318 235 2584
and
5 Post Oak Park
Suite 1170
Houston
Texas 77027
Fax No: 713 963 9796
(b) to the Lender or P.O. Box 1166 Sentrum
the Security Trustee: 0107 Oslo
Fax No: 22 48 47 51
(att: International Loans Admin.)
or to such other address as the relevant party may notify the other.
26.3 Subject to Clauses 26.4 and 26.5:
(a) a notice which is delivered personally or posted shall be
deemed to be served, and shall take effect, at the time when
it is delivered;
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(b) a notice which is sent by telex or fax shall be deemed to be
served, and shall take effect, 2 hours after its transmission
is completed.
26.4 However, if under Clause 26.3 a notice would be deemed to be served:
(a) on a day which is not a business day in the place of receipt;
or
(b) on such a business day, but after 5 p.m. local time;
the notice shall (subject to Clause 26.5) be deemed to be served, and
shall take effect, at 9 a.m. on the next day which is such a business
day.
26.5 Clauses 26.3 and 26.4 do not apply if the recipient of a notice
notifies the sender within 2 hours after the time at which the notice would
otherwise be deemed to be served that the notice has been received in a form
which is illegible in a material respect.
26.6 Any notice under or in connection with a Finance Document shall be
in English.
26.7 In this Clause "notice" includes any demand, consent, authorisation,
approval, instruction, waiver or other communication.
27 THE SECURITY TRUSTEE
27.1 In this Clause the "Trust Property" means:
(a) all Security Interests and all rights granted to, or held or
exercisable by, the Security Trustee under or by virtue of
the Finance Documents, except rights clearly intended for the
sole benefit or protection of the Security Trustee;
(b) all moneys which are received or recovered by or on behalf of
the Security Trustee under or by virtue of any Security
Interest or right covered by paragraph (a) above, including
any moneys which are received or recovered by it as a result
of the enforcement or exercise by it of such a Security
Interest or right;
(c) all moneys and other assets which may accrue in respect of,
or be derived from, any moneys covered by paragraph (b)
above; and
(d) any rights or other assets which the Security Trustee, by
notice to the Lender, states shall be deemed to form part of
the Trust Property;
except any moneys which the Security Trustee has transferred to the
Lender or (being entitled to do so) has retained in accordance with
the following provisions of this Clause.
27.2 The Security Trustee shall:
(a) hold the Trust Property on trust for the Lender and the
Security Trustee; and
(b) deal with the Trust Property; in accordance with this Clause
and the other provisions of the Finance Documents.
27.3 Except as expressly stated to the contrary in any Finance Document,
any moneys which the Security Trustee receives or recovers and which are Trust
Property shall (without prejudice to the rights of the Security Trustee under
any Finance Document to credit any moneys received or recovered by it to any
suspense account) be transferred to the Lender for application in accordance
with Clauses 13 and 14.
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27.4 However, before transferring such moneys to the Lender, the Security
Trustee may deduct any sum then due and payable under this Agreement or any
other Finance Document to the Security Trustee or any receiver, agent or other
person appointed by it and retain that sum for itself or, as the case may
require, pay it to the other person to whom it is then due and payable; for
this purpose if the Security Trustee has become entitled to require a sum to be
paid to it on demand, that sum shall be treated as due and payable, even if no
demand has yet been served.
27.5 In addition to its rights under or by virtue of this Agreement
and the Finance Documents, the Security Trustee shall have all of the rights
conferred on a trustee by the Trustee Act 1925 and any other applicable law for
the time being in force.
27.6 The duties of the Security Trustee are limited to those expressly
set out in this Agreement and the Finance Documents; and the Lender waives any
additional or more extensive fiduciary or other obligation which the Security
Trustee might otherwise have by virtue of its position or its designation as
trustee.
27.7 Subject to the provisions of the Finance Documents:
(a) the Security Trustee shall act in connection with the Finance
Documents in accordance with the written instructions of the
Lender; but
(b) in the absence of any such instructions, the Security
Trustee shall not be obliged to act.
27.8 The Security Trustee shall not have any obligation to request the
Lender to give it any instructions or to make any determination.
27.9 The Security Trustee cannot be required by the Lender:
(a) to commence, join in or defend any form of legal proceeding
or to take or participate in any other action which it
considers will or may expose it to any liability (whether for
expenses or otherwise) unless it has first received a letter
of credit in such amount and terms and from such a bank as it
may require; or
(b) to take or participate in any action which the Security
Trustee considers is or may be contrary to any Finance
Document or unlawful or contrary to or inconsistent with any
official requirement or the policy of any authority which
regulates or supervises any activity of the Security Trustee
or the Lender.
27.10 Any action which the Security Trustee takes or purports to take on
behalf of the Lender at a time when it had not been authorised to do so shall,
if subsequently ratified, be as valid as regards the Borrower, the Security
Parties and the Lender as if the Security Trustee had been expressly authorised
in advance.
27.11 The Security Trustee shall not have or incur any obligation or
to the Lender, the Borrower or any Security Party except those expressly
specified in the Finance Documents; and no term shall be implied into any
Finance Document to the effect that the Security Trustee has such an obligation
or responsibility.
27.12 The Security Trustee shall not be liable to the Borrower, any
Security Party or the Lender for any loss or expense attributable to any action
taken or omitted to be taken by the Security Trustee, or any of its officers,
employees or agents under or in connection with any Finance Document unless the
loss or expense is shown to have been caused directly and mainly by the gross
and culpable negligence or the dishonesty of the Security Trustee's own
officers or employees; and neither the Borrower, nor any Security Party nor the
Lender shall make any claim against an officer, employee or agent of the
Security Trustee in respect of such a loss or expense unless he is shown to
have acted dishonestly.
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27.13 The Security Trustee shall have no responsibility to keep under
review or to report to the Lender about:
(a) the financial position or the affairs of the Borrower, any
Security Party or any other person; or
(b) the accuracy of any representation, warranty or statement
made (or deemed to be repeated), or any information provided
(whether before the date of this Agreement or otherwise), by
the Borrower or any Security Party in or in connection with
any Finance Document; or
(c) the title, value or any other matter relating to, any asset
covered or proposed to be covered by a Security Interest
created by a Finance Document; or
(d) whether any Event of Default or Potential Event of Default
has occurred.
27.14 The Security Trustee shall not be treated as having knowledge, or
any form of notice, of:
(a) an Event of Default or a Potential Event of Default; or
(b) any other event or matter which is relevant to any Finance
Document;
until the Event of Default or Potential Event of Default or (as the
case may require) the other event or matter concerned has been
specifically brought to the attention of the officers of the Security
Trustee who have direct responsibility for the carrying out of the
Security Trustee's functions under the Finance Documents and so
brought to their attention specifically for the purposes of the
Finance Documents.
27.15 The Security Trustee shall not be responsible to the Lender for:
(a) any breach by the Borrower or a Security Party of any Finance
Document; or
(b) the business merits of the terms of any Finance Document; or
(c) ensuring and preserving the validity or enforceability of
any Finance Document or the validity, enforceability or
priority of any Security Interest created or purportedly
created by a Finance Document.
27.16 The Security Trustee may:
(a) engage lawyers, accountants and other experts, and rely on
their advice;
(b) rely on any communication or document, including any Transfer
Certificate, which it believes to be genuine and correct and
to have been communicated, sent or signed by (or with the
authority of) the person by whom (or on whose behalf) it
purports to be communicated, sent or signed; and
(c) perform all or any of its functions under this Agreement and
the other Finance Documents through any office or branch of
the Security Trustee which it may from time to time select
and notify to the other parties or through any kind of agent
and, in particular, by power of attorney or otherwise
delegate the exercise of any of its powers and discretions
under the Finance Documents to any person on such terms (as
to duration, sub-delegation, remuneration, exoneration and
otherwise) as the Security Trustee may consider appropriate.
27.17 The Security Trustee shall be fully entitled, without liability to
account or disclose to the Lender, to enter into:
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(a) banking, investment and/or other transactions of every kind
with the Borrower or any Security Party (including, but not
limited to, any interest or currency swap or other
transaction, whether related to this Agreement or not, and
acting as syndicate agent and/or security trustee for, and/or
participating in, other facilities to the Borrower or a
Security Party), and
(b) transactions relating, or dealings in, to any securities
issued or to be issued by the Borrower or any Security Party;
as though the Security Trustee were not a trustee of the Lender;
and, in particular, the Security Trustee:
(i) shall have no obligation to make available to the
Lender any information which it acquires in
connection with any such transaction or to use such
information for the benefit of the Lender or for the
purposes of any Finance Document; and
(ii) shall be fully entitled to act or refrain from
acting in relation to any such transaction having
exclusive regard to its own best interests.
27.18 At the end of the Security Period, the Security Trustee shall release,
without any covenants for title or other recourse whatsoever, all the Security
Interests created by the Finance Documents, whereupon the Security Trustee
shall be discharged from all liabilities and obligations which it has under
this Agreement and the other Finance Documents.
27.19 The trusts hereby constituted are governed by English law, and the
applicable perpetuity period is 75 years commencing on the date of this
Agreement.
27.20 In this Clause "right" includes any power, discretion or remedy.
28 SUPPLEMENTAL
28.1 The rights and remedies which the Finance Documents give to the
Lender and the Security Trustee are:
(a) cumulative;
(b) may be exercised as often as appears expedient; and
(c) shall not, unless a Finance Document explicitly and
specifically states so, be taken to exclude or limit any
right or remedy conferred by any law.
