As filed with the Securities and Exchange Commission on March 30, 1995
===============================================================================
UNITED STATES 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 Fiscal Year Ended December 31, 1994
------------------------
Commission File Number 2-87930
OMI CORP.
(Exact name of Registrant as specified in its charter)
Delaware 13-2625280
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 Park Avenue, New York, New York 10016
(Address of principal executive office) (Zip Code)
Registrant's telephone number including area code: (212) 986-1960.
Securities registered pursuant to Section 12(b) of the Act:
Common Stock, par value $.50 per share New York Stock Exchange
Title of Class Name of Exchange on which Registered
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 X NO
--- ---
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.
YES NO X
--- ---
Aggregate market value of Registrant's voting stock, held by
non-affiliates, based on the closing price on the New York Stock Exchange as of
the close of business on March 23, 1995:
$168,706,643.
Number of shares of the Registrant's Common Stock
outstanding as of March 23, 1995:
30,673,935.
The following document is hereby incorporated by reference into Part III of
this Form 10-K:
(1) Portions of the OMI Corp. 1994 Proxy Statement to be filed with the
Securities and Exchange Commission.
================================================================================
<PAGE>
INDEX
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PART I
<TABLE>
<CAPTION>
Items Page(s)
----- -------
<S> <C> <C>
1 and 2. Business and Properties ............................................... 1-8
3. Legal Proceedings ..................................................... 8
4. Submission of Matters to a Vote of Security Holders ................... 8
Executive Officers of OMI ............................................. 8
PART II
5. Market for OMI's Common Stock and Related Stockholder Matters ......... 9
6. Selected Financial Data ............................................... 10
7. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................ 10-14
8. Financial Statements and Supplementary Data ........................... 15-50
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure ................................................. 51
PART III
10. Directors and Executive Officers of OMI ............................... 51
11. Executive Compensation ................................................ 51
12. Security Ownership of Certain Beneficial Owners and Management ........ 51
13. Certain Relationships and Related Transactions ........................ 51
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K ....... 51-53
SIGNATURES ............................................................ 54
</TABLE>
<PAGE>
PART I
Items 1 and 2. BUSINESS AND PROPERTIES
General
OMI Corp. ("OMI" or the "Company"), organized under the laws of the State
of Delaware on July 19, 1968, is currently located at 90 Park Avenue, New York,
New York pursuant to a sublease which expires in 1999. The telephone number is
(212) 986-1960.
The Company owns solely or through joint ownership or charters-in a fleet
of 43 vessels which includes tankers, dry bulk carriers, a liquid petroleum gas
("LPG") carrier and an ore/bulk/oil ("OBO") carrier as follows:
34 tankers -- 8 U.S. flag, aggregating 422,393 metric tons ("dwt.");
21 foreign flag, aggregating 2,314,315 dwt; and 5
chartered-in foreign flag, aggregating 461,627 dwt.
7 bulk carriers -- 3 U.S. flag, aggregating 136,404 dwt.;
and 4 foreign flag, aggregating 262,176 dwt.
1 LPG carrier -- foreign flag, 49,880 dwt.
1 OBO carrier -- foreign flag, 71,879 dwt.
NOTE: Approximately 17% of the owned and jointly-owned tonnage is under charters
extending beyond year-end 1995.
There are two aspects to vessel operations, technical operation, which
involves maintaining, crewing and insuring, and commercial operation, which
involves arranging the business of the vessel. OMI is technical and commercial
operator of all U.S. flag vessels it owns or leases. OMI became technical
operator at the beginning of 1995 of vessels which had in prior years been
technically operated by an independent operator. OMI, either individually or
through a joint venture, is technical operator of its wholly-owned foreign flag
vessels except for an LPG carrier which is operated by an independent manager.
Technical and commercial operation of the jointly-owned vessels is allocated to
OMI or its joint venture partner based primarily on the experience of the entity
with the type and size of vessel.
The Company's vessels are available for charter on a voyage, time or
bareboat basis. Under a voyage charter, the operator of a vessel agrees to
provide the vessel for the transport of specific goods between specific ports in
return for the payment of an agreed-upon freight per ton of cargo or,
alternatively, for a named total amount. All operating costs are for the
operator's account. A single voyage (generally two to ten weeks) charter is
often referred to as a "spot market" charter. Vessels in the spot market may
also spend time idle or laid up as they await business. A voyage charter
involving more than one voyage is commonly known as a "consecutive voyage"
charter.
A time charter involves the placing of a vessel at the charterer's disposal
for a set period of time during which the charterer may use the vessel in return
for the payment by the charterer of a specified daily or monthly hire rate. In
time charters, operating costs such as for crews, maintenance and insurance are
typically paid by the owner of the vessel and voyage costs such as fuel and port
charges are paid by the charterer.
Under a bareboat charter, the charterer takes possession of the vessel in
return for a specified amount payable to the owner of the vessel. The bareboat
charterer must provide its own crew, pay all operating and voyage expenses and
is responsible for the operation and management of the vessel.
Voyage, time and bareboat charters are available for varying periods,
ranging from a single trip to a long-term arrangement approximating the useful
life of the ship, to commercial firms (such as oil companies) and governmental
agencies, both foreign and domestic, on a worldwide basis. In general, a
long-term charter affords the vessel owner greater assurance that it will be
able to cover its costs (including depreciation, interest, and operating costs).
Operating the vessel in the spot market affords the owner greater speculative
opportunity, which may result in high rates when ships are in high demand or low
rates (possibly insufficient to cover costs) when ship availability exceeds
demand. Ship charter rates are affected by world economics, international
events, weather conditions, strikes, governmental policies, supply and demand,
and many other factors beyond the control of the Company.
The following table sets forth certain information with respect to the
Company's vessels all of which are wholly-owned by the Company except the OMI
HUDSON and the OMI STAR, which are chartered-in under bareboat charters, the
SETTEBELLO, WHITE SEA, WILOMI ALTA, WILOMI TANANA, WILOMI YUKON, ELBE, MARITIME
MOSAIC, MARITIME OMI, MARITIME NANCY and MARITIME CONQUEROR which are
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<PAGE>
jointly-owned, and the chartered-in crude tankers. The vessels which are not
operated by a joint venture partner or by an independent manager or operator are
operated by the Company.
<TABLE>
<CAPTION>
Dead-
Weight Charter
Type of Year(1) Metric Expira-
Name of Vessel Vessel Built Tonnage tion(2)
--------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
U.S. Flag Vessels:
OMI COLUMBIA (3) ......................... Crude Oil Tanker 1974 138,698 Spot
OMI DYNACHEM (4) ......................... Chemical/Product Carrier 1981 51,668 05/97
OMI HUDSON (4) ........................... Chemical/Product Carrier 1981 51,668 05/97
OMI STAR (4) ............................. Chemical/Product Carrier 1970 37,711 05/97
PATRIOT .................................. Product Carrier 1976 35,662 Spot
RANGER ................................... Product Carrier 1976 35,662 Spot
COURIER .................................. Product Carrier 1977 35,662 Spot
ROVER .................................... Product Carrier 1977 35,662 Spot
OMI MISSOURI ............................. Dry Bulk Carrier 1983 49,672 Spot
OMI SACRAMENTO ........................... Dry Bulk Carrier 1983 49,672 Spot
PLATTE ................................... Dry Bulk Carrier 1982 37,060 Spot
-------
Total U.S. Flag Operating Fleet: 11 Vessels ..................................... 558,797
=======
Foreign Flag Vessels:
SETTEBELLO (5) ........................... Crude Oil Carrier 1983 322,446 Spot
PROMISE .................................. Crude Oil Carrier 1978 268,038 Spot
WHITE SEA (6) ............................ Crude Oil Carrier 1975 155,702 Spot
CAIRO SEA ................................ Crude Oil Carrier 1975 154,719 Spot
TRINIDAD SEA ............................. Crude Oil Carrier 1974 154,605 Spot
WILOMI ALTA (6) .......................... Crude Oil Carrier 1990 146,251 05/95
CZANTORIA ................................ Crude Oil Carrier 1975 146,104 Spot
SOKOLICA ................................. Crude Oil Carrier 1975 145,649 07/97
WILOMI TANANA (6) ........................ Crude Oil Carrier 1992 141,720 05/95
COLORADO ................................. Crude Oil Carrier 1980 86,648 05/97
OCEAN SPIRIT ............................. Crude Oil Carrier 1982 61,388 Spot
WILOMI YUKON (6) ......................... Product Carrier 1992 99,195 03/95
PANDA .................................... Product Carrier 1987 83,651 09/95
ELBE (7) ................................. Product Carrier 1984 66,800 Spot
NILE ..................................... Product Carrier 1981 65,755 Spot
VOLGA .................................... Product Carrier 1981 65,689 01/96
LIMAR .................................... Product Carrier 1988 29,999 07/95
PAULINA .................................. Product Carrier 1984 29,993 04/95
ALMA ..................................... Product Carrier 1988 29,994 01/96
PAGODA ................................... Product Carrier 1988 29,996 Spot
PATRICIA ................................. Product Carrier 1984 29,973 04/95
EBRO ..................................... Ore/Bulk/Oil Carrier 1978 71,879 Spot
MARITIME MOSAIC (7) ...................... Dry Bulk Carrier 1993 73,657 Spot
MARITIME OMI (7) ......................... Dry Bulk Carrier 1994 72,800 Spot
MARITIME NANCY (7) ....................... Dry Bulk Carrier 1990 72,136 04/96
MARITIME CONQUEROR (7) ................... Dry Bulk Carrier 1983 43,583 11/95
GENERAL .................................. LPG Carrier 1975 49,880 03/97
---------
Total Foreign Owned Fleet: 27 Vessels ........................................... 2,698,250
---------
5 Chartered-in Crude Tankers (8) ................................................ 461,627
Total Foreign Flag Operating Fleet: 32 Vessels .................................. 3,159,877
---------
Total OMI Fleet: 43 Vessels ................................................... 3,718,674
=========
(Footnotes on next page)
</TABLE>
2
<PAGE>
----------------
(1) Weighted average age (based on carrying capacity) of the Company's owned
fleet (including jointly-owned) at year-end 1994 is 12.4 years.
(2) Expiration dates do not reflect charterers' options for extensions or
cancellations.
(3) Rebuilt in 1983 under Wrecked Vessels Act, 46 U.S.C. Section 14.
(4) The vessels are time chartered to a 50% owned affiliate at rates dependent
upon the performance of the affiliate.
(5) Joint ownership with Bergesen d.y. A/S, Norway.
(6) Joint ownership with an affiliate of Anders Wilhelmsen & Co., Norway.
(7) Joint ownership with an affiliate of International Maritime Carriers
Limited ("IMC"), Hong Kong and chartered into pools operated by IMC.
(8) Time chartered-in under charters expiring in 1995 and 1996.
A brief description of the functions of the various types of vessels owned
or operated by the Company is set forth below:
Product Carrier -- Normally carries refined petroleum products such as
gasoline, naphtha and kerosene.
Chemical Tanker -- Normally carries various types of liquid chemicals.
Crude Tanker -- Normally carries crude oil and dirty products.
Dry Bulk Carrier -- Carries dry bulk products such as coal, ore, grain and
fertilizer.
LPG Carrier -- Carries various petroleum gas products in liquid form.
OBO Carrier -- Carries liquid petroleum or dry bulk products.
The Company has agreed to joint ownership of an additional vessel to be
delivered from a shipyard in China, to be jointly-owned with an affiliate of
Anders Wilhelmsen & Co. All of the Company's joint ownership arrangements
involve beneficial ownership by the Company of 49 to 50%.
As of December 31, 1994, OMI's U.S. flag ships were subject to mortgages
and bonds in the aggregate principal amount of approximately $48,775,000 and
OMI's foreign flag ships (not including debt of jointly-owned ships) were
subject to mortgages in the aggregate principal amount of approximately
$55,090,000. The Company and its joint venture partners are also several
guarantors, in proportion to their respective beneficial ownership, of certain
loan transactions relating to the joint ventures. The aggregate amount of such
debt is approximately $110,697,000, with OMI's share being approximately
$54,547,000.
The Company owns 80% of OMI Petrolink Corp. ("Petrolink"), a Houston-based
company which renders lightering services for large tankers in the U.S. Gulf.
Petrolink charters-in, for varying term periods, such vessels as are necessary
to satisfy the needs of its customers. OMI Offshore Marine Services, Inc.
("Offshore Marine"), a subsidiary of Petrolink with its principal office in
Sabine Pass, Texas, at year-end managed five offshore support boats and one crew
boat. The boats, owned by Petrolink, have also provided support for rigs and
platforms in the Gulf of Mexico.
The Company's wholly-owned subsidiary, OMI Ship Management, Inc., continues
to provide technical services to the U.S. Maritime Administration for six
vessels in the Ready Reserve Fleet Program under a multi-year contract. From
time to time, OMI Ship Management also manages vessel conversion contracts for
various U.S. government agencies.
In March, 1995 OMI sold its entire equity interest in Noble Drilling
Corporation ("Noble") which was then about 3.75% of the outstanding common stock
of Noble.
The Company is a party to an agreement with Hvide Marine, Inc. ("Hvide"),
Fort Lauderdale, Florida, a privately-held corporation with significant bulk
shipping operations, to charter on a long-term basis to Ocean Specialty Tankers
Corp. ("OSTC") several U.S. flag chemical/petroleum product carriers. The OMI
DYNACHEM, the OMI HUDSON and the OMI STAR and two similar vessels controlled by
Hvide have been time chartered to OSTC, a Houston-based company with expertise
in marketing parcel tankers. Net proceeds from OSTC's operations are
3
<PAGE>
shared among the vessels in accordance with mutually agreed formulas. OMI and
Hvide each own a 50% interest in OSTC.
During 1992, Ecomarine USA, a partnership with Ecoventures, Inc., an
affiliate of Ecolmare, SpA, was formed to build environmental vessels offering a
comprehensive oil spill service, a marine pollution control service, and a
marine monitoring and mapping service, but failed to develop successfully. The
Company has written off its investment and entered into an agreement to sell its
interest.
Customers
Payments to the Company under the Public Law 480/416 ("PL 480") federal
programs accounted for approximately 16% of the Company's consolidated voyage
revenues for 1994. No other charterer accounted for 10% or more of OMI's
consolidated revenues. For information about major customers, see Note 13 to
OMI's Notes to Consolidated Financial Statements.
U.S. Subsidies
The Merchant Marine Act, 1936, as amended (the "Merchant Marine Act"),
permits domestic shipping companies to establish a tax-deferred fund called a
Capital Construction Fund ("CCF") for such purposes as acquiring qualified
vessels for use in certain U.S. flag trades, reconstruction of existing vessels
and payment of principal on certain existing indebtedness. The Company maintains
a CCF as well as a Reserve Fund maintained in connection with its Title XI
financed vessels. Pursuant to a Dual Use Agreement, monies on deposit in the
Reserve Fund have the tax deferred aspects of a CCF. As of December 31, 1994,
the balance in the CCF and Reserve Fund was approximately $12,961,000.
Operating cost differentials favor foreign ships in worldwide commerce.
However, because United States laws restrict U.S. coastwise trade (generally
transport of cargo by sea from one U.S. port to another) to U.S. built, U.S.
flag ships, foreign flag ships cannot compete for U.S. coastwise cargoes.
To encourage U.S. flag vessels to engage in foreign trade, the Merchant
Marine Act provides for direct subsidies to equalize the disparity between the
costs of U.S. operations and construction and the costs of foreign operations
and construction. A qualified shipowner may apply for a contract with the
Maritime Subsidy Board of the U.S. Department of Transportation (the "Board")
whereby a portion of the costs of operating a U.S. flag vessel is subsidized.
Certain restrictions are placed on operations and dividends. The subsidy
resulting from this is known as an Operating-Differential Subsidy ("ODS").
Similarly, the Board may grant a construction subsidy for the construction of a
U.S. flag vessel in a U.S. shipyard. This is characterized as a
Construction-Differential Subsidy ("CDS"). Vessels built with CDS or operating
with ODS are not presently permitted in the U.S. coastwise trade during the term
of restrictions associated with these programs except on a case-by-case waiver
basis. A shipowner has filed suit to clarify the length of the term of coastwise
trading restrictions associated with the CDS program. The United States
Government is defending its current interpretation of these restrictions in this
lawsuit. Congress has not appropriated funds for new ODS or CDS contracts since
1981. While legislative proposals have been made to revise and extend an
operating subsidy program for a limited number of U.S. flag vessels, none has
been enacted and no current legislation is pending which would provide subsidy
for tankers or dry bulk carriers.
Four of the Company's U.S. flag tankers were constructed with CDS and are
eligible for ODS and two of the Company's U.S flag dry bulk carriers became
eligible for ODS in January 1990 under an ODS sharing program approved by the
Board. The tankers also qualify for non-coastwise U.S. military cargo. The bulk
carriers have historically been employed primarily in the carriage of U.S.
government generated preference cargoes. Recently they have been trading in
foreign trade where they are eligible for ODS. During such charters or whenever
the vessels are used for non-coastwise U.S. military cargo or in the preference
trades, they are not eligible for ODS. In 1994, the Company received benefits of
ODS payments. The ODS contracts expire in 1996 and 1997, after which the vessels
may be reflagged (assuming permission of the Maritime Administration is
obtained) or trade in the coastwise trade (assuming that a suit to block vessels
built with CDS from entering such trade is not successful).
The Export Administration Act ("EAA"), which provides the strictest
restrictions under U.S. law of exports on Alaskan North Slope oil, was to expire
June 30, 1994 but has been extended by Presidential Executive Order to June 30,
1995. The U.S. Canada Free Trade Agreement Implementation Act of 1988 contains a
provision allowing Canada access to a maximum of 50,000 barrels per day of North
Slope Alaska crude oil provided such oil is shipped on U.S. flag vessels.
4
<PAGE>
Legislation to reauthorize the EAA, and separate legislation to eliminate
restrictions on the export of Alaskan North Slope oil provided that exports are
carried on U.S. flag vessels, have been introduced into Congress. The
Administration has advised Congress it supports removal of the restrictions,
subject to certain conditions including that exports be carried on U.S. flag
vessels.
A lawsuit by the State of Alaska is challenging the restrictions on export
of Alaskan North Slope Oil as unconstitutional was dismissed in its entirety
last year. An appeal is pending.
The Company has changed its opinion as to the effect on it of removal of
the restrictions and now believes that if the export restrictions are rescinded
or allowed to lapse, U.S. flag vessels would be utilized to carry the exported
oil and that the OMI COLUMBIA would be chartered, with no material detriment
resulting to the remainder of the Company's fleet. That vessel has spent most of
the last three years without business and a charter for it would be materially
beneficial for the Company.
The U.S. Canada Free Trade Agreement Implementation Act of 1988 contains a
provision allowing Canada access to a maximum of 50,000 barrels per day of North
Slope Alaskan crude oil provided such oil is shipped on U.S. flag vessels, and
the U.S. Commerce Department has proposed allowing the export of 25,000 barrels
per day of heavy crude oil produced off the coast of California.
Legislation was passed and signed into law in 1985 to extend the
requirement to utilize U.S. flag vessels under the PL 480 program (by which the
U.S. Government sells or donates surplus grain for export to developing
countries) from its historic 50% level to 75% over a three year period.
Currently, most food aid programs are at the 75% level but several have still
remained at the 50% level. This program benefits the Company's three U.S. flag
dry bulk carriers and several of its U.S. flag tankers. This extension of the
cargo preference law was opposed by many agricultural interests and the
Administration. While the 75% level was retained in the 1990 Farm Bill, the
program is opposed by farm and other interests and there is no assurance that
the program will withstand future legislative tests. Further, the amount of
cargo shipped under the program in 1994 was far lower than that in 1993,
resulting in much lower freight rates. It is not expected that there will be
improvement in 1995.
Regulations
The Company is required by various governmental and quasi-governmental
agencies to obtain certain permits, licenses and certificates with respect to
its vessels. The kinds of permits, licenses and certificates required depend
upon such factors as the country of registry, the commodity transported, the
waters in which the vessel operates, the nationality of the vessel's crew, the
age of the vessel and the status of the Company as owner or charterer. The
Company believes that it has or can readily obtain all permits, licenses and
certificates necessary to permit its vessels to operate.
In the operation of its U.S. flag vessels, the Company is subject to
various statutes and regulations, including the Merchant Marine Act. Under the
Merchant Marine Act, vessels owned by United States citizens are subject to
requisition by purchase or charter by the United States whenever the President
declares that the national security requires such action. The owner of any such
vessel must receive just compensation as provided in the Merchant Marine Act,
but there is no assurance that lost profits, if any, will be fully recovered.
Additionally, U.S. law requires that, to be eligible for U.S. coastwise
trade, a corporation owning a vessel must be at least 75% U.S. owned. In order
to assure compliance with this citizenship requirement, the Restated Certificate
of Incorporation of the Company authorizes, and the Board of Directors has
adopted, a By-law authorizing the Board to determine a minimum percentage of
outstanding shares of common stock of the Company that must be held by U.S.
citizens. The minimum percentage established by the Board now stands at 77% and
officers of the Company have been authorized to set such percentage higher, if
deemed advisable. The Board has also adopted procedures for establishing the
citizenship of the Company's stockholders. The Company's stock certificates
(otherwise identical) are identified as "Domestic Share Certificates"
(certificates representing shares issued to United States citizens) and "Foreign
Share Certificates" (certificates representing shares issued to persons who are
non-U.S. citizens). Any purported transfer of shares represented by a Domestic
Share Certificate to a non-U.S. citizen that would cause the level of ownership
by U.S. citizens to drop below the minimum set by the Board of Directors will
not be recorded on the registration books of the Company and will be ineffective
to transfer the shares or any voting, dividend or other rights in respect
thereof. The By-laws authorize the Company to make all determinations with
respect to the validity of any transfer under these provisions and any such
decision by the Company is final and binding.
5
<PAGE>
The Company's operations are also affected by U.S., state and foreign
environmental protection laws and regulations, particularly the U.S. Port and
Tanker Safety Act, various volatile organic compound emission requirements, the
BCH Code for chemical carriers, the IMO/USCG pollution regulations and various
SOLAS amendments. Compliance with such laws and regulations entail additional
expense, including vessel modifications and changes in operating procedures.
The Oil Pollution Act of 1990 ("OPA") affects all vessel owners shipping
oil or hazardous materials to, from, or within the U.S. The law phases out the
use of tankers having single hulls, effectively imposes on vessel owners
unlimited liability in the event of a catastrophic oil spill and establishes the
Oil Spill Liability Trust Fund. OPA requires that tankers over 5,000 gross tons
calling at U.S. ports have double hulls if contracted after June 30, 1990, or
delivered after January 1, 1994; furthermore, it calls for the elimination of
all single hull vessels by the year 2010 on a phase-in schedule that is based on
size and age, unless the tankers are retrofitted with double hulls. In addition,
the law permits existing single hull tankers to operate until the year 2015 if
they discharge at deep water ports, such as the Louisiana Offshore Oil Port
("LOOP"), or lighter more than 60 miles offshore. The International Maritime
Organization ("IMO") has adopted a regulation that requires tankers, 5,000 dwt
and over contracted after July 6, 1993 to have double hull, mid-deck or
equivalent design. Existing single hull tankers will be phased-out unless they
are retrofitted with double hull, mid-deck or equivalent design no later than 30
years after delivery. Another IMO regulation mandates that after mid-1995
existing single hull crude oil tankers larger than 20,000 dwt and product
tankers over 30,000 dwt without segregated ballast tankers ("SBT") must convert
to SBT operations using at least 30% of their wing tanks, or cargo tank bottom
area, for this purpose by the age of 25. The U.S. has not accepted these IMO
regulations as they recognize, in addition to double hull, other designs as well
as contain different phase out dates for existing single hull tankers which are
in conflict with provisions of OPA. In addition, with respect to the IMO SBT
requirement and timetable, the U.S. Coast Guard has published a preliminary rule
which will require that all tankers over 5,000 gross tons, regardless of age, if
traded in U.S. ports to be fitted with SBT. This rule, if enacted, would take
effect within three years after publication of the final rule. These rules would
affect the Company's foreign flag vessels and U.S. vessels trading outside the
United States, but the effect is not likely to be material since the Company
normally does not operate non-coastwise vessels which are that old. While most
of the Company's existing vessels would eventually be unable to trade by virtue
of OPA or the IMO regulations, the useful lives of the vessels would have been
fully depreciated and their useful lives to the Company completed by the time
the restrictions affected them.
Liability for an oil spill is governed not only by the OPA, but also by the
laws, rules and regulations established by every coastal and inland waterway
state; Federal law does not preempt these state laws and provides that claims
made by state governments and other affected parties are not subject to
limitations of liability if the oil spill results from gross negligence, willful
misconduct or violation of any federal operating or safety standard. One result
of the OPA has been to create greater prominence for those U.S. independent
owners with a long standing industry reputation for a high quality of technical
management and well maintained physical assets. Another effect of the new law
has been to increase costs for liability insurance for vessel owners trading to
the U.S. While the Company maintains insurance at levels it believes prudent,
the claim from a catastrophic spill could exceed the insurance coverage
available, in which event there could be a material adverse effect on the
Company.
The Company believes that compliance with applicable environmental and
pollution laws and regulations has not had and is not expected to have a
material adverse effect upon its competitive position; however, the Company's
financial position, value and useful life of its vessels and results of
operations may be affected as a result of OPA and other environmental laws and
regulations.
Regulations issued by the USCG pursuant to OPA provided a new method for
determining whether vessel operators had the financial capability to satisfy
certain liability requirements of OPA. USCG set a deadline of December 28, 1994
for tanker owners to obtain Certificates of Financial Responsibility ("COFRs").
The Company obtained COFRs for all but one of its tankers without cost to it.
Because of the decrease in its equity, the Company anticipates it will need to
obtain COFRs for that vessel and one additional vessel through commercial
sources.
Competition
The Company competes with a small number of domestic and a large number of
foreign fleets. Both the domestic and foreign fleets include vessels owned by
independent operators and major oil companies; in addition, many foreign fleets
are government owned. Some of the Company's competitors have greater financial
resources than the Company.
6
<PAGE>
Competition in the ocean shipping industry varies primarily according to
the nature of the contractual relationship as well as with respect to the kind
of commodity being shipped. Federal regulations insulate domestic shipping from
direct competition with international shipping. Competition in virtually all
bulk trades, including crude oil, petroleum products and dry bulk (mainly coal,
grain and ore) is intense.
Employees and Labor Relations
On December 31, 1994, the Company and its subsidiaries had approximately
964 employees, of whom approximately 848 were seagoing employees. The Company's
seagoing employees which serve aboard its U.S. flag vessels are covered by
collective bargaining agreements with various maritime unions, all of which
expire in June 1996. Together with other maritime employers, the Company is
obligated through these agreements to contribute to various multi-employer
pension and health and welfare and other plans. The Employee Retirement Income
Security Act of 1974, as amended, provides for liabilities for withdrawal from a
multi-employer pension plan if an employer reduces its operations below a
minimum level. It is not anticipated that the Company will be in such a
position, but it is possible that the failure or withdrawal of any shipping
company employer may cause other employers (such as the Company) to increase
their plan contributions. The Company has been advised by the trustees of such
plans that it has no withdrawal liability as of December 31, 1994.
The Company primarily utilizes one hiring agent to crew its foreign flag
vessels. Although agents sign labor contracts with labor organizations in
various foreign countries that represent seagoing personnel from these
countries, the Company is not a party to these contracts. Some senior shipboard
positions on foreign flag vessels are filled directly by the Company.
The Company considers its relationship with its employees, including its
seagoing crews, to be satisfactory.
Value of Assets, Cash Requirements and Taxes
Although the replacement costs of comparable new vessels are significantly
above the book value of OMI's fleet, the market value of OMI's fleet may be
below book value when market conditions are weak. In common with other
shipowners, OMI continually considers asset redeployment which could at times
include the sale of vessels at less than their book value.
OMI's results of operations and cash flow may be significantly affected by
future charter markets because only 17% of OMI's tonnage is on charters
extending beyond year-end 1995.
At December 31, 1994, net book values of vessels exceeded their tax bases
by approximately $207,264,000. Accordingly, if such vessels were disposed of at
prices at or near book value, the Company's liability for taxes on the resulting
taxable gain would be substantial. See Note 5 to OMI's Consolidated Financial
Statements set forth in Item 8.
For years subsequent to December 31, 1983, the Company and its domestic
subsidiaries have filed consolidated federal income tax returns.
The 1986 Tax Reform Act had a significant effect on the taxation of income
from U.S. controlled (over 50%) foreign shipping operations. This change in the
tax law affected retained earnings of OMI's international fleet operations,
excluding the Company's joint ventures with overseas partners. There is no basic
change with respect to the exclusion from taxation of U.S. controlled foreign
companies' income earned and re-invested in foreign shipping operations between
January 1, 1976 and December 31, 1986; earnings prior to 1976 are not subject to
taxes unless repatriated.
Under the 1986 Act, effective January 1, 1987, earnings of U.S. controlled
foreign shipping companies are subject to U.S. income tax. As in the past,
disinvestment of qualified investments in foreign shipping operations (as
defined) can lead to taxation of past reinvested earnings; year end 1986 has
been established as a permanent base, with the amount of any decrease in assets
recorded at the end of subsequent years deemed to be taxable income in the
respective years, limited to the total amount reinvested from 1976 through 1986.
Shifting of earning assets to non-U.S. controlled (50% or less interest) foreign
companies could result in disinvestment.
OMI assets have a low tax basis and a relatively large deferred tax
liability due to the following practices:
1) OMI has employed monies held in it's CCF, for the acquisition of
qualified U.S. flag tonnage. The depreciable tax base of such assets
is reduced by the amount of the tax savings related to the CCF monies
employed.
7
<PAGE>
2) Prior to enactment of the 1986 Tax Reform Act, OMI utilized accelerated
depreciation for tax purposes in determining earnings on its foreign flag
vessels. Accelerated depreciation on foreign flag vessels is no longer
permitted. Accelerated depreciation for tax purposes is allowed on U.S. flag
vessels. The tax on the difference between accelerated and book depreciation is
recorded as a deferred tax liability.
Item 3. LEGAL PROCEEDINGS
OMI and its subsidiaries are not parties to any material pending legal
proceedings for damages, or a related group of such proceedings, other than
ordinary routine litigation incidental to the business.
OMI is a party, as plaintiff or defendant, in a variety of lawsuits for
damages arising principally from personal injuries or other casualties in the
ordinary course of the maritime business. All such personal injury and casualty
claims against OMI are fully covered by insurance (subject to deductibles which
are not material).
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders of the Company
during the fourth quarter of 1994.
