SEABULK TRANSMARINE PARTNERSHIP LTD, 10-K405, 1999-04-01

SEABULK TRANSMARINE PARTNERSHIP LTD
10-K405, 1999-04-01

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 1998

Commission File Number 333-42039

SEABULK TRANSMARINE PARTNERSHIP, LTD.
(Exact name of registrant as specified in its charter)

Florida 59-2580172
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

2200 Eller Drive, P.O. Box 13038
Ft. Lauderdale, Florida 33316
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (954) 523-2200

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. YES . NO X.

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

DOCUMENTS INCORPORATED BY REFERENCE

None.

The Registrant meets the conditions set forth in General Instructions
(I)(1)(a) and (b) of Form 10-K (as modified by grants of no-action relief to
unrelated parties) and is therefore filing this form using the reduced
disclosure format specified therein.

- --------------------------------------------------------------------------------

<PAGE>

SEABULK TRANSMARINE PARTNERSHIP, LTD.

FORM 10-K

<TABLE>
<CAPTION>
Table of Contents

Item Page

Part I
<S> <C> <C>
1 Business........................................................................................... 1
2 Properties......................................................................................... 2
3 Legal Proceedings.................................................................................. 2
4 Submission of Matters to a Vote of Security Holders................................................ 2

Part II

5 Market for Registrant's Common Equity and Related Stockholder Matters.............................. 3
6 Selected Financial Data............................................................................ 3
7 Management's Narrative Analysis of the Results of Operations....................................... 3
7A Quantitative and Qualitative Disclosures About Market Risk......................................... 4
8 Financial Statements............................................................................... 4
9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................................................... 4

Part III

10 Directors and Executive Officers of the Registrant................................................. 5
11 Executive Compensation............................................................................. 5
12 Security Ownership of Certain Beneficial Owners and Management..................................... 5
13 Certain Relationships and Related Transactions..................................................... 5

Part IV

14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................... 6

</TABLE>

<PAGE>

PART I

Item 1. Business

General

Seabulk Transmarine Partnership, Ltd. (the "Company"), a Florida
limited partnership and an indirect 67.33%-owned subsidiary of Hvide Marine
Incorporated (the "Parent"), provides marine transportation services to
companies that transport specialty chemicals in the U.S. domestic trade by time
chartering its vessel the Seabulk America, a 46,300 deadweight ton chemical
product carrier, to such companies. The Company time charters the Seabulk
America to Ocean Specialty Tankers Corporation ("OSTC"), an indirect wholly
owned subsidiary of the Parent, which in turn markets the vessel directly to
companies in the chemical industry. Under the charter with OSTC, the current
charter hire for the Seabulk America is $28,400 per day.

In the U.S. domestic chemical transportation trade, vessels carry
chemicals, primarily from chemical manufacturing plants and storage tank
facilities along the coast of the U.S. Gulf of Mexico to industrial users in and
around Atlantic and Pacific coast ports. The chemicals transported consist
primarily of caustic soda, alcohol, chlorinated solvents, paraxylene, alkylates,
toluene, methyl tertiary butyl ether (MTBE), phosphoric acid, and lubricating
oils. Coastwise chemical tonnage demand has increased in recent years as a
result of the general expansion of the U.S. economy and as gasoline additives
have begun to move coastwise. Certain of the chemicals transported must be
carried in vessels with specially coated or stainless steel cargo tanks;
further, many of these chemicals are very sensitive to contamination and require
special cargo-handling equipment.

The Seabulk America has full double bottoms (as distinct from double
hulls). Double bottoms provide increased protection over single-hull vessels in
the event of a spill. Delivered in 1990, the Seabulk America is the only vessel
in the U.S. domestic trade capable of carrying large cargoes of acid, as a
result of its large high-grade alloy stainless steel tanks, and the only such
vessel strengthened to carry relatively heavy cargoes such as phosphoric and
other acids. The Seabulk America's stainless steel tanks were constructed
without internal structure, which greatly reduces cargo residue from
transportation and results in less cargo degradation. Stainless steel tanks,
unlike epoxy-coated tanks, also do not require periodic sandblasting and
recoating. The Seabulk America was one of the first U.S.-flag carriers to be
equipped with state-of-the-art-integrated navigation, cargo control monitoring,
and automated engine room equipment.

The Seabulk America has 24 cargo segregations which are configured,
strengthened, and coated to handle various sized parcels of a wide variety of
industrial chemical and petroleum products, giving it the ability to handle a
broader range of chemicals than many chemical-capable product carriers. Many of
the chemicals transported by the Company are hazardous substances. Under current
arrangements, voyages are conducted from the Houston and Corpus Christi, Texas,
and Lake Charles, Louisiana areas to such ports as New York, Philadelphia,
Baltimore, Wilmington, North Carolina, Charleston, South Carolina, Los Angeles
and San Francisco.

Pursuant to the Oil Pollution Act of 1990, the Seabulk America, which
was built with full double bottoms but not double sides, cannot be used to
transport petroleum and petroleum products in U.S. commerce after 2015. It is
possible that it could continue to carry certain chemicals in U.S. commerce
after 2015, or that it could be redocumented in another country and be used to
transport chemicals in

<PAGE>

non-U.S. trades after 2015. The Company has no present plans to take any of
these actions, and no assurance can be given as to the feasibility or economic
liability of doing so.

Employees

As of March 15, 1999, the Company had approximately 34 employees, which
are comprised of the officers and crew of the Seabulk America. The crew of the
Seabulk America is subject to two collective bargaining agreements that expire
on December 31, 1999 and December 31, 2000. Management considers relations with
employees to be satisfactory.

Item 2. Properties

The Company's operations are conducted at the Parent's principal
offices located in Fort Lauderdale, Florida, where the Parent leases
approximately 36,000 square feet of office and shop space under a lease that
expires in 2009.

Item 3. Legal Proceedings

The Seabulk America was completed in 1990 by combining the stern
portion of the wrecked oil tanker Fuji with the forebody of the chemical barge
portion of the former integrated tug/barge Oxy Producer/Oxy 4102. In Norfolk
Shipbuilding and Dry Dock Corporation v. Seabulk Transmarine Partnership, Ltd.,
filed in the U.S. District Court for the Eastern District of Louisiana (Civil
Action No. 93-1312), one of the shipyards that contracted to complete the
Seabulk America for the Company sought to recover from the Company approximately
$6.1 million for alleged additions and changes to the contract work and the
costs of alleged delay and disruption, in addition to $2.4 million of the $5.9
million contract price that the Company previously withheld, plus fees and
expenses. This lawsuit was settled in the fourth quarter of 1998. Under the
terms of the settlement, the lawsuit and related counterclaims were dismissed
with prejudice in consideration of the agreement of the Company and certain
affiliates to pay the shipyard a total of $4.75 million in installments from
December 1998 to May 1999. As part of the settlement, a $5.6 million bond
previously provided by the Company and certain affiliates was released and a
related letter of credit was terminated.

From time to time the Company may also be a party to litigation arising
in the ordinary course of its business, most of which is covered by insurance.

Item 4. Submission of Matters to a Vote of Security Holders

Omitted pursuant to General Instruction I to Form 10-K (the
"Instruction").

<PAGE>

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The Company's equity securities are not publicly traded. The Company
files reports under the Securities Exchange Act of 1934 (the "Exchange Act") due
to its status as a non-wholly owned subsidiary guarantor of the Parent's 83/8%
Senior Notes due 2008.

The Company is presently 75%-owned by indirect subsidiaries of the
Parent and 25% owned by Stolt Tankers (U.S.A.), Inc., an unaffiliated third
party ("Stolt"). Seabulk Tankers, Ltd., an indirect wholly owned subsidiary of
the Parent, owns a 33% general partnership interest and a .33% limited
partnership interest in the Company; Seabulk America Partnership, Ltd., an
81.59%-owned indirect subsidiary of the Parent, owns a 41.67% limited
partnership interest in the Company; and Stolt owns a 25% limited partnership in
the Company. The Company's partnership agreement allows for distributions to be
made to the partners at any time based on the partners' percentage ownership of
the partnership assets without priority or preference. No distributions have
been made to the partners since the Company's formation and the Company does not
intend to make distributions in the future. In addition, the Company is
restricted from making distributions in certain circumstances by covenants
contained in the Parent's credit facility and senior notes documentation.

Item 6. Selected Financial Data

Omitted pursuant to the Instruction.

Item 7. Management's Narrative Analysis of the Results of Operations

This discussion should be read in conjunction with the Company's
historical financial statements and the related notes thereto included
elsewhere in this report.

Forward-Looking Information

Certain statements in the following analysis contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act of 1933. All statements other than statements of
historical fact included in this discussion are forward-looking statements.
Although the Company believes the expectations and beliefs reflected in such
forward-looking statements are reasonable, it can give no assurance that they
will prove to have been correct.

General

The Company is only a small part of the Parent's overall marine
support and transportation services business and operations. For the year ended
December 31, 1998, the assets and revenues of the Company respectively
represented 3.53% and 2.62% of the consolidated assets and revenues of the
Parent.

Results of Operations

1998 Compared with 1997

Revenue. Revenue increased 1.7% to $10.5 million for 1998 from $10.3
million for 1997 due to the increased charter rate in the Company's time charter
on the Seabulk America.

<PAGE>

Operating Expenses. Operating expenses decreased 11.7% to $4.1 million
for 1998 from $4.6 million for 1997, primarily due to cost savings on insurance
premiums and other miscellaneous expenses such as travel, communications,
training, and inspection fees. As a percentage of revenue, operating expenses
decreased to 38.7% for 1998 from 44.5% in 1997 due to these cost savings and the
increased charter rate of the Seabulk America.

Overhead Expenses. Overhead expenses decreased 33.7% to $2.1 million
for 1998 from $3.2 million for 1997, primarily due to a decrease in fees related
to litigation. As a percentage of revenues, overhead expenses decreased to 20.0%
for 1998 from 30.6% for 1997 due to this reduction in fees as compared to the
increase in the charter rate of the Seabulk America.

Depreciation Expense. Depreciation expense remained relatively the same for
1998 as compared with 1997 due to minimal amounts of new capital expenditures.

Income from Operations. Income from operations increased 157.3% to
$2.9 million, or 27.6% of revenue, for 1998 from $1.1 million, or 10.9% of
revenue, for 1997 as a result of the factors noted above.

Net Interest Expense. Net interest expense increased 31.2% to $2.2
million, or 20.6% of revenue, for 1998 from $1.6 million, or 16.0% of revenue,
for 1997, primarily as a result of an increase in the interest rate charged on a
higher average intercompany balance with the Parent.

Other Income (Expense). Other income was $275,000 for 1998 as compared
to other expense of $36,000 for 1997, primarily due to a settlement with a third
party insurance company.