28.2 If any provision of a Finance Document is or subsequently becomes
void, unenforceable or illegal, that shall not affect the validity,
enforceability or legality of the other provisions of that Finance Document or
of the provisions of any other Finance Document.
28.3 A Finance Document may be executed in any number of counterparts.
29 LAW AND JURISDICTION
29.1 This Agreement is governed by and construed in accordance with
English law.
29.2 Without prejudice to Clause 29.3, the courts of England shall have
exclusive jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement.
29.3 However, Clause 29.2 is for the exclusive benefit of the Lender,
which reserves the right to (a) commence proceedings in respect of any matter
which arises out of or in connection with this Agreement in the courts of any
country other than England and which have or claim jurisdiction in
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relation to that matter, and (b) to commence such proceedings in the courts of
any such country or countries concurrently with or in addition to proceedings
in England or without commencing proceedings in England.
29.4 The Borrower waives any objection on the ground of inconvenient
forum to any proceedings which relate to this Agreement being brought:
(a) in the courts of England; and
(b) in any other courts by virtue of Clause 29.3.
29.5 Nothing in this Clause 29 shall exclude or limit any right which
the Lender may have (whether under the law of any country, an international
convention or otherwise) with regard to the bringing of proceedings, the
service of process, the recognition or enforcement of a judgment or any similar
or related matter in any jurisdiction.
29.6 If the Lender commences proceedings in connection with a Finance
Document, that shall not preclude it from commencing proceedings (whether
concurrently or not) with respect to that or any other Finance Document in
another jurisdiction.
29.7 In this Clause 29, "proceedings" means proceedings of any kind,
including an application for a provisional or protective measure.
AS WITNESS the hands of the duly authorised officers or attorneys of the
parties the day and year first before written.
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SCHEDULE 1
DRAWDOWN NOTICE
To: Christiania Bank og Kreditkasse
P.O. Box 1166 Sentrum
0107 Oslo
Attention: Loans Administration [ ], 1997
DRAWDOWN NOTICE
1. We refer to the loan agreement (the "Loan Agreement") dated
1997 and made between ourselves, as Borrower, and yourselves, as
Lender and Security Trustee, in connection with a facility of up to
L.27,565,000. Terms defined in the Loan Agreement have their defined
meanings when used in this Drawdown Notice.
2. We request to borrow as follows:-
(a) Amount: L.[ ];
(b) Drawdown Date: [ ];
(c) Duration of the first Interest Period shall be [ ]
months;
(d) Payment instructions : account in our name and numbered [
] with [ ] of [ ].
3. We represent and warrant that:
(a) the representations and warranties in Clause 9 of the Loan
Agreement would remain true and not misleading if repeated
on the date of this notice with reference to the
circumstances now existing;
(b) no Event of Default or Potential Event of Default has
occurred or will result from the borrowing of the Loan.
[Name of Signatory]
Director
for and on behalf of
Gulf Offshore N.S. Limited
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SCHEDULE 2
CONDITION PRECEDENT DOCUMENTS
PART I
The following are the documents referred to in Clause 8.1 in relation to the
first Advance.
1. A duly executed original of each Finance Document (except those
relating to the Newbuilding) and of each document required to be
delivered by each such Finance Document, including (but without
limitation) all notices of assignment, acknowledgements and letters
of undertaking required by the Deeds of Covenant.
2. Copies of the certificate of incorporation and constitutional
documents of the Borrower and each Security Party.
3. Copies of resolutions of the directors of the Borrower and each
Security Party authorising the execution of each of the Finance
Documents to which the Borrower or that Security Party is a party
and, in the case of the Borrower, authorising named officers to give
the Drawdown Notices and other notices under this Agreement and
ratifying the execution of the Building Contract.
4. The original of any power of attorney under which any Finance
Document is executed on behalf of the Borrower or a Security Party.
5. Copies of all official consents which the Borrower or any Security
Party requires to enter into, or make any payment under, any Finance
Document or the Building Contract.
6. The originals of any mandates or other documents required in
connection with the opening or operation of the Earnings Account.
7. The audited (or, in the case of GOMI, unaudited) consolidated
accounts of the Borrower and each Guarantor for the year ended 31st
December, 1996.
8. A copy of the Building Contract.
9. Documentary evidence that each Ship (other than the Newbuilding):
(a) is definitively and permanently registered in the name of
the Borrower under British flag at the port of London, save
that "Highland Warrior" is registered at the port of
Hamilton, Bermuda;
(b) is in the absolute and unencumbered ownership of the
Borrower save as contemplated by the Finance Documents;
(c) maintains the class + 1A1 with Det norske Veritas, save that
"Highland Legend" maintains the class +100A1 offshore supply
ship +LMC + UMS with Lloyds Register, free of all
recommendations and qualifications of such Classification
Societies;
(d) the Mortgage on her has been duly registered against that
Ship as a valid first priority ship mortgage in accordance
with the laws of England;
(e) is insured in accordance with the provisions of the Deed of
Covenant and all requirements therein in respect of
insurances have been complied with; and
(f) is managed by an Approved Manager on terms acceptable to the
Lender, together with a letter or letters of undertaking
executed by the Approved Manager
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in favour of the Security Trustee in the terms required by
the Security Trustee agreeing certain matters in relation to
the management of the Ships (or any of them) and
subordinating the rights of the Approved Manager against the
Ships (or any of them) and the Borrower to the rights of the
Lender and the Security Trustee under the Finance Documents.
10. Favourable legal opinions from lawyers appointed by the Lender on
such matters concerning the laws of Panama and Bermuda and such other
relevant jurisdictions as the Lender may require.
Each of the documents specified in paragraphs 2, 3, 5 and 8 above and every
other copy document delivered under this Schedule shall be certified as a true
and up to date copy by a director or the secretary (or equivalent officer) of
the Borrower.
PART II
The following are the documents referred to in Clause 8.1 in relation to the
second Advance.
1. A duly executed original of each Finance Document relating to the
Newbuilding and of each document required to be delivered by each
such Finance Document, including (but without limitation) all notices
of assignment, acknowledgements and letters of undertaking required
by the Deed of Covenant.
2. A certificate signed by a director or the secretary of the Borrower
that there has been no revocation of or change to any of the
Documents specified in paragraphs 2, 3 and 5 of Part I and each of
them remains in full force and effect.
3. Documentary evidence that the Newbuilding:
(a) is definitively and permanently registered in the name of
the Borrower under British flag;
(b) is in the absolute and unencumbered ownership of the
Borrower save as contemplated by the Finance Documents;
(c) maintains the class + 1A1 with Det norske Veritas free of
all recommendations and qualifications of such Classification
Society;
(d) the Mortgage on her has been duly registered against that
Ship as a valid first priority ship mortgage in accordance
with the laws of England;
(e) is insured in accordance with the provisions of the Deed of
Covenant and all requirements therein in respect of
insurances have been complied with; and
(f) is managed by an Approved Manager from the second Drawdown
Date on terms acceptable to the Lender, together with a
letter or letters of undertaking executed by the Approved
Manager in favour of the Security Trustee in the terms
required by the Security Trustee agreeing certain matters in
relation to the management of the Newbuilding and
subordinating the rights of the Approved Manager against the
Newbuilding and the Borrower to the rights of the Lender and
the Security Trustee under the Finance Documents.
38
<PAGE> 42
SCHEDULE 3
TRANSFER CERTIFICATE
The Transferor and the Transferee accept exclusive responsibility for ensuring
that this Certificate and the transaction to which it relates comply with all
legal and regulatory requirements applicable to them respectively.
To: Christiania Bank og Kreditkasse ASA for itself, as Security Trustee,
and for and on behalf of the Borrower and each Security Party as
defined in the Loan Agreement referred to below.
[ ], 1997
1. This Certificate relates to a Loan Agreement ("the "Agreement") dated
[ ], 1997 and made between (1) Gulf Offshore N.S. Limited
(the "Borrower") and (2) Christiania Bank og Kreditkasse ASA as
Lender and Security Trustee for a loan facility of L.27,565,000.
2. In this Certificate:
"the Relevant Parties" means the Borrower, each Security Party, the
Security Trustee and [the] [each] Lender;
"the Transferor" means [full name] of [lending office];
"the Transferee" means [full name] of [lending office].
Terms defined in the Loan Agreement shall, unless the contrary
intention appears, have the same meanings when used in this
Certificate.
3. The effective date of this Certificate is .........19. , provided
that this Certificate shall not come into effect unless it is signed
by the Security Trustee on or before that date.
4. The Transferor assigns to the Transferee absolutely all rights and
interests (present, future or contingent) which the Transferor has as
Lender under or by virtue of the Loan Agreement and every other
Finance Document [in relation to [ ] per cent. of the Loan.].
5. By virtue of this Transfer Certificate and Clause 27 of the Loan
Agreement, the Transferor is discharged [entirely from its
obligations under the Loan Agreement] [from [ ] per cent. of its
obligations under the Loan Agreement, which percentage represents L.[
]].
6. The Transferee undertakes with the Transferor and each of the
Relevant Parties that the Transferee will observe and perform all the
obligations under the Finance Documents which Clause 27 of the Loan
Agreement provides will become binding on it upon this Certificate
taking effect.
7. The Security Trustee, at the request of the Transferee (which request
is hereby made) accepts, for the Security Trustee itself and for and
on behalf of every other Relevant Party, this Certificate as a
Transfer Certificate taking effect in accordance with Clause 27 of
the Loan Agreement.