EXECUTIVE OFFICERS OF OMI
Set forth below are the names, ages, position and office, term and year
appointed of all of the Company's executive officers as of March 23, 1995.
<TABLE>
<CAPTION>
Age Year
as of Appointed
Name Position and Office Held 3/23/95 to Office
---- ------------------------ ------- ----------
<S> <C> <C> <C>
Michael Klebanoff .................... Chairman of the Board 74 1983
Jack Goldstein ....................... President and Chief Executive Officer 56 1986
Craig H. Stevenson, Jr. .............. Executive Vice President and Chief 41 1993
Operating Officer
Vincent J. de Sostoa ................. Senior Vice President, Treasurer and Chief 50 1989
Financial Officer
Fredric S. London .................... Senior Vice President, Secretary and 47 1987
General Counsel
Judith K. Blackman ................... Vice President 52 1995
Kathleen C. Haines ................... Vice President/Controller 40 1994
Richard Halluska ..................... Vice President 47 1993
William A.G. Hogg .................... Vice President 57 1994
Anthony Naccarato .................... Vice President 49 1987
William Osmer ........................ Vice President 40 1994
Kenneth Rogers ....................... Vice President 39 1994
Thomas M. Scott ...................... Vice President 38 1995
</TABLE>
There is no family relationship by blood, marriage or adoption (not more
remote than first cousins) between any of the above individuals and any other
executive officer or any OMI director.
The term of office of each officer is until the first meeting of directors
after the annual stockholders' meeting next succeeding his election and until
his respective successor is chosen and qualified.
There are no arrangements or understandings between any of the above
officers and any other person pursuant to which any of the above was selected as
an officer.
Mr. Klebanoff has served as Chairman of the Board of the Company since
1983.
The following are descriptions of other occupations or positions that the
other executive officers of the Company have held during the last five years:
Jack Goldstein was appointed President and Chief Executive Officer of the
Company in April 1986.
Craig H. Stevenson, Jr. was elected Executive Vice President and Chief
Operating Officer in November 1994. He was elected Senior Vice
President/Chartering of the Company in August 1993. For five years prior thereto
he was President of Ocean Specialty Tankers Corp., a marketing manager for
several of the Company's chemical tankers.
8
<PAGE>
Vincent de Sostoa was elected Chief Financial Officer in January, 1994. He
was elected Senior Vice President/Finance of the Company in January 1989.
Fredric S. London was elected Senior Vice President of the Company in
December 1991. He was elected Vice President of the Company in December 1988.
Judith Blackman was elected Vice President of the Company in January, 1995.
She was Director of the Office of Cargo Preference for the United States
Maritime Administration the three previous years and prior to that time was an
employee in the chartering department at the Company.
Kathleen C. Haines was elected Vice President and Controller of the Company
in January 1994. She was elected Assistant Vice President and Controller in
December 1992. Prior thereto, Ms. Haines was Assistant Controller.
Richard Halluska was elected Vice President of the Company in July 1993. He
was elected Assistant Vice President of the Company in December 1989.
William A.G. Hogg was elected Vice President of the Company in January
1994. He was elected Assistant Vice President of the Company in June 1987.
Anthony Naccarato was elected Vice President of Human
Resources/Administration in October, 1993. He was elected Vice President/Labor
Relations of the Company in June 1987.
William Osmer was elected Vice President of the Company in January 1994. He
was elected Assistant Vice President of the Company in December 1986.
Kenneth Rogers was elected Vice President of the Company in January 1994.
He was elected Assistant Vice President of the Company in December 1990. Prior
thereto, Mr. Rogers was Ship Manager.
Thomas M. Scott was elected Vice President of the Company in February,
1995. He was Ship Manager starting in September, 1991 and was elected Assistant
Vice President/Operations in 1993. Prior thereto he was Port Captain for
International Maritime Carriers for one year and prior thereto Marine
Superintendent for Marine Transport Lines.
PART II
Item 5. MARKET FOR OMI CORP.'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Common Stock
The Company listed for trading on the New York Stock Exchange all of its
common stock on March 13, 1992 (NYSE-OMM). Previously, the Company's common
stock initially traded on the over-the-counter market on January 4, 1984, began
trading on the NASDAQ National Market System on February 18, 1986, and on
January 27, 1989 was listed for trading on the American Stock Exchange. As of
March 23, 1995, the number of holders of OMI common stock was approximately
5,122.
Payment of Dividends to Stockholders
On June 15, 1993, the Board voted to declare special dividends rather than
adhere to a regular dividend policy. For the years ended December 31, 1993 and
1994, there were no dividends declared.
In 1992 dividends were paid at $0.07 per share on July 23, 1992 and
January 21, 1993 to stockholders of record June 26, 1992 and December 28, 1992,
respectively.
1994 Quarter 1st 2nd 3rd 4th
------------ ----- ----- ----- -----
High ........................ 8 7 1/8 6 7/8 6 3/4
Low ......................... 6 1/4 6 5 3/4 5 7/8
1993 Quarter 1st 2nd 3rd 4th
------------ ----- ----- ----- -----
High ........................ 5 5/8 6 1/4 7 7
Low ......................... 3 7/8 4 3/4 5 5/8 6 1/8
9
<PAGE>
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
OMI CORP. AND SUBSIDIARIES
(In thousands, except per share amounts)
For the years ended December 31,
-------------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Revenues ........................................ $266,796 $270,479 $265,529 $284,758 $242,145
Other income .................................... 5,439 4,699 5,685 3,956 3,132
Depreciation and amortization ................... 37,770 35,441 35,483 34,688 30,993
Provision for losses:
Impaired value of vessel ....................... 14,798
Lease obligation ............................... 19,800
Operating (loss) income ......................... (48,084) 1,902 12,195 54,713 33,884
Gain (loss) on disposal of assets--net .......... 10,222 4,401 (1,146) 105
Provision for writedown of investments .......... (1,250) (1,625) (16,183)
Interest expense ................................ 28,808 21,788 23,983 29,527 28,521
Equity in operations of joint ventures .......... 5,402 5,544 9,059 12,259 9,907
Net (loss) income ............................... (37,865) (8,747) (11,424) 29,876 14,117
Net (loss) income per common share .............. (1.24) (0.29) (0.36) 0.94 0.44
Cash dividends declared on common stock ......... 0.14 0.14 0.10
Other Financial Data:
Cash dividends received from joint ventures ..... $ 2,477 $ 11,823 $ 5,880
Cash and cash equivalents ....................... 31,797 45,321 $ 16,850 26,158 $ 21,404
Vessels and other property--net ................. 400,998 453,683 458,564 499,010 519,305
Investments in, and advances to joint ventures .. 81,868 77,802 78,492 74,894 51,654
Total assets .................................... 605,132 671,516 644,443 678,618 684,483
Current portion of long-term debt ............... 18,900 15,302 40,820 32,505 43,192
Long-term debt .................................. 253,239 282,325 222,435 242,311 266,837
-------- -------- -------- -------- --------
Total debt ...................................... 272,139 297,627 263,255 274,816 310,029
-------- -------- -------- -------- --------
Total stockholders' equity ...................... 179,676 220,026 218,391 229,551 209,543
</TABLE>
See Notes to Consolidated Financial Statements.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OMI Corp. ("OMI" or the "Company"), is a highly diversified major bulk
shipping company operating in both the U.S. flag and international markets. Its
operating fleet currently totals 43 vessels, including nine joint venture
vessels and five chartered-in tankers, aggregating approximately 3.7 million
deadweight ("dwt."). One Suezmax tanker is currently under construction and
scheduled to be delivered mid-1996 to a 49 percent owned joint venture. The
Company also has significant investments in other marine related activities,
including lightering of large crude carriers in the Gulf of Mexico and workboat
supply services.
Results of operations of OMI include operating activities of the Company's
domestic and foreign wholly-owned, leased and chartered-in vessels.
10
<PAGE>
FISCAL YEARS 1994, 1993 AND 1992
Results of Operations
Net voyage revenues is defined as voyage revenue less vessel and voyage
expenses. The Company's vessels operate on time charters, short-term time
charters, bareboat charters, voyage (or "spot") charters, or in accordance with
other contractual arrangements involving one of the four mentioned charters.
Each type of charter or arrangement connotates a method by which revenue and
expenses are recorded. Under a time charter, revenue is usually based on daily
or monthly rates, the charterer assumes certain operating expenses, such as
bunkers and port charges, and the length of the charter ranges from one to five
years. Short-term time charters have similar characteristics as time charters
but are usually less than one year. Bareboat charters are similar to time
charters but the charterer assumes all operating expenses and the revenue rate
may be lower due to the additional costs covered by the charterer. Under a
voyage charter, revenues are based on amount of cargo carried, most expenses are
for the owner's account and the length of the charter is generally short-term.
Revenues may be higher in the spot market as the owner has to cover more costs.
As a result of fluctuations in voyage revenues and expenses due to the nature of
the charter, the discussion below addresses variations in net voyage revenues to
show trends in profitability.
In 1991, the majority of OMI's fleet was operating under long-term time
charter agreements which provided stable earnings. In 1992, many of the time
charters terminated and net voyage revenues declined $41,611,000 or 39 percent
in that year. As a result of weak worldwide economic conditions and lower demand
for petroleum products, profitable time charters were no longer available, and
spot rates were fluctuating. As revenues were reduced as a result of lower
rates, costs increased, partially due to regulatory changes, new environmental
laws and increased operating costs for vessels and crews. As a result of the Oil
Pollution Act of 1990, OMI sustained a substantial increase in insurance costs
in 1992, which leveled off in 1993. In 1993, net voyage revenues decreased
$10,299,000 or 16 percent from 1992, and continued to decrease in 1994 by
$11,841,000 or 21 percent due to market conditions. During the latter part of
1994, rates in the international tanker fleet began improving. Revenue for the
domestic fleet, however, has declined from 1993 to 1994 based on changes in both
government programs and business available for certain types of vessels.
Domestic operations are expected to continue to be uncertain in 1995.
YEAR ENDED DECEMBER 31, 1994 VERSUS DECEMBER 31, 1993
Net Voyage Revenues
Net voyage revenues of $44,217,000 for the year ended December 31, 1994
decreased $11,841,000 or 21 percent as compared to the year ended December 31,
1993. The decrease was primarily attributable to the U.S. flag fleet, which
accounted for a $14,364,000 decline in revenues. This decline was offset by
$2,523,000 in net increases in the foreign fleet. The majority of the decrease
in domestic revenues is attributable to three dry bulk carriers which have been
operating under a U.S. government sponsored foreign aid program ("PL480") for
the distribution of agricultural products. In 1993, there was a large volume of
cargo available under this program, especially for shipment to the Commonwealth
of Independent States. In fact, there was so much cargo moved under this program
that in 1993 and the first few months of 1994, four U.S. flag tankers also
participated in this program. As a result of reductions in subsidized cargoes,
there was much less tonnage available under this program in 1994 with even less
tonnage expected to be available in 1995.
Although the PL480 voyages were profitable in 1994, the rates earned
declined due to increased competition for less cargo. As the program decreased
in volume the four U.S. flag tankers moved into the vegetable oil trade at lower
profit margins and two of the bulkers are currently transporting grain in the
commercial market. The four U.S. flag tankers and two of the bulkers share four
Operating-Differential Subsidy ("ODS") contracts, under which the Company is
eligible to receive subsidy on commercial foreign cargoes. The subsidy covers
part of the expenses incurred for personal and indemnity insurance, crew and
maintenance and repairs.
Another reason for the decrease in domestic net revenues was that three
vessels built in 1969 were sold in July 1994, resulting in 213 less operating
days as compared to 1993.
The OMI Columbia, the largest of OMI's domestic vessels, has been operating
in the spot market or laid up since its redelivery from a time charter in 1992.
In 1993, the OMI Columbia was laid up for 288 days as there was no business for
the vessel. There was some improvement in 1994, with net voyage revenues of
$636,000 primarily from five spot charters, four consecutive voyages in the
Alaskan North Slope trade and one in PL480 trade. During the past few years
Alaskan crude oil production has decreased and distribution favors short hauls.
Additionally, there is a law
11
<PAGE>
restricting exports on Alaskan North Slope oil imposed by Congress. Alaska
favors lifting the export ban specifically because sales of crude oil outside
the U.S. would get higher prices. Legislation to retain the export ban and the
restrictions on exports has been extended until June 30, 1995. Separate
legislation has been introduced to Congress to eliminate restrictions on export
of Alaskan North Slope oil.
Increases in foreign net voyage revenues were primarily the result of
purchasing of two crude oil tankers in December 1993. These vessels were on
bareboat charters with a steady inflow of revenues when they were purchased
until the charters terminated in July and August 1994. At that time the two
vessels entered the spot market as crude oil rates began to improve in the
international markets. Additional increases in net voyage revenues were from
three profitable time charters, one of which continued from 1993 with a higher
rate in 1994, and the other two were for vessels previously in the spot market.
OMI periodically reviews the book value of its vessels and its ability to
recover the remaining book value of the vessels using estimated undiscounted
cash flows over the remaining life of each vessel. During its last review the
Company determined that the carrying value of one of its chemical/product
vessels, operating in coastal trade for liquid chemicals in a marketing pool
with a joint venture, exceeded the forecasted estimated undiscounted future net
cash flows from operations. An impairment loss of $14,798,000, measured by the
excess of the vessel's carrying value over its estimated fair value, based on
appraised values from two ship brokers, was recognized and reported as a
separate component of operating expenses in the Consolidated Statement of
Operations. Additionally, a similar loss was recognized as a separate component
of operating expenses, for the forecasted loss from operations of an almost
identical vessel chartered-in under an operating lease through 2006, operating
in the same marketing pool. The recognized loss of $19,800,000 was based on
estimated undiscounted cash flows, excluding from rent expense an amount
representative of the interest component of the lease agreement, through the
lease expiration date.
Other Income
Other income consists primarily of management fees, insurance premiums
received from affiliates and/or other parties and dividend income on
investments. During the year ended December 31, 1994, other income increased
$740,000 or 16 percent, as compared to 1993. The increase in 1994 comprises
dividend income received on a five percent owned investment in a company,
insurance premiums collected from affiliates and increased fees from the U.S.
government to manage vessels in the Ready Reserve Fleet.
Other Operating Expenses
The Company's operating expenses other than vessel and voyage expenses and
provision for losses, consist of depreciation and amortization, operating lease
expense and general and administrative expenses. For the year ended December 31,
1994, these expenses increased $4,287,000 or seven percent. Depreciation
increased seven percent due to the shortening of lives of six domestic vessels
and the purchase of four vessels, offset by the termination of depreciation for
the three vessels sold in July 1994. General and administrative expenses
increased 13 percent primarily due to costs associated with downsizing
international operations and severance agreements.
Other Income (Expense)
Other income (expense) consists of gain on disposal of assets-net,
provision for writedown of investments, interest expense, interest income,
minority interest in subsidiary and other-net. The decrease in net other expense
of $435,000 or two percent for the year ended December 31, 1994 over the same
period in 1993 is due to the sale of the three domestic vessels in July 1994 for
a net gain of $7,178,000, compared with gains from the sale of OMI Petrolink
Corp. ("Petrolink") workboats and marketable securities in 1993. Interest
expense increased in 1994 by $7,020,000 due primarily to the interest accrued at
10.25 percent on Senior Notes (the "Notes"), of which $160,650,000 were
outstanding at December 31, 1994. Interest income increased $1,105,000 because
of interest earned on invested proceeds of the Notes.
Benefit for Income Taxes
The benefit for income taxes of $22,305,000 for the year ended December 31,
1994 varied from statutory rates primarily because deferred taxes are not
recorded for the equity in operations of joint ventures other than Amazon
Transport, Inc. ("Amazon") and White Sea Holdings Ltd. ("White Sea"), as
management considers such earnings to be permanently invested.
12
<PAGE>
In August 1993, Congress passed the Omnibus Budget Reconciliation Act of
1993 (the "Act") which increased OMI's corporate tax rate of 34 percent to 35
percent. A retroactive provision of $3,044,000 for deferred income taxes was
made in 1993 to comply with the provisions of the Act.
Equity in Operations of Joint Ventures
Equity in operations of joint ventures of $5,402,000 was $142,000 or three
percent less in 1994 than in 1993. The decline in equity is primarily due to a
vessel owned by Amazon which was operating under a time charter until July 1993,
at which time it began operating in the spot market at lower rates with idle
time between voyages. Additionally, Wilomi, Inc. ("Wilomi") and White Sea
experienced declines in earnings pertaining to three vessels which operated in
the spot market in both years. These declines were offset, in part, by the gain
on the sale of a vessel owned by Mosaic Alliance Corporation and operating
activity from a vessel delivered in January 1994 to Geraldton Navigation Inc.
("Geraldton"). During January 1995, Geraldton sold one of its vessels for a
gain.
Balance Sheet
The increase in Marketable securities and the decrease in Long-term
securities is due primarily to the reclassification of all Noble Drilling
Corporation ("Noble") shares to current assets as all shares were sold in March
1995. Fair value of the 2,503,389 common shares in Marketable securities was
$14,394,000 at December 31, 1994. The decrease in Long-term securities was
offset in part by an increase due to the unrealized gain of $609,000 on 125,000
shares of SEACOR Holdings, Inc.
YEAR ENDED DECEMBER 31, 1993 VERSUS DECEMBER 31, 1992
Net Voyage Revenues
Net voyage revenues of $56,058,000, decreased $10,299,000 or 16 percent,
for the year ended December 31, 1993 from the prior year. The decreases in
domestic net voyage revenues of $11,609,000 were offset in part by increases in
foreign operations of $1,310,000. The net decrease resulted primarily from
increased idle time between voyages for five domestic vessels (aggregating 541
more offhire days in 1993 than in 1992) while continuing to incur port expenses
and other daily expenses. The net decrease was also attributable to three
domestic vessels operating in a profit sharing pool, four vessels operating on
time charters that were offhire a total of 144 days for drydocking, loss of
revenue for two vessels disposed of, and reduced revenue from Petrolink
resulting from reduced volume of its lightering operations in 1993 and the sale
of seven workboats.
Other Income
During the year ended December 31, 1993, other income decreased $986,000,
or 17 percent, compared to 1992. The decrease in 1993 resulted primarily from a
payment of $1,000,000 from Wilomi during the first quarter of 1992, which was
paid in accordance with a contractual agreement relating to the construction
contract of a vessel delivered, offset by increases in fees from the U.S.
government for the management of vessels in the Ready Reserve Fleet.
Other Operating Expenses
For the year ended December 31, 1993, these expenses decreased a net
$992,000 or two percent, as compared to the year ended December 31, 1992. The
primary causes of the decrease in 1993 in general and administrative expenses
were a change in health insurance coverage for employees, a decrease in other
employee benefits and a reduction in legal fees.
Other Income (Expense)
For the year ended December 31, 1993, net other expense decreased
$21,633,000, or 55 percent, as compared to 1992. The net decrease resulted
primarily from the writedown of $13,094,000 on Chiles Offshore Corporation stock
("Chiles") during 1992. In addition, decreases during 1993 also resulted from
the $2,190,000 gain from the sale of seven workboats of Petrolink, gain from the
sale of Chiles stock of $4,086,000 and the decrease in interest expense
resulting from both lower interest rates and a decrease in outstanding principal
balance of debt during the year prior to issuing $170,000,000 in Senior Notes in
November 1993, offset in part by losses on the sale of a 50 percent owned joint
venture and a 25 percent equity investment aggregating approximately $1,554,000.
13
<PAGE>
Equity in Operations of Joint Ventures
Equity in operations of joint ventures of $5,544,000 was $3,515,000 or 39
percent less in 1993 than in 1992. Joint venture equity was less in 1993
primarily due to a gain on sale of a vessel owned by Wilomi in April 1992, which
increased OMI's equity by approximately $4,826,000. This decline, along with a
decline in profits for the vessel owned by Amazon, resulting from the
termination of its time charter in 1993 and lower profits being earned in the
spot market, were offset by decreases in operating losses in 1993 compared to
1992 incurred by a partnership, Ecomarine USA and increased equity in operating
results of White Sea, a joint venture formed during December 1992.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital of $23,161,000 at December 31, 1994 was
$9,796,000 or 30 percent less than $32,957,000 at December 31, 1993. Cash and
cash equivalents of $31,797,000 decreased $13,524,000 or 30 percent from the
balance of $45,321,000 at December 31, 1993. For the year ended December 31,
1994, net cash provided by operating activities was $871,000 which was a
decrease of $29,252,000 or 97 percent from net cash provided by operations of
$30,123,000 for the year ended 1993.
During 1994, the source of the Company's liquidity was primarily from the
proceeds of $23,703,000 received from the sale of the three domestic vessels in
July 1994, the issuance of debt of $12,050,000, proceeds received from the sale
of Chiles stock of $3,749,000, and a cash distribution of $2,450,000 from
Amazon.
The primary uses of cash during 1994 were scheduled debt payments of
$16,963,000 and prepayments of debt of $19,484,000. OMI repurchased $9,350,000
of the Notes for a gain of $753,000 during 1994, and repurchased an additional
$4,100,000 for a gain of $431,000 in the first quarter of 1995. Other uses of
cash were the purchase of a foreign flag vessel at a cost of $12,050,000,
capital improvements on vessels of $3,268,000, capital contributions of
$2,847,000 to joint ventures, and $1,033,000 in proceeds from sales of
investments in and interest on the Capital Construction and other restricted
funds that was reinvested in the fund.
On March 3, 1995, OMI sold all its shares of Noble stock for $12,360,000
and recognized a gain of $7,806,000.
The Company anticipates cash from operations in 1995 to improve liquidity
and its financial position as it recovers from a depressed market. With its four
unused lines of credit aggregating $65,000,000 at December 31, 1994, OMI is in
the position to meet its current and future obligations, and to acquire and
dispose of vessels as opportunity and need arises.
COMMITMENTS
OMI and a joint venture partner have committed to construct a vessel being
built in the Peoples Republic of China for a cost of approximately $54,400,000.
The vessel is scheduled to be delivered mid-1996. OMI guarantees 49 percent,
through a joint venture subsidiary, of the shipbuilding contract as a backup
guarantor to the joint venture partner. OMI acts as a co-guarantor for a portion
of the debt incurred by joint ventures with affiliates of two of its joint
venture partners. Such debt was approximately $110,697,000 at December 31, 1994,
with OMI's share of such guarantees being approximately $54,547,000. OMI also is
a guarantor for one of its joint venture's revolving line of credit of up to
$4,000,000 at December 31, 1994, with a guarantee to OMI from its joint venture
partner of 50 percent of the amount guaranteed by OMI.
The Company and its joint ventures partners have committed to fund any
working capital deficiencies which may be incurred by their joint venture
investments. At December 31, 1994, no such deficiencies have occurred which have
required funding.
EFFECTS OF INFLATION
The Company does not consider inflation to be a significant risk to the
cost of doing business in the current and foreseeable future. The Company has
experienced some additions to the costs of operating the vessels due to price
level increases, however, in some cases, the effect has been offset by charter
escalation clauses.
14
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
For the Years Ended December 31,
-------------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Voyage revenues .................................................... $261,357 $265,780 $259,844
Other income (Note 2) .............................................. 5,439 4,699 5,685
-------- -------- --------
Total revenues ................................................... 266,796 270,479 265,529
-------- -------- --------
Operating Expenses:
Vessel and voyage .................................................. 217,140 209,722 193,487
Depreciation and amortization ...................................... 37,770 35,441 35,483
Operating lease .................................................... 6,400 6,666 6,473
Provision for losses (Note 11):
Impaired value of vessel ......................................... 14,798
Lease obligation ................................................. 19,800
General and administrative ......................................... 18,972 16,748 17,891
-------- -------- --------
Total operating expenses ......................................... 314,880 268,577 253,334
-------- -------- --------
Operating (loss) income .............................................. (48,084) 1,902 12,195
-------- -------- --------
Other Income (Expense):
Gain (loss) on disposal of assets--net (Note 12) ................... 10,222 4,401 (1,146)
Provision for writedown of investments (Notes 1, 2, 4) ............. (1,250) (1,625) (16,183)
Interest expense ................................................... (28,808) (21,788) (23,983)
Interest income .................................................... 2,843 1,738 2,000
Minority interest in income of subsidiary .......................... (304) (649) (244)
Other-net .......................................................... (191)
-------- -------- --------
Net other expense ................................................ (17,488) (17,923) (39,556)
Loss before income taxes and equity in operations of joint ventures .. (65,572) (16,021) (27,361)
Benefit for income taxes (Note 5) .................................... 22,305 1,730 6,878
-------- -------- --------
Loss before equity in operations of joint ventures ................... (43,267) (14,291) (20,483)
Equity in operations of joint ventures (Note 2) ...................... 5,402 5,544 9,059
-------- -------- --------
Net loss ............................................................. $(37,865) $(8,747) $(11,424)
======== ======= ========
Net loss per common share (Note 1) ................................... $ (1.24) $ (0.29) $ (0.36)
======== ======= ========
Weighted average number of shares of common stock outstanding ........ 30,417 30,590 31,654
======== ======= ========
</TABLE>
See notes to consolidated financial statements.
15
<PAGE>
<TABLE>
<CAPTION>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
December 31
------------------
1994 1993
-------- --------
ASSETS
<S> <C> <C>
Current assets:
Cash, including cash equivalents of: 1994, $19,734; 1993, $34,848
(Notes 1, 4) ............................................................... $ 31,797 $ 45,321
Marketable securities (Notes 1, 4) ........................................... 14,415 6,021
Advances to masters .......................................................... 635 503
Receivables:
Traffic .................................................................... 16,364 11,932
Other ...................................................................... 9,442 10,910
Prepaid expenses and other current assets .................................... 8,726 6,323
Total current assets ..................................................... 81,379 81,010
-------- --------
Capital Construction and other restricted funds (Notes 1, 3, 4) .............. 12,961 13,786
-------- --------
Vessels and other property (Note 1):
Vessels (Note 3) ........................................................... 686,763 753,819
Other property ............................................................. 8,636 7,922
-------- --------
Total vessels and other property ......................................... 695,399 761,741
Less accumulated depreciation ................................................ 294,401 308,058
-------- --------
Vessels and other property--net .......................................... 400,998 453,683
-------- --------
Investments in, and advances to joint ventures ............................... 81,868 77,802
Long-term securities (Notes 1, 4) ............................................ 3,075 16,912
Other assets and deferred charges ............................................ 24,851 28,323
-------- --------
Total .................................................................... $605,132 $671,516
======== ========
</TABLE>
See notes to consolidated financial statements.
16
<PAGE>
<TABLE>
<CAPTION>
December 31,
---------------------
1994 1993
-------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable ......................................................... $ 6,842 $ 4,125
Accrued liabilities:
Voyage and vessel ...................................................... 22,075 20,238
Interest ............................................................... 4,563 5,202
Other (Note 11) ........................................................ 5,838 3,186
Current portion of long-term debt (Notes 3, 4) ........................... 18,900 15,302
------- --------
Total current liabilities .............................................. 58,218 48,053
------- --------
Advance time charter revenues and other liabilities (Note 11) .............. 31,509 14,372
Long-term debt (Notes 3, 4) ................................................ 253,239 282,325
Deferred income taxes (Note 5) ............................................. 79,448 104,003
Minority interest in subsidiary ............................................ 3,042 2,737
Commitments and contingencies (Note 14)
Stockholders' equity:
Common stock, $0.50 par value, 80,000,000 shares authorized; 30,672,268
and 30,615,434 shares issued and outstanding,
1994 and 1993, respectively (Note 8) ..................................... 15,336 15,307
Capital surplus (Note 6) .................................................. 129,919 128,900
Retained earnings (Note 3) ................................................ 26,631 64,496
Cumulative translation adjustment ......................................... 4,912 4,912
Unearned compensation--employee stock ownership trust (Note 7) ............ (663) (2,159)
Unearned compensation--restricted stock (Note 8) .......................... (941) (1,057)
Unrealized gain on securities, net of deferred taxes of $3,060 in 1994 and
$5,228 in 1993 (Notes 1, 4) .............................................. 5,684 9,709
Treasury stock (Note 6) ................................................... (1,202) (82)
------- --------
Total stockholders' equity ............................................. 179,676 220,026
------- --------
Total .................................................................. $605,132 $671,516
======== ========
</TABLE>
See notes to consolidated financial statements.
17
<PAGE>
<TABLE>
<CAPTION>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
For the Years Ended December 31,
----------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Cash Flows Provided by Operating Activities:
Net loss ................................................................ $(37,865) $ (8,747) $(11,424)
Adjustments to reconcile net loss to net cash (used) provided by
operating activities:
Decrease in deferred income taxes ................................... (22,387) (4,720) (14,040)
Depreciation and amortization ....................................... 37,770 35,441 35,483
Amortization of unearned compensation ............................... 1,630 456 148
(Gain) loss on disposal of assets--net .............................. (10,222) (4,401) 1,146
Provision for losses on vessel/lease ................................ 34,598
Provision for writedown of investments .............................. 1,250 1,625 16,183
Other--net .......................................................... (554)
Equity in operations of joint ventures (over) under dividends
received .......................................................... (4,410) 6,279 (9,059)
Changes in assets and liabilities:
(Increase) decrease in receivables and other current assets ......... (5,499) 8,302 6,984
Increase (decrease) in accounts payable and accrued liabilities ..... 4,391 (448) 1,277
Advances to joint ventures--net ..................................... 196 (6,657) (7,056)
Decrease (increase) in other assets and deferred charges ............ 2,261 (2,992) (626)
(Decrease) increase in advance charter hire and other liabilities ... (981) 5,382 (7,025)
Other assets and liabilities--net .................................... 693 603 (5)
-------- --------- --------
Net cash provided by operating activities ......................... 871 30,123 11,986
-------- --------- --------
Cash Flows Provided (Used) by Investing Activities:
Proceeds from disposition of vessels and other property ................. 23,703 12,178 16,708
Proceeds received from sale of marketable securities .................... 3,749 12 447
Additions to vessels and other property ................................. (15,318) (36,548) (22,624)
Contributions to Capital Construction and other restricted funds ........ (3,750)
Withdrawals from Capital Construction and other restricted funds ........ 916 4,256
Proceeds and interest received and reinvested in Capital
Construction and other restricted funds ............................... (1,033) (650) (1,218)
Investments in joint ventures ........................................... (2,847) (3,724) (2,648)
Return of investment in joint venture ................................... 1,485
Purchase of long-term securities ........................................ (4,795)
Proceeds received on note receivable .................................... 300
Proceeds received from sale of investments .............................. 6,915
-------- --------- --------
Net cash provided (used) by investing activities ..................... 9,739 (20,601) (13,624)
-------- --------- --------
Cash Flows (Used) Provided by Financing Activities:
Proceeds and payments on notes payable to bank--net ..................... (13,500) 13,500
Proceeds from issuance of long-term debt ................................ 12,050 177,000 59,496
Net proceeds from issuance of common stock .............................. 263 218 29
Purchase of treasury stock .............................................. (1) (2,658)
Payments on long-term debt .............................................. (36,447) (142,628) (73,557)
Dividends paid .......................................................... (2,140) (4,480)
-------- --------- --------
Net cash (used) provided by financing activities ..................... (24,134) 18,949 (7,670)
-------- --------- --------
Net (decrease) increase in cash and cash equivalents ..................... (13,524) 28,471 (9,308)
Cash and cash equivalents at beginning of year ........................... 45,321 16,850 26,158
-------- --------- --------
Cash and cash equivalents at end of year ................................. $ 31,797 $ 45,321 $ 16,850
======== ========= ========
</TABLE>
See notes to consolidated financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
OMI CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Years Ended December 31, 1994, 1993 and 1992
(In thousands, except per share data)
Unearned
Common Stock Cumulative Compensation
-------------------- Capital Retained Translation From
Shares Amount Surplus Earnings Adjustment ESOP
------ ------ ------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1992 ............. 31,853 $15,927 $137,435 $ 89,011 $4,912 $(10,486)
Net loss ............................... (11,424)
Dividends ($0.14 per share) ............ (4,384)
Tax benefit for dividends on unallocated
ESOP shares .......................... 40
Amortization of unearned compensation ..