Net Income (Loss). The Company had net income of $1.0 million for 1998
as compared to a net loss of $559,000 for 1997, primarily as a result of the
factors noted above.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 8. Financial Statements

The Company's Financial Statements are listed in Item 14(a)(1),
included at the end of this report on Form 10-K beginning on page F-1, and
incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

Not applicable.

<PAGE>

PART III

Item 10. Directors and Executive Officers of the Registrant

Omitted pursuant to the Instruction.

Item 11. Executive Compensation

Omitted pursuant to the Instruction.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Omitted pursuant to the Instruction.

Item 13. Certain Relationships and Related Transactions

Omitted pursuant to the Instruction.

<PAGE>

Part IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a) (1) List of Financial Statements. The following is a list of the
financial statements included at the end of this report on Form 10-K beginning
on page F-1:

Report of Independent Certified Public Accountants
Balance Sheets as of December 31, 1997 and 1998
Statements of Operations for the Years Ended December 31, 1996, 1997
and 1998
Statements of Changes in Partners' Capital for the Years Ended
December 31, 1996, 1997 and 1998
Statements of Cash Flows for the Years Ended December 31, 1996, 1997
and 1998
Notes to Financial Statements

(2) List of Financial Statement Schedules. All schedules have been
omitted because they are not applicable or not required, or the required
information is provided in the financial statements or notes thereto.

(3) List of Exhibits. See Item 14(c) below.

(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
last quarter of the fiscal year covered by this report on Form 10-K.

(c) Exhibits. The following is a list of exhibits furnished. Copies of
exhibits will be furnished upon written request at a charge of $.25 per page
plus postage.

Exhibit
Number Exhibit

3.1(a) Supplemental Affidavit and Amended and Restated Certificate of Limited
Partnership of Seabulk Transmarine Partnership, Ltd.

3.1(b) Certificate of Amendment to Certificate of Limited Partnership For:
Seabulk Transmarine Partnership, Ltd. (Certificate filed September 17,
1985) dated January 1, 1991

3.1(c) Certificate of Amendment to Certificate of Limited Partnership For:
Seabulk Transmarine Partnership, Ltd. (Certificate filed September 17,
1985) dated January 1, 1991

3.2(a) Limited Partnership Agreement of Seabulk Transmarine Partnership, Ltd.
dated August 30, 1985

3.2(b) Amendment to Limited Partnership Agreement of Seabulk Transmarine
Partnership, Ltd., dated December 24, 1986

3.2(c) Amendment to Limited Partnership Agreement of Seabulk Transmarine
Partnership, Ltd., dated May 31, 1989

3.2(c) Amendment to Limited Partnership Agreement of Seabulk Transmarine
Partnership, Ltd., dated September 26, 1990

<PAGE>

4.1(1) Indenture, dated February 19, 1998, among Hvide
Marine Incorporated, the Subsidiary Guarantors named
therein and the Bank of New York as Trustee.

10.1(2)(3) Tanker Time Charter Party, dated December 15, 1989, between Seabulk
Transmarine Partnership, Ltd. and Ocean Specialty Tankers
Corporation, with respect to Seabulk America.

27 Financial Data Schedule.

(1) Incorporated herein by reference to the Registration Statement on
Form S-4 (Registration No. 333-42039) filed with the Commission on
March 18, 1998.

(2) Incorporated herein by reference to the Registration Statement on
Form S-1 (Registration No. 33-78166) filed with the Commission on
April 26, 1994.

(3) Materials from this document have been omitted and separately filed
with the Commission pursuant to a confidential treatment request.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

SEABULK TRANSMARINE PARTNERSHIP, LTD.

By: SEABULK TANKERS, Ltd.
its General Partner

By: HVIDE MARINE TRANSPORT, INCORPORATED
its General Partner

By: /s/ J. ERIK HVIDE
J. Erik Hvide
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>

Signature Title Date
<S> <C> <C>
/s/ J. ERIK HVIDE Chairman of the Board, March 31, 1999
- --------------------------------------
J. Erik Hvide President, Chief Executive
Officer and Director
(principal executive officer)

/s/ JOHN H. BLANKLEY Executive Vice March 31, 1999
- --------------------------------------
John H. Blankley President -- Chief Financial
Officer and Director
(principal financial officer)

/s/ EUGENE F. SWEENEY Executive Vice President-- Chief March 31, 1999
- --------------------------------------
Eugene F. Sweeney Operating Officer and Director

</TABLE>

<PAGE>

Report of Independent Certified Public Accountants

The Partners
Seabulk Transmarine Partnership, Ltd.

We have audited the accompanying balance sheets of Seabulk Transmarine
Partnership, Ltd. as of December 31, 1997 and 1998, and the related statements
of operations, changes in partners' capital and cash flows for each of the three
years in the period ended December 31, 1998. These financial statements are the
responsibility of the Partnership'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 the
Partnership's 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 Seabulk Transmarine
Partnership, Ltd. at December 31, 1997 and 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1998, in conformity with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Partnership will continue as a going concern. As more fully described in Note 2,
certain of the Partnership's partners are directly or indirectly owned by Hvide
Marine Incorporated (HMI). On a consolidated basis, HMI believes that it will
not be in compliance with certain covenants of a loan agreement as of March 31,
1999. Because of the aforementioned conditions relating to HMI, and the
uncertainties surrounding its plans to address its liquidity problems, HMI's
actions could have a substantial effect on the Partnership's assets; therefore,
there is also substantial doubt about whether the Partnership will continue as a
going concern. The financial statements of the Partnership do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the outcome of this uncertainty.

/s/ ERNST & YOUNG LLP

Miami, Florida
February 5, 1999,
except for Note 2,
as to which the date
is March 31, 1999

F-1

<PAGE>

Seabulk Transmarine Partnership, Ltd.

Balance Sheets
<TABLE>
<CAPTION>

Year Ended December 31,
1997 1998
--------------- ---------------
(in thousands)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents...................................... $ 16 $ 30
Insurance claim and receivables................................ 14 --
Inventory, spare parts and supplies............................ 1,320 1,320
Prepaid expenses and deferred costs............................ 312 304
--------------- ---------------
Total current assets........................................ 1,662 1,654

Vessel and improvements........................................... 43,806 48,577
Less accumulated depreciation..................................... (9,810) (11,258)
--------------- ---------------
33,996 37,319

Deferred costs, net............................................... 426 160
--------------- ---------------
$ 36,084 $ 39,133
=============== ===============

Liabilities and partners' equity
Current liabilities:
Accrued liabilities........................................... $ 741 $ 3,896
--------------- ---------------
Total current liabilities......................................... 741 3,896

Due to affiliates, net............................................ 31,777 30,658
Other long term obligations....................................... 109 113

Commitments and contingencies

Partners' equity.................................................. 3,457 4,466
--------------- ---------------
$ 36,084 $ 39,133
=============== ===============
</TABLE>

See accompanying notes.

F-2
<PAGE>

Seabulk Transmarine Partnership, Ltd.

Statements of Operations

December 31,
1996 1997 1998
------------- ------------- --------------
(in thousands)
<S> <C> <C> <C>
Revenues $ 10,193 $ 10,329 $ 10,505
Operating expenses:
Crew payroll and benefits...................................... 2,761 2,741 2,725
Repairs and maintenance........................................ 755 685 732
Insurance ..................................................... 715 471 305
Consumables.................................................... 303 254 282
Other.......................................................... 241 448 18
------------ ------------- -------------
Total operating expenses.................................... 4,775 4,599 4,062

Selling, general and administrative expenses:
Salaries and benefits.......................................... 133 169 188
Professional fees.............................................. 1,581 2,284 1,275
Guarantee fee.................................................. 222 149 12
Allocated overhead............................................. 518 535 550
Other.......................................................... 30 28 73
------------ ------------- -------------
Total overhead expenses..................................... 2,484 3,165 2,098

Depreciation...................................................... 1,400 1,439 1,448
------------ ------------- -------------
Income from operations............................................ 1,534 1,126 2,897

Interest expense.................................................. 4,150 1,649 2,163
Other income (expense)............................................ 304 (36) 275
------------ ------------- -------------
Net income (loss)................................................. $ (2,312) $ (559) $ 1,009
============ ============= =============
</TABLE>

See accompanying notes.

F-3

<PAGE>

Seabulk Transmarine Partnership, Ltd.

Statements of Changes in Partners' Capital
<TABLE>
<CAPTION>

Total
General Limited Partners'
Partner Partners Capital
-------------------------------------------
(in thousands)
<S> <C> <C> <C>
Partners' capital at December 31, 1995............................ $ 2,917 $ 3,411 $ 6,328
Net loss for the year ended December 31, 1996.................. (763) (1,549) (2,312)
------------ ------------- -------------
Partners' capital at December 31, 1996............................ 2,154 1,862 4,016
Net loss for the year ended December 31, 1997.................. (185) (374) (559)
------------ ------------- -------------
Partners' capital at December 31, 1997............................ 1,969 1,488 3,457
Net income for the year ended December 31, 1998................ 333 676 1,009
------------ ------------- -------------
Partners' capital at December 31, 1998............................ $ 2,302 $ 2,164 $ 4,466
============ ============= =============
</TABLE>

See accompanying notes.

F-4

<PAGE>

Seabulk Transmarine Partnership, Ltd.

Statements of Cash Flows

Year ended December 31,
1996 1997 1998
------------- ------------- --------------
(in thousands)
<S> <C> <C> <C>
Operating activities
Net income (loss)................................................. $ (2,312) $ (559) $ 1,009
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation.................................................. 1,400 1,439 1,448
Amortization of drydocking costs.............................. 318 292 240
Amortization of debt issuance costs........................... 234 176 --
Changes in operating assets and liabilities:
Accounts receivable......................................... 1,262 182 14
Other assets................................................ 43 (776) 35
Due to affiliates........................................... 1,603 635 (1,119)
Accrued and other liabilities............................... 178 415 3,159
------------ ------------- -------------
Net cash provided by operating activities......................... 2,726 1,804 4,786

Investing activity
Purchase of property.............................................. (196) (359) (4,772)

Financing activity
Principal payments on allocated term loan borrowings.............. (2,521) (1,446) --
------------ ------------- -------------

Change in cash and cash equivalents............................... 9 (1) 14
Cash and cash equivalents at beginning of year.................... 8 17 16
------------ ------------- -------------
Cash and cash equivalents at end of year.......................... $ 17 $ 16 $ 30
============ ============= =============
</TABLE>

See accompanying notes.

F-5
<PAGE>

Seabulk Transmarine Partnership, Ltd.