8. The Transferor:
39
<PAGE> 43
(a) warrants to the Transferee and each Relevant Party (i) that
the Transferor has full capacity to enter into this
transaction and has taken all corporate action and obtained
all official consents which are in connection with this
transaction; and (ii) that this Certificate is valid and
binding as regards the Transferor;
(b) warrants to the Transferee that the Transferor is absolutely
entitled, free of encumbrances, to all the rights and
interests covered by the assignment in paragraph 2 above;
(b) undertakes with the Transferee that the Transferor will, at
its own expense, execute any documents which the Transferee
reasonably requests for perfecting in any relevant
jurisdiction the Transferee's title under this Transfer
Certificate or for a similar purpose.
9. The Transferee:
(a) confirms that it has received a copy of the Loan Agreement;
(b) agrees that it will have no rights of recourse on any ground
against either the Transferor, the Security Trustee or [the]
[any] Lender in the event that (i) the Finance Documents
prove to be invalid or ineffective, (ii) the Borrower or any
Security Party fails to observe or perform its obligations,
or to discharge its liabilities, under the Finance Documents
(iii) it proves impossible to realise any asset covered by a
Security Interest created by a Finance Document, or the
proceeds of such assets are insufficient to discharge the
liabilities of the Borrower or any Security Party under the
Finance Documents;
(c) agrees that it will have no rights of recourse on any ground
against the Security Trustee or [the] [any] Lender in the
event that this Certificate proves to be invalid or
ineffective;
(d) warrants to the Transferor and each Relevant Party (i) that
it has full capacity to enter into this transaction and has
taken all corporate action and obtained all official
consents which it needs to take or obtain in connection with
this transaction; and (ii) that this Certificate is valid
and binding as regards the Transferee; and
(e) confirms the accuracy of the administrative details set out
below regarding the Transferee.
10. The Transferor and the Transferee each undertake with the Security
Trustee severally, on demand, fully to indemnify the Security Trustee
in respect of any claim, proceeding, liability or expense (including
all legal expenses) which it may incur in connection with this
Certificate or any matter arising out of it, except such as are shown
to have been mainly and directly caused by the gross and culpable
negligence or dishonesty of the Security Trustee's own officers or
employees.
40
<PAGE> 44
[Name of Transferor] [Name of Transferee]
By: By:
Date: Date:
SECURITY AGENT
Signed for itself and for and on behalf of itself
as Security Trustee and for every other Relevant Party
Christiania Bank og Kreditkasse ASA
By:
Date:
ADMINISTRATIVE DETAILS OF TRANSFEREE
Name of Transferee:
Lending Office:
Contact Person
(Loan Administration Department):
Telephone:
Telex:
Fax:
Contact Person
(Credit Administration Department):
Telephone:
Telex:
Fax:
Account for payments:
Note: This Transfer Certificate alone may not be sufficient to transfer a
proportionate share of the Transferor's interest in the security
constituted by the Finance Documents in the Transferor's or
Transferee's jurisdiction. It is the responsibility of each Lender
to ascertain whether any other documents are required for this
purpose.
41
<PAGE> 45
SCHEDULE 4
COMPLIANCE CERTIFICATE
Christiania Bank og Kreditkasse ASA Date, , 1997
P.O. Box 1166 Sentrum
0107 Oslo Norway
Att: E. Marianne Aalby
COMPLIANCE CERTIFICATE
Please accept this letter as certification that as of [date]*, Gulf Offshore
N.S. Limited was in compliance with all of the covenants stipulated in Clause
11.4 of the loan agreement dated [ ], 1997 between ourselves
and Christiania Bank og Kreditkasse. With regards to the covenants in Clause
11.4:-
1. The Company had L.[ ] in Liquid Assets as of [
]*;
2. The Company's Value Adjusted Equity as of [ ]* was L.[
];
3. The Company's Value Adjusted Total Assets as of [ ]*
was L.[ ], (based on the following vessel valuations):- [
]
4. The Book Equity of Gulf Offshore Marine International, Inc. as of [
]*, was USD[ ].
Regards,
Gulf Offshore N.S. Limited
* The quarter end for which compliance is being certified.
42
<PAGE> 46
EXECUTION PAGE
SIGNED by /s/ BRUCE A. STREETER )
)
for and on behalf of )
GULF OFFSHORE N.S. )
LIMITED in the presence of:- )
SIGNED by /s/ MARIANNE AALBY )
/s/ TOM C. KUHNLE )
)
for and on behalf of )
CHRISTIANIA BANK OG )
KREDITKASSE ASA as Lender and )
Security Trustee in the )
presence of:- )
/s/ JOHAN RASMUSSEN
43
<PAGE> 1
EXHIBIT 10.24
TAX ALLOCATION AND INDEMNIFICATION AGREEMENT
THIS TAX ALLOCATION AND INDEMNIFICATION AGREEMENT (this "Agreement")
is made and entered into as of April 30, 1997, by and among GULFMARK
INTERNATIONAL, INC., a Delaware corporation ("GulfMark"), GULFMARK OFFSHORE,
INC., a Delaware corporation ("Spinco"), and ENERGY VENTURES, INC., a Delaware
corporation ("EVI").
W I T N E S S E T H:
WHEREAS, GulfMark, Spinco and EVI have entered into that certain
Agreement and Plan of Distribution dated as of December 5, 1996 (the
"Distribution Agreement"), pursuant to which, among other things, GulfMark will
distribute to its stockholders all the outstanding stock of Spinco (the
"Distribution");
WHEREAS, GulfMark, Spinco, EVI and GulfMark Acquisition Co., a
Delaware corporation and wholly-owned subsidiary of EVI ("Merger Sub"), have
entered into that certain Agreement and Plan of Merger dated as of December 5,
1996 (the "Merger Agreement"), pursuant to which, among other things,
immediately following the Distribution, GulfMark will merge with Merger Sub
(the "Merger);
WHEREAS, Section 7.3 of the Distribution Agreement provides that prior
to the Distribution, GulfMark, Spinco and EVI will enter into a Tax Allocation
Agreement acceptable in all respects to EVI and Spinco, which will set forth
each party's rights and obligations with respect to payments and refunds, if
any, of Taxes (as hereinafter defined) for periods before and after, and
periods including, the Effective Date (as hereinafter defined) and related
matters such as the filing of tax returns and the conduct of audits and other
tax proceedings; and
<PAGE> 2
WHEREAS, the parties to this Agreement desire to set forth their
agreement in relation to their respective rights and obligations with respect
to such matters relating to Taxes;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
agree as follows:
1. Definitions. The defined terms used in this Agreement shall
have the following meanings:
"Affiliate" shall mean, as to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, such first Person. As used in this definition, the term "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of securities, by contract or otherwise.
"Agreement" shall have the meaning such term is given in the
preamble of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, or corresponding provisions of any subsequent federal Tax laws.
"Contribution" shall have the meaning such term is given in
the third recital of the Distribution Agreement.
"Distribution" shall have the meaning such term is given in
the first recital of this Agreement.
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<PAGE> 3
"Distribution Agreement" shall have the meaning such term is
given in the first recital of this Agreement.
"Effective Date" shall mean the time and date the Merger is
effective.
"Election Notice" shall have the meaning such term is given in
Section 7(b)(ii)(A) of this Agreement.
"Ercon" shall mean the wholly-owned subsidiary of GulfMark,
Ercon Development Corporation, and upon its merger into GulfMark, the Ercon
division of GulfMark.
"EVI" shall have the meaning such term is given in the
preamble of this Agreement.
"EVI Costs" shall mean any and all costs and expenses incurred
by any Tax Indemnitee and relating to any Tax, or any matter related to any
Tax, to which this Agreement relates (including, but not limited to, the
preparation and/or review of any claim for refund or Tax Return covered by the
provisions of Section 5 or 6 hereof and any preparation with respect to, or
review, investigation, defense, prosecution, settlement or compromise of, any
EVI Tax Claim controlled by EVI pursuant to this Agreement), such costs and
expenses including, but not limited to, (i) any and all third party costs
(including, without limitation, reasonable attorneys', accountants' and
experts' fees and disbursements, settlement costs and court costs), and (ii)
any and all direct costs and expenses relating to any Tax Indemnitee's
personnel and support.
"EVI Tax Claim" shall have the meaning such term is given in
Section 7(b)(i) of this Agreement.
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<PAGE> 4
"Financial Default" shall mean any of the following events:
(a) Spinco or any "Significant Affiliate" (as hereinafter
defined) (i) makes a general assignment for the benefit of creditors;
(ii) files a voluntary bankruptcy petition; (iii) files a petition or
answer seeking for itself a reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
law; (iv) files an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against it in a
proceeding of the type described in clauses (a)(i)--(iii) of this
sentence; or (v) seeks, consents to or acquiesces in the appointment
of a trustee, receiver or liquidator of itself, or of all or any
substantial part of its properties; or
(b) a final and non-appealable judgment is entered by a
court with appropriate jurisdiction ruling that Spinco or any
Significant Affiliate is bankrupt or insolvent, or a final and
non-appealable order for relief is entered by a court with appropriate
jurisdiction against Spinco or any Significant Affiliate, in each case
under any foreign, federal or state bankruptcy or insolvency laws as
now or hereafter in effect.
For purposes of this definition, the term "Significant Affiliate" means any
Affiliate of Spinco (other than any individual) which, at the time a Financial
Default occurs, has assets aggregating 10% or more of the consolidated assets
of Spinco and its Affiliates (other than any individual) at that time, taken as
a whole.