Exercise of stock options .............. 6 3 26
Payment of ESOP loan ................... 1,141
Purchase and retirement of ESOP shares . 6,825
Purchase of treasury stock .............
Retirement of treasury stock ........... (1,291) (646) (8,756)
Unrealized loss on investment--net .....
Realized loss on investment ............
------ ------- -------- -------- ------ -------
Balance at December 31, 1992 ........... 30,568 15,284 128,705 73,243 4,912 (2,520)
Net loss ............................... (8,747)
Exercise of stock options .............. 47 23 195
Amortization of unearned compensation .. 361
Unrealized gain on investment ..........
Purchase of treasury stock .............
------ ------- -------- -------- ------ -------
Balance at December 31, 1993 ........... 30,615 $15,307 $128,900 $ 64,496 $4,912 $(2,159)
Net loss ............................... (37,865)
Exercise of stock options .............. 52 26 237
Issuance of restricted stock awards .... 15 8 86
Forfeiture of restricted stock awards .. (10) (5) (71)
Amortization of unearned compensation .. 1,496
Net change in valuation account ........
Purchase of treasury stock .............
Sale of treasury stock ................. 767
------ ------- -------- -------- ------ -------
Balance at December 31, 1994 ........... 30,672 $15,336 $129,919 $ 26,631 $4,912 $ (663)
====== ======= ======== ======== ====== =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Unearned
Compensation Unrealized Total
Restricted Gain on Treasury Stockholders'
Stock Securities--Net Stock Equity
----- --------------- -------- -------------
<S> <C> <C> <C> <C>
Balance at January 1, 1992 ............. $ (1,300) $(5,948) $229,551
Net loss ............................... (11,424)
Dividends ($0.14 per share) ............ (4,384)
Tax benefit for dividends on unallocated
ESOP shares .......................... 40
Amortization of unearned compensation .. 148 148
Exercise of stock options .............. 29
Payment of ESOP loan ................... 1,141
Purchase and retirement of ESOP shares . $ (6,825)
Purchase of treasury stock ............. (2,658) (2,658)
Retirement of treasury stock ........... 9,402
Unrealized loss on investment--net ..... (3,057) (3,057)
Realized loss on investment ............ 9,005 9,005
-------- ------- -------- --------
Balance at December 31, 1992 ........... (1,152) (81) 218,391
Net loss ............................... (8,747)
Exercise of stock options .............. 218
Amortization of unearned compensation .. 95 456
Unrealized gain on investment .......... 9,709 9,709
Purchase of treasury stock ............. (1) (1)
-------- ------- -------- --------
Balance at December 31, 1993 ........... $ (1,057) $ 9,709 $ (82) $220,026
Net loss ............................... (37,865)
Exercise of stock options .............. 263
Issuance of restricted stock awards .... (94)
Forfeiture of restricted stock awards .. 76
Amortization of unearned compensation .. 134 1,630
Net change in valuation account ........ (4,025) (4,025)
Purchase of treasury stock ............. (2,431) (2,431)
Sale of treasury stock ................. 1,311 2,078
-------- ------- -------- --------
Balance at December 31, 1994 ........... $ (941) $ 5,684 $ (1,202) $179,676
======== ======= ======== ========
</TABLE>
See notes to consolidated financial statements.
19
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
Note 1--Summary of Significant Accounting Policies
Principles of Consolidation--The consolidated financial statements include
all domestic and foreign subsidiaries which are more than 50 percent owned by
OMI Corp. ("OMI" or the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
Investments in joint ventures, in which the Company's interest is 50
percent or less and where it is deemed that the Company's ownership gives it
significant influence over operating and financial policies, are accounted for
by the equity method. Accordingly, net income includes OMI's share of the
earnings of these companies.
Operating Revenues and Expenses--Voyage revenues and expenses are
recognized on the percentage of completion method of accounting based on voyage
costs incurred to date to estimated total voyage costs. Estimated losses on
voyages are provided for in full at the time such losses become evident.
Special survey and drydock expenses are accrued and charged to operating
expenses over the survey cycle, which is generally a two to three year period.
Accounting for Investments in Securities--The Company adopted Financial
Accounting Standards Board Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115") as of December 31, 1993.
In applying SFAS 115, investments in marketable securities have been classified
by management as available-for-sale and are carried at fair value. Net
unrealized gains or losses are reported as a separate component of stockholders'
equity. Upon adoption of SFAS 115, the Company recorded a net unrealized gain of
$9,709,000, net of deferred taxes of $5,228,000. Adjustments are made to net
income for any impairment in value that is deemed to be other than temporary.
Realized gains and losses on the sales of securities are recognized in net
income on the specific identification basis.
Capital Construction and Other Restricted Funds--The Capital Construction
Fund ("CCF") is restricted to provide for replacement vessels, additional
vessels or reconstruction of vessels built in the United States. The other
restricted funds are to be used to pay certain of the Company's debt. These
funds can be used at the discretion of the Company upon receipt of written
approval from the Maritime Administration.
Vessels and Other Property--Vessels and other property are recorded at
cost. Depreciation for financial reporting purposes is provided principally on
the straight-line method based on the estimated useful lives of the assets up to
the assets' estimated salvage value. The useful lives of the vessels range from
20 to 30 years. Salvage value is based upon a vessel's light weight tonnage
multiplied by a scrap rate.
The Company periodically reviews the book value of its vessels and its
ability to recover the remaining book value of the vessels using estimated
undiscounted cash flows over the remaining life of each vessel (see Note 11).
Leasehold improvements are amortized on the straight-line method over the
terms of the leases or the estimated useful lives of the improvements as
appropriate.
Goodwill--Goodwill, recognized in business combinations accounted for as
purchases, of $17,868,000 before accumulated amortization of $3,260,000 and
$2,559,000 at December 31, 1994 and 1993, respectively, is being amortized over
25 years.
Net Loss per Common Share--Net loss per common share is determined by
dividing net loss by the weighted average number of common shares outstanding
during the period. Shares issuable upon the exercise of stock options (see Note
8) have not been included in the computation because their effect would be
anti-dilutive.
Income Taxes--OMI files a consolidated Federal income tax return which
includes all its domestic subsidiary companies. Deferred income taxes are
recorded under the provisions of SFAS 109, "Accounting for Income Taxes" (see
Note 5).
Postemployment Benefits--In 1994, the Company adopted SFAS 112, "Employers'
Accounting for Post-employment Benefits". Adoption of this statement did not
have a material effect on the Company's financial position or results of
operations.
20
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
Cash Flows--Cash equivalents represent liquid investments which mature
within 90 days. The carrying amount approximates fair value.
During the years ended December 31, 1994, 1993 and 1992, interest paid
totaled approximately $29,447,000, $20,647,000 and $25,429,000, respectively.
For the years ended December 31, 1993 and 1992, income taxes paid were
approximately $6,413,000, and $7,628,000, respectively. There were no income
taxes paid during 1994.
Reclassifications--Certain reclassifications have been made to the 1993 and
1992 financial statements to conform to the 1994 presentation.
Note 2--Investments in Joint Ventures
The operating results of the joint ventures have been included in the
accompanying consolidated financial statements on the basis of ownership as
follows:
Percent of
Ownership
-----------
Amazon Transport, Inc. ("Amazon") .......................... 49.0
Aurora Management Ltd. ("Aurora") .......................... 49.9(1)
Aurora Tankers Ltd. ........................................ 49.9
Aurora Tankers Pte. Ltd. ................................... 49.9
Aurora Tankers (UK) Ltd. ................................... 49.9
Ecomarine USA .............................................. 49.0
Gainwell Investments Ltd. .................................. 25.0
Geraldton Navigation Company Inc. .......................... 49.9(2)
Grandteam Ship Management Ltd. ............................. 50.0
Greeley Management Ltd. ("Greeley") ........................ 49.9(1)
K/S Palawan Princess ....................................... 25.0(3)
Mosaic Alliance Corporation ("Mosaic") ..................... 49.9
Mundogas Orinoco Ltd. ...................................... 50.0(4)
Ocean Specialty Tankers Corp. ("OSTC") ..................... 50.0
Vanomi Management, Inc. .................................... 50.0
White Sea Holdings Ltd. ("White Sea") ...................... 49.0
Wilomi, Inc. ("Wilomi") .................................... 49.0
-------------------
(1) Joint ventures terminated July 1, 1993.
(2) During January 1995, Geraldton Navigation Company Inc. sold a vessel at a
gain.
(3) The joint venture sold its primary asset in January 1994.
(4) OMI sold its investment in Mundogas Orinoco Ltd. on May 4, 1993 for
$1,363,000.
OMI has entered into management service agreements with certain of its
joint ventures, wherein the Company acts as technical and/or commercial manager
for certain of the ventures' vessels. Management fees relating to services
rendered to joint ventures aggregated $820,000, $699,000 and $567,000 for the
years ended December 31, 1994, 1993 and 1992, respectively. During 1992, OMI
received a $1,000,000 payment from Wilomi, which is included in other income.
In 1994, Mosaic owned 893,800 shares of OMI common stock acquired on the
open market at an aggregate cost of $4,595,000 and also sold 600,000 of these
shares. OMI's equity in these shares is accounted for as treasury stock (see
Note 6).
21
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
Summarized combined financial information pertaining to all affiliated
companies accounted for by the equity method is as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Results of operations:
Revenues ............................................................................ $120,707 $118,769 $107,994
Operating income .................................................................... 18,661 17,410 12,797
Gain on disposal of assets, net ..................................................... 2,976 9,845
Net income .......................................................................... 11,741 10,869 17,405
Net Assets:
Current assets ...................................................................... $ 64,236 $ 44,445 $ 47,704
Vessels and other property, net ..................................................... 303,876 283,792 256,808
Other assets ........................................................................ 9,605 22,880 33,829
-------- -------- --------
Total assets ......................................................................... $377,717 $351,117 $338,341
-------- -------- --------
Less:
Current liabilities ................................................................. 39,414 30,956 39,024
Long-term debt ...................................................................... 171,045 156,839 131,132
Other liabilities ................................................................... 2,833 2,023 13,535
-------- -------- --------
Total liabilities .................................................................... 213,292 189,818 183,691
-------- -------- --------
Shareholders' and partners' equity ................................................... $164,425 $161,299 $154,650
======== ======== ========
</TABLE>
During 1994, 1993 and 1992, OMI chartered three vessels to OSTC for
$26,689,000, $24,269,000, and $27,260,000, respectively. These amounts are
included in revenues of OMI as the operations of OSTC are not consolidated.
During 1994, OMI wrote down its investment in Aurora Tankers Ltd. by
$1,250,000 to recognize the estimated loss on exiting the joint venture. The
Company has written off its investment in Ecomarine, $1,625,000 in 1993 and
$1,982,000 in 1992, and has entered into an agreement to sell its interest in
the partnership which is expected to conclude in the second quarter of 1995.
In 1994, the Company received distributions from Amazon of $2,450,000 and
Greeley of $27,000. In 1993, dividends of $4,410,000 and $258,000 were received
from Amazon and Aurora, respectively.
Certain of the loan agreements to which the Company's joint ventures are
party contain restrictive covenants requiring minimum levels of cash or cash
equivalents, working capital and net worth, maintenance of specified financial
ratios and collateral values, and restrict the ability of the joint ventures to
pay dividends to the Company. These loan agreements also contain various
provisions restricting the right of the joint ventures to make certain
investments, to place additional liens on their property, to incur additional
long-term debt, to make certain payments (including in certain instances,
dividends), to merge or to undergo a similar corporate reorganization, and to
enter into transactions with affiliated companies.
22
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
Note 3--Long-Term Debt and Credit Arrangements
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
------------------------
1994 1993
-------- --------
<S> <C> <C>
10.25% unsecured Senior Notes due 11/01/03 ............................. $160,650 $170,000
Bonds and mortgage notes secured by vessels:
5.35% to 10.1% payable in varying installments to 2006 ................ 20,013 36,390
Mortgage notes at variable rates above
the London Interbank Offering Rate ("LIBOR")
in varying installments to 2002(1) ................................... 83,852 82,181
Unsecured notes payable to an affiliate at 5.0% to 1996 ................ 7,624 8,881
Other .................................................................. 175
-------- --------
Total .................................................................. 272,139 297,627
Less current portion of long-term debt ................................. 18,900 15,302
-------- --------
Long-term debt ......................................................... $253,239 $282,325
======== ========
<FN>
-------------------
(1) Rates at December 31, 1994 ranged from approximately 5.125 percent to 7.75
percent.
</FN>
</TABLE>
Aggregate maturities during the next five years are $18,900,000,
$16,703,000, $15,930,000, $20,423,000 and $13,407,000.
In November 1993, the Company issued $170,000,000 in unsecured Senior Notes
("Notes") due November 1, 2003. The Notes are not redeemable prior to November
1, 1998; thereafter, the Notes are redeemable at the option of the Company at a
premium until November 1, 2000 when the Notes will be redeemable at face value,
plus accrued interest. During 1994, OMI repurchased $9,350,000 of the Notes for
a gain of $753,000. Bonds of a domestic subsidiary of OMI in the amount of
$20,013,000 at December 31, 1994 are collateralized by a mortgage on a vessel.
Bonds of domestic subsidiaries aggregating $36,390,000, including the amounts
due within one year, were collateralized by mortgages on specific vessels at
December 31, 1993. Such bonds are guaranteed as to the principal and interest by
the U.S. Government under the Title XI program. These security arrangements
restrict the subsidiary from, among other things, the withdrawal of capital, the
payment of common stock dividends and the extending of loans to affiliated
parties.
At December 31, 1994, vessels with a net book value of $248,487,000,
investments of $12,961,000 (included in Capital Construction and other
restricted funds in the accompanying consolidated balance sheets) and shares of
a subsidiary and a joint venture with an aggregate carrying value of $21,034,000
have been pledged as collateral on available lines of credit with banks and on
long-term debt issues.
Certain of the loan agreements of the Company's subsidiaries contain
restrictive covenants requiring minimum levels of cash or cash equivalents,
working capital and net worth, maintenance of specified financial ratios and
collateral values, and restrict the ability of the Company's subsidiaries to pay
dividends to the Company. These loan agreements also contain various provisions
restricting the right of OMI and/or its subsidiaries to make certain
investments, to place additional liens on the property of certain of OMI's
subsidiaries, to incur additional long-term debt, to make certain payments, to
merge or to undergo a similar corporate reorganization, and to enter into
transactions with affiliated companies. As dividend payments are limited to 50
percent of net income earned subsequent to issuance of the Notes, none of the
retained earnings at December 31, 1994 were available for payment of dividends.
At December 31, 1994, OMI had available and unused a total of $65,000,000
in four lines of credit with banks at variable rates, based on LIBOR.
23
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
OMI has entered into interest rate SWAP agreements to manage interest costs
and the risk associated with changing interest rates. At December 31, 1994 and
1993, the Company had outstanding three and four, respectively, interest rate
SWAP agreements with commercial banks. These agreements effectively change the
Company's interest rate exposure on floating rate loans to fixed rates ranging
from 7.83 percent to 9.02 percent. The differential to be paid or received on
these interest rate SWAP agreements is recognized as an adjustment to interest
expense over the lives of the agreements. The interest rate SWAP agreements have
various maturity dates from December 1995 to February 1999. The changes in the
notional principal amounts are as follows:
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Notional principal amount, beginning of year ........................... $ 69,650 $112,162
Reductions of notional amounts ......................................... (6,300) (6,300)
Maturity/termination of SWAPS .......................................... (25,000) (36,212)
-------- --------
Notional principal amount, end of year ................................. $ 38,350 $ 69,650
======== ========
</TABLE>
Interest expense pertaining to interest rate SWAPS for the years ended
December 31, 1994, 1993 and 1992 was $2,100,000, $2,914,000 and $4,332,000,
respectively.
The Company is exposed to credit loss in the event of non-performance by
other parties to the interest rate SWAP agreements. However, OMI does not
anticipate non-performance by the counter-parties.
Note 4--Fair Value of Financial Instruments
The estimated fair values of the Company's financial instruments at
December 31 are as follows:
<TABLE>
<CAPTION>
1994 1993
--------------------- ----------------------
Carrying Fair Carrying Fair
Value Value Value Value
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash and cash equivalents ................................. $ 31,797 $ 31,797 $ 45,321 $ 45,321
Marketable securities ..................................... 14,415 14,415 6,021 6,021
Capital Construction and other restricted
funds ................................................... 12,961 12,961 13,786 13,786
Long-term securities ...................................... 3,075 3,075 16,912 16,912
Long-term debt ............................................ 272,139 255,547 297,627 306,003
Unrecognized financial instruments:
Interest rate SWAPS in a net payable position ........... (631) (4,865)
</TABLE>
The fair value of long-term debt is estimated based on the quoted market
prices for the same or similar issues or on the current rates offered to the
Company for debt of the same remaining maturities. The fair value of interest
rate SWAPS (used for purposes other than trading) is the estimated amount the
Company would receive or pay to terminate SWAP agreements at the reporting date,
taking into account current interest rates and the current credit-worthiness of
the SWAP counter-parties.
24
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
Securities available-for-sale included in Marketable securities, Capital
Construction and other restricted funds, and Long-term securities consist of the
following components at December 31,
<TABLE>
<CAPTION>
1994 1993
---------------------- ----------------------
Fair Unrealized Fair Unrealized
Value Gain (Loss) Value Gain (Loss)
------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Current:
2,503,389 common shares of Noble Drilling
Corporation ("Noble") .................................... $14,394 $ 9,840
1,200,000 common shares of Chiles Offshore
Corporation ("Chiles") ................................... $ 6,000 $ 4,478
Miscellaneous Securities ................................... 21 21
Long-term:
125,000 common shares of SEACOR Holdings, Inc. ............. 2,484 609
12,500 B Capital shares of Sundal Collier & Co. a.s. ....... 591 591
2,885,077 common shares of Chiles .......................... 14,446 10,459
CCF:
Cash ....................................................... 933 115
U.S. Treasury Notes ........................................ 4,128 (468)
Preferred stocks ........................................... 7,000 (1,237) 9,001
Time Deposit ............................................... 900
Mutual Funds--adjustable rate mortgages .................... 4,670
------- -------
Total ........................................................ 8,744 14,937
Deferred taxes ............................................... (3,060) (5,228)
------- -------
Unrealized gain .............................................. $ 5,684 $ 9,709
======= =======
</TABLE>
On September 15, 1994, Noble merged with Chiles which resulted in the
receipt of 0.75 of Noble common stock for each share of Chiles common stock OMI
owned. In 1992, OMI recognized a $13,094,000 loss provision as a charge against
operations pertaining to the Chiles investment.
Excluded from the above schedule in 1993 are the 125,000 shares of SEACOR
Holdings, Inc., with a carrying value of $1,875,000, which were restricted from
sale until February 1995 and were not available-for-sale.
25
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
Note 5--Income Taxes
A summary of the components of the benefit for income taxes is as follows:
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
Current provision ............................................. $ 82 $ 2,990 $ 7,122
Deferred tax benefit .......................................... (22,387) (4,720) (14,040)
Tax benefit for dividends on unallocated ESOP shares 40
-------- ------- --------
Benefit for income taxes ...................................... $(22,305) $(1,730) $ (6,878)
======== ======= ========
</TABLE>
The benefit for income taxes varies from the statutory rates due to the
following:
<TABLE>
<CAPTION>
For the Years Ended December 31,
----------------------------------
1994 1993 1992
-------- ------- --------
<S> <C> <C> <C>
Tax benefit at statutory rate ................................. $(20,953) $(3,341) $ (6,140)
Equity in earnings of joint ventures (other than
Amazon/White Sea) net of dividends declared ................. (1,866) (1,314) (834)
Effect of change in Federal tax rate .......................... 3,044
Other ......................................................... 514 (119) 96
-------- ------- --------
Benefit for income taxes ...................................... $(22,305) $(1,730) $ (6,878)
======== ======= ========
</TABLE>
The components of deferred income taxes relate to the tax effects of
temporary differences as follows:
<TABLE>
<CAPTION>
December 31,
--------------------
1994 1993
-------- --------
<S> <C> <C>
Deferred tax liabilities:
Difference between book and tax basis in assets ............. $ 78,848 $ 95,019
Unrealized gain on investment ............................... 3,060 5,228
Capital Construction Fund ................................... 5,134 5,146
Previously excluded foreign income .......................... 10,285 7,873
Undistributed earnings of Amazon/White Sea .................. (324) 382
ESOP ........................................................ 552 680
Other ....................................................... 115 2,302
-------- --------
Total deferred tax liabilities .............................. 97,670 116,630
-------- --------
Deferred tax assets:
Unrealized losses on investments ............................ (3,249) (4,920)
Reserve for drydocking ...................................... (5,541) (4,757)
Deferred foreign deficits ................................... (993) (2,323)
Future lease liability reserve .............................. (6,930)
Other ....................................................... (1,509) (627)
-------- --------
Total deferred tax assets ................................... (18,222) (12,627)
-------- --------
Deferred income taxes ......................................... $ 79,448 $104,003
======== ========
</TABLE>
The Company has not provided deferred taxes on its equity in the
undistributed earnings of foreign corporate joint ventures accounted for under
the equity method other than those of Amazon and White Sea. These earnings are
considered by management to be permanently invested in the business. If the
earnings were not considered permanently invested, approximately $12,094,000
of additional deferred tax liabilities would have been provided at
December 31, 1994.
26
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
On August 2, 1993, Congress passed the Omnibus Budget Reconciliation Act of
1993, (the "Act"). The major component of the Act affecting OMI was the
retroactive increase in the marginal corporate tax rate from 34 percent to 35
percent, increasing 1993 deferred income taxes by $3,044,000 to comply with the
provisions of the Act.
Note 6--Treasury Stock
During 1994, OMI had 446,006 shares or $2,293,000 in treasury stock
representing OMI's proportionate share of Mosaic's ownership in OMI common stock
(see Note 2). Mosaic sold 600,000 shares of this stock during the year ended
December 31, 1994. OMI's share of this gain, or $767,000, was recorded in
capital surplus.
During 1992, OMI purchased 639,000 shares of the Company's common stock at
an aggregate price of $2,658,000. In addition, 666,000 shares were repurchased
from the ESOP and added to treasury and 1,291,000 shares were retired.
Note 7--Employee Stock Ownership Plan
In 1987, the Company established an Employee Stock Ownership Plan ("ESOP").
From November 1987 through February 1990, the ESOP trust purchased a total of
3,404,032 shares of OMI common stock for an aggregate purchase price of
$17,558,000. Such purchases were funded through an initial contribution of
$400,000 by the Company and $17,158,000 of bank debt, which was repaid with
contributions from the Company. Unearned compensation--employee stock ownership
trust in the accompanying consolidated balance sheets represents the cost of
unallocated shares held by the ESOP trust. Shares are allocated annually to
eligible participants based on a percentage of their annual salaries up to the
extent allowable by the Internal Revenue Code.
Note 8--Stock Option and Restricted Stock Plans
The Incentive Stock Option Plan ("ISO") of 1984 provides for the granting
of options to acquire up to 600,000 shares of the Company's common stock.
Options under this Plan are exercisable at the rate of 33 1/3 percent a year,
commencing one year from the date of grant and expiring ten years after the date
of grant.
The Non-Qualified Stock Option Plan of 1986 provides for the granting of up
to 500,000 shares at a price not less than fair market value at the date of
grant. Options are exercisable at the rate of 20 percent per year, commencing
one year from the date of grant, and expiring ten years after the date of grant.
Stock Appreciation Rights ("SARs") have been granted in tandem with all options
under this plan. Such rights offer recipients the alternative of electing to
cancel the related stock option, and to receive instead an amount in cash, stock
or a combination of cash and stock equal to the difference between the option
price and the market price of the Company's stock on the date at which the SAR
is exercised.
Proceeds received from the exercise of the options are credited to the
capital accounts. Compensation expense is recorded for options based on the
difference between market price on the day exercised and option prices.
Compensation expense relating to SARs is recorded with respect to the rights
based upon the quoted market value of the shares and exercise provisions.
Charges (benefits) to net income relating to SARs and/or options in 1994, 1993
and 1992 were ($36,000), $96,000 and ($126,000), respectively.
On June 12, 1990, the Board of Directors of OMI adopted, with shareholders'
approval, the 1990 Equity Incentive Plan (the "1990 Plan"). The total number of
shares that may be optioned or issued as restricted stock under the 1990 Plan
was 1,000,000 shares of OMI common stock with the maximum number of issuable
restricted stock being 300,000 shares, of which OMI awarded 15,000 shares in
1994, 15,000 shares in 1991, and 254,000 shares in 1990 to eligible key
employees under this Plan. On January 27, 1993 and December 18, 1990, OMI
granted options to acquire 131,000 and 606,000 shares, respectively, that are
not intended to qualify as incentive stock options which are exercisable at a
rate of 33 1/3 percent per year commencing one year from the date of grant, and
expiring ten years after the date of grant. Upon issuance of restricted common
stock under the 1990 Plan, unearned compensation, equivalent to the
27
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
market value at the date of grant, is charged to stockholders' equity and
subsequently amortized over the life of the award.
A summary of the changes in shares under option for all plans is as
follows:
Number of
Options Option Price
--------- ------------
Outstanding at January 1, 1992 ........ 917,679 $2.8125 to 9.875
Exercised ........................... (6,000) 5.125
Forfeited ........................... (4,267) 4.6875
-------
Outstanding at December 31, 1992 ...... 907,412 2.8125 to 9.875
Granted ............................. 131,000 4.50
Exercised ........................... (47,623) 2.8125 to 5.125
Forfeited ........................... (14,300) 5.125 to 9.875
-------
Outstanding at December 31, 1993 ...... 976,489 4.25 to 9.875
Granted ............................. 40,000 6.25
Exercised ........................... (66,834) 4.6875 to 5.125
Forfeited ........................... (34,400) 4.50 to 9.875
-------
Outstanding at December 31, 1994 ...... 915,255 $4.25 to 9.875
=======
Note 9--Retirement Benefits and Deferred Compensation
In June 1993, the Company terminated its non-contributory defined benefit
Pension Plan (the "Plan"). This termination resulted in a loss of $1,017,000,
which was recognized in 1993. All participants of the Plan were fully vested as
of the termination date. In April 1994, OMI settled the accumulated benefit
obligation through lump-sum payments of $2,950,000 to participants. The net
periodic pension costs in 1993 and 1992 were $158,000 and $252,000 respectively.
The terminated Plan was replaced by a 401(k) Plan. The 401(k) Plan is
available to full-time employees who meet the Plan's eligibility requirements.
This Plan is a defined contribution Plan, which permits employees to make
contributions up to two percent of their annual salaries. The Company matches
100 percent of the employee's contribution. Company contributions were $160,000
and $91,000 in 1994 and 1993, respectively.
In addition, certain domestic subsidiaries make contributions to union
sponsored multi-employer pension plans covering seagoing personnel.
Contributions to these plans amounted to approximately $1,020,000, $961,000 and
$746,000 for 1994, 1993 and 1992, respectively. If these subsidiaries were to
withdraw from the plans or the plans were to terminate, the subsidiaries would
be liable for a portion of any unfunded plan benefits that might exist. The
Company has been advised by the trustees of such plans that it has no withdrawal
liability as of December 31, 1994.
In December 1991, the Board of Directors adopted the OMI Corp. Key
Employees Deferred Compensation Plan which enables key employees of the Company
and its subsidiaries to defer the receipt of a portion of their compensation,
including salary, bonus and income derived from restricted stock and stock
options, until termination of employment or for a certain period of years. The
Company has included $303,000 and $134,000 in other accrued liabilities, at
December 31, 1994 and 1993, respectively, to reflect its liability under this
Plan.
Note 10--Operating Leases
Total rental expense, including contingent rentals, amounted to
$49,247,000, $40,350,000 and $42,647,000 for the years ended December 31, 1994,
1993 and 1992, respectively. Leases are primarily for vessels and office space.
28
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
The future minimum rental payments required, by year, under operating
leases subsequent to December 31, 1994, are as follows:
1995 ........................................................ $ 18,629
1996 ........................................................ 11,879
1997 ........................................................ 12,531
1998 ........................................................ 12,037
1999 ........................................................ 8,619
Thereafter .................................................. 58,613
--------
Total .................................................... $122,308
========
Time charters to third parties of the Company's owned and leased vessels
are accounted for as operating leases. Minimum future revenues, by year, to be
received subsequent to December 31, 1994 on these time charters are as follows:
1995 ......................................................... $61,193
1996 ......................................................... 23,847
1997 ......................................................... 8,037
---- -------
Total ..................................................... $93,077(1)
=======
------------------
(1) Minimum future revenues for later years are not included above due to the
charterers' options to continue the lease at such dates.
Note 11--Impairment and Provision for Loss on Lease Obligation
As part of OMI's periodic review of the recoverability of its investment in
its vessels, the Company determined that the carrying value of one of its
chemical/product vessels engaged in U.S. domestic shipping operations exceeded
the undiscounted forecasted future net cash flows from its operations. This
indicated that an impairment loss for this vessel should be recognized. This
loss was measured by the excess of the carrying value of the vessel over its
estimated fair value which was based on values provided by two ship brokers. The
carrying value of the vessel was reduced by $14,798,000, the amount of the
impairment loss which is reported as a separate item in the 1994 consolidated
statement of operations.