Notes to Financial Statements

December 31, 1998

1. Organization and Description of Business

Organization. Seabulk Transmarine Partnership, Ltd. (STPL or the
Partnership), a Florida limited partnership, was formed on August 30, 1985
pursuant to a partnership agreement (the Agreement), to own and operate a
chemical transportation carrier, the Seabulk America. The general partner of the
Partnership is Seabulk Tankers, Ltd. (STL), a Florida limited partnership (33%)
and the limited partners are STL (0.33%), Seabulk America Partnership Ltd.
(SAPL), a Florida limited partnership (41.67%) and Stolt Tankers (U.S.A) Inc.,
(25%).

Description of Business. The Seabulk America is used to transport
chemicals primarily from chemical manufacturing plants and storage facilities
along the U.S. Gulf of Mexico coast to industrial users in and around the
Atlantic and Pacific coast ports. The Partnership time charters, to Ocean
Specialty Tanker Corp. (OSTC), which is 100% owned by HMI.

2. Issues Affecting Liquidity

STL and SAPL are 100%- and 82%-owned subsidiaries of Hvide Marine
Incorporated (HMI), a Florida corporation.

HMI does not expect to be in compliance, as of March 31, 1999, with one
or more covenants contained in its Restated and Revolving Credit and Term Loan
Agreement, as amended ("Credit Facility"). See Note 6. HMI's management and the
Credit Facility lenders are engaged in discussions to resolve this matter. In
the event the parties are unable to reach an agreement, the lenders are
entitled, at their discretion, to exercise certain remedies including
acceleration of repayment. There can be no assurance that the Credit Facility
lenders will provide HMI with an amendment or waiver of the defaults. In
addition, HMI's Senior Notes contain provisions under which repayment of the
outstanding principal amount of $300.0 million, plus accrued interest, could be
accelerated in the event that repayment of the Credit Facility is accelerated.

In the event that the Credit Facility lenders elect to exercise their
right to accelerate repayment or exercise other remedies, such actions would
have a material adverse effect on HMI, its operations and its financial
condition. Furthermore, there can be no assurance that HMI would be successful
in identifying or consummating financing necessary to satisfy the obligations
which would become immediately due and payable. As a result of the uncertainty
related to these matters, the obligations with respect to the Credit Facility
are considered to be current liabilities of HMI at December 31, 1998 and HMI has
a deficit in working capital. These matters raise substantial doubt about HMI's
ability to continue as a going concern. These conditions also raise substantial
doubt about the Partnership's ability to continue as a going concern. In
addition to continuing to negotiate with the Credit Facility lenders to obtain
waivers or amendments, HMI has various plans to increase liquidity.

The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the outcome
of this uncertainty.

3. Partnership Agreement

The general partner is responsible for the management of the
Partnership. Pursuant to the Agreement, the general partner and the limited
partners (collectively referred to as the Partners) are required to make capital
contributions at such times and in such amounts as the general partner requests
by notice. No additional capital contributions have been required for 1996, 1997
or 1998. The Partners are not entitled to withdraw any part of his capital
account or to receive any distribution of the Partnership except as specifically
provided in the Agreement. All net income or net losses of the Partnership are
to be allocated to the capital accounts in proportion to their interests. The
Partnership terminates on August 30, 2010, unless sooner terminated, liquidated
or dissolved by law or pursuant to the Agreement or unless extended by amendment
to the Agreement.

F-6

<PAGE>

4. Summary of Significant Accounting and Reporting Policies

Revenues. The Partnership's vessel is time-chartered to Ocean Specialty
Tankers Corporation, a wholly owned subsidiary of HMI. Revenues from time
charters are earned and recognized on a daily basis. Accounts receivable are
billed and collected by OSTC pursuant to the time-charter agreement and remitted
to the Partnership when the voyage expenses are paid. Accordingly, amounts due
are included in Due to/from affiliates (see note 3).

Cash and Cash Equivalents. The Partnership considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

Insurance Claims Receivable. Insurance claims receivable represent
costs incurred in connection with insurable incidents for which the Partnership
expects to be reimbursed by the insurance carrier(s), subject to applicable
deductibles. Deductible amounts related to covered incidents are expensed in the
period of occurrence of the incident.

Inventory, Spare Parts and Supplies. Inventory, spare parts and
supplies are stated at the lower of cost, determined on a basis that
approximates the last-in, first-out method, or market.

Deferred Costs. Periodically, the Partnership's vessel is drydocked for
major repairs and maintenance which cannot be performed while the vessel is
operating. Drydocking costs are deferred and amortized over the period to the
next drydocking, generally 30 to 36 months. At December 31, 1997 and 1998,
deferred costs include unamortized drydocking of approximately $641,000 and
$401,000, respectively.

Long-Lived Assets. The Partnership accounts for long-lived assets
pursuant to Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
which requires impairment losses to be recorded on long-lived assets used in
operations when events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Management reviews long-lived assets
for impairment whenever events or changes in circumstances indicate the assets
may be impaired. The Partnership, based on current circumstances, does not
believe that any long-lived assets are impaired at December 31, 1998.

Property. The vessel and improvements are stated at cost less
accumulated depreciation. Major renewals and improvements are capitalized and
replacements, maintenance and repairs that do not improve or extend the lives of
the assets are expensed. Depreciation is computed on the straight-line method
over estimated useful lives ranging from 5 - 29 years, as determined by the Oil
Pollution Act of 1990 and other factors.

Income Taxes. No provision for income taxes has been recorded since
STPL is a partnership and taxable income or loss accrues to the Partners.

Reclassifications. Certain amounts from the prior year's financial
statements have been reclassified to conform with the current year's
presentation.

F-7

<PAGE>

5. Transactions with Affiliates

Balances due (to) from affiliates at December 31, 1997 and 1998 consist of the
following (in thousands):

1997 1998
--------------------------

Due to HMI $(33,212) $(33,554)
Due from STL 338 338
Due from OSTC 1,062 2,523
Other, net 35 35
==========================
Total due to affiliates $(31,777) $(30,658)
==========================

The amount payable to HMI represents a net balance as the result of
various transactions between the Partnership and HMI. There are no terms of
settlement associated with the account balance. The balance is primarily the
result of the Partnership's participation in HMI's central cash management
program, wherein substantially all the Partnership's cash receipts are remitted
to HMI and substantially all cash disbursements are funded by the parent. Other
transactions include miscellaneous other administrative expenses incurred by HMI
on behalf of the Partnership.

HMI provides various administrative services to the Partnership,
including legal assistance and technical expertise on ship management and
maintenance. It is HMI's policy to charge these expenses and all other central
operating costs, first on the basis of direct usage when identifiable, with the
remainder allocated pursuant to the terms of the Agreement. Amounts charged by
HMI include a monthly management fee, as set forth in the Agreement, which is
adjusted annually based on changes in the Consumer Price Index. HMI also charges
interest based on the amount due to HMI. In the opinion of the Partnership's
management, this method of allocation is reasonable.

An analysis of transactions in the Due to HMI account for each of the
three years in the period ended December 31, 1998 follows: (in thousands)

1996 1997 1998
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Balance at beginning of year $ (6,834) $ (8,472) $ (33,212)
Net cash remitted to (received from) HMI 10,193 (12,390) 10,780
Allocated management fees (518) (535) (550)
Allocated guarantee fee (222) (149) (12)
Allocated interest expense (4,150) (1,649) (2,163)
Operating expenses (4,775) (4,599) (4,062)
Professional fees (1,580) (2,284) (1,275)
Miscellaneous administrative expenses (586) (3,134) (3,060)
--------------------- --------------------- ---------------------
Balance at end of year $ (8,472) $ (33,212) $ (33,554)
===================== ===================== =====================
Average balance during the year $ (7,653) $ (20,842) $ (33,383)
===================== ===================== =====================
</TABLE>

Prior to December 1998, the Partnership had a stand-by letter of credit
in the amount of $5,600,000 available for the benefit of the Partnership
provided by HMI (the Letter of Credit). The Letter of Credit was

F-8

<PAGE>

collateral for a surety bond to fund any final award relating to a shipyard's
claims. The Letter of Credit was terminated in December 1998 (see Note 7).
Included on the accompanying statements of operations are guarantee fees
primarily related to the Letter of Credit.

The time charter to OSTC extends through May 2000 and provides for
charter hire at a rate of $22,000 per day plus supplemental hire based on the
vessel's earnings value, as defined. The aggregate charter hire pursuant to this
charter agreement for 1996, 1997 and 1998 was approximately $10,193,000,
$10,329,000, and $10,505,000, respectively, and is included as revenues in the
accompanying statements of operations.

6. Guarantees of Indebtedness of Others

In February 1998, HMI completed an offering of $300.0 million of 8.375%
senior notes (the Senior Notes). Interest on the Senior Notes is payable
semi-annually in arrears on February 15 and August 15. The Senior Notes mature
on February 15, 2008 and are redeemable, in whole or in part, at the option of
HMI on or after February 15, 2003. The Senior Notes are guaranteed by the
Partnership and certain other HMI subsidiaries; however the Partnership's
guarantee is limited to HMI's economic ownership interest in the Partnership of
approximately 67%.

HMI's Credit Facility provides revolving credit of up to $175 million,
based upon certain conditions, including HMI's compliance with a leverage ratio,
as defined. The Credit Facility also provides for a term loan in the amount of
$150 million. The Credit Facility provides that borrowings thereunder will be
secured by HMI-owned vessels, including the Seabulk America, having an appraised
value of at least $600.0 million and by substantially all other assets of HMI
and its subsidiaries. The revolving and term loan portions mature on February
12, 2003 and March 31, 2005, respectively. At December 31, 1998, HMI's
outstanding indebtedness under the revolving portion of the Credit Facility was
approximately $135.0 million, and approximately $118.0 million was outstanding
under the term loan portion of the Credit Facility. The Partnership and certain
subsidiaries of HMI jointly and severally guarantee the repayment of HMI's
indebtedness under the Credit Facility; however, the Partnership's guarantee is
limited to HMI's 67% ownership interest in the Seabulk America.

The Credit Facility contains certain covenants that must be satisfied
by the HMI consolidated group, of which the Partnership is a member. The Credit
Facility, among other things, (i) requires the consolidated group to meet
certain financial tests, including tests requiring the maintenance of minimum
leverage ratios, debt service coverage ratios, and indebtedness to tangible net
worth ratios; (ii) limits the creation or incurrence of certain liens; (iii)
limits the incurrence of additional indebtedness; (iv) limits certain
investments; and (v) restricts certain payments, including dividends.

HMI does not expect to be in compliance, as of March 31, 1999, with one
or more covenants contained in the Credit Facility (see Note 2).