"Final Determination" shall mean (a)(i) a decision of the
United States Tax Court, which has become final and non-appealable, or (ii) a
judgment, decree or other
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<PAGE> 5
order by another court or other tribunal with appropriate jurisdiction, which
has become final and non-appealable; (b) a final and binding settlement or
compromise with an administrative agency with appropriate jurisdiction,
including, but not limited to, a closing agreement under Section 7121 of the
Code; (c) any disallowance of a claim for refund or credit in respect to an
overpayment of Tax, but only at such time as the period for timely filing of
suit with respect to such disallowance has expired; or (d) any final
disposition by reason of the expiration of all applicable statutes of
limitations.
"GulfMark" shall have the meaning such term is given in the
preamble of this Agreement.
"GulfMark Company" shall mean any corporation, partnership,
limited liability company, association or other entity, excluding GulfMark and
Ercon but specifically including Spinco, of which GulfMark, Ercon or any
GulfMark Company now or at any time in the past owned, directly or indirectly,
an ownership interest in (whether or not such ownership interest constituted
control of the entity and whether or not such interest represented a passive or
active investment), including, without limitation, those companies and entities
described on Schedule A hereto.
"GulfMark Taxes" shall mean any and all Taxes to which
GulfMark, Ercon or any GulfMark Company may be obligated relating to or arising
from (i) the current or past operations or assets of GulfMark, Ercon or any
GulfMark Company through the Effective Date, (ii) the Contribution and the
Distribution, (iii) the Merger, (iv) any Tax Return filed by GulfMark, Ercon or
any current or past GulfMark Company, (v) any Tax for which GulfMark or Ercon
may be alleged to be liable by reason of being affiliated with any other Person
for all periods prior to the Effective Date, (vi) property
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<PAGE> 6
Taxes with respect to the assets of GulfMark, Ercon or any GulfMark Company for
all periods prior to the Effective Date and (vii) any transfer Taxes or value
added Taxes in connection with the transactions contemplated by the
Contribution, the Distribution and the Merger.
"Independent Accounting Firm" shall mean Price Waterhouse LLP
or such other independent accounting firm as may be mutually acceptable to EVI
and Spinco.
"Merger" shall have the meaning such term is given in the
second recital of this Agreement.
"Merger Agreement" shall have the meaning such term is given
in the second recital of this Agreement.
"Merger Sub" shall have the meaning such term is given in the
second recital of this Agreement.
"Person" shall mean a corporation, an association, a
partnership, a joint venture, a trust, an organization, a business, an
individual, or any other entity.
"Post-Closing Period" shall have the meaning such term is
given in Section 2(a)(iii) of this Agreement.
"Pre-Closing Period" shall have the meaning such term is given
in Section 2(a)(ii) of this Agreement.
"Significant Affiliate" shall have the meaning such term is
given in the definition of Financial Default herein.
"Spinco" shall have the meaning such term is given in the
preamble of this Agreement.
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<PAGE> 7
"Spinco Tax Claim" shall have the meaning such term is given
in Section 7(c) of this Agreement.
"Statement" shall have the meaning such term is given in
Section 6(c) of this Agreement.
"Straddle Period" shall have the meaning such term is given in
Section 2(b) of this Agreement.
"Tax Claim Notice" shall have the meaning such term is given
in Section 7(b)(i) of this Agreement.
"Tax Indemnitee" and "Tax Indemnitees" shall have the
respective meanings such terms are given in Section 2(a) of this Agreement.
"Tax Returns" shall mean all returns, declarations, reports,
statements and other documents of, relating to, or required to be filed in
respect of, any and all Taxes, and the term "Tax Return" means any one of the
foregoing Tax Returns.
"Taxes" shall mean all federal, state, local, foreign and
other taxes, charges, fees, duties, levies, imposts, customs or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise, profits, profit share,
license, lease, service, service use, value added, withholding, payroll,
employment, excise, estimated, severance, stamp, occupation, premium, property,
windfall profits, or other taxes, fees, assessments, customs, duties, levies,
imposts, or charges of any kind whatsoever, together with any interest,
penalties, additions to tax, fines or other additional amounts imposed thereon
or related thereto, and the term "Tax" means any one of the foregoing Taxes.
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<PAGE> 8
2. Spinco Tax Indemnity. (a) Spinco shall be responsible for,
shall pay or cause to be paid, and shall indemnify, defend and hold harmless
EVI, GulfMark and their respective Affiliates, officers, directors, employees,
agents and assigns (all of such Persons indemnified by Spinco under this
Section 2 being collectively referred to herein as the "Tax Indemnitees" and
individually referred to herein as a "Tax Indemnitee") from and against:
(i) any and all Taxes (including any and all
GulfMark Taxes) relating to any consolidated federal income Tax Return
of any "affiliated group" (as such term is defined in Section 1504 of
the Code) of corporations which includes or included GulfMark, Ercon
or any GulfMark Company (and any and all Taxes relating to any
consolidated, combined, affiliated or unitary income or franchise Tax
Return of any foreign, state or local taxing jurisdiction that
requires or permits consolidated, combined, affiliated or unitary
income or franchise Tax Returns of any affiliated group or groups of
corporations which includes or included GulfMark, Ercon or any
GulfMark Company) for any and all periods or portions thereof ending
on or before the Effective Date (including, without limitation, any
such Taxes relating to the income, business, activities, operations,
property or assets of GulfMark, Spinco, Ercon and any GulfMark Company
with respect to periods or portions thereof ending on or before the
Effective Date and any such Taxes for which GulfMark, Spinco, Ercon or
any GulfMark Company is or may be or become severally liable under
Treasury Regulation Section 1.1502-6 or
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<PAGE> 9
1.1502-78(b)(2) or any similar provision under any applicable foreign,
state or local law);
(ii) any and all Taxes (including any and all
GulfMark Taxes) not otherwise described in, and covered by, Section
2(a)(i) above of, imposed on, or pertaining or attributable to,
GulfMark, Spinco, Ercon or any GulfMark Company with respect to any
period or portion thereof that ends on or before the Effective Date (a
"Pre-Closing Period"), including, without limitation, any and all such
Taxes relating to (A) the income, business, activities, operations,
property or assets of GulfMark, Spinco, Ercon or any GulfMark Company
with respect to any Pre-Closing Period, (B) the Distribution and (C)
the Merger; and
(iii) any and all Taxes not otherwise described in,
and covered by, Section 2(a)(i) and/or (ii) above of, imposed on, or
pertaining or attributable to, any Tax Indemnitee with respect to any
period or portion thereof that begins and ends after the Effective
Date (a "Post-Closing Period") to the extent such Taxes relate to
Spinco or any of its Affiliates.
(b) In the case of any Tax described in Section 2(a)(ii)
above that pertains to any taxable period that begins on or before the
Effective Date but does not end on or before the Effective Date (a "Straddle
Period"), the portion of such Tax of, or pertaining or attributable to,
GulfMark, Spinco, Ercon or any GulfMark Company for the Pre-Closing Period of
such Straddle Period shall be determined in accordance with Section 4 hereof.
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<PAGE> 10
3. EVI Tax Indemnity. EVI shall be responsible for, shall pay or
cause to be paid, and shall indemnify, defend and hold harmless Spinco from and
against (i) any and all Taxes of, or pertaining or attributable to, GulfMark or
Ercon for any Post-Closing Period. In the case of any Tax described in the
preceding sentence and pertaining to any Straddle Period, the portion of such
Tax of, or pertaining or attributable to, GulfMark or Ercon for the
Post-Closing Period of such Straddle Period shall be the portion of such Tax
that is not allocated to the Pre-Closing Period of such Straddle Period under
Section 4 hereof.
4. Allocation of Certain Taxes.
(a) EVI will, to the extent permitted by applicable law,
elect with the appropriate taxing authorities to close the taxable periods of
GulfMark and Ercon as of and including the Effective Date. In any case where
applicable law does not require or permit such a taxable period of GulfMark or
Ercon to be closed as of and including the Effective Date, any Tax described in
Section 2(b) hereof and pertaining to such Straddle Period shall be determined
in accordance with the applicable provisions of Section 4(b) hereof.
(b) In the case of any Tax described in Section 2(b)
hereof and pertaining to a Straddle Period (including any franchise Taxes
described in Section 2(b) hereof (whether based on income, capitalization, debt
and/or shares of stock authorized, issued or outstanding or otherwise) or any
ad valorem Taxes described in Section 2(b) hereof), the portion of such Tax
pertaining or attributable to GulfMark or Ercon for the Pre-Closing Period of
such Straddle Period shall be determined on the basis of an interim closing of
the books as of and including the Effective Date in accordance with
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<PAGE> 11
the next two sentences of this Section 4(b). For purposes of this Section
4(b), the liability for such Tax with respect to the Pre-Closing Period of a
Straddle Period shall be the product of (i) such Tax for the entirety of such
Straddle Period, multiplied by (ii) a fraction, the numerator of which is the
hypothetical Tax for such Pre-Closing Period (determined on the basis of such
interim closing of the books, without annualization) and the denominator of
which is the sum of such numerator plus the hypothetical Tax for the
Post-Closing Period of such Straddle Period (determined on the basis of such
interim closing of the books, without annualization). The hypothetical Tax for
any period shall in no case be less than zero.
5. Carryovers and Refunds.
(a) Any benefit (inclusive of any interest thereon)
realized or arising in a Post-Closing Period and resulting from the carry
forward of any Tax attribute of GulfMark or Ercon (including, without
limitation, any net operating loss carry forward, net capital loss carry
forward, credit carry forward or carry forward of any other Tax attributes)
from a Pre-Closing Period to such Post-Closing Period shall be the property of
Spinco and shall be retained by Spinco.