As part of this periodic review, the Company also determined that a similar
loss should be recognized for the forecasted loss from operations of an almost
identical vessel similarly engaged in U.S. domestic shipping operations which is
chartered in on an operating lease through 2006. The amount of the loss has been
estimated based on forecasted undiscounted cash flows, excluding from rent
expense an amount representative of the interest component of the lease
agreement, through the lease expiration date. This loss, estimated as
$19,800,000, was also reported as a separate item in the 1994 consolidated
statement of operations.
Note 12--Disposal of Assets
In July 1994, OMI sold three vessels for $23,750,000 and realized a gain of
$7,178,000.
In 1992, the Company entered into a sale/leaseback transaction on a vessel.
The Company received $11,500,000 in cash, of which $3,500,000 was used to pay
the mortgage on the vessel, a $2,000,000 secured note receivable paid December
1994, and a six-year lease at the current market rate. The gain of approximately
$2,001,000 is being amortized over the term of the lease.
29
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
The Gain (loss) on disposal of assets--net for the years ended December 31,
consists of the following:
1994 1993 1992
-------- -------- --------
Amortization of gain on sale/leaseback ..... $ 334 $ 334 $ 52
Gain on sale of vessels .................... 7,178 1,802 (1,322)
Net loss on disposal of other assets ....... (26) (318) (72)
Net (loss) gain on sale of CCF investments . (78) 77 196
Loss on sale of joint venture interests .... (1,554)
Gain on sale of marketable securities ...... 2,814 4,060
-------- -------- --------
Total ................................... $ 10,222 $ 4,401 $ (1,146)
======== ======== ========
Note 13--Financial Information Relating to Domestic and Foreign Operations
Presented below is certain information relating to OMI's operations:
Years ended December 31,
--------------------------------
1994 1993 1992
-------- -------- --------
Revenues:
Domestic ............................. $173,378 $199,118 $196,804
Foreign .............................. 93,418 71,361 68,725
-------- -------- --------
Total ............................. $266,796 $270,479 $265,529
======== ======== ========
Operating income (loss):
Domestic ............................. $(63,093) $(12,276) $ (2,419)
Foreign .............................. 15,009 14,178 14,614
-------- -------- --------
Total ............................. $(48,084) $ 1,902 $ 12,195
Identifiable assets:
Domestic ............................. $228,162 $299,860 $271,172
Foreign .............................. 376,970 371,656 373,271
-------- -------- --------
Total ............................. $605,132 $671,516 $644,443
======== ======== ========
Capital expenditures:
Domestic ............................. $ 2,589 $ 15,199 $ 5,920
Foreign .............................. 12,729 21,349 16,704
-------- -------- --------
Total ............................. $ 15,318 $ 36,548 $ 22,624
======== ======== ========
Depreciation and amortization:
Domestic ............................. $ 19,953 $ 20,258 $ 21,170
Foreign .............................. 17,817 15,183 14,313
-------- -------- --------
Total ............................. $ 37,770 $ 35,441 $ 35,483
======== ======== ========
The operating loss pertaining to domestic operations for the year ended
December 31, 1994 includes the adjustments for impairment and provision for loss
on lease obligation (see Note 11).
Investments in and net receivables from foreign subsidiaries amounting to
$292,286,000, $395,988,000 and $274,109,000 at December 31, 1994, 1993 and 1992,
respectively, have been excluded from domestic assets as they have been
eliminated in consolidation.
30
<PAGE>
OMI CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
(All tabular amounts are in thousands of dollars)
Voyage revenues include revenue from major customers as follows:
Years ended December 31,
-----------------------------
1994 1993 1992
------- ------- -------
Federal Government Program, PL480 $40,573 $75,017 $28,273
Military Sealift Command 2,188 192 23,942
------- ------- -------
Total $42,761 $75,209 $52,215
======= ======= =======
Note 14--Commitments and Contingencies
OMI and certain subsidiaries are defendants in various actions arising from
shipping operations. Such actions are covered by insurance or, in the opinion of
management, after review with counsel, are of such nature that the ultimate
liability, if any, would not have a material adverse effect on the consolidated
financial statements.
In September 1988, the Board of Directors adopted a Separation Allowance
Program providing for severance benefits to all non-union employees other than
non-resident aliens, leased employees, directors who are not employees of the
Company or employees with individual severance plans in the event there is a
change of control in OMI and such employees are thereafter terminated without
cause or transferred or their position is significantly changed. Severance
benefits include a lump-sum payment equal to the employee's average monthly
wages immediately prior to the date of termination times the lesser of 24 or one
for each year of full-time employment by the Company (but not less than six).
The Company has employment agreements with four key officers. Each of the
employment agreements provide that if the employee is terminated without cause,
voluntarily terminates his employment within 90 days of a relocation or
reduction in compensation or responsibilities, dies or is disabled, such
employee will continue to receive base salary and other benefits until December
31, 1995 or twelve months from the date of termination, whichever is later. In
addition, if any such employee is terminated without cause (other than for
reasons of disability) within two years of a Change of Control (as defined in
the Company's Separation Allowance Program), the Company will pay such employee
an amount equal to three times the sum of his then current base salary and the
incentive bonus paid during the previous twelve months. The aggregate commitment
for future salaries, excluding bonuses, under these employment agreements is
approximately $977,000 at December 31, 1994. The maximum contingent liability
for salary and incentive compensation in the event of a change in control is
approximately $2,623,000 at December 31, 1994. The Company has recently entered
into employment agreements with additional employees.
OMI and a joint venture partner have contracted to construct a vessel which
is being built in the Peoples Republic of China for a cost of approximately
$54,400,000. The vessel is scheduled to be delivered in the second quarter of
1996.
OMI acts as a guarantor for a portion of the debt incurred by joint
ventures with affiliates of two of its joint venture partners. Such debt was
approximately $110,697,000 at December 31, 1994 with OMI's share of such
guarantees being approximately $54,547,000. OMI also is a guarantor for one of
its joint venture's revolving line of credit of $4,000,000, with a guarantee to
OMI from its joint venture partner of $2,000,000.
The Company and its joint venture partners have committed to fund any
working capital deficiencies which may be incurred by their joint venture
investments. At December 31, 1994, no such deficiencies have been funded.
Note 15--Subsequent Event
On March 3, 1995, the Company sold all of its shares of Noble for
$12,360,000 recognizing a gain of $7,806,000.
31
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of OMI Corp.:
We have audited the accompanying consolidated balance sheets of OMI Corp.
and its subsidiaries as of December 31, 1994 and 1993 and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1994. Our audits also
included the financial statement schedules listed in Item 14. These financial
statements and financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of the companies at December 31,
1994 and 1993, and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.
DELOITTE & TOUCHE LLP
New York, New York
February 22, 1995
(March 3, 1995 as to Note 15)
32
<PAGE>
Item 8. Supplementary Data
<TABLE>
<CAPTION>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)
1994 Quarter Ended 1993 Quarter Ended
--------------------------------------- -------------------------------------------
March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31
-------- ------- -------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues .......................... $66,688 $67,193 $64,635 $ 68,280 $67,838 $68,046 $69,099 $65,496
------- ------- ------- -------- ------- ------- ------- -------
Operating income (loss) ........... 1,628 (3,430) (3,082) (43,200)(2) 2,649 392 1,075 (2,214)
------- ------- ------- -------- ------- ------- ------- -------
Net income (loss) ................. $ 1,763 $(5,375) $ (498) $(30,229) $ 1,604 $ (519) $(1,897)(3) $(7,935)
======= ======= ======= ======== ======= ======= ======= =======
Net income (loss) per
common share(1) .................. $(0.06) $(0.18) $(0.02) $(0.99)(2) $0.05 $(0.02) $(0.06)(3) $(0.26)
======= ======= ======= ======== ======= ======= ======= =======
Weighted average number of shares
of common stock outstanding ...... 30,658 30,682 30,406 30,532 30,568 30,579 30,601 30,603
======= ======= ======= ======== ======= ======= ======= =======
----------------
<FN>
(1) Earnings per share are based on stand-alone quarters.
(2) Includes provision for losses due to the impaired value of a vessel of
$14,798,000 and lease obligation of $19,800,000.
(3) Includes a charge of $3,044,000 to increase deferred income taxes from a
marginal tax rate of 34 percent to 35 percent, to comply with provisions of
the Omnibus Budget Reconciliation Act of 1993.
</FN>
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
OMI CORP.
CONDENSED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(In Thousands)
For the Years Ended December 31,
--------------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenues:
Voyage revenues ................................... $ 10,001 $ 10,462 $ 7,532
Other income ...................................... 5,695 5,425 5,189
-------- -------- --------
Total revenues .................................. 15,696 15,887 12,721
-------- -------- --------
Operating Expenses:
Vessel and voyage ................................. 13,348 14,275 9,705
Depreciation and amortization ..................... 1,552 1,706 1,320
General and administrative ........................ 16,106 13,731 14,903
-------- -------- --------
Total operating expenses ........................ 31,006 29,712 25,928
-------- -------- --------
Operating loss ..................................... (15,310) (13,825) (13,207)
-------- -------- --------
Other Income (Expense):
Gain (loss) on disposal of assets--net ............ 3 (411) (27)
Interest expense .................................. (19,231) (5,149) (2,319)
Interest income ................................... 731 392 424
Minority interest in income of subsidiary ......... (304) (649) (244)
Other--net ........................................ 753
-------- -------- --------
Net other expense ............................... (18,048) (5,817) (2,166)
-------- -------- --------
Loss before income taxes and equity in operations
of subsidiaries ................................... (33,358) (19,642) (15,373)
Benefit for income taxes ........................... 22,305 1,730 6,878
-------- -------- --------
Loss before equity in operations of subsidiaries ... (11,053) (17,912) (8,495)
Equity in operations of subsidiaries ............... (26,812) 9,165 (2,929)
-------- -------- --------
Net loss ........................................... (37,865) (8,747) (11,424)
Retained earnings, beginning of year ............... 64,496 73,243 89,011
Dividends on common stock .......................... (4,384)
Tax benefit for dividends on unallocated ESOP shares 40
-------- -------- --------
Retained earnings, end of year ..................... $ 26,631 $ 64,496 $ 73,243
======== ======== ========
</TABLE>
See notes to condensed financial statements.
34
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
OMI CORP.
CONDENSED BALANCE SHEETS
(In Thousands)
December 31,
---------------------
1994 1993
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents (Note 2) .................................................................. $ 10,789 $ 26,438
Marketable securities ............................................................................... 21 21
Prepaid expenses and other current assets ........................................................... 3,415 4,274
-------- --------
Total current assets ............................................................................. 14,225 30,733
-------- --------
Capital construction and other restricted funds ...................................................... 3,498 3,673
Investment in (at equity) and net advances to subsidiaries ........................................... 407,139 464,030
Vessel and other property:
Vessel .............................................................................................. 8,643 8,462
Other property ...................................................................................... 6,925 6,521
-------- --------
Total vessel and other property .................................................................. 15,568 14,983
Less accumulated depreciation ....................................................................... 4,964 3,413
-------- --------
Vessel and other property--net ...................................................................... 10,604 11,570
-------- --------
Other assets and deferred charges .................................................................... 8,846 8,848
-------- --------
Total ............................................................................................ $444,312 $518,854
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................................................................... $ 770 $ 84
Accrued liabilities:
Vessel and voyage .................................................................................. 1,065 649
Interest ........................................................................................... 2,695 2,894
Other .............................................................................................. 3,040 2,142
Current portion of long-term debt (Note 3) .......................................................... 6,027 2,350
-------- --------
Total current liabilities ......................................................................... 13,597 8,119
-------- --------
Advance time charter revenues and other liabilities .................................................. 302 438
Long-term debt (Note 3) .............................................................................. 168,247 183,531
Deferred income taxes ................................................................................ 79,448 104,003
Minority interest in subsidiary ...................................................................... 3,042 2,737
Stockholders' equity:
Common stock ........................................................................................ 15,336 15,307
Capital surplus ..................................................................................... 129,919 128,900
Retained earnings ................................................................................... 26,631 64,496
Cumulative translation adjustment--net .............................................................. 4,912 4,912
Unearned compensation--employee stock ownership trust ............................................... (663) (2,159)
Unearned compensation--restricted stock ............................................................. (941) (1,057)
Unrealized gain on securities, net of deferred tax of $3,060 in 1994
and $5,228 in 1993 ................................................................................. 5,684 9,709
Treasury stock ...................................................................................... (1,202) (82)
-------- --------
Total stockholders' equity ....................................................................... 179,676 220,026
-------- --------
Total ............................................................................................ $444,312 $518,854
======== ========
</TABLE>
See notes to condensed financial statements.
35
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE I
OMI CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
For the Years Ended December 31,
------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss .................................................. $ (37,865) $ (8,747) $(11,424)
Adjustments to reconcile net loss to net cash (used)
provided by operating activities:
Decrease in deferred income taxes ......................... (22,387) (4,720) (14,040)
Depreciation and amortization ............................. 1,552 1,706 1,320
Amortization of unearned compensation ..................... 1,630 456 148
(Gain) loss on disposal of assets--net .................... (3) 411 27
Other--net ................................................ (753)
Equity in operations of subsidiaries over dividends
received ................................................. 43,880 9,696 17,173
Changes in assets and liabilities--net ...................... 9,300 6,825 10,963
--------- --------- --------
Net cash (used) provided by operating activities ............ (4,646) 5,627 4,167
--------- --------- --------
Cash Flows from Investing Activities:
Proceeds from disposition of vessel ........................ 1,480
Additions to vessel and other property ..................... (615) (8,852) (699)
Proceeds received from sale of marketable securities ....... 12 134
Proceeds and interest received and reinvested in
Capital Construction and other restricted funds ........... (134) (166)
Contributions to subsidiaries .............................. (123,700) (5,950)
--------- --------- --------
Net cash flows used by investing activities ................. (749) (131,226) (6,515)
--------- --------- --------
Cash Flows from Financing Activities:
Cash proceeds from issuance of long-term debt .............. 230,653 24,290
Net proceeds from issuance of common stock ................. 263 218 29
Purchase of treasury stock ................................. (1) (2,658)
Payments on long-term debt ................................. (10,517) (77,001) (14,756)
Dividends paid ............................................. (2,140) (4,480)
--------- --------- --------
Net cash flows (used) provided by financing activities ..... (10,254) 151,729 2,425
--------- --------- --------
Net (decrease) increase in cash and cash equivalents ....... (15,649) 26,130 77
Cash and cash equivalents, beginning of year ............... 26,438 308 231
--------- --------- --------
Cash and cash equivalents, end of year ..................... $ 10,789 $ 26,438 $ 308
========= ========= ========
</TABLE>
See notes to condensed financial statements.
36
<PAGE>
SCHEDULE I
OMI CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
For The Three Years Ended December 31, 1994
1. The condensed financial statements present the separate financial data
(parent only) of OMI Corp. ("OMI" or the "Company"). All domestic and foreign
subsidiaries which are more than 20% owned and investments in joint ventures are
accounted for by the equity method.
See Notes to Consolidated Financial Statements on pages 20 through 31 of
OMI's 1994 Annual Report on Form 10-K.
Certain reclassifications have been made to the 1993 and 1992 financial
statements to conform to the 1994 presentation.
2. Cash Flows--Cash equivalents represent liquid investments which mature
within 90 days. The carrying amount approximates fair value.
During the years ended December 31, 1994, 1993, and 1992, interest paid
totaled approximately $19,430,000, 2,305,000 and $2,334,000, respectively. For
the years ended December 31, 1993 and 1992, income taxes paid were approximately
$6,413,000, and $7,628,000, respectively. There were no income taxes paid during
1994.
3. Long-Term Debt--Long-term debt as of December 31, 1994 and 1993 consists
of the following:
1994 1993
-------- --------
(dollars in thousands)
10.25% unsecured Senior Notes due 11/01/03 ............... $160,650 $170,000
Mortgage note at a variable rate above the London
Interbank Offering Rate ("LIBOR") in varying
installments to 1998(1) ................................ 6,000 7,000
Unsecured notes payable to an affiliate at 5.0% to 1996 .. 7,624 8,881
-------- --------
Total ............................................... 174,274 185,881
Less current portion of long-term debt ................... 6,027 2,350
-------- --------
Long-term debt............................................ $168,247 $183,531
======== ========
-------------
(1) Rate at December 31, 1994 was 6.6875 percent.
In November 1993, the Company issued $170,000,000 in unsecured Senior Notes
("Notes") due November 1, 2003. The Notes are not redeemable prior to November
1, 1998; thereafter, the Notes are redeemable at the option of the Company at a
premium until November 1, 2000 when the Notes will be redeemable at face value,
plus accrued interest. During 1994, OMI repurchased $9,350,000 of the Notes for
a gain of $753,000.
4. Lines of Credit--At December 31, 1994, the Company had available and
unused $25,000,000 in two lines of credit with banks at variable rates, based on
LIBOR.
37
<PAGE>
WILOMI, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
----
CONSOLIDATED FINANCIAL STATEMENTS:
Consolidated Balance Sheets at December 31, 1994 and 1993 ............. 39
Statements of Consolidated Income and Retained Earnings for the years
ended December 31, 1994, 1993 and 1992 .............................. 40
Statements of Consolidated Cash Flows for the years ended
December 31, 1994, 1993 and 1992 .................................... 41
Notes to Consolidated Financial Statements ............................ 42-43
INDEPENDENT AUDITORS' REPORT ............................................ 44
38
<PAGE>
<TABLE>
<CAPTION>
WILOMI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31,
------------------------------
Notes 1994 1993
------- ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash (including cash equivalents of $1,500,000 in 1994 and
$2,400,000 in 1993) ............................................... 2 $ 9,655,328 $ 7,013,960
Advances to masters ................................................. 94,088 89,026
Receivables:
Traffic ........................................................... 272,404 925,328
Other ............................................................. 47,956 352,930
Notes due from affiliates ........................................... 4 10,535,400 2,755,102
Prepaid expenses .................................................... 568,375 922,827
------------ ------------
Total current assets ............................................ 21,173,551 12,059,173
------------ ------------
RECEIVABLES FROM AFFILIATES ........................................... 4 1,548,275 225,192
VESSELS AND VESSEL UNDER CONSTRUCTION
(net of accumulated depreciation of $14,896,518 in 1994 and
$10,069,152 in 1993) .............................................. 2, 3 118,791,496 120,682,447
NOTES DUE FROM AFFILIATES ............................................. 4 5,995,600 16,409,898
OTHER ASSETS .......................................................... 918,756 1,098,586
------------ ------------
TOTAL ASSETS .......................................................... $148,427,678 $150,475,296
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable .................................................... $ 398,282 $ 408,002
Accrued expenses .................................................... 1,854,668 2,241,373
Accrued interest payable ............................................ 2,026,382 1,562,057
Other current liabilities ........................................... 24,678 19,683
Current portion of long-term debt ................................... 6,446,000 6,064,000
------------ ------------
Total current liabilities ....................................... 10,750,010 10,295,115
------------ ------------
ADVANCE TIME CHARTER REVENUES AND OTHER LIABILITIES ................... 562,800 500,656
LONG-TERM DEBT ........................................................ 5 83,837,000 90,283,000
STOCKHOLDERS' EQUITY:
Common stock--$1 par value; 10,000 shares authorized and
outstanding ....................................................... 10,000 10,000
Capital surplus ..................................................... 1,080,577 1,080,577
Retained earnings ................................................... 52,187,291 48,305,948
------------ ------------
Total stockholders' equity ...................................... 53,277,868 49,396,525
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................ $148,427,678 $150,475,296
============ ============
</TABLE>
See notes to consolidated financial statements.
39
<PAGE>
<TABLE>
<CAPTION>
WILOMI, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME AND RETAINED EARNINGS
For the Years Ended December 31,
-------------------------------------------
Notes 1994 1993 1992
----- ----------- ----------- -----------
<S> <C> <C> <C> <C>
VOYAGE REVENUES .................................... 2 $20,891,795 $23,831,942 $17,159,445
----------- ----------- -----------
OPERATING EXPENSES:
Vessel and voyage ................................. 7,348,626 9,426,685 7,845,194
Depreciation ...................................... 4,827,798 4,809,448 3,314,786
General and administrative ........................ 506,645 504,191 323,817
----------- ----------- -----------
Total operating expenses ....................... 12,683,069 14,740,324 11,483,797
----------- ----------- -----------
INCOME FROM OPERATIONS ............................. 8,208,726 9,091,618 5,675,648
GAIN ON SALE OF VESSEL ............................. 3 9,848,317
----------- ----------- -----------
INCOME BEFORE INTEREST EXPENSE ..................... 8,208,726 9,091,618 15,523,965
----------- ----------- -----------
NET Interest Expense:
Interest expense .................................. 5,483,581 4,827,706 4,126,453
Interest income ................................... 4 (1,156,198) (1,413,957) (1,248,308)
----------- ----------- -----------
Net interest expense ........................... 4,327,383 3,413,749 2,878,145
----------- ----------- -----------
NET INCOME ......................................... 3,881,343 5,677,869 12,645,820
RETAINED EARNINGS, BEGINNING OF YEAR ............... 48,305,948 42,628,079 36,084,300
DIVIDENDS DECLARED ................................. 4 6,102,041
----------- ----------- -----------
RETAINED EARNINGS, END OF YEAR ..................... $52,187,291 $48,305,948 $42,628,079
=========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
40
<PAGE>
<TABLE>
<CAPTION>
WILOMI, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
For the Years Ended December 31,
----------------------------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income ............................................. $ 3,881,343 $ 5,677,869 $ 12,645,820
Adjustments to reconcile net income to net cash flows
provided (used) by operating activities:
Depreciation .......................................... 4,827,798 4,809,448 3,314,786
Gain on sale of vessel ................................ (9,848,317)
Changes in assets and liabilities:
Decrease (increase) in receivables and
advances to masters .................................. 952,836 433,850 (1,618,586)
Decrease (increase) in prepaid expenses ............... 354,452 49,706 (791,861)
Increase in accounts payable and other
current liabilities .................................. 72,895 1,326,378 1,807,646
Other assets and liabilities--net ..................... (1,079,052) (2,685,524) 839,912
------------ ------------ ------------
Net cash flows provided by operating activities ..... 9,010,272 9,611,727 6,349,400
------------ ------------ ------------
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES:
Additions to vessels including vessel under construction (2,938,904) (53,663) (97,349,609)
Proceeds from sale of vessel ........................... 47,530,000
Proceeds on notes due from affiliates .................. 2,634,000 2,500,000
Payments on notes due from affiliates .................. (19,165,000)
------------ ------------ ------------
Net cash flows (used) provided by investing
activities ......................................... (304,904) 2,446,337 (68,984,609)
------------ ------------ ------------
CASH FLOWS (USED) PROVIDED BY FINANCING ACTIVITIES:
Cash proceeds from issuance of long-term debt .......... 123,857,500
Payments on long-term debt ............................. (6,064,000) (5,887,000) (57,468,568)
Dividends paid ......................................... (2,500,000) (1,000,000)
------------ ------------ ------------
Net cash flows (used) provided by financing
activities ......................................... (6,064,000) (8,387,000) 65,388,932
------------ ------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS ............... 2,641,368 3,671,064 2,753,723
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ............ 7,013,960 3,342,896 589,173
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR .................. $ 9,655,328 $ 7,013,960 $ 3,342,896
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
41
<PAGE>
WILOMI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Years Ended December 31, 1994
1. Company
Wilomi, Inc. and subsidiaries (the "Company" or "Wilomi") are jointly-owned
by Loire Transport, Inc., a wholly-owned subsidiary of OMI Corp. ("OMI"), and
K/S Wilhelmsen Transport and Trading A/S ("Wilhelmsen") with interests of 49 and
51 percent, respectively. The joint venture, incorporated on May 15, 1987, owns
and operates commercial vessels.
2. Summary of Significant Accounting Policies
Basis of Presentation--The consolidated financial statements include all
subsidiaries of the Company. All significant intercompany accounts and
transactions have been eliminated in consolidation.
Operating Revenues and Expenses--Voyage revenues and expenses are
recognized on the percentage of completion method of accounting based on voyage
costs incurred to date to estimated total voyage costs. Estimated losses on
voyages are provided in full at the time such losses become evident.
Special survey and drydock expenses are accrued and charged to operating
expenses over the survey cycle, which is generally a three year period.
Vessels and Vessel Under Construction--Vessels are recorded at cost;
including interest on funds borrowed to finance the construction of new vessels.
Depreciation is provided on the straight-line method based on the vessel's
estimated useful life of 25 years, up to the vessel's estimated salvage value.
Salvage value is based upon the vessel's light weight tonnage, multiplied by a
scrap rate.
The Company periodically reviews the book value of its vessels and its
ability to recover the remaining book value of the vessels using estimated
undiscounted cash flow over the remaining life of each vessel.
Federal Income Taxes--No provision has been made for Federal income taxes.
The income of the Company is not generally subject to tax as a result of various
provisions of the Internal Revenue Code. Additionally, the country in which the
Company is incorporated exempts shipping and maritime operations from taxation.
Cash Flows--Cash equivalents represent liquid investments which mature
within 90 days. The carrying amount approximates fair value.
During the years ended December 31, 1994, 1993 and 1992, the Company paid
interest of $5,019,256, $4,605,435 and $4,097,261, respectively.
3. Vessels and Vessels Under Construction
In November 1993, the Company entered into an agreement to construct a new
vessel at an approximate cost of $54,400,000. As of December 31, 1994,
construction costs were $2,719,000. The vessel is expected to be delivered in
1996.
During 1992, the Company took delivery of three vessels which had been
under construction in 1991. One vessel, with a cost of $37,681,683, was sold in
April, 1992 at a gain of $9,848,317.
4. Related Party Transactions
OMI acted as technical and commercial manager for two vessels owned during
1994 and 1993 and three vessels owned during 1992. Management fees to OMI
relating to years ended December 31, 1994, 1993 and 1992 were $288,000, $288,000
and $255,827, respectively.
42
<PAGE>
WILOMI, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
For the Three Years Ended December 31, 1994
Wilhelmsen acted as manager for one vessel owned during 1994 and 1993.
Management fees to Wilhelmsen in each of the years ended December 31, 1994 and
1993 were $144,000.
The Company declared dividends of $5,102,041 and $1,000,000 in 1992. In
1992, the Company forgave a $2,602,041 note due from Wilhelmsen in lieu of
payment of a portion of the dividends.
Notes due from affiliates are as follows:
1994 1993
----------- -----------
Wilhelmsen ......................... $ 8,907,150 $10,284,150
OMI ................................ 7,623,850 8,880,850
----------- -----------
16,531,000 19,165,000
Less: current portion .............. 10,535,400 2,755,102
----------- -----------
Notes due from affiliates .......... $ 5,995,600 $16,409,898
=========== ===========
Interest rate ...................... 5% 6.5%
Included in interest income are the following amounts attributable to these
notes: $906,000, $1,263,000 and $836,000 for the years ended December 31, 1994,
1993 and 1992, respectively.
5. Long-Term Debt
Long-term debt at December 31, 1994 and 1993 consists of the following:
1994 1993
----------- -----------
Mortgage notes on vessels at
variable rates above LIBOR,
payable semi-annually to 2002* ... $90,283,000 $96,347,000
Less current portion of long-term
debt ............................. 6,446,000 6,064,000
----------- -----------
Long-term debt ..................... $83,837,000 $90,283,000
=========== ===========
--------------
* Rates at December 31, 1994 ranged from 5.9375 percent to 6.9375 percent.
Aggregate maturities during the next five years are $6,446,000, $6,654,000,
$6,879,000, $7,122,000 and $7,385,000.
At December 31, 1994, the Company had available $10,000,000 in a short-term
line of credit with a bank at a variable rate based on LIBOR.
The fair value of long-term debt at December 31, 1994 and 1993 approximates
its carrying value.
6. Commitments and Contingencies
The Company acts as a guarantor on debt incurred by an affiliated company.
Such debt was $3,000,000 at December 31, 1994.
43
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Wilomi, Inc. and Subsidiaries:
We have audited the accompanying consolidated balance sheets of Wilomi,
Inc. and subsidiaries as of December 31, 1994 and 1993 and the related
statements of consolidated income and retained earnings and of cash flows for
each of the three years in the period ended December 31, 1994. These financial
statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Companies at December 31, 1994 and 1993,
and the results of their operations and their cash flows for each of the three
years in the period ended December 31, 1994 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 22, 1995
44
<PAGE>
AMAZON TRANSPORT, INC.
TABLE OF CONTENTS
Page
----
FINANCIAL STATEMENTS:
Balance Sheets at December 31, 1994 and 1993 ......................... 46
Statements of Operations and Retained Earnings (Deficit) for the years
ended December 31, 1994, 1993 and 1992 .............................. 47
Statements of Cash Flows for the years ended December 31, 1994,
1993 and 1992 ....................................................... 48
Notes to Financial Statements ........................................ 49
INDEPENDENT AUDITORS' REPORT .......................................... 50
45
<PAGE>
<TABLE>
<CAPTION>
AMAZON TRANSPORT, INC.
BALANCE SHEETS
ASSETS
December 31,
-----------------------------
Notes 1994 1993
----- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ........................................... 2 $ 2,621,778 $ 7,873,324
Advances to masters ................................................. 146,000 31,971
Receivables:
Traffic ............................................................ 229,547 530,721
Other .............................................................. 117,167 107,258
Prepaid expenses and other current assets ........................... 349,589 497,579
----------- -----------
Total current assets ............................................. 3,464,081 9,040,853
----------- -----------
VESSEL AT COST ....................................................... 2
Vessel .............................................................. 21,399,261 21,394,270
Less accumulated depreciation ....................................... 5,526,226 4,906,994
----------- -----------
Vessel--net ........................................................ 15,873,035 16,487,276
----------- -----------
OTHER ASSETS ......................................................... 91 5,866
----------- -----------
TOTAL ASSETS ..................................................... $19,337,207 $25,533,995
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES--Accounts payable and accrued liabilities ........ $ 817,414 $ 2,113,435
PAYABLE TO AFFILIATES ................................................ 3 16,980 14,707
OTHER LIABILITIES .................................................... 339,388
STOCKHOLDERS' EQUITY:
Common stock--$5 par value; authorized 5,000 shares,
outstanding 180 shares ............................................. 900 900
Capital surplus ..................................................... 21,194,085 21,194,085
Retained (deficit) earnings ......................................... 4 (3,031,560) 2,210,868
----------- -----------
Total stockholders' equity ....................................... 18,163,425 23,405,853
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ....................... $19,337,207 $25,533,995
=========== ===========
</TABLE>
See notes to financial statements.