7. Commitments and Contingencies

In 1990, the Partnership withheld approximately $2,400,000 from a
shipyard relating to delays and other problems encountered in the construction
of the Partnership's vessel. In 1993, the shipyard filed a claim to recover
approximately $6,100,000 for additional construction costs allegedly due the
shipyard. The proceeding was settled in the fourth quarter of 1998. Under the
terms of the settlement, all claims were dismissed with prejudice in
consideration of the payment to the shipyard $4,750,000 in installments from
December 1998 to May 1999. As part of

F-9

<PAGE>

the settlement, a $5,600,000 bond previously provided by HMI was released and a
related letter of credit provided as collateral to the bond was terminated.
Included in accrued liabilities on the accompanying December 31, 1998 balance
sheet is $3,750,000 due the shipyard in 1999 representing the final payment
under the settlement agreement.

8. Employee Benefit Plans

The Partnership has adopted HMI's Section 401(k) retirement plan (the
Plan) for substantially all of its employees. Subject to certain dollar
limitations, employees may contribute a percentage of their salaries to this
Plan, and the Partnership will match a portion of the employees' contributions.
Profit sharing contributions by the Partnership to the Plan are discretionary.
Expense under the Plan for 1996, 1997 and 1998 was approximately $167,000,
$168,000 and $169,000, respectively.

9. Business Risks

Risks and Uncertainties. The Partnership's operating results and
financial condition may vary in the future depending on a number of factors. The
following factors may impact the Partnership's business, results of operations
and financial condition.

Significant Customers. The Partnership derived 100% of its revenues
from OSTC, an affiliated entity. Although there are no indications that this
relationship will change, the loss of OSTC as a customer could have an adverse
effect on the Partnership's results of operations.

Concentrations of Credit Risk. Financial instruments which potentially
subject the Partnership to concentrations of credit risk consist principally of
cash in banks, amounts due from OSTC and insurance claims receivable. The credit
risk associated with cash in banks is considered low due to their credit
quality. The credit risk associated with amounts due from OSTC is considered low
due to the ongoing credit evaluations of their trade customers and generally
does not require collateral. The credit risk associated with insurance claims
receivable is considered low due to the credit quality and funded status of the
insurance pools in which the Partnership participates.

Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Litigation. The Partnership is sometimes named as a defendant in
litigation, usually relating to claims for bodily injuries or property damage.
The Partnership maintains insurance coverage against such claims to the extent
deemed prudent by management and applicable deductible amounts are accrued at
the time of the incident. The Partnership believes that there are no existing
claims of a potentially material adverse nature.

Unions and Collective Bargaining Agreements. Members of the crew of the
Seabulk America are subject to collective bargaining agreements. Management
considers relations with employees to be satisfactory, however, if these
relations were to deteriorate it could have an adverse effect on the
Partnership's operating results.

F-10

<PAGE>

10. Income Taxes

The Partnership has received a ruling from the Internal Revenue Service
that it will be classified as a partnership for federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of the Partners.

The following is a reconciliation of reported net income (loss) and
Federal taxable loss (in thousands):
<TABLE>
<CAPTION>

1996 1997 1998
------------- ------------- --------------
<S> <C> <C> <C>
Net income (loss) as reported..................................... $ (2,312) $ (559) $ 1,009
Add (deduct):.....................................................
Depreciation differences....................................... (1,206) (1,159) (1,805)
Drydocking amortization differences............................ 318 (324) 240
Change in vacation and bonus accruals.......................... 88 2 (3)
Other.......................................................... 5 2 (14)
------------ ------------- -------------
Federal taxable loss.............................................. $ (3,107) $ (2,038) $ (573)
============ ============= =============
</TABLE>

The following is a reconciliation between the Partnership's reported
amounts and federal tax basis of net assets and liabilities (in thousands):
<TABLE>
<CAPTION>

1997 1998
------------- --------------
<S> <C> <C>
Net assets, as reported......................................................... $ 3,457 $ 4,466
Accruals and prepaid items.................................................. 79 123
Depreciation................................................................ (19,736) (21,541)
Deferred costs.............................................................. 641 (401)
Vessel basis difference..................................................... (6,168) (6,168)
------------- -------------
Net deficit, tax basis.......................................................... $ (21,727) $ (23,521)
============= =============
</TABLE>

F-11

SUPPLEMENTAL AFFIDAVIT AND
AMENDED AND RESTATED
CERTIFICATE OF LIMITED PARTNERSHIP
OF
SEABULK TRANSMARINE PARTNERSHIP, LTD.

Originally filed with the Secretary of State on September 17, 1985.

THE UNDERSIGNED Partners hereby make, acknowledge, and file this
Certificate of Limited Partnership for SEABULK TRANSMARINE PARTNERSHIP, LTD., a
Florida limited partnership, hereinafter referred to as the "Partnership".

1. Name of Partnership: The name of the Partnership is SEABULK
TRANSMARINE PARTNERSHIP, LTD.

2. Character of Business: The business and purpose of the Partnership
is:

(a) To acquire title to the damaged tank vessel named "Fuji"
(as may be renamed), to provide for its reconstruction into a self-propelled
vessel and to provide for its management and operation;

(b) To purchase, construct, reconstruct, manage, operate,
charter, lease or sell the damaged tank vessel named "Fuji" (as may be renamed);

(c) To engage in any and all maritime-related activities
relating to the ownership, operation and use of the damaged tank vessel named
"Fuji"; and

(d) To invest in stocks, bonds and securities, and to engage
without limitation in the purchase and sale of, and dealing in, stocks, bonds,
notes, and to open such checking and savings accounts with banking institutions
as may be necessary to conduct the business of the Partnership.

3. Location and Principal Place of Business: The principal place of
business of the Partnership shall be located at 2200 Eller Drive, Fort
Lauderdale, Florida 33316, or at such other place or places as the General
Partner may from time to time determine.

4. Name and Place of Residence of Partners:

(a) The name and address of the General Partner is SEABULK
TANKERS, LTD., 2200 Eller Drive, Fort Lauderdale, Florida 33316.

(b) The name and place of residence of the Limited Partners
are as follows:

NAME ADDRESS
Hans J. Hvide 2200 Eller Drive
Fort Lauderdale, FL 33316

<PAGE>

J. Erik Hvide 2200 Eller Drive
Fort Lauderdale, FL 33316

Seabulk America Partnership, 2200 Eller Drive
Ltd. Fort Lauderdale, FL 33316

Stolt Tankers (U.S.A.), Inc. 8 Sound Shore Drive
Greenwich, CT 06836

5. Term: The Partnership and the limitation of liability of Limited
Partners shall commence on the date of this Certificate. The Partnership shall
continue until 2010, unless sooner terminated or unless as extended as provided
in the Agreement of Limited Partnership.

6. Contribution of Limited Partners: The Limited Partners shall
contribute the amount of capital next to their respective names:

Hans J. Hvide $ 7,367.18

J. Erik Hvide $ 7,367.18

Seabulk America Partnership, Ltd. $3,605,595.50

Stolt Tankers (U.S.A.), Inc. $1,201,985.10

TOTAL: $4,822,314.96

7. Additional Contributions: The Limited Partners shall have no
responsibility or liability for additional contributions to the capital of the
Partnership, except in accordance with the Partnership Agreement.

8. Return of Contributions: The initial contribution of each Partner is
to be returned upon termination of the Partnership, if available.

9. Division of Profits: Net profits and losses of the Partnership for
any year shall be allocated to Partners in accordance with the Partnership
Agreement.

10. Assignee of Limited Partner: No limited partner shall have a right
to assign any part of his partnership interest, except with the prior written
consent of the General Partner and as provided in the Partnership Agreement.

11. Additional Limited Partners: No additional Limited Partners may be
admitted, except with the consent of the General Partner and in accordance with
the Partnership Agreement.

12. Right to Priority: No Limited Partner shall have the right to
priority over any other Limited Partner with respect to contributions or with
respect to compensation by way of income.

<PAGE>

13. Continuation of Business Partnership: In the event of the death,
incompetency, bankruptcy or retirement of any General Partners, the business of
the Partnership shall be continued by the remaining General Partners, if any,
and if there are none, and if the Limited Partners do not admit a new General
Partner or Partners to the Partnership, the business will not continue and the
Partnership will terminate as provided in the Partnership Agreement.

14. Return of Contribution Other Than Cash: No Limited Partner shall
have the right to demand and receive property other than cash in return for his
contribution.

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
as of the 26th day of September, 1990.

WITNESSES: GENERAL PARTNER:

_______________________ SEABULK TANKERS, LTD.
By: HVIDE MARINE TRANSPORT, INCORPORATED
Its Sole General Partner

_______________________ By:_____________________________

LIMITED PARTNERS:

- ------------------------ ---------------------------------
HANS J. HVIDE

- ------------------------ ---------------------------------
J. ERIK HVIDE

SEABULK AMERICA PARTNERSHIP, LTD.
_________________________ By: SEABULK TANKERS, LTD.
Its Sole General Partner
By: HVIDE MARINE TRANSPORT, INCORPORATED
Its Sole General Partner

__________________________ By: ________________________________

STOLT TANKERS (U.S.A.), INC.
By: Seabulk Tankers, Ltd.
Sole General Partner of
SEABULK AMERICA PARTNERSHIP, LTD.
Attorney-In-Fact
__________________________ By: Hvide Marine Transport, Incorporated
Its Sole General Partner

__________________________ By: _________________________________

<PAGE>

STATE OF FLORIDA )
) ss:
COUNTY OF BROWARD )

SWORN TO BEFORE ME, the undersigned authority, personally appeared
___________________, the Vice President of HVIDE MARINE TRANSPORT, INCORPORATED,
sole general partner of SEABULK TANKERS, LTD., personally known to me to be the
person described in and who executed the foregoing instrument in such capacity,
and he acknowledged before me that he executed the same for the uses and
purposes in said instrument set forth and that same was the act and deed of said
corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal as of
the 26th day of September, 1990.

[SEAL] _________________________________
NOTARY PUBLIC

STATE OF FLORIDA )
) ss:
COUNTY OF BROWARD )

SWORN TO BEFORE ME, the undersigned authority, personally appeared HANS
J. HVIDE (by Gene Douglas, his attorney-in-fact) and J. ERIK HVIDE, Limited
Partners, personally known to me to be the persons described in and who executed
the foregoing instrument, and they acknowledged before me that they executed the
same for the uses and purposes in said instrument set forth.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal as of
the 26th day of September, 1990.

[SEAL] _________________________________
NOTARY PUBLIC

<PAGE>

STATE OF FLORIDA )
) ss:
COUNTY OF BROWARD )

SWORN TO BEFORE ME, the undersigned authority, personally appeared
___________________, the Vice President of HVIDE MARINE TRANSPORT, INCORPORATED,
sole general partner of SEABULK TANKERS, LTD., sole general partner of SEABULK
AMERICA PARTNERSHIP, LTD, (both for itself and as attorney-in-fact for Stolt
Tankers (U.S.A.), Inc.) personally known to me to be the person described in and
who executed the foregoing instrument in such capacity, and he acknowledged
before me that he executed the same for the uses and purposes in said instrument
set forth and that same was the act and deed of said corporation.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal as of
the 26th day of September, 1990.