(b) If after the Effective Date, any Tax Indemnitee
receives a refund of any Tax described in Section 2(a) hereof and pertaining to
GulfMark or Ercon with respect to a Pre-Closing Period, then EVI shall cause to
be paid to Spinco (within 15 calendar days after such receipt) the amount of
such refund received together with any interest actually received thereon (net
of any Taxes imposed on any Tax Indemnitee with respect thereto). If there is
an adjustment to any such refund (or interest thereon), any payment or payments
theretofore made between the parties hereto with
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<PAGE> 12
respect to such refund (or interest thereon) pursuant to this Section 5(b)
shall be appropriately adjusted by means of a payment from Spinco to EVI or EVI
to Spinco, as the case may be, within 15 calendar days after such adjustment.
(c) Any refund of Taxes (inclusive of any interest
thereon) pertaining to GulfMark or Ercon and attributable to a Post-Closing
Period shall be the property of GulfMark or Ercon, as the case may be, and EVI
and shall be retained by GulfMark or Ercon, as the case may be and EVI (or, if
applicable, promptly paid or cause to be paid by Spinco to EVI if any such
refund (or interest thereon) is received by Spinco or any of its Affiliates).
(d) In applying the provisions of Section 5(b) and (c)
hereof, any refund of Taxes described in Section 2(b) (and any interest
thereon) for a Straddle Period of GulfMark or Ercon shall be allocated between
the Pre-Closing Period, on the one hand, and the Post-Closing Period, on the
other hand, in a manner consistent with the provisions of Section 4 hereof.
(e) (i) If reasonably requested by Spinco, and
subject to the last sentence of this Section 5(e)(i), EVI shall file, or, if
appropriate, shall cause GulfMark or Ercon to file, a claim for refund of any
Tax described in Section 2(a) hereof and pertaining exclusively to a period of
GulfMark or Ercon ending on or before the Effective Date, provided that Spinco
shall prepare, handle and prosecute any such claim (but shall keep EVI fully
informed of any developments with respect to such claim) and Spinco shall bear
any and all costs and expenses associated with filing and pursuing any such
claim (including, without limitation, any EVI Costs in connection therewith,
provided such EVI Costs shall have been incurred with the prior written
approval of
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<PAGE> 13
Spinco). Any EVI Tax Claim or Spinco Tax Claim resulting from the filing or
pursuit of such a claim for refund shall be governed by the provisions of
Section 7 hereof. If any dispute arises between EVI and Spinco concerning
whether or not any item in any such claim for refund is reasonable, EVI shall
be under no obligation to file, or to cause GulfMark or Ercon to file, such
claim unless and until independent professional tax counsel mutually acceptable
to both EVI and Spinco (or, in any case where EVI and Spinco are unable to
agree upon independent professional tax counsel, the Independent Accounting
Firm) issues its written opinion to EVI and Spinco concluding that there is
substantial authority for the Tax treatment claimed for such item in such
claim. Spinco shall bear and pay the fees and other costs charged by such
independent professional tax counsel or the Independent Accounting Firm, as the
case may be, that issued such written opinion. Notwithstanding anything
contained in this Section 5(e)(i) to the contrary, in no event shall EVI be
under any obligation to file or prosecute, or to cause GulfMark or Ercon to
file or prosecute, a claim for refund of any Tax described in Section 2(a)(ii)
hereof and pertaining exclusively to a period of GulfMark or Ercon ending on or
before the Effective Date to the extent that the granting of a refund with
respect to such claim would cause, or could reasonably be expected to cause, an
increase in any Tax pertaining to any Straddle Period of GulfMark or Ercon or
any period of any Tax Indemnitee beginning and ending after the Effective Date.
(ii) EVI and Spinco shall jointly agree to file any claim
for refund, and shall jointly prosecute any such claim for refund (by suit or
otherwise), of any Tax described in Section 2(a) hereof and pertaining to any
Straddle Period of GulfMark or Ercon; provided, however, that EVI and Spinco
shall first attempt to separate such
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<PAGE> 14
claim for refund into two claims, one involving the period or periods ending
before, or on and including, the Effective Date (which claim for refund shall
be governed by Section 5(e)(i) hereof), and the other involving the period or
periods beginning and ending after the Effective Date (which claim for refund
shall be subject to the exclusive control of EVI). If EVI and Spinco are not
successful in separating such claim, EVI and Spinco shall cooperate in good
faith with each other in defending or prosecuting such joint claims for refund
and shall not compromise or settle such claim without the other's written
consent. If EVI and Spinco cannot agree with respect to any matter involving
any such joint claim for refund, EVI and Spinco shall jointly engage the
Independent Accounting Firm to make its decision with respect to such matter,
which decision shall be final and binding on the parties hereto. Each of
Spinco and EVI shall bear and pay one-half of the fees and other costs charged
by the Independent Accounting Firm. Notwithstanding anything contained in this
Section 5(e)(ii) to the contrary, in no event shall EVI be under any obligation
to file or prosecute, or to cause GulfMark or Ercon to file or prosecute, any
joint claim for refund of any Tax described in Section 2(a)(ii) hereof and
pertaining to any Straddle Period of GulfMark or Ercon to the extent the
granting of a refund with respect to such joint claim for refund would cause,
or could reasonably be expected to cause, an increase in any Tax pertaining to
a Post-Closing Period.
6. Preparation of Tax Returns.
(a) Spinco will cause GulfMark and Ercon to be included
in, and will prepare or cause to be prepared at Spinco's expense, the
consolidated federal income Tax Returns of GulfMark, Ercon and the GulfMark
Companies (and will cause
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GulfMark and Ercon to be included in, and will prepare or cause to be prepared
at Spinco's expense, the consolidated, combined, affiliated or unitary income
and/or franchise Tax Returns of any foreign, state or local taxing jurisdiction
that requires or permits consolidated, combined, affiliated or unitary income
and/or franchise Tax Returns of an applicable group or groups of corporations
which includes or include GulfMark or Ercon and one or more GulfMark Companies)
for all periods or portions thereof ending on or before the Effective Date,
including, without limitation, the period from January 1, 1997, through and
including the Effective Date, and shall deliver a copy of each such Tax Return
to EVI at least 30 calendar days prior to the due date (including any extension
thereof) for filing such Tax Return, but not earlier than 15 calendar days
following the close of the applicable taxable period covered by such Tax
Return.
(b) Spinco will cause to be prepared at Spinco's expense
each Tax Return (other than any Tax Return described in, and covered by,
Section 6(a) hereof), covering a taxable period ending on or before the
Effective Date (including, without limitation, any short taxable period Tax
Return required or permitted to be filed for a short taxable period ending on
the Effective Date) which is required to be filed for, by, on behalf of or with
respect to GulfMark, Ercon or any GulfMark Company after the Effective Date and
shall deliver a copy of such Tax Return to EVI at least 30 calendar days prior
to the due date (including any extension thereof) for filing such Tax Return,
but not earlier than 15 calendar days following the close of the applicable
taxable period covered by such Tax Return.
(c) With respect to each Tax Return (other than any Tax
Return
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described in the first sentence of Section 6(a) hereof) covering a Straddle
Period which is required to be filed for, by, on behalf of or with respect to
GulfMark or Ercon after the Effective Date, EVI (i) shall cause to be prepared
at EVI's expense each such Tax Return, and (ii) shall determine the portion of
the Taxes shown as due on such Tax Return that is the responsibility of Spinco
under Section 2 hereof, which determination shall be set forth in a statement
("Statement") prepared by EVI. EVI shall deliver a copy of such Tax Return and
the Statement related thereto to Spinco at least 30 calendar days prior to the
due date (including any extension thereof) for filing such Tax Return, but not
earlier than 15 calendar days following the close of the applicable taxable
period covered by such Tax Return.
(d) The amount of Taxes shown to be due on any Tax Return
described in Section 6(a) or 6(b) hereof shall (for purposes of Section 6(e)
hereof) be final and binding upon the parties hereto, unless EVI shall have
delivered to Spinco (within 10 calendar days after the date of EVI's receipt of
such Tax Return) a written report containing all changes that EVI proposes to
make to such Tax Return. The amount of Taxes shown to be due on any Tax Return
and the Statement related thereto described in Section 6(c) hereof shall (for
purposes of Section 6(f) hereof) be final and binding upon the parties hereto,
unless Spinco shall have delivered to EVI (within 10 calendar days after the
date of Spinco's receipt of such Tax Return and the Statement related thereto)
a written report containing all changes that Spinco proposes to make to such
Tax Return and the Statement related thereto. EVI and Spinco shall undertake
in good faith to resolve any issues raised in any such report prior to the due
date (including any extension thereof) for filing such Tax Return and mutually
to consent to the filing of
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such Tax Return and, if applicable, to agree on the determination to be set
forth in the Statement related thereto, in which case the information and total
amount of Taxes shown to be due on such agreed Tax Return or, if applicable,
shown on such agreed Statement shall (for purposes of Section 6(e) hereof or
Section 6(f) hereof, respectively) be final and binding on the parties hereto.
In the event EVI and Spinco are unable to resolve any dispute by the earlier of
(i) 10 calendar days after the date of Spinco's receipt of written notice from
EVI setting forth EVI's proposed resolution of such dispute, or (ii) 10
calendar days prior to the due date for filing of the Tax Return in question
(including any extension thereof), EVI and Spinco shall jointly engage the
Independent Accounting Firm to make its independent determination with respect
to the item or items in dispute and the amount or amounts related thereto.