46
<PAGE>
<TABLE>
<CAPTION>
AMAZON TRANSPORT, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
For the Years Ended December 31,
---------------------------------------
Notes 1994 1993 1992
----- ---- ---- ----
<S> <C> <C> <C> <C>
VOYAGE REVENUES ............................. 2 $ 6,760,840 $11,301,039 $11,425,394
----------- ----------- -----------
OPERATING EXPENSES:
Vessel and voyage .......................... 2 6,266,407 5,608,645 3,022,774
Depreciation ............................... 2 619,232 613,636 604,741
General and administrative ................. 227,425 220,006 216,154
----------- ----------- -----------
Total operating expenses ................. 7,113,064 6,442,287 3,843,669
----------- ----------- -----------
(LOSS) INCOME BEFORE OTHER INCOME ........... (352,224) 4,858,752 7,581,725
OTHER INCOME:
Interest ................................... 109,611 219,792 674,448
Miscellaneous .............................. 185 566 61,007
----------- ----------- -----------
Total other income ....................... 109,796 220,358 735,455
----------- ----------- -----------
NET (LOSS) INCOME ........................... (242,428) 5,079,110 8,317,180
RETAINED EARNINGS, BEGINNING OF YEAR ........ 2,210,868 6,131,758 7,314,578
DIVIDENDS DECLARED .......................... 4 (5,000,000) (9,000,000) (9,500,000)
----------- ----------- -----------
RETAINED (DEFICIT) EARNINGS, END OF YEAR..... $(3,031,560) $ 2,210,868 $ 6,131,758
=========== =========== ===========
</TABLE>
See notes to financial statements.
47
<PAGE>
<TABLE>
<CAPTION>
AMAZON TRANSPORT, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
---------------------------------------------
1994 1993 1992
------------ ------------ -------------
<S> <C> <C> <C>
CASH FLOWS (USED) PROVIDED BY OPERATING ACTIVITIES:
Net (loss) income ................................... $ (242,428) $ 5,079,110 $ 8,317,180
Adjustments to reconcile net (loss) income to net
cash flows provided (used) by operating activities:
Depreciation ...................................... 619,232 613,636 604,741
Change in assets and liabilities:
Decrease (increase) in receivables and advances
to masters ...................................... 177,236 (200,927) (1,337)
Decrease (increase) in prepaid expenses and
other current assets ............................ 147,990 (218,395) 1,277,248
Decrease in receivable from affiliate ............ 1,097,268
Decrease (increase) in other assets .............. 5,775 67,846 (73,712)
(Decrease) increase in accounts payable and
accrued liabilities ............................. (1,296,021) 1,280,402 86,853
Increase (decrease) in payable to affiliates ..... 2,273 (25,318) (190,930)
Increase (decrease) in advanced time charter
revenue and other liabilities ................... 339,388 (511,897) (523,263)
------------ ------------ ------------
Net cash (used) provided by operating activities ... (246,555) 6,084,457 10,594,048
------------ ------------ ------------
CASH FLOWS (USED) PROVIDED BY INVESTING ACTIVITIES:
Additions to vessel ................................ (4,991) (121,503) (133,845)
Loans to affiliates ................................ (9,000,000)
Proceeds received from affiliate ................... 4,410,000
------------ ------------ ------------
Net cash (used) provided by investing activities ... (4,991) 4,288,497 (9,133,845)
------------ ------------ ------------
CASH FLOWS USED BY FINANCING ACTIVITIES:
Dividends paid .................................... (5,000,000) (13,655,000) (55,557)
------------ ------------ ------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS ........................................ (5,251,546) (3,282,046) 1,404,646
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR ........ 7,873,324 11,155,370 9,750,724
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR .............. $ 2,621,778 $ 7,873,324 $ 11,155,370
============ ============ ============
</TABLE>
See notes to financial statements.
48
<PAGE>
AMAZON TRANSPORT, INC.
NOTES TO FINANCIAL STATEMENTS
For the Three Years Ended December 31, 1994
1. COMPANY
Amazon Transport, Inc. (the "Company" or "Amazon") is jointly owned by a
subsidiary of Universal Bulk Carriers, Inc. ("UBC"), a wholly-owned subsidiary
of OMI Corp. ("OMI"), and Bergesen d.y. A/S ("Bergesen") with interests of 49
and 51 percent, respectively. The Company began operating as a joint venture on
December 3, 1988 for the purpose of owning and chartering commercial vessels.
The Company owned and operated one vessel, the Settebello, for all periods
presented.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Operating Revenues and Expenses--Voyage revenues and expenses are
recognized on the percentage of completion method of accounting based on voyage
costs incurred to date to estimated voyage costs. Estimated losses are provided
in full at the time such losses become evident.
Special survey and drydock expenses are accrued and charged to operating
expenses over the survey cycle, which is generally a three year period.
Vessel--The vessel is recorded at cost. Depreciation is provided on the
straight-line method based on the estimated 25 year useful life of the vessel up
to the estimated salvage value. Salvage value is based upon the vessel's light
weight tonnage multiplied by a scrap rate.
The Company periodically reviews the book value of its vessel and its
ability to recover the remaining book value of the vessel using estimated
undiscounted cash flows over the remaining life of the vessel.
Federal Income Taxes--No provision has been made for Federal income taxes.
The income of the Company is not generally subject to tax as a result of various
provisions of the Internal Revenue Code. Additionally, the country in which the
Company is incorporated exempts shipping and maritime operations from taxation.
Cash Flows--Cash equivalents represent liquid investments which mature
within 90 days. The carrying amount approximates fair value. The Company paid no
interest in 1994, 1993 and 1992.
3. RELATED PARTY TRANSACTIONS
The Company has entered into management service agreements with OMI and
Bergesen, who act as technical and commercial managers of the Settebello. The
Company paid OMI and Bergesen management fees of $200,000 for each of the years
ended December 31, 1994, 1993, and 1992.
The following table summarizes balances due to affiliated companies at
December 31:
1994 1993
------- -------
Payable to affiliates:
OMI .............................. $16,980 $14,646
UBC .............................. 61
------- -------
$16,980 $14,707
======= =======
On December 31, 1992, the Company forgave a $4,590,000 note due from
Bergesen and $199,443 of related interest in lieu of payment of a portion of the
1992 dividend.
4. DIVIDENDS
During 1994, the Company declared and paid a $5,000,000 dividend.
During 1993, the Company declared and paid a $9,000,000 dividend and also
paid $4,655,000 of dividends which had been declared in 1992.
During 1992, the Company declared dividends of $9,500,000 of which $55,557
was paid.
49
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of Amazon Transport, Inc.:
We have audited the accompanying balance sheets of Amazon Transport, Inc.
as of December 31, 1994 and 1993 and the related statements of operations and
retained earnings (deficit) and of cash flows for each of the three years in the
period ended December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements present fairly, in
all material respects, the financial position of the Company at December 31,
1994 and 1993, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1994 in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 22, 1995
50
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF OMI
Pursuant to General Instruction G(3) the information regarding directors
called for by this item is hereby incorporated by reference from OMI's 1994
Proxy Statement to be filed with the Securities and Exchange Commission. Certain
information relating to Executive Officers of the Company appears at the end of
Part I of this Form 10-K Annual Report.
Item 11. EXECUTIVE COMPENSATION
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from OMI's 1994 Proxy Statement to be
filed with the Securities and Exchange Commission.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from OMI's 1994 Proxy Statement to be
filed with the Securities and Exchange Commission.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to General Instruction G(3) the information called for by this
item is hereby incorporated by reference from OMI's 1994 Proxy Statement to be
filed with the Securities and Exchange Commission.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Financial Statements and Financial Statement Schedules
1. Financial Statements:
OMI Corp. and Subsidiaries Consolidated Statements of Operations for
the three years ended December 31, 1994.
OMI Corp. and Subsidiaries Consolidated Balance Sheets at December 31,
1994 and 1993.
OMI Corp. and Subsidiaries Consolidated Statements of Cash Flows for
the three years ended December 31, 1994.
OMI Corp. and Subsidiaries Consolidated Statements of Changes in
Stockholders' Equity for the three years ended December 31, 1994.
OMI Corp. and Subsidiaries Notes to Consolidated Financial Statements
for the three years ended December 31, 1994.
OMI Corp. and Subsidiaries Quarterly Results of Operations for 1994 and
1993.
2. Financial Statement Schedules:
I--OMI Corp. (Parent only) Condensed financial information as to
financial position as of December 31, 1994 and 1993, and cash flows and
results of operations for the years ended December 31, 1994, 1993 and
1992.
51
<PAGE>
<TABLE>
<CAPTION>
3. Exhibits
Number Incorporated by Reference to Description of Exhibit
------ ---------------------------- ----------------------
<S> <C> <C>
3.1 Exhibit 3.1 to 1990 Form 10-K Report Certificate of Incorporation as amended and restated.
of the Company (No. 2-87930)
3.2 Exhibit 3.2 to 1990 Form 10-K Report By-laws as amended.
of the Company (No. 2-87930)
4.1 Exhibit 4.1 to 1989 Form 10-K Report Form of Common Stock Certificate (Domestic).
of the Company (No. 2-87930)
4.2 Exhibit 4.2 to 1989 Form 10-K Report Form of Common Stock Certificate (Foreign).
of the Company (No. 2-87930)
10.1 Exhibit 10.1 to Registration Statement Tax Sharing Agreement between Ogden Corporation and
on Form S-1 (No. 33-7341) the Company.
10.2 Exhibit 10(d) to 1983 Form 10-K Report OMI Incentive Stock Option Plan.(1)
of the Company (No. 2-87930)
10.3 Exhibit 10.11 to Registration Statement OMI Supplementary Deferred Benefit Plan, as amended.
on Form S-1 (No. 33-7341)
10.4 Exhibit 10.9 to Registration Statement OMI Non-Qualified Stock Option Plan.(1)
on Form S-1 (No. 33-7341)
10.5 Exhibit 10.14(a) to Registration Severance Agreement dated as of August 9, 1984 between
Statement on Form S-1 (No. 33-7341) Michael Klebanoff and the Company.(1)
10.6 Exhibit 10.15 to 1987 Form 10-K Report Swap Agreement dated as of July 1, 1987 among General
of the Company (No. 2-87930) Electric Credit Corporation, The Bank of New York, OMI
Clover Transport, Inc. and OMI Hudson Transport, Inc.
10.7 Exhibit 10.16 to 1987 Form 10-K Report Bareboat Charter Party dated August 12, 1987 between
of the Company (No. 2-87930) OMI Clover Transport, Inc. and The Bank of New York,
not in its individual capacity but solely as owner trustee.
10.8(a) Exhibit 10.20 to 1987 Form 10-K Report OMI Corp. Employee Stock Ownership Plan (effective
of the Company (No. 2-87930) January 1, 1987).(1)
10.8(b) Exhibit 10.23 to 1988 Form 10-K Report Amendment No. 1 dated September 15, 1988 to OMI of
Company (No. 2-87930) Corp. Employee Stock Ownership Plan.(1)
10.9 Exhibit 10.31 to 1990 Form 10-K Report OMI Corp. 1990 Equity Incentive Plan.(1)
Report of the Company (No. 2-87930)
10.10 Exhibit 10.44 to 1991 Form 10-K Report OMI Corp. Key Employees Deferred Compensation Plan,
of the Company (No. 2-87930) effective January 1, 1992.(1)
10.11 Exhibit 10.43(a) to 1992 Form 10-K Bareboat Chemical Carrier Charter Party between AFG
Report of the Company (No. 2-87930) Star Limited Partnership and Omichem Transport, Inc.
dated September 30, 1992.
10.12 Registration Statement on Form S-3 filed Form of Indenture with respect to the $170,000,000 OMI
October 27, 1993 (No. 33-67640) Corp. 10 1/4% Senior Notes due November 1, 2003.
10.13 Exhibit 10.44 to Form 10-Q for period OMI Corp. Key Employee Amended and Restated
ended March 31, 1994 Employment Agreement dated October 1, 1993 between
George W. Vlandis and the Company.
<FN>
--------------------
(1) Denote executive compensation plan and/or placement agreement.
</FN>
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
Number Incorporated by Reference to Description of Exhibit
----- ---------------------------- ----------------------
<S> <C> <C>
10.14 Stock Option and Restricted Stock Award Agreement
dated as of February 23, 1994 between Craig H.
Stevenson, Jr. and the Company.
10.15(a) Employment Agreement dated as of January 1, 1995
between Jack Goldstein and the Company.(1)
10.15(b) Employment Agreement dated as of January 1, 1995
between Craig H. Stevenson, Jr. and the Company.(1)
10.15(c) Employment Agreement dated as of January 1, 1995
between Vincent J. de Sostoa and the Company.(1)
10.15(d) Employment Agreement dated as of January 1, 1995
between Fredric S. London and the Company.(1)
10.15(e) Form of Employment Agreement dated as of January 1,
1995 between any Vice-President and the Company.(1)
21 Subsidiaries of the Company.
27 Financial Data Schedule dated December 31, 1994.
99 Declarations Executive Risk Policy No. 81092598-F
dated January 27, 1995, for the period from January 31,
1995 to January 31, 1996.
(b) Reports on Form 8-K.
None.
(d) Financial Statements of Affiliates:
Wilomi Inc. and Subsidiaries Consolidated Balance Sheets at December 31, 1994 and
1993, and Related Statements of Consolidated Income and
Retained Earnings, and Cash Flows for each of the three
years in the period ended December 31, 1994 and
Independent Auditors' Report.
Amazon Transport, Inc. Balance Sheets at December 31, 1994 and 1993 and
Related Statements of Operations and Retained Earnings
(Deficit), and Cash Flows for each of the three years in the
period ended December 31, 1994 and Independent Auditors' Report.
<FN>
---------------
(1) Denote executive compensation plan and/or placement agreement.
</FN>
</TABLE>
53
<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.
OMI CORP.
By /s/ JACK GOLDSTEIN
---------------------------------------
Jack Goldstein,
Chief Executive officer and director
Pursuant to the requirements of the Securities Act of 1933, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL KLEBANOFF Chairman of the Board March 24, 1995
------------------------- and Director
Michael Klebanoff
/s/ JACK GOLDSTEIN President, Chief Executive Officer March 24, 1995
------------------------- and Director
Jack Goldstein
/s/ LIVIO BORGHESE Director March 24, 1995
-------------------------
Livio Borghese
/s/ C.G. CARAS Director March 24, 1995
-------------------------
C.G. Caras
/s/ STEVEN D. JELLINEK Director March 24, 1995
-------------------------
Steven D. Jellinek
/s/ EMANUEL L. ROUVELAS Director March 24, 1995
-------------------------
Emanuel L. Rouvelas
/s/ FRANKLIN W.L. TSAO Director March 24, 1995
-------------------------
Franklin W.L. Tsao
/s/ GEORGE W. VLANDIS Director March 24, 1995
-------------------------
George W. Vlandis
/s/ VINCENT J. DE SOSTOA Senior Vice President, Treasurer and March 24, 1995
------------------------- Chief Financial Officer
Vincent J. de Sostoa
</TABLE>
54
STOCK OPTION AND RESTRICTED STOCK AWARD AGREEMENT
This Stock Option and Restricted Stock Award Agreement ("Agreement"), dated
as of February 23, 1994, by and between OMI Corp., a Delaware corporation having
an office at 90 Park Avenue, New York, New York 10016 (the "Company"), and CRAIG
H. STEVENSON, JR., an individual, residing at 23 Valley View Drive, Stamford,
Connecticut 06903 (the "Awardee").
W I T N E S S E T H
WHEREAS, the Company wished to give an inducement and incentive to the
Awardee to enter into an employment contract with the Company and to perform his
duties and fulfill his responsibilities on behalf of the Company and its
subsidiaries and affiliates at the highest level of dedication and competence;
and
WHEREAS, the Company wished to give the Awardee benefits that are
substantially the same as those accorded to certain other officers and key
employees of the Company under the OMI Corp. 1990 Equity Incentive Plan, but not
pursuant to such plan; and
WHEREAS, the Awardee became an officer and key employee of the Company on
August 23, 1993, and immediately prior to such time was President of Ocean
Specialty Tankers Corp., a 50% owned subsidiary of the Company; and
WHEREAS, the Board of Directors of the Company, on February 23, 1994, as
such an inducement and incentive, granted to the Awardee 40,000 non-qualified
stock options at an option price of $6.25 ("Option") and awarded to the Awardee
15,000 restricted shares of Common Stock, par value $0.50 per share, of the
Company ("Restricted Stock"), in consideration, with respect to the Restricted
Stock, for the prior services performed by the Awardee to the Company and Ocean
Specialty Tankers Corp.; and
WHEREAS, the Awardee became an officer and key employee of the Company with
the expectation of this Agreement being entered into by him and the Company.
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and other good and
-1-
<PAGE>
valuable consideration, the Company and the Awardee agree as follows:
1. Terms Incorporated. The Restricted Stock and Option are issued pursuant to
this Agreement only. This Agreement, however, incorporates by reference the
terms of the OMI Corp. 1990 Equity Incentive Plan (the "Plan"), which was
adopted by the shareholders of the Company on June 12, 1990. The Restricted
Stock and Option are subject to the terms of the Plan and are exercisable
only to the extent provided herein and under the Plan, provided, however,
if and to the extent that any provision contained herein is inconsistent
with the Plan, this Agreement shall govern. All capitalized terms used
herein and not defined herein shall have the respective meanings assigned
to such terms in the Plan.
2. Option.
(a) Exercise. The Option may be exercised, no later than February 23, 2004,
on or after the dates indicated below as to that percentage of the shares
originally subject hereto set forth opposite such date, plus any shares as
to which the Option could have been exercised, but was not so exercised:
Date Percentage
---- ----------
August 23, 1994 33.333%
August 23, 1995 33.333%
August 23, 1996 33.334%
(b) Non-Statutory Option. The Option is intended not to be an incentive
stock option, as such term is defined in Section 422 of the United States
Internal Revenue Code of 1986, as amended.
(c) Execution. Each exercise in whole or in part of the Option shall be
effected by delivering written notice thereof signed by the Awardee or
other person entitled to exercise the same to the Company at the Company's
headquarters office, presently located at 90 Park Avenue, New York, New
York 10016, accompanied by payment in full:
(1) by certified or bank check in the full amount of the option price
of the shares purchased;
-2-
<PAGE>
(2) by shares of Common Stock having a fair market value (as defined
in the Plan) equal to the option price of the shares purchased;
(3) by a combination of certified or bank check and shares of Common
Stock valued as aforesaid, together aggregating the option price
of the shares purchased.
(d) Termination. On termination of the Awardee's employment with the
Company before the expiration of the term of the Option set forth in
Section 2(a) of this Agreement, the Option will be exercisable and will
terminate as set forth in paragraphs (f), (g), (h) or (i) of Section 5 of
the Plan, whichever is applicable.
(e) Transferability. The Option is not transferable otherwise than by will
or the laws of descent and distribution and is exercisable during the
lifetime of the Awardee only by him.
(f) Withholding of Taxes. The Awardee shall pay to the Company at the time
of exercise, or such other time as the Company shall specify, any amounts
that the Company shall determine are appropriate for it to withhold under
any federal, state or local law in respect of income arising on such
exercise.
3. Restricted Stock.
(a) Restriction Period. The Restricted Stock has a restriction period, as
set by the Board of Directors of the Company and as hereafter set forth
(the "Restriction Period"):
Number of Shares Restricted Period Ends
---------------- ----------------------
As to 5,000 shares August 23, 1994
As to 5,000 additional shares August 23, 1995
As to 5,000 additional shares August 23, 1996
(b) Stock Certificates. The Awardee acknowledges receipt of three stock
certificates, registered in his name, each for 5,000 shares of Restricted
Stock and each bearing the following legend:
-3-
<PAGE>
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of an Agreement entered into between the registered owner
and OMI Corp. Copies of such Agreement are on file in the offices of
the Secretary, OMI Corp., 90 Park Avenue, New York, New York 10016."
The Awardee agrees, concurrently with the execution of this Agreement, to
deposit such stock certificates with the Company, together with a stock
power endorsed in blank.
(c) Stock Rights. The Awardee shall have all voting and dividend rights
with respect to the Restricted Stock; provided that dividends paid in stock
or other property shall be deposited with the Company together with a stock
power endorsed in blank or other appropriate instrument of transfer and
shall be subject to the same restrictions and the same Restriction Period
as the underlying Restricted Stock.
(d) Transferability. The Awardee acknowledges that the Restricted Stock may
not be sold, assigned, transferred, pledged or otherwise encumbered prior
to the expiration of the applicable Restriction Period.
(e) Lapse of Restrictions. If the Awardee ceases to be employed by the
Company or any of its subsidiaries or affiliates prior to the expiration of
the applicable Restriction Period by reason of death, Disability or
Retirement, the Restricted Stock shall become free of all restrictions
under this Agreement. If a Change in Control of the Company occurs, the
Restricted Stock shall become free of all restrictions under this Agreement
unless the Company's Committee, as constituted immediately prior to the
Change in Control, determines that the Restricted Stock shall not, in whole
or in part, become free of such restrictions. When Restricted Stock becomes
free of the restrictions by reason of expiration or termination of the
applicable Restriction Period without a prior forfeiture of such Restricted
Stock, the Awardee shall promptly receive Common Stock certificates in
exchange for the Restricted Stock certificate described in Section 3(b) of
this Agreement and such Common Stock certificates shall not
-4-
<PAGE>
bear the legend set forth in Section 3(b) of this Agreement.
(f) Forfeiture. If the Awardee resigns his employment or if he is
involuntarily terminated by the Company with or without Cause, he agrees
that any Restricted Stock held by him that is still subject to an unexpired
Restriction Period will be forfeited and will be reacquired by the Company
without any action by him; provided, however, if the Company terminates his
employment without Cause, the Company may, in its sole discretion, when it
finds that a waiver would be in the best interests of the Company, waive
all or part of the application of this forfeiture provision to the
Awardee's Restricted Stock.
(g) Registration.
(1) The Restricted Stock has not been registered under the Securities
Act of 1933, as amended (the "Act"), and may be offered and sold only
if registered pursuant to the provisions of the Act or if an exemption
from registration is available. The Awardee hereby acknowledges that
the Restricted Stock has not been so registered and agrees to offer or
sell same only if it is registered pursuant to the provisions of the
Act or if an exemption from registration is available. If the
Restricted Stock is not so registered at the expiration of the
restrictions under this Agreement, the Awardee understands that the
Company will place stop-transfer instructions with its transfer agents
with respect to the Common Stock certificates replacing the Restricted
Stock certificates and will cause all certificates representing such
Common Stock to be conspicuously legended to evidence the fact that
the Common Stock has not been registered under the Act and may be
offered or sold only if registered pursuant to the provisions of the
Act or if an exemption from registration is available.
(2) The Awardee hereby represents that he accepts the Restricted Stock
for his own account for investment and not with a view to, or for sale
in connection therewith, the distribution of any part thereof, and the
Awardee acknowledges that he or his beneficiary may be required by the
-5-
<PAGE>
Company to repeat this representation in writing upon the delivery of
shares that are free of restrictions under this Agreement. The Awardee
further represents that he has knowledge and experience in financial
and business matters, that he is capable of evaluating the merits and
risks of owning the Restricted Stock and that he is a person who is
able to bear the economic risk of such ownership. Through Awardee's
position as a key officer and employee of the Company, the Awardee is
aware of all information about the Company disclosed to the public.
(h) Withholding of Taxes. The Awardee shall pay to the Company, prior to
the delivery to him of any Common Stock certificates that are free of
restrictions under this Agreement, any amounts that the Company shall
determine is appropriate for it to withhold under any federal, state or
local law.
(i) Cancellation. The award of Restricted Stock set forth in this Agreement
shall be subject to cancellation by the Company unless within ten (10) days
of the date of execution of this Agreement, the Awardee delivers or mails a
copy of this Agreement, duly executed by him, and the stock certificates
for the Restricted Stock, together with stock powers endorsed by him in
blank, to OMI Corp. at 90 Park Avenue, New York, New York 10016, for the
attention of the Secretary of OMI Corp.
4. Neither this Agreement, the Plan, nor any action taken under this Agreement
or the Plan shall be construed as giving the Awardee any right to be
retained in the employ of the Company or its subsidiaries or affiliates.
5. The Awardee acknowledges that the Company may in its sole discretion amend
the terms and conditions of this Agreement including retroactive
amendments; provided, however, no such amendment shall impair his rights
hereunder without his consent.
6. The Awardee acknowledges that he is familiar with the terms of the Plan
incorporated by reference into this Agreement and agrees to abide by the
terms thereof as such may be amended from time to time.
-6-
<PAGE>
IN WITNESS WHEREOF, the Company has duly executed and affixed its seal to
this Stock Option and Restricted Stock Award Agreement on this 19th day of July,
1994.
OMI Corp.
By: /s/ ANYA STAROSOLSKA
------------------------
Anya Starosolska
Dated:
The undersigned hereby accepts
and agrees to all the terms and
provisions of the foregoing Stock
Option and Restricted Stock Agreement
and acknowledges receipt of a copy
of the OMI Corp. 1990 Equity Incentive
Plan adopted by the shareholders on
June 12, 1990.
AWARDEE
/s/ CRAIG H. STEVENSON, JR.
------------------------------
Craig H. Stevenson, Jr.
-7-
EMPLOYMENT AGREEMENT Exhibit 10.15(a)
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of January 1, 1995 between
OMI Corp., a Delaware corporation (the "Company") and Jack Goldstein
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company desires to continue to employ the Executive; and
WHEREAS, the Executive is willing to continue to be employed by the Company, as
a senior executive of the Company, for the period and upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Company and the Executive hereby agree as follows:
1. Employment
The Company shall employ the Executive, and the Executive accepts
employment by the Company, as Chief Executive Officer and President of the
Company upon the terms and conditions herein, for the period commencing as of
January 1, 1995, and ending on December 31, 1996, subject to termination as
hereinafter provided (the period from January 1, 1995 through December 31, 1996,
as such period may be extended as described in this paragraph, being herein
referred to as the "Employment Period"). The Executive term of employment shall
be automatically extended for an additional period of one year unless written
notice of termination is given by either party no later than December 31, 1995,
and for an additional period thereafter of one year unless written notice of
termination is given by either party no later than December 31, 1996. If, upon
expiration of this Agreement, the Company desires to continue to employ the
Executive and the Executive desires to continue in the employ of the Company,
such employment shall be continued on terms and conditions which the Company and
the Executive find mutually satisfactory and which are consistent with the
employment policies of the Company. The Employment Agreement dated December 31,
1989 between the parties is hereby terminated with no further liability or
obligation to either party.
2. Duties
(a) Throughout the Employment Period, the Executive shall be Chief
Executive Officer and President of the Company and shall report to the person or
position designated by the Chief Executive Officer and the Board of Directors
(the "Board") of the Company. The Executive shall at all times comply with
Company policies as established by the Chief Executive Officer and/or the Board.
(b) During the Employment Period, the Executive shall devote his full-time
working hours to his duties hereunder, except during vacation time, any periods
of illness
<PAGE>
and authorized leaves of absence. The Executive shall have such responsibilities
and authorities consistent with the status, title and reporting requirements set
forth herein as are appropriate to said position, subject to change (other than
diminution in position, authority, duties or responsibilities) from time to time
by the Chief Executive Officer and/or the Board of Directors of the Company.
(c) Throughout the Employment Period, the Executive shall faithfully and
diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
3. Compensation
During the Employment Period, as full compensation to the Executive for his
performance of the services hereunder and for his acceptance of the
responsibilities described herein, the Company agrees to pay the Executive, and
the Executive agrees to accept, the following salary and other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at the
annual rate of $380,000. The Board shall review such Base Salary on an annual
basis and may increase it, from time to time, in its sole discretion. The Base
Salary due the Executive hereunder shall be payable in equal monthly
installments less any amounts required to be withheld by the Company from such
Base Salary pursuant to the benefit plans of Section 3(d) and applicable laws
and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus") at the
discretion, in the amount and at the times determined by the Board of Directors
of the Company; except that in the event of a Change in Control (as hereinafter
defined), the Executive shall immediately receive a cash payment in an amount
equal to the aggregate bonuses paid during the twelve-month period ending on the
date of the Change in Control.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted stock,
stock options and other stock awards at the discretion of the Compensation
Committee of the Board of Directors of the Company and/or other stock and cash
awards granted pursuant to any other long term incentive plans implemented by
the Company for the benefit of senior executives of the Company.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted by
law, the Executive shall be entitled to participate in any and all employee
welfare and benefit plans (including, but not limited to, retirement security,
life insurance, medical, dental, disability,
2
<PAGE>
and savings plans) established by the Company from time to time for the general
and overall benefit of executives of the Company.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum paid
vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive shall
have the right to request any lawful means (including, without limitation, any
deferred compensation arrangement requested by the Executive) by which he or she
wishes to receive any portion of his or her Base Salary, Bonus, or other
payments, and the Company shall reasonably cooperate with the Executive to grant
such request, provided that the granting of such request does not represent
inequitable treatment as concerns other senior employees or executives (in the
Company's sole judgment), and does not impose additional costs on the Company
other than insignificant administrative costs.
4. Reasonable Expenses
The Company will reimburse the Executive for all reasonable business
expenses, including travel and lodging, which are properly incurred by him or
her in the performance of his or her duties hereunder, upon presentation of
proper vouchers therefor and in accordance with written policies established
from time to time by the Company for such reimbursements.
5. Executive Covenants
The Executive acknowledges that as a result of the services to be rendered
to the Company hereunder, the Executive will be brought into close contact with
many confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. The Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
world; and that the Company competes with other organizations that are or could
be located in nearly any part of the United States or elsewhere. In recognition
of the foregoing:
(a) Except with the consent of or as directed by the Company, or except if
compelled by judicial or legal authorities, the Executive will keep confidential
and not divulge to any other person, during the Employment Period or thereafter,
any Confidential Information and Trade Secrets regarding the Company, its
subsidiaries and affiliates, except for information which is or becomes publicly
available other than as a result of disclosure by the Executive. For the
purposes of this Agreement "Confidential Information and Trade
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Secrets" means information which is secret to the Company, its subsidiaries and
affiliates. It may include, but is not limited to, information relating to new
and future concepts and business of the Company, its subsidiaries and
affiliates, in the form of memoranda, reports, computer software and data banks,
customer lists, employee lists, books, records, financial statements, manuals,
papers, contracts and strategic plans. As a guide, the Executive is to consider
information originated, owned, controlled or possessed by the Company, its
subsidiaries or affiliates which is not disclosed in printed publications stated
to be available for distribution outside the Company, its subsidiaries and
affiliates as being secret and confidential. In instances where doubt does or
should reasonably be understood to exist in the Executive's mind as to whether
information is secret and confidential to the Company, its subsidiaries and
affiliates, the Executive agrees to request an opinion, in writing, from the
Company.