[SEAL] _________________________________
NOTARY PUBLIC

CERTIFICATE OF AMENDMENT TO CERTIFICATE
OF LIMITED PARTNERSHIP FOR: SEABULK TRANSMARINE PARTNERSHIP, LTD.
(Certificate filed September 17, 1985)

THIS ASSIGNMENT, made and entered into as of the 1st day of January,
1991, by and between J. ERIK HVIDE (hereinafter referred to as "Assignor") and
SEABULK TANKERS, LTD. a Florida limited partnership, having its principal place
of business at 2200 Eller Drive, Fort Lauderdale, Florida 33316 (hereinafter
referred to as "Assignee").

W I T N E S S E T H:

WHEREAS, Assignor is the owner of One hundred sixty-five thousandths
percent (.165%) limited partnership interest (the "Interest") in Seabulk
Transmarine Partnership, Ltd. (sometimes referred to herein as the
"Partnership"); and

WHEREAS, Assignor desires to sell and assign the Interest in the
Partnership to Assignee subject to the terms and conditions of this Amendment
and Assignment; and

WHEREAS, the Assignee desires to receive an assignment of the Interest
subject to and in accordance with the terms of the Partnership's limited
partnership agreement dated the 30th day of August, 1985, (the "Partnership
Agreement"),

NOW THEREFORE, in consideration of the sum of Twenty-four Thousand
Seven Hundred Fifty and 00/100 Dollars ($24,750.00) and other good and valuable
consideration, the respective receipt of which is hereby acknowledged by each,
the parties agree as follows:

1. The above and foregoing preamble is hereby incorporated by reference
herein.

2. Assignor hereby sells, assigns and conveys all of its right, title,
privileges, duties, obligations, and interest in and to the Interest in the
Partnership to Assignee, which accepts the sale, assignment and conveyance of
the Interest and agrees to be bound by all of the terms and conditions of the
Partnership Agreement.

3. The Assignor is hereby released from all of its right, title,
privileges, duties, obligations and interest in and to the Interest.

4. Assignee hereby represents and warrants that it is a citizen of the
United States within the meaning of the Shipping Act, 1916, as amended.

5. The parties acknowledge that by the assignment of the interest
herein, together with an assignment as of the date hereof by Hans J. Hvide of a
limited partnership interest he owns it he partnership, the ownership of the
Partnership shall be as follows:

Seabulk Tankers, Ltd,. general partner - 33.00% general partnership interest
Seabulk Tankers, Ltd., limited partners - .33% general partnership interest
Seabulk America Partnership, Ltd., limited partner - 41.67% limited partnership
interest

<PAGE>

Stolt Tankers (U.S.A.), Inc., limited partner - 25.00% limited partnership
interest

IN WITNESS WHEREOF, the parties hereto have hereunto set their hands
and seal the day and year first above written.

Signed, sealed and delivered in the presence of:

- --------------------------------- --------------------------------
J. ERIK HVIDE (Assignor)
- ---------------------------------

SEABULK TANKERS, LTD.
By: Hvide Marine Transport,
Incorporated
as a General Partner

________________________________ By: ____________________________
(Assignee)
- --------------------------------

The foregoing Amendment and Assignment of the Interest in Seabulk Transmarine
Partnership, Ltd. is hereby approved, consented and agreed to as of the 1st day
of January, 1991.

SEABULK TRANSMARINE, PARTNERSHIP, LTD.
By: By Seabulk Tankers,. Ltd.
general partner
By: Hvide Marine Transport, Incorporated
as general partner

By: _____________________________________

<PAGE>

SUPPLEMENTAL AFFIDAVIT OF
CAPITAL CONTRIBUTIONS FOR A FLORIDA LIMITED PARTNERSHIP

The undersigned, constituting all of the general partners of Seabulk Transmarine
Partnership, Ltd., a Florida Limited Partnership, executed this supplemental
affidavit filed pursuant to section 620.112, Florida Statutes.

The total amount of the capital contributions of the limited partners is
$4,990,041.00.

This 6th day of December, 1994.

FURTHER AFFIANT SAYETH NOT.

Under penalties of perjury I declare that I have read the foregoing and that the
facts are true, to the best of my knowledge and belief.

General Partner

Hvide Marine Transport, Incorporated, General Partner
of Seabulk Tankers, Ltd.

By: ___________________________________
Vice President

CERTIFICATE OF AMENDMENT TO CERTIFICATE
OF LIMITED PARTNERSHIP FOR: SEABULK TRANSMARINE PARTNERSHIP, LTD.
(Certificate filed September 17, 1985)

THIS ASSIGNMENT, made an entered into as of the 1st day of January,
1991, by and between HANS J. HVIDE (hereinafter referred to as "Assignor") and
SEABULK TANKERS, LTD. a Florida limited partnership, having its principal place
of business at 2200 Eller Drive, Fort Lauderdale, Florida 33316 (hereinafter
referred to as "Assignee").

W I T N E S S E T H:

WHEREAS, Assignor is the owner of One hundred sixty-five thousandths
percent (.165%) limited partnership interest (the "Interest") in Seabulk
Transmarine Partnership, Ltd.
(sometimes referred to herein as the "Partnership"); and

WHEREAS, Assignor desires to sell and assign the Interest in the
Partnership to Assignee subject to the terms and conditions of this Amendment
and Assignment; and

1. The above and foregoing preamble is hereby incorporated by reference
herein.

3. The Assignor is hereby released from all of its right, title,
privileges, duties, obligations and interest in and to the Interest.

4. Assignee hereby represents and warrants that it is a citizen of the
United States within the meaning of the Shipping Act, 1916, as amended.

<PAGE>

SUPPLEMENTAL AFFIDAVIT OF
CAPITAL CONTRIBUTIONS FOR A FLORIDA LIMITED PARTNERSHIP

The total amount of the capital contributions of the limited partners is
$4,990,041.00.

This 6th day of December, 1994.

FURTHER AFFIANT SAYETH NOT.

Under penalties of perjury I declare that I have read the foregoing and that the
facts are true, to the best of my knowledge and belief.

General Partner

Hvide Marine Transport, Incorporated, General Partner
of Seabulk Tankers, Ltd.

By: ___________________________________
Vice President

LIMITED PARTNERSHIP AGREEMENT

SEABULK TRANSMARINE PARTNERSHIP, LTD.

THIS AGREEMENT of Limited Partnership made this 30th day of August,
1985, among SEABULK TANKERS, LTD. (hereinafter referred to as General Partner),
and Hans J. Hvide, J. Erik Hvide, Gerald Farmer, Brian S. Sowrey, and Eugene F.
Sweeney (herein referred to as "Limited Partners"). (The General Partner and the
Limited Partners are sometimes collectively referred to herein as the
"Partners").
ARTICLE I
GENERAL ORGANIZATION

1.01 Organization. The parties hereto hereby form a Limited Partnership
pursuant to Chapter 620, Florida Statutes, (herein called the "Partnership").

1.02 Statutory Requirement. The parties hereto shall simultaneously
herewith execute a Certificate of Limited Partnership and cause such certificate
to be filed in the appropriate office and, thereafter, execute and cause to be
filed and otherwise published such original or amended certificates all
evidencing the formation and operation of this Limited Partnership whenever the
same may be required under the laws of the State of Florida and of any other
states where the Partnership shall determine to do business. The General Partner
is hereby authorized and empowered by the Limited Partners to prepare, file and
publish either the original or any amended or modified Certificates of Limited
Partnership as may be necessary or desirable, and the Limited Partners
specifically designate and appoint the General Partner, for and on their behalf
as attorneys for the exclusive purposes of signing and attesting to such
original or amended Certificates of Limited Partnership. The creation of the
foregoing power of attorney is coupled with an interest and shall be
irrevocable.

1.03 Purposes of Partnership. The purposes of the Partnership shall be
as follows:

(a) To acquire title to the damaged tank vessel named
"Fuji" (as may be

<PAGE>

renamed), to provide for its reconstruction into a self-propelled vessel and to
provide for its management and operation;

(b) To purchase, construct, reconstruct, manage, operate,
charter, lease or sell the damaged tank vessel named "Fuji" (as may be renamed);

(c) To engage in any and all maritime-related activities
relating to the ownership, operation and use of the damaged tank vessel named
"Fuji"; and

(d) To invest in stocks, bonds and securities, and to engage
without limitation, in the purchase and sale of, and dealing in, stocks, bonds,
notes, and to open such checking and savings accounts with banking institutions
as may be necessary to conduct the business of the Partnership.

ARTICLE II
NAME, LOCATION AND PARTNERS

2.01 Name of Limited Partnership. The name of the Limited Partnership
is SEABULK TRANSMARINE PARTNERSHIP, LTD. The business of the Partnership shall
be conducted under such name and under such variations of this name as may be
necessary to comply with the laws of other states within which the Partnership
may do business or make investments.

2.02 Fictitious Name Certificates. The General Partner shall promptly
execute and duly file with the proper offices in each state in which the
Partnership may conduct the activities hereinafter authorized one or more
certificates as required by the Fictitious Names Act or similar statute in
effect as to each such state in which such activities are so conducted.

2.03 Location of Principal Place of Business. The principal place of
business shall be located at 1900 Southeast 17th Street Causeway, Fort
Lauderdale, Florida 33316, or at such other place or places as the General
Partner may designate and as agreed to by the Limited Partners.

<PAGE>

2.04 Names and Addresses or Places of Residence of Partners. The names
and places of residence of the General Partner and the Limited Partners are as
follows:

General Partner: Address:
Seabulk Tankers, Ltd. 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

Limited Partners: Address:
Hans J. Hvide 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

J. Erik Hvide 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

Gerald Farmer 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

Brian S. Sowrey 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

Eugene F. Sweeney 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

ARTICLE III
TERM

3.01 Term of Partnership. The Partnership shall commence on the date
that a Certificate of Limited Partnership is duly filed as required by law, and
shall continue in existence for a period of twenty-five (25) years from the date
of said filing, unless sooner terminated, liquidated, or dissolved by law or as
hereinafter provided or unless extended by amendment to this Limited Partnership
Agreement.

ARTICLE IV
CAPITAL CONTRIBUTIONS

4.01 Initial Capital Contributions. As its initial capital contribution,
the General Partner shall contribute to the Partnership the Sulzer main engines,
together with ancillary machinery

<PAGE>

and equipment contained in the damaged tank vessel named "Fuji", (as may be
renamed), the value of which the parties hereto acknowledge to be $630,000.00,
together with the sum of $20,000.00. This contribution shall represent a 61.89%
equity interest in the Partnership. The parties acknowledge that said
contribution (other than cash) has been previously purchased with Capital
Construction Fund monies, and STL hereby agrees to pay all penalties and
interest required for the ultimate repayment of such monies and to hold the
Limited Partners harmless for such repayment, penalties and interest. As their
initial capital contribution to the Partnership, Hans J. Hvide and J. Erik Hvide
shall each contribute $150,000.00, which amount represents a 14.29% interest for
each in the Partnership; Brian S. Sowrey shall contribute $40,000.00, which
amount represents a 3.81% interest in the Partnership; and Gerald Farmer and
Eugene F. Sweeney shall each contribute $30,000.00, which amount represents a
2.86% interest for each in the Partnership.