Spinco shall bear and pay all of the fees and other costs charged by the
Independent Accounting Firm with respect to disputes involving Tax Returns
described in Section 6(a) or 6(b) hereof. Each of Spinco and EVI shall bear
and pay one-half of the fees and other costs charged by the Independent
Accounting Firm with respect to disputes involving Tax Returns described in
Section 6(c) hereof. If the Independent Accounting Firm is engaged, EVI and
Spinco agree to provide, or cause to be provided, the Independent Accounting
Firm with all books, records and other information relevant to the
determination of the disputed items and the Independent Accounting Firm shall
be instructed to make its determination as soon as possible. The Independent
Accounting Firm's determination with respect to the Tax treatment of any
disputed item shall be made on the basis of the Tax treatment for which the
Independent Accounting Firm determines there is substantial authority (or, if
there is substantial authority for two
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or more Tax treatments of such disputed item, the Tax treatment for which the
weight of the authorities supporting such Tax treatment is most substantial in
relation to the weight of authorities supporting the other Tax treatment or
treatments). The determination of the Independent Accounting Firm shall (for
purposes of Section 6(e) hereof or Section 6(f) hereof, as the case may be) be
final and binding on the parties hereto. In any case where a disputed item has
not been resolved (either by mutual agreement of the parties hereto or by a
determination of the Independent Accounting Firm) prior to the due date
(including any extension thereof) for filing such Tax Return, then EVI may
resolve such item as it shall determine in its sole discretion and cause such
Tax Return to be filed on the due date (including any extension thereof) for
filing such Tax Return without the parties' mutual agreement or the Independent
Accounting Firm's determination having occurred and without the consent of
Spinco. Notwithstanding the filing of such Tax Return, (x) the Independent
Accounting Firm shall make a determination with respect to any such disputed
item, and (y) the amount of Taxes determined to be due with respect to such Tax
Return or, if applicable, determined to be properly set forth on the Statement
related to such Tax Return, shall (for purposes of Section 6(e) hereof or
Section 6(f) hereof, respectively) be the amount of Taxes that would have been
due on such Tax Return or, if applicable, be the amount of Taxes that would be
properly set forth on the Statement related to such Tax Return, after giving
effect to the Independent Accounting Firm's determination.
(e) In the case of each Tax Return described in Section
6(a) or 6(b) hereof, not later than five calendar days before the due date for
payment of Taxes with respect to such Tax Return, Spinco shall cause to be paid
to EVI an amount equal to
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the greater of (x) the total amount of Taxes shown as due on such Tax Return as
prepared or caused to be prepared by Spinco (net of any payments made prior to
the Effective Date in respect of such Taxes, whether as estimated Taxes or
otherwise) or (y) in the event EVI has timely proposed that changes be made to
such Tax Return, the total amount of Taxes that is shown as due on such Tax
Return after giving effect to the resolution of disputed items by EVI, the
parties' mutual agreement or the Independent Accounting Firm's determination
(net of any payments made prior to the Effective Date in respect of such Taxes,
whether as estimated Taxes or otherwise), as the case may be.
(f) In the case of each Tax Return described in Section
6(c) hereof, not later than five calendar days before the due date for payment
of Taxes with respect to such Tax Return, Spinco shall pay to EVI an amount
equal to the sum of (x) the lesser of (A) the total amount of Taxes shown on
the Statement related to such Tax Return as being the responsibility of Spinco
under Section 2 hereof (net of any payments made prior to the Effective Date in
respect of such Taxes, whether as estimated Taxes or otherwise) or (B), in the
event Spinco has timely proposed that changes be made to such Statement, the
total amount of Taxes that are set forth or would be set forth on such
Statement as being the responsibility of Spinco under Section 2 hereof after
giving effect to the parties' mutual agreement reached or the Independent
Accounting Firm's determination made at least five calendar days before the due
date for payment of Taxes with respect to such Tax Return (net of any payments
made prior to the Effective Date in respect of such Taxes, whether as estimated
Taxes or otherwise), as the case may be, and (y) one-half of the amount of any
EVI Costs incurred by EVI in
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connection with the preparation of such Tax Return and the Statement related
thereto.
(g) To the extent, if any, that Spinco pays a greater
amount of Taxes to EVI pursuant to the provisions of Section 6(e) or 6(f)
hereof than is ultimately determined by the Independent Accounting Firm to be
owed by Spinco, EVI shall pay such excess to Spinco not later than five
calendar days after receiving the Independent Accounting Firm's determination
thereof.
7. Tax Contests.
(a) Spinco shall have the sole and exclusive right (at
its sole risk, cost and expense) to control the conduct of any audit,
examination, investigation or administrative, court or other proceeding which
could, if pursued successfully, result in or give rise to a claim for
indemnification of any Tax Indemnitee by Spinco under this Agreement with
respect to any Tax described in Section 2(a)(i) hereof. Spinco shall, however,
promptly notify EVI if, in connection with any such audit, examination,
investigation or administrative, court or other proceeding, any governmental
authority makes (or proposes to make) any assessment or adjustment with respect
to, or takes (or proposes to take) any action against, GulfMark or Ercon, which
assessment, adjustment, or action could affect any Tax Indemnitee after the
Effective Date (including, without limitation, any action taken or proposed to
be taken by a governmental authority with respect to the collection from
GulfMark or Ercon of any part of a deficiency under Treasury Regulation
Section 1.1502-6 or any similar provision under any applicable foreign, state
or local law).
(b) (i) If a party hereto or any of its Affiliates
receives any written or oral communication with respect to any question,
adjustment, assessment or pending
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or threatened audit, examination, investigation, or administrative, court or
other proceeding which, if pursued successfully, could result in or give rise
to, or could reasonably be expected to result in or give rise to, a claim for
indemnification of any Tax Indemnitee by Spinco under this Agreement with
respect to any Tax described in Section 2(a) hereof ("EVI Tax Claim"), then
such party shall promptly notify the other parties hereto in writing ("Tax
Claim Notice") of such EVI Tax Claim.
(ii) EVI shall take or cause to be taken such
action in connection with contesting such EVI Tax Claim as Spinco shall
reasonably request in writing from time to time, including the retention of
counsel and experts as designated by Spinco (it being understood and agreed by
the parties hereto that the terms of any such retention shall expressly provide
that Spinco shall be solely responsible for the payment of any and all fees and
disbursements of such counsel and any experts) and the execution of powers of
attorney, provided that:
(A) within 30 calendar days after Spinco
receives or delivers, as the case may be, the Tax Claim Notice
relating to such EVI Tax Claim (or such earlier date that any
payment of the Taxes claimed is due from any Tax Indemnitee,
but in no event sooner than five calendar days after Spinco
receives or delivers such Tax Claim Notice), Spinco shall have
notified EVI in writing ("Election Notice") that Spinco does
not dispute its indemnity obligation under this Agreement and
that Spinco elects to contest, and to control the defense or
prosecution of, such EVI Tax Claim at its sole risk and sole
cost and expense; and
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(B) if EVI is requested by Spinco to pay
or cause to be paid the Tax claimed and sue for a refund,
Spinco shall have advanced to EVI on an interest-free basis,
the total amount of the Tax claimed; and
(C) Spinco shall reimburse EVI for any
EVI Costs resulting from any such request by Spinco, provided
such EVI Costs shall have been incurred with the prior written
approval of Spinco;
provided further, however, that if a Financial Default has occurred and is
continuing at the time any Election Notice has been delivered by Spinco to EVI,
or occurs at any time after any Election Notice has been delivered by Spinco to
EVI, then EVI may (but shall not be required to) elect to exercise control of
such EVI Tax Claim as provided in Section 7(b)(v) hereof.
(iii) Subject to the provisions of Sections
7(b)(ii) and (v) hereof, Spinco shall have the right to defend or prosecute, at
the sole cost, expense and risk of Spinco, such EVI Tax Claim by all
appropriate proceedings, which proceedings shall be defended or prosecuted
diligently by Spinco to a Final Determination; provided, however, that Spinco
shall not, without EVI's prior written consent, enter into any compromise or
settlement of such EVI Tax Claim that would adversely affect any of the Tax
Indemnitees. So long as Spinco is diligently defending or prosecuting such EVI
Tax Claim, EVI shall provide or cause to be provided to Spinco any information
reasonably requested by Spinco that relates to such EVI Tax Claim, and shall
otherwise cooperate with Spinco and its representatives in good faith in order
to contest effectively such EVI Tax Claim. Spinco shall keep EVI informed of
all developments and events relating to any such EVI Tax Claim (including,
without limitation, providing
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to EVI copies of all written materials pertaining to any such EVI Tax Claim),
and EVI or its authorized representatives shall be entitled, at EVI's expense,
to participate in all conferences, meetings and proceedings relating to any
such EVI Tax Claim.
(iv) If, after actual receipt by EVI of the total
amount of a Tax claimed (pursuant to a EVI Tax Claim) that has been advanced by
Spinco pursuant to Section 7(b)(ii)(B) hereof, the extent of the liability of
Spinco hereunder with respect to such Tax claimed has been established by a
Final Determination, EVI shall promptly pay or cause to be paid to Spinco any
refund actually received by or actually credited to any Tax Indemnitee with
respect to such Tax (together with any interest paid or credited thereon by the
taxing authority and any recovery of legal fees from such taxing authority
related thereto), except to the extent that any amounts are then owed by Spinco
to any Tax Indemnitee under the provisions of this Agreement, the Distribution
Agreement or the Merger Agreement.