(b) All papers, books and records of every kind and description relating to
the business and affairs of the Company, its subsidiaries and affiliates,
whether or not prepared by the Executive, and all property owned by the Company,
its subsidiaries and affiliates shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company, at any time upon
request, during or after the Employment Period.
(c) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive will not, without the prior written consent
of the Company, compete, directly or indirectly, with the Company, its
subsidiaries and affiliates or participate as a director, officer, employee,
agent, representative, stockholder, or partner, or have any direct or indirect
financial interest as a creditor, in any business which directly or indirectly
competes with the Company its subsidiaries and affiliates; provided, however,
that this paragraph (c) shall not restrict the Executive from holding up to 5%
of the publicly traded securities of any entity.
(d) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive shall not either for his or her own account
or for any person, firm or company (i) solicit any customers of the Company, its
subsidiaries and affiliates or (ii) solicit or endeavor to cause any employee of
the Company, its subsidiaries and affiliates to leave his employment or induce
or attempt to induce any such employee to breach any employment agreement with
the Company, its subsidiaries and affiliates, or otherwise interfere with the
employment of any employee by the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the Executive
hereby agrees to be bound by and to comply with any obligations known to the
Executive and imposed on the Company, its subsidiaries and affiliates, by law,
rule, regulation, ordinance, order, decree, instrument, agreement, understanding
or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to the
Company, its subsidiaries and affiliates during the Employment Period and any
Severance
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Period (as hereinafter defined) in any litigation between the Company, its
subsidiaries and affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other remedies
provided by law, have the right and remedy to have the provisions of this
Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) although the restrictions contained in Sections 5(a), (b), (c) and
(d) above are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of such nature may fail for
technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance
(a) Termination by the Company without Cause. If for any reason other than
the provisions of Section 6(d) hereof, the Company wishes to terminate the
Employment Period and the Executive's employment hereunder, the Company shall
give a written notice to the Executive of such termination stating that a
severance period (the "Severance Period") will commence upon receipt of such
notice by the Executive. The Severance Period shall be for the balance of the
then current term of this Agreement or twelve months, whichever is greater. Upon
receipt of such notice by the Executive, the Employment Period shall terminate
(and the Executive shall have no further duties under Section 2 hereof). During
the entire Severance Period, the Executive shall continue to receive all salary,
compensation, payments and benefits under Sections 3(a) and 3(d) of this
Agreement (including, to the extent allowable under applicable law, the accrual
of additional service credits or Company contributions under pension and thrift
plans, and any benefits under the Company's long term disability and life
insurance plans) available upon the date of the commencement of the Severance
Period as if the Employment Period continued throughout the Severance Period.
The Executive agrees that the payments described in this Section 6(a) shall be
full and adequate compensation to the Executive for all damages the Executive
may suffer as
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<PAGE>
a result of the termination of his employment pursuant to this Section 6(a), and
hereby waives and releases the Company from any and all obligations or
liabilities to the Executive arising from or in connection with the Executive's
employment with the Company or the termination and claims the Executive may have
under federal, state or local statutes, regulations or ordinances or under any
common law principles or breach of contract or the covenant of good faith and
fair dealing, defamation, wrongful discharge, intentional infliction of
emotional distress or promissory estoppel; provided, however, that any rights
and benefits the Executive may have under the employee benefit plans and
programs of the Company in which the Executive is a participant, shall be
determined in accordance with the terms and provisions of such plans and
programs.
(b) Death. If the Executive dies during the Employment Period, the
Severance Period or during the period when payments are being made pursuant to
Section 6(c), the Employment Period shall automatically terminate and the
obligations of the parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter defined)
during the Employment Period, the Company shall be entitled to terminate his or
her employment and the Employment Period upon written notice to the Executive
from the Company. In the event of such termination, the Executive shall be
released from any duties hereunder, and the Severance Period described in
Section 6(a) hereof shall immediately commence. The duties, rights, benefits and
other matters during the Severance Period shall be as set forth in Section 6(a),
and the Executive (and his or her heirs, beneficiaries and estate) shall be
entitled to all compensation, payments and benefits during the Severance Period
without any offset or reduction except by such amounts, if any, as are paid to
the Executive in lieu of compensation for services under any applicable
insurance policies of the Company (or by the Company under any self insurance
plan). For purposes of this Agreement, "Disabled" shall mean mental or physical
impairment or incapacity rendering the Executive substantially unable to perform
his duties under this Agreement for a period of longer than 180 days out of any
360-day period during the Employment Period. A determination of whether the
Executive is Disabled shall be made by the Company in its sole discretion upon
its own initiative or upon request of the Executive or a person acting on his
behalf. If the Executive becomes Disabled during a Severance Period, he or she
shall continue to receive the compensation, payments and benefits of this
Agreement during the entire Severance Period without any offset or reduction,
except by such amounts, if any, as are paid to the Executive in lieu of
compensation for services under any applicable insurance policies of the Company
(or by the Company under any self insurance plan).
(d) Termination by the Company for Cause. The Company by written notice to
the Executive, shall have the right to terminate the Employment Period in the
event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his or her duties under this
Agreement, such breach continuing unremedied for thirty days after
written notice thereof
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<PAGE>
from the Company to the Executive specifying the acts constituting the
breach and requesting that they be remedied; or
(ii) Any misconduct, dishonesty, insubordination or other act by the
Executive materially detrimental to the goodwill of the Company, or
materially damaging to the Company's, its subsidiaries' and/or
affiliates' relationships with their customers or employees, including
without limitation, the Executive having been convicted of a felony
during the Employment Period, provided such conviction has resulted or
is likely to result in substantial detriment to the Company, its
subsidiaries and/or affiliates.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no Severance Period.
(e) Voluntary Termination by the Executive. In the event of voluntary
termination of employment by the Executive, the terms of the last paragraph of
Section 6(d) shall apply, except in the event that such voluntary termination
occurs within ninety days of (i) a relocation of the Company's offices (or the
location of the performance of work by the Executive) beyond a fifty mile radius
of New York City, (ii) a material diminution of the Executive's duties and
responsibilities as provided in Section 2, or (iii) a reduction in Base Salary
in which cases the provisions of Section 6(a) shall apply.
(f) Termination Following a Change in Control.
(i) For purposes of this paragraph (f), the term "Change in Control"
shall mean a Change in Control as defined in Section 3 of the OMI Corp.
Separation Allowance Program, as amended from time (the "Program") to time.
Should the Executive's employment hereunder be terminated by the Company without
Cause (other than for reason of the Executive becoming Disabled) within two
years of a Change in Control, the Company shall pay and the Executive shall
receive in cash an amount equal to three times the sum of the Executive's then
current Base Salary and the amount paid to the Executive pursuant to the
exception in Section 3(b). The Executive shall also be eligible to receive any
and all other benefits as provided in the Program (excepting the severance
benefits of Paragraph 5(iii)B of the Program). For purposes other than with
respect to Paragraph 5(iii)B of the Program, wherever a Measuring Period (as
defined in the Program) is called for, the Measuring Period for the Executive
shall be twenty four. Upon termination under this paragraph (f), the Executive
shall no longer be bound by the provisions of Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement
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or agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person (together with
the payment pursuant to Section 6(f)(i), the "Total Payments")) would not be
deductible by the Company (in whole or in part) as a result of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), the payment pursuant
to Section 6(f)(i) shall be reduced until no portion or the Total Payments is
not deductible as a result of Section 280G of the Code, or the payment pursuant
to Section 6(f)(i) is reduced to zero. For purposes of this limitation (A) no
portion of the Total Payments the receipt or enjoyment of which the Executive
shall have effectively waived in writing prior to the date of payment of the
payment pursuant to Section 6(f)(i) shall be taken into account, (B) no portion
of the Total Payments shall be taken into account which, in the opinion of tax
counsel selected by the Company's independent auditors and acceptable to the
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
or benefit included in the Total Payments shall be determined by the Company's
independent auditors servicing the Company immediately prior to the time of a
Change in Control in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.
7. Conflicting Agreements
The Executive hereby represents and warrants to the Company that his
entering into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of, or otherwise violate
the terms of any other employment of other agreement to which he is a party.
8. Assignment
(a) By the Executive. This Agreement, any part thereof and any rights
(including compensation) or obligation hereunder shall not be assigned, pledged,
alienated, sold, attached, charged, encumbered or transferred in any way by the
Executive and any attempt to do so shall be void except that (i) the Executive
may designate any of his beneficiaries to receive (and such beneficiaries shall
receive) any compensation, payments or other benefits payable hereunder upon his
death, (ii) any assignment by will or by laws of descent and distribution or
following the occurrence of the Executive's legal incompetence is permitted and
(iii) the Executive's executors, administrators or other legal representatives
may assign any rights hereunder to the person or persons entitled thereto.
(b) By the Company. Provided the substance of the Executive's duties set
forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
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9. Notices
All notices, requests, demands and other communications hereunder must be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed within the continental United States by first class, registered mail,
return receipt requested, or sent by overnight mail, such as Federal Express,
postage and registry fees prepaid, to the applicable party and addressed as
follows:
(a) if to the Company:
President
OMI Corp.
90 Park Avenue
New York, New York 10016
(b) if to the Executive:
47 Quaker Bridge Road
Ossining, New York 10562
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous
(a) If any provision or portion of this Agreement shall, for any reason, be
adjudged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the jurisdiction in which
made and to the provisions of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy under or relating to this Agreement shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers
and remedies. No single or partial exercise of any rights, powers or remedies
under or relating to this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument, and all signatures need not
appear on any one counterpart.
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(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorney's
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary, or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The headings
in this Agreement are for convenience of reference only and shall not be
considered part of this Agreement or limit or otherwise affect the meaning
hereof. This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
New York (disregarding any choice of law rules which might look to the laws of
any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have been
fully explained to him or her, that the Executive understands the nature and
extent of the rights
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and obligations provided under this Agreement, and that the Executive has been
given the opportunity to be represented by legal counsel in the negotiation and
preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit any
acquisition, consolidation or merger of the Company.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
By /s/ JACK GOLDSTEIN
-----------------------------
Jack Goldstein
OMI CORP.
By /S/ FREDRIC S. LONDON
-----------------------------
Fredric S. London
11
EMPLOYMENT AGREEMENT Exhibit 10.15(b)
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of January 1, 1995 between
OMI Corp., a Delaware corporation (the "Company") and Craig H. Stevenson, Jr.
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company desires to continue to employ the Executive; and
WHEREAS, the Executive is willing to continue to be employed by the Company, as
a senior executive of the Company, for the period and upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Company and the Executive hereby agree as follows:
1. Employment
The Company shall employ the Executive, and the Executive accepts
employment by the Company, as Chief Operating Officer and Executive Vice
President of the Company upon the terms and conditions herein, for the period
commencing as of January 1, 1995, and ending on December 31, 1996, subject to
termination as hereinafter provided (the period from January 1, 1995 through
December 31, 1996, as such period may be extended as described in this
paragraph, being herein referred to as the "Employment Period"). The Executive
term of employment shall be automatically extended for an additional period of
one year unless written notice of termination is given by either party no later
than December 31, 1995, and for an additional period thereafter of one year
unless written notice of termination is given by either party no later than
December 31, 1996. If, upon expiration of this Agreement, the Company desires to
continue to employ the Executive and the Executive desires to continue in the
employ of the Company, such employment shall be continued on terms and
conditions which the Company and the Executive find mutually satisfactory and
which are consistent with the employment policies of the Company.
2. Duties
(a) Throughout the Employment Period, the Executive shall be Chief
Operating Officer and Executive Vice President of the Company and shall report
to the person or position designated by the Chief Executive Officer and the
Board of Directors (the "Board") of the Company. The Executive shall at all
times comply with Company policies as established by the Chief Executive Officer
and/or the Board.
(b) During the Employment Period, the Executive shall devote his full-time
working hours to his duties hereunder, except during vacation time, any periods
of illness and authorized leaves of absence. The Executive shall have such
responsibilities and authorities consistent with the status, title and reporting
requirements set forth herein as are
<PAGE>
appropriate to said position, subject to change (other than diminution in
position, authority, duties or responsibilities) from time to time by the Chief
Executive Officer and/or the Board of Directors of the Company.
(c) Throughout the Employment Period, the Executive shall faithfully and
diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
3. Compensation
During the Employment Period, as full compensation to the Executive for his
performance of the services hereunder and for his acceptance of the
responsibilities described herein, the Company agrees to pay the Executive, and
the Executive agrees to accept, the following salary and other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at the
annual rate of $265,000. The Board shall review such Base Salary on an annual
basis and may increase it, from time to time, in its sole discretion. The Base
Salary due the Executive hereunder shall be payable in equal monthly
installments less any amounts required to be withheld by the Company from such
Base Salary pursuant to the benefit plans of Section 3(d) and applicable laws
and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus") at the
discretion, in the amount and at the times determined by the Board of Directors
of the Company; except that in the event of a Change in Control (as hereinafter
defined), the Executive shall immediately receive a cash payment in an amount
equal to the aggregate bonuses paid during the twelve-month period ending on the
date of the Change in Control.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted stock,
stock options and other stock awards at the discretion of the Compensation
Committee of the Board of Directors of the Company and/or other stock and cash
awards granted pursuant to any other long term incentive plans implemented by
the Company for the benefit of senior executives of the Company.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted by
law, the Executive shall be entitled to participate in any and all employee
welfare and benefit plans (including, but not limited to, retirement security,
life insurance, medical, dental, disability,
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and savings plans) established by the Company from time to time for the general
and overall benefit of executives of the Company.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum paid
vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive shall
have the right to request any lawful means (including, without limitation, any
deferred compensation arrangement requested by the Executive) by which he or she
wishes to receive any portion of his or her Base Salary, Bonus, or other
payments, and the Company shall reasonably cooperate with the Executive to grant
such request, provided that the granting of such request does not represent
inequitable treatment as concerns other senior employees or executives (in the
Company's sole judgment), and does not impose additional costs on the Company
other than insignificant administrative costs.
4. Reasonable Expenses
The Company will reimburse the Executive for all reasonable business
expenses, including travel and lodging, which are properly incurred by him or
her in the performance of his or her duties hereunder, upon presentation of
proper vouchers therefor and in accordance with written policies established
from time to time by the Company for such reimbursements.
5. Executive Covenants
The Executive acknowledges that as a result of the services to be rendered
to the Company hereunder, the Executive will be brought into close contact with
many confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. The Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
world; and that the Company competes with other organizations that are or could
be located in nearly any part of the United States or elsewhere. In recognition
of the foregoing:
(a) Except with the consent of or as directed by the Company, or except if
compelled by judicial or legal authorities, the Executive will keep confidential
and not divulge to any other person, during the Employment Period or thereafter,
any Confidential Information and Trade Secrets regarding the Company, its
subsidiaries and affiliates, except for information which is or becomes publicly
available other than as a result of disclosure by the Executive. For the
purposes of this Agreement "Confidential Information and Trade
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Secrets" means information which is secret to the Company, its subsidiaries and
affiliates. It may include, but is not limited to, information relating to new
and future concepts and business of the Company, its subsidiaries and
affiliates, in the form of memoranda, reports, computer software and data banks,
customer lists, employee lists, books, records, financial statements, manuals,
papers, contracts and strategic plans. As a guide, the Executive is to consider
information originated, owned, controlled or possessed by the Company, its
subsidiaries or affiliates which is not disclosed in printed publications stated
to be available for distribution outside the Company, its subsidiaries and
affiliates as being secret and confidential. In instances where doubt does or
should reasonably be understood to exist in the Executive's mind as to whether
information is secret and confidential to the Company, its subsidiaries and
affiliates, the Executive agrees to request an opinion, in writing, from the
Company.
(b) All papers, books and records of every kind and description relating to
the business and affairs of the Company, its subsidiaries and affiliates,
whether or not prepared by the Executive, and all property owned by the Company,
its subsidiaries and affiliates shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company, at any time upon
request, during or after the Employment Period.
(c) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive will not, without the prior written consent
of the Company, compete, directly or indirectly, with the Company, its
subsidiaries and affiliates or participate as a director, officer, employee,
agent, representative, stockholder, or partner, or have any direct or indirect
financial interest as a creditor, in any business which directly or indirectly
competes with the Company its subsidiaries and affiliates; provided, however,
that this paragraph (c) shall not restrict the Executive from holding up to 5%
of the publicly traded securities of any entity.
(d) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive shall not either for his or her own account
or for any person, firm or company (i) solicit any customers of the Company, its
subsidiaries and affiliates or (ii) solicit or endeavor to cause any employee of
the Company, its subsidiaries and affiliates to leave his employment or induce
or attempt to induce any such employee to breach any employment agreement with
the Company, its subsidiaries and affiliates, or otherwise interfere with the
employment of any employee by the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the Executive
hereby agrees to be bound by and to comply with any obligations known to the
Executive and imposed on the Company, its subsidiaries and affiliates, by law,
rule, regulation, ordinance, order, decree, instrument, agreement, understanding
or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to the
Company, its subsidiaries and affiliates during the Employment Period and any
Severance
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Period (as hereinafter defined) in any litigation between the Company, its
subsidiaries and affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other remedies
provided by law, have the right and remedy to have the provisions of this
Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) although the restrictions contained in Sections 5(a), (b), (c) and
(d) above are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of such nature may fail for
technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance
(a) Termination by the Company without Cause. If for any reason other than
the provisions of Section 6(d) hereof, the Company wishes to terminate the
Employment Period and the Executive's employment hereunder, the Company shall
give a written notice to the Executive of such termination stating that a
severance period (the "Severance Period") will commence upon receipt of such
notice by the Executive. The Severance Period shall be for the balance of the
then current term of this Agreement or twelve months, whichever is greater. Upon
receipt of such notice by the Executive, the Employment Period shall terminate
(and the Executive shall have no further duties under Section 2 hereof). During
the entire Severance Period, the Executive shall continue to receive all salary,
compensation, payments and benefits under Sections 3(a) and 3(d) of this
Agreement (including, to the extent allowable under applicable law, the accrual
of additional service credits or Company contributions under pension and thrift
plans, and any benefits under the Company's long term disability and life
insurance plans) available upon the date of the commencement of the Severance
Period as if the Employment Period continued throughout the Severance Period.
The Executive agrees that the payments described in this Section 6(a) shall be
full and adequate compensation to the Executive for all damages the Executive
may suffer as
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a result of the termination of his employment pursuant to this Section 6(a), and
hereby waives and releases the Company from any and all obligations or
liabilities to the Executive arising from or in connection with the Executive's
employment with the Company or the termination and claims the Executive may have
under federal, state or local statutes, regulations or ordinances or under any
common law principles or breach of contract or the covenant of good faith and
fair dealing, defamation, wrongful discharge, intentional infliction of
emotional distress or promissory estoppel; provided, however, that any rights
and benefits the Executive may have under the employee benefit plans and
programs of the Company in which the Executive is a participant, shall be
determined in accordance with the terms and provisions of such plans and
programs.
(b) Death. If the Executive dies during the Employment Period, the
Severance Period or during the period when payments are being made pursuant to
Section 6(c), the Employment Period shall automatically terminate and the
obligations of the parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter defined)
during the Employment Period, the Company shall be entitled to terminate his or
her employment and the Employment Period upon written notice to the Executive
from the Company. In the event of such termination, the Executive shall be
released from any duties hereunder, and the Severance Period described in
Section 6(a) hereof shall immediately commence. The duties, rights, benefits and
other matters during the Severance Period shall be as set forth in Section 6(a),
and the Executive (and his or her heirs, beneficiaries and estate) shall be
entitled to all compensation, payments and benefits during the Severance Period
without any offset or reduction except by such amounts, if any, as are paid to
the Executive in lieu of compensation for services under any applicable
insurance policies of the Company (or by the Company under any self insurance
plan). For purposes of this Agreement, "Disabled" shall mean mental or physical
impairment or incapacity rendering the Executive substantially unable to perform
his duties under this Agreement for a period of longer than 180 days out of any
360-day period during the Employment Period. A determination of whether the
Executive is Disabled shall be made by the Company in its sole discretion upon
its own initiative or upon request of the Executive or a person acting on his
behalf. If the Executive becomes Disabled during a Severance Period, he or she
shall continue to receive the compensation, payments and benefits of this
Agreement during the entire Severance Period without any offset or reduction,
except by such amounts, if any, as are paid to the Executive in lieu of
compensation for services under any applicable insurance policies of the Company
(or by the Company under any self insurance plan).
(d) Termination by the Company for Cause. The Company by written notice to
the Executive, shall have the right to terminate the Employment Period in the
event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his or her duties under this
Agreement, such breach continuing unremedied for thirty days after
written notice thereof
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from the Company to the Executive specifying the acts constituting the
breach and requesting that they be remedied; or
(ii) Any misconduct, dishonesty, insubordination or other act by the
Executive materially detrimental to the goodwill of the Company, or
materially damaging to the Company's, its subsidiaries' and/or
affiliates' relationships with their customers or employees, including
without limitation, the Executive having been convicted of a felony
during the Employment Period, provided such conviction has resulted or
is likely to result in substantial detriment to the Company, its
subsidiaries and/or affiliates.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no Severance Period.
(e) Voluntary Termination by the Executive. In the event of voluntary
termination of employment by the Executive, the terms of the last paragraph of
Section 6(d) shall apply, except in the event that such voluntary termination
occurs within ninety days of (i) a relocation of the Company's offices (or the
location of the performance of work by the Executive) beyond a fifty mile radius
of New York City, (ii) a material diminution of the Executive's duties and
responsibilities as provided in Section 2, or (iii) a reduction in Base Salary
in which cases the provisions of Section 6(a) shall apply.
(f) Termination Following a Change in Control.
(i) For purposes of this paragraph (f), the term "Change in Control"
shall mean a Change in Control as defined in Section 3 of the OMI Corp.
Separation Allowance Program, as amended from time (the "Program") to time.
Should the Executive's employment hereunder be terminated by the Company without
Cause (other than for reason of the Executive becoming Disabled) within two
years of a Change in Control, the Company shall pay and the Executive shall
receive in cash an amount equal to three times the sum of the Executive's then
current Base Salary and the amount paid to the Executive pursuant to the
exception in Section 3(b). The Executive shall also be eligible to receive any
and all other benefits as provided in the Program (excepting the severance
benefits of Paragraph 5(iii)B of the Program). For purposes other than with
respect to Paragraph 5(iii)B of the Program, wherever a Measuring Period (as
defined in the Program) is called for, the Measuring Period for the Executive
shall be twenty four. Upon termination under this paragraph (f), the Executive
shall no longer be bound by the provisions of Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement
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or agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person (together with
the payment pursuant to Section 6(f)(i), the "Total Payments")) would not be
deductible by the Company (in whole or in part) as a result of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), the payment pursuant
to Section 6(f)(i) shall be reduced until no portion or the Total Payments is
not deductible as a result of Section 280G of the Code, or the payment pursuant
to Section 6(f)(i) is reduced to zero. For purposes of this limitation (A) no
portion of the Total Payments the receipt or enjoyment of which the Executive
shall have effectively waived in writing prior to the date of payment of the
payment pursuant to Section 6(f)(i) shall be taken into account, (B) no portion
of the Total Payments shall be taken into account which, in the opinion of tax
counsel selected by the Company's independent auditors and acceptable to the
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
or benefit included in the Total Payments shall be determined by the Company's
independent auditors servicing the Company immediately prior to the time of a
Change in Control in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.
7. Conflicting Agreements
The Executive hereby represents and warrants to the Company that his
entering into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of, or otherwise violate
the terms of any other employment of other agreement to which he is a party.
8. Assignment
(a) By the Executive. This Agreement, any part thereof and any rights
(including compensation) or obligation hereunder shall not be assigned, pledged,
alienated, sold, attached, charged, encumbered or transferred in any way by the
Executive and any attempt to do so shall be void except that (i) the Executive
may designate any of his beneficiaries to receive (and such beneficiaries shall
receive) any compensation, payments or other benefits payable hereunder upon his
death, (ii) any assignment by will or by laws of descent and distribution or
following the occurrence of the Executive's legal incompetence is permitted and
(iii) the Executive's executors, administrators or other legal representatives
may assign any rights hereunder to the person or persons entitled thereto.
(b) By the Company. Provided the substance of the Executive's duties set
forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
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9. Notices
All notices, requests, demands and other communications hereunder must be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed within the continental United States by first class, registered mail,
return receipt requested, or sent by overnight mail, such as Federal Express,
postage and registry fees prepaid, to the applicable party and addressed as
follows:
(a) if to the Company:
President
OMI Corp.
90 Park Avenue
New York, New York 10016
(b) if to the Executive:
23 Valley View Drive
Stamford, CT 06903-3843
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous
(a) If any provision or portion of this Agreement shall, for any reason, be
adjudged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the jurisdiction in which
made and to the provisions of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy under or relating to this Agreement shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers
and remedies. No single or partial exercise of any rights, powers or remedies
under or relating to this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument, and all signatures need not
appear on any one counterpart.
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(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorney's
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary, or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The headings
in this Agreement are for convenience of reference only and shall not be
considered part of this Agreement or limit or otherwise affect the meaning
hereof. This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
New York (disregarding any choice of law rules which might look to the laws of
any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have been
fully explained to him or her, that the Executive understands the nature and
extent of the rights
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and obligations provided under this Agreement, and that the Executive has been
given the opportunity to be represented by legal counsel in the negotiation and
preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit any
acquisition, consolidation or merger of the Company.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
By /s/ CRAIG H. STEVENSON, JR.
------------------------------
Craig H. Stevenson, Jr.
OMI CORP.
By /S/ FREDRIC S. LONDON
-------------------------------
Fredric S. London
11
EMPLOYMENT AGREEMENT Exhibit 10.15(c)
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of January 1, 1995 between
OMI Corp., a Delaware corporation (the "Company") and Vincent J. de Sostoa
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company desires to continue to employ the Executive; and
WHEREAS, the Executive is willing to continue to be employed by the Company, as
a senior executive of the Company, for the period and upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Company and the Executive hereby agree as follows:
1. Employment
The Company shall employ the Executive, and the Executive accepts
employment by the Company, as Sr. Vice President, Chief Financial Officer and
Treasurer of the Company upon the terms and conditions herein, for the period
commencing as of January 1, 1995, and ending on December 31, 1996, subject to
termination as hereinafter provided (the period from January 1, 1995 through
December 31, 1996, as such period may be extended as described in this
paragraph, being herein referred to as the "Employment Period"). The Executive
term of employment shall be automatically extended for an additional period of
one year unless written notice of termination is given by either party no later
than December 31, 1995, and for an additional period thereafter of one year
unless written notice of termination is given by either party no later than
December 31, 1996. If, upon expiration of this Agreement, the Company desires to
continue to employ the Executive and the Executive desires to continue in the
employ of the Company, such employment shall be continued on terms and
conditions which the Company and the Executive find mutually satisfactory and
which are consistent with the employment policies of the Company. The Employment
Agreement dated December 31, 1989 between the parties is hereby terminated with
no further liability or obligation to either party.
2. Duties
(a) Throughout the Employment Period, the Executive shall be Sr. Vice
President, Chief Financial Officer and Treasurer of the Company and shall report
to the person or position designated by the Chief Executive Officer and the
Board of Directors (the "Board") of the Company. The Executive shall at all
times comply with Company policies as established by the Chief Executive Officer
and/or the Board.
(b) During the Employment Period, the Executive shall devote his full-time
working hours to his duties hereunder, except during vacation time, any periods
of illness
<PAGE>
and authorized leaves of absence. The Executive shall have such responsibilities
and authorities consistent with the status, title and reporting requirements set
forth herein as are appropriate to said position, subject to change (other than
diminution in position, authority, duties or responsibilities) from time to time
by the Chief Executive Officer and/or the Board of Directors of the Company.
(c) Throughout the Employment Period, the Executive shall faithfully and
diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
3. Compensation
During the Employment Period, as full compensation to the Executive for his
performance of the services hereunder and for his acceptance of the
responsibilities described herein, the Company agrees to pay the Executive, and
the Executive agrees to accept, the following salary and other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at the
annual rate of $225,000. The Board shall review such Base Salary on an
annual basis and may increase it, from time to time, in its sole discretion. The
Base Salary due the Executive hereunder shall be payable in equal monthly
installments less any amounts required to be withheld by the Company from such
Base Salary pursuant to the benefit plans of Section 3(d) and applicable laws
and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus") at the
discretion, in the amount and at the times determined by the Board of Directors
of the Company; except that in the event of a Change in Control (as hereinafter
defined), the Executive shall immediately receive a cash payment in an amount
equal to the aggregate bonuses paid during the twelve-month period ending on the
date of the Change in Control.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted stock,
stock options and other stock awards at the discretion of the Compensation
Committee of the Board of Directors of the Company and/or other stock and cash
awards granted pursuant to any other long term incentive plans implemented by
the Company for the benefit of senior executives of the Company.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted by
law, the Executive shall be entitled to participate in any and all employee
welfare and benefit plans (including, but not limited to, retirement security,
life insurance, medical, dental, disability,
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and savings plans) established by the Company from time to time for the general
and overall benefit of executives of the Company.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum paid
vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive shall
have the right to request any lawful means (including, without limitation, any
deferred compensation arrangement requested by the Executive) by which he or she
wishes to receive any portion of his or her Base Salary, Bonus, or other
payments, and the Company shall reasonably cooperate with the Executive to grant
such request, provided that the granting of such request does not represent
inequitable treatment as concerns other senior employees or executives (in the
Company's sole judgment), and does not impose additional costs on the Company
other than insignificant administrative costs.
4. Reasonable Expenses
The Company will reimburse the Executive for all reasonable business
expenses, including travel and lodging, which are properly incurred by him or
her in the performance of his or her duties hereunder, upon presentation of
proper vouchers therefor and in accordance with written policies established
from time to time by the Company for such reimbursements.
5. Executive Covenants
The Executive acknowledges that as a result of the services to be rendered
to the Company hereunder, the Executive will be brought into close contact with
many confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. The Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
world; and that the Company competes with other organizations that are or could
be located in nearly any part of the United States or elsewhere. In recognition
of the foregoing:
(a) Except with the consent of or as directed by the Company, or except if
compelled by judicial or legal authorities, the Executive will keep confidential
and not divulge to any other person, during the Employment Period or thereafter,
any Confidential Information and Trade Secrets regarding the Company, its
subsidiaries and affiliates, except for information which is or becomes publicly
available other than as a result of disclosure by the Executive. For the
purposes of this Agreement "Confidential Information and Trade
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Secrets" means information which is secret to the Company, its subsidiaries and
affiliates. It may include, but is not limited to, information relating to new
and future concepts and business of the Company, its subsidiaries and
affiliates, in the form of memoranda, reports, computer software and data banks,
customer lists, employee lists, books, records, financial statements, manuals,
papers, contracts and strategic plans. As a guide, the Executive is to consider
information originated, owned, controlled or possessed by the Company, its
subsidiaries or affiliates which is not disclosed in printed publications stated
to be available for distribution outside the Company, its subsidiaries and
affiliates as being secret and confidential. In instances where doubt does or
should reasonably be understood to exist in the Executive's mind as to whether
information is secret and confidential to the Company, its subsidiaries and
affiliates, the Executive agrees to request an opinion, in writing, from the
Company.