4.02 Additional Capital Contributions. Each of the General Partner and
the Limited Partners agree to contribute to the capital of the Partnership at
such times and such in amounts as the General Partner may from time to time
request by notice to the Limited Partner, its proportionate share (based upon
its initial capital contribution as set forth in Section 4.01 hereof) of costs
incurred and necessary for the care, maintenance or reconstruction of the
damaged tank vessel named "Fuji" (as may be renamed), for general and
administrative expenses, and for other expenses incurred in connection with
other activities in which the Partnership is authorized to engage in.

4.03 Percentage Ownership of the Partnership Assets. The percentage
interest of the General Partner and the Limited Partners in the partnership
assets are as follows:
Percentage
General Partner:

<PAGE>

Seabulk Tankers, Ltd. 61.89%
Limited Partners:

Hans J. Hvide 14.29%
J. Erik Hvide 14.29%
Brian S. Sowrey 3.81%
Gerald Farmer 2.86%
Eugene F. Sweeney 2.86%

4.04 Capital Account. Each Partner shall have a capital account which shall
be credited with:

(a) The amount of its capital contribution pursuant to
Sections 4.01 and 4.02 hereof; and

(b) The amount of net profits (as defined in Section 5.01
below) allocated to such Partner pursuant to its equity interest as set forth in
Section 4.01 hereof; and shall, be debited with:

(i) The amount of net losses (as defined in Section 5.01
below) allocated to such Partner pursuant to equity interest as set forth in
Section 4.01 hereof; and

(ii) All amounts distributed to such Partner pursuant to
Article V hereof. Whenever it is necessary to determine the capital account of
any Partner for purposes of this Agreement, the capital account of the Partner
shall be determined after giving effect to the allocation for the Partnership's
current year (or the portion thereof ending on the date of such determination)
of net profits or net losses in accordance with Section 5.02 and all
distributions for such year pursuant to Section 5.03. A Partner shall not be
entitled to withdraw any part of

<PAGE>

his capital account or to receive any distribution of the Partnership except as
specifically provided in this Agreement.

ARTICLE V
DISTRIBUTIONS

5.01 Definition of Net Profits and Net Losses. The terms "net profits"
and "net losses" as used in this Agreement shall mean the net profits and the
net losses of the Partnership as determined under generally accepted accounting
principles by a nationally-recognized firm of independent certified public
accountants servicing the Partnership account.

5.02 Division of Net Profits and Net Losses. All net profits and net
losses of the Partnership shall be allocated to the General Partner and the
Limited Partners, in a percentage equal to that set forth in Section 4.03.

5.03 Division of Cash Flow. The cash flow of the Partnership shall be
the net profits and net losses of the Partnership as defined in Section 5.01
above, plus depreciation and other noncash charges deducted in determining such
net profits and net losses, minus principal payments on all mortgages, and any
other cash expenditures which have not been deducted in determining the net
profits and net losses of the Partnership, and minus any amount reasonably
determined by the General Partner as being required to maintain sufficient
working capital and a reasonable reserve for repairs, replacement, or other
reasonable contingencies. The cash flow, as so determined, may be distributed by
the General Partner to all the Partners in a percentage equal to that set forth
in Section 4.03. There shall be no obligation to return to the General Partner
or to the Limited Partners, or to any one of them, any part of the respective
capital'contributions for so long as the Partnership continues in existence.
Neither the General Partner nor the Limited Partners shall be entitled to any
priority or preference over any other

<PAGE>

Partner as to the distribution of the cash flow of the Partnership.

ARTICLE VI
OWNERSHIP OF PROPERTY

6.01 Ownership. All property, including all improvements thereto,
acquired by the Partnership shall be owned by the Partners in a percentage equal
to that set forth in Section 4.03, such ownership being subject to the terms and
provisions of this Agreement. Each Partner hereby expressly waives the right to
require partition of any Partnership property or any part thereof.

ARTICLE VII
BOOKS, ACCOUNTS AND RECORDS

7.01 Partnership Accognting Year. The Partnership's books and records
and all required income tax returns shall be kept or made on the basis of a
fiscal year to be determined by the General Partner. The General Partner shall
determine whether the cash or accrual method of accounting is to be used in
keeping the Partnership records.

7.02 Books and Records. The General Partner shall keep at the principal
place of business and make available to all Partners at any time during normal
business hours, true and correct books of account and all other Partnership
records. The copying by a Partner or his designated agent, of any part or all
parts of such records is specifically authorized. Within forty-five (45) days
after the close of each month of each fiscal year of the Partnership, the
General Partner shall furnish to all Partners unaudited financial statements of
the Partnership. In addition, within ninety (90) days after the close of each
fiscal year of the Partnership, the General Partner shall furnish to all
Partners any additional information needed or necessary to complete their
federal and state income tax returns, including statements of the net
distributable

<PAGE>

income or loss to each Partner from the operation of the Partnership. The cost
of all of the above duties and services to be performed by the General Partner
shall be deemed an expense of the Partnership.

7.03 Partnership Bank Account. The General Partner shall receive all
monies of the Partnership and shall deposit the same in one or more Partnership
bank accounts. All expenditures by the General Partner on partnership interests
shall be made by checks or other debits drawn against the Partnership bank
account. Withdrawals from the Partnership bank accounts shall be made on such
signature or signatures and on such terms and conditions as the General Partner
shall authorize.

ARTICLE VIII
POWERS AND LIABILITIES OF THE GENERAL PARTNER

8.01 Powers. The Partnership shall have the power to reconstruct,
operate, acquire, charter, hold, mortgage, sell or otherwise dispose of the
damaged tank vessel named "Fuji" (as may be renamed,) to borrow money, to give
evidence of indebtedness, and to execute and deliver such instruments and
documents and to take such other action as the General Partner shall from time
to time deem necessary and appropriate in connection with carrying out the
purposes of the Partnership.

8.02 Management. The General Partner shall manage and operate the
business of the Partnership and shall have full discretion in the management and
operation thereof. The General Partner shall use due diligence to carry out the
purposes and business of the Partnership and shall devote to the Partnership
business such time as it shall determine to be required for its welfare and
success. The General Partner agrees to provide frequent, periodic information to
the Limited Partners regarding the Partnership's financial condition and
business activities.

<PAGE>

8.03 Responsibility of General Partner. The General Partner shall
exercise due diligence in managing the affairs of the Partnership. Always,
unless fraud, deceit, gross negligence, or a wrongful taking shall be involved,
the General Partner shall not be liable or obligated to the Limited Partner for
any mistake of fact or judgment made by the General Partner in operating the
business of the Partnership, which results in any loss to the Partnership or its
Partners. The General Partner does not, in any way, guarantee the return of the
Limited Partners' capital or a profit from the operations of the Partnership.
Neither shall the General Partner be responsible to the Limited Partners because
of a loss of his investment or a loss in operations. The General Partner shall
devote such attention and business capacity to the affairs of the Partnership as
may be reasonably necessary. In this connection, the parties hereby acknowledge
that any General Partner may be the Manager or General Partner of other
partnerships or entities and may continue to manage other partnerships or
entities, and may continue to engage in other distinct or related businesses,
including the investment in or ownership or development of such business,
whether or not competitive with the business of the Partnership.

8.04 Indemnification. The General Partner shall be indemnified by the
Partnership from any loss or damage incurred by the General Partner by reason of
any act performed or omitted by it if its conduct was consistent with sound
business practices and it reasonably believed the act or omission to be in
furtherance of the interest of the Partnership; provided, however, that nothing
contained herein shall in any manner increase the liability of the Limited
Partners beyond their obligation to make capital contributions to the
Partnership, as provided for herein.

ARTICLE IX
POWER OF ATTORNEY

<PAGE>

9.01 Appointment of General Partner. The Limited Partners hereby
constitutes and appoints the General Partner, the true and lawful attorney for
the undersigned to act in their behalf as provided for hereinabove, and to make,
execute, sign, acknowledge, and file Certificates of Limited Partnership or
amendments thereto, and, upon termination of the Partnership, Certificates of
Dissolution as required under the laws of the State of Florida, and to include
therein all information required by the laws of the State of Florida, and also
make, execute, sign, acknowledge, and file such other instruments as may be
required under the laws of the State of Florida, and the General Partner
undertakes to perform all such acts necessary and desirable for the protection
of the Limited Partners.

ARTICLE X
COMPENSATION OF THE GENERAL PARTNER

10.01 Compensation. The General Partner shall be compensated for the
performance of its duties and functions under this Agreement. Such compensation
will be made on a monthly basis and shall be the actual costs and expenses of
operating the partnership.

ARTICLE XI
ADMISSION OF NEW PARTNERS

11.01 Admission of New Partners. New general partners may be admitted
to the Partnership with the written consent of all Partners. In the event that
new general partners are admitted into the Partnership, the share of each new
general partner and all other partners in the net profits and losses shall be in
such proportion as may be agreed upon between all the partners and the new
general partners. With the written consent of all Partners, new limited partners
may be admitted into the partnership upon the payment of such capital
contribution and upon such terms as the General Partner shall decide. In the
event that new limited

<PAGE>

partners are admitted into the Partnership, the share of each new limited
partner in the net profits and net losses shall be in such proportion as may be
determined by the General Partner.

11.02 Compliance with Laws. Notwithstanding the provisions of Section
11.01, no new partners shall be admitted in violation of any of the U.S.
maritime laws or statutes nor which would, in consideration of the business of
the Partnership, result in a violation of the Merchant Marine Act, 1936, as
amended.

ARTICLE XII
POWERS, RIGHTS AND RESTRICTIONS ON LIMITED PARTNERS

12.01 Restrictions on Limited Partners. The Limited Partners shall not
have either the obligation or the right to take part, directly or indirectly, in
the active management of the business of the Partnership and the Limited
Partners are not authorized to do or perform any act, thing, or deed in the name
of or for or on behalf of either the General Partner or the Partnership. The
Limited Partners are not authorized to and shall not, directly or indirectly,
have a voice in or take part in the business affairs or business operations of
the Partnership, or receive any compensation as such Partner. The Limited
Partners are not authorized to and shall not be permitted to do any act, deed,
or thing which will cause such Limited Partners to be classified as General
Partners of the Partnership. The foregoing shall not apply to a General Partner
who has acquired a Limited Partner's interest in accordance with the terms of
this Agreement.