(v) With respect to any EVI Tax Claim, if:
(A) Spinco fails to deliver an Election
Notice to EVI within the period provided in Section
7(b)(ii)(A) hereof or, after delivery of such Election Notice,
Spinco fails to comply with the provisions of Section
7(b)(ii)(B) hereof or fails to diligently defend or prosecute
such EVI Tax Claim to a Final Determination; or
(B) a Financial Default has occurred and
is continuing at the time any Election Notice has been
delivered by Spinco to EVI; or
(C) a Financial Default occurs at any
time after any Election Notice has been delivered by Spinco;
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then in any such event, EVI shall at any time thereafter have the right (but
not the obligation), at its election and in its sole and absolute discretion,
to defend or prosecute, at the sole cost, expense and risk of Spinco, such EVI
Tax Claim; provided, however, that at any time after delivery of written notice
of such election to Spinco and before a Final Determination with respect to
such EVI Tax Claim, EVI shall cause such defense or prosecution to be
discontinued upon EVI's receipt of payment in immediately available funds from
Spinco of the full amount of all Taxes claimed by the taxing authority, plus
the full amount of all EVI Costs incurred on or before such discontinuance in
connection with such defense or prosecution. EVI shall have full control of
such defense or prosecution and such proceedings, including any settlement or
compromise thereof. If requested by EVI, Spinco shall cooperate, and shall
cause its Affiliates to cooperate, in good faith with EVI and its authorized
representatives in order to contest effectively such EVI Tax Claim. Spinco may
attend, but not participate in or control, any defense, prosecution, settlement
or compromise of any EVI Tax Claim controlled by EVI pursuant to this Section
7(b)(v) and shall bear its own costs and expenses with respect thereto. In the
case of any EVI Tax Claim that is defended or prosecuted by EVI, EVI shall,
from time to time, be entitled to current payment from Spinco with respect to
EVI Costs incurred in connection with such defense or prosecution.
(vi) In the case of any EVI Tax Claim that is
defended or prosecuted to a Final Determination by Spinco pursuant to the terms
of this Section 7(b), Spinco shall pay to EVI in immediately available funds
the full amount of any Taxes arising or resulting from or incurred in
connection with such EVI Tax Claim
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within 10 calendar days after such Final Determination. In the case of any EVI
Tax Claim that is defended or prosecuted to a Final Determination by EVI
pursuant to the terms of this Section 7(b), Spinco shall pay to EVI in
immediately available funds the full amount of any Taxes arising or resulting
from or incurred in connection with such EVI Tax Claim, together with the EVI
Costs incurred in connection therewith that have not theretofore been paid by
Spinco to EVI, within 10 calendar days after such Final Determination. In the
case of any EVI Tax Claim not covered by the two preceding sentences, Spinco
shall pay to EVI in immediately available funds the full amount of any Taxes
arising or resulting from or incurred in connection with such EVI Tax Claim at
least 10 calendar days before the date payment of such Taxes is due from any
Tax Indemnitee, except where payment of such Taxes is sooner required under the
provisions of Section 7(b)(ii) hereof or the first sentence of Section 7(b)(v)
hereof, in which case payment of such Taxes (and EVI Costs to the extent
provided in the first sentence of Section 7(b)(v) hereof) shall be made within
the time and in the manner provided in Section 7(b)(ii) hereof or the first
sentence of Section 7(b)(v) hereof, respectively.
(c) Spinco shall promptly notify EVI in writing upon
receipt by Spinco or any of its Affiliates of any written or oral communication
with respect to any question, adjustment, assessment, pending or threatened
audit, examination, investigation, or administrative, court or other proceeding
which could, if pursued successfully, result in or give rise to a claim for
indemnification of Spinco by EVI under this Agreement ("Spinco Tax Claim").
EVI shall have the sole and exclusive right at EVI's expense to represent
GulfMark's and Ercon's interests in any audit, examination,
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investigation or administrative, court or other proceeding relating to a Spinco
Tax Claim, to employ counsel of its choice and otherwise to control the conduct
of such audit, examination, investigation or proceeding in such manner as it
deems fit in its sole and absolute discretion, including, without limitation,
any settlement, compromise or other disposition thereof. Spinco agrees that
upon request from EVI, Spinco will cooperate, and will cause its personnel,
Affiliates and personnel of its Affiliates to cooperate fully with EVI and its
counsel in connection with the preparation for, or defense, prosecution,
settlement or compromise of, any such audit, examination, investigation or
proceeding pertaining or attributable to GulfMark or Ercon with respect to any
Post-Closing Period.
8. Cooperation. Spinco shall grant or cause to be granted to EVI
or EVI's representatives access at all reasonable times to all of the
information, books and records relating to GulfMark, Ercon or any GulfMark
Company within its possession or control (including, without limitation, Tax
work papers, Tax Returns and correspondence with Tax authorities), including
the right to take extracts therefrom and make copies thereof at EVI's expense,
to the extent reasonably necessary in connection with Taxes to which this
Agreement, the Distribution Agreement or the Merger Agreement applies and shall
furnish the assistance and cooperation of such personnel of Spinco and its
Affiliates as EVI may reasonably request in connection therewith. EVI shall
grant or cause to be granted to Spinco or Spinco's representatives access at
all reasonable times to all of the information, books and records relating to
GulfMark, Ercon or any GulfMark Company within EVI's possession or control for
periods ending on or before the Effective Date (including, without limitation,
Tax work
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papers, Tax Returns and correspondence with Tax authorities), including the
right to take extracts therefrom and make copies thereof at Spinco's expense,
to the extent reasonably necessary in connection with Taxes to which this
Agreement, the Distribution Agreement or the Merger Agreement applies and shall
furnish the assistance and cooperation of such personnel of GulfMark and Ercon
as Spinco may reasonably request in connection therewith. Without limiting the
generality of the foregoing provisions of this Section 8, EVI and Spinco shall
cooperate and consult in good faith with each other during the course of the
preparation of foreign, federal, state and local income Tax Returns of or
including GulfMark, Ercon or any GulfMark Company for periods including, or
ending on or before, the Effective Date and for periods after the Effective
Date, and to the extent appropriate, shall use their respective best efforts to
agree on the inclusion of items of income, deduction, gain, loss and credit for
each of such periods so as to properly reflect such items attributable to such
periods. Any information obtained by a party hereto or its Affiliates from
another party hereto or its Affiliates in connection with any Tax matters to
which this Agreement, the Distribution Agreement or the Merger Agreement
applies shall be kept confidential, except as may be otherwise necessary in
connection with the filing of Tax Returns or claims for refund or in conducting
an audit or other proceeding. Except as expressly provided otherwise in this
Agreement, each of EVI and Spinco shall bear and pay its own costs and expenses
incurred in connection with performing its obligations under this Agreement.
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9. Termination of Tax Sharing Agreements. Except as expressly
provided in this Agreement, any and all Tax allocation agreements, Tax sharing
agreements, intercompany agreements or other agreements or arrangements,
between either of GulfMark or Ercon and Spinco and/or any of Spinco's
Affiliates and relating to any Tax matters shall be terminated with respect to
GulfMark and Ercon as of the day before the Effective Date, and from and after
the Effective Date, neither GulfMark nor Ercon shall be obligated to make any
payment to Spinco or any of Spinco's Affiliates pursuant to any of such
agreements or arrangements.
10. Survival. Anything to the contrary in this Agreement, the
Distribution Agreement or the Merger Agreement notwithstanding, the parties'
representations, warranties, covenants, agreements, rights and obligations with
respect to any Tax covered by this Agreement, the Distribution Agreement or the
Merger Agreement shall survive the Effective Date and shall not terminate until
20 calendar days after the expiration of all statutes of limitations (including
any and all extensions thereof) applicable to such Tax, or the assessment
thereof; provided, however, that:
(a) any Tax Indemnitee's right to receive indemnity in
respect of any Tax as to which notice thereof has been delivered to,
or received from, Spinco prior to the termination of any
representation, warranty, covenant, agreement or obligation of Spinco
relating to such Tax, and
(b) any Tax Indemnitee's right to initially assert a
claim for indemnification in respect of a breach of any
representation, warranty, covenant, agreement or obligation of Spinco
with respect to any Tax covered by this Agreement,
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shall survive such termination.