(b) All papers, books and records of every kind and description relating to
the business and affairs of the Company, its subsidiaries and affiliates,
whether or not prepared by the Executive, and all property owned by the Company,
its subsidiaries and affiliates shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company, at any time upon
request, during or after the Employment Period.
(c) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive will not, without the prior written consent
of the Company, compete, directly or indirectly, with the Company, its
subsidiaries and affiliates or participate as a director, officer, employee,
agent, representative, stockholder, or partner, or have any direct or indirect
financial interest as a creditor, in any business which directly or indirectly
competes with the Company its subsidiaries and affiliates; provided, however,
that this paragraph (c) shall not restrict the Executive from holding up to 5%
of the publicly traded securities of any entity.
(d) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive shall not either for his or her own account
or for any person, firm or company (i) solicit any customers of the Company, its
subsidiaries and affiliates or (ii) solicit or endeavor to cause any employee of
the Company, its subsidiaries and affiliates to leave his employment or induce
or attempt to induce any such employee to breach any employment agreement with
the Company, its subsidiaries and affiliates, or otherwise interfere with the
employment of any employee by the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the Executive
hereby agrees to be bound by and to comply with any obligations known to the
Executive and imposed on the Company, its subsidiaries and affiliates, by law,
rule, regulation, ordinance, order, decree, instrument, agreement, understanding
or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to the
Company, its subsidiaries and affiliates during the Employment Period and any
Severance
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<PAGE>
Period (as hereinafter defined) in any litigation between the Company, its
subsidiaries and affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other remedies
provided by law, have the right and remedy to have the provisions of this
Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) although the restrictions contained in Sections 5(a), (b), (c) and
(d) above are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of such nature may fail for
technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance
(a) Termination by the Company without Cause. If for any reason other than
the provisions of Section 6(d) hereof, the Company wishes to terminate the
Employment Period and the Executive's employment hereunder, the Company shall
give a written notice to the Executive of such termination stating that a
severance period (the "Severance Period") will commence upon receipt of such
notice by the Executive. The Severance Period shall be for the balance of the
then current term of this Agreement or twelve months, whichever is greater. Upon
receipt of such notice by the Executive, the Employment Period shall terminate
(and the Executive shall have no further duties under Section 2 hereof). During
the entire Severance Period, the Executive shall continue to receive all salary,
compensation, payments and benefits under Sections 3(a) and 3(d) of this
Agreement (including, to the extent allowable under applicable law, the accrual
of additional service credits or Company contributions under pension and thrift
plans, and any benefits under the Company's long term disability and life
insurance plans) available upon the date of the commencement of the Severance
Period as if the Employment Period continued throughout the Severance Period.
The Executive agrees that the payments described in this Section 6(a) shall be
full and adequate compensation to the Executive for all damages the Executive
may suffer as
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<PAGE>
a result of the termination of his employment pursuant to this Section 6(a), and
hereby waives and releases the Company from any and all obligations or
liabilities to the Executive arising from or in connection with the Executive's
employment with the Company or the termination and claims the Executive may have
under federal, state or local statutes, regulations or ordinances or under any
common law principles or breach of contract or the covenant of good faith and
fair dealing, defamation, wrongful discharge, intentional infliction of
emotional distress or promissory estoppel; provided, however, that any rights
and benefits the Executive may have under the employee benefit plans and
programs of the Company in which the Executive is a participant, shall be
determined in accordance with the terms and provisions of such plans and
programs.
(b) Death. If the Executive dies during the Employment Period, the
Severance Period or during the period when payments are being made pursuant to
Section 6(c), the Employment Period shall automatically terminate and the
obligations of the parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter defined)
during the Employment Period, the Company shall be entitled to terminate his or
her employment and the Employment Period upon written notice to the Executive
from the Company. In the event of such termination, the Executive shall be
released from any duties hereunder, and the Severance Period described in
Section 6(a) hereof shall immediately commence. The duties, rights, benefits and
other matters during the Severance Period shall be as set forth in Section 6(a),
and the Executive (and his or her heirs, beneficiaries and estate) shall be
entitled to all compensation, payments and benefits during the Severance Period
without any offset or reduction except by such amounts, if any, as are paid to
the Executive in lieu of compensation for services under any applicable
insurance policies of the Company (or by the Company under any self insurance
plan). For purposes of this Agreement, "Disabled" shall mean mental or physical
impairment or incapacity rendering the Executive substantially unable to perform
his duties under this Agreement for a period of longer than 180 days out of any
360-day period during the Employment Period. A determination of whether the
Executive is Disabled shall be made by the Company in its sole discretion upon
its own initiative or upon request of the Executive or a person acting on his
behalf. If the Executive becomes Disabled during a Severance Period, he or she
shall continue to receive the compensation, payments and benefits of this
Agreement during the entire Severance Period without any offset or reduction,
except by such amounts, if any, as are paid to the Executive in lieu of
compensation for services under any applicable insurance policies of the Company
(or by the Company under any self insurance plan).
(d) Termination by the Company for Cause. The Company by written notice to
the Executive, shall have the right to terminate the Employment Period in the
event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his or her duties under this
Agreement, such breach continuing unremedied for thirty days after
written notice thereof
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from the Company to the Executive specifying the acts constituting the
breach and requesting that they be remedied; or
(ii) Any misconduct, dishonesty, insubordination or other act by the
Executive materially detrimental to the goodwill of the Company, or
materially damaging to the Company's, its subsidiaries' and/or
affiliates' relationships with their customers or employees, including
without limitation, the Executive having been convicted of a felony
during the Employment Period, provided such conviction has resulted or
is likely to result in substantial detriment to the Company, its
subsidiaries and/or affiliates.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no Severance Period.
(e) Voluntary Termination by the Executive. In the event of voluntary
termination of employment by the Executive, the terms of the last paragraph of
Section 6(d) shall apply, except in the event that such voluntary termination
occurs within ninety days of (i) a relocation of the Company's offices (or the
location of the performance of work by the Executive) beyond a fifty mile radius
of New York City, (ii) a material diminution of the Executive's duties and
responsibilities as provided in Section 2, or (iii) a reduction in Base Salary
in which cases the provisions of Section 6(a) shall apply.
(f) Termination Following a Change in Control.
(i) For purposes of this paragraph (f), the term "Change in Control"
shall mean a Change in Control as defined in Section 3 of the OMI Corp.
Separation Allowance Program, as amended from time (the "Program") to time.
Should the Executive's employment hereunder be terminated by the Company without
Cause (other than for reason of the Executive becoming Disabled) within two
years of a Change in Control, the Company shall pay and the Executive shall
receive in cash an amount equal to three times the sum of the Executive's then
current Base Salary and the amount paid to the Executive pursuant to the
exception in Section 3(b). The Executive shall also be eligible to receive any
and all other benefits as provided in the Program (excepting the severance
benefits of Paragraph 5(iii)B of the Program). For purposes other than with
respect to Paragraph 5(iii)B of the Program, wherever a Measuring Period (as
defined in the Program) is called for, the Measuring Period for the Executive
shall be twenty four. Upon termination under this paragraph (f), the Executive
shall no longer be bound by the provisions of Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement
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or agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person (together with
the payment pursuant to Section 6(f)(i), the "Total Payments")) would not be
deductible by the Company (in whole or in part) as a result of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), the payment pursuant
to Section 6(f)(i) shall be reduced until no portion or the Total Payments is
not deductible as a result of Section 280G of the Code, or the payment pursuant
to Section 6(f)(i) is reduced to zero. For purposes of this limitation (A) no
portion of the Total Payments the receipt or enjoyment of which the Executive
shall have effectively waived in writing prior to the date of payment of the
payment pursuant to Section 6(f)(i) shall be taken into account, (B) no portion
of the Total Payments shall be taken into account which, in the opinion of tax
counsel selected by the Company's independent auditors and acceptable to the
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
or benefit included in the Total Payments shall be determined by the Company's
independent auditors servicing the Company immediately prior to the time of a
Change in Control in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.
7. Conflicting Agreements
The Executive hereby represents and warrants to the Company that his
entering into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of, or otherwise violate
the terms of any other employment of other agreement to which he is a party.
8. Assignment
(a) By the Executive. This Agreement, any part thereof and any rights
(including compensation) or obligation hereunder shall not be assigned, pledged,
alienated, sold, attached, charged, encumbered or transferred in any way by the
Executive and any attempt to do so shall be void except that (i) the Executive
may designate any of his beneficiaries to receive (and such beneficiaries shall
receive) any compensation, payments or other benefits payable hereunder upon his
death, (ii) any assignment by will or by laws of descent and distribution or
following the occurrence of the Executive's legal incompetence is permitted and
(iii) the Executive's executors, administrators or other legal representatives
may assign any rights hereunder to the person or persons entitled thereto.
(b) By the Company. Provided the substance of the Executive's duties set
forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
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9. Notices
All notices, requests, demands and other communications hereunder must be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed within the continental United States by first class, registered mail,
return receipt requested, or sent by overnight mail, such as Federal Express,
postage and registry fees prepaid, to the applicable party and addressed as
follows:
(a) if to the Company:
President
OMI Corp.
90 Park Avenue
New York, New York 10016
(b) if to the Executive:
222 West Hill Road
New Canaan, CT 06840
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous
(a) If any provision or portion of this Agreement shall, for any reason, be
adjudged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the jurisdiction in which
made and to the provisions of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy under or relating to this Agreement shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers
and remedies. No single or partial exercise of any rights, powers or remedies
under or relating to this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument, and all signatures need not
appear on any one counterpart.
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<PAGE>
(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorney's
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary, or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The headings
in this Agreement are for convenience of reference only and shall not be
considered part of this Agreement or limit or otherwise affect the meaning
hereof. This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
New York (disregarding any choice of law rules which might look to the laws of
any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have been
fully explained to him or her, that the Executive understands the nature and
extent of the rights
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and obligations provided under this Agreement, and that the Executive has been
given the opportunity to be represented by legal counsel in the negotiation and
preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit any
acquisition, consolidation or merger of the Company.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
By /s/ VINCENT J. DE SOSTOA
-------------------------------
Vincent J. de Sostoa
OMI CORP.
By /s/ FREDRIC S. LONDON
--------------------------------
Fredric S. London
11
EMPLOYMENT AGREEMENT Exhibit 10.15(d)
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of January 1, 1995 between
OMI Corp., a Delaware corporation (the "Company") and Fredric S. London
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company desires to continue to employ the Executive; and
WHEREAS, the Executive is willing to continue to be employed by the Company, as
a senior executive of the Company, for the period and upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Company and the Executive hereby agree as follows:
1. Employment
The Company shall employ the Executive, and the Executive accepts
employment by the Company, as Sr. Vice President, General Counsel and Secretary
of the Company upon the terms and conditions herein, for the period commencing
as of January 1, 1995, and ending on December 31, 1996, subject to termination
as hereinafter provided (the period from January 1, 1995 through December 31,
1996, as such period may be extended as described in this paragraph, being
herein referred to as the "Employment Period"). The Executive term of employment
shall be automatically extended for an additional period of one year unless
written notice of termination is given by either party no later than December
31, 1995, and for an additional period thereafter of one year unless written
notice of termination is given by either party no later than December 31, 1996.
If, upon expiration of this Agreement, the Company desires to continue to employ
the Executive and the Executive desires to continue in the employ of the
Company, such employment shall be continued on terms and conditions which the
Company and the Executive find mutually satisfactory and which are consistent
with the employment policies of the Company. The Employment Agreement dated
December 31, 1989 between the parties is hereby terminated with no further
liablity or obligation to either party.
2. Duties
(a) Throughout the Employment Period, the Executive shall be Sr. Vice
President, General Counsel and Secretary of the Company and shall report to the
person or position designated by the Chief Executive Officer and the Board of
Directors (the "Board") of the Company. The Executive shall at all times comply
with Company policies as established by the Chief Executive Officer and/or the
Board.
(b) During the Employment Period, the Executive shall devote his full-time
working hours to his duties hereunder, except during vacation time, any periods
of illness
<PAGE>
and authorized leaves of absence. The Executive shall have such responsibilities
and authorities consistent with the status, title and reporting requirements set
forth herein as are appropriate to said position, subject to change (other than
diminution in position, authority, duties or responsibilities) from time to time
by the Chief Executive Officer and/or the Board of Directors of the Company.
(c) Throughout the Employment Period, the Executive shall faithfully and
diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
3. Compensation
During the Employment Period, as full compensation to the Executive for his
performance of the services hereunder and for his acceptance of the
responsibilities described herein, the Company agrees to pay the Executive, and
the Executive agrees to accept, the following salary and other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at the
annual rate of $218,000. The Board shall review such Base Salary on an
annual basis and may increase it, from time to time, in its sole discretion. The
Base Salary due the Executive hereunder shall be payable in equal monthly
installments less any amounts required to be withheld by the Company from such
Base Salary pursuant to the benefit plans of Section 3(d) and applicable laws
and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus") at the
discretion, in the amount and at the times determined by the Board of Directors
of the Company; except that in the event of a Change in Control (as hereinafter
defined), the Executive shall immediately receive a cash payment in an amount
equal to the aggregate bonuses paid during the twelve-month period ending on the
date of the Change in Control.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted stock,
stock options and other stock awards at the discretion of the Compensation
Committee of the Board of Directors of the Company and/or other stock and cash
awards granted pursuant to any other long term incentive plans implemented by
the Company for the benefit of senior executives of the Company.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted by
law, the Executive shall be entitled to participate in any and all employee
welfare and benefit plans (including, but not limited to, retirement security,
life insurance, medical, dental, disability,
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and savings plans) established by the Company from time to time for the general
and overall benefit of executives of the Company.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum paid
vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive shall
have the right to request any lawful means (including, without limitation, any
deferred compensation arrangement requested by the Executive) by which he or she
wishes to receive any portion of his or her Base Salary, Bonus, or other
payments, and the Company shall reasonably cooperate with the Executive to grant
such request, provided that the granting of such request does not represent
inequitable treatment as concerns other senior employees or executives (in the
Company's sole judgment), and does not impose additional costs on the Company
other than insignificant administrative costs.
4. Reasonable Expenses
The Company will reimburse the Executive for all reasonable business
expenses, including travel and lodging, which are properly incurred by him or
her in the performance of his or her duties hereunder, upon presentation of
proper vouchers therefor and in accordance with written policies established
from time to time by the Company for such reimbursements.
5. Executive Covenants
The Executive acknowledges that as a result of the services to be rendered
to the Company hereunder, the Executive will be brought into close contact with
many confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. The Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
world; and that the Company competes with other organizations that are or could
be located in nearly any part of the United States or elsewhere. In recognition
of the foregoing:
(a) Except with the consent of or as directed by the Company, or except if
compelled by judicial or legal authorities, the Executive will keep confidential
and not divulge to any other person, during the Employment Period or thereafter,
any Confidential Information and Trade Secrets regarding the Company, its
subsidiaries and affiliates, except for information which is or becomes publicly
available other than as a result of disclosure by the Executive. For the
purposes of this Agreement "Confidential Information and Trade
3
<PAGE>
Secrets" means information which is secret to the Company, its subsidiaries and
affiliates. It may include, but is not limited to, information relating to new
and future concepts and business of the Company, its subsidiaries and
affiliates, in the form of memoranda, reports, computer software and data banks,
customer lists, employee lists, books, records, financial statements, manuals,
papers, contracts and strategic plans. As a guide, the Executive is to consider
information originated, owned, controlled or possessed by the Company, its
subsidiaries or affiliates which is not disclosed in printed publications stated
to be available for distribution outside the Company, its subsidiaries and
affiliates as being secret and confidential. In instances where doubt does or
should reasonably be understood to exist in the Executive's mind as to whether
information is secret and confidential to the Company, its subsidiaries and
affiliates, the Executive agrees to request an opinion, in writing, from the
Company.
(b) All papers, books and records of every kind and description relating to
the business and affairs of the Company, its subsidiaries and affiliates,
whether or not prepared by the Executive, and all property owned by the Company,
its subsidiaries and affiliates shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company, at any time upon
request, during or after the Employment Period.
(c) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive will not, without the prior written consent
of the Company, compete, directly or indirectly, with the Company, its
subsidiaries and affiliates or participate as a director, officer, employee,
agent, representative, stockholder, or partner, or have any direct or indirect
financial interest as a creditor, in any business which directly or indirectly
competes with the Company its subsidiaries and affiliates; provided, however,
that this paragraph (c) shall not restrict the Executive from holding up to 5%
of the publicly traded securities of any entity.
(d) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive shall not either for his or her own account
or for any person, firm or company (i) solicit any customers of the Company, its
subsidiaries and affiliates or (ii) solicit or endeavor to cause any employee of
the Company, its subsidiaries and affiliates to leave his employment or induce
or attempt to induce any such employee to breach any employment agreement with
the Company, its subsidiaries and affiliates, or otherwise interfere with the
employment of any employee by the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the Executive
hereby agrees to be bound by and to comply with any obligations known to the
Executive and imposed on the Company, its subsidiaries and affiliates, by law,
rule, regulation, ordinance, order, decree, instrument, agreement, understanding
or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to the
Company, its subsidiaries and affiliates during the Employment Period and any
Severance
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<PAGE>
Period (as hereinafter defined) in any litigation between the Company, its
subsidiaries and affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other remedies
provided by law, have the right and remedy to have the provisions of this
Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) although the restrictions contained in Sections 5(a), (b), (c) and
(d) above are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of such nature may fail for
technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance
(a) Termination by the Company without Cause. If for any reason other than
the provisions of Section 6(d) hereof, the Company wishes to terminate the
Employment Period and the Executive's employment hereunder, the Company shall
give a written notice to the Executive of such termination stating that a
severance period (the "Severance Period") will commence upon receipt of such
notice by the Executive. The Severance Period shall be for the balance of the
then current term of this Agreement or twelve months, whichever is greater. Upon
receipt of such notice by the Executive, the Employment Period shall terminate
(and the Executive shall have no further duties under Section 2 hereof). During
the entire Severance Period, the Executive shall continue to receive all salary,
compensation, payments and benefits under Sections 3(a) and 3(d) of this
Agreement (including, to the extent allowable under applicable law, the accrual
of additional service credits or Company contributions under pension and thrift
plans, and any benefits under the Company's long term disability and life
insurance plans) available upon the date of the commencement of the Severance
Period as if the Employment Period continued throughout the Severance Period.
The Executive agrees that the payments described in this Section 6(a) shall be
full and adequate compensation to the Executive for all damages the Executive
may suffer as
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a result of the termination of his employment pursuant to this Section 6(a), and
hereby waives and releases the Company from any and all obligations or
liabilities to the Executive arising from or in connection with the Executive's
employment with the Company or the termination and claims the Executive may have
under federal, state or local statutes, regulations or ordinances or under any
common law principles or breach of contract or the covenant of good faith and
fair dealing, defamation, wrongful discharge, intentional infliction of
emotional distress or promissory estoppel; provided, however, that any rights
and benefits the Executive may have under the employee benefit plans and
programs of the Company in which the Executive is a participant, shall be
determined in accordance with the terms and provisions of such plans and
programs.
(b) Death. If the Executive dies during the Employment Period, the
Severance Period or during the period when payments are being made pursuant to
Section 6(c), the Employment Period shall automatically terminate and the
obligations of the parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter defined)
during the Employment Period, the Company shall be entitled to terminate his or
her employment and the Employment Period upon written notice to the Executive
from the Company. In the event of such termination, the Executive shall be
released from any duties hereunder, and the Severance Period described in
Section 6(a) hereof shall immediately commence. The duties, rights, benefits and
other matters during the Severance Period shall be as set forth in Section 6(a),
and the Executive (and his or her heirs, beneficiaries and estate) shall be
entitled to all compensation, payments and benefits during the Severance Period
without any offset or reduction except by such amounts, if any, as are paid to
the Executive in lieu of compensation for services under any applicable
insurance policies of the Company (or by the Company under any self insurance
plan). For purposes of this Agreement, "Disabled" shall mean mental or physical
impairment or incapacity rendering the Executive substantially unable to perform
his duties under this Agreement for a period of longer than 180 days out of any
360-day period during the Employment Period. A determination of whether the
Executive is Disabled shall be made by the Company in its sole discretion upon
its own initiative or upon request of the Executive or a person acting on his
behalf. If the Executive becomes Disabled during a Severance Period, he or she
shall continue to receive the compensation, payments and benefits of this
Agreement during the entire Severance Period without any offset or reduction,
except by such amounts, if any, as are paid to the Executive in lieu of
compensation for services under any applicable insurance policies of the Company
(or by the Company under any self insurance plan).
(d) Termination by the Company for Cause. The Company by written notice to
the Executive, shall have the right to terminate the Employment Period in the
event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his or her duties under this
Agreement, such breach continuing unremedied for thirty days after
written notice thereof
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<PAGE>
from the Company to the Executive specifying the acts constituting the
breach and requesting that they be remedied; or
(ii) Any misconduct, dishonesty, insubordination or other act by the
Executive materially detrimental to the goodwill of the Company, or
materially damaging to the Company's, its subsidiaries' and/or
affiliates' relationships with their customers or employees, including
without limitation, the Executive having been convicted of a felony
during the Employment Period, provided such conviction has resulted or
is likely to result in substantial detriment to the Company, its
subsidiaries and/or affiliates.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no Severance Period.
(e) Voluntary Termination by the Executive. In the event of voluntary
termination of employment by the Executive, the terms of the last paragraph of
Section 6(d) shall apply, except in the event that such voluntary termination
occurs within ninety days of (i) a relocation of the Company's offices (or the
location of the performance of work by the Executive) beyond a fifty mile radius
of New York City, (ii) a material diminution of the Executive's duties and
responsibilities as provided in Section 2, or (iii) a reduction in Base Salary
in which cases the provisions of Section 6(a) shall apply.
(f) Termination Following a Change in Control.
(i) For purposes of this paragraph (f), the term "Change in Control"
shall mean a Change in Control as defined in Section 3 of the OMI Corp.
Separation Allowance Program, as amended from time (the "Program") to time.
Should the Executive's employment hereunder be terminated by the Company without
Cause (other than for reason of the Executive becoming Disabled) within two
years of a Change in Control, the Company shall pay and the Executive shall
receive in cash an amount equal to three times the sum of the Executive's then
current Base Salary and the amount paid to the Executive pursuant to the
exception in Section 3(b). The Executive shall also be eligible to receive any
and all other benefits as provided in the Program (excepting the severance
benefits of Paragraph 5(iii)B of the Program). For purposes other than with
respect to Paragraph 5(iii)B of the Program, wherever a Measuring Period (as
defined in the Program) is called for, the Measuring Period for the Executive
shall be twenty four. Upon termination under this paragraph (f), the Executive
shall no longer be bound by the provisions of Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement
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or agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person (together with
the payment pursuant to Section 6(f)(i), the "Total Payments")) would not be
deductible by the Company (in whole or in part) as a result of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), the payment pursuant
to Section 6(f)(i) shall be reduced until no portion or the Total Payments is
not deductible as a result of Section 280G of the Code, or the payment pursuant
to Section 6(f)(i) is reduced to zero. For purposes of this limitation (A) no
portion of the Total Payments the receipt or enjoyment of which the Executive
shall have effectively waived in writing prior to the date of payment of the
payment pursuant to Section 6(f)(i) shall be taken into account, (B) no portion
of the Total Payments shall be taken into account which, in the opinion of tax
counsel selected by the Company's independent auditors and acceptable to the
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
or benefit included in the Total Payments shall be determined by the Company's
independent auditors servicing the Company immediately prior to the time of a
Change in Control in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.
7. Conflicting Agreements
The Executive hereby represents and warrants to the Company that his
entering into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of, or otherwise violate
the terms of any other employment of other agreement to which he is a party.
8. Assignment
(a) By the Executive. This Agreement, any part thereof and any rights
(including compensation) or obligation hereunder shall not be assigned, pledged,
alienated, sold, attached, charged, encumbered or transferred in any way by the
Executive and any attempt to do so shall be void except that (i) the Executive
may designate any of his beneficiaries to receive (and such beneficiaries shall
receive) any compensation, payments or other benefits payable hereunder upon his
death, (ii) any assignment by will or by laws of descent and distribution or
following the occurrence of the Executive's legal incompetence is permitted and
(iii) the Executive's executors, administrators or other legal representatives
may assign any rights hereunder to the person or persons entitled thereto.
(b) By the Company. Provided the substance of the Executive's duties set
forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
8
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9. Notices
All notices, requests, demands and other communications hereunder must be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed within the continental United States by first class, registered mail,
return receipt requested, or sent by overnight mail, such as Federal Express,
postage and registry fees prepaid, to the applicable party and addressed as
follows:
(a) if to the Company:
President
OMI Corp.
90 Park Avenue
New York, New York 10016
(b) if to the Executive:
159 Old Church Road
Greenwich, CT 06830
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous
(a) If any provision or portion of this Agreement shall, for any reason, be
adjudged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the jurisdiction in which
made and to the provisions of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy under or relating to this Agreement shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers
and remedies. No single or partial exercise of any rights, powers or remedies
under or relating to this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument, and all signatures need not
appear on any one counterpart.
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<PAGE>
(d)(i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorney's
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary, or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The headings
in this Agreement are for convenience of reference only and shall not be
considered part of this Agreement or limit or otherwise affect the meaning
hereof. This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
New York (disregarding any choice of law rules which might look to the laws of
any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have been
fully explained to him or her, that the Executive understands the nature and
extent of the rights
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and obligations provided under this Agreement, and that the Executive has been
given the opportunity to be represented by legal counsel in the negotiation and
preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit any
acquisition, consolidation or merger of the Company.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
By /s/ FREDRIC S. LONDON
------------------------------
Fredric S. London
OMI CORP.
By /s/ JACK GOLDSTEIN
------------------------------
Jack Goldstein
11
EMPLOYMENT AGREEMENT Exhibit 10.15(e)
--------------------
THIS EMPLOYMENT AGREEMENT (the "Agreement") dated as of January 1, 1995 between
OMI Corp., a Delaware corporation (the "Company") and [Vice President]
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company desires to continue to employ the Executive; and
WHEREAS, the Executive is willing to continue to be employed by the Company, as
a senior executive of the Company, for the period and upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants and conditions contained
herein, the Company and the Executive hereby agree as follows:
1. Employment
The Company shall employ the Executive, and the Executive accepts
employment by the Company, as Vice President of the Company upon the terms and
conditions herein, for the period commencing as of January 1, 1995, and ending
on December 31, 1996, subject to termination as hereinafter provided (the period
from January 1, 1995 through December 31, 1996, as such period may be extended
as described in this paragraph, being herein referred to as the "Employment
Period"). The Executive term of employment shall be automatically extended for
an additional period of one year unless written notice of termination is given
by either party no later than December 31, 1995, and for an additional period
thereafter of one year unless written notice of termination is given by either
party no later than December 31, 1996. If, upon expiration of this Agreement,
the Company desires to continue to employ the Executive and the Executive
desires to continue in the employ of the Company, such employment shall be
continued on terms and conditions which the Company and the Executive find
mutually satisfactory and which are consistent with the employment policies of
the Company.
2. Duties
(a) Throughout the Employment Period, the Executive shall be Vice President
of the Company and shall report to the person or position designated by the
Chief Executive Officer and the Board of Directors (the "Board") of the Company.
The Executive shall at all times comply with Company policies as established by
the Chief Executive Officer and/or the Board.
(b) During the Employment Period, the Executive shall devote his full-time
working hours to his duties hereunder, except during vacation time, any periods
of illness and authorized leaves of absence. The Executive shall have such
responsibilities and authorities consistent with the status, title and reporting
requirements set forth herein as are
<PAGE>
appropriate to said position, subject to change (other than diminution in
position, authority, duties or responsibilities) from time to time by the Chief
Executive Officer and/or the Board of Directors of the Company.
(c) Throughout the Employment Period, the Executive shall faithfully and
diligently perform his duties under this Agreement and shall use his best
efforts to promote the interests of the Company.
3. Compensation
During the Employment Period, as full compensation to the Executive for his
performance of the services hereunder and for his acceptance of the
responsibilities described herein, the Company agrees to pay the Executive, and
the Executive agrees to accept, the following salary and other benefits:
(a) Salary
The Company shall pay the Executive a salary (the "Base Salary") at the
annual rate of $_______________. The Board shall review such Base Salary on an
annual basis and may increase it, from time to time, in its sole discretion. The
Base Salary due the Executive hereunder shall be payable in equal monthly
installments less any amounts required to be withheld by the Company from such
Base Salary pursuant to the benefit plans of Section 3(d) and applicable laws
and regulations described under Section 10(e).
(b) Bonus
The Executive shall be eligible to receive bonuses (each a "Bonus") at the
discretion, in the amount and at the times determined by the Board of Directors
of the Company; except that in the event of a Change in Control (as hereinafter
defined), the Executive shall immediately receive a cash payment in an amount
equal to the aggregate bonuses paid during the twelve-month period ending on the
date of the Change in Control.
(c) Long Term Incentives
The Executive shall be entitled to receive grants of restricted stock,
stock options and other stock awards at the discretion of the Compensation
Committee of the Board of Directors of the Company and/or other stock and cash
awards granted pursuant to any other long term incentive plans implemented by
the Company for the benefit of senior executives of the Company.
(d) Other Benefit Plans
Subject to all eligibility requirements, and to the extent permitted by
law, the Executive shall be entitled to participate in any and all employee
welfare and benefit plans (including, but not limited to, retirement security,
life insurance, medical, dental, disability,
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<PAGE>
and savings plans) established by the Company from time to time for the general
and overall benefit of executives of the Company.
(e) Further Benefits
The Executive shall be entitled to a minimum of four weeks per annum paid
vacation.
(f) Deferred Compensation
Notwithstanding any other provision of the Agreement, the Executive shall
have the right to request any lawful means (including, without limitation, any
deferred compensation arrangement requested by the Executive) by which he or she
wishes to receive any portion of his or her Base Salary, Bonus, or other
payments, and the Company shall reasonably cooperate with the Executive to grant
such request, provided that the granting of such request does not represent
inequitable treatment as concerns other senior employees or executives (in the
Company's sole judgment), and does not impose additional costs on the Company
other than insignificant administrative costs.