ARTICLE XIII
LIABILITY OF LIMITED PARTNERS

13.01 Liability. The liability of the Limited Partners with regard to
the Partnership in all respects is restricted and limited to the amount of the
actual capital contributions (and loans, if any) that each Limited Partner
agrees to make to the Partnership.

<PAGE>

ARTICLE XIV
LOANS TO THE PARTNERSHIP

14.01 Loans to the Partnership. Nothing herein shall prevent or act
against a General or Limited Partner loaning money to the Partnership on a
promissory note or similar evidence of indebtedness for a reasonable rate of
interest. Any Partner loaning money to the Partnership shall have the same
rights and risks regarding the loan as would any person or entity making the
loan who was not a Partner of the Partnership.

ARTICLE XV
TERMINATION OR DISSOLUTION

15.01 Termination Upon Withdrawal, Bankruptcy, Death, or Incapacity of
General Partners. The General Partner, upon at least six (6) months prior
written notice, effective as of the last day of any fiscal year of the
Partnership, may voluntarily withdraw from the Partnership as General Partner
and such withdrawal shall have the effect of terminating the Partnership as of
the close of business on such last day. (Provided, however, that upon voluntary
withdrawal of such General Partner, and prior to such termination, the Limited
Partners may designate a new general partner, subject to such new general
partner meeting all citizenship and other criteria, as may be required, of the
U.S. Maritime Administration and other applicable governmental agencies,
including that criteria dealing with de facto control. If such new general
partner is so appointed, subject to the requirements set forth above: (a) the
Partnership shall continue; (b) the new general partner shall expressly assume
all rights, liabilities and responsibilities of the prior General Partner in the
Partnership, shall release the General Partner from any such liabilities and
responsibilities, and shall execute any documents necessary to effect such
assumption and release; and (c) the prior General Partner shall be immediately
paid for its interest in the Partnership assets, which payment

<PAGE>

shall be the fair market value of the prior General Partner's interest in the
Partnership as determined by a competent appraisal.)

The bankruptcy, death, incapacity, or resignation of one General
Partner (if there shall at the time of such event then be more than one General
Partner) shall not have the effect of terminating the Partnership and the other
General Partner shall continue to serve as the General Partner. Upon the
bankruptcy, death, incapacity, or resignation of the General Partner, the
Partnership shall terminate as of the close of business on the last day of the
fiscal year in which such event occurs.

15.02 Voluntary Termination - Effect of Bankruptcy, Dissolution, Death
or Incapacity of Limited Partners. The Partnership may be terminated upon any
date specified in a notice of termination, signed by the General Partner.
(Provided, however, that upon voluntary withdrawal of such General Partner, and
prior to such termination, the Limited Partners may designate a new general
partner, subject to such new general partner meeting all citizenship and other
criteria, as may be required, of the U.S. Maritime Administration and other
applicable governmental agencies, including that criteria dealing with de facto
control and subject also to fulfilling the name change, assumption, release and
payment provisions as set forth in 15.01(a), (b) and (c) above.) The bankruptcy,
dissolution, death or incapacity of a Limited Partner shall have no effect on
the life of the Partnership, which shall continue. (Provided, however, that upon
any such bankruptcy, dissolution or incapacity of a Limited Partner, the General
Partner may designate a new limited partner subject to such new limited partner
meeting all citizenship and other criteria, as may be required, of the U.S.
Maritime Administration and applicable governmental agencies, including that
criteria dealing with de facto control. If such new limited partner is so
appointed, subject to the requirements set forth above (a) the new limited
partner shall expressly assume all rights,

<PAGE>

liabilities, and responsibilities of the prior Limited Partner in the
Partnership, shall release the Limited Partner from any such liabilities and
responsibilities, and shall execute any documents necessary to effect such
assumption and release; and (b) the prior Limited Partner shall be immediately
paid for its interest in the Partnership assets, which payment shall be the fair
market value of the prior Limited Partner's interest in the Partnership as
determined by a competent appraisal.)

15.03 Effect of a Termination of the Partnership. Upon the termination
of the Partnership, regardless of how it is terminated, the affairs of the
Partnership shall be wound up by the General Partner. If for any reason there is
no General Partner, or if they refuse to serve, or are incapable of serving, the
holders of a majority of interests of the Limited Partnership may appoint or
designate a Trustee-in-Liquidation who shall serve to wind up the affairs of the
Partnership. The Trustee-in-Liquidation need not be a commercial corporate
trustee, need not be bonded, and may be a Limited Partner. Whoever serves to
wind up the affairs of the Partnership, the following procedure shall be
followed:

Upon such termination, the assets of the Partnership shall be applied
as follows: to payment of the outstanding Partnership liabilities, although an
appropriate reserve may be maintained and the amount determined by the General
Partner or Trustee-in-Liquidation for any contingent liability until said
contingent liability is satisfied, and the balance of such reserve, if any,
shall be distributed, together with any other sum remaining after payment of the
outstanding Partnership liabilities, to the Partners in the following order of
priority:

(1) To the Limited Partners in an amount not to exceed their capital
account, which capital account shall include the Limited Partners, proportionate
share of any profits or losses from the sale of Partnership assets.

(2) Balance to the General Partner(s).

<PAGE>

Nothing contained in this Agreement shall defeat the right of either a
Limited or a General Partner to require and to have a court-supervised winding
up, liquidation, and dissolution of the Partnership. No Partner shall be
entitled to demand a distribution be made to him in the Partnership property,
but the General Partner may make or direct property distributions to be made,
using the property's fair market value as of the time of distribution as the
basis of making the distribution.

ARTICLE XVI
MISCELLANEOUS

16.01 Amendment. This Agreement may be amended or modified by the
Partners from time to time but only by a written instrument executed by the
General Partner and the holders of a majority of the Limited Partnership
interests.

16.02 Notices. Except as may be otherwise specifically provided in this
Agreement, all notices required or permitted hereunder shall be in writing by
either telex or cable and shall be deemed to be delivered after receipt of same
by the other party at such party's respective address set forth in Section 2.04
hereof or at such other respective address as may have been theretofore
specified by written notice by such party.

16.03 Applicable Law. This Agreement shall be construed under and in
accordance with the laws of the State of Florida.

16.04 Other Instruments. The parties hereto covenant and agree that
they will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out the Partnership
created by this Agreement.

16.05 Headings. The headings used in this Agreement are used for
administrative purposes only and do not constitute substantive matters to be
considered in construing the

<PAGE>

terms of this Agreement.

16.06 Parties Bound. This Agreement shall be binding on and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors, and assigns where permitted
by this Agreement.

16.07 Legal Construction. If any one or more of the provisions
contained in this Partnership Agreement for any reason are held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision thereof and this
Partnership Agreement shall be construed as if such invalid, illegal, or
unenforceable provision had never been contained herein.

16.08 Counterparts. This Partnership Agreement may be executed in any
number of counterparts and each such counterpart shall for all purposes be
deemed to be an original.

16.09 Gender. Wherever the context shall so require, all words herein
in the male gender shall be deemed to include the female or neuter gender, all
singular words shall include the plural words, and all plural words shall
include the singular.

16.10 Arbitration. Any dispute arising under this Agreement or the
performance thereof shall be settled by arbitration in Miami, Florida. The party
requesting arbitration shall serve upon the other party a written demand for
arbitration with the name and address of the arbitrator appointed by it, and
such other party shall within 20 days thereafter appoint an arbitrator, and the
two arbitrators so named shall appoint a third, and the decision or award of any
two shall be final and binding upon the parties. Should the party upon whom the
demand for arbitration is served fail or refuse to appoint an arbitrator within
20 days, the single arbitrator shall have the right to decide alone, and his
decision or award shall be final and binding upon the parties. The arbitrators
shall have the discretion to impose the cost of the arbitration upon the losing
party, or divide it between the parties on any terms which

<PAGE>

may appear just. Any decision or award rendered hereunder may be made and
entered as a rule or judgment of any Court in any country having jurisdiction.
The arbitrators shall be commercial men.

IN WITNESS WHEREOF, each party has executed this Agreement or a
counterpart hereof on the 30th day of August, 1985.

GENERAL PARTNER:

SEABULK TANKERS, LTD.
By: Hvide Marine Transport, Incorporated
its sole general partner

By: __________________________

LIMITED PARTNERS:

By: ___________________________
HANS J. HVIDE

---------------------------
J. ERIK HVIDE

---------------------------
GERALD FARMER

---------------------------
BRIAN S. SOWREY

---------------------------
EUGENE F. SWEENEY

AMENDMENT TO LIMITED PARTNERSHIP AGREEMENT

SEABULK TRANSMARINE PARTNERSHIP, LTD.

THIS AMENDMENT to Limited Partnership Agreement made this 24th day of
December, 1986 among SEABULK TANKERS, LTD. (hereinafter referred to as"General
Partner") and Hans J. Hvide, J. Erik Hvide, Gerald Farmer, Brian S. Sowrey, and
Eugene F. Sweeney (herein referred to as "Limited Partners"). (The General
Partner and the Limited Partners are sometimes collectively referred to herein
as the "Partners").

W I T N E S S E T H :

WHEREAS, the Partners entered into a Limited Partnership Agreement
dated the 30th day of August, 1985 (the "Agreement"); and

WHEREAS, the partners desire to amend Sections 2.04, 401 and 403 of the
Agreement so as to reflect certain assigments by the Limtid Partners to the
General Partner of their Limited Partnership interests in the Parntership, the
conversion of such Limited Parntership interests to general interests of the
General Parnter, and to reflect the withdrawal of certain of the Limited
Partners.

NOW, THEREFORE, in consideration of the premises and the sum of Ten
Dollars ($10.00) and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowleged the Partners agree as follows:

1. Section 2.04 of the Agreement is deleted in its entirety and the
following substituted in its stead:

"2.04 Names and Addresses or Places of Residence of Partners The names
and places of residence of the General Parnter and the Limited Partners are as
follows:

General Partner: Address:

Seabulk Tankers, Ltd. 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

<PAGE>

Limited Partners: Address:

Hans J. Hvide 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

J. Erik Hvide 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

2. Section 4.01 of the Agreement is deleted in its entirety and the
following substituted in its stead:

"4.01 Initial Capital Contributions. As its initial capital
contribution, the General Parnter shall contribute to the Partnership the Sulzer
main engines, together with ancillary machinery and equipment contained in the
damaged tank vessel named "Fuji", (as may be renamed), the value of which the
parties hereto acknowleged to be $630,000.00, together with the sum of
$20,000.00. In addition, the General Parnter has contributed certain funds to
the capital of the Partnership and together the aforesaid contributions shall
represent a 99.0% equity interest in the Partnership. As their initial capital
contribution to the Partnership, Hans J. Hvide and J. Erik Hvide shall each
contribute $7,288.92, which amount represents a 0.5% interest for each in the
Parntership."