11. Arbitration. Any disputes, claims or controversies connected
with, arising out of, or related to, this Agreement (other than any such
dispute, claim or controversy with respect to which the procedure or mechanism
for resolving the same is otherwise provided in this Agreement, which dispute,
claim or controversy shall be resolved in accordance with such procedure or
mechanism) and the rights and obligations created herein, or the breach,
validity, existence or termination hereof, shall be settled by arbitration to
be conducted in accordance with the Commercial Rules of Arbitration of the
American Arbitration Association, except as such Commercial Rules may be
changed by this Section 11. The disputes, claims or controversies shall be
decided by three independent arbitrators (that is, arbitrators having no
substantial economic or other material relationship with the parties), one to
be appointed by Spinco and one to be appointed by EVI within 14 days following
the submission of the claim to the parties hereto and the third to be appointed
by the two so appointed within 5 days. Should either party refuse or neglect
to join in the timely appointment of the arbitrators, the other party shall be
entitled to select both arbitrators. Should the two arbitrators fail timely to
appoint a third arbitrator, either party may apply to the Chief Judge of the
United States District Court for the Southern District of Texas to make such
appointment. The arbitrators shall have 90 days after the selection of the
third arbitrator within which to allow discovery, hear evidence and issue their
decision or award and shall in good faith attempt to comply with such time
limits; provided, however, if two of the three arbitrators believe additional
time is necessary to reach a decision, they may notify the parties and extend
the time to reach a decision in 30-day
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increments, but in no event to exceed an additional 90 days. Discovery of
evidence shall be conducted expeditiously by the parties, bearing in mind the
parties desire to limit discovery and to expedite the decision or award of the
arbitrators at the most reasonable cost and expense of the parties. Judgment
upon an award rendered pursuant to such arbitration may be entered in any court
having jurisdiction, or application may be made to such court for a judicial
acceptance of the award, and an order of enforcement, as the case may be. The
place of arbitration shall be Houston, Texas. The decision of the arbitrators,
or a majority thereof, made in writing, shall be final and binding upon the
parties hereto as to the questions submitted, and each party shall abide by
such decision. Notwithstanding the provisions of this Section 11, no party
shall be prohibited from seeking injunctive relief pending the completion of
any arbitration. The costs and expenses of the arbitration proceeding,
including the fees of the arbitrators and all costs and expenses, including
legal fees and witness fees, incurred by the prevailing party, shall be borne
by the losing party.
Solely for purposes of injunctive relief, orders in aid of arbitration
and entry of the arbitrator's award:
(a) each of the parties hereto irrevocably consents to
the non-exclusive jurisdiction of, and venue in, any state court
located in Harris County, Texas or any federal court sitting in the
Southern District of Texas in any suit, action or proceeding seeking
injunctive relief, arising out of or relating to this Agreement or any
of the other agreements contemplated hereby and any other court in
which a matter that may result in a claim for indemnification
hereunder by a Tax Indemnitee may be brought with respect to any claim
for indemnification by
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a Tax Indemnitee;
(b) each of the parties hereto waives, to the fullest
extent permitted by law, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding seeking
injunctive relief, orders in aid of arbitration or entry or an
arbitration order arising out of or relating to this Agreement or any
of the other agreements contemplated hereby brought in any state court
located in Harris County, Texas or any federal court sitting in the
Southern District of Texas or any other court in which a matter that
may result in a claim for indemnification hereunder by a Tax
Indemnitee may be brought with respect to any claim for
indemnification by a Tax Indemnitee, and further irrevocably waives
any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum; and
(c) each of the parties hereto irrevocably designates,
appoints and empowers CT Corporation System, Inc. and any successor
thereto as its designee, appointee and agent to receive, accept and
acknowledge for and on its behalf, and in respect of its property,
service of any and all legal process, summons, notices and documents
which may be served in any suit, action or proceeding arising out of
or relating to this Agreement or any of the other agreements
contemplated hereby.
12. Conflict. In the event of a conflict between the provisions
of this Agreement and the provisions of the Distribution Agreement or the
Merger Agreement, the provisions of this Agreement shall control.
13. Notices. All notices, requests, demands and other communications required
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or permitted hereunder shall be in writing and shall be deemed given if
actually received, if delivered personally or if delivered by courier or
overnight delivery service with proof of delivery or if delivered by certified
or registered mail, postage prepaid, return receipt requested, addressed in all
of the foregoing cases as set forth below, or if delivered by facsimile at the
facsimile number set forth below, with confirmation delivered promptly
thereafter (in a manner as previously set forth in this sentence):
If to EVI or GulfMark:
Energy Ventures, Inc.
5 Post Oak Park, Suite 1760
Houston, Texas 77027
Attention: Bernard J. Duroc-Danner
If by facsimile, to: (713) 297-8488
If to Spinco:
GulfMark Offshore, Inc.
5 Post Oak Park, Suite 1170
Houston, Texas 77027
Attention: Frank R. Pierce
If by facsimile, to: (713) 973-9796
14. Assignability and Parties in Interest. This Agreement shall not
be assignable by either of the parties hereto or any successor or permitted
assignee, without the consent of the other party (such consent not unreasonably
to be withheld), except that after the Effective Date EVI or any successor or
permitted assignee may assign its rights, including, without limitation, its
rights to indemnification, under this Agreement to one or more Affiliates, and
upon each such assignment such Affiliate or Affiliates shall be deemed to
succeed to the rights of EVI hereunder, provided, however,
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<PAGE> 33
that any assignment shall not relieve EVI of liability hereunder. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors and permitted assignees.
15. Governing Law. This Agreement shall be governed and construed
and enforced in accordance with the internal laws, and not the laws pertaining
to choice or conflicts of laws, of the State of Texas.
16. Counterparts. This Agreement may be executed simultaneously
in one or more counterparts, each of which shall be deemed an original, but all
of which shall constitute but one and the same instrument.
17. Complete Agreement; Time is of the Essence. This Agreement, the
Distribution Agreement and the Merger Agreement and the exhibits and schedules
hereto and thereto contain the entire agreement between the parties hereto and
thereto with respect to the transactions contemplated hereby and thereby and
supersede all previous oral and written and all contemporaneous oral
negotiations, commitments, representations, writings and understandings. Time
is of the essence hereof.
18. Modifications, Amendments and Waivers. No term or provision
of this Agreement may be amended, waived or otherwise modified without the
prior written consent of each of the parties hereto. The failure of either
party at any time or times to require performance of any term or provision
hereof shall in no manner affect the right to enforce such term or provision.
No waiver by either party of compliance with any term, provision or covenant,
or of the breach of any term, provision, covenant, representation or warranty,
contained in this Agreement, whether by conduct or otherwise, in any one or
more instances, shall be deemed to be or construed as a
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<PAGE> 34
further or continuing waiver of the breach of any such term, provision,
covenant, representation or warranty, or a waiver of compliance with any other
term, provision or covenant or of the breach of any other term, provision,
covenant, representation or warranty.
19. Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
20. Severability. Any provision of this Agreement which is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other jurisdiction.
21. Remedies Cumulative. Except as otherwise provided in Section
12 hereof, the remedies provided in this Agreement, the Distribution Agreement
and the Merger Agreement shall be cumulative and shall not preclude the
assertion by any party hereto or third party beneficiary hereof of any other
rights or the seeking of any other remedies against any other party hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
GULFMARK INTERNATIONAL, INC.
By: /s/ FRANK R. PIERCE
Printed Name: FRANK R. PIERCE
Printed Title: EXEC. VICE PRESIDENT
"GULFMARK"
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<PAGE> 35
GULFMARK OFFSHORE, INC.
By: /s/ FRANK R. PIERCE
Printed Name: FRANK R. PIERCE
Printed Title: EXEC. VICE PRESIDENT
"SPINCO"
ENERGY VENTURES, INC.
By: /s/ JAMES G. KILEY
Printed Name: JAMES G. KILEY
Printed Title: VICE PRESIDENT
"EVI"
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<PAGE> 36
SCHEDULE A
GULFMARK COMPANIES
<TABLE>
<CAPTION>
Name of Subsidiary or Organization State or Country of Incorporation
---------------------------------- ---------------------------------
<S> <C>
GulfMark Offshore, Inc. Delaware
Gulf Offshore N.S. Ltd. United Kingdom
GulfMark North Sea Ltd. United Kingdom
Dianne Operating Ltd. United Kingdom
Gulf Marine Far East PTE, Ltd. Singapore
Gulf Offshore Marine International, Inc. Panama
Gulf Offshore Far East Inc. Panama
SeaMark, Ltd. Inc. Panama
Gulf Marine do Brazil, Ltda. Brazil
Semaring Logistics (M) Sdn. Bhd. Malaysia
Chalvoyage (M) Sdn. Bhd. Malaysia
Gulf Offshore Shipping Services Inc. Panama
</TABLE>
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<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated May 30, 1997 in this Registration Statement on Form S-1 of our
audits of the consolidated financial statements of GulfMark Offshore, Inc. and
Subsidiaries at December 31, 1996 and 1995 and for each of the three years in
the period ended December 31, 1996 and to all references to our Firm included in
this Registration Statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Houston, Texas
July 11, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FOLLOWING SETS FORTH FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED
FINANCIAL STATEMENTS OF GULFMARK OFFSHORE, INC. AND AS OF DECEMBER 31, 1996, AND
THE CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997
<CASH> 17,234 10,233
<SECURITIES> 0 0
<RECEIVABLES> 8,939 10,870
<ALLOWANCES> 0 0
<INVENTORY> 675 761
<CURRENT-ASSETS> 26,848 21,864
<PP&E> 106,909 114,961
<DEPRECIATION> (19,504) (20,049)
<TOTAL-ASSETS> 131,307 134,652
<CURRENT-LIABILITIES> 12,900 19,332
<BONDS> 0 0
0 0
0 0
<COMMON> 67 67
<OTHER-SE> 61,949 59,574
<TOTAL-LIABILITY-AND-EQUITY> 131,307 134,652
<SALES> 34,749 9,679
<TOTAL-REVENUES> 34,749 9,679
<CGS> 16,178 4,302
<TOTAL-COSTS> 25,714 7,187
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (3,936) (1,226)
<INCOME-PRETAX> 5,482 1,442
<INCOME-TAX> 1,839 398
<INCOME-CONTINUING> 3,643 1,044
<DISCONTINUED> 4,796 (648)
<EXTRAORDINARY> 0 (1,426)
<CHANGES> 0 0
<NET-INCOME> 8,439 (1,030)
<EPS-PRIMARY> 1.26 (0.15)
<EPS-DILUTED> 1.26 (0.15)
</TABLE>