4. Reasonable Expenses
The Company will reimburse the Executive for all reasonable business
expenses, including travel and lodging, which are properly incurred by him or
her in the performance of his or her duties hereunder, upon presentation of
proper vouchers therefor and in accordance with written policies established
from time to time by the Company for such reimbursements.
5. Executive Covenants
The Executive acknowledges that as a result of the services to be rendered
to the Company hereunder, the Executive will be brought into close contact with
many confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. The Executive further acknowledges that the
services to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
world; and that the Company competes with other organizations that are or could
be located in nearly any part of the United States or elsewhere. In recognition
of the foregoing:
(a) Except with the consent of or as directed by the Company, or except if
compelled by judicial or legal authorities, the Executive will keep confidential
and not divulge to any other person, during the Employment Period or thereafter,
any Confidential Information and Trade Secrets regarding the Company, its
subsidiaries and affiliates, except for information which is or becomes publicly
available other than as a result of disclosure by the Executive. For the
purposes of this Agreement "Confidential Information and Trade
3
<PAGE>
Secrets" means information which is secret to the Company, its subsidiaries and
affiliates. It may include, but is not limited to, information relating to new
and future concepts and business of the Company, its subsidiaries and
affiliates, in the form of memoranda, reports, computer software and data banks,
customer lists, employee lists, books, records, financial statements, manuals,
papers, contracts and strategic plans. As a guide, the Executive is to consider
information originated, owned, controlled or possessed by the Company, its
subsidiaries or affiliates which is not disclosed in printed publications stated
to be available for distribution outside the Company, its subsidiaries and
affiliates as being secret and confidential. In instances where doubt does or
should reasonably be understood to exist in the Executive's mind as to whether
information is secret and confidential to the Company, its subsidiaries and
affiliates, the Executive agrees to request an opinion, in writing, from the
Company.
(b) All papers, books and records of every kind and description relating to
the business and affairs of the Company, its subsidiaries and affiliates,
whether or not prepared by the Executive, and all property owned by the Company,
its subsidiaries and affiliates shall be the sole and exclusive property of the
Company, and the Executive shall surrender them to the Company, at any time upon
request, during or after the Employment Period.
(c) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive will not, without the prior written consent
of the Company, compete, directly or indirectly, with the Company, its
subsidiaries and affiliates or participate as a director, officer, employee,
agent, representative, stockholder, or partner, or have any direct or indirect
financial interest as a creditor, in any business which directly or indirectly
competes with the Company its subsidiaries and affiliates; provided, however,
that this paragraph (c) shall not restrict the Executive from holding up to 5%
of the publicly traded securities of any entity.
(d) During the Employment Period and during any Severance Period (as
hereinafter defined), the Executive shall not either for his or her own account
or for any person, firm or company (i) solicit any customers of the Company, its
subsidiaries and affiliates or (ii) solicit or endeavor to cause any employee of
the Company, its subsidiaries and affiliates to leave his employment or induce
or attempt to induce any such employee to breach any employment agreement with
the Company, its subsidiaries and affiliates, or otherwise interfere with the
employment of any employee by the Company, its subsidiaries and affiliates.
(e) Without limiting any other provision of this Agreement, the Executive
hereby agrees to be bound by and to comply with any obligations known to the
Executive and imposed on the Company, its subsidiaries and affiliates, by law,
rule, regulation, ordinance, order, decree, instrument, agreement, understanding
or other restriction of any kind.
(f) The Executive hereby agrees to provide reasonable cooperation to the
Company, its subsidiaries and affiliates during the Employment Period and any
Severance
4
<PAGE>
Period (as hereinafter defined) in any litigation between the Company, its
subsidiaries and affiliates, and third parties.
(g) The parties agree that the Company shall, in addition to other remedies
provided by law, have the right and remedy to have the provisions of this
Section 5 specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any breach or threatened breach of the
provisions of this Section 5 will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company. Nothing
contained herein shall be construed as prohibiting the Company from pursuing any
other remedies available to it for such breach or threatened breach, including
the recovery of damages from the Executive.
(i) although the restrictions contained in Sections 5(a), (b), (c) and
(d) above are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of such nature may fail for
technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be adjudged to be void or unenforceable for whatever reason,
but would be valid if part of the wording thereof were deleted, or the period
thereof reduced or the area dealt with thereby reduced in scope, the
restrictions contained in Sections 5(a), (b), (c) and (d) shall be enforced to
the maximum extent permitted by law, and the parties consent and agree that such
scope or wording may be accordingly judicially modified in any proceeding
brought to enforce such restrictions.
(ii) Notwithstanding that the Executive's employment hereunder may
expire or be terminated as provided in Section 1 or Section 6 hereof, this
Agreement shall continue in full force and effect insofar as is necessary to
enforce the covenants and agreements of the Executive contained in this Section
5.
6. Termination of Employment Period and Severance
(a) Termination by the Company without Cause. If for any reason other than
the provisions of Section 6(d) hereof, the Company wishes to terminate the
Employment Period and the Executive's employment hereunder, the Company shall
give a written notice to the Executive of such termination stating that a
severance period (the "Severance Period") will commence upon receipt of such
notice by the Executive. The Severance Period shall be for the balance of the
then current term of this Agreement or twelve months, whichever is greater. Upon
receipt of such notice by the Executive, the Employment Period shall terminate
(and the Executive shall have no further duties under Section 2 hereof). During
the entire Severance Period, the Executive shall continue to receive all salary,
compensation, payments and benefits under Sections 3(a) and 3(d) of this
Agreement (including, to the extent allowable under applicable law, the accrual
of additional service credits or Company contributions under pension and thrift
plans, and any benefits under the Company's long term disability and life
insurance plans) available upon the date of the commencement of the Severance
Period as if the Employment Period continued throughout the Severance Period.
The Executive agrees that the payments described in this Section 6(a) shall be
full and adequate compensation to the Executive for all damages the Executive
may suffer as
5
<PAGE>
a result of the termination of his employment pursuant to this Section 6(a), and
hereby waives and releases the Company from any and all obligations or
liabilities to the Executive arising from or in connection with the Executive's
employment with the Company or the termination and claims the Executive may have
under federal, state or local statutes, regulations or ordinances or under any
common law principles or breach of contract or the covenant of good faith and
fair dealing, defamation, wrongful discharge, intentional infliction of
emotional distress or promissory estoppel; provided, however, that any rights
and benefits the Executive may have under the employee benefit plans and
programs of the Company in which the Executive is a participant, shall be
determined in accordance with the terms and provisions of such plans and
programs.
(b) Death. If the Executive dies during the Employment Period, the
Severance Period or during the period when payments are being made pursuant to
Section 6(c), the Employment Period shall automatically terminate and the
obligations of the parties shall terminate effective the date of death.
(c) Disability. If the Executive becomes Disabled (as hereinafter defined)
during the Employment Period, the Company shall be entitled to terminate his or
her employment and the Employment Period upon written notice to the Executive
from the Company. In the event of such termination, the Executive shall be
released from any duties hereunder, and the Severance Period described in
Section 6(a) hereof shall immediately commence. The duties, rights, benefits and
other matters during the Severance Period shall be as set forth in Section 6(a),
and the Executive (and his or her heirs, beneficiaries and estate) shall be
entitled to all compensation, payments and benefits during the Severance Period
without any offset or reduction except by such amounts, if any, as are paid to
the Executive in lieu of compensation for services under any applicable
insurance policies of the Company (or by the Company under any self insurance
plan). For purposes of this Agreement, "Disabled" shall mean mental or physical
impairment or incapacity rendering the Executive substantially unable to perform
his duties under this Agreement for a period of longer than 180 days out of any
360-day period during the Employment Period. A determination of whether the
Executive is Disabled shall be made by the Company in its sole discretion upon
its own initiative or upon request of the Executive or a person acting on his
behalf. If the Executive becomes Disabled during a Severance Period, he or she
shall continue to receive the compensation, payments and benefits of this
Agreement during the entire Severance Period without any offset or reduction,
except by such amounts, if any, as are paid to the Executive in lieu of
compensation for services under any applicable insurance policies of the Company
(or by the Company under any self insurance plan).
(d) Termination by the Company for Cause. The Company by written notice to
the Executive, shall have the right to terminate the Employment Period in the
event of any of the following (which shall constitute "Cause"):
(i) The Executive's breach in respect of his or her duties under this
Agreement, such breach continuing unremedied for thirty days after
written notice thereof
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<PAGE>
from the Company to the Executive specifying the acts constituting the
breach and requesting that they be remedied; or
(ii) Any misconduct, dishonesty, insubordination or other act by the
Executive materially detrimental to the goodwill of the Company, or
materially damaging to the Company's, its subsidiaries' and/or
affiliates' relationships with their customers or employees, including
without limitation, the Executive having been convicted of a felony
during the Employment Period, provided such conviction has resulted or
is likely to result in substantial detriment to the Company, its
subsidiaries and/or affiliates.
Any termination under this Section 6(d) shall be without damages or
liability to the Company for compensation and other benefits which would have
accrued to the Executive hereunder after termination, but all compensation,
benefits and reimbursements accrued through the date of termination shall be
paid to the Executive at the times normally paid by the Company. In this event,
there shall be no Severance Period.
(e) Voluntary Termination by the Executive. In the event of voluntary
termination of employment by the Executive, the terms of the last paragraph of
Section 6(d) shall apply, except in the event that such voluntary termination
occurs within ninety days of (i) a relocation of the Company's offices (or the
location of the performance of work by the Executive) beyond a fifty mile radius
of New York City, (ii) a material diminution of the Executive's duties and
responsibilities as provided in Section 2, or (iii) a reduction in Base Salary
in which cases the provisions of Section 6(a) shall apply.
(f) Termination Following a Change in Control.
(i) For purposes of this paragraph (f), the term "Change in Control"
shall mean a Change in Control as defined in Section 3 of the OMI Corp.
Separation Allowance Program, as amended from time (the "Program") to time.
Should the Executive's employment hereunder be terminated by the Company without
Cause (other than for reason of the Executive becoming Disabled) within two
years of a Change in Control, the Company shall pay and the Executive shall
receive in cash an amount equal to three times the sum of the Executive's then
current Base Salary and the amount paid to the Executive pursuant to the
exception in Section 3(b). The Executive shall also be eligible to receive any
and all other benefits as provided in the Program (excepting the severance
benefits of Paragraph 5(iii)B of the Program). For purposes other than with
respect to Paragraph 5(iii)B of the Program, wherever a Measuring Period (as
defined in the Program) is called for, the Measuring Period for the Executive
shall be twenty four. Upon termination under this paragraph (f), the Executive
shall no longer be bound by the provisions of Section 5 of this Agreement.
(ii) In the event that any payment received or to be received by the
Executive in connection with a Change in Control or the termination of the
Executive's employment (whether payable pursuant to the terms of this Agreement
or any other plan, arrangement
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<PAGE>
or agreement with the Company, any person whose actions result in a Change in
Control or any person affiliated with the Company or such person (together with
the payment pursuant to Section 6(f)(i), the "Total Payments")) would not be
deductible by the Company (in whole or in part) as a result of Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), the payment pursuant
to Section 6(f)(i) shall be reduced until no portion or the Total Payments is
not deductible as a result of Section 280G of the Code, or the payment pursuant
to Section 6(f)(i) is reduced to zero. For purposes of this limitation (A) no
portion of the Total Payments the receipt or enjoyment of which the Executive
shall have effectively waived in writing prior to the date of payment of the
payment pursuant to Section 6(f)(i) shall be taken into account, (B) no portion
of the Total Payments shall be taken into account which, in the opinion of tax
counsel selected by the Company's independent auditors and acceptable to the
Executive, does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code, and (C) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
or benefit included in the Total Payments shall be determined by the Company's
independent auditors servicing the Company immediately prior to the time of a
Change in Control in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.
7. Conflicting Agreements
The Executive hereby represents and warrants to the Company that his
entering into this Agreement, and the obligations and duties undertaken by him
hereunder, will not conflict with, constitute a breach of, or otherwise violate
the terms of any other employment of other agreement to which he is a party.
8. Assignment
(a) By the Executive. This Agreement, any part thereof and any rights
(including compensation) or obligation hereunder shall not be assigned, pledged,
alienated, sold, attached, charged, encumbered or transferred in any way by the
Executive and any attempt to do so shall be void except that (i) the Executive
may designate any of his beneficiaries to receive (and such beneficiaries shall
receive) any compensation, payments or other benefits payable hereunder upon his
death, (ii) any assignment by will or by laws of descent and distribution or
following the occurrence of the Executive's legal incompetence is permitted and
(iii) the Executive's executors, administrators or other legal representatives
may assign any rights hereunder to the person or persons entitled thereto.
(b) By the Company. Provided the substance of the Executive's duties set
forth in Section 2 shall not change, and provided that the Executive's
compensation as set forth in Section 3 shall not be adversely affected, the
Company may assign or otherwise transfer this Agreement to any succeeding entity
without limitation, which entity shall assume all rights and obligations
hereunder.
8
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9. Notices
All notices, requests, demands and other communications hereunder must be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed within the continental United States by first class, registered mail,
return receipt requested, or sent by overnight mail, such as Federal Express,
postage and registry fees prepaid, to the applicable party and addressed as
follows:
(a) if to the Company:
President
OMI Corp.
90 Park Avenue
New York, New York 10016
(b) if to the Executive:
Addresses may be changed by notice in writing signed by the addressee.
10. Miscellaneous
(a) If any provision or portion of this Agreement shall, for any reason, be
adjudged by any court of competent jurisdiction to be invalid or unenforceable,
such judgment shall not affect, impair or invalidate the remainder of this
Agreement but shall be confined in its operation to the jurisdiction in which
made and to the provisions of this Agreement directly involved in the
controversy in which such judgment shall have been rendered.
(b) No course of dealing and no delay on the part of any party hereto in
exercising any right, power or remedy under or relating to this Agreement shall
operate as a waiver thereof or otherwise prejudice such party's rights, powers
and remedies. No single or partial exercise of any rights, powers or remedies
under or relating to this Agreement shall preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
(c) This Agreement may be executed by the parties hereto in counterparts,
each of which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument, and all signatures need not
appear on any one counterpart.
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<PAGE>
(d) (i) Any other agreement, rule or regulation to the contrary,
notwithstanding, the parties hereby agree that any action or proceeding relating
to this Agreement or its subject matter shall be brought in a state or federal
court situated in the County of New York, State of New York and such court shall
have exclusive jurisdiction thereof; provided, however, any court with
jurisdiction over the parties may, at the election of Company, have jurisdiction
over any action brought with regard to or any action brought to enforce any
violation or claimed violation of Section 5. The parties each hereby
specifically submit to the jurisdiction of such court and further agree that
service of process may be made within or without the State of New York by giving
notice in the manner provided in Section 9. Each party further agrees to waive
and hereby waives any right to a trial by jury, and to any objection it or he
may have in any such action, based on lack of personal jurisdiction or venue, or
inconvenient forum.
(ii) In any such action or proceeding, the prevailing party shall be
entitled to recover from the other party reasonable costs, including attorney's
fees and expenses. In any action or proceeding before a court or other tribunal
relating to this Agreement with respect to which damages are an adequate remedy,
the parties agree that no damages other than compensatory damages shall be
sought or claimed by either party and each party waives any claim, right or
entitlement to punitive, exemplary, or consequential damages, or any statutory
damages, or any other damages of any kind or nature in excess of compensatory
damages, and any court or arbitration tribunal is specifically divested of any
power to award any damages in the nature of punitive, exemplary, or
consequential damages, or any statutory damages, or any other damages of any
kind or nature in excess of compensatory damages.
(e) All payments required to be made by the Company hereunder to the
Executive or his beneficiaries, including his estate, shall be subject to
withholding and deductions as the Company may reasonably determine it should
withhold or deduct pursuant to any applicable law or regulation. In lieu of
withholding or deducting such amounts in whole or in part, the Company may, in
its sole discretion, accept other provision for payment as permitted by law,
provided it is satisfied in its sole discretion that all requirements of law
affecting its responsibilities to withhold such taxes have been satisfied.
(f) This Agreement embodies the entire understanding, and supersedes all
other oral or written agreements or understandings, between the parties
regarding the subject matter hereof. No change, alteration or modification
hereof may be made except in writing signed by both parties hereto. The headings
in this Agreement are for convenience of reference only and shall not be
considered part of this Agreement or limit or otherwise affect the meaning
hereof. This Agreement and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the State of
New York (disregarding any choice of law rules which might look to the laws of
any other jurisdiction).
(g) The Executive acknowledges that the terms of this Agreement have been
fully explained to him or her, that the Executive understands the nature and
extent of the rights
10
<PAGE>
and obligations provided under this Agreement, and that the Executive has been
given the opportunity to be represented by legal counsel in the negotiation and
preparation of this Agreement.
(h) Nothing herein contained shall be construed to prevent or limit any
acquisition, consolidation or merger of the Company.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
By /s/
--------------------------------
Vice President
OMI CORP.
By /s/ FREDRIC S. LONDON
--------------------------------
Fredric S. London
11
EXHIBIT 21
LIST OF SUBSIDIARIES
--------------------
The following table sets forth all directly and indirectly owned subsidiaries of
OMI and the jurisdiction of incorporation or organization of each subsidiary:
Jurisdiction of
Incorporation
Company or Organization % Owned
------- --------------- -------
Argus Port and Lightering Services Ltd. .......... Liberia 100%
Colorado Shipping Ltd. ........................... Liberia 100%
Darien Shipping Ltd. ............................. Liberia 100%
Limar Shipping Ltd. .............................. Liberia 100%
Loire Transport, Inc. ............................ Liberia 100%
Navassure Ltd. ................................... Bermuda 100%
Nile Transport, Inc. ............................. Liberia 100%
Ogden Marine T-5, Inc. ........................... Delaware 100%
OMI Avon Transport, Inc. ......................... Liberia 100%
OMI Bulk Transport, Inc. ......................... Delaware 100%
OMI Challenger Transport, Inc. ................... Delaware 100%
OMI Champion Transport, Inc. ..................... Delaware 100%
Omichem Transport, Inc. .......................... Delaware 100%
OMI Clover Transport, Inc. ....................... Delaware 100%
OMI Courier Transport, Inc. ...................... New York 100%
OMI of Delaware, Inc. ............................ Delaware 100%
OMI Environmental Ventures, Inc. ................. Delaware 100%
OMI Hudson Transport, Inc. ....................... Delaware 100%
OMI Investments, Inc. ............................ Delaware 100%
OMI Leader Transport, Inc. ....................... New York 100%
OMI Missouri Transport, Inc. ..................... Delaware 100%
OMI Oriole Transport, Inc. ....................... Delaware 100%
OMI Patriot Transport, Inc. ...................... Delaware 100%
OMI Promise Transport, Inc. ...................... Liberia 100%
OMI Rover Transport, Inc. ........................ Delaware 100%
OMI Ship Management, Inc. ........................ Delaware 100%
OMI State, Inc. .................................. Washington 100%
OMI Trent Transport, Inc. ........................ Liberia 100%
OMI (U.K.) Ltd. .................................. Liberia 100%
OMI Willamette Transport, Inc. ................... Delaware 100%
Rio Grande Transport, Inc. ....................... New York 100%
Rowayton Shipping Ltd. ........................... Liberia 100%
Saugatuck Shipping Ltd. .......................... Liberia 100%
Saybrook Shipping Ltd. ........................... Liberia 100%
Sokolica Transport, Inc. ......................... Liberia 100%
<PAGE>
Jurisdiction of
Incorporation
Company or Organization % Owned
------- --------------- -------
UBC Chartering Ltd. ........................... Liberia 100%
Universal Bulk Carriers, Inc. .................. Liberia 100%
Volga Transport, Inc. .......................... Liberia 100%
OMI Petrolink Corp.(1) ......................... Delaware 80%
(1) The following companies are 100% owned by OMI Petrolink Corp.:
Harlink Corp. ......................... Delaware
Kenedy Corp. .......................... Delaware
Nuelink Corp. ......................... Delaware
Ogden Marine Indonesia, Inc. .......... Delaware
OMI Offshore Marine Services, Inc. .... Delaware
Potomac Transport, Inc. ............... Delaware
The following table sets forth a list of companies in which OMI directly or
indirectly has a 50% or less ownership:
Jurisdiction of
Incorporation
Company or Organization % Owned
------- --------------- -------
Grandteam Ship Management Ltd. ............ Hong Kong 50%
Ocean Specialty Tankers Corp. ............. Delaware 50%
Vanomi Management, Inc. ................... Liberia 50%
Aurora Tankers Ltd. ....................... Marshall Islands 49.9%
Aurora Tankers (U.K.) Ltd. ................ Great Britain 49.9%
Aurora Tankers Pte. Ltd. .................. Singapore 49.9%
Geraldton Navigation Company Inc. (1) ..... Panama 49.9%
Mosaic Alliance Corp. (2) ................. Liberia 49.9%
Amazon Transport, Inc. .................... Liberia 49%
Mendala Transport, Inc. ................... Liberia 49%
White Sea Holdings Ltd. (3) ............... Liberia 49%
Wilomi, Inc. (4) .......................... Liberia 49%
Gainwell Investments Ltd. ................. British Virgin Islands 25%
Noble Drilling Corp. ...................... -- 3.75%
<PAGE>
(1) The following companies are 100% owned by Geraldton Navigation Co. Inc.:
Geraldton Navigation Company Pte. Ltd. Singapore
Hayes Navigation Company Pte. Ltd. ... Singapore
(2) The following companies are 100% owned by Mosaic Alliance Corp.:
AVAC Limited ......................... Liberia
Bunbury Navigation Co., Inc. ......... Panama
FLT Ltd. ............................. Liberia
MacKenzie Navigation Co. Pte. Ltd. ... Singapore
Romeo Navigation Co., Inc. ........... Panama
Sheffield Navigation Co., Inc. ....... Panama
Tulsa Navigation Co. Pte. Ltd. ....... Singapore
(3) The following company is 100% owned by White Sea Holdings Ltd.:
White Sea Corp.
(4) The following companies are 100% owned by Wilomi, Inc.:
Ease Shipping, Inc. .................. Liberia
Gladiator Maritime Limited ........... Liberia
Loretta Shipping, Inc. ............... Liberia
Mendala II Transport, Inc. ........... Liberia
Mendala III Transport, Inc. .......... Liberia
Parallel Maritime, Inc. .............. Liberia
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Exhibit 27 contains summary information extracted from OMI Corp. and
Subsidiaries Consolidated financial statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 31,797
<SECURITIES> 14,415
<RECEIVABLES> 16,364
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 81,379
<PP&E> 695,339
<DEPRECIATION> 294,401
<TOTAL-ASSETS> 605,132
<CURRENT-LIABILITIES> 58,218
<BONDS> 253,239
<COMMON> 15,336
0
0
<OTHER-SE> 164,340
<TOTAL-LIABILITY-AND-EQUITY> 605,132
<SALES> 0
<TOTAL-REVENUES> 266,796
<CGS> 0
<TOTAL-COSTS> 223,540
<OTHER-EXPENSES> 56,742
<LOSS-PROVISION> 34,598
<INTEREST-EXPENSE> 28,808
<INCOME-PRETAX> (60,170)
<INCOME-TAX> (22,305)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (37,865)
<EPS-PRIMARY> (1.24)
<EPS-DILUTED> (1.24)
</TABLE>
BINDER
Alexander & Alexander of New
York, Inc.
1185 Avenue of the Americas
New York, N.Y. 10036
Telephone (212) 575-8000
Submitted by
To: Mr. Kent B. Shelley John M. Perkins
Chubb & Son, Inc. -----------------
1221 Avenue of the Americas January 27, 1995
New York, NY 10020-1001 -----------------
Date
INSURED OMI Corp.
------------------------------------------------------------
------------------------------------------------------------
TYPE OF INSURANCE See details in Instructions section below
------------------------------------------------------------
EFFECTIVE DATE January 31, 1995 EXPIRATION DATE January 31, 1996
------------------- ---------------------
LOCATION 90 Park Avenue
------------------------------------------------------------
New York, NY 10016
------------------------------------------------------------
INSTRUCTIONS:
I) DIRECTORS & OFFICERS LIABILITY COVERAGE
Parent Organization: OMI Corp.
Limits of Liability:
(A) Each Loss $10,000,000
(B) Each Policy Period $10,000,000
Coinsurance Percent: .5% of the first $1,000,000 of Loss on
Insuring Clause 1 only.
INSURANCE COMPANY Federal
-----------------------------------------------------------
POLICY NO. 81092598-G ACCEPTED BY /s/ KENT B. SHELLEY
------------------------- ------------------------
Kent B. Shelley
When accepted by the Company, the coverage is in effect from the effective time
and date of coverage. The Company accepting this risk acknowledges itself bound
by the terms, conditions and limitations of the policy (or policies) of
insurance in current use by the Company for the kind (or kinds) of insurance
specifically ordered from the effective date and hour specified herein.
Acceptance by or on behalf of the insured of a policy (or policies) as ordered
in place hereof shall render this Binder void. This Binder may be canceled at
any time by the Insured or by the broker or agent who placed the risk by notice
to the Company or by the surrender of this Binder stating when thereafter such
cancellation shall be effective. This Binder may be canceled by the Company
by written notice to the insured and to Alexander & Alexander of New York Inc.
who placed the risk stating when, not before 12:00 o'clock noon of the fifth
business day following the date of mailing, such cancellation shall be
effective. A premium charge at the rates agreed upon when this Binder becomes
effective will be made for the time this Binder is in effect if no policy of
insurance in place hereof is issued and accepted by the insured.
A & A-NY - 7101 - 0381 SHL/1 [25B1.SHL]
<PAGE>
PAGE 2 OF 4
--- ---
ATTACHED TO AND FORMING PART OF A&A BINDER DATED January 27, 1995
------------------------------
INSURED OMI Corp.
-----------------------------------------------------------------------
TYPE OF INSURANCE See details in Instructions below
-------------------------------------------------------------
Deductible Amounts:
Executive Liability (A) Each Insured Person $NIL
(B) All Insured Persons $NIL
Executive Indemnification (C) The Insured Organization $1,000,000
Insured Organization: OMI Corp. and its subsidiaries.
Insured Persons: Any person who has been, now is, or
shall become a duly elected or appointed
officer or general manager of the
Insured Organization.
Continuity Date: None
Extended Reporting Period:
(A) Additional Premium: 150% of the Annual Premium
(B) Additional Period: One Year
Endorsements:
- New York Amendatory (Extended Reporting Period)
- New York Amendatory (107)
- Pending or Prior Litigation exclusion on the $5,000,000 excess
$5,000,000 layer as of December 31, 1988
- Insured vs Insured exclusion with Wrongful Termination carveout
- Excluded loss arising out of legal proceedings in December 31,
1994 10-K
- Absolute BI/PD exclusion
- Absolute Pollution exclusion
- Spousal Liability extension
- Presumptive Indemnification
- Pending or Prior Litigation exclusion December 31, 1984
- Scheduled For-Profit Triple Excess Outside Directorship Liability
coverage
- Automatic Acquisition Threshold--10% of OMI's assets
II) COMMERCIAL CRIME COVERAGE SECTION--FORM 14-02-263 (ED. 6-81)
Name of Insured: OMI Corp. and any other subsidiary corporation(s) now
existing or hereafter created or acquired.
Limits of Liability:
Employee Theft Coverage: $2,000,000
Premises Coverage: $1,000,000
Transit Coverage: $1,000,000
Depositors Forgery Coverage: $2,000,000
Deductible Amount: $ 100,000
<PAGE>
PAGE 3 OF 4
--- ---
ATTACHED TO AND FORMING PART OF A&A BINDER DATED January 27, 1995
---------------------------
INSURED OMI Corp.
--------------------------------------------------------------------
TYPE OF INSURANCE See details in Instructions section below
----------------------------------------------------------
Territory: Anywhere in the world.
Employee Benefit Plans included as Insureds:
- OMI Corp. Employee Stock Ownership Plan
- OMI Corp. Savings Plan and any other Employee Benefit Plans now
existing or hereafter created which may be required to be
bonded under the Employee Retirement Income Security Act of 1974.
Endorsements:
- Credit Card Forgery - $100,000 with $1,000 deductible
- Money Orders & Counterfeit Currency Coverage--$100,000 with
$1,000 deductible
- Perils of the Sea exclusion
- Computer Fraud and Funds Transfer Endorsement
III) SPECIAL COVERAGE--FORM 14-02-264 (ED. 6-81)
Name of Insured: OMI Corp. and any subsidiary corporation(s) now
existing or hereafter created or acquired.
Limits of Liability:
Kidnap/Ransom and
Extortion Coverage: $10,000,000
Delivery Coverage: $10,000,000
Expense Coverage: $10,000,000
Deductible Amount: NONE
Designated Persons: All directors, officers and employees
of the Insured.
Designated Property: All Premises and Merchandise of the
Insured and any other tangible real or
personal property owned by the Insured
or for which the Insured is legally
liable.
Endorsements:
- Extended Expense Coverage--Insuring Clause 4: 30 day wait--
$10,000,000 Limit.
- Accidental Death and Dismemberment Coverage
$100,000 per loss/$1,000,000 aggregate
- Business Interruption Coverage
- Consequential Personal Financial Loss
- Renewal Expense Endorsement
- B/I Computer Virus Endorsement
- Computer Virus Extortion
<PAGE>
PAGE 4 OF 4
--- ---
ATTACHED TO AND FORMING PART OF A&A BINDER DATED January 27, 1995
---------------------------
INSURED OMI Corp.
---------------------------------------------------------------------
TYPE OF INSURANCE See details in Instructions section below
-----------------------------------------------------------
IV) FIDUCIARY LIABILITY AND DEFENSE COVERAGE--FORM 14-02-262 (ED. 6-81)
Limits of Liability:
(A) Each Loss $5,000,000
(B) Each Policy Year $5,000,000
Deductible Amount: $5,000
Sponsor Organization: OMI Corp. and its subsidiaries.
Employee Benefit Plans included as Insureds:
- OMI Corp. Employee Stock Ownership Plan
- OMI Corp. Savings Plan
and any other Employee Benefit Plans now existing or hereafter created
which may be required to be bonded under the Employee Retirement
Income Security Act of 1974.
Retroactive Date: NONE
Extended Reporting Period:
(A) Additional Premium: 150% of the Annual Premium
(B) Additional Period: One Year
Endorsements:
- Pending & Prior Litigation Exclusion - January 31, 1995
- Terminated Plan Endorsement: OMI Corp. 88 Pension Plan, OMI
Corp. Savings and Security Plan
- 502(L) Coverage
- Delete 502 (i) Coverage
- Split deductible Endorsement
ANNUAL PREMIUM: $260,100