3. Section 4.03 of the Agreement is hereby deleted in its entirety and
the following substituted in its stead:

"4.03 Percentage Ownership of the Partnership Assets. The percentage
interest of the General Partner and the Limited Partners in the Partnership
assets are as follows:

Percentage
General Partner:
Seabulk Tankers, Ltd. 99.0%

Limited Partners:
----------------
Hans J. Hvide 0.5%
J. Erik Hvide 0.5%

<PAGE>

4. Except for the foregoing amendments, the Limitd Partnership
Agreement is hereby ratified and confirmed and shall remain in full force and
effect.

IN WITNESS WHEREOF, each party has executed this Agreement or a
counterpart hereof on the 24th day of December, 1986.

GENERAL PARTNER:

SEABULK TANKERS, LTD.
By: Hvide Marine Transport,
Incorporated
its sole general partner

By: /s/ Gerald Farmer
Vice President

LIMITED PARTNERS:

/s/ GENE DOUGLAS Atty-in-fact
HANS J. HVIDE

/s/ J. ERIK HVIDE
J. ERIK HVIDE

/s/ GERALD FARMER
GERALD FARMER

/s/ BRIAN S. SOWREY
BRIAN S. SOWREY

/s/ EUGENE F. SWEENEY
EUGENE F. SWEENEY

AMENDMENT TO LIMITED PARTNERSHIP AGREEMENT

SEABULK TRANSMARINE PARTNERSHIP, LTD.

THIS AMENDMENT to Limited Partnership Agreement made as of the 31st day of
May, 1989, among SEABULK TANKERS, LTD. (hereinafter referred to as "General
Partner") and Hans J. Hvide, J. Erik Hvide, and Seabulk America Partnership,
Ltd. as a Limited Partner (herein referred to as "Limited Partners"). (The
General Partner and the Limited Partners are sometimes collectively referred to
herein as the "Partners").

W I T N E S S E T H:

WHEREAS, the Partners entered into a Limited Partnership Agreement
dated the 30th of August, 1985, as amended through the date hereof, (the
"Agreement"); and

WHEREAS, the Partners desire to amend Sections 2.04, 4.01 and 4.03 of
the Agreement so as to reflect the admittance of Seabulk America Partnership,
Ltd. as a Limited Partner in the Partnership.

NOW THEREFORE, in consideration of the premises and the sum of Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Partners agree as follows:

1. Section 2.04 of the Agreement is deleted in its entirety and the
following substituted in its stead:

"2.04 Names and Addresses or Places of Residence of Partners: The names
and places of residence of the General Partner and the Limited Partners
are as follows:

<PAGE>

General Partner: Address:
Seabulk Tankers, Ltd. 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

Limited Partners: Address:

Hans J. Hvide 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

J. Erik Hvide 1900 S.E. 17th Street
Fort Lauderdale, FL 33316

Seabulk America 1900 S.E. 17th Street
Partnership, Ltd. Fort Lauderdale, FL 33316

2. Section 4.01 of the Agreement is deleted in its entirety and the following
substituted in its stead:

"4.01 Initial Capital Contributions: As its initial capital
contribution, the General Partner has contributed to the Partnership
the Sulzer main engines, together with ancillary machinery and
equipment contained in the damaged tank vessel named "Fuji", (as may be
renamed), the value of which the parties hereto acknowledge to be
$630,000.00, together with sum of $20,000.00. In addition, the General
Partner has contributed certain funds to the capital of the Partnership
and together the aforesaid contributions shall represent a 33.000%
equity interest in the Partnership. As their initial capital
contribution to the Partnership, Hans J. Hvide and J. Erik Hvide each
have contributed $7, 228.92, which amount represents a 0.165% interest
for each in the Partnership. As its initial capital contribution to the
Partnership, Seabulk America Partnership, Ltd. has contributed to the
Partnership 100% of its interest in the vessel "4102", the value of
which the parties hereto acknowledge to be $10,000,000, which
contribution represents a 66.67% interest in the Partnership."

3. Section 4.03 of the Agreement is hereby deleted in its entirety and the
following substituted in its stead:

<PAGE>

"4.03 Percentage Ownership of the Partnership Assets: The percentage
interest of the General Partner and the Limited Partners in the Partnership
assets are as follows:

Percentage:
General Partner:
Seabulk Tankers, Ltd. 33.000%

Limited Partners;
Hans J. Hvide 0.165%
J. Erik Hvide 0.165%
Seabulk America Partnership,
Ltd. 66.67%"

4. Except for the foregoing amendments, the Limited Partnership Agreement is
hereby ratified and confirmed and shall remain in full force and effect.

IN WITNESS WHEREOF, each party has executed this Agreement or a
counterpart hereof as of the 31st day of May, 1989.

General Partner:
SEABULK TANKERS, LTD.
By: Hvide Marine Transport, Incorporated
Its sole general partner

By: /s/ Gene Douglas

LIMITED PARTNERS:

/s/ Hans J. Hvide
Hans J. Hvide

<PAGE>

/s/ J. Erik Hvide
J. Erik Hvide

SEABULK AMERICA PARTNERSHIP, LTD.
By: Seabulk Tankers, Ltd.
Its sole general partner
By: Hvide Marine Transport Incorporated
its sole general partner

By: /s/ J. Erik Hvide
President

AMENDMENT TO LIMITED PARTNERSHIP AGREEMENT

SEABULK TRANSMARINE PARTNERSHIP, LTD.

THIS AMENDMENT to Limited Partnership Agreement made this 26th day of
September, 1990 among SEABULK TANKERS, LTD. (hereinafter referred to as "General
Partner"), and Hans J. Hvide, J. Erik Hvide, SEABULK AMERICA PARTNERSHIP, LTD.,
and STOLT TANKERS (U.S.A.), INC. (hereinafter referred to as "Limited
Partners"). (The General Partner and the Limited Partners are sometimes
collectively referred to herein as the "Partners").

W I T N E S S E T H :

WHEREAS, Seabulk Tankers, Ltd., Hans J. Hvide, J. Erik Hvide, Gerald
Farmer, Brian S. Sowrey and Eugene F. Sweeney entered into a Limited Partnership
Agreement (the "Agreement") dated the 30th day of August, 1985;

WHEREAS, the Agreement was amended on the 24th day of December, 1986 to
reflect certain assignments by the Limited Partners to the General Partner of
their Limited Partnership interests in the Partnership, the conversion of such
Limited Partnership interests to general partnership interests of the General
Partner, and to reflect the withdrawal of certain of the then Limited Partners;

WHEREAS, the Agreement was amended on the 31st day of May, 1989 to
reflect the admittance of Seabulk America Partnership, Ltd. ("SAPL") as a
Limited Partner in the Partnership and to reflect SAPL's exchange of its 100%
ownership interest in the vessel "4102" for a 66.67% interest in the
Partnership; and

WHEREAS, in conjunction with the operation of the wrecked tank vessel
known as the "Fuji" (since renamed the "SEABULK AMERICA") following its
redelivery, the Partners desire to amend Sections 2.04 and 4.03 of the Agreement
to (a) reflect the distribution by SAPL of a

<PAGE>

portion of its limited partnership interest in the Partnership to Stolt Tankers
(U.S.A.), Inc. ("Stolt") representing a 25% limited partnership interest in the
Partnership; (b) the resulting admittance of Stolt as a Limited Partner in the
Partnership and (c) the resulting reduction of SAPL's limited partnership
interest in the Partnership from 66.67% to 41.67%, all so as to legally qualify
SEABULK AMERICA to operate in the U.S. coastwise trade.

NOW, THEREFORE, in consideration of the premises and the sum of Ten
Dollars ($10.00) and other good and valuable consideration, the receipt and
suffiency of which is hereby acknowledged, the Partners agree as follows:

1. Section 2.04 of the Agreement is hereby deleted in its entirety and
the following is substituted in its stead:

"2.04 Names and Addresses or Places of Residence of Partners.

The names and places of residence of the General Partner and the
Limited Partners are as follows:

General Partner: Address:

Seabulk Tankers, Ltd. 2200 Eller Drive
Fort Lauderdale, FL 33316

Limited Partners: Address:

Hans J. Hvide 2200 Eller Drive
Fort Lauderdale, FL 33316
J. Erik Hvide 2200 Eller Drive
Fort Lauderdale, FL 33316

Seabulk America 2200 Eller Drive
Partnership, Ltd. Fort Lauderdale, FL 33316

Stolt Tanker c/o Stolt-Nielsen, Inc.

<PAGE>

(U.S.A.), Inc. 8 Sound Shore Drive
Greenwich, CT 06836

2. Section 4.03 of the Agreement is hereby deleted in its entirety and the
following in its stead:

"4.03 Percentage Ownership of the Partnership Assets. The percentage
interest of the General Partner and the Limited Partners in the partnership
assets are as follows:

Percentage
General Partner:
Seabulk Tankers, Ltd. 33.00%
Limited Partners:
----------------
Hans J. Hvide 0.165%
J. Erik Hvide 0.165%
Seabulk America
Partnership, Ltd. 41.67%

Stolt Tankers
(U.S.A.)., Inc. 25.00%"

3. It is acknowledged that Seabulk America Partnership, Ltd. (by and
through its general partner Seabulk Tankers, Ltd.) is executing this Amendment
in its capacity as attorney- in-fact for Stolt Tankers (U.S.A.), Inc. as
provided for in Section 9.01 of the SAPL Agreement;

4. Except for the foregoing amendments, the Limited Partnership
Agreement is hereby ratified and confirmed and shall remain in full force and
effect.

IN WITNESS WHEREOF, each party has executed this Agreement or a
counterpart hereof as of the 26th day of September, 1990.

GENERAL PARTNER:

<PAGE>

SEABULK TANKERS, LTD.
By: Hvide Marine Transport, Incorporated
its sole general partner

By: /s/ Gene Douglas
Vice President

LIMITED PARTNERS:

/s/ Gene Douglas
Hans J. Hvide, Gene Douglas, atty-in-fact

/s/ J. Erik Hvide
J. Erik Hvide

SEABULK AMERICA PARTNERSHIP
LTD.
By: Seabulk Tankers, Ltd.
its sole general partner
By: Hvide Marine Transport,
Incorporated
its sole general partner

By: /s/ Gene Douglas
Title: Vice President

STOLT TANKERS (U.S.A.)., INC.
By: Seabulk Tankers, Ltd.
sole general partner of
SEABULK AMERICA
PARTNERSHIP, LTD.
attorney-in-fact

<PAGE>

By: Hvide Marine Transport, Incorporated
its sole general partner

By: /s/ Gene Douglas
Title: Vice President

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